0001454124 2012-01-01 2012-12-31 0001454124 2012-12-31 0001454124 2011-12-31 0001454124 2010-12-31 0001454124 BARZOB:CellynxGroupIncMember 2012-01-01 2012-12-31 0001454124 us-gaap:SubsidiariesMember 2012-12-31 0001454124 us-gaap:FurnitureAndFixturesMember 2012-12-31 0001454124 us-gaap:FurnitureAndFixturesMember 2011-12-31 0001454124 us-gaap:ComputerEquipmentMember 2012-12-31 0001454124 us-gaap:ComputerEquipmentMember 2011-12-31 0001454124 2011-01-01 2011-12-31 0001454124 us-gaap:PatentsMember 2012-12-31 0001454124 us-gaap:PatentsMember 2011-12-31 0001454124 us-gaap:TrademarksMember 2012-12-31 0001454124 us-gaap:TrademarksMember 2011-12-31 0001454124 us-gaap:LicensingAgreementsMember 2012-12-31 0001454124 us-gaap:LicensingAgreementsMember 2011-12-31 0001454124 us-gaap:MaximumMember 2012-01-01 2012-12-31 0001454124 us-gaap:MinimumMember 2012-01-01 2012-12-31 0001454124 BARZOB:StockSplitMember 2010-11-01 2010-11-30 0001454124 us-gaap:CommonStockMember 2010-12-01 2010-12-31 0001454124 BARZOB:FoundersSharesMember 2008-11-13 0001454124 us-gaap:CommonStockMember 2012-03-29 0001454124 us-gaap:CommonStockMember 2008-12-31 0001454124 us-gaap:CommonStockMember 2011-12-31 0001454124 us-gaap:MinimumMember us-gaap:CommonStockMember 2011-03-30 0001454124 us-gaap:MaximumMember us-gaap:CommonStockMember 2011-03-30 0001454124 us-gaap:MinimumMember 2011-12-31 0001454124 us-gaap:MaximumMember 2011-12-31 0001454124 us-gaap:MinimumMember us-gaap:CommonStockMember 2011-12-31 0001454124 us-gaap:MaximumMember us-gaap:CommonStockMember 2011-12-31 0001454124 us-gaap:MinimumMember us-gaap:CommonStockMember 2012-03-31 0001454124 us-gaap:MaximumMember us-gaap:CommonStockMember 2012-03-31 0001454124 2012-03-29 0001454124 BARZOB:Note1Member 2012-12-31 0001454124 BARZOB:Note2Member 2012-12-31 0001454124 BARZOB:Note3Member 2012-12-31 0001454124 BARZOB:Note1Member 2012-01-01 2012-12-31 0001454124 BARZOB:Note2Member 2012-01-01 2012-12-31 0001454124 BARZOB:Note3Member 2012-01-01 2012-12-31 0001454124 BARZOB:NetBookValueMember 2012-03-29 0001454124 BARZOB:AdjustmentsMember 2012-03-29 0001454124 BARZOB:ValuationMember 2012-03-29 0001454124 us-gaap:SubsidiariesMember 2011-10-01 2011-10-06 0001454124 us-gaap:SubsidiariesMember 2012-01-01 2012-12-31 0001454124 BARZOB:CellynxGroupIncMember 2012-04-01 2012-04-13 0001454124 BARZOB:CellynxGroupIncMember 2012-05-01 2012-05-15 0001454124 BARZOB:CommonStockForCellynxMember 2012-03-01 2012-03-29 0001454124 us-gaap:AdditionalPaidInCapitalMember 2012-03-31 0001454124 BARZOB:ConversionOfConvertibleDebentureMember 2011-10-01 2011-12-31 0001454124 BARZOB:ConversionOfConvertibleDebentureMember 2011-12-31 0001454124 us-gaap:GoodsAndServicesExchangedForEquityInstrumentMember 2012-03-31 0001454124 us-gaap:MinimumMember us-gaap:CommonStockMember 2012-12-31 0001454124 us-gaap:MaximumMember us-gaap:CommonStockMember 2012-12-31 0001454124 BARZOB:CellynxNote1Member 2012-12-31 0001454124 BARZOB:CellynxNote2Member 2012-12-31 0001454124 BARZOB:CellynxNote1Member 2012-01-01 2012-12-31 0001454124 BARZOB:CellynxNote2Member 2012-01-01 2012-12-31 0001454124 2008-11-13 0001454124 BARZOB:Note4Member 2012-01-01 2012-12-31 0001454124 BARZOB:Note4Member 2012-12-31 0001454124 us-gaap:MinimumMember us-gaap:CommonStockMember 2011-06-30 0001454124 us-gaap:MaximumMember us-gaap:CommonStockMember 2011-06-30 0001454124 us-gaap:MinimumMember us-gaap:CommonStockMember 2012-06-30 0001454124 us-gaap:MaximumMember us-gaap:CommonStockMember 2012-06-30 0001454124 us-gaap:DebtSecuritiesMember 2012-12-31 0001454124 us-gaap:DebtSecuritiesMember 2012-07-01 2012-09-30 0001454124 us-gaap:InvestorMember 2012-12-31 0001454124 us-gaap:InvestorMember 2012-01-01 2012-12-31 0001454124 us-gaap:InvestorMember 2012-01-30 0001454124 BARZOB:CellynxGroupIncMember 2012-01-01 2012-03-31 0001454124 BARZOB:CellynxGroupIncMember 2012-03-29 0001454124 us-gaap:CommonStockMember 2008-11-18 2008-12-31 0001454124 us-gaap:CommonStockMember 2010-01-01 2010-12-31 0001454124 us-gaap:CommonStockMember 2011-01-01 2011-12-31 0001454124 us-gaap:CommonStockMember 2012-01-01 2012-12-31 0001454124 us-gaap:CommonStockMember 2009-12-31 0001454124 us-gaap:CommonStockMember 2010-12-31 0001454124 us-gaap:CommonStockMember 2012-12-31 0001454124 us-gaap:AdditionalPaidInCapitalMember 2008-11-18 2008-12-31 0001454124 us-gaap:AdditionalPaidInCapitalMember 2010-01-01 2010-12-31 0001454124 us-gaap:AdditionalPaidInCapitalMember 2011-01-01 2011-12-31 0001454124 us-gaap:AdditionalPaidInCapitalMember 2012-01-01 2012-12-31 0001454124 us-gaap:AdditionalPaidInCapitalMember 2008-12-31 0001454124 us-gaap:AdditionalPaidInCapitalMember 2009-12-31 0001454124 us-gaap:AdditionalPaidInCapitalMember 2010-12-31 0001454124 us-gaap:AdditionalPaidInCapitalMember 2011-12-31 0001454124 us-gaap:AdditionalPaidInCapitalMember 2012-12-31 0001454124 us-gaap:EquitySecuritiesMember 2008-11-18 2008-12-31 0001454124 us-gaap:EquitySecuritiesMember 2009-01-01 2009-12-31 0001454124 us-gaap:EquitySecuritiesMember 2008-12-31 0001454124 us-gaap:EquitySecuritiesMember 2009-12-31 0001454124 us-gaap:EquitySecuritiesMember 2010-12-31 0001454124 us-gaap:EquitySecuritiesMember 2011-12-31 0001454124 us-gaap:EquitySecuritiesMember 2012-12-31 0001454124 us-gaap:RetainedEarningsMember 2008-11-18 2008-12-31 0001454124 us-gaap:RetainedEarningsMember 2009-01-01 2009-12-31 0001454124 us-gaap:RetainedEarningsMember 2010-01-01 2010-12-31 0001454124 us-gaap:RetainedEarningsMember 2011-01-01 2011-12-31 0001454124 us-gaap:RetainedEarningsMember 2012-01-01 2012-12-31 0001454124 us-gaap:RetainedEarningsMember 2008-12-31 0001454124 us-gaap:RetainedEarningsMember 2009-12-31 0001454124 us-gaap:RetainedEarningsMember 2010-12-31 0001454124 us-gaap:RetainedEarningsMember 2011-12-31 0001454124 us-gaap:RetainedEarningsMember 2012-12-31 0001454124 us-gaap:NoncontrollingInterestMember 2011-01-01 2011-12-31 0001454124 us-gaap:NoncontrollingInterestMember 2012-01-01 2012-12-31 0001454124 us-gaap:NoncontrollingInterestMember 2011-12-31 0001454124 us-gaap:NoncontrollingInterestMember 2012-12-31 0001454124 2009-01-01 2009-12-31 0001454124 2010-01-01 2010-12-31 0001454124 2008-12-31 0001454124 2009-12-31 0001454124 2012-06-30 0001454124 2013-03-20 0001454124 2008-11-14 2012-12-31 0001454124 us-gaap:MinimumMember us-gaap:CommonStockMember 2011-09-30 0001454124 us-gaap:MaximumMember us-gaap:CommonStockMember 2011-09-30 0001454124 us-gaap:MinimumMember us-gaap:CommonStockMember 2012-09-30 0001454124 us-gaap:MaximumMember us-gaap:CommonStockMember 2012-09-30 0001454124 us-gaap:PaymentInKindPIKNoteMember 2012-01-01 2012-12-31 0001454124 us-gaap:PaymentInKindPIKNoteMember 2012-12-31 0001454124 BARZOB:CellynxGroupIncMember 2012-12-31 0001454124 BARZOB:CellynxGroupIncMember 2011-12-31 0001454124 BARZOB:CellynxGroupIncMember 2012-01-01 2012-12-31 0001454124 BARZOB:BARzAGMember 2012-01-01 2012-12-31 0001454124 BARZOB:BARzAGMember 2012-12-31 0001454124 BARZOB:BARzAGMember 2011-12-31 0001454124 BARZOB:CellynxGroupIncMember 2011-01-07 0001454124 BARZOB:CellynxGroupIncMember 2011-01-02 2011-01-07 0001454124 BARZOB:CellynxGroupIncMember 2012-01-01 2012-03-29 0001454124 BARZOB:CSSProperties1Member 2012-01-01 2012-12-31 0001454124 BARZOB:CSSProperties2Member 2012-01-01 2012-12-31 0001454124 BARZOB:LaborCommissionMember 2012-01-01 2012-12-31 0001454124 BARZOB:LaJollaCoveInvestorsIncMember 2012-01-01 2012-12-31 0001454124 BARZOB:AsherEnterprisesIncMember 2012-01-01 2012-12-31 0001454124 BARZOB:SubsequentMember 2013-01-04 0001454124 BARZOB:SubsequentMember 2013-01-02 2013-01-04 0001454124 BARZOB:SubsequentMember 2013-01-09 2013-01-10 0001454124 BARZOB:SubsequentMember 2013-01-10 0001454124 BARZOB:SubsequentMember 2013-01-16 0001454124 BARZOB:SubsequentMember 2013-01-15 2013-01-16 0001454124 BARZOB:SubsequentMember 2013-01-17 2013-01-22 0001454124 BARZOB:SubsequentMember 2013-01-22 0001454124 BARZOB:SubsequentMember 2013-01-25 0001454124 BARZOB:SubsequentMember 2013-01-23 2013-01-25 0001454124 BARZOB:SubsequentMember 2013-02-01 2013-02-04 0001454124 BARZOB:SubsequentMember 2013-02-04 0001454124 BARZOB:SubsequentMember 2013-02-12 0001454124 BARZOB:SubsequentMember 2013-02-05 2013-02-12 0001454124 BARZOB:SubsequentMember 2013-02-13 2013-02-14 0001454124 BARZOB:SubsequentMember 2013-02-14 0001454124 BARZOB:SubsequentMember 2013-02-16 0001454124 BARZOB:SubsequentMember 2013-02-15 2013-02-16 0001454124 BARZOB:SubsequentMember 2013-02-20 2013-02-26 0001454124 BARZOB:SubsequentMember 2013-02-26 0001454124 BARZOB:SubsequentMember 2013-03-01 0001454124 BARZOB:SubsequentMember 2013-02-28 2013-03-01 0001454124 BARZOB:SubsequentMember 2013-03-02 2013-03-06 0001454124 BARZOB:SubsequentMember 2013-03-06 0001454124 BARZOB:SubsequentMember 2013-03-08 0001454124 BARZOB:SubsequentMember 2013-03-07 2013-03-08 0001454124 BARZOB:SubsequentMember 2013-01-08 0001454124 us-gaap:CommonStockMember 2012-01-11 2012-01-12 0001454124 us-gaap:CommonStockMember 2012-01-12 0001454124 us-gaap:CommonStockMember 2012-02-01 0001454124 us-gaap:CommonStockMember 2012-01-31 2012-02-01 0001454124 us-gaap:CommonStockMember 2012-02-02 2012-02-07 0001454124 us-gaap:CommonStockMember 2012-02-07 0001454124 BARZOB:CommonStockAdditionalMember 2012-02-01 0001454124 BARZOB:CommonStockAdditionalMember 2012-01-31 2012-02-01 0001454124 us-gaap:CommonStockMember 2012-02-28 2012-02-29 0001454124 us-gaap:CommonStockMember 2012-02-29 0001454124 us-gaap:CommonStockMember 2012-03-05 0001454124 us-gaap:CommonStockMember 2012-03-04 2012-03-05 0001454124 us-gaap:CommonStockMember 2012-03-06 2012-03-07 0001454124 us-gaap:CommonStockMember 2012-03-07 0001454124 us-gaap:CommonStockMember 2012-03-20 0001454124 us-gaap:CommonStockMember 2012-03-19 2012-03-20 0001454124 us-gaap:CommonStockMember 2012-03-21 2012-03-22 0001454124 us-gaap:CommonStockMember 2012-03-22 0001454124 us-gaap:CommonStockMember 2012-03-26 0001454124 us-gaap:CommonStockMember 2012-03-25 2012-03-26 0001454124 us-gaap:CommonStockMember 2012-04-01 2012-04-02 0001454124 us-gaap:CommonStockMember 2012-04-02 0001454124 us-gaap:CommonStockMember 2012-04-18 0001454124 us-gaap:CommonStockMember 2012-04-17 2012-04-18 0001454124 us-gaap:PatentsMember 2012-01-01 2012-12-31 0001454124 us-gaap:TrademarksMember 2012-01-01 2012-12-31 0001454124 us-gaap:CommonStockMember 2012-04-29 2012-04-30 0001454124 us-gaap:CommonStockMember 2012-04-30 0001454124 BARZOB:CommonStockAdditionalMember 2012-04-29 2012-04-30 0001454124 BARZOB:CommonStockAdditionalMember 2012-04-30 0001454124 us-gaap:CommonStockMember 2012-05-01 2012-05-03 0001454124 us-gaap:CommonStockMember 2012-05-03 0001454124 us-gaap:CommonStockMember 2012-05-14 0001454124 us-gaap:CommonStockMember 2012-05-12 2012-05-14 0001454124 us-gaap:CommonStockMember 2012-06-10 2012-06-12 0001454124 us-gaap:CommonStockMember 2012-06-12 0001454124 us-gaap:CommonStockMember 2012-06-21 0001454124 us-gaap:CommonStockMember 2012-06-20 2012-06-21 0001454124 us-gaap:CommonStockMember 2012-06-26 2012-06-27 0001454124 us-gaap:CommonStockMember 2012-06-27 0001454124 us-gaap:CommonStockMember 2012-07-08 2012-07-09 0001454124 us-gaap:CommonStockMember 2012-07-09 0001454124 us-gaap:CommonStockMember 2012-07-20 0001454124 us-gaap:CommonStockMember 2012-07-19 2012-07-20 0001454124 us-gaap:CommonStockMember 2012-08-09 2012-08-10 0001454124 us-gaap:CommonStockMember 2012-08-10 0001454124 us-gaap:CommonStockMember 2012-08-14 0001454124 us-gaap:CommonStockMember 2012-08-13 2012-08-14 0001454124 us-gaap:CommonStockMember 2012-09-04 2012-09-05 0001454124 us-gaap:CommonStockMember 2012-09-05 0001454124 us-gaap:CommonStockMember 2012-09-10 0001454124 us-gaap:CommonStockMember 2012-09-09 2012-09-10 0001454124 us-gaap:CommonStockMember 2012-09-13 2012-09-14 0001454124 us-gaap:CommonStockMember 2012-09-14 0001454124 BARZOB:CommonStockAdditionalMember 2012-08-13 2012-08-14 0001454124 BARZOB:CommonStockAdditionalMember 2012-08-14 0001454124 us-gaap:CommonStockMember 2012-10-11 2012-10-12 0001454124 us-gaap:CommonStockMember 2012-10-12 0001454124 us-gaap:CommonStockMember 2012-10-26 0001454124 us-gaap:CommonStockMember 2012-10-25 2012-10-26 0001454124 us-gaap:CommonStockMember 2012-12-06 2012-12-07 0001454124 us-gaap:CommonStockMember 2012-12-07 0001454124 us-gaap:CommonStockMember 2012-12-12 0001454124 us-gaap:CommonStockMember 2012-12-11 2012-12-12 0001454124 us-gaap:CommonStockMember 2012-12-16 2012-12-17 0001454124 us-gaap:CommonStockMember 2012-12-17 0001454124 us-gaap:CommonStockMember 2012-12-29 2012-12-31 0001454124 us-gaap:CommonStockMember 2011-01-09 2011-01-10 0001454124 us-gaap:CommonStockMember 2011-01-10 0001454124 us-gaap:CommonStockMember 2011-01-15 0001454124 us-gaap:CommonStockMember 2011-01-14 2011-01-15 0001454124 us-gaap:CommonStockMember 2011-03-08 2011-03-09 0001454124 us-gaap:CommonStockMember 2011-03-09 0001454124 us-gaap:CommonStockMember 2011-04-04 0001454124 us-gaap:CommonStockMember 2011-04-03 2011-04-04 0001454124 us-gaap:CommonStockMember 2011-04-06 2011-04-07 0001454124 us-gaap:CommonStockMember 2011-04-07 0001454124 us-gaap:CommonStockMember 2011-06-03 0001454124 us-gaap:CommonStockMember 2011-06-02 2011-06-03 0001454124 us-gaap:CommonStockMember 2011-07-17 2011-07-18 0001454124 us-gaap:CommonStockMember 2011-07-18 0001454124 us-gaap:CommonStockMember 2011-07-21 0001454124 us-gaap:CommonStockMember 2011-07-19 2011-07-21 0001454124 us-gaap:CommonStockMember 2011-07-23 2011-07-24 0001454124 us-gaap:CommonStockMember 2011-07-24 0001454124 us-gaap:CommonStockMember 2011-11-08 0001454124 us-gaap:CommonStockMember 2011-11-07 2011-11-08 0001454124 us-gaap:CommonStockMember 2011-12-06 2011-12-07 0001454124 us-gaap:CommonStockMember 2011-12-07 0001454124 us-gaap:CommonStockMember 2011-12-15 0001454124 us-gaap:CommonStockMember 2011-12-14 2011-12-15 0001454124 us-gaap:CommonStockMember 2011-12-19 0001454124 us-gaap:CommonStockMember 2011-12-18 2011-12-19 0001454124 us-gaap:OtherComprehensiveIncomeMember 2012-01-01 2012-12-31 0001454124 us-gaap:OtherComprehensiveIncomeMember 2012-12-31 0001454124 us-gaap:CommonStockMember 2011-10-19 2011-10-20 0001454124 us-gaap:CommonStockMember 2011-10-20 0001454124 BARZOB:BARzAGMember 2011-12-01 2011-12-31 0001454124 BARZOB:BARzAGMember 2011-12-31 0001454124 us-gaap:DebtMember 2012-12-31 0001454124 BARZOB:StockOptionsRange.0008Member 2012-01-01 2012-12-31 0001454124 BARZOB:StockOptionsRange.0008Member 2012-12-31 0001454124 BARZOB:SubsequentMember 2013-03-16 2013-03-17 0001454124 BARZOB:SubsequentMember 2013-03-17 0001454124 us-gaap:ConvertibleDebtMember 2012-01-01 2012-12-31 0001454124 us-gaap:ConvertibleDebtMember 2012-12-31 0001454124 BARZOB:January52012Member 2012-01-01 2012-12-31 0001454124 BARZOB:January52012Member 2012-12-31 0001454124 BARZOB:April52011NoteMember 2012-01-01 2012-12-31 0001454124 BARZOB:April52011NoteMember 2012-12-31 0001454124 BARZOB:August2006NoteMember 2012-01-01 2012-12-31 0001454124 BARZOB:August2006NoteMember 2012-12-31 0001454124 us-gaap:MarketingExpenseMember 2012-12-31 0001454124 us-gaap:MarketingExpenseMember 2011-12-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure 5Barz International, Inc. 0001454124 10-K 2012-12-31 false --12-31 No No No Smaller Reporting Company FY 2012 2011-11-06 2012-03-29 0.946 0.60 CeLlynx Inc. 1.00 10126 468 1451 416 4573 3387406 1883650 3015794 1513650 264 1348 370000 370000 3387406 1883650 P20Y P10Y P10Y 1.00 1.00 0.10 0.20 0.10 0.20 0.10 0.15 3.26 0.20 0.10 .05 .05 0.70 1.00 0.10 0.15 0.05 0.20 1.00 0.5 .20 0.05 0.05 0.05 0.05 0.05 0.05 0.06 0.05 0.05 0.05 0.05 0.05 0.05 0.10 0.10 0.10 0.10 0.4799 0.12 0.12 0.15 0.15 0.12 0.12 0.15 0.12 0.15 0.10 0.10 0.10 0.10 0.10 0.10 0.20 0.05 0.05 0.20 0.0299 0.05 0.05 0.05 0.05 0.05 0.05 0.05 1.00 1.00 1.00 1.00 1.00 0.70 1.00 .20 0.50 0.15 0.10 0.10 0.10 0.20 3.26 0.05 500000 200000 433334 150000 333334 170000 50000 100000 80000 20000 95000 50000 200000 250000 500000 500000 401338 100000 300000 200000 150000 350000 200000 5000 25000 69610 40000 200000 75000 455180 150000 37500 21000 25000 2000 10000 7500 32500 100000 30000 3000 10000 30000 150000 5000 47990 30000 14977 10000 212620 165041 112500 15600000 1250000 170000 Cellynx Group, Inc. 2012-03-29 1800000 730879 10/5/2013 25% 139200 73500 791333333 350000000 50% 42500 37500 42500 37500 12500 13500 12000 147428 50000 50000 250000 2012-06-22 2012-11-29 2013-02-03 2013-02-18 2013-06-15 2013-03-17 2012-07-09 2012-07-03 0.08 0.08 0.08 0.08 0.08 0.08 0.10 0.08 0.08 0.08 0.08 0.04 6400000 6400000 65361.52 12000.00 250000 455000 1250000 1250000 0.20 3260 3260 44718 1155282 1200000 1800000 1800000 2113 2113 -1756628 -1756628 -403076 -403076 -5495425 -5026093 -469332 -586525 -586525 0 -6449813 6184567 -265246 1140246 875000 875000 10000000 5100000 9458000 4450000 0.01 CHF 0.01 CHF 71000 108752 223650 2010-12-30 370000 15600000 61954 7100000 1776100 18 250000000 150893700 87800000 520000 1360440 1776 15600 2182 6542 15969 -1950 1358258 513458 13650 50000 20000 52000 18000 50000 25500 6000 15000 8000 2000 9500 5000 52000 52000 25000 25000 5000 12000 15000 7000 15000 5000 20000 60000 300000 200000 150000 350000 200000 3000 25000 14000 20000 30000 7500 45581 15000 7500 75840 300000 1500000 50000 100000 250000 125000 66667 2150000 3300824 2250000 335695 355695 401338 67513 63412638 63412638 100000000 0.20 2200000 0.00015 14532 4653 9879 4653 4653 0.586 2011-09-20 2012-02-27 2012-05-03 2012-05-24 2012-09-18 2012-09-18 2012-08-14 2012-01-05 2012-03-20 2012-09-10 19850 120437 5930000 36114757 2140000 2140000 30184757 1.19 0.12 0.20 .20 0.12 P2Y0M0D P2Y0M0D 51333333 390000000 <p>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.</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The terms of these note are such that subsequent to the prepayment date six months after the issue date, if not paid,&#160;holder may convert principal and unpaid interest on the note into shares of the Company&#146;s common stock, with the number of shares issuable determined to be the variable conversion factor. The variable conversion factor is calculated by dividing the amount to be converted by the conversion price which is equal to 51% of the average of the three lowest closing bid prices of the Company&#146;s common stock over the ten trading days prior to the date of the conversion. Holder is prohibited from converting amounts if principal and interest that would result in holder receiving shares, which when combined with shares of the Company&#146;s common stock held, would result in investor holding more than 4.99% of the Company&#146;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.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p></td> </tr> </table> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The terms of these note are such that subsequent to the prepayment date six months after the issue date, if not paid,&#160;holder may convert principal and unpaid interest on the note into shares of the Company&#146;s common stock, with the number of shares issuable determined to be the variable conversion factor. The variable conversion factor is calculated by dividing the amount to be converted by the conversion price which is equal to 51% of the average of the three lowest closing bid prices of the Company&#146;s common stock over the ten trading days prior to the date of the conversion. Holder is prohibited from converting amounts if principal and interest that would result in holder receiving shares, which when combined with shares of the Company&#146;s common stock held, would result in investor holding more than 4.99% of the Company&#146;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.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p></td> </tr> </table> <p>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.</p> 7700 58500 401338 72000000 0.0299 0.15 0.05 35000 1060 49 2012-09-04 90 days 150000 400000 0.08 500000 30582 262356 14400 450000 7100000 7100 1776100 15600000 2182290 6541667 -2027393 -781147 -4888 -19220 -29122 -781147 -2136722 109329 -19220 -29122 8876100 90182785 8876100 87500000 117418281 1091387 719564 -14735 8876 90183 8876 87570 117418 15969 15969 -49075 1458086 3226802 -425 0 0 -4888 -24108 -53230 -834377 -2971099 528 713994 19532 737 4272 150894 -150894 -87800000 -87800 87800 75000 10042491 100000 125000 1440000 341780 275000 513827 798463 7500 75 10042 7425 778421 5000 7500 72000 17089 13500 25961 12000 71139 356 401 70782 11599 220238 75840 75840 220238 11787173 124753887 132897 132897 250000 1250 248750 -1800000 -1800000 -425 425 425 <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>Note 1 &#150; Organization, Going Concern and Development Stage</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;&#160;</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 14, 2008. The Company was originally named &#147;Bio-Stuff&#148; and was a designated shell corporation from inception to the date of acquisition of the 5BARz assets.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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 from CelLynx Group, Inc. the rights to certain intellectual property underlying the 5BARz products, a highly engineered wireless technology referred to as a &#147;cellular network infrastructure device&#148;. 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. 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">&#160;</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 94.6% held subsidiary at December 31, 2012. This entity has been granted the license for the marketing and distribution rights for 5BARz products in Germany, Austria and Switzerland.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">These financial statements reflect the financial position for the Company and its subsidiary companies 5BARz AG, CelLynx Group Inc. and its wholly owned subsidiary CelLynx Inc. as at December 31, 2012. Results of operations include those operations for subsidiaries acquired from the date of acquisition. &#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a development stage company and has not commenced planned principal operations. As shown in the accompanying consolidated financial statements, the Company has incurred recurring losses for the period from November 14, 2008 (date of inception) through December 31, 2012 of $2,861,770. The Company has negative cash flows from operations since inception of $1,390,106 and has an accumulated deficit of $2,971,099 at December 31, 2012. 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 Company&#146;s ability to continue as a going concern and the Company&#146;s continued existence is dependent upon adequate additional financing being raised to develop its sales and marketing program for the sales of 5BARz product and commence its planned operations.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company is considered to be a development stage entity as defined by the Financial Accounting Standards Board (&#147;FASB&#148;) Accounting Standards Codification (&#147;ASC&#148;) Topic 915. The Company has been a development stage entity since November 14, 2008 its inception. The Company has not generated any revenues to date.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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">&#160;</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>&#160;</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 94.6% owned subsidiary, 5BARz AG, and it&#146;s 56% owned subsidiary CelLynx Group, Inc. and that Company&#146;s 100% owned subsidiary CelLynx, Inc. All intercompany accounts and transactions have been eliminated in consolidation.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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">&#160;</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 one year or less.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The preparation of these 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. Significant estimates include impairment analysis for long lived assets, income taxes, litigation and valuation of derivative instruments. Actual results could differ from those estimates.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Cash includes deposits in accounts maintained at financial institutions.&#160;&#160;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, 2012 and 2011, the Company did not have any deposits in excess of federally-insured limits.&#160;&#160;To date, the Company has not experienced any losses in such accounts.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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">&#160;</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.&#160;&#160;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">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Acquired patents, licensing rights and trademarks are capitalized at their 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">&#160;</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. Based on its review, the Company concluded that as of December 31, 2012 and December 31, 2011 there was no impairment of its intangible assets.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><font style="font-variant: small-caps"><b>&#160;</b></font></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Goodwill</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Generally accepted accounting principles in the United States require the Company to perform a goodwill impairment test annually and more frequently when negative conditions or a triggering event arise. After an assessment of certain qualitative factors, if it is determined to be more likely than not that the fair value of a reporting unit is less than its carrying amount, entities must perform the quantitative analysis of the goodwill impairment test. Based on its review, the Company concluded that as of December 31, 2012 there was no impairment of its goodwill.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company applies the provisions of Accounting Standards Codification (&#147;ASC&#148;) Topic 360, &#147;Property, Plant, and Equipment,&#148; 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&#146; 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 concluded that as of December 31, 2012 and December 31, 2011 there was no impairment of its long-lived assets.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;&#160;</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">&#160;</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, &#147;Revenue Recognition.&#148;&#160;&#160;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">&#160;</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>&#160;</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 method. The functional currency of the Company&#146;s subsidiary 5BARz AG, is its local currency (Swiss Franc &#150; CHF). 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</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">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>&#160;<u>Fair value of financial instruments</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities, approximate fair value due to the short-term nature of these instruments.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">Fair value is defined as an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:</p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px">&#160;</td> <td style="width: 24px; font-size: 11pt">&#183;</td> <td style="font-size: 11pt">Level 1. Quoted prices in active markets for identical assets or liabilities.</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px">&#160;</td> <td style="width: 24px; font-size: 11pt">&#183;</td> <td style="font-size: 11pt">Level 2. Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly.</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px">&#160;</td> <td style="width: 24px; font-size: 11pt">&#183;</td> <td style="font-size: 11pt">Level 3. Significant unobservable inputs that cannot be corroborated by market data.</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The assets or liability&#146;s fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. The following&#160;table provides a summary of the assets&#160;that are measured at fair value on a recurring basis.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td>&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Consolidated <br /> Balance Sheet</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Quoted Prices in Active Markets for Identical Assets or Liabilities <br /> (Level 1)</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Quoted Prices for Similar Assets or Liabilities in Active Markets <br /> (Level 2)</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Significant<br /> Unobservable<br /> Inputs <br /> (Level 3)</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 5.4pt">Derivative Liabilities:</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 40%; padding-left: 17.75pt">December 31, 2012</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">-</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">-</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">-</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">-</td> <td style="width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 17.75pt">December 31, 2011</td> <td>&#160;</td> <td>$</td> <td style="text-align: right">-</td> <td>&#160;</td> <td>&#160;</td> <td>$</td> <td style="text-align: right">-</td> <td>&#160;</td> <td>&#160;</td> <td>$</td> <td style="text-align: right">-</td> <td>&#160;</td> <td>&#160;</td> <td>$</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The following table sets forth a summary of the changes in the fair value of the Company&#146;s Level 3 financial liabilities that are measured at fair value on a recurring basis:</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: justify">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center">For the Year Ended December 31,</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2012</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2011</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%; padding-left: 5.4pt; text-align: justify">Beginning balance</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 15%; text-align: right">-</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 15%; text-align: right">-</td> <td style="width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 5.4pt; text-align: justify">Aggregate fair value of conversion features upon issuance</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">469,332</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt; padding-left: 5.4pt; text-align: justify">Change in fair value of conversion features</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">(469,332</td> <td style="padding-bottom: 1pt">)</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">-</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt; padding-left: 5.4pt; text-align: justify">Ending balance</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">-</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">-</td> <td style="padding-bottom: 2.5pt">&#160;</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The derivative conversion feature liabilities are measured at fair value using the Black-Scholes pricing model and are classified within Level 3 of the valuation hierarchy. The significant assumptions and valuation methods that the Company used to determine fair value and the change in fair value of the Company&#146;s derivative financial instruments are provided below:</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: justify">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center">December 31,</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2012</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2011</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%; padding-left: 5.4pt; text-align: justify">Stock price</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 15%; text-align: right">0.0002</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 15%; text-align: right">-</td> <td style="width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 5.4pt; text-align: justify">Volatility</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">150</td> <td>%</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 5.4pt; text-align: justify">Risk-free interest rate</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">0.05%-0.26</td> <td>%</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 5.4pt; text-align: justify">Dividend yield</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">0</td> <td>%</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 5.4pt; text-align: justify">Expected life</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">0.25-1.52 years</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> </table> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the derivate liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company&#146;s accounting and finance department, which reports to the Chief Financial Officer, determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company&#146;s accounting and finance department with support from the Company&#146;s consultants and which are approved by the Chief Financial Officer.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Level 3 financial liabilities consist of the derivative liabilities for which there is no current market such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company uses the Black-Scholes option valuation model to value Level 3 financial liabilities at inception and on subsequent valuation dates. This model incorporates transaction details such as the Company&#146;s stock price, contractual terms, maturity, risk free rates, as well as, volatility.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">As of December 31, 2012 and 2011, there were no transfers in or out of Level 3 from other levels in the fair value hierarchy.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Derivative instruments</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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, &#147;Derivatives and Hedging&#148;. 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.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Stock-Based Compensation</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: left">The Company records stock-based compensation in accordance with ASC Topic 718, &#147;Compensation &#150; Stock Compensation.&#148; ASC 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee&#146;s requisite service period. Under ASC 718, the Company&#146;s volatility is based on the historical volatility of the Company&#146;s stock or the expected volatility of similar companies. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.75in">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">The Company uses the Black-Scholes option-pricing model which was developed for use in estimating the fair value of options. Option-pricing models require the input of highly complex and subjective variables including the expected life of options granted and the Company&#146;s expected stock price volatility over a period equal to or greater than the expected life of the options. Because changes in the subjective assumptions can materially affect the estimated value of the Company&#146;s employee stock options, it is management&#146;s opinion that the Black-Scholes option-pricing model may not provide an accurate measure of the fair value of the Company&#146;s employee stock options. Although the fair value of employee stock options is determined in accordance with ASC 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/seller market transaction.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.75in">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>&#160;&#160;</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">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company accounts for income taxes in accordance with ASC Topic 740, &#147;Income Taxes.&#148; 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&#160;not be realized.&#160;&#160;Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></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 &#147;more likely than not&#148; 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 &#147;more likely than not&#148; test, no tax benefit is recorded. The Company is open for examination for the years 2009, 2010 and 2011.&#160;&#160;Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred.&#160;&#160;No significant penalties or interest relating to income taxes have been incurred during the years ended December 31, 2012 and 2011.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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">&#160;</p> <p style="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, &#147;Earnings Per Share.&#148;, 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.&#160;&#160;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 plus the issuance of common shares, if dilutive, that could result from the exercise of outstanding stock options and warrants. These potentially dilutive securities were not included in the calculation of loss per common share for the years ended December 31, 2012 or 2011 because their effect would be anti-dilutive. The weighted average number of shares outstanding does not include reciprocal shareholdings, held by the Company&#146;s subsidiary, CelLynx Group, Inc. which is reflected as a reduction in capital in excess of par value on the Company&#146;s balance sheet.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><u>Reclassifications</u></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4.5pt; text-align: justify; text-indent: 0.25in"><b>&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Certain reclassifications have been made in the financial statements at December 31, 2011 and for the periods then ended to conform to the December 31, 2012 presentation. The reclassifications had no effect on net loss.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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">&#160;</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">&#160;</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.&#160;&#160;The Company has adopted this guidance, during the fiscal year ended December 31, 2012.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In December 2011, The FASB issued Accounting Standards Update 2011-12 (ASU 2011-12), Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05. ASU 2011-12 defers the requirement that companies present reclassification adjustments for each component of AOCI in both net income and OCI on the face of the financial statements. All other requirements in ASU No. 2011-05 are not affected by ASU No. 2011-12, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this standard did not have a material impact on the Company&#146;s consolidated financial position and results of operations.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In July 2012, the FASB issued ASU 2012-02, &#147;Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment.&#34;&#160; This ASU simplifies how entities test indefinite-lived intangible assets for impairment which improve consistency in impairment testing requirements among long-lived asset categories. These amended standards permit an assessment of qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. For assets in which this assessment concludes it is more likely than not that the fair value is more than its carrying value, these amended standards eliminate the requirement to perform quantitative impairment testing as outlined in the previously issued standards. The guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company&#146;s consolidated financial position and results of operations.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="margin: 0"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (&#147;ASU 2013-02&#148;).&#160; The amendment requires disclosure of information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, disclosure is required, either on the face of the statement where net income is presented or in the notes, of significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The new requirements are effective for public companies in interim and annual reporting periods beginning after December 15, 2012. The adoption of ASU 2013-02 as of January 1, 2013 did not have an impact on the Company's condensed consolidated financial statements.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of December 31, 2012 that will become effective in subsequent periods; however, management does not believe that any of those updates would have significantly affected our financial accounting measures or disclosures had they been in effect during 2012 or 2011, and it does not believe that any of those pronouncements will have a significant impact on our consolidated financial statements at the time they become effective.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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>&#160;</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 94.6% owned subsidiary, 5BARz AG, and it&#146;s 56% owned subsidiary CelLynx Group, Inc. and that Company&#146;s 100% owned subsidiary CelLynx, Inc. All intercompany accounts and transactions have been eliminated in consolidation.</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">&#160;</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 one year or less.</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">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The preparation of these 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. Significant estimates include impairment analysis for long lived assets, income taxes, litigation and valuation of derivative instruments. Actual results could differ from those estimates.</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">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Cash includes deposits in accounts maintained at financial institutions.&#160;&#160;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, 2012 and 2011, the Company did not have any deposits in excess of federally-insured limits.&#160;&#160;To date, the Company has not experienced any losses in such accounts.</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">&#160;</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.&#160;&#160;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"><b><u>Intangible assets</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Acquired patents, licensing rights and trademarks are capitalized at their 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">&#160;</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. Based on its review, the Company concluded that as of December 31, 2012 and December 31, 2011 there was no impairment of its intangible assets.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Goodwill</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Generally accepted accounting principles in the United States require the Company to perform a goodwill impairment test annually and more frequently when negative conditions or a triggering event arise. After an assessment of certain qualitative factors, if it is determined to be more likely than not that the fair value of a reporting unit is less than its carrying amount, entities must perform the quantitative analysis of the goodwill impairment test. Based on its review, the Company concluded that as of December 31, 2012 there was no impairment of its goodwill.</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">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company applies the provisions of Accounting Standards Codification (&#147;ASC&#148;) Topic 360, &#147;Property, Plant, and Equipment,&#148; 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&#146; 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 concluded that as of December 31, 2012 and December 31, 2011 there was no impairment of its long-lived assets.</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">&#160;</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, &#147;Revenue Recognition.&#148;&#160;&#160;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"><b><u>Foreign currency translation</u></b></p> <p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0"><b>&#160;</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 method. The functional currency of the Company&#146;s subsidiary 5BARz AG, is its local currency (Swiss Franc &#150; CHF). 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</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"><b><u>Fair value of financial instruments</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities, approximate fair value due to the short-term nature of these instruments.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">Fair value is defined as an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:</p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px">&#160;</td> <td style="width: 24px; font-size: 11pt">&#183;</td> <td style="font-size: 11pt">Level 1. Quoted prices in active markets for identical assets or liabilities.</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px">&#160;</td> <td style="width: 24px; font-size: 11pt">&#183;</td> <td style="font-size: 11pt">Level 2. Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly.</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px">&#160;</td> <td style="width: 24px; font-size: 11pt">&#183;</td> <td style="font-size: 11pt">Level 3. Significant unobservable inputs that cannot be corroborated by market data.</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The assets or liability&#146;s fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. The following&#160;table provides a summary of the assets&#160;that are measured at fair value on a recurring basis.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td>&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Consolidated <br /> Balance Sheet</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Quoted Prices in Active Markets for Identical Assets or Liabilities <br /> (Level 1)</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Quoted Prices for Similar Assets or Liabilities in Active Markets <br /> (Level 2)</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Significant<br /> Unobservable<br /> Inputs <br /> (Level 3)</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 5.4pt">Derivative Liabilities:</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 40%; padding-left: 17.75pt">December 31, 2012</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">-</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">-</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">-</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">-</td> <td style="width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 17.75pt">December 31, 2011</td> <td>&#160;</td> <td>$</td> <td style="text-align: right">-</td> <td>&#160;</td> <td>&#160;</td> <td>$</td> <td style="text-align: right">-</td> <td>&#160;</td> <td>&#160;</td> <td>$</td> <td style="text-align: right">-</td> <td>&#160;</td> <td>&#160;</td> <td>$</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The following table sets forth a summary of the changes in the fair value of the Company&#146;s Level 3 financial liabilities that are measured at fair value on a recurring basis:</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: justify">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center">For the Year Ended December 31,</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2012</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2011</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%; padding-left: 5.4pt; text-align: justify">Beginning balance</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 15%; text-align: right">-</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 15%; text-align: right">-</td> <td style="width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 5.4pt; text-align: justify">Aggregate fair value of conversion features upon issuance</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">469,332</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt; padding-left: 5.4pt; text-align: justify">Change in fair value of conversion features</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">(469,332</td> <td style="padding-bottom: 1pt">)</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">-</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt; padding-left: 5.4pt; text-align: justify">Ending balance</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">-</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">-</td> <td style="padding-bottom: 2.5pt">&#160;</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The derivative conversion feature liabilities are measured at fair value using the Black-Scholes pricing model and are classified within Level 3 of the valuation hierarchy. The significant assumptions and valuation methods that the Company used to determine fair value and the change in fair value of the Company&#146;s derivative financial instruments are provided below:</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: justify">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center">December 31,</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2012</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2011</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%; padding-left: 5.4pt; text-align: justify">Stock price</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 15%; text-align: right">0.0002</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 15%; text-align: right">-</td> <td style="width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 5.4pt; text-align: justify">Volatility</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">150</td> <td>%</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 5.4pt; text-align: justify">Risk-free interest rate</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">0.05%-0.26</td> <td>%</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 5.4pt; text-align: justify">Dividend yield</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">0</td> <td>%</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 5.4pt; text-align: justify">Expected life</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">0.25-1.52 years</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> </table> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the derivate liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company&#146;s accounting and finance department, which reports to the Chief Financial Officer, determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company&#146;s accounting and finance department with support from the Company&#146;s consultants and which are approved by the Chief Financial Officer.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Level 3 financial liabilities consist of the derivative liabilities for which there is no current market such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company uses the Black-Scholes option valuation model to value Level 3 financial liabilities at inception and on subsequent valuation dates. This model incorporates transaction details such as the Company&#146;s stock price, contractual terms, maturity, risk free rates, as well as, volatility.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">As of December 31, 2012 and 2011, there were no transfers in or out of Level 3 from other levels in the fair value hierarchy.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Accounting for Derivatives</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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, &#147;Derivatives and Hedging&#148;. 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.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Stock-Based Compensation</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: left; text-indent: 0.75in">The Company records stock-based compensation in accordance with ASC Topic 718, &#147;Compensation &#150; Stock Compensation.&#148; ASC 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee&#146;s requisite service period. Under ASC 718, the Company&#146;s volatility is based on the historical volatility of the Company&#146;s stock or the expected volatility of similar companies. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.75in">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.75in">The Company uses the Black-Scholes option-pricing model which was developed for use in estimating the fair value of options. Option-pricing models require the input of highly complex and subjective variables including the expected life of options granted and the Company&#146;s expected stock price volatility over a period equal to or greater than the expected life of the options. Because changes in the subjective assumptions can materially affect the estimated value of the Company&#146;s employee stock options, it is management&#146;s opinion that the Black-Scholes option-pricing model may not provide an accurate measure of the fair value of the Company&#146;s employee stock options. Although the fair value of employee stock options is determined in accordance with ASC 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/seller market transaction.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.75in">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.75in">The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees.</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">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company accounts for income taxes in accordance with ASC Topic 740, &#147;Income Taxes.&#148; 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&#160;not be realized.&#160;&#160;Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></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 &#147;more likely than not&#148; 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 &#147;more likely than not&#148; test, no tax benefit is recorded. The Company is open for examination for the years 2009, 2010 and 2011.&#160;&#160;Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred.&#160;&#160;No significant penalties or interest relating to income taxes have been incurred during the years ended December 31, 2012 and 2011.</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">&#160;</p> <p style="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, &#147;Earnings Per Share.&#148;, 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.&#160;&#160;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 plus the issuance of common shares, if dilutive, that could result from the exercise of outstanding stock options and warrants. These potentially dilutive securities were not included in the calculation of loss per common share for the years ended December 31, 2012 or 2011 because their effect would be anti-dilutive. The weighted average number of shares outstanding does not include reciprocal shareholdings, held by the Company&#146;s subsidiary, CelLynx Group, Inc. which is reflected as a reduction in capital in excess of par value on the Company&#146;s balance sheet.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Reclassifications</u></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4.5pt; text-align: justify; text-indent: 0.25in"><b>&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Certain reclassifications have been made in the financial statements at December 31, 2011 and for the periods then ended to conform to the December 31, 2012 presentation. The reclassifications had no effect on net loss.</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">&#160;</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">&#160;</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.&#160;&#160;The Company has adopted this guidance, during the fiscal year ended December 31, 2012.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In December 2011, The FASB issued Accounting Standards Update 2011-12 (ASU 2011-12), Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05. ASU 2011-12 defers the requirement that companies present reclassification adjustments for each component of AOCI in both net income and OCI on the face of the financial statements. All other requirements in ASU No. 2011-05 are not affected by ASU No. 2011-12, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this standard did not have a material impact on the Company&#146;s consolidated financial position and results of operations.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In July 2012, the FASB issued ASU 2012-02, &#147;Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment.&#34;&#160; This ASU simplifies how entities test indefinite-lived intangible assets for impairment which improve consistency in impairment testing requirements among long-lived asset categories. These amended standards permit an assessment of qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. For assets in which this assessment concludes it is more likely than not that the fair value is more than its carrying value, these amended standards eliminate the requirement to perform quantitative impairment testing as outlined in the previously issued standards. The guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company&#146;s consolidated financial position and results of operations.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="margin: 0"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (&#147;ASU 2013-02&#148;).&#160; The amendment requires disclosure of information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, disclosure is required, either on the face of the statement where net income is presented or in the notes, of significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The new requirements are effective for public companies in interim and annual reporting periods beginning after December 15, 2012. The adoption of ASU 2013-02 as of January 1, 2013 did not have an impact on the Company's condensed consolidated financial statements.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of December 31, 2012 that will become effective in subsequent periods; however, management does not believe that any of those updates would have significantly affected our financial accounting measures or disclosures had they been in effect during 2012 or 2011, and it does not believe that any of those pronouncements will have a significant impact on our consolidated financial statements at the time they become effective.</p> <p style="margin: 0pt">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td>&#160;</td> <td style="font-weight: bold; text-align: center">&#160;</td> <td colspan="2" style="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">December 31, 2012</td> <td style="font-weight: bold; text-align: center">&#160;</td> <td colspan="2" style="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">December 31, 2011</td></tr> <tr style="background-color: #CCEEFF"> <td style="width: 48%; vertical-align: top">Office furniture and equipment</td> <td style="width: 4%; vertical-align: top; text-align: center">&#160;</td> <td style="width: 2%; vertical-align: bottom; text-align: right">$</td> <td style="width: 20%; vertical-align: bottom; text-align: right">9,879</td> <td style="width: 4%; vertical-align: bottom; text-align: right">&#160;</td> <td style="width: 2%; vertical-align: bottom; text-align: right">$</td> <td style="width: 20%; vertical-align: bottom; text-align: right">-</td></tr> <tr style="background-color: white"> <td style="vertical-align: top">Computer equipment</td> <td style="vertical-align: top; text-align: center">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">4,653</td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">4,653</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top">&#160;</td> <td style="vertical-align: top; font-weight: bold; text-align: center">&#160;</td> <td style="vertical-align: bottom; font-weight: bold; text-align: right">&#160;</td> <td style="vertical-align: bottom; font-weight: bold; text-align: right">14,532</td> <td style="vertical-align: bottom; font-weight: bold; text-align: right">&#160;</td> <td style="vertical-align: bottom; font-weight: bold; text-align: right">&#160;</td> <td style="vertical-align: bottom; font-weight: bold; text-align: right">4,653</td></tr> <tr style="background-color: white"> <td style="vertical-align: top">Accumulated depreciation</td> <td style="vertical-align: top; text-align: center">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">(10,126)</td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">(468)</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top">Furniture &#38; equipment net</td> <td style="vertical-align: top; font-weight: bold; text-align: center">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">$</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: right">4,406</td> <td style="vertical-align: bottom; font-weight: bold; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">$</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: right">4,185</td></tr> </table> <p style="margin: 0pt"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><b>Note 3 &#150; Equipment</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;Equipment consisted of the following at December 31, 2012 and December 31, 2011:</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td>&#160;</td> <td style="font-weight: bold; text-align: center">&#160;</td> <td colspan="2" style="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">December 31, 2012</td> <td style="font-weight: bold; text-align: center">&#160;</td> <td colspan="2" style="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">December 31, 2011</td></tr> <tr style="background-color: #CCEEFF"> <td style="width: 48%; vertical-align: top">Office furniture and equipment</td> <td style="width: 4%; vertical-align: top; text-align: center">&#160;</td> <td style="width: 2%; vertical-align: bottom; text-align: right">$</td> <td style="width: 20%; vertical-align: bottom; text-align: right">9,879</td> <td style="width: 4%; vertical-align: bottom; text-align: right">&#160;</td> <td style="width: 2%; vertical-align: bottom; text-align: right">$</td> <td style="width: 20%; vertical-align: bottom; text-align: right">-</td></tr> <tr style="background-color: white"> <td style="vertical-align: top">Computer equipment</td> <td style="vertical-align: top; text-align: center">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">4,653</td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">4,653</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top">&#160;</td> <td style="vertical-align: top; font-weight: bold; text-align: center">&#160;</td> <td style="vertical-align: bottom; font-weight: bold; text-align: right">&#160;</td> <td style="vertical-align: bottom; font-weight: bold; text-align: right">14,532</td> <td style="vertical-align: bottom; font-weight: bold; text-align: right">&#160;</td> <td style="vertical-align: bottom; font-weight: bold; text-align: right">&#160;</td> <td style="vertical-align: bottom; font-weight: bold; text-align: right">4,653</td></tr> <tr style="background-color: white"> <td style="vertical-align: top">Accumulated depreciation</td> <td style="vertical-align: top; text-align: center">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">(10,126)</td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">(468)</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top">Furniture &#38; equipment net</td> <td style="vertical-align: top; font-weight: bold; text-align: center">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">$</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: right">4,406</td> <td style="vertical-align: bottom; font-weight: bold; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">$</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: right">4,185</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">During the year ended December 31, 2012 the Company incurred depreciation expense of $1,451, (2011 - $416), and $4,573 from November 14, 2008 (date of inception) to December 31, 2012.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Note 4 &#150; Patents and other intangible assets</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b>&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Intangible assets are comprised of patents, trademarks&#160;and license rights which are recorded at cost, comprised of legal fees and acquisition costs. Once each patent or trademark is issued, capitalized costs are amortized on a straight-line basis over a period not to exceed 20 years and 10 years, respectively. License rights are amortized over the period of the respective license agreement.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 48%">&#160;</td> <td style="width: 4%; text-align: center">&#160;</td> <td style="width: 2%; border-bottom: windowtext 1pt solid; text-align: center">&#160;</td> <td style="width: 20%; border-bottom: windowtext 1pt solid; text-align: center"><font style="font-size: 11pt"><b>December 31, 2012</b></font></td> <td style="width: 4%; text-align: center">&#160;</td> <td style="width: 2%; border-bottom: windowtext 1pt solid; text-align: center">&#160;</td> <td style="width: 20%; border-bottom: windowtext 1pt solid; text-align: center"><font style="font-size: 11pt"><b>December 31, 2011</b></font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top"><font style="font-size: 11pt">Patents</font></td> <td style="vertical-align: top; text-align: center">&#160;</td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">3,015,794</font></td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">1,513,650</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top"><font style="font-size: 11pt">Marketing and distribution agreement</font></td> <td style="vertical-align: top">&#160;</td> <td style="vertical-align: bottom">&#160;</td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">370,000</font></td> <td style="vertical-align: bottom">&#160;</td> <td style="vertical-align: bottom">&#160;</td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">370,000</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top"><font style="font-size: 11pt">Trademarks</font></td> <td style="vertical-align: top; text-align: center">&#160;</td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">264</font></td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">-</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top"><font style="font-size: 11pt">License rights</font></td> <td style="vertical-align: top; text-align: center">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right"><font style="font-size: 11pt">1,348</font></td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right"><font style="font-size: 11pt">-</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top">&#160;</td> <td style="vertical-align: top; text-align: center">&#160;</td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt"><b>3,387,406</b></font></td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt"><b>1,883,650</b></font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top"><font style="font-size: 11pt">Accumulated amortization</font></td> <td style="vertical-align: top; text-align: center">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right"><font style="font-size: 11pt">-</font></td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right"><font style="font-size: 11pt">--</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top"><font style="font-size: 11pt">Patents and other intangibles, net</font></td> <td style="vertical-align: top; text-align: center">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right"><font style="font-size: 11pt">$</font></td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right"><font style="font-size: 11pt"><b>3,387,406</b></font></td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right"><font style="font-size: 11pt">$</font></td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right"><font style="font-size: 11pt"><b>1,883,650</b></font></td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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 years ended December 31, 2012 and 2011 no amortization has been recorded on the intangible assets. The intangible assets acquired on December 29, 2011 related to the 5BARz technology will commence amortization with the initial commercial production of products incorporating the related technology. The Company&#146;s estimated patent amortization over the next five years is expected to be $886,998.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Marketing and distribution agreement will commence amortization with the initial commercial production of products. Trademark and license amortization is calculated straight line over a 10 year period. The Company&#146;s estimated amortization on trademarks and licenses over the next five years is expected to be $806 and $806 for the remaining life of those assets.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The changes in the carrying amount of goodwill for the year ended December 31, 2012 are as follows:</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font-size: 11pt"> <tr style="vertical-align: top; background-color: rgb(204,238,255)"> <td style="width: 50%; border: windowtext 1pt solid"><font style="font-size: 11pt">Balance as of December 31, 2011</font></td> <td style="width: 50%; border-top: windowtext 1pt solid; border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid"><font style="font-size: 11pt">$0</font></td></tr> <tr style="vertical-align: top; background-color: White"> <td style="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; border-left: windowtext 1pt solid"><font style="font-size: 11pt">Acquisition of Cellynx Group, Inc.</font></td> <td style="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid"><font style="font-size: 11pt">$556,913</font></td></tr> <tr style="vertical-align: top; background-color: rgb(204,238,255)"> <td style="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; border-left: windowtext 1pt solid"><font style="font-size: 11pt">Fair value of non-controlling interest</font></td> <td style="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid"><font style="font-size: 11pt">$583,333</font></td></tr> <tr style="vertical-align: top; background-color: White"> <td style="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; border-left: windowtext 1pt solid"><font style="font-size: 11pt">Balance as of December 31, 2012</font></td> <td style="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid"><font style="font-size: 11pt">$1,140,246</font></td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"></p> <p style="margin: 0pt">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 48%">&#160;</td> <td style="width: 4%; text-align: center">&#160;</td> <td style="width: 2%; border-bottom: windowtext 1pt solid; text-align: center">&#160;</td> <td style="width: 20%; border-bottom: windowtext 1pt solid; text-align: center"><font style="font-size: 11pt"><b>December 31, 2012</b></font></td> <td style="width: 4%; text-align: center">&#160;</td> <td style="width: 2%; border-bottom: windowtext 1pt solid; text-align: center">&#160;</td> <td style="width: 20%; border-bottom: windowtext 1pt solid; text-align: center"><font style="font-size: 11pt"><b>December 31, 2011</b></font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top"><font style="font-size: 11pt">Patents</font></td> <td style="vertical-align: top; text-align: center">&#160;</td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">3,015,794</font></td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">1,513,650</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top"><font style="font-size: 11pt">Marketing and distribution agreement</font></td> <td style="vertical-align: top">&#160;</td> <td style="vertical-align: bottom">&#160;</td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">370,000</font></td> <td style="vertical-align: bottom">&#160;</td> <td style="vertical-align: bottom">&#160;</td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">370,000</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top"><font style="font-size: 11pt">Trademarks</font></td> <td style="vertical-align: top; text-align: center">&#160;</td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">264</font></td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">-</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top"><font style="font-size: 11pt">License rights</font></td> <td style="vertical-align: top; text-align: center">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right"><font style="font-size: 11pt">1,348</font></td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right"><font style="font-size: 11pt">-</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top">&#160;</td> <td style="vertical-align: top; text-align: center">&#160;</td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt"><b>3,387,406</b></font></td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font-size: 11pt"><b>1,883,650</b></font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top"><font style="font-size: 11pt">Accumulated amortization</font></td> <td style="vertical-align: top; text-align: center">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right"><font style="font-size: 11pt">-</font></td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right"><font style="font-size: 11pt">--</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top"><font style="font-size: 11pt">Patents and other intangibles, net</font></td> <td style="vertical-align: top; text-align: center">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right"><font style="font-size: 11pt">$</font></td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right"><font style="font-size: 11pt"><b>3,387,406</b></font></td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right"><font style="font-size: 11pt">$</font></td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right"><font style="font-size: 11pt"><b>1,883,650</b></font></td></tr> </table> <p style="margin: 0pt"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><b>Note 5 - Income taxes </b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The domestic and foreign components of income (loss) before income taxes from continuing operations are as follows:</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">For the period from November 14, 2008 (date of inception) through December 31, 2012</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">December 31, 2012</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">December 31, 2011</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 44%; padding-bottom: 1pt; padding-left: 5.4pt">Domestic</td><td style="width: 1%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 21%; text-align: right">(2,644,415</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">)</td><td style="width: 2%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(1,882,912</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">)</td><td style="width: 2%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(708,273</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt; padding-left: 5.4pt">Foreign</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(217,355</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(144,481</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(72,874</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Loss from continuing operation before <br />provision for income taxes</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">($</td><td style="border-bottom: Black 1pt solid; text-align: right">2,861,770</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">($</td><td style="border-bottom: Black 1pt solid; text-align: right">2,027,393</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">($</td><td style="border-bottom: Black 1pt solid; text-align: right">781,147</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The income tax provision (benefit) consists of the following:</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">For the period from November 14, 2008 (date of inception) through December 31, 2012</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">December 31, 2012</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">December 31, 2011</td></tr> <tr style="vertical-align: bottom"> <td>Foreign</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: right">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: right">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: right">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 44%; padding-bottom: 1pt">&#160;&#160;&#160;&#160;Current</td><td style="width: 1%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 21%; text-align: right">0</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">&#160;</td><td style="width: 2%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">0</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">&#160;</td><td style="width: 2%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">0</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt">&#160;&#160;&#160;&#160;Deferred</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(46,159</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(46,159</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt">US federal</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt">&#160;&#160;&#160;&#160;Current</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt">&#160;&#160;&#160;&#160;Deferred</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(1,203,254</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(980,972</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(212,103</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">State &#38; local</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt; padding-left: 5.4pt">Current</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt">&#160;&#160;&#160;&#160;Deferred</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(84,897</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(84,897</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt; padding-left: 5.4pt">Total</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(1,334,310</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(1,112,028</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(212,103</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Change in valuation allowance</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">1,334,310</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">1,112,028</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">212,103</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Income tax provision (benefit)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The provision (benefit) for income taxes using the statutory federal tax rate as compared to the Company&#146;s effective tax rate is summarized as follows:</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">For the period from November 14, 2008 (date of inception) through December 31, 2012</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">December 31, 2012</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">December 31, 2011</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 44%; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">US federal statutory income tax rate (benefit)</td><td style="width: 1%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">&#160;</td><td style="width: 21%; text-align: right">(34.0</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">%)</td><td style="width: 2%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">&#160;</td><td style="width: 12%; text-align: right">(34.0</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">%)</td><td style="width: 2%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">&#160;</td><td style="width: 12%; text-align: right">(34.0</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">%)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">State income taxes</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(1.4</td><td style="padding-bottom: 1pt; text-align: left">%)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(2.3</td><td style="padding-bottom: 1pt; text-align: left">%)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0.0</td><td style="padding-bottom: 1pt; text-align: left">%</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Fair value of beneficial conversion feature</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(4.9</td><td style="padding-bottom: 1pt; text-align: left">%)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(7.5</td><td style="padding-bottom: 1pt; text-align: left">%)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0.0</td><td style="padding-bottom: 1pt; text-align: left">%</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Acquired deferred balances</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(7.2</td><td style="padding-bottom: 1pt; text-align: left">%)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(11.2</td><td style="padding-bottom: 1pt; text-align: left">%)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0.0</td><td style="padding-bottom: 1pt; text-align: left">%</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Other permanent differences</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">4.7</td><td style="padding-bottom: 1pt; text-align: left">%</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0.1</td><td style="padding-bottom: 1pt; text-align: left">%</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0.0</td><td style="padding-bottom: 1pt; text-align: left">%</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Change in valuation allowance</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">42.8</td><td style="padding-bottom: 1pt; text-align: left">%</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">54.9</td><td style="padding-bottom: 1pt; text-align: left">%</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">34.0</td><td style="padding-bottom: 1pt; text-align: left">%</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Effective rate</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">0.0</td><td style="padding-bottom: 1pt; text-align: left">%</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">0.0</td><td style="padding-bottom: 1pt; text-align: left">%</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">0.0</td><td style="padding-bottom: 1pt; text-align: left">%</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company&#146;s deferred tax assets (liabilities) consisted of the effects of temporary differences attributable to the following:</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellpadding="0" cellspacing="0" style="width: 100%"> <tr style="vertical-align: bottom"> <td style="font-size: 11pt; font-weight: bold">&#160;</td><td style="font-size: 11pt; font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-size: 11pt; font-weight: bold; border-bottom: Black 1pt solid">For the period from November 14, 2008 (date of inception) through December 31, 2012</td><td style="font-size: 11pt; font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-size: 11pt; font-weight: bold; border-bottom: Black 1pt solid">December 31, 2012</td><td style="font-size: 11pt; font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-size: 11pt; font-weight: bold; border-bottom: Black 1pt solid">December 31, 2011</td></tr> <tr style="vertical-align: bottom"> <td style="font-size: 11pt">Deferred tax assets</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-size: 11pt; text-align: right">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-size: 11pt; text-align: right">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-size: 11pt; text-align: right">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 44%; font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Net operating loss carryovers</td><td style="width: 1%; font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; font-size: 11pt; text-align: left">$</td><td style="width: 21%; font-size: 11pt; text-align: right">1,483,704</td><td style="width: 1%; padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="width: 2%; font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; font-size: 11pt; text-align: left">$</td><td style="width: 12%; font-size: 11pt; text-align: right">1,261,422</td><td style="width: 1%; padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="width: 2%; font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; font-size: 11pt; text-align: left">$</td><td style="width: 12%; font-size: 11pt; text-align: right">222,282</td><td style="width: 1%; padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 11pt; padding-bottom: 1pt; padding-left: 5.4pt">Stock-based compensation</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">2,833</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">2,833</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Accrued compensation</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">167,355</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">167,355</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Total deferred tax assets</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">1,653,892</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">1,431,610</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Valuation allowance</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(1,556,592</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(1,334,310</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(222,282</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Deferred tax asset, net of valuation allowance</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">97,300</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">97,300</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 11pt; padding-bottom: 1pt; padding-left: 5.4pt">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">&#160;</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">&#160;</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">&#160;</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt">Deferred tax liabilities</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">&#160;</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">&#160;</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">&#160;</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Fixed asset depreciation</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(170</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(170</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Intangible asset amortization</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(97,130</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(97,130</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Total deferred tax liabilities</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(97,300</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(97,300</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">&#160;</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Net deferred tax asset (liability)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">$</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">$</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">$</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">As of December 31, 2012, the Company had approximately $210,000, $3,375,000 and $1,159,000 of foreign, U.S. federal and state net operating loss carryovers (&#147;NOL&#146;s&#148;), respectively, to offset future taxable income. As of December 31, 2011, the Company had approximately $73,000, $9,655,000 and $8,685,000 of foreign, U.S. federal and state NOL&#146;s, respectively, to offset future taxable income. The foreign net operating loss carryovers begin expiring in 2018, if not utilized. The U.S. federal and state net operating loss carryovers begin expiring in 2025. In accordance with section 382 of the Internal Revenue Code, deductibility of the Company&#146;s U.S. net operating loss carryovers may be subject to an annual limitation in the event of a change of control. Management has performed a preliminary evaluation as to whether a change in control has taken place, and has concluded that there was a change of control with respect to the NOL&#146;s of CelLynx Group, Inc. when the Company acquired its 60% ownership interest in March 2012.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Therefore, the NOL&#146;s of CelLynx Group Inc. will be subject to an annual limitation of approximately $8,700 as determined under the regulations. Due to the annual limitation, management has determined that $8,838,000 of the NOL&#146;s of CelLynx Group, Inc. will expire unused and has reduced the related deferred tax asset accordingly.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 11pt">In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will 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 become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, Management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance&#160;for all periods.&#160;For the years ended December</font><font style="font-size: 10pt"> 31, </font><font style="font-size: 11pt">2012 and 2011, the change in the valuation allowance was $1,112,028 and $212,103, respectively.</font></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; text-align: left; margin-right: 0; margin-left: 0">The Company evaluated the provisions of ASC 740 related to the accounting for uncertainty in income taxes recognized in an enterprise&#146;s financial statements. ASC 740 prescribes a comprehensive model for how a company should recognize, present, and disclose uncertain positions that the company has taken or expects to take in its tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as &#34;unrecognized benefits.&#34;&#160;A liability is recognized (or amount of net operating loss carry forward or amount of tax refundable is reduced) for an unrecognized tax benefit because it represents an enterprise's potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740.</p> <p style="font: 11pt Times New Roman, Times, Serif; text-align: justify; margin-right: 0; margin-left: 0">Interest costs related to unrecognized tax benefits are required to be calculated (if applicable) and would be classified as &#34;Interest expense, net&#34; in the statements of operation. Penalties would be recognized as a component of &#34;General and administrative expenses.&#34;</p> <p style="font: 11pt Times New Roman, Times, Serif; text-align: justify; margin-right: 0; margin-left: 0">No interest or penalties were recorded during the year ended December 31, 2012 and December 31, 2011. As of December 31, 2012 and December 31, 2011 no liability for unrecognized tax benefits was required to be reported. The Company does not expect any significant changes in its unrecognized tax benefits in the next year.</p> <p style="font: 11pt Times New Roman, Times, Serif; text-align: justify; margin-right: 0; margin-left: 0">The Company files U.S. federal and state income tax returns. These tax returns are subject to examination by tax authorities for years beginning in December 31, 2009. &#160;5Barz AG files foreign tax returns in Switzerland. These tax returns are subject to examination by tax authorities for years beginning in 2011.</p> <p style="margin: 0pt">&#160;</p> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">For the period from November 14, 2008 (date of inception) through December 31, 2012</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">December 31, 2012</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">December 31, 2011</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 44%; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">US federal statutory income tax rate (benefit)</td><td style="width: 1%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">&#160;</td><td style="width: 21%; text-align: right">(34.0</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">%)</td><td style="width: 2%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">&#160;</td><td style="width: 12%; text-align: right">(34.0</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">%)</td><td style="width: 2%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">&#160;</td><td style="width: 12%; text-align: right">(34.0</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">%)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">State income taxes</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(1.4</td><td style="padding-bottom: 1pt; text-align: left">%)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(2.3</td><td style="padding-bottom: 1pt; text-align: left">%)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0.0</td><td style="padding-bottom: 1pt; text-align: left">%</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Fair value of beneficial conversion feature</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(4.9</td><td style="padding-bottom: 1pt; text-align: left">%)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(7.5</td><td style="padding-bottom: 1pt; text-align: left">%)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0.0</td><td style="padding-bottom: 1pt; text-align: left">%</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Acquired deferred balances</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(7.2</td><td style="padding-bottom: 1pt; text-align: left">%)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(11.2</td><td style="padding-bottom: 1pt; text-align: left">%)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0.0</td><td style="padding-bottom: 1pt; text-align: left">%</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Other permanent differences</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">4.7</td><td style="padding-bottom: 1pt; text-align: left">%</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0.1</td><td style="padding-bottom: 1pt; text-align: left">%</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0.0</td><td style="padding-bottom: 1pt; text-align: left">%</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Change in valuation allowance</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">42.8</td><td style="padding-bottom: 1pt; text-align: left">%</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">54.9</td><td style="padding-bottom: 1pt; text-align: left">%</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">34.0</td><td style="padding-bottom: 1pt; text-align: left">%</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Effective rate</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">0.0</td><td style="padding-bottom: 1pt; text-align: left">%</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">0.0</td><td style="padding-bottom: 1pt; text-align: left">%</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">0.0</td><td style="padding-bottom: 1pt; text-align: left">%</td></tr> </table> <p style="margin: 0pt"></p> <p style="margin: 0pt">&#160;</p> <table cellpadding="0" cellspacing="0" style="width: 100%"> <tr style="vertical-align: bottom"> <td style="font-size: 11pt; font-weight: bold">&#160;</td><td style="font-size: 11pt; font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-size: 11pt; font-weight: bold; border-bottom: Black 1pt solid">For the period from November 14, 2008 (date of inception) through December 31, 2012</td><td style="font-size: 11pt; font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-size: 11pt; font-weight: bold; border-bottom: Black 1pt solid">December 31, 2012</td><td style="font-size: 11pt; font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-size: 11pt; font-weight: bold; border-bottom: Black 1pt solid">December 31, 2011</td></tr> <tr style="vertical-align: bottom"> <td style="font-size: 11pt">Deferred tax assets</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-size: 11pt; text-align: right">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-size: 11pt; text-align: right">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-size: 11pt; text-align: right">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 44%; font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Net operating loss carryovers</td><td style="width: 1%; font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; font-size: 11pt; text-align: left">$</td><td style="width: 21%; font-size: 11pt; text-align: right">1,483,704</td><td style="width: 1%; padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="width: 2%; font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; font-size: 11pt; text-align: left">$</td><td style="width: 12%; font-size: 11pt; text-align: right">1,261,422</td><td style="width: 1%; padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="width: 2%; font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; font-size: 11pt; text-align: left">$</td><td style="width: 12%; font-size: 11pt; text-align: right">222,282</td><td style="width: 1%; padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 11pt; padding-bottom: 1pt; padding-left: 5.4pt">Stock-based compensation</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">2,833</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">2,833</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Accrued compensation</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">167,355</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">167,355</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Total deferred tax assets</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">1,653,892</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">1,431,610</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Valuation allowance</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(1,556,592</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(1,334,310</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(222,282</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Deferred tax asset, net of valuation allowance</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">97,300</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">97,300</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 11pt; padding-bottom: 1pt; padding-left: 5.4pt">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">&#160;</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">&#160;</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">&#160;</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt">Deferred tax liabilities</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">&#160;</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">&#160;</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; text-align: right">&#160;</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Fixed asset depreciation</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(170</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(170</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Intangible asset amortization</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(97,130</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(97,130</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Total deferred tax liabilities</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(97,300</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">(97,300</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">&#160;</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 11pt; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Net deferred tax asset (liability)</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">$</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">$</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: left">$</td><td style="border-bottom: Black 1pt solid; font-size: 11pt; text-align: right">0</td><td style="padding-bottom: 1pt; font-size: 11pt; text-align: left">&#160;</td></tr> </table> <p style="margin: 0pt"></p> 1334310 222282 <p style="font: 9pt Times New Roman, Times, Serif; margin: 0">2018 through&#160;2025</p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><b>Note 6 - Cumulative sales of stock</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">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 14, 2008, the Companies 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.&#160;</p> <p style="font: 7pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"></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">&#160;</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">&#160;</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">&#160;</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">&#160;</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">&#160;</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">&#160;</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">&#160;</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 $13,922.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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 $0.50 per share for aggregate proceeds of $20,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On October 20, 2011 the Company issued 37,500 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">&#160;</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">&#160;</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">&#160;</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">&#160;</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 (&#128;50,000), which </font>bears interest at a rate of 8.5%. The aggregate proceeds amounted to $67,513.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In December 2011, 5BARz AG sold 21,000 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 63,000 (US &#150; $75,840). 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">&#160;&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 12, 2012 the Company issued 300,000 shares of common stock at a price of $0.10 per share for services for aggregate proceeds of $30,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On February 1, 2012 the Company issued 1,500,000 shares of common stock at a price of $0.10 per share for services for aggregate proceeds of $150,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On February 1, 2012 the Company issued 50,000 shares of common stock at a price of $0.10 per share for services for aggregate proceeds of $5,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On February 7, 2012 the Company issued 500,000 shares of common stock at a price of $0.10 per share for aggregate proceeds of $50,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On February 29, 2012 the Company issued 100,000 shares of common stock for services at a price of $0.4799 per share for aggregate proceeds of $47,990.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On February 29, 2012 the Company issued 200,000 shares of common stock for services at a price of $0.10 per share for aggregate proceeds of $20,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On March 6, 2012 the Company issued 433,334 shares of common stock at a price of $0.12 per share for aggregate proceeds of $52,000.</p> <p style="font: 11pt Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 0.5in">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On March 7, 2012 the Company issued 150,000 shares of common stock at a price of $0.12 per share for aggregate proceeds of $18,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On March 20, 2012 the Company issued 333,334 shares of common stock at a price of $0.15 per share for aggregate proceeds of $50,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On March 22, 2012 the Company issued 170,000 shares of common stock at a price of $0.15 per share for aggregate proceeds of $25,500.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On March 26, 2012 the Company issued 50,000 shares of common stock at a price of $0.12 per share for aggregate proceeds of $6,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On March 29, 2012 the Company issued 9,000,000 shares of common stock at a price of $0.20 per share in payment to CelLynx Group, Inc. for a 60% for aggregate proceeds of $1,800,000. The shares were issued to acquire the 5BARz cellular technology rights.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On March 29, 2012 the Company issued 1,250,000 shares of 5BARz common stock at a price of $0.20 per share for aggregate proceeds of $250,000, plus $170,000 cash, in payment to two founders of CelLynx Group Inc. for 63,412,638 common shares of CelLynx Group, Inc.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On April 2, 2012 the Company issued 250,000 shares of common stock for services, at a price of $0.12 per share for an aggregate value of $30,270.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On April 18, 2012 the Company issued 100,000 shares of common stock at a price of $0.15 per share for aggregate proceeds of $15,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On April 30, 2012 the Company issued 125,000 shares of common stock at a price of $0.12 per share for services for an aggregate value of $14,977.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On April 30, 2012 the Company issued 66,667 shares of common stock at a price of $0.15 per share for services for an aggregate value of $10,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On May 3, 2012 the Company issued 80,000 shares of common stock at a price of $0.10 per share for aggregate proceeds of $8,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On May 14, 2012 the Company issued 20,000 shares of common stock at a price of $0.10 per share for aggregate proceeds of $2,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On June 12, 2012 the Company issued 95,000 shares of common stock at a price of $0.10 per share for aggregate proceeds of $9,500.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On June 21, 2012 the Company issued 2,150,000 shares of common stock at a price of $0.10 per share for services for an aggregate value of $212,685.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On June 27, 2012 the Company issued 50,000 shares of common stock at a price of $0.10 per share for aggregate proceeds of $5,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On July 9, 2012 the Company issued 520,000 shares of common stock at a price of $0.10 per share for aggregate proceeds of $52,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On July 20, 2012 the Company issued 250,000 shares of common stock at a price of $0.20 per share for services for an aggregate value of $50,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On August 10, 2012 the Company issued 500,000 shares of common stock at a price of $0.05 per share for aggregate proceeds of $25,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On August 14, 2012 the Company issued 500,000 shares of common stock at a price of $0.05 per share for aggregate proceeds of $25,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On August 14, 2012 the Company issued 140,000 units at a price of $0.05 per unit for aggregate proceeds of $7,000. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On September 5, 2012 the Company issued 100,000 units at a price of $0.05 per unit for aggregate proceeds of $5,000. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On September 10, 2012 the Company issued 401,338 shares of common stock at a price of $0.0299 per share as partial conversion of a note payable in settlement of $12,000 due under that note.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On September 14, 2012 the Company issued 300,000 shares of common stock at a price of $0.05 per share for aggregate proceeds of $15,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On October 12, 2012 the Company issued 300,000 units at a price of $0.05 per unit for aggregate proceeds of $15,000. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On October 26, 2012 the Company issued 100,000 shares of common stock at a price of $0.05 per share for aggregate proceeds of $5,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On December 7, 2012 the Company issued 3,300,824 shares of common stock at a price of $0.05 per share, for services with a total value of $165,041.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On December 12, 2012 the Company issued 400,000 units at a price of $0.05 per unit for aggregate proceeds of $20,000. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term.</p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On December 17, 2012 the Company issued 1,200,000 units at a price of $0.05 per unit for aggregate proceeds of $60,000. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term.</p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On December 31, 2012 the Company issued 2,250,000 shares for services at a price of $0.05 per share, for a total value of $112,500.</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-right: 0; margin-left: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">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">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font style="font-size: 11pt">An &#147;Amended and Restated Master Global Marketing and Distribution Agreement.&#148;</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">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </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">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </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: left">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.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: left">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;</p> <table cellspacing="0" cellpadding="0" style="width: 100%; font-size: 11pt"> <tr style="vertical-align: top"> <td style="width: 10px; font: 12pt Times New Roman, Times, Serif; padding-bottom: 13.15pt">&#160;</td> <td style="width: 25px; font: 7pt Times New Roman, Times, Serif; padding-bottom: 13.15pt">&#160;</td> <td style="font: 12pt Times New Roman, Times, Serif; padding-bottom: 13.15pt; text-align: left"><font style="font-size: 11pt">i.</font><font style="font-size: 7pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font style="font-size: 11pt">5BARz International, Inc. acquired a 60% interest in the patents and trademarks held by CelLynx Group Inc., referred to as the &#147;</font>5BARz&#153;&#148; technology. <font style="font-size: 11pt">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.</font></td></tr> <tr style="vertical-align: top"> <td style="font: 12pt Times New Roman, Times, Serif; padding-bottom: 13.15pt">&#160;</td> <td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 13.15pt">&#160;</td> <td style="font: 12pt Times New Roman, Times, Serif; padding-bottom: 13.15pt; text-align: left"><font style="font-size: 11pt">ii.</font><font style="font-size: 7pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font style="font-size: 11pt">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 $730,879 has been advanced as of December 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 December 31, 2012, the Company had converted $139,200 of the amount due under the revolving line of credit facility for 791,333,333 shares of the capital stock of CelLynx Group, Inc. CelLynx is a consolidated subsidiary of 5BARz International Inc., since March 29, 2012. The credit facility is eliminated in consolidation.</font></td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="width: 100%; font-size: 11pt"> <tr style="vertical-align: top"> <td style="width: 10px; font: 12pt Times New Roman, Times, Serif">&#160;</td> <td style="width: 25px; font: 7pt Times New Roman, Times, Serif">&#160;</td> <td style="font: 12pt Times New Roman, Times, Serif"><font style="font-size: 11pt">iii.</font><font style="font-size: 7pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font style="font-size: 11pt">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&#146;s Net Earnings, from products or license arrangements related to the 5BARz technology, in a ratio equal to the CelLynx proportionate interest in that technology. 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. Any amounts paid or due under the arrangement would be eliminated in consolidation.</font></td></tr></table> 2012-09-28 2012-12-31 2012-12-12 25000 15000 2500000 25000 24699 263023 2500000 81000 634126 <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="background-color: #CCEEFF"> <td style="width: 4%; vertical-align: top; text-align: right">i.</td> <td style="width: 1%; font-size: 9pt">&#160;</td> <td style="width: 75%; vertical-align: top">Cash consideration paid&#160;</td> <td style="width: 1%; vertical-align: top">&#160;</td> <td style="width: 2%; vertical-align: bottom; text-align: right">$</td> <td style="width: 13%; vertical-align: bottom; text-align: right">170,000</td> <td style="width: 4%; vertical-align: bottom; text-align: right">&#160;</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: right">ii.</td> <td style="font-size: 9pt">&#160;</td> <td style="vertical-align: top">1,250,000 common shares of the registrant issued at a market price of $0.20 per share</td> <td style="vertical-align: top">&#160;</td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right">250,000</td> <td style="vertical-align: bottom; text-align: right">&#160;</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: right">iii.</td> <td style="font-size: 9pt">&#160;</td> <td style="vertical-align: top">Redemption of convertible debt for 350 million shares of Cellynx Group Inc. common stock</td> <td style="vertical-align: top">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">455,000</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">(a)</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: right">&#160;</td> <td style="font-size: 9pt">&#160;</td> <td style="vertical-align: top">&#160;</td> <td style="vertical-align: top">&#160;</td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right">&#160;</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: right">&#160;</td> <td style="font-size: 9pt">&#160;</td> <td style="vertical-align: top">Fair market value of consideration paid</td> <td style="vertical-align: top">&#160;</td> <td style="vertical-align: bottom; text-align: right">$</td> <td style="vertical-align: bottom; text-align: right"> 875,000</td> <td style="vertical-align: bottom; text-align: right">&#160;</td></tr> </table> <p style="margin: 0pt">&#160;</p> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold; border-bottom: Black 1pt solid">Description</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">Net book value of CelLynx Group, Inc. consolidated assets and liabilities</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">Acquisition <br />Adjustments (i) (ii)</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Valuation attributed to assets acquired</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 42%; text-align: left">Current assets</td><td style="width: 1%">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 21%; text-align: right">3,260</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 3%">&#160;</td> <td style="width: 1%; text-align: left">&#160;</td><td style="width: 12%; text-align: right">&#160;</td><td style="width: 2%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">3,260</td><td style="width: 1%; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left">Patents, trademarks, and license</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">44,718</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">$</td><td style="text-align: right">1,155,282</td><td style="text-align: left">(ii)</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">1,200,000</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Investment in 5BARz&#160;&#160; (iii)</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">1,800,000</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">1,800,000</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left">Furniture and equipment</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">2,113</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">2,113</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Accounts payable and accruals</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(1,752,628</td><td style="text-align: left">)</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(1,752,628</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left">Notes payable (net of discount)</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(403,076</td><td style="text-align: left">)</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(403,076</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Accrued interest</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(62,250</td><td style="text-align: left">)</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(62,250</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left">Derivative liability</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(5,495,425</td><td style="text-align: left">)</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">5,026,093</td><td style="text-align: left">(i)</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(469,332</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt">LOC payable &#150; 5BARz (net)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(586,525</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">586,525</td><td style="padding-bottom: 1pt; text-align: left">(i)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#151;&#160;&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt">Fair value non-controlling interest</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(583,333</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(583,333</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt">Totals</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">$</td><td style="text-align: right">(6,449,813</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">$</td><td style="text-align: right">6,184,567</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(265,246</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt">Goodwill</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">1,140,246</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt">Purchase price</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">875,000</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> </table> <p style="margin: 0pt"></p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr> <td style="width: 22%; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Issue Date</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p></td> <td style="width: 1%; vertical-align: bottom; font-weight: bold; text-align: right">&#160;</td> <td style="width: 13%; vertical-align: top; font-weight: bold; text-decoration: underline; text-align: center">Principal Amount</td> <td style="width: 18%; vertical-align: top; font-weight: bold; text-decoration: underline; text-align: center">Date of Maturity</td> <td style="width: 3%; vertical-align: top; font-size: 9pt">&#160;</td> <td style="width: 1%; vertical-align: top; font-weight: bold; text-align: right">&#160;</td> <td style="width: 11%; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><u>Accrued</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><u>Interest</u></b></p></td> <td style="width: 1%; vertical-align: top; font-weight: bold; text-align: right">&#160;</td> <td style="width: 1%; vertical-align: top; font-weight: bold; text-align: right">&#160;</td> </tr> <tr style="background-color: rgb(204,238,255)"> <td style="vertical-align: top">May 24, 2012</td> <td style="vertical-align: bottom; text-align: center">$</td> <td style="vertical-align: bottom; text-align: center">37,500 (1)</td> <td style="vertical-align: bottom; text-align: center">February 18, 2013</td> <td style="vertical-align: top; font-size: 9pt">&#160;</td> <td style="vertical-align: bottom; text-align: center">$</td> <td style="vertical-align: bottom; text-align: right">1,060</td> <td style="vertical-align: top; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right">&#160;</td> </tr> <tr style="background-color: White"> <td style="vertical-align: top">September 18, 2012</td> <td style="vertical-align: bottom; text-align: center">$</td> <td style="vertical-align: bottom; text-align: center">12,500 (2)</td> <td style="vertical-align: bottom; text-align: center">June 15, 2013</td> <td style="vertical-align: top; font-size: 9pt">&#160;</td> <td style="vertical-align: bottom; text-align: center">$</td> <td style="vertical-align: bottom; text-align: right">49</td> <td style="vertical-align: top; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right">&#160;</td> </tr> </table> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold; text-decoration: underline; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt"><p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Issue Date</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"></p></td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">Principal Amount</td><td style="padding-bottom: 1pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><u>Accrued</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><u>Interest</u></b></p></td><td style="padding-bottom: 1pt; font-weight: bold; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 56%; padding-left: 5.4pt">May 24, 2012</td><td style="width: 8%; font-weight: normal; font-style: normal; text-decoration: none">&#160;</td> <td style="width: 1%; font-weight: normal; font-style: normal; text-decoration: none; text-align: left">$</td><td style="width: 12%; font-weight: normal; font-style: normal; text-decoration: none; text-align: right">37,000</td><td style="width: 1%; font-weight: normal; font-style: normal; text-decoration: none; text-align: left">&#160;</td><td style="width: 8%">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">21,475</td><td style="width: 1%; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 5.4pt">September 18, 2012</td><td style="font-weight: normal; font-style: normal; text-decoration: none">&#160;</td> <td style="font-weight: normal; font-style: normal; text-decoration: none; text-align: left">$</td><td style="font-weight: normal; font-style: normal; text-decoration: none; text-align: right">12,500</td><td style="font-weight: normal; font-style: normal; text-decoration: none; text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">$</td><td style="text-align: right">6,702</td><td style="text-align: left">&#160;</td></tr> </table> 469332 0 0.25-1.52 0.05%-0.26% 0.00 1.50 10/21/2010 8/27/2012 7/19/2010 10/16/2012 3/22/2013 Past due rent Past due rent Unpaid Wages Breach of contract Repayment of notes 3000 300000 2041 <p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 32.85pt">Seeking compensatory damages and alleged loss of profits of in excess of $2,500,000, based upon a $150,000 investment made by LA Jolla Cove Investors under certain putative agreements. <i>La Jolla Cove Investors Inc. v. 5Barz International, Inc.</i>, 3:12-CV-5333 (N.D. Cal.). On January 3, 2013, the Company and La Jolla Cove Investors, Inc. entered into an agreement for the settlement of the lawsuit for proceeds of $300,000 plus accrued interest from the date of the settlement agreement at a rate of 9%, plus the delivery of 125,000 shares of the common stock of the Company. On January 13, 2013 a stipulation dismissing action without prejudice and without award of attorney&#146;s fees or costs was entered. The Company issued the 125,000 shares but was unable to meet the payment schedule as provided in the settlement agreement. On March 8, 2013 as a result of the default, La Jolla Cove was awarded a judgment in the amount of $300,000 plus accrued interest at a rate of 9% from the date of the settlement agreement. The Company intends to pay the balance due once funded.&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 32.85pt"></p> The claims allege that damages in the amount of the greater of; (i) 200% x $81,000, the remaining outstanding principle amount of the Note, together with accrued and unpaid interest in the unpaid principle amount of the Notes, plus default interest; or (ii) the &#147;parity value&#148; of the &#147;default amount&#148; paid in shares as defined in the terms of the agreements. The Company intends to file an appearance and defend against the law suit. 500000 60000 40000 200000 150000 650000 2000000 600000 60000 200000 100000 300000 140000 300000 400000 1200000 <p>Convert the principal and unpaid interest into a certain number of shares, 180 days from the date of the agreement. The equity investment agreement provided to Holder the right, from time to time during the term of the Agreement, to invest in the Company through the purchase of up to $5,000,000 of the Company's Common Stock. Each purchase under this Agreement was to be made at 150% of the Volume Weighted Average Price (VWAP) on the day prior to the day the investment is made (the Purchase Price). Beginning on the date that is one hundred eighty (180) days following the Issue Date, Holder shall have the right to purchase Common Stock under this Agreement. Provided the VWAP is above $0.06, Holder shall purchase a minimum of $50,000 per month beginning two hundred ten (210) days from the Issue Date.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt">&#160;<b>Note 8 &#150; Convertible Securities</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>Convertible Promissory Note&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On September 20, 2011, 5BARz International Inc., 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 &#147;Due Date&#148;).&#160;&#160;The Company may settle that note within the first 90 days following the issue date by paying to the&#160;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 in full by the payment of $65,361, and the note was cancelled.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On February 27, 2012, 5BARz International Inc., completed a transaction pursuant to a Promissory Note agreement (the &#147;February 27, 2012 Note&#148;), through which the Company borrowed $37,500. The Note bears interest at a rate of 8%, and is due on November 29, 2012, (the &#147;Due Date&#148;).&#160;&#160;The Company may settle that note within the first 90 days following the issue date by paying to the&#160;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 at a variable conversion price equal to 55% of the average of the three lowest closing bid prices for the Company&#146;s common stock for a period of 10 days prior to the date of notice of conversion. On September 10, 2012, the Company redeemed $12,000 payable on that note, by the issuance of 401,338 common shares at a price of $0.0299 per share. </p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On May 3, 2012, 5BARz International Inc., completed a transaction pursuant to a Promissory Note agreement (the &#147;May 3, 2012 Note&#148;), through which the Company borrowed $42,500. The proceeds were received by the Company on May 24, 2012. The Note bears interest at a rate of 8%, and is due on February 3, 2013, (the &#147;Due Date&#148;).&#160;&#160;The Company may settle that note within the first 90 days following the issue date by paying to the&#160;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 at a variable conversion price equal to 55% of the average of the three lowest closing bid prices for the Company&#146;s common stock for a period of 10 days prior to the date of notice of conversion.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;On September 18, 2012, the Company completed a transaction pursuant to a Promissory Note agreement (the &#147;September 18, 2012 Note&#148;), through which the Company borrowed $13,500. The Note bears interest at a rate of 8%, and is due on March 17, 2013, (the &#147;Due Date&#148;).&#160;&#160;The Company may settle that note within the first 90 days following the issue date by paying to the&#160;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 at a variable conversion price equal to 55% of the average of the three lowest closing bid prices for the Company&#146;s common stock for a period of 10 days prior to the date of notice of conversion.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On December 12, 2012, the Company entered into a future agreement to repay the February 27, 2012 Note, May 3, 2012 Note and the September 18, 2012 Note for aggregate payments of $100,000 payable as to $35,000 on December 31, 2012 and $65,000 on February 15, 2013. At this time the notes were no longer convertible and upon the payment of $100,000 would be paid in full. The Company missed its December 31, 2012 payment of $35,000. However, on January 4, 2013, the Company paid $25,000 to the note holder and another $15,000 on February 15, 2013. On March 22, 2013, the note holder filed a complaint against the Company (see Note 13). The complaint claims that the Company missed its required payments under the December 12, 2012 agreement. The Company has accrued a default penalty of 50% of the notes payable as well as default interest of 22% per annum from the date of the default. As of December 31, 2012, the Company has recorded the total of $129,460 which includes the original principal balance, the default penalty and interest.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company has the option to pay the amount due in cash or in shares as defined in the terms of the notes agreements.</p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><b>Securities Purchase Agreements</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">&#160;<b>Convertible Debenture Agreement &#38; Equity Investment Agreement</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: left"><font style="font-size: 11pt">In January 2012, the Company negotiated potential agreements for a convertible debenture and an equity investment agreement with a private investment firm. As contemplated, the convertible debenture agreement provided that the investor could invest up to $500,000 and convert the principal and unpaid interest into a certain number of shares, 180 days from the date of the agreement. The equity investment agreement provided </font>to <font style="font-size: 11pt">Holder the right, from time to time during the term of the Agreement, to invest in the Company through the purchase of up to $5,000,000 of the Company&#146;s Common Stock. Each purchase under this Agreement was to be made at 150% of the &#147;Volume Weighted Average Price&#148; (VWAP) on the day prior to the day the investment is made (the &#147;<b>Purchase Price</b>&#148;). Beginning on the date that is one hundred eighty (180) days following the Issue Date, Holder shall have the right to purchase Common Stock under this Agreement. Provided the VWAP is above $0.06, Holder shall purchase a minimum of $50,000 per month beginning two hundred ten (210) days from the Issue Date. </font></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">As at December 31, 2012, the Company had received $150,000 in funding from the private investment firm. In addition the Company had taken back a $400,000 note receivable from the investment firm under the terms of the convertible debenture agreement.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On August 2, 2012 and August 13, 2012, the Company received conversion notices that materially conflict with the parties&#146; negotiations and the terms of the agreement. Based on those and related communications, the Company has concluded that there has been no meeting of the minds between the Company and the private investment firm on key provisions of the putative agreements. The Company has offered to repay the amounts invested along with accrued interest and additional share compensation, but arrived at no settlement.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;<b>&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On October 16, 2012, the investment firm filed a complaint in the federal court for the Northern District of California claiming breach of contract and seeking compensatory damages and alleged loss of profits of in excess of $2,500,000, based upon their $150,000 investment made under the putative agreements. <i>La Jolla Cove Investors, Inc. v. 5BARz International, Inc.</i>, 3:12-CV-5333 (N.D. Cal.). On November 8, 2012, the Company filed an answer, affirmative defenses, and counterclaims, against the plaintiff. On January 3, 2013, the Company entered into a settlement agreement requiring payments in the aggregate amount of $300,000 yielding interest at 9%, and the issuance of 125,000 shares of the common stock of the Company. In the event that $220,000 is paid by July 2, 2013, all amounts will be considered paid. The schedule for payments is January 24, 2013 - $10,000, April 3, 2013 - $30,000, July 2, 2013 - $180,000. The Company issued the 125,000 shares on February 12, 2013. On March 13, 2013, an order granting entry of stipulated judgment was granted to La Jolla Cove Investors for payment by the Company of the $300,000 plus interest at 9%. The $300,000 and the value of the shares have been accrued for at December 31, 2012. Also see litigation note 13.</p> <p style="font: 11pt Times New Roman, Times, Serif; text-align: center; margin-right: 0; margin-left: 0"><b>&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>CelLynx Group, Inc. &#150; Convertible Promissory Notes&#160;</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company&#146;s subsidiary, CelLynx Group, Inc. has two 8% convertible promissory notes outstanding at December 31, 2012 as follows:</p> <p style="font: 12pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><font style="font-size: 11pt">&#160;</font>&#160;</p> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold; border-bottom: Black 1pt solid; text-align: left; vertical-align: bottom">Issue Date &#160; &#160;</td> <td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Principal Amount</td> <td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Date of Maturity</td> <td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Accrued <br />Interest</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>May 24, 2012</td> <td style="text-align: center; padding-left: 10pt"></td> <td>$</td> <td style="text-align: left">&#160;</td> <td style="text-align: right">37,500 (1)</td> <td style="text-align: left">&#160;</td> <td colspan="3" style="text-align: right; vertical-align: bottom">February 18, 2013</td> <td style="text-align: left">&#160;</td> <td>&#160;</td> <td style="text-align: left">$</td> <td style="text-align: right">1,060</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 40%">September 18, 2012</td> <td style="text-align: center; padding-left: 10pt; width: 1%"></td> <td style="width: 1%">$</td> <td style="text-align: left; width: 1%">&#160;</td> <td style="text-align: right; width: 16%">12,500 (2)</td> <td style="text-align: left; width: 3%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="text-align: left; width: 1%">&#160;</td> <td style="text-align: right; width: 16%">June 15, 2013</td> <td style="text-align: left; width: 3%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="text-align: left; width: 1%">$</td> <td style="text-align: right; width: 15%">49</td> </tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 10px; font-size: 12pt">&#160;</td> <td style="width: 28px">(1&#38;2)</td> <td> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The terms of these notes are such that subsequent to the prepayment date six months after the issue date, if not paid,&#160;holder may convert principal and unpaid interest on the note into shares of the Company&#146;s common stock, with the number of shares issuable determined to be the variable conversion factor. The variable conversion factor is calculated by dividing the amount to be converted by the conversion price which is equal to 51% of the average of the three lowest closing bid prices of the Company&#146;s common stock over the ten trading days prior to the date of the conversion. Holder is prohibited from converting amounts if principal and interest that would result in holder receiving shares, which when combined with shares of the Company&#146;s common stock held, would result in investor holding more than 4.99% of the Company&#146;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.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p></td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">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.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Subsequent to year end the Company received a notice of default on notes entered into with the lender. Accordingly all notes to the lender have been recorded at the default amount at December 31, 2012 as the result of a cross default provision in the agreements. The Company has accrued a default penalty of 50% of the note payable as well as default interest at 22% per annum from the date of the default.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;The Company has the option to pay the amounts due in cash or in shares as defined in the terms of the notes agreements. The resulting balances are as follows:</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold; border-bottom: Black 1pt solid"><p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>Issue Date</b></p> </td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Principal Amount</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Accrued Penalty <br />and Interest</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%; padding-bottom: 1pt">May 24, 2012</td><td style="width: 2%; font-weight: bold; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; font-weight: bold; text-align: left">$</td><td style="width: 16%; text-align: right">26,700</td><td style="width: 1%; padding-bottom: 1pt; font-weight: bold; text-align: left">*</td><td style="width: 3%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">15,290</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">&#160;</td><td style="width: 3%; font-weight: bold; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; font-weight: bold; text-align: left">$</td><td style="width: 14%; text-align: right">41,990</td><td style="width: 1%; padding-bottom: 1pt; font-weight: bold; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 12pt; padding-bottom: 1pt">September18, 2012</td><td style="font-size: 12pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 12pt; text-align: left">$</td><td style="border-bottom: Black 1pt solid; font-size: 12pt; text-align: right">12,500</td><td style="padding-bottom: 1pt; font-size: 12pt; text-align: left">&#160;</td><td style="font-size: 12pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 12pt; text-align: left">$</td><td style="border-bottom: Black 1pt solid; font-size: 12pt; text-align: right">6,702</td><td style="padding-bottom: 1pt; font-size: 12pt; text-align: left">&#160;</td><td style="font-size: 12pt; padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; font-size: 12pt; text-align: left">$</td><td style="border-bottom: Black 1pt solid; font-size: 12pt; text-align: right">19,202</td><td style="padding-bottom: 1pt; font-size: 12pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td><p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Total</p> </td><td style="font-size: 12pt">&#160;</td> <td style="font-size: 12pt; text-align: left">$</td><td style="font-size: 12pt; text-align: right">39,200</td><td style="font-size: 12pt; text-align: left">&#160;</td><td style="font-size: 12pt">&#160;</td> <td style="font-size: 12pt; text-align: left">$</td><td style="font-size: 12pt; text-align: right">28,177</td><td style="font-size: 12pt; text-align: left">&#160;</td><td style="font-size: 12pt">&#160;</td> <td style="font-size: 12pt; text-align: left">$</td><td style="font-size: 12pt; text-align: right">61,192</td><td style="font-size: 12pt; text-align: left">&#160;</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; text-align: justify; margin-right: 0; margin-left: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; text-align: justify; margin-right: 0; margin-left: 0">*On November 27, 2012, the holder of the note converted principal amount of $10,800 into 72,000,000 shares of CelLynx Group, Inc.</p> <p style="font: 11pt Times New Roman, Times, Serif; text-align: justify; margin-right: 0; margin-left: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; text-align: justify; margin-right: 0; margin-left: 0"><b><u>CelLynx Group, Inc. &#150; Other Convertible Promissory Note&#160;</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On July 9, 2012 the Company settled the terms of a convertible debenture owed by its subsidiary Company, CelLynx Group, Inc. on the six month anniversary of the note for proceeds of $30,582. The payment represents payment in full of principal, interest at a rate of 8% per annum and a pre-payment penalty of $14,400.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="text-align: left">Pursuant to the Note agreement dated January 5, 2012 (the &#147;January 5, 2012 Note&#148;), the Company received the principal amount of $50,000, by way of settlement of certain debts owed by the Company to Holder. The Note bears interest at a rate of 8%, and was due on July 3, 2012. Holder may convert principal and unpaid interest on the note into shares of the Company&#146;s common stock, with the number of shares issuable determined to be the amount obtained by dividing the amount to be converted by the conversion price which is the lesser of $0.0013 per share or 63% of the average of the three lowest trading prices of the Company&#146;s common stock over the ten trading days prior to the date of the conversion.</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 1pt 31.95pt 0 0.5in">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">As described elsewhere herein, the Company was in default on its other notes. Accordingly, based on the agreement, the January 5, 2012 Note was in default. The Company has accrued a default penalty of 50% of the note payable as well as default interest at 22% per annum from the date of the default and recorded a total of $80,438 on its books at December 31, 2012. The Company has the option to pay the amount due in cash or in shares as defined in the terms of the note agreement.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">On April 5, 2011 (the April 5, 2011 Note), the Company entered into a Securities Purchase Agreement (the &#147;SPA&#148;) with one of its directors, Dwayne Yaretz (&#147;Yaretz&#148;), in connection with the purchase by Yaretz of a Convertible Promissory Note (the &#147;Yaretz Note&#148;).</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;Pursuant to the Yaretz Note, Yaretz loaned to the Company the principal amount of $50,000. The Yaretz Note bears interest at a rate of 8%, and was due on January 5, 2012. Yaretz could have converted principal and unpaid interest on the note into shares of the Company&#146;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 63% of the average of the three lowest trading prices of the Company&#146;s common stock over the ten trading days prior to the date of the conversion.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">As described elsewhere herein, the Company was in default on its other notes. Accordingly, based on the agreement, the April 5, 2011 Note was in default. The Company has accrued a default penalty of 50% of the note payable as well as default interest at 22% per annum from the date of the default and recorded a total of $98,613 on its books at December 31, 2012. The Company has the option to pay the amount due in cash or in shares as defined in the terms of the note agreement.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On August 15, 2006, the Company issued a secured promissory note (the &#147;August 2006 Note&#148;) for $250,000 to an unrelated entity &#147;Holder&#148;.&#160;&#160;On November 10, 2007, the August 2006 Note was amended (the &#147;Amended Note&#148;).&#160;&#160;At the date of the amendment, the Company was obligated to pay to the Holder $262,356 which represented the principal and accrued interest.&#160;In contemplation of the completion of the reverse merger, the Company and the holder reached an agreement whereby this Amended Note superseded the August 2006 Note.&#160;&#160;The principal amount of the Amended Note is $262,356, is unsecured and bears interest at 4% per annum, computed on the basis of the actual number of days elapsed and a year of 365 days.&#160;&#160;All unpaid principal, together with any then accrued but unpaid interest, shall be due and payable upon the earlier of (i) November 9, 2010 at the written request of the holder to the Company, or (ii) when, upon or after the occurrence of an event of default. The principal amount is convertible into 4.8% of the Company shares outstanding. At December 31, 2012, the Company recorded on its books principal and interest in the amount of $316,351.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt"><b>Note 9 &#150; Options and Warrants</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>Warrants &#150; 5BARz International Inc.</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt"><b>&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes the warrant activity to December 31, 2012:</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.1pt">&#160;</td> <td colspan="2" style="border-bottom: windowtext 1pt solid; padding-bottom: 1.1pt"> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">Number of</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">Warrants</p></td> <td nowrap="nowrap" style="padding-bottom: 1.1pt">&#160;</td> <td colspan="2" style="border-bottom: windowtext 1pt solid; padding-bottom: 1.1pt"> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">Weighted Average</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">Exercise Price</p></td> <td nowrap="nowrap" style="padding-bottom: 1.1pt">&#160;</td> <td colspan="2" style="border-bottom: windowtext 1pt solid; padding-bottom: 1.1pt"> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">Average Remaining</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">Contractual Life</p></td> <td nowrap="nowrap" style="padding-bottom: 1.1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td>Outstanding at December 31, 2011</td> <td style="text-align: center">&#160;</td> <td style="text-align: center">&#151;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td> <td style="text-align: center">$</td> <td style="text-align: center">&#151;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td> <td colspan="2" style="text-align: center">&#160;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Granted</td> <td style="text-align: center">&#160;</td> <td style="text-align: center">2,140,000</td> <td nowrap="nowrap" style="text-align: center">&#160;</td> <td style="text-align: center">&#160;</td> <td style="text-align: center">0.20</td> <td nowrap="nowrap" style="text-align: center">&#160;</td> <td colspan="2" style="text-align: center">&#160;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Exercised</td> <td style="text-align: center">&#160;</td> <td style="text-align: center">&#151;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td> <td style="text-align: center">&#160;</td> <td style="text-align: center">&#151;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td> <td colspan="2" style="text-align: center">&#160;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Expired</td> <td style="text-align: center">&#160;</td> <td style="text-align: center">&#151;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td> <td style="text-align: center">&#160;</td> <td style="text-align: center">&#151;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td> <td colspan="2" style="text-align: center">&#160;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 54%; padding-bottom: 2.25pt">Outstanding at December 31, 2012</td> <td style="width: 1%; border-bottom: black 2.25pt double; padding-bottom: 2.25pt; text-align: center">&#160;</td> <td style="width: 14%; border-bottom: black 2.25pt double; padding-bottom: 2.25pt; text-align: center">2,140,000</td> <td nowrap="nowrap" style="width: 1%; padding-bottom: 2.25pt; text-align: center">&#160;</td> <td style="width: 1%; border-bottom: black 2.25pt double; padding-bottom: 2.25pt; text-align: center">$</td> <td style="width: 13%; border-bottom: black 2.25pt double; padding-bottom: 2.25pt; text-align: center">0.20</td> <td nowrap="nowrap" style="width: 1%; padding-bottom: 2.25pt; text-align: center">&#160;</td> <td style="width: 1%; padding-bottom: 2.25pt; text-align: center">&#160;</td> <td style="width: 13%; padding-bottom: 2.25pt; text-align: center">2</td> <td nowrap="nowrap" style="width: 1%; padding-bottom: 2.25pt; text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.25pt">Exercisable at December 31, 2012</td> <td style="border-bottom: black 2.25pt double; padding-bottom: 2.25pt; text-align: center">&#160;</td> <td style="border-bottom: black 2.25pt double; padding-bottom: 2.25pt; text-align: center">2,140,000</td> <td nowrap="nowrap" style="padding-bottom: 2.25pt; text-align: center">&#160;</td> <td style="border-bottom: black 2.25pt double; padding-bottom: 2.25pt; text-align: center">$</td> <td style="border-bottom: black 2.25pt double; padding-bottom: 2.25pt; text-align: center">0.20</td> <td nowrap="nowrap" style="padding-bottom: 2.25pt; text-align: center">&#160;</td> <td style="padding-bottom: 2.25pt; text-align: center">&#160;</td> <td style="padding-bottom: 2.25pt; text-align: center">2</td> <td nowrap="nowrap" style="padding-bottom: 2.25pt; text-align: center">&#160;</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt"><b>&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><u>Options &#150; CelLynx Group, Inc.</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">At December 31, 2012, CelLynx Group Inc. has the following Options outstanding;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The number and weighted average exercise prices of all options and warrants exercisable as of December 31, 2012, are as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td colspan="15" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">CelLynx Group, Inc. - Options Exercisable</td></tr> <tr style="vertical-align: bottom"> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Range of <br />Exercise Price</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Number Outstanding as of <br />December 31, 2012</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Weighted Average <br />Exercise Price</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Weighted Average <br />Remaining Contractual <br />Life (Years)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</td><td style="width: 20%; border-bottom: Black 1pt solid; text-align: right">0.0008</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">&#160;</td><td style="width: 5%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="width: 19%; border-bottom: Black 1pt solid; text-align: right">6,400,000</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">&#160;</td><td style="width: 5%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="width: 19%; border-bottom: Black 1pt solid; text-align: right">0.0008</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">&#160;</td><td style="width: 5%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="width: 19%; border-bottom: Black 1pt solid; text-align: right">2.5</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">6,400,000</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>&#160;&#160;&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Warrants &#150; CelLynx Group, Inc.</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes the warrant activity to December 31, 2012:</p> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Number of <br />Warrants</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Weighted Average <br />Exercise Price</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Average Remaining <br />Contractual Life</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 46%">Outstanding at December 31, 2011</td><td style="width: 5%">&#160;</td> <td style="width: 1%; text-align: left">&#160;</td><td style="width: 11%; text-align: right">36,114,757</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 5%">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">0.12</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 5%">&#160;</td> <td style="width: 1%; text-align: left">&#160;</td><td style="width: 11%; text-align: right">&#160;</td><td style="width: 1%; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td>Granted</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Exercised</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#151;&#160;&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#151;&#160;&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td>Expired</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">30,184,757</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0.12</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 2.5pt">Outstanding at December 31, 2012</td><td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,930,000</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1.19</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; text-align: right">2</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt">Exercisable at December 31, 2012</td><td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,930,000</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1.19</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; text-align: right">2</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt"><b>&#160;</b></p> <p style="margin: 0pt">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.1pt">&#160;</td> <td colspan="2" style="border-bottom: windowtext 1pt solid; padding-bottom: 1.1pt"> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">Number of</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">Warrants</p></td> <td nowrap="nowrap" style="padding-bottom: 1.1pt">&#160;</td> <td colspan="2" style="border-bottom: windowtext 1pt solid; padding-bottom: 1.1pt"> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">Weighted Average</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">Exercise Price</p></td> <td nowrap="nowrap" style="padding-bottom: 1.1pt">&#160;</td> <td colspan="2" style="border-bottom: windowtext 1pt solid; padding-bottom: 1.1pt"> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">Average Remaining</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">Contractual Life</p></td> <td nowrap="nowrap" style="padding-bottom: 1.1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td>Outstanding at December 31, 2011</td> <td style="text-align: center">&#160;</td> <td style="text-align: center">&#151;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td> <td style="text-align: center">$</td> <td style="text-align: center">&#151;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td> <td colspan="2" style="text-align: center">&#160;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Granted</td> <td style="text-align: center">&#160;</td> <td style="text-align: center">2,140,000</td> <td nowrap="nowrap" style="text-align: center">&#160;</td> <td style="text-align: center">&#160;</td> <td style="text-align: center">0.20</td> <td nowrap="nowrap" style="text-align: center">&#160;</td> <td colspan="2" style="text-align: center">&#160;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Exercised</td> <td style="text-align: center">&#160;</td> <td style="text-align: center">&#151;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td> <td style="text-align: center">&#160;</td> <td style="text-align: center">&#151;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td> <td colspan="2" style="text-align: center">&#160;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Expired</td> <td style="text-align: center">&#160;</td> <td style="text-align: center">&#151;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td> <td style="text-align: center">&#160;</td> <td style="text-align: center">&#151;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td> <td colspan="2" style="text-align: center">&#160;</td> <td nowrap="nowrap" style="text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 54%; padding-bottom: 2.25pt">Outstanding at December 31, 2012</td> <td style="width: 1%; border-bottom: black 2.25pt double; padding-bottom: 2.25pt; text-align: center">&#160;</td> <td style="width: 14%; border-bottom: black 2.25pt double; padding-bottom: 2.25pt; text-align: center">2,140,000</td> <td nowrap="nowrap" style="width: 1%; padding-bottom: 2.25pt; text-align: center">&#160;</td> <td style="width: 1%; border-bottom: black 2.25pt double; padding-bottom: 2.25pt; text-align: center">$</td> <td style="width: 13%; border-bottom: black 2.25pt double; padding-bottom: 2.25pt; text-align: center">0.20</td> <td nowrap="nowrap" style="width: 1%; padding-bottom: 2.25pt; text-align: center">&#160;</td> <td style="width: 1%; padding-bottom: 2.25pt; text-align: center">&#160;</td> <td style="width: 13%; padding-bottom: 2.25pt; text-align: center">2</td> <td nowrap="nowrap" style="width: 1%; padding-bottom: 2.25pt; text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.25pt">Exercisable at December 31, 2012</td> <td style="border-bottom: black 2.25pt double; padding-bottom: 2.25pt; text-align: center">&#160;</td> <td style="border-bottom: black 2.25pt double; padding-bottom: 2.25pt; text-align: center">2,140,000</td> <td nowrap="nowrap" style="padding-bottom: 2.25pt; text-align: center">&#160;</td> <td style="border-bottom: black 2.25pt double; padding-bottom: 2.25pt; text-align: center">$</td> <td style="border-bottom: black 2.25pt double; padding-bottom: 2.25pt; text-align: center">0.20</td> <td nowrap="nowrap" style="padding-bottom: 2.25pt; text-align: center">&#160;</td> <td style="padding-bottom: 2.25pt; text-align: center">&#160;</td> <td style="padding-bottom: 2.25pt; text-align: center">2</td> <td nowrap="nowrap" style="padding-bottom: 2.25pt; text-align: center">&#160;</td></tr> </table> <p style="margin: 0pt"></p> <p style="margin: 0pt">&#160;</p> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td colspan="15" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">CelLynx Group, Inc. - Options Exercisable</td></tr> <tr style="vertical-align: bottom"> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Range of <br />Exercise Price</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Number Outstanding as of <br />December 31, 2012</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Weighted Average <br />Exercise Price</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Weighted Average <br />Remaining Contractual <br />Life (Years)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</td><td style="width: 20%; border-bottom: Black 1pt solid; text-align: right">0.0008</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">&#160;</td><td style="width: 5%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="width: 19%; border-bottom: Black 1pt solid; text-align: right">6,400,000</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">&#160;</td><td style="width: 5%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="width: 19%; border-bottom: Black 1pt solid; text-align: right">0.0008</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">&#160;</td><td style="width: 5%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="width: 19%; border-bottom: Black 1pt solid; text-align: right">2.5</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">6,400,000</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> </table> <p style="margin: 0pt"></p> <p style="margin: 0pt">&#160;</p> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Number of <br />Warrants</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Weighted Average <br />Exercise Price</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Average Remaining <br />Contractual Life</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 46%">Outstanding at December 31, 2011</td><td style="width: 5%">&#160;</td> <td style="width: 1%; text-align: left">&#160;</td><td style="width: 11%; text-align: right">36,114,757</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 5%">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">0.12</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 5%">&#160;</td> <td style="width: 1%; text-align: left">&#160;</td><td style="width: 11%; text-align: right">&#160;</td><td style="width: 1%; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td>Granted</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Exercised</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#151;&#160;&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#151;&#160;&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td>Expired</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">30,184,757</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0.12</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 2.5pt">Outstanding at December 31, 2012</td><td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,930,000</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0.79</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; text-align: right">2</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt">Exercisable at December 31, 2012</td><td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,930,000</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0.79</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; text-align: right">2</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr> </table> <p style="margin: 0pt"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt"><b>Note 10 - 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.&#160;&#160;During the year ended December 31, 2012 the Company paid $61,954 of principal and interest on that note. At December 31, 2012 the Company had a remaining balance to the related party in the amount of $19,850 (2011 - $120,437).</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>Note 11 &#150; Investment in 5BARz AG</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On October 6, 2011, the Company incorporated 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, 450,000 are held by officers and a consultant to the Company and 4,450,000 were 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>During the year ended December 31, 2012, sales of those securities aggregated 71,000 shares sold for proceeds of $213,000 CHF ($223,650 USD). At December 31, 2012 the Company holds a 94.6% controlling interest in 5BArz AG represented by 9,458,000 shares.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</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; text-align: justify"><b>Note 13 - Litigation</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="letter-spacing: -0.05pt">Prior to the Company&#146;s investment in CelLynx, on November 8, 2011 CelLynx Group, Inc</font><font style="letter-spacing: -0.2pt"> </font><font style="letter-spacing: -0.05pt">wa</font>s a<font style="letter-spacing: 0.1pt"> </font><font style="letter-spacing: -0.05pt">Defendan</font>t<font style="letter-spacing: -0.25pt"> </font><font style="letter-spacing: -0.05pt">i</font>n<font style="letter-spacing: 0.1pt"> </font><font style="letter-spacing: -0.05pt">a</font>n<font style="letter-spacing: 0.05pt"> </font><font style="letter-spacing: -0.05pt">actio</font>n<font style="letter-spacing: -0.1pt"> </font><font style="letter-spacing: -0.05pt">brough</font>t<font style="letter-spacing: -0.15pt"> </font><font style="letter-spacing: -0.05pt">b</font>y<font style="letter-spacing: 0.05pt"> </font><font style="letter-spacing: -0.05pt">Dophinshir</font>e<font style="letter-spacing: -0.3pt"> </font><font style="letter-spacing: -0.05pt">L.P</font>. <font style="letter-spacing: -0.05pt">regardin</font>g<font style="letter-spacing: -0.2pt"> </font><font style="letter-spacing: -0.05pt">its </font>office<font style="letter-spacing: 1.85pt"> </font>space<font style="letter-spacing: 1.85pt"> </font>in<font style="letter-spacing: 2pt"> </font>Mission<font style="letter-spacing: 1.75pt"> </font>Viejo,<font style="letter-spacing: 1.85pt"> </font>CA.<font style="letter-spacing: 1.9pt"> </font>That<font style="letter-spacing: 1.9pt"> </font>action<font style="letter-spacing: 1.85pt"> </font>has<font style="letter-spacing: 1.95pt"> </font>since<font style="letter-spacing: 1.9pt"> </font>been<font style="letter-spacing: 1.9pt"> </font>dismissed. <font style="letter-spacing: -0.05pt">Dolphinshir</font>e <font style="letter-spacing: -0.05pt">L.P.</font>,<font style="letter-spacing: 0.3pt"> </font>a<font style="letter-spacing: 0.45pt"> </font><font style="letter-spacing: -0.05pt">Californi</font>a<font style="letter-spacing: 0.1pt"> </font><font style="letter-spacing: -0.05pt">limite</font>d <font style="letter-spacing: -0.05pt">partnershi</font>p<font style="letter-spacing: 0.05pt"> </font><font style="letter-spacing: -0.05pt">v</font>. <font style="letter-spacing: -0.05pt">CelLyn</font>x <font style="letter-spacing: -0.05pt">Group</font>, <font style="letter-spacing: -0.05pt">Inc.</font>, a<font style="letter-spacing: 0.45pt"> </font><font style="letter-spacing: -0.05pt">Nevad</font>a <font style="letter-spacing: -0.05pt">corporatio</font>n<font style="letter-spacing: 0.05pt"> </font><font style="letter-spacing: -0.05pt">an</font>d <font style="letter-spacing: -0.05pt">Doe</font>s<font style="letter-spacing: 0.3pt"> </font><font style="letter-spacing: -0.05pt">1</font>-<font style="letter-spacing: 0.05pt">10</font>,<font style="letter-spacing: 0.45pt"> </font><font style="letter-spacing: 0.05pt">Superio</font>r<font style="letter-spacing: 0.3pt"> </font><font style="letter-spacing: 0.05pt">Cour</font>t<font style="letter-spacing: 0.45pt"> </font><font style="letter-spacing: 0.05pt">of </font>California, Orange County,<font style="letter-spacing: 0.1pt"> </font>Case No. 00521213. On<font style="letter-spacing: 0.3pt"> </font>November 8, 2011, plaintiff<font style="letter-spacing: 0.1pt"> </font>brought<font style="letter-spacing: 0.1pt"> </font>suit against the<font style="letter-spacing: 0.3pt"> </font>Company<font style="letter-spacing: 0.05pt"> </font>for<font style="letter-spacing: 0.3pt"> </font>unlawful<font style="letter-spacing: 0.05pt"> </font>detainer<font style="letter-spacing: 0.1pt"> </font>of <font style="letter-spacing: 0.05pt">office</font>s<font style="letter-spacing: -0.2pt"> </font><font style="letter-spacing: 0.05pt">locate</font>d<font style="letter-spacing: -0.2pt"> </font><font style="letter-spacing: 0.05pt">a</font>t <font style="letter-spacing: 0.05pt">2591</font>0<font style="letter-spacing: -0.2pt"> </font><font style="letter-spacing: 0.05pt">Acero</font>,<font style="letter-spacing: -0.2pt"> </font><font style="letter-spacing: 0.05pt">Suit</font>e<font style="letter-spacing: -0.15pt"> </font><font style="letter-spacing: 0.05pt">370</font>,<font style="letter-spacing: -0.1pt"> </font><font style="letter-spacing: 0.05pt">Missio</font>n<font style="letter-spacing: -0.25pt"> </font><font style="letter-spacing: 0.05pt">Viejo</font>,<font style="letter-spacing: -0.2pt"> </font><font style="letter-spacing: 0.05pt">C</font>A<font style="letter-spacing: -0.1pt"> </font><font style="letter-spacing: 0.05pt">9269</font>1<font style="letter-spacing: -0.2pt"> </font><font style="letter-spacing: 0.05pt">pursuan</font>t<font style="letter-spacing: -0.3pt"> </font><font style="letter-spacing: 0.05pt">t</font>o a <font style="letter-spacing: 0.05pt">leas</font>e<font style="letter-spacing: -0.15pt"> </font><font style="letter-spacing: 0.05pt">agreement</font>, <font style="letter-spacing: 0.05pt">seekin</font>g<font style="letter-spacing: -0.25pt"> </font><font style="letter-spacing: 0.05pt">a</font>n<font style="letter-spacing: -0.05pt"> </font><font style="letter-spacing: 0.05pt">unspecifie</font>d <font style="letter-spacing: 0.05pt">amoun</font>t<font style="letter-spacing: -0.25pt"> </font><font style="letter-spacing: 0.05pt">o</font>f<font style="letter-spacing: -0.05pt"> </font><font style="letter-spacing: 0.05pt">damages </font>not to exceed $25,000. The Company has engaged in settlement negotiations with the plaintiff and management expected to settle. CelLynx has since, by agreement, vacated the leased premises and continues to negotiate a payout of past due rent and penalties and has moved the general office to 4014 Calle Isabella, San Clemente, CA 92672. Past due rents have been included in accounts payable at December 31, 2012 and are subject to adjustments based on the outcome of negotiation.</p> <p style="font: 6pt/105% Times New Roman, Times, Serif; margin: 0 31.5pt 0 32.85pt">&#160;</p> <p style="font: 6pt/105% Times New Roman, Times, Serif; margin: 0 31.5pt 0 32.85pt; text-align: justify">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">On August 27, 2012, an action was brought against CelLynx Inc. <font style="letter-spacing: -0.05pt">an</font>d <font style="letter-spacing: -0.05pt">Doe</font>s<font style="letter-spacing: 0.1pt"> </font><font style="letter-spacing: -0.05pt">1</font>-<font style="letter-spacing: 0.05pt">10</font>, in the <font style="letter-spacing: 0.05pt">Superio</font>r <font style="letter-spacing: 0.05pt">Cour</font>t <font style="letter-spacing: 0.05pt">o</font>f <font style="letter-spacing: 0.05pt">California</font>,<font style="letter-spacing: -0.05pt"> </font><font style="letter-spacing: 0.05pt">E</font>l <font style="letter-spacing: 0.05pt">Dorad</font>o<font style="letter-spacing: 0.05pt"> County</font>,<font style="letter-spacing: 0.05pt"> Cas</font>e <font style="letter-spacing: 0.05pt">No</font>. <font style="letter-spacing: 0.05pt">PCL20120700. </font>On August 27, 2012,<font style="letter-spacing: 0.1pt"> </font>plaintiff brought suit against<font style="letter-spacing: 0.05pt"> </font>the Company<font style="letter-spacing: -0.05pt"> </font>for unlawful<font style="letter-spacing: -0.05pt"> </font>detainer of offices<font style="letter-spacing: 0.05pt"> </font>located<font style="letter-spacing: 0.05pt"> </font>at 5047<font style="letter-spacing: 0.1pt"> </font>Robert<font style="letter-spacing: 0.05pt"> </font>J Matthews<font style="letter-spacing: -0.05pt"> </font>Parkway, El<font style="letter-spacing: -0.1pt"> </font>Dorado<font style="letter-spacing: -0.3pt"> </font>Hills,<font style="letter-spacing: -0.2pt"> </font>CA<font style="letter-spacing: -0.15pt"> </font>95762<font style="letter-spacing: -0.25pt"> </font>pursuant to<font style="letter-spacing: -0.05pt"> </font>a<font style="letter-spacing: -0.05pt"> </font>lease<font style="letter-spacing: -0.2pt"> </font>agreement, seeking<font style="letter-spacing: -0.3pt"> damages of $24,699, legal fees of $3,000 and late charges of $2,041.</font> The Company had by agreement, vacated the leased premises and continues to negotiate a payout of past due rent and penalties. Past due rents have been included in accounts payable at December 31, 2012 and are subject to adjustments based on the outcome of negotiation.</p> <p style="font: 6pt Times New Roman, Times, Serif; margin: 0.7pt 31.5pt 0 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="letter-spacing: -0.05pt">Prior to the Company&#146;s investment in CelLynx, on July 19, 2010 certain claims for unpaid wages were filed against CelLynx. Judgments were obtained commencing in August 2011 </font>for back wages by some of its former employees.<font style="letter-spacing: -0.05pt"> </font>Some of<font style="letter-spacing: 0.3pt"> </font>those claims have been partially<font style="letter-spacing: 0.1pt"> </font>paid and others were expected<font style="letter-spacing: 0.05pt"> </font>to be<font style="letter-spacing: 0.3pt"> </font>paid in the<font style="letter-spacing: 0.3pt"> </font>normal course of<font style="letter-spacing: 0.3pt"> </font>business<font style="letter-spacing: 0.1pt"> </font>or<font style="letter-spacing: 0.3pt"> </font>were to be otherwise<font style="letter-spacing: 0.05pt"> </font>defended.<font style="letter-spacing: 0.05pt"> </font>Those claims have now been incorporated<font style="letter-spacing: -0.1pt"> </font>into California Labor Commission<font style="letter-spacing: -0.1pt"> </font>awards in favor of<font style="letter-spacing: 0.3pt"> </font>those former employees. Those<font style="letter-spacing: -0.25pt"> </font>awards<font style="letter-spacing: -0.25pt"> </font>total<font style="letter-spacing: -0.15pt"> </font>approximately $263,023 depending on<font style="letter-spacing: -0.1pt"> </font>interest<font style="letter-spacing: -0.3pt"> </font>charges.<font style="letter-spacing: -0.3pt"> It is the Company&#146;s intention to pay these amounts when proceeds are available.</font></p> <p style="font: 6pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">On October 16, 2012, a complaint was filed in the federal court for the Northern District of California against 5BARz International Inc. and Does 1 - 10, claiming breach of contract and seeking compensatory damages and alleged loss of profits of in excess of $2,500,000, based upon a $150,000 investment made by LA Jolla Cove Investors under certain putative agreements. <i>La Jolla Cove Investors Inc. v. 5BARz International, Inc.</i>, 3:12-CV-5333 (N.D. Cal.). On January 3, 2013, the Company and La Jolla Cove Investors, Inc. entered into an agreement for the settlement of the lawsuit for proceeds of $300,000 plus accrued interest from the date of the settlement agreement at a rate of 9%, plus the delivery of 125,000 shares of the common stock of the Company. On January 13, 2013 a stipulation dismissing action without prejudice and without award of attorney&#146;s fees or costs was entered. The Company issued the 125,000 shares but was unable to meet the payment schedule as provided in the settlement agreement. On March 8, 2013 as a result of the default, La Jolla Cove was awarded a judgment in the amount of $300,000 plus accrued interest at a rate of 9% from the date of the settlement agreement. As of December 31, 2012, the Company has recorded $300,000 plus the value of the shares issued on its books.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 32.85pt"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 32.85pt"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 32.85pt">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">On March 22, 2013 a complaint was filed in the Supreme Court of the State of New York, County of Nassau against 5BARz International Inc, Daniel Bland and James Vandeberg, by Asher Enterprises, Inc. claiming repayment of three Promissory notes in the principle amount of $81,000, penalties and interest. <i>Asher Enterprises, Inc. vs. 5BARz International Inc.., Daniel Bland and James Vandeberg 13-003472(County of Nassau)</i> The claims allege that damages in the amount of the greater of; (i) 200% x $81,000, the remaining outstanding principle amount of the Note, together with accrued and unpaid interest in the unpaid principle amount of the Notes, plus default interest; or (ii) the &#147;parity value&#148; of the &#147;default amount&#148; paid in shares as defined in the terms of the agreements. The Company intends to file an appearance and defend against the law suit.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">The Company&#146;s subsidiary CelLynx Group, Inc. has received a Cease Trading Order from the British Columbia Securities Commission (BCSC) alleging that the Company is in violation of the British Colombia reporting requirements. The BCSC has assumed that since two the Company's Directors are domiciled in BC that the company is controlled out of BC and therefore subject to its reporting requirements. The Company denies that premise and is appealing the issuance of the CTO.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">In addition to the above, the Company may become involved in legal proceedings in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance.</p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 11pt"><b>Note 12 &#150; Investment in CelLynx Group, Inc.</b></font></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0.25in 0 0; text-align: justify">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.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0.25in 0 0; text-align: justify">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0.25in 0 0; text-align: justify">As provided in Note 7 above, on March 29, 2012, the Company converted $73,500 of convertible debt in CelLynx Group, Inc for the issuance of 350,000,000 shares in the capital stock of CelLynx Group, Inc. As a result, in combination with the shares acquired from existing shareholders referred to above, the registrant acquired a 60% controlling interest in CelLynx Group, Inc. and has accounted for that acquisition as a consolidate subsidiary of the registrant effective March 29, 2012.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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 $875,000, as follows;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="background-color: #CCEEFF"> <td style="width: 4%; vertical-align: top; text-align: right">i.</td> <td style="width: 1%; font-size: 9pt">&#160;</td> <td style="width: 68%; vertical-align: top">Cash consideration paid&#160;</td> <td style="width: 4%; vertical-align: top">&#160;</td> <td style="width: 4%; vertical-align: bottom; text-align: right">$</td> <td style="width: 14%; vertical-align: bottom; text-align: right">170,000</td> <td style="width: 5%; vertical-align: top; text-align: right">&#160;</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: right">ii.</td> <td style="font-size: 9pt">&#160;</td> <td style="vertical-align: top">1,250,000 common shares of the registrant issued at a market price of $0.20 per share</td> <td style="vertical-align: top">&#160;</td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right">250,000</td> <td style="vertical-align: top; text-align: right">&#160;</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: right">iii.</td> <td style="font-size: 9pt">&#160;</td> <td style="vertical-align: top">Redemption of convertible debt for 350 million shares of CelLynx Group Inc. common stock</td> <td style="vertical-align: top">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">&#160;</td> <td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; text-align: right">455,000</td> <td style="vertical-align: bottom">(a)</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: right">&#160;</td> <td style="font-size: 9pt">&#160;</td> <td style="vertical-align: top">&#160;</td> <td style="vertical-align: top">&#160;</td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: bottom; text-align: right">&#160;</td> <td style="vertical-align: top; text-align: right">&#160;</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: right">&#160;</td> <td style="font-size: 9pt">&#160;</td> <td style="vertical-align: top">Fair market value of consideration paid</td> <td style="vertical-align: top">&#160;</td> <td style="vertical-align: bottom; text-align: right">$</td> <td style="vertical-align: bottom; text-align: right"> 875,000</td> <td style="vertical-align: top; text-align: right">&#160;</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px">&#160;</td> <td style="width: 24px">(a)</td> <td>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.</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The amounts recognized for each class of the acquiree&#146;s assets and liabilities recognized at the acquisition date, March 29, 2012 are as follows;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"></p> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold; border-bottom: Black 1pt solid">Description</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">Net book value of CelLynx Group, Inc. consolidated assets and liabilities</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">Acquisition <br />Adjustments (i) (ii)</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Valuation attributed to assets acquired</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 42%; text-align: left">Current assets</td><td style="width: 1%">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 21%; text-align: right">3,260</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 3%">&#160;</td> <td style="width: 1%; text-align: left">&#160;</td><td style="width: 12%; text-align: right">&#160;</td><td style="width: 2%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">3,260</td><td style="width: 1%; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left">Patents, trademarks, and license</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">44,718</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">$</td><td style="text-align: right">1,155,282</td><td style="text-align: left">(ii)</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">1,200,000</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Investment in 5BARz&#160;&#160; (iii)</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">1,800,000</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">1,800,000</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left">Furniture and equipment</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">2,113</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">2,113</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Accounts payable and accruals</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(1,752,628</td><td style="text-align: left">)</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(1,752,628</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left">Notes payable (net of discount)</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(403,076</td><td style="text-align: left">)</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(403,076</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Accrued interest</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(62,250</td><td style="text-align: left">)</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(62,250</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left">Derivative liability</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(5,495,425</td><td style="text-align: left">)</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">5,026,093</td><td style="text-align: left">(i)</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(469,332</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt">LOC payable &#150; 5BARz (net)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(586,525</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">586,525</td><td style="padding-bottom: 1pt; text-align: left">(i)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#151;&#160;&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt">Fair value non-controlling interest</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(583,333</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(583,333</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt">Totals</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">$</td><td style="text-align: right">(6,449,813</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">$</td><td style="text-align: right">6,184,567</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(265,246</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt">Goodwill</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">1,140,246</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt">Purchase price</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">875,000</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> </table> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 1%">&#160;</td> <td style="width: 4%">(i)</td> <td style="width: 95%">In determining the fair value of assets acquired, the Company eliminated the convertible debt owed to 5BARz and the derivative liability attributed to that debt.</td></tr> <tr style="vertical-align: top"> <td></td> <td>(ii)</td> <td>Fair value of patents, trademarks and license.</td></tr> <tr style="vertical-align: top"> <td>&#160;</td> <td>(iii)</td> <td>Eliminates in consolidation</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">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">As of December 31, 2012, the Company had only a 56% interest in CelLynx Group, Inc.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><font style="color: black">The individual results of operation for CelLynx Group Inc. for the quarter ended March 31, 2012 are available at the web site </font>www.sec.gov<font style="color: black">, as that entity is a reporting public company, trading on the OTCBB in the US under trading symbol &#147;CYNX&#148;.</font></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">Subsequent to the date of acquisition, 5BARz International Inc. converted two amounts of debt due from CelLynx Group Inc.. On April 13, 2012 the company converted $7,700 of debt in exchange for 51,333,333 shares of CelLynx and on May 15, 2012 5BARz converted $58,500 dollars of debt due from CelLynx for 390,000,000 shares of CelLynx. &#160;</p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><i>Unaudited pro forma combined financial information</i></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><b></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The following presents the unaudited pro forma combined financial information, as if the CelLynx acquisition had occurred as of January 1.</p> <table cellpadding="0" cellspacing="0" style="width: 100%"> <tr style="vertical-align: bottom"> <td style="font-size: 11pt">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-size: 11pt; text-align: right; border-bottom: Black 1pt solid">For the Year Ended December 31, 2012</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-size: 11pt; text-align: right; border-bottom: Black 1pt solid">For the Year Ended December 31, 2011</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 60%; font-size: 11pt; padding-bottom: 2.5pt">Revenues</td><td style="width: 1%; font-size: 11pt; padding-bottom: 2.5pt">&#160;</td> <td style="width: 1%; border-bottom: Black 2.5pt double; font-size: 11pt; text-align: left">$</td><td style="width: 16%; border-bottom: Black 2.5pt double; font-size: 11pt; text-align: right">0</td><td style="width: 1%; padding-bottom: 2.5pt; font-size: 11pt; text-align: left">&#160;</td><td style="width: 3%; font-size: 11pt; padding-bottom: 2.5pt">&#160;</td> <td style="width: 1%; border-bottom: Black 2.5pt double; font-size: 11pt; text-align: left">$</td><td style="width: 16%; border-bottom: Black 2.5pt double; font-size: 11pt; text-align: right">0</td><td style="width: 1%; padding-bottom: 2.5pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 11pt; text-align: left; padding-bottom: 2.5pt">Net loss</td><td style="font-size: 11pt; padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: right">1,070,117</td><td style="padding-bottom: 2.5pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: right">1,504,494</td><td style="padding-bottom: 2.5pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 11pt; text-align: left; padding-bottom: 2.5pt">Pro forma basic and diluted net loss per common share</td><td style="font-size: 11pt; padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: right">(0.01</td><td style="padding-bottom: 2.5pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: right">(0.02</td><td style="padding-bottom: 2.5pt; font-size: 11pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 11pt; text-align: left; padding-bottom: 2.5pt">Pro forma weighted average common shares outstanding &#150; basic and diluted</td><td style="font-size: 11pt; padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: right">97,833,528</td><td style="padding-bottom: 2.5pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: right">90,182,785</td><td style="padding-bottom: 2.5pt; font-size: 11pt; text-align: left">&#160;</td></tr> </table> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The pro forma combined results of operations are not necessarily indicative of the results of operations that actually would have occurred had the acquisition of CelLynx been completed as of January 1, 2012, nor are they necessarily indicative of future consolidated results.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Note 14 Subsequent events</b></p> <p style="font: 11pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify">&#160;</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"><b>&#160;</b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">During the period from January 1, 2013 to March 20, 2013, the Company sold the following equity securities;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 4, 2013 the Company issued 500,000 units at a price of $0.05 per unit for aggregate proceeds of $25,000. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 10, 2013 the Company issued 60,000 units at a price of $0.05 per unit for aggregate proceeds of $3,000. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 16, 2013 the Company issued 40,000 units at a price of $0.05 per unit for aggregate proceeds of $2,000. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 16, 2013 the Company issued 80,000 units at a price of $0.05 per unit for aggregate proceeds of $4,000. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 22, 2013 the Company issued 200,000 units at a price of $0.05 per unit for aggregate proceeds of $10,000. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 25, 2013 the Company issued 150,000 units at a price of $0.05 per unit for aggregate proceeds of $7,500. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 25, 2013 the Company issued 100,000 common shares at a price of $0.05 per share for services at an aggregate value of $5,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On February 4, 2013 the Company issued 650,000 units at a price of $0.05 per unit for aggregate proceeds of $32,500. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 12, 2013 the Company issued 125,000 common shares at a price of $0.06 per share, at a deemed value of $7,500 in partial settlement of a lawsuit with La Jolla Cove Investors, Inc.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 14, 2013 the Company issued 2,000,000 units at a price of $0.05 per unit for aggregate proceeds of $100,000. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 15, 2013 the Company issued 1,440,000 common shares at a price of $0.05 per share, for services with an aggregate value of $72,000.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 26, 2013 the Company issued 341,780 common shares at a price of $0.05 per share, for services with an aggregate value of $17,089.</p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 1, 2013 the Company issued 600,000 units at a price of $0.05 per unit for aggregate proceeds of $30,000. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 1, 2013 the Company issued 275,000 common shares at a price of $0.05 per share, for services with an aggregate value of $13,500.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 7, 2013 the Company issued 60,000 units at a price of $0.05 per unit for aggregate proceeds of $3,000. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 8, 2013 the Company issued 200,000 units at a price of $0.05 per unit for aggregate proceeds of $10,000. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 17, 2013 the Company issued 513,827 common shares at a price of $0.05 per share, for services with an aggregate value of $25,691.</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Convertible debenture</u></b></p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 8, 2013 the Company entered into a convertible debenture agreement with a consultant of the Company in settlement of $147,428 due to that consultant for services that had been performed over the preceding two years. The convertible debenture yields interest at 8% per annum and may be converted into common stock, 90 days after the inception of the agreement, at a price which is a 20% discount to market, but not less than $0.05 per share.</p> 9000000 1800000 9000 1791000 866998 806 806 22156 19159 5144 70464 73512 4406 4185 250152 170000 1140246 4527652 2303802 4602522 2381499 2445410 236446 1196701 52321 53033 3491285 1541498 19850 120437 3511135 1661935 117418 90183 3226802 1463230 2971099 834377 3387406 1883650 993554 55318 4602522 2381499 713994 528 4272 0.001 0.001 250000000 250000000 117418281 90182785 117418281 90182785 192466 41982 235863 114672 226741 344413 2053678 534777 2634397 2364336 804106 3219246 -2364336 -804106 -3219246 16666 16666 -5215 6803 -567 -2027393 -781147 -2861770 109329 109329 97532158 90182785 3520 606 4573 630086 630086 -2355 -2355 781 781 -152676 -152676 336943 22959 357476 -0.02 -0.01 -2136722 -781418 -2971099 48308 49209 -2132450 4272 4272 3520 469 3989 7113 7113 798463 7500 805963 -19159 -19159 379118 221226 615564 -2997 -2997 -541450 -541450 359698 22833 382531 -712 53033 52321 14968 14968 -3260 -3260 -1548 -174653 -176201 250152 250152 293500 113639 407139 -100587 -324576 -425163 68318 68318 520000 1360440 1909847 203230 76625 279855 8602 8602 -5144 5145 -8602 852969 719364 1610343 -901 49209 48308 17506 1018 60903 250000 250000 170000 170000 455000 455000 875000 875000 69900 69900 1800000 1800000 -257 -257 20181 20181 -856594 -495502 -1390106 -170000 -170000 4808 4808 4653 4653 242865 242865 4272 4272 7113 7113 528 528 10531 10531 583333 583333 4272 4272 <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td>&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Consolidated <br /> Balance Sheet</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Quoted Prices in Active Markets for Identical Assets or Liabilities <br /> (Level 1)</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Quoted Prices for Similar Assets or Liabilities in Active Markets <br /> (Level 2)</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Significant<br /> Unobservable<br /> Inputs <br /> (Level 3)</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 5.4pt">Derivative Liabilities:</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 40%; padding-left: 17.75pt">December 31, 2012</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">-</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">-</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">-</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">-</td> <td style="width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 17.75pt">December 31, 2011</td> <td>&#160;</td> <td>$</td> <td style="text-align: right">-</td> <td>&#160;</td> <td>&#160;</td> <td>$</td> <td style="text-align: right">-</td> <td>&#160;</td> <td>&#160;</td> <td>$</td> <td style="text-align: right">-</td> <td>&#160;</td> <td>&#160;</td> <td>$</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> </table> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: justify">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center">For the Year Ended December 31,</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2012</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2011</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%; padding-left: 5.4pt; text-align: justify">Beginning balance</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 15%; text-align: right">-</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 15%; text-align: right">-</td> <td style="width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 5.4pt; text-align: justify">Aggregate fair value of conversion features upon issuance</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">469,332</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt; padding-left: 5.4pt; text-align: justify">Change in fair value of conversion features</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">(469,332</td> <td style="padding-bottom: 1pt">)</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">-</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt; padding-left: 5.4pt; text-align: justify">Ending balance</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">-</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">-</td> <td style="padding-bottom: 2.5pt">&#160;</td></tr> </table> <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: justify">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center">December 31,</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2012</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2011</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%; padding-left: 5.4pt; text-align: justify">Stock price</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 15%; text-align: right">0.0002</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">$</td> <td style="width: 15%; text-align: right">-</td> <td style="width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 5.4pt; text-align: justify">Volatility</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">150</td> <td>%</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 5.4pt; text-align: justify">Risk-free interest rate</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">0.05%-0.26</td> <td>%</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 5.4pt; text-align: justify">Dividend yield</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">0</td> <td>%</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 5.4pt; text-align: justify">Expected life</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">0.25-1.52 years</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">-</td> <td>&#160;</td></tr> </table> -.340 -.340 -.340 0.549 0.340 0.428 0.000 0.000 0.000 -.23 0.000 -.14 0.001 0.000 0.047 -.112 0.000 -.72 -.75 0.000 -.49 <table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">For the period from November 14, 2008 (date of inception) through December 31, 2012</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">December 31, 2012</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">December 31, 2011</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 44%; padding-bottom: 1pt; padding-left: 5.4pt">Domestic</td><td style="width: 1%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 21%; text-align: right">(2,644,415</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">)</td><td style="width: 2%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(1,882,912</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">)</td><td style="width: 2%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(708,273</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt; padding-left: 5.4pt">Foreign</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(217,355</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(144,481</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(72,874</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Loss from continuing operation before <br />provision for income taxes</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">($</td><td style="border-bottom: Black 1pt solid; text-align: right">2,861,770</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">($</td><td style="border-bottom: Black 1pt solid; text-align: right">2,027,393</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">($</td><td style="border-bottom: Black 1pt solid; text-align: right">781,147</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> </table> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">For the period from November 14, 2008 (date of inception) through December 31, 2012</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">December 31, 2012</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid">December 31, 2011</td></tr> <tr style="vertical-align: bottom"> <td>Foreign</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: right">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: right">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td colspan="3" style="text-align: right">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 44%; padding-bottom: 1pt">&#160;&#160;&#160;&#160;Current</td><td style="width: 1%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 21%; text-align: right">0</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">&#160;</td><td style="width: 2%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">0</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">&#160;</td><td style="width: 2%; padding-bottom: 1pt">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">0</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt">&#160;&#160;&#160;&#160;Deferred</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(46,159</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(46,159</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt">US federal</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt">&#160;&#160;&#160;&#160;Current</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt">&#160;&#160;&#160;&#160;Deferred</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(1,203,254</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(980,972</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(212,103</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">State &#38; local</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt; padding-left: 5.4pt">Current</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt">&#160;&#160;&#160;&#160;Deferred</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(84,897</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(84,897</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt; padding-left: 5.4pt">Total</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(1,334,310</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(1,112,028</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">(212,103</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Change in valuation allowance</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">1,334,310</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">1,112,028</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">212,103</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Income tax provision (benefit)</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> </table> -1882912 708273 -2644415 -144481 -72874 -217355 0 0 0 -46159 0 -46159 -980972 -212103 -1203254 0 0 0 0 0 0 -84897 0 -84897 -1112028 -212103 -1334310 1112028 212103 1334310 0 0 0 1070117 1504494 2861770 2971099 97300 0 1431610 0 2833 0 167355 0 -170 0 -97130 0 0 0 1261422 222282 210000 73000 3375000 9655000 1159000 8685000 1112028 212103 NOL&#146;s of CelLynx Group Inc. will be subject to an annual limitation of approximately $8,700 as determined under the regulations. Due to the annual limitation, management has determined that $8,838,000 of the NOL&#146;s of CelLynx Group, Inc. will expire unused and has reduced the related deferred tax asset accordingly. 100000 26700 12500 129460 41990 262356 15290 6702 19202 41990 19202 61192 80438 98613 316351 10800 .0008 P2Y5M -62250 -62250 3000 Holder may convert principal and unpaid interest on the note into shares of the Company&#146;s common stock, with the number of shares issuable determined to be the amount obtained by dividing the amount to be converted by the conversion price which is the lesser of $0.0013 per share or 63% of the average of the three lowest trading prices of the Company&#146;s common stock over the ten trading days prior to the date of the conversion. convert principal and unpaid interest on the note into shares of the Company&#146;s common stock, with the number of shares issuable determined by dividing the amount to be converted by the conversion price which is equal to 63% of the average of the three lowest trading prices of the Company&#146;s common stock over the ten trading days prior to the date of the conversion. All unpaid principal, together with any then accrued but unpaid interest, shall be due and payable upon the earlier of (i) November 9, 2010 at the written request of the holder to the Company, or (ii) when, upon or after the occurrence of an event of default. The principal amount is convertible into 4.8% of the Company shares outstanding. -583333 -583333 0 0 -0.01 -0.02 97833528 90182785 <p style="margin: 0pt">&#160;</p> <table cellpadding="0" cellspacing="0" style="width: 100%"> <tr style="vertical-align: bottom"> <td style="font-size: 11pt">&#160;</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-size: 11pt; text-align: right; border-bottom: Black 1pt solid">For the Year Ended December 31, 2012</td><td style="font-size: 11pt; padding-bottom: 1pt">&#160;</td> <td colspan="3" style="font-size: 11pt; text-align: right; border-bottom: Black 1pt solid">For the Year Ended December 31, 2011</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 60%; font-size: 11pt; padding-bottom: 2.5pt">Revenues</td><td style="width: 1%; font-size: 11pt; padding-bottom: 2.5pt">&#160;</td> <td style="width: 1%; border-bottom: Black 2.5pt double; font-size: 11pt; text-align: left">$</td><td style="width: 16%; border-bottom: Black 2.5pt double; font-size: 11pt; text-align: right">0</td><td style="width: 1%; padding-bottom: 2.5pt; font-size: 11pt; text-align: left">&#160;</td><td style="width: 3%; font-size: 11pt; padding-bottom: 2.5pt">&#160;</td> <td style="width: 1%; border-bottom: Black 2.5pt double; font-size: 11pt; text-align: left">$</td><td style="width: 16%; border-bottom: Black 2.5pt double; font-size: 11pt; text-align: right">0</td><td style="width: 1%; padding-bottom: 2.5pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 11pt; text-align: left; padding-bottom: 2.5pt">Net loss</td><td style="font-size: 11pt; padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: right">1,070,117</td><td style="padding-bottom: 2.5pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: right">1,504,494</td><td style="padding-bottom: 2.5pt; font-size: 11pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 11pt; text-align: left; padding-bottom: 2.5pt">Pro forma basic and diluted net loss per common share</td><td style="font-size: 11pt; padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: right">(0.01</td><td style="padding-bottom: 2.5pt; font-size: 11pt; text-align: left">)</td><td style="font-size: 11pt; padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: right">(0.02</td><td style="padding-bottom: 2.5pt; font-size: 11pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 11pt; text-align: left; padding-bottom: 2.5pt">Pro forma weighted average common shares outstanding &#150; basic and diluted</td><td style="font-size: 11pt; padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: right">97,833,528</td><td style="padding-bottom: 2.5pt; font-size: 11pt; text-align: left">&#160;</td><td style="font-size: 11pt; padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-size: 11pt; text-align: right">90,182,785</td><td style="padding-bottom: 2.5pt; font-size: 11pt; text-align: left">&#160;</td></tr> </table> <p style="margin: 0pt"></p> 10273 10273 1390106 <table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font-size: 11pt"> <tr style="vertical-align: top; background-color: rgb(204,238,255)"> <td style="width: 50%; border: windowtext 1pt solid"><font style="font-size: 11pt">Balance as of December 31, 2011</font></td> <td style="width: 50%; border-top: windowtext 1pt solid; border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid"><font style="font-size: 11pt">$0</font></td></tr> <tr style="vertical-align: top; background-color: White"> <td style="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; border-left: windowtext 1pt solid"><font style="font-size: 11pt">Acquisition of Cellynx Group, Inc.</font></td> <td style="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid"><font style="font-size: 11pt">$556,913</font></td></tr> <tr style="vertical-align: top; background-color: rgb(204,238,255)"> <td style="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; border-left: windowtext 1pt solid"><font style="font-size: 11pt">Fair value of non-controlling interest</font></td> <td style="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid"><font style="font-size: 11pt">$583,333</font></td></tr> <tr style="vertical-align: top; background-color: White"> <td style="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; border-left: windowtext 1pt solid"><font style="font-size: 11pt">Balance as of December 31, 2012</font></td> <td style="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid"><font style="font-size: 11pt">$1,140,246</font></td></tr> </table> 556913 -97300 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. 25% of average lowest three closing bid prices of Cellynx Group, Inc. common stock for a period which is ten (10) days prior to the date of conversion. Payable as to $35,000 on December 31, 2012 and $65,000 on February 15, 2013 On January 3, 2013, the Company entered into a settlement agreement requiring payments in the aggregate amount of $300,000 yielding interest at 9%, and the issuance of 125,000 shares of the common stock of the Company. In the event that $220,000 is paid by July 2, 2013, all amounts will be considered paid. The schedule for payments is January 24, 2013 - $10,000, April 3, 2013 - $30,000, July 2, 2013 - $180,000. The Company issued the 125,000 shares on February 12, 2013. On March 13, 2013, an order granting entry of stipulated judgment was granted to La Jolla Cove Investors for payment by the Company of the $300,000 plus interest at 9%. Each unit is comprised of one share and one warrant to acquire a second share at a price of $0.20 per share acquired, with a two year warrant term. The Company has accrued a default penalty of 50% of the note payable as well as default interest at 22% per annum from the date of the default