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Document and Entity Information (USD $)
12 Months Ended
Dec. 31, 2012
Mar. 20, 2013
Jun. 30, 2012
Document And Entity Information
Entity Registrant Name
5Barz International, Inc.
Entity Central Index Key
0001454124
Document Type
10-K
Document Period End Date
Dec. 31, 2012
Amendment Flag
false
Current Fiscal Year End Date
--12-31
Is Entity a Well-known Seasoned Issuer?
No
Is Entity a Voluntary Filer?
No
Is Entity's Reporting Status Current?
No
Entity Filer Category
Smaller Reporting Company
Entity Public Float
$ 11,787,173
Entity Common Stock, Shares Outstanding
124,753,887
Document Fiscal Period Focus
FY
Document Fiscal Year Focus
2012


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Consolidatated Balance Sheets (USD $)
Dec. 31, 2012
Dec. 31, 2011
CURRENT ASSETS:
Cash
$ 48,308 $ 49,209
Prepaid expenses and deposits
22,156 19,159
Subscriptions receivable
5,144
TOTAL CURRENT ASSETS
70,464 73,512
Equipment, net
4,406 4,185
OTHER ASSETS:
Due from Cellynx - Line of credit
250,152
Deposit on investment in Cellynx
170,000
Intangible assets
3,387,406 1,883,650
Goodwill
1,140,246
Total other assets
4,527,652 2,303,802
TOTAL ASSETS
4,602,522 2,381,499
Current liabilities:
Accounts payable and accrued expenses
2,445,410 236,446
Due to Cellynx
1,196,701
Due to escrow agent
52,321 53,033
Notes payable (net of discount)
993,554 55,318
Total current liabilities
3,491,285 1,541,498
Related party loans
19,850 120,437
TOTAL LIABILITIES
3,511,135 1,661,935
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 250,000,000 shares authorized; 117,418,281 and 90,182,785 shares issued and outstanding as of Decdember 31, 2012 and December 31, 2011, respectively
117,418 90,183
Capital in excess of par value
3,226,802 1,463,230
Deficit accumulated during the development stage
(2,971,099) (834,377)
Accumulated Other Comprehensive Income
4,272
Non-controlling interest
713,994 528
Total stockholders' deficit
1,091,387 719,564
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
$ 4,602,522 $ 2,381,499


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Consolidatated Balance Sheets (Parenthetical) (USD $)
Dec. 31, 2012
Dec. 31, 2011
Statement of Financial Position [Abstract]
Common stock, par value
$ 0.001 $ 0.001
Common stock, authorized
250,000,000 250,000,000
Common stock, issued
117,418,281 90,182,785
Common stock,outstanding
117,418,281 90,182,785


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Statement Of Loss and Deficit (USD $)
12 Months Ended 50 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2012
Income Statement [Abstract]
Sales
Cost of Sales
Selling general and administrative expenses:
Amortization and depreciation
3,520 606 4,573
Bank charges and interest
192,466 41,982 235,863
Sales and marketing expenses
114,672 226,741 344,413
General and administrative expenses
2,053,678 534,777 2,634,397
Total operating expenses
2,364,336 804,106 3,219,246
(Loss) from operations
(2,364,336) (804,106) (3,219,246)
Other income (expense):
Interest Income
16,666 16,666
Currency gains (losses)
(5,215) 6,803 (567)
Change in fair value of derivative liability
630,086 630,086
Amortization of debt discount on derivative liability
(132,897) (132,897)
Change in warrant liability
(2,355) (2,355)
Other expense
(781) (781)
Loss on termination of financing agreements
(152,676) (152,676)
Other income
336,943 22,959 357,476
Net (loss) before non-controlling interest
(2,027,393) (781,147) (2,861,770)
Non-controlling interest
109,329 109,329
Net (loss) after non-controlling interest
(2,136,722) (781,418) (2,971,099)
Basic earnings (loss) per common share
$ (0.02) $ (0.01)
Weighted average number of shares outstanding
97,532,158 90,182,785
Other comprehensive income:
Foreign currency translation adjustments
4,272
Other comprehensive income
4,272
Comprehensive income
$ (2,132,450)


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Statements of Cash Flows (USD $)
12 Months Ended 50 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$ (2,027,393) $ (781,147) $ (2,861,770)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
3,520 469 3,989
Amortization of debt discount on derivative security
132,897 132,897
Non-controlling interest share of net loss
(257) (257)
Stock based compensation
7,113 7,113
Common shares issued for services
798,463 7,500 805,963
Change in fair value of derivative liability
(541,450) (541,450)
Changes in operating assets and liabilities:
Change in amount due to related party
(19,159) (19,159)
Change in accounts payable and accrued expenses
379,118 221,226 615,564
Change in prepaid expenses and deposits
(2,997) (2,997)
Change in unpaid interest and penalties on notes payable
359,698 22,833 382,531
Change in debt discount on convertible notes
20,181 20,181
Change in amount due to escrow agent
(712) 53,033 52,321
Change in warrant liability
14,968 14,968
Net cash from (used in) operating activities
(856,594) (495,502) (1,390,106)
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposit on investment in Cellynx
(170,000) (170,000)
Cash in Cellynx - date of acquisition
3,260 3,260
Acquisition of intangible assets
(4,808) (4,808)
Purchase of furniture and equipment
(4,653) (4,653)
Net cash used in investing activities
(1,548) (174,653) (176,201)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments under line of credit agreement Cellynx
(250,152) (250,152)
Payment of amount due to Cellynx - intellectual property acquisition
(242,865) (242,865)
Proceeds from issuance of convertible notes
293,500 113,639 407,139
Payments of notes to related party - Dollardex
(100,587) (324,576) (425,163)
Proceeds used to settle notes payable
(68,318) (68,318)
Proceeds from issuance of common stock
520,000 1,360,440 1,909,847
Proceeds from issuance of common stock to minority interest - 5BARz AG
203,230 76,625 279,855
Proceeds used in repayment of loans from shareholder
(8,602) (8,602)
Subscription receivable
5,144 (5,145) 8,602
Net cash provided by financing activities
852,969 719,364 1,610,343
Effects of foreign currency exchange
4,272 4,272
NET INCREASE IN CASH
(901) 49,209 48,308
CASH, BEGINNING OF PERIOD
49,209
CASH, END OF PERIOD
48,308 49,209 48,308
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest
17,506 1,018 60,903
Acquisition of interest in Cellynx Group, Inc.
Common stock issued upon acquisition of Cellynx Group, Inc.
250,000 250,000
Settlement of prepaid deposit upon acquisition of Cellynx Group, Inc.
170,000 170,000
Fair market value of notes converted upon acquisition of Cellynx
455,000 455,000
Fair market value of net assets acquired (Note 12)
875,000 875,000
Conversion of Note payables
69,900 69,900
Investment in Cellynx Intellectual property for shares
$ 1,800,000 $ 1,800,000


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Consolidated Statements of Stockholders Equity (USD $)
Common Stock
Excess of Par Value
Subscription Receivable
Deficit Accumulated During Development Stage
Noncontrolling Interest
Other Comprehensive Income
Total
Beginning Balance, Amount at Nov. 17, 2008
Founder Shares Issued, Shares
7,100,000
Founder Shares Issued, Amount
$ 7,100
Issuance of Common Stock , shares
1,776,100
Issuance of Common Stock , amount
1,776 15,969
Stock Subscription Receivable
(425)
Development state net loss
(4,888)
Ending Balance, Amount at Dec. 31, 2008
8,876 15,969 (425) (4,888) 19,532
Ending Balance, Shares at Dec. 31, 2008
8,876,100
Stock Subscription Receivable
425 425
Development state net loss
(19,220) (19,220)
Ending Balance, Amount at Dec. 31, 2009
8,876 15,969 (24,108) 737
Beginning Balance, Shares at Dec. 31, 2009
8,876,100
Initiated 18:1 stock split, November 2010, Shares
150,893,700
Initiated 18:1 stock split, November 2010, Amount
150,894 (150,894)
Shares cancelled, Shares
(87,800,000)
Shares cancelled, Amount
(87,800) 87,800
Issuance of Common Stock , shares
15,600,000
Issuance of Common Stock , amount
15,600 (1,950) 13,650
Development state net loss
(29,122) (29,122)
Ending Balance, Amount at Dec. 31, 2010
87,570 (49,075) (53,230) (14,735)
Ending Balance, Shares at Dec. 31, 2010
87,500,000
Beginning Balance, Amount at Nov. 30, 2010
Shares issued - Investement in CelLynx Group Inc, shares
15,600,000
Ending Balance, Amount at Dec. 31, 2010
87,570 (49,075) (53,230) (14,735)
Ending Balance, Shares at Dec. 31, 2010
87,500,000
Issuance of Common Stock , shares
2,182,290
Issuance of Common Stock , amount
2,182 1,358,258 1,360,440
Shares issued for Services, shares
75,000
Shares issued for Services, amount
75 7,425 7,500
Conversion of convertible note, shares
355,695
Conversion of convertible note, amount
356 70,782 71,139
Proceeds on share sales - 5BARz AG
75,840 75,840
Development state net loss
(781,147) (781,147)
Minority Interest
528 528
Ending Balance, Amount at Dec. 31, 2011
90,183 1,458,086 0 (834,377) 528 719,564
Ending Balance, Shares at Dec. 31, 2011
90,182,785
Issuance of Common Stock , shares
6,541,667
Issuance of Common Stock , amount
6,542 513,458 520,000
Shares issued for Services, shares
10,042,491
Shares issued for Services, amount
10,042 778,421 798,463
Stock option expense
7,113 7,113
Conversion of convertible note, shares
401,338
Conversion of convertible note, amount
401 11,599 12,000
Proceeds on share sales - 5BARz AG
220,238 220,238
Shares issued - Investement in CelLynx Group Inc, shares
1,250,000
Shares issued - Investement in CelLynx Group Inc, amount
1,250 248,750 250,000
Intangible assets, shares
9,000,000
Intangible assets, amount
9,000 1,791,000 1,800,000
Elimination of CelLynx investment in 5BARz
(1,800,000) (1,800,000)
Development state net loss
(2,136,722) 109,329 (2,027,393)
Foreign Currency Gain
4,272 4,272
Other
10,273 10,273
Sale of non-controlling interest
10,531 10,531
Fair value of non-controlling interest
583,333 583,333
Ending Balance, Amount at Dec. 31, 2012
$ 117,418 $ 3,226,802 $ 0 $ (2,971,099) $ 713,994 $ 4,272 $ 1,091,387
Ending Balance, Shares at Dec. 31, 2012
117,418,281


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Organization, Going Concern and Development Stage
12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Organization, Going Concern and Development Stage

Note 1 – Organization, Going Concern and Development Stage

  

The Company was incorporated under the laws of the State of Nevada on November 14, 2008. The Company was originally named “Bio-Stuff” and was a designated shell corporation from inception to the date of acquisition of the 5BARz assets.

 

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 “cellular network infrastructure device”. The 5BARz device captures cell signal and provides a smart amplification and resend of that cell signal giving the user improved cellular reception in their home, office or while mobile. On March 29, 2012, 5BARz International, Inc. acquired a 60% controlling interest in CelLynx Group, Inc.

 

On November 6, 2011, the Company incorporated a subsidiary Company in Zurich, Switzerland called 5BARz AG which is a 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.

 

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.  

 

Going concern

 

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’s ability to continue as a going concern and the Company’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.

 

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.

 

Development stage

 

The Company is considered to be a development stage entity as defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 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.

 



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Summary of significant accounting policies
12 Months Ended
Dec. 31, 2012
Accounting Policies [Abstract]
Summary of significant accounting policies

Note 2 - Summary of significant accounting policies

 

Basis of presentation

 

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements include the accounts of 5BARz International Inc., and its 94.6% owned subsidiary, 5BARz AG, and it’s 56% owned subsidiary CelLynx Group, Inc. and that Company’s 100% owned subsidiary CelLynx, Inc. All intercompany accounts and transactions have been eliminated in consolidation.

 

Cash

 

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of one year or less.

 

Use of estimates

 

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.

 

Concentration of credit risk

 

Cash includes deposits in accounts maintained at financial institutions.  Certain financial instruments, which subject the Company to concentration of credit risk, consist of cash. The Company maintains balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits for the banks located in the United States. As of December 31, 2012 and 2011, the Company did not have any deposits in excess of federally-insured limits.  To date, the Company has not experienced any losses in such accounts.

 

Equipment

 

Equipment is recorded at historical cost and is depreciated using the straight-line method over their estimated useful lives.  The useful life and depreciation method are reviewed periodically to ensure that the depreciation method and period are consistent with the anticipated pattern of future economic benefits. Expenditures for maintenance and repairs are charged to operations as incurred while renewals and betterments are capitalized. Gains and losses on disposals are included in the results of operations. The useful life of the equipment is being depreciated over three to five years.

 

 

Intangible assets

 

Acquired patents, licensing rights and trademarks are capitalized at their fair value. The legal costs, patent registration fees, and models and drawings required for filing patent applications are capitalized if they relate to commercially viable technologies. Commercially viable technologies are those technologies that are projected to generate future positive cash flows in the near term. Legal costs associated with applications that are not determined to be commercially viable are expensed as incurred. All research and development costs incurred in developing the patentable idea are expensed as incurred. Legal fees from the costs incurred in successful defense to the extent of an evident increase in the value of the patents are capitalized.

 

Capitalized costs for patents are amortized on a straight-line basis over the remaining twenty-year legal life of each patent after the costs have been incurred. Once each patent or trademark is issued, capitalized costs are amortized on a straight-line basis over a period not to exceed 20 years and 10 years, respectively. All research and development costs incurred in developing the patentable idea are expensed as incurred. The licensing right is amortized on a straight-line basis over a period of 10 years. 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.

 

Goodwill

 

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.

 

Impairment or disposal of long-lived assets

 

The Company applies the provisions of Accounting Standards Codification (“ASC”) Topic 360, “Property, Plant, and Equipment,” which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. ASC 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal. Based on its review, the Company concluded that as of December 31, 2012 and December 31, 2011 there was no impairment of its long-lived assets.

  

Revenue recognition

 

The Company's revenue recognition policies are in compliance with ASC Topic 605, “Revenue Recognition.”  Revenue is recognized at the date of shipment to customers, and when the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured.

 

Foreign currency translation

 

Transactions in foreign currencies have been translated into US dollars using the temporal method. The functional currency of the Company’s subsidiary 5BARz AG, is its local currency (Swiss Franc – 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

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

 

 Fair value of financial instruments

 

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.

 

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:

 

  · Level 1. Quoted prices in active markets for identical assets or liabilities.

 

  · 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.

 

  · Level 3. Significant unobservable inputs that cannot be corroborated by market data.

 

The assets or liability’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 table provides a summary of the assets that are measured at fair value on a recurring basis.

 

    Consolidated
Balance Sheet
    Quoted Prices in Active Markets for Identical Assets or Liabilities
(Level 1)
    Quoted Prices for Similar Assets or Liabilities in Active Markets
(Level 2)
    Significant
Unobservable
Inputs
(Level 3)
 
Derivative Liabilities:                                
December 31, 2012   $ -     $ -     $ -     $ -  
December 31, 2011   $ -     $ -     $ -     $ -  

 

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis:

 

    For the Year Ended December 31,  
    2012     2011  
Beginning balance   $ -     $ -  
Aggregate fair value of conversion features upon issuance     469,332       -  
Change in fair value of conversion features     (469,332 )     -  
Ending balance   $ -     $ -  

 

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’s derivative financial instruments are provided below:

 

    December 31,  
    2012     2011  
Stock price   $ 0.0002     $ -  
Volatility     150 %     -  
Risk-free interest rate     0.05%-0.26 %     -  
Dividend yield     0 %     -  
Expected life     0.25-1.52 years       -  

 

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’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’s accounting and finance department with support from the Company’s consultants and which are approved by the Chief Financial Officer.

 

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.

 

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’s stock price, contractual terms, maturity, risk free rates, as well as, volatility.

 

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.

 

Derivative instruments

 

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

 

Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation.” 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’s requisite service period. Under ASC 718, the Company’s volatility is based on the historical volatility of the Company’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.

 

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’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’s employee stock options, it is management’s opinion that the Black-Scholes option-pricing model may not provide an accurate measure of the fair value of the Company’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.

 

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.

 

  

Income taxes

 

The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes.” ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. 

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company is open for examination for the years 2009, 2010 and 2011.  Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred.  No significant penalties or interest relating to income taxes have been incurred during the years ended December 31, 2012 and 2011.

 

Net loss per share

 

The Company reports loss per share in accordance with the ASC Topic 260, “Earnings Per Share.”, which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.  In the accompanying financial statements, basic earnings per share of common stock is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period 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’s subsidiary, CelLynx Group, Inc. which is reflected as a reduction in capital in excess of par value on the Company’s balance sheet.

 

 

Reclassifications

 

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.

 

Recent accounting pronouncements

 

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

 

In June 2011, the FASB issued new guidance on the presentation of comprehensive income that will require a company to present components of net income and other comprehensive income in one continuous statement or in two separate, but consecutive statements. There are no changes to the components that are recognized in net income or other comprehensive income under current GAAP. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011, with early adoption permitted.  The Company has adopted this guidance, during the fiscal year ended December 31, 2012.

 

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.

 

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’s consolidated financial position and results of operations.

 

In July 2012, the FASB issued ASU 2012-02, “Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment."  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’s consolidated financial position and results of operations.

 

In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”).  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.

 

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.

 



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

Note 3 – Equipment

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

  

    December 31, 2012   December 31, 2011
Office furniture and equipment   $ 9,879   $ -
Computer equipment     4,653     4,653
      14,532     4,653
Accumulated depreciation     (10,126)     (468)
Furniture & equipment net   $ 4,406   $ 4,185

 

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.

 



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Intangible assets and goodwill
12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Intangible assets and goodwill

Note 4 – Patents and other intangible assets

  

Intangible assets are comprised of patents, trademarks and license rights which are recorded at cost, comprised of legal fees and acquisition costs. Once each patent or trademark is issued, capitalized costs are amortized on a straight-line basis over a period not to exceed 20 years and 10 years, respectively. License rights are amortized over the period of the respective license agreement.

 

      December 31, 2012     December 31, 2011
Patents   $ 3,015,794   $ 1,513,650
Marketing and distribution agreement     370,000     370,000
Trademarks     264     -
License rights     1,348     -
    $ 3,387,406   $ 1,883,650
Accumulated amortization     -     --
Patents and other intangibles, net   $ 3,387,406   $ 1,883,650

 

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’s estimated patent amortization over the next five years is expected to be $886,998.

 

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’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.

 

The changes in the carrying amount of goodwill for the year ended December 31, 2012 are as follows:

 

Balance as of December 31, 2011 $0
Acquisition of Cellynx Group, Inc. $556,913
Fair value of non-controlling interest $583,333
Balance as of December 31, 2012 $1,140,246



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Income taxes
12 Months Ended
Dec. 31, 2012
Schedule of Investments [Abstract]
Income taxes

Note 5 - Income taxes

The domestic and foreign components of income (loss) before income taxes from continuing operations are as follows:

 

   For the period from November 14, 2008 (date of inception) through December 31, 2012  December 31, 2012  December 31, 2011
Domestic  $(2,644,415)  $(1,882,912)  $(708,273)
Foreign   (217,355)   (144,481)   (72,874)
Loss from continuing operation before
provision for income taxes
  ($2,861,770)  ($2,027,393)  ($781,147)

 

The income tax provision (benefit) consists of the following:

 

   For the period from November 14, 2008 (date of inception) through December 31, 2012  December 31, 2012  December 31, 2011
Foreign         
    Current  $0   $0   $0 
    Deferred   (46,159)   (46,159)   0 
US federal               
    Current   0    0    0 
    Deferred   (1,203,254)   (980,972)   (212,103)
State & local               
Current   0    0    0 
    Deferred   (84,897)   (84,897)   0 
Total   (1,334,310)   (1,112,028)   (212,103)
Change in valuation allowance   1,334,310    1,112,028    212,103 
Income tax provision (benefit)  $0   $0   $0 

 

 

The provision (benefit) for income taxes using the statutory federal tax rate as compared to the Company’s effective tax rate is summarized as follows:

 

   For the period from November 14, 2008 (date of inception) through December 31, 2012  December 31, 2012  December 31, 2011
US federal statutory income tax rate (benefit)   (34.0%)   (34.0%)   (34.0%)
State income taxes   (1.4%)   (2.3%)   0.0%
Fair value of beneficial conversion feature   (4.9%)   (7.5%)   0.0%
Acquired deferred balances   (7.2%)   (11.2%)   0.0%
Other permanent differences   4.7%   0.1%   0.0%
Change in valuation allowance   42.8%   54.9%   34.0%
Effective rate   0.0%   0.0%   0.0%

 

The Company’s deferred tax assets (liabilities) consisted of the effects of temporary differences attributable to the following:

 

   For the period from November 14, 2008 (date of inception) through December 31, 2012  December 31, 2012  December 31, 2011
Deferred tax assets         
Net operating loss carryovers  $1,483,704   $1,261,422   $222,282 
Stock-based compensation   2,833    2,833    0 
Accrued compensation   167,355    167,355    0 
Total deferred tax assets   1,653,892    1,431,610    0 
Valuation allowance   (1,556,592)   (1,334,310)   (222,282)
Deferred tax asset, net of valuation allowance   97,300    97,300    0 
                
Deferred tax liabilities               
Fixed asset depreciation   (170)   (170)   0 
Intangible asset amortization   (97,130)   (97,130)   0 
Total deferred tax liabilities   (97,300)   (97,300)     
Net deferred tax asset (liability)  $0   $0   $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 (“NOL’s”), 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’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’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’s of CelLynx Group, Inc. when the Company acquired its 60% ownership interest in March 2012.

  

Therefore, the NOL’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’s of CelLynx Group, Inc. will expire unused and has reduced the related deferred tax asset accordingly.

 

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 for all periods. For the years ended December 31, 2012 and 2011, the change in the valuation allowance was $1,112,028 and $212,103, respectively.

 

The Company evaluated the provisions of ASC 740 related to the accounting for uncertainty in income taxes recognized in an enterprise’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 "unrecognized benefits." 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.

Interest costs related to unrecognized tax benefits are required to be calculated (if applicable) and would be classified as "Interest expense, net" in the statements of operation. Penalties would be recognized as a component of "General and administrative expenses."

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.

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.  5Barz AG files foreign tax returns in Switzerland. These tax returns are subject to examination by tax authorities for years beginning in 2011.



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

Note 6 - Cumulative sales of stock

Since its inception, we have issued shares of common stock as follows:

On November 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.

On various days in December 2008, our Directors authorized the issuance of 1,776,100 shares of common stock at a price of $0.01 per share as fully paid and non-assessable to the subscriber. These shares are not restricted and are free trading.

On November 15, 2010, our Directors initiated a forward stock split of 18:1 and increased the authorized shares from 100,000,000 to 250,000,000

On December 30, 2010, the Directors approved the cancellation of 87,800,000 shares of common stock.

On December 31, 2010, the Directors issued 15,600,000 shares in conjunction with the acquisition of certain assets, more fully described in Note 7. 

 

On January 10, 2011 the Company issued 300,000 shares of common stock at a price of $1.00 per share for aggregate proceeds of $300,000.

 

On January 15, 2011 the Company issued 200,000 shares of common stock at a price of $1.00 per share for aggregate proceeds of $200,000.

 

On March 9, 2011 the Company issued 150,000 shares of common stock at a price of $1.00 per share for aggregate proceeds of $150,000.

 

On April 4, 2011 the Company issued 350,000 shares of common stock at a price of $1.00 per share for aggregate proceeds of $350,000.

 

On April 7, 2011 the Company issued 200,000 shares of common stock at a price of $1.00 per share for aggregate proceeds of $200,000.

 

On June 3, 2011 the Company issued 5,000 shares of common stock at a price of $0.70 per share for aggregate proceeds of $3,500.

 

On July 18, 2011 the Company issued 25,000 shares of common stock at a price of $1.00 per share for aggregate proceeds of $25,000.

 

On July 21, 2011 the Company issued 69,610 shares of common stock at a price of $0.20 per share for aggregate proceeds of $13,922.

 

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.

 

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

 

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

 

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

 

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

 

On December 1, 2011 the Company issued 355,695 shares of common stock at a price of $0.20 per share for conversion of a Convertible Debenture Agreement, dated August 15,2011for a principal amount of Fifty Thousand Euros (€50,000), which bears interest at a rate of 8.5%. The aggregate proceeds amounted to $67,513.

 

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

 

In December 2011, 5BARz AG sold 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 – $75,840). The proceeds received have been credited to additional paid in capital in these consolidated financial statements.

  

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

  

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

  

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

 

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.

 

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.

 

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.

 

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.



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

Note 7 - Asset acquisition agreement

 

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

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

(ii)               An asset purchase agreement

(iii)             A line of credit agreement and security agreement

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

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

    i.            5BARz International, Inc. acquired a 60% interest in the patents and trademarks held by CelLynx Group Inc., referred to as the “5BARz™” technology. That interest in the technology was acquired for proceeds comprised of 9,000,000 shares of the common stock of the Company, valued at the date of acquisition at $0.20 per share or $1,800,000 USD. The acquisition agreement also clarified that the ownership interest in the intellectual property does represent that proportionate interest in income earned from the intellectual property.
    ii.            The Company agreed to make available to CelLynx Group, Inc a revolving line of credit facility in the amount of $2.2 million dollars of which $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.

 

    iii.            Pursuant to the Master Global Marketing and Distribution agreement between 5BARz International Inc and Cellyx Group, Inc., the registrant was obligated to pay to CelLynx Group, Inc a royalty fee amounting to 50% of the Company’s Net Earnings, 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.


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

 Note 8 – Convertible Securities

Convertible Promissory Note 

 

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 “Due Date”).  The Company may settle that note within the first 90 days following the issue date by paying to the Lender 140% of the principle amount of the note plus accrued interest. The Company may settle the note during the period which is 91 days from the issue date of the note to 180 days from the issue date of the note by payment of 150% of the principle amount of the note plus accrued interest. In the event that the note is not repaid 180 days from the date of issue, the note is convertible into common stock. On March 20, 2012 the note, along with accrued interest and a prepayment amount was settled in full by the payment of $65,361, and the note was cancelled.

 

On February 27, 2012, 5BARz International Inc., completed a transaction pursuant to a Promissory Note agreement (the “February 27, 2012 Note”), through which the Company borrowed $37,500. The Note bears interest at a rate of 8%, and is due on November 29, 2012, (the “Due Date”).  The Company may settle that note within the first 90 days following the issue date by paying to the Lender 140% of the principle amount of the note plus accrued interest. The Company may settle the note during the period which is 91 days from the issue date of the note to 180 days from the issue date of the note by payment of 150% of the principle amount of the note plus accrued interest. In the event that the note is not repaid 180 days from the date of issue, the note is convertible into common stock at a variable conversion price equal to 55% of the average of the three lowest closing bid prices for the Company’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.

 

On May 3, 2012, 5BARz International Inc., completed a transaction pursuant to a Promissory Note agreement (the “May 3, 2012 Note”), 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 “Due Date”).  The Company may settle that note within the first 90 days following the issue date by paying to the Lender 140% of the principle amount of the note plus accrued interest. The Company may settle the note during the period which is 91 days from the issue date of the note to 180 days from the issue date of the note by payment of 150% of the principle amount of the note plus accrued interest. In the event that the note is not repaid 180 days from the date of issue, the note is convertible into common stock at a variable conversion price equal to 55% of the average of the three lowest closing bid prices for the Company’s common stock for a period of 10 days prior to the date of notice of conversion.

 

 On September 18, 2012, the Company completed a transaction pursuant to a Promissory Note agreement (the “September 18, 2012 Note”), through which the Company borrowed $13,500. The Note bears interest at a rate of 8%, and is due on March 17, 2013, (the “Due Date”).  The Company may settle that note within the first 90 days following the issue date by paying to the Lender 140% of the principle amount of the note plus accrued interest. The Company may settle the note during the period which is 91 days from the issue date of the note to 180 days from the issue date of the note by payment of 150% of the principle amount of the note plus accrued interest. In the event that the note is not repaid 180 days from the date of issue, the note is convertible into common stock at a variable conversion price equal to 55% of the average of the three lowest closing bid prices for the Company’s common stock for a period of 10 days prior to the date of notice of conversion.

 

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.

 

The Company has the option to pay the amount due in cash or in shares as defined in the terms of the notes agreements.

 

Securities Purchase Agreements

 Convertible Debenture Agreement & Equity Investment Agreement

 

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 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.

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.

 

On August 2, 2012 and August 13, 2012, the Company received conversion notices that materially conflict with the parties’ 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.

  

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. La Jolla Cove Investors, Inc. v. 5BARz International, Inc., 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.

 

CelLynx Group, Inc. – Convertible Promissory Notes 

 

The Company’s subsidiary, CelLynx Group, Inc. has two 8% convertible promissory notes outstanding at December 31, 2012 as follows:

  

Issue Date       Principal Amount   Date of Maturity   Accrued
Interest
May 24, 2012 $   37,500 (1)   February 18, 2013     $ 1,060
September 18, 2012 $   12,500 (2)       June 15, 2013     $ 49

 

  (1&2)

The terms of these notes are such that subsequent to the prepayment date six months after the issue date, if not paid, holder may convert principal and unpaid interest on the note into shares of the Company’s common stock, with the number of shares issuable determined to be the 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’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’s common stock held, would result in investor holding more than 4.99% of the Company’s then- outstanding common stock. The shares of common stock, if any, issued upon conversion, will be restricted securities as defined pursuant to the terms of Rule 144.

 

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.

 

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.

 

 

 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:

 

Issue Date

  Principal Amount  Accrued Penalty
and Interest
  Total
May 24, 2012  $26,700*  $15,290   $41,990 
September18, 2012  $12,500   $6,702   $19,202 

Total

  $39,200   $28,177   $61,192 

 

*On November 27, 2012, the holder of the note converted principal amount of $10,800 into 72,000,000 shares of CelLynx Group, Inc.

 

CelLynx Group, Inc. – Other Convertible Promissory Note 

 

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.

 

Pursuant to the Note agreement dated January 5, 2012 (the “January 5, 2012 Note”), 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’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’s common stock over the ten trading days prior to the date of the conversion.

 

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.

 

On April 5, 2011 (the April 5, 2011 Note), the Company entered into a Securities Purchase Agreement (the “SPA”) with one of its directors, Dwayne Yaretz (“Yaretz”), in connection with the purchase by Yaretz of a Convertible Promissory Note (the “Yaretz Note”).

 

 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’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’s common stock over the ten trading days prior to the date of the conversion.

 

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.

 

On August 15, 2006, the Company issued a secured promissory note (the “August 2006 Note”) for $250,000 to an unrelated entity “Holder”.  On November 10, 2007, the August 2006 Note was amended (the “Amended Note”).  At the date of the amendment, the Company was obligated to pay to the Holder $262,356 which represented the principal and accrued interest. 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.  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.  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.



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Options and Warrants
12 Months Ended
Dec. 31, 2012
Options And Warrants
Options and Warrants

Note 9 – Options and Warrants

Warrants – 5BARz International Inc.

 

The following table summarizes the warrant activity to December 31, 2012:

 

Number of

Warrants

 

Weighted Average

Exercise Price

 

Average Remaining

Contractual Life

 
Outstanding at December 31, 2011     $      
Granted   2,140,000     0.20      
Exercised            
Expired            
Outstanding at December 31, 2012   2,140,000   $ 0.20     2  
Exercisable at December 31, 2012   2,140,000   $ 0.20     2  

 

Options – CelLynx Group, Inc.

  

At December 31, 2012, CelLynx Group Inc. has the following Options outstanding;

 

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

 

CelLynx Group, Inc. - Options Exercisable
Range of
Exercise Price
  Number Outstanding as of
December 31, 2012
  Weighted Average
Exercise Price
  Weighted Average
Remaining Contractual
Life (Years)
                  
$0.0008    6,400,000    0.0008    2.5 
      6,400,000           

   

 

Warrants – CelLynx Group, Inc.

 

The following table summarizes the warrant activity to December 31, 2012:

   Number of
Warrants
  Weighted Average
Exercise Price
  Average Remaining
Contractual Life
Outstanding at December 31, 2011   36,114,757   $0.12      
Granted               
Exercised   —      —        
Expired   30,184,757    0.12      
Outstanding at December 31, 2012   5,930,000   $1.19    2 
Exercisable at December 31, 2012   5,930,000   $1.19    2 

 



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

Note 10 - Related party transactions

On December 30, 2010 the Company acquired by way of an assignment agreement all right title and interest in a set of agreements from a Company of which the President and Director is also the President and Director of the reporting Company. The proceeds to be paid for that assignment agreement is comprised of a note payable in the amount of $370,000, and the issuance of 15,600,000 shares of common stock.  During the year ended December 31, 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).



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Investment in 5BARz AG
12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Investment in 5BARz AG

Note 11 – Investment in 5BARz AG

 

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. 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.

 

On October 19, 2011, the registrant, 5BARz International Inc. entered into a Marketing and Distribution agreement with 5BARz AG, through which 5BARz AG holds the exclusive rights for the marketing and distribution of products produced under the 5BARz brand for markets in Switzerland, Austria and Germany. That agreement does not have a royalty payment requirement, and remains effective as long as 5BARz AG is controlled by the Company. 5BARz AG is a consolidated subsidiary of the Company in these financial statements.



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Investment in Cellynx Group, Inc.
12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Investment in Cellynx Group, Inc.

Note 12 – Investment in CelLynx Group, Inc.

 

On January 7, 2011 the Company entered into a stock purchase agreement with two founding shareholders of CelLynx Group, Inc. to acquire in aggregate 63,412,638 shares of the capital stock of CelLynx Group, Inc. for total proceeds of $634,126. At that date the Company had paid $170,000 as a deposit made under that agreement. On March 29, 2012 the Company entered into a securities exchange agreement and settlement agreement with each of the two founding shareholders of CelLynx Group, Inc. whereby in addition to the $170,000 paid, the Company issued 1,250,000 shares of common stock of the issuer in exchange for the 63,412,638 shares of CelLynx Group, Inc. and mutual releases were signed between the parties releasing each from any further obligation.

 

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.

 

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

 

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

 

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

  

 

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

 

Description  Net book value of CelLynx Group, Inc. consolidated assets and liabilities  Acquisition
Adjustments (i) (ii)
  Valuation attributed to assets acquired
Current assets  $3,260        $3,260 
Patents, trademarks, and license   44,718   $1,155,282(ii)   1,200,000 
Investment in 5BARz   (iii)   1,800,000         1,800,000 
Furniture and equipment   2,113         2,113 
Accounts payable and accruals   (1,752,628)        (1,752,628)
Notes payable (net of discount)   (403,076)        (403,076)
Accrued interest   (62,250)        (62,250)
Derivative liability   (5,495,425)   5,026,093(i)   (469,332)
LOC payable – 5BARz (net)   (586,525)   586,525(i)   —   
Fair value non-controlling interest        (583,333)   (583,333)
Totals  $(6,449,813)  $6,184,567    (265,246)
Goodwill             1,140,246 
Purchase price            $875,000 

 

  (i) 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.
(ii) Fair value of patents, trademarks and license.
  (iii) Eliminates in consolidation

 

As of December 31, 2012, the Company had only a 56% interest in CelLynx Group, Inc.

 

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

 

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.  

 

Unaudited pro forma combined financial information

 

The following presents the unaudited pro forma combined financial information, as if the CelLynx acquisition had occurred as of January 1.

   For the Year Ended December 31, 2012  For the Year Ended December 31, 2011
Revenues  $0   $0 
Net loss  $1,070,117   $1,504,494 
Pro forma basic and diluted net loss per common share  $(0.01)  $(0.02)
Pro forma weighted average common shares outstanding – basic and diluted   97,833,528    90,182,785 

 

 

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.



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Litigation
12 Months Ended
Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
Litigation

Note 13 - Litigation

 

Prior to the Company’s investment in CelLynx, on November 8, 2011 CelLynx Group, Inc was a Defendant in an action brought by Dophinshire L.P. regarding its office space in Mission Viejo, CA. That action has since been dismissed. Dolphinshire L.P., a California limited partnership v. CelLynx Group, Inc., a Nevada corporation and Does 1-10, Superior Court of California, Orange County, Case No. 00521213. On November 8, 2011, plaintiff brought suit against the Company for unlawful detainer of offices located at 25910 Acero, Suite 370, Mission Viejo, CA 92691 pursuant to a lease agreement, seeking an unspecified amount of damages 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.

 

 

On August 27, 2012, an action was brought against CelLynx Inc. and Does 1-10, in the Superior Court of California, El Dorado County, Case No. PCL20120700. On August 27, 2012, plaintiff brought suit against the Company for unlawful detainer of offices located at 5047 Robert J Matthews Parkway, El Dorado Hills, CA 95762 pursuant to a lease agreement, seeking damages of $24,699, legal fees of $3,000 and late charges of $2,041. 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.

 

Prior to the Company’s investment in CelLynx, on July 19, 2010 certain claims for unpaid wages were filed against CelLynx. Judgments were obtained commencing in August 2011 for back wages by some of its former employees. Some of those claims have been partially paid and others were expected to be paid in the normal course of business or were to be otherwise defended. Those claims have now been incorporated into California Labor Commission awards in favor of those former employees. Those awards total approximately $263,023 depending on interest charges. It is the Company’s intention to pay these amounts when proceeds are available.

 

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. La Jolla Cove Investors Inc. v. 5BARz International, Inc., 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’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.

 

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. Asher Enterprises, Inc. vs. 5BARz International Inc.., Daniel Bland and James Vandeberg 13-003472(County of Nassau) 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 “parity value” of the “default amount” paid in shares as defined in the terms of the agreements. The Company intends to file an appearance and defend against the law suit.

 

The Company’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.

 

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.



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

Note 14 Subsequent events

 

Sales of Common Stock

 

During the period from January 1, 2013 to March 20, 2013, the Company sold the following equity securities;

 

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.

 

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.

 

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.

 

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.

 

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.

 

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

 

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.

  

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

Convertible debenture

 

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.



v0.0.0.0
Summary of significant accounting policies (Policies)
12 Months Ended
Dec. 31, 2012
Accounting Policies [Abstract]
Basis of Presentation

Basis of presentation

 

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements include the accounts of 5BARz International Inc., and its 94.6% owned subsidiary, 5BARz AG, and it’s 56% owned subsidiary CelLynx Group, Inc. and that Company’s 100% owned subsidiary CelLynx, Inc. All intercompany accounts and transactions have been eliminated in consolidation.

Cash

Cash

 

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of one year or less.

Use of estimates

Use of estimates

 

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.

Concentration of credit risk

Concentration of credit risk

 

Cash includes deposits in accounts maintained at financial institutions.  Certain financial instruments, which subject the Company to concentration of credit risk, consist of cash. The Company maintains balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits for the banks located in the United States. As of December 31, 2012 and 2011, the Company did not have any deposits in excess of federally-insured limits.  To date, the Company has not experienced any losses in such accounts.

Equipment

Equipment

 

Equipment is recorded at historical cost and is depreciated using the straight-line method over their estimated useful lives.  The useful life and depreciation method are reviewed periodically to ensure that the depreciation method and period are consistent with the anticipated pattern of future economic benefits. Expenditures for maintenance and repairs are charged to operations as incurred while renewals and betterments are capitalized. Gains and losses on disposals are included in the results of operations. The useful life of the equipment is being depreciated over three to five years.

Intangible assets

Intangible assets

 

Acquired patents, licensing rights and trademarks are capitalized at their fair value. The legal costs, patent registration fees, and models and drawings required for filing patent applications are capitalized if they relate to commercially viable technologies. Commercially viable technologies are those technologies that are projected to generate future positive cash flows in the near term. Legal costs associated with applications that are not determined to be commercially viable are expensed as incurred. All research and development costs incurred in developing the patentable idea are expensed as incurred. Legal fees from the costs incurred in successful defense to the extent of an evident increase in the value of the patents are capitalized.

 

Capitalized costs for patents are amortized on a straight-line basis over the remaining twenty-year legal life of each patent after the costs have been incurred. Once each patent or trademark is issued, capitalized costs are amortized on a straight-line basis over a period not to exceed 20 years and 10 years, respectively. All research and development costs incurred in developing the patentable idea are expensed as incurred. The licensing right is amortized on a straight-line basis over a period of 10 years. 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.

Goodwill

Goodwill

 

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.

Impairment or disposal of long-lived assets

Impairment or disposal of long-lived assets

 

The Company applies the provisions of Accounting Standards Codification (“ASC”) Topic 360, “Property, Plant, and Equipment,” which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. ASC 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal. Based on its review, the Company concluded that as of December 31, 2012 and December 31, 2011 there was no impairment of its long-lived assets.

Revenue recognition

Revenue recognition

 

The Company's revenue recognition policies are in compliance with ASC Topic 605, “Revenue Recognition.”  Revenue is recognized at the date of shipment to customers, and when the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured.

Foreign currency translation

Foreign currency translation

 

Transactions in foreign currencies have been translated into US dollars using the temporal method. The functional currency of the Company’s subsidiary 5BARz AG, is its local currency (Swiss Franc – 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

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

Fair value of financial instruments

Fair value of financial instruments

 

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.

 

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:

 

  · Level 1. Quoted prices in active markets for identical assets or liabilities.

 

  · 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.

 

  · Level 3. Significant unobservable inputs that cannot be corroborated by market data.

 

The assets or liability’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 table provides a summary of the assets that are measured at fair value on a recurring basis.

 

    Consolidated
Balance Sheet
    Quoted Prices in Active Markets for Identical Assets or Liabilities
(Level 1)
    Quoted Prices for Similar Assets or Liabilities in Active Markets
(Level 2)
    Significant
Unobservable
Inputs
(Level 3)
 
Derivative Liabilities:                                
December 31, 2012   $ -     $ -     $ -     $ -  
December 31, 2011   $ -     $ -     $ -     $ -  

 

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis:

 

    For the Year Ended December 31,  
    2012     2011  
Beginning balance   $ -     $ -  
Aggregate fair value of conversion features upon issuance     469,332       -  
Change in fair value of conversion features     (469,332 )     -  
Ending balance   $ -     $ -  

 

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’s derivative financial instruments are provided below:

 

    December 31,  
    2012     2011  
Stock price   $ 0.0002     $ -  
Volatility     150 %     -  
Risk-free interest rate     0.05%-0.26 %     -  
Dividend yield     0 %     -  
Expected life     0.25-1.52 years       -  

 

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’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’s accounting and finance department with support from the Company’s consultants and which are approved by the Chief Financial Officer.

 

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.

 

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’s stock price, contractual terms, maturity, risk free rates, as well as, volatility.

 

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.

Derivative Instruments

Accounting for Derivatives

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

Stock-based Compensation

Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation.” 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’s requisite service period. Under ASC 718, the Company’s volatility is based on the historical volatility of the Company’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.

 

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’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’s employee stock options, it is management’s opinion that the Black-Scholes option-pricing model may not provide an accurate measure of the fair value of the Company’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.

 

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.

Income Taxes

Income taxes

 

The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes.” ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. 

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company is open for examination for the years 2009, 2010 and 2011.  Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred.  No significant penalties or interest relating to income taxes have been incurred during the years ended December 31, 2012 and 2011.

Net loss per share

Net loss per share

 

The Company reports loss per share in accordance with the ASC Topic 260, “Earnings Per Share.”, which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.  In the accompanying financial statements, basic earnings per share of common stock is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period 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’s subsidiary, CelLynx Group, Inc. which is reflected as a reduction in capital in excess of par value on the Company’s balance sheet.

 

Reclassifications

Reclassifications

 

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.

Recent accounting pronouncements

Recent accounting pronouncements

 

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

 

In June 2011, the FASB issued new guidance on the presentation of comprehensive income that will require a company to present components of net income and other comprehensive income in one continuous statement or in two separate, but consecutive statements. There are no changes to the components that are recognized in net income or other comprehensive income under current GAAP. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011, with early adoption permitted.  The Company has adopted this guidance, during the fiscal year ended December 31, 2012.

 

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.

 

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’s consolidated financial position and results of operations.

 

In July 2012, the FASB issued ASU 2012-02, “Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment."  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’s consolidated financial position and results of operations.

 

In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”).  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.

 

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.



v0.0.0.0
Summary of Accounting Policies (Tables)
12 Months Ended
Dec. 31, 2012
Summary Of Accounting Policies Tables
Fair Value of Financial instruments Assets and Liabilities
    Consolidated
Balance Sheet
    Quoted Prices in Active Markets for Identical Assets or Liabilities
(Level 1)
    Quoted Prices for Similar Assets or Liabilities in Active Markets
(Level 2)
    Significant
Unobservable
Inputs
(Level 3)
 
Derivative Liabilities:                                
December 31, 2012   $ -     $ -     $ -     $ -  
December 31, 2011   $ -     $ -     $ -     $ -  
Level 3 financial liabilities that are measured at fair value on a recurring basis
    For the Year Ended December 31,  
    2012     2011  
Beginning balance   $ -     $ -  
Aggregate fair value of conversion features upon issuance     469,332       -  
Change in fair value of conversion features     (469,332 )     -  
Ending balance   $ -     $ -  
Fair Value of Financial instruments Black-Scholes option pricing models
    December 31,  
    2012     2011  
Stock price   $ 0.0002     $ -  
Volatility     150 %     -  
Risk-free interest rate     0.05%-0.26 %     -  
Dividend yield     0 %     -  
Expected life     0.25-1.52 years       -  


v0.0.0.0
Equipment (Tables)
12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Equipment

 

    December 31, 2012   December 31, 2011
Office furniture and equipment   $ 9,879   $ -
Computer equipment     4,653     4,653
      14,532     4,653
Accumulated depreciation     (10,126)     (468)
Furniture & equipment net   $ 4,406   $ 4,185



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

 

      December 31, 2012     December 31, 2011
Patents   $ 3,015,794   $ 1,513,650
Marketing and distribution agreement     370,000     370,000
Trademarks     264     -
License rights     1,348     -
    $ 3,387,406   $ 1,883,650
Accumulated amortization     -     --
Patents and other intangibles, net   $ 3,387,406   $ 1,883,650

Carrying amount of goodwil
Balance as of December 31, 2011 $0
Acquisition of Cellynx Group, Inc. $556,913
Fair value of non-controlling interest $583,333
Balance as of December 31, 2012 $1,140,246


v0.0.0.0
Income taxes (Tables)
12 Months Ended
Dec. 31, 2012
Schedule of Investments [Abstract]
Domestic and Foreign components of income (loss) before income taxes
   For the period from November 14, 2008 (date of inception) through December 31, 2012  December 31, 2012  December 31, 2011
Domestic  $(2,644,415)  $(1,882,912)  $(708,273)
Foreign   (217,355)   (144,481)   (72,874)
Loss from continuing operation before
provision for income taxes
  ($2,861,770)  ($2,027,393)  ($781,147)
Income tax provision (benefit)
   For the period from November 14, 2008 (date of inception) through December 31, 2012  December 31, 2012  December 31, 2011
Foreign         
    Current  $0   $0   $0 
    Deferred   (46,159)   (46,159)   0 
US federal               
    Current   0    0    0 
    Deferred   (1,203,254)   (980,972)   (212,103)
State & local               
Current   0    0    0 
    Deferred   (84,897)   (84,897)   0 
Total   (1,334,310)   (1,112,028)   (212,103)
Change in valuation allowance   1,334,310    1,112,028    212,103 
Income tax provision (benefit)  $0   $0   $0 
Reconciliation of statutory and effective income tax rate

 

   For the period from November 14, 2008 (date of inception) through December 31, 2012  December 31, 2012  December 31, 2011
US federal statutory income tax rate (benefit)   (34.0%)   (34.0%)   (34.0%)
State income taxes   (1.4%)   (2.3%)   0.0%
Fair value of beneficial conversion feature   (4.9%)   (7.5%)   0.0%
Acquired deferred balances   (7.2%)   (11.2%)   0.0%
Other permanent differences   4.7%   0.1%   0.0%
Change in valuation allowance   42.8%   54.9%   34.0%
Effective rate   0.0%   0.0%   0.0%

Deferred Tax asset and liability

 

   For the period from November 14, 2008 (date of inception) through December 31, 2012  December 31, 2012  December 31, 2011
Deferred tax assets         
Net operating loss carryovers  $1,483,704   $1,261,422   $222,282 
Stock-based compensation   2,833    2,833    0 
Accrued compensation   167,355    167,355    0 
Total deferred tax assets   1,653,892    1,431,610    0 
Valuation allowance   (1,556,592)   (1,334,310)   (222,282)
Deferred tax asset, net of valuation allowance   97,300    97,300    0 
                
Deferred tax liabilities               
Fixed asset depreciation   (170)   (170)   0 
Intangible asset amortization   (97,130)   (97,130)   0 
Total deferred tax liabilities   (97,300)   (97,300)     
Net deferred tax asset (liability)  $0   $0   $0 



v0.0.0.0
Convertible Securities (Tables)
12 Months Ended
Dec. 31, 2012
Convertible Securities Tables
Convertible Promissory Note

Issue Date

 

 

  Principal Amount Date of Maturity    

Accrued

Interest

   
May 24, 2012 $ 37,500 (1) February 18, 2013   $ 1,060    
September 18, 2012 $ 12,500 (2) June 15, 2013   $ 49    

Issue Date

   Principal Amount    

Accrued

Interest

 
May 24, 2012  $37,000   $21,475 
September 18, 2012  $12,500   $6,702 


v0.0.0.0
Options and Warrants (Tables)
12 Months Ended
Dec. 31, 2012
Options And Warrants Tables
Warrants - 5BARz International Inc.

 

 

Number of

Warrants

 

Weighted Average

Exercise Price

 

Average Remaining

Contractual Life

 
Outstanding at December 31, 2011     $      
Granted   2,140,000     0.20      
Exercised            
Expired            
Outstanding at December 31, 2012   2,140,000   $ 0.20     2  
Exercisable at December 31, 2012   2,140,000   $ 0.20     2  

Weighted Average Exercise Price of all Options

 

CelLynx Group, Inc. - Options Exercisable
Range of
Exercise Price
  Number Outstanding as of
December 31, 2012
  Weighted Average
Exercise Price
  Weighted Average
Remaining Contractual
Life (Years)
                  
$0.0008    6,400,000    0.0008    2.5 
      6,400,000           

Warrants - CelLynx Group, Inc.

 

   Number of
Warrants
  Weighted Average
Exercise Price
  Average Remaining
Contractual Life
Outstanding at December 31, 2011   36,114,757   $0.12      
Granted               
Exercised   —      —        
Expired   30,184,757    0.12      
Outstanding at December 31, 2012   5,930,000   $0.79    2 
Exercisable at December 31, 2012   5,930,000   $0.79    2 



v0.0.0.0
Business combination (Tables)
12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Acquistion of Cellynx Group, Inc.
i.   Cash consideration paid    $ 170,000  
ii.   1,250,000 common shares of the registrant issued at a market price of $0.20 per share     250,000  
iii.   Redemption of convertible debt for 350 million shares of Cellynx Group Inc. common stock     455,000 (a)
             
    Fair market value of consideration paid   $ 875,000  
Assets and Liabilities recognized at acquisition date

 

Description  Net book value of CelLynx Group, Inc. consolidated assets and liabilities  Acquisition
Adjustments (i) (ii)
  Valuation attributed to assets acquired
Current assets  $3,260        $3,260 
Patents, trademarks, and license   44,718   $1,155,282(ii)   1,200,000 
Investment in 5BARz   (iii)   1,800,000         1,800,000 
Furniture and equipment   2,113         2,113 
Accounts payable and accruals   (1,752,628)        (1,752,628)
Notes payable (net of discount)   (403,076)        (403,076)
Accrued interest   (62,250)        (62,250)
Derivative liability   (5,495,425)   5,026,093(i)   (469,332)
LOC payable – 5BARz (net)   (586,525)   586,525(i)   —   
Fair value non-controlling interest        (583,333)   (583,333)
Totals  $(6,449,813)  $6,184,567    (265,246)
Goodwill             1,140,246 
Purchase price            $875,000 

Pro Forma Combined Financial Information

 

   For the Year Ended December 31, 2012  For the Year Ended December 31, 2011
Revenues  $0   $0 
Net loss  $1,070,117   $1,504,494 
Pro forma basic and diluted net loss per common share  $(0.01)  $(0.02)
Pro forma weighted average common shares outstanding – basic and diluted   97,833,528    90,182,785 



v0.0.0.0
Organization and Basis of Reporting (Details)
12 Months Ended 3 Months Ended
Dec. 31, 2012
5BARz AG
Mar. 31, 2012
CeLlynx Group, Inc.
Mar. 29, 2012
CeLlynx Group, Inc.
Business Acquisition [Line Items]
Agreement date
Nov. 06, 2011 Mar. 29, 2012
Acquired interest
94.60% 60.00%
Ownership in Entity
CeLlynx Inc.
Percentage Owned
100.00%


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Going concern (Details) (USD $)
12 Months Ended 50 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2012
Going Concern Details
Net loss
$ 1,070,117 $ 1,504,494 $ 2,861,770
Negative Cash Flows
1,390,106
Accumulated Deficit
$ 2,971,099 $ 2,971,099


v0.0.0.0
Summary of Accounting Policies (Details) (USD $)
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Summary Of Accounting Policies Details
Warranty Liablilty at Fair Value
Conversion Option Liability at Fair Value
Accured Derivative Liabilities
Gain on change in the Fair value of accrued warranty liability
Gain/Loss in the Benefical conversion Liability
$ 469,332 $ 0
Level 2 Valuation Methodolgy
Annual Dividend Yield
0.00%
Exepected Life (years)
0.25-1.52
Risk-free Interest
0.05%-0.26%
Expected volatility
150.00%


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Equipment (Details Narrative) (USD $)
Dec. 31, 2012
Dec. 31, 2011
Property, Plant and Equipment [Line Items]
Property and Equipment
$ 14,532 $ 4,653
Accumulated depreciation
10,126 468
Furniture & equipment net
4,406 4,185
Furniture and Equipment
Property, Plant and Equipment [Line Items]
Property and Equipment
9,879
Computer Equipment
Property, Plant and Equipment [Line Items]
Property and Equipment
$ 4,653 $ 4,653


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Equipment Additional (Details Narrative) (USD $)
12 Months Ended 50 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2012
Equipment Additional Details Narrative
Depreciation Expense
$ 1,451 $ 416 $ 4,573


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Intangible Assets (Details) (USD $)
Dec. 31, 2012
Dec. 31, 2011
Intangible Assets, Gross
$ 3,387,406 $ 1,883,650
Accumulated amortization
Intangibles Assets, net
3,387,406 1,883,650
Patents
Intangible Assets, Gross
3,015,794 1,513,650
Marketing and distribution agreement
Intangible Assets, Gross
370,000 370,000
Trademarks
Intangible Assets, Gross
264
License rights
Intangible Assets, Gross
$ 1,348


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Intangible Assets (Details Narrative) (USD $)
12 Months Ended
Dec. 31, 2012
Patents
Amortization over the next five years
$ 866,998
Trademarks
Life of amortization
10 years
Amortization over the next five years
806
Amortization thereafter
$ 806
Maximum
Life of amortization
20 years
Minimum
Life of amortization
10 years


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Intangible Assets:Goodwill (Details Narrative) (USD $) (USD $)
12 Months Ended
Dec. 31, 2012
Intangible Assetsgoodwill Details Narrative Usd
Balance as of December 31, 2011
Acquisition of Cellynx Group, Inc.
556,913
Fair value of non-controlling interest
583,333
Balance as of December 31, 2012
$ 1,140,246


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Domestic and Foreign Components of income (loss) (Details) (USD $)
12 Months Ended 50 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2012
Domestic And Foreign Components Of Income Loss Details
Domestic
$ (1,882,912) $ 708,273 $ (2,644,415)
Foreign
(144,481) (72,874) (217,355)
Loss from continuing operation before provision for income taxes
$ (2,027,393) $ (781,147) $ (2,861,770)


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Income Tax Provision (benefit) (Details) (USD $)
12 Months Ended 50 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2012
Foreign
Current
$ 0 $ 0 $ 0
Deferred
(46,159) 0 (46,159)
US federal
Current
0 0 0
Deferred
(980,972) (212,103) (1,203,254)
State & local
Current
0 0 0
Deferred
(84,897) 0 (84,897)
Total
(1,112,028) (212,103) (1,334,310)
Change in valuation allowance
1,112,028 212,103 1,334,310
Income tax provision (benefit)
$ 0 $ 0 $ 0


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Reconciliation of statutory and effective income tax rate (Details)
12 Months Ended 50 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2012
Schedule of Investments [Abstract]
US federal statutory income tax rate (benefit)
(34.00%) (34.00%) (34.00%)
State income taxes
(23.00%) 0.00% (14.00%)
Fair value of beneficial conversion feature
(75.00%) 0.00% (49.00%)
Acquired deferred balances
(11.20%) 0.00% (72.00%)
Other permanent differences
0.10% 0.00% 4.70%
Change in valuation allowance
54.90% 34.00% 42.80%
Effective rate
0.00% 0.00% 0.00%


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Deferred Tax asset and liability (Details) (USD $)
Dec. 31, 2012
Dec. 31, 2011
Schedule of Investments [Abstract]
Net operating loss carryovers
$ 1,261,422 $ 222,282
Stock-based compensation
2,833 0
Accrued compensation
167,355 0
Total deferred tax assets
1,431,610 0
Valuation allowance
(1,334,310) (222,282)
Net deferred tax assets
97,300 0
Deferred tax liabilities
Fixed asset depreciation
(170) 0
Intangible asset amortization
(97,130) 0
Total Deferred Liabilities
(97,300)
Net deferred tax assets (liability)
$ 0 $ 0


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Federal income tax (Details Narrative) (USD $)
12 Months Ended 50 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2012
Schedule of Investments [Abstract]
Net operating loss: Foreign
$ 210,000 $ 73,000 $ 210,000
Net operating loss: U.S. Federal
3,375,000 9,655,000 3,375,000
Net operating loss: State
1,159,000 8,685,000 1,159,000
Expiration date

2018 through 2025

Change in valuation allowance
$ 1,112,028 $ 212,103


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Federal income tax (Details Narrative) (Parenthetical)
12 Months Ended
Dec. 31, 2012
Schedule of Investments [Abstract]
CelLynx Group Inc. NOL's
NOL’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’s of CelLynx Group, Inc. will expire unused and has reduced the related deferred tax asset accordingly.


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Cumulative Sales of Stock 2008-2010 (Details)
1 Months Ended 12 Months Ended 1 Months Ended
Nov. 13, 2008
Founders Shares
Dec. 31, 2010
Common Stock
Dec. 31, 2012
Common Stock
Dec. 31, 2010
Common Stock
Dec. 31, 2008
Common Stock
Nov. 30, 2010
Stock Split
Issuance of restricted common stock/founders shares
7,100,000 1,776,100
Forward stock split
18
Authorized Shares-before stock split
100,000,000
Authorized Shares-After Stock split
150,893,700 250,000,000
Cancellation of Common Stock, shares
87,800,000
Common stock issued forAcquistions (in shares)
15,600,000 1,250,000


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Cumulative Sales of Stock 2011 (Details) (USD $)
12 Months Ended 3 Months Ended 0 Months Ended 1 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Conversion Of Convertible Debenture
Dec. 19, 2011
Common Stock
Dec. 15, 2011
Common Stock
Dec. 07, 2011
Common Stock
Nov. 08, 2011
Common Stock
Oct. 20, 2011
Common Stock
Jul. 24, 2011
Common Stock
Jul. 21, 2011
Common Stock
Jul. 18, 2011
Common Stock
Jun. 03, 2011
Common Stock
Apr. 07, 2011
Common Stock
Apr. 04, 2011
Common Stock
Mar. 09, 2011
Common Stock
Jan. 15, 2011
Common Stock
Jan. 10, 2011
Common Stock
Dec. 31, 2011
BARz AG
Issuance of common stock (in shares)
150,000 455,180 75,000 200,000 37,500 40,000 69,610 25,000 5,000 200,000 350,000 150,000 200,000 300,000 21,000
Issuance of common stock
$ 520,000 $ 1,360,440 $ 13,650 $ 15,000 $ 45,581 $ 7,500 $ 30,000 $ 7,500 $ 20,000 $ 14,000 $ 25,000 $ 3,000 $ 200,000 $ 350,000 $ 150,000 $ 200,000 $ 300,000 $ 75,840
Conversion of Convertible Debenture Agreement (in shares)
335,695
Conversion of Convertible Debenture Agreement (Euro's)
$ 67,513
Price Per Unit
$ 0.10 $ 0.10 $ 0.10 $ 0.15 $ 0.20 $ 0.50 $ 0.20 $ 1.00 $ 0.70 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 3.26


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Cumulative Sales of Stock 2012 (Details) (USD $)
0 Months Ended 1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 17, 2012
Dec. 12, 2012
Dec. 07, 2012
Oct. 26, 2012
Oct. 12, 2012
Sep. 14, 2012
Sep. 10, 2012
Sep. 05, 2012
Aug. 14, 2012
Aug. 10, 2012
Jul. 20, 2012
Jul. 09, 2012
Jun. 27, 2012
Jun. 21, 2012
Jun. 12, 2012
May 14, 2012
May 03, 2012
Apr. 30, 2012
Apr. 18, 2012
Apr. 02, 2012
Mar. 26, 2012
Mar. 22, 2012
Mar. 20, 2012
Mar. 07, 2012
Mar. 05, 2012
Feb. 29, 2012
Feb. 07, 2012
Feb. 01, 2012
Jan. 12, 2012
Dec. 31, 2008
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Issuance of common stock
$ 520,000 $ 1,360,440 $ 13,650
Common Stock
Issuance of common stock (in shares)
100,000 401,338 500,000 500,000 250,000 200,000 50,000 95,000 20,000 80,000 100,000 50,000 170,000 333,334 150,000 433,334 200,000 500,000
Units Issued (in shares)
1,200,000 [1] 400,000 [1] 300,000 [1] 300,000 [1] 100,000 [1]
Issuance of common stock
60,000 20,000 5,000 15,000 15,000 12,000 5,000 25,000 25,000 52,000 52,000 5,000 9,500 2,000 8,000 15,000 6,000 25,500 50,000 18,000 52,000 20,000 50,000 1,776 6,542 2,182 15,600
Common stock issued for services (in shares)
2,250,000 3,300,824 2,150,000 125,000 250,000 100,000 1,500,000 300,000
Common stock issued for services
112,500 165,041 212,620 14,977 30,000 47,990 150,000 30,000
Price Per Unit
$ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.0299 $ 0.20 $ 0.05 $ 0.05 $ 0.20 $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.12 $ 0.15 $ 0.12 $ 0.12 $ 0.15 $ 0.15 $ 0.12 $ 0.12 $ 0.4799 $ 0.10 $ 0.10 $ 0.10 $ 0.05
Common Stock Additional
Units Issued (in shares)
140,000 [1]
Issuance of common stock
7,000
Common stock issued for services (in shares)
66,667 50,000
Common stock issued for services
$ 10,000 $ 5,000
Price Per Unit
$ 0.05 $ 0.15 $ 0.10
[1] 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.


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Cumulative Sales of Stock Prices (Details) (USD $)
Dec. 31, 2012
Common Stock
Dec. 17, 2012
Common Stock
Dec. 12, 2012
Common Stock
Dec. 07, 2012
Common Stock
Oct. 26, 2012
Common Stock
Oct. 12, 2012
Common Stock
Sep. 14, 2012
Common Stock
Sep. 10, 2012
Common Stock
Sep. 05, 2012
Common Stock
Aug. 14, 2012
Common Stock
Aug. 10, 2012
Common Stock
Jul. 20, 2012
Common Stock
Jul. 09, 2012
Common Stock
Jun. 27, 2012
Common Stock
Jun. 21, 2012
Common Stock
Jun. 12, 2012
Common Stock
May 14, 2012
Common Stock
May 03, 2012
Common Stock
Apr. 30, 2012
Common Stock
Apr. 18, 2012
Common Stock
Apr. 02, 2012
Common Stock
Mar. 26, 2012
Common Stock
Mar. 22, 2012
Common Stock
Mar. 20, 2012
Common Stock
Mar. 07, 2012
Common Stock
Mar. 05, 2012
Common Stock
Feb. 29, 2012
Common Stock
Feb. 07, 2012
Common Stock
Feb. 01, 2012
Common Stock
Jan. 12, 2012
Common Stock
Dec. 31, 2011
Conversion Of Convertible Debenture
Mar. 31, 2012
Common Stock for Services
Mar. 31, 2012
Excess of Par Value
Dec. 31, 2011
Minimum
Dec. 31, 2012
Minimum
Common Stock
Sep. 30, 2012
Minimum
Common Stock
Jun. 30, 2012
Minimum
Common Stock
Mar. 31, 2012
Minimum
Common Stock
Dec. 31, 2011
Minimum
Common Stock
Sep. 30, 2011
Minimum
Common Stock
Jun. 30, 2011
Minimum
Common Stock
Mar. 30, 2011
Minimum
Common Stock
Dec. 31, 2011
Maximum
Dec. 31, 2012
Maximum
Common Stock
Sep. 30, 2012
Maximum
Common Stock
Jun. 30, 2012
Maximum
Common Stock
Mar. 31, 2012
Maximum
Common Stock
Dec. 31, 2011
Maximum
Common Stock
Sep. 30, 2011
Maximum
Common Stock
Jun. 30, 2011
Maximum
Common Stock
Mar. 30, 2011
Maximum
Common Stock
Price Per Unit
$ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.0299 $ 0.20 $ 0.05 $ 0.05 $ 0.20 $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.12 $ 0.15 $ 0.12 $ 0.12 $ 0.15 $ 0.15 $ 0.12 $ 0.12 $ 0.4799 $ 0.10 $ 0.10 $ 0.10 $ 0.20 $ 0.10 $ 3.26 $ 0.10 $ 0.05 $ 0.5 $ 0.10 $ 0.10 $ 0.10 $ 0.20 $ 0.70 $ 1.00 $ 0.20 $ 0.05 $ 0.20 $ 0.15 $ 0.15 $ 0.20 $ 1.00 $ 1.00 $ 1.00


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Asset Acquistion Agreement (Details) (USD $) (CeLlynx Group, Inc., USD $)
3 Months Ended 12 Months Ended
Mar. 31, 2012
Dec. 31, 2012
Mar. 29, 2012
CeLlynx Group, Inc.
Name of Company
Cellynx Group, Inc.
Date
Mar. 29, 2012
Asset Purchase Agreement
Interest acquiried in Patents and trademarks
60.00%
Price per share
$ 0.20
Cost of acquisition
$ 1,800,000
Revolving Line of Credit and Security Agreement
Amount of credit facility
2,200,000
Amount of credit facility advanced
730,879
Expiration date of credit facility
10/5/2013
Conversion Rate-per share of 5BARz common stock-Lesser of:
(1) fixed Conversion Rate-per share
$ 0.00015
(2) Variable Conversion Rate-per share
25% [1]
Amount of credit facility converted to capital stock of Cellynx Group, Inc.
$ 139,200
Amount of Shares of Cellynx Group, Inc. resulting from conversion of credit facility
791,333,333
Equity Interest in Cellynx Group, Inc.
58.60%
Master Global Marketing and Distribution agreement
Royalty fee to Cellynx Group, as % of Company's Net Earnings
50% [2]
[1] 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.
[2] 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.


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Promissory Notes (Details) (USD $)
12 Months Ended
Dec. 31, 2012
Note 1
Issue Date
Sep. 20, 2011
Principal Amount
$ 42,500
Date of Maturity
Jun. 22, 2012
Interest Rate per annum
8.00%
Date
Mar. 20, 2012
Note paid off
65,361.52
Note 2
Issue Date
Feb. 27, 2012
Principal Amount
37,500
Date of Maturity
Nov. 29, 2012
Interest Rate per annum
8.00%
Date
Sep. 10, 2012
Note paid off
12,000.00
Common stock issued for debt
401,338
Date of arrangement
Sep. 28, 2012
Date Due
Dec. 31, 2012
Price per share
$ 0.0299
Accrued interest
35,000
Note 3
Issue Date
May 03, 2012
Principal Amount
42,500
Date of Maturity
Feb. 03, 2013
Interest Rate per annum
8.00%
Note 4
Issue Date
Sep. 18, 2012
Principal Amount
13,500
Date of Maturity
Mar. 17, 2013
Interest Rate per annum
8.00%
Note payments
Date Due
Dec. 12, 2012
Aggregate payments
100,000 [1]
First Payment
25,000
Second Payment
15,000
Note Payable
$ 129,460
[1] Payable as to $35,000 on December 31, 2012 and $65,000 on February 15, 2013


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Promissory Notes (Details) (Parenthetical) (Note payments)
12 Months Ended
Dec. 31, 2012
Note payments
Terms of note

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.



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Convertible debenture agreement and Equity Investment Agreement (Details) (Investor, USD $)
12 Months Ended
Dec. 31, 2012
Jan. 30, 2012
Investor
Convertible Debenture Agreement
$ 500,000
Convertible Debenture issued to investor
150,000
Note Receivable exchange for convertible debenture
400,000
Interest Rate
8.00%
Alleged damages
$ 2,500,000 [1]
[1] 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%.


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Convertible debenture agreement and Equity Investment Agreement (Details) (Parenthetical) (Investor)
12 Months Ended
Dec. 31, 2012
Investor
Terms of note

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.



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Convertible Debentures(Details) (Convertible Debentures, USD $)
3 Months Ended
Sep. 30, 2012
Dec. 31, 2012
Convertible Debentures
Issue Date
Aug. 14, 2012
Issue Date
2012-09-04
Principal Amount
$ 12,000
Date of Maturity
90 days
Interest Rate per annum
10.00%
Price per share
$ 0.15


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Cellynx Group, Inc. - Convertibles Promissory Notes (Details) (USD $)
12 Months Ended
Dec. 31, 2012
Total
Principal amount
$ 41,990
Accrued Penalty and Interest
19,202
Total Note Balance
61,192
Cellynx Note1
Issue Date
May 24, 2012
Face Amount
37,500
Date of Maturity
Feb. 18, 2013
Accrued Interest
1,060
Interest Rate per annum
8.00%
Principal amount
26,700
Accrued Penalty and Interest
15,290
Total Note Balance
41,990
Common stock issued for debt
72,000,000
Common Stock issued for debt, amount
10,800
Cellynx Note2
Issue Date
Sep. 18, 2012
Face Amount
12,500
Date of Maturity
Jun. 15, 2013
Accrued Interest
49
Interest Rate per annum
8.00%
Principal amount
12,500
Accrued Penalty and Interest
6,702
Total Note Balance
$ 19,202


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Cellynx Group, Inc. - Convertibles Promissory Notes (Details Narrative)
12 Months Ended
Dec. 31, 2012
Cellynx Note1
Terms of note

The terms of these note are such that subsequent to the prepayment date six months after the issue date, if not paid, holder may convert principal and unpaid interest on the note into shares of the Company’s common stock, with the number of shares issuable determined to be the 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’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’s common stock held, would result in investor holding more than 4.99% of the Company’s then- outstanding common stock. The shares of common stock, if any, issued upon conversion, will be restricted securities as defined pursuant to the terms of Rule 144.

 

Cellynx Note2
Terms of note

The terms of these note are such that subsequent to the prepayment date six months after the issue date, if not paid, holder may convert principal and unpaid interest on the note into shares of the Company’s common stock, with the number of shares issuable determined to be the 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’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’s common stock held, would result in investor holding more than 4.99% of the Company’s then- outstanding common stock. The shares of common stock, if any, issued upon conversion, will be restricted securities as defined pursuant to the terms of Rule 144.

 



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Cellynx Group, Inc. - Other Convertibles Promissory Notes (Details) (USD $)
12 Months Ended
Dec. 31, 2012
Convertible Debenture
Date of Maturity
Jul. 09, 2012
Interest Rate per annum
8.00%
Convertible Debt Payment
$ 30,582
Pre payment penalty
14,400
January 5, 2012
Issue Date
Jan. 05, 2012
Face Amount
50,000
Date of Maturity
Jul. 03, 2012
Interest Rate per annum
8.00%
Total Note Balance
80,438 [1]
April 5, 2011 Note
Face Amount
50,000
Interest Rate per annum
8.00%
Total Note Balance
98,613 [1]
August 2006 Note
Face Amount
250,000
Interest Rate per annum
4.00%
Convertible Debt Payment
262,356
Principal amount
262,356
Total Note Balance
$ 316,351
[1] 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


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Cellynx Group, Inc. - Other Convertibles Promissory Notes (Details) (Parenthetical)
12 Months Ended
Dec. 31, 2012
January 5, 2012
Terms
Holder may convert principal and unpaid interest on the note into shares of the Company’s common stock, with the number of shares issuable determined to be the 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’s common stock over the ten trading days prior to the date of the conversion.
April 5, 2011 Note
Terms
convert principal and unpaid interest on the note into shares of the Company’s common stock, with the number of shares issuable determined by dividing the amount to be converted by the conversion price which is equal to 63% of the average of the three lowest trading prices of the Company’s common stock over the ten trading days prior to the date of the conversion.
August 2006 Note
Terms
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.


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Warrant Activity - 5BARz International Inc. (Details) (USD $) (BARz AG, USD $)
12 Months Ended
Dec. 31, 2012
BARz AG
Warrant Activity
Outstanding at December 31, 2011, Number of Warrants
Granted, Number of shares
2,140,000
Outstanding and exercisable at December 31, 2012, Number of Warrants
2,140,000
Weighted Average Exericse Price
Outstanding at December31, 2011,Weighted average exercise price
Granted, Weighted average exercise price
$ 0.20
Outstanding and exercisable at December 31, 2012, Weighted average exercise price
$ 0.20
Outstanding at December 31, 2012, Average Remaining Contractual Life
2 years 0 months 0 days


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Options Exercisable (Details) (USD $) (USD $)
12 Months Ended
Dec. 31, 2012
Number of Options
6,400,000
$0.0008
Number of Options
6,400,000
Weighted Average Exercise Price
$ 0.0008
Weighted Average Remaining Contractual Life
2 years 5 months


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Warrant Activity - CelLynx Group, Inc. (Details) (USD $) (CeLlynx Group, Inc., USD $)
12 Months Ended
Dec. 31, 2012
CeLlynx Group, Inc.
Warrant Activity
Outstanding at December 31, 2011, Number of Warrants
36,114,757
Granted, Number of shares
Exercised, Number of shares
Expired, Number of shares
30,184,757
Outstanding and exercisable at December 31, 2012, Number of Warrants
5,930,000
Weighted Average Exericse Price
Outstanding at December31, 2011,Weighted average exercise price
$ 0.12
Granted, Weighted average exercise price
Exercised, Weighted average exercise price
Expired, Weighted average exercise price
$ 0.12
Outstanding and exercisable at December 31, 2012, Weighted average exercise price
$ 1.19
Outstanding at December 31, 2012, Average Remaining Contractual Life
2 years 0 months 0 days


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Related Party transactions (Details) (USD $)
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Date of Agreement
Dec. 30, 2010
Proceeds from Note Payable
$ 370,000
Issuance of Common Stock
15,600,000
Payment on Note
61,954
Balance of Note
$ 19,850 $ 120,437


v0.0.0.0
Investment in 5BARz AG (Details Narrative) (5BARz AG, USD $)
0 Months Ended 12 Months Ended
Oct. 06, 2011
Dec. 31, 2012
5BARz AG
Subsidiary or Equity Method Investee [Line Items]
5BARz AG Common stock issued, shares
10,000,000
5BARz AG Common stock issued held by company, shares
5,100,000 9,458,000
5BARz AG Common stock issued held by officers and a consultant, shares
450,000
5BARz AG Common stock in escrow, shares
4,450,000
5BARz AG Common stock, Par Value
0.01 CHF 0.01 CHF
Common Stock Sold, in shares
71,000
Proceeds of Common Stock
$ 108,752 $ 223,650
Acquired interest
94.60%


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Investment in CelLynx Group, Inc.Description (Details Narrative) (CeLlynx Group, Inc., USD $)
0 Months Ended 3 Months Ended
Jan. 07, 2011
Mar. 29, 2012
CeLlynx Group, Inc.
Common Stock recieved from CelLynx Group, Inc.
63,412,638
Purchase Price for common stok of CelLynx Group, Inc.
$ 634,126
Common Share of the registrant issued
1,250,000
Amount of credit facility converted to capital stock of CelLynx Group, Inc.
$ 73,500
Amount of Shares of CelLynx Group, Inc. resulting from conversion of credit facility
350,000,000


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Investment in CelLynx Group, Inc. (Details) (USD $)
Mar. 29, 2012
Asset Purchase Agreement
Cash consideration paid
$ 170,000
1,250,000 common shares of the registrant issued at a market price of $0.20 per share
250,000
Redemption of convertible debt for 350 million shares of Cellynx Group Inc. common stock
455,000
Fair market value of consideration paid
$ 875,000


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Investment in CelLynx Group, Inc. (Details) (Parenthetical) (USD $)
1 Months Ended
Mar. 29, 2012
Common Stock For Cellynx
Common Share of the registrant issued
1,250,000
Common Stock recieved from Cellynx Group, Inc.
63,412,638
Common Stock
Price Per Unit
$ 0.20


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Investment in CelLynx Group, Inc. Additional(Details) (USD $) (Common Stock For Cellynx)
1 Months Ended
Mar. 29, 2012
Common Stock For Cellynx
Terms

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.



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Investment in CelLynx Group, Inc. - Assets and Liabilites recognized (Details) (USD $)
Mar. 29, 2012
Purchase price
$ 875,000
Net book Value of Cellynx
Current assets
3,260
Patents, trademarks, and license
44,718
Investment in 5BARz
1,800,000
Furniture and equipment
2,113
Accounts payable and accruals
(1,756,628)
Notes payable (net of discount)
(403,076)
Accrued Interest
(62,250)
Derivative liability
(5,495,425)
LOC payable-5BARz (net)
(586,525)
Totals
(6,449,813)
Adjustments
Patents, trademarks, and license
1,155,282
Derivative liability
(5,026,093)
LOC payable-5BARz (net)
(586,525)
Fair value non-controlling interest
(583,333)
Totals
6,184,567
Valuation attributed to assets acquired
Current assets
3,260
Patents, trademarks, and license
1,200,000
Investment in 5BARz
1,800,000
Furniture and equipment
2,113
Accounts payable and accruals
(1,756,628)
Notes payable (net of discount)
(403,076)
Accrued Interest
(62,250)
Derivative liability
(469,332)
LOC payable-5BARz (net)
0
Fair value non-controlling interest
(583,333)
Totals
(265,246)
Goodwill
1,140,246
Purchase price
$ 875,000


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Investment in CelLynx Group, Inc. (Details Narrative) (CeLlynx Group, Inc., USD $)
0 Months Ended
May 15, 2012
Apr. 13, 2012
CeLlynx Group, Inc.
Conversion of debt
$ 58,500 $ 7,700
Common Stock Recieved, share
390,000,000 51,333,333


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Investment in CelLynx Group, Inc. - Financial Information (Details) (USD $)
12 Months Ended 50 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2012
Investment In Cellynx Group Inc. - Financial Information Details
Revenues
$ 0 $ 0
Net loss
$ 1,070,117 $ 1,504,494 $ 2,861,770
Pro forma basic and diluted net loss per common share
$ (0.01) $ (0.02)
Pro forma weighted average common shares outstanding- basic and diluted
97,833,528 90,182,785


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Litigation (Details Narrative) (USD $)
12 Months Ended
Dec. 31, 2012
CSS Properties #1
Date
10/21/2010
Allegations
Past due rent
Alleged Damages
$ 25,000
CSS Properties #2
Date
8/27/2012
Allegations
Past due rent
Alleged Damages
24,699
Legal Fees
3,000
Late Charges
2,041
Labor Commission
Date
7/19/2010
Allegations
Unpaid Wages
Alleged Damages
263,023
LaJolla Cove Investors Inc.
Date
10/16/2012
Allegations
Breach of contract
Alleged Damages
2,500,000
Legal Fees
300,000
Asher Enterprises, Inc.
Date
3/22/2013
Allegations
Repayment of notes
Alleged Damages
$ 81,000


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Litigation (Details Narrative) (Parenthetical)
12 Months Ended
Dec. 31, 2012
LaJolla Cove Investors Inc.
Damages Sought

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. La Jolla Cove Investors Inc. v. 5Barz International, Inc., 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’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. 

Asher Enterprises, Inc.
Damages Sought
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 “parity value” of the “default amount” paid in shares as defined in the terms of the agreements. The Company intends to file an appearance and defend against the law suit.


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Subsequent Events (Details Narrative) (USD $)
12 Months Ended 0 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Mar. 17, 2013
Subsequent Event
Mar. 08, 2013
Subsequent Event
Mar. 06, 2013
Subsequent Event
Mar. 01, 2013
Subsequent Event
Feb. 26, 2013
Subsequent Event
Feb. 16, 2013
Subsequent Event
Feb. 14, 2013
Subsequent Event
Feb. 12, 2013
Subsequent Event
Feb. 04, 2013
Subsequent Event
Jan. 25, 2013
Subsequent Event
Jan. 22, 2013
Subsequent Event
Jan. 16, 2013
Subsequent Event
Jan. 10, 2013
Subsequent Event
Jan. 04, 2013
Subsequent Event
Jan. 08, 2013
Subsequent Event
Units Issued
200,000 [1] 60,000 [1] 600,000 [1] 2,000,000 [1] 650,000 [1] 150,000 [1] 200,000 [1] 40,000 [1] 60,000 [1] 500,000 [1]
Proceeds from Sale of Warrants
$ 3,000
Aggregate Proceeds
10,000 3,000 30,000 100,000 32,500 7,500 10,000 2,000 25,000
Shares issued for Services, shares
513,827 275,000 341,780 1,440,000 125,000 100,000
Shares issued for Services, amount
798,463 7,500 25,961 13,500 17,089 72,000 7,500 5,000
Price of Stock
$ 0.05 $ 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
Principal Amount convertible debenture for services
$ 147,428
Interest Rate per annum
8.00%
Price per share
$ 0.05
[1] 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.