UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)
þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended DECEMBER 31, 2012
	For the Quarterly Period Ended March 31, 2013
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File No. 000-27147

CelLynx Group, Inc.

(Exact name of small business issuer as specified in its charter)

NEVADA

(State or other jurisdiction of

incorporation or organization)

95-4705831

(I.R.S. Employer

Identification No.)

~~4014~~9444 ~~Calle~~Waples ~~Isabella~~Street, Suite 140, San ~~Clemente~~Diego, California ~~92672~~92121-2940

(Address of principal executive offices)

(~~949~~877) ~~305~~723-~~5290~~7255

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer	¨			Accelerated filer	¨
	Non-accelerated filer	¨			Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each issuer's classes of common stock, as of the latest practicable date: The total shares outstanding for this company is 12,~~457~~048,498,001 shares outstanding as of ~~February~~September 1430, 2013.

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (Unaudited)	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
	a) Condensed Consolidated Balance Sheet as at March 31, 2013 and September 30, 2012	F-1
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
	b) Condensed Consolidated Statement of Operations for the three and six month period ended March 31, 2013 and 2012	F-2
Item 4.	Controls and Procedures	33
	c) Condensed Consolidated Statement of Cash Flows for the six months ended March 31, 2013 and 2012	F-3
PART II	OTHER INFORMATION	34
	d) Notes to Condensed Consolidated Financial Statements	7
Item 1.	Legal Proceedings	34
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Controls and Procedures	26
Item 4.	(Removed and Reserved)	35
PART II	OTHER INFORMATION	29
Item 5.	Other Information	35
Item 1.	Legal Proceedings	29
Item 6.	Exhibits	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine safety disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34

As used in this Quarterly report, the terms "we," "us," "our," "5BARz" and the "Company" mean 5BARz International Inc. and its subsidiaries, unless otherwise indicated. All dollar amounts in this Quarterly report are expressed in U.S. dollars, unless otherwise indicated.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. Forward-looking statements include those that address activities, developments or events that we expect or anticipate will or may occur in the future. All statements other than statements of historical facts contained in this Quarterly report, including statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under the captions "Risk Factors" beginning on page 21, "Management's Discussion and Analysis of Financial Condition and Results of Operations" beginning on page 4, and elsewhere in this Quarterly report. We undertake no obligation to update or revise our forward-looking statements, whether as a result of new information, future events or otherwise. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the "SEC"), particularly our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K.

The disclosures set forth in this report should be read in conjunction with the audited financial statements and notes thereto of the Company for the year ended September 30, 2012. Because of the nature of a relatively new and growing company, the reported results will not necessarily reflect the operating results that will be achieved in the future.

Part I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CELLYNX GROUP, INC.
CONSOLIDATED BALANCE SHEETS
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2012 AND SEPTEMBER 30, 2012
(Unaudited)
				December 31,			September 30,
		March 31,				September 30,
				2012			2012
		2013				2012
				(unaudited)
ASSETS
CURRENT ASSETS:
Cash	~~Cash~~	$	14	$	14	$	$(284	~~(284~~)
TOTAL CURRENT ASSETS			14		14		(284	~~(284~~)
EQUIPMENT, net			608		~~982~~		1,359	~~1,359~~
INTANGIBLE ASSETS, net			48,474		~~48,473~~		48,737	~~48,737~~
TOTAL ASSETS		$	49,096	$	~~49,469~~	$	$49,812	~~49,812~~
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	~~Accounts payable and accrued expenses~~	$	2,104,620	$	~~1,999,475~~	$	$1,890,211	~~1,890,212~~
Accrued interest	~~Accrued interest~~		164,672		~~143,788~~		69,346	~~69,346~~
Accrued derivative liabilities	~~Accrued derivative liabilities~~		2,420,225		~~367,530~~		1,487,568	~~1,487,568~~
	Line of credit net of debt discount of $63,775				598,333			580,473
Line of credit			765,724				580,473
	Convertible promissory notes, net of debt discount of $2,855 and $18,868 as of December 31, 2012 and September 30, 2012, respectively				406,501			390,488
Promissory notes			397,956				390,488
TOTAL CURRENT LIABILITIES			5,853,197		~~3,515,627~~		4,418,086	~~4,418,087~~
TOTAL LIABILITIES			5,853,197		~~3,515,627~~		4,418,086	~~4,418,087~~
COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS' DEFICIT:
Series A preferred stock, $0.001 par value; 100,000,000 shares authorized; nil shares issued and outstanding	~~Series A preferred stock, $0.001 par value; 100,000,000 shares authorized; nil shares issued and outstanding~~		—		-		—	-
	Common stock, $0.001 par value, 2,000,000,000 shares authorized; 1,457,498,001 shares issued and outstanding as of December 31, 2012 and September 30, 2012				1,457,498			1,457,498
Common stock, $0.001 par value, 2,000,000,000 shares authorized; 1,601,498,001 and 1,457,498,001 shares issued and outstanding as of March 31, 2013 and September 30, 2012 respectively.			1,601,497				1,457,498
Additional paid-in capital	~~Additional paid-in capital~~		13,044,849		~~13,170,581~~		13,170,581	~~13,170,581~~
Accumulated deficit	~~Accumulated deficit~~		(18,650,447	)	~~(16,294,237)~~		(17,196,353	~~(17,196,354~~)
Treasury stock	~~Treasury stock~~		(720,000	)	~~(459,000)~~		(450,000	~~(450,000~~)
Accumulated other comprehensive income	~~Accumulated other comprehensive income~~		(1,080,000	)	~~(1,341,000)~~		(1,350,000	~~(1,350,000~~)
Total stockholders’ deficit	~~Total stockholders’ deficit~~	$	(5,804,101	$)	~~(3,466,158)~~	$	$(4,368,274	~~(4,368,275~~)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	~~TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT~~	$	49,096	$	~~49,469~~	$	$49,812	~~49,812~~
The accompanying notes are an integral part of these consolidated financial statements.
See accompanying notes

3F-1

CELLYNX GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2012 AND 2011

CELLYNX GROUP INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2013 AND 2012
(Unaudited)
	3 Months Ended						6 Months Ended
Income Statement	March 31, 2013			March 31, 2012			March 31, 2013			March 31, 2012
Sales	$	—		$	—		$	—		$	—
Cost of Sales		—			—			—			—
Selling general and administrative expenses:
Amortization and depreciation		638			3,732			1,015			4,571
Bank charges and interest		88,179			51,291			112,635			92,131
Research & development		39,000			—			78,000			—
General and administrative expenses		154,988			214,377			268,201			368,667
Total operating expenses		282,804			269,400			459,851			465,369
(Loss) from operations		(282,804	)		(269,400	)		(459,851	)		(465,369	)
Other income (expense):
Change in fair value of derivative liability		(2,115,823	)		(5,621,028	)		(992,832	)		(5,595,012	)
Change in fair value of accrued warrant and option liability		8,170			—			8,217			2,718
Gain on settlement of debt		52,240			3,766			52,240			3,766
Amortization of debt discount		(21,258	)		—			(61,867	)		—
Gain on sale of intangible assets		—			1,482,563			—			1,485,513
Total Other income (expense)		(2,076,671	)		(4,134,699	)		(994,242	)		(4,103,015	)
Net loss	$	(2,359,475	)	$	(4,404,099	)	$	(1,454,094	)	$	(4,568,384	)
Basic (loss) per common share		(0.0015	)		(0.02	)		(0.0010	)		(0.02	)
Weighted average number of shares outstanding		1,561,498,081			211,946,779			1,521,629,229			267,598,489
Other comprehensive income
Unrealized gain on investment		180,000			—			270,000			—
Other comprehensive income		180,000			—			270,000			—
Comprehensive (loss)	$	(2,179,475	)	$	(4,404,099	)	$	(1,184,094	)	$	(4,568,384	)

			Three Months Ended
			December 31, 2012	December 31, 2011
			(unaudited)	(unaudited)
Net Revenue		$	-	$	-
Cost of Revenue			-		-
Gross profit			-		-
Operating expenses
	Research and development		39,000		-
	General and administrative		138,312		155,504
	Total operating expenses		177,312		155,504
Loss from operations		$	(177,312)	$	(155,504)
Non-operating income (expense):
	Interest and financing costs, net		(40,609)		(40,465)
	Change in fair value of accrued beneficial conversion liability,		1,119,991		26,016
	Change in fair value of accrued warrant and options liability		47		2,718
	Gain on sale of intangible assets		-		2,950
	Total non-operating income (expense), net		1,079,429		(8,781)
Net income (loss)		$	902,116	$	(164,285)
Weighted average shares outstanding
	Basic		1,457,498,081	212,006,020
	Diluted		2,000,000,000	212,006,020
Loss per share :
	Basic	$	0.0006	$	(0.0011)
	Diluted		0.0005		(0.0011)

See accompanying notes

4F-2

CELLYNX GROUP, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED DECEMBER 31, 2012 AND 2011

CELLYNX GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 2013 AND 2012

	6 Months Ended
	March 31, 2013			March 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,454,094	)	$	(4,568,384	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,015			4,571
Stock based compensation					79,618
Note payable issued for services					50,000
Change in fair value of derivative liability		992,832			5,595,012
Change in debt discount on convertible notes		61,867			92,131
Change in fair value of accrued warrant and option liability		(4,696	)		(2,718	)
Change in line of credit for services		90,000			—
Gain on sale of intangibles					(1,485,513	)
Gain on settlement of debt		(52,240	)		(3,766
Changes in operating assets and liabilities:
Change in other assets		—			20,090
Change in accounts payable and accrued expenses		220,891			119,921
Change in unpaid interest and penalties on notes payable		117,433			76,774
Net cash from (used in) operating activities		(26,992	)		(99,038	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash used in investing activities		—			—


CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes					15,000
Proceeds from convertible line of credit		27,290			87,106
Net cash provided by financing activities		27,290			102,106

NET INCREASE IN CASH		298			3,068

CASH, BEGINNING OF PERIOD		(284	)		178

CASH, END OF PERIOD	$	14		$	3,246

Supplementary disclosure of Cash Flow Information
Cash paid for interest	$	—		$	—

NON-CASH INVESTING AND FINANCING ACTIVITIES
Conversion of notes payable to common stock	$	14,400			52,700

	Three Months Ended
	December 31, 2012		December31, 2011
	(unaudited)		(unaudited)
Net Income	$	902,116	$	(164,285	)
Other comprehensive income (loss)
Net unrealized gain on investment		9,000		—
Comprehensive income (loss)	$	911,116		(164,285	)

See accompanying notes

~~The accompanying notes are an integral part of these consolidated financial statements.~~F-3

CELLYNX GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2012 AND 2011
			2012		2011
				(unaudited)		(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss		$	902,116	$	(164,285)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation and amortization		641		839
		Stock issued for services		-		39,809
		Change in fair value of accrued beneficial conversion liability		(1,119,991)		(26,016)
		Change in fair value of accrued warrant and option liability		(47)		(2,718)
		Amortization of debt discount		40,609		25,379
	Changes in operating assets and liabilities:
		Change in other assets		-		20,090
		Change in accounts payable, accrued expenses and interest		170,573		101,213
	Net	cash used in operating activities		(6,099)		(5,689)
CASH FLOWS FROM INVESTING ACTIVITIES:
		Investment in intangible assets		-		(3,436)
	Net cash used in investing activities			0		(3,436)
CASH FLOWS FROM FINANCING ACTIVITIES:
		Proceeds from line of credit		6,397		9,114
	Net cash provided by financing activities			6,397		9,114
NET INCREASE (DECREASE) IN CASH				298		(11)
CASH, BEGINNING OF PERIOD				(284)		178
CASH, END OF PERIOD			$	14	$	167
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash paid for interest		$	-	$	-
	Cash paid for income taxes		$	-	$	-
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING:
	Conversion of convertible note payable to common stock		$	-	$	34,500
The accompanying notes are an integral part of these consolidated financial statements.

CELLYNX GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~DECEMBER~~MARCH 31, ~~2012~~2013

(Unaudited)

Note 1 – Organization, Going Concern and ~~Basis~~Exiting ofDevelopment ~~Presentation~~Stage

The unaudited consolidated financial statements have been prepared by CelLynx Group, Inc., formerly known as NorPac Technologies, Inc. (hereinafter referred to as “CelLynx” or the “Company”), pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K. The results for the three months ended December 31, 2012, are not necessarily indicative of the results to be expected for the full year ending September 30, 2013.

Organization and Line of Business

CelLynx Group, Inc. (the “Company”) , was ~~originally~~ incorporated under the laws of the State of Minnesota on April 1, 1998. The Company changed its name from NorPac Technologies, Inc. to Cellynx Group, Inc. on August 5, 2008.

OnThe ~~July~~Company ~~23,~~developed ~~2008,~~and ~~prior to~~patented ~~the~~a ~~closing~~technology of for a ~~Share~~line ~~Exchange~~of ~~Agreement~~cellular ~~(described~~network ~~below),~~infrastructure ~~the~~devices ~~Company~~for ~~entered~~use ~~into~~in athe ~~Regulation~~small Soffice, home ~~Subscription~~and ~~Agreement pursuant~~mobile tomarket ~~which the Company issued~~places. ~~10,500,000~~The ~~shares~~products ofare ~~its common~~being ~~stock~~further developed and ~~warrants~~brought to ~~purchase~~market ~~10,500,000~~by ~~shares of~~5BARz ~~common~~International ~~stock~~Inc., ata anCompany ~~exercise~~which ~~price~~acquired ofa ~~$0.20~~60% ~~per~~interest in ~~share~~that totechnology ~~non-U.S.~~and ~~persons~~also ~~for an~~a ~~aggregate~~60% ~~purchase~~equity ~~price~~interest ofin $1Cellynx Group,~~575,000~~ Inc.

On July 24, 2008, the Company entered into a Share Exchange Agreement, as amended, with CelLynx, Inc., a California corporation ("CelLynx- California")~~, and~~. ~~twenty-three CelLynx-California shareholders who, immediately prior~~ Pursuant to the ~~closing of~~terms ~~the transaction, collectively held 100%~~ of ~~CelLynx-California’s issued~~that ~~and~~share ~~outstanding~~exchange ~~shares of capital stock. As a result~~agreement, the CelLynx-California shareholders were to receive 77,970,956 shares of ~~the~~ the Company’s common stock in exchange for 100%, or 61,983,580 shares, of CelLynx-California’s ~~common~~ ~~stock. However, the Company had only 41,402,110 authorized, unissued and unreserved shares of~~ common stock ~~available, after taking into account the shares of common stock issued in the July 23, 2008, financing described above~~. ~~Pursuant~~The ~~to the Share Exchange Agreement, in the event that there was an insufficient number of authorized but unissued and unreserved common stock to complete the transaction, the~~ Company was to issue all of the available authorized but unissued and unreserved common stock to the CelLynx-California shareholders in a pro rata manner and then establish a class of Series A Convertible Preferred Stock (“Series A Preferred Stock”) and issue that number of shares of Series A Preferred Stock such that the common stock underlying the Series A Preferred Stock plus the common stock actually issued to the CelLynx- California shareholders would equal the total number of shares of common stock due to the CelLynx-California shareholders under the Share Exchange Agreement. As a result, the Company issued to the CelLynx-California shareholders an aggregate of of 32,454,922 shares of common stock ~~and~~ and 45,516,034 shares of Series A Preferred Stock. The Series A Preferred Stock automatically ~~would~~converted ~~convert~~ into common stock on a one-to-one ratio upon the authorized capital stock of ~~the~~ the Company being increased to include ~~not~~ not less than 150,000,000 shares of common stock.

On November 7, 2008, the Company amended the Articles of Incorporation to increase the number of authorized shares to 400,000,000 and converted the 45,516,034 shares of Series A Preferred Stock into 45,516,034 shares of the Company’s common stock.

The exchange of shares with CelLynx-California was accounted for as a reverse acquisition under the purchase method of accounting because the shareholders of CelLynx-California obtained control of the Company. At the date of the reverse merger transaction, the net assets of the legal acquirer CelLynx Group, Inc. were $1,248,748. As a result of the reverse merger transactions described above, the historical financial statements presented are those of CelLynx-California, the operating entity. Each CelLynx-California shareholder received 1.2579292 shares of stock in the Company for each share of CelLynx- California capital stock. All shares and per-share information have been retroactively restated for all periods presented to reflect the reverse merger transaction.

On October 27, 2008, the Board of Directors approved a change of the Company’s fiscal year end from June 30 to September 30 to correspond to the fiscal year of CelLynx-California. The fiscal year end change was effective for the year ended September 30, 2008.

On March 23, 2012, the Company amended the Articles of Incorporation to increase the number of authorized shares to 1,000,000,000. On May 7, 2012 the Company amended the Articles of Incorporation to increase the number of authorized shares to 2,000,000,000 and on May 1, 2013 the Company amended the Articles of Incorporation to increase the number of authorized shares to 4,450,000,000.

These financial statements reflect the financial position and results of operations for the Company and its wholly owned subsidiary Cellynx, Inc. for the six month period ended March 31, 2013.

CELLYNX GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~DECEMBER~~MARCH 31, ~~2012~~2013

(Unaudited)

~~On November~~Going 7, 2008, the Company amended the Articles of Incorporation to increase the number of authorized shares to 400,000,000 and converted the 45,516,034 shares of Series A Preferred Stock into 45,516,034 shares of the Company’s common stock.concern

The ~~exchange~~accompanying ~~of shares~~consolidated ~~with~~financial ~~CelLynx-California~~statements ~~was accounted~~have ~~for~~been asprepared on a ~~reverse~~going ~~acquisition under~~concern basis, which contemplates the ~~purchase~~realization ~~method~~ of ~~accounting~~assets ~~because~~and the ~~shareholders~~satisfaction of ~~CelLynx-California obtained~~liabilities ~~control~~in the normal course of business. As shown in the ~~Company.~~accompanying Onconsolidated ~~August~~financial 5statements, ~~2008,~~the ~~NorPac~~Company ~~Technologies,~~has ~~Inc. changed~~incurred ~~its~~losses ~~name~~for tothe ~~CelLynx~~period ~~Group~~from October 1, ~~Inc.~~2012 ~~Accordingly~~through ~~the~~March ~~merger~~31, 2013 of ~~CelLynx-California into~~$1,454,094. ~~the~~The Company ~~was~~has ~~recorded~~negative ascash aflows ~~recapitalization~~from operations for the six months ended March 31, 2013 of ~~CelLynx-California~~$26,992 ~~with~~and ~~CelLynx-California being~~has ~~treated~~an asaccumulated ~~the~~deficit ~~continuing~~of ~~entity~~$18,650,447 at March 31, 2013. The ~~historical~~ ~~financial~~Company ~~statements~~has ~~presented~~made no revenue to date. ~~are~~The ~~the~~Company ~~financial~~is ~~statements~~seeking additional sources of ~~CelLynx-California.~~equity ~~The Share~~or ~~Exchange~~debt ~~Agreement~~financing, ~~has~~and ~~been~~there ~~treated~~is asno assurance these activities will be successful. aThese ~~recapitalization~~factors ~~and~~raise ~~not~~substantial doubt about the Company’s ability to continue as a ~~business~~going ~~combination;~~concern ~~therefore,~~and nothe ~~pro forma~~Company’s ~~information~~continued existence is ~~disclosed.~~dependent Atupon ~~the~~adequate ~~date of~~additional ~~the~~financing ~~reverse~~being ~~merger~~raised ~~transaction, the~~to ~~net~~develop ~~assets~~its ofsales ~~the~~and ~~legal~~marketing ~~acquirer~~program ~~CelLynx~~for ~~Group,~~the ~~Inc.~~sales ~~were~~of ~~$1,248,748~~5BARz product.

~~As a~~The ~~result~~Company ofis ~~the reverse~~in ~~merger~~default ~~transactions~~on ~~described above,~~certain ~~the~~notes ~~historical~~payable. ~~financial statements presented are those of CelLynx-California~~Accordingly, ~~the~~any ~~operating~~penalties ~~entity. Each CelLynx-California shareholder received 1.2579292 shares of stock in the Company for each share of CelLynx- California capital stock. All shares~~ and ~~per-share~~interest ~~information~~has ~~have~~ been ~~retroactively~~ ~~restated~~accrued ~~for~~as ~~all periods~~of ~~presented~~March to31, ~~reflect~~2013 ~~the reverse~~(see ~~merger~~Note ~~transaction~~4 (d)).

OnThe ~~October~~accompanying ~~27,~~consolidated ~~2008,~~financial statements ~~the~~do ~~Board~~not ofinclude ~~Directors~~any ~~approved~~adjustments arelated ~~change~~to of the ~~Company’s~~recoverability ~~fiscal~~or ~~year~~classification ~~end~~of ~~from~~asset-carrying ~~June~~amounts 30or tothe ~~September~~amounts 30and ~~to correspond to the~~classification ~~fiscal year~~ of ~~CelLynx-California.~~liabilities ~~The~~that ~~fiscal~~may ~~year~~result ~~end~~should ~~change~~the ~~was~~Company ~~effective~~be ~~for~~unable ~~the year~~to ~~ended~~continue ~~September~~as ~~30,~~a ~~2008~~going concern.

OnExiting ~~March~~Development 23, 2012, the Company amended the Articles of Incorporation to increase the number of authorized shares to 1,000,000,000. On May 7, 2012 the Company amended the Articles of Incorporation to increase the number of authorized shares to 2,000,000,000.Stage

The Company was in the development stage through June 30, 2009. In July 2009, the Company ~~develops~~received the first ~~and~~220 ~~manufactures~~units of the Company’s cellular network ~~extenders~~extender, The ~~which~~Road ~~enable~~Warrior, ~~users~~from toits ~~obtain~~manufacturer. ~~stronger~~As ~~signals~~of July 2009, the Company became fully operational and ~~better~~as such ~~reception~~was no longer considered a development stage company. During the period that the Company was considered a development stage company, the Company incurred accumulated losses of approximately $10,948,625.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended March 31, 2013, are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2013. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K filed on January 15, 2013 for the fiscal year ended September 30, 2012.

The accompanying consolidated financial statements include the accounts of CelLynx Group, Inc., and its 100% wholly -owned subsidiary, CelLynx, Inc. All intercompany accounts and transactions have been eliminated in consolidation.

CELLYNX GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~DECEMBER~~MARCH 31, ~~2012~~2013

(Unaudited)

~~Going Concern~~Use ~~and~~of ~~Exiting Development Stage~~Estimates

~~These~~The ~~consolidated financial~~preparation ~~statements~~of ~~have~~these ~~been prepared on~~financial astatements ~~going~~in ~~concern~~conformity ~~basis,~~with ~~which~~accounting ~~implies~~principles ~~the Company~~generally ~~will~~accepted ~~continue to realize its assets and discharge its liabilities~~ in the ~~normal~~United ~~course~~States of ~~business.~~America ~~The~~requires ~~Company~~management ~~is unlikely~~ to ~~pay dividends~~make orestimates ~~generate~~and ~~significant~~assumptions ~~earnings~~that inaffect the ~~immediate~~reported ~~or foreseeable~~amounts ~~future. The continuation~~ of ~~the~~assets ~~Company~~and ~~as a~~liabilities ~~going~~and ~~concern~~disclosures ~~is dependent upon the continued financial support from its stockholders, the ability~~ of ~~the~~ ~~Company~~contingent toassets ~~obtain necessary equity~~ and ~~debt~~liabilities ~~financing to~~at ~~continue operations and to generate sustainable revenue. There is no guarantee that~~ the ~~Company will be able~~date toof ~~raise adequate equity or debt financing or generate profitable operations. For~~ the ~~three~~financial ~~months~~statements ~~ended~~and ~~December 31, 2012,~~ the ~~Company~~ ~~incurred~~reported aamounts ~~net loss from operations~~ of ~~$177,312.~~revenues Asand ofexpenses ~~December~~during ~~31, 2012,~~ the ~~Company had an accumulated deficit of~~reporting ~~$16,294,237~~period. ~~Further,~~Significant asestimates ofinclude ~~December~~impairment ~~31,~~analysis ~~2012~~for ~~and~~long ~~September~~lived 30assets, ~~2012, the Company had~~ ~~negative~~income ~~working capital of $3~~taxes,~~515,613~~ ~~and~~litigation ~~$4,418,370, respectively. These consolidated financial statements do not include any adjustments to the recoverability~~ and ~~classification~~valuation of ~~recorded~~derivative ~~asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern~~instruments. ~~Management~~ ~~intends~~Actual ~~to raise additional~~results ~~funds~~could ~~through~~differ ~~equity or debt financing and to generate cash~~ from ~~the~~those ~~sale of the Company’s products and from license fees as further described below~~estimates.

~~The Company~~Intangible was in the development stage through June 30, 2009. In July 2009, the Company received the first 220 units of the Company’s cellular network extender, The Road Warrior, from its manufacturer. As of July 2009, the Company was fully operational and as such was longer considered a development stage company. During the period that the Company was considered a development stage company, the Company incurred accumulated losses of approximately $10,948,625.Assets

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

Capitalized costs for patents are amortized on a straight-line basis over the remaining twenty-year legal life of each patent after the costs have been incurred. Once each patent or trademark is issued, capitalized costs are amortized on a straight-line basis over a period not to exceed 20 years and 10 years, respectively. The licensing right is amortized on a straight-line basis over a period of 10 years. Based on its review, the Company believes that as of March 31, 2013 and September 30, 2012, there was no significant impairment of its intangible assets

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.

CELLYNX GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~DECEMBER~~MARCH 31, ~~2012~~2013

(Unaudited)

~~Note~~Fair ~~2 –~~value ~~Summary~~ of ~~Significant~~financial ~~Accounting~~instruments ~~Policies~~– continued

Basis of Presentation

	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:
Conversion option liability	$	2,420,225	$	—	$	—	$	2,420,225

The ~~accompanying consolidated~~following ~~financial~~table ~~statements~~sets ~~have~~forth ~~been~~a ~~prepared~~summary inof ~~accordance~~the ~~with~~changes ~~accounting principles generally accepted~~ in the fair ~~United~~value ~~States~~ of ~~America.~~the ~~The~~Company’s ~~accompanying~~Level ~~consolidated~~3 financial ~~statements include~~liabilities ~~the~~that ~~accounts~~are ofmeasured ~~CelLynx~~at ~~Group,~~fair ~~Inc., and~~value ~~its~~on ~~100%~~a ~~wholly~~recurring ~~-owned subsidiary, CelLynx, Inc. All intercompany accounts and transactions have been eliminated in consolidation.~~basis:

Cash

	March 31, 2013
Beginning balance – October 1, 2012	$	1,487,568
Change in fair value of derivative liabilities		992,832
Write down of derivative liabilities on default of securities		(51,613	)
Change in accounting treatment of option and warrant liability		(8,562	)
Ending balance – March 31, 2013	$	2,420,225

~~Cash~~Level ~~and~~3 ~~cash~~liabilities ~~equivalents~~are ~~include~~valued ~~cash~~using unobservable inputs to inthe ~~hand~~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 ~~cash~~finance indepartment, ~~time~~which reports ~~deposits~~to the Chief Financial Officer, ~~certificates~~determines its valuation policies and procedures. The development and determination of the ~~deposit~~unobservable inputs for Level 3 fair value measurements and ~~all~~fair ~~highly~~value ~~liquid~~calculations are the responsibility of the Company’s ~~debt~~accounting ~~instruments~~and finance department with ~~original~~support ~~maturities of~~from ~~three~~the ~~months~~Company’s orconsultants ~~less~~and which are approved by the Chief Financial Officer.

~~Inventory~~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.

~~Inventory~~As ~~consists~~ of ~~finished~~March ~~goods~~31, ~~ready~~2013 ~~for sale~~there ~~and~~were isno ~~valued~~transfers ~~at the lower of cost (determined on a first-~~in, ~~first-out basis)~~ or ~~market.~~out ~~The~~of ~~Company reviews its~~Level ~~reserves~~3 ~~for~~from ~~slow~~other ~~moving~~levels ~~and~~in ~~obsolete inventories. As of September 30, 2011,~~ the ~~Company wrote~~fair ~~off~~value ~~its entire inventory balance~~hierarchy.

~~Accounts~~Derivative ~~Receivable~~instruments

The Company ~~maintains~~evaluates its convertible instruments, options, warrants ~~reserves~~or ~~for~~other ~~potential~~contracts ~~credit~~to ~~losses~~determine ~~for~~if ~~accounts~~those contracts or components of those contracts qualify as derivatives to be separately accounted ~~receivable~~for under ASC Topic 815, “Derivatives and Hedging”. ~~Management~~The ~~reviews~~result of this accounting treatment is that the ~~composition~~fair value of ~~accounts~~the ~~receivable~~derivative is marked-to-market each balance sheet date and ~~analyzes~~recorded ~~historical bad~~as ~~debts,~~a ~~customer~~liability. ~~concentrations,~~In ~~customer credit~~the ~~worthiness,~~event ~~current~~that ~~economic~~the fair value is ~~trends~~recorded ~~and~~as ~~changes~~a liability, the change in ~~customer~~ ~~payment~~fair ~~patterns~~value tois ~~evaluate~~ recorded in the ~~adequacy~~statement of ~~these~~operations ~~reserves~~as other income (expense). ~~Reserves~~Upon conversion ~~are~~or ~~recorded~~exercise ~~based~~of ona derivative instrument, the ~~Company’s~~instrument ~~historical~~is marked to fair value at the conversion date and then that fair value ~~collection~~is ~~history~~reclassified to equity. ~~Receivables~~Equity instruments that are ~~written off~~initially ~~when~~classified ~~they~~as ~~are~~equity ~~determined~~that become subject to bereclassification under ~~uncollectible.~~ASC AsTopic of815 ~~December~~are ~~31,~~reclassified ~~2012,~~to liability at the ~~Company~~ ~~determined~~fair ~~that~~value ~~allowance~~of ~~for~~the ~~bad debt~~instrument ~~was~~on ~~not~~the ~~necessary~~reclassification date.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

CELLYNX GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~DECEMBER~~MARCH 31, ~~2012~~2013

(Unaudited)

~~Equipment~~Net loss per share

~~Equipment~~The isCompany ~~recorded~~reports loss per share in accordance with the ASC Topic at260, ~~historical~~“Earnings ~~cost~~Per Share.”, which requires presentation of basic and isdiluted ~~depreciated~~EPS ~~using~~on the ~~straight-line~~face ~~method~~of ~~over~~the ~~their~~income ~~estimated~~statement ~~useful~~for ~~lives.~~all ~~The~~entities ~~useful~~with ~~life~~ complex capital structures and ~~depreciation~~requires ~~method~~a ~~are~~reconciliation ~~reviewed~~of ~~periodically~~the numerator and denominator of the basic EPS computation to ~~ensure~~the ~~that~~numerator and denominator of the ~~depreciation~~diluted ~~method~~EPS computation. In the accompanying financial statements, ~~and~~basic ~~period~~earnings ~~are~~per ~~consistent~~share ~~with~~of common stock is computed by dividing net income by the ~~anticipated~~weighted ~~pattern~~average number of shares of common ~~future~~stock ~~economic~~outstanding ~~benefits.~~during ~~Expenditures~~the ~~for~~period ~~maintenance~~plus ~~and~~the ~~repairs~~issuance ~~are~~of ~~charged~~common toshares, ~~operations~~if asdilutive, ~~incurred~~that ~~while renewals~~could ~~and~~result ~~betterments~~from ~~are~~the ~~capitalized.~~exercise ~~Gains~~of outstanding stock options and ~~losses~~warrants. onThese ~~disposals~~potentially ~~are~~dilutive securities were not included in the ~~results~~ calculation of ~~operations.~~loss ~~The~~per ~~useful~~common share ~~life~~for of the ~~equipment~~ isthree ~~being~~and ~~depreciated~~six ~~over three~~months ~~years~~ended March 31, 2013 or 2012 because their effect would be anti-dilutive.

~~Intangible~~Stock ~~Assets~~Based Compensation

~~Acquired~~The ~~patents,~~Company reports stock-based compensation ~~licensing~~under ~~rights~~ASC ~~and~~718 ~~trademarks~~“Compensation ~~are~~– ~~capitalized~~Stock atCompensation”. ~~their~~ASC ~~acquisition~~718 ~~cost~~requires orall ~~fair value.~~share-based ~~The~~payments ~~legal~~to ~~costs~~employees, ~~patent registration~~including ~~fees~~grants of employee stock options, ~~and~~warrants ~~models~~to ~~and~~be ~~drawings~~recognized ~~required~~in ~~for~~the ~~filing~~consolidated ~~patent~~financial ~~applications~~statements ~~are~~based ~~capitalized~~on iftheir ~~they~~fair ~~relate~~values. The Company accounts for equity instruments issued to ~~commercially~~non-employees ~~viable technologies.~~as ~~Commercially~~compensation ~~viable~~in ~~technologies~~accordance ~~are~~with ~~those~~the ~~technologies~~provisions of ASC 718, which require that each such equity instrument be recorded at its fair value on the measurement date, which is typically the date the services are ~~projected~~performed. The Black-Scholes option valuation model is used to ~~generate~~estimate ~~future~~the ~~positive~~fair ~~cash~~value ~~flows in~~of the ~~near~~warrants or options ~~term~~granted. ~~Legal~~The ~~costs~~model ~~associated~~includes ~~with~~subjective ~~applications that~~input ~~are~~assumptions ~~not~~that ~~determined~~can tomaterially beaffect ~~commercially viable~~the ~~are~~fair ~~expensed~~value ~~as incurred~~estimates. ~~All~~The ~~research~~model ~~and~~was ~~development~~developed ~~costs~~for ~~incurred~~use in ~~developing~~estimating the ~~patentable~~ ~~idea~~fair ~~are~~value ~~expensed~~of astraded ~~incurred. Legal~~options ~~fees~~or ~~from~~warrants. ~~the~~The ~~costs~~expected ~~incurred~~volatility inis ~~successful~~estimated ~~defense~~based toon the ~~extent~~most recent historical period of antime ~~evident~~equal ~~increase in~~to the ~~value~~ weighted average life of the ~~patents~~warrants ~~are capitalized~~or options granted.

~~Impairment~~Certain orreclassifications have been ~~Disposal~~made ofin ~~Long-~~the ~~lived~~financial ~~Assets~~statements at March 31, 2012 and for the three and six months then ended to conform to the March 31, 2013 presentation. The reclassifications had no effect on net loss.

~~The Company applies~~Recent ~~the provisions of Accounting Standards Codification (“ASC”) Topic 360, “Property, Plant, and Equipment,” which addresses financial~~ accounting and reporting for the impairment or disposal of long -lived assets. ASC 360 requires impairment losses to be recorded on long - lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long -lived assets. Loss on long- lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal. Based on its review, the Company believes that as of December 31, 2012 and September 30, 2012, there was no significant impairment of its long -lived assets.pronouncements

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 guidance did not have a material effect on the condensed consolidated financial statements.

FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of March 31, 2013 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 2013 or 2012, 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.

CELLYNX GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~DECEMBER~~MARCH 31, ~~2012~~2013

(Unaudited)

~~Revenue~~Note ~~Recognition~~3 – Intangible Assets

The Company's ~~revenue~~incurred legal costs ~~recognition~~in ~~policies~~acquiring patent and trademark rights. These costs are projected to generate future positive cash flows in ~~compliance~~the ~~with~~near ~~ASC~~term ~~Topic~~and ~~605,~~have ~~“Revenue~~been ~~Recognition~~capitalized to intangible assets in the period incurred.” ~~Revenue~~Once each patent or trademark is ~~recognized~~issued, capitalized atcosts ~~the~~are ~~date~~amortized on a straight-line ofbasis ~~shipment~~over a period not to ~~customers,~~exceed 20 years and ~~when~~10 ~~the~~years, respectively. ~~price~~On isMarch ~~fixed or~~29, ~~determinable~~2012, the ~~delivery~~Company issold ~~completed,~~a ~~no other~~60% ~~significant~~interest ~~obligations~~in oftheir ~~the~~patents to 5BARz International Inc. The balances ~~Company~~below ~~exist~~reflect ~~and~~the ~~collectability~~residual isbalance ~~reasonably~~at ~~assured~~cost.

~~The~~Intangible ~~gain on sale of intangibles is fully reflected~~assets asconsist ~~income in the period~~ of ~~sale as~~ the ~~sale proceeds were fully paid at the date of sale, March 29, 2012.~~following:

Fair Value of Financial Instruments

	March 31, 2013			September 30, 2012
Patents	$	46,862		$	46,862
Trademarks		4,995			4,995
Licensing rights		4,214			4,214
		56,071			56,071
Accumulated Amortization		(7,597	)		(7,334	)
Intangibles, net	$	48,473		$	48,737

~~ASC~~During ~~Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of~~ the ~~fair~~six ~~value~~months ~~of financial~~ended ~~instruments~~March ~~held by the Company. ASC Topic 825~~31, ~~“Financial~~2013 ~~Instruments,” defines fair value,~~ and ~~establishes a~~ ~~three-level~~the ~~valuation~~year ~~hierarchy~~ended ~~for disclosures~~September of30, ~~fair value~~2012 ~~measurement~~no ~~that~~amortization ~~enhances~~has ~~disclosure~~been ~~requirements~~recorded ~~for~~on ~~fair value measures~~Patents. The ~~carrying~~other ~~amounts reported in the consolidated balance sheets for cash~~intangibles, ~~accounts~~comprised ~~receivable,~~of ~~accounts payable, and other current liabilities~~trademarks ~~each qualify as financial instruments~~ and ~~are~~licensing arights ~~reasonable~~have ~~estimate~~amortization of ~~their fair~~$263 ~~values~~recorded ~~because~~for of the ~~short~~six ~~period~~months ofended ~~time~~March ~~between~~31, ~~the~~2013 ~~origination of such instruments~~ and ~~their~~$528 ~~expected~~for ~~realization and~~the ~~their~~six ~~current~~months ~~market rate~~ended ofMarch ~~interest.~~31, ~~The three levels of the valuation hierarchy are defined as follows:~~2012.

●	Level 1	inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
●	Level 2	inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
●	Level 3	inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Note 4 – Promissory Notes

The Company~~’s warrant~~ &has ~~option~~notes ~~liability~~payable ~~is carried at fair value totaling $8,281 and $8,364,~~ as of December 31, 2012 and September 30, 2012, respectively. The Company’s conversion option liability is carried at fair value totaling $359,015 and $1,479,204 as of December 31, 2012 and September 30, 2012, respectively. The Company used Level 2 inputs for its valuation methodology for the warrant liability and conversion option liability as their fair values were determined by using the Black-Scholes option pricing model using the following assumptions:follows;

December 31, 2012
Issue Date			Note Principal	Note Terms		Accrued Interest		Converted to Common Stock		Balance March 31, 2013			Balance Sept. 30, 2012
Annual dividend yield	—
November. 10, 2007		$	262,356	(a)	$	56,583	$	—	$	318,939		$	313,677
Expected life (years)	0.55 – 5.0
April 5, 2011			50,000	(b)		49,254		—		99,254			56,247
Risk-free interest rate	0.45% - 0.81%
January 5, 2012			50,000	(c)		36,324		—		86,324			52,498
Expected volatility	183%
May 24, 2012			37,500	(d)		14,935		14,400		38,035			38,256
September 12, 2012			12,500	(e)		7,576		—		20,076			12,549
										562,268			473,677
Accrued interest										(164,672	)		(69,346	)
Discount on notes										—			(18,869	)
Notes payable		$	412,356		$	164,672	$	14,400	$	397,956		$	385,463

CELLYNX GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~December~~MARCH 31, ~~2012~~2013

(Unaudited)

~~Expected~~Note ~~volatility is~~4 ~~based primarily on historical~~– ~~volatility.~~Promissory ~~Historical~~Notes volatility was computed using daily pricing observations for recent periods that correspond to the term of the warrants and conversion options. We believe this method produces an estimate that is representative of our expectations of future volatility over the expected term of these warrants and conversion options. We have no reason to believe future volatility over the expected remaining life of these warrants is likely to differ materially from historical volatility. The expected life is based on the remaining term of the warrants and conversion options. The risk-~~free~~ ~~interest rate is based on U.S. Treasury securities with maturity terms similar to the expected remaining term of the warrants and conversion options.~~continued

(a) On August 15, 2006, Cellynx, Inc. 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”). 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~~March 31, 2013, the Company recorded on its books principal and interest in the amount of $318,939. (b) On April 5, 2011 (the April 5, 2011 Note), the Company entered into a Securities Purchase Agreement (the “SPA”) with a former Director of the Company. Pursuant to that Securities Purchase Agreement, the former director loaned to the Company the principal amount of $50,000. The Note bears interest at a rate of 8%, and was due on January 5, 2012. The “SPA” provides for the conversion of 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 ~~identified~~common stock over the ~~following assets~~ten trading days prior to the date of the conversion. On January 5, 2012 the Company did not repay the note as so was in default. Accordingly, 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 ~~liabilities~~recorded a total of $99,254 on its books at March 31, 2013. The Company has the option to pay the amount due in cash or in shares as defined in the terms of the note agreement. (c) 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, a former officer of the Company. The Note bears interest at a rate of 8%, and was due on July 3, 2012. Prior to that ~~are required~~date, 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 ~~presented~~the onamount obtained by dividing the ~~balance~~ ~~sheet~~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. On July 3, 2012 the note was not paid and accordingly 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 ~~fair value:~~22% per annum from the date of the default and recorded a total of $86,324 on its books at March 31, 2013. The Company has the option to pay the amount due in cash or in shares as defined in the terms of the note agreement. (d) On May 24, 2012 and September 12, 2012, the Company received proceeds of $37,500 and $12,500, respectively, from an investor, pursuant to the terms of Securities Purchase Agreements and Convertible note agreements. The terms of these notes are such that subsequent to the prepayment date, which is 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.

		Fair Value As of December 31, 2012	Fair Value Measurements at December 31, 2012 Using Fair Value Hierarchy
Liabilities		Level 1		Level 2	Level 3
Warrant & option liability	$	8,515	$	8,515
Conversion option liability	$	359,015	$	359,015
Total accrued derivative liabilities	$	367,530	$	367,530

For the three months ended December 31, 2012, the Company recognized a gain (loss) of $47 for the change in the fair value of accrued option and warrant liability and the Company recognized a gain of $1,119,990 for the change in fair value of accrued beneficial conversion liability, respectively.

The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the consolidated balance sheets at fair value in accordance with ASC 825.

CELLYNX GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~DECEMBER~~MARCH 31, ~~2012~~2013

(Unaudited)

~~Income~~Note ~~Taxes~~4 – Promissory Notes - continued

~~The~~(e) ~~Company~~In ~~accounts for~~December ~~income~~2012 ~~taxes~~the inCompany’s ~~accordance with ASC Topic 740~~parent, ~~“Income~~5BARz ~~Taxes~~International Inc.” ~~ASC~~received ~~740 requires~~ a ~~company~~notice ~~to use the asset and liability method~~ of ~~accounting~~default ~~for~~on ~~income~~notes ~~taxes,~~entered ~~whereby~~into ~~deferred~~with ~~tax~~the ~~assets~~lender. ~~are~~Accordingly ~~recognized~~all ~~for deductible~~notes ~~temporary~~to ~~differences,~~the ~~and~~lender ~~deferred~~have ~~tax~~been ~~liabilities~~recorded ~~are~~at ~~recognized for~~the ~~taxable~~default ~~temporary~~amount ~~differences.~~at ~~Temporary~~March ~~differences~~31, ~~are~~2013 ~~the~~as ~~differences between~~ the ~~reported~~result ~~amounts~~ of ~~assets and~~a ~~liabilities~~cross ~~and~~default ~~their~~provision ~~tax~~in ~~bases~~the agreements. ~~Deferred~~The ~~tax~~Company ~~assets~~has ~~are~~accrued ~~reduced by~~ a ~~valuation~~ ~~allowance~~default ~~when,~~penalty inof ~~the~~50% ~~opinion~~ of ~~management,~~the itnote ispayable ~~more likely~~as ~~than~~well ~~not~~as ~~that~~default ~~some~~interest ~~portion, or~~at ~~all~~22% ~~of, the~~per ~~deferred~~annum ~~tax~~from ~~assets~~the ~~will not~~date beof ~~realized~~the default. ~~Deferred~~The ~~tax assets~~Company ~~and~~has ~~liabilities~~the ~~are~~option ~~adjusted for~~to pay the ~~effects~~amounts ~~of changes~~due in ~~tax~~cash ~~laws and~~or ~~rates~~in onshares as defined in the ~~date~~ terms of ~~enactment~~the notes agreements.

~~Under~~Note ~~ASC~~5 ~~740,~~– a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no effect on the CompanyStockholder’s ~~consolidated financial statements. Penalties and interest incurred related to underpayment of~~ ~~income~~Equity 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 three months ended December 31, 2012 and 2011.

~~Basic~~During the six months ended March 31, 2013 and ~~Diluted~~2012, ~~Net~~the Company issued 144,000,000 and 33,506,911 shares of common stock pursuant to ~~Loss~~the ~~Per~~conversion ~~Share~~of $14,400 and $34,500 principal of convertible notes payable.

~~The~~Note ~~Company~~6 ~~reports loss per share in accordance with the ASC Topic 260, “Earnings Per Share.” Basic earnings~~-~~per-share~~ is based upon the weighted average number of common shares outstanding. Diluted earnings-per-share is based on the assumption that all dilutive convertible shares and stock warrants were converted or exercised. Diluted net loss-per-share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period, plus the potential dilutive effect of common shares issuable upon exercise or conversion of outstanding stock options and warrants during the period.Options

At March 31, 2013, CelLynx Group Inc. has the following Options outstanding;

The number and weighted average exercise prices of all options and warrants exercisable as of March 31, 2013, are as follows:

Options Exercisable
	Options		Exercise price		Weighted average remaining contract life
Opening – September 30, 2012		6,400,000	$	0.0008		0.4
Granted		40,000,000		0.0002		2.0
Expired		3,000,000		0.0008		0
Outstanding – March 31, 2013		43,400,000	$	0.00025		1.87

Note 7 - Warrants

The following table summarizes the warrant activity to March 31, 2013:

	Number of Warrants		Weighted Average Exercise Price		Average Remaining Contractual Life
Outstanding at September 30, 2012		32,454,757	$	0.275		0.88
Granted		0
Exercised		0		—
Expired		21,104,757		0.275
Outstanding at March 31, 2013		4,950,000	$	0.90		1.7
Exercisable at March 31, 2013		4,950,000	$	0.90		1.7

CELLYNX GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~DECEMBER~~MARCH 31, ~~2012~~2013

(Unaudited)

~~Stock~~Note -8 – ~~Based~~5BARz ~~Compensation~~International, Inc. agreements and transactions

~~The~~On ~~Company~~December ~~records stock-based compensation in accordance with ASC Topic 718~~31, “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 7182010, the Company’s ~~volatility~~consented isto ~~based on~~ the ~~historical~~transfer ~~volatility~~ of ~~the~~three ~~Company’s~~agreements ~~stock~~that ~~or the~~they ~~expected~~had ~~volatility~~entered ofinto ~~similar~~with ~~companies.~~Dollardex ~~The~~Group ~~expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior~~Corp. ~~The~~to ~~risk-free interest~~5BARz ~~rate for the expected term of the~~International, ~~option is based on the U~~Inc.S. ~~Treasury~~as ~~yield curve in effect at the time of grant.~~follows;

~~The~~(i) ~~Company~~An ~~uses~~“Amended ~~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~~Restated ~~variables~~Master ~~including~~Global ~~the expected~~Marketing ~~life of options granted~~ and ~~the~~Distribution ~~Company’s expected stock price volatility over a period equal to or greater than the expected life of the options~~Agreement.” ~~Because changes~~(ii) inAn ~~the~~“Asset ~~subjective~~Purchase ~~assumptions~~Agreement” ~~can~~(iii) ~~materially affect~~A ~~the~~“Revolving ~~estimated~~line ~~value~~ of ~~the Company’s~~credit ~~employee~~agreement ~~stock~~and ~~options, it~~security ~~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~~agreement”. 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~~These ~~Company~~agreements ~~recognizes in~~provided for the ~~statement~~exclusive ofglobal ~~operations~~marketing and distribution of the ~~grant-date fair~~5BARz ~~value~~line of products ~~stock~~and ~~options~~related accessories and ~~other~~the ~~equity-based~~acquisition of a 50% ownership interest in the ~~compensation~~5BARz ~~issued~~intellectual toproperty. ~~employees~~In ~~and~~addition, ~~non-employees~~a revolving line of credit facility has been made available to Cellynx.

~~Recent~~On ~~Accounting~~March 29, 2012, the Company ~~Pronouncements~~and 5BARz International, 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 was established:

In(iv) ~~December~~5BARz ~~2011~~International, Inc. acquired a 60% interest in the ~~FASB~~ ~~issued~~patents ~~guidance~~and ontrademarks ~~offsetting~~held by Cellynx Group Inc., referred to as the “5BARz™” technology. That interest in the technology was acquired by delivery of 9,000,000 shares of the common stock of 5BArz International Inc., valued at the date of acquisition at $0.20 per share or $1,800,000 USD. The acquisition agreement clarified that the ownership interest in the intellectual property does represent that proportionate interest in income earned from the intellectual property. (~~netting~~v) ~~assets~~5BARz ~~and~~International, ~~liabilities~~Inc. ~~Entities~~agreed ~~are~~to ~~required~~make available to ~~disclose~~Cellynx ~~both~~Group, ~~gross~~Inc., ~~information~~a ~~and net~~revolving ~~information~~line ~~about~~of ~~both~~credit ~~instruments~~facility ~~and~~in ~~transactions~~the ~~eligible~~amount of $2.2 million dollars of which $765,724 has been advanced as of March 31, 2013. 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 ~~offset~~a inperiod which is ten (10) days prior to the ~~statement~~date of ~~financial~~conversion. ~~position~~At March 31, 2012, the Company converted $78,500 of the amount due under the revolving line of credit facility for 350,000,000 shares of the capital stock of Cellynx Group, Inc. As a result, Cellynx became a consolidated subsidiary of 5Barz International Inc., on March 29, 2012. (vi) Pursuant to the Master Global Marketing and ~~instruments~~ Distribution agreement between 5Barz International Inc. and ~~transactions~~Cellynx ~~subject~~Group, Inc., 5BARz International, Inc. was obligated to anpay ~~agreement~~to ~~similar~~Cellynx Group, Inc., a royalty fee amounting to 50% of the Company’s Net Earnings. That fee would be paid on a ~~master~~quarterly ~~netting~~basis, ~~arrangement~~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 ~~new~~asset ~~guidance~~acquisition isagreement ~~effective~~amendment ~~for~~referred ~~annual~~to ~~periods beginning~~herein ~~after~~specified ~~January~~that 1,the ~~2013~~royalties would be paid in relation to the ownership of the intellectual property.

In September 2011, the FASB issued guidance on testing goodwill for impairment. The new guidance provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines that this is the case, it is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized for that reporting unit (if any). If an entity determines that the fair value of a reporting unit is no less than its carrying amount, the two-step goodwill impairment test is not required. The new guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted.

CELLYNX GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~DECEMBER~~MARCH 31, ~~2012~~2013

(Unaudited)

InNote ~~June 2011, the FASB~~8 ~~issued~~– ~~guidance~~5BARz onInternational, ~~presentation of comprehensive income~~Inc. ~~The~~agreements ~~new guidance eliminates the current option to report other comprehensive income~~ and ~~its~~transactions ~~components~~– in the statement of changes in equity. Instead, an entity will be required to present either a continuous statement of net income and other comprehensive income or in two separate but consecutive statements. The new guidance is effective for annual periods beginning after December 15, 2011. In December 2011, the FASB issued a deferral of certain portion of this guidance.continued

InDuring ~~May 2011,~~ the ~~FASB issued~~six ~~guidance~~months ~~to amend the accounting and disclosure requirements on fair value measurements. The new guidance limits the highest-and-best-use~~ended ~~measure~~March ~~to nonfinancial assets~~31, ~~permits~~2013 ~~certain financial assets~~ and ~~liabilities~~2012 ~~with offsetting positions in market or counter-party credit risks to be measured at a net basis, and provides guidance on~~ the ~~applicability~~following oftransactions ~~premiums~~have ~~and~~taken ~~discounts.~~place ~~Additionally, the~~between ~~new guidance expands~~ the ~~disclosures~~Company ~~on Level 3 inputs by requiring quantitative disclosure of the unobservable inputs~~ and ~~assumptions,~~ as5BARz ~~well~~International ~~as description of the valuation processes and the sensitivity of the fair value to changes in unobservable inputs~~Inc. ~~The new guidance is effective for annual periods beginning after December 15, 2011.~~:

Note 3 – Equipment

Line of Credit	March 31, 2013			March 31, 2012
Opening balance – October 1, 2012 & 2011	$	668,844		$	241,038
Advances		27,290			392,455
Management fees		90,000			—
Interest charges		22,107			32,532
Share conversions		—			(79,500	)
Closing balance – March 31, 2013 & 2012		808,241			586,525
Less – discount on convertible		(42,517	)		(126,861	)
Line of Credit (net) March 31	$	765,724		$	459,664

~~Equipment~~At ~~consisted~~March 31, 2013 5BARz International Inc. held 854,745,971 shares of the Company’s common stock representing a 53% interest based upon the 1,601,498,001 common shares issued and outstanding in the ~~following~~Company at ~~December~~March 31, 2013. At March 31, 2012 5BARz International Inc. held 413,412,638 common shares of the Company representing a 60% interest, based upon the 690,165,000 common shares issued and ~~September~~outstanding 30in the Company at March 31, 2012:.

	December 31, 2012			September 30, 2012
Office furniture and equipment	$	9,879		$	9,879
Computer equipment		8,930			8,930
	$	18,809		$	18,809
Accumulated depreciation		(17,827	)		(17,450	)
Equipment, net	$	982		$	1,359

At March 31, 2013 and 2012, the Company holds a reciprocal shareholding in 5BARz International Inc. in the amount of 9,000,000 shares representing a 7% equity interest in 5BArz International Inc. based upon the 123,157,887 shares issued and outstanding at that date.

~~The~~Note ~~Company~~9 ~~recorded depreciation~~– ~~expense~~Commitments ~~of $377 for the three ended December 31, 2012~~ and ~~2011.~~Contingencies

Litigation

The Company, CelLynx Group, Inc was a Defendant in an action brought by Dolphinshire 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 and interest have been included in accounts payable at March 31, 2013 and are subject to adjustments based on the outcome of negotiation.

CELLYNX GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~DECEMBER~~MARCH 31, ~~2012~~2013

(Unaudited)

Note 49 – Commitments ~~Intangible~~and ~~Assets~~Contingencies - continued

~~The~~Litigation Company incurred legal costs in acquiring patent and trademark rights. These costs are projected to generate future positive cash flows in the near term and have been capitalized to intangible assets in the period 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. On March 29, 2012, the Company sold a 60% interest in their patents to 5BARz International Inc. The balances below reflect the residual balance at cost.continued

~~Intangible~~On ~~assets~~August 27, 2012, an action was brought against CelLynx Inc. and ~~consist~~Does 1-10, in the Superior Court of California, El Dorado County, Case No. PCL20120700. On August 27, 2012, plaintiff brought suit against the ~~following:~~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 March 31, 2012 and are subject to adjustments based on the outcome of negotiation.

	December 31, 2012			September 30, 2012
Patents	$	46,862		$	46,862
Trademarks		4,995			4,995
Licensing rights		4,214			4,214
		56,071			56,071
Accumulated Amortization		(7,597	)		(7,334	)
Intangibles, net	$	48,474		$	48,737

Certain claims for unpaid wages were filed against CelLynx, Inc. 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.

~~Amortization~~CelLynx onGroup, ~~patents~~Inc. ~~will~~has bereceived ~~calculated~~ a Cease Trading Order from the British ~~date~~Columbia Securities Commission (BCSC) alleging that the ~~patents~~Company ~~are~~is ~~issued~~in ~~and~~violation of the British Colombia reporting requirements. The BCSC has assumed that since two the Company's ~~commences~~former ~~its~~Directors ~~initial~~were ~~substantive~~domiciled ~~revenue~~in ~~based~~BC ~~upon~~that ~~those~~the ~~intangible~~company is controlled in BC and ~~assets~~therefore subject to its reporting requirements. ~~Amortization~~The ~~expense~~Company denies that premise and is appealing the issuance of ~~$264~~the CTO. On March 31, 2013, the sole Director of the Company is domiciled in the US.

~~was~~In ~~charged~~addition onto ~~intangible~~the ~~assets~~above, ~~for~~ the ~~three~~Company may become involved in legal ~~months~~proceedings ~~ended~~in ~~December~~the ~~31,~~ordinary ~~2012~~course of business. Such matters are subject to many uncertainties, and ~~2011~~outcomes are not predictable with assurance.

Note 510 – ~~Convertible~~Subsequent ~~Promissory Notes~~Events

~~Convertible~~On ~~Promissory~~April 1, 2013, the Company issued ~~Note~~72,000,000 ~~Issued~~shares ~~April~~upon 5the conversion of $3,600 ~~2011~~due –under the terms of a convertible note agreement. The remaining principle balance ~~Related~~of ~~Party~~that note is $34,500. As provided in note 4(d) above, in December 2012 the Company’s parent, 5BARz International Inc. 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 March 31, 2013 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 note agreements.

On ~~April~~May 51, ~~2011,~~ 2013 the Company ~~entered~~amended ~~into a Securities Purchase Agreement (~~the ~~“SPA”) with~~ ~~one~~articles of ~~its~~Incorporation ~~directors,~~to ~~Mr.~~increase ~~Dwayne Yaretz (“Holder”), in connection with~~ the ~~purchase~~ number of aauthorized ~~Convertible~~shares ~~Promissory Note~~from ~~(the~~2,000,000,000 ~~Note)~~to 4,450,000,000.

~~Pursuant~~On toMay ~~the Note~~15, ~~the~~ ~~Company received the principal amount of $50~~2013,~~000. The~~ ~~Note bears interest at a rate of 8%, and was due on January 5, 2012. Holder may convert principal and unpaid interest on~~ the ~~note~~ ~~into shares of the~~ Company’s ~~common stock~~ parent, ~~with the~~5BARz ~~number~~International ofInc. ~~shares issuable determined by dividing the amount to be~~ converted ~~by the~~a ~~conversion~~further ~~price~~$9,375 ~~which~~due isunder ~~equal to 63% of~~ the ~~average~~terms of ~~the three~~a ~~lowest~~convertible ~~trading~~line ~~prices~~ of ~~the~~credit ~~Company’s~~for common stock over the ten trading days prior to the date of the conversion. Holder is prohibited under the Note from converting amounts if principal and interest that would result in Holder receiving shares375, ~~which when combined with shares of the Company’s common stock held~~000,000 ~~would result in Holder owning more than 4.99% of the Company’s then-outstanding~~ common ~~stock. No registration rights were granted in connection with the purchase of the Note, and the~~ shares ~~of common stock, if any, issued upon conversion, will be restricted securities as defined pursuant to the terms of Rule 144~~.

On August 28, 2013, the Board of Directors approved a resolution to issue 20,000,000 options to acquire common stock at a strike price of $0.0002 per share for a period of five years to the estate of Mr. Norm Collins, former Director of the Company.

CELLYNX GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~DECEMBER~~MARCH 31, ~~2012~~2013

(Unaudited)

~~Pursuant to the terms of the~~ Note, ~~while~~10 ~~there remains any unpaid amounts~~– ~~owing~~Subsequent onEvents ~~the~~- Note, the Company may not incur additional debt without Holder’s approval except for (i) debt that was owed or committed as of the date of the SPA and of which the Company had informed Holder; (ii) indebtedness to trade creditors or financial institutions in the ordinary course of business; (c) debt which in the aggregate does not exceed $250,000; or (d) debt the proceeds of which are used to repay the Note.continued

~~The~~On ~~Company~~August ~~had the~~28, ~~right~~2013, ~~to pre-pay~~ the ~~Note~~Board ~~during~~of Directors ~~the~~approved ~~first~~a ~~180 days~~resolution ~~following~~to extend the ~~date~~ expiration of the ~~Note~~40,000,000 byoptions ~~paying~~ to ~~Holder~~former ~~150%~~Employees and Directors of the ~~then-outstanding~~Company ~~principal~~from a ~~amount~~two ~~and any~~(2) ~~accrued~~year ~~and~~expiration ~~unpaid~~term ~~interest~~to a five (5) year expiration, ~~penalties~~ to expire March 7, or2018. ~~other~~The ~~amounts~~exercise ~~owing~~price of the options remain at $0.0002 per share.

The Company determined that the Note contained a beneficial conversion feature because the conversion rate is a factor less than the share price. The note and accrued interest of $56,970 remain outstanding at December 31, 2012.

Convertible Promissory Note Issued January 5, 2012 – Former Related Party

On January 5, 2012, the Company entered into a Securities Purchase Agreement (the “SPA”) with its former CFO, in the name of Pickard & Green, CPA’s (“Holder”), in connection with the purchase of a Convertible Promissory Note (the Note).

Pursuant to the 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 is 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. Holder is prohibited under the Note 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 Holder owning more than 4.99% of the Company’s then-outstanding common stock. No registration rights were granted in connection with the purchase of the Note, and the shares of common stock, if any, issued upon conversion, will be restricted securities as defined pursuant to the terms of Rule 144.

Pursuant to the terms of the Note, while there remains any unpaid amounts owing on the Note, the Company may not incur additional debt without Holder’s approval except for (i) debt that was owed or committed as of the date of the SPA and of which the Company had informed Holder; (ii) indebtedness to trade creditors or financial institutions in the ordinary course of business; (c) debt which in the aggregate does not exceed $250,000; or (d) debt the proceeds of which are used to repay the Note.

~~CELLYNX GROUP,~~ITEM ~~INC~~2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

~~NOTES TO~~Plan ~~CONSOLIDATED~~of ~~FINANCIAL STATEMENTS~~Operations

~~DECEMBER~~Cellynx Group, Inc. (“Cellynx” 31or the “Company”) has developed a patented technology which is the basis for the development of a line of cellular network infrastructure devices for use in the small office, home ~~2012~~and mobile market places. This next generation cellular network extender, branded as 5BARz™ incorporates a patented technology to create a highly engineered, single-piece, plug ‘n play unit that strengthens weak cellular signals to deliver higher quality signals for voice, data and video reception on cell phones, and other cellular devices. The technology is held under joint ownership with the Company’s parent, 5BARz International Inc. (“5BARz”), and is being commercialized by 5BARz.

The Company’s initial product, the Road Warrior, won the prestigious 2010 innovation of the year award at CES (~~Unaudited~~the largest consumer electronics show in the world) for achievements in product design and engineering. The Road Warrior, has passed FCC Certification, and has been produced in limited quantities to date by a contract manufacturer in the Philippines.

The ~~Company~~market ~~has the~~opportunity ~~right~~for ~~to pre-pay~~ the ~~Note~~5Barz ~~during~~technology ~~the~~represents ~~first~~some ~~180 days~~5.4 ~~following~~billion ~~the~~cell ~~date of~~phone ~~the~~subscribers ~~Note~~worldwide serviced by ~~paying to~~900 ~~Holder~~cellular ~~150%~~network ~~of the~~operators. ~~then-outstanding~~These ~~principal~~cellular ~~amount and~~network ~~any~~operators ~~accrued~~represent ~~and~~the ~~unpaid~~Company’s ~~interest, penalties,~~primary orpoint ~~other~~of ~~amounts~~entry ~~owing~~to the Global marketplace.

The ~~Company~~Cellynx ~~determined~~business opportunity represents ~~that~~a significant step forward in the ~~Note~~deployment ~~contained~~of micro-cell technology, referred to as a ~~beneficial~~‘cellular ~~conversion~~network infrastructure ~~feature~~device” ~~because~~in the ~~conversion~~industry. ~~rate~~A isstep athat management believes will significantly improve the functionality of cellular networks ~~factor~~by ~~less~~managing ~~than~~cellular signal within the ~~share~~vicinity of the user. This technology facilitates cellular usage in areas where ~~price~~structures, create “cellular shadows” or weak spots within metropolitan areas. AtIn ~~December~~addition 31in highly congested areas such as freeways, ~~2012~~the device also serves to hold stronger signal amid competing users. In rural areas, ~~$53~~cellular towers are less frequent,~~956~~ ofand ~~principle~~the ~~plus~~device ~~accrued~~allows ~~interest~~for ~~remains~~better ~~outstanding~~signal for the user at points further from the cellular tower. The market potential of the technology is far reaching.

~~Convertible~~Corporate ~~Promissory Note Issued May 24, 2012~~ Background

OnCelLynx ~~May 24~~Group, ~~2012,~~Inc. ~~the~~(“CelLynx” ~~Company~~or ~~entered into a Securities Purchase Agreement (~~the “~~SPA~~Company”) ~~with~~was anoriginally ~~unrelated~~incorporated ~~holder,~~under ~~in connection with~~ the ~~purchase~~laws ~~by Holder~~ of ~~a Convertible Promissory Note in~~ the ~~principle~~State ~~amount~~ of ~~$37,500.~~Minnesota ~~The~~on ~~May~~April ~~2012~~1, ~~note~~1998, ~~bears~~under ~~interest at~~the aname ~~rate~~“Cool ofCan 8%Technologies, ~~and~~Inc.” isEffective ~~due~~July on12, ~~February 7~~2004, ~~2013.~~the ~~Pursuant~~Company tomerged ~~the~~with ~~terms~~NorPac ofTechnologies, ~~the note~~Inc., ~~the~~its ~~principle~~wholly ~~and~~owned ~~accrued~~subsidiary, ~~interest~~for ~~may~~the bepurpose ~~converted~~of ~~into~~reincorporating ~~shares of~~ the Company’s ~~common~~in ~~stock, with~~Nevada. ~~the~~The ~~number~~Merger ofwas ~~shares~~completed ~~issuable~~effective ~~calculated~~July ~~at a variable rate calculated by dividing~~12, ~~the~~2004, ~~amount~~with toNorPac beTechnologies, ~~converted~~Inc. byas the ~~conversion price~~surviving ~~which~~corporation. isOn ~~equal~~July ~~to 51%~~24, of2008, the ~~average~~Company ofentered ~~the~~into ~~three lowest~~a ~~trading~~transaction ~~prices~~with shareholders of ~~the~~CelLynx, ~~Company’s~~Inc., ~~common~~a ~~stock~~California ~~over~~corporation, ~~the~~in ~~ten~~which ~~trading~~it ~~days~~issued ~~prior~~shares to ~~the~~ ~~date of~~ the ~~conversion~~CelLynx Inc. ~~The~~shareholders ~~Holder~~in isexchange for ~~prohibited~~all ~~under~~of the ~~note~~outstanding ~~from~~shares ~~converting~~of ~~amounts if~~CelLynx ~~principal~~Inc. ~~and~~Through ~~interest~~this ~~that would result in Holder receiving shares~~transaction, ~~which when combined with shares of~~ the Company’s ~~common~~acquired ~~stock~~the ~~held~~cellular atnetwork ~~the~~extender business ~~time,~~as ~~would~~its ~~result~~wholly inowned ~~Holder~~subsidiary. ~~owning~~This ~~more~~transaction ~~than 4.99%~~has ofbeen ~~the~~considered ~~Company’s~~a ~~then~~"reverse take-over" ~~outstanding common~~for ~~stock~~accounting purposes.

~~Pursuant~~Effective toAugust ~~the terms of the Note~~5, ~~while there remains any unpaid amounts owing on the Note~~2008, the Company ~~may not incur~~ ~~additional~~changed ~~debt~~its ~~without~~name ~~Holder’s~~to ~~approval~~CelLynx ~~except~~Group, ~~for~~Inc. ~~(i)~~by ~~debt~~merging ~~that~~another ~~was~~wholly ~~owed~~owned orsubsidiary ~~committed~~into ~~as of~~ the ~~date~~Company ~~of the SPA~~ and ofassuming ~~which~~ the ~~Company had informed holder; (ii)~~subsidiary’s ~~indebtedness~~name. toOn ~~trade~~October ~~creditors~~27, ~~or financial~~2008, ~~institutions in~~ the ~~ordinary~~ ~~course~~Company’s Board of ~~business; (c)~~Directors ~~debt~~approved ~~which~~a ~~in the~~change ~~aggregate~~of ~~does not exceed $250,000; or (d) debt~~ the ~~proceeds of~~Company’s ~~which~~fiscal ~~are used~~year to ~~repay~~September ~~the~~30, ~~Note~~2008.

~~The~~On ~~Company~~March ~~had~~27, ~~the right~~2012 to5Barz ~~pre-pay the Note during the first 180 days following the date of the Note by~~International ~~paying~~Inc. toacquired ~~Holder~~a ~~150~~60% ofcontrolling ~~the~~interest ~~then- outstanding~~in ~~principal~~Cellynx ~~amount and any accrued and unpaid interest~~Group, ~~penalties, or other amounts owing~~Inc.

The Company determined that the Note contained a beneficial conversion feature because the conversion rate is a factor less than the share price. At December 31, 2012, $39,316 of principle plus accrued interest remains outstanding. 19

19Agreement with 5BARz International, Inc.

~~CELLYNX GROUP~~On December 31, ~~INC~~2010, the Company consented to the transfer of three agreements that they had entered into with Dollardex Group Corp. to 5BARz International, Inc. as follows:

~~NOTES TO~~(i) ~~CONSOLIDATED~~An ~~FINANCIAL~~“Amended ~~STATEMENTS~~and Restated Master Global Marketing and Distribution Agreement.”

~~DECEMBER 31,~~(ii) ~~2012~~An “Asset Purchase Agreement”

(~~Unaudited~~iii) A “Revolving line of credit agreement and security agreement”.

~~Convertible~~These ~~Promissory~~agreements provided ~~Note~~for ~~Issued~~the ~~September~~exclusive 12global marketing and distribution of products which incorporate the 5BARz technology and a provide for the sale of a 50% ownership interest in the 5BARz intellectual property. In addition, ~~2012~~a revolving line of credit facility has been made available to Cellynx.

On ~~September~~March 1229, 2012, ~~the~~ ~~Company entered into a Securities Purchase Agreement (~~the ~~“SPA”) with an unrelated holder, in~~Company ~~connection with the purchase by Holder of a Convertible Promissory Note in the principle amount of $12,500. The September 2012 note bears interest at a rate of 8%,~~ and is5BARz ~~due on June 12~~International, ~~2013~~Inc. ~~Pursuant~~entered ~~to the terms of the note, the principle and accrued interest may be converted~~ into ~~shares~~an ~~of the~~agreement ~~Company’s~~which ~~common~~provided ~~stock, with~~several ~~the~~amendments ~~number of shares issuable calculated at a variable rate calculated by dividing the amount~~ to ~~be converted by~~ the ~~conversion price~~agreement ~~which~~referred ~~is equal~~ to ~~51%~~ ~~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~~above. ~~The Holder is prohibited under the note from converting amounts~~As ifa ~~principal and interest that would~~ result in ~~Holder~~of ~~receiving~~those ~~shares~~amendments, ~~which when combined with shares of~~ the ~~Company’s~~following ~~common~~arrangements ~~stock~~between ~~held at~~ the ~~time,~~Companies ~~would~~were ~~result in Holder owning more than 4.99% of the Company’s then- outstanding common stock.~~established;

~~Pursuant~~(iv) to5BARz ~~the~~International, ~~terms of~~Inc. ~~the~~acquired ~~Note,~~a ~~while~~60% ~~there~~interest ~~remains~~in ~~any~~the ~~unpaid~~patents ~~amounts owing~~and ontrademarks ~~the~~held ~~Note,~~by ~~the~~Cellynx ~~Company~~Group ~~may~~Inc., ~~not~~referred ~~incur additional~~to ~~debt~~as ~~without~~the ~~Holder’s~~“5BARz™” ~~approval~~technology. ~~except~~That ~~for~~interest ~~(i)~~in ~~debt~~the ~~that~~technology was ~~owed~~acquired orfor ~~committed~~proceeds ascomprised of ~~the~~9,000,000 ~~date~~shares of the ~~SPA and~~common stock of ~~which~~ the Company, ~~had~~valued ~~informed~~at ~~holder;~~the ~~(ii) indebtedness~~date toof ~~trade~~acquisition ~~creditors~~at $0.20 per share or ~~financial~~ ~~institutions~~$1,800,000. inThe ~~the ordinary~~acquisition ~~course~~agreement ofalso ~~business; (c)~~clarified ~~debt~~that ~~which~~the ownership interest in the ~~aggregate~~intellectual property does ~~not exceed~~represent ~~$250,000;~~that orproportionate ~~(d)~~interest ~~debt~~in ~~the~~income ~~proceeds of~~earned ~~which~~from ~~are used to repay~~ the ~~Note~~intellectual property.

~~The~~(v) 5BARz International, Inc. agreed to make available to Cellynx Group, Inc. a revolving line of credit facility in the amount of $2.2 million dollars of which $765,724 has been advanced as of March 31, 2013. This revolving line of credit facility expires on October 5, 2013. Under the terms of the line of credit facility, the Company ~~had~~has the right to ~~pre-pay~~convert amounts due under the ~~Note~~facility ~~during~~into common stock of Cellynx, at a conversion rate which is the ~~first~~lesser ~~180~~of ~~days~~a ~~following~~fixed conversion rate of $0.00015 per share or a variable rate which is calculated at 25% of the ~~date~~average lowest three closing bid prices of the ~~Note~~Cellynx ~~by paying~~Group, Inc. common stock for a period which is ten (10) days prior to ~~Holder~~the ~~150%~~date of conversion. At March 31, 2012, the ~~then- outstanding~~Company ~~principal~~converted $78,500 of the amount ~~and~~due ~~any~~under ~~accrued~~the ~~and unpaid~~revolving ~~interest~~line of credit facility for 350,000,000 ~~penalties~~shares of the capital stock of Cellynx Group, ~~or other~~Inc. ~~amounts~~As ~~owing~~a result, Cellynx became a consolidated subsidiary of 5Barz International Inc. During the subsequent period, the Company converted the following amounts in order to maintain their 60% equity interest in the Company;

The Company determined that the Note contained a beneficial conversion feature because the conversion rate is a factor less than the share price. At December 31, 2012, $12,801 of principle plus accrued interest remains outstanding.

Date	Debt Converted		Shares acquired
April 13, 2012	$	7,700		51,333,333
May 15, 2012		58,500		390,000,000
May 21, 2013		9,375		375,000,000

~~Convertible promissory notes~~20

~~The~~(vi) ~~Company~~Pursuant ~~recorded interest~~to ~~expense~~the ~~relating~~Master Global Marketing and Distribution agreement between 5Barz International Inc. and Cellynx Group, Inc., 5BARz International, Inc. was obligated to ~~each~~pay ofto ~~the~~Cellynx ~~four~~Group, ~~convertible~~Inc. ~~promissory~~a ~~notes~~royalty ~~referred~~fee amounting to ~~above~~50% of $3the Company’s Net Earnings. That fee would be paid on a quarterly basis,~~025~~ payable in cash or immediately available funds and ~~$5,973~~shall ~~for~~be due and payable not later than 45 days following the ~~three~~ ~~months~~end ~~ended~~of ~~December~~each ~~31,~~calendar ~~2012~~quarter ~~and~~of ~~2011,~~the ~~respectively~~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.

~~The~~Change ~~Company~~in ~~amortized $40,609 and $25,379 of the debt discount for the three months ended December 31, 2012 and 2011, respectively.~~Management

20On March 19, 2013 the Company issued a press release which reports the resignation of Mr. Dwayne Yaretz as the Chief Executive Officer and Director of the company and the resignation of Mr. Malcolm Burke as a Director of the Company. The Company thanks Mr. Yaretz and Mr. Burke for their terms of service with the Company. The Company has appointed Mr. Patrick Grant as the Chief Executive Officer and Director of the Company. Mr. Grant is a highly accomplished business executive with a broad base of international experience in diversified business interests. He holds a Masters of Business Administration from the University of Illinois, Chicago.

~~CELLYNX GROUP, INC.~~21

~~NOTES~~Results TOof ~~CONSOLIDATED FINANCIAL STATEMENTS~~Operations

~~DECEMBER~~Comparison of the three and six months ended March 31, 2013 and 2012

~~(Unaudited)~~Three month period ended March 31, 2013 compared to three month period ended March 31, 2012.

The following table summarizes the convertible promissory notes at December 31, 2012 and September 30, 2012:

	3 Months ended March 31 2013			3 Months ended March 31, 2012			Difference
Amortization and depreciation	$	638			3,732			(3,094	)
Bank charges & interest		88,179			51,219			36,960
Research & development		39,000			0			39,000
General and administrative		154,988			214,377			(59,389	)
Total Operating Expenses		282,804			269,400			13,401
Other income (expenses)		—
Net Income (Loss)	$	(282,804	)		(269,400	)		(13,401	)

	December 31,			September 30,
	2012			2012
Issued August 2006, through December 31, 2012	$	597,356		$	597,356
Less: Amounts repaid		(15,000	)		(15,000	)
Less amounts converted		(173,000	)		(170,000	)
Less: Debt discount		(2,855	)		(21,868	)
Convertible promissory notes, net	$	406,501		$	390,488

The three months ended March 31, 2013 reflects a net loss of $282,804, representing an increase in the loss of $13,401 compared to the corresponding three month period loss of $269,400 for the period ended March 31, 2012. Although general and administrative expenses have declined by $59,389 during that three month period ended March 31, 2013 compared to the corresponding period ended March 31, 2012, that decrease was more than offset by additional R&D costs of $39,000 comprised of consulting engineering fees and additional interest charges of $36,960 comprised in the most part of interest on the line of credit due to the Company’s parent, 5BARz International Inc. The decrease in general and administrative fees is the result of reduced labor costs in the current year compared to the corresponding period in the preceding year.

~~Note~~Six 6month period ended March 31, 2013 compared to six month –period ~~License~~ended ~~Agreement~~March 31, 2012.

On January 12, 2009, the Company entered into a Licensing Agreement with an unrelated party. The Licensing Agreement gives the Company the right to manufacture, have manufactured, use, import, and offer to sell, lease, distribute or otherwise exploit certain technology rights and intellectual rights. The License Agreement has a term of ten years. As consideration for the License Agreement, the Company issued 57,143 shares of its common stock and paid $1,000 in cash. The Company determined the fair value of the License Agreement to be $7,429 based on the market value of its common stock on the date of the agreement plus the $1,000, for a total acquisition cost of $8,429, which is included in the accompanying consolidated balance sheet.

	6 Months ended March 31, 2013			6 Months ended March 31, 2012			Difference
Amortization and depreciation		1,015			4,571			(3,556	)
Bank charges & interest		112,635			92,131			20,504
Research & development		78,000						78,000
General and administrative		268,201			368,667			(100,466	)
Total Operating Expenses		459,851			465,369			(5,518	)
Other income (expenses)		—
Net Loss	$	(459,851	)		(465,369	)	$	(5,518	)

~~The~~Operating ~~Company recorded amortization expense related to the licensing agreement of $106 and $106 for the three months ended December 31, 2012, and 2011, respectively.~~Expenses

21Total operating expenses incurred for the six months ended March 31, 2013 and 2012 were $459,851 and $465,360, respectively. This represents a decrease of $5,518. The net decrease is comprised of the following factors;

~~CELLYNX~~The increase ~~GROUP~~in bank charges and interest in the amount of $20,504 ~~INC~~is the result of interest charges on the line of credit between the Company and 5BARz International Inc. This line of credit balance increased from $580,473 March 31, 2012 to $765,724 as of March 31, 2013.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~22

~~DECEMBER 31,~~Operating ~~2012~~Expenses- Continued

~~(Unaudited)~~The research and development costs incurred in the current year of $78,000 are comprised of consulting engineering fees, which were not incurred in 2012.

~~Note~~The 7decrease -in ~~Consulting~~general and administrative ~~Agreement~~fees in the amount of $100,466 is comprised of a decrease in consulting fees over the consulting fees incurred in the corresponding period in 2012.

OnLiquidity ~~January~~and ~~15, 2010, the Company entered into a consulting agreement with Seahawk~~ Capital Partners, Inc. The Company issued 1,000,000 shares of Company restricted stock and 2,000,000 warrants upon signing of agreement. In addition, the Company agreed to issue an additional 50,000 shares of restricted Company stock. The warrants expired December 1, 2012.Resources

~~Note~~Financial ~~8 – 5BARz International Inc. Agreement~~Condition

OnAs ~~December~~of March 31, ~~2010~~2013, the Company had ~~consented~~cash resources of $14, and a working capital deficit of $5,835,183 compared to cash of $(284) and a working capital deficit of $4,418,370 as of September 30, 2012, which was a decrease in working capital of $1,416,813. This decrease is comprised of the accrued ~~transfer~~derivative liability change in the amount of ~~three~~$932,657 ~~agreements~~which ~~that~~reflects ~~they~~the ~~had~~intrinsic ~~entered~~value ~~into~~of ~~with~~convertible ~~Dollardex~~debt ~~Group~~issued ~~Corp~~by the Company. It should be noted that the full balance of the accrued derivative liability of $2,420,225 is related to the debt held by 5BARz International Inc., the Company’s parent. At September 30, 2012 the accrued derivative liability of $1,487,568 was a balance related to the 5BARz International Inc., line of credit balance as ~~follows;~~well. The additional decrease in working capital is comprised of an increase in accounts payable and accrued expenses of $214,409 and an increase of $95,326 in accrued interest on notes payable. As these notes are in default the interest is calculated at 22% per annum.

~~(i)~~During Anthe ~~“Amended~~six ~~and~~months ~~Restated~~ended ~~Master~~March 31, ~~Global~~2013, ~~Marketing~~cash ~~and~~used ~~Distribution~~in ~~Agreement.”~~operating ~~(ii)~~activities Anwas ~~“Asset~~$26,992 ~~Purchase~~compared ~~Agreement”~~to ~~(iii)~~$99,038 Ain ~~“Revolving~~the ~~line~~corresponding period of ~~credit~~2012. ~~agreement~~This decrease in cash burn rate reflects the limited cash resources and ~~security~~operating ~~agreement”~~levels in Cellynx Group, Inc. during the period.

~~These~~During ~~agreements~~the ~~which~~six ~~provide~~months ended March ~~for~~31, 2013 the ~~exclusive~~Company ~~global~~received ~~marketing~~$27,290 ~~and~~from ~~distribution~~5BARz ofInternational ~~the~~Inc. ~~5BARz~~pursuant to the line of ~~products~~ ~~and~~credit ~~related~~agreement, ~~accessories~~compared ~~and~~to ~~a 50% ownership~~$87,106 ~~interest~~ in the ~~5BARz~~corresponding ~~intellectual~~period ~~property~~of 2012. InDuring ~~addition,~~that acorresponding ~~revolving~~period ~~line~~in of2012 ~~credit~~the ~~facility~~Company ~~has~~also ~~been~~received ~~made~~proceeds ~~available~~of $15,000 pursuant to ~~CelLynx~~convertible notes from third parties.

OnPlan ~~March~~of ~~29,~~operation ~~2012, the Company~~ and 5BARz International 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:funding

~~(iv)~~Since ~~5BARz~~joining ~~International~~the ~~Inc.~~Company ~~acquired~~on aMarch 19, ~~60%~~2013, ~~interest in~~ the ~~patents~~Company’s Director and ~~trademarks~~Chief ~~held~~Executive ~~by CelLynx Group Inc.~~Officer, ~~referred to as the “5BARz™” technology~~Mr. ~~That~~Patrick ~~interest~~Grant inhas ~~the~~undertaken ~~technology~~a ~~was~~program ~~acquired for proceeds comprised~~ of ~~9,000,000~~mitigating ~~shares~~operating expenses offor the ~~common stock of the~~ Company, ~~valued~~and at the ~~date~~same ~~of acquisition at $0.20 per share or $1~~time,~~800,000~~ ~~USD.~~settling ~~The~~debts ~~acquisition~~which ~~agreement~~existed ~~also clarified that the ownership interest~~ in the ~~intellectual~~Company ~~property does represent that proportionate interest in income earned~~ from the ~~intellectual~~date ~~property. (v) 5BARz International Inc. agreed to make available to CelLynx Group, Inc., a revolving line~~ of ~~credit~~his ~~facility in the amount of $2~~appointment.2 ~~million~~It is ~~dollars of which $710,776 has been advanced as of June 30, 2012. This revolving line of credit facility expires on October 5, 2013. Under~~ the ~~terms of the line of credit facility, the~~ Company’s ~~has~~intention ~~the right~~ to ~~convert~~maintain ~~amounts~~expenditures ~~due under the facility into common stock of CelLynx,~~ at a ~~conversion~~minimum ~~rate~~as ~~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. At March 31, 2012, the Company’s ~~converted $78~~parent,~~500~~ ~~of the amount due under the revolving line of credit facility for 350,000,000 shares of the capital stock of CelLynx Group, Inc. As a result, CelLynx became a consolidated subsidiary of~~ 5BARz International Inc., attends ~~on March 29, 2012. (vi) Pursuant~~ to the ~~Master~~commercialization Global Marketing and Distribution agreement between 5BARz International Inc. and CelLynx Group, Inc., 5BARz International Inc. was obligated to pay to CelLynx Group, Inc., a royalty fee amounting to 50% of the ~~Company’s~~technology ~~Net~~which ~~Earnings.~~is ~~That~~owned ~~fee~~jointly ~~would~~by ~~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~~two ~~of each calendar quarter of the year~~entities. ~~The asset acquisition agreement amendment referred to herein specified that the royalties would be paid in relation to the ownership of the intellectual property.~~

22The primary source of funding for the Company has been from 5BARz International Inc., pursuant to the terms of a convertible line of credit agreement. That funding agreement has been managed on a best efforts basis such that during the term of the agreement 5BARz International Inc. has provided $765,724, net of $149,075 settled by way of the conversion of advances into common stock of the Company. On October 5, 2013 that line of credit agreement matured.

~~CELLYNX~~It is the intention of the parties ~~GROUP,~~to ~~INC~~extend the terms of the existing convertible line of credit agreement until such time that the Company has settled all convertible debts with third parties. At that time the Companies may re-negotiate a funding arrangement if necessary.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~23

~~DECEMBER 31,~~Material ~~2012~~Commitments

~~(Unaudited)~~As of the date of this quarterly report, the Company has entered into no material commitments other than those disclosed and accrued in the body of the financial statements comprising this quarterly report.

~~Note~~Purchase 9of –significant ~~Stockholder’s Equity~~ equipment

~~During~~The ~~the three months ended December 31, 2012, the~~ Company ~~issued~~does ~~Nil~~not ~~(0)~~plan ~~shares~~on ~~and for~~ the ~~three months ended December 31, 2011 the Company issued 33,506,911~~ ~~shares~~purchase of ~~common~~any ~~stock~~significant ~~pursuant~~equipment toduring the ~~conversion~~next oftwelve ~~$34,500 principal of convertible notes payable~~months.

~~Stock~~Going ~~Options~~Concern

OnIn ~~December~~our 3,Annual ~~2007,~~Report ~~the Board~~on ofForm ~~Directors~~10-K for ~~adopted~~ the ~~2007~~year ~~Stock~~ended ~~Incentive~~September ~~Plan~~30, ~~(the “Plan”) of CelLynx~~2012, ~~Inc.~~our ~~All~~independent ofauditors ~~the~~included ~~Company’s~~an ~~employees, officers,~~explanatory ~~directors,~~paragraph ~~consultants~~in ~~and~~its ~~advisors~~report ~~are~~relating ~~eligible~~ to beour consolidated ~~granted~~financial ~~options,~~statements ~~restricted~~for ~~stock~~the ~~awards,~~years orended ~~other~~September ~~stock-based awards~~30, ~~under~~2012 ~~the~~and ~~Plan.~~2011, ~~The~~which ~~Plan~~states isthat ~~administered~~we byhave ~~the~~incurred ~~Board. The Board has authority~~negative tocash ~~grant~~flows ~~awards~~from ~~and~~operations tosince ~~adopt~~inception, ~~amend~~ and ~~repeal~~expect ~~such~~to ~~administrative~~incur ~~rules,~~additional ~~guidelines~~losses ~~and~~in ~~practices~~the ~~relating~~future toand ~~the~~have ~~Plan~~a assubstantial ~~it shall~~accumulated ~~deem advisable~~deficit. ~~Subject~~These toconditions ~~certain~~give ~~adjustments,~~rise ~~awards~~to ~~may~~substantial bedoubt ~~made~~about ~~under~~our ~~the~~ability ~~Plan~~to ~~for~~continue upas toa ~~25,000,000~~going ~~shares~~concern. ofOur ~~common~~ability ~~stock~~to ofexpand ~~the~~operations ~~Company.~~and ~~The~~generate ~~Board~~additional ~~shall~~revenue ~~establish~~and ~~the~~our ~~exercise~~ability ~~price~~to atobtain ~~the~~additional ~~time~~funding ~~each~~will ~~option~~determine isour ~~granted.~~ability Into ~~July~~continue as ~~2008,~~a ~~the~~going ~~Company~~concern. ~~amended the~~Our ~~Plan~~condensed toconsolidated ~~increase~~financial ~~the~~statements ~~number~~do ofnot ~~awards~~include ~~available~~any ~~under~~adjustments ~~the~~that ~~Plan~~might result from ~~25,000,000~~the tooutcome of ~~75,000,000~~this uncertainty.

~~The~~We ~~Company~~have ~~calculated~~prepared aour ~~fair~~consolidated financial ~~value~~statements ~~of options~~assuming ~~and~~that ~~warrants~~we ~~outstanding~~will ofcontinue $8as a going concern,~~281~~ ~~utilizing~~which ~~the~~contemplates ~~Black~~realization ~~Scholes~~of ~~model~~assets and ~~recorded~~the assatisfaction aof ~~liability~~liabilities in the ~~accompanying~~normal ~~consolidated balance~~course ~~sheet~~of business.

~~The~~Recent ~~following~~accounting ~~table summarizes information with respect to warrants outstanding;~~pronouncements

	Number of Shares	Weighted Average Exercise Price		Weighted Average Contractual Life	Aggregate Intrinsic Value
Outstanding at September. 30, 2012	32,454,757	$	0.27	.88
Granted
Expired	28,524,757		-
Exercised
Outstanding at December 31, 2012	3,930,000	$	0.08	.67	$	0
Exercisable at December 31, 2012	3,930,000	$	0.08	.67	$	0

FASB, the Emerging Issues Task Force and the SEC have issued certain accounting standards, updates, and regulations as of March 31, 2013 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 2013 or 2012, 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.

23Critical Accounting Policies and Estimates

~~CELLYNX~~Our management’s discussion ~~GROUP~~and analysis of our financial condition and results of operations are based on our consolidated financial statements, ~~INC~~which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported net sales and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

~~NOTES~~While our significant accounting TOpolicies ~~CONSOLIDATED~~are ~~FINANCIAL~~more ~~STATEMENTS~~fully described in Note 2 to our consolidated financial statements, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis.

~~DECEMBER 31, 2012~~24

~~(Unaudited)~~Intangible Assets

Acquired patents, licensing rights and trademarks are capitalized at their acquisition cost or fair value. The ~~number~~legal costs, patent registration fees, and ~~weighted~~models ~~average~~and drawings ~~exercise~~required ~~prices~~for offiling ~~all~~patent applications are capitalized if they relate to commercially viable technologies. Commercially ~~options~~viable ~~outstanding~~technologies ~~and~~are ~~exercisable~~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 ofincurred. ~~December~~All ~~31,~~research ~~2012,~~and development costs incurred in developing the patentable idea are expensed as ~~follows:~~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.

Options outstanding
						Weighted
				Weighted		Average
		Number		Average		Remaining
Range of		Outstanding as of		Exercise		Contractual Life
Exercise Price		December 31, 2011		Price		(Years)
$	0.0008		6,400,000		0.0008		2.45
$	0.013		580,000		0.013		2.17
			6,980,000

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.

~~Note~~Impairment ~~10 –~~or ~~Commitments~~Disposal ~~and~~of ~~Contingencies~~ Long- lived Assets

~~Litigation~~The Company applies the provisions of ASC Topic 360, “Property, Plant, and Equipment,” which addresses financial accounting and reporting for the impairment or disposal of long -lived assets. ASC 360 requires impairment losses to be recorded on long -lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long -lived assets. Loss on long -lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal. Based on its review, the Company believes that as of March 31, 2013 and September 30, 2012, there was no significant impairment of its long -lived assets.

AsAccounting earlier reported in the Company’s Form 10K and 10Q, the Company 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 before eviction. The Company 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.Derivatives

~~A similar~~The ~~action~~Company ~~for~~evaluates ~~past~~its ~~due~~convertible ~~rent~~instruments, ~~has~~options, ~~been filed~~warrants asor other contracts to ~~its~~determine ~~facility~~if inthose Elcontracts ~~Dorado Hills,~~or ~~CA.~~components ~~CSS~~of ~~Properties,~~those v.contracts ~~CelLynx~~qualify ~~Group,~~as ~~Inc.,~~derivatives ~~and~~to ~~Does~~be ~~1-10,~~separately accounted ~~Superior~~for ~~Court~~under ofASC ~~California~~Topic 815, El“Derivatives ~~Dorado~~and ~~County,~~Hedging”. ~~Case~~The ~~No.~~result ~~PCU~~of 2this 0accounting ~~110442.~~treatment Onis that the fair value ~~October~~of ~~12,~~the ~~2011,~~derivative ~~plaintiff~~is ~~brought~~marked-to-market ~~suit~~each ~~against~~balance sheet date and recorded as a liability. In the ~~Company~~ ~~for~~event ~~unlawful~~that ~~detainer~~the offair ~~offices~~value is ~~located~~recorded atas ~~5047~~a ~~Robert~~liability, Jthe ~~Matthews~~change ~~Parkway,~~in Elfair ~~Dorado~~value ~~Hills,~~is CArecorded ~~95762~~in ~~pursuant~~the tostatement aof ~~lease~~operations ~~agreement,~~as ~~seeking~~other anincome ~~unspecified~~(expense). ~~amount~~Upon conversion ofor ~~damages~~exercise ~~not~~of toa ~~exceed~~derivative ~~$25~~instrument,~~000.~~ ~~The~~the ~~Company~~instrument ~~has~~is ~~engaged~~marked into ~~settlement~~fair ~~negotiations~~value ~~with~~at the ~~plaintiff~~conversion date and ~~management~~then ~~expected~~that fair value tois ~~settle~~reclassified ~~before~~to ~~eviction~~equity. ~~The~~Equity ~~Company~~instruments ~~has~~that ~~since,~~are byinitially ~~agreement,~~classified ~~vacated~~as ~~the~~equity ~~leased~~that ~~premises~~become ~~and~~subject ~~continues~~to reclassification under ASC Topic 815 are reclassified to ~~negotiate~~liability aat ~~payout~~ the fair value of ~~past~~the ~~due~~instrument ~~rent~~on ~~and~~the ~~penalties~~reclassification date.

24Revenue Recognition

~~CELLYNX~~The Company's revenue recognition ~~GROUP~~policies are in compliance with ASC Topic 605, ~~INC~~“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. The revenue earned on the sale of intangibles is realized at the time that proceeds are paid in full for that intangible.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~25

~~DECEMBER 31,~~Stock ~~2012~~Based Compensation

~~(Unaudited)~~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.

Note 10 – Commitments and Contingencies

Litigation - Continued

As had been previously reported in the Company’s Form 10K and 10Q, the Company was facing claims 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 $312,986.45 depending on interest charges. The first award has been converted into a judgment in the amount of $118,224. Management had negotiated a monthly payment plan amounting to $10,000 per month commencing on February 1, 2012 and every month thereafter until the judgment has been satisfied. This agreement is now in the process of revision.

The Company 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.

On October 12, 2012 the Depository Trust Company placed a Deposit Transfer Restriction, known as a “DTC Chill” on the securities of the Company. The Company has disputed that restriction and is in the process of responding to enquiries from the Depository Trust Company, and is in the process of compiling information and documentation related to those enquiries.

Note 11 – Subsequent Events

The Company has no reportable subsequent events required to be reported in the accompanying financial statements.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward Looking Statements

Certain statements in the Management’s Discussion and Analysis (“MD&A”), other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward -looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

As used in this Form 10-Q, unless the context requires otherwise, “we” or “us” or the “Company” or “CelLynx” means CelLynx Group, Inc., and our subsidiary.

Plan of Operations

CelLynx Group, Inc. (“CelLynx” or the “Company”) is in the business of the development of a line of cellular network infrastructure devices for use in the small office, home and mobile market places. This next generation cellular network extender, branded as 5BARz™ incorporates a patented technology to create a highly engineered, single-piece, plug ‘n play unit that strengthens weak cellular signals to deliver higher quality signals for voice, data and video reception on cell phones, and other cellular devices. The technology is held under joint ownership with the Company’s parent, 5BARz International Inc. (“5BARz”), and is being commercialized by 5BARz.

The Company’s initial product, the Road Warrior, won the prestigious 2010 innovation of the year award at CES (the largest consumer electronics show in the world) for achievements in product design and engineering. The Road Warrior, has passed FCC Certification, and has been produced in limited quantities to date by a contract manufacturer in the Philippines.

The market opportunity for the 5BARz technology represents some 5.4 billion cell phone subscribers worldwide serviced by 900 cellular network operators. These cellular network operators represent the Company’s primary point of entry to the Global marketplace.

The CelLynx business opportunity represents a significant step forward in the deployment of micro-cell technology, referred to as a ‘cellular network infrastructure device” in the industry. A step that management believes will significantly improve the functionality of cellular networks by managing cellular signal within the vicinity of the user. This technology facilitates cellular usage in areas where structures, create “cellular shadows” or weak spots within metropolitan areas, and highly congested areas such as freeways, and also serves to amplify cellular signal as users move away from cellular towers in urban areas. The market potential of the technology is far reaching.

Corporate Background

CelLynx Group, Inc. (“CelLynx” or the “Company”) was originally incorporated under the laws of the State of Minnesota on April 1, 1998, under the name “Cool Can Technologies, Inc.” Effective July 12, 2004, the Company merged (the “Merger”) with NorPac Technologies, Inc., its wholly owned subsidiary (“Nevada Sub”), for the purpose of reincorporating the Company in Nevada. The Merger was completed effective July 12, 2004, with the Nevada Sub as the surviving corporation. Upon completion of the Merger, the Company’s name was changed to NorPac Technologies, Inc. (“NorPac”). On July 24, 2008, the Company closed another transaction with shareholders of CelLynx, Inc., a California corporation, in which it issued shares to the CelLynx Inc. shareholders in exchange for all of the outstanding shares of CelLynx Inc. Through this transaction, the Company acquired the cellular network extender business as its wholly owned subsidiary. This transaction has been considered a "reverse take-over" for accounting purposes.

Effective August 5, 2008, the Company changed its name to CelLynx Group, Inc. by merging another wholly owned subsidiary into the Company and assuming the subsidiary’s name. On October 27, 2008, the Company’s Board of Directors approved a change of the Company’s fiscal year to September 30, 2008.

On March 27, 2012 5BARz International Inc. acquired a 60% controlling interest in CelLynx Group, Inc.

Agreement; 5BARz International Inc.

On December 31, 2010, the Company consented to the transfer of three agreements that they had entered into with Dollardex Group Corp. to 5BARz International, Inc. as follows:

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

(ii) An “Asset Purchase Agreement”

(iii) A “Revolving line of credit agreement and security agreement”.

These agreements will 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 5BARz International 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:

(iv) 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.

(v) 5BARz International Inc. agreed to make available to CelLynx Group, Inc. a revolving line of credit facility in the amount of $2.2 million dollars of which $710,776 has been advanced as of June 30, 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. At March 31, 2012, the Company converted $78,500 of the amount due under the revolving line of credit facility for 350,000,000 shares of the capital stock of CelLynx Group, Inc. As a result, CelLynx became a consolidated subsidiary of 5BARz International Inc., on March 29, 2012.

(vi) Pursuant to the Master Global Marketing and Distribution agreement between 5BARz International Inc. and CelLynx Group, Inc., 5BARz International Inc. was obligated to pay to CelLynx Group, Inc. a royalty fee amounting to 50% of the Company’s Net Earnings. That fee would be paid on a quarterly basis, payable in cash or immediately available funds and shall be due and payable not later than 45 days following the end of each calendar quarter of the year. The asset acquisition agreement amendment referred to herein specified that the royalties would be paid in relation to the ownership of the intellectual property.

As a result of the above agreements, 5BARz International Inc. and CelLynx Group, Inc. are working together to commercialize the 5BARz technology.

Change in Management

Mr. Norm Collins Sr., who has served as a Director on the CelLynx Group, Inc., Board of Directors since July 2008, and as the Chairman of the Board since July 2010, has recently passed away. As a result, the Company held a Board of Directors meeting on October 13, 2012 to formally end Mr. Collins term of service with the Company. At that date, in addition to his Directorship, Mr. Collins acted as the interim Chief Executive Officer for the Company as well as the Chief Financial Officer. Further, Mr. Collins served on a committee of the Board of Directors, to search for a new CEO for the Company. On October 17, 2012, the Company issued a press release announcing the fact that Mr. Norm Collins Sr. had passed away, and the loss of Mr. Collins as a valued director and officer of CelLynx Group, Inc.

On October 13, 2012 the Board of Directors of CelLynx Group, Inc. appointed Mr. Dwayne Yaretz as the Chief Executive Officer as well as the Chief Financial Officer for the Company. Mr. Yaretz has been a Director of CelLynx Group, Inc. since December 19, 2009.

Results of Operations

Comparison of the three months ended December 31, 2012 and 2011

Three months ended December 31,
	2012		2011			$ Change	% Change
REVENUE	$		$
COST OF REVENUE
GROSS PROFIT
OPERATING EXPENSES Research and development		39,000		—		39,000	100%
General and administrative		138,312		155,504		(17,192)	(11)%
NON OPERATING INCOME (EXPENSE)		1,079,429		(8,781	)	1,088,210	1,232%
NET INCOME (LOSS)	$	902,116	$	(164,285	)	1,066,401	649.1%

Operating Expenses

Total operating expenses incurred for the three months ended December 31, 2012 and 2011 were $177,312 and $155,504, respectively. This represents an increase of $21,808 . The increase was due to an increase in consulting fees for research and development costs associated with the development of an updated prototype for the next generation of the 5BARz network extender, in the amount of $39,000. In addition that increase in costs was offset by a decrease in general and administrative costs of $17,192, comprised of a reduction in consulting fees from the loss of Mr. Collins as the CEO of the Company.

Non Operating Income and Expenses

Total non-operating income (expenses) incurred for the three months ended December 31, 2012 and 2011 was $1,079,429 and (8,781), respectively; which was an increase of $1,088,210. The differences arise from the variations in the Beneficial Conversion Factor calculations related to the Company’s convertible debt position. The Company’s share price fell to a balance of $0.0002 by the end of the current period reducing the intrinsic value of the Companies convertible securities during the period, resulting in a decrease in the valuation of the beneficial conversion liability calculation.

Liquidity and Capital Resources

Financial Condition

As of December 31, 2012, the Company had cash resources of $14, and a working capital deficit of $3,515,613 compared to cash of $(254) and a working capital deficit of $4,418,370 as of September 30, 2012, which was a increase in working capital of $902,757. This increase is comprised of the accrued derivative liability change in the amount of $1,120,038 which reflects the intrinsic value of convertible debt issued by the Company.

During the three months ended December 31, 2012, cash used in operating activities was $6,099 compared to $5,689 in the corresponding period of 2011. This increase in cash burn rate reflects the limited cash resources and operating levels in CelLynx Group, Inc. during the period.

The Company received $6,397 and $9,114 from financing activities for the three months ended December 31, 2012 and 2011 respectively, comprised of advances from 5BARz International Inc.

Going Concern

In our Annual Report on Form 10-K for the year ended September 30, 2012, our independent auditors included an explanatory paragraph in its report relating to our consolidated financial statements for the years ended September 30, 2012 and 2011, which states that we have incurred negative cash flows from operations since inception, and expect to incur additional losses in the future and have a substantial accumulated deficit. These conditions give rise to substantial doubt about our ability to continue as a going concern. Our ability to expand operations and generate additional revenue and our ability to obtain additional funding will determine our ability to continue as a going concern. Our condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We have prepared our consolidated financial statements assuming that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As of December 31, 2012, we had an accumulated deficit of $16,294,237, negative cash flows from operations since inception, and expect to incur additional losses in the future as we continue to develop and grow our business. We have funded our losses primarily through the sale of common stock and warrants in private placements; borrowings from related parties and other investors; and revenue provided by the sales of our 5BARz unit. The further development of our business will require capital. Our operating expenses will consume a material amount of our cash resources.

Our current cash levels, together with the cash flows we generate from operating activities, are not sufficient to enable us to execute our business strategy. We require additional financing to execute our business strategy and to satisfy our near-term working capital requirements. In the event that we cannot obtain additional funds on a timely basis or our operations do not generate sufficient cash flow, we may be forced to curtail or cease our activities, which would likely result in the loss to investors of all or a substantial portion of their investment. We are actively seeking to raise additional capital through the sale of shares of our capital stock to institutional investors and through strategic investments. If management deems necessary, we might also seek additional loans from related parties. However, there can be no assurance that we will be able to consummate any of these transactions, or that these transactions will be consummated on a timely basis or on terms favorable to us.

Off-Balance Sheet Arrangements

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholder’s equity or that are not reflected in our financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported net sales and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis.

Intangible Assets

Impairment or Disposal of Long- lived Assets

The Company applies the provisions of ASC Topic 360, “Property, Plant, and Equipment,” which addresses financial accounting and reporting for the impairment or disposal of long -lived assets. ASC 360 requires impairment losses to be recorded on long -lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long -lived assets. Loss on long -lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal. Based on its review, the Company believes that as of December 31, 2012 and September 30, 2011, there was no significant impairment of its long -lived assets.

Revenue Recognition

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

The revenue earned on the sale of intangibles is realized at the time that proceeds are paid in full for that intellectual property comprised of shares in the capital stock of 5BARz International Inc.

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. Penalties and interest incurred relate 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 three months ended December 31, 2012 and 2011.

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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Not~~Market ~~Applicable~~risk is the risk of loss from adverse changes in market prices and interest rates. We do not have substantial operations at this time so they are not susceptible to these market risks. If, however, the Company begins to generate substantial revenue, their operations will be materially impacted by interest rates and market prices.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of ~~Disclosure Controls~~disclosure controls and ~~Procedures~~procedures

~~Regulations~~Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, ~~(the~~as "amended (Exchange Act"), ~~require~~as ~~public~~of ~~companies~~March to31, ~~maintain~~2013. ~~"disclosure~~Based ~~controls~~on ~~and~~this ~~procedures~~evaluation," our principal executive officer and principal ~~which~~financial ~~are~~officers ~~defined~~have toconcluded ~~mean~~that aour ~~company's~~disclosure controls and ~~other~~ procedures ~~that~~ are ~~designed~~not effective to ensure that information required to be disclosed by us in the reports ~~that~~we itfile ~~files~~ or ~~submits~~submit under the ~~Securities~~ Exchange Act, ofincluding ~~1934~~this isQuarterly Report on Form 10-Q, is recorded, processed, summarized , and reported, within the time periods specified in the Securities and Exchange Commission'’s rules and forms. ~~Our~~and ~~Chief~~that ~~Executive~~our ~~Officer~~disclosure ~~("CEO")~~ and acontrols ~~consultant~~are ~~providing~~designed ~~services~~to ~~commonly~~ensure ~~provided~~that byinformation arequired ~~Chief~~to ~~Financial~~be ~~Officer~~disclosed ~~("CFO")~~by ~~carried~~us ~~out~~in the anreports ~~evaluation of~~that ~~the~~we ~~effectiveness~~file ofor ~~our~~submit ~~disclosure~~under ~~controls~~the ~~and~~Exchange ~~procedures~~Act asis ofaccumulated ~~the~~and ~~end~~communicated ofto ~~the~~our ~~period~~management, ~~covered~~including byour ~~this~~principal executive ~~report.~~and ~~Based~~principal onfinancial ~~those evaluations~~officers, asor ofpersons ~~the~~performing ~~Evaluation~~similar ~~Date~~functions, ~~our~~as ~~CEO~~appropriate ~~and~~to ~~CFO~~allow ~~believe~~timely ~~that:~~decisions regarding required disclosure.

	(i)	our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports we file under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure; and
	(ii)	disclosure controls and procedures were effective as of the date of the evaluation

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the control system are met. The design of any system of controls also is based in part on certain assumptions regarding the likelihood of certain events, and there can no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Given these and other inherent limitations of control systems, these are only reasonable assurance that our controls will succeed in achieving their stated goals under all potential future conditions.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements in accordance with United State’s generally accepted accounting principles (US GAAP), including those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with US GAAP and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Management conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of our internal control over financial reporting. Based on this assessment, Management concluded the Company did not maintain effective internal control over financial reporting as of March 31, 2013.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

An internal control material weakness is a significant deficiency, or aggregation of deficiencies, that does not reduce to a relatively low level the risk that material misstatements in financial statements will be prevented or detected on a timely basis by employees in the normal course of their work. An internal control significant deficiency, or aggregation of deficiencies, is one that could result in a misstatement of the financial statements that is more than consequential.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2013, and this assessment identified the following material weaknesses in the company’s internal control over financial reporting:

•	A system of internal controls (including policies and procedures) has neither been designed nor implemented.

•	A formal, internal accounting system has not been implemented.

•	Segregation of duties in the handling of cash, cash receipts, and cash disbursements is not formalized.

Therefore, we have relied heavily on entity or management review controls to lessen the issue of segregation of duties.

This quarterly report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Quarterly Report.

Changes in Internal Control over Financial Reporting

There were no changes in our ~~internal~~ internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the quarter ended ~~December~~March 31, ~~2012~~2013 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

3328

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

AsWe ~~earlier~~know ~~reported~~of inno ~~the Company’s~~material, ~~Form~~existing ~~10K~~or ~~and~~pending ~~10Q~~legal proceedings against us, ~~the~~nor ~~Company~~are ~~was~~we involved as a ~~Defendant~~plaintiff in anany ~~action~~material ~~brought~~proceeding byor ~~Dolphinshire~~pending ~~L.P.~~litigation ~~regarding~~other ~~its~~than ~~office~~those ~~space~~articulated below. There inare ~~Mission~~no ~~Viejo,~~proceedings ~~CA.~~in ~~That~~which ~~action~~any ~~has~~of ~~since~~our ~~been~~directors, ~~dismissed.~~officers ~~However~~or affiliates, aor ~~new~~any ~~action~~registered or beneficial stockholder, is inan ~~process~~adverse party ~~and~~or ishas ~~currently~~a ~~being~~material ~~negotiated. Management~~interest ~~expects~~adverse to ~~settle~~our ~~this~~company, ~~action~~other than those articulated below.

AOn ~~similar~~November ~~action~~8, ~~for~~2011 ~~past~~CelLynx Group, Inc was a Defendant in an action ~~due~~brought ~~rent~~by Dophinshire L.P. regarding its office space in Mission Viejo, CA. That action has since been ~~filed~~dismissed. asOn toNovember 8, ~~its~~2011, ~~facility~~plaintiff inbrought Elsuit ~~Dorado~~against ~~Hills~~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. ~~This~~The ~~action~~Company ~~too~~has engaged isin ~~being~~settlement ~~negotiated~~negotiations with the plaintiff and ~~Management~~management ~~expects~~expected to settle. ~~this~~CelLynx ~~action~~has assince, ~~well~~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 March 31, 2013 and are subject to adjustments based on the outcome of negotiation.

AsOn ~~had~~August ~~been~~27, ~~previously~~2012, ~~reported in~~an ~~the~~action ~~Company’s~~was ~~Form~~brought ~~10K~~against CelLynx Inc. and Does ~~10Q~~1-10, in the ~~Company~~Superior ~~was~~Court ~~facing~~of ~~claims~~California, ~~for~~El ~~back~~Dorado ~~wages~~County, byCase ~~some~~No. ofPCL20120700. ~~its~~On ~~former~~August ~~employees.~~27, ~~Some~~2012, ~~of those~~plaintiff ~~claims~~brought ~~have~~suit against ~~been~~the ~~partially~~Company ~~paid~~for ~~and~~unlawful ~~others~~detainer ~~were~~of ~~expected~~offices tolocated beat ~~paid~~5047 inRobert ~~the~~J ~~normal~~Matthews ~~course~~Parkway, ofEl ~~business~~Dorado orHills, ~~were~~CA to95762 ~~be otherwise~~pursuant ~~defended.~~to ~~Those~~a ~~claims~~lease ~~have~~agreement, ~~now~~seeking ~~been~~damages ~~incorporated~~of ~~into~~$24,699, ~~California~~legal ~~Labor~~fees ~~Commission awards in favor~~ of ~~those~~$3,000 ~~former~~and ~~employees.~~late ~~Those awards~~charges ~~total~~of ~~approximately~~ $~~312~~2,~~986~~041.45 ~~depending on interest charges.~~ The ~~first~~Company ~~award~~had ~~has~~by ~~been~~agreement, vacated ~~converted into a judgment in~~ the ~~amount~~ ofleased ~~$118,224.~~premises ~~Management~~and ~~had~~continues ~~negotiated~~to negotiate a ~~monthly~~payout ~~payment~~of ~~plan~~past ~~amounting~~due torent ~~$10,000~~and ~~per~~penalties. ~~month~~Past ~~commencing~~due onrents ~~February~~have 1,been ~~2012~~included ~~and~~in ~~every~~accounts ~~month~~payable ~~thereafter~~at ~~until~~March ~~the~~31, ~~judgment~~2013 ~~has~~and ~~been~~are ~~satisfied.~~subject ~~This~~to ~~agreement~~adjustments isbased ~~now~~on in the ~~process~~outcome of ~~revision~~negotiation.

~~The~~On ~~Company~~July ~~has~~19, ~~received~~2010 ~~a Cease~~certain ~~Trading~~claims ~~Order~~for ~~from~~unpaid ~~the~~wages ~~British~~were ~~Columbia~~filed ~~Securities~~against CelLynx, ~~Commission~~Inc.. ~~(BCSC)~~Judgments ~~alleging~~were ~~that~~obtained ~~the~~commencing ~~Company~~in isAugust in2011 ~~violation~~for back wages by some of ~~the~~its ~~British~~former employees. Some of those ~~Colombia~~claims ~~reporting~~have ~~requirements.~~been ~~The~~partially ~~BCSC~~paid ~~has~~and ~~assumed~~others ~~that~~were ~~since~~expected ~~two~~to be paid in the ~~Company's~~normal ~~Directors~~course ~~are~~of ~~domiciled~~business inor BCwere ~~that~~to ~~the~~be ~~company~~otherwise defended. isThose ~~controlled~~claims ~~out~~have ofnow BCbeen ~~and~~incorporated ~~therefore~~into ~~subject~~California toLabor ~~its~~Commission ~~reporting~~awards ~~requirements~~in favor of those former employees. ~~The~~Those ~~Company~~awards total ~~denies~~approximately ~~that~~$263,023 ~~premise~~depending ~~and~~on isinterest ~~appealing~~charges. ~~the issuance~~It ofis the ~~CTO~~Company’s intention to pay these amounts when proceeds are available.

~~With~~ITEM the exception of the actions reported above, we know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation1A. ~~There~~RISK ~~are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our company.~~FACTORS

Need For Additional Financing

The Company has very limited funds, and such funds may not be adequate to take advantage of current and planned business opportunities. Even if the Company's funds prove to be sufficient to acquire an interest in, or complete upon transactions contemplated, the Company may not have enough capital to fully develop the opportunity. The ultimate success of the Company may depend upon its ability to raise additional capital. As additional capital is needed, there is no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to the Company. If not available, the Company's operations will be limited.

Ability to continue as a going concern

The Company has incurred net losses of $4,053,221 for the period from inception November 14, 2008, to June 30, 2013. The Company has earned no revenues to date. Consequently the Company’s future is dependent upon their ability to obtain financing and to execute upon their business plan and to create future profitable operations for the business. These factors raise substantial doubt that the Company will be able to continue as a going concern. In the event that the Company cannot raise further debt or equity capital, or achieve profitable operations, the Company may have to liquidate their business interests and investors may lose their investment.

Lack of profitable operating history

The Company faces all of the risks of a new business and the special risks inherent in the investigation, acquisition, and involvement in a new business opportunity. The Company must be regarded as a new or "start-up" venture with all of the unforeseen costs, expenses, problems, and difficulties to which such ventures are subject, and consequently has a high risk or failure.

We may be subject to significant foreign currency exchange controls in certain countries in which we operate

Certain foreign economies have experienced shortages in foreign currency reserves and their respective governments have adopted restrictions on the ability to transfer funds out of the country and convert local currencies into U.S. dollars. This may increase our costs and limit our ability to convert local currency into U.S. dollars and transfer funds out of certain countries. Any shortages or restrictions may impede our ability to convert these currencies into U.S. dollars and to transfer funds, including for the payment of dividends or interest or principal on our outstanding debt. In the event that any of our subsidiaries are unable to transfer funds to us due to currency restrictions, we are responsible for any resulting shortfall.

Our foreign operations subject us to risks that could negatively affect our business

Our business can be exposed to risks inherent in foreign operations. These risks, which can vary substantially by market, include political instability, corruption, social and ethnic unrest, changes in economic conditions (including wage and commodity inflation, consumer spending and unemployment levels), the regulatory environment, tax rates and laws and consumer preferences as well as changes in the laws and policies that govern foreign investment in other countries.

In addition, the value of our foreign assets is affected by fluctuations in foreign currency exchange rates, which may adversely affect reported earnings. There can be no assurance as to the future effect of any such changes on our results of operations, financial condition or cash flows.

Dependence upon a sole director and limited management and consultants

The Company currently has only one individuals serving as its officer and director, and few employees and consultants. The Company will be heavily dependent upon their skills, talents, and abilities to implement its business plan, and secure additional personnel and may, from time to time, find that the inability of the officers and directors to fully meet the needs of the business of the Company results in a delay in progress toward implementing its business plan.

We may conduct further offerings in the future in which case investors' shareholdings may be diluted

Since our inception, we have relied on sales of our common stock to fund our operations. We may conduct further equity offerings in the future to finance our current operations. If common stock is issued in return for additional funds, the price per share could be lower than that paid by our current stockholders. We anticipate continuing to rely on equity sales of our common stock in order to fund our business operations. If we issue additional stock, investors' percentage interests in us will be diluted. The result of this could reduce the value of current investors' stock.

Regulation of Penny Stocks

The Company's securities are subject to a Securities and Exchange Commission rule that imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than established customers or accredited investors. For purposes of the rule, the phrase "accredited investors" means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse's income, exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written agreement to the transaction prior to the sale. Consequently, the rule may affect the ability of broker- dealers to sell the Company's securities and also may affect the ability of purchasers in this offering to sell their securities in any market that might develop therefore.

In addition, the Securities and Exchange Commission has adopted a number of rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange Act of 1934, as amended. Because the securities of the Company may constitute "penny stocks" within the meaning of the rules, the rules would apply to the Company and to its securities. The rules may further affect the ability of owners of Shares to sell the securities of the Company in any market that might develop for them.

Shareholders should be aware that, according to Securities and Exchange Commission, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. The Company's management is aware of the abuses that have occurred historically in the penny stock market. Although the Company does not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to the Company's securities.

Our common stock is not listed on a national exchange and as a public market develops in the future, it may be limited and highly volatile, which may generally affect any future price of our common stock

Our common stock currently is listed only in the over-the-counter market on the OTCBB, which is a reporting service and not a securities exchange. We cannot assure investors that in the future our common stock would ever qualify for inclusion on any of the NASDAQ markets for our common stock, The American Stock Exchange or any other national exchange or that more than a limited market will ever develop for our common stock. The lack of an orderly market for our common stock may negatively impact the volume of trading and market price for our common stock.

Any future prices for our common stock will be determined in the marketplace and may be influenced by many factors, including the following:

•

the depth and liquidity of the markets for our common stock;

•

investor perception of 5BARz International Inc. and the industry in which we participate;

•

general economic and market conditions;

•

statements or changes in opinions, ratings or earnings estimates made by brokerage firms or industry analysts relating to the market in which we do business or relating to us specifically, as has occurred in the past;

•

quarterly variations in our results of operations;

•

general market conditions or market conditions specific to technology industries; and

•

domestic and international macroeconomic factors.

In addition, the stock market has recently experienced extreme price and volume fluctuations. These fluctuations are often unrelated to the operating performance of the specific companies. As a result of the factors identified above, a stockholder (due to personal circumstances) may be required to sell his shares of our common stock at a time when our stock price is depressed due to random fluctuations, possibly based on factors beyond our control.

Impracticability of Exhaustive Investigation

The Company's limited funds and the lack of full-time management will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of its chosen business opportunity before the Company commits its capital or other resources thereto. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys and the like which, if the Company had more funds available to it, would be desirable.

Other Regulation

The Company may be subject to regulation or licensing by federal, state, or local authorities. Compliance with such regulations and licensing can be expected to be a time-consuming, expensive process and may limit other investment opportunities of the Company.

Failure to Perform

The Company may be unable to comply with the payment terms of certain agreements providing the Company with the exclusive sales marketing and distribution rights to 5BARz product. In the event that the Company defaults on such agreements, the Company may be unable to maintain operations as a going concern.

Reliance on Third parties

The Company has entered into certain agreements related to the exclusive sales marketing and distribution rights. In the event that the production Company is unable or unwilling for any reason to supply product under the terms of such agreement, the Company may not be able distribute product or may have business interrupted as they secure alternative production facilities.

Competitive Technologies

The Companies technology relates to a market that is highly competitive and a much sought after solution by cellular networks. The Company expects to be at a disadvantage when competing with firms that have substantially greater financial and management resources and capabilities than the Company. The Company is subject to technological obsolescence should other technologies be developed which are superior to the Companies technology.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None~~On November 28, 2012, the Company issued 72,000,000 shares upon the conversion of $10,800 due under the terms of a convertible note agreement.

On February 19, 2013, the Company issued 72,000,000 shares upon the conversion of $3,600 due under the terms of a convertible note agreement.

On April 1, 2013, the Company issued 72,000,000 shares upon the conversion of $3,600 due under the terms of a convertible note agreement.

On May 15, 2013, the Company’s parent, 5BARz International Inc. converted a further $9,375 due under the terms of a convertible line of credit for 375,000,000 common shares.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

~~None~~On May 24, 2012 and September 12, 2012, the Company received proceeds of $37,500 and $12,500, respectively, from an investor, pursuant to the terms of Securities Purchase Agreements and Convertible note agreements. The terms of these notes are such that subsequent to the prepayment date, which is 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.

34In December 2012 the Company’s parent, 5BARz International Inc. 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 March 31, 2013 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. At March 31, 2013 the principle and interest accrued as payable to the lender was $58,111. On April 1, 2013 a further conversion of $3,600 was exercised reducing the balance to $54,511.

ITEM 4. MINE SAFETY DISCLOSURES

~~(REMOVED AND RESERVED)~~None

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

EXHIBIT INDEX

Exhibit Number	Description
31.1	Section 302 Certification by the Corporation’s Chief Executive Officer *
31.2	Section 302 Certification by the Corporation’s Chief Financial Officer *
32.1	Section 906 Certification by the Corporation’s Chief Executive Officer *
32.2	Section 906 Certification by the Corporation’s Chief Financial Officer *

Exhibit Number	Description
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.DEF	XBRL Label Linkbase Document
101.LAB	XBRL Presentation Linkbase Document
101.PRE	XBRL Definition Linkbase Document

36SIGNATURES

~~SIGNATURES~~Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CelLynx Group, Inc.
	(Registrant)

Date: November 5, 2013
	By: /s/ Patrick Grant
	Patrick Grant
	Chief Executive Officer

	CelLynx Group, Inc.
	(Registrant)
Date: February 19, 2013
	By: /s/ Dwayne Yaretz
	Dwayne Yaretz
	Chief Executive Officer

(

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Filing Compare · CelLynx Group, Inc.