UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549




FORM
10-K


x
            
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
the fiscal year ended June 30, 2008




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 number: 000-27147





CELLYNX
GROUP, INC.


(Exact
name of registrant as specified in its charter)


Nevada
            
            95-4705831(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)25910
      Acero, Suite 370
              Mission Viejo, California
            
            92691(Address
      of principal executive offices)
            
            (Zip
      Code)




Registrant’s
telephone number: (949) 305-5290





Securities
registered pursuant to Section 12(b) of the Act: None


Securities
registered pursuant to Section 12(g) of the Act: Common Stock, no par
value




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes o No þ





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.


Yes o No þ




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 þ No o




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will
not be contained herein, to the best of registrant’s knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. þ




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” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act.





Large
accelerated filer o
        Accelerated filer o




Non-accelerated
filer o  
        Smaller reporting company þ





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





At
December 31, 2007, the end of our second fiscal quarter, the aggregate market
value of common stock held by non-affiliates of the registrant was approximately
$7,265,557 based on the closing price of $0.21 as reported on the
Over-the-Counter Bulletin Board.





Number of
shares of common stock outstanding as of October 10,
2008:  80,552,812.














TABLE
OF CONTENTS


TO
ANNUAL REPORT ON FORM 10-K


FOR
YEAR ENDED JUNE 30, 2008





PagePART
      I
            
            
            
            1Item
      1.
            
            Business
            
            1Item
      1A.
            
            Risk
      Factors
            
            8Item
      1B.
            
            Unresolved
      Staff Comments
            
            8Item
      2.
            
            Properties
            
            8Item
      3.
            
            Legal
      Proceedings
            
            9Item
      4.
            
            Submission
      of Matters to a Vote of Security Holders
            
            9PART
      II
            
            
            
            9Item
      5.
            
            Market
      for Registrant's Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
            
            9Item
      6.
            
            Selected
      Financial Data
            
            9Item
      7.
            
            Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
            
            10Item
      7A.
            
            Quantitative
      and Qualitative Disclosures About Market Risk
            
            13Item
      8.
            
            Financial
      Statements and Supplementary Data
            
            13Item
      9.
            
            Disagreements
      With Accountants on Accounting and Financial Disclosure
            
            13Item
      9A.
            
            Controls
      and Procedures
            
            13Item
      9B.
            
            Other
      Information
            
            13PART
      III
            
            
            
            15Item
      10.
            
            Directors,
      Executive Officers and Corporate Governance
            
            15Item
      11.
            
            Executive
      Compensation
            
            18Item
      12.
            
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
            
            22Item
      13.
            
            Certain
      Relationships and Related Transactions, and Director
      Independence
            
            23Item
      14.
            
            Principal
      Accounting Fees and Services
            
            24PART
      IV
            
            
            
            25Item
      15.
            
            Exhibits,
      Financial Statement Schedules
            
            25Signatures
            
            
            
            26




i


EXPLANATORY
NOTE





As
previously reported in our Current Report on Form 8-K dated July 30, 2008, the
Company, under its predecessor name NorPac Technologies, Inc. (“NorPac”),
completed a share exchange transaction with CelLynx, Inc. a California
corporation (“CelLynx”) and CelLynx’s shareholders (the “Share Exchange”) that
resulted in CelLynx becoming a wholly-owned subsidiary of NorPac and also
resulted in a change of control of the Company. The Share Exchange was accounted
for as a reverse acquisition and recapitalization and, as a result, NorPac’s
(the legal acquirer) consolidated financial statements will, in substance, be
those of CelLynx (the accounting acquirer), with the assets and liabilities, and
revenues and expenses, of CelLynx being included effective from the date of the
Share Exchange. However, the Share Exchange was not completed until after the
end of Company’s current fiscal year, June 30, 2008, and thus the Company was
required to file this Annual Report on Form 10-K for NorPac’s business
activities prior to the Share Exchange and as of June 30, 2008. Although this
Annual Report on Form 10-K includes descriptions of the Share Exchange and the
business of the combined entity after the Closing of the Share Exchange, the
financial statements and information included are only those of NorPac, the
legal acquirer. The financial statements for CelLynx for the years ended
September 30, 2006 and September 30, 2007 and the unaudited financial statements
for the six-months ended March 31, 2008 were included with the Form 8-K filed on
July 30, 2008 in connection with the Share Exchange. Further, the Company has
also decided to adopt the fiscal year end of CelLynx, its operating business
after the share exchange transaction, and thus the Company will be filing an
annual report on Form 10-K for its new fiscal year ending September 30th,
commencing with the Company’s annual report for the year ending September 30,
2008.





FORWARD
LOOKING STATEMENTS AND CERTAIN TERMINOLOGY





Some of
the statements made by us in this Annual Report on Form 10-K are
forward-looking in nature, including but not limited to, statements relating to
our future revenue, product development, demand, acceptance and market share,
gross margins, levels of research and development, our management's plans and
objectives for our current and future operations, and other statements that are
not historical facts. Forward-looking statements include, but are not limited
to, statements that are not historical facts, and statements including forms of
the words "intend", "believe", "will", "may", "could", "expect", "anticipate",
"plan", "possible", and similar terms. Actual results could differ materially
from the results implied by the forward looking statements due to a variety of
factors.  Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. We undertake
no obligation to publicly release any revisions to these forward-looking
statements that may reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events. Factors that could cause actual
results to differ materially from those expressed in any forward-looking
statement made by us include, but are not limited to:





●our limited operational
history;


● our ability to finance our activities
and maintain our financial liquidity;


● our ability to attract and retain
qualified, knowledgeable employees;


● the impact of general economic
conditions on our business;


● the ability to bring our technology to
commercialization;


●market acceptance of our
products;


● dependence on suppliers, third party
manufacturers and other key vendors;


● our ability to design and market new
products successfully;


●our failure to acquire new
customers in the future;


●continued enforceability
of patent and trademark rights;


● deterioration of business and economic
conditions in our markets;


● intensely competitive industry
conditions with increasing price competition; and


●the rate of growth in the
cellular amplifier market.






In this
document, the words "we," "our," "ours," "us,"  “CelLynx” and
“Company” refer to CelLynx Group, Inc. and our subsidiary.




ii





PART
I





ITEM
1. BUSINESS




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 Nevada Sub as the surviving corporation. Upon
completion of the Merger, the Company’s name was changed to NorPac Technologies,
Inc. (“NorPac”).





The
Company had originally been in the business of developing and marketing a
proprietary technology for self-chilling beverage containers (the “Cool Can
Technology”). However, the Company’s patents for the Cool Can Technology
expired, and, as a result, the Company’s management decided to abandon the
development of the Cool Can Technology and seek alternative business
opportunities. To that end, as more fully explained below, on July 24, 2008, the
Company closed a transaction with shareholders of CelLynx, Inc., a California
corporation ("CelLynx-California"), by which it newly issued shares to the
CelLynx-California shareholders in exchange for all outstanding shares of
CelLynx-California. Through this transaction, the Company acquired a
cellular amplifier 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, CelLynx Group, Inc., a Nevada corporation, into
the Company and assuming the subsidiary’s name.





The
Reverse Take-Over





On July
24, 2008, the Company closed a reverse take-over transaction by which it
acquired a cellular amplifier business pursuant to a Share Exchange Agreement,
as amended  (the “Exchange Agreement”), by and among the Company,
CelLynx, Inc., a California corporation (“CelLynx-California”),
and twenty-three (23) CelLynx-California shareholders who, immediately prior to
the closing of the transactions contemplated by the Exchange Agreement,
collectively held 100% of CelLynx-California’s issued and outstanding shares of
capital stock (the “CelLynx Owners”).





Prior to
the closing, on July 23, 2008, the Company entered into a Regulation S
Subscription Agreement (the “Subscription Agreement”) pursuant to which the
Company agreed to issue and sell 10,500,000 shares of its common stock and
warrants to purchase 10,500,000 shares of common stock at an exercise price of
$0.20 per share to non-U.S. persons (the “Investors”) for an aggregate purchase
price of $1,575,000 (the “Financing”).





Prior to
the closing, on July 22, 2008, CelLynx-California entered into a Master Global
Marketing and Distribution Agreement (the “Distribution Agreement”) with
Dollardex Group Corp., a company organized under the laws of
Panama (“Dollardex”), whereby Dollardex shall act as CelLynx-California’s
exclusive distributor of CelLynx-California’s products and related accessories
in the following regions: Canada, South America, Europe, Middle East, China,
India, Australia, Africa and South East Asia.





Immediately
following the closing, on July 24, 2008, two of the new officers and directors,
one of the new employees and one of the new non-officer directors of the Company
entered into a Lock-Up Agreement (the “Lock-Up Agreement”) whereby they agreed
not to transfer their the Company shares for a period of 24 months following the
closing of the reverse take-over transaction.





As a
result of the closing of the reverse take-over transaction, the CelLynx Owners
became our controlling shareholders, CelLynx-California became our wholly-owned
subsidiary, and CelLynx-California’s business became our business.





The
following is a brief description of the terms and conditions of the Exchange
Agreement, Subscription Agreement and Distribution Agreement, and the
transactions contemplated thereunder that are material to the
Company.





Share
Exchange




Under the
Exchange Agreement, the Company was to acquire all of the equity interests of
CelLynx-California in exchange for issuing restricted common stock to the
CelLynx Owners in an aggregate amount equal to approximately 70% of the total
issued and outstanding shares of common stock immediately after the closing of
the reverse take-over, taking into account certain derivative shares held by
certain CelLynx Owners and a CelLynx-California noteholder, but exclusive of the
shares issued in the Financing and to certain CelLynx-California
investors.   As a result, the CelLynx Owners were to receive
77,970,956 shares of the Company’s common stock in exchange for 100% of
CelLynx’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 and reserved in the
Financing described below.  Pursuant to the Exchange Agreement, in the
event that there were 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 Owners 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
Owners would equal the total number of shares of common stock due to the CelLynx
Owners under the Exchange Agreement.  As a result, the Company issued
to the CelLynx Owners an aggregate of 32,454,922 shares of common stock and
45,516,034 shares of Series A Preferred Stock.  The Series A Preferred
Stock automatically converts into common stock on a one-to-one ratio upon the
authorized capital stock of the Company being increased to include not less than
150,000,000 shares of common stock.


1


The
Exchange Agreement also provided that all options, warrants and convertible
notes to purchase or acquire shares of CelLynx-California be converted into
options, warrants or convertible notes to purchase or acquire shares of the
Company in the same proportion at which the CelLynx-California shares were
converted into Company shares (the “Conversion Ratio”) under the Exchange
Agreement.  The exercise or conversion price for such options,
warrants or convertible notes shall be the exercise price or conversion price of
the CelLynx-California options, warrants or convertible notes divided by the
Conversion Ratio.  As a result, 750,000 CelLynx-California options
with an exercise price of $0.018 per share were converted into 943,447 Company
options with an exercise price of $0.014 per share; 375,000 CelLynx-California
options with an exercise price of $0.02 per share were converted into 471,723
Company options with an exercise price of $0.016 per share; 23,394,133
CelLynx-California options with an exercise price of $0.09 per share were
converted into 29,428,164 Company options at an exercise price of approximately
$0.0715 per share; 18,330,574 CelLynx-California options with an exercise price
of $0.099 per share were converted into 23,058,565 Company options with an
exercise price of approximately $0.0787 per share, and, with the exception of
the Palomar Note described below, $40,000 of CelLynx-California convertible
notes with a conversion price of $0.01 per share were converted into $40,000 of
Company convertible notes with a conversion price of approximately $0.0079 per
share, and $20,000 of CelLynx-California convertible notes with a conversion
price of $0.10 per share were converted into $20,000 of Company convertible
notes with a conversion price of approximately $0.0795 per
share.  There were no CelLynx-California warrants issued and
outstanding at the time of the closing of the Exchange Agreement.




In
connection with the reverse take-over transaction, Palomar Ventures III, L.P.
(“Palomar”), holder of a certain amended and restated convertible promissory
note dated November 10, 2007 (the “Palomar Note”) executed by CelLynx-California
in the principal amount of $262,356.16, is entitled to convert the Palomar Note
into that number of shares of common stock of CelLynx-California such that
immediately following the closing of the reverse take-over transaction, the
Palomar Note would be convertible into 4.8% of the issued and outstanding common
stock of the Company, exclusive of unvested options.  As a result, the
Palomar Note is convertible into 6,340,029 shares of the Company' s common
stock.




As a
condition to closing the Exchange Agreement, John P. Thornton resigned as the
Company’s President, Chief Executive Officer, Chief Financial Officer, Secretary
and Treasurer, and the following officers were appointed:




§
            Daniel
      R. Ash, President, Chief Executive Officer, Chief Operating Officer and
      Secretary;§
            Kevin
      Pickard, Chief Financial Officer and Treasurer,
  and


§
            Tareq
      Risheq, Chief Strategy Officer.




In
addition, Mr. Thornton agreed to resign as a director of the Company and Mr.
Ash, Mr. Risheq, Norman W. Collins, and Robert J. Legendre were appointed
directors of the Company.  Mr. Ash’s appointment was effective
immediately.  The appointment of the other directors became effective
upon the Company’s compliance with the provisions of Section 14(f) of the
Securities Act of 1933, as amended, and Rule 14(f)-1 thereunder.




$1,575,000 Financing




Under the
Subscription Agreement, the Company issued 10,500,000 shares of its common stock
and warrants (the “Warrants”) to purchase 10,500,000 shares of common stock at
an exercise price of $0.20 per share to the Investors for an aggregate purchase
price of $1,575,000, or $0.15 per share, payable in cash and through the
cancellation of debt.  The proceeds from the Financing were allocated
as follows: $100,000 to pay current obligations of NorPac, $225,000 as
cancellation of current debt of NorPac and the remaining $1,250,000 for working
capital.  The Warrants expire on July 22, 2010 except in the event
that at any time CelLynx has manufactured 25 or more of its mobile or home
repeater units, then the Company may, at its option, accelerate the expiry of
the Warrants by giving notice (“Notice of Acceleration”) to the holder
thereof.  If the holder does not exercise the Warrant within 30 days
of the giving of the Notice of Acceleration, the Warrants will expire and the
holder will have no further rights to acquire any shares of the Company under
the Warrants.




As a
result of the closing of the Exchange Agreement and Subscription Agreement, the
CelLynx Owners now own 40.3%, and the investors in the Financing own 13.0%, of
the issued and outstanding common stock of the Company, and the CelLynx Owners
own 100% of the issued and outstanding Preferred Stock, which are convertible
into 45,516,034 shares of common stock.  At the closing of the
Exchange Agreement, the Company had a total of 80,552,812 shares of its common
stock issued and outstanding.




Dollardex
Distribution Agreement




Under the Distribution Agreement, Dollardex shall act
as CelLynx’s exclusive distributor of the CelLynx’s 5BARzTM products and related
accessories (the “Products”) in the following nine regions: Canada, South
America, Europe, Middle East, China, India, Australia, Africa, and South East
Asia (the “Territory”).  The Distribution Agreement supersedes a prior
Joint Venture Agreement, as amended, dated January 3, 2008 entered into between
the parties.





In
accordance with the terms of the Distribution Agreement, Dollardex will sell and
distribute the Products directly to resellers (whether wholesales or retailers)
or end users of the Products in the Territory as well as sell and distribute the
Products to its agents in the Territory (the “Dealers”).  The Dealers
will be located and appointed by Dollardex but their appointment will be subject
to CelLynx’s approval.


2


In
accordance with the terms of the Distribution Agreement, CelLynx also granted
Dollardex an exclusive non-transferrable license to use the tradenames,
trademark, logos, and designations in or associated with the Products during the
term of the Distribution Agreement in connection with the promotion and
distribution of the Products in the Territory. The Distribution Agreement is
otherwise subject to customary intellectual property protections, including,
without limitation, all of the processes, know-how, and related material
proprietary of CelLynx to manufacture the Products.





The term
of the Distribution Agreement is perpetual though the Distribution Agreement may
be terminated, in the event of, among other events, a material breach,
upon a change of control of Dollardex, or by mutual agreement of the
parties.  The Distribution Agreement further provides that CelLynx
shall have the exclusive right of first refusal to acquire Dollardex in the
event that Dollardex considers such transaction. In addition, effective December
31, 2011, CelLynx shall have the option to acquire Dollardex in accordance with
a certain appraisal method as further described in the Distribution
Agreement.





In
accordance with the terms of the Distribution Agreement, CelLynx and Dollardex,
prior to Dollardex entering into a contractual relationship with a Dealer or
commencing distribution of the Product in a given Territory, will develop a
business plan for deployment of the distribution and marketing of the Products
in the specific Territory.  CelLynx will have approval rights over the
business plan and Dollardex is obligated to conduct business and ensure that
Dealers conduct their business substantially in accordance with the terms of the
business plan.





As
consideration for the rights granted under the Distribution Agreement, Dollardex
will provide funding to the Company as follows: (i) $1,000,000 due and payable
after the pilot production run for the first commercial Product is completed
(the “Initial Roll Out”); (ii) $4,000,000 due and payable 90 days from the
commencement of the Initial Roll Out; and (iii) $5,000,000 due and payable 180
days from the commencement of the Initial Roll Out.  In addition, the
parties agreed that the Company will sell products to Dollardex at 10% over cost
of goods sold and Dollardex will pay the Company 50.1% of its Net Earning (as
defined in the Distribution Agreement) on a quarterly basis with payments to be
made within 45 days following the end of each quarter.




Lock-Up
Agreements




Under the
Lock-Up Agreement, Robert J. Legendre, Chairman of the Board of
Directors of the Company,  Daniel R. Ash, Chief Executive Officer
and a director of the Company, Tareq Risheq, Chief Strategy Officer and a
director of the Company, and Anthony DeMarco, a senior employee of the Company,
agreed not to transfer, sell, assign, pledge, hypothecate, give, create a
security interest in or lien on, place in trust (voting trust or otherwise), or
in any other way encumber or dispose of, directly or indirectly and whether or
not voluntarily, without express prior written consent of the Company, any
common stock or options to purchase common stock of the Company for a period of
24 months.




The
descriptions of the Exchange Agreement, Subscription Agreement, Warrants,
Distribution Agreement, Palomar Note, and Lock-Up Agreement are qualified in
their entirety by the contents of such agreements, which are attached to this
report as Exhibits 2.1, 2.2, 2.3, 10.1, 10.2, 10.3, 10.4 and 10.8, respectively,
and are incorporated herein by reference.





Recent
Events





On September 22, 2008, shareholders
owning in the aggregate 26,441,554 shares of the Company’s common stock and
40,411,544 shares of the Company’s Series A Preferred Stock, outstanding as of
September 10, 2008 (the “Record Date”), consented in writing to amend the
Company’s articles of incorporation to increase the number of shares of the
Company’s authorized common stock from 100,000,000 to 400,000,000.  On
October 8, 2008, the Company filed and mailed a Definitive Information Statement
notifying its shareholders of this action. This action will become effective on
or about October 28, 2008, at which time the Company with file a Certificate of
Amendment to its Articles of Incorporation.





Overview
of CelLynx





CelLynx
is developing and plans to produce and market a next generation of cell phone
amplifiers (also known as repeaters or boosters) for the small office, home
office (“SOHO”) and vehicle.  This next generation product, CelLynx
5BARzTM, is the first single piece unit that strengthens weak cellular signals to
deliver higher quality signals for voice, data and video reception on cell
phones being used indoors or in vehicles.   CelLynx plans to
develop its products for use in North America, Europe and Asia.  The
CelLynx product line is intended to be manufactured by top tier contract
manufacturers located in South East Asia.   These manufacturers
will allow CelLynx to capitalize on the full advantages of multiple
manufacturing locations with a trained and experienced technical work
force,  state of the art facilities and knowledge of all aspects of
supply chain management, operational execution, global logistics and reverse
logistics. The marketing and sales functions will be handled in-house
incorporating a multi-channel strategy that includes distribution partners,
wireless service providers, retail outlets and international joint
ventures.


3


The
CelLynx Solution




Most SOHO
cellular amplifiers currently on the market require a receiving tower or
antenna, usually placed in an attic or on a rooftop, and a transmitting tower or
antenna to be placed at least 35 feet from the other antenna with each connected
to the amplifier by cable.  CelLynx’s patent pending technology
eliminates the need to distance the receiving and transmitting towers, allowing
the two towers to be placed directly inside the amplifier, resulting in a more
affordable, one piece unit sometimes referred to as ‘plug & play’, i.e.
requiring no installation other than plugging the unit into a power
source.




CelLynx has
      recently completed a prototype of the SOHO unit which delivers 45 decibel
       (dB) of gain in a Single Band PCS environment providing up to 1,500
      square feet of indoor coverage.  This unit measures 6.5 X 7.5 X
      2.5 inches, weighs approximately one pound and does not require the
      installation of antennas or cables in order to function.  In
      order to optimize marketability, CelLynx is developing an improved model
      which it expects to operate in a dual band, PCS and Cellular, environment
      delivering 65 dB of gain thereby allowing for coverage of 2,500 to 3,000
      square feet.  This dual band unit would work with all current
      wireless carriers in the U.S.  and Canada except Nextel, which
      operates on its own frequency. The PCS network is generally used by the
      older carriers such as AT&T at 850MHz while the newer carriers such as
      T-Mobile operate on the Cellular network at 1900 MHz.  Management is
      confident that all of the critical functions required for this dual band
      unit have been identified and that their engineering team has the
      capability to accomplish development leading to
      commercialization.
            
            soho




We
believe the CelLynx product line, when commercialized, will also offer an
advantage over other repeater such as the Femtocell architecture being developed
by wireless service providers such as AT&T and Verizon.  This
Femtocell technology requires a small cellular base station which connects to
the service provider’s network via a broadband such as DSL or
cable.  As such, Femtocell will be carrier specific and subject to a
monthly subscription fee.  CelLynx products, on the other hand, will
be compatible with all wireless carriers in the U.S. and Canada  with
the exception of Nextel, will not require a broadband internet connection and
will not entail a monthly service fee.




CelLynx
has also developed a mobile unit particularly designed for use in
vehicles.  This unit currently is an adaptation of the SOHO unit
described above.  However, CelLynx is currently improving the mobility
of that model by developing an amplifier which will measure 3.5 X 5 inches
including one built in antenna and another antenna measuring 4 to 6 inches to be
connected to the amplifier by a micro-coax cable and attached to any of the
windows by suction cup or other portable means.  The unit will produce
up to 45 dB of gain offering higher performance than the competition within the
interior of the vehicle cabin while minimizing the signal degrading effects of
cabling. The mobile unit will feature built in caller ID and Bluetooth speaker
phone for hands free driving and will operate in a dual band environment. It
will require no installation other than placing the antennae within the cabin of
the vehicle and inserting the cigarette lighter power adapter. Unlike the other
products on the market, the CelLynx product will not require the installation of
a roof top mounted antenna.  As a result, management believes that
this consumer friendly product, will surpass the competition in market
acceptance thereby creating the potential for a mass market distribution
channel.




History
and Development of CelLynx





CelLynx
assembled a veteran engineering team with extensive cellular radio
frequency (RF)  experience headquartered in Sacramento,
California.  Within eight months, this team, with more than 80 years
of combined experience in building RF products, developed working prototypes of
an affordable consumer friendly single piece plug & play amplifier with a
minimum of 45dB of gain in both up and down paths. By late 2007, a
pre-production prototype had been developed. At that time, CelLynx entered into
a merger agreement with NorPac Technologies, Inc., a Nevada corporation trading
on the Over The Counter Bulletin Board (OTC BB).





Since the
closing of the reverse take-over, CelLynx has continued the development of the
product while working toward the development of the dual band unit, improving
the design and is currently adapting the SOHO unit into a mobile amplifier for
vehicle use.  Meanwhile management is focusing on the manufacturing
process and a sales and marketing plan to ensure the delivery of a quality low
cost product into the market place.





The
CelLynx Product Line





5BarzTM
Home Unit





The
5BarzTM home unit is designed to eliminate cell phone dead spots in an
area similar to the size of a single family home (2,000 to 3,000 square
feet).  Expected to retail at about $299.00, the 5BarzTM home unit is
lightweight, aesthetically pleasing and designed to sit on a table near a window
in the direction of the nearest cell tower.  There is an indicator
light to determine the best placement.  This product requires no
assembly: simply place the unit on a table and plug in the power
chord.  Product introduction is expected to occur near the beginning
of second quarter 2009 for the North American model.  The European and
Asian models are expected to be introduced in the fall of 2009.


4


5BarzTM
Mobile Unit





The
5BarzTM mobile unit is designed to eliminate cell phone dead spots while in a
vehicle, moving or stationary.  Simply place the unit in a convenient
location within the vehicle, place the antenna close to the windshield on the
dash board or attached to the inside windshield with the supplied suction cup,
and plug in the cigarette lighter power adapter.  The 5BarzTM mobile
unit includes a Blue Tooth speaker phone with caller ID to offer the user the
convenience of hands free phone conversation while driving, which is mandated by
law in many areas.  This product is also expected to retail at about
$299.00 and to be introduced in North American in the beginning of
2009.  The European and Asian models are expected to be introduced
mid-year 2009.





5Barz
Product Launch





The 5Barz
product launch schedule is coordinated with the marketing plan to first
introduce the 5Barz home unit and 5Barz mobile unit in the United States and
Canada, operating at the Cellular and PCS frequencies
(800/1900MHz).  To allow for the marketing of the 5Barz products in
Europe and Asia, new models will be launched next that are designed to operate
at the ETSI defined frequencies for GSM (900/1800MHz).  The
development requirement for the new models is primarily limited to the tuning of
the US based units for the change of frequency assignments, including
replacement of frequency sensitive components such as band pass filters and
antennas.





Industry
Overview





Given the
nature of the CelLynx product line, CelLynx is within the overall cellular
telephone market as well as two sub-segments of that market, i.e. the
in-building wireless systems marketplace and the vehicle amplifier
marketplace.





The
overall cellular telephone marketplace





Statistics
from the 3GSM World Congress in Barcelona, Spain this year indicate that the
number of worldwide mobile subscribers has surpassed the two billion mark and is
predicted to reach three billion by the end of this year and four billion by
2011.  Demand for cellular applications beyond voice, such as video,
SMS, email and internet access have created a multi-billion dollar market for
accessorial cellular network products such as CelLynx amplifiers. “Certain user
segments have an almost insatiable appetite for connectivity and enhanced access
to critical productivity applications while at work, at home and on the move,”
according to Cliff Raskind, Strategy Analytics’ director of Wireless
Strategies.  These early adopters are already driving the market for
products that will improve connectivity. Business users are twice as likely to
carry a mobile phone as a notebook when away from their desk and are keenly
interested in expanding email and internet access to the phone.  This
increase in bandwidth demand on the cellular network decreases signal strength
and increases the need for CelLynx’s 5BARzÔ
products.





In spite
of the overall proliferation of cell phones, the carriers themselves are
suffering from a high rate of customer defections sometimes referred to as
churn.  According to CITA, The Wireless Association, 40% of those
customers switching networks are searching for a better signal. Considering that
it costs the average carrier almost $400 to acquire a new subscriber, this
global churn rate is the most serious problem affecting the cellular industry
and CelLynx is directly addressing this problem through improving indoor and
vehicle coverage while diminishing interference. It is also noteworthy that
according to First Research, a D & B Company providing Industry
Intelligence, 85% of the U.S. Wireless industry revenues are generated by the
four major wireless companies, AT&T, Verizon, Sprint and T-Mobile. In the US
market, CelLynx will concentrate on adapting its products to the frequencies
being used by those carriers, in particular the Dual Band
850/1900MHz.  In the International market, CelLynx will focus on the
Dual Band 900/1800MHz being used in Europe, Africa, Asia, Australia, New Zealand
and most of South America.





CelLynx
believes that all of the above market conditions indicate the potential for the
success of The CelLynx product line within the general cell phone
market.  The CelLynx products will seek to attract virtually all cell
phone users including those who will come by the product through their cellular
and Wi-MAX carriers, enterprise employers, government agencies or military
service organizations.





The
‘In Building’ wireless systems marketplace





According
to ABI Research, ‘In-building wireless systems, forecasted to exceed $15 billion
in revenues in 2013, are a key enabler for delivering on the potential of
cellular mobile services.’ Total Telecom, a
leading communications periodical, reports that the role of the traditional
office is no longer essential for day-to-day productivity as people increasingly
work wherever the technology is available,  generally at home if not
in the office.  The US Department of Labor reports that over 20
million workers work at home and this does not include those who work out of a
home office to conduct personal business or those who work at home to finish
uncompleted tasks from their regular employment or use their home office for
outside or after hours employment.  More and more workers are adopting
the trend toward work-life balance that results in them spending more time at
home. These factors reinforce the need for improved signal in the Small Office
Home Office.  That need is expected to be met by the CelLynx SOHO
unit.


5


The
‘In-Vehicle’ wireless systems marketplace





Three
trends are noteworthy when discussing this sub sector:  the growth of
the number of motor vehicles on the road, the trend indicating the increased
number of mobile workers and the trend toward legislation requiring hands free
cell phone operation while driving.





According
to Plunkett Research, Ltd. there were 806 million automobiles and light trucks
on the roads of the world in 2007.  That number is expected to
increase to one billion by the year 2020. Not so surprisingly, predictions by
Analyst House IDC indicate that the number of mobile workers is set to reach
one billion by 2011. It is reasonable to assume that as the number of
vehicles increase and the number of cell phones increase that the number of
drivers using cell phones will also increase.





The
National Council of Legislators estimate that 73 % of drivers use their cell
phones in the car. That being the case,  twenty states and dozens of
municipalities have passed legislation requiring hands free  cell
phones while driving. Anticipating the continuation of this legislative trend,
the CelLynx vehicular model is equipped with Bluetooth for hands free, safe
driving.





All of
the above trends suggest the need for quality voice, data and media solutions in
the mobile environment and that the market for user friendly amplifiers such as
CelLynx will follow these trends in both growth and application.




Sales
and Marketing Strategy





In the
US, CelLynx will  deploy a multi-channel sales strategy seeking to
include: Distribution Partners such as Celluphone, QDI or Advantage; Stocking
Partners such as Tesco, Hutton & Brightstar;   Cellular
Carriers such as AT&T & Verizon; Corporate Accounts such as Accenture,
IBM, Remax, Roadway & Hertz;  Retail Outlets such as Radio Shack,
Comp USA & Best Buy and Web based direct sales.





CelLynx
will address the international market place through a Master Global Marketing,
Distribution and Service Agreement between CelLynx and Dollardex Group Corp.
(“DGC”).  DGC intends to build an international marketing and
distribution dealer network through its existing relationships in its licensed
territories.





Operating
and Manufacturing Strategy





CelLynx’s  management
and engineering teams have extensive experience working with top-tier off shore
manufacturers.  In fact, this collective team has successfully
launched over 150 complex RF products in the past seven years using off shore
manufacturers.





Given
their expertise in this area they have become acutely aware of the advantages of
partnering with a reputable contract manufacturer (CM).  In this case,
CelLynx will immediately leverage manufacturing practices at minimal cost. In
fact, the team has identified several CM candidates in South East Asia. Once a
CM is selected CelLynx will immediately benefit from multiple manufacturing
locations with a trained and experienced technical work force, state of the art
facilities and knowledge of all aspects of supply chain management, operational
execution, global logistics and reverse logistics.





An
additional benefit to CelLynx is that the CM to be selected will have facilities
in California which will produce the first 200 units in coordination with the
Company’s engineering team.  Once the team has approved these
pre-production units, the manufacturing plan will be developed for one of the
CM’s Southeast Asia facilities.  The 200 units scheduled for the
beginning of the second quarter of 2009 availability will then be used for UL
testing and product demonstrations.




Competition
by Market Segment





The SOHO or residential wireless
amplifier competitors; Most of the companies in this industry do not
offer Plug & Play single unit solutions such as CelLynx.  In fact,
companies such as Wilson, Wi-Ex and CellAntenna, offer two-piece, ‘cable
connected amplifier-to-antenna’ solutions requiring complex installation enabled
only by tech savvy users or professional installers and at considerably higher
prices than CelLynx.





The mobile vehicle market
competitors; A few companies such as Digital Antenna and Richardson (Call
Capture) are focused on the vehicle market and others such as Wilson are
entering that market.  Again, however, these vehicle solutions require
complex installation including roof top mounting of antenna and, in some cases,
a direct connection between the cell phone and the roof top
antenna.





The Wireless enterprise solution
providers as competitors; While the equipment manufacturers in the
enterprise market such as Wilson, EMS Wireless and Radioframe Networks are
attempting to enter the the SOHO/residential market, their products are
engineered for commercial enterprises  requiring complex installation
and as a result are expensive as compared to the CelLynx
solution.


6


While
each of the above competitors has solutions for certain market segments such as
large buildings and warehouses, there is no dominant market leader in the SOHO
and Vehicle segments of the Market. CelLynx believes that the total indoor and
vehicle cell signal amplification market although now exceeding $300 million
annually could experience continued growth through the commercialization of
products such as those being offered by CelLynx. As compared to the current
products in the marketplace, CelLynx’s key sustainable competitive advantage is
in its patent pending technology providing for compact, plug & play,
consumer friendly and affordable product lines. An overview of the competition
is shown below.









Intellectual
Property





CelLynx
has trademark protection for the brand name “5Barz” and has applied for
trademark protection for its sales slogan, “Turning Weak Spots into Sweet
Spots.”  CelLynx has the following patent applications
pending:




Table 2




The
CelLynx Technology





The
plug-and-play aspects of the CelLynx cellular amplifier demanded complex
algorithms and intuitive interfaces. Further complicating the challenge, the
repeater required a full duplex linear amplifier providing up to 45db of gain in
both RX and TX paths and directional antennae with one inch of separation and
70db of isolation between them. It further required an active feed-forward
cancellation in both the RX and TX links with real time correction and an active
Automatic Gain Control for both links running in sync with the active
feed-forward cancellation.  Typically, a repeater simply boosts off
the air cell phone signals so operating performance of a repeater can be related
to the amount of boost reliability delivered by the repeater.





System
gain is the measure of boost in decibels or dB.  The major obstacles
to reliable gain in a repeater are isolation and linearity.  Linearity
is a function of the amplification in the active portion of the repeater.
Generally, the amplifiers in a repeater are deigned to operate class A and the
usable output power is de-rated from the maximum output power by 10dB or 90%
below the saturated output of the amplifier. Isolation is the measure of
separation of the input from the output of the repeater.  If the
separation is less than the system gain, the result will be similar to the
feedback screech heard when a microphone is placed too close to a loud
speaker.  In practice, isolation has proven to be the Achilles heel of
repeaters because unlike linearity, improvements in isolation have proven to be
costly and unmanageable.


7


Traditionally
the low tech approaches to achieving the isolation necessary for adequate
repeater performance includes vertical and horizontal spacing of the two
antennae, as with a speaker and microphone.  In most cases this
horizontal spacing requires approximately ten times the distance of vertical
spacing.   CelLynx has used a high tech approach to deal with the
real world environment resulting in a superior product delivering high
performance. Not only did the team meet the challenge, but in the process they
developed a user friendly, affordable unit that is protected by five
pending patents.





Government
Regulation and Probability of Affecting Business





Our
products are subject to Federal Communications Commission (FCC) and Underwriter
Laboratories (UL) certifications.  We will submit samples of our
products to both agencies according to our product development
process.  We do not anticipate any difficulty in obtaining these
certifications for our products.





In
addition, because we plan to market and sell our products in other countries,
importation and exportation regulations may impact our activities. A breach of
these laws or regulations may result in the imposition of penalties or fines,
suspension or revocation of licenses. We are not currently involved in any such
judicial or administrative proceedings and believe that we are in compliance
with all applicable regulations.  Although it is impossible to predict
with certainty the effect that additional importation and exportation
requirements and other regulations may have on future earnings and operations,
we are presently unaware of any future regulations that may have a material
effect on our financial position, but cannot rule out the
possibility.




Compliance
with Environmental Laws





CelLynx
is not required to comply with any environmental laws that are particular to the
cellular amplifier industry.  However, it is company policy to be as
environmentally conscience in every aspect of our operations.





Employees





CelLynx
has approximately seven (7) full-time employees.  In addition, we have
hired several consultants to assist with development of our cellular amplifier
units.   CelLynx is not affiliated with any union or collective
bargaining agreement.  There have been
no adverse labor incidents or work stoppages in the history of CelLynx.
Management believes that its relationship with our employees is
good.





Corporate
Information





CelLynx’s
principal executive offices are located at 25910 Acero, Suite 370, Mission
Viejo, California 92691.CelLynx’s main
telephone number is (949) 305-5290, and our website address is www.CelLynx.com.  Information
provided on our website, however, is not part of this report and is not
incorporated herein.





ITEM
1A. RISK FACTORS





Not
applicable.





ITEM
1B. UNRESOLVED STAFF COMMENTS





Not
applicable.





ITEM
2. PROPERTIES





We lease office space in Mission Viejo, California at 25910 Acero,
Suite 370, Mission Viejo, California 92691.  The facility is our
primary operating offices and headquarters.  The facility is
approximately 2,120 square feet.  The lease has a one-and-half year
term that expires March 31, 2010 and the monthly base rent is
$4,664.





We also
lease office space in El Dorado Hills, California at 5047 Robert J Mathews
Parkway, Suite 400, El Dorado Hills, California 95762. This facility is used for
research, development and engineering.  The facility is approximately
1,570 square feet. The lease has a one-year term that expires February 21, 2009
and the monthly base rent is $2,198.





We
believe that the foregoing facilities are sufficient for our operational
needs.





We do not anticipate investing in real estate or interests in
real estate, real estate mortgages, or securities of or interests in persons
primarily engaged in real estate activities. We currently have no formal
investment policy, and we do not intend to undertake investments in real estate
as a part of our normal operations.


8


ITEM 3. LEGAL PROCEEDINGS




We are
not currently involved in any material legal proceedings, nor have we been
involved in any such proceedings that have had or may have a significant effect
on the Company. We are not aware of any other material legal proceedings pending
against us.





ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS




The
Company did not submit any matters to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.




PART
II




ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES




Market
Information





The
Company’s common stock, par value $0.001 per share, is traded on the
Over-The-Counter Bulletin Board ("OTCBB") under the symbol "CYNX." The following
table sets forth, for each quarter within the last two fiscal years, the
reported high and low bid quotations for the Company’s common stock as reported
on the OTCBB. The bid prices reflect inter-dealer quotations, do not include
retail markups, markdowns or commissions and do not necessarily reflect actual
transactions.





QUARTER
            HIGH
      ($)
            LOW
      ($)1st
      Quarter 2007
            $0.25
            $0.252nd
      Quarter 2007
            $0.62
            $0.253rd
      Quarter 2007
            $0.65
            $0.284th
      Quarter 2007
            $0.31
            $0.111st
      Quarter 2008
            $0.19
            $0.122nd
      Quarter 2008
            $0.23
            $0.123rd
      Quarter 2008
            $0.35
            $0.184th
      Quarter 2008
            $0.28
            $0.18




Holders




As of
October 10, 2008, there were approximately 191 shareholders of record of our
common stock based upon the shareholder list provided by our transfer agent. Our
transfer agent is Signature Stock Transfer located at 2632 Coachlight Court,
Plano, Texas 75093, and their telephone number is (972) 612-4120.




Dividends




We have
not declared any dividends on our common stock since our inception. Our current
policy is to retain any earnings in order to finance the expansion of our
operations. Our board of directors will determine future declaration and payment
of dividends, if any, in light of the then-current conditions they deem relevant
and in accordance with applicable corporate law. There are no dividend
restrictions that limit our ability to pay dividends on our common stock in our
Articles of Incorporation or Bylaws. Chapter 78 of the Nevada Revised Statutes
(the “NRS”), does provide certain limitations on our ability to declare
dividends. Section 78.288 of Chapter 78 of the NRS prohibits us from declaring
dividends where, after giving effect to the distribution of the
dividend:




(a)
            we
      would not be able to pay our debts as they become due in the usual course
      of business; or(b)
            except
      as may be allowed by our Articles of Incorporation, our total assets would
      be less than the sum of our total liabilities plus the amount that would
      be needed, if we were to be dissolved at the time of the distribution, to
      satisfy the preferential rights upon dissolution of stockholders who may
      have preferential rights and whose preferential rights are superior to
      those receiving the distribution.




We have
not declared any dividends and we do not plan to declare any dividends in the
foreseeable future.





Sales
of Unregistered Securities





None.




ITEM 6. SELECTED FINANCIAL
DATA





Not
applicable.


9


ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION




Management’s
      Discussion and Analysis or Plan of
Operation.





FORWARD
LOOKING STATEMENTS





The
following discussion and analysis of our results of operations and financial
condition for the years ended June 30, 2008 and 2007 should be read in
conjunction with our financial statements and the notes to those financial
statements that are included elsewhere in this Annual Report on Form 10-K. Our
discussion includes forward-looking statements based upon current expectations
that involve risks and uncertainties, such as our plans, objectives,
expectations and intentions. Actual results and the timing of events could
differ materially from those anticipated in these forward-looking statements as
a result of a number of factors. We use words such as “anticipate,” “estimate,”
“plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,”
“may,” “will,” “should,” “could,” and similar expressions to identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date hereof. Except
as required by law, we do not undertake any obligation to update or keep current
either (i) any forward-looking statement to reflect events or circumstances
arising after the date of such statement, or (ii) the important factors that
could cause our future results to differ materially from historical results or
trends, results anticipated or planned by us, or which are reflected from time
to time in any forward-looking statement.





Overview




On July
24, 2008, the Company acquired all of the outstanding shares of
CelLynx-California in exchange for the issuance by the Company of 32,454,922
restricted shares of our common stock to the CelLynx Owners, which represented
approximately 40.3% of the then-issued and outstanding common stock of the
Company (including the shares issued in the Financing), and 45,516,034
restricted shares of Preferred Stock of the Company, which automatically convert
into 45,516,034 shares of common stock of the Company upon the filing of a
Certificate of Amendment to the Company’s Articles of Incorporation increasing
the number of authorized common stock to at least 150,000,000 shares. As a
result of this reverse merger transaction, CelLynx-California became the
Company’s wholly owned subsidiary, and the Company acquired the business and
operations of CelLynx-California.




Just
prior to the closing of the share exchange transaction, on July 23, 2008, we
raised $1,575,000 in a private placement by issuing 10,500,000 shares of our
common stock and warrants to purchase 10,500,000 shares of our common stock at
an exercise price of $0.20 per share to investors.   See Item
1.01 of our Form 8-K filed on July 30, 2008 for additional details regarding
this equity financing.




We have
not generated any revenue since the commencement of our operations on October
11, 2005.




Critical
Accounting Policies and Estimates





Our
management’s discussion and analysis of our financial condition and results of
operations are based on our combined financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States.  The preparation of these 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 3 to our
financial statements attached hereto as Exhibit 99.1, we believe that the
following accounting policies are the most critical to aid you in fully
understanding and evaluating this management discussion and
analysis:





Fair Value of Financial
Instruments





On
January 1, 2008, CelLynx adopted SFAS No. 157, Fair Value Measurements. SFAS No.
157 defines fair value, establishes a three-level valuation hierarchy for
disclosures of fair value measurement and enhances disclosures requirements for
fair value measures. The carrying amounts reported in the balance sheets for
receivables and current liabilities each qualify as financial instruments and
are a reasonable estimate of fair value because of the short period of time
between the origination of such instruments and their expected realization and
their current market rate of interest. The three levels are defined as
follows:




·
            Level
      1 inputs to the valuation methodology are quoted prices (unadjusted) 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.





10


CelLynx
analyzes all financial instruments with features of both liabilities and equity
under SFAS 150, “Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity,” SFAS No 133, “Accounting for
Derivative Instruments and Hedging Activities” and EITF 00-19, “Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company’s Own Stock.”




CelLynx’s
share-based compensation liability is carried at fair value totaling $296,267
(unaudited), as of March 31, 2008. The Company used Level 2 inputs for its
valuation methodology for the share-based compensation liability, and the fair
values is determined by using the Black Scholes option pricing model based on
various assumptions.




CelLynx
recognized a $1,851 (unaudited) gain, on the change in the share-based
compensation liability for the six months ended March 31, 2008, and compensation
expense of $208,500 (unaudited) for the six month ended March 31,
2008.




CelLynx
did not identify any other non-recurring assets and liabilities that are
required to be presented on the balance sheet at fair value in accordance with
SFAS No. 157.





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.





Income
Taxes





Income
taxes are provided based upon the liability method of accounting in accordance
with SFAS No. 109, “Accounting for Income Taxes.”  Deferred income
taxes are recognized for the tax effect of temporary differences between the
basis of assets and liabilities for financial statement and income tax
purposes.  Pursuant to SFAS No. 109, we are required to compute
deferred income tax assets for net operating losses carried forward. The
potential benefits of net operating losses have not been recognized in these
financial statements because the Company cannot be assured it is more likely
than not it will utilize the net operating losses carried forward in future
years.





We
adopted FASB Interpretation 48, “Accounting for Uncertainty in Income Taxes”,
during 2007. 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 affect on our financial
statements.





Stock-Based
Compensation





We
account for our stock-based compensation for employees in accordance with
Statement of Financial Accounting Standards (“SFAS”) No. 123R, "Share-Based
Payment, an Amendment of Financial Accounting Standards Board (“FASB”) Statement
No. 123." We recognize in the statement of operations the grant-date fair value
of stock options and other equity-based compensation issued to employees and
non-employees.  We use the Black-Scholes option pricing model to value
the options issued.





Shares Issued for
Services





From time
to time, we issued stock for services.  Since we were a private
company, we used the most recent stock issuance price to determine the value of
the services performed.





Patents and
Trademarks





Acquired
patents 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
cost for pending 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.


11


Plan
of Operations





Overview





CelLynx
is an early stage developer of patent pending technology that allows for
the production of the next generation of cell phone amplifiers (also known as
repeaters or boosters) for the small office,  home office (SOHO) and
vehicle.  This next generation product, CelLynx 5BARz, is a single
piece unit that strengthens weak cellular signals to deliver higher quality
signals for voice, data and video reception on cell phones being used indoors or
in vehicles.  CelLynx has recently completed a prototype SOHO unit
which delivers 45 decibel (dB) of gain in a Single Band PCS environment
providing up to 1,500 square feet of indoor coverage.  This unit
measures 6.5 X 7.5 X 2.5 inches, weighs approximately one pound and does not
require the installation of antennas or cables in order to
function.  Most SOHO cellular amplifiers currently on the market
require a receiving tower or antenna, usually placed in an attic or on a
rooftop, and a transmitting tower or antenna to be placed at least 35 feet from
the other antenna with each connected to the amplifier by
cable.  CelLynx’s patent pending technology eliminates the need to
distance the receiving and transmitting towers, allowing the two towers to be
placed directly inside the amplifier, resulting in a more affordable, one piece
unit sometimes referred to as ‘plug & play’, i.e. requiring no installation
other than plugging the unit into a power source. In order to optimize
marketability, CelLynx is developing an improved model which it expects to
operate in a dual band, PCS and Cellular, environment delivering 65 dB of gain
thereby allowing for coverage of 2,500 to 3,000 square feet.  This dual
band unit would work with all current wireless carriers except Nextel which
operates on its own frequency. The PCS network is generally used by the older
carriers such as AT&T at 850MHz while the newer carriers such as T-Mobile
operate on the Cellular network at 1900 MHz.  Management is confident that
all of the critical functions required for this dual band unit have been
identified and that their engineering team has the capability to accomplish
development leading to commercialization.





CelLynx
has also developed a mobile unit particularly designed for use in
vehicles.  This unit currently is an adaptation of the SOHO unit
described above.  However, CelLynx is currently improving the mobility
of that model by developing a single piece amplifier which will measure 3.5 X 5
inches including one built in antenna and another antenna measuring 4 to 6
inches to be attached to any of the windows by suction cup or other portable
means.  The unit will produce up to 45 dB of gain offering higher
performance within the interior of the vehicle cabin while reducing the signal
degrading effects of cabling. The mobile unit will feature built in caller ID
and Bluetooth speaker phone for hands free driving and will operate in a dual
band environment. It will require no installation other than placing the
antennae within the cabin of the vehicle and inserting the cigarette lighter
power adapter. Unlike the other products on the market, the CelLynx product will
not require the installation of a roof top, garage mounted,
antenna.  As a result, management believes that this consumer friendly
product will surpass the competition in market acceptance thereby creating the
potential for a mass market distribution channel.





The
CelLynx product line is expected to be manufactured by top tier contract
manufacturers located in South East Asia.   These manufacturers
allow CelLynx to capitalize on the full advantages of multiple manufacturing
locations with a trained and experienced technical work force,  state
of the art facilities and knowledge of all aspects of supply chain management,
operational execution, global logistics and reverse logistics. The marketing and
sales functions will be handled in house incorporating a multi-channel strategy
that includes distribution partners, wireless service providers, retail outlets
and international joint ventures.





Material
Impact of Known Events on Liquidity





There are
no known events that are expected to have a material impact on our short-term or
long-term liquidity.





Capital
Resources




We have
financed our operations primarily through proceeds from the issuance of common
stock.  From January to June 2008, we received approximately $750,000
in equity financing. In July 2008, we also received proceeds of $1,575,000 from
a private placement financing transaction.  We believe that our
current cash, anticipated cash flow from operations, and net proceeds from the
private placement financing will be sufficient to meet our anticipated cash
needs, including our cash needs for working capital and capital expenditures for
at least the next four months.  We will need to raise additional
capital in order to remain operational beyond this point.  We believe
we will raise an additional $2,100,000 by the Investors exercising the warrants
they were issued in the private placement financing transaction referenced
above, however, the Investors are under no obligation to exercise their warrants
and there can be no assurances that they will exercise their
warrants.  We also believe we will receive an additional $10,000,000
from the Distribution Agreement we entered into with Dollardex, however, this
funding is contingent on our meeting certain milestones and there can be no
assurances that we will meet those milestones.  If we receive these
funds, we believe we will have sufficient capital to meet our needs for the
foreseeable future.  If these funds do not materialize, we will need
to seek additional financing elsewhere.  In addition, we may require
additional cash due to changes in business conditions or other future
developments, including any investments or acquisitions we may decide to pursue.
To the extent it becomes necessary to raise additional cash in the future, we
may seek to raise it through the sale of debt or equity securities, funding from
joint-venture or strategic partners, debt financing or loans, issuance of common
stock or a combination of the foregoing. We currently do not have any binding
commitments for, or readily available sources of, additional financing. We
cannot provide any assurances that we will be able to secure the additional cash
or working capital we may require to continue our operations, either now or in
the future.


12


Contractual
Obligations and Off-Balance Sheet Arrangements





Contractual
Obligations





CelLynx
has certain fixed contractual obligations and commitments that include future
estimated payments. Changes in our business needs, cancellation provisions,
changing interest rates, and other factors may result in actual payments
differing from the estimates. We cannot provide certainty regarding the timing
and amounts of payments. We have presented below a summary of the most
significant assumptions used in our determination of amounts presented in the
tables, in order to assist in the review of this information within the context
of our financial position, results of operations, and cash flows.





The
following table summarizes CelLynx’s contractual obligations as of June 30,
2008, and the effect these obligations are expected to have on our liquidity and
cash flows in future periods.





Contractual
      Obligation
            
            Total
            
            
            Less
      than 1 year
            
            
            1-3
      yearsNote
      payable
            
            $
            250,000
            
            
            $
            250,000
            
            
            $
            -Stockholder
      notes
            
            
            60,000
            
            
            
            -
            
            
            
            60,000Operating
      lease
            
            
            21,980
            
            
            
            21,980
            
            
            
            -Total
      Contractual Obligations
            
            $
            331,980
            
            
            $
            271,980
            
            
            $
            60,000





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.







ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK





Not
applicable.




ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA





The financial statements are listed in
the Index to Financial Statements on page F-1.





ITEM
9. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES





None.





ITEM 9A(T). CONTROLS AND
PROCEDURES





Evaluation
of Disclosure Controls and Procedures





Regulations
under the Securities Exchange Act of 1934 (the "Exchange Act") require
public companies to maintain "disclosure controls and procedures," which are
defined to mean a company's controls and other procedures that are designed to
ensure that information required to be disclosed in the reports that it files or
submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported, within the time periods specified in the Commission's
rules and forms. Our Chief Executive Officer ("CEO") and Chief Financial Officer
("CFO") carried out an evaluation of the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this report.
Based on those evaluations, as of the Evaluation Date, our CEO and CFO believe
that:





(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) our
disclosure controls and procedures are not effective.


13


Management’s
Annual Report on Internal Control over Financial Reporting





Management
is responsible for establishing and maintaining adequate internal control over
financial reporting, as such terms are defined in Rules 13(a) – 15(f)
promulgated under the Securities Exchange Act of 1934, as amended. The purpose
of an internal control system is to provide reasonable assurance to the
Company’s management and board of directors regarding the preparation and fair
presentation of published financial statements.





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 June 30, 2008 and this assessment identified the following
material weaknesses in the company’s internal control over financial
reporting:





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


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


o
            Appropriate
      technology systems to ensure reliability of information and record-keeping
      have not been acquired.


o
            Management
      has not organized an Audit Committee to supervise and monitor accounting
      and financial control initiatives.


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





It is
Management’s opinion that the above weaknesses exist due to the small size of
operating staff and the current R&D phase of operations (e.g., no current
sales activity).





In making
this assessment, Management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated
Framework. Because of the material weaknesses described in the preceding
paragraph, Management believes that, as of June 30, 2008, the Company’s internal
control over financial reporting was not effective based on those
criteria.





This
annual 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 the Company's 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 annual report.





Changes
in Internal Controls





There
were no changes in our 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 year ended June 30, 2008 that have materially affected, or
are reasonably likely to materially affect, our international control over
financial reporting.





ITEM 9B. OTHER INFORMATION





On August
26, 2008, we entered into a lease agreement (the “Lease”) with Dolphinshire,
L.P. for approximately 2,120 square feet of office space located at 25910 Acero,
Suite 370, Mission Viejo, California 92691.  The term of the Lease is
for a period of one year and six months, commencing October 1, 2008 and ending
March 31, 2010, with a base rent of $4,664.





The
foregoing discussion provides only a brief description of the Lease and is
qualified in its entirety by the full text of the Lease, which is attached to
this Annual Report on Form 10-K as Exhibit 10.27.


14


PART III




ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE




Previous
Executive Officers and Directors





As of
June 30, 2008, John P. Thornton was the Chief Executive Officer, President,
Chief Financial Officer, Secretary, Treasurer and sole Director of the
Company.





Name
      of Director
            Age
            PositionJohn
      P. Thornton
            74
            Chief
      Executive Officer, Chief Financial Officer,
              President,
      Secretary, Treasurer and Director




John
P. Thornton – Chief  Executive Officer, Chief Financial Officer,
President, Secretary, Treasurer and Director




Effective
April 18, 2006, John P. Thornton was appointed as a member of our board of
directors. Mr. Thornton was appointed as our Chief Executive Officer, Chief
Financial Officer, President, Secretary and Treasurer as of June 7, 2006. Mr.
Thornton has been a self-employed businessman and consultant in the securities
industry in the Vancouver, British Columbia area since 1986. During the past
five years, Mr. Thornton served as a director of several U.S. and Canadian
public companies listed on TSX Venture Exchange, Canadian Venture Exchange, and
Over-the-Counter Bulletin Board (“OTCBB”) including:




·
            Bonaventure
      Enterprises Inc., TSX Venture
Exchange;




·
            Consolidated
      Odyssey Exploration Inc., TSX Venture
Exchange;




·
            Caesar’s
      Explorations Inc., Canadian Venture
Exchange;




·
            Goldnev
      Resources Inc., TSX Venture
Exchange;




·
            Knightsbridge
      Resources Inc., OTCBB;




·
            Fairchild
      International Corp., OTCBB; and




·
            Patch
      International Inc., OTCBB.




In
connection with the reverse take-over, Mr. Thornton resigned as our Chief
Executive Officer, President, Chief Financial Officer, Secretary and Treasurer
effective July 24, 2008, and as a director effective August 21,
2008.




Current
Executive Officers and Directors





Our
current directors and executive officers, their ages, their respective offices
and positions, and their respective dates of election or appointment are as
follows:




Name
            
            Age
            
            Position
            
            Date
      of AppointmentDaniel
      R. Ash
            
            47
            
            President,
      Chief Executive Officer, Chief Operating Officer, Secretary and
      Director
            
            July
      24, 2008Tareq
      Risheq
            
            44
            
            Chief
      Strategy Officer and Director
            
            July
      24, 2008Kevin
      Pickard
            
            44
            
            Chief
      Financial Officer and Treasurer
            
            July
      24, 2008Robert
      J. Legendre
            
            51
            
            Chairman
      of the Board
            
            July
      24, 2008Norman
      W. Collins
            
            69
            
            Director
            
            July
      24, 2008





15




Daniel R. Ash – President, Chief
Executive Officer, Chief Operating Officer, Secretary and
Director
  Daniel R.
Ash currently serves as a Director, President and Chief Executive
Officer.  Since July of 2006 he has devoted his full time efforts to
the development of CelLynx and its products. Mr. Ash has more than 20 years
experience in the wireless industry with senior management roles in new product
development, engineering, off-shore manufacturing and global
operations.
 
 From 1999
to 2006 Mr. Ash held senior positions at Powerwave Technologies, a manufacturer
of RF amplifiers and antennae, and was instrumental in its growth from $200M to
more than $800M annual revenues. From 1991 to 1999, Mr. Ash held senior
positions with Hewlett Packard and was responsible for the transfer of RF cell
phone amplifier modules to high volume production in Malaysia ramping production
to over one million amplifiers per month.
 
 Early in
his career, Mr. Ash worked in the electronic defense industry for Teledyne
Microwave and Narda Microwave. He worked on several missile projects and was
considered by many to be one of the industry experts in millimeter wave
electronics.


Tareq
Risheq – Chief Strategy Officer and Director




Tareq
Risheq currently serves as Director and Chief Strategy Officer.  He
has over 20 years experience in the Consumer Electronics and Information
Technology industries.  Mr. Risheq, founded Simpliciti Corporation,
where, from 2002 to 2004, he took a PDA product from concept to volume
manufacturing and nationwide distribution to major
retailers.  Simpliciti was featured in the Wall Street Journal as well
as most of the other national media outlets. Mr. Risheq also established a
direct sales organization in Saudi Arabia and grew that firm to $30M in revenues
within three years.  He holds a Bachelor of Science degree in
Business/Management from Bradley University.




Kevin
Pickard – Chief Financial Officer and Treasurer




Since 1998,
Mr. Pickard has been a principal officer and owner of Pickard & Green
CPAs (formerly Pickard & Company, CPA’s, P.C.), an accounting firm formed by
Mr. Pickard that specializes in providing SEC accounting and other
management consulting services for small to medium sized companies, including
preparing required SEC filings for public companies, due diligence on potential
acquisitions, preparing projections and business plans, assisting with
restructuring of companies, and positioning companies for initial public
offerings. Mr. Pickard also currently serves as the interim President for
Universal Guardian Holding, Inc., a company that trades on the Pink Sheets, and
as interim CFO for Signalife, Inc., a company that trades on the American Stock
Exchange.  Mr. Pickard was a Partner with Singer Lewak Greenbaum
& Goldstein, LLP, from 1996 to 1998, where he co-managed the
firm’s securities practice group. Mr. Pickard also spent over nine years
with Coopers & Lybrand, L.L.P. (currently PricewaterhouseCoopers, LLP),
where he focused on the auditing companies in the insurance, high-tech and
manufacturing industries.  Mr. Pickard holds Bachelors of Science
and Masters degrees in Accounting from Brigham Young University.




Robert
J. Legendre – Chairman of the Board




Robert J.
Legendre brings 25 years of global experience in all aspects of operations
management including supply chain management, global operations, captive and
contracted offshore manufacturing, NPI management, research & development,
engineering development, and sales & marketing. Mr. Legendre held several
senior level positions including Sr. Vice President of Global Operations and
President of Asia & America’s Strategic Business Unit for Powerwave
Technologies. He has also held Sr. Management positions in operations and supply
chain with Infocus Corporation, Pemstar Corporation and Western Digital, where
he managed operations and supply chain in many global locations including Puerto
Rico, Singapore and Malaysia. Mr. Legendre has a Bachelor of Science degree in
Business from LaSalle University.




Norman
W. Collins – Director




Norman W.
Collins, Sr. is an independent Director who was appointed upon the completion of
the merger between CelLynx, Inc. and NorPac.  Since June of 2003, Mr.
Collins has been Director and President of Collins & Associates, a Delaware
corporation providing consulting services to corporations as well as legal
services in the form of Mediation and Arbitration of corporate
disputes.  He is admitted to the Tennessee Bar and is a Certified
Mediator and Arbitrator in Georgia and a Certified Mediator in North Carolina
and the District of Columbia.  Between 2003 and 2007 Mr. Collins also
served as the Executive Director of the Living Memorial Tree Foundation, a New
York non-profit organization dedicated to the creation of a memorial to the
victims of 9/11. Since May of 2006, Mr. Collins has also served as Director and
CEO of Upgrade International, a Washington technology
corporation.  Prior positions include Director and CEO of several
non-reporting companies either in the development stage or with revenues
exceeding $30 Million.




Mr.
Collins holds a Bachelor of Science degree in Business Administration from Trine
University and a Juris Doctor degree from Michigan State University, College of
Law.





Family
Relationships





There are
no family relationships among our directors and executive
officers.


16


Involvement
in Certain Legal Proceedings




Except as
provided below, none of our directors or executive officers has, during the past
five years:





(a)
            Has
      had a petition under the federal bankruptcy laws or any state insolvency
      law filed by or against, or a receiver, fiscal agent or similar officer
      was appointed by a court for the business or property of such person, or
      any partnership in which he was a general partner at or within two years
      before the time of such filing, or any corporation or business association
      of which he was an executive officer at or within two years before the
      time of such filing;





(b)
            Been
      convicted in a criminal proceeding or is a named subject of a pending
      criminal proceeding (excluding traffic violations and other minor
      offenses);





(c)
            Been the subject of
      any order, judgment, or decree, not subsequently reversed, suspended or
      vacated, of any court of competent jurisdiction, permanently or
      temporarily enjoining him from, or otherwise limiting, the following
      activities:
              
              ·Acting as a futures commission merchant,
      introducing broker, commodity trading advisor, commodity pool operator,
      floor broker, leverage transaction merchant, any other person regulated by
      the Commodity Futures Trading Commission, or an associated person of any
      of the foregoing, or as an investment adviser, underwriter, broker or
      dealer in securities, or as an affiliated person, director or employee of
      any investment company, bank, savings and loan association or insurance
      company, or engaging in or continuing any conduct or practice in
      connection with such activity;
              
              ·Engaging
      in any type of business practice; or
              
              (iii)
        Engaging in any activity in connection with the purchase or sale of
      any security or commodity or in connection with any violation of federal
      or state securities laws or federal commodities
  laws;(d)
            Been
      the subject of any order, judgment or decree, not subsequently reversed,
      suspended or vacated, of any federal or state authority barring,
      suspending or otherwise limiting for more than 60 days the right of such
      person to engage in any activity described in paragraph I(i) above, or to
      be associated with persons engaged in any such
activity;(e)
            Been
      found by a court of competent jurisdiction in a civil action or by the
      Commission to have violated any federal or state securities law, and the
      judgment in such civil action or finding by the Commission has not been
      subsequently reversed, suspended, or vacated; and(f)
            Been
      found by a court of competent jurisdiction in a civil action or by the
      Commodity Futures Trading Commission to have violated any federal
      commodities law, and the judgment in such civil action or finding by the
      Commodity Futures Trading Commission has not been subsequently reversed,
      suspended or vacated.




In
January 2008, Mr. Pickard became interim President of Universal Guardian
Holding, Inc. (“UGH”) to assist the Board of Directors in disposing of UGH’s
assets to repay UGH’s bondholders.  UGH was not successful in selling
its assets and on June 23, 2008, the Board of Directors elected to voluntarily
file for Chapter 7 bankruptcy protection.





Compliance
with Section 16(a) of the Exchange Act





Based
solely upon a review of the copies of such forms furnished to the Company, or
written representations that no reports were required, we believe that for the
fiscal year ended June 30, 2008, beneficial owners complied with
Section 16(a) filing requirements applicable to them.




Code
of Ethics





We have
not adopted a code of ethics, but we plan on adopting a code of ethics that
applies to all directors, officers, and employees, including our Chief Executive
Officer and Chief Financial Officer, and members of the board of directors in
the near future.




Material
Changes to the Procedures by which Security Holders May Recommend Nominees to
the Board of Directors




There
have been no material changes to the procedures by which security holders may
recommend nominees to the Board of Directors.


17


Board
Committees; Director Independence




As of
this date, our board of directors has not appointed an audit committee or
compensation committee, and none of our current directors qualifies as an “audit
committee financial expert;” however, we are not currently required to have such
committees.  The functions ordinarily handled by these committees are
currently handled by our entire board of directors. Our board of directors
intends, however, to review our governance structure and institute board
committees as necessary and advisable in the future to facilitate the management
of our business.




Our board
of directors consists of one independent director, Mr. Norman W. Collins, and
three non-independent directors. We have determined independence in accordance
with definitions and criteria applicable under the NASDAQ rules.




Compensation
Committee Interlocks and Insider Participation




No
interlocking relationship exists between our board of directors and the board of
directors or compensation committee of any other company, nor has any
interlocking relationship existed in the past.




ITEM 11. EXECUTIVE COMPENSATION





Summary
of Compensation





Executive
Compensation




The
following summary compensation table reflects all compensation for fiscal years
2007 and 2008 received by our predecessor’s principal executive officer and two
most highly compensated executive officers whose salary exceeded
$100,000.




Summary
Compensation Table – Predecessor




Name
      and
              Principal
      Position
            
            
            Year
            
            Salary
              ($)
            
            
            Bonus
              ($)
            
            
            Stock
              Awards
              ($)
            
            
            Option
              Awards
              ($)
            
            
            Non-Equity
              Incentive
      Plan
              Compensation
              ($)
            
            
            Nonqualified
              Deferred
              Compensation
      Earnings
              ($)
            
            
            All
      Other
              Compensation
              ($)
            
            
            Total
              ($)John
      P. Thornton, Former
              President,
      CEO, CFO, Secretary and Treasurer
            
            
            2008
            
            12,000
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            12,0002007
            
            12,000
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            12,000




18


The
following summary compensation table reflects all compensation for fiscal years
2006 and 2007 received by CelLynx’s principal executive officer and two most
highly compensated executive officers whose salary exceeded
$100,000.




Summary
Compensation Table – CelLynx





Name
      and Principal Position
            
            Year
            
            Salary
              ($)
            
            Bonus
              ($)
            
            Stock
              Awards
              (
      $)
            
            Option
              Awards
              ($)
            
            Non-Equity
              Incentive
      Plan
              Compensation
              ($)
            
            Non-qualified
              Deferred
              Compensation
      Earnings
              ($)
            
            All
      Other
              Comp-ensation
              (
      $)
            
            Total
              ($)Daniel
      R. Ash, President, Chief Executive Officer, Chief Operating Officer
      Secretary and Director
            
            2008
            
            
            170,000
            
            --
            
            
            --
            
            623,956
            
            (2)
            --
            
            --
            
            
            --
            
            793,9562007
            
            
            30,000
            
            --
            
            
            63,333
            (1)
            --
            
            
            --
            
            --
            
            
            --
            
            93,333Tareq
      Risheq, Chief Strategy Officer and Director
            
            2008
            
            
            108,000
            
            --
            
            
            --
            
            448,931
            
            (2)
            --
            
            --
            
            
            --
            
            556,9312007
            
            
            30,000
            
            --
            
            
            63,333
            (1)
            --
            
            
            --
            
            --
            
            
            --
            
            93,333





(1)
            
            The
      value of the stock award was determined based on the fair market value of
      the services performed.(2)
            
            The
      Company used the Black-Scholes option-pricing model to value the
      options.  The assumptions used in calculating the fair value of
      options granted are as follows:
              
              Expected
      life (years):      2.5 – 3.5
              Risk-free
      interest rate:     2.37% -- 4.05%
              Expected
      volatility:         100%
              Expected
      dividend yield: 0%




19


Outstanding
Equity Awards




The
following table sets forth certain information concerning stock and option
awards granted to our named executive officers.





OUTSTANDING
      EQUITY AWARDS AT FISCAL YEAR-ENDOPTION
      AWARDS
            STOCK
      AWARDSName
            
            Number
      of securities underlying unexercised options (#)
    Exercisable
            
            Number
      of securities underlying unexercised options (#)
              Unexercisable
            Equity
      Incentive Plan Awards: Number of Securities underlying unexercised
      unearned options (#)
            
            Option
      exercise price ($)
            
            Option
      expiration date
            Number
      of shares or units of stock that have not vested (#)
            Market
      value of shares or units of stock that have not vested ($)
            Equity
      incentive plan awards: number of unearned shares, units or other rights
      that have not vested (#)
            Equity
      incentive plan awards: Market or payout value of unearned shares, units or
      other rights that have not vested ($)Daniel
      R. Ash (1)
            
            
            —
            
            4,587,979
            —
            
            $
            0.0787
            
            10/01/2012Daniel
      R. Ash (2)
            
            
            —
            
            349,426
            —
            
            $
            0.0787
            
            04/21/2013Daniel
      R. Ash (1)
            
            
            —
            
            8,475,270
            —
            
            $
            0.0787
            
            05/20/2013Tareq
      Risheq (1)
            
            
            —
            
            4,587,979
            —
            
            $
            0.0787
            
            10/01/2012Tareq
      Risheq (2)
            
            
            —
            
            349,426
            —
            
            $
            0.0787
            
            04/21/2013Tareq
      Risheq (1)
            
            
            —
            
            4,708,484
            —
            
            $
            0.0787
            
            05/20/2013






(1)
            
            Option
      vests 33.3% after one year, with the remaining 66.7% to vest evenly over
      the remaining months.




(2)
            
            Option
      fully vests after 90 days of the grant date of April 21,
    2008.




Retirement
Plans




We
currently have no plans that provide for the payment of retirement benefits, or
benefits that will be paid primarily following retirement, including but not
limited to tax-qualified defined benefit plans, supplemental executive
retirement plans, tax-qualified defined contribution plans and nonqualified
defined contribution plans.




Potential
Payments upon Termination or Change-in-Control




Except as
described below under “Employment Agreements,” we currently have no contract,
agreement, plan or arrangement, whether written or unwritten, that provides for
payments to a named executive officer at, following, or in connection with any
termination, including without limitation resignation, severance, retirement or
a constructive termination of a named executive officer, or a change in control
of the registrant or a change in the named executive officer’s responsibilities,
with respect to each named executive officer.


20


Employment
Agreements




On
October 1, 2007, the Board of Directors of CelLynx-California approved the
following compensation packages for Daniel R. Ash and Tareq Risheq:




Annual
      Base Salary:
            $200,000Bonus
      Plan:
            Participation
      in the CelLynx Bonus Plan can amount up to 30% of the annual base salary,
      but is conditioned upon achievement of the goals and objectives of the
      then current plan, including those related to overall company
      performance.




Fringe
      Benefits:
            Fifteen
      paid vacation days per year.  Ten paid holidays per
      year.  Health insurance with hospital
  coverage.




Stock
      Options:
            3%
      of the current outstanding common stock based the fair market value on the
      date of hire of $0.10 per share.  The options vest over three
      years with 33.3% vesting after the first year and monthly vesting
      thereafter of 1/24th
      of the remaining 66.6%.




Severance:
            If
      employment is terminated without cause, Mr. Ash and Mr. Tareq will receive
      six months pay.




Acquisition:
            If
      CelLynx-California is acquired, all outstanding stock options will become
      fully vested.




The Board
of Directors of CelLynx-California amended this compensation package on May 20,
2008 to provide for an annual salary of $170,000 for Mr. Ash and $108,000 for
Mr. Risheq.




On July
22, 2008, CelLynx-California entered into a consulting agreement (the
“Consulting Agreement”) with Kevin Pickard whereby Mr. Pickard agreed to serve
as the Company’s interim Chief Financial Officer for a period beginning on the
date of the Consulting Agreement and ending on the earlier of (i) the date that
the Company retains a permanent Chief Financial Officer, (ii) the 90th day
after the closing of the reverse take-over transaction contemplated by the
Exchange Agreement, or (iii) the date which the Company notifies Mr. Pickard
that he has been terminated in writing, and which notification may occur at any
time for any reason.  As an inducement to enter into the Consulting
Agreement, CelLynx-California granted Mr. Pickard 100,000 shares of
CelLynx-California common stock and $5,000 in cash.  The
CelLynx-California common stock were converted into 62,896 shares of the
Company's common stock and 62,897 shares of the Company's Series A Preferred
Stock upon the closing of the reverse take-over transaction.




Director
Compensation




On July
15, 2008, CelLynx-California entered into an agreement with Mr. Norman W.
Collins that granted Mr. Collins a stock option to purchase 610,000 shares of
CelLynx-California’s common stock at an exercise price of $0.09 per share that
vests 25% per year so long as Mr. Collins remains a director of
CelLynx.  Upon the closing of the Exchange Agreement, this option was
exchanged for an option to purchase 767,337 shares of the Company's common stock
at an exercise price of $0.0715 per share.




Other
than as described above, we do not pay any compensation to members of our board
of directors for their service on the board. However, we intend to review and
consider future proposals regarding board compensation.







21


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS




Securities
Authorized for Issuance under Equity Compensation Plans




Set forth
in the table below is information regarding awards made through compensation
plans or arrangements through June 30, 2008, the most recently completed fiscal
year.





Equity
      Compensation Plan InformationPlan
      category
            Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
              (a)
            
            Weighted-average
      exercise price of outstanding options, warrants and rights
              (b)
            
            Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities reflected in column
      (a))
              (c)Equity
      compensation plans approved by security holders
            --
            
            $
            --
            
            --Equity
      compensation plans not approved by security holders
            53,901,899
            
            $
            $0.073
            
            21,098,101Total
            53,901,899
            
            
            
            
            21,098,101




Security
Ownership of Certain Beneficial Owners and Management




Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission. Unless otherwise indicated in the table, the persons and
entities named in the table have sole voting and sole investment power with
respect to the shares set forth opposite the shareholder’s name. Unless
otherwise indicated, the address of each beneficial owner listed below is 27795
Country Lane, Laguna Niguel, California 92677.  The percentage of
class beneficially owned set forth below is based on 126,068,846 shares
outstanding as of October 10, 2008, which includes 80,552,812 shares of common
stock and 45,516,034 shares of Series A Preferred Stock that automatically
convert into 45,516,034 shares of common stock upon the authorized common stock
of the Company being increased to include not less than 150,000,000 shares of
common stock.




Name
      and Position
            
            Number
      of Shares of Common Stock Beneficially Owned
              (1)
            
            
            Percent
      of Shares of Common Stock Beneficially Owned (2)Daniel
      R. Ash, President, Chief Executive Officer, Chief Operating Officer,
      Secretary and Director (3)
            
            
            32,864,326
            
            
            
            25.2
            %Tareq
      Risheq, Chief Strategy Officer and Director (4)
            
            
            32,864,326
            
            
            
            25.2
            %Kevin
      Pickard, Chief Financial Officer and Treasurer (5)
            
            
            382,970
            
            
            
            *Robert
      J. Legendre, Chairman of the Board
            
            
            --
            
            
            
            *Norman
      W. Collins, Director
            
            
            490,793
            
            
            
            *All
      Executive Officers and Directors as a Group (5 persons)
            
            
            66,602,415
            
            
            
            49.3
            %






* Less
than 1%





(1)
            Under
      Rule 13d-3, a beneficial owner of a security includes any person who,
      directly or indirectly, through any contract, arrangement, understanding,
      relationship, or otherwise has or shares: (i) voting power, which includes
      the power to vote, or to direct the voting of shares; and (ii) investment
      power, which includes the power to dispose or direct the disposition of
      shares. Certain shares may be deemed to be beneficially owned by more than
      one person (if, for example, persons share the power to vote or the power
      to dispose of the shares). In addition, shares are deemed to be
      beneficially owned by a person if the person has the right to acquire the
      shares (for example, upon exercise of an option) within 60 days of the
      date as of which the information is provided. In computing the percentage
      ownership of any person, the amount of shares outstanding is deemed to
      include the amount of shares beneficially owned by such person (and only
      such person) by reason of these acquisition rights. As a result, the
      percentage of outstanding shares of any person as shown in this table does
      not necessarily reflect the person’s actual ownership or voting power with
      respect to the number of shares of common stock actually
      outstanding.




22





(2)
            Percentage
      based upon 126,068,846 issued and outstanding shares of the Company’s
      capital stock, which include 42,954,922 shares of our common stock and
      45,516,034 shares of our Series A Preferred Stock.  The Series A
      Preferred Stock automatically convert into 45,516,034 shares of common
      stock upon the authorized common stock of the Company being increased to
      include not less than 150,000,000 shares of common stock. Percentage
      totals may vary slightly due to
rounding.




(3)
            Includes
      10,672,726 shares of common stock, 17,672,726 shares of Series A Preferred
      Stock, options to purchase 1,877,223 shares of common stock at an exercise
      price of $0.0787 per share, a $20,000 note convertible into 2,515,858
      shares of common stock at a conversion price of $0.0079 per share and a
      $10,000 note convertible into 125,793 shares of common stock at a
      conversion price of $0.0795 per share.(4)
            Includes
      10,672,726 shares of common stock, 17,672,726 shares of Series A Preferred
      Stock, options to purchase 1,877,223 shares of common stock at an exercise
      price of $0.0787 per share, a $20,000 note convertible into 2,515,858
      shares of common stock at a conversion price of $0.0079 per share and a
      $10,000 note convertible into 125,793 shares of common stock at a
      conversion price of $0.0795 per share.(5)
            Includes
      191,484 shares of common stock and 191,486 shares of Series A Preferred
      Stock.







ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE





Share
Exchange Agreement




On July
24, 2008, in a reverse take-over transaction, we acquired a cellular amplifier
business based in California by executing the Exchange Agreement by and among
the Company, CelLynx, and the CelLynx Owners.




Under the
Exchange Agreement, on the Closing Date, we acquired all of the issued and
outstanding shares of CelLynx through the issuance of 32,454,922 restricted
shares of our common stock and 45,516,034 restricted shares of our Series A
Preferred Stock to the CelLynx Owners. Immediately prior to the exchange
transaction, we had 37,597,890 shares of common stock issued and outstanding and
no shares of Series A Preferred Stock issued and outstanding. Immediately after
the issuance of the shares to the CelLynx Owners, we had 80,552,812 shares of
common stock issued and outstanding (including the shares issued in the
Financing) and 45,516,034 shares of Series A Preferred Stock issued and
outstanding. As a result of this exchange transaction, the CelLynx Owners became
our controlling shareholders and CelLynx became our wholly owned subsidiary. In
connection with CelLynx becoming our wholly owned subsidiary, we acquired the
business and operations of CelLynx, which has become our principal
business.





Related
Party Transactions of CelLynx




On
October 1, 2007, CelLynx-California granted to Robert J. Legendre, the Company’s
current Chairman of the Board, options to purchase 9,725,991 shares of
CelLynx-California’s common stock at an exercise price of $0.09 per share in
exchange for executive management services rendered as a
consultant.  Upon the closing of the Exchange Agreement, this option
was exchanged for an option to purchase 12,234,608 shares of NorPac’s common
stock at an exercise price of $0.0715 per share.




On March
27, 2007, CelLynx-California entered into a two-year convertible promissory note
with Daniel R. Ash, the Company’s current Chief Executive Officer and a
director, and Tareq Risheq, the Company’s current Chief Strategy Officer and a
director, in the amount of $20,000 each in exchange for cash leant to
CelLynx-California.  The unpaid principal balance accrues interest at
a rate of 4% per annum, computed on the basis of the actual number of days
elapsed and a year of 365 days.  The note and accrued interest is
convertible into CelLynx-California common stock at a conversion rate of $0.01
per share.  Upon the closing of the Exchange Agreement, these notes
were exchanged for notes of the Company at a conversion rate $0.0079 per
share.




On
October 25, 2007, CelLynx-California entered into a two-year convertible
promissory note with Mssrs. Ash and Risheq in the amount of $10,000 each in
exchange for cash leant to CelLynx-California.  The unpaid principal
balance accrues interest at a rate of 4% per annum, computed on the basis of the
actual number of days elapsed and a year of 365 days.  The note and
accrued interest is convertible into CelLynx-California common stock at a
conversion rate of $0.10 per share.  Upon the closing of the Exchange
Agreement, these notes were exchanged for notes of the Company at a conversion
rate $0.0795 per share.




On
February 12, 2008, CelLynx-California entered into a Stock Purchase Agreement
with Norman Collins, currently a director of the Company, under which
CelLynx-California issued an aggregate of 1,111,111 shares of common stock in
exchange for an investment of $100,000.  Pursuant to the Stock
Purchase Agreement, 100,000 shares were delivered to Mr. Collins and 1,011,111
shares were held in escrow and automatically cancelled upon the closing of the
Exchange Agreement.  The remaining 100,000 shares were converted into
125,793 shares of the Company.


23


On July
15, 2008, CelLynx-California entered into an agreement with Mr. Norman W.
Collins that granted Mr. Collins a stock option to purchase 610,000 shares of
CelLynx-California’s common stock at an exercise price of $0.09 per share that
vests 25% per year so long as Mr. Collins remains a director of
CelLynx.  Upon the closing of the Exchange Agreement, this option was
exchanged for an option to purchase 767,337 shares of the Company’s common stock
at an exercise price of $0.0715 per share.





Other
than the transactions described above, there were no transactions or proposed
transactions since the beginning of CelLynx’s last fiscal year, in which CelLynx
was or is to be a participant and the amount involved exceeds the lesser of
$120,000 or one percent of the average of CelLynx’s total assets at year-end for
the last three completed fiscal years, and in which any related person had or
will have a direct or indirect material interest.




Director
Independence





One of
our directors – Norman W. Collins – is an independent director as that term
is defined under NASDAQ Rules and Regulations.







ITEM 14.   PRINCIPAL ACCOUNTING FEES AND
SERVICES




The
aggregate fees billed for the two most recently completed fiscal years ended
June 30, 2008 and 2007 for professional services rendered by the principal
accountant for the audit of the Corporation’s annual financial statements and
review of the financial statements included our quarterly reports and services
that are normally provided by the accountant in connection with statutory and
regulatory filings or engagements for these fiscal periods were as
follows:




Year Ended June 30,
      2008
            Year Ended June 30,
      2007Audit
      Fees
            $39,000
            $34,400Audit
      Related Fees
            -
            -Tax
      Fees
            -
            -All
      Other Fees
            -
            -Total
            $39,000
            $34,400





Fees for
audit services include fees associated with the annual audit and the review of
documents filed with the Securities and Exchange Commission. Audit-related fees
principally include fees reasonably related to the performance of the audit or
review of our financial statements and that are not reported as Audit Fees. Tax
fees included tax compliance, tax advice and tax planning
work.


24


PART
IV





ITEM 15.   EXHIBITS, FINANCIAL STATEMENT
SCHEDULES




Financial
Statements





A list of
the financial statements of the Company filed as part of this Report can be
found in the Index to Financial Statements on page F-1.





Exhibits





INDEX TO
EXHIBITS





Exhibit
              Number
            
            Description2.1
            
            Share
      Exchange Agreement by and among the Company, CelLynx-California and the
      CelLynx Owners dated January 3, 2008 (1)2.2
            
            Amendment
      Agreement to Share Exchange Agreement between the Company and
      CelLynx-California dated May 20, 2008 (2)2.3
            
            Waiver
      of Conditions Precedent *3.1
            
            Articles
      of Incorporation of CelLynx Group, Inc. (3)3.2
            
            Articles
      of Merger of CelLynx Group, Inc. (4)3.3
            
            Bylaws
      of CelLynx Group, Inc. (4)3.4
            
            Certificate
      of Designation of CelLynx Group, Inc. (5)3.5
            
            Articles
      of Merger of CelLynx Group, Inc. (8)10.1
            
            Form
      of Subscription Agreement dated July 23, 2008 (6)10.2
            
            Form
      of Warrant dated July 23, 2008 (6)10.3
            
            Master
      Global Marketing and Distribution Agreement between CelLynx and Dollardex
      Group Corp. dated July 22, 2008 (7)10.4
            
            Palomar
      Ventures III, LP Amended and Restated Subordinated Convertible Promissory
      Note dated November 10, 2007 (7)10.5
            
            Lease
      Agreement between CelLynx-California and CSS Properties, LLC dated
      February 21, 2008 (7)10.6
            
            CelLynx-California
      2007 Stock Incentive Plan (7)10.7
            
            Amendment
      No. 1 to CelLynx-California 2007 Stock Incentive Plan
  (7)10.8
            
            Form
      of Lock-Up Agreement dated July 22, 2008 (7)10.9
            
            Norman
      W. Collins Offer Letter dated July 15, 2008 (7)10.10
            
            Kevin
      Pickard Consulting Agreement dated July 22, 2008 (7)10.11
            
            Convertible
      Promissory Note between CelLynx-California and Daniel Ash dated March 27,
      2007 (7)10.12
            
            Convertible
      Promissory Note between CelLynx-California and Tareq Risheq dated March
      27, 2007 (7)10.13
            
            Convertible
      Promissory Note between CelLynx-California and Daniel Ash dated October
      25, 2007 (7)10.14
            
            Convertible
      Promissory Note between CelLynx-California and Tareq Risheq dated October
      25, 2007 (7)10.15
            
            Incentive
      Stock Option Agreement between CelLynx-California and Daniel Ash dated
      October 1, 2007 (7)10.16
            
            Incentive
      Stock Option Agreement between CelLynx-California and Tareq Risheq dated
      October 1, 2007 (7)









10.17
            
            Incentive
      Stock Option Agreement between CelLynx-California and Robert Legendre
      dated October 1, 2007 (7)10.18
            
            Non-Qualified
      Stock Option Agreement between CelLynx-California and Daniel Ash dated
      October 1, 2007 (7)10.19
            
            Non-Qualified
      Option Agreement between CelLynx-California and Tareq Risheq dated October
      1, 2007 (7)10.20
            
            Non-Qualified
      Stock Option Agreement between CelLynx-California and Robert Legendre
      dated October 1, 2007 (7)10.21
            
            Non-Qualified
      Stock Option Agreement between CelLynx-California and Daniel Ash dated
      April 21, 2008 (7)10.22
            
            Non-Qualified
      Option Agreement between CelLynx-California and Tareq Risheq dated April
      21, 2008 (7)10.23
            
            Non-Qualified
      Stock Option Agreement between CelLynx-California and Daniel Ash dated May
      20, 2008 (7)10.24
            
            Non-Qualified
      Option Agreement between CelLynx-California and Tareq Risheq dated May 20,
      2008 (7)10.25
            
            Non-Qualified
      Option Agreement between CelLynx-California and Norman Collins dated July
      20, 2008 (7)10.26
            
            Stock
      Purchase Agreement between CelLynx-California and Norman Collins dated
      February 12, 2008 (7)10.27
            
            Lease
      Agreement between CelLynx and Dolphinshire, L.P. dated August 26, 2008
      *17.1
            
            Letter
      of Resignation from John P. Thornton to the Board of Directors
      (7)21.1
            
            List
      of Subsidiaries (7)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
    *




*
      Filed Herewith.





(1)
            Filed
      on January 9, 2008 as an exhibit to our Current Report on Form 8-K, and
      incorporated herein by reference.(2)
            Filed
      on May 27, 2008 as an exhibit to our Current Report on Form 8-K, and
      incorporated herein by reference.


(3)
            Filed
      as an exhibit to our Registration Statement on Form 10SB originally filed
      on August 26, 1999, as amended, an incorporated herein by
      reference.(4)
            Filed
      as an exhibit to our Quarterly Report on Form 10-QSB for the fiscal period
      ended September 30, 2003, and incorporated herein by
      reference.


(5)
            Filed
      on July 15, 2008 as an exhibit to our Current Report on Form 8-K, and
      incorporated herein by reference.(6)
            Filed
      on July 23, 2008 as an exhibit to our Current Report on Form 8-K, and
      incorporated herein by reference.(7)
            Filed
      on July 30, 2008 as an exhibit to our Current Report on Form 8-K, and
      incorporated herein by reference.(8)
            Filed
      on August 8, 2008 as an exhibit to our Current Report on Form 8-K, and
      incorporated herein by reference.


26


INDEX TO FINANCIAL STATEMENTS




PAGEFINANCIAL
      STATEMENTSReport
      of Independent Registered Public Accounting Firm
            
            F-2Balance
      Sheets as of June 30, 2008 and June 30, 2007
            
            F-3Statements
      of Operations and Comprehensive Loss for the years ended June 30, 2008,
      2007 and the period from inception (April 1, 1998) through June 30,
      2008
            
            F-4Statements
      of Cash Flows for the years ended June 30, 2008, 2007 and the period from
      inception (April 1, 1998) through June 30, 2008
            
            F-5Statements
      of Stockholders' Equity (Deficit) for the years ended June 30, 2008, 2007
      and the period from inception (April 1, 1998) through June 30,
      2008
            
            F-6Notes
      to financial statements
            
            F-9




F-1




REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 
 To the
Board of Directors and Stockholders
 CelLynx
Group, Inc.
 Mission
Viejo, California
 
 
 We have
audited the accompanying balance sheets of CelLynx Group, Inc. (formerly NorPac
Technologies, Inc.) (a development stage company) as of June 30, 2008 and
2007, and the related statements of operations and
comprehensive loss, cash flows and stockholders' equity for
each of the years in the two-year period ended June 30, 2008, and for the
period from April 1, 1998 (date of inception) to June 30,
2008.  These financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on
these financial statements based on our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Company has determined that it is not required to have, nor were we engaged to
perform, an audit of its internal control over financial
reporting.  Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting.  Accordingly, we express no such opinion.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of CelLynx Group, Inc. (a development
stage company) as of June 30, 2008 and 2007, and the results of its
operations and its cash flows for each of the years in the two-year period ended
June 30, 2008, and for the period from April 1, 1998 (date of
inception) to June 30, 2008, in conformity with accounting principles
generally accepted in the United States.
  The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern.  As discussed in Note 2 to the
financial statements, the Company has experienced recurring losses from
operations since inception, net operating cash flow deficits, and has a deficit
accumulated during the development stage.  These conditions raise
substantial doubt about the Company's ability to continue as a going
concern.  Management's plans regarding these matters are also
described in Note 2.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
 
 
 /S/
PETERSON SULLIVAN PLLC
 
 Seattle,
Washington
 October
7, 2008
   F-2
  CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 BALANCE
SHEETS
 
 
 June
      30,
              
              
              June
      30,2008
              
              
              2007ASSETSCURRENT
      ASSETS:Cash
              
              $
              181
              
              
              $
              1,089Total
      Current Assets
              
              
              181
              
              
              
              1,089AVAILABLE-FOR-SALE
      SECURITIES (Note 4)
              
              
              -
              
              
              
              526,775LOANS
      RECEIVABLE (Note 5)
              
              
              -
              
              
              
              638,698$
              181
              
              
              $
              1,166,562LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIES:Accounts
      payable and accrued liabilities
              
              $
              217,388
              
              
              $
              101,339Loans
      payable (Note 7)
              
              
              84,213
              
              
              
              10,000Total
      Current Liabilities
              
              
              301,601
              
              
              
              111,339STOCKHOLDERS’
      EQUITY (Note 9):Authorized:100,000,000
      shares of common stock, $0.001 par value100,000,000
      shares of preferred stock, $0.001 par valueIssued
      and outstanding:June
      30, 2008 and 200737,597,890
      shares of common stock
              
              
              37,597
              
              
              
              37,597Additional
      paid-in capital
              
              
              3,467,383
              
              
              
              3,467,383Deficit
      accumulated during the development stage
              
              
              (3,806,400
              )
              
              
              (2,762,082
              )Accumulated
      other comprehensive income
              
              
              -
              
              
              
              312,325301,420
              
              
              
              1,055,223$
              181
              
              
              $
              1,166,562
 
 
 The
accompanying notes are an integral part of these financial
statements.
  F-3
  CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 STATEMENTS
OF OPERATIONS AND COMPREHENSIVE LOSS
 
 
 Period
      FromInception(April
      1, 1998)Year
      Ended
              
              
              Year
      Ended
              
              
              ThroughJune
      30,
              
              
              June
      30,
              
              
              June
      30,2008
              
              
              2007
              
              
              2008Revenues
              
              $
              -
              
              
              $
              15,000
              
              
              $
              303,000Administrative
      pre-opening and development expenses
              
              
              (188,778
              )
              
              
              (146,807
              )
              
              
              (1,909,892
              )Interest
      expense
              
              
              (2,393
              )
              
              
              -
              
              
              
              (681,934
              )Impairment
      of intangibles
              
              
              -
              
              
              
              (4,800
              )
              
              
              (24,800
              )Stock-based
      expenses
              
              
              -
              
              
              
              -
              
              
              
              (624,000
              )Realized
      loss on sale of available-for-sale securities
              
              
              -
              
              
              
              -
              
              
              
              (42,325
              )Loss
      reserve on loans receivable
              
              
              (331,829
              )
              
              
              -
              
              
              
              (331,829
              )Loss
      on assignment of loans receivable
              
              
              (331,829
              )
              
              
              -
              
              
              
              (331,829
              )Loss
      on surrender of available-for-sale securities
              
              
              (214,449
              )
              
              
              -
              
              
              
              (214,449
              )Loss
      before interest income
              
              
              (1,069,278
              )
              
              
              (136,607
              )
              
              
              (3,858,058
              )Interest
      income
              
              
              24,960
              
              
              
              26,698
              
              
              
              51,658Net
      loss
              
              
              (1,044,318
              )
              
              
              (109,909
              )
              
              
              (3,806,400
              )Unrealized
      loss on available-for-sale securities
              
              
              (312,325
              )
              
              
              (27,725
              )
              
              
              -Comprehensive
      loss
              
              $
              (1,356,643
              )
              
              $
              (137,634
              )
              
              $
              (3,806,400
              )Basic
      and diluted net loss per common share
              
              $
              (0.03
              )
              
              $
              (0.00
              )Weighted
      average number of outstanding shares
              
              
              37,597,890
              
              
              
              36,542,246
 
 
 The
accompanying notes are an integral part of these financial
statements.
  F-4
 CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 STATEMENTS
OF CASH FLOWS
 Period
      FromInception(April
      1, 1998)Year
      Ended
              
              
              ThroughJune 30,
              
              
              June
      30,2008
              
              
              2007
              
              
              2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
              
              $
              (1,044,318
              )
              
              $
              (109,909
              )
              
              $
              (3,806,400
              )Adjustments
      to reconcile net loss to net cash flows from operating
      activities:Amortization
      expense
              
              
              -
              
              
              
              2,400
              
              
              
              19,200Compensation
      expense, options to nonemployees
              
              
              -
              
              
              
              -
              
              
              
              504,000Receipt
      of available-for-sale securities
              
              
              -
              
              
              
              -
              
              
              
              (268,000
              )Fair
      value of common stock issued over carrying amount of debt-
              
              
              -
              
              
              
              -
              
              
              
              120,000Realized
      loss on sales of available-for-sale securities
              
              
              -
              
              
              
              -
              
              
              
              42,325Amortization
      of original issue discount
              
              
              -
              
              
              
              -
              
              
              
              550,000Impairment
      loss on intangibles
              
              
              -
              
              
              
              4,800
              
              
              
              24,800Loss
      reserve on loans receivable
              
              
              331,829
              
              
              
              -
              
              
              
              331,829Loss
      on assignment of loans receivable
              
              
              331,829
              
              
              
              -
              
              
              
              331,829Loss
      on surrender of available-for-sale securities
              
              
              214,449
              
              
              
              -
              
              
              
              214,449Changes
      in operating assets and liabilities:Increase
      in accrued interest receivable
              
              
              (24,960
              )
              
              
              (26,698
              )
              
              
              (51,658
              )Increase
      in accounts payable and accrued liabilities
              
              
              116,049
              
              
              
              43,109
              
              
              
              297,169Increase
      in accrued interest payable
              
              
              2,394
              
              
              
              -
              
              
              
              129,774Increase
      in accounts payable, stockholders
              
              
              -
              
              
              
              -
              
              
              
              369,346Increase
      in due to stockholders
              
              
              -
              
              
              
              -
              
              
              
              20,776Net
      cash flows from operating activities
              
              
              (72,728
              )
              
              
              (86,298
              )
              
              
              (1,170,561
              )CASH
      FLOWS FROM INVESTING ACTIVITIES:Proceeds
      from sale of available-for-sale securities
              
              
              -
              
              
              
              -
              
              
              
              11,225Advances
      under loan receivable agreements
              
              
              -
              
              
              
              (612,000
              )
              
              
              (612,000
              )Purchase
      of intangibles
              
              
              -
              
              
              
              -
              
              
              
              (44,000
              )Net
      cash flows from investing activities
              
              
              -
              
              
              
              (612,000
              )
              
              
              (644,775
              )CASH
      FLOWS FROM FINANCING ACTIVITIES:Collection
      of subscription receivable
              
              
              -
              
              
              
              -
              
              
              
              10,000Issuance
      of common stock
              
              
              -
              
              
              
              673,000
              
              
              
              1,292,269Net
      proceeds from due to stockholders
              
              
              -
              
              
              
              -
              
              
              
              348,928Proceeds
      from (repayment of) loans payable
              
              
              71,820
              
              
              
              (9,500
              )
              
              
              81,820Issuance
      of convertible notes
              
              
              -
              
              
              
              -
              
              
              
              82,500Net
      cash flows from financing activities
              
              
              71,820
              
              
              
              682,500
              
              
              
              1,815,517Increase
      (decrease) in cash
              
              
              (908
              )
              
              
              (15,798
              )
              
              
              181Cash:Beginning
              
              
              1,089
              
              
              
              16,887
              
              
              
              -Ending
              
              $
              181
              
              
              $
              1,089
              
              
              $
              181SUPPLEMENTAL
      CASH FLOWS INFORMATION:Cash
      paid for interest
              
              $
              1
              
              
              $
              -
              
              
              $
              2,183NONCASH
      INVESTING AND FINANCING ACTIVITIES:Stock
      issued for amount due to stockholders
              
              $
              -
              
              
              $
              -
              
              
              $
              233,125Stock
      issued for accounts payable
              
              $
              -
              
              
              $
              -
              
              
              $
              10,000Conversion
      of accounts payable, stockholders and due to stockholdersand
      issuance of subscription receivable for convertible notes
              
              $
              -
              
              
              $
              -
              
              
              $
              467,500Stock
      issued for conversion of notes payable
              
              $
              -
              
              
              $
              -
              
              
              $
              550,000Stock
      issued for accrued interest on notes payable
              
              $
              -
              
              
              $
              -
              
              
              $
              127,381
  The
accompanying notes are an integral part of these financial
statements.
 F-5
  CelLynx
      Group, Inc.
                (formerly
      NorPac Technologies, Inc.)
                (A
      Development Stage Company)
                
                STATEMENTS
      OF STOCKHOLDERS’ EQUITYCommon
      Stock
              
              
              Additional
      Paid In
              
              
              Amount
      Per Share/
              
              
              Stock
      Subscription
              
              
              Accumulated
      Other Comprehensive
              
              
              Deficit
      Accumulated During the DevelopmentShares
              
              
              Amount
              
              
              Capital
              
              
              Unit
              
              
              Receivable
              
              
              Income
      (Loss)
              
              
              StageBalance,
      April 1, 1998
              
              
              -
              
              
              $
              -
              
              
              $
              -
              
              
              
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (6,345
              )Balance,
      June 30, 1998
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (6,345
              )Shares
      issued for cash - July and August 1998
              
              
              891,000
              
              
              
              891
              
              
              
              16,929
              
              
              
              0.02
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for cash - September 1998
              
              
              10,000
              
              
              
              10
              
              
              
              99,990
              
              
              
              10.00
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for cash - April 1999
              
              
              1,841
              
              
              
              2
              
              
              
              55,228
              
              
              
              30.00
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for receivable - April 1999
              
              
              3,557
              
              
              
              4
              
              
              
              106,715
              
              
              
              30.00
              
              
              
              (106,719
              )
              
              
              -
              
              
              
              -Payment
      on receivable
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              106,719
              
              
              
              -
              
              
              
              -Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (228,505
              )Balance,
      June 30, 1999
              
              
              906,398
              
              
              
              907
              
              
              
              278,862
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (234,850
              )Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (174,236
              )Balance,
      June 30, 2000
              
              
              906,398
              
              
              
              907
              
              
              
              278,862
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (409,086
              )Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (307,225
              )Balance,
      June 30, 2001
              
              
              906,398
              
              
              
              907
              
              
              
              278,862
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (716,311
              )Shares
      issued for stockholder debt - October 2001
              
              
              25,000
              
              
              
              25
              
              
              
              274,975
              
              
              
              11.00
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for cash - October 2001
              
              
              6,250
              
              
              
              6
              
              
              
              49,994
              
              
              
              8.00
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for stockholder debt - November 2001
              
              
              25,000
              
              
              
              25
              
              
              
              49,975
              
              
              
              2.00
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for accounts payable - November 2001
              
              
              5,000
              
              
              
              5
              
              
              
              9,995
              
              
              
              2.00
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for rounding up of fractional shares related
      to  merger
              
              
              451
              
              
              
              -
              
              
              
              -Stock
      option compensation expense
              
              
              -
              
              
              
              -
              
              
              
              504,000
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (840,330
              )Balance,
      June 30, 2002
              
              
              968,099
              
              
              
              968
              
              
              
              1,167,801
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (1,556,641
              )Beneficial
      conversion of convertible notes issued – January 2003 to June
      2003
              
              
              -
              
              
              
              -
              
              
              
              550,000
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (225,141
              )Other
      comprehensive loss on available-for-sale securities
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              (48,000
              )
              
              
              -Balance,
      June 30, 2003
              
              
              968,099
              
              
              
              968
              
              
              
              1,717,801
              
              
              
              
              
              
              
              -
              
              
              
              (48,000
              )
              
              
              (1,781,782
              )
 
  F-6
  CelLynx
      Group, Inc.
                (formerly
      NorPac Technologies, Inc.)
                (A
      Development Stage Company)
                
                STATEMENTS
      OF STOCKHOLDERS’ EQUITYCommon
      Stock
              
              
              Additional
      Paid In
              
              
              Amount
      Per Share/
              
              
              Stock
      Subscription
              
              
              Accumulated
      Other Comprehensive
              
              
              Deficit
      Accumulated During the DevelopmentShares
              
              
              Amount
              
              
              Capital
              
              
              Unit
              
              
              Receivable
              
              
              Income
      (Loss)
              
              
              StageShares
      issued for conversion of note payable – April 23, 2004
              
              
              1,000,000
              
              
              
              1,000
              
              
              
              19,000
              
              
              
              0.02
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for accrued interest on note payable – April 23,
    2004
              
              
              8,901
              
              
              
              9
              
              
              
              2,583
              
              
              
              0.29
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (278,135
              )Other
      comprehensive gain on available-for-sale securities
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              128,000
              
              
              
              -Balance,
      June 30, 2004
              
              
              1,977,000
              
              
              
              1,977
              
              
              
              1,739,384
              
              
              
              
              
              
              
              -
              
              
              
              80,000
              
              
              
              (2,059,917
              )Shares
      issued for conversion of notes payable – May 26, 2005 to June 27,
      2005
              
              
              26,500,000
              
              
              
              26,500
              
              
              
              503,500
              
              
              
              0.02
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for accrued interest on notes payable – May 26, 2005 to June 27,
      2005
              
              
              2,300,646
              
              
              
              2,301
              
              
              
              46,013
              
              
              
              0.021
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for accrued interest on notes payable – May 26, 2005 to June 27,
      2005
              
              
              1,514,286
              
              
              
              1,514
              
              
              
              51,486
              
              
              
              0.035
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for accrued interest on notes payable – May 26, 2005 to June 27,
      2005
              
              
              72,848
              
              
              
              73
              
              
              
              2,987
              
              
              
              0.042
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for accrued interest on notes payable – May 26, 2005 to June 27,
      2005
              
              
              42,869
              
              
              
              43
              
              
              
              4,758
              
              
              
              0.112
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for accrued interest on notes payable – May 26, 2005 to June 27,
      2005
              
              
              67,551
              
              
              
              67
              
              
              
              7,971
              
              
              
              0.119
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for accrued interest on notes payable – May 26, 2005 to June 27,
      2005
              
              
              90,190
              
              
              
              90
              
              
              
              7,486
              
              
              
              0.084
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (548,670
              )Other
      comprehensive loss on available-for-sale securities
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              (12,200
              )
              
              
              -Balance,
      June 30, 2005
              
              
              32,565,390
              
              
              
              32,565
              
              
              
              2,363,585
              
              
              
              
              
              
              
              -
              
              
              
              67,800
              
              
              
              (2,608,587
              )Shares
      issued for  cash –June 2006
              
              
              2,412,500
              
              
              
              2,413
              
              
              
              287,087
              
              
              
              0.12
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for stockholder accounts payable –June 2006
              
              
              187,500
              
              
              
              187
              
              
              
              146,143
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (43,586
              )Other
      comprehensive gain on available-for-sale securities
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              272,250
              
              
              
              -Balance,
      June 30, 2006
              
              
              35,165,390
              
              
              
              35,165
              
              
              
              2,796,815
              
              
              
              
              
              
              
              -
              
              
              
              340,050
              
              
              
              (2,652,173
              )
 
 
 
  F-7
  CelLynx
      Group, Inc.
                (formerly
      NorPac Technologies, Inc.)
                (A
      Development Stage Company)
                
                STATEMENTS
      OF STOCKHOLDERS’ EQUITYCommon
      Stock
              
              
              Additional
      Paid In
              
              
              Amount
      Per Share/
              
              
              Stock
      Subscription
              
              
              Accumulated
      Other Comprehensive
              
              
              Deficit
      Accumulated During the DevelopmentShares
              
              
              Amount
              
              
              Capital
              
              
              Unit
              
              
              Receivable
              
              
              Income
      (Loss)
              
              
              StageShares
      issued for  cash –November 2006
              
              
              2,000,000
              
              
              
              2,000
              
              
              
              498,000
              
              
              
              0.25
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for  cash –January 2007
              
              
              432,500
              
              
              
              432
              
              
              
              103,368
              
              
              
              0.40
              
              
              
              -
              
              
              
              -
              
              
              
              -Issuance
      of warrants –January 2007
              
              
              -
              
              
              
              -
              
              
              
              69,200
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (109,909
              )Other
      comprehensive loss on available-for-sale securities
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              (27,725
              )
              
              
              -Balance,
      June 30, 2007
              
              
              37,597,890
              
              
              
              37,597
              
              
              
              3,467,383
              
              
              
              
              
              
              
              -
              
              
              
              312,325
              
              
              
              (2,762,082
              )Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (1,044,318
              )Other
      comprehensive loss on available-for-sale securities
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              (312,325
              )
              
              
              -Balance,
      June 30, 2008
              
              
              37,597,890
              
              
              $
              37,597
              
              
              $
              3,467,383
              
              
              
              
              
              
              $
              -
              
              
              $
              -
              
              
              $
              (3,806,400
              )
  
 The
accompanying notes are an integral part of these financial
statements.
  F-8
  CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 NOTES
TO FINANCIAL STATEMENTS
 
 
 1.           History
and Organization of the Company
 
 NorPac
Technologies, Inc. (the “Company”) was originally incorporated on April 1, 1998
in the State of Minnesota.  On July 12, 2004 the Company was
reorganized and became a Nevada corporation.  The Company was formed
to act as a holding company for manufacturing companies and since inception, has
devoted its efforts to raising capital and pre-opening
activities.  The Company previously owned a patent for a self-chilling
beverage container (the “Cool Can Technology”) in the United States and certain
foreign countries.  The Company had a License Agreement with Balsam
Ventures, Inc. (“Balsam”) for the Cool Can Technology, which it settled under
the terms of a Release Agreement dated June 30, 2008 (see Note
13).  Management abandoned the development of the Cool Can Technology
during the year ended June 30, 2008.
 
 On
November 7, 2006, the Company entered into an Agreement and Plan of Merger
(“Merger Agreement”) for a merger with Nextdigital Corp. (“Nextdigital”), a
Nevada company engaged in the provision of smart card solutions to the
international marketplace.  Under the terms of the Merger Agreement,
the Company would have merged with Nextdigital and changed its name to
Nextdigital Corporation.  On February 15, 2007 the Company received
notice from Nextdigital that it was electing not to proceed with the Merger
Agreement because it believed its shareholders would not approve
it.  During the year ended June 30, 2007, the Company made advances to
Nextdigital amounting to $612,000 under a series of unsecured loan
agreements.  At December 31, 2007, management determined that the
collectibility of the loans was in doubt and based on its best estimate,
recorded a loss reserve equal to 50% of the total loans receivable and accrued
interest receivable totaling $331,829.  Also on December 31, 2007, the
Company ceased accruing interest on the loans receivable (see Note
5).  On June 30, 2008, the Company assigned the loans receivable of
$612,000 plus accrued interest to Balsam under the terms of a Release Agreement
(see Notes 5 and 13).
 
 On July
25, 2008, the Company completed a reverse take-over transaction with CelLynx,
Inc. (“CelLynx-California”), a California company engaged in the development of
plug-and-play cell phone signal amplification technology pursuant to a Share
Exchange Agreement (the “Exchange Agreement”) dated January 3,
2008.  Under the terms of the Exchange Agreement, the Company issued a
total of 32,454,922 shares of the Company’s common stock and 45,516,034 shares
of the Company’s series A convertible preferred stock (established July 2, 2008)
to the former CelLynx-California shareholders.  The series A
convertible preferred stock automatically converts into common stock on a
one-to-one ratio upon the authorized capital stock of the Company being
increased to not less than 150,000,000 shares of common stock.  As a
result of the reverse take-over transaction, the former shareholders of
CelLynx-California became the Company’s controlling shareholders and
CelLynx-California became the Company’s wholly-owned subsidiary. For accounting
purposes, the Exchange Agreement will be treated as an acquisition of the
Company (legal acquirer) by CelLynx-California and a recapitalization of
CelLynx-California (accounting acquirer).
 
 On July
21, 2008, the Company incorporated a wholly-owned subsidiary, CelLynx Group,
Inc., for the sole purpose of effecting a name change. On August 5, 2008, the
Company merged with CelLynx Group, Inc., with the Company as the
surviving corporation.  Upon completion of the merger, the Company’s
name was changed to CelLynx Group, Inc.
 
 The
Company is considered to be in the development stage. The accompanying financial
statements represent those of a development stage enterprise and therefore, are
subject to the usual business risks of development stage
companies.  The Company has had no significant revenue from
operations.  Research and development costs are expensed as
incurred.
  F-9
  CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 NOTES
TO FINANCIAL STATEMENTS
 
 
 2.           Going
Concern
 
 The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States, which contemplate
continuation of the Company as a going concern.  However, the Company
has sustained substantial losses, net operating cash flow deficits, and has a
deficit accumulated during the development stage.  These
financial statements do not include any adjustments that might result from this
uncertainty.
 
 The
Company intends to arrange for the sale of additional shares of stock to obtain
additional operating capital for at least the next twelve
months.  There can be no assurance the Company will be able to raise
the necessary capital to continue in business.
 
 
 3.
              Significant
      Accounting Policies
 
 The
financial statements of the Company have been prepared in conformity with
accounting principles generally accepted in the United States and are stated in
U.S. dollars. The significant accounting policies adopted by the Company are as
follows:
 
 (a)  Use
of estimates
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the reporting
period.  Actual results could differ from these
estimates.
 
 (b)  Foreign
currency translation
 
 The
      functional currency of the Company is the U.S. dollar.  Monetary
      assets and liabilities denominated in a foreign currency are translated at
      the exchange rate in effect at the balance sheet date while non-monetary
      assets and liabilities are translated at historical
      rates.  Revenue and expense items denominated in a foreign
      currency are translated at exchange rates prevailing when such items are
      recognized in the statement of operations.  Exchange gainsand
      losses arising on transactions denominated in foreign currency are
      included in the statement of
operations.
 
 (c)  Cash
and cash equivalents
 
 The
Company considers cash held at banks and all highly liquid investments with
original maturities of three months or less to be cash and cash
equivalents.  As of June 30, 2008 and 2007, cash and cash equivalents
consists of cash only.
 
 (d)  Loans
receivable
 
 Loans
receivable are reported at the outstanding principal balance adjusted for any
charge-offs and reserve for loan losses.  Management recorded a
reserve amounting to $331,829 for loans receivable and accrued interest
receivable resulting from its impairment review.  When determining the
reserve for loan losses, management considers if any events or changes in
circumstances indicate uncollectibility.  When a loan is determined to
be uncollectible, it is charged against the loss reserve.  Loans are
not collateralized.
  F-10
  CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 NOTES
TO FINANCIAL STATEMENTS
 
 
 3.
              Significant
      Accounting Policies (continued)
 
 (d)  Loans
receivable (continued)
 
 Because
of inherent uncertainties in estimating the reserve for loan losses, it is at
least reasonably possible that the estimates used will change in the near
term.  Interest on loans is recognized when
earned.  Interest on loans is generally not recognized when loans
become past due.  Thereafter, no interest is taken into income until
such time as the borrower demonstrates the ability to resume
payments.  There were no past due loans at June 30,
2007.  Based on current loan interest rates, management does not
believe exposure to interest rate sensitivity is
significant.  Management periodically reviews loans outstanding to
determine if any loans are impaired.  Impaired loans, if any, are
adjusted to estimated net realized value through the loan loss
reserve.  On June 30, 2008, the Company assigned the loans receivable
of $612,000 plus accrued interest to Balsam under the terms of a Release
Agreement (see Notes 5 and 13).
 
 (e)  Intangible
assets
 
 Intangible
assets are recorded at cost.  Amortization is calculated using the
straight-line method over the useful lives of the assets.  In
accordance with Statement of Financial Accounting Standards (“SFAS”) 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets,” the Company reviews all long-lived assets
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.  Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to future net cash flows expected to be generated by the
assets.  If such assets are considered to be impaired, the impairment
recognized is measured by the amount by which the carrying amount of the assets
exceeds the fair value of the assets.  Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs to
sell.
 
 (f)  Income
taxes
 
 Effective
July 1, 2007, the Company adopted Financial Accounting Standards Board (“FASB”)
Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes" ("FIN 48"), which clarifies the accounting for uncertainty
in income taxes recognized in the financial statements in accordance with SFAS
109, "Accounting for Income
Taxes."  FIN 48 provides guidance on the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return.  FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosures, and transition.  In accordance with FIN 48, a tax
position is a position in a previously filed tax return or a position expected
to be taken in a future tax filing that is reflected in measuring current or
deferred income tax assets and liabilities.  Tax positions shall be
recognized only when it is more likely than not (likelihood of greater than
50%), based on technical merits, that the position would be sustained upon
examination.  Tax positions that meet the more likely than not
threshold should be measured using a probability-weighted approach as the
largest amount of tax benefit that is greater than 50% likely of being realized
upon settlement.  The adoption of FIN 48 did not have a material
impact on the Company’s financial position, results of operations or cash
flows.  Income taxes are accounted for using an asset and liability
approach that requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been recognized in
our financial statements or tax returns.  A valuation allowance is
established to reduce deferred tax assets if all, or some portion, of such
assets will more than likely not be realized.
  F-11
  CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 NOTES
TO FINANCIAL STATEMENTS
 
 
 3.
              Significant
      Accounting Policies (continued)
 
 (g)  Fair
value of financial instruments
 
 The
Company's financial instruments consist of cash, available-for-sale securities,
loans receivable, accounts payable and accrued liabilities and loans
payable.  It is management's opinion that the Company is not exposed
to significant interest, currency or credit risks arising from these financial
instruments.  The fair value of these financial instruments, other
than available-for-sale securities, approximates their carrying values because
of the short-term nature of these financial
instruments.  Available-for-sale securities are recorded at their fair
market values determined by quoted market prices.
 
 (h)  Advertising
expenses
 
 The
Company expenses advertising costs as incurred. There were no advertising
expenses incurred by the Company for the years ended June 30, 2008 and
2007.
 
 (i)  Stock-based
compensation
 
 Effective
January 1, 2006, the Company adopted SFAS123(R), "Share-Based Payment," which
requires that compensation cost for all stock-based awards be measured at the
grant date, based on the fair value of the award, and is recognized as an
expense, on a straight-line basis, over the requisite service
period.  The fair value of each option award is estimated on the date
of grant using a Black-Scholes option valuation model.  SFAS 123(R)
requires stock-based compensation expense to be recorded only for those awards
expected to vest using an estimated forfeiture rate.  The Company
estimates pre-vesting option forfeitures at the time of grant and reflects the
impact of estimated pre-vesting option forfeitures in compensation expense
recognized.
 
 The
following table shows the pro forma effect on net loss prior to the adoption of
SFAS 123(R) had compensation expense been determined based on the fair value at
the award grant date, in accordance with SFAS 123:
 
 Period
      From Inception (April 1, 1998) Through June 30,2008Net
      loss
              
              $
              (3,806,400
              )Pro
      forma net loss
              
              $
              (3,854,400
              )Stock
      based compensationAs
      reported
              
              $
              504,000Proforma
              
              $
              552,000
 
 There
were no options granted or vested during the years ended June 30, 2008 and
2007.
  F-12
  CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 NOTES
TO FINANCIAL STATEMENTS
 
 
 3.
              Significant
      Accounting Policies (continued)
 
 (j)  Loss
per common share
 
 Basic net
loss per share is computed by dividing the net loss for the period by the
weighted average number of shares of common stock outstanding during the
period.  Diluted earnings per share takes into consideration shares of
common stock outstanding (computed under basic earnings per share) and
potentially dilutive securities.  As of June 30, 2007, the 432,500
warrants outstanding have been excluded from diluted net loss per common share
as they were anti-dilutive.  There were no other potentially dilutive
securities during the years ended June 30, 2008 and 2007.
 
 (k)  Comprehensive
income (loss)
 
 The
      Company has adopted SFAS 130, “Reporting Comprehensive
      Income,” which establishes guidelines for the reporting and display
      of comprehensive income (loss) and its components in financial
      statements.  Comprehensive income (loss) consists of the
      Company’s net loss and unrealized gain (loss) on available-for-sale
      securities.
 
 (l)  Development
stage
 
 The
Company is a development stage company as defined in SFAS 7, “Accounting and Reporting by
Development Stage Enterprises,”as it is devoting substantially all of
its efforts to establish a new business and planned principal operations have
not yet commenced.
 
 (m)  Recent
accounting pronouncements
 
 In
September 2006, the FASB issued SFAS 157, “Fair Value
Measurements.”  SFAS 157 establishes a framework for measuring
the fair value of assets and liabilities. This framework is intended to provide
increased consistency in how fair value determinations are made under various
existing accounting standards which permit, or in some cases require, estimates
of fair market value.  SFAS 157 is effective for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years.  Earlier application is encouraged, provided that the reporting
entity has not yet issued financial statements for that fiscal year, including
any financial statements for an interim period within that fiscal
year.  In February 2008, the FASB issued Staff Position 157-2, “Effective Date of FASB Statement No.
157,” that deferred the effective date of SFAS 157 for one year for
nonfinancial assets and liabilities recorded at fair value on a non-recurring
basis.  The Company does not believe that the adoption of SFAS 157
will have a material impact on the financial statements.
 
 In
February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial
Assets and Financial Liabilities,” which permits an instrument election
to account for selected financial assts and liabilities at fair
value.  SFAS 159 is effective for fiscal years beginning after
November 15, 2007, with early adoption permitted as of January 1, 2007. The
Company is currently evaluating the impact of SFAS 159 will have on the
financial statements.
 
 In
December 2007, the FASB issued SFAS 141 (revised 2007), "Business Combinations"
(“SFAS 141R”).  Under SFAS 141R, a company is required to recognize
the assets acquired, liabilities assumed, contractual contingencies and
contingent consideration at their fair value at the acquisition
date.  It further requires that acquisition-related costs are to be
recognized separately from the acquisition and expensed as
incurred.  Among other changes, SFAS 141R also requires that “negative
goodwill” be recognized in earnings as a
  F-13
  CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 NOTES
TO FINANCIAL STATEMENTS
 
 
 3.           Significant
Accounting Policies (continued)
 
 (m)  Recent
accounting pronouncements (continued)
 
 gain
attributable to the acquisition, and any deferred tax benefits resulting from a
business combination be recognized in income from continuing operations in the
period of the combination.  SFAS 141R is effective for business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15,
2008.  The Company is evaluating what impact SFAS 141R will have
on the financial statements.
 
 In
December 2007, the FASB issued SFAS 160, "Noncontrolling Interests in
Consolidated Financial Statements — an amendment of ARB No. 51" (“SFAS
160”).  SFAS 160 requires a company to clearly identify and present
ownership interests in subsidiaries held by parties other than the company in
the consolidated financial statements within the equity section but separate
from the company’s equity.  It also requires the amounts of
consolidated net income attributable to the parent and to the noncontrolling
interest to be clearly identified and presented on the face of the consolidated
statement of operations; changes in ownership interest to be accounted for as
equity transactions; and when a subsidiary is deconsolidated, any retained
noncontrolling equity investment in the former subsidiary and the gain or loss
on the deconsolidation of the subsidiary must be measured at fair
value.  SFAS 160 is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15,
2008.  The Company is evaluating what impact SFAS 160 will have on the
financial statements.
 
 In March
2008, the FASB issued SFAS 161, “Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No.
133” (“SFAS 161”).  SFAS 161 requires enhanced disclosures
about an entity’s derivative instruments and hedging activities including: (1)
how and why an entity uses derivative instruments; (2) how derivative
instruments and related hedged items are accounted for under SFAS 133 and its
related interpretations; and (3) how derivative instruments and related hedged
items affect an entity’s financial position, financial performance, and cash
flows.  SFAS 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008, with earlier
application encouraged.  The Company is evaluating what impact SFAS
161 will have on the financial statements.
 
 In May
2008, the FASB issued SFAS 162, “The Hierarchy of Generally Accepted
Accounting Principles.”This Statement identifies the sources
of accounting principles and the framework for selecting the principles to be
used in the preparation of financial statements of nongovernmental entities that
are presented in conformity with generally accepted accounting principles (GAAP)
in the United States (the GAAP hierarchy).  This Statement will not
have an impact on the Company’s financial statements.
 
 In May
2008, the FASB issued SFAS 163, “Accounting for Financial Guarantee
Insurance Contracts, an interpretation of SFAS 60.”The
scope of this statement is limited to financial guarantee insurance (and
reinsurance) contracts, as described in this Statement, issued by enterprises
included within the scope of SFAS 60.  Accordingly, this Statement
does not apply to financial guarantee contracts issued by enterprises excluded
from the scope of SFAS 60 or to some insurance contracts that seem similar to
financial guarantee insurance contracts issued by insurance enterprises (such as
mortgage guaranty insurance or credit insurance on trade
receivable).  This Statement also does not apply to financial
guarantee insurance contracts that are derivative instruments include within the
scope of SFAS 133, “Accounting
for Derivative Instrument and Hedging Activities.”This
Statement will not have an impact on the Company’s financial
statements.
  F-14
  CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 NOTES
TO FINANCIAL STATEMENTS
  
 3.           Significant
Accounting Policies (continued)
 
 (m)  Recent
accounting pronouncements (continued)
 
 In June
2007, the FASB’s Emerging Issues
Task Force (“EITF”) issued EITF
07-3, “Accounting for
Nonrefundable Advance Payments for Goods or Services Received for use in Future
Research and Development Activities,”which addresses whether
nonrefundable advance payments for goods or services that were used or rendered
for research and development activities should be expensed when the advance
payment is made or when the research and development activity has been
performed.  Management is currently evaluating the effect of this
pronouncement on financial statements.
 
 
 4.           Available-for-sale
Securities
 
 Investments
held by the Company were classified as available-for-sale securities.
Available-for-sale securities were reported at fair value with all unrealized
gains or losses included in other comprehensive income (loss).  The
fair value of the securities was determined by quoted market prices of the
underlying security.  For purposes of determining gross realized gains
or losses, the cost of available-for-sale securities is based on specific
identification.
 
 Aggregate
                fair
      value
              Gross
                unrealized
                gains
              Gross
                unrealized
                losses
              CostEquity
      securities – June 30, 2008
                Equity
      securities – June 30, 2007
              $              -
                $  
      526,775
              $              -
                $ 
      312,325
              $             -
                $             -
              $              -
                $  214,450
 
 In
November 2002, the Company received securities valued at
$63,000.  Pursuant to the License Agreement described in Note 13, the
Company received additional securities valued at $175,000 in November 2003, and
securities valued at $30,000 in January 2006.  Securities with a cost
of $53,550 were sold prior to July 1, 2005.  There were no sales of
available-for-sale securities during the years ended June 30, 2008 and
2007.
 
 The
Company’s net unrealized holding loss was $(429,737) and $(27,725) for the years
ended June 30, 2008 and 2007, respectively.  The reclassification
adjustment was $117,412 and $0 for the years ended June 30, 2008 and 2007,
respectively and $40,800 for the period from inception through June 30,
2008.
 
 On June
30, 2008, the Company entered into a Release Agreement with Balsam, pursuant to
which Balsam agreed to release the Company from any legal claims and liabilities
(the “Release”) in connection with a License Agreement dated November 30, 2003,
and amended on January 12, 2006.  In exchange for the Release, the
Company surrendered for cancellation the 5,545,000 shares of Balsam’s common
stock to Balsam which were issued to the Company under the License Agreement
(see Note 13).
 
 On June
30, 2007, the Company held 5,545,000 common shares, respectively, of Balsam for
an ownership percentage of 15.3%.  This investment in Balsam was not
accounted for under the equity method in accordance with APB Opinion 18, “The Equity Method of Accounting for
Investments in Common Stock,”because the Company was unable to exercise
significant influence over the operating and financial policies of the
investee.
  F-15
  CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 NOTES
TO FINANCIAL STATEMENTS
 
 
 5.
              Loans
      Receivable
 
 During
the year ended June 30, 2007, four unsecured loans were granted to Nextdigital,
totaling $612,000.  The loans bear interest at 8% per annum and all
loan agreements were due during the year ended June 30, 2009.
 
 Interest
income related to these loans receivable totaled $24,960 and $26,698 for the
years ended June 30, 2008 and 2007, respectively and $51,658 for the period from
inception through June 30, 2008.
 
 As
discussed in Note 1, the Merger Agreement with Nextdigital was
terminated.  Management determined that the collectibility of the
loans was in doubt and based on its best estimate, recorded a loss reserve equal
to 50% of the total loans receivable and accrued interest receivable totaling
$331,829.  On December 31, 2007, the Company ceased accruing interest
on the loans receivable.
 
 On June
30, 2008, the Company entered into a Release Agreement with Balsam, pursuant to
which Balsam agreed to release the Company from any legal claims and
liabilities in connection with a License Agreement dated November 30, 2003,
and amended on January 12, 2006.  In exchange for the Release, the
Company agreed to assign the loans receivable of $612,000 plus accrued interest
to Balsam  (see Note 13).
 
 
 6.            
Intangible Assets
 
 A United
States patent for a self-chilling beverage container and related component parts
was obtained by a founding stockholder on March 11, 1997.  During
1998, the patent and patent holder rights thereunder were sold to the Company
for $1.  Subsequent costs in June 1999 of $24,000 to file foreign
patent applications were similarly capitalized.  Since the patents
have expired, an impairment loss of $4,800 was recorded in the year ended June
30, 2007.
 
 In April
2001, the Company acquired a patent pending from certain stockholders which
expanded on the patent described above.  The acquisition agreement
required the payment by the Company to the stockholders of
$20,000.  In addition, the Company was to issue to the stockholders:
(i) 7,500 shares of the Company’s common stock upon the grant of a patent in
connection with the acquired patent pending; and (ii) an additional 4,500 shares
for each country in respect of which the Company grants a license of the
acquired technology, for the first ten countries, and 3,000 shares for each
additional country, to a maximum of 75,000 shares under the acquisition
agreement.  The Company was to also pay an ongoing royalty to the
stockholders based on sales of products incorporating the technology as follows:
(i) 4.5% of gross profits achieved by the Company on products incorporating the
technology; and (ii) 15% of any licensing revenues or royalty payments earned by
the Company on licenses of the acquired technology.  The Company had
agreed to use its best efforts to commercialize the acquired technology and to
apply to the United States Patent Office for a grant of a patent relating to the
patent pending.  The agreement was cancelled due to the Company’s
default under the agreement on June 14, 2003 and as such, an impairment loss of
$20,000 was recorded for the year ended June 30, 2003.
  F-16
  CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 NOTES
TO FINANCIAL STATEMENTS
 
 
 7.
              Loans
      Payable
 
 During
the year ended June 30, 2008, a loan was granted from an unrelated entity for
$15,000.  The loan is unsecured, bears interest at 10% and is due on
demand.  Interest expense accrued for the year ended June 30, 2008
totaled $476 and $476 for the period from inception through June 30,
2008.  On June 25, 2008, the loan was assigned to another unrelated
entity.  Subsequent to June 30, 2008, the Company issued 103,221 units
at a price of $0.15 per unit in satisfaction of the loan and accrued interest
outstanding (see Note 15).
 
 During
the year ended June 30, 2008, two loans were granted from an unrelated entity
for $1,000 and $2,700 of which $680 of the first loan was repaid.  The
first loan is unsecured, non-interest bearing and is due on
demand.  The second loan is unsecured, bears interest at 10% and is
due on demand.  Interest expense accrued for the year ended June 30,
2008 totaled $20 and $20 for the period from inception through June 30,
2008.  Subsequent to June 30, 2008, the Company issued 20,270 units at
a price of $0.15 per unit satisfaction of the loan and accrued interest
outstanding (see Note 15).
 
 During
the year ended June 30, 2008, several loans were granted from an unrelated
entity totaling $43,000.  The loans are unsecured, bear interest at
10% and are due on demand.  Interest expense accrued for the year
ended June 30, 2008 totaled $1,662 and $1,662 for the period from inception
through June 30, 2008.  Subsequent to June 30, 2008, the Company
issued 297,747 units at a price of $0.15 per unit in satisfaction of the loan
and accrued interest outstanding (see Note 15).
 
 During
the year ended June 30, 2007, a loan was granted from an unrelated entity for
$10,000.  During the year ended June 30, 2008, a second loan was
granted from the same unrelated entity for $5,000.  Both loans are
unsecured, non-interest bearing, and due on demand.  During the year
ended June 30, 2008, two additional loans were granted from the same unrelated
entity totaling $5,800.  The additional loans are unsecured, bear
interest at 10% and are due on demand.  Interest expense accrued for
the year ended June 30, 2008 totaled $235 and $235 for the period from inception
through June 30, 2008.  On June 25, 2008, the loan was assigned to
another unrelated entity.  Subsequent to June 30, 2008, the Company
issued 140,182 units at a price of $0.15 per unit in satisfaction of the loan
and accrued interest outstanding (see Note 15).
 
 During
the year ended June 30, 2006, several loans were granted from and repaid to an
unrelated entity.  The balance due at June 30, 2006 was
$500.  During the year ended June 30, 2007, the loan was
repaid.  The loans were unsecured, non-interest bearing, and due on
demand.
 
 
 8.
              Related
      Party Transactions
 
 Consulting
fees paid to an officer and director totaled $12,000 for each of the years
ended June 30, 2008 and 2007.  Consulting fees paid to an officer and
director from inception through June 30, 2008 totaled $26,500.
 
 Consulting
fees paid to a former officer and director from inception through June 30, 2008
totaled $588,000.  During the period of inception through June 30,
2008, a former officer and director settled accounts payable of $146,330 in
exchange for 187,500 common shares of the Company with a fair value of
$28,125.  The difference between the carrying amount of the accounts
payable and the fair value of the common shares issued of $118,205 was recorded
as an increase to additional paid in capital.
 
 At June
30, 2007 included in accounts payable and accrued liabilities was $50, owed to a
former officer and director of the Company.
  F-17
  CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 NOTES
TO FINANCIAL STATEMENTS
 
 
 9.           Stockholders’
Equity
 
 The
      Board of Directors has the power and authority to fix by resolution any
      designation, class, series, voting power, preference, right,
      qualification, limitation, restriction, dividend, time and place of
      redemption, and conversion right with respect to any stock of the
      Company.
 
 On
November 30, 2006, the Company issued 2,000,000 shares of common stock at a
price of $0.25 per share for total proceeds of $500,000.
 
 On
January 5, 2007, the Company issued 432,500 units at a price of $0.40 per unit
for total proceeds of $173,000 in a private placement
transaction.  Each unit consists of one share of the Company’s common
stock and one share purchase warrant.  Each warrant entitled the
holder to purchase an additional share of the Company’s common stock at a price
of $0.40 per share and expired January 5, 2008.  The relative fair
value of the common stock was estimated to be approximately $103,800 and the
relative fair value of the warrants was estimated to be approximately $69,200 as
determined based on the relative fair value allocation of the proceeds
received.  The warrants were valued using the Black-Scholes option
pricing model.
 
 10.          Stock
Options
 
 The
Company adopted a Stock Option Plan on June 21, 2000, which authorizes an
initial 3,600,000 shares for issuance of incentive and non-qualified stock
options to non-employees.  The maximum aggregate number of shares that
may be optioned and sold under the Plan may increase each quarter upon
conditions outlined in the Plan.  Options expire as determined by the
Company but in no event later than ten years after the date the options are
granted.
 
 Information
      relating to stock options is as
follows:
 
 Number
      of Shares
              
              
              Weighted
                Average
                ExerciseUnder
      option, June 30, 2001
              
              
              177,500
              
              
              $
              7.50Granted
              
              
              30,000
              
              
              
              0.50Exercised
      – conversion of debt and accounts payable
              
              
              (55,000
              )
              
              
              1.50Cancelled
              
              
              (27,500
              )
              
              
              3.00Under
      option, June 30, 2002
              
              
              125,000
              
              
              
              2.65Expired
              
              
              (100,000
              )
              
              
              2.20Cancelled
              
              
              (25,000
              )
              
              
              3.00Under
      option, June 30, 2003
              
              
              -
              
              
              
              -Granted
              
              
              -
              
              
              
              -Expired
              
              
              -
              
              
              
              -Cancelled
              
              
              -
              
              
              
              -Under
      option, June 30, 2008
              
              
              -
              
              
              
              -
 
 During
the year ended June 30, 2002, based on the decrease in the market price of the
Company’s common stock, the Company re-priced its stock
options.  There was no accounting consequence or compensation for the
options repriced.  All outstanding options were cancelled or expired
during the year ended June 30, 2003.  On October 10, 2007, the Company
terminated the 2000 Stock Option Plan.
  F-18
  CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 NOTES
TO FINANCIAL STATEMENTS
 
 
 11.           Segment
Information
 
 The
Company’s business is considered as operating in one segment based upon the
Company’s organization structure, the way in which the operation is managed and
evaluated, the availability of separate financial results and materiality
considerations.
 
 
 12.           Income
Taxes
 For
income tax purposes, pre-opening costs are generally deferred and amortized to
expense in future tax returns.  Accordingly, the Company has no
significant tax loss carryforwards.  For financial reporting purposes,
realization of the value of book versus tax temporary differences is dependent
upon the Company generating sufficient taxable income in future
years.  Because of the development stage nature of the Company, lack
of operating history and potential future stock sales (which may limit the value
of loss carryforwards), management has eliminated the deferred tax value of
pre-opening costs with a valuation allowance. Each of the years from April 1,
1998 (date of inception) to June 30, 2008, remain subject to examination by
federal and state tax jurisdictions.
  The
benefit for income taxes differs from the amount computed by applying the U.S.
federal income tax rate to loss before income taxes for the years ended June 30,
as follows:
 
 2008
              
              
              2007Expected
      tax benefit at statutory rate
              
              $
              (355,068
              )
              
              $
              (40,769
              )State
      tax effects
              
              
              (62,659
              )
              
              
              (7,195
              )Increase
      in valuation allowance
              
              
              417,727
              
              
              
              47,964$
              -
              
              
              $
              -
 
 Tax law
provides for limitation on the use of future loss carryovers should significant
ownership changes occur.
 
 The
following is a summary of deferred taxes:
 
 June
      30,
              
              
              June
      30,2008
              
              
              2007Deferred
      tax assets:Deferred
      pre-opening costs
              
              $
              (1,555,816
              )
              
              $
              (1,138,089
              )Valuation
      allowance
              
              
              1,555,816
              
              
              
              1,138,089$
              -
              
              
              $
              -
 
  F-19
  CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 NOTES
TO FINANCIAL STATEMENTS
 
 
 13.           License
Agreement
 
 The
Company has entered into an exclusive licensing agreement (the "License
Agreement") with Balsam, dated for reference November 30, 2003, granting Balsam
the exclusive right and license (the “License”), for a period of 40 years, to
use, commercialize and exploit the Company’s proprietary trademarks, patents,
process information, technical information, designs and drawings associated with
the Company’s self-chilling beverage container technology (the "Cool Can
Technology") including the right to manufacture, use and sell apparatus and
products embodying the Cool Can Technologywithin the countries
comprising the European Union and the Republic of China.  Balsam also
has the right to sub-license the right to manufacture, use and sell products
embodying the Cool Can Technology.
 
 The
consideration for the License Agreement was as follows:
 
 1.
              Balsam
      issued to the Company 5,000,000 restricted shares of its common stock;
      and2.
              Balsam
      must pay the Company the following royalties: (a) a sales royalty equal to
      2% of gross profits from sales of all apparatus incorporating the Cool Can
      Technology and/or commercial goods or products incorporating the Cool Can
      Technology, (b) a license royalty equal to 5% of revenues received by
      Balsam from sub-licensing the Cool Can Technology, and (c) a minimum
      royalty payment of $5,000 per month commencing on January 15, 2006, which
      is to be credited towards all royalty payments under the License Agreement
      that have been paid by Balsam or become payable by Balsam during the
      course of the
License Agreement.
 
 On
January 14, 2006, the Company entered into an agreement (the “Extension
Agreement”) with Balsam, to amend the terms of the License Agreement dated
November 30, 2003.  Under the Extension Agreement, the Company agreed
to extend the date on which Balsam is required to commence paying the minimum
royalty payments to January 15, 2007.
 
 The
consideration for the Extension Agreement was as follows:
 
 1.
              Balsam  issued
      to the Company 500,000 restricted shares of its common stock;
      and2.
              Balsam
      paid the Company $20,000.
 
 The Cool
Can Technology and the Company patents and trademarks included in the Cool Can
Technology remain the property of the Company subject to the terms of the
License granted under the License Agreement.  However, Balsam has
a right of first refusal to acquire the intellectual property subject to the
License Agreement should the Company seek to dispose of the Cool Can Technology
during the currency of the License Agreement.  The License
Agreement supersedes all prior arrangements and agreements between the Company
and Balsam in respect of the Cool Can Technology.
 
 In June,
2007, the Company notified Balsam that its intellectual property rights to the
Cool Can Technology possibly expired.  As a result, Balsam suspended
payment of the minimum royalty amounts required under the License Agreement
effective April 1, 2007.  As the patents for the Cool Can Technology
have expired, Balsam advised the Company that they intended to terminate the
Agreement.
  F-20
  CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 NOTES
TO FINANCIAL STATEMENTS
  
 13.           License
Agreement (continued)
 
 On June
30, 2008, the Company entered into a Release Agreement with Balsam, pursuant to
which Balsam agreed to release the Company from any legal claims and liabilities
(the “Release”) in connection with the License Agreement.
 
 The
consideration for the Release was as follows:
 
 1.
              The
      Company surrendered for cancellation the 5,545,000 shares of Balsam’s
      common stock to Balsam which were issued to the Company under the License
      Agreement; and2.
              The
      Company agreed to assign loans receivable of $612,000 plus accrued
      interest to Balsam.
 
 
 14.
              Commitments
 
 On
February 3, 2008, the Company entered into a Consulting Agreement (the
“Consulting Agreement”) with Mountain View Holdings, LLC (“Mountain View”), a
Colorado Limited Liability Company.  Under the terms of the Consulting
Agreement, Mountain View is to be paid $1,500 per month in consideration for
providing the Company with various investor relation services for a six month
period ending on August 31, 2008.  The Consulting Agreement shall
automatically renew in 30-day period intervals thereafter.  Either
party shall have the right to terminate this Consulting Agreement, beginning in
the first monthly renewal period, upon 15 days advance written
notice.  In addition to the monthly consulting fee, the Company is
required to pay Mountain View a transaction fee as a result of any transaction
between the Company and any other party introduced or put into contact with by
Mountain View whereby a sale of stock, issuance of debt, sale of assets,
consolidation or other similar transaction or series or combination of
transactions occurs.  The transaction fee shall be equal to 3% of the
dollar value of the transaction, which is based on the total value of the
consideration, securities, property, business, assets or other value given,
paid, transferred or contributed by, or to, the Company.  The
Consulting Agreement was terminated effective April 1, 2008.  The
Company incurred expenses amounting to $3,000 during the year ended June 30,
2008 for services provided by Mountain View.
 
 
 15.
              Subsequent
      Events
 
 On July
7, 2008, a loan was granted and payment waived from an unrelated third party for
$2,400.
 
 On July
23, 2008, the Company issued 10,500,000 units at a price of $0.15 per unit for
total consideration of $1,575,000 in a private placement
transaction.  As payment for the subscription price, several
subscribers agreed to cancel indebtedness from the Company in the amount of
$225,000.  Each unit consists of one share of the Company’s common
stock and one share purchase warrant.  Each warrant entitles the
holder to purchase an additional share of the Company’s common stock at a price
of $0.20 per share for a period of two years from the date of
issuance.  In the event that Cellynx manufactures 25 or more of
its mobile or home repeater units, the Company may, at its option, accelerate
the expiry of the warrants by giving a 30 day notice to the warrant
holder.
  F-21
  CelLynx
Group, Inc.
 (formerly
NorPac Technologies, Inc.)
 (A
Development Stage Company)
 
 NOTES
TO FINANCIAL STATEMENTS
 
 
 15.
              Subsequent
      Events (continued)
  On July
24, 2008, the Company completed a reverse take-over transaction with CelLynx,
Inc. (“CelLynx-California”), a California company engaged in the development of
plug-and-play cell phone signal –amplification technology pursuant to a Share
Exchange Agreement (the “Exchange Agreement”) dated January 3,
2008.  Under the terms of the Exchange Agreement, the Company issued a
total of 32,454,922 shares of the Company’s common stock and 45,516,034 shares
of the Company’s series A convertible preferred stock (established July 2, 2008)
to the former CelLynx-California shareholders.  The series A
convertible preferred stock automatically converts into common stock on a
one-to-one ratio upon the authorized capital stock of the Company being
increased to include not less than 150,000,000 shares of common
stock.  Under the Exchange Agreement, all options and convertible
notes to purchase or acquire shares of CelLynx-California were converted into
options and convertible notes to purchase or acquire shares of the Company in
the same proportion at which the CelLynx-California shares were converted into
Company shares (the “Conversion Ratio).  As a result, 750,000
CelLynx-California options with an exercise price of $0.018 per share were
converted into 943,447 Company options at an exercise price of $0.014 per share;
375,000 CelLynx-California options with an exercise price of $0.02 per share
were converted into 471,723 CelLynx-California options at an exercise price of
$0.016 per share; 23,394,133 CelLynx-California options with an exercise price
of $0.09 per share were converted into 29,428,164 Company options at an exercise
price of approximately $0.0715 per share; 18,330,574 CelLynx-California options
with an exercise price of $0.099 per share were converted into 23,058,565
Company options with an exercise price of approximately $0.0787 per share;
$40,000 of CelLynx-California convertible notes with a conversion price of $0.01
were converted into $40,000 of Company convertible notes with a conversion price
of $0.0079; $20,000 of CelLynx-California convertible notes with a conversion
price of $0.10 were converted into $20,000 of Company convertible notes with a
conversion price of $0.0795 per share; and $262,356 of CelLynx-California
convertible notes with a conversion price such that the note holder immediately
following the closing of the reverse take-over transaction would hold equal to
4.8% of the issued and outstanding common stock of the Company were converted
into Company convertible notes which are convertible into 6,340,029 shares of
the Company’s common stock.  As a result of the reverse take-over
transaction, the former shareholders of CelLynx-California became the Company’s
controlling shareholders and CelLynx-California became the Company’s
wholly-owned subsidiary.
 
 On July
21, 2008, the Company incorporated a wholly-owned subsidiary, CelLynx Group,
Inc., for the sole purpose of effecting a name change. On August 5, 2008, the
Company merged with CelLynx Group, Inc., with the Company as the surviving
corporation.  Upon completion of the merger, the Company’s name was
changed to CelLynx Group, Inc.
 
  F-22


SIGNATURES




Pursuant
to the requirements of section 13 or 15 (d) of the Securities Exchange Act
of 1934, the Registrant caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.




CELLYNX
      GROUP, INC.Dated:
      October 14, 2008
            By:
            /s/
      Daniel R. Ash
              
              Daniel R. Ash,
              President,
      Chief Executive Officer and Chief Operating
  Officer




Pursuant
to the requirements of the Securities and Exchange Act of 1934, this Report has
been signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.




Name
            
            Position
            
            Date/s/
      Daniel R. Ash
              Daniel R.
      Ash
            
            Director
      and Principal Executive Officer
            
            October
      14, 2008/s/
      Tareq Risheq
              Tareq
      Risheq
            
            Director
      and Chief Strategy Officer
            
            October
      14, 2008/s/
      Kevin Pickard
              Kevin
      Pickard
            
            Principal
      Financial and Accounting Officer
            
            October
      14, 2008/s/
      Robert J. Legendre
              Robert
      J. Legendre
            
            Director
            
            October
      14, 2008/s/
      Norman W. Collins
              Norman
      W. Collins
            
            Director
            
            October
      14, 2008