UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

 

x

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

 

For the quarterly period ended June 30, 2015

 

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: 000-49933

 

Pollex, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada (State or other jurisdiction of incorporation or organization)	95-4886472 (I.R.S. Employer Identification No.)
2005 De La Cruz Blvd. Suite 235 Santa Clara, CA (Address of principal executive offices)	95050 (Zip Code)

 

Registrant’s telephone number, including area code (408) 350-7340

 

(Former name, former address and former fiscal year, if changed since last report.)

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).           x Yes ¨ No.

 

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

 

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

(Do not check if a smaller reporting company)

 

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

 

Applicable only to corporate issuers:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 14, 2015, there were 5,121,688 shares of common stock, par value $0.001, issued and outstanding.

 

 

POLLEX, INC.

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION
ITEM 1	Financial Statements	3
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	9
ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	12
ITEM 4	Controls and Procedures	12
PART II – OTHER INFORMATION
ITEM 1	Legal Proceedings	12
ITEM 1A	Risk Factors	12
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	13
ITEM 3	Defaults Upon Senior Securities	13
ITEM 4	Mine Safety Disclosures	13
ITEM 5	Other Information	13
ITEM 6	Exhibits	13

 

 

PART I – FINANCIAL INFORMATION

 

This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading “Management’s Discussion and Analysis of Financial Condition or Plan of Operation.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider” or similar expressions are used.

 

Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. Our future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.

 

ITEM 1 Financial Statements

 

POLLEX, INC.

BALANCE SHEETS

 

		June 30,				December 31,
		2015				2014
		(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	4,241			$	4,329
Due from related party			70,352				53,423
Total current assets			74,593				57,752
Property and equipment, net of accumulated depreciation of $10,479 and $10,479 at June 30, 2015 and December 31, 2014, respectively			-				-
OTHER ASSETS:
Other Asset - Deposit			1,300				1,300
Total Assets		$	75,893			$	59,052
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable		$	509,854			$	506,093
Accrued expenses			447,368				398,943
Amounts due to affiliate under service agreement			1,131,000				1,011,000
Advances from affiliate			416,197				388,477
Loans payable			1,215,799				1,215,799
Total Current Liabilities			3,720,218				3,520,312
Stockholders' Deficit
Preferred Stock, authorized 10,000,000 shares; par value $0.001; none issued and outstanding at June 30, 2015 and December 31, 2014, respectively			-				-
Common stock, authorized 300,000,000 shares; par value $0.001; 5,121,688 issued and outstanding at June 30, 2015 and December 31, 2014, respectively			5,120				5,120
Additional paid-in capital			136,994,861				136,954,861
Accumulated deficit			(140,644,306	)			(140,421,241	)
Total Stockholders’ Deficit			(3,644,325	)			(3,461,260	)
Total Liabilities and Stockholders’ Deficit		$	75,893			$	59,052

 

See accompanying notes to financial statements.

 

 

POLLEX, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

 

		For the three months ended								For the six months ended
		June 30,								June 30,
		2015				2014				2015				2014
REVENUES		$	21,016			$	16,894			$	42,775			$	35,720
COSTS AND  EXPENSES
Cost of goods sold			-				-				-				586
Selling, general and administrative			55,910				78,967				109,666				149,773
Related party service agreement			60,000				60,000				120,000				120,000
Impairment of license agreements			-				70,000				-				70,000
Depreciation and amortization			-				5,082				-				10,188
Total Costs and Expenses			115,910				214,049				229,666				350,547
OPERATING LOSS			(94,894	)			(197,155	)			(186,891	)			(314,827	)
OTHER EXPENSE
Interest expense			(18,187	)			(18,998	)			(36,174	)			(36,166	)
Total Other Expense			(18,187	)			(18,998	)			(36,174	)			(36,166	)
LOSS BEFORE INCOME TAXES			(113,081	)			(216,153	)			(223,065	)			(350,993	)
PROVISION FOR INCOME TAXES			-				-				-				-
NET LOSS		$	(113,081	)		$	(216,153	)		$	(223,065	)		$	(350,993	)
NET LOSS PER COMMON SHARE (Basic and Diluted)		$	(0.02	)		$	(0.04	)		$	(0.04	)		$	(0.07	)
WEIGHTED AVERAGE SHARES OUTSTANDING			5,121,688				5,121,688				5,121,688				5,121,688

 

See accompanying notes to financial statements.

 

 

POLLEX, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

		For the six months ended
		June 30,
		2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(223,065	)		$	(350,993	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			-				10,188
Impairment of license agreements			-				70,000
Contributed Service			40,000				40,000
Changes in assets and liabilities:
(Increase) decrease in accounts receivable			-				(708	)
(Increase) decrease in receivable from affiliate			(16,929	)			(24,795	)
Increase (decrease) in accounts payable			3,761				-
Increase (decrease) in accrued expenses			48,425				69,551
Increase (decrease) in amounts due affiliate under service agreement			120,000				120,000
Net cash used in operating activities			(27,808	)			(66,757	)
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities			-				-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from advance from affiliate			28,720				75,200
Repayment of advance from affiliate			(1,000	)			(40,000	)
Loan proceeds			-				85,000
Repayment of loan			-				(28,896	)
Net cash provided by financing activities			27,720				91,304
Net increase (decrease) in cash			(88	)			24,547
CASH AT BEGINNING OF PERIOD			4,329				4,745
CASH AT END OF PERIOD		$	4,241			$	29,292
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest		$	-			$	-
Cash paid for taxes		$	-			$	-
Assumption of accounts receivable by lender		$	-			$	708

 

See accompanying notes to financial statements.

 

 

POLLEX, INC.

NOTES TO FINANCIAL STATEMENTS

June 30, 2015

(UNAUDITED)

 

NOTE A – BASIS OF PRESENTATION

 

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the financial statements not misleading have been included. Results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. For further information, refer to the financial statements and footnotes thereto included in the Pollex, Inc. annual report on Form 10-K for the year ended December 31, 2014. 

 

NOTE B – GOING CONCERN

 

As shown in the accompanying financial statements, the Company incurred net losses of $223,065 and $350,993 for the six months ended June 30, 2015 and 2014, respectively, had negative working capital of $3,645,625 at June 30, 2015 and had an accumulated deficit of $140,644,306 at June 30, 2015.  In order to fund future operations, the Company will need to raise capital through the equity markets and generate revenue through its license agreements. Failure to raise adequate capital and generate adequate sales revenues could result in the Company having to curtail or cease operations.  Additionally, even if the Company does raise sufficient capital to support its operating expenses and generate adequate revenues, there can be no assurances that the revenue will be sufficient to enable it to develop business to a level where it will generate profits and cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. However, the accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern. 

 

NOTE C – LICENSE AGREEMENTS

 

The Company’s license agreements consist of the following:

 

1.

On April 18, 2007, the Company entered into a master license agreement with Joytoto Korea granting the Company a 10 year license for up to 4 online games, including The Great Merchant. This license is renewable for two additional 5 year terms for $10,000. Prior to the launch of the Great Merchant in 2010, the Company determined that the master license agreement was fully impaired.

 

The Company began operating The Great Merchant, in open beta testing in January 2010. During the six months ended June 30, 2015 and 2014, the Company generated revenues of $42,775 and $35,012, respectively, from The Great Merchant.

 

2.

Beginning in 2010, the Company acquired licenses for online games in South Korea. Each license also has a royalty fee which varies for each license. The licenses have terms of 2 to 3 years, beginning when they are launched commercially. Under the license agreements, the Company is required to pay the licensor 24%- 25% of gross sales.

 

The Company engaged a Korea-based service provider to support and maintain the online games, and collect payments from customers.  Under this agreement the service provider is required to pay the Company 29% of gross sales.  For the six months ended June 30, 2015 and 2014, the Company billed such 29%, or $0 and $708, respectively. In June 2014, the Company decided to no longer utilize its’ licenses in South Korea and to focus on the Great Merchant and other gaming opportunities in the United States.

 

 

POLLEX, INC.

NOTES TO FINANCIAL STATEMENTS

June 30, 2015

(UNAUDITED)

 

NOTE D – RELATED PARTY TRANSACTIONS

 

Certain expenses have been paid on behalf of the Company by Joytoto Co., Ltd (“Joytoto Korea”), of which the Company is a majority owned subsidiary. The Company has recognized the expenses and corresponding payable to Joytoto Korea as due to affiliate. The advances are non-interest bearing and have no specific repayment date. During the six months ended June 30, 2015, the Company received proceeds of $28,720 and repaid $1,000. During the six months ended June 30, 2014, the Company received proceeds of $75,200 and repaid $40,000.

 

The Company has entered into a Service Agreement with Gameforyou, Incorporated, a wholly-owned subsidiary of Joytoto Korea. Under this agreement, Gameforyou, Incorporated provides translation, customer support, and system operations and maintenance. The Company is required to pay Gameforyou, Incorporated $10,000 in cash and $10,000 in cash or stock each month. Any issuance of stock will be at the market value or at a price determined and agreed to by both parties. For the six months ended June 30, 2015 and 2014, $120,000 and $120,000, respectively, were recognized in the Statement of Operations under this agreement. At June 30, 2015 and December 31, 2014, $1,131,000 and $1,011,000, respectively were due to Gameforyou, Incorporated.

 

During the year ended December 31, 2014, the Company began making purchases of computer equipment for resale by a related company, BCasual, Incorporated (“BCasual”.) During the year ended December 31, 2014, the Company made purchases of $177,045 on behalf of BCasual, of which $53,423 was due from BCasual at December 31, 2014. During the six months ended June 30, 2015, the Company made additional purchases of $107,341 and received payments of $90,412, resulting in a balance of $70,352 at June 30, 2015.

 

In June 2014, the Company entered a sublease agreement with BCasual for its’ existing office space. BCasual agreed to pay the Company $1,250 per month under this agreement.

 

NOTE E – LOANS PAYABLE

 

The loans payable consists of borrowings from two notes. The terms of the promissory notes are one year and bear interest at an annual rate of 6% and are unsecured. The notes may be repaid at any time prior to its due date without a prepayment penalty.

 

During the six months ended June 30, 2014, the Company received proceeds of $85,000 and repaid $28,896.

 

NOTE F - INCOME TAXES

 

At June 30, 2015 and December 31, 2014, the Company had unused net operating loss carryforwards of approximately $6,400,000 and $6,200,000, respectively, for income tax purposes, which expire between 2027 and 2035. The net operating loss carryforwards may result in future income tax benefits of approximately $2,170,000 and $2,108,000, respectively; however because realization is uncertain at this time, a valuation reserve in the same amount has been established. Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

 

 

POLLEX, INC.

NOTES TO FINANCIAL STATEMENTS

June 30, 2015

(UNAUDITED)

 

NOTE F - INCOME TAXES (Continued)

 

Significant components of the Company’s deferred tax liabilities and assets at June 30, 2015 and December 31, 2014 are as follows:

 

		June 30,				December 31,
		2015				2014
Deferred tax liabilities		$	-			$	-
Deferred tax asset-
Net operating loss carryforward			2,170,000				2,108,000
Valuation allowance			(2,170,000	)			(2,108,000	)
Net deferred tax asset		$	-			$	-

 

The income tax expense (benefit) differs from the amount computed by applying the United States statutory corporate income tax rate as follows:

 

		June 30,
		2015				2014
U.S statutory income tax rate			34	%			34	%
Change in valuation allowance of deferred tax assets			(34	)%			(34	)%
Net deferred tax asset			-	%			-	%

 

NOTE G- COMMITMENTS AND CONTINGENCIES

 

Property Leases:

 

On September 5, 2012, the Company signed a lease for office space in Santa Clara, California. The lease term is through September 30, 2015.  The Company made a deposit of $1,300 and the rent payments are $1,380 per month. In June 2014, the Company entered a sublease agreement with BCasual for its’ existing office space. BCasual agreed to pay the Company $1,250 per month under this agreement.

 

The minimum future lease commitment at June 30, 2015 on the above lease is $4,140, through September 30, 2015, exclusive of $3,750 in noncancelable subleases.

 

Employment Agreements:

 

On March 21, 2014, the Company entered into three year employment agreement Seong Sam Cho, to serve as Chief Executive Officer, President and Chairman for an annual salary of $1.00.

 

For the six months ended June 30, 2015 and 2014, the Company recorded $40,000 and $40,000, respectively, for the fair value of the services contributed by Seong Sam Cho.

 

 

ITEM 2     Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include, but are not limited to, international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

 

Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

 

Overview

 

Pollex, Inc., formerly Joytoto USA, Inc., formerly BioStem, Inc. (the “Company,” “we,” and “us”) was incorporated on November 2, 2001, in the State of Nevada, under the name “Web Views Corporation”.

 

We are a majority owned subsidiary of Joytoto Co., Ltd. (“Joytoto Korea”). We are determined to focus our efforts on our Online Games business by acquiring new game licenses and making such games commercially available in South Korea and the United States.

 

Our operations are focused on Online Games. We have acquired licenses from various online game developers to use in South Korea. Our Online Games business segment has generated $42,775 for the six months ended June 30, 2015.

 

The Company operates The Great Merchant under a master leasing agreement with Joytoto Korea. The Great Merchant is an economic based MMORPG (Massively Multiplayer Online Role Playing Game) online at http://www.thegreatmerchant.com.  While the game is free to play and there is no cost for users to purchase and connect to the game, the game prompts the user to use micro transactions to purchase in-game points that can be used in the game to further the in-game operations of their own character. Unlike different MMORPGs on the market, the Great Merchant player can advance through the game by trading online items and virtual goods. 

 

As of June 30, 2015, the Company entered into license agreements for 15 games for use in South Korea. These agreements allow the Company to release and service these games in South Korea.  The Company opened one of these games in South Korea under open beta testing on March 16, 2011. Open Beta testing allows users and players to test the game while not implementing the full revenue generating service of the game.  One of the games was launched commercially on July 14, 2012. 

 

In June 2014, the Company decided to no longer utilize its’ licenses in South Korea and to focus on the Great Merchant and other gaming opportunities in the US. As such, the licenses were written off and an impairment loss of $70,000 was recognized.

 

Revenues, Expenses and Loss from Operations

 

Three months ended June 30, 2015 compared to three months ended June 30, 2014

 

Our results of operations for the three months ended June 30, 2015 and for the three months ended June 30, 2014 are as follows:

 

		Three Months Ended  June 30, 2015				Three Months Ended  June 30, 2014
Revenue		$	21,016			$	16,894
Cost of services			-				-
Selling, general and administrative			55,910				78,967
Related party service agreement			60,000				60,000
Impairment of license agreements			-				70,000
Depreciation and amortization			-				5,082
Total costs and expenses			115,910				214,049
Other expense - interest expense			(18,187	)			(18,998	)
Net Loss		$	(113,081	)		$	(216,153	)

 

 

For the three months ended June 30, 2015, we generated $21,016 in revenue compared to $16,894 for the three months ended June 30, 2014.  The increase of $4,122 or 24.4% was primarily due to an increase in game revenue from the Great Merchant generated for the three months ended June 30, 2015.

 

For the three months ended June 30, 2015, our selling, general and administrative expenses of $55,910 consisted primarily of $28,410 in professional fees, $20,000 in contributed services and $7,500 in office expenses.  For the three months ended June 30, 2014, our selling, general and administrative expenses of $78,967 consisted primarily of $40,410 in professional fees, $20,000 in contributed services and $4,730 in rental expense. The decrease of $23,057 or 29.2% was primarily due to expense decrease in professional fees.

 

The related party service agreement is for services provided by a related party for game translation, customer support, and system operations and maintenance. The Company is required to pay $10,000 in cash and $10,000 in cash or stock each month.

 

Depreciation is of computers and other office furniture and equipment. The amortization relates to the in service license agreements. The impairment of license agreements relates to the cancellation of the game licenses discussed above.

 

For the three months ended June 30, 2015, we had $115,910 in total costs and expenses compared to $214,049 for the three months ended June 30, 2014.  The decrease of $98,139 or 45.8% was primarily due to impairment of license expense and depreciation and amortization.

 

Other Expenses for the three months ended June 30, 2015 consisted of $18,187. Other Expenses for the three months ended June 30, 2014 consisted of $18,998. The decrease of $811 or 4.3% was primarily due to less interest expense.

  

Our Net Loss for the three months ended June 30, 2015 was $113,081 compared to $216,153 for the three months ended June 30, 2014.  The decrease of $103,072 or 47.7% was primarily due to impairment of license agreements and depreciation and amortization.

 

Six months ended June 30, 2015 compared to six months ended June 30, 2014

 

Our results of operations for the six months ended June 30, 2015 and for the six months ended June 30, 2014 are as follows:

 

		Six Months Ended  June 30, 2015				Six Months Ended  June 30, 2014
Revenue		$	42,775			$	35,720
Cost of services			-				586
Selling, general and administrative			109,666				149,773
Related party service agreement			120,000				120,000
Impairment of license agreements			-				70,000
Depreciation and amortization			-				10,188
Total costs and expenses			229,666				350,547
Other expense - interest expense			(36,174	)			(36,166	)
Net Loss		$	(223,065	)		$	(350,993	)

 

For the six months ended June 30, 2015, we generated $42,775 in revenue compared to $35,720 for the six months ended June 30, 2014.  The increase of $7,055 or 19.8% was primarily due to an increase in game revenue from the Great Merchant.

 

For the six months ended June 30, 2015, our selling, general and administrative expenses of $109,666 consisted primarily of $55,880 in professional fees, $40,000 in contributed services, and $13,786 in office expenses.  For the six months ended June 30, 2014, our selling, general and administrative expenses of $149,773 consisted primarily of $57,599 in professional fees, $40,000 in contributed services, $22,504 in office expenses and $8,480 in rental expense.  The decrease of $40,107 or 26.8% was primarily due to a decrease in office expenses.

 

The related party service agreement is for services provided by a related party for game translation, customer support, and system operations and maintenance. The Company is required to pay $10,000 in cash and $10,000 in cash or stock each month.

 

Depreciation is of computers and other office furniture and equipment. The amortization relates to the in service license agreements. The impairment of license agreements relates to the cancellation of the game licenses discussed above.

 

Depreciation is of computers and other office furniture and equipment. The amortization relates to the in service license agreements.  The impairment of the license agreements relates to the cancellation of the game licenses discussed above.

 

For the six months ended June 30, 2015, we had $229,666 in total costs and expenses compared to $350,547 for the six months ended June 30, 2014.  The decrease of $120,881 or 34.5% was primarily due to decrease in selling general and administrative fees and less impairment of license agreements.

 

Other Expenses for the six months ended June 30, 2015 consisted of $36,174. Other Expenses for the six months ended June 30, 2014 consisted of $36,166, an increase of $8 or .1%.

 

  

 Our Net Loss for the six months ended June 30, 2015 was $223,065 compared to $350,993 for the six months ended June 30, 2014.  The decrease of $127,928 or 36.4% was primarily due to less fees and impairment of license agreements.

 

Liquidity and Capital Resources

 

Introduction

 

Our primary assets are cash and the amounts due from a related party from the purchase of computer equipment.

 

During the six months ended June 30, 2015, our online games business segment generated $42,775 in total revenues while in its open beta testing and commercial service. We have begun to generate revenue from our other license agreements.

 

Our cash requirements have been relatively small up to this point, but we anticipate that our cash needs will increase dramatically. We anticipate satisfying these cash needs through the sale of our common stock until we can generate enough revenue to sustain our operations.

 

		As of June 30, 2015				As of December 31, 2014				Change
Cash		$	4,241			$	4,329			$	(88	)
Due from related party			70,352				53,423				16,929
Total current assets			74,593				57,572				16,841
Property and equipment, net of accumulated depreciation of $10,479 and $10,479
Deposits			1,300				1,300				-
Total assets			75,893				59,052				16,841
Accounts payable			509,854				506,093				3,761
Accrued expenses			447,368				398,943				48,425
Due to affiliate			1,131,000				1,011,000				120,000
Advances from affiliate			416,197				388,477				27,720
Loans payable			1,215,799				1,215,799				-
Total Current Liabilities			3,720,218				3,520,312				199,906

 

Cash Requirements

 

As stated above, we anticipate that our cash requirements will increase substantially as we begin to increase operations to generate revenue from our license agreements.

 

Sources and Uses of Cash

 

Operations

 

For the six months ended June 30, 2015 we had a net loss of $223,065 compared to $350,993 for the six months ended June 30, 2014.  This was offset by contributed services of $40,000, an increase in accrued expenses of $48,425, an increase in amounts due to affiliate under service agreement of $120,000 for total cash used in our operating activities of $27,808.

 

Investments

 

We had $0 invested in cash used in investment activities for the three and six months ended June 30, 2015.

 

We had $0 invested in cash used in investment activities for the three and six months ended June 30, 2014.

 

Financing

 

For the six months ended June 30, 2015, our cash flows from financing activities totaled $27,720 from an advance from an affiliate of $28,720 offset by repayments of $1,000.

 

For the six months ended June 30, 2014, our cash flows from financing activities totaled $91,304 from an advance from an affiliate of $75,200, loan proceeds of $85,000, offset by $40,000 repayments of advance from an affiliate and loan repayments of $28,896.

 

 

We will be required to raise additional capital to continue the development and commercialization of our games and to continue to fund operations at the current cash expenditure levels. We cannot be certain that additional funding will be available on acceptable terms, or at all. Recently worldwide economic conditions and the international equity and credit markets have significantly deteriorated and may remain difficult for the foreseeable future. These developments will make it more difficult to obtain additional equity or credit financing, when needed. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact our ability to conduct delay, scale back or discontinue the development and/or commercialization of one or more of our gaming products.

 

Critical Accounting Policies

 

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. In consultation with our board of directors, we have identified the following accounting policies that we believe are key to an understanding of our financial statements. These are important accounting policies that require management’s most difficult, subjective judgments.

 

Revenue Recognition

 

Revenues are recognized when all of the following criteria have been met: persuasive evidence for an arrangement exists; delivery has occurred or services have been rendered; the fee is fixed or determinable; and collectability is reasonably assured.

 

Off-balance Sheet Arrangements

 

We have no off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is deemed by our management to be material to investors.

 

ITEM 3     Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

ITEM 4     Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We conducted an evaluation, with the participation of our Chief Executive Officer, who is also our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of June 30, 2015 to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission's rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer concluded that as of June 30, 2015, our disclosure controls and procedures were not effective at the reasonable assurance level.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

ITEM 1

Legal Proceedings

 

None.

 

ITEM 1A

Risk Factors

 

There are no material changes to the risk factors in our most recent Annual Report on Form 10-K.

 

 

ITEM 2

Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

ITEM 3

Defaults Upon Senior Securities

 

None.

 

ITEM 4

Mine Safety Disclosures.

 

Not applicable.

 

ITEM 5

Other Information

 

None.

 

ITEM 6

Exhibits

 

31.1		Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer and Principal Financial and Accounting Officer
32.1		Principal Executive Officer and Principal Financial and Accounting Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

SIGNATURES

 

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

 

	Pollex, Inc.
August 14, 2015
	By:	/s/Seong Sam Cho
		Seong Sam Cho
		Its: President, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer)