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 September 30, 2015

 

¨   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 ¨

 

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 ¨   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 November 13, 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		3
ITEM 1	Financial Statements	4
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	10
ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	14
ITEM 4	Controls and Procedures	14
PART II – OTHER INFORMATION		15
ITEM 1	Legal Proceedings	15
ITEM 1A	Risk Factors	15
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	15
ITEM 3	Defaults Upon Senior Securities	15
ITEM 4	Mine Safety Disclosures	15
ITEM 5	Other Information	15
ITEM 6	Exhibits	15

 

  

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

 

			September 30,				December 31,
			2015				2014
			(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents			$	12,057			$	4,329
Due from related party				67,102				53,423
Total Current Assets				79,159				57,752
Property and equipment, net of accumulated depreciation of $10,479 and $10,479 at September 30, 2015 and December 31, 2014, respectively				-				-
Other asset - Deposit				1,300				1,300
Total Assets			$	80,459			$	59,052
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable			$	510,174			$	506,093
Accrued expenses				468,255				398,943
Amounts due to affiliate under service agreement				1,191,000				1,011,000
Advances from affiliate				416,197				388,477
Loans payable				1,215,799				1,215,799
Total Current Liabilities				3,801,425				3,520,312
Stockholders' Deficit
Preferred stock, authorized 10,000,000 shares; par value $0.001; none issued and outstanding at September 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 September 30, 2015 and December 31, 2014, respectively				5,120				5,120
Additional paid-in capital				137,014,861				136,954,861
Accumulated deficit				(140,740,947	)			(140,421,241	)
Total Stockholders’ Deficit				(3,720,966	)			(3,461,260	)
Total Liabilities and Stockholders’ Deficit			$	80,459			$	59,052

 

See accompanying notes to financial statements.

 

 

POLLEX, INC.

 

STATEMENTS OF OPERATIONS

(UNAUDITED)

  

		For the three months ended								For the nine months ended
		September 30,								September 30,
		2015				2014				2015				2014
REVENUES		$	23,086			$	24,905			$	65,861			$	60,625
COSTS AND EXPENSES
Cost of goods sold			-				-				-				586
Selling, general and administrative			41,340				71,098				151,006				220,871
Related party service agreement			60,000				60,000				180,000				180,000
Impairment of license agreements			-				-				-				70,000
Depreciation and amortization			-				-				-				10,188
Total Costs and Expenses			101,340				131,098				331,006				481,645
OPERATING LOSS			(78,254	)			(106,193	)			(265,145	)			(421,020	)
OTHER EXPENSE
Interest expense			(18,387	)			(17,944	)			(54,561	)			(54,110	)
Total Other Expense			(18,387	)			(17,944	)			(54,561	)			(54,110	)
LOSS BEFORE INCOME TAXES			(96,641	)			(124,137	)			(319,706	)			(475,130	)
PROVISION FOR INCOME TAXES			-				-				-				-
NET LOSS		$	(96,641	)		$	(124,137	)		$	(319,706	)		$	(475,130	)
NET LOSS PER COMMON SHARE (Basic and Diluted)		$	(0.02	)		$	(0.02	)		$	(0.06	)		$	(0.09	)
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 nine months ended September 30,
		2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(319,706	)		$	(475,130	)
Adjustments to reconcile net loss to net cash used in continuing operating activities:
Depreciation and amortization			-				10,188
Impairment of license agreements			-				70,000
Contributed Service			60,000				60,000
Changes in assets and liabilities:
(Increase) decrease in accounts receivable			-				(708	)
(Increase) decrease in receivable from affiliate			(13,679	)			(7,363	)
Increase (decrease) in account payable			4,081				-
Increase (decrease) in accrued expenses			69,312				76,797
Increase (decrease) in amounts due affiliate under service agreement			180,000				180,000
Net cash used in operating activities			(19,992	)			(86,216	)
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 in cash			7,728				5,088
CASH AT BEGINNING OF PERIOD			4,329				4,745
CASH AT END OF PERIOD		$	12,057			$	9,833
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

September 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 nine months ended September 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 $319,706 and $475,130 for the nine months ended September 30, 2015 and 2014, respectively, had negative working capital of $3,722,266 at September 30, 2015 and had an accumulated deficit of $140,740,947 at September 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 nine months ended September 30, 2015 and 2014, the Company generated revenues of $65,861 and $59,917, 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 nine months ended September 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

September 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 nine months ended September 30, 2015, the Company received proceeds of $28,720 and repaid $1,000. During the nine months ended September 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 nine months ended September 30, 2015 and 2014, $180,000 and $180,000, respectively, were recognized in the Statement of Operations under this agreement. At September 30, 2015 and December 31, 2014, $1,191,000 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 nine months ended September 30, 2015, the Company made additional purchases of $131,091 and received payments of $117,412, resulting in a balance of $67,102 at September 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 nine months ended September 30, 2014, the Company received proceeds of $85,000 and repaid $28,896.

 

NOTE F - INCOME TAXES

 

At September 30, 2015 and December 31, 2014, the Company had unused net operating loss carryforwards of approximately $6,500,000 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 $2,196,000 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

September 30, 2015

(UNAUDITED)

 

NOTE F - INCOME TAXES (Continued)

 

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

 

		September 30,				December 31,
		2015				2014
Deferred tax liabilities		$	-			$	-
Deferred tax asset-
Net operating loss carryforward			2,196,000				2,108,000
Valuation allowance			(2,196,000	)			(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:

 

		September 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, 2016.  The Company made a deposit of $1,300 and the rent payments are $1,480 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 September 30, 2016 on the above lease is $17,760, through September 30, 2015, exclusive of $11.250 in noncancelable subleases.

 

Employment Agreements:

 

On March 21, 2014, the Company entered into a 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 nine months ended September 30, 2015 and 2014, the Company recorded $60,000 and $60,000, 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 $65,861 for the nine months ended September 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 September 30, 2015, the Company has 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 September 30, 2015 compared to three months ended September 30, 2014

 

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

 

		Three Months Ended  September 30, 2015				Three Months Ended  September 30, 2014
Revenue		$	23,086			$	24,905
Cost of goods sold			-				-
Selling, general and administrative			41,340				71,098
Related party service agreement			60,000				60,000
Impairment of license agreements			-				-
Depreciation and amortization			-				-
Total costs and expenses			101,340				131,098
Other expense - interest expense			18,387				17,944
Net Loss		$	96,641			$	124,137

 

For the three months ended September 30, 2015, we generated $23,086 in revenue compared to $24,905 for the three months ended September 30, 2014.  The decrease of $1,819 or 7% was primarily due to less revenue generated from our online games.

 

The costs of services represent the Company's payments to the licensor for the online games which are active. These games began operating in the third quarter of 2012.

 

For the three months ended September 30, 2015, our selling, general and administrative expenses of $41,340 consisted primarily of $16,470 in professional fees, $20,000 in contributed services and $4,870 in office expenses.  For the three months ended September 30, 2014, our selling, general and administrative expenses of $71,098 consisted primarily of $29,160 in professional fees, $20,000 in contributed services, and $3,750 in rental expense. The decrease of $29,758 or 42% was primarily due to less services and 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 the license agreements relates to the cancellation of the game licenses discussed above.

 

For the three months ended September 30, 2015, we had $101,340 in total costs and expenses compared to $131,098 for the three months ended September 30, 2014.  The decrease of $29,758 or 23% was primarily due to less selling general and administrative fees.

 

Other Expenses for the three months ended September 30, 2015 consisted of $18,387. Other Expenses for the three months ended September 30, 2014 consisted of $17,944. The increase of $443 or 2% was primarily due to less interest expense.

 

 Our Net Loss for the three months ended September 30, 2015 was $96,641 compared to $124,137 for the three months ended September 30, 2014.  The decrease of $27,496 or 22% was primarily due to decrease in selling and administrative expenses.

 

 

Nine months ended September 30, 2015 compared to nine months ended September 30, 2014

 

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

 

		Nine Months Ended  September 30, 2015				Nine Months Ended  September 30, 2014
Revenue		$	65,861			$	60,625
Cost of goods sold			-				586
Selling, general and administrative			151,006				220,871
Related party service agreement			180,000				180,000
Impairment of license agreements							70,000
Depreciation and amortization							10,188
Total costs and expenses			331,006				481,645
Other expense - interest expense			54,561				54,110
Net Loss		$	319,706			$	475,130

 

For the nine months ended September 30, 2015, we generated $65,861 in revenue compared to $60,625 for the nine months ended September 30, 2014.  The increase of $5,236 or 9% was primarily due to increase in revenue generated from our online game sales.

 

For the nine months ended September 30, 2015, our selling, general and administrative expenses of $151,006 consisted primarily of $72,350 in professional fees, $60,000 in contributed services, and $18,656 in office expenses.  For the nine months ended September 30, 2014, our selling, general and administrative expenses of $220,871 consisted primarily of $86,759 in professional fees, $34,359 in office expense, $60,000 in contributed services and $12,230 in rental expense.  The decrease of $69,865 or 32% was primarily due to decrease in office fees.

 

The related party service agreement are 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 the license agreements relates to the cancellation of the game licenses discussed above.

 

For the nine months ended September 30, 2015, we had $331,006 in total costs and expenses compared to $481,645 for the nine months ended September 30, 2014.  The decrease of $150,639 or 31% was primarily due to decrease in selling, general, and administrative fees and less impairment of license agreements.

 

Other Expenses for the nine months ended September 30, 2015 consisted of $54,561. Other Expenses for the nine months ended September 30, 2014 consisted of $54,110. The increase of $451 or 1% was primarily due to increase in interest expense.

 

 Our Net Loss for the nine months ended September 30, 2015 was $319,706 compared to $475,130 for the nine months ended September 30, 2014.  The decrease of $155,424 or 33% was primarily due to decrease in selling, general, and administrative fees and impairment of license agreements.

 

 

Liquidity and Capital Resources

 

 Introduction

 

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

 

 During the nine months ended September 30, 2015, our online games business segment generated $65,861 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 September 30, 2015				As of December 31, 2014				Change
Cash		$	12,057			$	4,329			$	7,728
Due from related party			67,102				53,423				13,679
Total current assets			79,159				57,752				21,407
Property and equipment, net of accumulated depreciation of $10,479 and $10,479
Deposits			1,300				1,300				0
Total assets			80,459				59,052				21,407
Accounts payable			510,174				506,093				4,081
Accrued expenses			468,255				398,943				69,312
Due to affiliate			1,191,000				1,011,000				180,000
Advances from affiliate			416,197				388,477				27,720
Loans payable			1,215,799				1,215,799				0
Total Current Liabilities			3,801,425				3,520,312				281,113

 

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 nine months ended September 30, 2015 we had a net loss of $319,706 compared to $475,130 for the nine months ended September 30, 2014.  This was offset by contributed services of $60,000, an increase in accrued expenses of $69,312 and an increase in amounts due to affiliate under service agreement of $180,000 for total cash used in our operating activities of $19,992.

 

Investments

 

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

 

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

 

 

Financing

 

For the nine months ended September 30, 2015, our cash flows from financing activities totaled $27,720 from $28,720 in net cash from proceeds advances from affiliate offset by $1000 in repayment of advance from affiliate.

 

For the nine months ended September 30, 2014, our cash flows from financing activities totaled $91,304 from loan proceeds.

 

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 September 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 September 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.
November 19, 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)