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, 2017

 

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

(Do not check if a smaller reporting company)

Emerging growth company  ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

 

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 July 12, 2017, there were 999,433 shares of common stock, par value $0.001, issued and outstanding.

   

     
     

 

POLLEX, INC.

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION  
     
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 12
     
ITEM 4 Controls and Procedures 13
     
PART II – OTHER INFORMATION  
     
ITEM 1 Legal Proceedings 13
     
ITEM 1A Risk Factors 13
     
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

 

  2  
     

 

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.

  

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ITEM 1 Financial Statements

 

POLLEX, INC.

 

BALANCE SHEETS

 

    June 30        
    2017     December 31  
    (Unaudited)     2016  
             
ASSETS                
                 
CURRENT ASSETS                
Cash and cash equivalents   $ 8,582     $ 9,160  
                 
Total Current Assets     8,582       9,160  
                 
Deposit     1,300       1,300  
                 
Total Assets   $ 9,882     $ 10,460  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
                 
CURRENT LIABILITIES                
Accounts payable   $ -     $ 118,134  
Accrued expenses     10,173       621,397  
Amounts due to affiliate under service agreement     -       1,440,387  
Advances from affiliate     -       707,756  
Loans payable     -       1,215,799  
                 
Total Current Liabilities     10,173       4,103,473  
                 
Stockholders' Deficit                
Preferred stock, authorized 10,000,000 shares; par value $0.001; none issued and outstanding     -       -  
Common stock, authorized 300,000,000 shares; par value $0.001; 999,433 issued and outstanding at June 30, 2017 and $0.001; 17,072 issued and outstanding at December 31, 2016.   999       17  
Additional paid-in capital     141,330,608       137,119,964  
Accumulated deficit     (141,331,898 )     (141,212,994 )
                 
Total Stockholders’ Deficit     (291 )     (4,093,013 )
                 
Total Liabilities and Stockholders’ Deficit   $ 9,882     $ 10,460  

 

See accompanying notes to financial statements.

 

  4  
     

  

POLLEX, INC.

 

STATEMENTS OF OPERATIONS

(UNAUDITED)

 

    For the three months ended     For the six months ended  
    June 30,     June 30,  
    2017     2016     2017     2016  
                         
REVENUES   $ 57,022     $ 44,907     $ 100,483     $ 79,042  
                                 
COSTS AND EXPENSES                                
Selling, general and administrative     59,390       97,876       109,211       128,103  
Related party service agreement     40,000       60,000       100,000       120,000  
Total Costs and Expenses     99,390       157,876       209,211       248,103  
                                 
OPERATING LOSS     (42,368 )     (112,969 )     (108,728 )     (169,061 )
                                 
OTHER EXPENSE                                
Interest expense     (12,191 )     (18,187 )     (30,178 )     (36,374 )
Total Other Expense     (12,191 )     (18,187 )     (30,178 )     (36,374 )
                                 
LOSS BEFORE INCOME TAXES     (54,559 )     (131,156 )     (138,906 )     (205,435 )
                                 
PROVISION FOR INCOME TAXES     -       -       -       -  
                                 
NET LOSS   $ (54,559 )   $ (131,156 )   $ (138,906 )   $ (205,435 )
                                 
NET LOSS PER COMMON SHARE (Basic and Diluted)   $ (0.22 )   $ (7.68 )   $ (1.05 )   $ (12.03 )
                                 
WEIGHTED AVERAGE SHARES  OUTSTANDING     246,290       17,072       131,681       17,072  

 

See accompanying notes to financial statements.

 

  5  
     

  

POLLEX, INC.

 

STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

    For the six months ended June 30,  
    2017     2016  
             
CASH FLOWS FROM OPERATING ACTIVITIES                
Net loss   $ (138,906 )   $ (205,435 )
Adjustments to reconcile net loss to net cash provided by operating activities:                
Contributed Service     33,333       40,000  
Changes in assets and liabilities:              
Increase (decrease) in accrued expenses     35,494       84,388  
Increase (decrease) in amounts due affiliate under service agreement     100,000       120,000  
Net cash provided by operating activities     29,921       38,953  
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Repayment of advance from affiliate     (30,500 )     (35,962 )
                 
Net cash used in financing activities     (30,500 )     (35,962 )
                 
Net (decrease) increase in cash and cash equivalents     (579 )     2,991  
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR     9,160       5,922  
                 
CASH AND CASH EQUIVALENTS AT END OF YEAR   $ 8,581     $ 8,913  
                 
SUPPLEMENTAL CASH FLOW DISCLOSURES:                
Accounts payable settled by stock issuances   $ 71,250     $ -  
Payables to affiliates settled by stock issuances   $ 2,395,156     $ -  
Loans and accrued interest settled by stock issuances   $ 1,744,971     $ -  

 

See accompanying notes to financial statements.

 

  6  
     

 

POLLEX, INC.

NOTES TO FINANCIAL STATEMENTS

June 30, 2017

 

NOTE A – BASIS OF PRESENTATION

 

The accompanying unaudited interim condensed financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q and article 10 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures included in these financial statements are adequate to make the information presented not misleading. The unaudited interim condensed financial statements included in this document have been prepared on the same basis as the annual audited financial statements, and in the Company’s opinion, reflect all adjustments necessary for a fair presentation in accordance with GAAP and SEC regulations for interim financial statements. The results for the three and six months ended June 30, 2017 are not necessarily indicative of the results that the Company will have for any subsequent period. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes to those statements for the year ended December 31, 2016 included in the Company’s Annual Report on Form 10-K.

 

NOTE B – GOING CONCERN

 

As shown in the accompanying financial statements, the Company incurred net losses of $138,906 and $205,435 for the six months ended June 30, 2017 and 2016, respectively, had negative working capital of $291 at June 30, 2017 and had an accumulated deficit of $141,331,898 at June 30, 2017. 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, 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 began operating The Great Merchant in September 2011. During the six months ended June 30, 2017 and 2016, the Company generated revenues of $100,483 and $79,042, respectively, from The Great Merchant.

 

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. At June 30, 2017 and December 31, 2016, $0 and $707,756 respectively were due to Joytoto Korea. At June 9, 2017 the Company entered into a loan conversion agreement with Joytoto Korea to satisfy the debts of $695,588 through the issuance of 162,255 restricted shares of common stock of the Company.

 

  7  
     

 

POLLEX, INC.

NOTES TO FINANCIAL STATEMENTS

June 30, 2017

 

NOTE D – RELATED PARTY TRANSACTIONS (continued)

 

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, 2017 and 2016, $40,000 and $60,000, respectively, were recognized in the Statement of Operations under this agreement. At June 30, 2017 and December 31, 2016, $0 and $1,440,387 respectively were due to Gameforyou, Incorporated. At June 9, 2017, the Company entered into a loan conversion agreement with Gameforyou, Incorporated to satisfy the debts of $1,699,620 through the issuance of 396,459 restricted shares of common stock of the Company. The debt consists of borrowings of $1,535,387 and accounts payable of $164,233. This service agreement has expired as of June 30, 2017 and will not be renewed. See Note I for further discussion into the loan conversion agreement that occurred at June 9, 2017.

 

NOTE E – LOANS PAYABLE

 

The loans payable consists of unsecured 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 and are callable upon demand.

 

At June 9, 2017 the Company entered into a loan conversion agreement with the debtors to satisfy the debts in aggregate of $1,744,919 through the issuance of 407,026 restricted shares of common stock of the Company. These borrowings consisted of interest of $529,120 and principal of $1,215,799 on the two notes. See Note I for further discussion into the loan conversion agreement that occurred at June 9, 2017.

 

NOTE F – INCOME TAXES

 

At June 30, 2017 and December 31, 2016, the Company had unused net operating loss carryforwards of approximately $7,130,000 and $6,990,000, respectively, for income tax purposes, which expire between 2027 and 2037. The net operating loss carryforwards may result in future income tax benefits of approximately $2,424,000 and $2,377,000, 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.

 

Significant components of the Company’s deferred tax liabilities and assets at June 30, 2017 and December 31, 2016 are as follows:

 

    June  30,     December 31,  
    2017     2016  
Deferred tax asset-                
Net operating loss carryforward     2,424,000       2,377,000  
Valuation allowance     (2,424,000 )     (2,377,000 )
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,  
    2016     2015  
U.S statutory income tax rate     34 %     34 %
Change in valuation allowance of deferred tax assets     (34 )%   (34 )%
Net deferred tax asset     - %     - %

 

  8  
     

 

POLLEX, INC.

NOTES TO FINANCIAL STATEMENTS

June 30, 2017

 

NOTE G – COMMITMENTS AND CONTINGENCIES

 

Property Leases:

 

On October 1, 2016, the Company signed a month-to-month lease with rent payments of $3,255. 

 

Employment Agreements:

 

On March 21, 2014, the Company entered into three-year employment agreement through March 21, 2017 with Mr. Seong Sam Cho, to serve as Chief Executive Officer, President and Chairman for an annual salary of $1.00. On April 6, 2017, the Company entered into a new one year employment agreement through April 6, 2018 with Mr. Seong Sam Cho, to serve as Chief Executive Officer, President and Chairman for an annual salary of $80,000. For the six months ended June 30, 2017 and 2016, the Company recorded $33,333 and $40,000, respectively, for the fair value of the services contributed by Seong Sam Cho. Services include development and implementation of the Company’s strategy, ensure that Company is organized and risks are monitored and managed, and effective communication with shareholders and the public.

 

NOTE H – EARNINGS (NET LOSS) PER SHARE

 

In accordance with ASC 260, basic earnings per share are computed by dividing net earnings available to common shareholders (the numerator) by the weighted average number of common shares (the denominator) for the period presented. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued. There were no dilutive or potentially dilutive financial instruments issued or outstanding for the periods ended June 30, 2017 and 2016.

 

NOTE I – ISSUANCE OF SHARES

 

On June 9, 2017, the Company entered into Loan Conversion Agreements and Debt Cancellation Agreements with certain lenders and debtholders pursuant to which outstanding loans and debt were exchanged for common stock of the Company. Gameforyou Inc., a related party, was issued 396,459 restricted shares of common stock of the Company to satisfy the debts of $1,699,620 with a $4.20 value. AK Interactive Co. Ltd., a related party, was issued 196,860 restricted shares of common stock of the Company to satisfy the debts of $843,939 with a $4.20 value. Joytoto Korea, a related party, was issued 162,255 restricted shares of common stock of the Company to satisfy the debts of $695,588 with a $4.20 value. Mr. Seung Han Shin was issued 210,166 restricted shares of common stock of the Company to satisfy the debts of $900,980 with a $4.20 value. Sichenzia Ross Ference Kesner, LLP was issued 16,620 restricted shares of common stock of the Company to satisfy the debts of $71,250 with a $4.20 value. A total aggregate amount due of $4,211,377 was discharged in exchange for an aggregate of 982,360 shares of common stock of the Company. All of the shares above have not been registered under the Securities Act of 1933, as amended, or any other applicable state securities laws, restricting their ability to be sold, transferred or assigned.

 

On June 22, 2017, the Company filed a certificate of amendment to its articles of incorporation with the State of Nevada effectuating a reverse split of the Company’s common stock at a ratio of 1 for 300. The Reverse Split became effective in the State of Nevada on July 12, 2017. The holders of a majority of the shares of common stock of the Company had previously approved the Reverse Split on June 8, 2017. All share numbers reflected in the unaudited financial statements are post-split figures; all per share data was also retroactively restated.

 

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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. Our online games business segment has generated $100,483 for the six months ended June 30, 2017.

 

Our major online game business is The Great Merchant. The online game is operating at its website http://www.thegreatmerchant.com. The website operated in open beta testing on January 2010. The game opened for full commercial service on September 1, 2011. The Great Merchant is a free-to-play MMO (Massively Multiplayer Online) PC game. Players can download the game for free from our website and interact with other players in the game to trade, fight, and explore the game world. The game is set in 14th century Asia with Korea, China, Taiwan, and Japan as the main explorable countries. As a free-to-play game, the Great Merchant offers micro-transactions through PayPal which players can purchase in game currency (GP) to further their character and purchase items to increase their character’s abilities and in-game looks. We anticipate that other purchase methods such as credit cards and mobile phone payments will be added in the future.

 

  Revenues, Expenses and Loss from Operations

 

Three months ended June 30, 2017 compared to three months ended June 30, 2016

 

Our results of operations for the three months ended June 30, 2017 and for the three months ended June 30, 2016 are as follows:

 

    Three Months
Ended 
June 30, 2017 		    Three Months
Ended 
June 30, 2016 		 
             
Revenue   $ 57,022     $ 44,907  
Selling, general and administrative     59,390       97,876  
Related party service agreement     40,000       60,000  
Total costs and expenses     99,390       157,876  
Other expense - interest expense     (12,191 )     (18,187 )
Net Loss   $ (54,559 )   $ (131,156 )

 

For the three months ended June 30, 2017, we generated $57,002 in revenue compared to $44,907 for the three months ended June 30, 2016.  The increase of $12,115 or 27% was primarily due to increase in revenue from our online games due to increased amounts in player spending and increased organic growth of players.

 

  10  
     

 

For the three months ended June 30, 2017, our selling, general and administrative expenses of $59,390 consisted primarily of $33,630 in professional fees, $13,333 in contributed services and $12,427 in office expenses.  For the three months ended June 30, 2016, our selling, general and administrative expenses of $97,876 consisted primarily of $57,845 in professional fees, $20,000 in contributed services and $20,031 in office expenses. The decrease of $38,486 or 39% was primarily due to less professional fees, office expense, and contributed service.

 

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.

 

For the three months ended June 30, 2017, we had $99,390 in total costs and expenses compared to $157,876 for the three months ended June 30, 2016.  The decrease of $58,486 or 37% was primarily due to an increase in revenue and decrease in selling, general and administrative fees.

 

Other Expenses for the three months ended June 30, 2017 consisted of $12,191. Other Expenses for the three months ended June 30, 2016 consisted of $18,187. The decrease of $5,996 or 33% was primarily due to a decrease in interest from loans.

   

Our Net Loss for the three months ended June 30, 2017 was $54,559 compared to $131,156 for the three months ended June 30, 2016.  The decrease of $76,597 or 43% was primarily due to the decrease in selling, general and administrative fees.

 

Six months ended June 30, 2017 compared to six months ended June 30, 2016

 

Our results of operations for the six months ended June 30, 2017 and for the six months ended June 30, 2016 are as follows:

 

    Six Months
Ended 
June 30, 2017 		    Six Months
Ended 
June 30, 2016 		 
             
Revenue   $ 100,483     $ 79,042  
Selling, general and administrative     109,211       128,103  
Related party service agreement     100,000       120,000  
Total costs and expenses     209,211       248,103  
Other expense - interest expense     (30,178 )     (36,374 )
Net Loss   $ (138,906 )   $ (205,435 )

 

For the six months ended June 30, 2017, we generated $100,483 in revenue compared to $79,042 for the six months ended June 30, 2016.  The increase of $21,441 or 27% was primarily due to due to increase in revenue from our online games due to increased amounts in player spending and increased organic growth of players.

 

For the six months ended June 30, 2017, our selling, general and administrative expenses of $109,211 consisted primarily of $53,685 in professional fees, $33,333 in contributed services, and $22,193 in office expenses.  For the six months ended June 30, 2016, our selling, general and administrative expenses of $128,103 consisted primarily of $64,565 in professional fees, $40,000 in contributed services, and $23,538 in office expenses.  The decrease of $18,892 or 15% was primarily due to less professional fees and less contributed services.

 

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.

 

For the six months ended June 30, 2017, we had $209,211 in total costs and expenses compared to $248,103 for the six months ended June 30, 2016.  The decrease of $38,892 or 16% was primarily due to the decrease in selling, general and administrative fees.

 

Other Expenses for the six months ended June 30, 2017 consisted of $30,178. Other Expenses for the six months ended June 30, 2016 consisted of $36,374, a decrease of $6,196 or 17% due to less interest in loans.

  

Our Net Loss for the six months ended June 30, 2017 was $138,906 compared to $205,435 for the six months ended June 30, 2016.  The decrease of $66,529 or 32% was primarily due to the increase in revenue from our online game offset by less selling, general and administrative fees.

 

Liquidity and Capital Resources

 

Introduction

 

Our primary asset is cash and cash equivalents.

 

During the six months ended June 30, 2017, our online games business segment generated $100,483 in total revenues while in commercial service.

 

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.

 

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    As of
June 30, 2017 		    As of
December 31,
2016 		    Change  
Cash and cash equivalents   $ 8,582     $ 9,160     $ 578  
Total current assets     8,582       9,160       578  
Deposits     1,300       1,300       0  
Total assets     9,882       10,460       578  
Accounts payable     -       118,134       118,134  
Accrued expenses     10,173       621,397       611,224  
Due to affiliate under service agreement     -       1,440,387       1,440,387  
Advances from affiliate     -       707,756       707,756  
Loans payable     -       1,215,799       1,215,799  
Total Current Liabilities     10,173       4,103,473       4,103,473  

 

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, 2017, we had a net loss of $138,906 compared to $205,435 for the six months ended June 30, 2016.  This was offset by a decrease in contributed service of $33,333, a decrease in accrued expenses of $35,494 and a decrease in amounts due to affiliate under service agreement of $100,000 for total cash used in our operating activities of $29,921.

 

Investments

 

We had no cash used in provided by investment activities for the six months ended June 30, 2017 and June 30, 2016.

 

Financing

 

For the six months ended June 30, 2017, our cash flows from financing activities totaled $30,500 from repayment of advance from affiliate. 

 

For the six months ended June 30, 2016, our cash flows from financing activities totaled $35,962 from repayment of advance from affiliate. 

 

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.

 

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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, 2017 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, 2017, 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

 

During the quarter ended June 30, 2017, the Company entered into Loan Conversion Agreements with certain lenders and debtholders pursuant to which outstanding loans and debt were exchanged for common stock of the Company. A total aggregate amount due of $4,140,126.34 and debt owed of $71,250 was discharged in exchange for an aggregate of 294,707,931 shares of common stock of the Company.

 

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.

 

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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.
     
July 24, 2017    
  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)

 

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