Emarine Global (EMRN) 10-Q 2013 Q3 Quarterly report

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, 2013

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 November 17, 2013, there were 5,121,688 shares of common stock, par value $0.001, issued and outstanding.

1

POLLEX, INC.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION		Page
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
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

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

	September 30,			December 31,
	2013			2012
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	7,410		$	3,836
Accounts receivable, net allowance for doubtful
doubtful accounts of $135,285 and $97,842 at
September 30, 2013 and December 31, 2012, respectively		-			-
Total current assets		7,410			3,836
Property and equipment, net of accumulated
depreciation of $10,161 and $8,475, at September 30, 2013
and December 31, 2012, respectively		318			2,004
License agreements, net of accumulated amortization of
$49,795 and $25,108 at September 30, 2013 and
December 31, 2012, respectively		102,705			127,392
OTHER ASSETS:
Prepaid royalty		10,000			10,000
Deposits		1,300			1,300
Total other assets		11,300			11,300
Total Assets	$	121,733		$	144,532
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accrued expenses and accounts payable	$	846,708		$	833,691
Amounts due to affiliate under service agreement		747,950			567,950
Advances from affiliate		248,156			134,556
Loans payable		1,299,300			1,299,300
Total Current Liabilities		3,142,114			2,835,497
Stockholders' Deficit
Common stock, authorized 300,000,000 shares;
par value $0.001; 5,121,688 issued and outstanding
at September 30, 2013 and December 31, 2012, respectively		5,120			5,120
Additional paid-in capital		136,874,861			136,874,861
Accumulated deficit		(139,900,362	)		(139,570,946	)
Total Stockholders’ Deficit		(3,020,381	)		(2,690,965	)
Total Liabilities and Stockholders’ Deficit	$	121,733		$	144,532

 See accompanying notes to financial statements.

4

POLLEX, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

	For the three months ended						For the nine months ended
	September 30,						September 30,
	2013			2012			2013			2012
REVENUES	$	23,563		$	69,829		$	101,312		$	104,921
COSTS AND  EXPENSES
Cost of services		6,891			50,959			30,718			50,959
Selling, general and administrative		22,574			48,650			97,887			176,833
Related party service agreement		60,000			60,000			180,000			180,000
Bad debt expense		8,932			-			37,442			-
Depreciation and amortization		8,651			9,104			26,373			17,310
Total Costs and Expenses		107,048			168,713			372,420			425,102
OPERATING LOSS		(83,485	)		(98,884	)		(271,108	)		(320,181	)
OTHER INCOME (EXPENSE)
Gain on license termination		-			-			-			5,000
Interest expense		(19,649	)		(19,707	)		(58,308	)		(55,329	)
Total Other Expense		(19,649	)		(19,707	)		(58,308	)		(50,329	)
LOSS BEFORE INCOME TAXES		(103,134	)		(118,591	)		(329,416	)		(370,510	)
PROVISION FOR INCOME TAXES		-			-			-			-
NET LOSS	$	(103,134	)	$	(118,591	)	$	(329,416	)	$	(370,510	)
NET LOSS PER COMMON SHARE (Basic and Diluted)	$	(0.02	)	$	(0.02	)	$	(0.06	)	$	(0.07	)
WEIGHTED AVERAGE SHARES
OUTSTANDING		5,121,668			5,121,688			5,121,668			5,121,688

See accompanying notes to financial statements.

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POLLEX, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

	For the nine months ended
	September 30
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(329,416	)	$	(370,510	)
Adjustments to reconcile net loss to net cash
used in continuing operating activities:
Gain on license termination		-			(5,000	)
Depreciation and amortization		26,373			17,310
Bad debt expense		37,442			-
Changes in assets and liabilities:
(Increase) decrease in accounts receivable		(37,442	)		(61,180	)
Increase (decrease) in accrued expenses		13,017			106,139
Increase (decrease) in amounts due affiliate under service agreement		180,000			137,250
Net cash used in operating activities		(110,026	)		(175,991	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from termination of license agreement		-			35,000
Acquisition of license agreements		-			(40,000	)
Net cash used in investing activities		-			(5,000	)
CASH FLOWS FROM FINANCING ACTIVITIES
Advance from Affiliate		113,600			20,000
Loan proceeds		-			167,500
Repayment of loan		-			(4,434	)
Net cash provided by financing activities		113,600			183,066
Net increase in cash		3,574			2,075
CASH AT BEGINNING OF PERIOD		3,836			5,415
CASH AT END OF PERIOD	$	7,410		$	7,490
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest		-			-
Cash paid for taxes		-			-

See accompanying notes to financial statements.

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POLLEX, INC.

NOTES TO FINANCIAL STATEMENTS

September 30, 2013

(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, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. For further information, refer to the consolidated financial statements and footnotes thereto included in the Pollex, Inc. annual report on Form 10-K for the year ended December 31, 2012.

NOTE B – GOING CONCERN

As shown in the accompanying financial statements, the Company incurred net losses of $329,416 and $370,510 for the nine months ended September 30, 2013 and 2012, respectively, and has an accumulated deficit of $139,900,362 at September 30, 2013.  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 consolidated 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 online game, The Great Merchant, in open beta testing in January 2010. During the nine months ended September 30, 2013 and 2012, the Company generated revenues of $63,521 and $43,741, respectively, from this beta testing.

The Company has a total of 5 active license agreements that were acquired for use in South Korea. These agreements called for a total of $152,500 in license fees and $10,000 in nonrefundable royalty prepayments. Each license also has a royalty fee which varies for each license. Future royalties will be offset against the $10,000 prepayment. The licenses have terms of 2 to 3 years, beginning when they are launched commercially.

The Company engaged a Korea-based service provider to support and maintain the online game, 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, 2013, the Company billed such 29%, or $37,443.  For the nine months ended September 30, 2013, the Company was billed $30,718 by the licensor on these games.

Amortization expense related to those licenses was $24,687 and $8,230 for the nine months ended September 30, 2013 and 2012, respectively.

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POLLEX, INC.

NOTES TO FINANCIAL STATEMENTS

September 30, 2013

(UNAUDITED)

NOTE D – LOANS PAYABLE

The loans payable consists of borrowings from two individual noteholders. The terms of each promissory note is one year and bears interest at an annual rate of 6% and are unsecured. The notes may be repaid at any time prior to their due date without a prepayment penalty. During the nine months ended September 30, 2012, the Company received proceeds of $167,500 from these borrowings and repaid $4,434 of these borrowings. During the nine months ended September 30, 2013, no amounts were borrowed or repaid.

NOTE E – 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, 2013 and 2012, the Company received proceeds of $113,600 and $20,000, respectively, from these borrowings. No amounts were repaid during these periods.

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, 2013 and 2012, $180,000 and $180,000, respectively, were recognized in the Statement of Operations under this agreement. At September 30, 2013 and December 31, 2012, $747,950 and $567,950, respectively were due to Gameforyou, Incorporated.

NOTE F- EMPLOYMENT AGREEMENTS

On March 21, 2011, the Company entered into a three year employment agreement with Seong Sam Cho to serve as Chief Financial Officer.  On December 4, 2012, Seong Sam Cho was appointed as the Company’s Chief Executive Officer, President and Chairman. Pursuant to the term of the employment agreement, Mr. Seong Sam Cho receives an annual salary of $1.00. The employment agreement runs through March 21, 2014.

8

POLLEX, INC.

NOTES TO FINANCIAL STATEMENTS

September 30, 2013

(UNAUDITED)

NOTE G – WARRANTS

Warrant activity for the nine months ended September 30, 2013 is as follows:

	Shares		Weighted Average Grant Date Fair Value
Outstanding, January 1, 2013		946,667	$	41.46
Granted		-		-
Forfeited		-		-
Expired		-		-
Exercised		-		-
Outstanding, September 30, 2013		946,667	$	41.46

The weighted average remaining contractual life and exercise price of the warrants outstanding and exercisable at September 30, 2013 was 1.09 years and $4.95, respectively. The intrinsic value of the warrants outstanding and exercisable at September 30, 2013 was $0 as the exercise price exceeded the stock price.

9

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 $23,563 and $101,312 for the three and nine months ended September 30, 2013, respectively.

  As of September 30, 2013, 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 in July 14, 2012.   The remainder of the games are expected to be launched in consecutive succession in the fourth quarter of 2013.

The Company engaged a Korea-based service provider to support and maintain the online game and collect payments from customers. Under this agreement, the service provider is required to pay the Company 29% of gross sales.  For the three and nine months ended September 30, 2013, the Company billed 29%, $20,602 and $37,443, respectively.  The remaining revenues were generated from the Company's online game, the Great Merchant, which has been in beta testing since 2010.

Revenues, Expenses and Loss from Operations

 Three months ended September 30, 2013 compared to three months ended September 30, 2012

Our revenues, selling, general and administrative expenses, depreciation, amortization, total costs and expenses, and net loss for the three months ended September 30, 2013 and for the three months ended September 30, 2012 are as follows:

	Three Months Ended  September 30, 2013		Three Months Ended  September 30, 2012
Revenue	$	23,563	$	68,829
Cost of goods sold		6,891		50,959
Selling, general and administrative		22,574		48,650
Related party service agreement		60,000		60,000
Bad debt expense Depreciation and amortization		8,932 8,651		- 9,104
Total costs and expenses		107,048		168,713
Other expense - interest expense		(19,649)		(19,707)
Net Loss	$	103,134	$	118,591

10

For the three months ended September 30, 2013, we generated $23,563 in revenue compared to $68,829 for the three months ended September 30, 2012.  The decrease of $45,266 or 66% 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, 2013, our selling, general and administrative expenses of $22,574 consisted primarily of $7,500 in professional fees and $3,750 in rental expense.  For the three months ended September 30, 2012, our selling, general and administrative expenses of $48,650 consisted primarily of $11,350 in professional fees and $12,889 in rental expense.  The decrease of $26,076 or 54% was primarily due to less professional fees and rental expense.

 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.

 The allowance for doubtful accounts represents management’s best estimate of the amount of probable credit losses. The Company has determined that all amounts billed to the game service provider are uncollectible as none of the amounts had been paid, the Company has granted extended payment terms, and the ultimate collection of the receivables is not certain.

 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, 2013, we had $107,048 in total costs and expenses compared to $168,713 for the three months ended September 30, 2012.  The decrease of $61,665 or 37% was primarily due to decreased costs in our selling, general and administrative fees.

Other Expenses for the three months ended September 30, 2013 consisted of $19,649. Other Expenses for the three months ended September 30, 2012 consisted of $19,707. The decrease of $58 or 1% was primarily due to no change in our interest expense.

Net Loss

 Our Net Loss for the three months ended September 30, 2013 was $103,134 compared to $118,591 for the three months ended September 30, 2012.  The decrease of $15,457 or 13% was primarily due to less selling, general and administrative fees and less costs of goods sold.

 Nine months ended September 30, 2013 compared to nine months ended September 30, 2012

Our revenues, selling, general and administrative expenses, depreciation, amortization, total costs and expenses, and net loss for the nine months ended September 30, 2013 and for the nine months ended September 30, 2012 are as follows:

11

	Nine months Ended September 30, 2013			Nine months Ended September 30, 2012
Revenue	$	101,312		$	104,921
Cost of services		30,718			50,959
Selling, general and administrative		97,887			176,833
Related party service agreement		180,000			180,000
Bad debt expense		37,442			-
Depreciation and amortization		26,373			17,310
Total costs and expenses		372,420			425,102
Other income – gain on license termination					5,000
Other expense - interest expense		(58,308	)		(53,329	)
Net Loss	$	(329,416	)	$	(370,510	)

For the nine months ended September 30, 2013, we generated $101,312 in revenue compared to $104,921 for the nine months ended September 30, 2012.  The decrease of $3,609 or 3% was primarily due to less revenue generated from our online games.

For the nine months ended September 30, 2013, our selling, general and administrative expenses of $97,887 consisted primarily of $33,750 in professional fees and $11,336 in rental expense.  For the nine months ended September 30, 2012, our selling, general and administrative expenses of $176,833 consisted primarily of $68,700 in professional fees, $23,940 in travel expense and $55,665 in rental expense.  The decrease of $78,946 or 45% was primarily due to was primarily due to less professional fees and rental expense.

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.

 The allowance for doubtful accounts represents management’s best estimate of the amount of probable credit losses. The Company has determined that all amounts billed to the game service provider are uncollectible as none of the amounts had been paid, the Company has granted extended payment terms, and the ultimate collection of the receivables is not certain.

            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, 2013, we had $372,420 in total costs and expenses compared to $425,102 for the nine months ended September 30, 2012.  The decrease of $52,682 or 12% was primarily due to decreased costs in our selling, general and administrative fees.

Other Expenses for the nine months ended September 30, 2013 consisted of $58,308. Other Expenses for the nine months ended September 30, 2012 consisted of interest expense of $53,329 and a gain on license termination of $5,000. The decrease of $21 or 1% was primarily due to decreased costs in our selling, general and administrative fees.

Net Loss

 Our Net Loss for the nine months ended September 30, 2013 was $329,416 compared to $370,510 for the nine months ended September 30, 2012.  The decrease of $41,094 or 11% was primarily due to decreased costs in our selling, general and administrative fees.

Liquidity and Capital Resources

 Introduction

 Our primary assets are cash and the online game license agreements.

During the nine months ended September 30, 2013, our online games business segment generated $101,312 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.

12

	As of September 30, 2013		As of December 31, 2012		Change
Cash	$	7,410	$	3,836	$	3,574
Accounts receivable, net of allowance for doubtful accounts of $135,285 and $97,842		-		-
Total current assets		7,410		3,836		3,574
Property and equipment, net of accumulated depreciation of $10,161 and $8,475		318		2,004		(1,686)
License Agreements, net of accumulated amortization of $49,795 and $25,108		102,705		127,392		(24,687)
Prepaid Royalties		10,000		10,000		0
Deposits		1,300		1,300		0
Total assets		121,733		144,532		(22,799)
Accrued expenses and accounts payable		846,708		833,691		13,017
Due to affiliate under service agreement		747,950		567,950		180,000
Advances from affiliate		248,156		134,556		113,600
Loans payable		1,299,300		1,299,300		0
Total Current Liabilities		3,142,114		2,835,497		306,617

 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, 2013 we had a net loss of $329,416 compared to $370,510 for the nine months ended September 30, 2012.  This was offset by depreciation and amortization of $24,687, an increase in accrued expenses of $13,017, an increase in amounts due to affiliate under service agreement of $180,000 for total cash used in our operating activities of $110,026.

 Investments

We had $0 invested in cash used in investment activities for the three and nine months ended September 30, 2013.

We had $5,000 invested in cash used in investment activities for the nine months ended September 30, 2012, which relates to the proceeds from termination of a license agreement.

 Financing

For the nine months ended September 30, 2013, our cash flows from financing activities totaled $113,600 from an advance from an affiliate.

For the nine months ended September 30, 2012, our cash flows from financing activities totaled $183,066 from an advance from an affiliate of $20,000, loan proceeds of $167,500, offset by loan repayments of $4,434.

 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.

13

 Valuation of License Agreements

As of September 30, 2013, 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 in July 14, 2012.   The remainder of the games are expected to be launched in consecutive succession in the fourth quarter of 2013.

For the game licenses, the Company was required to pay aggregate license fees of $152,500, ranging from $0 to $30,000 per game.  For one of the games, the Company was required to prepay $10,000 in non-refundable deposits which can be used for future commission payments.  For one game, the Company was required to make a $5,000 non-refundable deposit. 

 The Company engaged a Korea-based service provider to support and maintain the online game 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, 2013, the Company billed 29%, or $37,433.

  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, 2013 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, 2013, 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.

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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.
101	The following materials from Pollex, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 are formatted in XBRL (eXtensible Business Reporting Language):  (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Cash Flow, (iii) the Consolidated Balance Sheets, and (iv) Notes to Consolidated Financial Statements tagged as blocks of text.

EX-101.INS	XBRL INSTANCE DOCUMENT
EX-101.SCH	XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
EX-101.CAL	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
EX-101.DEF	XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
EX-101.LAB	XBRL TAXONOMY EXTENSION LABELS LINKBASE
EX-101.PRE	XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

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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.
November 18, 2013
	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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