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 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.
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.
|
|
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.