EMARINE GLOBAL INC. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - EMARINE GLOBAL INC.	Financial_Report.xls
EX-31.1 - EXHIBIT 31.1 - EMARINE GLOBAL INC.	ex311.htm
EX-32.2 - EXHIBIT 32.2 - EMARINE GLOBAL INC.	ex322.htm
EX-31.2 - EXHIBIT 31.2 - EMARINE GLOBAL INC.	ex312.htm
EX-32.1 - EXHIBIT 32.1 - EMARINE GLOBAL INC.	ex321.htm

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 March 31, 2012

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 April 15, 2012, 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		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

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


	March 31,			December 31,
	2012			2011
	(Unaudited)

ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	18,483		$	5,415
Total current assets		18,483			5,415

Property and equipment, net of accumulated
depreciation of $5,855 and $4,982, respectively		4,624			5,497

License agreements, net of accumulated
amortization of $5,418 and $2,188, respectively		125,082			98,312

OTHER ASSETS:
Prepaid royalty		10,000			30,000
Deposits		6,000			6,000
Total other assets		16,000			36,000

Total Assets	$	164,189		$	145,224

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accrued expenses and accounts payable	$	709,517		$	649,238
Amounts due to affiliate under service agreement		301,500			291,000
Advances from affiliate		134,556			114,556
Loans payable		1,218,800			1,153,734

Total Current Liabilities		2,364,373			2,208,528

Stockholders' Deficit
Common stock, authorized 300,000,000 shares;
par value $0.001; 5,121,688 and 5,121,688 issued and
outstanding at March 31, 2012 and December 31, 2011,
respectively		5,120			5,120
Additional paid-in capital		136,874,861			136,874,861
Accumulated deficit		(139,080,165	)		(138,943,285	)

Total Stockholders’ Deficit		(2,200,184	)		(2,063,304	)

Total Liabilities and Stockholders’ Deficit	$	164,189		$	145,224

See accompanying notes to financial statements.

POLLEX, INC.

STATEMENTS OF OPERATIONS
(UNAUDITED)

	For the three months ended
	March 31,
	2012			2011

REVENUES	$	17,920		$	22,406

COSTS AND EXPENSES
Cost of goods sold		-			-
Selling, general and administrative		78,840			47,985
Related party service agreement		60,000			-
Impairment of license agreements		-			20,000
Depreciation and amortization		4,103			997
Total Costs and Expenses		142,943			68,982

OPERATING LOSS		(125,023	)		(46,576	)

OTHER INCOME (EXPENSE)
Gain on license termination		5,000			-
Interest expense		(16,857	)		(11,608	)
Total Other Expense		(11,857	)		(11,608	)

LOSS BEFORE TAXES		(136,880	)		(58,184	)

PROVISION FOR INCOME TAXES		-			-

NET LOSS	$	(136,880	)	$	(58,184	)

NET LOSS PER COMMON SHARE (Basic and Diluted)	$	(0.03	)	$	(0.01	)

WEIGHTED AVERAGE SHARES
OUTSTANDING		5,121,688			5,013,540


See accompanying notes to financial statements.

POLLEX, INC.

STATEMENTS OF CASH FLOWS
(UNAUDITED)

	For the three months ended
	March 31,
	2012			2011

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(136,880	)	$	(58,184	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Gain on license termination		(5,000	)		-
Depreciation and amortization		4,103			997
Impairment of license agreements		-			20,000
Changes in assets and liabilities:
(Increase) decrease in receivable from affiliate		-			1,963
Increase (decrease) in accrued expenses		60,279			(8,893	)
Increase (decrease) in amounts due affiliate under service agreement		10,500			-

Net cash used in operating activities		(66,998	)		(44,117	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		-			(997	)
Proceeds from termination of license agreement		35,000			-
Acquisition of license agreement		(40,000	)		-

Net cash used in investing activities		(5,000	)		(997	)

CASH FLOWS FROM FINANCING ACTIVITIES
Advance from affiliate		20,000			-
Loan proceeds		69,500			90,000
Repayment of loan		(4,434	)		(33,990	)

Net cash provided by financing activities		85,066			56,010

Net increase in cash		13,068			10,896

CASH AT BEGINNING OF PERIOD		5,415			11,452

CASH AT END OF PERIOD	$	18,483		$	22,348

SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid for interest	$	-		$	-
Cash paid for taxes	$	-		$	-


See accompanying notes to financial statements.

POLLEX, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

March 31, 2012

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 months ended March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. 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, 2011.

NOTE B – GOING CONCERN

As shown in the accompanying consolidated financial statements, the Company incurred net losses of $136,880 and $58,184 for the three months ended March 31, 2012 and 2011, respectively, and has an accumulated deficit of $139,080,165 at March 31, 2012. Management’s plans include raising capital through the equity markets to fund future operations and generating 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 consolidated 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

During 2010, the Company acquired license agreements for 16 online games for use in South Korea. These agreements called for a total of $120,500 in license fees, $30,000 in nonrefundable royalty prepayments on two of the licenses and a $5,000 non refundable deposit on one of the licenses. The Company paid $73,750 of these fees during the nine months ended September 30, 2010 and will pay the remaining fees of $81,750 when the games are launched commercially. Each license also has a royalty fee which varies for each license. Future royalties will be offset against the $30,000 prepayment. The licenses have terms of 2 to 3 years, beginning when they are launched commercially.

In 2011, the licensor terminated two of these agreements due to the licensor’s inability to install and localize the game for the South Korean territory. These licenses were for $20,000, of which $10,000 was paid by the Company. The Company has determined that the possibility of realizing these license agreements or recovering those funds advanced is minimal due to the locality of the licensor in China. As such, the Company has concluded that these licenses are impaired and has written them off.

Also in 2011, the Company decided to dissolve two of the agreements due to problems in scheduling the launch dates. The Company did not pay any deposits to acquire licenses for these two games.

POLLEX, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

March 31, 2012

NOTE C – LICENSE AGREEMENTS

During 2012, the Company acquired an additional license agreement for $40,000, of which $20,000 was paid. The Company will pay the remaining fee when the game is launched commercially. The terms of this license are similar to the Company’s other license agreements

On March 9, 2012, the Company entered into a termination agreement relating to one of its license agreements. The license agreement had a carrying value of $10,000 and related prepaid revenue of $20,000. As part of the termination, the licensor paid the Company $35,000, plus VAT. The Company recognized a gain of $5,000 on the termination.

Amortization expense was $3,230 and $271 for the three months ended March 31, 2012 and 2011, respectively.

NOTE D – LOANS PAYABLE

The loans payable consists of borrowings from two notes. The terms of the promissory notes are one year and bears interest at an annual rate of 6%. The notes may be repaid at any time prior to its due date without a prepayment penalty, however if any amount of the principal plus accrued interest remains unpaid after the notes due date then the annual rate of interest increases to 10% per annum. During the three months ended March 31, 2012, the Company received proceeds of $69,500 from these borrowings and repaid $4,434 of these borrowings.

NOTE E – RELATED PARTY TRANSACTIONS

Certain expenses have been paid on behalf of the Company by Joytoto Korea. 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.

On March 21, 2011, the Company, entered into a Conversion and Release Agreement (the “Agreement”) with Joytoto Korea. Pursuant to the terms of the Agreement, the Company issued 166,666 shares of its common stock, valued at $11,667 on the agreement date, to Joytoto Korea in consideration for the cancellation of $20,000 owed to Joytoto Korea by the Company. The Company recorded this $20,000 debt cancellation as a capital transaction.

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 price determined by both parties and must be agreed by both parties. For the three months ended March 31, 2012 and 2011, $60,000 and $0, respectively, were recognized in the Statement of Operations under this agreement. At March 31, 2012 and December 31, 2011, $301,500 and $291,000, respectively, were due to Gameforyou, Incorporated under this agreement.

NOTE F- EMPLOYMENT AGREEMENTS

On March 21, 2011, the Company entered into three year employment agreements (the “Employment Agreements”) with each of Seong Yong Cho, its current President and Chief Executive Officer, and Seong Sam Cho, its current Chief Financial Officer, respectively. Pursuant to the terms of the Employment

POLLEX, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

March 31, 2012

NOTE F- EMPLOYMENT AGREEMENTS (Continued)

Agreements, Mr. Seong Yong Cho will continue to serve as President and Chief Executive Officer of the Company for an annual salary of $1.00 and Mr. Seong Sam Cho will continue to serve as Chief Financial Officer of the Company for an annual salary of $1.00. These employment agreement run through March 21, 2014.

NOTE G – WARRANTS

The following summarizes warrant activity for the three months ended March 31, 2012:

	Shares		Weighted Average Grant Date Fair Value
Outstanding, January 1, 2012		946,667	$	41.46
Granted		-		-
Forfeited		-		-
Expired		-		-
Exercised		-		-
Outstanding, March 31, 2012		946,667	$	41.46

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, as Web Views Corporation.

We are a majority owned subsidiary of Joytoto Co., Ltd. (“Joytoto Korea”). We had one wholly-owned subsidiary, Joyon Entertainment, Inc. (“JEI”), and had two sub-subsidiaries, Joytoto Technologies, Inc., a Nevada corporation (“JTI”) and Joytoto America, Inc., a California corporation (“JAI”), both of which were wholly-owned subsidiaries of JEI. Effective June 30, 2010, we, along with JEI, sold 100% of the issued and outstanding common stock of JAI to Joytoto Korea in exchange for the return and cancellation to us of 166,667 shares of our common stock held by Joytoto Korea. Effective August 6, 2010, JEI was dissolved. The Company is determined to focus on its Online Games business by acquiring new game licenses to provide commercial service of such games in South Korea and the United States.

Products and Services

Our operations are focused on Online Games. The Company has acquired licenses from various online game developers to use in South Korea. Our Online Games business segment has generated $17,920 for the fiscal quarter ended March 31, 2012.

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. Additional purchase methods such as credit cards and mobile phone payments are expected to be added in the future.

Online Games

As of March 31, 2012, the Company has acquired license agreements for 16 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. Three other titles that the Company has licensed are in closed beta testing and are expected to be available for full commercial service during the second quarter of 2012. The rest of the games are expected to be launched in consecutive succession soon afterward in each following quarter. For the game licenses, the Company was required to pay license fees of $120,500, ranging from $0 to $30,000 per game. For two games, the Company was required to prepay $30,000 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.

Licenses for four of the games referenced above were terminated by the Company due to differences in scheduling the launch dates. In total, the Company has paid $101,000 of these amounts and is required to make additional payments of $44,500. When these games are commercially operating, the Company will be required to split the revenue with the licensors.

In March of 2012, the Company entered into a termination agreement relating to one of the licenses. The Company received $35,000, plus value added tax, to terminate a license with a carrying value of $10,000 and related deposit of $20,000.

During March of 2012, the Company acquired an additional license agreement for $40,000, of which $20,000 was paid. The Company will pay the remaining fee when the game is launched commercially. This license agreement has a term of 2 years.

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.

Revenues, Expenses and Loss from Operations

Three months ended March 31, 2012 compared to three months ended March 31, 2011

Our revenues, selling, general and administrative expenses, depreciation, amortization, total costs and expenses, and net loss for the three months ended March 31, 2012 and for the three months ended March 31, 2011 are as follows:

	Three Months Ended March 31, 2012		Three Months Ended March 31, 2011

Revenue	$	17,920	$	22,406
Selling, general and administrative		78,840		47,985
Related party service agreement		60,000		-
Impairment of license agreements		-		20,000
Depreciation and amortization		4,103		997
Total costs and expenses		142,943		68,982
Other income - gain on license termination		5,000		-
Other expense - interest expense		(16,857)		(11,608)
Net Loss	$	136,880	$	58,184

For the three months ended March 31, 2012, we generated $17,920 in revenue compared to $22,406 for the three months ended March 31, 2011. The decrease of $ 4,486 or 20% was primarily due to less revenue generated from our online game, the Great Merchant.

For the three months ended March 31, 2012, our selling, general and administrative expenses of $78,840 consisted primarily of $11,250 in professional fees, $12,353 in rental expense and $21,090 in travel expense. For the three months ended March 31, 2011, our selling, general and administrative expenses of $47,985 consisted primarily of $10,850 in professional fees and $19,857 in rental expense. The increase of $30,855 or 64% in our selling, general and administrative expenses was primarily due to increased administrative expenses.

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 March 31, 2012, we had $142,943 in total costs and expenses compared to $68,982 for the three months ended March 31, 2011. The increase of $73,961 or 107% was primarily due to increased costs in selling, general and administrative costs and related party service agreement.

Net Loss

Our Net Loss for the three months ended March 31, 2012 was $136,880 compared to $58,184 for the three months ended March 31, 2011. The increase of $78,696 or 135% was primarily due to less revenue and increased selling, general and administrative expenses.

Other Expenses

Other Expenses for the three months ended March 31, 2012 consisted of $11,857. Other Expenses for the three months ended March 31, 2011 consisted of $11,608. The increase of $249 or 2% was primarily due to increase in interest expense of $5,249, offset by a gain of $5,000 recognized on the termination of one of the licenses.

Liquidity and Capital Resources

Introduction

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

During the three months ended March 31, 2012, our online games business segment generated $17,920 in total revenues while in its open beta testing and commercial service. We have not 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 March 31, 2012		As of December 31, 2011		Change
Cash	$	18,483	$	5,415	$	13,068
Total current assets		18,483		5,415		13,068
Property and equipment, net of accumulated depreciation of $4,109 and $1,577		4,624		5,497		(873	)
License Agreements		125,082		98,312		26,770
Prepaid Royalties		10,000		30,000		(20,000	)
Deposits		6,000		6,000		0
Total assets		164,189		145,224		18,965
Accrued expenses and accounts payable		709,517		649,238		60,279
Amounts due to due to affiliate under service agreement		301,500		291,000		10,500
Advances from affiliate		134,556		114,556		20,000
Loans payable		1,218,800		1,153,734		65,066
Total Current Liabilities		2,364,373		2,208,528		155,845

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 three months ended March 31, 2012, we had a net loss of $136,880 compared to $58,184 for the three months ended March 31, 2011. This was offset by depreciation and amortization of $4,103, an increase in accrued expenses of $60,279, an increase in amounts due to affiliate under service agreement of $10,500, and gain on license termination of $5,000 for total cash used in our operating activities of $66,998.

Investments

We had $5,000 invested in cash used in investment activities for the three months ended March 31, 2012, which relates to the proceeds from termination of a license agreement of $35,000 and the acquisition of a new license agreement of $40,000.

We had $997 invested in cash used in investment activities for the three months ended March 31, 2011, which relates to the purchase of property and equipment of $997 and the acquisition of license agreements of $0.

Financing

Our cash flows from financing activities totaled $85,066 from $69,500 in loan proceeds offset by $4,434 from an advance from affiliate of $20,000.

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.

Valuation of License Agreements

In 2007, the Company acquired the following license agreements:

·	On February 23, 2007, JAI entered into a license agreement with Joytoto Korea, for one game, Pang Pang Terrible, for consideration of $400,000. The license is for the United States of America territory and is for a term of 3 years.

On April 18, 2007, JAI entered into an exclusive North American Master License Agreement with Joytoto Korea and Joyon Korea. The license gives JAI the exclusive right to the use and commercialization of 4 game titles immediately, and the right to acquire no less than 20 additional game title licenses for no additional consideration. The term of the agreement is 10 years and allows for two 5 year extensions for additional consideration of $10,000. Upon execution of the Master License Agreement, JEI issued Joyon Korea 1,000,000 common shares as consideration. Prior to the acquisition of the Master License Agreement, JEI had an independent business valuation performed whereby the Company’s enterprise value was calculated to be $0.1799 per share. Accordingly, the shares issued for the license were valued at this amount.

On June 11, 2007, JTI entered into an Exclusive Distributorship Agreement with Joytoto Korea. The agreement provides that JTI has the worldwide, exclusive right to distribute, market, promote and sell Joytoto Korea’s current and future model MP3 player devices. As consideration for the Exclusive Distributorship Agreement, JEI issued Joytoto Korea 1,000,000 common shares. Prior to the acquisition of the Exclusive Distributorship Agreement the Company had an independent business valuation performed whereby the Company’s enterprise value was calculated to be $0.3562 per share. Accordingly, the shares issued for the license agreement were valued at this amount.

These license agreements were being amortized over their useful lives ranging from 3 to 10 years. The Company periodically evaluates the reasonableness of the useful lives of these intangible assets. In 2008 and 2009, these licenses were evaluated for impairment as follows:

At September 30, 2008, the Company reviewed its license agreements for impairment due to the deteriorating market for consumer goods in the US. At that time, the Company reviewed and adjusted its discounted cash flow projections. As a result of this assessment, the Company determined that the value of its license agreements was $5,000,000. As such, an impairment charge of $9,095,227 was recorded to reduce the carrying amount of the license agreements to this amount.

The Company reviewed its license agreements for impairment again at December 31, 2009 and determined that the license agreements were completely impaired and should be reduced to zero. Accordingly, the Company recognized an impairment loss of $4,227,975 in 2009. The Company reached this conclusion due to its inability to generate the revenues originally anticipated as well the difficulty in raising the necessary funds to develop and utilize the licenses due to the current difficult credit environment.

During 2010, the Company acquired license agreements for 16 online games for use in South Korea. These agreements called for a total of $120,500 in license fees, $30,000 in nonrefundable royalty prepayments on two of the licenses and a $5,000 non-refundable deposit on one of the licenses. The Company paid $73,750 of these fees as of March 31, 2012 and will pay the remaining fees of $81,750 when the games are launched commercially. Each license also has a royalty fee which varies for each license. Future royalties will be offset against the $30,000 prepayment. The licenses have terms of 2 to 3 years, beginning when they are launched commercially.

In 2011, the licensor terminated two of these agreements due to licensor’s inability to install and localize the game for the South Korean territory. These licenses were for $20,000, of which $10,000 was paid by the Company. The Company has determined that the possibility of realizing these license agreements or recovering those funds advanced is minimal due to the locality of the licensor in China As such, the Company has concluded that these licenses are impaired and has written them off.

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 and 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 March 31, 2012 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 and Chief Financial Officer have concluded that as of March 31, 2012, 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 Chief Executive Officer

31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

32.1		Chief Executive Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Chief Financial 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 March 31, 2012 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

** In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

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.

Dated: May 21, 2012	By:	/s/ Seong Yong Cho
		Seong Yong Cho
		Its: Chief Executive Officer (Principal Executive Officer)


	By:	/s/Seong Sam Cho
		Seong Sam Cho
		Its: Chief Financial Officer (Principal Financial and Accounting Officer)

EMARINE GLOBAL INC. - FORM 10-Q - May 18, 2012

Attached files

EMARINE GLOBAL INC. Reports