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FRZT Freeze Tag Inc (PK)

0.0098
0.0023 (30.67%)
Last Updated: 17:55:01
Delayed by 15 minutes
Share Name Share Symbol Market Type
Freeze Tag Inc (PK) USOTC:FRZT OTCMarkets Common Stock
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.0023 30.67% 0.0098 0.007 0.009 0.0098 0.0098 0.0098 5,000 17:55:01

Form 10-Q - Quarterly report [Sections 13 or 15(d)]

14/11/2024 10:00pm

Edgar (US Regulatory)


  

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

 

     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2024

 

     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: 000-54267

 

FREEZE TAG, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

20-4532392

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

360 E 1st Street, #450

Tustin, California

 

92780

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code (714) 210-3850

 

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 ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated Filer

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 ☒

 

Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:

 

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐     No ☐

 

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 14, 2024, there were 75,056,123 shares of common stock, $0.00001 par value, issued and outstanding.

 

 

 

 

FREEZE TAG, INC. 

TABLE OF CONTENTS

QUARTER ENDED SEPTEMBER 30, 2024

 

PART I – FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Condensed Consolidated Financial Statements

 

4

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

16

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

19

 

Item 4.

Controls and Procedures

 

19

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

20

 

Item 1A.

Risk Factors

 

20

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

20

 

Item 3.

Defaults Upon Senior Securities

 

20

 

Item 4.

Mine Safety Disclosures

 

20

 

Item 5.

Other Information

 

20

 

Item 6.

Exhibits

 

21

 

 

 
2

Table of Contents

 

PART I – FINANCIAL INFORMATION

 

The accompanying condensed, consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions for Form 10-Q. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements.

 

In the opinion of management, the condensed, consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented.

 

The results for the period ended September 30, 2024 are not necessarily indicative of the results of operations for the full year. These condensed, consolidated financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission on April 1, 2024.

 

 
3

Table of Contents

 

FREEZE TAG, INC.

(A DELAWARE CORPORATION)

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

September 30,

2024

 

 

December 31,

2023

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash

 

$139,570

 

 

$383,362

 

Accounts receivable

 

 

20,401

 

 

 

20,298

 

Prepaid expenses and other current assets

 

 

18,258

 

 

 

20,108

 

Total current assets

 

 

178,229

 

 

 

423,768

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

3,884

 

 

 

10,875

 

Capitalized software, net

 

 

453,036

 

 

 

522,084

 

Other assets

 

 

1,603

 

 

 

853

 

 

 

 

 

 

 

 

 

 

Total assets

 

$636,752

 

 

$957,580

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$150,510

 

 

$143,842

 

Accrued expenses

 

 

501,801

 

 

 

489,639

 

Unearned royalties

 

 

7,543

 

 

 

7,543

 

Notes payable – related party, current portion

 

 

379,825

 

 

 

379,825

 

Notes payable, current portion

 

 

5,356

 

 

 

10,569

 

Total current liabilities

 

 

1,045,035

 

 

 

1,031,418

 

 

 

 

 

 

 

 

 

 

Notes payable, net of current portion

 

 

150,000

 

 

 

152,686

 

Other long-term liabilities

 

 

-

 

 

 

5,812

 

Total liabilities

 

 

1,195,035

 

 

 

1,189,916

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

 

 

 

 

 

Preferred stock, $0.00001 par value, 10,000,000 shares authorized:

 

 

 

 

 

 

 

 

Series B; 2,480,482 shares issued and outstanding

 

 

25

 

 

 

25

 

Series C; 4,355,000 shares issued and outstanding

 

 

44

 

 

 

44

 

Common stock; $0.00001 par value, 800,000,000 shares authorized, 75,056,123 shares issued and outstanding

 

 

751

 

 

 

751

 

Additional paid-in capital

 

 

9,357,327

 

 

 

9,328,813

 

Common stock payable

 

 

16,800

 

 

 

16,800

 

Accumulated deficit

 

 

(9,933,230 )

 

 

(9,578,769 )

Total stockholders’ deficit

 

 

(558,283 )

 

 

(232,336 )

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ deficit

 

$636,752

 

 

$957,580

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements

 

 
4

Table of Contents

 

FREEZE TAG, INC. 

(A DELAWARE CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

     2024

 

 

     2023

 

 

     2024

 

 

     2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$532,637

 

 

$533,229

 

 

$1,514,159

 

 

$1,624,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

112,425

 

 

 

100,872

 

 

 

329,606

 

 

 

294,233

 

Selling, general and administrative expenses

 

 

447,175

 

 

 

469,817

 

 

 

1,506,069

 

 

 

1,366,810

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating costs and expenses

 

 

559,600

 

 

 

570,689

 

 

 

1,835,675

 

 

 

1,661,043

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(26,963)

 

 

(37,460)

 

 

(321,516)

 

 

(36,900)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(11,032)

 

 

(11,108)

 

 

(32,945)

 

 

(34,307)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other expense

 

 

(11,032)

 

 

(11,108)

 

 

(32,945)

 

 

(34,307)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$(37,995)

 

$(48,568)

 

$(354,461)

 

$(71,207)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic

 

 

75,056,123

 

 

 

75,056,123

 

 

 

75,056,123

 

 

 

75,056,123

 

Weighted average number of common shares outstanding - diluted

 

 

75,056,123

 

 

 

75,056,123

 

 

 

75,056,123

 

 

 

75,056,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per common share – basic and diluted

 

$0.00

 

 

$0.00

 

 

$0.00

 

 

$0.00

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements

 

 
5

Table of Contents

  

FREEZE TAG, INC. 

(A DELAWARE CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

 

 

Series B

Preferred Stock

 

 

Series C

Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Common

Stock

 

 

Retained

Earnings

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Payable

 

 

(Deficit)

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2023

 

 

2,480,482

 

 

$25

 

 

 

4,355,000

 

 

$44

 

 

 

75,056,123

 

 

$751

 

 

$9,328,813

 

 

$16,800

 

 

$(9,578,769)

 

$(232,336)

Imputed interest on related party debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,470

 

 

 

-

 

 

 

-

 

 

 

9,470

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(218,098)

 

 

(218,098)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2024

 

 

2,480,482

 

 

$25

 

 

 

4,355,000

 

 

$44

 

 

 

75,056,123

 

 

$751

 

 

$9,338,283

 

 

$16,800

 

 

$(9,796,867)

 

$(440,964)

Imputed interest on related party debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,470

 

 

 

-

 

 

 

-

 

 

 

9,470

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(98,368)

 

 

(98,368)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2024

 

 

2,480,482

 

 

$25

 

 

 

4,355,000

 

 

$44

 

 

 

75,056,123

 

 

$751

 

 

$9,347,753

 

 

$16,800

 

 

$(9,895,235)

 

$(529,862)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imputed interest on related party debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,574

 

 

 

-

 

 

 

-

 

 

 

9,574

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(37,995)

 

 

(37,995)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2024

 

 

2,480,482

 

 

$25

 

 

 

4,355,000

 

 

$44

 

 

 

75,056,123

 

 

$751

 

 

$9,357,327

 

 

$16,800

 

 

$(9,933,230)

 

$(558,283)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2022

 

 

2,480,482

 

 

$25

 

 

 

4,355,000

 

 

$44

 

 

 

75,056,123

 

 

$751

 

 

$9,290,829

 

 

$16,800

 

 

$(9,373,571)

 

$(65,122)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imputed interest on related party debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,367

 

 

 

-

 

 

 

-

 

 

 

9,367

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(47,841)

 

 

(47,841)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2023

 

 

2,480,482

 

 

$25

 

 

 

4,355,000

 

 

$44

 

 

 

75,056,123

 

 

$751

 

 

$9,300,196

 

 

$16,800

 

 

$(9,421,412)

 

$(103,596)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imputed interest on related party debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,469

 

 

 

-

 

 

 

-

 

 

 

9,469

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

25,202

 

 

 

25,202

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2023

 

 

2,480,482

 

 

$25

 

 

 

4,355,000

 

 

$44

 

 

 

75,056,123

 

 

$751

 

 

$9,309,665

 

 

$16,800

 

 

$(9,396,210)

 

$(68,925)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imputed interest on related party debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,574

 

 

 

-

 

 

 

-

 

 

 

9,574

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(48,568)

 

 

(48,568)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2023

 

 

2,480,482

 

 

$25

 

 

 

4,355,000

 

 

$44

 

 

 

75,056,123

 

 

$751

 

 

$9,319,239

 

 

$16,800

 

 

$(9,444,778)

 

$(107,919)

 

The accompanying notes are an integral part of the condensed consolidated financial statements

 

 
6

Table of Contents

 

FREEZE TAG, INC. 

(A DELAWARE CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Nine Months Ended

September 30,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$(354,461)

 

$(71,207)

Adjustments to reconcile net income to net cash (used) provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

76,039

 

 

 

14,663

 

Imputed interest expense

 

 

28,514

 

 

 

28,410

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(103)

 

 

(6,738)

Prepaid expenses and other current assets

 

 

1,850

 

 

 

(6,194)

Other assets

 

 

(750)

 

 

-

 

Accounts payable

 

 

6,668

 

 

 

(9,904)

Accrued expenses

 

 

6,850

 

 

 

1,878

 

Other

 

 

(500)

 

 

2,164

 

 

 

 

 

 

 

 

 

 

Net cash used by operating activities

 

 

(235,893)

 

 

(46,928)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capitalized software costs

 

 

-

 

 

 

(182,133)

 

 

 

 

 

 

 

 

 

Net cash used by investing activities

 

 

-

 

 

 

(182,133)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payments on notes payable

 

 

(7,899)

 

 

(7,672)

 

 

 

 

 

 

 

 

 

Net cash used by financing activities

 

 

(7,899)

 

 

(7,672)

 

 

 

 

 

 

 

 

 

Net decrease in cash

 

 

(243,792)

 

 

(236,733)

Cash at the beginning of the period

 

 

383,362

 

 

 

741,163

 

 

 

 

 

 

 

 

 

 

Cash at the end of the period

 

$139,570

 

 

$504,430

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure:

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$1,500

 

 

$1,500

 

Cash paid for interest expense

 

$1,458

 

 

$438

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements

 

 
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FREEZE TAG, INC.

(A DELAWARE CORPORATION)

Notes to Condensed Consolidated Financial Statements

Nine Months Ended September 30, 2024

(Unaudited)

 

NOTE 1 – THE COMPANY AND NATURE OF BUSINESS

 

Nature of Operations

 

Freeze Tag, Inc. (“Freeze Tag” or the “Company”) is a leading creator of mobile location-based games for consumers and businesses. The Company also offers gaming technology and services to businesses that want to leverage mobile gaming in their marketing and branding programs.

 

Beginning in the quarter ended March 31, 2020, our wholly-owned subsidiary, Space Coast Geo Store, LLC, a Florida limited liability company, sells merchandise to the geocaching industry. The LLC was filed with the State of Florida on September 3, 2019. 

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in its financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates and these differences may be material.

 

Revenue Recognition

 

The Company’s revenues are derived primarily by licensing software products in the form of mobile games for smartphone and tablet platforms. Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

 

We determine revenue recognition through the following steps:

 

 

·

identification of the contract, or contracts, with a customer;

 

·

identification of the performance obligations in the contract;

 

·

determination of the transaction price;

 

·

allocation of the transaction price to the performance obligations in the contract; and

 

·

recognition of revenue when, or as, we satisfy a performance obligation.

 

 
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Property and Equipment

 

Property and equipment is stated at cost and is depreciated or amortized using the straight-line method over the estimated useful life of the related asset as follows:

 

Vehicle

 

5 years

Computer equipment

 

5 years

Office furniture and equipment

 

7 years

 

Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments will be capitalized. At the time of retirement or other disposition of equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.

 

The Company will assess the recoverability of property and equipment by determining whether the depreciation and amortization of these assets over their remaining life can be recovered through projected undiscounted future cash flows. The amount of equipment impairment, if any, will be measured based on fair value and is charged to operations in the period in which such impairment is determined by management.

 

Intangible Assets

 

Intangible assets consist primarily of intellectual property, customer base and non-compete agreements acquired in 2017, which are amortized on a straight-line basis over their estimated useful lives of 5 years. Intangible assets are reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

 

Income Taxes

 

We account for income taxes using ASC Topic 740, Income Taxes (“ASC Topic 740”). Under ASC Topic 740, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

ASC Topic 740 includes accounting guidance which clarifies the accounting for the uncertainty in recognizing income taxes in an organization by providing detailed guidance for financial statement recognition, measurement and disclosure involving uncertain tax positions. This guidance requires an uncertain tax position to meet a more-likely-than-not recognition threshold at the effective date to be recognized both upon the adoption of the related guidance and in subsequent periods.

 

The Company has no uncertain tax positions at any of the dates presented.

 

Stock-Based Compensation

 

The Company accounts for stock-based compensation in accordance with ASC Topic 718-10, Compensation-Stock Compensation and ASC Subtopic 505-50, Equity-Based Payments to Non-Employees. Stock-based compensation expense recognized during the requisite services period is based on the value of share-based payment awards after reduction for estimated forfeitures. Forfeitures are estimated at the time of grant and are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

 

 
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The Company had no stock-based compensation expense recognized in its statements of operations for the nine months ended September 30, 2024 and 2023.

 

Earnings per Share

 

The computation of basic earnings per common share is based on the weighted average number of shares outstanding during the period. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the weighted average common stock equivalents which would arise from the exercise of stock options, warrants, convertible preferred stock and other rights during the period.

 

For the three and nine months ended September 30, 2024 and 2023, the diluted weighted average number of shares is the same as the basic weighted average number of shares as the inclusion of any common stock equivalents would be anti-dilutive.

 

Fair Value of Financial Instruments

 

In accordance with current accounting standards, certain assets and liabilities must be measured at fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. ASC 820 requires that certain assets and liabilities must be measured at fair value, and the standard details the disclosures that are required for items measured at fair value. The Company had no assets and liabilities required to be measured on a recurring basis at September 30, 2024 and December 31, 2023.

 

The current assets and current liabilities reported on the Company’s balance sheets are estimated by management to approximate fair market value due to their short-term nature.

 

Software Development Costs

 

Software development costs include direct costs incurred for internally developed products and payments made to independent software developers and/or contract engineers and artists. The Company accounts for software development costs in accordance with the FASB guidance for the costs of computer software to be sold, leased, or otherwise marketed as found in ASC Subtopic 985-20. On a case-by-case basis, certain software development costs are capitalized once the technological feasibility of a product is established and such costs are determined to be recoverable. Technological feasibility of a product encompasses both technical design documentation and game design documentation, or the completed and tested product design and working model. Software development costs are capitalized once technological feasibility of a product is established and such costs are determined to be recoverable against future revenues. For products where proven game engine technology exists, this may occur early in the development cycle.

 

Significant management judgments and estimates are utilized in the assessment of when technological feasibility is established. For most products, technological feasibility is established when a detailed game design document containing sufficient technical specifications written for a proven game engine or framework technology had been created and approved by management. However, technological feasibility is evaluated on a product-by-product basis. Amounts related to software development that are not capitalized are charged immediately to the appropriate expense account. Amounts that were considered ‘research and development’ that are not capitalized are immediately charged to general and administrative expense.

 

Prior to a product’s release, the Company expenses, as part of “Cost of Sales—Product Development,” capitalized costs when the Company believes such amounts are not recoverable. Capitalized costs for those products that are cancelled or abandoned are charged to product development expense in the period of cancellation. Commencing upon product release, capitalized software development costs are amortized to “Cost of Sales—Product Development” based on the straight-line method.

 

 The Company evaluates the future recoverability of capitalized software development costs and intellectual property licenses on an annual basis. For products that have been released in prior years, the primary evaluation criterion is actual title performance. For products that are scheduled to be released in future years, recoverability is evaluated based on the expected performance of the specific products to which the costs relate or in which the licensed trademark or copyright is to be used. Criteria used to evaluate expected product performance include: historical performance of comparable products developed with comparable technology; orders for the product prior to its release; and, for any sequel product, estimated performance based on the performance of the product on which the sequel was based.

 

The Company had no impairment expense, related to capitalized software development costs, recognized in the Company’s statements of operations for the nine months ended September 30, 2024 or 2023

 

Based on the previous trends in the Company’s business, management has determined the expected shelf life of the majority of a game’s revenue will be realized over a three to five-year period and will expense capitalized production costs from the date of the initial release, or first sale of the product for a specific technology platform. It is possible that the same game developed on different technology platforms (such as PC and Mac, or iOS and Android) would be launched on different release dates because product development cycles may differ and distribution partner release policies may differ.

 

 
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At September 30, 2024 and December 31, 2023, the Company had $453,036 and $522,084 respectively, of capitalized software development costs in other assets on the balance sheet. The Company recognized amortization expense of $69,048 and $7,672 in the nine months ended September 30, 2024 and 2023, respectively.

 

Recent Accounting Pronouncements

 

Although there were new accounting pronouncements issued or proposed by the FASB during the nine months ended September 30, 2024 and through the date of filing of this report, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.

 

NOTE 3 – GOING CONCERN UNCERTAINTY

 

The accompanying financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. As shown in the accompanying condensed consolidated financial statements, the Company had a net loss of $354,461 and used net cash in operations of $235,893 for the nine months ended September 30, 2024. As of September 30, 2024, the Company had a working capital deficit of $866,806 and a total stockholders’ deficit of $558,283. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

 

Management believes that by continuing to implement cost reductions, and by increasing revenue from updated product lines, operating cash flows will be sufficient to support the Company’s business plan. However, management is currently evaluating alternative financing sources to fund the Company’s current business plan should cash provided by operations be insufficient.

 

The Company’s ability to continue as a going concern is dependent upon successfully executing its plans to attain a successful level of operations. The Company’s financial statements do not include any adjustments that might be necessary if it were unable to continue as a going concern.

 

NOTE 4 – PROPERTY AND EQUIPMENT

 

Property and equipment consisted of the following at:

 

 

 

September 30,

2024

 

 

December 31,

2023

 

 

 

 

 

 

 

 

Vehicle

 

$46,609

 

 

$46,609

 

Computer equipment

 

 

7,170

 

 

 

7,170

 

Office furniture and equipment

 

 

8,613

 

 

 

8,613

 

Total

 

 

62,392

 

 

 

62,392

 

Less accumulated depreciation

 

 

(58,508 )

 

 

(51,517 )

 

 

 

 

 

 

 

 

 

Net

 

$3,884

 

 

$10,875

 

 

Depreciation expense was $6,991 for the nine months ended September 30, 2024 and 2023.

 

 
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NOTE 5 – INTANGIBLE ASSETS

 

Intangible assets consisted of the following at:

 

 

 

September 30,

2024

 

 

December 31,

2023

 

 

 

 

 

 

 

 

Intellectual property

 

$307,100

 

 

$307,100

 

Customer base

 

 

142,000

 

 

 

142,000

 

Non-compete agreements

 

 

8,300

 

 

 

8,300

 

Less accumulated depreciation

 

 

(457,400 )

 

 

(457,400 )

 

 

 

 

 

 

 

 

 

Net

 

$-

 

 

$-

 

 

Amortization expense was $0 for the nine months ended September 30, 2024 and 2023.

 

NOTE 6 – CAPITALIZED SOFTWARE COSTS

 

Our capitalized software costs are summarized as follows:

 

 

 

September 30,

2024

 

 

December 31,

2023

 

Gross carrying amount

 

$552,772

 

 

$552,772

 

Accumulated amortization

 

 

(99,736)

 

 

(30,688)

Net capitalized software costs

 

$453,036

 

 

$522,084

 

 

Amortization expense related to capitalized software costs was $69,048 and $7,672 for the nine months ended September 30, 2024 and 2023, respectively, and is recorded as cost of revenue in the consolidated statements of operations.

 

The following table presents the remaining estimated amortization of capitalized software costs as of September 30, 2024:

 

Remainder of FY24

 

$27,639

 

FY25

 

$110,555

 

FY26

 

$110,555

 

FY27

 

$110,555

 

FY28

 

$79,868

 

Thereafter

 

$13,864

 

 

 

 

 

 

 

 

$453,036

 

 

 
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NOTE 7 – NOTES PAYABLE

 

Notes payable consisted of the following:

 

 

 

September 30,

2024

 

 

December 31,

2023

 

Related Party:

 

 

 

 

 

 

Note payable to Craig Holland, non-interest bearing, maturing on December 31, 2024

 

$6,925

 

 

$6,925

 

Convertible note payable to Craig Holland, non- interest bearing, maturing on December 31, 2024

 

 

186,450

 

 

 

186,450

 

Convertible note payable to Mick Donahoo, non- Interest bearing, maturing on December 31, 2024

 

 

186,450

 

 

 

186,450

 

 

 

 

 

 

 

 

 

 

Other:

 

 

 

 

 

 

 

 

Note payable to financial institution, secured by vehicle, interest at 2.9%, monthly payments of $901, due in 2025

 

 

5,356

 

 

 

13,255

 

Small Business Loan, payable to financial institution, 3.75% interest, monthly payments of $731, due in 2050

 

 

150,000

 

 

 

150,000

 

 

 

 

 

 

 

 

 

 

Total notes payable

 

$535,181

 

 

$543,080

 

Less current portion

 

 

385,181

 

 

 

390,394

 

 

 

 

 

 

 

 

 

 

Notes payable, net of current portion

 

$150,000

 

 

$152,686

 

 

On May 18, 2020, the Company received an additional U.S. Small Business Administration Loan (SBA Loan) in the amount of $150,000 to alleviate continued economic injury caused the COVID-19 crisis. The SBA Loan has a fixed interest rate of 3.75% and matures in thirty years from the date of the loan. Payments were scheduled to begin twelve months from the effective date in a fixed amount of $731 per month. All payments will be applied to interest first. This loan is secured by the general assets of the Company. The SBA Loan has since indicated that the first payments are not required to begin until 30 months from the date of the note. In July 2024, the Company received a temporary reduction in payments for this loan and will only pay $73 monthly from August 2024 to January 2025, after which normal payments will resume.

 

The Company had a note payable to Craig Holland, its Chief Executive Officer, with a balance of $6,925 at March 31, 2024 and 2023. The Company also had convertible notes payable to Mr. Holland and Mick Donahoo, its Chief Financial Officer, with a total balance of $372,900 as of March 31, 2024 and 2023. Messrs. Holland and Donahoo have the right, at any time, at their election, to convert all or part of the amount due into shares of fully paid and non-assessable shares of common stock of the Company. The fixed conversion price is $0.02 per share.

 

The Company has imputed interest expense on the notes payable – related party using an annual rate of 10%. During the nine months ended September 30, 2024 and 2023, total imputed interest expense was $28,514 and $28,409; respectively, which was recorded to additional paid-in capital.

 

Future maturities of notes payable as of September 30, 2024 are as follows:

 

December 31,

 

Amount

 

2024

 

$382,495

 

2025

 

 

2,686

 

2026

 

 

-

 

2027

 

 

2,704

 

2028

 

 

3,305

 

Thereafter

 

 

143,991

 

Notes Payable

 

$535,181

 

 

 
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NOTE 8 – STOCKHOLDERS’ DEFICIT

 

Common Stock

 

The Company is authorized to issue up to 800,000,000 shares of its $0.00001 par value common stock and had 75,056,123 common shares issued and outstanding as of September 30, 2024. There was no common stock activity during the nine months ended September 30, 2024 and September 30, 2023.

 

As of September 30, 2024 and 2023, the Company had common stock payable of $16,800 resulting from a technology transfer agreement with an unrelated party that obligated the Company to issue a total of 960 shares of its common stock, payable in 8 quarterly installments of 120 shares.

 

Preferred Stock

 

The Company is authorized to issue up to 10,000,000 shares of its $0.00001 par value preferred stock. The shares of preferred stock may be issued from time to time in one or more series. As of September 30, 2024 and 2023, there were 2,480,482 shares of Series B preferred stock and 4,355,000 shares of Series C preferred stock issued and outstanding.

 

Series B Preferred Stock

 

The Company’s Series B preferred stock has 2,700,000 shares authorized and the following rights: (i) dividend rights equal to the Company’s common stock; (ii) no liquidation preference over the Company’s common stock; (iii) each share is convertible into 50 shares of the Company’s common stock; (iv) no redemption rights; (v) no call rights by the Company; and (vi) no voting rights. The holders of the Series B preferred stock cannot convert their shares of Series B preferred stock if such conversion would cause the holder to beneficially own more than 4.99% of the Company’s then-outstanding common stock.

 

There was no Series B preferred stock activity during the nine months ended September 30, 2024 and 2023.

 

Series C Preferred Stock

 

The Company’s Series C Preferred Stock has 4,500,000 shares authorized and the following rights: (i) dividend rights equal to the Company’s common stock; (ii) no liquidation preference over the Company’s common stock; (iii) each share is convertible into 50 shares of the Company’s common stock; (iv) no redemption rights; (v) no call rights by the Company; and (vi) each shares votes on an “as converted” basis, such that each share currently has 50 votes on all matters brought before the Company’s common stockholders for a vote. 

There was no Series C preferred stock activity during the nine months ended September 30, 2024 and 2023.

 

Stock Options

 

2006 Stock Option Plan

 

The Company’s 2006 Stock Option Plan adopted by our Board of Directors in March of 2006 terminated in the year ended December 31, 2016. As of September 30, 2024 and 2023, there were no stock options outstanding under the 2006 Stock Option Plan.

 

2017 Non-Qualified Stock Option Plan

 

On December 4, 2017, our Board of Directors approved the Freeze Tag, Inc. 2017 Non-Qualified Stock Option Plan (the “Plan”). Under the Plan, our Board of Directors may issue options to purchase up to an aggregate of 10,000,000 shares of common stock to individuals, including, but not limited to, our Board of Directors and/or our executive management. As of September 30, 2024 and 2023, there were 7,762,821 stock options outstanding under the 2017 Stock Option Plan.

 

We account for stock-based compensation in accordance with ASC Topic 718, Compensation – Stock Compensation. Under the fair value recognition provisions of this standard, stock-based compensation cost is measured at the grant date based on the estimated value of the award granted, using the Black-Scholes option pricing model, and recognized over the period in which the award vests in general and administrative expenses.

 

 
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The Company recognized $0 of stock-based compensation during the nine months ended September 30, 2024 and 2023. As of September 30, 2024, there is no future compensation cost related to non-vested stock options not yet recognized in the statements of operations.

 

A summary of the status of the stock options issued by the Company under both plans as of September 30, 2024, and changes during nine months then ended is presented below:

 

 

 

 

 

 

Weighted Average

 

 

 

Shares

 

 

Exercise Price

 

 

 

 

 

 

 

 

Outstanding, December 31, 2023

 

 

7,762,821

 

 

$0.024

 

 

 

 

 

 

 

 

 

 

Granted

 

 

-

 

 

 

-

 

Canceled / Expired

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Outstanding, September 30, 2024

 

 

7,762,821

 

 

$0.024

 

 

All outstanding options are exercisable. The outstanding options expire on various dates beginning in 2027 through 2029, with a weighted average remaining contractual life of 4.9 years

 

NOTE 9 – SUBSEQUENT EVENTS

 

Effective October 31, 2024, the Company has begun shutting down its wholly owned subsidiary, Space Coast Geo Store, LLC.  Effective October 31, 2024, there are no longer any employees paid through the LLC, and the Company anticipates that the business operations of the LLC will be completely shut down by December 31, 2024.  

 

In addition, on October 15, 2024, the Company received a merchant loan from Shopify Capital for $160,000 with a term of 18 months, a repayment amount of $168,800, and a repayment rate of 17% of daily sales.  The proceeds from the loan will be used to fund growth efforts related to the Company’s products.

 

 
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ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q of Freeze Tag, Inc. (“Freeze Tag” or the “Company”) for the nine months ended September 30, 2024 contains forward-looking statements, principally in this Section and “Business.” Generally, you can identify these statements because they use words like “anticipates,” “believes,” “expects,” “future,” “intends,” “plans,” and similar terms. These statements reflect only our current expectations. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy and actual results may differ materially from those we anticipated due to a number of uncertainties, many of which are unforeseen, including, among others, the risks we face as described in this filing. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this annual report. To the extent that such statements are not recitations of historical fact, such statements constitute forward-looking statements that, by definition, involve risks and uncertainties. In any forward-looking statement where we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation of belief will be accomplished.

 

We believe it is important to communicate our expectations to our investors. There may be events in the future; however, that we are unable to predict accurately or over which we have no control. The risk factors listed in our Annual Report on Form 10-K for the year ended December 31, 2023, as well as any cautionary language in this Quarterly Report on Form 10-Q and our last Annual Report on Form 10-K, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Factors that could cause actual results or events to differ materially from those anticipated include but are not limited to: distributors not accepting our games; price reductions; unforeseen delays in game production; changes in product strategies; general economic, financial and business conditions; changes in and compliance with governmental regulations; changes in various tax laws; and the availability of key management and other personnel.

 

Summary Overview

 

Freeze Tag, Inc. is a creator of location-based, mobile social games that are fun and engaging for consumers and businesses. Based on a free-to-play business model that has propelled games built and marketed by some of our competitors to worldwide success, we employ state-of-the-art data analytics and proprietary technology to dynamically optimize the gaming experience for revenue generation. Players can download and enjoy our games for free, and, if they so choose, they can purchase virtual items and additional features within the game to increase the fun factor.

 

In October 2017, Rob Vardeman, former President of Munzee Inc. joined gaming industry veterans, Craig Holland and Mick Donahoo, to form a stronger and well-rounded Freeze Tag team through a merger. In addition to successful games Freeze Tag has launched previously, the current portfolio of games includes hits such as Munzee, a real-world gaming adventure and social platform with over 8 million locations worldwide and hundreds of thousands of players, WallaBee, an addictive collecting game with over 2,000 beautifully drawn digital cards.

 

 We also offer our technology and services to businesses that want to leverage our expertise in location-based mobile gaming in their marketing and branding programs. For example, our Eventzee solution allows businesses to create private scavenger hunts in physical places such as malls, tradeshows, company events or campuses to create immersive brand experiences.

 

Central to Freeze Tag’s core strategy is capitalizing on fast-growing trends in the mobile applications world, including geofencing and location-based advertising. We plan to leverage the combined company’s proprietary technology and expertise to create more exciting location-based experiences in our games.

 

Going Concern Uncertainty

 

The accompanying financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. As shown in the accompanying condensed consolidated financial statements, the Company recognized a net loss of $354,461 and used net cash of $235,893 in operations for the nine months ended September 30, 2024. As of September 30, 2024, the Company had a working capital deficit of $866,806 and a total stockholders’ deficit of $558,283. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

 

Management believes that by continuing to implement cost reductions, and by increasing revenue from updated product lines, operating cash flows will be sufficient to support the Company’s business plan. However, management is currently evaluating alternative financing sources to fund the Company’s current business plan should cash provided by operations be insufficient.

 

The Company’s ability to continue as a going concern is dependent upon successfully executing its plans to attain a successful level of operations. The Company’s financial statements do not include any adjustments that might be necessary if it were unable to continue as a going concern.

 

 
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Critical Accounting Policies

 

The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs, expenses and related disclosures. These estimates and assumptions are often based on historical experience and judgments that we believe to be reasonable under the circumstances at the time made. However, all such estimates and assumptions are inherently uncertain and unpredictable and actual results may differ. For further information on our significant accounting policies, see Note 2 to our financial statements included in this filing.

 

The following is a summary of our critical accounting policies that involve estimates and management’s judgment.

 

Revenue Recognition

 

The Company’s revenues are derived primarily by licensing software products in the form of mobile games for smartphone and tablet platforms. Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

 

We determine revenue recognition through the following steps:

 

 

·

identification of the contract, or contracts, with a customer;

 

·

identification of the performance obligations in the contract;

 

·

determination of the transaction price;

 

·

allocation of the transaction price to the performance obligations in the contract; and

 

·

recognition of revenue when, or as, we satisfy a performance obligation.

 

 Intangible Assets

 

Intangible assets consist primarily of intellectual property, customer base and non-compete agreements acquired in 2017, which are amortized on a straight-line basis over their estimated useful lives of 5 years. Intangible assets are reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.

 

Accounting for Stock-Based Compensation

 

The Company accounts for stock-based compensation in accordance with ASC Topic 718-10, Compensation-Stock Compensation and ASC Subtopic 505-50, Equity-Based Payments to Non-Employees. Stock-based compensation expense recognized during the requisite services period is based on the value of share-based payment awards after reduction for estimated forfeitures. Forfeitures are estimated at the time of grant and are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

 

Software Development Costs

 

Software development costs include direct costs incurred for internally developed products and payments made to independent software developers and/or contract engineers and artists. The Company accounts for software development costs in accordance with the FASB guidance for the costs of computer software to be sold, leased, or otherwise marketed as found in ASC Subtopic 985-20. On a case-by-case basis, certain software development costs are capitalized once the technological feasibility of a product is established and such costs are determined to be recoverable. Technological feasibility of a product encompasses both technical design documentation and game design documentation, or the completed and tested product design and working model. Software development costs are capitalized once technological feasibility of a product is established and such costs are determined to be recoverable against future revenues. For products where proven game engine technology exists, this may occur early in the development cycle.

 

Significant management judgments and estimates are utilized in the assessment of when technological feasibility is established. For most products, technological feasibility is established when a detailed game design document containing sufficient technical specifications written for a proven game engine or framework technology had been created and approved by management. However, technological feasibility is evaluated on a product-by-product basis. Amounts related to software development that are not capitalized are charged immediately to the appropriate expense account. Amounts that were considered ‘research and development’ that are not capitalized are immediately charged to general and administrative expense.

 

 
17

Table of Contents

 

Prior to a product’s release, the Company expenses, as part of “Cost of Sales—Product Development,” capitalized costs when the Company believes such amounts are not recoverable. Capitalized costs for those products that are cancelled or abandoned are charged to product development expense in the period of cancellation. Commencing upon product release, capitalized software development costs are amortized to “Cost of Sales—Product Development” based on the straight-line method.

 

The Company evaluates the future recoverability of capitalized software development costs and intellectual property licenses on an annual basis. For products that have been released in prior years, the primary evaluation criterion is actual title performance. For products that are scheduled to be released in future years, recoverability is evaluated based on the expected performance of the specific products to which the costs relate or in which the licensed trademark or copyright is to be used. Criteria used to evaluate expected product performance include: historical performance of comparable products developed with comparable technology; orders for the product prior to its release; and, for any sequel product, estimated performance based on the performance of the product on which the sequel was based.

 

Recent Accounting Pronouncements

 

Although there were new accounting pronouncements issued or proposed by the FASB during the nine months ended September 30, 2024 and through the date of filing of this report, we do not believe any of these accounting pronouncements has had or will have a material impact on our financial position or results of operations.

 

Results of Operations

 

Revenues

 

Our revenues for the three months ended September 30, 2024 of $532,637 were down $592 from revenues of $533,229 for the three months ended September 30, 2023. Revenues for the nine months ended September 30, 2024 of $1,514,159 were down $109,984 from revenues of $1,624,143 for the nine months ended September 30, 2023. The primary reason for the decrease in revenues year over year was due to a reduction in demand for some product types. We are continuing to make improvements in our products and have expectations for continued growth in our Munzee and Eventzee apps, and we expect to see increased demand going forward.

 

Cost of Sales

 

Cost of sales increased $11,553 to $112,425 for the three months ended September 30, 2024 from $100,872 for the three months ended September 30, 2023. Cost of sales for the nine months ended September 30, 2024 of $329,606 were up $35,373 from cost of sales of $294,233 for the nine months ended September 30, 2023. The increase was a mainly a result of increased server and supporting software product costs offset by a decrease in physical product costs (inventory of physical products).

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses decreased $22,642 to $447,175 for the three months ended September 30, 2024 from $469,817 for the three months ended September 30, 2023. Selling, general and administrative expenses for the nine months ended September 30, 2024 of $1,506,069 were up $139,259 from $1,366,810 for the nine months ended September 30, 2023. The increase is primarily due to an increase in accounting, salary, external software developers, insurance, and travel expenses, offset by a decrease in rent, and slight decrease in marketing, general office, and postage expenses.

 

Other Expense

 

Total other expense for the three months ended September 30, 2024 of $11,032 was $76 lower than other expense of $11,108 for the three months ended September 30, 2023. Total other expense for the nine months ended September 30, 2024 of $32,945 was down $1,362 from $34,307 for the nine months ended September 30, 2023. Other expense remained relatively stable.

 

Net Loss

 

As a result of the above, we reported net loss of $37,995 and $354,461 for the three and nine months ended September 30, 2024 compared to net loss of $48,568 and $71,207 for the three and nine months ended September 30, 2023.

 

 
18

Table of Contents

 

Liquidity and Capital Resources Introduction

 

As of September 30, 2024, we had current assets of $178,229, including cash of $139,570, and current liabilities of $1,045,035, resulting in a working capital deficit of $866,806. In addition, we had a total stockholders’ deficit of $558,283 at September 30, 2024.

 

During the nine months ended September 30, 2024, we used net cash of $243,792. Management believes that by continuing to implement cost reductions, and by increasing revenue from updated product lines, operating cash flows will be sufficient to support our business plan. However, management is currently evaluating alternative financing sources to fund our current business plan should cash provided by operations be insufficient. There can be no assurance that we will be successful in these efforts.

 

Sources and Uses of Cash

 

We used net cash of $235,893 from operating activities for the nine months ended September 30, 2024. A net loss of $354,461 and increases in accounts receivable, other assets and decreases in other liabilities totaling $1,353 were partially offset by $104,553 of non-cash expenses, decreases in prepaids of $1,850 and increases in accounts payable and accrued liabilities of $13,518.

 

By comparison, we used net cash of $46,928 from operating activities for the nine months ended September 30, 2023. A net loss of $71,207 and increases in accounts receivable and prepaids of $12,932 and decreases in accounts payable of $9,904 were partially offset by $43,073 of non-cash expenses and increases in accrued liabilities of $4,042.

 

We used no cash for investing activities during the nine months ended September 30, 2024. For the nine months ended September 30, 2023, we used $182,133 for capitalized software development costs.

 

Financing activities used $7,899 and $7,672 for auto loan payments for the nine months ended September 30, 2024 and 2023, respectively.

 

Notes Payable – Related Party

 

As of September 30, 2024, our related party debt was comprised of notes payable totaling $379,825 to Craig Holland, our Chief Executive Officer, and Mick Donahoo, our Chief Financial Officer. These notes are non-interest bearing and mature on December 31, 2024. Of this related party indebtedness, there are two convertible notes payable of $186,450 to each of Messrs. Holland and Donahoo, who have the right, at any time, at their election, to convert all or part of the amount due into shares of fully paid and non-assessable shares of our common stock. The fixed conversion price is $0.02 per share. We have imputed interest on these notes payable using an annual rate of 10%.

 

ITEM 3 Quantitative and Qualitative Disclosures About Market Risk

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

ITEM 4 Controls and Procedures

 

(a) Evaluation of Disclosure Controls and Procedures

 

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined) in Exchange Act Rules 13a – 15(c) and 15d – 15(e). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer, who are our principal executive officer and principal financial officers, respectively, concluded that, as of the end of the nine month period ended September 30, 2024, our disclosure controls and procedures were not effective (1) to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to us, including our chief executive and chief financial officers, as appropriate to allow timely decisions regarding required disclosure.

 

(b) Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 
19

Table of Contents

  

PART II – OTHER INFORMATION

 

ITEM 1 Legal Proceedings

 

We are not a party to or otherwise involved in any legal proceedings.

 

In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.

 

ITEM 1A Risk Factors

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

 

There is no information required to be disclosed by this Item.

 

ITEM 3 Defaults Upon Senior Securities

 

There is no information required to be disclosed by this Item.

 

ITEM 4 Mine Safety Disclosures

 

There is no information required to be disclosed by this Item.

 

ITEM 5 Other Information

 

There is no information required to be disclosed by this Item.

 

 
20

Table of Contents

  

ITEM 6 Exhibits

 

3.1 (1)

 

Articles of Incorporation of Freeze Tag, Inc.

 

 

 

3.2 (1)

 

Articles of Amendment to Articles of Incorporation

 

 

 

3.3 (1)

 

Bylaws of Freeze Tag, Inc.

 

 

 

3.4 (3)

 

Articles of Amendment to Certificate of Incorporation February 4, 2014

 

 

 

3.5 (7)

 

Articles of Amendment to Certificate of Incorporation filed on February 18, 2016

 

 

 

3.6*

 

Articles of Amendment to Certificate of Incorporation filed on September 21, 2017

 

 

 

3.7*

 

Form of Certificate of Designations, Preferences, Rights, and Restrictions of Series B Convertible Preferred Stock filed on October 5, 2017

 

 

 

3.8*

 

Form of Certificate of Designations, Preferences, Rights, and Restrictions of Series C Convertible Preferred Stock filed on October 17, 2017

 

 

 

10.1 (1)

 

10% Convertible Promissory Note dated July 1, 2010 with The Holland Family Trust

 

 

 

10.2 (2)

 

Convertible Promissory Note (10%) dated December 20, 2013 – Accredited Investor

 

 

 

10.3 (2)

 

Convertible Promissory Note (10%) dated December 31, 2013 – Holland Family Trust

 

 

 

10.4 (2)

 

Convertible Promissory Note (10%) dated December 31, 2013 – Craig Holland Debt

 

 

 

10.5 (2)

 

Convertible Promissory Note (10%) dated December 31, 2013 – Craig Holland Salary

 

 

 

10.6 (2)

 

Convertible Promissory Note (10%) dated December 31, 2013 – Mick Donahoo Salary

 

 

 

10.7 (2)

 

Convertible Promissory Note (10%) dated December 31, 2013 – Mick Donahoo Debt

 

 

 

10.8 (2)

 

Convertible Promissory Note (10%) dated December 31, 2013 – Robert Cowdell

 

 

 

10.9 (8)

 

Convertible Promissory Note with an Accredited Investor dated June 25, 2014

 

 

 

10.10 (4)

 

Convertible Promissory Note (10%) dated September 30, 2014 – Holland Family Trust

 

 

 

10.11 (4)

 

Convertible Promissory Note (10%) dated September 30, 2014 – Craig Holland

 

 

 

10.12 (5)

 

Consulting and Co-Development Agreement with Gogii Games Corp. dated November 17, 2014 (Redacted Version)

 

 

10.13 (5)

Convertible Promissory Note with an accredited investor dated February 11, 2015

 

 

10.14 (5)

Master Development Agreement with TIC TOC STUDIOS, LLC dated February 18, 2015 (Redacted Version)

 

 

10.15 (6)

Convertible Promissory Note with an accredited investor dated July 28, 2015

 

 

10.16 (6)

Amendment to Convertible Promissory Note dated December 31, 2013 – Craig Holland

 

 

10.17 (6)

Amendment to Convertible Promissory Note dated December 31, 2013 – Mick Donahoo

 

 
21

Table of Contents

  

10.18 (6)

 

Amendment to Convertible Promissory Note with an accredited investor dated December 30, 2013

 

 

 

10.19 (8)

 

Convertible Promissory Note with an accredited investor dated April 7, 2016

 

 

 

10.20 (9)

 

License Agreement with Munzee, Inc. dated October 19, 2016

 

 

 

10.21 (9)

 

License Agreement with Paws, Incorporation dated November 1, 2016 (Redacted Version)

 

 

 

10.22 (10)

 

Amendment #1 to Convertible Promissory Note with an accredited investor dated April 7, 2016

 

 

 

10.23 (10)

 

Convertible Promissory Note with an accredited investor dated February 8, 2017

 

 

 

10.24 (11)

 

Merger Agreement with Munzee, Inc. dated July 26, 2017

 

 

 

10.25 (11)

 

Form of Securities Exchange and Common Stock Purchase Agreement with Related Parties dated July 25, 2017

 

 

 

10.26 (11)

 

Form of Securities Exchange and Common Stock Purchase Agreement with Accredited Investor #1 and Accredited Investor #2 dated July 26, 2017

 

 

 

10.27 (11)

 

Form of Second Securities Exchange and Common Stock Purchase Agreement with Accredited Investor #2 dated July 26, 2017

 

 

 

10.28 (11)

 

Form of Securities Exchange and Common Stock Purchase Agreement with Accredited Investor #3 dated July 26, 2017

 

 

 

10.29 (11)

 

Form of Amendment No. 1 to Promissory Note with Craig Holland and Mick Donahoo dated July 25, 2017

 

 

 

10.30 (11)

 

Amendment No. 1 to Promissory Note with Craig Holland dated July 25, 2017

 

 

 

10.31 (12)

 

Corporate Sponsorship Agreement with American Diabetes Association dated March 22, 2018

 

 

 

21.1(13)

 

Subsidiaries of Freeze Tag Inc.

 

 

 

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*

 

Section 1350 Certification of Chief Executive Officer

 

 

 

32.2*

 

Section 1350 Certification of Chief Financial Officer.

 

 

 

101.INS**

 

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

 

 

 

101.SCH**

 

Inline XBRL Taxonomy Extension Schema Document

 

 

 

101.CAL**

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

 

101.DEF**

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

 

 

 

101.LAB**

 

Inline XBRL Taxonomy Extension Label Linkbase Document

 

 

 

101.PRE**

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

 

 

 

104

 

Cover Page Interactive Data File (embedded within the inline XBRL document).

 

*

Filed herewith.

 

 

**

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability.

 

 
22

Table of Contents

  

(1)

Incorporated by reference from our Registration Statement on Form S-1, filed with the Commission on August 16, 2010.

 

 

(2)

Incorporated by reference from Current Report on Form 8-K filed with the Commission on February 4, 2014.

 

 

(3)

Incorporated by reference from Definitive Information Statement on Schedule 14-C filed with the Commission on December 31, 2013.

 

 

(4)

Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on November 14, 2014.

 

 

(5)

Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on May 15, 2015.

 

 

(6)

Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on November 16, 2015.

 

 

(7)

Incorporated by reference from Annual Report on Form 10-K filed with the Commission on March 30, 2016.

 

 

(8)

Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on August 14, 2016.

 

 

(9)

Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on November 14, 2016.

 

 

(10)

Incorporated by reference from Annual Report on Form 10-K filed with the Commission on March 31, 2017.

 

 

(11)

Incorporated by reference from Current Report on Form 8-K filed with the Commission on July 31, 2017.

 

 

(12)

Incorporated by reference from Current Report on Form 8-K filed with the Commission on April 11, 2018

 

 

(13)

Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on May 15, 2020.

 

 
23

Table of Contents

  

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.

 

 

Freeze Tag, Inc.

 

 

 

 

 

Dated: November 14, 2024

By:

/s/ Craig Holland

 

 

Craig Holland

 

 

Its:

Chief Executive Officer (Principal Executive Officer)

 

 

 
24

 

nullnullnullnullnullnullnullv3.24.3
Cover - shares
9 Months Ended
Sep. 30, 2024
Nov. 14, 2024
Cover [Abstract]    
Entity Registrant Name FREEZE TAG, Inc.  
Entity Central Index Key 0001485074  
Document Type 10-Q  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Small Business true  
Entity Shell Company false  
Entity Emerging Growth Company false  
Entity Current Reporting Status Yes  
Document Period End Date Sep. 30, 2024  
Entity Filer Category Non-accelerated Filer  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2024  
Entity Common Stock Shares Outstanding   75,056,123
Entity File Number 000-54267  
Entity Incorporation State Country Code DE  
Entity Tax Identification Number 20-4532392  
Entity Address Address Line 1 360 E 1st Street  
Entity Address Address Line 2 #450  
Entity Address City Or Town Tustin  
Entity Address State Or Province CA  
Entity Address Postal Zip Code 92780  
City Area Code 714  
Local Phone Number 210-3850  
Document Quarterly Report true  
Document Transition Report false  
Entity Interactive Data Current Yes  
v3.24.3
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
Sep. 30, 2024
Dec. 31, 2023
Current assets:    
Cash $ 139,570 $ 383,362
Accounts receivable 20,401 20,298
Prepaid expenses and other current assets 18,258 20,108
Total current assets 178,229 423,768
Property and equipment, net 3,884 10,875
Capitalized software, net 453,036 522,084
Other assets 1,603 853
Total assets 636,752 957,580
Current liabilities:    
Accounts payable 150,510 143,842
Accrued expenses 501,801 489,639
Unearned royalties 7,543 7,543
Notes payable - related party, current portion 379,825 379,825
Notes payable, current portion 5,356 10,569
Total current liabilities 1,045,035 1,031,418
Notes payable, net of current portion 150,000 152,686
Other long-term liabilities 0 5,812
Total liabilities 1,195,035 1,189,916
Stockholders' deficit:    
Common stock; $0.00001 par value, 800,000,000 shares authorized, 75,056,123 shares issued and outstanding 751 751
Additional paid-in capital 9,357,327 9,328,813
Common stock payable 16,800 16,800
Accumulated deficit (9,933,230) (9,578,769)
Total stockholders' deficit (558,283) (232,336)
Total liabilities and stockholders' deficit 636,752 957,580
Series B Preferred Stocks [Member]    
Stockholders' deficit:    
Preferred Stock Value 25 25
Series C Preferred Stocks [Member]    
Stockholders' deficit:    
Preferred Stock Value $ 44 $ 44
v3.24.3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Sep. 30, 2024
Dec. 31, 2023
Common stock, par value $ 0.00001 $ 0.00001
Common stock, shares authorized 800,000,000 800,000,000
Common stock, shares issued 75,056,123 75,056,123
Common stock, shares outstanding 75,056,123 75,056,123
Preferred stock, par value $ 0.00001 $ 0.00001
Preferred stock, shares authorized 10,000,000 10,000,000
Series B Preferred Stocks [Member]    
Preferred stock, shares authorized 2,700,000 2,700,000
Preferred stock, shares issued 2,480,482 2,480,482
Preferred stock, shares outstanding 2,480,482 2,480,482
Series C Preferred Stocks [Member]    
Preferred stock, shares authorized 4,500,000 4,500,000
Preferred stock, shares issued 4,355,000 4,355,000
Preferred stock, shares outstanding 4,355,000 4,355,000
v3.24.3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)        
Revenues $ 532,637 $ 533,229 $ 1,514,159 $ 1,624,143
Operating costs and expenses:        
Cost of sales 112,425 100,872 329,606 294,233
Selling, general and administrative expenses 447,175 469,817 1,506,069 1,366,810
Total operating costs and expenses 559,600 570,689 1,835,675 1,661,043
Loss from operations (26,963) (37,460) (321,516) (36,900)
Other expense:        
Interest expense, net (11,032) (11,108) (32,945) (34,307)
Total other expense (11,032) (11,108) (32,945) (34,307)
Net loss $ (37,995) $ (48,568) $ (354,461) $ (71,207)
Weighted average number of common shares outstanding - basic 75,056,123 75,056,123 75,056,123 75,056,123
Weighted average number of common shares outstanding - diluted 75,056,123 75,056,123 75,056,123 75,056,123
Income per common share - basic and diluted $ 0.00 $ 0.00 $ 0.00 $ 0.00
v3.24.3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) (Unaudited) - USD ($)
Total
Common Stock
Additional Paid-In Capital
Common Stock Payable [Member]
Retained Earnings (Accumulated Deficit)
Series B, Preferred Stock
Series C, Preferred Stock
Balance, shares at Dec. 31, 2022   75,056,123       2,480,482 4,355,000
Balance, amount at Dec. 31, 2022 $ (65,122) $ 751 $ 9,290,829 $ 16,800 $ (9,373,571) $ 25 $ 44
Imputed interest on related party debt 9,367 0 9,367 0 0 0 0
Net loss (47,841) $ 0 0 0 (47,841) $ 0 $ 0
Balance, shares at Mar. 31, 2023   75,056,123       2,480,482 4,355,000
Balance, amount at Mar. 31, 2023 (103,596) $ 751 9,300,196 16,800 (9,421,412) $ 25 $ 44
Balance, shares at Dec. 31, 2022   75,056,123       2,480,482 4,355,000
Balance, amount at Dec. 31, 2022 (65,122) $ 751 9,290,829 16,800 (9,373,571) $ 25 $ 44
Net loss (71,207)            
Balance, shares at Sep. 30, 2023   75,056,123       2,480,482 4,355,000
Balance, amount at Sep. 30, 2023 (107,919) $ 751 9,319,239 16,800 (9,444,778) $ 25 $ 44
Balance, shares at Mar. 31, 2023   75,056,123       2,480,482 4,355,000
Balance, amount at Mar. 31, 2023 (103,596) $ 751 9,300,196 16,800 (9,421,412) $ 25 $ 44
Imputed interest on related party debt 9,469 0 9,469 0 0 0 0
Net loss 25,202 $ 0 0 0 25,202 $ 0 $ 0
Balance, shares at Jun. 30, 2023   75,056,123       2,480,482 4,355,000
Balance, amount at Jun. 30, 2023 (68,925) $ 751 9,309,665 16,800 (9,396,210) $ 25 $ 44
Imputed interest on related party debt 9,574 0 9,574 0 0 0 0
Net loss (48,568) $ 0 0 0 (48,568) $ 0 $ 0
Balance, shares at Sep. 30, 2023   75,056,123       2,480,482 4,355,000
Balance, amount at Sep. 30, 2023 (107,919) $ 751 9,319,239 16,800 (9,444,778) $ 25 $ 44
Balance, shares at Dec. 31, 2023   75,056,123       2,480,482 4,355,000
Balance, amount at Dec. 31, 2023 (232,336) $ 751 9,328,813 16,800 (9,578,769) $ 25 $ 44
Imputed interest on related party debt 9,470 0 9,470 0 0 0 0
Net loss (218,098) $ 0 0 0 (218,098) $ 0 $ 0
Balance, shares at Mar. 31, 2024   75,056,123       2,480,482 4,355,000
Balance, amount at Mar. 31, 2024 (440,964) $ 751 9,338,283 16,800 (9,796,867) $ 25 $ 44
Balance, shares at Dec. 31, 2023   75,056,123       2,480,482 4,355,000
Balance, amount at Dec. 31, 2023 (232,336) $ 751 9,328,813 16,800 (9,578,769) $ 25 $ 44
Net loss (354,461)            
Balance, shares at Sep. 30, 2024   75,056,123       2,480,482 4,355,000
Balance, amount at Sep. 30, 2024 (558,283) $ 751 9,357,327 16,800 (9,933,230) $ 25 $ 44
Balance, shares at Mar. 31, 2024   75,056,123       2,480,482 4,355,000
Balance, amount at Mar. 31, 2024 (440,964) $ 751 9,338,283 16,800 (9,796,867) $ 25 $ 44
Imputed interest on related party debt 9,470 0 9,470 0 0 0 0
Net loss (98,368) $ 0 0 0 (98,368) $ 0 $ 0
Balance, shares at Jun. 30, 2024   75,056,123       2,480,482 4,355,000
Balance, amount at Jun. 30, 2024 (529,862) $ 751 9,347,753 16,800 (9,895,235) $ 25 $ 44
Imputed interest on related party debt 9,574 0 9,574 0 0 0 0
Net loss (37,995) $ 0 0 0 (37,995) $ 0 $ 0
Balance, shares at Sep. 30, 2024   75,056,123       2,480,482 4,355,000
Balance, amount at Sep. 30, 2024 $ (558,283) $ 751 $ 9,357,327 $ 16,800 $ (9,933,230) $ 25 $ 44
v3.24.3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Cash flows from operating activities:    
Net loss $ (354,461) $ (71,207)
Adjustments to reconcile net income to net cash (used) provided by operating activities:    
Depreciation and amortization 76,039 14,663
Imputed interest expense 28,514 28,410
Changes in operating assets and liabilities:    
Accounts receivable (103) (6,738)
Prepaid expenses and other current assets 1,850 (6,194)
Other assets (750) 0
Accounts payable 6,668 (9,904)
Accrued expenses 6,850 1,878
Other (500) 2,164
Net cash used by operating activities (235,893) (46,928)
Cash flows from investing activities:    
Capitalized software costs 0 (182,133)
Net cash used by investing activities 0 (182,133)
Cash flows from financing activities:    
Payments on notes payable (7,899) (7,672)
Net cash used by financing activities (7,899) (7,672)
Net decrease in cash (243,792) (236,733)
Cash at the beginning of the period 383,362 741,163
Cash at the end of the period 139,570 504,430
Supplemental disclosure:    
Cash paid for income taxes 1,500 1,500
Cash paid for interest expense $ 1,458 $ 438
v3.24.3
THE COMPANY AND NATURE OF BUSINESS
9 Months Ended
Sep. 30, 2024
THE COMPANY AND NATURE OF BUSINESS  
THE COMPANY AND NATURE OF BUSINESS

NOTE 1 – THE COMPANY AND NATURE OF BUSINESS

 

Nature of Operations

 

Freeze Tag, Inc. (“Freeze Tag” or the “Company”) is a leading creator of mobile location-based games for consumers and businesses. The Company also offers gaming technology and services to businesses that want to leverage mobile gaming in their marketing and branding programs.

 

Beginning in the quarter ended March 31, 2020, our wholly-owned subsidiary, Space Coast Geo Store, LLC, a Florida limited liability company, sells merchandise to the geocaching industry. The LLC was filed with the State of Florida on September 3, 2019. 

v3.24.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Sep. 30, 2024
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in its financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates and these differences may be material.

 

Revenue Recognition

 

The Company’s revenues are derived primarily by licensing software products in the form of mobile games for smartphone and tablet platforms. Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

 

We determine revenue recognition through the following steps:

 

 

·

identification of the contract, or contracts, with a customer;

 

·

identification of the performance obligations in the contract;

 

·

determination of the transaction price;

 

·

allocation of the transaction price to the performance obligations in the contract; and

 

·

recognition of revenue when, or as, we satisfy a performance obligation.

Property and Equipment

 

Property and equipment is stated at cost and is depreciated or amortized using the straight-line method over the estimated useful life of the related asset as follows:

 

Vehicle

 

5 years

Computer equipment

 

5 years

Office furniture and equipment

 

7 years

 

Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments will be capitalized. At the time of retirement or other disposition of equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.

 

The Company will assess the recoverability of property and equipment by determining whether the depreciation and amortization of these assets over their remaining life can be recovered through projected undiscounted future cash flows. The amount of equipment impairment, if any, will be measured based on fair value and is charged to operations in the period in which such impairment is determined by management.

 

Intangible Assets

 

Intangible assets consist primarily of intellectual property, customer base and non-compete agreements acquired in 2017, which are amortized on a straight-line basis over their estimated useful lives of 5 years. Intangible assets are reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

 

Income Taxes

 

We account for income taxes using ASC Topic 740, Income Taxes (“ASC Topic 740”). Under ASC Topic 740, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

ASC Topic 740 includes accounting guidance which clarifies the accounting for the uncertainty in recognizing income taxes in an organization by providing detailed guidance for financial statement recognition, measurement and disclosure involving uncertain tax positions. This guidance requires an uncertain tax position to meet a more-likely-than-not recognition threshold at the effective date to be recognized both upon the adoption of the related guidance and in subsequent periods.

 

The Company has no uncertain tax positions at any of the dates presented.

 

Stock-Based Compensation

 

The Company accounts for stock-based compensation in accordance with ASC Topic 718-10, Compensation-Stock Compensation and ASC Subtopic 505-50, Equity-Based Payments to Non-Employees. Stock-based compensation expense recognized during the requisite services period is based on the value of share-based payment awards after reduction for estimated forfeitures. Forfeitures are estimated at the time of grant and are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The Company had no stock-based compensation expense recognized in its statements of operations for the nine months ended September 30, 2024 and 2023.

 

Earnings per Share

 

The computation of basic earnings per common share is based on the weighted average number of shares outstanding during the period. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the weighted average common stock equivalents which would arise from the exercise of stock options, warrants, convertible preferred stock and other rights during the period.

 

For the three and nine months ended September 30, 2024 and 2023, the diluted weighted average number of shares is the same as the basic weighted average number of shares as the inclusion of any common stock equivalents would be anti-dilutive.

 

Fair Value of Financial Instruments

 

In accordance with current accounting standards, certain assets and liabilities must be measured at fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. ASC 820 requires that certain assets and liabilities must be measured at fair value, and the standard details the disclosures that are required for items measured at fair value. The Company had no assets and liabilities required to be measured on a recurring basis at September 30, 2024 and December 31, 2023.

 

The current assets and current liabilities reported on the Company’s balance sheets are estimated by management to approximate fair market value due to their short-term nature.

 

Software Development Costs

 

Software development costs include direct costs incurred for internally developed products and payments made to independent software developers and/or contract engineers and artists. The Company accounts for software development costs in accordance with the FASB guidance for the costs of computer software to be sold, leased, or otherwise marketed as found in ASC Subtopic 985-20. On a case-by-case basis, certain software development costs are capitalized once the technological feasibility of a product is established and such costs are determined to be recoverable. Technological feasibility of a product encompasses both technical design documentation and game design documentation, or the completed and tested product design and working model. Software development costs are capitalized once technological feasibility of a product is established and such costs are determined to be recoverable against future revenues. For products where proven game engine technology exists, this may occur early in the development cycle.

 

Significant management judgments and estimates are utilized in the assessment of when technological feasibility is established. For most products, technological feasibility is established when a detailed game design document containing sufficient technical specifications written for a proven game engine or framework technology had been created and approved by management. However, technological feasibility is evaluated on a product-by-product basis. Amounts related to software development that are not capitalized are charged immediately to the appropriate expense account. Amounts that were considered ‘research and development’ that are not capitalized are immediately charged to general and administrative expense.

 

Prior to a product’s release, the Company expenses, as part of “Cost of Sales—Product Development,” capitalized costs when the Company believes such amounts are not recoverable. Capitalized costs for those products that are cancelled or abandoned are charged to product development expense in the period of cancellation. Commencing upon product release, capitalized software development costs are amortized to “Cost of Sales—Product Development” based on the straight-line method.

 

 The Company evaluates the future recoverability of capitalized software development costs and intellectual property licenses on an annual basis. For products that have been released in prior years, the primary evaluation criterion is actual title performance. For products that are scheduled to be released in future years, recoverability is evaluated based on the expected performance of the specific products to which the costs relate or in which the licensed trademark or copyright is to be used. Criteria used to evaluate expected product performance include: historical performance of comparable products developed with comparable technology; orders for the product prior to its release; and, for any sequel product, estimated performance based on the performance of the product on which the sequel was based.

 

The Company had no impairment expense, related to capitalized software development costs, recognized in the Company’s statements of operations for the nine months ended September 30, 2024 or 2023

 

Based on the previous trends in the Company’s business, management has determined the expected shelf life of the majority of a game’s revenue will be realized over a three to five-year period and will expense capitalized production costs from the date of the initial release, or first sale of the product for a specific technology platform. It is possible that the same game developed on different technology platforms (such as PC and Mac, or iOS and Android) would be launched on different release dates because product development cycles may differ and distribution partner release policies may differ.

At September 30, 2024 and December 31, 2023, the Company had $453,036 and $522,084 respectively, of capitalized software development costs in other assets on the balance sheet. The Company recognized amortization expense of $69,048 and $7,672 in the nine months ended September 30, 2024 and 2023, respectively.

 

Recent Accounting Pronouncements

 

Although there were new accounting pronouncements issued or proposed by the FASB during the nine months ended September 30, 2024 and through the date of filing of this report, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.

v3.24.3
GOING CONCERN UNCERTAINITY
9 Months Ended
Sep. 30, 2024
GOING CONCERN UNCERTAINITY  
GOING CONCERN UNCERTAINITY

NOTE 3 – GOING CONCERN UNCERTAINTY

 

The accompanying financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. As shown in the accompanying condensed consolidated financial statements, the Company had a net loss of $354,461 and used net cash in operations of $235,893 for the nine months ended September 30, 2024. As of September 30, 2024, the Company had a working capital deficit of $866,806 and a total stockholders’ deficit of $558,283. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

 

Management believes that by continuing to implement cost reductions, and by increasing revenue from updated product lines, operating cash flows will be sufficient to support the Company’s business plan. However, management is currently evaluating alternative financing sources to fund the Company’s current business plan should cash provided by operations be insufficient.

 

The Company’s ability to continue as a going concern is dependent upon successfully executing its plans to attain a successful level of operations. The Company’s financial statements do not include any adjustments that might be necessary if it were unable to continue as a going concern.

v3.24.3
PROPERTY AND EQUIPMENT
9 Months Ended
Sep. 30, 2024
PROPERTY AND EQUIPMENT  
PROPERTY AND EQUIPMENT

NOTE 4 – PROPERTY AND EQUIPMENT

 

Property and equipment consisted of the following at:

 

 

 

September 30,

2024

 

 

December 31,

2023

 

 

 

 

 

 

 

 

Vehicle

 

$46,609

 

 

$46,609

 

Computer equipment

 

 

7,170

 

 

 

7,170

 

Office furniture and equipment

 

 

8,613

 

 

 

8,613

 

Total

 

 

62,392

 

 

 

62,392

 

Less accumulated depreciation

 

 

(58,508 )

 

 

(51,517 )

 

 

 

 

 

 

 

 

 

Net

 

$3,884

 

 

$10,875

 

 

Depreciation expense was $6,991 for the nine months ended September 30, 2024 and 2023.

v3.24.3
INTANGIBLE ASSETS
9 Months Ended
Sep. 30, 2024
INTANGIBLE ASSETS  
INTANGIBLE ASSETS

NOTE 5 – INTANGIBLE ASSETS

 

Intangible assets consisted of the following at:

 

 

 

September 30,

2024

 

 

December 31,

2023

 

 

 

 

 

 

 

 

Intellectual property

 

$307,100

 

 

$307,100

 

Customer base

 

 

142,000

 

 

 

142,000

 

Non-compete agreements

 

 

8,300

 

 

 

8,300

 

Less accumulated depreciation

 

 

(457,400 )

 

 

(457,400 )

 

 

 

 

 

 

 

 

 

Net

 

$-

 

 

$-

 

 

Amortization expense was $0 for the nine months ended September 30, 2024 and 2023.

v3.24.3
CAPITALIZED SOFTWARE COSTS
9 Months Ended
Sep. 30, 2024
CAPITALIZED SOFTWARE COSTS  
CAPITALIZED SOFTWARE COSTS

NOTE 6 – CAPITALIZED SOFTWARE COSTS

 

Our capitalized software costs are summarized as follows:

 

 

 

September 30,

2024

 

 

December 31,

2023

 

Gross carrying amount

 

$552,772

 

 

$552,772

 

Accumulated amortization

 

 

(99,736)

 

 

(30,688)

Net capitalized software costs

 

$453,036

 

 

$522,084

 

 

Amortization expense related to capitalized software costs was $69,048 and $7,672 for the nine months ended September 30, 2024 and 2023, respectively, and is recorded as cost of revenue in the consolidated statements of operations.

 

The following table presents the remaining estimated amortization of capitalized software costs as of September 30, 2024:

 

Remainder of FY24

 

$27,639

 

FY25

 

$110,555

 

FY26

 

$110,555

 

FY27

 

$110,555

 

FY28

 

$79,868

 

Thereafter

 

$13,864

 

 

 

 

 

 

 

 

$453,036

 

v3.24.3
NOTES PAYABLE
9 Months Ended
Sep. 30, 2024
NOTES PAYABLE  
NOTES PAYABLE

NOTE 7 – NOTES PAYABLE

 

Notes payable consisted of the following:

 

 

 

September 30,

2024

 

 

December 31,

2023

 

Related Party:

 

 

 

 

 

 

Note payable to Craig Holland, non-interest bearing, maturing on December 31, 2024

 

$6,925

 

 

$6,925

 

Convertible note payable to Craig Holland, non- interest bearing, maturing on December 31, 2024

 

 

186,450

 

 

 

186,450

 

Convertible note payable to Mick Donahoo, non- Interest bearing, maturing on December 31, 2024

 

 

186,450

 

 

 

186,450

 

 

 

 

 

 

 

 

 

 

Other:

 

 

 

 

 

 

 

 

Note payable to financial institution, secured by vehicle, interest at 2.9%, monthly payments of $901, due in 2025

 

 

5,356

 

 

 

13,255

 

Small Business Loan, payable to financial institution, 3.75% interest, monthly payments of $731, due in 2050

 

 

150,000

 

 

 

150,000

 

 

 

 

 

 

 

 

 

 

Total notes payable

 

$535,181

 

 

$543,080

 

Less current portion

 

 

385,181

 

 

 

390,394

 

 

 

 

 

 

 

 

 

 

Notes payable, net of current portion

 

$150,000

 

 

$152,686

 

 

On May 18, 2020, the Company received an additional U.S. Small Business Administration Loan (SBA Loan) in the amount of $150,000 to alleviate continued economic injury caused the COVID-19 crisis. The SBA Loan has a fixed interest rate of 3.75% and matures in thirty years from the date of the loan. Payments were scheduled to begin twelve months from the effective date in a fixed amount of $731 per month. All payments will be applied to interest first. This loan is secured by the general assets of the Company. The SBA Loan has since indicated that the first payments are not required to begin until 30 months from the date of the note. In July 2024, the Company received a temporary reduction in payments for this loan and will only pay $73 monthly from August 2024 to January 2025, after which normal payments will resume.

 

The Company had a note payable to Craig Holland, its Chief Executive Officer, with a balance of $6,925 at March 31, 2024 and 2023. The Company also had convertible notes payable to Mr. Holland and Mick Donahoo, its Chief Financial Officer, with a total balance of $372,900 as of March 31, 2024 and 2023. Messrs. Holland and Donahoo have the right, at any time, at their election, to convert all or part of the amount due into shares of fully paid and non-assessable shares of common stock of the Company. The fixed conversion price is $0.02 per share.

 

The Company has imputed interest expense on the notes payable – related party using an annual rate of 10%. During the nine months ended September 30, 2024 and 2023, total imputed interest expense was $28,514 and $28,409; respectively, which was recorded to additional paid-in capital.

 

Future maturities of notes payable as of September 30, 2024 are as follows:

 

December 31,

 

Amount

 

2024

 

$382,495

 

2025

 

 

2,686

 

2026

 

 

-

 

2027

 

 

2,704

 

2028

 

 

3,305

 

Thereafter

 

 

143,991

 

Notes Payable

 

$535,181

 

v3.24.3
STOCKHOLDERS DEFICIT
9 Months Ended
Sep. 30, 2024
STOCKHOLDERS DEFICIT  
STOCKHOLDERS' DEFICIT

NOTE 8 – STOCKHOLDERS’ DEFICIT

 

Common Stock

 

The Company is authorized to issue up to 800,000,000 shares of its $0.00001 par value common stock and had 75,056,123 common shares issued and outstanding as of September 30, 2024. There was no common stock activity during the nine months ended September 30, 2024 and September 30, 2023.

 

As of September 30, 2024 and 2023, the Company had common stock payable of $16,800 resulting from a technology transfer agreement with an unrelated party that obligated the Company to issue a total of 960 shares of its common stock, payable in 8 quarterly installments of 120 shares.

 

Preferred Stock

 

The Company is authorized to issue up to 10,000,000 shares of its $0.00001 par value preferred stock. The shares of preferred stock may be issued from time to time in one or more series. As of September 30, 2024 and 2023, there were 2,480,482 shares of Series B preferred stock and 4,355,000 shares of Series C preferred stock issued and outstanding.

 

Series B Preferred Stock

 

The Company’s Series B preferred stock has 2,700,000 shares authorized and the following rights: (i) dividend rights equal to the Company’s common stock; (ii) no liquidation preference over the Company’s common stock; (iii) each share is convertible into 50 shares of the Company’s common stock; (iv) no redemption rights; (v) no call rights by the Company; and (vi) no voting rights. The holders of the Series B preferred stock cannot convert their shares of Series B preferred stock if such conversion would cause the holder to beneficially own more than 4.99% of the Company’s then-outstanding common stock.

 

There was no Series B preferred stock activity during the nine months ended September 30, 2024 and 2023.

 

Series C Preferred Stock

 

The Company’s Series C Preferred Stock has 4,500,000 shares authorized and the following rights: (i) dividend rights equal to the Company’s common stock; (ii) no liquidation preference over the Company’s common stock; (iii) each share is convertible into 50 shares of the Company’s common stock; (iv) no redemption rights; (v) no call rights by the Company; and (vi) each shares votes on an “as converted” basis, such that each share currently has 50 votes on all matters brought before the Company’s common stockholders for a vote. 

There was no Series C preferred stock activity during the nine months ended September 30, 2024 and 2023.

 

Stock Options

 

2006 Stock Option Plan

 

The Company’s 2006 Stock Option Plan adopted by our Board of Directors in March of 2006 terminated in the year ended December 31, 2016. As of September 30, 2024 and 2023, there were no stock options outstanding under the 2006 Stock Option Plan.

 

2017 Non-Qualified Stock Option Plan

 

On December 4, 2017, our Board of Directors approved the Freeze Tag, Inc. 2017 Non-Qualified Stock Option Plan (the “Plan”). Under the Plan, our Board of Directors may issue options to purchase up to an aggregate of 10,000,000 shares of common stock to individuals, including, but not limited to, our Board of Directors and/or our executive management. As of September 30, 2024 and 2023, there were 7,762,821 stock options outstanding under the 2017 Stock Option Plan.

 

We account for stock-based compensation in accordance with ASC Topic 718, Compensation – Stock Compensation. Under the fair value recognition provisions of this standard, stock-based compensation cost is measured at the grant date based on the estimated value of the award granted, using the Black-Scholes option pricing model, and recognized over the period in which the award vests in general and administrative expenses.

The Company recognized $0 of stock-based compensation during the nine months ended September 30, 2024 and 2023. As of September 30, 2024, there is no future compensation cost related to non-vested stock options not yet recognized in the statements of operations.

 

A summary of the status of the stock options issued by the Company under both plans as of September 30, 2024, and changes during nine months then ended is presented below:

 

 

 

 

 

 

Weighted Average

 

 

 

Shares

 

 

Exercise Price

 

 

 

 

 

 

 

 

Outstanding, December 31, 2023

 

 

7,762,821

 

 

$0.024

 

 

 

 

 

 

 

 

 

 

Granted

 

 

-

 

 

 

-

 

Canceled / Expired

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Outstanding, September 30, 2024

 

 

7,762,821

 

 

$0.024

 

 

All outstanding options are exercisable. The outstanding options expire on various dates beginning in 2027 through 2029, with a weighted average remaining contractual life of 4.9 years

v3.24.3
SUBSEQUENT EVENTS
9 Months Ended
Sep. 30, 2024
SUBSEQUENT EVENTS  
SUBSEQUENT EVENTS

NOTE 9 – SUBSEQUENT EVENTS

 

Effective October 31, 2024, the Company has begun shutting down its wholly owned subsidiary, Space Coast Geo Store, LLC.  Effective October 31, 2024, there are no longer any employees paid through the LLC, and the Company anticipates that the business operations of the LLC will be completely shut down by December 31, 2024.  

 

In addition, on October 15, 2024, the Company received a merchant loan from Shopify Capital for $160,000 with a term of 18 months, a repayment amount of $168,800, and a repayment rate of 17% of daily sales.  The proceeds from the loan will be used to fund growth efforts related to the Company’s products.

v3.24.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
9 Months Ended
Sep. 30, 2024
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  
Use of Estimates

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in its financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates and these differences may be material.

Revenue Recognition

The Company’s revenues are derived primarily by licensing software products in the form of mobile games for smartphone and tablet platforms. Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

 

We determine revenue recognition through the following steps:

 

 

·

identification of the contract, or contracts, with a customer;

 

·

identification of the performance obligations in the contract;

 

·

determination of the transaction price;

 

·

allocation of the transaction price to the performance obligations in the contract; and

 

·

recognition of revenue when, or as, we satisfy a performance obligation.

Property and Equipment

Property and equipment is stated at cost and is depreciated or amortized using the straight-line method over the estimated useful life of the related asset as follows:

 

Vehicle

 

5 years

Computer equipment

 

5 years

Office furniture and equipment

 

7 years

 

Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments will be capitalized. At the time of retirement or other disposition of equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.

 

The Company will assess the recoverability of property and equipment by determining whether the depreciation and amortization of these assets over their remaining life can be recovered through projected undiscounted future cash flows. The amount of equipment impairment, if any, will be measured based on fair value and is charged to operations in the period in which such impairment is determined by management.

Intangible Assets

Intangible assets consist primarily of intellectual property, customer base and non-compete agreements acquired in 2017, which are amortized on a straight-line basis over their estimated useful lives of 5 years. Intangible assets are reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

Income Taxes

We account for income taxes using ASC Topic 740, Income Taxes (“ASC Topic 740”). Under ASC Topic 740, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

ASC Topic 740 includes accounting guidance which clarifies the accounting for the uncertainty in recognizing income taxes in an organization by providing detailed guidance for financial statement recognition, measurement and disclosure involving uncertain tax positions. This guidance requires an uncertain tax position to meet a more-likely-than-not recognition threshold at the effective date to be recognized both upon the adoption of the related guidance and in subsequent periods.

 

The Company has no uncertain tax positions at any of the dates presented.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC Topic 718-10, Compensation-Stock Compensation and ASC Subtopic 505-50, Equity-Based Payments to Non-Employees. Stock-based compensation expense recognized during the requisite services period is based on the value of share-based payment awards after reduction for estimated forfeitures. Forfeitures are estimated at the time of grant and are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The Company had no stock-based compensation expense recognized in its statements of operations for the nine months ended September 30, 2024 and 2023.

Earnings per Share

The computation of basic earnings per common share is based on the weighted average number of shares outstanding during the period. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the weighted average common stock equivalents which would arise from the exercise of stock options, warrants, convertible preferred stock and other rights during the period.

 

For the three and nine months ended September 30, 2024 and 2023, the diluted weighted average number of shares is the same as the basic weighted average number of shares as the inclusion of any common stock equivalents would be anti-dilutive.

Fair Value of Financial Instruments

In accordance with current accounting standards, certain assets and liabilities must be measured at fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. ASC 820 requires that certain assets and liabilities must be measured at fair value, and the standard details the disclosures that are required for items measured at fair value. The Company had no assets and liabilities required to be measured on a recurring basis at September 30, 2024 and December 31, 2023.

 

The current assets and current liabilities reported on the Company’s balance sheets are estimated by management to approximate fair market value due to their short-term nature.

Software Development Costs

Software development costs include direct costs incurred for internally developed products and payments made to independent software developers and/or contract engineers and artists. The Company accounts for software development costs in accordance with the FASB guidance for the costs of computer software to be sold, leased, or otherwise marketed as found in ASC Subtopic 985-20. On a case-by-case basis, certain software development costs are capitalized once the technological feasibility of a product is established and such costs are determined to be recoverable. Technological feasibility of a product encompasses both technical design documentation and game design documentation, or the completed and tested product design and working model. Software development costs are capitalized once technological feasibility of a product is established and such costs are determined to be recoverable against future revenues. For products where proven game engine technology exists, this may occur early in the development cycle.

 

Significant management judgments and estimates are utilized in the assessment of when technological feasibility is established. For most products, technological feasibility is established when a detailed game design document containing sufficient technical specifications written for a proven game engine or framework technology had been created and approved by management. However, technological feasibility is evaluated on a product-by-product basis. Amounts related to software development that are not capitalized are charged immediately to the appropriate expense account. Amounts that were considered ‘research and development’ that are not capitalized are immediately charged to general and administrative expense.

 

Prior to a product’s release, the Company expenses, as part of “Cost of Sales—Product Development,” capitalized costs when the Company believes such amounts are not recoverable. Capitalized costs for those products that are cancelled or abandoned are charged to product development expense in the period of cancellation. Commencing upon product release, capitalized software development costs are amortized to “Cost of Sales—Product Development” based on the straight-line method.

 

 The Company evaluates the future recoverability of capitalized software development costs and intellectual property licenses on an annual basis. For products that have been released in prior years, the primary evaluation criterion is actual title performance. For products that are scheduled to be released in future years, recoverability is evaluated based on the expected performance of the specific products to which the costs relate or in which the licensed trademark or copyright is to be used. Criteria used to evaluate expected product performance include: historical performance of comparable products developed with comparable technology; orders for the product prior to its release; and, for any sequel product, estimated performance based on the performance of the product on which the sequel was based.

 

The Company had no impairment expense, related to capitalized software development costs, recognized in the Company’s statements of operations for the nine months ended September 30, 2024 or 2023

 

Based on the previous trends in the Company’s business, management has determined the expected shelf life of the majority of a game’s revenue will be realized over a three to five-year period and will expense capitalized production costs from the date of the initial release, or first sale of the product for a specific technology platform. It is possible that the same game developed on different technology platforms (such as PC and Mac, or iOS and Android) would be launched on different release dates because product development cycles may differ and distribution partner release policies may differ.

At September 30, 2024 and December 31, 2023, the Company had $453,036 and $522,084 respectively, of capitalized software development costs in other assets on the balance sheet. The Company recognized amortization expense of $69,048 and $7,672 in the nine months ended September 30, 2024 and 2023, respectively.

Recent Accounting Pronouncements

Although there were new accounting pronouncements issued or proposed by the FASB during the nine months ended September 30, 2024 and through the date of filing of this report, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.

v3.24.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
9 Months Ended
Sep. 30, 2024
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  
Schedule of Property and Equipment, Estimated Useful Life

Vehicle

 

5 years

Computer equipment

 

5 years

Office furniture and equipment

 

7 years

v3.24.3
PROPERTY AND EQUIPMENT (Tables)
9 Months Ended
Sep. 30, 2024
PROPERTY AND EQUIPMENT  
Schedule of Property and Equipment

 

 

September 30,

2024

 

 

December 31,

2023

 

 

 

 

 

 

 

 

Vehicle

 

$46,609

 

 

$46,609

 

Computer equipment

 

 

7,170

 

 

 

7,170

 

Office furniture and equipment

 

 

8,613

 

 

 

8,613

 

Total

 

 

62,392

 

 

 

62,392

 

Less accumulated depreciation

 

 

(58,508 )

 

 

(51,517 )

 

 

 

 

 

 

 

 

 

Net

 

$3,884

 

 

$10,875

 

v3.24.3
INTANGIBLE ASSETS (Tables)
9 Months Ended
Sep. 30, 2024
INTANGIBLE ASSETS  
Schedule of Intangible Assets

 

 

September 30,

2024

 

 

December 31,

2023

 

 

 

 

 

 

 

 

Intellectual property

 

$307,100

 

 

$307,100

 

Customer base

 

 

142,000

 

 

 

142,000

 

Non-compete agreements

 

 

8,300

 

 

 

8,300

 

Less accumulated depreciation

 

 

(457,400 )

 

 

(457,400 )

 

 

 

 

 

 

 

 

 

Net

 

$-

 

 

$-

 

v3.24.3
CAPITALIZED SOFTWARE COSTS (Tables)
9 Months Ended
Sep. 30, 2024
CAPITALIZED SOFTWARE COSTS  
Schedule of capitalized software costs

 

 

September 30,

2024

 

 

December 31,

2023

 

Gross carrying amount

 

$552,772

 

 

$552,772

 

Accumulated amortization

 

 

(99,736)

 

 

(30,688)

Net capitalized software costs

 

$453,036

 

 

$522,084

 

Schedule of remaining estimated amortization of capitalized software costs

Remainder of FY24

 

$27,639

 

FY25

 

$110,555

 

FY26

 

$110,555

 

FY27

 

$110,555

 

FY28

 

$79,868

 

Thereafter

 

$13,864

 

 

 

 

 

 

 

 

$453,036

 

v3.24.3
NOTES PAYABLE (Tables)
9 Months Ended
Sep. 30, 2024
NOTES PAYABLE  
Schedule of Notes Payable

 

 

September 30,

2024

 

 

December 31,

2023

 

Related Party:

 

 

 

 

 

 

Note payable to Craig Holland, non-interest bearing, maturing on December 31, 2024

 

$6,925

 

 

$6,925

 

Convertible note payable to Craig Holland, non- interest bearing, maturing on December 31, 2024

 

 

186,450

 

 

 

186,450

 

Convertible note payable to Mick Donahoo, non- Interest bearing, maturing on December 31, 2024

 

 

186,450

 

 

 

186,450

 

 

 

 

 

 

 

 

 

 

Other:

 

 

 

 

 

 

 

 

Note payable to financial institution, secured by vehicle, interest at 2.9%, monthly payments of $901, due in 2025

 

 

5,356

 

 

 

13,255

 

Small Business Loan, payable to financial institution, 3.75% interest, monthly payments of $731, due in 2050

 

 

150,000

 

 

 

150,000

 

 

 

 

 

 

 

 

 

 

Total notes payable

 

$535,181

 

 

$543,080

 

Less current portion

 

 

385,181

 

 

 

390,394

 

 

 

 

 

 

 

 

 

 

Notes payable, net of current portion

 

$150,000

 

 

$152,686

 

Schedule of Future Maturities of Notes Payable

December 31,

 

Amount

 

2024

 

$382,495

 

2025

 

 

2,686

 

2026

 

 

-

 

2027

 

 

2,704

 

2028

 

 

3,305

 

Thereafter

 

 

143,991

 

Notes Payable

 

$535,181

 

v3.24.3
STOCKHOLDERS DEFICIT (Tables)
9 Months Ended
Sep. 30, 2024
STOCKHOLDERS DEFICIT  
Schedule of Status of Warrants and Options Issued

 

 

 

 

 

Weighted Average

 

 

 

Shares

 

 

Exercise Price

 

 

 

 

 

 

 

 

Outstanding, December 31, 2023

 

 

7,762,821

 

 

$0.024

 

 

 

 

 

 

 

 

 

 

Granted

 

 

-

 

 

 

-

 

Canceled / Expired

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Outstanding, September 30, 2024

 

 

7,762,821

 

 

$0.024

 

v3.24.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)
9 Months Ended
Sep. 30, 2024
Computer Equipment [Member]  
Property, plant and equipment, estimated useful lives 5 years
Office Furniture and Equipment [Member]  
Property, plant and equipment, estimated useful lives 7 years
Vehicles [Member]  
Property, plant and equipment, estimated useful lives 5 years
v3.24.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES      
Intangible assets estimated useful lives 5 years    
Stock-based compensation $ 0 $ 0  
Capitalized software development costs 453,036   $ 522,084
Amortization expense $ 69,048 $ 7,672  
v3.24.3
GOING CONCERN (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Dec. 31, 2022
GOING CONCERN UNCERTAINITY                    
Net income (loss) $ (37,995) $ (98,368) $ (218,098) $ (48,568) $ 25,202 $ (47,841) $ (354,461) $ (71,207)    
Net cash used by operating activities             (235,893) (46,928)    
Stockholders' deficit (558,283) $ (529,862) $ (440,964) $ (107,919) $ (68,925) $ (103,596) (558,283) $ (107,919) $ (232,336) $ (65,122)
Working capital deficit $ (866,806)           $ (866,806)      
v3.24.3
PROPERTY AND EQUIPMENT (Details) - USD ($)
Sep. 30, 2024
Dec. 31, 2023
Property and equipment, gross $ 62,392 $ 62,392
Less accumulated depreciation (58,508) (51,517)
Property and equipment, net 3,884 10,875
Computer Equipment [Member]    
Property and equipment, gross 7,170 7,170
Office Furniture and Equipment [Member]    
Property and equipment, gross 8,613 8,613
Vehicles [Member]    
Property and equipment, gross $ 46,609 $ 46,609
v3.24.3
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
PROPERTY AND EQUIPMENT    
Depreciation expense $ 6,991 $ 6,991
v3.24.3
INTANGIBLE ASSETS (Details) - USD ($)
Sep. 30, 2024
Dec. 31, 2023
Less accumulated amortization $ (457,400) $ (457,400)
Intangible assets, net 0 0
Intellectual property [Member]    
Intangible assets, gross 307,100 307,100
Customer base [Member]    
Intangible assets, gross 142,000 142,000
Non-compete agreements [Member]    
Intangible assets, gross $ 8,300 $ 8,300
v3.24.3
INTANGIBLE ASSETS (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
INTANGIBLE ASSETS    
Amortization expense $ 0 $ 0
v3.24.3
CAPITALIZED SOFTWARE COSTS (Details) - USD ($)
Sep. 30, 2024
Dec. 31, 2023
CAPITALIZED SOFTWARE COSTS    
Gross carrying amount $ 552,772 $ 552,772
Accumulated Amortization (99,736) (30,688)
Net capitalized software costs $ 453,036 $ 522,084
v3.24.3
CAPITALIZED SOFTWARE COSTS (Details 1) - USD ($)
Sep. 30, 2024
Dec. 31, 2023
CAPITALIZED SOFTWARE COSTS    
Remainder of FY24 $ 27,639  
FY25 110,555  
FY26 110,555  
FY27 110,555  
FY28 79,868  
Thereafter 13,864  
Net capitalized software costs $ 453,036 $ 522,084
v3.24.3
CAPITALIZED SOFTWARE COSTS (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
CAPITALIZED SOFTWARE COSTS    
Amortization expense related to capitalized software costs $ 69,048 $ 7,672
v3.24.3
NOTES PAYABLE (Details) - USD ($)
Sep. 30, 2024
Dec. 31, 2023
Notes payable $ 379,825 $ 379,825
Notes payable 535,181  
Notes payable, net of current portion 5,356 10,569
Note Payable To Financial Institution, Secured By Vehicle [Member]    
Notes payable 5,356 13,255
Notes Payable [Member]    
Notes payable 535,181 543,080
Less current portion 385,181 390,394
Notes payable, net of current portion 150,000 152,686
Small Business Loan [Member]    
Notes payable 150,000 150,000
Craig Holland [Member] | Notes Payable [Member]    
Notes payable 6,925 6,925
Craig Holland [Member] | Convertible Notes Payable [Member]    
Notes payable 186,450 186,450
Mick Donahoo [Member] | Convertible Notes Payable [Member]    
Notes payable $ 186,450 $ 186,450
v3.24.3
NOTES PAYABLE (Details 1)
Sep. 30, 2024
USD ($)
NOTES PAYABLE  
2024 $ 382,495
2025 2,686
2026 0
2027 2,704
2028 3,305
Thereafter 143,991
Notes Payable $ 535,181
v3.24.3
NOTES PAYABLE (Details Narrative) - USD ($)
1 Months Ended 9 Months Ended
May 18, 2020
Sep. 30, 2024
Sep. 30, 2023
Mar. 31, 2024
Mar. 31, 2023
Imputed interest expense   $ 28,514 $ 28,409    
May 18, 2020 [Member] | SBA LOAN [Member]          
Proceeds From Loan $ 150,000        
Interest Rate 3.75%        
Maturity Description The SBA Loan has since indicated that the first payments are not required to begin until 30 months from the date of the note        
Payments loan, monthly $ 73        
Payment From Effective Date Per Month $ 731        
Mr. Holland and Mick Donahoo [Member]          
Convertible Note Payable       $ 372,900 $ 372,900
Debt Instrument, Convertible, Conversion Price   $ 0.02      
Notes Payable [Member] | Craig Holland [Member]          
Notes Payable       $ 6,925 $ 6,925
v3.24.3
STOCKHOLDERS DEFICIT (Details)
9 Months Ended
Sep. 30, 2024
$ / shares
shares
Shares  
Outstanding At Beginning Of Period | shares 7,762,821
Granted | shares 0
Canceled / Expired | shares 0
Exercised | shares 0
Outstanding At Ending Of Period | shares 7,762,821
Weighted Average Exercise Price  
Outstanding At Beginning Of Period | $ / shares $ 0.024
Granted | $ / shares 0
Canceled / Expired | $ / shares 0
Exercised | $ / shares 0
Outstanding At Ending Of Period | $ / shares $ 0.024
v3.24.3
STOCKHOLDERS DEFICIT (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Dec. 04, 2017
Common Stock, Par Value $ 0.00001   $ 0.00001  
Common Stock, Authorized Shares 800,000,000   800,000,000  
Common Stock, Issued Shares 75,056,123   75,056,123  
Common Stock, Outstanding Shares 75,056,123   75,056,123  
Preferred Stock, Par Value $ 0.00001   $ 0.00001  
Preferred Stock, Authorized Shares 10,000,000   10,000,000  
Stock-based Compensation $ 0 $ 0    
Common stock payable $ 16,800   $ 16,800  
2017 Non-Qualified Stock Option Plan [Member]        
Common Stock, Outstanding Shares 7,762,821   7,762,821  
Stock-based Compensation $ 0      
Outstanding options expiration description The outstanding options expire on various dates beginning in 2027 through 2029      
Weighted average remaining contractual life 4 years 10 months 24 days      
Option Granted To Purchase Common Shares       10,000,000
Unrelated Party [Member]        
Common Stock, Issued Shares 960      
Quaterly intallment share 120      
Common stock payable $ 16,800   $ 16,800  
Number of quarterly installments 8      
Series B Preferred Stocks [Member]        
Preferred Stock, Authorized Shares 2,700,000   2,700,000  
Preferred Stock, Issued Shares 2,480,482   2,480,482  
Preferred Stock, Outstanding Shares 2,480,482   2,480,482  
Description Of Voting Rights (i) dividend rights equal to the Company’s common stock; (ii) no liquidation preference over the Company’s common stock; (iii) each share is convertible into 50 shares of the Company’s common stock; (iv) no redemption rights; (v) no call rights by the Company; and (vi) no voting rights. The holders of the Series B preferred stock cannot convert their shares of Series B preferred stock if such conversion would cause the holder to beneficially own more than 4.99% of the Company’s then-outstanding common stock.      
Series C Preferred Stocks [Member]        
Preferred Stock, Authorized Shares 4,500,000   4,500,000  
Preferred Stock, Issued Shares 4,355,000   4,355,000  
Preferred Stock, Outstanding Shares 4,355,000   4,355,000  
Description Of Voting Rights (i) dividend rights equal to the Company’s common stock; (ii) no liquidation preference over the Company’s common stock; (iii) each share is convertible into 50 shares of the Company’s common stock; (iv) no redemption rights; (v) no call rights by the Company; and (vi) each shares votes on an “as converted” basis, such that each share currently has 50 votes on all matters brought before the Company’s common stockholders for a vote.      
Common Stocks [Member]        
Common Stock, Par Value $ 0.00001      
Common Stock, Authorized Shares 800,000,000      
Common Stock, Issued Shares 75,056,123      
Common Stock, Outstanding Shares 75,056,123      
Preferred Stocks [Member]        
Preferred Stock, Par Value $ 0.00001      
Preferred Stock, Authorized Shares 10,000,000      
v3.24.3
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member]
Oct. 15, 2024
USD ($)
Proceeds from merchant loan $ 160,000
Repayment amount of merchant loan $ 168,800
Repayment amount of merchant loan, percentage rate 17.00%

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