RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

NOTE 14 - RELATED PARTY TRANSACTIONS

On August 2, 2010, the Company granted Craig Holland, its President, Chief Executive Officer, and a Director, options to purchase up to 115,000 shares of Company common stock at an exercise price of $0.11 per share.  The options were granted under the Freeze Tag, Inc. 2006 Stock Plan.  As of September 30, 2012, the stock options are fully expensed and included in stock based compensation of $16,003.

As of July 1, 2010, there are notes payable to Craig Holland and Mick Donahoo for $25,000 each (a total of $50,000 notes payable) for money that was loaned to the Company to secure the Sunwest Bank loan. As of September 30, 2012; the $50,000 loaned by Craig Holland and Mick Donahoo, on July 1, 2010, is in default. The money was loaned to the Company at a rate of 10% interest compounded annually.  In addition, as of October 19, 2011, there is a note payable to Mick Donahoo for $5,000 for money that was loaned to the Company to secure equipment.  The money was loaned to the Company at a rate of 10% interest compounded annually and matures on October 19, 2013.  As of April 11, 2012, there is a note payable to Mick Donahoo for $15,000 for money that was loaned to the Company.  The money was loaned to the Company at a rate of 10% interest compounded annually and matures on October 11, 2012.  As of April 25, 2012, there is a note payable to Craig Holland and Mick Donahoo for $10,000 each (a total of $20,000 notes payable) for money that was loaned to the Company.  The money was loaned to the Company at a rate of 10% interest compounded annually and matures on October 25, 2012.  As of June 21, 2012, there is a note payable to the Holland Family Trust for $40,000 for money that was loaned to the Company.  The money was loaned to the Company at a rate of 10% interest compounded annually and matures on October 24, 2012.

On July 1, 2010, the Company entered into one (1) $100,000 principal amount convertible promissory note, which is convertible any time at $0.10 per share.  The holder of this note is the Holland Family Trust, which was not controlled by any of the Company’s officers and directors, but was controlled by Franklena E. Holland, the mother of one of the Company’s officers and directors.  Under the note the Company has received $75,000 of the purchase price, with the remaining $25,000 to be paid at a later date.  The note matured on July 1, 2011, and was renewed for another 1 year term.  Interest on the notes is paid each month at the first of the month as such there is no accrued interest as of December 31, 2011.  The Company had a convertible note payable balance of $75,000 for period ended September 30, 2012 and $75,000 for period ended December 31, 2011. On April 19, 2012, Franklena E. Holland passed away. The terms of the Holland Family Trust indicate that Craig B. Holland becomes the Successor Trustee after Franklena's passing. As of April 19, 2012, Mr. Holland is now acting as the Trustee of the Holland Family Trust.

On January 26, 2012, the Company entered into one (1) $100,000 principal amount convertible promissory note, which is convertible at any time at $0.05 per share.  The holder of this note is the Holland Family Trust, which was not controlled by any of the Company’s officers and directors at the time, but was controlled by Franklena Holland, the mother of one of the Company’s officers and directors.  The convertible promissory note bears interest at the rate of 10% per annum and matures 12 months from the date of issuance.  Accrued interest on the note as of September 30, 2012 is $0.  The Company had a convertible note payable balance of $100,000 for period the period ended September 30, 2012 and December 31, 2011.  On April 19, 2012, Franklena E. Holland passed away. The terms of the Holland Family Trust indicate that Craig B. Holland becomes the Successor Trustee after Franklena's passing. As of April 19, 2012, Mr. Holland is now acting as the Trustee of the Holland Family Trust.

As of April 11, 2012, there is a note payable to Mick Donahoo for $15,000 for money that was loaned to the Company.  The money was loaned to the Company at a rate of 10% interest compounded annually and matures on October 11, 2012.

As of April 25, 2012, there is a note payable to Craig Holland and Mick Donahoo for $10,000 each (a total of $20,000 notes payable) for money that was loaned to the Company.  The money was loaned to the Company at a rate of 10% interest compounded annually and matures on October 25, 2012.

As of June 21, 2012, there is a note payable to the Holland Family Trust for $40,000 for money that was loaned to the Company.  The money was loaned to the Company at a rate of 10% interest compounded annually and matures on January 24, 2013.

As of August 13, 2012, there is a note payable to the Holland Family Trust for $70,000 for money that was loaned to the Company.  The money was loaned to the Company at a rate of 10% interest compounded annually and matures on February 13, 2013.

As of September 12, 2012, there is a note payable to the Holland Family Trust for $65,000 for money that was loaned to the Company.  The money was loaned to the Company at a rate of 10% interest compounded annually and matures on March 12, 2013.