10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2015

¨ 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.)

18062 Irvine Blvd, Suite 103 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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x 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	x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

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 May 15, 2015, there were 233,285,127 shares of common stock, $0.001 par value, issued and outstanding.

FREEZE TAG, INC.

TABLE OF CONTENTS

QUARTER ENDED MARCH 31, 2015

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	23
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	25

2

PART I – FINANCIAL INFORMATION

The accompanying condensed 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 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 March 31, 2015 are not necessarily indicative of the results of operations for the full year. These condensed 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 filed with the Securities and Exchange Commission for the year ended December 31, 2014.

3

FREEZE TAG, INC.

(A DELAWARE CORPORATION)

CONDENSED BALANCE SHEETS

	March 31, 2015			December 31, 2014
	(Unaudited)
ASSETS
Current assets:
Cash	$	25,594		$	14,688
Accounts receivable, net of allowance of $5,600		8,195			16,197
Prepaid expenses and other current assets		5,115			8,245
Total current assets		38,904			39,130
	$	38,904		$	39,130
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	108,808		$	116,150
Accrued expenses		495,646			495,315
Accrued interest payable – related party		104,014			68,106
Accrued interest payable		60,042			41,385
Unearned royalties		200,666			202,499
Convertible notes payable – related party		1,456,254			1,456,254
Convertible notes payable, net of discount of $307,684 and $343,902, respectively		701,459			412,841
Derivative liabilities		501,728			438,374
Total current liabilities		3,628,617			3,230,924
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock; $0.001 par value, 500,000,000 shares authorized, 211,710,840 and 184,518,250 shares issued and outstanding, respectively		211,710			184,517
Additional paid-in capital		3,792,611			3,720,722
Common stock payable		16,800			16,800
Accumulated deficit		(7,610,834	)		(7,113,833	)
Total stockholders’ deficit		(3,589,713	)		(3,191,794	)
	$	38,904		$	39,130

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

4

FREEZE TAG, INC.

(A DELAWARE CORPORATION)

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended March 31,
	2015			2014
Revenues	$	7,903		$	14,842
Operating costs and expenses:
Cost of sales		127,324			23,540
Selling, general and administrative expenses		150,679			140,624
Depreciation and amortization expense		-			6,100
Total operating costs and expenses		278,003			170,264
Loss from operations		(270,100	)		(155,422	)
Other income (expense):
Interest expense, net		(217,748	)		(163,698	)
Loss on change in derivative liabilities		(8,753	)		-
Total other income (expense)		(226,501	)		(163,698	)
Loss before income taxes		(496,601	)		(319,120	)
Provision for income taxes		400			1,267
Net loss	$	(497,001	)	$	(320,387	)
Weighted average number of common shares outstanding – basic and diluted		191,529,335			99,938,817
Loss per common share – basic and diluted	$	(0.00	)	$	(0.00	)

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

5

FREEZE TAG, INC.

(A DELAWARE CORPORATION)

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2015			2014
Cash flows from operating activities:
Net loss	$	(497,001	)	$	(320,387	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization expense		-			6,100
Amortization of debt discount to interest expense		158,944			123,363
Loss on change in derivative liabilities		8,753			-
Changes in operating assets and liabilities:
Accounts receivable, net		8,002			2,312
Prepaid expenses and other current assets		3,130			1,082
Accounts payable		(7,342	)		(3,890	)
Accrued expenses		331			6,510
Accrued interest payable – related party		35,908			35,800
Accrued interest payable		22,014			4,529
Unearned royalties		(1,833	)		(2,425	)
Net cash used by operating activities		(269,094	)		(147,006	)
Cash flows from investing activities		-			-
Net cash provided by investing activities		-			-
Cash flows from financing activities:
Borrowings of debt		280,000			150,000
Net cash provided by financing activities		280,000			150,000
Net increase in cash		10,906			2,994
Cash at the beginning of the period		14,688			39,847
Cash at the end of the period	$	25,594		$	42,841
Non-cash transactions:
Conversion of debt to common shares	$	27,600		$	-
Conversion of accrued interest to common shares		3,357			-
Conversion of derivative liabilities to common shares		68,125			-
Debt discount due to derivative		122,726			-
Beneficial conversion feature		-			150,000

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

6

FREEZE TAG, INC.

(A DELAWARE CORPORATION)

Notes to Condensed Financial Statements

Three Months Ended March 31, 2015

(Unaudited)

NOTE 1 – THE COMPANY

Freeze Tag, Inc. (the “Company”) is a leading creator of mobile social games that are fun and engaging for all ages. Based on a free-to-play business model that has propelled games like Candy Crush Saga to worldwide success, the Company employs state-of-the-art data analytics and proprietary technology to dynamically optimize the gaming experience for revenue generation. Players can download and enjoy the Company’s games for free, or they can purchase virtual items and additional features within the game to increase the fun factor. The Company’s games encourage players to compete and engage with their friends on major social networks such as Facebook and Twitter.

NOTE 2 – GOING CONCERN

As shown in the accompanying financial statements for the three-month periods ended March 31, 2015 and 2014, the Company incurred net losses of $497,001 and $320,387, respectively. As of March 31, 2015, the Company’s accumulated deficit was $7,610,834. During the period ended March 31, 2015 and the year ended December 3l, 2014, the Company experienced negative cash flows from operations largely due to its continued investment spending for product development of game titles for smartphones and tablets that are expected to benefit future periods. Those facts, along with our lack of access to a significant bank credit facility, create an uncertainty about the Company’s ability to continue as a going concern. Accordingly, the Company is currently evaluating its alternatives to secure financing sufficient to support the operating requirements of its current business plan, as well as continuing to execute its business strategy of distributing game titles to digital distribution outlets, including mobile gaming app stores, online PC and Mac gaming portals, and opportunities for new devices such as tablet (mobile internet device) applications, mobile gaming platforms and international licensing opportunities.

The Company’s ability to continue as a going concern is dependent upon its success in securing sufficient financing and in successfully executing its plans to return to positive cash flows during fiscal 2015. 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 3 – ACCRUED EXPENSES

Accrued liabilities consisted of the following at:

	March 31, 2015		December 31, 2014
Accrued vacation	$	70,356	$	68,344
Accrued royalties		407,290		406,790
Technology payable		18,000		18,000
Other		-		2,181
	$	495,646	$	495,315

7

Accrued royalties consist of amounts owed to other parties with whom the Company has revenue-sharing agreements or from whom it licenses certain trademarks or copyrights.

Unearned royalties consist of royalties received from licensees, which have not yet been earned. Unearned royalties were $200,666 and $202,499 at March 31, 2015 and December 31, 2014, respectively.

As of March 31, 2015 and December 31, 2014, the Company had technology payable of $18,000 resulting from a technology transfer agreement with an unrelated party entered into in June 2011, payable in 24 installments of $1,500 without interest.

NOTE 4 – DEBT

Convertible Notes Payable – Related Party

Convertible notes payable, related party consisted of the following at:

	March 31, 2015		December 31, 2014
Convertible note payable to the Holland Family Trust, maturing on September 30, 2015, with interest at 10%	$	222,572	$	222,572
Convertible note payable to Craig Holland, maturing on September 30, 2015, with interest at 10%		813,602		813,602
Convertible note payable to Craig Holland, maturing on December 31, 2014, with interest at 10%		186,450		186,450
Convertible note payable to Mick Donahoo, maturing on December 31, 2014, with interest at 10%		186,450		186,450
Convertible note payable to Craig Holland, maturing on December 31, 2014, with interest at 10%		11,532		11,532
Convertible note payable to Mick Donahoo, maturing on December 31, 2014, with interest at 10%		35,648		35,648
Total	$	1,456,254	$	1,456,254

The “Holland Family Trust Convertible Note” is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the date of conversion. “Fixed Conversion Price” shall mean $0.00005.

The Company evaluated the Holland Family Trust Convertible Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The note payable is convertible into common stock at the discretion of the Holland Family Trust. Furthermore, at any time, the Company may pay the balance of the unconverted note payable in cash.

8

As of September 30, 2014, $72,107 of accrued interest was added to the note principal and $813,602 of the note was transferred to Craig Holland. A new convertible note for $222,572 was issued to the Holland Family Trust with the same terms as the previous note, with the exception of the maturity date, which has been extended to September 30, 2015. As of March 31, 2015 and December 31, 2014, accrued interest related to the Holland Family Trust Convertible Note was $11,098 and $5,610, respectively.

On September 30, 2014, $813,602 principal balance (including interest) of the Holland Family Trust Convertible Note was transferred to Craig Holland (the “Holland Transferred Convertible Note”). The Holland Transferred Convertible Note retains the same terms as the original Holland Family Trust Convertible Note with the exception of the maturity date, which has been extended to September 30, 2015. As of March 31, 2015 and December 31, 2014, accrued interest related to the Holland Transferred Convertible Note was $40,569 and $20,507, respectively.

On December 31, 2013, the Company converted $186,450 of accrued salaries due to Craig Holland into a convertible note (the “Holland Accrued Salary Note”) and converted $186,450 of accrued salaries due to Mick Donahoo into a convertible note (the “Donahoo Accrued Salary Note”). The Holland Accrued Salary Note and the Donahoo Accrued Salary Note are convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005.

The Company evaluated the Holland Accrued Salary Note and the Donahoo Accrued Salary Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, the conversion feature does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. As of March 31, 2015 and December 31, 2014, there was $23,242 and $18,645, respectively, of accrued interest related to each of the notes.

On December 31, 2013, the Company converted a note payable to Mick Donahoo of $55,250 and accrued interest of $15,399 into a new convertible related party note in the amount of $70,649 (the “Mick Donahoo Convertible Note”).

On December 31, 2013, the Company converted a note payable to Craig Holland of $35,100 and accrued interest of $11,432 into a new convertible related party note in the amount of $46,532 (the “Craig Holland Convertible Note”).

The Mick Donahoo Convertible Note and the Craig Holland Convertible Note are convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005.

9

The Company evaluated the Mick Donahoo Convertible Note and the Craig Holland Convertible Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The agreements modified the debt to make it convertible into common stock of the Company. As of March 31, 2015 and December 31, 2014, there was a total of $5,863 and $4,699, respectively, of accrued interest payable related to these notes.

On October 23, 2014, Craig Holland converted $35,000 principal and $2,836 accrued interest into 39,829,849 shares of the Company’s common stock.

On October 23, 2014, Mick Donahoo converted $35,000 principal and $2,836 accrued interest into 39,829,849 shares of the Company’s common stock.

Total accrued interest payable for the above related party convertible notes was $104,014 and $68,106 as of March 31, 2015 and December 31, 2014, respectively.

Convertible Notes Payable – Non-Related Party

Convertible notes payable – non-related party consisted of the following at:

	March 31, 2015			December 31, 2014
Convertible note payable to Robert Cowdell,  maturing on December 31, 2014, with interest at 10%	$	61,443		$	61,443
Convertible note payable to an accredited investor, maturing on September 30, 2015, with interest at 10%		17,700			45,300
Convertible note payable to an accredited investor, maturing on January 6, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on February 18, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on March 26, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on April 25, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on May 21, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on June 25, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on July 15, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on August 19, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on September 17, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on October 13, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on November 7, 2015, with interest at 10%		100,000			100,000
Convertible note payable to an accredited investor, maturing on December 17, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on January 14, 2016, with interest at 10%		70,000			-
Convertible note payable to an accredited investor, maturing on February 10, 2016, with interest at 10%		30,000			-
Convertible note payable to an accredited investor, maturing on November 11, 2015, with interest at 10%		30,000			-
Convertible note payable to an accredited investor, maturing on November 25, 2015, with interest at 10%		40,000			-
Convertible note payable to an accredited investor, maturing on December 10, 2015, with interest at 10%		110,000			-
Total		1,009,143			756,743
Less discount		(307,684	)		(343,902	)
	$	701,459		$	412,841

10

On December 31, 2013, the Company converted $55,429 of convertible debt and $6,014 in accrued interest due to Robert Cowdell (the “Convertible Cowdell Note”) into a convertible note. The Convertible Cowdell Note is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005. The Convertible Cowdell Note had accrued interest of $7,659 and $6,144 as of March 31, 2015 and December 31, 2014, respectively.

The Company evaluated the Convertible Cowdell Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The agreement modified the debt to make it convertible into common stock of the Company.

The convertible notes to an accredited investor (the “Accredited Investor”) were issued in $50,000 tranches in December 2013 and January, February, March, April, May, June, July, August, September, October and December 2014, and tranches of $100,000 in November 2014, $70,000 in January 2015, two $30,000 tranches in February 2015, $40,000 in February 2015 and $110,000 in March 2015. Each note is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005. The notes also include conversion price reset features that are triggered when new equity issuances are made by the Company; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the notes is generally one year from the date of funding with the exception of the last three notes issued during the three months ended March 31, 2015, which have a maturity date of nine months from the date of funding.

The December 2013 derivative was valued at $50,453, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized at December 31, 2014. The December 2013 note had accrued interest of $329 and $4,068 as of March 31, 2015 and December 31, 2014, respectively.

The January 2014 derivative was valued as of January 6, 2014 at $44,493, of which all was recorded as a debt discount. During the three months ended March 31, 2015, $731 was amortized from the debt discount. The debt discount was fully amortized at March 31, 2015. The January 2014 note had accrued interest of $6,096 and $4,863 as of March 31, 2015 and December 31, 2014, respectively.

The February 2014 derivative was valued as of February 18, 2014 at $44,556, of which all was recorded as a debt discount. During the three months ended March 31, 2015, $5,981 was amortized from the debt discount. The debt discount was fully amortized at March 31, 2015. The February 2014 note had accrued interest of $5,562 and $5,981 as of March 31, 2015 and December 31, 2014, respectively.

The March 2014 derivative was valued as of March 26, 2014 at $77,884, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $11,644 was amortized from the debt discount. The debt discount was fully amortized at March 31, 2015. The March 2014 note had accrued interest of $5,068 and $3,836 as of March 31, 2015 and December 31, 2014, respectively.

11

The April 2014 derivative was valued as of April 25, 2014 at $90,605, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $12,328 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $3,425. The April 2014 note had accrued interest of $4,658 and $3,425 as of March 31, 2015 and December 31, 2014, respectively.

The May 2014 derivative was valued as of May 21, 2014 at $95,029, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $12,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $6,986. The May 2014 note had accrued interest of $4,301 and $3,068 as of March 31, 2015 and December 31, 2014, respectively.

The June 2014 derivative was valued as of June 25, 2014 at $83,184, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $12,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $11,781. The June 2014 note had accrued interest of $3,808 and $2,575 as of March 31, 2015 and December 31, 2014, respectively.

The July 2014 derivative was valued as of July 15, 2014 at $73,999, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $12,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $14,520. The July 2014 note had accrued interest of $3,534 and $2,301 as of March 31, 2015 and December 31, 2014, respectively.

The August 2014 derivative was valued as of August 19, 2014 at $64,104, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $12,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $19,315. The August 2014 note had accrued interest of $3,055 and $1,822 as of March 31, 2015 and December 31, 2014, respectively.

The September 2014 derivative was valued as of September 17, 2014 at $62,915, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $12,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $23,287. The September 2014 note had accrued interest of $2,671 and $1,438 as of March 31, 2015 and December 31, 2014, respectively.

The October 2014 derivative was valued as of October 13, 2014 at $63,347, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $12,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $26,849. The October 2014 note had accrued interest of $2,301 and $1,068 as of March 31, 2015 and December 31, 2014, respectively.

The November 2014 derivative was valued as of November 7, 2014 at $99,757, of which all was recorded as a debt discount. During the three months ended March 31, 2015, $24,597 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $60,401. The November 2014 note had accrued interest of $4,137 and $1,671 as of March 31, 2015 and December 31, 2014, respectively.

The December 2014 derivative was valued as of December 17, 2014 at $58,456, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $12,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $35,753. The December 2014 note had accrued interest of $1,411 and $178 as of March 31, 2015 and December 31, 2014, respectively.

12

The January 2015 derivative was valued as of January 14, 2015 at $29,360, of which all was recorded as a debt discount. During the three months ended March 31, 2015, $6,113 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $23,247. The January 2015 note had accrued interest of $1,477 as of March 31, 2015.

The first February 2015 derivative was valued as of February 10, 2015 at $23,984, of which all was recorded as a debt discount. During the three months ended March 31, 2015, $3,220 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $20,764. The first February 2015 note had accrued interest of $411 as of March 31, 2015.

The second February 2015 derivative was valued as of February 11, 2015 at $18,003, of which all was recorded as a debt discount. During the three months ended March 31, 2015, $3,165 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $14,838. The second February 2015 note had accrued interest of $403 as of March 31, 2015.

The third February 2015 derivative was valued as of February 25, 2015 at $19,494, of which all was recorded as a debt discount. During the three months ended March 31, 2015, $2,428 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $17,066. The third February 2015 note had accrued interest of $575 as of March 31, 2015.

The March 2015 derivative was valued as of March 10, 2015 at $31,885, of which all was recorded as a debt discount. During the three months ended March 31, 2015, $2,435 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $29,450. The March 2015 note had accrued interest of $663 as of March 31, 2015.

Total accrued interest payable for the above non-related party convertible notes was $60,042 and $41,385 as of March 31, 2015 and December 31, 2014, respectively.

The Company recorded total interest expense, including debt discount and beneficial conversion feature amortization, for all debt of $217,748 and $163,698 for the three months ended March 31, 2015 and 2014, respectively.

NOTE 5 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company adopted FASB ASC 820 on October 1, 2008. Under this FASB, fair value is defined 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. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

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The Company has various financial instruments that must be measured under the new fair value standard including: cash and debt. The Company currently does not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The fair value of the Company’s cash is based on quoted prices and therefore classified as Level 1.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

Cash, accounts receivable, capitalized production costs, prepaid royalties, prepaid expenses, accounts payable, accrued compensation, accrued royalties, accrued interest, accrued expenses, unearned royalties, notes payable – related party and technology payables reported on the balance sheet are estimated by management to approximate fair market value due to their short term nature.

The following tables provide a summary of the fair values of assets and liabilities measured on a non-recurring basis as of March 31, 2015 and December 31, 2014:

March 31, 2015	Total		Level 1		Level 2		Level 3		Losses (Gains)
Derivative liabilities	$	501,728	$	-	$	-	$	501,728	$	8,753

December 31, 2014	Total		Level 1		Level 2		Level 3		Losses (Gains)
Derivative liabilities	$	438,374	$	-	$	-	$	438,374	$	(241,154	)

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NOTE 6 – DERIVATIVE FINANCIAL INSTRUMENTS

As discussed in Note 4, the Company issued convertible notes payable to non-related parties that contain anti-dilutive, or down round, price protection. Pursuant to ASC 815-15 Embedded Derivatives and ASC 815-40 Contracts in Entity’s Own Equity, the Company recorded a derivative liability for the price protection provisions issued within the convertible debt transactions.

The fair values of the Company’s derivative liabilities are estimated at the issuance date and are revalued at each subsequent reporting date using a multinomial lattice model simulation discussed below. At March 31, 2015 and December 31, 2014, the Company recorded current derivative liabilities of $501,728 and $438,374, respectively. The net change in fair value of the derivative liabilities for the three months ended March 31, 2015 was a loss of $8,753, which was reported as other expense in the statements of operations.

The following table presents details of the Company’s derivative liabilities for the three months ended March 31, 2015:

Balance, December 31, 2014	$	438,374
Increases in derivative value due to new issuances of notes		122,726
Derivative adjustment due to debt conversion		(68,125	)
Change in fair value of derivative liabilities		8,753
Balance, March 31, 2015	$	501,728

The Company calculated the fair value of the compound embedded derivatives using a multinomial lattice model simulation. The model is based on a probability weighted discounted cash flow model using projections of the various potential outcomes.

Key inputs and assumptions used in valuing the Company’s derivative liabilities are as follows for issuances of notes:

· Stock prices on all measurement dates were based on the fair market value

· Down round protection is based on the subsequent issuance of common stock at prices less than the conversion feature

· The probability of future financing was estimated at 100%

· Computed volatility ranging from 302% to 309%

See Note 5 for a discussion of fair value measurements.

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NOTE 7 – STOCKHOLDERS’ DEFICIT

Stock Issuances

The Company is authorized to issue up to 500,000,000 shares of its $.001 par value common stock, and up to 10,000,000 shares of its $.001 par value preferred stock.

As of March 31, 2015 and December 31, 2014, 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 96,000 shares of its common stock, payable in 8 quarterly installments of 12,000 shares.

During the three months ended March 31, 2015, the Company issued a total of 27,192,590 shares of its common stock to an accredited investor in conversion of $27,600 principal and $3,357 accrued interest payable at a conversion prices ranging from $0.00097 to $0.00135 per share. As a result of the debt conversions, common stock was increased by $27,193 and additional paid-in capital was increased by $71,889.

2006 Stock Option Plan

The 2006 Stock Option Plan was adopted by our Board of Directors in March of 2006. A total of 550,000 shares of Common Stock have been reserved for issuance to employees, consultants and directors upon exercise of incentive and non-statutory options and stock purchase rights which may be granted under the Company’s 2006 Stock Plan (the “2006 Plan”). On October 15, 2009, 235,000 of those options were exercised, leaving 315,000 shares available for issuance to employees. Because of the 5.31-for-one forward stock split of the Company’s common stock on October 15, 2009, there are now 1,512,650 shares available for issuance as a part of this stock plan. As of March 31, 2015, there were 560,000 options outstanding to purchase shares of Common Stock, and no shares of Common Stock had been issued pursuant to stock purchase rights under the 2006 Plan.

Under the 2006 Plan, options may be granted to employees, directors, and consultants. Only employees may receive “incentive stock options,” which are intended to qualify for certain tax treatment, and consultants and directors may receive “non-statutory stock options,” which do not qualify for such treatment. A holder of more than 10% of the outstanding voting shares may only be granted options with an exercise price of at least 110% of the fair market value of the underlying stock on the date of the grant, and if such holder has incentive stock options, the term of the options must not exceed five years.

Options and stock purchase rights granted under the 2006 Plan generally vest ratably over a four year period (typically 1⁄4 or 25% of the shares vest after the 1st year and 1/48 of the remaining shares vest each month thereafter); however, alternative vesting schedules may be approved by the Board of Directors in its sole discretion. Any unvested portion of an option or stock purchase right will accelerate and become fully vested if a holder’s service with the Company is terminated by the Company without cause within twelve months following a Change in Control (as defined in the 2006 Plan).

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All options must be exercised within ten years after the date of grant. Upon a holder’s termination of service for any reason prior to a Change in Control, the Company may repurchase any shares issued to such holder upon the exercise of options or stock purchase rights. The Board of Directors may amend the 2006 Plan at any time. The 2006 Plan will terminate in 2016, unless terminated sooner by the Board of Directors.

The Company did not grant any stock options or warrants during the three months ended March 31, 2015, and did not record any stock-based compensation expense during the three months ended March 31, 2015 and 2014.

A summary of the status of the options and warrants issued by the Company as of March 31, 2015, and changes during the three months then ended is presented below:

			Weighted Average
	Shares		Exercise Price
Outstanding, December 31, 2014		560,000	$	0.10
Granted		-		-
Canceled / Expired		-		-
Exercised		-		-
Outstanding, March 31, 2015		560,000	$	0.10

NOTE 8 – LOSS PER COMMON 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 and rights outstanding using the treasury stock method and the average market price per share during the period.

For the three months ended March 31, 2015 and 2014, the diluted weighted average number of shares is the same as the basic weighted average number of shares as the conversion of debt, options and warrants would be anti-dilutive.

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NOTE 9 – RELATED PARTY TRANSACTIONS

The Company had convertible notes payable to related parties totaling $1,456,254 as of March 31, 2015 and December 31, 2014. See Note 4 for a detailed disclosure of this related party debt, including interest rates, terms of conversion and other repayment terms. Accrued interest payable to related parties was $104,014 and $68,106 as of March 31, 2015 and December 31, 2014, respectively.

NOTE 10 – RECENT ACCOUNTING PRONOUNCEMENTS

There were no new accounting pronouncements issued during the three months ended March 31, 2015 and through the date of the filing of this report that we believe are applicable to or would have a material impact on our consolidated financial statements.

NOTE 11 – SUBSEQUENT EVENTS

Subsequent to March 31, 2015, we received additional consideration of $88,000 from an accredited investor pursuant to an existing convertible promissory note. The note payable matures nine months from the date of each payment of consideration and bears interest at the rate of 10% per annum. The conversion terms are the same as those described in Note 4 for the prior convertible notes payable to the accredited investor.

Subsequent to March 31, 2015, we issued a total of 21,574,287 shares of our common stock in the conversion of convertible notes payable principal totaling $17,900 and accrued interest payable totaling $2,447.

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

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

Although the forward-looking statements in this Quarterly Statement reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

The following discussion and analysis of our financial condition and results of operations is based upon, and should be read in conjunction with, its unaudited condensed financial statements and related notes located elsewhere in this Quarterly Report on Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States.

Summary Overview

Freeze Tag, Inc. is a leading creator of mobile social games that are fun and engaging for all ages. Based on a free-to-play business model that has propelled games like Candy Crush Saga 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, or they can purchase virtual items and additional features within the game to increase the fun factor. Our games encourage players to compete and engage with their friends on major social networks such as Facebook and Twitter.

During our most recent fiscal quarter ended March 31, 2015, we generated revenues of $7,903 from the sales our games compared to $14,842 for the quarter ended March 31, 2014.

Our business strategy is now focused on free-to-play games that require constant updates and new content to keep players engaged. Therefore, we no longer measure our success based upon the quantity of titles we launch, but rather on the metrics we receive as we monitor and try to improve upon our games in the market. On November 6, 2014, we released our most recent update to Party Animals: Dance Battle and began a worldwide (English only) promotion and press campaign of the game. In fiscal year 2015, we anticipate continuing to release updates to Party Animals: Dance Battle and begin development and testing on at least four other titles with a goal to release one title per quarter.

During the quarter ended March 31, 2015, we generated a net loss of $497,001, primarily attributable to increases in cost of sales and interest, as described below.

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Going Concern Uncertainty

As shown in the accompanying financial statements for the three-month periods ended March 31, 2015 and 2014, we incurred net losses of $497,001 and $320,387, respectively. As of March 31, 2015, our accumulated deficit was $7,610,834. During the period ended March 31, 2015 and the year ended December 3l, 2014, we experienced negative cash flows from operations largely due to our continued investment spending for product development of game titles for smartphones and tablets that are expected to benefit future periods. Those facts, along with our lack of access to a significant bank credit facility, create an uncertainty about our ability to continue as a going concern. Accordingly, we are currently evaluating our alternatives to secure financing sufficient to support the operating requirements of our current business plan, as well as continuing to execute our business strategy of distributing game titles to digital distribution outlets, including mobile gaming app stores, online PC and Mac gaming portals, and opportunities for new devices such as tablet (mobile internet device) applications, mobile gaming platforms and international licensing opportunities.

Our ability to continue as a going concern is dependent upon our success in securing sufficient financing and in successfully executing our plans to return to positive cash flows during fiscal 2015. Our financial statements do not include any adjustments that might be necessary if we were unable to continue as a going concern.

Results of Operations

Revenues

Our revenues decreased $6,939 to $7,903 for the three months ended March 31, 2015 from $14,842 for the three months ended March 31, 2014. Our revenues decreased due to our focused efforts on building games in the free-to-play game genre. Previously, the majority of our released game titles were “pay-per-download”, where the consumer paid to download the game onto their device, leading to revenue per download. Now our games are free to download and play, but have built-in features that require the consumer to pay if they want to access the feature, which means our revenue is tied to when the consumer pays to access the features, if they do. Our revenue can typically fluctuate based on when we release our games and the popularity of the games we release.

We are continuing development on Party Animals (one of our free-to-play games). We released an update in the third quarter of 2014, and have released the game for Worldwide (English language only) distribution as of November 6, 2014. We are currently working on two other free-to-play titles, with the goal of releasing four titles in 2015.

Operating Costs and Expenses

Our cost of sales increased $103,784 to $127,324 for the three months ended March 31, 2015 from $23,540 for the three months ended March 31, 2014. Our cost of sales includes royalties, subcontractors and internal costs of programming, analytics, and design.

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Our selling, general and administrative expenses increased $10,055 to $150,679 for the three months ended March 31, 2015 from $140,624 for the three months ended March 31, 2014. The increase in selling, general and administrative expenses was primarily due to an increase in public relations services and payroll expense. Our sales and marketing also increased due to promotional and research efforts related to acquiring users and game testing Party Animals: Dance Battle.

Our depreciation and amortization expense decreased $6,100 to $0 for the three months ended March 31, 2015 from $6,100 for the three months ended March 31, 2014. The decrease in depreciation and amortization 2014 was due to our property and equipment being fully depreciated and to no amounts of technology subject to amortization.

Other Income (Expense)

Our interest expense increased $54,050 to $217,748 for the three months ended March 31, 2015, from $163,698 for the three months ended March 31, 2014. The increase in interest expense is due to the increase in our debt in the current year and the related debt discounts that are amortized to interest expense.

Our estimate of the fair value of the derivative liability for the conversion feature of our convertible notes payable is based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, and variable conversion prices based on market prices as defined in the respective loan agreements. These inputs are subject to significant changes from period to period; therefore, the estimated fair value of the derivative liability will fluctuate from period to period and the fluctuation may be material. We reported a loss on change in derivative liability of $8,753 for the three months ended March 31, 2015. We reported no gain or loss on change in derivative liability for the three months ended March 31, 2014.

Net Loss

As a result of the above, our net loss increased to $497,001 for the three months ended March 31, 2015 from $320,387 for the three months ended March 31, 2014.

Liquidity and Capital Resources

Introduction

As of March 31, 2015, we had current assets of $38,904 and current liabilities of $3,628,617, resulting in a working capital deficit of $3,589,713. In addition, we had an accumulated deficit of $7,610,834 and a total stockholders’ deficit of $3,589,713 as of March 31, 2015.

During the three months ended March 31, 2015, because of our operating losses, we did not generate positive operating cash flows. Our cash balance as of March 31, 2015 was $25,594, and our monthly cash flow burn rate, based on the three month period ended March 31, 2015, is approximately $90,000. As a result, we have significant short-term cash needs. These needs are currently being satisfied primarily from the proceeds from short-term convertible debt. We intend to raise additional capital through the issuance of debt from third parties and other related parties until such time as our cash flows from operations will satisfy our cash flow needs. There can be no assurance that we will be successful in these efforts.

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Sources and Uses of Cash

We used cash of $269,094 in operating activities for the three months ended March 31, 2015 as a result of our net loss of $497,001 and decreases in accounts payable of $7,342 and unearned royalties of $1,833, partially offset by non-cash expenses totaling $167,697, decreases in accounts receivable, net of $8,002, and prepaid expenses and other current assets of $3,130, and increases in accrued expenses of $331, accrued interest payable – related party of $35,908 and accrued interest payable of $22,014.

By comparison, we used cash of $147,006 in operating activities for the three months ended March 31, 2014 as a result of our net loss of $320,387 and decreases in accounts payable of $3,890 and unearned royalties of $2,425, partially offset by non-cash expenses totaling $129,463, decreases in accounts receivable, net of $2,312 and prepaid expenses and other current assets of $1,082, and increases in accrued expenses of $6,510, accrued interest payable – related party of $35,800 and accrued interest payable of $4,529.

We had no cash provided by or used by investing activities for the three months ended March 31, 2015 and 2014.

We had net cash provided by financing activities of $280,000 and $150,000 for the three months ended March 31, 2015 and 2014, respectively, comprised of borrowings of debt – proceeds from the issuance of short-term convertible notes payable to non-related parties.

Debt Instruments, Guarantees, and Related Covenants

We have no disclosures required by this item.

Critical Accounting Policies

The preparation of our condensed consolidated 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 our Annual Report on Form 10-K for the year ended December 31, 2014. There have been no changes to our significant accounting policies since December 31, 2014.

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.

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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 three month period ended March 31, 2015, our disclosure controls and procedures were 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

During the three months ended March 31, 2015, we engaged an outside financial consultant to address the material weaknesses in internal controls over financial reporting that we have previously reported related to insufficient segregation of duties and the documentation, evaluation and testing of internal controls. The financial consultant now allows us to further segregate the preparation and review of key account analyses and reconciliations, more timely close our quarterly accounting records and prepare our quarterly financial statements, and improve our documentation of material transactions.

Other than the changes reported in the preceding paragraph, 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.

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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

During the three months ended March 31, 2015, we issued the following unregistered securities:

On February 11, 2015, we entered into a Convertible Promissory Note (the "Note”) with an accredited investor (the "Accredited Investor") under which the Accredited Investor agreed to loan us up to Five Hundred Thousand Dollars ($500,000). The Note bears interest at Ten Percent (10%) per annum and matures on November 11, 2015. Under the terms of the Note, the Accredited Investor agreed to loan us Thirty Thousand Dollars ($30,000) upon execution of the Note and can loan us the additional amounts up to Five Hundred Thousand Dollars ($500,000) at any time in their sole discretion. The Accredited Investor has the right, at any time after February 11, 2015, at its election, to convert all or part of the amounts due to it under the Note into shares of our common stock. The conversion price shall be the lesser of (a) $0.003 per share of our common stock or (b) Fifty Percent (50%) of the average of the three (3) lowest trade prices on three (3) separate trading days of our common stock recorded after February 11, 2015, or (c) the lowest effective price per share granted to any person or entity after February 11, 2015 to acquire our common stock or adjust, whether by operation of purchase price adjustment, settlement agreements, exchange agreements, reset provision, floating conversion or otherwise, any outstanding warrant, option or other right to acquire our common stock or outstanding our common stock equivalents, excluding any lower price per share offered to any of our officers and directors. However, the Accredited Investor may not convert the amounts due under the Note into shares of our common stock if such conversion would cause it to own more than 4.99% of our then-outstanding common stock. Based on the representation and warranties provided by the Accredited Investor in the investment documents, the issuance of the Note was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, due to the fact the Accredited Investor is an accredited investor and is familiar with our operations.

ITEM 3 Defaults Upon Senior Securities

There have been no events that are required to be reported under 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.

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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 (10)	Articles of Amendment to Certificate of Incorporation February 4, 2014
4.1 (1)	Freeze Tag, Inc. 2006 Stock Plan
10.1 (1)	10% Convertible Promissory Note dated July 1, 2010 with The Holland Family Trust
10.2 (1)	Support Services Agreement with Cardiff Partners, LLC dated October 12, 2009
10.3 (1)	Amendment No. 1 to Support Services Agreement with Cardiff Partners, LLC dated March 2, 2010
10.4 (1)	Amendment No. 2 to Support Services Agreement with Cardiff Partners, LLC dated March 3, 2010
10.5 (1)	Form of Conversion Agreement for October 2009 Conversions
10.6 (1)	Form of Option Conversion Agreement for October 2009 Conversions
10.7 (1)	Placement Agent and Advisory Services Agreement with Monarch Bay Associates, LLC dated October 12, 2009
10.8 (1)	Corporate Communications Consulting Agreement Michael Southworth dated September 25, 2009
10.9 (1)	Lock-Up Agreement dated November 10, 2009
10.10 (2)	Loan Agreement with Sunwest Bank dated October 20, 2006, as amended
10.11 (3)	Securities Purchase Agreement with Asher Enterprises, Inc. dated July 21, 2011
10.12 (3)	Convertible Promissory Note with Asher Enterprises, Inc. dated July 21, 2011
10.13 (4)	Technology Transfer Agreement dated June 22, 2011

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10.14 (5)	Securities Purchase Agreement with Asher Enterprises, Inc. dated September 16, 2011
10.15 (5)	Convertible Promissory Note with Asher Enterprises, Inc. dated September 16, 2011
10.16 (6)	Securities Purchase Agreement with Asher Enterprises, Inc. dated December 6, 2011
10.16 (6)	Convertible Promissory Note with Asher Enterprises, Inc. dated December 6, 2011
10.17 (7)	Letter Agreement with Crucible Capital, Inc. dated February 29, 2012
10.18 (8)	Amendment No. 1 to Securities Purchase Agreement with Asher Enterprises, Inc. dated July 21, 2011
10.19 (8)	Amendment No. 1 to Securities Purchase Agreement with Asher Enterprises, Inc. dated September 16, 2011
10.20 (8)	Amendment No. 1 to Securities Purchase Agreement with Asher Enterprises, Inc. dated December 6, 2011
10.21 (8)	Amendment No. 1 to Promissory Note with The Lebrecht Group, APLC dated November 17, 2011
10.22 (9)	Convertible Promissory Note (10%) dated December 20, 2013 – Accredited Investor
10.23 (9)	Convertible Promissory Note (10%) dated December 31, 2013 – Craig Holland Debt
10.24 (9)	Convertible Promissory Note (10%) dated December 31, 2013 – Craig Holland Salary
10.25 (9)	Convertible Promissory Note (10%) dated December 31, 2013 – Mick Donahoo Salary
10.26 (9)	Convertible Promissory Note (10%) dated December 31, 2013 – Mick Donahoo Debt
10.27 (9)	Convertible Promissory Note (10%) dated December 31, 2013 – Robert Cowdell
10.28 (11)	Convertible Promissory Note (10%) dated September 30, 2014 – Holland Family Trust
10.29 (11)	Convertible Promissory Note (10%) dated September 30, 2014 – Craig Holland
10.30*	Consulting and Co-Development Agreement with Gogii Games Corp. dated November 17, 2014 (Redacted Version)
10.31*	Convertible Promissory Note with an accredited investor dated February 11, 2015
10.32*	Master Development Agreement with TIC TOC STUDIOS, LLC dated February 18, 2015 (Redacted Version)
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

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32.1*	Section 1350 Certification of Chief Executive Officer
32.2*	Section 1350 Certification of Chief Financial Officer.
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase 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.
(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 Amendment No. 2 to our Registration Statement on Form S-1/A2, filed with the Commission on October 25, 2010.
(3)	Incorporated by reference from Current Report on Form 8-K filed with the Commission on August 3, 2011.
(4)	Incorporated by reference from Quarterly Report on Form 10-Q for the period ended June 30, 2011 filed with the Commission on August 15, 2011.
(5)	Incorporated by reference from Current Report on Form 8-K filed with the Commission on September 21, 2011.
(6)	Incorporated by reference from Current Report on Form 8-K filed with the Commission on December 23, 2011.
(7)	Incorporated by reference from Current Report on Form 8-K filed with the Commission on March 8, 2012.
(8)	Incorporated by reference from Annual Report on Form 10-K filed with the Commission on March 30, 2012.
(9)	Incorporated by reference from Current Report on Form 8-K filed with the Commission on October 4, 2013.
(10)	Incorporated by reference from Annual Report on Form 10-K filed with the Commission on March 31, 2014.
(11)	Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on November 14, 2014.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Freeze Tag, Inc.
Dated: May 15, 2015	By:	/s/ Craig Holland
	Name:	Craig Holland
	Its:	President and Chief Executive Officer

28

EX-10.30

EXHIBIT 10.30

November 17, 2014

CONSULTING AND CO-DEVELOPMENT AGREEMENT

THIS AGREEMENT made as of the 17th day of November, 2014, (the “Effective Date”) AMONG:

Gogii Games Corp., a corporation incorporated under the laws of the Province of New Brunswick (Canada) and having its registered office at 713 Main Street, 3^rd Floor, Moncton, NB, Canada E1C 1E3 (hereinafter “Gogii”)

-and-

Freeze Tag, Inc., a corporation incorporated under the laws of the State of Delaware (USA) and having its registered office at 18062 Irvine Blvd., Suite 103, Tustin, CA, USA 92780 (hereinafter “Freeze Tag”)

WHEREAS Gogii and Freeze Tag are both engaged in the business of developing and distributing computer software games for consumer end users;

AND WHEREAS Gogii has extensive experience in such game development and has developed a game engine and framework entitled the ‘Kingdoms Engine’ (the “Engine”) that can be utilized to accelerate the development of software games;

AND WHEREAS Freeze Tag desires to license Gogii’s Engine and also desires to engage the services of Gogii to co-develop and integrate a certain computer software game for certain platforms (the “Software”) using the Engine, and Gogii is willing to license its Engine and provide such services to Freeze Tag.

NOW THEREFORE in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. CO-DEVELOPMENT AND INTEGRATION  

1.1 Freeze Tag hereby engages Gogii to (a) co-develop and/or integrate the Software using the Engine, and (b) create, where necessary, visual characteristics, screen images, “look and feel,” and any other necessary distinctive art and design features and characteristics required for the Software (collectively, the “Design and Art”) of the game or games set out in Schedule "A" attached hereto (collectively all of the foregoing is hereinafter the "Product"). To the extent necessary and commercially reasonable, Gogii shall make modifications to the Engine to allow the Product to function in substantial conformity with the Product Specifications, as hereinafter defined.

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November 17, 2014

1.2	The Product shall be co-developed and/or integrated by Gogii for use on a platform or platforms, as set out in Schedule “A” attached hereto. Gogii and Freeze Tag shall consult and co-operate with each other on a regular basis with respect to progress being made in the co-development and/or integration of the Product, with Freeze Tag having the final approval for the Product.
1.3	Freeze Tag shall provide Gogii with the necessary assets to allow for the co-development and/or integration of the Product, as set out in Schedule “C” attached hereto (the “Assets”), in accordance with the schedule outlined in Schedule “B”, also attached hereto. Each post-Asset Delivery Milestone, as hereinafter defined, must be approved or disapproved in accordance with Section 5 below.

2. OWNERSHIP

2.1

Freeze Tag shall be the exclusive owner of all right, title, and interest in and to the Product, expressly excepting and excluding the Engine or any modifications to the Engine or derivatives thereof, but including (without limiting the foregoing) the Software, Design and Art, Assets and all other intellectual property of any nature or kind and all rights associated therewith, including without limitation, all rights of copyright, patent, trade secret, trade-mark, service mark, trade dress, artistic and moral rights, mask rights, character rights, publicity rights, and any and all other proprietary rights of any kind whatsoever relating to the Product or derivative works of any of the foregoing (collectively, the “Product Rights”) together with any and all applications, registrations, renewal and extension rights, and rights to sue for any past, present, or future infringement. To the extent that Gogii has or obtains any right, title or interest in the Product Rights, it hereby transfers, sells, and assigns to Freeze Tag all of its worldwide right, title, and interest in and to the Product Rights and hereby expressly waives in favour of Freeze Tag (or any assignee, license or sub-licensee thereof) any and all moral or similar non-assignable rights relating to the Product Rights provided that nothing herein shall transfer any right, title or interest in and to the Engine or any modifications made using the Engine to the Product.

2.2

Gogii shall be the exclusive owner of all right, title, and interest in and to the Engine or any modifications to the Engine or any derivatives of the Engine (whether created by Gogii or Freeze Tag), including (without limiting the foregoing) all intellectual property of any nature or kind and all rights associated therewith, including without limitation, all rights of copyright, patent, trade secret, trade-mark, service mark, trade dress, artistic and moral rights, mask rights, character rights, publicity rights, and any and all other proprietary rights of any kind whatsoever relating to the Engine or derivative works of any of the foregoing (collectively, the “Engine Rights”) together with any and all applications, registrations, renewal and extension rights, and rights to sue for any past, present, or future infringement. To the extent that Freeze Tag has or obtains any right, title or interest in the Engine Rights, it hereby transfers, sells, and assigns to Gogii all of its worldwide right, title, and interest in and to the Engine Rights and hereby expressly waives in favour of Gogii (or any assignee, license or sub-licensee thereof) any and all moral or similar non-assignable rights relating to the Engine Rights.

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November 17, 2014 

3. LICENSE

3.1	Gogii hereby grants to Freeze Tag and Freeze Tag hereby accepts a non-exclusive, worldwide and perpetual license to use the Engine solely to the extent the Engine is incorporated in or necessary to use the Product in conformity with the Product Specifications. As part of this license, Freeze Tag shall have such source code access and right to make modifications to the Engine (such modifications subject to Sub-section 2.2) solely as reasonably necessary to allow the Product to function in substantial conformity with the Product Specifications. Freeze Tag shall have no other rights to the Engine, except as herein provided.
3.2	Freeze Tag shall be allowed to sub-license the license granted by this Section 3 to end users of the Product solely and to the limited extent necessary to allow them to use the Product and such sub-license shall not allow such users to access or view the source code, disassemble, decompile or otherwise reverse engineer the Engine or to make any derivatives thereof or modifications thereto.
3.3	The license to Freeze Tag in this Section 3 shall be irrevocable, provided that Freeze Tag is not in default of any of its obligations (including payment obligations) under this Agreement and provided that this Agreement has not otherwise expired or been terminated.

4. PHASES OF CO-DEVELOPMENT AND INTEGRATION

4.1	The Product shall be co-developed and/or integrated in the phases and in substantial conformity with the schedule described in Schedule "B" attached hereto (each, a “Milestone”) and in accordance with any specifications set out in Schedule “A” attached hereto or other specifications as may be agreed to from time to time by the parties (the “Product Specifications”).
4.2	Should Freeze Tag request any modifications to the Milestones and/or the Product Specifications, Gogii shall provide Freeze Tag with a change order proposal for such requests, detailing the cost and schedule impact of such requested changes, if any. Freeze Tag shall review the change order proposal within five (5) days of submission and shall either approve or disapprove the change order in writing. If the change order proposal is approved, it shall be an amendment to this Agreement. If the change order proposal is disapproved, Gogii is under no obligation to make the requested changes. In case Freeze Tag fails to notify Gogii in writing as to whether the change order proposal was approved or disapproved within the five (5) days, the change order shall be considered automatically disapproved at that time.
4.3	The parties, by mutual written agreement, may make any other modifications to the Milestones and/or the Product Specifications.

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5. REVIEW AND ACCEPTANCE

5.1	Upon completion of each of the post-Asset Delivery Milestones, Gogii shall provide a notice to this effect to Freeze Tag (the “Completion Notice”).
5.2	After the receipt of each Completion Notice by Freeze Tag, Freeze Tag and Gogii shall consult and cooperate with each other to determine whether the work undertaken during such Milestone substantially conforms to the applicable Product Specifications and/or Milestone requirements. Each such Milestone must be approved by Freeze Tag within five (5) days of receipt of the applicable Completion Notice and if the Milestone is not approved, Freeze Tag shall notify Gogii in writing as to why the Milestone was not approved in accordance with this Section 5, by the issuance of a Defect Notice, as hereinafter defined. In case Freeze Tag fails to notify Gogii in writing as to whether the Milestone was approved or fails to issue a Defect Notice in writing within the five (5) days, the Milestone shall be considered automatically approved at that time and it shall be deemed that the work conforms to the applicable Product Specifications and/or Milestone requirements.
5.3	In the event Freeze Tag determines, acting reasonably, that the work covered by a Completion Notice does not substantially conform to the applicable Product Specifications and/or Milestone requirements, Freeze Tag shall provide written notice to Gogii containing a detailed description of the failure to conform (the “Defect Notice”). Within five (5) days after its receipt of the Defect Notice, Gogii shall make such commercially reasonable corrections or modifications as may be necessary for the work to substantially conform with the applicable Product Specifications and/or Milestone requirements and issue a revised Completion Notice and thereafter the procedures of this this Section 5 shall apply with such modifications as necessitated by the context, provided, however that should Freeze Tag issue a second Defect Notice for the same Milestone, the parties shall consult and cooperate with each other to determine how to proceed, including considering reasonable modifications to the applicable Product Specifications and/or Milestone requirements.

6. COMPENSATION, ROYALTIES AND AUDITS

6.1

As compensation for its performance of co-development and integration services hereunder, Freeze Tag shall pay Gogii in accordance with the payments described in Schedule "B" (weekly payments referenced therein, notwithstanding the Effective Date, shall accrue effective as of the week starting November 3, 2014), unless otherwise modified by an approved change order proposal in accordance with Section 4, above. With the exception of the initial payment payable immediately upon the execution of this Agreement, Gogii shall invoice Freeze Tag on bi-weekly basis and Freeze Tag shall pay such invoice within five (5) days of receipt, in any manner as reasonably determined and requested by Gogii.

6.2

As compensation for the license to the Engine described in Section 3, above, Freeze Tag shall pay Gogii the amounts payable for maintenance and technical support services, pursuant to Sub-section 10.2.

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November 17, 2014

7. AUTHORIZATIONS

Except with respect to the Engine provided by Gogii, Freeze Tag shall be solely responsible for obtaining and shall obtain any and all consents, permits, licenses, releases, and any other authorizations required in connection with the use, sale of distribution of the Product, including with the use of any copyrighted materials, patents, trade secrets, trade-marks, service marks, trade dress, characters, or any other proprietary materials used as a part of or in connection with the Product.

8. REPRESENTATIONS AND WARRANTIES

8.1 Each party represents and warrants to the other party that:

8.1.1	It is authorized to enter into this Agreement and has the capacity to perform its obligations under this Agreement; and
8.1.2	It is not a party to, subject to or bound by any agreement, contract, license, sub-license or any other commitment of any kind with any third party that would prevent, or that would be breached or violated by, the execution, performance and delivery of this Agreement.

8.2	Freeze Tag represents and warrants to Gogii that the use of the Assets, as provided for in this Agreement, do not infringe the intellectual property or other proprietary rights of any other party (including, without limitation, any privacy, publicity or moral rights).
8.3	Gogii represents and warrants to Freeze Tag that:

8.3.1	Gogii has the right and authority to grant Freeze Tag the license to use the Engine as set out in this Agreement;
8.3.2	The use of the Engine, as provided for in this Agreement, does not infringe the intellectual property or other proprietary rights of any other party (including, without limitation, any privacy, publicity or moral rights); and
8.3.3	The co-development and/or integration of the Product shall be performed using commercially reasonable practices applicable to computer software game development.

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November 17, 2014

9. WARRANTY ON THE PRODUCT

Gogii warrants that the Product shall be free of material defects and shall operate substantially in accordance with any Product Specifications. In the event of a material defect in the Product that exists due to the negligence of Gogii, Gogii shall, at no expense to Freeze Tag or a consumer end user, make such repairs, corrections, adjustments, replacements, or changes in the Product as may be commercially reasonable in Gogii’s sole discretion under the circumstances. Gogii shall have no obligations under this Section in the event the Product or Engine is misused or damaged as a result of the actions of Freeze Tag or a consumer end user. Except as provided herein, there are no other warranties, express or implied, in respect of any services to be performed by Gogii or in respect of the Software or Product or the Engine.

10. OTHER SERVICES, MAINTENANCE AND TECHNICAL SUPPORT

10.1

At the request of Freeze Tag, Gogii may elect to provide such other services as may be requested by Freeze Tag in connection with the Product, including, the development of modifications and improvements, localization, facilitating delivery of the Product by downloading from the Internet, and facilitating compatibility with new and/or modified operating systems and/or computer hardware. Any and all such other services will be on terms and conditions (including compensation rates) as the parties agree to and Gogii shall be under no obligation to provide any such further services should an agreement not be reached.

10.2

Gogii shall provide Freeze Tag with such maintenance and technical support in relation to the Engine and/or Product, after the Product has reached the Final Milestone as may be commercially reasonable and as requested by Freeze Tag. Freeze Tag hereby agrees that it shall pay for such maintenance and technical support at the then current Gogii rates for such services, provided, however, that Freeze Tag shall pay Gogii a minimum of AMOUNT HERE per month for at least six (6) months after the Product has reached the Final Milestone, irrespective of Freeze Tag’s use or non-use of such services, in consideration for having the right to access such services. Gogii shall invoice Freeze Tag for any such services (including any minimums prescribed) and such invoices shall be payable by Freeze Tag within five (5) days of receipt of such invoice, in any manner as reasonably determined and requested by Gogii.

11. CONFIDENTIAL INFORMATION

11.1

All of the trade secrets and other confidential information of Gogii and Freeze Tag, including without limitation, methods, processes, marketing plans, strategic plans, customer lists, computer software, and financial information shall be maintained in confidence, and neither Gogii nor Freeze Tag shall, during the term of this Agreement or subsequent to the expiry or termination of this Agreement, whether such termination is voluntary or involuntary, divulge to any person or organization, or use in any manner whatsoever, directly or indirectly, for any reason whatsoever, any of the trade secrets or confidential information of the other party without receiving the prior written consent of the other party, except as may be legally required. Gogii and Freeze Tag shall take such actions as may be reasonably necessary to ensure that their employees and agents are bound by the provisions of this Section, which actions shall, as may be reasonably requested by either party, include the execution of written agreements with the employees and agents of the other party.

11.2

For the avoidance of doubt, the provisions of this Section shall not apply to information received by a party from the other party when that information: (a) was rightfully possessed by such party before it was received from the other party; (b) is independently developed by such party without reference to the other party’s information or data; (c) is subsequently furnished to such party by a third party not under any obligation of confidentiality with respect to such information or data, and without restrictions on use or disclosure; or (d) is or becomes public or available to the general public otherwise than through any act or default of such party.

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November 17, 2014

12. INDEMNIFICATION

Each party (the “Indemnifying Party”) and its successors and assigns shall indemnify, defend, and hold harmless the other party (the “Indemnified Party”) and its successors and assigns from and against and in respect of any and all claims, demands, losses, costs, expenses, obligations, liabilities, damages, recoveries and deficiencies, including interest, penalties and reasonable attorneys’ fees, that the Indemnified Party may incur or suffer, which arise, result from or relate to any claims asserted against the Indemnified Party relating to the Indemnifying Party’s breach of any of its representations or warranties specified in this Agreement, or the Indemnifying Party’s failure to perform any of its obligations pursuant to the provisions of this Agreement.

13. TERM AND TERMINATION 

13.1	This Agreement shall continue indefinitely unless it is terminated in accordance with the provisions of this Agreement. All amounts accrued and owing to Gogii by Freeze Tag up until the time of such termination shall become immediately payable upon such termination and all rights granted by either party to the other party shall also immediately terminate, including any and all license rights that Freeze Tag may have to the Engine.
13.2	Gogii and Freeze Tag may terminate this Agreement upon mutual consent, on such terms and conditions as they may agree to.
13.3	Gogii or Freeze Tag, as applicable, may immediately terminate this Agreement upon the occurrence of any of the following:

13.3.1	By either party after providing at least sixty (60) days prior written notice of termination to the other party.
13.3.2	By either party in the event of the other party’s failure to substantially perform any of its obligations under this Agreement after the expiration of thirty (30) days from receipt of a written notice from the other party communicating such failure, and such failure to perform is not cured within such thirty (30) day period.
13.3.3	By either party in the event the other party shall initiate or have initiated against it, voluntarily or involuntarily, any act, process or proceeding under the provisions of any bankruptcy law, or under any other insolvency law or other statute or law providing for the modification or adjustment of the rights of creditors, which act, process, or proceeding is not dismissed within sixty (60) days after it has been initiated.

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14. GENERAL PROVISIONS

14.1	Nature of Relationship - The provisions of this Agreement shall not in any respect whatsoever be deemed to create a partnership, joint venture, or other business combination between Gogii and Freeze Tag. Gogii and Freeze Tag shall conspicuously identify themselves to all persons and organizations as independent contractors and shall not represent or imply to any other person or organization that this Agreement authorizes either Gogii or Freeze Tag to act as an agent for or on behalf of the other party, other than as provided for in this Agreement. Neither Gogii nor Freeze Tag shall be obligated by any agreement, representation or warranty made by the other, nor shall Gogii or Freeze Tag be obligated for damages to any person or organization for personal injuries or property damage directly or indirectly arising out of the conduct of the other party’s business or caused by the other party’s negligence, willful act, or failure to act. As independent contractors, Gogii and Freeze Tag shall be separately responsible for the payment of their income or other taxes. In addition, Gogii and Freeze Tag shall be separately responsible (if and where legally required) for carrying workers’ compensation insurance on themselves and their employees and agents.
14.2	Further Assurances - Each party shall, from time to time, during or after the term of this Agreement, promptly execute and deliver all further documents without any further compensation, and take all further action necessary or appropriate to give effect to the provisions and intent of this Agreement.
14.3	Force Majeure - Neither Gogii nor Freeze Tag shall be in breach of this Agreement in the event they are unable to perform their obligations under this Agreement as a result of natural disaster, war, emergency conditions, labor strife, the substantial inoperability of the Internet, the inability to obtain supplies, or other reasons or conditions beyond their reasonable control; provided, however, if such reasons or conditions remain in effect for a period of more than ninety (90) days, either Gogii or Freeze Tag may terminate this Agreement without further liability to the other party.
14.4	Remedies - Injunctive or other equitable relief shall be a remedy available to either party in the event of a breach of any provision of this Agreement by the other party, but such remedy shall not be the exclusive remedy available to the parties.
14.5	Notices - Any notices required or permitted to be given under this Agreement shall be sufficient if in writing and personally delivered or sent by certified mail, express courier, e-mail or facsimile to the other party at its address set forth in this Agreement, or at such other address or addresses as the parties shall designate in writing by personal delivery, certified mail, express courier, e-mail or facsimile.

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November 17, 2014

Gogii’s e-mail:	EMAIL HERE
Gogii’s Facsimile:	[insert]
Freeze Tag’s e-mail:	EMAIL HERE
Freeze Tag’s Facsimile:	714-210-3851

14.6	Survival - The provisions of this Agreement which, by their terms, require performance after the termination of this Agreement, or have application to events that may occur after the termination of this Agreement, shall survive the termination of this Agreement.
14.7	Assignment and Delegation - Neither party shall, without the prior written consent of the other party, which consent shall not be unreasonably withheld, assign their rights or delegate their duties under this Agreement; provided, however, after providing the other party with at least thirty (30) days prior written notice, either party may assign its rights and delegate its duties under this Agreement to a person or organization that has directly or indirectly acquired all or substantially all of the business of such party, whether by means of an asset sale, stock sale, merger, reorganization, consolidation, or otherwise.
14.8	Successors in Interest - The provisions of this Agreement shall be binding upon and enure to the benefit of the parties and their permitted successors and assigns.
14.9	Waiver - The waiver of any provision or the breach of any provision of this Agreement shall not be effective unless made in writing. Any waiver by either party of any provision or the breach of any provision of this Agreement shall not operate as or be construed to be a continuing waiver of the provision or the breach of the provision.
14.10	Situs and Jurisdiction - This Agreement shall be governed by the laws of the Province of New Brunswick and the federal laws of Canada applicable therein. Each party irrevocably attorns to the non-exclusive jurisdiction of the courts of the Province of New Brunswick (Canada).
14.11	Severability - In the event any portion of this Agreement shall be held to be invalid, the same shall not affect in any respect whatsoever the validity of the remainder of this Agreement.
14.12	Entire Agreement - This Agreement sets forth the entire understanding between the parties with respect to the subject matter hereof, there being no terms, conditions, warranties, or representations other than those contained in this Agreement, and no amendments shall be valid unless made in writing and signed by the parties to this Agreement.
14.13	Form and Counterparts - This Agreement and any amendment, supplement, restatement or termination of any provision of this Agreement may be executed in any number of counterparts, each of which when executed and delivered (including by facsimile copy or by scanned copy attached to an email) is an original, but all of which when taken together constitute a single instrument.

[the rest of this page has been left intentionally blank–signature page to follow]

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November 17, 2014

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

Gogii Games Corp.
Per:
	George Donovan, Director
Freeze Tag, Inc.
Per:
	Craig Holland, CEO

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November 17, 2014

Schedule "A"

Product and Specifications

The Products to be co-developed and/or integrated using the Engine are as follows:

Product	Platforms
Black Forest (working title)	iOS 7.0+
	Ipad Only

Specifications:

Developed with Unity 4.5.5

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November 17, 2014

Scheule B"Schedule "B"

Milestones

Milestone	Definition	Condition of Approval	Date	Payments by Freeze Tag
Signing	The parties execute this Agreement	Execution of Agreement	November 17 2014	PAYMENT TERMS HERE
Asset Delivery	Assets contemplated by Schedule “C” to be delivered by Freeze Tag to Gogii	Assets received in formats and manner acceptable to Gogii, reviewed, and approved for implementation into the Engine.	November 17 2014
Project Setup and Initialization	Gogii baseline Engine prep and customization for new game	Technical outline for game features received and development roadmap approved by both parties; Engine ready for art import.	November 17 2014
First Build	Available map and HO art assets implemented in-game	All art assets provided at the outset are implemented in the Engine to specification	November 28 2014
Second Build, First Playable	Apothecary and Greenhouse systems functional in-game	Functionality of the Apothecary and Greenhouse game features are available in-game and linked to the UI and world map.	December 12, 2014
Third Build	Mini-game logic design and art integration	Minigame features implemented as designed and logic functioning as expected.	December 29 2014
Beta	Functional game ready for playtesting of all features designed for soft-launch.	Freeze Tag confirms functionality with smoke testing. Gogii Games internal testing team signs off on functional build for wide-scale beta testing. Authority on bug waivers resides with Gogii for Beta.	January 12, 2014
GM Submission	Revised game has feedback and changes from Beta implemented and tested.	Gogii Games internal testing team approves game for GM submission for soft-launch, and submits the game to platform for release.	January 23, 2014

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November 17, 2014

Schedule “C”

The Assets

Freeze Tag shall provide Gogii with the following assets, in a format and manner reasonably acceptable to Gogii, in order to allow Gogii to provide the services contemplated by this Agreement.

Swap-able Art Assets 

Hidden Object Scenes 

PSD Format - Items as well as background included.  

Resolution 1280x800 (Cut at 1024 vertically to fit on one atlas)

Regular Find Items 

All items that should appear on the find list need to be surrounded by quotes in the PSD's layer name. 

"Brick" 

"Lavender" 

etc...

Generic Layers 

Any layers not containing quotation marks are treated as prop layers and are not interactive. 

Multiple Items 

Each findable item in the game (whether it's a Regular Find Item or an Ingredient) should have multiple hiding places in an HO. Simply name multiple layers exactly the same, and when the scene is loaded, only one of the layers will appear; the rest will be switched off.

Ingredients 

All ingredients must have the suffix of reqN, where 'N' is the ingredient's corresponding building level.

Using the Mayor's Office as an example: 

Level 1: Phoenix Feather 

Level 2: Lavender

Level 3: Disappearing Ink 

etc...

... you should have layers in the psd that look like: 

"Phoenix Feather" req1 

"Lavender" req2 

"Disappearing Ink" req3 

etc...

* Since your buildings don't have levels, all visible ingredients that appear on the find list should be marked req1

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November 17, 2014

Map 

2048x2048 One Atlas - Square layout (We did ocean behind ours, really it's up to you. Fill the whole atlas it's more desirable. 

Separate layers you want to remove during unlock events. 

Characters 

​Individuals PSDs for the following:

- Quest Bubble Heads (Side)

- Character Map Icons

- Dialogue Poses 

User Interface (Gogii to Provide)

Breakdown function of each UI component and include a demo image for each set (Map UI, HO UI, Mini-Game UI)

9 Sliced buttons, holders, boxes for assembly with NGUI (can provide examples if needed) 

All currency icons, items, potions. 

New Game Elements  

Apothecary Artwork / UI

Greenhouse Artwork / UI 

Please provide examples of layout as well. Icons for potion ingredients and potions should be included as well, so we can get a good head start on the systems needed. 

Mini-Game Artwork  

Individual artwork implemented in the mini-games delivered by Freeze Tag

14

EX-10.31

EXHIBIT 10.31

CONVERTIBLE PROMISSORY NOTE 

$500,000

FOR VALUE RECEIVED, Freeze Tag, Inc., a Delaware corporation, (the “Borrower”) with approximately 184,518,250 shares of common stock issued and outstanding, promises to pay to Accredited Investor, or its assignees (the “Lender”) the Principal Sum along with the Interest and any other fees according to the terms herein (this “Note”). This Note shall become effective on February 11, 2015 (the “Effective Date”).

The Principal Sum is Five Hundred Thousand Dollars ($500,000) plus accrued and unpaid interest. The Consideration is Five Hundred Thousand Dollars ($500,000) payable by wire. The Lender shall pay Thirty Thousand Dollars ($30,000) of the Consideration upon execution of this Note (the “Initial Consideration”). The Lender may pay additional Consideration to the Borrower in such amounts as the Lender may choose in its sole discretion (the “Additional Consideration”). The Principal Sum due to the Lender, and as referenced hereinafter, shall be the Initial Consideration plus any Additional Consideration actually paid by the Lender such that the Borrower is only required to repay the amount funded and the Borrower is not required to repay any unfunded portion of this Note, nor shall any interest or other rights or remedies granted herein extend to any unfunded portion of this Note. 

1. Maturity Date. The Maturity Date is nine (9) months from the Effective Date of each payment of Consideration (the “Maturity Date”) and is the date upon which the Principal Sum of this Note and unpaid interest and fees (the “Note Amount”) shall be due and payable.

2. Interest. This Note shall bear interest at the rate of Ten Percent (10%) per year.

3. Conversion. The Lender has the right, at any time after the Effective Date, at its election, to convert all or part of the Note Amount into shares of fully paid and non-assessable shares of common stock of the Borrower (the “Common Stock”). The conversion price (the “Conversion Price”) shall be the lesser of (a) $0.003 per share of Common Stock or (b) Fifty Percent (50%) of the average of the three (3) lowest trade prices on three (3) separate trading days of Common Stock recorded after the original Effective Date of this Note, February 11, 2015, or (c) the lowest effective price per share granted to any person or entity after the Effective Date to acquire Common Stock or adjust, whether by operation of purchase price adjustment, settlement agreements, exchange agreements, reset provision, floating conversion or otherwise, any outstanding warrant, option or other right to acquire Common Stock or outstanding Common Stock equivalents; however, this Section 3(c) shall exclude any lower price per share offered to officers and directors of the Borrower (the “Conversion Price”). The conversion formula shall be as follows: Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price. A conversion notice (the “Conversion Notice”) may be delivered to Borrower by method of Lender’s choice (including but not limited to email, facsimile, mail, overnight courier, or personal delivery), and all conversions shall be cashless and not require further payment from the Lender. If no objection is delivered from the Borrower to the Lender, with respect to any variable or calculation reflected in the Conversion Notice within 24 hours of delivery of the Conversion Notice, the Borrower shall have been thereafter deemed to have irrevocably confirmed and irrevocably ratified such notice of conversion and waived any objection thereto. The Borrower shall deliver the shares of Common Stock from any conversion to the Lender within three (3) business days of Conversion Notice delivery. The Lender shall pay the transfer agent fees for the issuance of share certificates. If the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, then upon request of the Lender and provided that the shares to be issued are eligible for transfer under Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”), or are effectively registered under the Securities Act, the Borrower shall cause its transfer agent to electronically issue the Common Stock issuable upon conversion to the Lender through the DTC Direct Registration System (“DRS”). If the Borrower is not participating in the DTC FAST program, then after receiving the Initial Consideration, the Borrower agrees to begin a good faith effort to apply and cause the approval for participation in the DTC FAST program. The Conversion Price shall be subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events.

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4. Conversion Delays. If Borrower fails to deliver shares in accordance with the timeframe stated in Section 3, the Lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part, of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the Principal Sum with the rescinded conversion shares returned to the Borrower (under the Lender’s and the Borrower’s expectations that any returned conversion amounts shall tack back to the original date of this Note). In addition, for each conversion, in the event that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $2,000 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until share delivery is made; and such penalty shall be added to the Principal Sum of this Note (under the Lender’s and the Borrower’s expectations that any penalty amounts shall tack back to the original date of this Note consistent with applicable securities laws). If the Borrower is unable to deliver shares under this provision, due to an insufficient number of authorized and unissued shares available, the Lender agrees not to force the Borrower to issue the shares or trigger an Event of Default, provided that the Borrower takes immediate steps necessary to obtain the appropriate approval from shareholders and/or the board of directors, where applicable, to increase the number of authorized shares to satisfy the Conversion Notice.

5. Limitation of Conversions. In no event shall the Lender be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Lender and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of this Note or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Lender and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be waived by the Lender upon, at the election of the Lender, not less than 61 days prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by the Lender, as may be specified in such notice of waiver).

6. Payment. The Borrower may not prepay this Note prior to the Maturity Date. Within six (6) days prior to the Maturity Date, Borrower shall provide Lender with a written notice to pay the Note Amount on the Maturity Date. Within three (3) days of receiving written notice, the Lender shall elect to either (a) accept payment of the Note Amount or (b) convert any part of the Note Amount into shares of Common Stock and the Borrower shall pay the remaining balance of the Note Amount by the Maturity Date, or (c) modify the Maturity Date to be up to eighteen (18) months from the Effective Date.

7. Piggyback Registration Rights. The Borrower shall include on the next registration statement the Borrower files with the SEC (or on the subsequent registration statement if such registration statement is withdrawn) excluding S-8 registration statements for employee stock grant and option plans, all shares of Common Stock issuable upon conversion of this Note unless such shares of Common Stock are eligible for resale under Rule 144. Failure to do so shall result in liquidated damages of Twenty Five Percent (25%) of the outstanding principal balance of this Note being immediately due and payable to the Lender at its election in the form of cash payment or addition to the balance of this Note.

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8. Lender’s Representations. The Lender hereby represents and warrants to the Borrower that (i) it is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act, (ii) it understands that this Note and the shares of Common Stock underlying this Note (collectively, the “Securities”) have not been registered under the Securities Act by reason of a claimed exemption under the provisions of the Securities Act that depends, in part, upon the Lender’s investment intention; in this connection, the Lender hereby represents that it is purchasing the Securities for the Lender’s own account for investment and not with a view toward the resale or distribution to others; provided, that Lender may syndicate participations in the Securities among a limited number of participants who all meet the suitability standards of an “accredited investor” as defined in Rule 501(a) of Regulation D of the Securities Act and will share among themselves and the Lender an economic interest in the Securities on a pari passu, pass through basis with investment intent, such that the availability of the private placement exemption for the issuance of the Note under Rule 506 of Regulation D of the Securities Act is preserved, (iii) the Lender, if an entity, further represents that it was not formed for the purpose of purchasing the Securities, (iv) the Lender acknowledges that the issuance of this Note has not been reviewed by the United States Securities and Exchange Commission (the “SEC”) nor any state regulatory authority since the issuance of this Note is intended to be exempt from the registration requirements of Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D, and (v) the Lender acknowledges receipt and careful review of this Note, the Borrower’s filings with the SEC (including without limitation, any risk factors included in the Borrower’s most recent Annual Report on Form 10-K), and any documents which may have been made available upon request as reflected therein, and hereby represents that it has been furnished by the Borrower with all information regarding the Borrower, the terms and conditions of the purchase and any additional information that the Lender has requested or desired to know, and has been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the Borrower concerning the Borrower and the terms and conditions of the purchase.

9. Borrower’s Representations. The Borrower hereby represents and warrants to the Lender that (i) the Borrower is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full power and authority to own, lease, license and use its properties and assets and to carry out the business in which it proposes to engage, and (ii) the Borrower has the requisite corporate power and authority to execute, deliver and perform its obligations under this Note and to issue and sell this Note, and (iii) all necessary proceedings of the Borrower have been duly taken to authorize the execution, delivery, and performance of this Note, and when this Note is executed and delivered by the Borrower, it will constitute the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with their terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

10. Default. The following are events of default under this Note: (i) the Borrower shall fail to pay any principal under this Note when due and payable (or payable by conversion) thereunder; or (ii) the Borrower shall fail to pay any interest or any other amount under this Note when due and payable (or payable by conversion) thereunder; or (iii) a receiver, trustee or other similar official shall be appointed over the Borrower or a material part of its assets and such appointment shall remain uncontested for twenty (20) days or shall not be dismissed or discharged within sixty (60) days; or (iv) the Borrower shall become insolvent or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any; or (v) the Borrower shall make a general assignment for the benefit of creditors; or (vi) the Borrower shall file a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign); or (vii) an involuntary proceeding shall be commenced or filed against the Borrower; or (viii) the Borrower shall lose its status as “DTC Eligible” or the Borrower’s shareholders shall lose the ability to deposit (either electronically or by physical certificates, or otherwise) shares into the DTC System; or (ix) the Borrower shall become delinquent in its filing requirements as a fully-reporting issuer registered with the SEC; or (x) the Borrower shall commit a material breach of any of its covenants, representations or warranties in this Note.

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11. Remedies. In the event of any default, the funded portion of the Note Amount shall become immediately due and payable at the Mandatory Default Amount. The Mandatory Default Amount shall be 150% of the funded portion of the Note Amount. Commencing five (5) days after the occurrence of any event of default that results in the eventual acceleration of this Note, the interest rate on the Mandatory Default Amount shall accrue at a default interest rate equal to the lesser of ten percent (10%) per annum or the maximum rate permitted under applicable law. In connection with such acceleration described herein, the Lender need not provide, and the Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and the Lender may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. While the Mandatory Default Amount is outstanding and default interest is accruing, the Lender shall have all rights as a holder of this Note until such time as the Lender receives full payment pursuant to this paragraph, or has converted all the remaining Mandatory Default Amount and any other outstanding fees and interest into Common Stock under the terms of this Note. In the event of any default and at the request of the Lender, the Borrower shall file a registration statement with the SEC to register all shares of Common Stock issuable upon conversion of this Note that are otherwise eligible to have their restrictive transfer legend removed under Rule 144 of the Securities Act. Nothing herein shall limit Lender’s right to pursue any other remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Borrower’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.

12. No Shorting. Lender agrees that so long as this Note from Borrower to Lender remains outstanding, the Lender shall not, Lender’s affiliates shall not, and Lender will not direct any third parties to, enter into or effect “short sales” of the Common Stock or hedging transaction which establishes a short position with respect to the Common Stock of the Borrower. The Borrower acknowledges and agrees that upon delivery of a Conversion Notice by the Lender, the Lender immediately owns the shares of Common Stock described in the Conversion Notice and any sale of those shares issuable under such Conversion Notice would not be considered short sales.

13. Assignability. The Borrower may not assign this Note. This Note shall be binding upon the Borrower and its successors and shall inure to the benefit of the Lender and its successors and assigns and may be assigned by the Lender, in whole or in part, to anyone of its choosing without Borrower’s approval subject to applicable securities laws. Lender covenants not to engage in any unregistered public distribution of the Note when making any assignments.

14. Governing Law. This Note shall be governed by, and construed and enforced in accordance with, the laws of the STATE HERE, without regard to the conflict of laws principles thereof. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of STATE HERE or in the federal courts located in COUNTY HERE, in the State of STATE HERE. Both parties and the individuals signing this Agreement agree to submit to the jurisdiction of such courts.

15. Delivery of Process by the Lender to the Borrower. In the event of any action or proceeding by the Lender against the Borrower, and only by the Lender against the Borrower, service of copies of summons and/or complaint and/or any other process which may be served in any such action or proceeding may be made by the Lender via U.S. Mail, overnight delivery service such as FedEx or UPS, email, fax, or process server, or by mailing or otherwise delivering a copy of such process to the Borrower at its last known attorney as set forth in its most recent SEC filing.

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16. Attorney Fees. In the event any attorney is employed by either party to this Note with regard to any legal or equitable action, arbitration or other proceeding brought by such party for the enforcement of this Note or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Note, the prevailing party in such proceeding shall be entitled to recover from the other party reasonable attorneys' fees and other costs and expenses incurred, including but not limited to post judgment costs, in addition to any other relief to which the prevailing party may be entitled.

17. Transfer Agent Instructions. In the event that an opinion of counsel, such as but not limited to a Rule 144 opinion, is needed for any matter related to this Note or the Common Stock the Lender has the right to have any such opinion provided by its counsel. If the Lender chooses to have its counsel provide such opinion, then the Lender shall provide the Borrower with written notice. Within three (3) business days of receiving written notice, the Borrower shall instruct its transfer agent to rely upon valid legal opinions from the Lender’s counsel. A penalty of $2,000 per day shall be assessed for each day after the third business day (inclusive of the day of request) until the reliance instruction is delivered to the transfer agent. If the Lender requests that the Borrower’s counsel issue an opinion, then the Borrower shall cause the issuance of the requested opinion within three (3) business days. A penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of request) until the requested opinion is delivered. The Lender and the Borrower agree that all penalty amounts shall be added to the Principal Sum of this Note and shall tack back to the Effective Date of this Note, with respect to the holding period under Rule 144, so long as such treatment is not inconsistent with Rule 144’s applicable tacking provisions. The Borrower warrants that it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing)(electronically or in certificated form) any certificate for the Securities to be issued to the Lender and it will not fail to remove (or direct its transfer agent not to remove or impair, delay, and/or hinder its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for the Securities when required by this Note. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Lender by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note may be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of these provisions, that the Lender shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required.

18. Reservation of Shares. At all times during which this Note is convertible, the Borrower shall reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Note.

19. Disclosure of Material Non-Public Information. The Borrower agrees not to disclose any material non-public information to the Lender after the Effective Date. If the Borrower inadvertently discloses any material non-public information to the Lender, then the Borrower shall promptly publicly disclose that information by filing a Form 8-K with the SEC and by any other means necessary to make that information known to the public.

20. Public Disclosure. The Lender and the Borrower agree not to issue any public statement with respect to the Lender’s investment or proposed investment in the Borrower or the terms of any agreement or covenant without the other party’s prior written consent, except such disclosures as may be required under applicable law or under any applicable order, rule or regulation. The Borrower agrees to reference Lender only as “an accredited investor” and attach only a form copy this Note in any of the Borrower’s filings with the Securities and Exchange Commission or any other public filings, except such full disclosures as may be required under applicable law or under any applicable order, rule or regulation.

21. Notices. Any notice required or permitted hereunder (including Conversion Notices) must be in writing and either personally served, sent by facsimile or email transmission, or sent by overnight courier. Notices shall be deemed effectively delivered at the time of transmission if by facsimile or email, and if by overnight courier the business day after such notice is deposited with the courier service for delivery.

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IN WITNESS WHEREOF, the authorized agents of the Borrower and the Lender have caused this Note to be duly executed as of the Effective Date.

Freeze Tag, Inc. (the “Borrower”)
By:
	Craig Holland
	Chief Executive Officer
Accredited Investor (the “Lender”)
By:
	Accredited Investor Name
	Accredited Investor Title

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EX-10.32

EXHIBIT 10.32 

FREEZE TAG / TIC TOC STUDIOS 

MASTER DEVELOPMENT AGREEMENT

This Development Agreement (“Agreement”) is entered into and effective as of February 18, 2015 (the “Effective Date”) by and between Freeze Tag, Inc., (“Freeze Tag”) a Delaware Corporation, having its principal place of business at 18062 Irvine Blvd., Suite 103, Tustin, CA 92780 and TIC TOC STUDIOS, LLC. (“DEVELOPER”), a California LLC, having a principal place of business at 11240 Magnolia Blvd, Ste. #204 North Hollywood, CA 91601.

RECITALS

WHEREAS, Freeze Tag designs, manufactures, publishes, distributes and markets games and applications to be used and played on a number of electronic devices, including but not limited to cellular phones, smart phones (including iPhone / iPod Touch, Android smart phones, and similar smart phones), personal digital assistants, tablets (including the iPad and other iOS and Android tablets), personal computers and other devices hereto referred to as “Freeze Tag’s Business”;

AND WHEREAS, DEVELOPER designs, develops and programs software for applications and games to be run and/or played on such electronic devices (referred to in this Agreement as “DEVELOPER’s Business”);

AND WHEREAS, Freeze Tag desires to have a game and/or series of games to be developed or enhanced based on the Property as specified in Exhibit A and subsequent exhibits and is the rightful owner of the intellectual property described in Exhibit A or has entered into an agreement with the holder of Intellectual Property Rights in the Property, for rights to develop and market such game(s).

AGREEMENT

1. DEFINITIONS

1.1  “Commercial Release” means the first commercial shipment or download of the Product by Freeze Tag (or its licensees), excluding any “beta” testing or similar quality control testing by a limited number of users who are not charged for the use or operation of the Product.

1.2  “Deliverables” means the items, including but not limited to executable software code, the artwork, game design document and other documentation to be delivered by DEVELOPER to Freeze Tag under this Agreement as described and limited on Exhibit A and subsequent detailed Exhibits. For the purposes of Section 4 hereof, Deliverables shall not include any DEVELOPER Proprietary Technology.

1.3 INTENTIONALLY LEFT BANK

1.4  “Development” means the design and development of the Product in accordance with the Specification and delivery of the Deliverables.

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1.5  “Intellectual Property Rights” means all forms of intellectual property and proprietary rights recognized by U.S. laws and other applicable foreign and international laws, treaties and conventions in intellectual property such as know-how, inventions, patents, patent rights, and registrations and applications, renewals, continuations and extensions thereof, works of authorship and art, copyrightable materials and copyrights (including, but not limited to, titles, computer code, designs, themes, objects, buildings and architecture, automobiles, characters, character names, stories, dialog, catch phrases, locations, game play, rules, concepts, artwork, animation, sounds, musical compositions, graphics and visual elements, audio-visual effects and methods of operation, and any related documentation), copyright registrations and applications, renewals and extensions therefor, mask works, industrial rights, trademarks, service marks, service names, trade names, logos, product names, trademark registrations and applications, renewals and extensions therefor, trade secrets, rights in trade dress and packaging, publicity, personality and privacy rights, rights of attribution, paternity, integrity and other similarly afforded “moral” rights; and all rights to sue for and remedies against past, present and future infringements or misappropriations of the foregoing.

1.6 “Moral Rights” refers to any rights to claim authorship of a work, to object to or prevent any modification of a work, to withdraw from circulation or control the publication or distribution of a work, and any similar right, existing under judicial or statutory law of any country in the world, or under any treaty, regardless of whether or not such right is called or generally referred to as a “moral right.”

1.7 “Milestone” means each development or delivery milestone for the Development as set forth in the Exhibit A and subsequent detailed Exhibits referenced on Exhibit A.

1.8 “Product” means the game based on and branded as the Property for the PC (and/or Mac), iPhone, iPad, smart phone, tablet, or other electronic device – including the Flash or other web enabled version, currently referred to in Exhibit A and subsequent detailed Exhibits, to be developed by DEVELOPER under this Agreement in accordance with the Specifications.

1.9 “Property” means the branded property referenced in Exhibit A and subsequent detailed Exhibits proprietary to Freeze Tag.

1.10 “Flash or other web enabled versions” as used herein shall mean software developed for distribution via the World Wide Web, and all similar modes of transmission now known or hereafter developed involving web distribution / play of software to personal computers. May also refer to the game using the same files as a web-playable version and designed to be played in a browser but distributed via CD or other physical storage means.

1.11 “Product Technology” means all copyrightable works, products, discoveries, developments, designs, improvements, inventions, concepts, processes, techniques, know-how, audiovisual elements, content and computer code (including all Source Code & Materials) (whether or not patentable, and whether or not at a commercial stage, or registerable under copyright or similar statutes) which are authored, made, conceived, reduced to practice or learned as a result of the Development excluding DEVELOPER Proprietary Technology.

1.12 “DEVELOPER Proprietary Technology” means the Intellectual Property Rights in the software tools and other technology described in Appendix A owned by DEVELOPER together with all derivatives, enhancements, improvements and modifications of such technology and any Intellectual Property Rights associated with the same.

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1.13 “DEVELOPER Trademarks” means any trade marks or trade names belonging to DEVELOPER.

1.14 INTENTIONALLY LEFT BLANK

1.15  “Schedule” refers to the project schedule, as specified and limited in Exhibit A and subsequent detailed Exhibits, and as may be amended during the Development by the mutual written agreement of Freeze Tag and DEVELOPER, for the execution, completion and review of the Development and delivery, testing, and acceptance of the Deliverables.

1.16 “Source Materials” means all of the computer source code, source code documentation, and programmers’ notes for the Product Technology, including, but not limited to those listed in Appendix A.

1.17 “Specification and/or Design” means the concept, feature, functionality and performance specifications for the Product as supplied by Freeze Tag and set forth in Exhibit A and subsequent detailed Exhibits, as amended from time to time. The Specification / Design may be amended only by the mutual written agreement of Freeze Tag and DEVELOPER.

1.18 “Third Party Materials” means any audiovisual materials, content, data, software, libraries, copyrights, trademarks, service marks, or other materials owned or licensed by third parties which Freeze Tag agrees in writing may be included in the Product or used for the Development, including any listed in Exhibit A and subsequent detailed Exhibits.

2. DEVELOPMENT

2.1 Performance. DEVELOPER shall perform the Development to create the Product (Deliverables) in accordance with the Schedule and pursuant to the Specification / Design.

2.2 Specification Changes. DEVELOPER understands that Freeze Tag may request additions, deletions or other changes to the Development which may affect the Specification / Design at any time during the term of this Agreement. Within 5 business days of receiving any change request from Freeze Tag which DEVELOPER reasonably believes will increase the originally agreed upon budget by 5 percent or the originally agreed upon timeframe by at least 5 days, DEVELOPER shall provide Freeze Tag with a revised budget and timeframe to perform the Development reflecting the requested change. Upon notice of any additional fees and/or amendment to the Schedule, as required, to affect the change request, Freeze Tag shall confirm, in writing the acceptance or rejection of the change request to DEVELOPER. Upon written acceptance of the revised budget and timeframe by Freeze Tag, DEVELOPER and Freeze Tag shall work together to make any changes necessary to the Specification and the Schedule, and DEVELOPER shall perform the Development in accordance with the revised Schedule and the revised Specification / Design. In the event that Freeze Tag confirms its rejection of the change request, the original timeframe of each of the remaining Milestones shall be extended by the number of days DEVELOPER advises was spent by DEVELOPER on developing the revised budget and timeframe in response to such change request.

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2.3 Evaluation; Testing; Acceptance.

2.3.1 After delivery of each Deliverable, Freeze Tag shall evaluate such Deliverable for conformity to the Specification. If Freeze Tag determines that the Deliverable conforms to the Specification then it shall immediately send written notice of acceptance to DEVELOPER. If the Deliverable does not conform to the Specification, Freeze Tag shall submit a written rejection to DEVELOPER within five (5) business days after Freeze Tag’s receipt of such Deliverable, setting forth detailed reasons for rejection. In the event that Freeze Tag does not reject a Deliverable in writing within ten (10) business days after its receipt, the Deliverable shall be deemed accepted. DEVELOPER shall correct such rejected Deliverable within ten (10) business days (the “Correction Period”) following receipt of any written rejection thereof and redeliver the corrected Deliverable to Freeze Tag, and the procedure in this Section 2.3.1 shall be repeated.

2.3.2 If any rejected Deliverable cannot be corrected within thirty (30) days, then Freeze Tag may, at its option:

(a)	extend the period during which DEVELOPER may attempt to correct the Deliverable; or
(b)	suspend performance and retain the Deliverable with rights as set forth in Section 4, provided that Freeze Tag pays DEVELOPER for all work performed at a rate equal to the number of hours worked on such Deliverable at DEVELOPER’s standard hourly rates of (HOURLY RATE HERE), not to exceed 75% of the payment due for that milestone;

In the event that Freeze Tag chooses to retain the Deliverables in accordance with paragraph (b) of this section 2.3.2, DEVELOPER shall provide Freeze Tag with the Source Materials for such Deliverables.

2.4 Project Management. Each party will identify to the other a project manager who will serve as such party’s primary contact for matters relating to the Development. Each party may identify to the other additional contact persons for specific aspects of the Development. Each party may change its list of contacts at any time by giving notice to the other party in conformity with Section 12.1.

2.5 Status Reports. At Freeze Tag’s request DEVELOPER will provide Freeze Tag a written status report via e-mail to discuss any of the above issues.

2.6 Warranty. DEVELOPER shall, as promptly as reasonably possible, correct all of the Product’s non-conformities with the Specification / Design of which Freeze Tag notifies DEVELOPER in writing prior to or within thirty (30) days after Commercial Release of the Product, and DEVELOPER shall promptly furnish the corrected Product to Freeze Tag. If DEVELOPER makes any corrections, enhancements, modifications and/or updates to the Product within such period, DEVELOPER shall promptly make all such corrections, enhancements, modifications and/or updates available to Freeze Tag on such media as Freeze Tag may reasonably request. This shall be Freeze Tag’s sole and exclusive remedy relating to the quality and performance of the Product.

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2.7 INTENTIONALLY LEFT BLANK

2.8 No Breach. In no event shall DEVELOPER be in breach of any provision of this Agreement by reason of its failure to fulfill any obligation hereunder where such failure is caused by Freeze Tag's failure to provide any information, material, licenses, instructions, approvals or other acts, goods or services under this Agreement. This clause shall survive the expiration or earlier termination of this Agreement.

3. PAYMENT FOR SERVICES

3.1 Development Fees. Freeze Tag shall pay DEVELOPER for the Development as set forth in Exhibit A and subsequent detailed Exhibits, provided that: (i) DEVELOPER has completed and delivered to Freeze Tag the Deliverables associated with such Milestone with respect to each payment Milestone; and (ii) Freeze Tag has accepted the Deliverables associated with such Milestone with respect to each payment Milestone. Such payments will be made by Freeze Tag within thirty (30) days from Freeze Tag’s receipt of DEVELOPER’s invoice associated with the applicable payment Milestone. DEVELOPER must invoice Freeze Tag for each payment Milestone when due in accordance with this Section 3 and Exhibit A and subsequent detailed Exhibits.

3.2 Royalty Payments. If applicable, Freeze Tag shall pay to DEVELOPER royalties (“Royalties”) based on Freeze Tag’s Net Publishing Revenue (as defined below) from the distribution, sale, license and/or other exploitation of the Product by Freeze Tag in accordance with this Section 3. Royalties payable by Freeze Tag to DEVELOPER are defined in Exhibit A and subsequent detailed Exhibits. “Net Publishing Revenue” shall mean gross amounts from any and all sources that are actually received by Freeze Tag from the sale, license, distribution and exploitation of the Products as provided for in this Agreement, less any amounts paid to a Licensor(s), less any advance or development monies paid to the DEVELOPER, less any User Acquisition Costs spent by Freeze Tag, less variable costs strictly related to running, maintaining and updating the game such as content servers, platform service fees (such as DeltaDNA, Locatlytics, Parse, Leanplum, etc.) and other similar services (which will not include labor costs), and less any authorized unrelated third party distributor of a Product. In the event that the Product is included in a collection of other titles offered for a single price, Royalties payable under this clause shall be calculated based on the pro-rata subscription (or fixed) price for the Product as a percentage of the total subscription / fixed prices for all titles in the collection.

3.3 Royalty Payment Schedule. Freeze Tag will pay DEVELOPER its earned Royalties on a quarterly basis via check through the US mail (or other certified delivery service) no later than thirty (30) days after the close of the quarter in which royalties have been received by Freeze Tag. Freeze Tag’s fiscal year end is December 31. At DEVELOPER’s request, Freeze Tag will make the Royalty Payment via wire transfer, but the wire transfer fee for this transaction will be subtracted as an expense from the Royalties due to DEVELOPER.

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3.4 Auditing Records. For products or services that have a Royalty sharing component as described in an Exhibit. Freeze Tag shall maintain copies of sales and royalty records it receives from distributors, sales representatives, developers and any other party permitted to exploit any component of the Product. Freeze Tag shall provide DEVELOPER a copy of the calculation of Net Publishing Revenue used for the purposes of calculating Royalty payments to DEVELOPER with each payment of Royalties made to DEVELOPER. DEVELOPER will have the right every six (6) calendar months during the Term to have an independent auditor examine Freeze Tag’s books, records and accounts during regular business hours for the purpose of verifying Royalties owed to DEVELOPER hereunder. Each such examination will be upon at least five (5) days prior written notice to Freeze Tag and will not unreasonably interfere with Freeze Tag’s business. DEVELOPER and the independent auditor shall keep all materials related thereto confidential. If any examination discloses a shortfall in any Royalty payment due DEVELOPER of more than ten percent (10%), Freeze Tag will pay the fee of the auditors for that examination, in addition to the payment of such shortfall, and DEVELOPER will be entitled to perform an additional examination within one (1) year from the date of the examination that disclosed such shortfall, at Freeze Tag’s expense. In the event that Royalties become payable to DEVELOPER under this Agreement, this section 3.5 shall survive the termination of this Agreement for a period of six (6) months.

3.5 Accruing Interest. Without limiting DEVELOPER's rights and remedies hereunder, in the event Freeze Tag fails to make any payment when due hereunder, interest shall accrue on the amount owed as of the due date at an interest rate of (a) one percent (1.0%) per month or twelve percent (12.0%) annually, or (b) the highest rate allowed by law, whichever is less.

3.6 Termination of the Agreement. In the event of termination of this Agreement pursuant to Section 10 Freeze Tag shall pay DEVELOPER for all work performed at a rate equal to the number of hours worked on such Deliverable at DEVELOPER’s standard hourly rates of (HOURLY RATE HERE) as per Exhibit A and subsequent detailed Exhibits, not to exceed 75% of the payment due for that milestone. In the event that Freeze Tag wishes to retain the Product and all of the Product Technology developed up to the date of termination, Freeze Tag and DEVELOPER shall negotiate in good faith an agreed upon amount, not to exceed 75% of the fees already paid, ADDITIONAL TERMS HERE

4. RIGHTS/ASSIGNMENT

4.1 Product. As between the parties and except as expressly provided elsewhere in this Agreement, upon Freeze Tag’s acceptance pursuant to Section 2.3:

4.1.1 PRODUCT RIGHTS HERE;

4.1.2 PRODUCT TECHNOLOGY RIGHTS HERE;

4.1.3 INTENTIONALLY LEFT BLANK; and

4.1.4 INTENTIONALLY LEFT BLANK

6

4.2 DEVELOPER Proprietary Technology. The parties understand that certain software programs, routines and other intellectual property developed and/or owned by DEVELOPER through the course of its regular business activities may be incorporated into or utilized in the development of the software provided to Freeze Tag. See Appendix A for a description of DEVELOPER’s Proprietary Technology. Upon Freeze Tag’s acceptance of the Deliverable pursuant to section 2.3, DEVELOPER hereby grants to Freeze Tag a nonexclusive, worldwide, royalty-free license to use any DEVELOPER Proprietary Technology provided to Freeze Tag embedded in such Deliverable, provided that use of the Developer Proprietary Technology is limited to the manner in which it is embedded and shall not be exploited separate and apart from the Product.

4.3 Ownership. OWNERSHIP TERMS HERE.

4.4 Exclusivity. DEVELOPER acknowledges and agrees that the Product Technology and the Deliverable(s) specified in Exhibit A and subsequent detailed Exhibits are being made exclusively for Freeze Tag, and DEVELOPER further agrees that it will not sell or otherwise distribute the same to any entities, provided that Freeze Tag has accepted the Product in accordance with Section 2.3 hereof and has paid DEVELOPER the Development Fee. Notwithstanding the foregoing and as a matter of clarity, Freeze Tag acknowledges and agrees that solely with respect to the Product Technology, DEVELOPER shall be entitled to sell or distribute the same to third party entities and Freeze Tag shall not be entitled to share in any proceeds or revenue received by DEVELOPER as a result of any such exploitation thereof.

5. PRESS RELEASES

The contents of any press releases or other announcements of either party regarding any of the details contained in this Agreement or the rights granted hereunder, which shall be deemed to be Confidential Information, shall be approved by the other party in writing prior to being released or made.

6. DISTRIBUTION

6.1 No Obligation. Notwithstanding any other provision of this Agreement, Freeze Tag shall have the right, in its sole and absolute discretion, to determine whether or not to release, publish, or distribute the Product. Freeze Tag shall determine in its sole discretion the nature and scope of any promotional and distribution efforts undertaken by Freeze Tag with respect to the Product, and DEVELOPER acknowledges that Freeze Tag may in its sole discretion limit, suspend or terminate the availability, promotion or distribution of the Product at any time and for any reason without incurring any liability to DEVELOPER.

6.2 INTENTIONALLY LEFT BLANK

6.3 INTENTIONALLY LEFT BLANK

7. CONFIDENTIALITY

7.1 Confidentiality of Terms. Each party shall treat all of the terms of this Agreement as confidential and shall not disclose them to any third party, except (i) to its employees, affiliates and its immediate legal and financial consultants on a need to know basis as required in the ordinary course of that party’s business; and (ii) as required by government or judicial order, provided each party gives each other party prompt notice of such order and complies with any protective order (or equivalent) imposed on such disclosure. Further, the parties acknowledge that this Agreement, or portions thereof, may be required under applicable law to be disclosed, as part of or as an exhibit to a party’s required public disclosure documents. If either party is advised by its legal counsel that such disclosure is required, it will notify the other in writing and the parties will jointly seek confidential treatment of this Agreement to the maximum extent reasonably possible, in documents approved by all parties and filed with the applicable governmental or regulatory authorities.

7

8. WARRANTIES AND INDEMNIFICATIONS

The representations, warranties, and covenants in this Section 8 are continuous in nature and shall be deemed to have been given by each party at execution of this Agreement and at each stage of performance hereunder.

8.1 DEVELOPER. DEVELOPER warrants and represents that:

8.1.1 It has the full power to enter into and perform its duties under this Agreement;

8.1.2 DEVELOPER is not presently subject to, nor will DEVELOPER subsequently enter into, any agreement effective during the term of this Agreement, nor is there any pending or threatened claim, nor does any third party or fact exist to DEVELOPER’s knowledge, that would limit DEVELOPER’s ability to perform its obligations under this Agreement;

8.1.3 The Deliverables will meet the Specifications and (subject to Freeze Tag’s warranty in section 8.3) shall be original works of or on behalf of DEVELOPER to the best of DEVELOPER’s knowledge and will comply with applicable laws and regulations of the United States of America;

8.2 Freeze Tag. Freeze Tag warrants and represents that:

8.2.1 It is has the full power to enter into and perform its duties under this Agreement;

8.2.2 Its publishing and other exploitation of the Games shall be in accordance with applicable law and not infringe the rights of any third party;

8.2.3 It shall not and nor shall it permit others to decompile, reverse-engineer, or make derivative works from the DEVELOPER Proprietary Technology (as defined in Appendix A to this Agreement).

8.3 Third party materials.

8.3.1 With regard to Third Party Materials that Freeze Tag requires or requests DEVELOPER to include in the Deliverables, Freeze Tag warrants and represents that such materials are not in violation of any rights existing now under any law and/or regulation. In the event of Freeze Tag’ breach of the warranty of this section 8.3.1, then Freeze Tag shall indemnify, defend and hold harmless DEVELOPER, and its officers, directors, employees, contractors, and agents.

8

8.3.2 With regard to Third Party Materials that DEVELOPER includes in the Deliverables, DEVELOPER warrants and represents that to the best of its knowledge such materials are not in violation of any rights existing now under any law and/or regulation. In the event of DEVELOPER’s breach of the warranty of this section 8.3.2, then DEVELOPER shall indemnify, defend and hold harmless Freeze Tag, and its officers, directors, employees, contractors, and agents.

8.4 Disclaimer. Other than the warranties expressly provided in this Section 8, no other warranties regarding the Product, the Product Technology, the Deliverables, the Development generally, or DEVELOPER Intellectual Property are provided and are hereby expressly disclaimed to the fullest extent permitted by law (including but not limited to any warranties of fitness for a particular purpose, merchantability, operability, and anticipated revenue implied by law or course of dealing, usage or trade).

8.5 Indemnification. Each Party agrees to indemnify, defend and hold harmless the other party, and its officers, directors, employees, contractors, and agents, from and against any loss, damage, expense, or cost, including reasonable attorney’s fees, arising out of any claim, demand, or suit arising from a breach of any of its warranties set out in this section 8.

9. TERM

9.1 Term. The term of this Agreement shall commence as of the Effective Date and shall continue, unless earlier terminated as provided in Section 10, until such time as Freeze Tag has accepted the final version of the Product in accordance with Section 2.3.

10. TERMINATION

10.1 Termination By Either Party For Cause. Either party may suspend performance and/or terminate this Agreement immediately upon written notice at any time if:

10.1.1  The other party commits a material breach of any warranty, term, condition or covenant of this Agreement, other than those contained in Section 7, and fails to cure that breach within thirty (30) days after written notice thereof; or

10.1.2  The other party is in material breach of Section 7.

10.2 Termination for Failure to Deliver. If DEVELOPER fails to deliver any Deliverable within the dates specified in the Schedule or if any of the Deliverables cannot be corrected within a specified period of time, as mutually agreed upon by DEVELOPER and Freeze Tag, then Freeze Tag may, at its option, immediately terminate this Agreement upon written notice to DEVELOPER.

9

10.3 Termination By Either Party Without Cause. Either party can terminate this Agreement without reason or cause with 30 days written notice.

10.4 Survival. Intellectual Property Rights granted hereunder, confidentiality obligations, and obligations to pay and report on Royalties and DEVELOPER’s associated audit rights shall survive any termination of this Agreement, and shall continue to be enforceable.

10.5 Rights. Neither party shall be entitled to any compensation or claim for goodwill or other loss, cost or expense, which either of them may suffer or claim to have suffered solely by reason of termination or expiration of this Agreement, provided, however, that nothing herein shall operate to limit any other rights or remedies available to a non-defaulting party at law or in equity upon the breach of this Agreement by the other party nor shall termination affect the accrued rights and remedies of the parties at termination which unless expressly provided to the contrary in this Agreement shall survive any termination howsoever caused.

11.  LIMITATION OF LIABILITY

PROVIDED ALWAYS THAT NOTHING SHALL LIMIT OR EXCLUDE EITHER PARTY’S LIABILITY (1) FOR FRAUD OR (2) FOR DEATH OR PERSONAL INJURY CAUSED BY ITS OR ITS EMPLOYEES’ NEGLIGENCE OR (3) PURSUANT TO THE INDEMNITIES GIVEN BY THAT PARTY IN SECTION 8 OF THIS AGREEMENT:

(A) NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, EXEMPLARY OR SPECIAL DAMAGES OF ANY KIND, INCLUDING LOSS OF ANTICIPATED PROFITS, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND REGARDLESS OF WHETHER REMEDY SET FORTH HEREIN FAILS OF ITS ESSENTIAL PURPOSE; AND

(B) INTENTIONALLY LEFT BLANK

12.  GENERAL

12.1 Notices. All notices and requests in connection with this Agreement shall be deemed given (1) as of the day they are received if sent either by messenger, international express delivery service, or by fax with a postal copy by certified mail, postage prepaid, return receipt requested, and (2) as of the day they were sent if sent by e-mail. In each case notice shall be addressed to the appropriate party at its address set forth on page 1 of this Agreement or to such other address as such party may designate pursuant to this notice provision.

12.2 Independent Contractors. DEVELOPER is an independent contractor for Freeze Tag, and nothing in this Agreement shall be construed as creating an employer-employee relationship, a partnership, or a joint venture between the parties. Except as otherwise expressly provided in this Agreement, each party shall bear all of its own costs, including the salaries of its employees and fees of its contractors, in performing its obligations under this Agreement.

10

12.3 Governing Law. This Agreement shall be governed by the laws of the State of California as though entered into between California residents and to be performed entirely within California. DEVELOPER consents to jurisdiction and venue in the state and federal courts located in the Central or Southern District of California. In any action or suit to enforce any right or remedy under this Agreement or to interpret any provision of this Agreement, the prevailing party shall be entitled to recover its costs, including reasonable attorneys’ fees. The parties hereto expressly decline the application of the United Nations Convention on Contracts for the International Sale of Goods.

12.4 Assignment. This Agreement shall be binding upon and inure to the benefit of each party’s respective successors and lawful assigns; provided, however, that DEVELOPER may not assign this Agreement, in whole or in part, at any time before thirty (30) days following the Commercial Release of the Product have elapsed without the prior written approval of Freeze Tag. Notwithstanding the foregoing, DEVELOPER may assign its rights and its benefits (but not its obligations) under this Agreement to a third party, but must first obtain written approval from Freeze Tag in order to do so, which approval shall not be unreasonably withheld.

12.5 Construction. If for any reason a court of competent jurisdiction finds any provision of this Agreement, or portion thereof, to be unenforceable, that provision of the Agreement will be enforced to the maximum extent permissible so as to affect the intent of the parties, and the remainder of this Agreement will continue in full force and effect. Failure by either party to enforce any provision of this Agreement will not be deemed a waiver of future enforcement of that or any other provision.

12.6 Waiver. The waiver by either party of a breach or default of any provision to this Agreement by the other party shall not be construed as a waiver of any succeeding breach or default of the same or any other provision, nor shall any delay or omission on the part of either party to exercise or avail itself of any right, power or privilege that it has or may have thereunder operate as a waiver of any right, power or privilege of such party.

12.7 Survival of Obligations. All obligations and associated rights under this Agreement shall survive the expiration or termination of this Agreement and continue to be enforceable.

12.8 Severability. In the event that any provision or particular application of a provision of this Agreement is held to be unenforceable because it is invalid or in conflict with any law of any relevant jurisdiction, the validity of the remaining provisions or of other applications of the affected provision shall not be affected and the rights and obligations of the parties shall not be construed and enforced as if this Agreement did not contain the particular provision or particular application of that provision that is held to be unenforceable.

12.9 Headings. The headings contained in this Agreement are for convenience of reference only and shall not be considered in interpreting or construing this Agreement.

11

12.10 Counterparts and Facsimile. This Agreement may be executed (including, but not limited to, by facsimile signature) in one or more counterparts, with the same effect as if the Parties had signed the same document. Each counterpart so executed will be deemed to be an original, and all such counterparts will be construed together and will constitute one Agreement.

12.11 Force Majeure. Neither party shall be responsible for any delays or failure to perform caused by or resulting from any act, omission or condition beyond the respective Party’s reasonable control, whether or not foreseeable, including without limitation Acts of God, strikes, lockouts, riots, war, governmental regulations, fire, power failure, earthquakes, severe weather or other natural disaster, or any failure of software, hardware or communications equipment.

12.12 Entire Agreement. This Agreement does not constitute an offer by Freeze Tag or DEVELOPER and it shall not be effective until signed by both parties. This Agreement constitutes the entire agreement between the parties with respect to the Development of the Products specified in Exhibit A and subsequent detailed Exhibits, and all other subject matter hereof and merges all prior and contemporaneous communications. It shall not be modified except by a written agreement dated subsequent to the date of this Agreement and signed on behalf of DEVELOPER and Freeze Tag by their respective duly authorized representatives.

IN WITNESS WHEREOF, the parties have entered into this Agreement as of the Effective Date.

Freeze Tag, Inc.	Tic Toc Studios, LLC.
By (Sign)	By (Sign)
Name (Print)	Name (Print)
Title	Title
	Federal Tax ID Number

12

Appendix “A”

Description of DEVELOPER’s Proprietary Technology

DEVELOPER shall retain ownership of the following technology disclosed herein and Freeze Tag shall be entitled to use the DEVELOPER Proprietary Technology only as described in section 4 or otherwise expressly provided in this agreement.

Description:

Developer’s PRE-EXISTING INTELLECTUAL PROPERTY and Proprietary Technology DESCRIPTION HERE.

13

Appendix “B” 

Copyright Assignment

The undersigned hereby assigns in perpetuity all rights, title and interest in and to the materials described below, including the copyright thereof, in the United States and throughout the world, together with any rights of action which may have accrued under said copyrights, which are owned by the undersigned, for One Dollar ($1.00) and other good and valuable consideration, the receipt of which is hereby acknowledged, to FREEZE TAG, Inc.

Work: All protectable elements and materials relating to the name, the characters and the artwork to be developed by DEVELOPER under that certain Master Development Agreement by and between FREEZE TAG, INC. and DEVELOPER dated 18 FEBRUARY 2015 which fall within the definition of “Deliverables” provided therein including, without limitation, all protectable elements and materials related to the Product therein described, but excluding “DEVELOPER Proprietary Technology” as therein defined.

Dated:_________________________	By:
	Name:
	Title:
	Address:

14

Exhibit “A”

Property: TITLE NAME HERE

Platform: iOS (includes iPhone, iPod Touch, iPad), Android (smartphone and tablet) – devices to be called out in Exhibit A1)

Additional Exhibit Info: Exhibit A1

Start Date: February 18, 2015

Completion Date: 6/15/2015

Development Fee: DEVELOPMENT FEE HERE

Standard Hourly Rates: HOURLY RATE HERE

License Holder of the “Property”: Freeze Tag, Inc.

Date Added to Exhibit A: February 18, 2015

15

EX-31.1

EXHIBIT 31.1

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

I, Craig Holland, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Freeze Tag, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exhibit Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 15, 2015	By:	/s/ Craig Holland
		Craig Holland
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

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

I, Mick Donahoo, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Freeze Tag, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exhibit Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 15, 2015	By:	/s/ Mick Donahoo
		Mick Donahoo
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Freeze Tag, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2015, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Craig Holland, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  May 15, 2015	By:	/s/ Craig Holland
		Craig Holland
		Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Freeze Tag, Inc. and will be retained by Freeze Tag, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Freeze Tag, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2015, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Mick Donahoo, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  May 15, 2015	By:	/s/ Mick Donahoo
		Mick Donahoo
		Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Freeze Tag, Inc. and will be retained by Freeze Tag, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

RELATED PARTY TRANSACTIONS (Details Narrative) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Related Party Transactions Details Narrative
Notes payable to related parties	$ 1,456,254	$ 1,456,254
Accrued interest payable to related parties	$ 104,014	$ 68,106

XML

DEBT (Details) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Convertible note payable, gross	$ 1,009,143	$ 756,743
Related Party [Member]
Convertible note payable, gross	1,456,254	1,456,254
Related Party [Member] | Convertible note payable to the Holland Family Trust, maturing on September 30, 2015, with interest at 10%
Convertible note payable, gross	222,572	222,572
Related Party [Member] | Convertible note payable to Craig Holland, maturing on September 30, 2015, with interest at 10%
Convertible note payable, gross	813,602	813,602
Related Party [Member] | Convertible note payable to Craig Holland, maturing on December 31, 2014, with interest at 10%
Convertible note payable, gross	186,450	186,450
Related Party [Member] | Convertible note payable to Mick Donahoo, maturing on December 31, 2014, with interest at 10%
Convertible note payable, gross	186,450	186,450
Related Party [Member] | Convertible note payable to Craig Holland, maturing on December 31, 2014, with interest at 10%
Convertible note payable, gross	11,532	11,532
Related Party [Member] | Convertible note payable to Mick Donahoo, maturing on December 31, 2014, with interest at 10%
Convertible note payable, gross	$ 35,648	$ 35,648

XML

DEBT

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

Note 4 - DEBT

Convertible Notes Payable – Related Party

Convertible notes payable, related party consisted of the following at:

	March 31, 2015		December 31, 2014
Convertible note payable to the Holland Family Trust, maturing on September 30, 2015, with interest at 10%	$	222,572	$	222,572
Convertible note payable to Craig Holland, maturing on September 30, 2015, with interest at 10%		813,602		813,602
Convertible note payable to Craig Holland, maturing on December 31, 2014, with interest at 10%		186,450		186,450
Convertible note payable to Mick Donahoo, maturing on December 31, 2014, with interest at 10%		186,450		186,450
Convertible note payable to Craig Holland, maturing on December 31, 2014, with interest at 10%		11,532		11,532
Convertible note payable to Mick Donahoo, maturing on December 31, 2014, with interest at 10%		35,648		35,648
Total	$	1,456,254	$	1,456,254

The “Holland Family Trust Convertible Note” is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the date of conversion. “Fixed Conversion Price” shall mean $0.00005.

The Company evaluated the Holland Family Trust Convertible Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The note payable is convertible into common stock at the discretion of the Holland Family Trust. Furthermore, at any time, the Company may pay the balance of the unconverted note payable in cash.

As of September 30, 2014, $72,107 of accrued interest was added to the note principal and $813,602 of the note was transferred to Craig Holland. A new convertible note for $222,572 was issued to the Holland Family Trust with the same terms as the previous note, with the exception of the maturity date, which has been extended to September 30, 2015. As of March 31, 2015 and December 31, 2014, accrued interest related to the Holland Family Trust Convertible Note was $11,098 and $5,610, respectively.

On September 30, 2014, $813,602 principal balance (including interest) of the Holland Family Trust Convertible Note was transferred to Craig Holland (the “Holland Transferred Convertible Note”). The Holland Transferred Convertible Note retains the same terms as the original Holland Family Trust Convertible Note with the exception of the maturity date, which has been extended to September 30, 2015. As of March 31, 2015 and December 31, 2014, accrued interest related to the Holland Transferred Convertible Note was $40,569 and $20,507, respectively.

On December 31, 2013, the Company converted $186,450 of accrued salaries due to Craig Holland into a convertible note (the “Holland Accrued Salary Note”) and converted $186,450 of accrued salaries due to Mick Donahoo into a convertible note (the “Donahoo Accrued Salary Note”). The Holland Accrued Salary Note and the Donahoo Accrued Salary Note are convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005.

The Company evaluated the Holland Accrued Salary Note and the Donahoo Accrued Salary Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, the conversion feature does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. As of March 31, 2015 and December 31, 2014, there was $23,242 and $18,645, respectively, of accrued interest related to each of the notes.

On December 31, 2013, the Company converted a note payable to Mick Donahoo of $55,250 and accrued interest of $15,399 into a new convertible related party note in the amount of $70,649 (the “Mick Donahoo Convertible Note”).

On December 31, 2013, the Company converted a note payable to Craig Holland of $35,100 and accrued interest of $11,432 into a new convertible related party note in the amount of $46,532 (the “Craig Holland Convertible Note”).

The Mick Donahoo Convertible Note and the Craig Holland Convertible Note are convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005.

The Company evaluated the Mick Donahoo Convertible Note and the Craig Holland Convertible Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The agreements modified the debt to make it convertible into common stock of the Company. As of March 31, 2015 and December 31, 2014, there was a total of $5,863 and $4,699, respectively, of accrued interest payable related to these notes.

On October 23, 2014, Craig Holland converted $35,000 principal and $2,836 accrued interest into 39,829,849 shares of the Company’s common stock.

On October 23, 2014, Mick Donahoo converted $35,000 principal and $2,836 accrued interest into 39,829,849 shares of the Company’s common stock.

Total accrued interest payable for the above related party convertible notes was $104,014 and $68,106 as of March 31, 2015 and December 31, 2014, respectively.

Convertible Notes Payable – Non-Related Party

Convertible notes payable – non-related party consisted of the following at:

	March 31, 2015			December 31, 2014
Convertible note payable to Robert Cowdell,  maturing on December 31, 2014, with interest at 10%	$	61,443		$	61,443
Convertible note payable to an accredited investor, maturing on September 30, 2015, with interest at 10%		17,700			45,300
Convertible note payable to an accredited investor, maturing on January 6, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on February 18, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on March 26, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on April 25, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on May 21, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on June 25, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on July 15, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on August 19, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on September 17, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on October 13, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on November 7, 2015, with interest at 10%		100,000			100,000
Convertible note payable to an accredited investor, maturing on December 17, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on January 14, 2016, with interest at 10%		70,000			-
Convertible note payable to an accredited investor, maturing on February 10, 2016, with interest at 10%		30,000			-
Convertible note payable to an accredited investor, maturing on November 11, 2015, with interest at 10%		30,000			-
Convertible note payable to an accredited investor, maturing on November 25, 2015, with interest at 10%		40,000			-
Convertible note payable to an accredited investor, maturing on December 10, 2015, with interest at 10%		110,000			-
Total		1,009,143			756,743
Less discount		(307,684	)		(343,902	)
	$	701,459		$	412,841

On December 31, 2013, the Company converted $55,429 of convertible debt and $6,014 in accrued interest due to Robert Cowdell (the “Convertible Cowdell Note”) into a convertible note. The Convertible Cowdell Note is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005. The Convertible Cowdell Note had accrued interest of $7,659 and $6,144 as of March 31, 2015 and December 31, 2014, respectively.

The Company evaluated the Convertible Cowdell Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The agreement modified the debt to make it convertible into common stock of the Company.

The convertible notes to an accredited investor (the “Accredited Investor”) were issued in $50,000 tranches in December 2013 and January, February, March, April, May, June, July, August, September, October and December 2014, and tranches of $100,000 in November 2014, $70,000 in January 2015, two $30,000 tranches in February 2015, $40,000 in February 2015 and $110,000 in March 2015. Each note is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005. The notes also include conversion price reset features that are triggered when new equity issuances are made by the Company; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the notes is generally one year from the date of funding with the exception of the last three notes issued during the three months ended March 31, 2015, which have a maturity date of nine months from the date of funding.

The December 2013 derivative was valued at $50,453, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized at December 31, 2014. The December 2013 note had accrued interest of $329 and $4,068 as of March 31, 2015 and December 31, 2014, respectively.

The January 2014 derivative was valued as of January 6, 2014 at $44,493, of which all was recorded as a debt discount. During the three months ended March 31, 2015, $731 was amortized from the debt discount. The debt discount was fully amortized at March 31, 2015. The January 2014 note had accrued interest of $6,096 and $4,863 as of March 31, 2015 and December 31, 2014, respectively.

The February 2014 derivative was valued as of February 18, 2014 at $44,556, of which all was recorded as a debt discount. During the three months ended March 31, 2015, $5,981 was amortized from the debt discount. The debt discount was fully amortized at March 31, 2015. The February 2014 note had accrued interest of $5,562 and $5,981 as of March 31, 2015 and December 31, 2014, respectively.

The March 2014 derivative was valued as of March 26, 2014 at $77,884, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $11,644 was amortized from the debt discount. The debt discount was fully amortized at March 31, 2015. The March 2014 note had accrued interest of $5,068 and $3,836 as of March 31, 2015 and December 31, 2014, respectively.

The April 2014 derivative was valued as of April 25, 2014 at $90,605, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $12,328 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $3,425. The April 2014 note had accrued interest of $4,658 and $3,425 as of March 31, 2015 and December 31, 2014, respectively.

The May 2014 derivative was valued as of May 21, 2014 at $95,029, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $12,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $6,986. The May 2014 note had accrued interest of $4,301 and $3,068 as of March 31, 2015 and December 31, 2014, respectively.

The June 2014 derivative was valued as of June 25, 2014 at $83,184, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $12,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $11,781. The June 2014 note had accrued interest of $3,808 and $2,575 as of March 31, 2015 and December 31, 2014, respectively.

The July 2014 derivative was valued as of July 15, 2014 at $73,999, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $12,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $14,520. The July 2014 note had accrued interest of $3,534 and $2,301 as of March 31, 2015 and December 31, 2014, respectively.

The August 2014 derivative was valued as of August 19, 2014 at $64,104, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $12,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $19,315. The August 2014 note had accrued interest of $3,055 and $1,822 as of March 31, 2015 and December 31, 2014, respectively.

The September 2014 derivative was valued as of September 17, 2014 at $62,915, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $12,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $23,287. The September 2014 note had accrued interest of $2,671 and $1,438 as of March 31, 2015 and December 31, 2014, respectively.

The October 2014 derivative was valued as of October 13, 2014 at $63,347, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $12,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $26,849. The October 2014 note had accrued interest of $2,301 and $1,068 as of March 31, 2015 and December 31, 2014, respectively.

The November 2014 derivative was valued as of November 7, 2014 at $99,757, of which all was recorded as a debt discount. During the three months ended March 31, 2015, $24,597 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $60,401. The November 2014 note had accrued interest of $4,137 and $1,671 as of March 31, 2015 and December 31, 2014, respectively.

The December 2014 derivative was valued as of December 17, 2014 at $58,456, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2015, $12,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $35,753. The December 2014 note had accrued interest of $1,411 and $178 as of March 31, 2015 and December 31, 2014, respectively.

The January 2015 derivative was valued as of January 14, 2015 at $29,360, of which all was recorded as a debt discount. During the three months ended March 31, 2015, $6,113 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $23,247. The January 2015 note had accrued interest of $1,477 as of March 31, 2015.

The first February 2015 derivative was valued as of February 10, 2015 at $23,984, of which all was recorded as a debt discount. During the three months ended March 31, 2015, $3,220 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $20,764. The first February 2015 note had accrued interest of $411 as of March 31, 2015.

The second February 2015 derivative was valued as of February 11, 2015 at $18,003, of which all was recorded as a debt discount. During the three months ended March 31, 2015, $3,165 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $14,838. The second February 2015 note had accrued interest of $403 as of March 31, 2015.

The third February 2015 derivative was valued as of February 25, 2015 at $19,494, of which all was recorded as a debt discount. During the three months ended March 31, 2015, $2,428 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $17,066. The third February 2015 note had accrued interest of $575 as of March 31, 2015.

The March 2015 derivative was valued as of March 10, 2015 at $31,885, of which all was recorded as a debt discount. During the three months ended March 31, 2015, $2,435 was amortized from the debt discount. The debt discount had a balance at March 31, 2015 of $29,450. The March 2015 note had accrued interest of $663 as of March 31, 2015.

Total accrued interest payable for the above non-related party convertible notes was $60,042 and $41,385 as of March 31, 2015 and December 31, 2014, respectively.

The Company recorded total interest expense, including debt discount and beneficial conversion feature amortization, for all debt of $217,748 and $163,698 for the three months ended March 31, 2015 and 2014, respectively.

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DERIVATIVE FINANCIAL INSTRUMENTS (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Derivative Financial Instruments Details
Balance, December 31, 2014	$ 438,374
Increases in derivative value due to new issuances of notes	122,726
Derivative adjustment due to debt conversion	(68,125)
Change in fair value of derivative liabilities	8,753
Balance, March 31, 2015	$ 501,728

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Derivative liabilities	$ 501,728	$ 438,374
Derivatives Losses (Gains)	8,753	(241,154)
Level 1 [Member]
Derivative liabilities
Level 2 [Member]
Derivative liabilities
Level 3 [Member]
Derivative liabilities	$ 501,728	$ 438,374

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DERIVATIVE FINANCIAL INSTRUMENTS (Details Narrative) (USD $)	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Derivative Financial Instruments Details Narrative
Current derivative liabilities	$ 501,728	$ 438,374
Net change in fair value of the derivative liabilities	$ 8,753

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STOCKHOLDERS' DEFICIT (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Stockholders Deficit Details
Number of Option and warrants, Outstanding at beginning of year	560,000
Number of Option and Warrants, Granted
Number of Option and Warrants, Exercised
Number of Option and Warrants, Canceled / Expired
Number of Option and Warrants, Outstanding, end of period	560,000
Weighted Average Exercise Price, Outstanding at beginning of year	$ 0.10
Weighted Average Exercise Price, Granted
Weighted Average Exercise Price, Exercised
Weighted Average Exercise Price, Canceled / Expired
Weighted Average Exercise Price, Outstanding, end of period	$ 0.10

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ACCRUED EXPENSES

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

NOTE 3 - ACCRUED EXPENSES

Accrued liabilities consisted of the following at:

	March 31, 2015		December 31, 2014
Accrued vacation	$	70,356	$	68,344
Accrued royalties		407,290		406,790
Technology payable		18,000		18,000
Other		-		2,181
	$	495,646	$	495,315

Accrued royalties consist of amounts owed to other parties with whom the Company has revenue-sharing agreements or from whom it licenses certain trademarks or copyrights.

Unearned royalties consist of royalties received from licensees, which have not yet been earned. Unearned royalties were $200,666 and $202,499 at March 31, 2015 and December 31, 2014, respectively.

As of March 31, 2015 and December 31, 2014, the Company had technology payable of $18,000 resulting from a technology transfer agreement with an unrelated party entered into in June 2011, payable in 24 installments of $1,500 without interest.

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STOCKHOLDERS' DEFICIT (Details Narrative) (USD $)	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Stock payables	$ 16,800	$ 16,800
Number of shares payable in installments	12,000
Stock payables shares	96,000
Common stock to an accredited investor	27,192,590
Conversion of principal amount	27,600
Accrued interest payable to investors	$ 3,357
Options outstanding to purchase shares of Common Stock	560,000
Minimum [Member]
Conversion prices	$ 0.00097
Maximum [Member]
Conversion prices	$ 0.00135
Mr. Holland [Member]
Number of quarterly installments	8

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CONDENSED BALANCE SHEETS (USD $)	Mar. 31, 2015	Dec. 31, 2014
Current Assets
Cash	$ 25,594	$ 14,688
Accounts receivable, net of allowance of $5,600	8,195	16,197
Prepaid expenses and other current assets	5,115	8,245
Total Current Assets	38,904	39,130
TOTAL ASSETS	38,904	39,130
Current liabilities:
Accounts Payable	108,808	116,150
Accrued Expenses	495,646	495,315
Accrued interest payable - related party	104,014	68,106
Accrued interest payable	60,042	41,385
Unearned royalties	200,666	202,499
Convertible notes payable, related party	1,456,254	1,456,254
Convertible notes payable, net of discount of $307,684 and $343,902, respectively	701,459	412,841
Derivative Liabilities	501,728	438,374
Total Current Liabilities	3,628,617	3,230,924
Stockholders' deficit:
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding
Common stock; $0.001 par value, 500,000,000 shares authorized, 211,710,840 and 184,518,250 shares issued and outstanding, respectively	211,710	184,517
Additional Paid-In Capital	3,792,611	3,720,722
Common Stock Payable	16,800	16,800
Accumulated deficit	(7,610,834)	(7,113,833)
Total stockholders' deficit	(3,589,713)	(3,191,794)
TOTAL LIABILITIES & EQUITY (DEFICIT)	$ 38,904	$ 39,130

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THE COMPANY

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

NOTE 1 - THE COMPANY

Freeze Tag, Inc. (the “Company”) is a leading creator of mobile social games that are fun and engaging for all ages. Based on a free-to-play business model that has propelled games like Candy Crush Saga to worldwide success, the Company employs state-of-the-art data analytics and proprietary technology to dynamically optimize the gaming experience for revenue generation. Players can download and enjoy the Company’s games for free, or they can purchase virtual items and additional features within the game to increase the fun factor. The Company’s games encourage players to compete and engage with their friends on major social networks such as Facebook and Twitter.

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GOING CONCERN (Details Narrative) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Going Concern Details Narrative
Net Loss	$ (497,001)	$ (320,387)
Accumulated deficit	$ (7,610,834)		$ (7,113,833)

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ACCRUED EXPENSES (Details Narrative) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Accrued Expenses Details Narrative
Unearned royalties	$ 200,666	$ 202,499
Technology payable	$ 18,000	$ 18,000

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GOING CONCERN

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

NOTE 2 - GOING CONCERN

As shown in the accompanying financial statements for the three-month periods ended March 31, 2015 and 2014, the Company incurred net losses of $497,001 and $320,387, respectively. As of March 31, 2015, the Company’s accumulated deficit was $7,610,834. During the period ended March 31, 2015 and the year ended December 3l, 2014, the Company experienced negative cash flows from operations largely due to its continued investment spending for product development of game titles for smartphones and tablets that are expected to benefit future periods. Those facts, along with our lack of access to a significant bank credit facility, create an uncertainty about the Company’s ability to continue as a going concern. Accordingly, the Company is currently evaluating its alternatives to secure financing sufficient to support the operating requirements of its current business plan, as well as continuing to execute its business strategy of distributing game titles to digital distribution outlets, including mobile gaming app stores, online PC and Mac gaming portals, and opportunities for new devices such as tablet (mobile internet device) applications, mobile gaming platforms and international licensing opportunities.

The Company’s ability to continue as a going concern is dependent upon its success in securing sufficient financing and in successfully executing its plans to return to positive cash flows during fiscal 2015. 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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CONDENSED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Current Assets
Accounts Receivable, net of allowance	$ 5,600	$ 5,600
Current liabilities:
Convertible notes payable, net of discount	$ 307,684	$ 343,902
Stockholder's deficit:
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, authorized shares	10,000,000	10,000,000
Preferred stock, issued shares
Preferred stock, outstanding shares
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized shares	500,000,000	500,000,000
Common stock, issued shares	211,710,840	184,518,250
Common stock, outstanding shares	211,710,840	184,518,250

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ACCRUED EXPENSES (Tables)

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

Accrued liabilities

Accrued liabilities consisted of the following at:

	March 31, 2015		December 31, 2014
Accrued vacation	$	70,356	$	68,344
Accrued royalties		407,290		406,790
Technology payable		18,000		18,000
Other		-		2,181
	$	495,646	$	495,315

Accrued royalties consist of amounts owed to other parties with whom the Company has revenue-sharing agreements or from whom it licenses certain trademarks or copyrights.

Unearned royalties consist of royalties received from licensees, which have not yet been earned. Unearned royalties were $200,666 and $202,499 at March 31, 2015 and December 31, 2014, respectively.

As of March 31, 2015 and December 31, 2014, the Company had technology payable of $18,000 resulting from a technology transfer agreement with an unrelated party entered into in June 2011, payable in 24 installments of $1,500 without interest.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2015	May 15, 2015
Document And Entity Information
Entity Registrant Name	FREEZE TAG, INC.
Entity Central Index Key	0001485074
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		233,285,127
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2015

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DEBT (Tables)

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

Convertible notes payable, related party

Convertible notes payable, related party consisted of the following at:

	March 31, 2015		December 31, 2014
Convertible note payable to the Holland Family Trust, maturing on September 30, 2015, with interest at 10%	$	222,572	$	222,572
Convertible note payable to Craig Holland, maturing on September 30, 2015, with interest at 10%		813,602		813,602
Convertible note payable to Craig Holland, maturing on December 31, 2014, with interest at 10%		186,450		186,450
Convertible note payable to Mick Donahoo, maturing on December 31, 2014, with interest at 10%		186,450		186,450
Convertible note payable to Craig Holland, maturing on December 31, 2014, with interest at 10%		11,532		11,532
Convertible note payable to Mick Donahoo, maturing on December 31, 2014, with interest at 10%		35,648		35,648
Total	$	1,456,254	$	1,456,254

Convertible notes payable, Non-Related Party

Convertible notes payable – non-related party consisted of the following at:

	March 31, 2015			December 31, 2014
Convertible note payable to Robert Cowdell,  maturing on December 31, 2014, with interest at 10%	$	61,443		$	61,443
Convertible note payable to an accredited investor, maturing on September 30, 2015, with interest at 10%		17,700			45,300
Convertible note payable to an accredited investor, maturing on January 6, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on February 18, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on March 26, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on April 25, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on May 21, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on June 25, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on July 15, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on August 19, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on September 17, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on October 13, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on November 7, 2015, with interest at 10%		100,000			100,000
Convertible note payable to an accredited investor, maturing on December 17, 2015, with interest at 10%		50,000			50,000
Convertible note payable to an accredited investor, maturing on January 14, 2016, with interest at 10%		70,000			-
Convertible note payable to an accredited investor, maturing on February 10, 2016, with interest at 10%		30,000			-
Convertible note payable to an accredited investor, maturing on November 11, 2015, with interest at 10%		30,000			-
Convertible note payable to an accredited investor, maturing on November 25, 2015, with interest at 10%		40,000			-
Convertible note payable to an accredited investor, maturing on December 10, 2015, with interest at 10%		110,000			-
Total		1,009,143			756,743
Less discount		(307,684	)		(343,902	)
	$	701,459		$	412,841

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CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Condensed Statements Of Operations
Revenues	$ 7,903	$ 14,842
Operating costs and expenses:
Cost of Sales	127,324	23,540
Selling, general and administrative expenses	150,679	140,624
Depreciation and amortization expense		6,100
Total operating costs and expenses	278,003	170,264
Loss from operations	(270,100)	(155,422)
Other income (expense):
Interest expense, net	(217,748)	(163,698)
Loss on change in derivative liabilities	(8,753)
Total other income (expense)	(226,501)	(163,698)
Loss before income taxes	(496,601)	(319,120)
Provision for income taxes	400	1,267
Net Loss	$ (497,001)	$ (320,387)
Weighted number of common shares outstanding-basic and fully diluted	191,529,335	99,938,817
Loss per common share - basic and diluted	$ 0.00	$ 0.00

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STOCKHOLDERS DEFICIT

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

NOTE 7 - STOCKHOLDERS DEFICIT

Stock Issuances

The Company is authorized to issue up to 500,000,000 shares of its $.001 par value common stock, and up to 10,000,000 shares of its $.001 par value preferred stock.

As of March 31, 2015 and December 31, 2014, 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 96,000 shares of its common stock, payable in 8 quarterly installments of 12,000 shares.

During the three months ended March 31, 2015, the Company issued a total of 27,192,590 shares of its common stock to an accredited investor in conversion of $27,600 principal and $3,357 accrued interest payable at a conversion prices ranging from $0.00097 to $0.00135 per share. As a result of the debt conversions, common stock was increased by $27,193 and additional paid-in capital was increased by $71,889.

2006 Stock Option Plan

The 2006 Stock Option Plan was adopted by our Board of Directors in March of 2006. A total of 550,000 shares of Common Stock have been reserved for issuance to employees, consultants and directors upon exercise of incentive and non-statutory options and stock purchase rights which may be granted under the Company’s 2006 Stock Plan (the “2006 Plan”). On October 15, 2009, 235,000 of those options were exercised, leaving 315,000 shares available for issuance to employees. Because of the 5.31-for-one forward stock split of the Company’s common stock on October 15, 2009, there are now 1,512,650 shares available for issuance as a part of this stock plan. As of March 31, 2015, there were 560,000 options outstanding to purchase shares of Common Stock, and no shares of Common Stock had been issued pursuant to stock purchase rights under the 2006 Plan.

Under the 2006 Plan, options may be granted to employees, directors, and consultants. Only employees may receive “incentive stock options,” which are intended to qualify for certain tax treatment, and consultants and directors may receive “non-statutory stock options,” which do not qualify for such treatment. A holder of more than 10% of the outstanding voting shares may only be granted options with an exercise price of at least 110% of the fair market value of the underlying stock on the date of the grant, and if such holder has incentive stock options, the term of the options must not exceed five years.

Options and stock purchase rights granted under the 2006 Plan generally vest ratably over a four year period (typically 1⁄4 or 25% of the shares vest after the 1st year and 1/48 of the remaining shares vest each month thereafter); however, alternative vesting schedules may be approved by the Board of Directors in its sole discretion. Any unvested portion of an option or stock purchase right will accelerate and become fully vested if a holder’s service with the Company is terminated by the Company without cause within twelve months following a Change in Control (as defined in the 2006 Plan).

All options must be exercised within ten years after the date of grant. Upon a holder’s termination of service for any reason prior to a Change in Control, the Company may repurchase any shares issued to such holder upon the exercise of options or stock purchase rights. The Board of Directors may amend the 2006 Plan at any time. The 2006 Plan will terminate in 2016, unless terminated sooner by the Board of Directors.

The Company did not grant any stock options or warrants during the three months ended March 31, 2015, and did not record any stock-based compensation expense during the three months ended March 31, 2015 and 2014.

A summary of the status of the options and warrants issued by the Company as of March 31, 2015, and changes during the three months then ended is presented below:

			Weighted Average
	Shares		Exercise Price
Outstanding, December 31, 2014		560,000	$	0.10
Granted		-		-
Canceled / Expired		-		-
Exercised		-		-
Outstanding, March 31, 2015		560,000	$	0.10

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DERIVATIVE FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS

As discussed in Note 4, the Company issued convertible notes payable to non-related parties that contain anti-dilutive, or down round, price protection. Pursuant to ASC 815-15 Embedded Derivatives and ASC 815-40 Contracts in Entity’s Own Equity, the Company recorded a derivative liability for the price protection provisions issued within the convertible debt transactions.

The fair values of the Company’s derivative liabilities are estimated at the issuance date and are revalued at each subsequent reporting date using a multinomial lattice model simulation discussed below. At March 31, 2015 and December 31, 2014, the Company recorded current derivative liabilities of $501,728 and $438,374, respectively. The net change in fair value of the derivative liabilities for the three months ended March 31, 2015 was a loss of $8,753, which was reported as other expense in the statements of operations.

The following table presents details of the Company’s derivative liabilities for the three months ended March 31, 2015:

Balance, December 31, 2014	$	438,374
Increases in derivative value due to new issuances of notes		122,726
Derivative adjustment due to debt conversion		(68,125	)
Change in fair value of derivative liabilities		8,753
Balance, March 31, 2015	$	501,728

The Company calculated the fair value of the compound embedded derivatives using a multinomial lattice model simulation. The model is based on a probability weighted discounted cash flow model using projections of the various potential outcomes.

Key inputs and assumptions used in valuing the Company’s derivative liabilities are as follows for issuances of notes:

· Stock prices on all measurement dates were based on the fair market value

· Down round protection is based on the subsequent issuance of common stock at prices less than the conversion feature

· The probability of future financing was estimated at 100%

· Computed volatility ranging from 302% to 309%

See Note 5 for a discussion of fair value measurements.

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ACCRUED EXPENSES (Details) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Accrued Expenses Details
Accrued Vacation	$ 70,356	$ 68,344
Accrued royalties	407,290	406,790
Technology payable	18,000	18,000
Other		2,181
Total Accrued Compensation	$ 495,646	$ 495,315

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Of Financial Instruments Tables

Fair values of assets and liabilities measured on a non-recurring basis

The following tables provide a summary of the fair values of assets and liabilities measured on a non-recurring basis as of March 31, 2015 and December 31, 2014:

March 31, 2015	Total		Level 1		Level 2		Level 3		Losses (Gains)
Derivative liabilities	$	501,728	$	-	$	-	$	501,728	$	8,753
December 31, 2014	Total		Level 1		Level 2		Level 3		Losses (Gains)
Derivative liabilities	$	438,374	$	-	$	-	$	438,374	$	(241,154	)

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RECENT ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

Note 10 - RECENT ACCOUNTING PRONOUNCEMENTS

There were no new accounting pronouncements issued during the three months ended March 31, 2015 and through the date of the filing of this report that we believe are applicable to or would have a material impact on our consolidated financial statements.

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LOSS PER COMMON SHARE

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

NOTE 8 - LOSS PER COMMON 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 and rights outstanding using the treasury stock method and the average market price per share during the period.

For the three months ended March 31, 2015 and 2014, the diluted weighted average number of shares is the same as the basic weighted average number of shares as the conversion of debt, options and warrants would be anti-dilutive.

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RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

NOTE 9 - RELATED PARTY TRANSACTIONS

The Company had convertible notes payable to related parties totaling $1,456,254 as of March 31, 2015 and December 31, 2014. See Note 4 for a detailed disclosure of this related party debt, including interest rates, terms of conversion and other repayment terms. Accrued interest payable to related parties was $104,014 and $68,106 as of March 31, 2015 and December 31, 2014, respectively.

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

NOTE 11 - SUBSEQUENT EVENTS

Subsequent to March 31, 2015, we received additional consideration of $88,000 from an accredited investor pursuant to an existing convertible promissory note. The note payable matures nine months from the date of each payment of consideration and bears interest at the rate of 10% per annum. The conversion terms are the same as those described in Note 4 for the prior convertible notes payable to the accredited investor.

Subsequent to March 31, 2015, we issued a total of 21,574,287 shares of our common stock in the conversion of convertible notes payable principal totaling $17,900 and accrued interest payable totaling $2,447.

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STOCKHOLDERS DEFICIT (Tables)

3 Months Ended

Mar. 31, 2015

Stockholders Deficit Tables

Schedule of status of warrants and options issued

A summary of the status of the options and warrants issued by the Company as of March 31, 2015, and changes during the three months then ended is presented below:

			Weighted Average
	Shares		Exercise Price
Outstanding, December 31, 2014		560,000	$	0.10
Granted		-		-
Canceled / Expired		-		-
Exercised		-		-
Outstanding, March 31, 2015		560,000	$	0.10

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DEBT (Details 1) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Convertible note payable, gross	$ 1,009,143	$ 756,743
Less discount	(307,684)	(343,902)
Convertible note payable, net	701,459	412,841
Convertible note payable to Robert Cowdell, maturing on December 31, 2014, with interest at 10%
Convertible note payable, gross	61,443	61,443
Convertible note payable to an accredited investor, maturing on September 30, 2015, with interest at 10%
Convertible note payable, gross	17,700	45,300
Convertible note payable to an accredited investor, maturing on January 6, 2015, with interest at 10%
Convertible note payable, gross	50,000	50,000
Convertible note payable to an accredited investor, maturing on February 18, 2015, with interest at 10%
Convertible note payable, gross	50,000	50,000
Convertible note payable to an accredited investor, maturing on March 26, 2015, with interest at 10%
Convertible note payable, gross	50,000	50,000
Convertible note payable to an accredited investor, maturing on April 25, 2015, with interest at 10%
Convertible note payable, gross	50,000	50,000
Convertible note payable to an accredited investor, maturing on May 21, 2015, with interest at 10%
Convertible note payable, gross	50,000	50,000
Convertible note payable to an accredited investor, maturing on June 25, 2015, with interest at 10%
Convertible note payable, gross	50,000	50,000
Convertible note payable to an accredited investor, maturing on July 15, 2015, with interest at 10%
Convertible note payable, gross	50,000	50,000
Convertible note payable to an accredited investor, maturing on August 19, 2015, with interest at 10%
Convertible note payable, gross	50,000	50,000
Convertible note payable to an accredited investor, maturing on September 17, 2015, with interest at 10%
Convertible note payable, gross	50,000	50,000
Convertible note payable to an accredited investor, maturing on October 13, 2015, with interest at 10%
Convertible note payable, gross	50,000	50,000
Convertible note payable to an accredited investor, maturing on November 7, 2015, with interest at 10%
Convertible note payable, gross	100,000	100,000
Convertible note payable to an accredited investor, maturing on December 17, 2015, with interest at 10%
Convertible note payable, gross	50,000	50,000
Convertible note payable to an accredited investor, maturing on January 14, 2016, with interest at 10%
Convertible note payable, gross	70,000
Convertible note payable to an accredited investor, maturing on February 10, 2016, with interest at 10%
Convertible note payable, gross	30,000
Convertible note payable to an accredited investor, maturing on November 11, 2015, with interest at 10%
Convertible note payable, gross	30,000
Convertible note payable to an accredited investor, maturing on November 25, 2015, with interest at 10%
Convertible note payable, gross	40,000
Convertible note payable to an accredited investor, maturing on December 10, 2015, with interest at 10%
Convertible note payable, gross	$ 110,000

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CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash flows from operating activities:
Net Loss	$ (497,001)	$ (320,387)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization expense		6,100
Amortization of debt discount to interest expense	158,944	123,363
Loss on change in derivative liability	8,753
Changes in operating assets and liabilities:
Accounts receivable, net	8,002	2,312
Prepaid expenses and other current assets	3,130	1,082
Accounts Payable	(7,342)	(3,890)
Accrued Expenses	331	6,510
Accrued interest payable - related party	35,908	35,800
Accrued interest payable	22,014	4,529
Unearned royalties	(1,833)	(2,425)
Net cash used by operating activities	(269,094)	(147,006)
Cash flows from Investing activities:
Net cash provided by investing activities
Cash flows from financing activities:
Borrowings of debt	280,000	150,000
Net cash provided by financing activities	280,000	150,000
Net increase in cash	10,906	2,994
Cash at the beginning of the period	14,688	39,847
Cash at the end of the period	25,594	42,841
Non-cash transactions
Conversion of debt to common shares	27,600
Conversion of accrued interest to common shares	3,357
Conversion of derivative liabilities to common shares	68,125
Debt discount due to derivative	122,726
Beneficial conversion feature		$ 150,000

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FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company adopted FASB ASC 820 on October 1, 2008. Under this FASB, fair value is defined 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. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

The Company has various financial instruments that must be measured under the new fair value standard including: cash and debt. The Company currently does not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The fair value of the Company’s cash is based on quoted prices and therefore classified as Level 1.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

Cash, accounts receivable, capitalized production costs, prepaid royalties, prepaid expenses, accounts payable, accrued compensation, accrued royalties, accrued interest, accrued expenses, unearned royalties, notes payable – related party and technology payables reported on the balance sheet are estimated by management to approximate fair market value due to their short term nature.

The following tables provide a summary of the fair values of assets and liabilities measured on a non-recurring basis as of March 31, 2015 and December 31, 2014:

March 31, 2015	Total		Level 1		Level 2		Level 3		Losses (Gains)
Derivative liabilities	$	501,728	$	-	$	-	$	501,728	$	8,753
December 31, 2014	Total		Level 1		Level 2		Level 3		Losses (Gains)
Derivative liabilities	$	438,374	$	-	$	-	$	438,374	$	(241,154	)

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DEBT (Details Narrative) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Accrued interest	$ 20,206
Accrued interest payable - related party	104,014		68,106
Debt discount	(307,684)		(343,902)
Non-related party convertible notes	60,042		41,385
Interest expense, net	217,748	163,698
Convertible notes payable	1,009,143		756,743
Holland Family Trust Convertible Note [Member]
Accrued interest	11,098		5,610
Holland Transferred Convertible Note [Member]
Accrued interest	40,569		20,507
Craig Holland and Mick Donahoo [Member]
Accrued interest	23,242		18,645
Craig Holland and Mick Donahoo Convertible Notes [Member]
Accrued interest	5,863		4,699
Cowdell Convertible Note [Member]
Accrued interest	7,659		6,144
December 2013 derivative [Member]
Accrued interest	329		4,068
Convertible note issued	50,453
January 2014 derivative [Member]
Accrued interest	6,096		4,863
Convertible note issued	44,493
Amortization on debt discount	731
February 2014 derivative [Member]
Accrued interest	5,562		5,981
Convertible note issued	44,556
Amortization on debt discount	5,981
March 2014 derivative [Member]
Accrued interest	5,068		3,836
Convertible note issued	77,884
Amortization on debt discount	11,644
April 2014 derivative [Member]
Accrued interest	4,658		3,425
Convertible note issued	90,605
Amortization on debt discount	12,328
Debt discount	3,425
May 2014 derivative [Member}
Accrued interest	4,301		3,068
Convertible note issued	95,029
Amortization on debt discount	12,329
Debt discount	6,986
June 2014 derivative [Member}
Accrued interest	3,808		2,575
Convertible note issued	83,184
Amortization on debt discount	12,329
Debt discount	11,781
July 2014 derivative [Member}
Accrued interest	3,534		2,301
Convertible note issued	73,999
Amortization on debt discount	12,329
Debt discount	14,520
August 2014 derivative [Member}
Accrued interest	3,055		1,822
Convertible note issued	64,104
Amortization on debt discount	12,329
Debt discount	19,315
September 2014 derivative [Member}
Accrued interest	2,671		1,438
Convertible note issued	62,915
Amortization on debt discount	12,329
Debt discount	23,287
October 2014 derivative [Member}
Accrued interest	2,301		1,068
Convertible note issued	63,347
Amortization on debt discount	12,329
Debt discount	26,849
November 2014 derivative [Member}
Accrued interest	4,137		1,671
Convertible note issued	99,757
Amortization on debt discount	24,597
Debt discount	60,401
December 2014 derivative [Member}
Accrued interest	1,411		178
Convertible note issued	58,456
Amortization on debt discount	12,329
Debt discount	35,753
January 2015 derivative [Member}
Accrued interest	1,477
Convertible note issued	29,360
Amortization on debt discount	6,113
Debt discount	23,247
First February 2015 derivative [Member}
Accrued interest	411
Convertible note issued	23,984
Amortization on debt discount	3,220
Debt discount	20,764
Second February 2015 derivative [Member}
Accrued interest	403
Convertible note issued	18,003
Amortization on debt discount	3,165
Debt discount	14,838
Third February 2015 derivative [Member}
Accrued interest	575
Convertible note issued	19,494
Amortization on debt discount	2,428
Debt discount	17,066
March 2015 derivative [Member}
Accrued interest	663
Convertible note issued	31,885
Amortization on debt discount	2,435
Debt discount	$ 29,450

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2015

Derivative Financial Instruments Tables

Summary of Company's derivative liabilities

The following table presents details of the Company’s derivative liabilities for the three months ended March 31, 2015:

Balance, December 31, 2014	$	438,374
Increases in derivative value due to new issuances of notes		122,726
Derivative adjustment due to debt conversion		(68,125	)
Change in fair value of derivative liabilities		8,753
Balance, March 31, 2015	$	501,728