8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K/A

(Amendment No. 1)

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 18, 2017

FREEZE TAG, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-54267	20-4532392
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

18062 Irvine Blvd, Suite 103

Tustin, California 92780

(Address of principal executive offices) (zip code)

(714) 210-3850

(Registrant’s telephone number, including area code)

__________________________________________________

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

SECTION 9 – FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01 Financial Statements and Exhibits

As reported on our Current Report on Form 8-K filed with the Securities and Exchange Commission on October 20, 2017, on October 18, 2017, we closed the merger transaction (the “Merger”) that was the subject of that certain Agreement and Plan of Merger (the “Merger Agreement”) with Munzee, Inc., a Delaware corporation (“Munzee”) dated July 26, 2017. At closing, in accordance with the Merger Agreement, Munzee merged with and into our corporation, Freeze Tag, Inc., a Delaware corporation (the “Merger”), with Freeze Tag, Inc. being the surviving corporation. At the closing, we issued the current owners of all of Munzee’s outstanding common stock 4,355,000 shares of our Series C Convertible Preferred Stock. Each share of our Series C Convertible Preferred Stock is convertible into fifty (50) shares of our common stock.

The purpose of this amended filing is to enclose the audited financial statements of Munzee for the years ended December 31, 2016 and 2015, the unaudited financial statements for Munzee for the periods ended September 30, 2017 and 2016, and pro forma financial statements, as required.

Exhibits

99.1	Audited financial statements of Munzee, Inc. for the years ended December 31, 2016 and 2015
99.2	Unaudited financial statements of Munzee, Inc. for the three and nine months ended September 30, 2017 and 2016
99.3	Unaudited pro forma condensed combined financial statements of Munzee, Inc. and Freeze Tag, Inc. as of December 31, 2016 and September 30, 2017

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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 hereunto duly authorized.

	Freeze Tag, Inc., a Delaware corporation
Date: January 8, 2018	By:	/s/ Craig Holland
		Craig Holland Chief Executive Officer (Principal Executive Officer)

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EX-99.1

EXHIBIT 99.1

MUNZEE, INC.

INDEX TO FINANCIAL STATEMENTS

Audited Financial Statements of Munzee, Inc.

	Page
Report of Independent Registered Public Accounting Firm	2
Balance Sheets as of December 31, 2016 and 2015	3
Statements of Operations for the Years Ended December 31, 2016 and 2015	4
Statements of Stockholders’ Equity for the Years Ended December 31, 2016 and 2015	5
Statements of Cash Flows for the Years Ended December 31, 2016 and 2015	6
Notes to Financial Statements	7

1

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Munzee, Inc.

We have audited the accompanying balance sheets of Munzee, Inc. as of December 31, 2016 and 2015, and the related statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2016. Munzee, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Munzee, Inc. as of December 31, 2016 and 2015, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.

/s/ M&K CPAS, PLLC

Houston, Texas

January 3, 2018

2

MUNZEE, INC.

BALANCE SHEETS

	December 31,
	2016		2015
ASSETS
Current assets:
Cash	$	193,892	$	124,321
Prepaid expenses		44,767		42,081
Total current assets		238,659		166,402
Property and equipment, net		106,319		101,634
Total assets	$	344,978	$	268,036
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	30,843	$	10,318
Accrued expenses		17,805		24,671
Current portion of long-term debt		72,112		12,242
Total current liabilities		120,760		47,231
Long-term liabilities:
Notes payable		23,995		37,650
Total liabilities		144,755		84,881
Commitments and contingencies
Stockholders’ equity:
Common stock; $0.00001 par value, 10,000,000 shares authorized, 6,720,000 issued and outstanding		67		67
Additional paid-in capital		109		109
Retained earnings		200,047		182,979
Total stockholders’ equity		200,223		183,155
Total liabilities and stockholders’ equity	$	344,978	$	268,036

The accompanying notes are an integral part of the financial statements

3

MUNZEE, INC.

STATEMENTS OF OPERATIONS

	Years Ended December 31,
	2016			2015
Revenues	$	2,359,759		$	1,894,382
Operating costs and expenses:
Cost of sales		931,745			612,015
Selling, general and administrative expenses		1,401,238			1,190,596
Total operating costs and expenses		2,332,983			1,802,611
Income from operations		26,776			91,771
Other expense:
Interest expense, net		(2,394	)		(3,158	)
Total other expense		(2,394	)		(3,158	)
Income before income taxes		24,382			88,613
Provision for income taxes		(7,314	)		(22,919	)
Net income	$	17,068		$	65,694
Weighted average number of common shares outstanding – basic and diluted		6,720,000			6,720,000
Income per common share – basic and diluted	$	0.00		$	0.01

The accompanying notes are an integral part of the financial statements

4

MUNZEE, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITY

Years Ended December 31, 2016 and 2015

	Common Stock				Additional Paid-In		Retained
	Shares		Amount		Capital		Earnings		Total
Balance, December 31, 2014		6,720,000	$	67	$	109	$	117,285	$	117,461
Net income		-		-		-		65,694		65,694
Balance, December 31, 2015		6,720,000		67		109		182,979		183,155
Net income		-		-		-		17,068		17,068
Balance, December 31, 2016		6,720,000	$	67	$	109	$	200,047	$	200,223

The accompanying notes are an integral part of the financial statements

5

MUNZEE, INC.

STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2016			2015
Cash flows from operating activities:
Net income	$	17,068		$	65,694
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		22,245			18,316
Changes in operating assets and liabilities:
Prepaid expenses		(2,686	)		(42,081	)
Accounts payable		20,525			(16,085	)
Accrued expenses		(6,866	)		(1,890	)
Net cash provided by operating activities:		50,286			23,954
Cash flows from investing activities:
Purchase of property and equipment		(26,930	)		(21,334	)
Net cash used by investing activities		(26,930	)		(21,334	)
Cash flows from financing activities:
Proceeds from notes payable		75,168			186
Repayment of notes payable		(28,953	)		(10,396	)
Net cash provided (used) by financing activities		46,215			(10,210	)
Net increase (decrease) in cash		69,571			(7,590	)
Cash at the beginning of the year		124,321			131,911
Cash at the end of the year	$	193,892		$	124,321

Supplemental disclosure:
Cash paid for income taxes	$	10,000	$	65,000
Cash paid for interest	$	2,394	$	3,158

The accompanying notes are an integral part of the financial statements

6

MUNZEE, INC.

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2016 and 2015

NOTE 1 – THE COMPANY AND NATURE OF BUSINESS

Munzee, Inc. (the “Company” or “Munzee”) was incorporated in the state of Delaware on November 18, 2011. Munzee provides a social platform that blends gamification, geolocation and marketing elements into an experience that rewards players for going places in the physical world. Utilizing QR code and GPS technology, Munzee is able to validate a person’s location and provide them points to level up in the various Munzee mobile applications. The Munzee suite of applications includes Munzee, its flagship product, Eventzee, a photo scavenger hunt useful for corporate training and trade shows, and WallaBee, an addictive collecting game with over 2,000 beautifully drawn digital cards.

In 2014, the Company opened a retail store called The Marketplace which was located in the same building as the company’s offices on 111 East Virginia Street, McKinney, Texas. A variety of items were sold in this store such as snacks, beverages and goods produced by local area businesses. The Marketplace also serve as a location where Munzee players could scan unique QR codes and receive special virtual badges. In March of 2017, the Company closed the Marketplace retail store in order to focus more attention on the core business, namely location based mobile gaming software. Revenue and expenses from the Marketplace store is included in the 2015 and 2016 financial reports.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

The Company’s revenues are derived primarily by licensing software products in the form of mobile games for smartphone and tablet platforms. The Company recognizes revenue from the sale of its products in accordance with current accounting standards upon the transfer of title and risk of loss to its customers, and once any performance obligations have been completed. Revenue from product sales is recorded net of processing costs.

Cash and Cash Equivalents

For purposes of the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be cash equivalents. The Company places its cash and cash equivalents with large commercial banks. The Federal Deposit Insurance Corporation (“FDIC”) insures these balances, up to $250,000. All of the Company’s cash balances at December 31, 2016 and December 31, 2015 were insured. At December 31, 2016 and December 31, 2015 there were no cash equivalents.

Property and Equipment

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

Computer equipment	5 years
Office furniture and equipment	7 years
Automobiles	5 years
Leasehold improvements	15 years

7

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

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

Concentrations of Credit Risk, Major Customers and Major Vendors

The Company’s customers are the end-consumers that purchase its games from the websites where the Company has its games listed for sale. Therefore, the Company does not have any individual customers that represent any more than a fraction of its revenue.

Income Taxes

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

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

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

Foreign Currency Translation

The Company derives a portion of its revenue from foreign countries, but customers pay in U.S. Dollars. Therefore, no adjustments are required in the accompanying financial statements for foreign currency transactions.

Fair Value of Financial Instruments

In accordance with current accounting standards, certain assets and liabilities must be measured at fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. ASC 820 requires that certain assets and liabilities must be measured at fair value, and the standard details the disclosures that are required for items measured at fair value. The Company had no assets and liabilities required to be measured on a recurring basis at December 31, 2016 and 2015.

Cash, prepaid expenses, accounts payable, accrued compensation and notes payable reported on the Company’s balance sheets are estimated by management to approximate fair market value due to their short-term nature.

8

Use of Estimates

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

Research and Development Costs

The Company charges costs related to research and development of products to selling, general and administrative expense as incurred. The types of costs included in research and development expenses include research materials, salaries, contractor fees, and support materials.

Recent Accounting Pronouncements

In July 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-11, “Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception.” Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, “Distinguishing Liabilities from Equity,” because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable non-controlling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently unable to determine the impact on its consolidated financial statements of the adoption of this new accounting pronouncement.

In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-4, “Intangibles – Goodwill and Other (Topic 350): “Simplifying the Test for Goodwill Impairment.” This update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity should apply the amendments in this update on a prospective basis. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition. That disclosure should be provided in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments in this update. A public business entity that is an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is currently unable to determine the impact on its financial statements of the adoption of this new accounting pronouncement.

In January 2017, the FASB issued ASU No. 2017-1, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments of this ASU are effective for public business entities for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The amendments in this Update are to be applied prospectively on or after the effective date. The Company is currently unable to determine the impact on its financial statements of the adoption of this new accounting pronouncement.

9

Although there are several other new accounting pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31:

	2016			2015
Computer equipment	$	1,516		$	1,516
Office furniture and equipment		16,474			16,474
Automobiles		91,181			91,181
Leasehold improvements		60,127			33,197
Total		169,298			142,368
Less accumulated depreciation and amortization		(62,979	)		(40,734	)
Net	$	106,319		$	101,634

Depreciation and amortization expense was $22,245 and $18,316 for the years ended December 31, 2016 and 2015, respectively.

Automobiles are pledged as collateral for certain notes payable –see Note 4.

NOTE 4 – DEBT

Notes payable consisted of the following at December 31:

	2016		2015
Installment loan payable to finance company with monthly payments of $500, including interest at 6%, secured by vehicle, maturing October 2019	$	17,613	$	22,171
Installment loan payable to bank with monthly payments of $355, including interest at 5.54%, secured by vehicle, maturing December 2019		10,735		14,993
Installment loan payable to finance company with monthly payments of $303, including interest at 6%, secured by vehicle, maturing October 2019		9,543		12,578
Line of credit payable to bank, with interest at 7.4%, secured by personal guarantee of a stockholder, maturing October 2018		58,216		150
Total		96,107		49,892
Less current portion		72,112		12,242
Long-term portion	$	23,995	$	37,650

10

On October 7, 2015, the Company entered into a three-year revolving Line of Credit Note (“Note”) with its bank for up to $100,000. Beginning November 7, 2015, monthly payments are due equal to accrued interest at an annual rate of 3.90% above the Prime Rate (7.4% as of December 31, 2016) and a defined percentage of the principal balance outstanding. Prior to the third anniversary date of the Note, the bank, in its sole discretion, may terminate its obligation to make further advances under the Note and convert the Note to a term note. The Note is secured by a personal guarantee of a stockholder.

Total interest expense on notes payable was $2,394 and $3,158 for the years ended December 31, 2016 and 2015, respectively.

NOTE 5 – STOCKHOLDERS’ DEFICIT

The Company is authorized to issue one class of shares to be designated as common shares. The total number of shares of common stock the Company has authority to issue is 10,000,000, with par value of $0.00001 per share.

The Company had 6,720,000 shares of its common stock issued and outstanding as of December 31, 2016 and 2015.

The Company did not issue any shares of its common stock during the years ended December 31, 2016 and 2015.

NOTE 6 – INCOME 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 during the period.

For the years ended December 31, 2016 and 2015, the diluted weighted average number of shares is the same as the basic weighted average number of shares as the Company does not have any common stock equivalents.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

Leases

As of December 31, 2016, the Company leased its office facilities under a lease that was terminated in March 2017 – see Note 9. The Company or Company employees or contractors own all of the computer and office equipment that is used in the course of business. We do not have any lease agreements for any office equipment.

NOTE 8 – INCOME TAXES

The Company accounts for income taxes in accordance with standards of disclosure issued by the FASB, and any related interpretations of those standards sanctioned by the FASB. Accordingly, deferred tax assets and liabilities are determined based on differences between the financial statement and tax bases of assets and liabilities, as well as a consideration of net operating loss and credit carry forwards, using enacted tax rates in effect for the period in which the differences are expected to impact taxable income. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. We have not identified any material deferred tax assets or liabilities as of December 31, 2016 and 2015. All tax years since inception of the Company are open for tax audit, with an audit for 2015 in process.

The provision for income taxes consists of federal income taxes and totaled $7,314 and $22,919 for the years ended December 31, 2016 and 2015, respectively. The Company was not subject to state income taxes for these years. The Company has determined that there are no material uncertain tax positions that have a greater than 50% likelihood of reversal if the Company were to be audited.

11

A reconciliation of the income tax provision (benefit) that would result from applying a U.S. federal rate of 39% to income before income taxes with the provision for income taxes presented in the financial statements is as follows:

	2016			2015
Income tax provision at statutory rate	$	9,509		$	34,559
Non-deductible expenses		9,507			5,110
Impact of graduated rates		(11,702	)		(16,750	)
Income tax provision	$	7,314		$	22,919

NOTE 9 – SUBSEQUENT EVENTS

Management has evaluated subsequent events according to the requirements of ASC TOPIC 855, and has reported the following:

Common Stock

On January 12, 2017, the Company cancelled 800,000 shares of its common stock.

On July 26, 2017, the Company issued 500,000 shares of its common stock for services valued at $5,000.

Debt

All debt discussed in Note 4 has been repaid subsequent to December 31, 2016.

Lease Agreement

Effective April 1, 2017, the Company entered into a three-year operating lease for its office facilities. Monthly base rental payments are as follows: April 1, 2017 to March 31, 2018 - $15,000; April 1, 2018 to March 31, 2019 - $17,500 and April 1, 2019 – March 31, 2020 - $18,500. In addition to the base rent, the Company will pay its allocated portion of common area maintenance expenses and certain utilities. A deposit of $15,000 was required at the beginning of the lease.

Merger

On October 18, 2017, we closed the merger transaction (the ”Merger”) that was the subject of that certain Agreement and Plan of Merger (the “Merger Agreement”) with Freeze Tag, Inc., a Delaware corporation (“Freeze Tag”) dated July 26, 2017. At closing, in accordance with the Merger Agreement, Munzee merged with and into Freeze Tag, with Freeze Tag being the surviving corporation. At the closing, Freeze Tag issued the current owners of all of Munzee’s outstanding common stock 4,355,000 shares of Freeze Tag Series C Convertible Preferred Stock. Each share of the Series C Convertible Preferred Stock is convertible into 50 shares of Freeze Tag common stock.

12

EX-99.2

EXHIBIT 99.2

  

MUNZEE, INC.

INDEX TO FINANCIAL STATEMENTS

Unaudited Condensed Financial Statements of Munzee, Inc.

Condensed Balance Sheet as of September 30, 2017 (Unaudited) and December 31, 2016	2
Condensed Statements of Operations for the Nine Months Ended September 30, 2017 and 2016 (Unaudited)	3
Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016 (Unaudited)	4
Notes to Condensed Financial Statements (Unaudited)	5

1

MUNZEE, INC.

CONDENSED BALANCE SHEETS

	September 30, 2017			December 31, 2016
	(Unaudited)
ASSETS
Current assets:
Cash	$	189,582		$	193,892
Accounts receivable		3,469			-
Prepaid expenses		46,626			44,767
Total current assets		239,677			238,659
Property and equipment, net		8,391			106,319
Other assets - deposits		15,000			-
Total assets	$	263,068		$	344,978
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,987		$	30,843
Accrued expenses		43,025			17,805
Current portion of long-term debt		-			72,112
Total current liabilities		46,012			120,760
Long-term liabilities:
Notes payable		-			23,995
Total liabilities		46,012			144,755
Commitments and contingencies
Stockholders’ equity:
Common stock; $0.00001 par value, 10,000,000 shares authorized, 6,420,000 and 6,720,000 shares issued and outstanding, respectively		64			67
Additional paid-in capital		5,112			109
Stock subscription receivable		(5,000	)		-
Retained earnings		216,880			200,047
Total stockholders’ equity		217,056			200,223
Total liabilities and stockholders’ equity	$	263,068		$	344,978

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

2

MUNZEE, INC.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Nine Months Ended September 30,
	2017			2016
Revenues	$	1,740,782		$	1,700,544
Operating costs and expenses:
Cost of sales		405,959			785,733
Selling, general and administrative expenses		1,258,249			1,019,159
Total operating costs and expenses		1,664,208			1,804,892
Income (loss) from operations		76,574			(104,348	)
Other expense:
Interest expense, net		(4,870	)		(1,890	)
Loss on disposition of property and equipment		(46,230	)		-
Total other expense		(51,100	)		(1,890	)
Income (loss) before income taxes		25,474			(106,238	)
Provision for income taxes		(8,641	)		-
Net income (loss)	$	16,833		$	(106,238	)
Weighted average number of common shares outstanding – basic and diluted		6,076,044			6,720,000
Income (loss) per common share – basic and diluted	$	0.00		$	(0.01	)

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

3

MUNZEE, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
	2017			2016
Cash flows from operating activities:
Net income (loss)	$	16,833		$	(106,238	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense		12,447			26,589
Loss on disposition of property and equipment		46,230			-
Changes in operating assets and liabilities:
Accounts receivable		(3,469	)		-
Prepaid expenses		(1,859	)		(10,000	)
Deposits		(15,000	)		-
Accounts payable		(27,856	)		7,525
Accrued expenses		25,220			81,334
Net cash provided (used) by operating activities:		52,546			(790	)
Cash flows from investing activities:
Proceeds from sale of property and equipment		39,251			-
Purchase of property and equipment		-			(25,825	)
Net cash provided (used) by investing activities		39,251			(25,825	)
Cash flows from financing activities:
Repayment of notes payable		(96,107	)		(8,091	)
Net cash used by financing activities		(96,107	)		(8,091	)
Net decrease in cash		(4,310	)		(34,706	)
Cash at the beginning of the period		193,892			124,321
Cash at the end of the period	$	189,582		$	89,615
Supplemental disclosure:
Cash paid for income taxes	$	10,000		$	10,000
Cash paid for interest	$	4,870		$	1,890
Non-cash investing and financing activities:
Common stock cancelled	$	(8	)	$	-
Common stock issued for stock subscription receivable	$	5,000		$	-

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

4

MUNZEE, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Nine Months Ended September 30, 2017 and 2016

(UNAUDITED)

NOTE 1 – THE COMPANY AND NATURE OF BUSINESS

Munzee, Inc. (the “Company” or “Munzee”) was incorporated in the state of Delaware on November 18, 2011. Munzee provides a social platform that blends gamification, geolocation and marketing elements into an experience that rewards players for going places in the physical world. Utilizing QR code and GPS technology, Munzee is able to validate a person’s location and provide them points to level up in the various Munzee mobile applications. The Munzee suite of applications includes Munzee, its flagship product, Eventzee, a photo scavenger hunt useful for corporate training and trade shows, and WallaBee, an addictive collecting game with over 2,000 beautifully drawn digital cards.

In 2014, the Company opened a retail store called The Marketplace which was located in the same building as the company’s offices on 111 East Virginia Street, McKinney, Texas. A variety of items were sold in this store such as snacks, beverages and goods produced by local area businesses. The Marketplace also serve as a location where Munzee players could scan unique QR codes and receive special virtual badges. In March of 2017, the Company closed the Marketplace retail store in order to focus more attention on the core business, namely location based mobile gaming software. Revenue and expenses from the Marketplace store is included in the 2015 and 2016 financial reports.

On July 26, 2017, Munzee entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Freeze Tag, Inc., a Delaware corporation (“Freeze Tag”), a public company engaged in the creation of mobile social games. The Merger Agreement closed in October 2017 – see Note 8.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission. 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 September 30, 2017 are not necessarily indicative of the results of operations for the full year.

Revenue Recognition

The Company’s revenues are derived primarily by licensing software products in the form of mobile games for smartphone and tablet platforms. The Company recognizes revenue from the sale of its products in accordance with current accounting standards upon the transfer of title and risk of loss to its customers, and once any performance obligations have been completed. Revenue from product sales is recorded net of processing costs.

5

Cash and Cash Equivalents

For purposes of the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be cash equivalents. The Company places its cash and cash equivalents with large commercial banks. The Federal Deposit Insurance Corporation (“FDIC”) insures these balances, up to $250,000. All of the Company’s cash balances at September 30, 2017 and December 31, 2016 were insured. At September 30, 2017 and December 31, 2016 there were no cash equivalents.

Property and Equipment

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

Computer equipment	5 years
Office furniture and equipment	7 years
Automobiles	5 years
Leasehold improvements	15 years

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

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

Concentrations of Credit Risk, Major Customers and Major Vendors

The Company’s customers are the end-consumers that purchase its games from the websites where the Company has its games listed for sale. Therefore, the Company does not have any individual customers that represent any more than a fraction of its revenue.

Income Taxes

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

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

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

Foreign Currency Translation

The Company derives a portion of its revenue from foreign countries, but customers pay in U.S. Dollars. Therefore, no adjustments are required in the accompanying financial statements for foreign currency transactions.

6

Fair Value of Financial Instruments

In accordance with current accounting standards, certain assets and liabilities must be measured at fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. ASC 820 requires that certain assets and liabilities must be measured at fair value, and the standard details the disclosures that are required for items measured at fair value. The Company had no assets and liabilities required to be measured on a recurring basis at September 30, 2017 and December 31, 2016.

Cash, accounts receivable, prepaid expenses, accounts payable, accrued compensation and notes payable reported on the Company’s balance sheets are estimated by management to approximate fair market value due to their short-term nature.

Use of Estimates

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

Research and Development Costs

The Company charges costs related to research and development of products to selling, general and administrative expense as incurred. The types of costs included in research and development expenses include research materials, salaries, contractor fees, and support materials.

Recent Accounting Pronouncements

In July 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-11, “Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception.” Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, “Distinguishing Liabilities from Equity,” because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable non-controlling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently unable to determine the impact on its consolidated financial statements of the adoption of this new accounting pronouncement.

7

In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-4, “Intangibles – Goodwill and Other (Topic 350): “Simplifying the Test for Goodwill Impairment.” This update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity should apply the amendments in this update on a prospective basis. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition. That disclosure should be provided in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments in this update. A public business entity that is an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is currently unable to determine the impact on its financial statements of the adoption of this new accounting pronouncement.

In January 2017, the FASB issued ASU No. 2017-1, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments of this ASU are effective for public business entities for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The amendments in this Update are to be applied prospectively on or after the effective date. The Company is currently unable to determine the impact on its financial statements of the adoption of this new accounting pronouncement.

Although there are several other new accounting pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at September 30, 2017:

Automobiles	$	20,549
Less accumulated depreciation and amortization		(12,158	)
Net	$	8,391

Depreciation and amortization expense was $12,447 and $26,589 for the nine months ended September 30, 2017 and 2016, respectively.

During the nine months ended September 30, 2017, the Company sold or disposed of all property and equipment with the exception of one vehicle, receiving total proceeds of $39,251 and resulting in a loss on disposition of property and equipment of $46,230.

NOTE 4 – DEBT

During the nine months ended September 30, 2017, the Company repaid in full three installment loans and its bank line of credit with total principal of $96,107.

NOTE 5 – STOCKHOLDERS’ DEFICIT

The Company is authorized to issue one class of shares to be designated as common shares. The total number of shares of common stock the Company has authority to issue is 10,000,000, with par value of $0.00001 per share.

8

On January 12, 2017, the Company cancelled 800,000 shares of its common stock, reducing common stock by the par value of $8 and increasing additional paid-in capital by $8.

On July 26, 2017, the Company issued 500,000 shares of its common stock for stock subscription receivable of $5,000.

The Company had 6,420,000 and 6,720,000 shares of its common stock issued and outstanding as of September 30, 2017 and December 31, 2016, respectively.

NOTE 6 – INCOME PER COMMON SHARE

The computation of basic income (loss) 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 during the period.

For the nine months ended September 30, 2017 and 2016, the diluted weighted average number of shares is the same as the basic weighted average number of shares as the Company does not have any common stock equivalents.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

Leases

Effective April 1, 2017, the Company entered into a three-year operating lease for its office facilities. Monthly base rental payments are as follows: April 1, 2017 to March 31, 2018 - $15,000; April 1, 2018 to March 31, 2019 - $17,500 and April 1, 2019 – March 31, 2020 - $18,500. In addition to the base rent, the Company will pay its allocated portion of common area maintenance expenses and certain utilities. A deposit of $15,000 was required at the beginning of the lease.

The Company or Company employees or contractors own all of the computer and office equipment that is used in the course of business. We do not have any lease agreements for any office equipment.

NOTE 8 – SUBSEQUENT EVENTS

Management has evaluated subsequent events according to the requirements of ASC TOPIC 855, and has reported the following:

Merger

On October 18, 2017, we closed the merger transaction (the ”Merger”) that was the subject of that certain Merger Agreement with Freeze Tag, Inc. dated July 26, 2017. At closing, in accordance with the Merger Agreement, Munzee merged with and into Freeze Tag, with Freeze Tag being the surviving corporation. At the closing, Freeze Tag issued the current owners of all of Munzee’s outstanding common stock 4,355,000 shares of Freeze Tag Series C Convertible Preferred Stock. Each share of the Series C Convertible Preferred Stock is convertible into 50 shares of Freeze Tag common stock. The Merger will be accounted for as a reverse merger transaction, with Munzee as the accounting acquirer.

9

EX-99.3

EXHIBIT 99.3

MUNZEE, INC.

INDEX TO PRO FORMA FINANCIAL INFORMATION

Unaudited Pro Forma Combined Financial Information

of Munzee, Inc. and Freeze Tag, Inc.

	Page
Unaudited Pro Forma Condensed Financial Information		2
Unaudited Pro Forma Condensed Combined Balance Sheets as of September 30, 2017		3
Unaudited Pro Forma Condensed Combined Statements of Operations for the Year Ended December 31, 2016		4
Unaudited Pro Forma Condensed Combined Statements of Operations for the Nine Months Ended September 30, 2017		5
Notes to Unaudited Pro Forma Condensed Combined Financial Statements		6

1

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The unaudited pro forma condensed combined balance sheet presents the historical balance sheets of Munzee, Inc. (“Munzee”) and Freeze Tag, Inc. (“Freeze Tag”) as of September 30, 2017 and accounts for the merger of Munzee and Freeze Tag as a reverse merger transaction, with Munzee as the accounting acquirer giving effect to the transaction as if it had occurred as of September 30, 2017. On July 26, 2017, Munzee entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Freeze Tag, which closed on October 18, 2017. At closing, in accordance with the Merger Agreement, Munzee merged with and into Freeze Tag, with Freeze Tag being the surviving corporation.

The Munzee balance sheet information was derived from its unaudited balance sheet as of September 30, 2017. The Freeze Tag balance sheet information was derived from its unaudited balance sheet as of September 30, 2017 included in its quarterly report on Form 10-Q that was filed with the Securities and Exchange Commission (“SEC”) on November 14, 2017.

The unaudited pro forma condensed combined statements of operations are based on the historical statements of Munzee and Freeze Tag and combine the results of operations of Munzee and Freeze Tag for the year ended December 31, 2016 and the nine months ended September 30, 2017, giving effect to the transaction as if it occurred on January 1, 2016, and reflecting the pro forma adjustments expected to have a continuing impact on the combined results.

The historical results of operations of Munzee were derived from its unaudited statement of operations for the nine months ended September 30, 2017 and its audited statement of operations for the year ended December 31, 2016 that are included in this Form 8-K. The historical results of operations for Freeze Tag were derived from its unaudited statement of operations for the nine months ended September 30, 2017 included in its quarterly report on Form 10-Q that was filed with the SEC on November 14, 2017 and its audited statement of operations for the year ended December 31, 2016 included in its annual report on Form 10-K that was filed with the SEC on March 31, 2017.

The unaudited pro forma condensed combined financial statements are for informational purposes only. They do not purport to indicate the results that would have actually been obtained had the reverse acquisition been completed on the assumed dates or for the periods presented, or that may be realized in the future. Furthermore, while the pro forma financial information reflects transaction costs incurred with the merger of Munzee with and into Freeze Tag on October 18, 2017, the pro forma financial information does not reflect the impact of any reorganization or restructuring expenses or operating efficiencies resulting from the transaction. The unaudited pro forma condensed combined financial statements, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with, the historical financial statements referred to above.

2

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS

AS OF SEPTEMBER 30, 2017

	Munzee			Freeze Tag			Pro Forma Adjustments			Pro Forma Combined
ASSETS
Current assets:
Cash	$	189,582		$	31,367		$	-		$	220,949
Accounts receivable		3,469			7,693			-			11,162
Prepaid expenses and other current assets		46,626			4,402			-			51,028
Total current assets		239,677			43,462			-			283,139
Property and equipment, net		8,391			-			-			8,391
Intangible assets, net		-			-		391,800		{b}		391,800
Goodwill		-			-		7,082,607		{b}		7,082,607
Other assets – deposits		15,000			38			-			15,038
Total assets	$	263,068		$	43,500		$	7,474,407		$	7,780,975
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	2,987		$	126,499		$	-		$	129,486
Accrued expenses		43,025			517,904			-			560,929
Accrued interest payable – related party		-			321,262			-			321,262
Accrued interest payable		-			534,737			-			534,737
Unearned royalties		-			127,187			-			127,187
Notes payable		-			58,096			-			58,096
Convertible notes payable – related party		-			1,447,041			-			1,447,041
Convertible notes payable, net of discount		-			2,359,014			-			2,359,014
Derivative liabilities		-			4,005,735			-			4,005,735
Total current liabilities		46,012			9,497,475			-			9,543,487
Total liabilities		46,012			9,497,475			-			9,543,487
Stockholders’ equity:
Series A preferred stock, $0.00001 par value		-			-			-			-
Series C preferred stock, $0.00001 par value		-			-		44		{b}		44
Common stock; $0.00001 par value		64			125		(64		){a}		125
Additional paid-in capital		5,112			4,568,430		(5,112		){a}		12,264,849
							222,056		{a}
							7,474,363		{b}
Stock subscription receivable		(5,000	)		-						(5,000	)
Common stock payable		-			16,800			-			16,800
Retained earnings (deficit)		216,880			(14,039,330	)		(216,880	){a}		(14,039,330	)
Total stockholders’ equity (deficit)		217,056			(9,453,975	)		7,474,407			(1,762,512	)
Total liabilities and stockholders’ equity (deficit)	$	263,068		$	43,500		$	7,474,407		$	7,780,975

See notes to the unaudited pro forma condensed combined financial statements

3

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2016

	Munzee			Freeze Tag			Pro Forma Adjustments			Pro Forma Combined
Revenues	$	2,359,759		$	138,720		$	-		$	2,498,479
Operating costs and expenses:
Cost of sales		931,745			235,153			-			1,166,898
Selling, general and administrative expenses		1,401,238			554,773		78,360		{c}		2,034,371
Total operating costs and expenses		2,332,983			789,926			78,360			3,201,269
Income (loss) from operations		26,776			(651,206	)		(78,360	)		(702,790	)
Other expenses:
Interest expense, net		(2,394	)		(859,645	)		-			(862,039	)
Loss on change in derivative liabilities		-			(616,286	)		-			(616,286	)
Total other expenses		(2,394	)		(1,475,931	)		-			(1,478,325	)
Income (loss) before income taxes		24,382			(2,127,137	)		(78,360	)		(2,181,115	)
Provision for income taxes		(7,314	)		(2,282	)	7,314		{d}		(2,282	)
Net income (loss)	$	17,068		$	(2,129,419	)	$	(71,046	)	$	(2,183,397	)
Weighted average number of common shares outstanding – basic and diluted		6,720,000			3,811,940			(6,720,000	){e}		3,811,940
Income (loss) per common share – basic and diluted	$	0.00		$	(0.56	)	$	-		$	(0.57	)

See notes to the unaudited pro forma condensed combined financial statements

4

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

	Munzee			Freeze Tag			Pro Forma Adjustments			Pro Forma Combined
Revenues	$	1,740,782		$	14,125		$	-		$	1,754,907
Operating costs and expenses:
Cost of sales		405,959			85,751			-			491,710
Selling, general and administrative expenses		1,258,249			451,466		58,770		{c}		1,768,485
Total operating costs and expenses		1,664,208			537,217			58,770			2,260,195
Income (loss) from operations		76,574			(523,092	)		(58,770	)		(505,288	)
Other expenses:
Interest expense, net		(4,870	)		(643,149	)		-			(648,019	)
Loss on disposition of property and equipment		(46,230	)		-			-			(46,230	)
Loss on change in derivative liabilities		-			(1,757,960	)		-			(1,757,960	)
Total other expenses		(51,100	)		(2,401,109	)		-			(2,452,209	)
Income (loss) before income taxes		25,474			(2,924,201	)		(58,770	)		(2,957,497	)
Provision for income taxes		(8,641	)		(1,200	)	8,641		{d}		(1,200	)
Net income (loss)	$	16,833		$	(2,925,401	)	$	(50,129	)	$	(2,958,697	)
Weighted average number of common shares outstanding – basic and diluted		6,076,044			9,284,279		(6,076,044		){e}		9,284,279
Income (loss) per common share – basic and diluted	$	0.00		$	(0.32	)	$	-		$	(0.32	)

See notes to the unaudited pro forma condensed combined financial statements

5

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

On July 26, 2017, Munzee entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Freeze Tag, wherein Freeze Tag acquired 100% of Munzee’s common stock through the issuance of 4,355,000 shares of Freeze Tag’s Series C Convertible Preferred Stock. The Merger Agreement closed on October 18, 2017 and will be accounted for as a reverse merger transaction, with Munzee as the accounting acquirer.

Pro forma adjustments to the attached condensed combined financial statements include the following:

a)	To eliminate the equity accounts of Munzee.
b)	To record the issuance of 4,355,000 shares of Freeze Tag $0.00001 par value Series C Preferred Stock to the shareholders of Munzee, valued at $7,696,463 and allocated to the following assets based on the report of an independent valuation firm:

Asset	Value
Net assets recorded by Munzee at September 30, 2017	$	222,056
Identifiable intangible assets:
IP/Technology/Patents		258,900
Customer base		109,000
Non-compete agreements		23,900
Total identifiable intangible assets		391,800
Goodwill		7,082,607
Total	$	7,696,463

	The identifiable intangible assets are amortized using the straight-line method over an estimated life of 5 years. The goodwill is not amortized, but evaluated periodically for impairment.
c)	To record amortization of identifiable intangible assets.
d)	To eliminate Munzee income tax provision due to offset of taxable loss of Freeze Tag.
e)	To eliminate Munzee weighted average shares outstanding.

6