0001477932-20-004994.txt : 20200814 0001477932-20-004994.hdr.sgml : 20200814 20200814170111 ACCESSION NUMBER: 0001477932-20-004994 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 49 CONFORMED PERIOD OF REPORT: 20200630 FILED AS OF DATE: 20200814 DATE AS OF CHANGE: 20200814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Freeze Tag, Inc. CENTRAL INDEX KEY: 0001485074 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-54267 FILM NUMBER: 201106359 BUSINESS ADDRESS: STREET 1: 18062 IRVINE BLVD, SUITE 103 CITY: TUSTIN STATE: CA ZIP: 92780 BUSINESS PHONE: 714-210-3850 MAIL ADDRESS: STREET 1: 18062 IRVINE BLVD, SUITE 103 CITY: TUSTIN STATE: CA ZIP: 92780 10-Q 1 frzt_10q.htm FORM 10-Q frzt_10q.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10‑Q

 

(Mark One)

 

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

 

For the quarterly period ended June 30, 2020

 

☐ 

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 ☒     No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒     No ☐

 

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

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

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

 

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

 

Applicable only to corporate issuers:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 14, 2020, there were 75,056,123 shares of common stock, $0.00001 par value, issued and outstanding.

  

 

 

  

FREEZE TAG, INC.

 

TABLE OF CONTENTS

QUARTER ENDED JUNE 30, 2020

 

PART I – FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Financial Statements

 

3

 

Item 2.

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

 

16

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

20

 

Item 4.

Controls and Procedures

 

20

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

21

 

Item 1A.

Risk Factors

 

21

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

21

 

Item 3.

Defaults Upon Senior Securities

 

21

 

Item 4.

Mine Safety Disclosures

 

21

 

Item 5.

Other Information

 

21

 

Item 6.

Exhibits

 

22

 

 

 
2

Table of Contents

  

PART I – FINANCIAL INFORMATION

 

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

 

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

 

The results for the period ended June 30, 2020 are not necessarily indicative of the results of operations for the full year. These condensed, consolidated financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on March 30, 2020.

 

 
3

Table of Contents

 

FREEZE TAG, INC. 

(A DELAWARE CORPORATION)

CONDENSED CONSOLIDATED BALANCE SHEETS

  

 

 

June 30,
 2020

 

 

December 31,

2019

 

 

 

(Unaudited)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash

 

$ 495,613

 

 

$ 254,776

 

Accounts receivable

 

 

9,711

 

 

 

9,772

 

Prepaid expenses and other current assets

 

 

11,233

 

 

 

17,628

 

Total current assets

 

 

516,557

 

 

 

282,176

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

50,520

 

 

 

9,563

 

Intangible assets, net

 

 

203,940

 

 

 

249,680

 

Other assets

 

 

50,305

 

 

 

64,612

 

 

 

 

 

 

 

 

 

 

Total assets

 

$ 821,322

 

 

$ 606,031

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$ 142,976

 

 

$ 162,476

 

Accrued expenses

 

 

500,874

 

 

 

458,025

 

Unearned royalties

 

 

7,543

 

 

 

7,543

 

Notes payable, current portion

 

 

87,072

 

 

 

-

 

Other current liabilities

 

 

30,843

 

 

 

49,715

 

Total current liabilities

 

 

769,308

 

 

 

677,759

 

 

 

 

 

 

 

 

 

 

Notes payable, net of current portion

 

 

285,282

 

 

 

-

 

Notes payable–related party

 

 

379,825

 

 

 

379,825

 

Other long-term liabilities

 

 

16,612

 

 

 

32,417

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

1,451,027

 

 

 

1,090,001

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

 

 

 

 

 

Preferred stock, $0.00001 par value, 25,000,000 shares authorized:

 

 

 

 

 

 

 

 

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

 

 

25

 

 

 

25

 

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

 

 

44

 

 

 

44

 

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

 

 

751

 

 

 

751

 

Additional paid-in capital

 

 

9,133,212

 

 

 

9,093,439

 

Common stock payable

 

 

16,800

 

 

 

16,800

 

Accumulated deficit

 

 

(9,780,537 )

 

 

(9,595,029 )

Total stockholders’ deficit

 

 

(629,705 )

 

 

(483,970 )

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ deficit

 

$ 821,322

 

 

$ 606,031

 

 

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

 

 
4

Table of Contents

  

FREEZE TAG, INC. 

(A DELAWARE CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$ 436,065

 

 

$ 518,213

 

 

$ 839,555

 

 

$ 1,078,416

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

57,959

 

 

 

82,670

 

 

 

121,873

 

 

 

154,593

 

Selling, general and administrative expenses

 

 

440,095

 

 

 

477,992

 

 

 

883,628

 

 

 

941,910

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating costs and expenses

 

 

498,054

 

 

 

560,662

 

 

 

1,005,501

 

 

 

1,096,503

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(61,989 )

 

 

(42,449 )

 

 

(165,946 )

 

 

(18,087 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(10,972 )

 

 

(10,090 )

 

 

(21,062 )

 

 

(20,076 )

Other income

 

 

1,500

 

 

 

-

 

 

 

1,500

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other income (expense)

 

 

(9,472 )

 

 

(10,090 )

 

 

(19,562 )

 

 

(20,076 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$ (71,461 )

 

$ (52,539 )

 

$ (185,508 )

 

$ (38,163 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic

 

 

75,056,123

 

 

 

75,056,123

 

 

 

75,056,123

 

 

 

75,056,123

 

Weighted average number of common shares outstanding - diluted

 

 

75,056,123

 

 

 

75,056,123

 

 

 

75,056,123

 

 

 

75,056,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per common share – basic and diluted

 

$ (0.00 )

 

$ (0.00 )

 

$ (0.00 )

 

$ (0.00 )

  

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

  

 
5

Table of Contents

  

FREEZE TAG, INC. 

(A DELAWARE CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

 

 

 

Series A
Preferred Stock

 

 

Series B
Preferred Stock

 

 

Series C
Preferred Stock

 

 


Common Stock

 

 

Additional
Paid-in

 

 


Common
Stock

 

 

Common
Stock
 Subscription

 

 

Retained
Earnings

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Payable

 

 

Receivable

 

 

(Deficit)

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2019

 

 

-

 

 

$ -

 

 

 

2,480,482

 

 

$ 25

 

 

 

4,355,000

 

 

$ 44

 

 

 

75,056,123

 

 

$ 751

 

 

$ 9,093,439

 

 

$ 16,800

 

 

$ -

 

 

$ (9,595,029 )

 

$ (483,970 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imputed interest on related party
 debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,470

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,470

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,417

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,417

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(114,047 )

 

 

(114,047 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2020

 

 

-

 

 

$ -

 

 

 

2,480,482

 

 

$ 25

 

 

 

4,355,000

 

 

$ 44

 

 

 

75,056,123

 

 

$ 751

 

 

$ 9,113,326

 

 

$ 16,800

 

 

$ -

 

 

$ (9,709,076 )

 

$ (578,130 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imputed interest on related party
 debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,470

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,470

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,416

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,416

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(71,461 )

 

 

(71,461 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2020

 

 

-

 

 

$ -

 

 

 

2,480,482

 

 

$ 25

 

 

 

4,355,000

 

 

$ 44

 

 

 

75,056,123

 

 

$ 751

 

 

$ 9,133,212

 

 

$ 16,800

 

 

$ -

 

 

$ (9,780,537 )

 

$ (629,705 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018

 

 

-

 

 

$ -

 

 

 

2,480,482

 

 

$ 25

 

 

 

4,355,000

 

 

$ 44

 

 

 

75,056,123

 

 

$ 751

 

 

$ 8,997,457

 

 

$ 16,800

 

 

$ -

 

 

$ (9,452,402 )

 

$ (437,325 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imputed interest on related party
 debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,366

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,366

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,083

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,083

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

14,376

 

 

 

14,376

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2019

 

 

-

 

 

$ -

 

 

 

2,480,482

 

 

$ 25

 

 

 

4,355,000

 

 

$ 44

 

 

 

75,056,123

 

 

$ 751

 

 

$ 9,010,906

 

 

$ 16,800

 

 

$ -

 

 

$ (9,438,026 )

 

$ (409,500 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imputed interest on related party
 debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,469

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,469

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,084

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,084

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(52,539 )

 

 

(52,539 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2019

 

 

-

 

 

$ -

 

 

 

2,480,482

 

 

$ 25

 

 

 

4,355,000

 

 

$ 44

 

 

 

75,056,123

 

 

$ 751

 

 

$ 9,024,459

 

 

$ 16,800

 

 

$ -

 

 

$ (9,490,565 )

 

$ (448,486 )

 

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

 

 
6

Table of Contents

  

FREEZE TAG, INC. 

(A DELAWARE CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Six Months Ended
June 30,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$ (185,508 )

 

$ (38,163 )

Adjustments to reconcile net loss to net cash used by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

50,591

 

 

 

47,484

 

Imputed interest expense

 

 

18,940

 

 

 

18,835

 

Stock-based compensation

 

 

20,833

 

 

 

8,167

 

Loss on disposal of assets

 

 

801

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

61

 

 

 

2,525

 

Prepaid expenses and other current assets

 

 

6,395

 

 

 

12,086

 

Accounts payable

 

 

(19,500 )

 

 

(24,779 )

Accrued expenses

 

 

42,849

 

 

 

3,235

 

Unearned royalties

 

 

-

 

 

 

(119,639 )

Other current liabilities

 

 

(20,370 )

 

 

-

 

 

 

 

 

 

 

 

 

 

Net cash used by operating activities

 

 

(84,908 )

 

 

(90,249 )

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(46,609 )

 

 

-

 

 

 

 

 

 

 

 

 

 

Net cash used by investing activities

 

 

(46,609 )

 

 

-

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from loan financing

 

 

374,645

 

 

 

-

 

Payments on loan financing

 

 

(2,291 )

 

 

-

 

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

372,354

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

240,837

 

 

 

(90,249 )

Cash at the beginning of the period

 

 

254,776

 

 

 

309,216

 

 

 

 

 

 

 

 

 

 

Cash at the end of the period

 

$ 495,613

 

 

$ 218,967

 

Supplemental disclosure:

 

 

 

 

 

 

Cash paid for income taxes

 

$ -

 

 

$ -

 

Cash paid for interest expense

 

$ 412

 

 

$ -

 

 

 

 

 

 

 

 

 

 

Non-cash transactions:

 

 

 

 

 

 

 

 

Issuance of common shares in conversion of Series B preferred stock

 

$ -

 

 

$ -

 

Right-of-use asset obtained in exchange for lease obligation

 

$ -

 

 

$ 88,325

 

  

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

 

 
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FREEZE TAG, INC.

(A DELAWARE CORPORATION)

Notes to Condensed Consolidated Financial Statements

Six Months Ended June 30, 2020

(Unaudited)

 

NOTE 1 – THE COMPANY AND NATURE OF BUSINESS

 

Nature of Operations

 

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

 

 Beginning in the quarter ended March 31, 2020, our wholly-owned subsidiary, Space Coast Geo Store, LLC, a Florida limited liability company, sells merchandise to the geocaching industry. The LLC was filed with the State of Florida on September 3, 2019 and there was no activity in the entity from the time of filing until it began operations in the quarter ended March 31, 2020.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

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

 

The following accounting policies involve significant judgments, assumptions and estimates by management:

 

Revenue Recognition

 

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

 

We determine revenue recognition through the following steps:

 

 

·

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

 

 

 

 

·

identification of the performance obligations in the contract;

 

 

 

 

·

determination of the transaction price;

 

 

 

 

·

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

 

 

 

 

·

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

 

 
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Property and Equipment

 

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

 

Vehicle

 

5 years

Computer equipment

 

5 years

Office furniture and equipment

 

7 years

 

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

 

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

 

Intangible Assets

 

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

 

Income Taxes

 

We account for income taxes using ASC Topic 740, Income Taxes. 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.

 

 
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Stock-Based Compensation

 

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

 

The Company had stock-based compensation expense recognized in its statements of operations of $20,833 for the six months ended June 30, 2020 and $8,167 for the six months ended June 30, 2019.

 

Earnings per Share

 

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

 

For the three and six months ended June 30, 2020 and 2019, the diluted weighted average number of shares is the same as the basic weighted average number of shares as the inclusion of any common stock equivalents would be anti-dilutive.

 

Fair Value of Financial Instruments

 

In accordance with current accounting standards, certain assets and liabilities must be measured at fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. ASC 820 requires that certain assets and liabilities must be measured at fair value, and the standard details the disclosures that are required for items measured at fair value. The Company had no assets and liabilities required to be measured on a recurring basis at June 30, 2020 and December 31, 2019.

 

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

 

Recent Accounting Pronouncements

 

Although there were new accounting pronouncements issued or proposed by the FASB during the six months ended June 30, 2020 and through the date of filing of this report, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.

  

NOTE 3 – GOING CONCERN UNCERTAINTY

 

The accompanying financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. As shown in the accompanying financial statements, the Company incurred net loss of $185,508 and used net cash of $84,908 in operations for the six months ended June 30, 2020. As of June 30, 2020, the Company had a working capital deficit of $252,751 and a total stockholders’ deficit of $629,705. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

 

 
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Management believes that by implementing cost reductions and realizing cost efficiencies from the Merger, operating cash flows will be sufficient to support the Company’s business plan. The Company will also continue to develop and launch new games to maximize revenues. However, management is currently evaluating alternative financing sources to fund the Company’s current business plan should cash provided by operations be insufficient.

 

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

 

NOTE 4 – PROPERTY AND EQUIPMENT

 

Property and equipment consisted of the following at:

 

 

 

June 30,
2020

 

 

December 31,
2019

 

 

 

 

 

 

 

 

Vehicle

 

$ 46,609

 

 

$ -

 

Computer equipment

 

 

7,170

 

 

 

7,971

 

Office furniture and equipment

 

 

10,055

 

 

 

10,055

 

Total

 

 

63,834

 

 

 

18,026

 

Less accumulated depreciation

 

 

(13,314 )

 

 

(8,463 )

 

 

 

 

 

 

 

 

 

Net

 

$ 50,520

 

 

$ 9,563

 

 

Depreciation expense was $4,851 and $1,744 for the six months ended June 30, 2020 and 2019, respectively.

 

NOTE 5 – INTANGIBLE ASSETS

 

Intangible assets consisted of the following at:

 

 

 

June 30,
2020

 

 

December 31,
2019

 

 

 

 

 

 

 

 

Intellectual property

 

$ 307,100

 

 

$ 307,100

 

Customer base

 

 

142,000

 

 

 

142,000

 

Non-compete agreements

 

 

8,300

 

 

 

8,300

 

Less accumulated depreciation

 

 

(253,460 )

 

 

(207,720 )

 

 

 

 

 

 

 

 

 

Net

 

$ 203,940

 

 

$ 249,680

 

 

Amortization expense was $45,740 for the six months ended June 30, 2020 and 2019.

 

 
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NOTE 6 – NOTES PAYABLE

 

Notes payable consisted of the following at June 30, 2020 and December 31, 2019:

 

 

 

June 30,

2020

 

 

December 31,

2019

 

Related Party:

 

 

 

 

 

 

Note payable to Craig Holland, non-interest bearing, maturing on December 31, 2021

 

$ 6,925

 

 

$ 6,925

 

Convertible note payable to Craig Holland, non-interest bearing, maturing on December 31, 2021

 

 

186,450

 

 

 

186,450

 

Convertible note payable to Mick Donahoo, non-interest bearing, maturing on December 31, 2021

 

 

186,450

 

 

 

186,450

 

Other:

 

 

 

 

 

 

 

 

Note payable to financial institution, secured by vehicle, interest at 2.9%, due in 2025

 

 

47,934

 

 

 

-

 

Paycheck Protection Program loan, payable to financial institution, 1% interest, principal and interest deferred six months, payments starting in November, 2020, due in 2022

 

 

174,420

 

 

 

-

 

Small Business Loan, payable to financial institution, 3.75% interest, payments starting in June 2021, due in 2050

 

 

150,000

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Total notes payable

 

$ 752,179

 

 

$ 379,825

 

Less current portion

 

 

87,072

 

 

 

-

 

Notes payable, net of current portion

 

$ 665,107

 

 

$ 379,825

 

 

On April 30, 2020, the Company received a U.S. Small Business Administration Loan under the Paycheck Protection Program (PPP Loan) primarily for payroll costs related to the COVID-19 crisis in the amount of $174,420. Under the Paycheck Protection Program, the PPP Loan has a fixed interest rate of 1%, a maturity date two years from the date of the funding of the loan and no payments are due for six months. Pursuant to the terms of the PPP Loan, the Company may apply for forgiveness of the amount due on the PPP Loan in an amount equal to the sum of the following costs incurred by the Company during the 8-week period (or any other period that may be authorized by the U.S. Small Business Association) beginning on the date of first disbursement of the loan: payroll costs, any payment of interest on a covered mortgage obligation, payment on a covered rent obligation, and any covered utility payment. The amount of PPP Loan forgiveness shall be calculated in accordance with the requirements of the Paycheck Protection Program, including the provisions of Section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), although no more than 25% of the amount forgiven can be attributable to non-payroll costs.

 

On May 18, 2020, the Company received an additional U.S. Small Business Administration Loan (SBA Loan) in the amount of $150,000 to alleviate continued economic injury caused the COVID-19 crisis. The SBA Loan has a fixed interest rate of 3.75% and matures in thirty years from the date of the loan. Payments begin twelve months from the effective date in a fixed amount of $731 per month. All payments will be applied to interest first. This loan is secured by the general assets of the Company.

 

 
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The Company had a note payable to Craig Holland, its Chief Executive Officer, with a balance of $6,925 at June 30, 2020 and 2019. The Company also had convertible notes payable to Mr. Holland and Mick Donahoo, its Chief Financial Officer, with a total balance of $372,900 as of June 30, 2020 and 2019. See Note 7 for detailed disclosure of this related party debt, including interest rates, terms of conversion and other repayment terms. Messrs. Holland and Donahoo have the right, at any time, at their election, to convert all or part of the amount due into shares of fully paid and non-assessable shares of common stock of the Company. The fixed conversion price is $0.02 per share.

 

The Company has imputed interest expense on the notes payable – related party using an annual rate of 10%. During the six months ended June 30, 2020 and 2019, total imputed interest expense was $18,940 and $18,835, respectively, which was recorded to additional paid-in capital.

 

Future maturities of notes payable as of June 30, 2020 are as follows:

 

December 31,

 

Amount

 

2020

 

$ 24,121

 

2021

 

 

544,555

 

2022

 

 

9,975

 

2023

 

 

12,807

 

2024

 

 

13,868

 

Thereafter

 

 

146,853

 

Notes Payable

 

$ 752,179

 

 

NOTE 7 – STOCKHOLDERS’ DEFICIT

 

Common Stock

 

The Company is authorized to issue up to 800,000,000 shares of its $0.00001 par value common stock and had 75,056,123 common shares issued and outstanding as of June 30, 2020.

 

There was no common stock activity during the six months ended June 30, 2020 and June 30, 2019.

 

Preferred Stock

 

The Company is authorized to issue up to 25,000,000 shares of its $0.00001 par value preferred stock. The shares of preferred stock may be issued from time to time in one or more series. As of June 30, 2020 and 2019, there were 2,480,482 shares of Series B preferred stock and 4,355,000 shares of Series C preferred stock issued and outstanding.

 

Series B Preferred Stock

 

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

 

There was no Series B preferred stock activity during the six months ended June 30, 2020 and June 30, 2019

 

 
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Series C Preferred Stock

 

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

 

There was no Series C preferred stock activity during the six months ended June 30, 2020 and June 30, 2019.

  

Stock Options

 

2017 Non-Qualified Stock Option Plan

 

On December 4, 2017, our Board of Directors approved the Freeze Tag, Inc. 2017 Non-Qualified Stock Option Plan (the “Plan”). Under the Plan, our Board of Directors may issue options to purchase up to an aggregate of 10,000,000 shares of common stock to individuals, including, but not limited to, our Board of Directors and/or our executive management. On December 5, 2017, our Board of Directors granted options to purchase a total of 1,512,821 shares of our common stock.

 

2006 Stock Option Plan

 

The Company’s 2006 Stock Option Plan adopted by our Board of Directors in March of 2006 terminated in the year ended December 31, 2016. As of June 30, 2019, there were 5,600 stock options outstanding under the 2006 Stock Option Plan.

 

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

 

The Company recognized $20,833 of stock-based compensation during the six months ended June 30, 2020 and $8,167 during the six months ended June 30, 2019. As of June 30, 2020, future compensation cost related to non-vested stock options not yet recognized in the statements of operations totaled $62,501.

 

 
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A summary of the status of the stock options issued by the Company under both plans as of June 30, 2020, and changes during six months then ended is presented below:  

 

 

 

 

 

Weighted Average

 

 

 

Shares

 

 

Exercise Price

 

 

 

 

 

 

 

 

Outstanding, December 31, 2019

 

 

7,768,421

 

 

$ 0.031

 

 

 

 

 

 

 

 

 

 

Granted

 

 

-

 

 

 

-

 

Canceled / Expired

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Outstanding, June 30, 2020

 

 

7,768,421

 

 

$ 0.031

 

 

The outstanding options expire on various dates beginning in 2020 through 2029.

 

NOTE 10 – SUBSEQUENT EVENTS

 

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

 

No subsequent events to report.

 

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

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q of Freeze Tag, Inc. (“Freeze Tag” or the “Company”) for the six months ended June 30, 2020 contains forward-looking statements, principally in this Section and “Business.” Generally, you can identify these statements because they use words like “anticipates,” “believes,” “expects,” “future,” “intends,” “plans,” and similar terms. These statements reflect only our current expectations. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy and actual results may differ materially from those we anticipated due to a number of uncertainties, many of which are unforeseen, including, among others, the risks we face as described in this filing. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this annual report. To the extent that such statements are not recitations of historical fact, such statements constitute forward-looking statements that, by definition, involve risks and uncertainties. In any forward-looking statement where we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation of belief will be accomplished.

 

We believe it is important to communicate our expectations to our investors. There may be events in the future; however, that we are unable to predict accurately or over which we have no control. The risk factors listed in our Annual Report on Form 10-K for the year ended December 31, 2019, as well as any cautionary language in this Quarterly Report on Form 10-Q and our last Annual Report on Form 10-K, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Factors that could cause actual results or events to differ materially from those anticipated include but are not limited to: distributors not accepting our games; price reductions; unforeseen delays in game production; changes in product strategies; general economic, financial and business conditions; changes in and compliance with governmental regulations; changes in various tax laws; and the availability of key management and other personnel. As noted in our risk factors in our Annual Report on Form 10-K for year ended December 31, 2019, we are also closely monitoring the ongoing COVID-19 pandemic and its effects on our business, as well as its effects on general market and economic conditions.

 

Summary Overview

 

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

 

Founded by gaming industry veterans, Freeze Tag has launched several successful games over the course of its history. Our current portfolio includes hits such as Munzee®, a social platform with over 7 million locations worldwide and hundreds of thousands of players that blends gamification and geolocation into an experience that rewards players for going places in the physical world; Garfield Go, a Pokémon Go style augmented reality game based on the iconic cat Garfield; WallaBee®, an addictive collecting game with over 2,000 beautifully drawn digital cards; as well as many social mobile games that provide endless hours of family-friendly fun. We also offer our technology and services to third party businesses that want to leverage mobile gaming in their marketing and branding programs. For example, our Eventzee® solution allows businesses to create private scavenger hunts in physical places such as malls, tradeshows, company events or campuses to create immersive brand experiences.

 

 
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Our mission is to design, develop and deliver innovative digital entertainment that surprises and delights. Our products bring families together by providing fun to kids of all ages. We also strive to create a workplace environment where creativity and fun can thrive in a demanding industry.

 

In 2019, after successfully launching a new version of our flagship product, Munzee, we continued to develop and enhance the mobile application by adding more features and functionality, such as incorporating the ability for players to join teams (called “clans”) from anywhere in the world and play together, competing against other worldwide teams. Adding these features increased the usage of existing players and increased the retention of new players such that by the end of 2019, we achieved a marked increase in user retention.

 

In Q4 of 2019, we embarked upon another major development project involving our Eventzee app. We have completely re-designed the Eventzee app, adding many features requested by our customers over the years. We launched the revised Eventzee app in Q2 of 2020, and also launched a new white label version of Eventzee called, “Barnes HD” (Barnes Harley Davidson), with a partner that own multiple Harley Davidson dealerships in Canada.

 

Beginning in the quarter ended March 31, 2020, our wholly-owned subsidiary, Space Coast Geo Store, LLC, a Florida limited liability company, sells merchandise to the geocaching industry

 

Going Concern Uncertainty

 

The accompanying financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. As shown in the accompanying financial statements, the Company incurred net loss of $185,508 and used net cash of $84,908 in operations for the six months ended June 30, 2020. As of June 30, 2020, the Company had a working capital deficit of $252,751 and a total stockholders’ deficit of $629,705. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

 

Management believes that by implementing cost reductions and realizing cost efficiencies from the Merger, operating cash flows will be sufficient to support the Company’s business plan. The Company will also continue to develop and launch new games to maximize revenues. However, management is currently evaluating alternative financing sources to fund the Company’s current business plan should cash provided by operations be insufficient.

 

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

 

Critical Accounting Policies

 

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

 

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

 

Revenue Recognition

 

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

 

We determine revenue recognition through the following steps:

 

 

·

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

 

 

 

 

·

identification of the performance obligations in the contract;

 

 

 

 

·

determination of the transaction price;

 

 

 

 

·

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

 

 

 

 

·

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

  

Intangible Assets

 

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

 

Accounting for Stock-Based Compensation

 

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

 

Recent Accounting Pronouncements

 

Although there were new accounting pronouncements issued or proposed by the FASB during the six months ended June 30, 2020 and through the date of filing of this report, we do not believe any of these accounting pronouncements has had or will have a material impact on our financial position or results of operations.

 

Results of Operations

 

Revenues

 

Our revenues for the three months ended June 30, 2020 of $436,065 were down $82,148 from revenues of $518,213 for the three months ended June 30, 2019. Revenues for the six months ended June 30, 2020 of $839,555 were down $238,861 from revenues of $1,078,416 for the six months ended June 30, 2019. The primary reason for the decrease in revenues year over year was due to the close-out of a significant mobile distribution contract in the prior year period allowing us to recognize deferred revenue, and the limited number of events our players were able to hold due to the COVID-19 crisis.

 

 
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Cost of Sales

 

Cost of sales decreased $24,711 to $57,959 for the three months ended June 30, 2020 from $82,670 for the three months ended June 30, 2019. Costs of sales for the six months ended June 30, 2020 of $121,873 were $32,720 lower than the $154,593 for the six months ended June 30, 2019. The decrease was a mainly a result of decreased server and server usage fees, as well as decreased physical product costs.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses decreased $37,897 to $440,095 for the three months ended June 30, 2020 from $477,992 for the three months ended June 30, 2019. Selling, general and administrative for the six months ended June 30, 2020 of $883,628 decreased $58,282 from $941,910 for the six months ended June 30, 2019. The decrease is primarily due to reduced development and travel expenses, as well as other cost savings initiatives throughout the company

 

Other Income (Expense)

 

Total other income (expense) for the three months ended June 30, 2020 of ($9,472) was relatively consistent with other income (expense) of ($10,090) for the three months ended June 30, 2019. Total other income (expense) was also consistent at ($19,562) for the six months ended June 30, 2020 compared to ($20,076) for the six months ended June 30, 2019. These amounts relate primarily to the imputed interest on related party debt.

 

Net Income (Loss)

 

As a result of the above, we reported a net loss of $71,461 for the three months ended June 30, 2020 compared to a net loss of $52,539 for the three months ended June 30, 2019 and net losses of $185,508 and $38,163 for the six months ended June 30, 2020 and 2019, respectively.

 

Liquidity and Capital Resources

 

Introduction

 

As of June 30, 2020, we had current assets of $516,557, including cash of $495,613, and current liabilities of $769,308, resulting in a working capital deficit of $252,751. In addition, we had a total stockholders’ deficit of $629,705 at June 30, 2020.

 

During the six months ended June 30, 2020, we used net cash of $84,908 from operating activities. Management believes that by implementing cost reductions and realizing cost efficiencies from the Merger, operating cash flows will be sufficient to support our business plan. We will also continue to develop and launch new games to maximize revenues. As a result, we may have short-term cash needs. Therefore, management is currently evaluating alternative financing sources to fund our current business plan should cash provided by operations be insufficient. There can be no assurance that we will be successful in these efforts.

 

 
19

Table of Contents

 

Sources and Uses of Cash

 

We used net cash of $84,908 in operating activities for the six months ended June 30, 2020. A net loss of $185,508 and a decrease in accounts payable of $19,500 and other current liabilities of $20,370 were partially offset by non-cash expenses of $91,165, decreases of our current assets of $6,456 and increases of accrued expenses of $42,849.

 

By comparison, net cash used by operating activities for the six months ended June 30, 2019 was $90,249 as a result of our net loss of $38,163 and decreases in unearned royalties of $119,639 partially offset by non-cash expenses of $74,486 and increases of our prepaid expenses and other assets of $12,086.

 

We used $46,609 for investing activities for the purchase of property and equipment during the six months ended June 30, 2020. For the six months ended June 30, 2019, we did not have any cash provided by or used in investing activities.

 

Financing activities provided net cash of $372,354 for the six months ended June 30, 2020 related to three new loans during the period, the significant portion to alleviate the impact of the COVID-19 crisis. For the six months ended June 30, 2019, we did not have any cash provided by or used in financing activities.

 

Notes Payable – Related Party

 

As of June 30, 2020, our related party debt was comprised of notes payable totaling $379,825 to Craig Holland, our Chief Executive Officer and Mick Donahoo, our Chief Financial Officer. These notes are non-interest bearing and mature on December 31, 2021. Of this related party indebtedness, there are two convertible notes payable of $186,450 to each of Messrs. Holland and Donahoo, who have the right, at any time, at their election, to convert all or part of the amount due into shares of fully paid and non-assessable shares of our common stock. The fixed conversion price is $0.02 per share. We have imputed interest on these notes payable using an annual rate of 10%.

 

ITEM 3 Quantitative and Qualitative Disclosures About Market Risk

 

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

 

ITEM 4 Controls and Procedures

 

(a) Evaluation of Disclosure Controls and Procedures

 

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined) in Exchange Act Rules 13a – 15(c) and 15d – 15(e). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer, who are our principal executive officer and principal financial officers, respectively, concluded that, as of the end of the three month period ended June 30, 2020, 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

 

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.

 

 
20

Table of Contents

  

PART II – OTHER INFORMATION

 

ITEM 1 Legal Proceedings

 

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

 

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

 

ITEM 1A Risk Factors

 

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

 

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

 

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

 

ITEM 3 Defaults Upon Senior Securities

 

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

 

ITEM 4 Mine Safety Disclosures

 

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

 

ITEM 5 Other Information

 

As noted in our previous filings, we are also currently under an Internal Revenue Service tax audit for 2015 and 2016. We are undergoing negotiations relating to tax matters with the taxing authorities and believe that we have provided adequate reserves related to all matters contained in tax periods open to examination. The years open to examination by taxing authorities vary by jurisdiction; no years prior to 2016 are open.

 

 
21

Table of Contents

 

ITEM 6 Exhibits

 

3.1 (1)

Articles of Incorporation of Freeze Tag, Inc.

 

3.2 (1)

Articles of Amendment to Articles of Incorporation

 

3.3 (1)

Bylaws of Freeze Tag, Inc.

 

3.4 (3)

Articles of Amendment to Certificate of Incorporation February 4, 2014

 

3.5 (7)

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

 

10.1 (1)

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

 

10.2 (2)

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

 

10.3 (2)

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

 

10.4 (2)

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

 

10.5 (2)

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

 

10.6 (2)

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

 

10.7 (2)

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

 

10.8 (2)

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

 

10.9 (8)

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

 

10.10 (4)

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

 

10.11 (4)

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

 

10.12 (5)

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

 

10.13 (5)

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

 

10.14 (5)

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

 

10.15 (6)

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

 

10.16 (6)

 

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

 

10.17 (6)

 

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

10.18 (6)

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

 

10.19 (8)

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

 

 

22

 

 

 

10.20 (9)

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

 

10.21 (9)

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

 

10.22 (10)

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

 

10.23 (10)

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

 

10.24 (11)

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

 

10.25 (11)

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

 

10.26 (11)

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

 

10.27 (11)

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

 

10.28 (11)

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

 

10.29 (11)

 

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

 

10.30 (11)

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

 

10.31 (12)

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

 

21.1*

 

Subsidiaries of Freeze Tag, Inc.

 

31.1*

 

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

 

31.2*

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

 

32.1*

 

Section 1350 Certification of Chief Executive Officer

 

32.2*

Section 1350 Certification of Chief Financial Officer.

 

 
23

Table of Contents

   

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

 

 

(3)

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

 

 

(4)

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

 

 

(5)

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

 

 

(6)

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

 

 

(7)

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

 

 

(8)

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

 

 

(9)

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

 

 

(10)

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

 

 

(11)

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

 

 

(12)

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

 

 
24

Table of Contents

  

SIGNATURES

 

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

   

 

Freeze Tag, Inc.

 

 

 

 

 

Dated: August 14, 2020

By:

/s/ Craig Holland

 

 

 

Craig Holland

 

 

Its:

Chief Executive Officer (Principal Executive Officer)

 

 

 

25

 

EX-21.1 2 frzt_ex211.htm SUBSIDIARIES docarltd.htm

 

EXHIBIT 21.1

 

List of Freeze Tag, Inc. Subsidiaries

 

 

1. Space Coast Geo Store, LLC, a Florida limited liability company

 

EX-31.1 3 frzt_ex311.htm CERTIFICATION frzt_ex311.htm

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: August 14, 2020

By:

/s/ Craig Holland

 

 

 

Craig Holland

 

 

 

Chief Executive Officer (Principal Executive Officer)

 

EX-31.2 4 frzt_ex312.htm CERTIFICATION frzt_ex312.htm

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: August 14, 2020

By:

/s/ Mick Donahoo

 

 

 

Mick Donahoo

 

 

 

Chief Financial Officer (Chief Accounting Officer)

 

EX-32.1 5 frzt_ex321.htm CERTIFICATION frzt_ex321.htm

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 June 30, 2020, 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: August 14, 2020

By:

/s/ Craig Holland

 

 

 

Craig Holland

 

 

 

Chief Executive Officer (Principal 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 6 frzt_ex322.htm CERTIFICATION frzt_ex322.htm

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 June 30, 2020, 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: August 14, 2020

By:

/s/ Mick Donahoo

 

 

 

Mick Donahoo

 

 

 

Chief Financial Officer (Chief Accounting 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.

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(&#8220;Freeze Tag&#8221; or the &#8220;Company&#8221;) is a leading creator of mobile location-based games for consumers and businesses. The Company also offers gaming technology and services to businesses that want to leverage mobile gaming in their marketing and branding programs.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;Beginning in the quarter ended March 31, 2020, our wholly-owned subsidiary, Space Coast Geo Store, LLC, a Florida limited liability company, sells merchandise to the geocaching industry. The LLC was filed with the State of Florida on September 3, 2019 and there was no activity in the entity from the time of filing until it began operations in the quarter ended March 31, 2020.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="MARGIN: 0px; text-align:justify;"><strong><em>Use of Estimates</em></strong></p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (&#8220;U.S. GAAP&#8221;) requires the Company&#8217;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.</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The following accounting policies involve significant judgments, assumptions and estimates by management:</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; text-align:justify;"><strong><em>Revenue Recognition</em></strong></p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The Company&#8217;s revenues are derived primarily by licensing software products in the form of mobile games for smartphone and tablet platforms. Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">We determine revenue recognition through the following steps:</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><table style="border-spacing:0;font-size:10pt;font-variant:normal;font-weight:normal;font-style:normal;text-align:left;line-height:normal;width:100%" cellpadding="0"> <tr style="height:15px"> <td style="width:4%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:4%;vertical-align:top;"> <p style="margin:0px"><font style="font-family:symbol">&#183;</font></p></td> <td style="vertical-align:top;">identification of the contract, or contracts, with a customer;</td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px;text-indent:30px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="margin:0px"><font style="font-family:symbol">&#183;</font></p></td> <td style="vertical-align:top;">identification of the performance obligations in the contract;</td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px;text-indent:30px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="margin:0px"><font style="font-family:symbol">&#183;</font></p></td> <td style="vertical-align:top;">determination of the transaction price;</td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px;text-indent:30px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="margin:0px"><font style="font-family:symbol">&#183;</font></p></td> <td style="vertical-align:top;">allocation of the transaction price to the performance obligations in the contract; and</td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px;text-indent:30px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="margin:0px"><font style="font-family:symbol">&#183;</font></p></td> <td style="vertical-align:top;">recognition of revenue when, or as, we satisfy a performance obligation.</td></tr></table> <p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; text-align:justify;"><strong><em>Property and Equipment</em></strong></p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">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:</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><table style="border-spacing:0;font-size:10pt;text-align:justify;margin-left:auto;margin-right:auto;width:85%" cellpadding="0"> <tr style="height:15px;background-color:#cceeff"> <td style="width:40%;vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Vehicle</p></td> <td style="width:2%;"> <p style="MARGIN: 0px; text-align:justify;">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">5 years</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Computer equipment</p></td> <td> <p style="MARGIN: 0px; text-align:justify;">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">5 years</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Office furniture and equipment</p></td> <td> <p style="MARGIN: 0px; text-align:justify;">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">7 years</p></td></tr></table> <p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">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.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">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.</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; text-align:justify;"><strong><em>Intangible Assets</em></strong></p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">Intangible assets consist primarily of intellectual property, customer base and non-compete agreements acquired in the Merger, which are amortized on a straight-line basis over their estimated useful lives of 5 years. Intangible assets are reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; text-align:justify;"><strong><em>Income Taxes</em></strong></p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">We account for income taxes using 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.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">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.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The Company has no uncertain tax positions at any of the dates presented.</p><p style="MARGIN: 0px; text-align:justify;">&nbsp; </p><p style="MARGIN: 0px; text-align:justify;">&nbsp;<strong><em>Stock-Based Compensation</em></strong></p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The Company accounts for stock-based compensation in accordance with ASC Topic 718-10, Compensation-Stock Compensation and ASC Subtopic 505-50, Equity-Based Payments to Non-Employees (&#8220;ASC stock-based compensation guidance&#8221;). Stock-based compensation expense recognized during the requisite services period is based on the value of share-based payment awards after reduction for estimated forfeitures. Forfeitures are estimated at the time of grant and are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The Company had stock-based compensation expense recognized in its statements of operations of $20,833 for the six months ended June 30, 2020 and $8,167 for the six months ended June 30, 2019.</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; text-align:justify;"><strong><em>Earnings per Share</em></strong></p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The computation of basic earnings per common share is based on the weighted average number of shares outstanding during the period. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the weighted average common stock equivalents which would arise from the exercise of stock options, warrants, convertible preferred stock and other rights during the period.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">For the three and six months ended June 30, 2020 and 2019, the diluted weighted average number of shares is the same as the basic weighted average number of shares as the inclusion of any common stock equivalents would be anti-dilutive. </p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; text-align:justify;"><strong><em>Fair Value of Financial Instruments</em></strong></p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">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 June 30, 2020 and December 31, 2019.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The current assets and current liabilities reported on the Company&#8217;s balance sheets are estimated by management to approximate fair market value due to their short-term nature. </p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; text-align:justify;"><strong><em>Recent Accounting Pronouncements</em></strong></p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">Although there were new accounting pronouncements issued or proposed by the FASB during the six months ended June 30, 2020 and through the date of filing of this report, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="MARGIN: 0px; TEXT-INDENT: 33.75pt; text-align:justify;">The accompanying financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. As shown in the accompanying financial statements, the Company incurred net loss of $185,508 and used net cash of $84,908 in operations for the six months ended June 30, 2020. As of June 30, 2020, the Company had a working capital deficit of $252,751 and a total stockholders&#8217; deficit of $629,705. These factors, among others, raise substantial doubt about the Company&#8217;s ability to continue as a going concern.</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 33.75pt; text-align:justify;">Management believes that by implementing cost reductions and realizing cost efficiencies from the Merger, operating cash flows will be sufficient to support the Company&#8217;s business plan. The Company will also continue to develop and launch new games to maximize revenues. However, management is currently evaluating alternative financing sources to fund the Company&#8217;s current business plan should cash provided by operations be insufficient.</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="margin:0px">The Company&#8217;s ability to continue as a going concern is dependent upon successfully executing its plans to attain a successful level of operations. The Company&#8217;s financial statements do not include any adjustments that might be necessary if it were unable to continue as a going concern.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="text-align:justify;margin:0px;text-indent:45px">Property and equipment consisted of the following at:</p><p style="text-align:justify;margin:0px">&nbsp;</p><table style="border-spacing:0;text-align:left;font:10pt times new roman;margin-left:auto;margin-right:auto;width:85%" cellpadding="0"> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="text-align:center;margin:0px"><strong>June 30,<br />2020</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="text-align:center;margin:0px"><strong>December&nbsp;31,<br />2019</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Vehicle</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">46,609</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Computer equipment</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">7,170</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">7,971</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Office furniture and equipment</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">10,055</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">10,055</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Total</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">63,834</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">18,026</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Less accumulated depreciation</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">(13,314</td> <td style="PADDING-BOTTOM: 1px;width:1%;vertical-align:bottom;white-space: nowrap;">)</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">(8,463</td> <td style="PADDING-BOTTOM: 1px;width:1%;vertical-align:bottom;white-space: nowrap;">)</td></tr> <tr style="height:15px;background-color:#ffffff"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Net</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">50,520</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">9,563</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr></table> <p style="text-align:justify;margin:0px">&nbsp;</p><p style="text-align:justify;margin:0px;text-indent:45px">Depreciation expense was $4,851 and $1,744 for the six months ended June 30, 2020 and 2019, respectively.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="text-align:justify;margin:0px;text-indent:45px">Intangible assets consisted of the following at:</p><p style="text-align:justify;margin:0px">&nbsp;</p><table style="border-spacing:0;text-align:left;font:10pt times new roman;margin-left:auto;margin-right:auto;width:85%" cellpadding="0"> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="text-align:center;margin:0px"><strong>June 30,<br />2020</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="text-align:center;margin:0px"><strong>December&nbsp;31,<br />2019</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Intellectual property</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">307,100</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">307,100</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Customer base</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">142,000</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">142,000</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Non-compete agreements</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">8,300</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">8,300</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Less accumulated depreciation</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">(253,460</td> <td style="PADDING-BOTTOM: 1px;width:1%;vertical-align:bottom;white-space: nowrap;">)</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">(207,720</td> <td style="PADDING-BOTTOM: 1px;width:1%;vertical-align:bottom;white-space: nowrap;">)</td></tr> <tr style="height:15px;background-color:#cceeff"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Net</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">203,940</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">249,680</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr></table> <p style="text-align:justify;margin:0px">&nbsp;</p><p style="text-align:justify;margin:0px;text-indent:45px">Amortization expense was $45,740 for the six months ended June 30, 2020 and 2019.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">Notes payable consisted of the following at June 30, 2020 and December 31, 2019:</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><table style="border-spacing:0;text-align:left;font:10pt times new roman;margin-left:auto;margin-right:auto;width:85%" cellpadding="0"> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: black 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>June 30,</strong></p><p style="MARGIN: 0px; text-align:center;"><strong>2020</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px"><strong>&nbsp;</strong></p></td> <td style="BORDER-BOTTOM: black 1px solid;white-space: nowrap;"> <p style="margin:0px"><strong>&nbsp;</strong></p></td> <td class="hdcell" style="BORDER-BOTTOM: black 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>December&nbsp;31,</strong></p><p style="MARGIN: 0px; text-align:center;"><strong>2019</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px"><strong>&nbsp;</strong></p></td></tr> <tr style="height:15px"> <td style="vertical-align:top;"> <p style="margin:0px"><u>Related Party</u>:</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px"><strong>&nbsp;</strong></p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px"><strong>&nbsp;</strong></p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px"><strong>&nbsp;</strong></p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px"><strong>&nbsp;</strong></p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Note payable to Craig Holland, non-interest bearing, maturing on December 31, 2021</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">6,925</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">6,925</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Convertible note payable to Craig Holland, non-interest bearing, maturing on December 31, 2021</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">186,450</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">186,450</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Convertible note payable to Mick Donahoo, non-interest&nbsp;bearing, maturing on December 31, 2021</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">186,450</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">186,450</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px"><u>Other</u>:</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Note payable to financial institution, secured by vehicle, interest at 2.9%, due in 2025</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">47,934</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Paycheck Protection Program loan, payable to financial institution, 1% interest, principal and interest deferred six&nbsp;months, payments starting in November, 2020, due in 2022</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">174,420</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Small Business Loan, payable to financial institution, 3.75%&nbsp;interest, payments starting in June 2021, due in 2050</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">150,000</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="MARGIN: 0px;vertical-align:top;"> <p style="MARGIN: 0px 0px 0px 15px; text-align:left;">Total notes payable</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">752,179</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">379,825</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px 0px 0px 15px; text-align:left;"><em>Less current portion</em></p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">87,072</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px 0px 0px 15px; text-align:left;">Notes payable, net of current portion</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">665,107</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">379,825</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr></table> <p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">On April 30, 2020, the Company received a U.S. Small Business Administration Loan under the Paycheck Protection Program (PPP Loan) primarily for payroll costs related to the COVID-19 crisis in the amount of $174,420. Under the Paycheck Protection Program, the PPP Loan has a fixed interest rate of 1%, a maturity date two years from the date of the funding of the loan and no payments are due for six months. Pursuant to the terms of the PPP Loan, the Company may apply for forgiveness of the amount due on the PPP Loan in an amount equal to the sum of the following costs incurred by the Company during the 8-week period (or any other period that may be authorized by the U.S. Small Business Association) beginning on the date of first disbursement of the loan: payroll costs, any payment of interest on a covered mortgage obligation, payment on a covered rent obligation, and any covered utility payment. The amount of PPP Loan forgiveness shall be calculated in accordance with the requirements of the Paycheck Protection Program, including the provisions of Section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), although no more than 25% of the amount forgiven can be attributable to non-payroll costs.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">On May 18, 2020, the Company received an additional U.S. Small Business Administration Loan (SBA Loan) in the amount of $150,000 to alleviate continued economic injury caused the COVID-19 crisis. The SBA Loan has a fixed interest rate of 3.75% and matures in thirty years from the date of the loan. Payments begin twelve months from the effective date in a fixed amount of $731 per month. All payments will be applied to interest first. This loan is secured by the general assets of the Company.</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The Company had a note payable to Craig Holland, its Chief Executive Officer, with a balance of $6,925 at June 30, 2020 and 2019. The Company also had convertible notes payable to Mr. Holland and Mick Donahoo, its Chief Financial Officer, with a total balance of $372,900 as of June 30, 2020 and 2019. See Note 7 for detailed disclosure of this related party debt, including interest rates, terms of conversion and other repayment terms. Messrs. Holland and Donahoo have the right, at any time, at their election, to convert all or part of the amount due into shares of fully paid and non-assessable shares of common stock of the Company. The fixed conversion price is $0.02 per share.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The Company has imputed interest expense on the notes payable &#8211; related party using an annual rate of 10%. During the six months ended June 30, 2020 and 2019, total imputed interest expense was $18,940 and $18,835, respectively, which was recorded to additional paid-in capital. </p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">Future maturities of notes payable as of June 30, 2020 are as follows:</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><table style="border-spacing:0;text-align:left;font:10pt times new roman;margin-left:auto;margin-right:auto;width:85%" cellpadding="0"> <tr style="height:15px"> <td style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;"> <p style="margin:0px"><strong>December 31,</strong></p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>Amount</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">2020</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">24,121</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">2021</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">544,555</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">2022</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">9,975</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">2023</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">12,807</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">2024</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">13,868</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Thereafter</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">146,853</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px 0px 0px 15px">Notes Payable</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">752,179</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr></table></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="MARGIN: 0px; text-align:justify;"><strong><em>Common Stock</em></strong></p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The Company is authorized to issue up to 800,000,000 shares of its $0.00001 par value common stock and had 75,056,123 common shares issued and outstanding as of June 30, 2020.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">There was no common stock activity during the six months ended June 30, 2020 and June 30, 2019.</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; text-align:justify;"><strong><em>Preferred Stock</em></strong></p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The Company is authorized to issue up to 25,000,000 shares of its $0.00001 par value preferred stock. The shares of preferred stock may be issued from time to time in one or more series. As of June 30, 2020 and 2019, there were 2,480,482 shares of Series B preferred stock and 4,355,000 shares of Series C preferred stock issued and outstanding.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;"><u>Series B Preferred Stock</u></p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The Company&#8217;s Series B preferred stock has 2,700,000 shares authorized and the following rights: (i) dividend rights equal to the Company&#8217;s common stock; (ii) no liquidation preference over the Company&#8217;s common stock; (iii) each share is convertible into 50 shares of the Company&#8217;s common stock; (iv) no redemption rights; (v) no call rights by the Company; and (vi) no voting rights. The holders of the Series B preferred stock cannot convert their shares of Series B preferred stock if such conversion would cause the holder to beneficially own more than 4.99% of our then-outstanding common stock.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">There was no Series B preferred stock activity during the six months ended June 30, 2020 and June 30, 2019</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;"><u>Series C Preferred Stock</u></p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The Company&#8217;s Series C Preferred Stock has 4,500,000 shares authorized and the following rights: (i) dividend rights equal to the Company&#8217;s common stock; (ii) no liquidation preference over the Company&#8217;s common stock; (iii) each share is convertible into 50 shares of the Company&#8217;s common stock; (iv) no redemption rights; (v) no call rights by the Company; and (vi) each shares votes on an &#8220;as converted&#8221; basis, such that each share currently has 50 votes on all matters brought before the Company&#8217;s common stockholders for a vote.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">There was no Series C preferred stock activity during the six months ended June 30, 2020 and June 30, 2019.</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;&nbsp;</p><p style="MARGIN: 0px; text-align:justify;"><strong><em>Stock Options</em></strong></p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;"><u>2017 Non-Qualified Stock Option Plan</u></p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">On December 4, 2017, our Board of Directors approved the Freeze Tag, Inc. 2017 Non-Qualified Stock Option Plan (the &#8220;Plan&#8221;). Under the Plan, our Board of Directors may issue options to purchase up to an aggregate of 10,000,000 shares of common stock to individuals, including, but not limited to, our Board of Directors and/or our executive management. On December 5, 2017, our Board of Directors granted options to purchase a total of 1,512,821 shares of our common stock.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;"><u>2006 Stock Option Plan</u></p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The Company&#8217;s 2006 Stock Option Plan adopted by our Board of Directors in March of 2006 terminated in the year ended December 31, 2016. As of June 30, 2019, there were 5,600 stock options outstanding under the 2006 Stock Option Plan.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">We account for stock-based compensation in accordance with ASC Topic 718, Compensation &#8211; Stock Compensation. Under the fair value recognition provisions of this standard, stock-based compensation cost is measured at the grant date based on the estimated value of the award granted, using the Black-Scholes option pricing model, and recognized over the period in which the award vests in general and administrative expenses. </p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The Company recognized $20,833 of stock-based compensation during the six months ended June 30, 2020 and $8,167 during the six months ended June 30, 2019. As of June 30, 2020, future compensation cost related to non-vested stock options not yet recognized in the statements of operations totaled $62,501.</p><p style="margin:0px">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">A summary of the status of the stock options issued by the Company under both plans as of June 30, 2020, and changes during six months then ended is presented below: &nbsp;</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><table style="border-spacing:0;text-align:left;font:10pt times new roman;margin-left:auto;margin-right:auto;width:85%" cellpadding="0"> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" colspan="2" style="width:9%;"></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" colspan="2" style="width:9%;vertical-align:bottom;text-align:center;"> <p style="MARGIN: 0px; text-align:center;"><strong>Weighted Average</strong></p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>Shares</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>Exercise Price</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Outstanding, December 31, 2019</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">7,768,421</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">0.031</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Granted</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Canceled / Expired</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Exercised</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: black 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: black 1px solid;width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: black 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: black 1px solid;width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Outstanding, June 30, 2020</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">7,768,421</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">0.031</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr></table> <p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The outstanding options expire on various dates beginning in 2020 through 2029.</p></div> <div style="TEXT-ALIGN:justify; FONT: 10pt TIMES NEW ROMAN"><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">Management has evaluated subsequent events according to the requirements of ASC TOPIC 855, and has reported the following:</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">No subsequent events to report.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (&#8220;U.S. GAAP&#8221;) requires the Company&#8217;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.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The following accounting policies involve significant judgments, assumptions and estimates by management:</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The Company&#8217;s revenues are derived primarily by licensing software products in the form of mobile games for smartphone and tablet platforms. Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">We determine revenue recognition through the following steps:</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><table style="border-spacing:0;font-size:10pt;font-variant:normal;font-weight:normal;font-style:normal;text-align:left;line-height:normal;width:100%" cellpadding="0"> <tr style="height:15px"> <td style="width:4%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:4%;vertical-align:top;"> <p style="margin:0px"><font style="font-family:symbol">&#183;</font></p></td> <td style="vertical-align:top;">identification of the contract, or contracts, with a customer;</td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px;text-indent:30px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="margin:0px"><font style="font-family:symbol">&#183;</font></p></td> <td style="vertical-align:top;">identification of the performance obligations in the contract;</td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px;text-indent:30px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="margin:0px"><font style="font-family:symbol">&#183;</font></p></td> <td style="vertical-align:top;">determination of the transaction price;</td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px;text-indent:30px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="margin:0px"><font style="font-family:symbol">&#183;</font></p></td> <td style="vertical-align:top;">allocation of the transaction price to the performance obligations in the contract; and</td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px;text-indent:30px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="margin:0px"><font style="font-family:symbol">&#183;</font></p></td> <td style="vertical-align:top;">recognition of revenue when, or as, we satisfy a performance obligation.</td></tr></table> <p style="margin:0px">&nbsp;</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">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:</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><table style="border-spacing:0;font-size:10pt;text-align:justify;margin-left:auto;margin-right:auto;width:85%" cellpadding="0"> <tr style="height:15px;background-color:#cceeff"> <td style="width:40%;vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Vehicle</p></td> <td style="width:2%;"> <p style="MARGIN: 0px; text-align:justify;">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">5 years</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Computer equipment</p></td> <td> <p style="MARGIN: 0px; text-align:justify;">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">5 years</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Office furniture and equipment</p></td> <td> <p style="MARGIN: 0px; text-align:justify;">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">7 years</p></td></tr></table> <p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">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.</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">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.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">Intangible assets consist primarily of intellectual property, customer base and non-compete agreements acquired in the Merger, which are amortized on a straight-line basis over their estimated useful lives of 5 years. Intangible assets are reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">We account for income taxes using 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.</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">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.</p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The Company has no uncertain tax positions at any of the dates presented.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The Company accounts for stock-based compensation in accordance with ASC Topic 718-10, Compensation-Stock Compensation and ASC Subtopic 505-50, Equity-Based Payments to Non-Employees (&#8220;ASC stock-based compensation guidance&#8221;). Stock-based compensation expense recognized during the requisite services period is based on the value of share-based payment awards after reduction for estimated forfeitures. Forfeitures are estimated at the time of grant and are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;&nbsp;&nbsp; </p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The Company had stock-based compensation expense recognized in its statements of operations of $20,833 for the six months ended June 30, 2020 and $8,167 for the six months ended June 30, 2019.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The computation of basic earnings per common share is based on the weighted average number of shares outstanding during the period. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the weighted average common stock equivalents which would arise from the exercise of stock options, warrants, convertible preferred stock and other rights during the period.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">For the three and six months ended June 30, 2020 and 2019, the diluted weighted average number of shares is the same as the basic weighted average number of shares as the inclusion of any common stock equivalents would be anti-dilutive. </p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">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 June 30, 2020 and December 31, 2019.</p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">The current assets and current liabilities reported on the Company&#8217;s balance sheets are estimated by management to approximate fair market value due to their short-term nature. </p><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="MARGIN: 0px; TEXT-INDENT: 45px; text-align:justify;">Although there were new accounting pronouncements issued or proposed by the FASB during the six months ended June 30, 2020 and through the date of filing of this report, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="MARGIN: 0px; text-align:justify;">&nbsp;</p><table style="border-spacing:0;font-size:10pt;text-align:justify;margin-left:auto;margin-right:auto;width:85%" cellpadding="0"> <tr style="height:15px;background-color:#cceeff"> <td style="width:40%;vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Vehicle</p></td> <td style="width:2%;"> <p style="MARGIN: 0px; text-align:justify;">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">5 years</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Computer equipment</p></td> <td> <p style="MARGIN: 0px; text-align:justify;">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">5 years</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Office furniture and equipment</p></td> <td> <p style="MARGIN: 0px; text-align:justify;">&nbsp;</p></td> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">7 years</p></td></tr></table></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><table style="border-spacing:0;text-align:left;font:10pt times new roman;margin-left:auto;margin-right:auto;width:85%" cellpadding="0"> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="text-align:center;margin:0px"><strong>June 30,<br />2020</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="text-align:center;margin:0px"><strong>December&nbsp;31,<br />2019</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Vehicle</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">46,609</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Computer equipment</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">7,170</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">7,971</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Office furniture and equipment</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">10,055</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">10,055</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Total</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">63,834</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">18,026</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Less accumulated depreciation</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">(13,314</td> <td style="PADDING-BOTTOM: 1px;width:1%;vertical-align:bottom;white-space: nowrap;">)</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">(8,463</td> <td style="PADDING-BOTTOM: 1px;width:1%;vertical-align:bottom;white-space: nowrap;">)</td></tr> <tr style="height:15px;background-color:#ffffff"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Net</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">50,520</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">9,563</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr></table></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><table style="border-spacing:0;text-align:left;font:10pt times new roman;margin-left:auto;margin-right:auto;width:85%" cellpadding="0"> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="text-align:center;margin:0px"><strong>June 30,<br />2020</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="text-align:center;margin:0px"><strong>December&nbsp;31,<br />2019</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Intellectual property</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">307,100</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">307,100</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Customer base</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">142,000</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">142,000</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Non-compete agreements</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">8,300</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">8,300</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Less accumulated depreciation</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">(253,460</td> <td style="PADDING-BOTTOM: 1px;width:1%;vertical-align:bottom;white-space: nowrap;">)</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">(207,720</td> <td style="PADDING-BOTTOM: 1px;width:1%;vertical-align:bottom;white-space: nowrap;">)</td></tr> <tr style="height:15px;background-color:#cceeff"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Net</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">203,940</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">249,680</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr></table></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><table style="border-spacing:0;text-align:left;font:10pt times new roman;margin-left:auto;margin-right:auto;width:85%" cellpadding="0"> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: black 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="text-align:center;margin:0px"><strong>June 30,</strong></p><p style="text-align:center;margin:0px"><strong>2020</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px"><strong>&nbsp;</strong></p></td> <td style="BORDER-BOTTOM: black 1px solid;white-space: nowrap;"> <p style="margin:0px"><strong>&nbsp;</strong></p></td> <td class="hdcell" style="BORDER-BOTTOM: black 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="text-align:center;margin:0px"><strong>December&nbsp;31,</strong></p><p style="text-align:center;margin:0px"><strong>2019</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px"><strong>&nbsp;</strong></p></td></tr> <tr style="height:15px"> <td style="vertical-align:top;"> <p style="margin:0px"><u>Related Party</u>:</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px"><strong>&nbsp;</strong></p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px"><strong>&nbsp;</strong></p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px"><strong>&nbsp;</strong></p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px"><strong>&nbsp;</strong></p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Note payable to Craig Holland, non-interest bearing, maturing on December 31, 2021</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">6,925</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">6,925</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Convertible note payable to Craig Holland, non-interest bearing, maturing on December 31, 2021</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">186,450</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">186,450</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Convertible note payable to Mick Donahoo, non-interest&nbsp;bearing, maturing on December 31, 2021</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">186,450</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">186,450</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px"><u>Other</u>:</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Note payable to financial institution, secured by vehicle, interest at 2.9%, due in 2025</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">47,934</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Paycheck Protection Program loan, payable to financial institution, 1% interest, principal and interest deferred six&nbsp;months, payments starting in November, 2020, due in 2022</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">174,420</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Small Business Loan, payable to financial institution, 3.75%&nbsp;interest, payments starting in June 2021, due in 2050</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">150,000</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="MARGIN: 0px;vertical-align:top;"> <p style="text-align:left;margin:0px 0px 0px 15px">Total notes payable</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">752,179</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">379,825</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="text-align:left;margin:0px 0px 0px 15px"><em>Less current portion</em></p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">87,072</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="text-align:left;margin:0px 0px 0px 15px">Notes payable, net of current portion</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">665,107</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">379,825</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr></table></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><table style="border-spacing:0;text-align:left;font:10pt times new roman;margin-left:auto;margin-right:auto;width:85%" cellpadding="0"> <tr style="height:15px"> <td style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;"> <p style="margin:0px"><strong>December 31,</strong></p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="text-align:center;margin:0px"><strong>Amount</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">2020</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">24,121</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">2021</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">544,555</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">2022</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">9,975</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">2023</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">12,807</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">2024</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">13,868</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Thereafter</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">146,853</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px 0px 0px 15px">Notes Payable</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">752,179</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr></table></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><table style="border-spacing:0;text-align:left;font:10pt times new roman;margin-left:auto;margin-right:auto;width:85%" cellpadding="0"> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" colspan="2" style="width:9%;"></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" colspan="2" style="width:9%;vertical-align:bottom;text-align:center;"> <p style="text-align:center;margin:0px"><strong>Weighted Average</strong></p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="text-align:center;margin:0px"><strong>Shares</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="text-align:center;margin:0px"><strong>Exercise Price</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Outstanding, December 31, 2019</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">7,768,421</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">0.031</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Granted</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Canceled / Expired</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Exercised</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: black 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: black 1px solid;width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: black 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: black 1px solid;width:9%;vertical-align:bottom;text-align:right;">-</td> <td style="PADDING-BOTTOM: 1px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Outstanding, June 30, 2020</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">7,768,421</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">0.031</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr></table></div> P5Y P5Y P7Y P5Y 20833 8167 -629705 -252751 63834 18026 13314 8463 46609 7170 7971 10055 10055 4851 1744 -253460 -207720 307100 307100 142000 142000 8300 8300 45740 45740 1500000 0 752179 379825 -87072 0 665107 379825 186450 186450 174420 6925 6925 186450 186450 47934 24121 544555 9975 12807 13868 146853 752179 0.02 0.1 174420 0.01 Maturity date two years from the date of the funding of the loan and no payments are due for six months. 150000 731 0.0375 6925 6925 December 31, 2021 372900 372900 December 31, 2021 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DEFICIT Current liabilities: Accounts payable Accrued expenses Unearned royalties Notes payable, current portion Other current liabilities Total current liabilities [Liabilities, Current] Notes payable, net of current portion Notes payable?related party Other long-term liabilities Total liabilities [Liabilities] Commitments and contingencies Stockholders' deficit: Common stock; $0.00001 par value, 800,000,000 shares authorized, 75,056,123 shares issued and outstanding Additional paid-in capital Common stock payable Accumulated deficit Total stockholders' deficit Total liabilities and stockholders' deficit [Liabilities and Equity] Preferred stock value Stockholders' deficit Common stock, shares par value Common stock, shares authorized Common stock, shares issued Common stock, shares outstanding Preferred stock, shares par value Preferred stock, shares authorized Preferred stock, shares issued Preferred stock, shares outstanding CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Revenues Operating costs and expenses: Cost of sales Selling, general and administrative expenses Total operating costs and expenses [Operating Costs and Expenses] Loss from operations [Operating Income (Loss)] Other income (expense): Interest expense, net [Interest Expense] Other income Total other income (expense) [Other Nonoperating Income (Expense)] Net loss [Net Income (Loss) Attributable to Parent] Weighted average number of common shares outstanding - basic Weighted average number of common shares outstanding - diluted Income (loss) per common share ? basic and diluted CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) (Unaudited) Equity Components [Axis] Series A Preferred Stock [Member] Series B Preferred Stock [Member] Series C Preferred Stock [Member] Common Stock [Member] Additional Paid-in Capital [Member] Common Stock Payable [Member] Common Stock Subscription Receivable [Member] Retained Earnings (Deficit) [Member] Balance, shares [Shares, Issued] Balance, amount Imputed interest on related party debt Stock-based compensation Net income (loss) Balance, shares Balance, amount CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Cash flows from operating activities: Net loss Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization Imputed interest expense Stock-based compensation [Share-based Payment Arrangement, Noncash Expense] Loss on disposal of assets Changes in operating assets and liabilities: Accounts receivable [Increase (Decrease) in Accounts Receivable] Prepaid expenses and other current assets [Increase (Decrease) in Prepaid Expenses, Other] Accounts payable [Increase (Decrease) in Accounts Payable] Accrued expenses [Increase (Decrease) in Accrued Liabilities] Unearned royalties [Increase (Decrease) in Royalties Payable] Other current liabilities [Increase (Decrease) in Other Current Assets and Liabilities, Net] Net cash used by operating activities [Net Cash Provided by (Used in) Operating Activities] Cash flows from investing activities: Purchase of property and equipment [Payments to Acquire Property, Plant, and Equipment] Net cash used by investing activities [Net Cash Provided by (Used in) Investing Activities] Cash flows from financing activities: Proceeds from loan financing Payments on loan financing [Payments for Loans] Net cash provided by financing activities [Net Cash Provided by (Used in) Financing Activities] Net increase (decrease) in cash [Cash, Period Increase (Decrease)] Cash at the beginning of the period [Cash and Cash Equivalents, at Carrying Value] Cash at the end of the period Supplemental disclosure: Cash paid for income taxes Cash paid for interest expense Non-cash transactions: Issuance of common shares in conversion of Series B preferred stock Right-of-use asset obtained in exchange for lease obligation THE COMPANY AND NATURE OF BUSINESS NOTE 1 - THE COMPANY AND NATURE OF BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GOING CONCERN UNCERTAINTY NOTE 3 - GOING CONCERN UNCERTAINTY PROPERTY AND EQUIPMENT NOTE 4 - PROPERTY AND EQUIPMENT INTANGIBLE ASSETS NOTE 5 - INTANGIBLE ASSETS NOTES PAYABLES NOTE 6 - NOTES PAYABLES STOCKHOLDERS' DEFICIT NOTE 7 - STOCKHOLDERS' DEFICIT SUBSEQUENT EVENTS NOTE 10 - SUBSEQUENT EVENTS Use of Estimates Revenue Recognition Property and Equipment Intangible Assets Income Taxes Stock-Based Compensation Earnings per Share Fair Value of Financial Instruments Recent Accounting Pronouncements Schedule of Property and equipment , estimated useful life Schedule of Property and equipment Schedule of Intangible assets Schedule of notes payable - related party Schedule of future maturities of notes payable STOCKHOLDERS' DEFICIT (Tables) Schedule of status of warrants and options issued Property Plant And Equipment By Type Axis Vehicle [Member] Computer equipment [Member] Office furniture and equipment [Member] Property, plant and equipment, estimated useful lives Intangible assets estimated useful lives Stock-based compensation [Stock-based compensation] Stockholders' deficit [Stockholders' deficit] Net cash used by operating activities Working capital deficit Property and equipment, gross Less accumulated depreciation [Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment] Property and equipment, net Depreciation expense Finite Lived Intangible Assets By Major Class Axis Intellectual property [Member] Customer base [Member] Non-compete agreements [Member] Less accumulated amortization Intangible assets, net Intangible assets, gross Amortization expense Short-term Debt, Type [Axis] Debt Instrument Axis Related Party Transactions By Related Party Axis Small Business Loan [Member] Notes Payable [Member] Convertible Notes Payable [Member] Mick Donahoo [Member] Paycheck Protection Program (PPP Loan) [Member] Craig Holland [Member] Note Payable To Financial Institution, Secured By Vehicle [Member] Notes payable Total Notes payable Less current portion Notes payable, net of current portion 2020 2021 2022 2023 2024 Thereafter Notes Payable Title of Individual [Axis] Award Date [Axis] Convertible Notes Payable [Member] Notes Payable [Member] Craig Holland [Member] SBA LOAN [Member] May 18, 2020 [Member] Debt instrument, convertible, conversion price Imputed interest expense Imputed interest expense, annual rate Proceeds from loan Interest rate Maturity description Payment from effective date per month Note payable Debt instrument maturity date Number of shares Outstanding, December 31, 2019 Outstanding, March 31, 2020 Outstanding, December 31, 2019 [Outstanding, December 31, 2019] Outstanding, March 31, 2020 [Outstanding, March 31, 2020] Award Type Axis Range Axis Preferred Stock Series B [Member] [Preferred Stock Series B [Member]] Board of Directors [Member] 2017 Non-Qualified Stock Option Plan [Member] Maximum [Member] 2006 Stock Option Plan [Member] Common stock, par value Common stock, authorized shares Common stock, issued shares Common stock, outstanding shares Preferred stock, par value Preferred stock, authorized shares Unrecognized compensation cost Stock-based compensation Preferred stock, issued shares Preferred stock, outstanding shares Preferred Stock voting rights description Common stock shares options purchase Option granted to purchase common shares Stock options outstanding EX-101.CAL 10 frzt-20200630_cal.xml XBRL TAXONOMY EXTENSION CALCULATION LINKBASE EX-101.PRE 11 frzt-20200630_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE