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 December 31, 2020 and 2019. There was no common stock activity during years ended December 31, 2020 and 2019.

As of December 31, 2020 and 2019, the Company had common stock payable of $16,800 resulting from a technology transfer agreement with an unrelated party that obligated the Company to issue a total of 960 shares of its common stock, payable in 8 quarterly installments of 120 shares.

Preferred Stock

The Company is authorized to issue up to 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 December 31, 2020 and 2019, there were 2,480,482 shares of Series B preferred and 4,355,000 shares of Series C preferred stock issued and outstanding.

Series A Preferred Stock

The Company’s Series A Preferred Stock has 1,000 shares authorized and the following rights: (i) no dividend rights; (ii) no liquidation preference over the Company’s common stock; (iii) no conversion rights; (iv) the shares are automatically redeemed by the Company in the event: (a) Mr. Holland is no longer an officer, director or consultant with the Company, or (b) the Company’s common stock is listed on a national exchange, if the listing rules require the shares to be eliminated; (v) no call rights by the Company; (vi) non-transferable; and (vii) the aggregate 1,000 shares have votes equal to 51% of the then-outstanding voting rights of the Company (including all common stock and any other series of preferred stock) on any matter properly brought before the Company’s stockholders for a vote. There was no Series A Preferred Stock activity during years ended December 31, 2020 and 2019.

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 years ended December 31, 2020 and 2019.

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 years ended December 31, 2020 and 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 18, 2019, our Board of Directors granted options to purchase an additional 6,250,000 shares of our common stock. All options have an exercise price of $0.020 and a ten-year expiration. 3,750,000 options to purchase stock were issued to Mick Donahoo, our CFO, and the remaining 2,500,000 shares were issued to employees or independent consultants.

As of December 31, 2020 and 2019, there were 7,762,821 and 1,512,821 stock options, respectively, outstanding under the 2017 Stock Option Plan.

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 December 31, 2020 and 2019, there were zero and 5,600 stock options, respectively, 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 recorded stock-based compensation expense of $41,667 and $57,999 during the years ended December 31, 2020 and 2019. As of December 31, 2020, future compensation cost related to non-vested stock options not yet recognized in the Consolidated Statements of Operations totaled $41,667.

A summary of the status of the stock options issued by the Company under both plans as of December 31, 2020, and changes during the years ended December 31, 2019 and 2020 is presented below:

				Weighted Average
	Shares			Exercise Price

Outstanding, December 31, 2018		1,518,421		$	0.076

Granted		6,250,000			0.020
Canceled / Expired		-			-
Exercised		-			-

Outstanding, December 31, 2019		7,768,421		$	0.031

Granted		-			-
Canceled / Expired		(5,600	)	$	10.00
Exercised		-			-

Outstanding, December 31, 2020		7,762,821		$	0.024

The outstanding options expire on various dates beginning in 2027 through 2029.