Freeze Tag, Inc. (Form: 10-Q, Received: 08/15/2016 17:03:45)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2016

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

For the transition period from ____________ to ____________.

Commission file number: 000-54267

FREEZE TAG, Inc.

(Exact name of registrant as specified in its charter)

Delaware

20-4532392

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

18062 Irvine Blvd, Suite 103

Tustin, California

92780

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code: (714) 210-3850

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

x

(Do not check if a smaller reporting company)

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

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

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

Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of August 15, 2016, there were 390,023,332 shares of common stock, $0.00001 par value, issued and outstanding.

FREEZE TAG, INC.

TABLE OF CONTENTS

QUARTER ENDED JUNE 30, 2016

PART I – FINANCIAL INFORMATION

Item 1.
Financial Statements

4

Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.
Quantitative and Qualitative Disclosures About Market Risk

25

Item 4.
Controls and Procedures

25

PART II – OTHER INFORMATION

Item 1.
Legal Proceedings

26

Item 1A.
Risk Factors

26

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds

26

Item 3.
Defaults Upon Senior Securities

27

Item 4.
Mine Safety Disclosures

27

Item 5.
Other Information

27

Item 6.
Exhibits

28

PART I – FINANCIAL INFORMATION

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

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

The results for the period ended June 30, 2016 are not necessarily indicative of the results of operations for the full year. These condensed financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2015.

3

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FREEZE TAG, INC.

(A DELAWARE CORPORATION)

CONDENSED BALANCE SHEETS

June 30,
2016

December 31,
2015

(Unaudited)

ASSETS

Current assets:

Cash

$ 21,156

$ 42,052

Accounts receivable, net of allowance of $5,600

3,725

4,504

Prepaid expenses and other current assets

4,455

5,249

Total current assets

29,336

51,805

Total assets

$ 29,336

$ 51,805

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:

Accounts payable

$ 119,207

$ 124,163

Accrued expenses

495,569

492,012

Accrued interest payable – related party

281,417

209,461

Accrued interest payable

262,917

154,925

Unearned royalties

191,538

195,033

Notes payable

58,096

-

Convertible notes payable – related party

1,447,041

1,447,041

Convertible notes payable, net of discount of $232,993 and $21,646, respectively

1,673,176

718,923

Derivative liabilities

941,152

841,677

Total current liabilities

5,470,113

4,183,235

Long-term liabilities:

Convertible notes payable, net of discount of $0 and $158,562, respectively

-

686,438

Total liabilities

5,470,113

4,869,673

Commitments and contingencies

Stockholders' deficit:

Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding

-

-

Common stock; $0.00001 par value, 2,000,000,000 shares authorized, 297,593,541 and 280,442,125 shares issued and outstanding, respectively

2,976

2,804

Additional paid-in capital

4,167,395

4,147,038

Common stock payable

16,800

16,800

Accumulated deficit

(9,627,948 )

(8,984,510 )

Total stockholders' deficit

(5,440,777 )

(4,817,868 )

Total liabilities and stockholders' deficit

$ 29,336

$ 51,805

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

4

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FREEZE TAG, INC.

(A DELAWARE CORPORATION)

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended
June 30,

Six Months Ended
June 30,

2016

2015

2016

2015

Revenues

$ 25,048

$ 7,623

$ 46,825

$ 15,526

Operating costs and expenses:

Cost of sales

89,171

114,045

146,998

241,369

Selling, general and administrative expenses

140,037

133,861

293,129

284,540

Total operating costs and expenses

229,208

247,906

440,127

525,909

Loss from operations

(204,160 )

(240,283 )

(393,302 )

(510,383 )

Other income (expense):

Interest expense, net

(227,372 )

(226,697 )

(442,046 )

(444,445 )

Gain (loss) on change in derivative liabilities

139,297

(211,769 )

194,276

(220,522 )

Total other income (expense)

(88,075 )

(438,466 )

(247,770 )

(664,967 )

Loss before income taxes

(292,235 )

(678,749 )

(641,072 )

(1,175,350 )

Provision for income taxes

641

-

2,366

400

Net loss

$ (292,876 )

$ (678,749 )

$ (643,438 )

$ (1,175,750 )

Weighted average number of common shares outstanding – basic and diluted

297,305,853

229,781,350

291,099,961

210,761,012

Loss per common share – basic and diluted

$ (0.00 )

$ (0.00 )

$ (0.00 )

$ (0.01 )

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

5

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FREEZE TAG, INC.

(A DELAWARE CORPORATION)

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended
June 30,

2016

2015

Cash flows from operating activities:

Net loss

$ (643,438 )

$ (1,175,750 )

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

Amortization of debt discount to interest expense

253,777

319,368

(Gain) loss on change in derivative liabilities

(194,276 )

220,522

Changes in operating assets and liabilities:

Accounts receivable, net

779

8,547

Prepaid expenses and other current assets

794

3,397

Accounts payable

(4,956 )

(587 )

Accrued expenses

3,557

5,728

Accrued interest payable – related party

71,956

73,960

Accrued interest payable

109,310

50,234

Unearned royalties

(3,495 )

(3,820 )

Net cash used by operating activities

(405,992 )

(498,401 )

Cash flows from investing activities

-

-

Net cash provided by investing activities

-

-

Cash flows from financing activities:

Proceeds from notes payable

58,096

-

Proceeds from convertible notes payable

327,000

548,000

Net cash provided by financing activities

385,096

548,000

Net increase (decrease) in cash

(20,896 )

49,599

Cash at the beginning of the period

42,052

14,688

Cash at the end of the period

$ 21,156

$ 64,287

Non-cash transactions:

Conversion of debt to common shares

$ 6,400

$ 56,000

Conversion of accrued interest to common shares

$ 1,318

$ 7,310

Conversion of derivative liabilities to common shares

$ 12,811

$ 136,208

Debt discount due to derivative

$ 284,893

$ 232,551

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

6

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FREEZE TAG, INC.

(A DELAWARE CORPORATION)

Notes to Condensed Financial Statements

Six Months Ended June 30, 2016

(Unaudited)

NOTE 1 – THE COMPANY

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

NOTE 2 – GOING CONCERN

As shown in the accompanying financial statements, the Company incurred net losses of $643,438 and $1,175,750 for the six-month periods ended June 30, 2016 and 2015, respectively. As of June 30, 2016, the Company's accumulated deficit was $9,627,948. During the six months ended June 30, 2016 and the year ended December 3l, 2015, the Company experienced negative cash flows from operations largely due to its continued investment spending for product development of game titles for smartphones and tablets that are expected to benefit future periods. Those facts, along with our lack of access to a significant bank credit facility, create an uncertainty about the Company's ability to continue as a going concern. Accordingly, the Company is currently evaluating its alternatives to secure financing sufficient to support the operating requirements of its current business plan, as well as continuing to execute its business strategy of distributing game titles to digital distribution outlets, including mobile gaming app stores, online PC and Mac gaming portals, and opportunities for new devices such as tablet (mobile internet device) applications, mobile gaming platforms and international licensing opportunities.

The Company's ability to continue as a going concern is dependent upon its success in securing sufficient financing and in successfully executing its plans to return to positive cash flows during fiscal 2016. The Company's financial statements do not include any adjustments that might be necessary if it were unable to continue as a going concern.

NOTE 3 – ACCRUED EXPENSES

Accrued liabilities consisted of the following at:

June 30,
2016

December 31,
2015

Accrued vacation

$ 68,728

$ 64,461

Accrued royalties

408,576

408,134

Technology payable

18,000

18,000

Other

265

1,417

$ 495,569

$ 492,012

7

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

Unearned royalties consist of royalties received from licensees, which have not yet been earned. Unearned royalties were $191,538 and $195,033 at June 30, 2016 and December 31, 2015, respectively.

As of June 30, 2016 and December 31, 2015, the Company had technology payable of $18,000 resulting from a technology transfer agreement with an unrelated party entered into in June 2011, payable in 24 installments of $1,500 without interest.

NOTE 4 – DEBT

Notes Payable

On February 1, 2016, the Company entered into a Game Marketing Agreement with an investor whereby the investor agreed, at its option, to loan up to $250,000 (the "Marketing Fund") to the Company to exclusively fund user acquisition efforts for the game Kitty Pawp (the "Game"). The investor will receive 50% of Net Receipts (as defined in the agreement) from the Game until the Marketing Fund is fully recouped. Once the Marketing Fund is recouped, the investor will receive 50% of Net Receipts from the Game until the investor receives a 50% return on the Marketing Funds advanced.

The Company has recorded Marketing Fund advances as notes payable in the accompanying condensed balance sheets. Upon receiving a Marketing Fund advance, the Company accrues the 50% return as interest expense and includes the obligation in accrued interest payable in the accompanying condensed balance sheets. As of June 30, 2016, total advances recorded as notes payable were $58,096 and accrued interest payable included a total of $22,046 of the 50% guaranteed return, net of repayments.

Convertible Notes Payable – Related Party

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

June 30,
2016

December 31,
2015

Convertible note payable to the Holland Family Trust, maturing on September 30, 2016, with interest at 10%

$ 222,572

$ 222,572

Convertible note payable to Craig Holland, maturing on September 30, 2016, with interest at 10%

813,602

813,602

Convertible note payable to Craig Holland, maturing on December 31, 2016, with interest at 10%

186,450

186,450

Convertible note payable to Mick Donahoo, maturing on December 31, 2016, with interest at 10%

186,450

186,450

Convertible note payable to Craig Holland, maturing on December 31, 2016, with interest at 10%

6,925

6,925

Convertible note payable to Mick Donahoo, maturing on December 31, 2016, with interest at 10%

31,042

31,042

Total

$ 1,447,041

$ 1,447,041

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

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

As of September 30, 2014, $72,107 of accrued interest was added to the note principal and $813,602 of the note was transferred to Craig Holland. A new convertible note for $222,572 was issued to the Holland Family Trust with the same terms as the previous note, with the exception of the maturity date, which was extended to September 30, 2016. As of June 30, 2016 and December 31, 2015, accrued interest related to the Holland Family Trust Convertible Note was $38,935 and $27,867, respectively.

On September 30, 2014, $813,602 principal balance (including interest) of the Holland Family Trust Convertible Note was transferred to Craig Holland (the "Holland Transferred Convertible Note"). The Holland Transferred Convertible Note retains the same terms as the original Holland Family Trust Convertible Note with the exception of the maturity date, which was extended to December 31, 2016. As of June 30, 2016 and December 31, 2015, accrued interest related to the Holland Transferred Convertible Note was $142,325 and $101,867, respectively.

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

The Company evaluated the Holland Accrued Salary Note and the Donahoo Accrued Salary Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, the conversion feature does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. As of June 30, 2016 and December 31, 2015, there was $46,562 and $37,290, respectively, of accrued interest related to each of the notes.

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

9

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

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

The Company evaluated the Mick Donahoo Convertible Note and the Craig Holland Convertible Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The agreements modified the debt to make it convertible into common stock of the Company. As of June 30, 2016 and December 31, 2015, there was accrued interest payable related to these notes totaling $7,033 and $5,146, respectively.

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

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

On October 8, 2015, Craig Holland converted $4,607 principal and $2,028 accrued interest into 12,637,860 shares of the Company's common stock.

On October 8, 2015, Mick Donahoo converted $4,607 principal and $2,028 accrued interest into 12,637,860 shares of the Company's common stock.

Effective October 15, 2015, the Company entered into an Amendment to Convertible Promissory Note with each of Craig Holland and Mick Donahoo with respect to the Craig Holland Convertible Note and the Mick Donahoo Convertible Note. The parties agreed to modify the terms of the notes such that in the event the lender issues a valid conversion notice and the conversion notice results in a conversion price less than the then-par value of the Company's common stock, the conversion will be effected at par value with additional principal amounts added to the note equal to the value of the common shares that were not able to be issued due to the conversion price being less than the par value of the Company's common stock. As the amendment did not alter the shares received by converting the notes, no additional value was recorded by the Company as a result of these amendments.

Total accrued interest payable for the related party convertible notes was $281,417 and $209,461 as of June 30, 2016 and December 31, 2015, respectively.

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Convertible Notes Payable – Non-Related Party

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

June 30,
2016

December 31,
2015

Convertible note payable to Robert Cowdell, maturing on December 31, 2016, with interest at 10%

$ 61,443

$ 61,443

Tranche #2 from 12/20/2013 $500,000 convertible note payable to an accredited investor, maturing on September 30, 2016, with interest at 10%

26,726

31,126

Tranche #3 from 12/20/2013 $500,000 convertible note payable to an accredited investor, maturing on September 30, 2016, with interest at 10%

50,000

50,000

Tranche #4 from 12/20/2013 $500,000 convertible note payable to an accredited investor, maturing on September 30, 2016, with interest at 10%

50,000

50,000

Tranche #5 from 12/20/2013 $500,000 convertible note payable to an accredited investor, maturing on September 30, 2016, with interest at 10%

50,000

50,000

Tranche #6 from 12/20/2013 $500,000 convertible note payable to an accredited investor, maturing on September 30, 2016, with interest at 10%

50,000

50,000

Tranche #1 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%

48,000

50,000

Tranche #2 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%

50,000

50,000

Tranche #3 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%

50,000

50,000

Tranche #4 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%

50,000

50,000

Tranche #5 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%

50,000

50,000

Tranche #6 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%

100,000

100,000

Tranche #7 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%

50,000

50,000

Tranche #8 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%

70,000

70,000

Tranche #9 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%

30,000

30,000

Tranche #1 from 2/11/15 $500,000 convertible note payable to an accredited investor, maturing on November 11, 2016, with interest at 10%

30,000

30,000

Tranche #2 from 2/11/15 $500,000 convertible note payable to an accredited investor, maturing on November 11, 2016, with interest at 10%

40,000

40,000

Tranche #3 from 2/11/15 $500,000 convertible note payable to an accredited investor, maturing on November 11, 2016, with interest at 10%

110,000

110,000

Tranche #4 from 2/11/15 $500,000 convertible note payable to an accredited investor, maturing on November 11, 2016, with interest at 10%

88,000

88,000

Tranche #5 from 2/11/15 $500,000 convertible note payable to an accredited investor, maturing on November 11, 2016, with interest at 10%

90,000

90,000

Tranche #6 from 2/11/15 $500,000 convertible note payable to an accredited investor, maturing on November 11, 2016, with interest at 10%

90,000

90,000

Tranche #1 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%

65,000

65,000

Tranche #2 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%

65,000

65,000

Tranche #3 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%

60,000

60,000

Tranche #4 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%

50,000

50,000

Tranche #5 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%

50,000

50,000

Tranche #6 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%

55,000

55,000

Tranche #7 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%

25,000

-

Tranche #8 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%

55,000

-

Tranche #9 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%

50,000

-

Tranche #1 from 4/7/16 $500,000 convertible note payable to an accredited investor, maturing on April 7, 2017, with interest at 10%

60,000

-

Tranche #2 from 4/7/16 $500,000 convertible note payable to an accredited investor, maturing on April 7, 2017, with interest at 10%

45,000

-

Tranche #3 from 4/7/16 $500,000 convertible note payable to an accredited investor, maturing on April 7, 2017, with interest at 10%

55,000

-

Tranche #4 from 4/7/16 $500,000 convertible note payable to an accredited investor, maturing on April 7, 2017, with interest at 10%

27,000

-

Tranche #5 from 4/7/16 $500,000 convertible note payable to an accredited investor, maturing on April 7, 2017, with interest at 10%

10,000

-

Total

1,906,169

1,585,569

Less discount

(232,993 )

(180,208 )

Net

1,673,176

1,405,361

Less current portion

1,673,176

718,923

Long-term portion

$ -

$ 686,438

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On December 31, 2013, the Company converted $55,429 of convertible debt and $6,014 in accrued interest due to Robert Cowdell (the "Convertible Cowdell Note") into a convertible note. The Convertible Cowdell Note is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The "Variable Conversion Price" shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). "Market Price" means the average of the three lowest trading prices for the Company's common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. "Fixed Conversion Price" shall mean $0.00005. The Convertible Cowdell Note had accrued interest of $15,344 and $12,289 as of June 30, 2016 and December 31, 2015, respectively.

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

The $500,000 principal amount convertible note dated December 20, 2013 to an accredited investor ("Accredited Investor #1") with an outstanding balance of $226,726 at June 30, 2016 was funded in $50,000 tranches in January, February, March, April and May 2014. The note is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The "Variable Conversion Price" shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). "Market Price" means the average of the three lowest trading prices for the Company's common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. "Fixed Conversion Price" shall mean $0.00005. The note also includes conversion price reset features that are triggered when the Company issues certain new equity instruments; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the note initially was one year from the date of funding, with the maturity date subsequently extended to September 30, 2016.

The $500,000 principal amount convertible note dated June 25, 2014 to an accredited investor ("Accredited Investor #2") with an outstanding balance of $500,000 at June 30, 2016 was funded in $50,000 tranches in June, July, August, September, October, and December 2014, and tranches of $100,000 in November 2014, $70,000 in January 2015, and $30,000 in February 2015. The note is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The "Variable Conversion Price" shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). "Market Price" means the average of the three lowest trading prices for the Company's common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. "Fixed Conversion Price" shall mean $0.00005. The note also includes conversion price reset features that are triggered when the Company issues certain new equity instruments; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the note initially was one year from the date of funding, with the maturity date subsequently extended to June 25, 2017.

The $500,000 principal amount convertible note dated February 11, 2015 to Accredited Investor #2 with an outstanding balance of $448,000 at June 30, 2016 was funded by tranches of $30,000 in February 2015, $40,000 in February 2015, $110,000 in March 2015, $88,000 in April 2015, $90,000 in May and June 2015. The note is convertible into Company common stock at the lesser of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The "Variable Conversion Price" shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). "Market Price" means the average of the three (3) lowest trade prices on three (3) separate trading days of Common Stock recorded after the original Effective Date of the note. "Fixed Conversion Price" shall mean $0.003. The note also includes conversion price reset features that are triggered when the Company issues certain new equity instruments; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the note initially was nine months from the date of funding, with the maturity date subsequently extended to November 11, 2016.

The $500,000 principal amount convertible note dated July 28, 2015 to Accredited Investor #2 with an outstanding balance of $475,000 at June 30, 2016 was funded by tranches of $65,000 in July and August 2015, $60,000 in September 2015, $50,000 in October and November 2015, $55,000 in December 2015, $25,000 in January 2016, $55,000 in February 2016, and $50,000 in March 2016. The note is convertible into Company common stock at the lesser of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The "Variable Conversion Price" shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). "Market Price" means the average of the three (3) lowest trade prices on three (3) separate trading days of Common Stock recorded after the original Effective Date of the note. "Fixed Conversion Price" shall mean $0.003. The note also includes conversion price reset features that are triggered when the Company issues certain new equity instruments; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the note initially was nine months from the date of funding, with the maturity date subsequently extended to April 28, 2017.

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The $500,000 principal amount convertible note dated April 7, 2016 to Accredited Investor #2 with an outstanding balance of $197,000 at June 30, 2016 was funded by tranches of $60,000 in April 2016, $45,000 in May 2016, and $55,000, $27,000 and $10,000 in June 2016. The note is convertible into Company common stock at the lesser of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The "Variable Conversion Price" shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). "Market Price" means the average of the three (3) lowest trade prices on three (3) separate trading days of Common Stock recorded after the original Effective Date of the note. "Fixed Conversion Price" shall mean $0.003. The note also includes conversion price reset features that are triggered when the Company issues certain new equity instruments; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the note is one year from the date of funding.

The January 2014 derivative was valued as of January 6, 2014 at $44,493, of which all was recorded as a debt discount. The debt discount was fully amortized to interest expense at June 30, 2016. The January 2014 note had accrued interest of $6,250 and $5,814 as of June 30, 2016 and December 31, 2015, respectively.

The February 2014 derivative was valued as of February 18, 2014 at $44,556, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at June 30, 2016. The February 2014 note had accrued interest of $11,815 and $9,329 as of June 30, 2016 and December 31, 2015, respectively.

The March 2014 derivative was valued as of March 26, 2014 at $77,884, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at June 30, 2016. The March 2014 note had accrued interest of $11,322 and $8,836 as of June 30, 2016 and December 31, 2015, respectively.

The April 2014 derivative was valued as of April 25, 2014 at $90,605, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at June 30, 2016. The April 2014 note had accrued interest of $10,911 and $8,425 as of June 30, 2016 and December 31, 2015, respectively.

The May 2014 derivative was valued as of May 21, 2014 at $95,029, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at June 30, 2016. The May 2014 note had accrued interest of $10,555 and $8,068 as of June 30, 2016 and December 31, 2015, respectively.

The June 2014 derivative was valued as of June 25, 2014 at $83,184, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at June 30, 2016. The June 2014 note had accrued interest of $9,661 and $7,575 as of June 30, 2016 and December 31, 2015, respectively.

The July 2014 derivative was valued as of July 15, 2014 at $73,999, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at June 30, 2016. The July 2014 note had accrued interest of $9,788 and $7,301 as of June 30, 2016 and December 31, 2015, respectively.

The August 2014 derivative was valued as of August 19, 2014 at $64,104, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at June 30, 2016. The August 2014 note had accrued interest of $9,322 and $6,836 as of June 30, 2016 and December 31, 2015, respectively.

The September 2014 derivative was valued as of September 17, 2014 at $62,915, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at June 30, 2016. The September 2014 note had accrued interest of $8,925 and $6,438 as of June 30, 2016 and December 31, 2015, respectively.

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The October 2014 derivative was valued as of October 13, 2014 at $63,347, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at June 30, 2016. The October 2014 note had accrued interest of $8,555 and $6,069 as of June 30, 2016 and December 31, 2015, respectively.

The November 2014 derivative was valued as of November 7, 2014 at $99,757, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at June 30, 2016. The November 2014 note had accrued interest of $16,616 and $11,644 as of June 30, 2016 and December 31, 2015, respectively.

The December 2014 derivative was valued as of December 17, 2014 at $58,456, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at June 30, 2016. The December 2014 note had accrued interest of $7,664 and $5,178 as of June 30, 2016 and December 31, 2015, respectively.

The January 2015 derivative was valued as of January 14, 2015 at $29,360, which was recorded as a debt discount. During the six months ended June 30, 2016, $1,126 was amortized from the debt discount. The debt discount was fully amortized to interest expense at June 30, 2016. The January 2015 note had accrued interest of $10,231 and $6,751 as of June 30, 2016 and December 31, 2015, respectively.

The first February 2015 derivative was valued as of February 10, 2015 at $23,984, which was recorded as a debt discount. During the six months ended June 30, 2016, $2,694 was amortized from the debt discount. The debt discount was fully amortized to interest expense at June 30, 2016. The first February 2015 note had accrued interest of $4,163 and $2,671 as of June 30, 2016 and December 31, 2015, respectively.

The second February 2015 derivative was valued as of February 11, 2015 at $18,003, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at June 30, 2016. The second February 2015 note had accrued interest of $4,157 and $2,663 as of June 30, 2016 and December 31, 2015, respectively.

The third February 2015 derivative was valued as of February 25, 2015 at $19,494, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at June 30, 2016. The third February 2015 note had accrued interest of $8,079 and $5,096 as of June 30, 2016 and December 31, 2015, respectively.

The March 2015 derivative was valued as of March 10, 2015 at $31,885, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at June 30, 2016. The March 2015 note had accrued interest of $14,420 and $8,951 as of June 30, 2016 and December 31, 2015, respectively.

The April 2015 derivative was valued as of April 17, 2015 at $31,397, which was recorded as a debt discount. During the six months ended June 30, 2016, $1,941 was amortized from the debt discount. The debt discount was fully amortized to interest expense at June 30, 2016. The April 2015 note had accrued interest of $10,620 and $6,244 as of June 30, 2016 and December 31, 2015, respectively.

The May 2015 derivative was valued as of May 22, 2015 at $36,550, which was recorded as a debt discount. During the six months ended June 30, 2016, $7,019 was amortized from the debt discount. The debt discount was fully amortized to interest expense at June 30, 2016. The May 2015 note had accrued interest of $9,999 and $5,523 as of June 30, 2016 and December 31, 2015, respectively.

The June 2015 derivative was valued as of June 23, 2015 at $41,878, which was recorded as a debt discount. During the six months ended June 30, 2016, $12,686 was amortized from the debt discount. The debt discount was fully amortized to interest expense at June 30, 2016. The June 2015 note had accrued interest of $9,209 and $4,734 as of June 30, 2016 and December 31, 2015, respectively.

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The July 2015 derivative was valued as of July 28, 2015 at $38,600, which was recorded as a debt discount. During the six months ended June 30, 2016, $16,703 was amortized from the debt discount. The debt discount was fully amortized to interest expense at June 30, 2016. The July 2015 note had accrued interest of $6,028 and $2,796 as of June 30, 2016 and December 31, 2015, respectively.

The August 2015 derivative was valued as of August 21, 2015 at $37,269, which was recorded as a debt discount. During the six months ended June 30, 2016, $19,315 was amortized from the debt discount. The debt discount was fully amortized to interest expense at June 30, 2016. The August 2015 note had accrued interest of $5,601 and $2,369 as of June 30, 2016 and December 31, 2015, respectively.

The September 2015 derivative was valued as of September 24, 2015 at $37,820, which was recorded as a debt discount. During the six months ended June 30, 2016, $24,293 was amortized from the debt discount. The debt discount was fully amortized to interest expense at June 30, 2016. The September 2015 note had accrued interest of $4,995 and $1,763 as of June 30, 2016 and December 31, 2015, respectively.

The October 2015 derivative was valued as of October 23, 2015 at $35,290, which was recorded as a debt discount. During the six months ended June 30, 2016, $23,441 was amortized from the debt discount. The debt discount had a balance at June 30, 2016 of $2,962. The October 2015 note had accrued interest of $3,445 and $959 as of June 30, 2016 and December 31, 2015, respectively.

The November 2015 derivative was valued as of November 30, 2015 at $36,448, which was recorded as a debt discount. During the six months ended June 30, 2016, $24,845 was amortized from the debt discount. The debt discount had a balance at June 30, 2016 of $7,371. The November 2015 note had accrued interest of $2,925 and $438 as of June 30, 2016 and December 31, 2015, respectively.

The December 2015 derivative was valued as of December 21, 2015 at $37,163, which was recorded as a debt discount. During the six months ended June 30, 2016, $24,595 was amortized from the debt discount. The debt discount had a balance at June 30, 2016 of $11,217. The December 2015 note had accrued interest of $2,901 and $166 as of June 30, 2016 and December 31, 2015, respectively.

The January 2016 derivative was valued as of January 22, 2016 at $30,855, of which $25,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the six months ended June 30, 2016, $14,599 was amortized from the debt discount. The debt discount had a balance at June 30, 2016 of $10,401. The January 2016 note had accrued interest of $1,100 as of June 30, 2016.

The February 2016 derivative was valued as of February 8, 2016 at $37,835, which was recorded as a debt discount. During the six months ended June 30, 2016, $19,746 was amortized from the debt discount. The debt discount had a balance at June 30, 2016 of $18,089. The February 2016 note had accrued interest of $2,149 as of June 30, 2016.

The March 2016 derivative was valued as of March 7, 2016 at $37,402, which was recorded as a debt discount. During the six months ended June 30, 2016, $15,641 was amortized from the debt discount. The debt discount had a balance at June 30, 2016 of $21,761. The March 2016 note had accrued interest of $1,571 as of June 30, 2016.

The April 2016 derivative was valued as of April 7, 2016 at $53,978, which was recorded as a debt discount. During the six months ended June 30, 2016, $12,422 was amortized from the debt discount. The debt discount had a balance at June 30, 2016 of $41,556. The April 2016 note had accrued interest of $1,377 as of June 30, 2016.

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The May 2016 derivative was valued as of May 10, 2016 at $47,249, of which $45,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the six months ended June 30, 2016, $6,288 was amortized from the debt discount. The debt discount had a balance at June 30, 2016 of $38,712. The May 2016 note had accrued interest of $639 as of June 30, 2016.

The first June 2016 derivative was valued as of June 6, 2016 at $48,678, which was recorded as a debt discount. During the six months ended June 30, 2016, $3,201 was amortized from the debt discount. The debt discount had a balance at June 30, 2016 of $45,477. The first June 2016 note had accrued interest of $376 as of June 30, 2016.

The second June 2016 derivative was valued as of June 9, 2016 at $35,935, of which $27,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the six months ended June 30, 2016, $1,553 was amortized from the debt discount. The debt discount had a balance at June 30, 2016 of $25,447. The second June 2016 note had accrued interest of $155 as of June 30, 2016.

The third June 2016 derivative was valued as of June 30, 2016 at $14,630, which was recorded as a debt discount. The debt discount had a balance at June 30, 2016 of $3.

Total accrued interest payable for the non-related party convertible notes was $262,917 and $154,925 as of June 30, 2016 and December 31, 2015, respectively.

The Company recorded total interest expense, including debt discount and beneficial conversion feature amortization, for all debt of $227,372 and $226,697 for the three months ended June 30, 2016 and 2015, and $442,046 and $444,445, respectively.

NOTE 5 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company adopted FASB ASC 820 on October 1, 2008. Under this FASB, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

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

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

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

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

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

The following tables provide a summary of the fair values of liabilities measured on a non-recurring basis as of June 30, 2016 and December 31, 2015:

June 30, 2016

Total

Level 1

Level 2

Level 3

Losses (Gains)

Derivative liabilities

$ 941,152

$ -

$ -

$ 941,152

$ (194,276 )

December 31, 2015

Total

Level 1

Level 2

Level 3

Losses (Gains)

Derivative liabilities

$ 841,677

$ -

$ -

$ 841,677

$ (106,543 )

NOTE 6 – DERIVATIVE FINANCIAL INSTRUMENTS

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

The fair values of the Company's derivative liabilities are estimated at the issuance date and are revalued at each subsequent reporting date using a multinomial lattice model simulation discussed below. At June 30, 2016 and December 31, 2015, the Company recorded current derivative liabilities of $941,152 and $841,677, respectively. The net change in fair value of the derivative liabilities resulted in a gain of $139,297 and $194,276 for the three months and six months ended June 30, 2016, respectively, and a loss of $211,769 and $220,522 for the three months and six months ended June 30, 2015, which are reported as other income (expense) in the statements of operations.

The following table presents details of the Company's derivative liabilities for the six months ended June 30, 2016:

Balance, December 31, 2015

$ 841,677

Increases in derivative value due to new issuances of notes

306,562

Derivative adjustment due to debt conversion

(12,811 )

Change in fair value of derivative liabilities

(194,276 )

Balance, June 30, 2016

$ 941,152

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

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

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

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

· The probability of future financing was estimated at 100%

· Computed volatility ranging from 265% to 280%

See Note 5 for a discussion of fair value measurements.

NOTE 7 – STOCKHOLDERS' DEFICIT

Stock Issuances

The Company is authorized to issue up to 2,000,000,000 shares of its $0.00001 par value common stock, and up to 10,000,000 shares of its $.001 par value preferred stock.

As of June 30, 2016 and December 31, 2015, the Company had common stock payable of $16,800 resulting from a technology transfer agreement with an unrelated party that obligated the Company to issue a total of 96,000 shares of its common stock, payable in 8 quarterly installments of 12,000 shares.

During the six months ended June 30, 2016, the Company issued a total of 17,151,416 shares of its common stock to an accredited investor in conversion of $6,400 principal and $1,318 accrued interest payable at a conversion price of $0.00045 per share and settled $12,811 of derivative liabilities. As a result of the debt conversion and derivative settlement, common stock was increased by $172 and additional paid-in capital was increased by $20,357.

2006 Stock Option Plan

The 2006 Stock Option Plan was adopted by our Board of Directors in March of 2006. A total of 550,000 shares of Common Stock have been reserved for issuance to employees, consultants and directors upon exercise of incentive and non-statutory options and stock purchase rights which may be granted under the Company's 2006 Stock Plan (the "2006 Plan"). On October 15, 2009, 235,000 of those options were exercised, leaving 315,000 shares available for issuance to employees. Because of the 5.31-for-one forward stock split of the Company's common stock on October 15, 2009, there are now 1,512,650 shares available for issuance as a part of this stock plan. As of June 30, 2016, there were 560,000 options outstanding to purchase shares of Common Stock, and no shares of Common Stock had been issued pursuant to stock purchase rights under the 2006 Plan.

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

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

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

The Company did not grant any stock options or warrants during the six months ended June 30, 2016, and did not record any stock-based compensation expense during the six months ended June 30, 2016 and 2015.

A summary of the status of the options and warrants issued by the Company as of June 30, 2016, and changes during the six months then ended is presented below:

Weighted Average

Shares

Exercise Price

Outstanding, December 31, 2015

560,000

$ 0.10

Granted

-

-

Canceled / Expired

-

-

Exercised

-

-

Outstanding, June 30, 2016

560,000

$ 0.10

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NOTE 8 – LOSS PER COMMON SHARE

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

For the three months and six months ended June 30, 2016 and 2015, the diluted weighted average number of shares is the same as the basic weighted average number of shares as the conversion of debt, options and warrants would be anti-dilutive.

NOTE 9 – RELATED PARTY TRANSACTIONS

The Company had convertible notes payable to related parties totaling $1,447,041 as of June 30, 2016 and December 31, 2015. See Note 4 for a detailed disclosure of this related party debt, including interest rates, terms of conversion and other repayment terms. Accrued interest payable to related parties was $281,417 and $209,461 as of June 30, 2016 and December 31, 2015, respectively.

NOTE 10 – RECENT ACCOUNTING PRONOUNCEMENTS

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)". The amendments in this ASU revise the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018 and are to be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We are currently unable to determine the impact on our financial statements of the adoption of this new accounting pronouncement.

NOTE 11 – SUBSEQUENT EVENTS

Subsequent to June 30, 2016, the Company issued a total of 92,429,791 shares of common stock in the conversion of convertible notes payable principal totaling $12,660 and accrued interest payable totaling $3,206.

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

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

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

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

Summary Overview

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

During our most recent fiscal quarter ended June 30, 2016, we generated revenues of $25,048 from the sales our games or in-app purchases in our games compared to $7,623 for the quarter ended June 30, 2015. For the six months ended June 30, 2016, we generated revenues of $46,825 compared to $15,526 for the six months ended June 30, 2015. Going forward, with our shift to free-to-play games, we anticipate the vast majority of our revenue in future years will be derived from consumers making in-game purchases in one of our free-to-play games and that revenue from consumers paying to download a game will be minimal.

Our business strategy is now focused on free-to-play games that require constant updates and new content to keep players engaged. During the quarter, we launched several updates to our most popular title, Kitty Pawp: Bubble Shooter, including additional content (levels and world). We now have Kitty Pawp available across a broad spectrum of devices and platforms, including iOS phones and tablets, Android phones and tablets, and Facebook on all popular browsers. We continued to work on new content during Q2 and will be updating Kitty Pawp with new content to keep long term players engaged on a consistent basis going forward.

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Our publishing partner launched Black Forest™: Hidden Objects Fairy Tale Mystery to the Android platform during Q2 2016. The new version of Black Forest will be playable across Android smartphones and tablets. As of the end of Q2, we had not received any revenue from this new publishing arrangement, but we anticipate we will receive some revenue in Q3.

In addition to Kitty Pawp: Bubble Shooter and Black Forest: Hidden Objects Fairy Tale Mystery, we began researching additional genres and styles of games to add to our portfolio. While we made no decisions on these new efforts during Q2, we will be making announcements during Q3 about our future intentions in adding to our product offerings.

We remain intent on growing the company through acquisition, and during the quarter we continued to have discussions with prospective acquisition targets and consultants who may lead us to prospective targets. We feel that the time is right to build an alliance of companies in the digital entertainment business who can become stronger and more successful by working together to build a company that can leverage market intelligence, development expertise and cross-promotional opportunities to achieve great results for our customers and shareholders.

During the three months and six months ended June 30, 2016, we reported a net loss of $292,876 and $643,438, respectively, primarily attributable to continued high levels of interest expense, as discussed below.

Going Concern Uncertainty

As shown in the accompanying financial statements, we incurred net losses of $643,438 and $1,175,750 for the six-month periods ended June 30, 2016 and 2015, respectively. As of June 30, 2016, the Company's accumulated deficit was $9,627,948. During the six months ended June 30, 2016 and the year ended December 3l, 2015, the Company experienced negative cash flows from operations largely due to its continued investment spending for product development of game titles for smartphones and tablets that are expected to benefit future periods. Those facts, along with our lack of access to a significant bank credit facility, create an uncertainty about the Company's ability to continue as a going concern. Accordingly, the Company is currently evaluating its alternatives to secure financing sufficient to support the operating requirements of its current business plan, as well as continuing to execute its business strategy of distributing game titles to digital distribution outlets, including mobile gaming app stores, online PC and Mac gaming portals, and opportunities for new devices such as tablet (mobile internet device) applications, mobile gaming platforms and international licensing opportunities.

Our ability to continue as a going concern is dependent upon our success in securing sufficient financing and in successfully executing its plans to return to positive cash flows during fiscal 2016. Our financial statements do not include any adjustments that might be necessary if it were unable to continue as a going concern.

Results of Operations

Revenues

Our revenues increased $17,425 to $25,048 for the three months ended June 30, 2016 from $7,623 for the three months ended June 30, 2015, and increased $31,299 to $46,825 for the six months ended June 30, 2016 from $15,526 mainly due to increased in-game purchases from the players of our Kitty Pawp title. Our revenues increased due to positive results of our focused efforts on building games in the free-to-play game genre. Previously, the majority of our released game titles were "pay-per-download", where the consumer paid to download the game onto their device, leading to revenue per download. Now our games are free to download and play, but have built-in features that require the consumer to pay if they want to access the feature, which means our revenue is tied to when the consumer pays to access the features, if they do. Our revenue can typically fluctuate based on when we release our games and the popularity of the games we release.

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Operating Costs and Expenses

Our cost of sales decreased $24,874 to $89,171 for the three months ended June 30, 2016 from $114,045 for the three months ended June 30, 2015, and decreased $94,371 to $146,998 from $241,369 for the six months ended June 30, 2016 due to fewer new titles that we have in development. Our cost of sales includes royalties, subcontractors and internal costs of programming, analytics, and design .

Our selling, general and administrative expenses were relatively constant compared to the prior year periods. Our selling, general and administrative expenses increased $6,176 to $140,037 for the three months ended June 30, 2016 from $133,861 for the three months ended June 30, 2015, and increased $8,589 to $293,129 for the six months ended June 30, 2016 from $284,540 for the six months ended June 30, 2015.

Other Income (Expense)

Our interest expense also remained relatively constant compared to the prior year periods. Our interest expense increased $675 to $227,372 for the three months ended June 30, 2016 from $226,697 for the three months ended June 30, 2015, and decreased $2,399 to $442,046 for the six months ended June 30, 2016 from $444,445 for the six months ended June 30, 2015. During the six months ended June 30, 2016, we continued to increase our convertible debt and the related debt discount that is amortized to interest expense. However, the increased interest expense attributable to the new debt was offset by decreased interest expense attributable to prior years' debt resulting from debt discount being fully amortized in prior periods.

Our estimate of the fair value of the derivative liability for the conversion feature of our convertible notes payable is based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, and variable conversion prices based on market prices as defined in the respective loan agreements. These inputs are subject to significant changes from period to period; therefore, the estimated fair value of the derivative liability will fluctuate from period to period and the fluctuation may be material. We reported a gain on change in derivative liabilities of $139,297 for the three months ended June 30, 2016 and a loss on change in derivative liabilities of $211,769 for the three months ended June 30, 2015. We reported a gain on change in derivative liabilities of $194,276 for the six months ended June 30, 2016 and a loss on change in derivative liabilities of $220,522 for the six months ended June 30, 2015.

Net Loss

As a result of the above, our net loss decreased to $292,876 for the three months ended June 30, 2016 from $678,749 for the three months ended June 30, 2015, and decreased to $643,438 for the six months ended June 30, 2016 from $1,175,750 for the six months ended June 30, 2015.

Liquidity and Capital Resources

Introduction

As of June 30, 2016, we had current assets of $29,336 and current liabilities of $5,470,113, resulting in a working capital deficit and a total stockholders' deficit of $5,440,777.

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During the six months ended June 30, 2016, because of our operating losses, we did not generate positive operating cash flows. Our cash balance as of June 30, 2016 was $21,156, and our monthly operating cash flow burn rate is approximately $68,000. As a result, we have significant short-term cash needs. These needs are currently being satisfied primarily from the proceeds from short-term convertible debt. We intend to raise additional capital through the issuance of debt from third parties and other related parties until such time as our cash flows from operations will satisfy our cash flow needs. There can be no assurance that we will be successful in these efforts.

Sources and Uses of Cash

We used net cash of $405,992 in operating activities for the six months ended June 30, 2016 as a result of our net loss of $643,438, non-cash gain of $194,276, and decreases in accounts payable of $4,956 and unearned royalties of $3,495, partially offset by non-cash expense of $253,777, decreases in accounts receivable, net of $779 and prepaid expenses and other current assets of $794, and increases in accrued expenses of $3,557, accrued interest payable – related party of $71,956 and accrued interest payable of $109,310.

By comparison, we used net cash of $498,401 in operating activities for the six months ended June 30, 2015 as a result of our net loss of $1,175,750 and decreases in accounts payable of $587 and unearned royalties of $3,820, partially offset by non-cash expenses totaling $539,890, decreases in accounts receivable, net of $8,547 and prepaid and other assets of $3,397, and increases in accrued expenses of $5,728, accrued interest payable – related party of $73,960 and accrued interest payable of $50,234.

We had no net cash provided by or used in investing activities for the six months ended June 30, 2016 and 2015.

We had net cash provided by financing activities of $385,096 for the six months ended June 30, 2016, comprised of proceeds from notes payable of $58,096 and proceeds from convertible notes payable of $327,000. Net cash provided by financing activities was $548,000 for the six months ended June 30, 2015, comprised of proceeds from convertible notes payable.

Notes Payable

On February 1, 2016, we entered into a Game Marketing Agreement with an investor whereby the investor agreed, at its option, to loan us up to $250,000 (the "Marketing Fund") to exclusively fund user acquisition efforts for the game Kitty Pawp (the "Game"). The investor will receive 50% of Net Receipts (as defined in the agreement) from the Game until the Marketing Fund is fully recouped. Once the Marketing Fund is recouped, the investor will receive 50% of Net Receipts from the Game until the investor receives a 50% return on the Marketing Funds advanced.

We recorded Marketing Fund advances as notes payable in the accompanying condensed balance sheets. Upon receiving a Marketing Fund advance, we accrue the 50% return as interest expense and includes the obligation in accrued interest payable in the accompanying condensed balance sheets. As of June 30, 2016, total advances recorded as notes payable were $58,096 and accrued interest payable included a total of $22,046 of the 50% guaranteed return, net of repayments.

Debt Instruments, Guarantees, and Related Covenants

We have no disclosures required by this item.

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Critical Accounting Policies

The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs, expenses and related disclosures. These estimates and assumptions are often based on historical experience and judgments that we believe to be reasonable under the circumstances at the time made. However, all such estimates and assumptions are inherently uncertain and unpredictable and actual results may differ. For further information on our significant accounting policies see the notes to our condensed financial statements included in this filing and Note 2 to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015. There have been no changes to our significant accounting policies since December 31, 2015.

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, 2016, 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.

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PART II – OTHER INFORMATION

ITEM 1 Legal Proceedings

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

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

ITEM 1A Risk Factors

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

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended June 30, 2016, we had the following unregistered sales of equity securities:

On April 5, 2016, we issued 5,235,921 shares of our common stock to a non-affiliate holder of one of our outstanding convertible promissory notes pursuant to a notice of conversion submitted to us from the holder notifying us of their election to convert $2,356 of principal and interest due under the promissory note into the shares. Due to the length of time since the holder lent us the funds and that the holder has held the note, the shares were issued without a standard Rule 144 restrictive legend. Based on the representations of the investor in the Convertible Promissory Note and the Notice of Conversion, the issuance of the shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933. The investor was accredited and sophisticated, familiar with our operations, and there was no solicitation.

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On April 7, 2016, we entered into a Convertible Promissory Note (the "Note") with an accredited investor (the "Accredited Investor") under which the Accredited Investor agreed to loan us up to Five Hundred Thousand Dollars ($500,000). The Note bears interest at Ten Percent (10%) per annum and matures on April 7, 2017. Under the terms of the Note, the Accredited Investor agreed to loan us Sixty Thousand Dollars ($60,000) upon execution of the Note and can loan us the additional amounts up to Five Hundred Thousand Dollars ($500,000) at any time in their sole discretion. The Accredited Investor has the right, at any time after April 7, 2016, at its election, to convert all or part of the amounts due to it under the Note into shares of our common stock. The conversion price shall be the lesser of (a) $0.003 per share of our common stock or (b) Fifty Percent (50%) of the average of the three (3) lowest trade prices on three (3) separate trading days of our common stock recorded after April 7, 2016, or (c) the lowest effective price per share granted to any person or entity after April 7, 2016 to acquire our common stock or adjust, whether by operation of purchase price adjustment, settlement agreements, exchange agreements, reset provision, floating conversion or otherwise, any outstanding warrant, option or other right to acquire our common stock or outstanding our common stock equivalents, excluding any lower price per share offered to any of our officers and directors. However, the Accredited Investor may not convert the amounts due under the Note into shares of our common stock if such conversion would cause it to own more than 4.99% of our then-outstanding common stock. The Note also contains piggyback registration rights. In the event we default under the terms of the Note, we owe 150% of the principal amount then due under the Note immediately.

As an example, if the Accredited Investor loans us the entire Five Hundred Thousand ($500,000), the principal due under the Note would convert into 666,666,667 shares of our common stock calculated from our closing stock price on February 11, 2015 of $0.0015 per share. The number of shares of our common stock we may have to issue under the Note depends on a variety of factors, including, but not limited to, our stock price, the amount loaned to us under the Note, and the interest we owe on the outstanding principal. However, due to the limiter contained in the Note, the Accredited Investor cannot convert into more than 4.99% of our then-outstanding common stock.

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

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

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ITEM 6 Exhibits

3.1 (1)

Articles of Incorporation of Freeze Tag, Inc.

3.2 (1)

Articles of Amendment to Articles of Incorporation

3.3 (1)

Bylaws of Freeze Tag, Inc.

3.4 (10)

Articles of Amendment to Certificate of Incorporation February 4, 2014

3.5 (14)

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

4.1 (1)

Freeze Tag, Inc. 2006 Stock Plan

10.1 (1)

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

10.2 (1)

Support Services Agreement with Cardiff Partners, LLC dated October 12, 2009

10.3 (1)

Amendment No. 1 to Support Services Agreement with Cardiff Partners, LLC dated March 2, 2010

10.4 (1)

Amendment No. 2 to Support Services Agreement with Cardiff Partners, LLC dated March 3, 2010

10.5 (1)

Form of Conversion Agreement for October 2009 Conversions

10.6 (1)

Form of Option Conversion Agreement for October 2009 Conversions

10.7 (1)

Placement Agent and Advisory Services Agreement with Monarch Bay Associates, LLC dated October 12, 2009

10.8 (1)

Corporate Communications Consulting Agreement Michael Southworth dated September 25, 2009

10.9 (1)

Lock-Up Agreement dated November 10, 2009

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10.10 (2)		Loan Agreement with Sunwest Bank dated October 20, 2006, as amended

10.11 (3)		Securities Purchase Agreement with Asher Enterprises, Inc. dated July 21, 2011

10.12 (3)		Convertible Promissory Note with Asher Enterprises, Inc. dated July 21, 2011

10.13 (4)		Technology Transfer Agreement dated June 22, 2011

10.14 (5)

Securities Purchase Agreement with Asher Enterprises, Inc. dated September 16, 2011

10.15 (5)

Convertible Promissory Note with Asher Enterprises, Inc. dated September 16, 2011

10.16 (6)

Securities Purchase Agreement with Asher Enterprises, Inc. dated December 6, 2011

10.16 (6)

Convertible Promissory Note with Asher Enterprises, Inc. dated December 6, 2011

10.17 (7)

Letter Agreement with Crucible Capital, Inc. dated February 29, 2012

10.18 (8)

Amendment No. 1 to Securities Purchase Agreement with Asher Enterprises, Inc. dated July 21, 2011

10.19 (8)

Amendment No. 1 to Securities Purchase Agreement with Asher Enterprises, Inc. dated September 16, 2011

10.20 (8)

Amendment No. 1 to Securities Purchase Agreement with Asher Enterprises, Inc. dated December 6, 2011

10.21 (8)

Amendment No. 1 to Promissory Note with The Lebrecht Group, APLC dated November 17, 2011

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

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

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

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

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

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

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

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

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

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

10.32 (12)		Convertible Promissory Note with an accredited investor dated February 11, 2015

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

10.34 (13)		Convertible Promissory Note with an accredited investor dated July 28, 2015

10.35 (13)		Amendment to Convertible Promissory Note dated December 31, 2013 – Craig Holland

10.36 (13)		Amendment to Convertible Promissory Note dated December 31, 2013 – Mick Donahoo

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10.37 (13)		Amendment to Convertible Promissory Note with an accredited investor dated December 30, 2013

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

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.

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.

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(1) Incorporated by reference from our Registration Statement on Form S-1, filed with the Commission on August 16, 2010.

(2) Incorporated by reference from Amendment No. 2 to our Registration Statement on Form S-1/A2, filed with the Commission on October 25, 2010.

(3) Incorporated by reference from Current Report on Form 8-K filed with the Commission on August 3, 2011.

(4) Incorporated by reference from Quarterly Report on Form 10-Q for the period ended June 30, 2011 filed with the Commission on August 15, 2011.

(5) Incorporated by reference from Current Report on Form 8-K filed with the Commission on September 21, 2011.

(6) Incorporated by reference from Current Report on Form 8-K filed with the Commission on December 23, 2011.

(7) Incorporated by reference from Current Report on Form 8-K filed with the Commission on March 8, 2012.

(8) Incorporated by reference from Annual Report on Form 10-K filed with the Commission on March 30, 2012.

(9) Incorporated by reference from Current Report on Form 8-K filed with the Commission on October 4, 2013.

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

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

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

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

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

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 15, 2016
By:
/s/ Craig Holland

Name:

Craig Holland

Its:

President and Chief Executive Officer

EXHIBIT 10.28

CONVERTIBLE PROMISSORY NOTE

$500,000

FOR VALUE RECEIVED, Freeze Tag, Inc. , a Delaware corporation, (the "Borrower") with approximately 99,938,817 shares of common stock issued and outstanding, promises to pay to Accredited Investor , or its assignees (the "Lender") the Principal Sum along with the Interest and any other fees according to the terms herein (this "Note"). This Note shall become effective on June 25, 2014 (the "Effective Date").

The Principal Sum is Five Hundred Thousand Dollars ( $500,000 ) plus accrued and unpaid interest. The Consideration is Five Hundred Thousand Dollars ( $500,000 ) payable by wire . The Lender shall pay Fifty Thousand Dollars ( $50,000) of the Consideration upon execution of this Note (the "Initial Consideration"). The Lender may pay additional Consideration to the Borrower in such amounts as the Lender may choose in its sole discretion (the "Additional Consideration"). The Principal Sum due to the Lender, and as referenced hereinafter, shall be the Initial Consideration plus any Additional Consideration actually paid by the Lender such that the Borrower is only required to repay the amount funded and the Borrower is not required to repay any unfunded portion of this Note, nor shall any interest or other rights or remedies granted herein extend to any unfunded portion of this Note.

1. Maturity Date . The Maturity Date is twelve ( 12 ) months from the Effective Date of each payment of Consideration (the "Maturity Date") and is the date upon which the Principal Sum of this Note and unpaid interest and fees (the "Note Amount") shall be due and payable.

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

3. Conversion . The Lender has the right, at any time after the Effective Date, at its election, to convert all or part of the Note Amount into shares of fully paid and non-assessable shares of common stock of the Borrower (the "Common Stock"). The conversion price (the "Conversion Price") shall be the lesser of (a) $0.01 per share of Common Stock or (b) Fifty Percent ( 50% ) of the average of the three ( 3 ) lowest trade prices of three (3) separate trading days of Common Stock recorded during the twenty five ( 25 ) previous trading days prior to conversion, or (c) the lowest effective price per share granted to any person or entity after the Effective Date to acquire Common Stock, with the exception of the price per share offered to officers and directors of the Borrower, or adjust, whether by operation of purchase price adjustment, settlement agreements, exchange agreements, reset provision, floating conversion or otherwise, any outstanding warrant, option or other right to acquire Common Stock or outstanding Common Stock equivalents (the "Conversion Price"). The Conversion Price shall, in no event, be less than $0.00005. The conversion formula shall be as follows: Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price. A conversion notice (the "Conversion Notice") may be delivered to Borrower by method of Lender's choice (including but not limited to email, facsimile, mail, overnight courier, or personal delivery), and all conversions shall be cashless and not require further payment from the Lender. If no objection is delivered from the Borrower to the Lender, with respect to any variable or calculation reflected in the Conversion Notice within 24 hours of delivery of the Conversion Notice, the Borrower shall have been thereafter deemed to have irrevocably confirmed and irrevocably ratified such notice of conversion and waived any objection thereto. The Borrower shall deliver the shares of Common Stock from any conversion to the Lender (in any name directed by the Lender) within five (5) business days of Conversion Notice delivery. The Lender shall pay the transfer agent fees for the issuance of share certificates. After receiving the Initial Consideration, the Borrower agrees to begin a good faith effort to apply for participation in the Depository Trust Company ("DTC") Fast Automated Securities Transfer ("FAST") program. Subject to FAST approval by the DTC, and upon request of the Lender and provided that the shares to be issued are eligible for transfer under Rule 144 of the Securities Act of 1933, as amended (the "Securities Act"), or are effectively registered under the Securities Act, the Borrower shall cause its transfer agent to electronically issue the Common Stock issuable upon conversion to the Lender through the DTC Direct Registration System ("DRS"). The Conversion Price shall be subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower's securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events.

4. Conversion Delays . If Borrower fails to deliver shares in accordance with the timeframe stated in Section 3 , the Lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part, of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the Principal Sum with the rescinded conversion shares returned to the Borrower (under the Lender's and the Borrower's expectations that any returned conversion amounts shall tack back to the original date of this Note). In addition, for each conversion, in the event that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until share delivery is made; and such penalty shall be added to the Principal Sum of this Note (under the Lender's and the Borrower's expectations that any penalty amounts shall tack back to the original date of this Note consistent with applicable securities laws). If the Borrower is unable to deliver shares under this provision, due to an insufficient number of authorized and unissued shares available, the Lender agrees not to force the Borrower to issue the shares or trigger an Event of Default, provided that the Borrower takes immediate steps necessary to obtain the appropriate approval from shareholders and/or the board of directors, where applicable, to increase the number of authorized shares to satisfy the Conversion Notice.

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

6. Payment . The Borrower may not prepay this Note prior to the Maturity Date. Within six (6) days prior to the Maturity Date, Borrower shall provide Lender with a written notice to pay the Note Amount on the Maturity Date. Within three (3) days of receiving written notice, the Lender shall elect to either (a) accept payment of the Note Amount or (b) convert any part of the Note Amount into shares of Common Stock. If the Lender elects to convert part of the Note Amount into shares of Common Stock, then the Borrower shall pay the remaining balance of the Note Amount by the Maturity Date.

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

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

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

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

11. Remedies . In the event of any default, the Note Amount shall become immediately due and payable at the Mandatory Default Amount. The Mandatory Default Amount shall be 110% of the Note Amount. Commencing five (5) days after the occurrence of any event of default that results in the eventual acceleration of this Note, the interest rate on the Mandatory Default Amount shall accrue at a default interest rate equal to the lesser of ten percent (10%) per annum or the maximum rate permitted under applicable law. In connection with such acceleration described herein, the Lender need not provide, and the Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and the Lender may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. While the Mandatory Default Amount is outstanding and default interest is accruing, the Lender shall have all rights as a holder of this Note until such time as the Lender receives full payment pursuant to this paragraph, or has converted all the remaining Mandatory Default Amount and any other outstanding fees and interest into Common Stock under the terms of this Note. In the event of any default and at the request of the Lender, the Borrower shall file a registration statement with the SEC to register all shares of Common Stock issuable upon conversion of this Note that are otherwise not eligible to have their restrictive transfer legend removed under Rule 144 of the Securities Act. Nothing herein shall limit Lender's right to pursue any other remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Borrower's failure to timely deliver certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.

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

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

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

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

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

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

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

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

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

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

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

Freeze Tag, Inc. (the "Borrower")

By: /s/ Craig Holland

Craig Holland

Chief Executive Officer

Accredited Investor (the "Lender")

By:

Accredited Investor Name

Accredited Investor Title

EXHIBIT 10.38

CONVERTIBLE PROMISSORY NOTE

$500,000

FOR VALUE RECEIVED, Freeze Tag, Inc. , a Delaware corporation, (the "Borrower") with approximately 292,357,620 shares of common stock issued and outstanding, promises to pay to Accredited Investor , or its assignees (the "Lender") the Principal Sum along with the Interest and any other fees according to the terms herein (this "Note"). This Note shall become effective on April 7, 2016 (the "Effective Date").

The Principal Sum is Five Hundred Thousand Dollars ( $500,000 ) plus accrued and unpaid interest. The total Consideration is Five Hundred Thousand Dollars ( $500,000 ) payable by wire . The Lender shall pay Sixty Thousand Dollars ( $60,000) of the Consideration upon execution of this Note (the "Initial Consideration"). The Lender may pay additional Consideration to the Borrower in such amounts as the Lender may choose in its sole discretion (the "Additional Consideration"). The Principal Sum due to the Lender, and as referenced hereinafter, shall be the Initial Consideration plus any Additional Consideration actually paid by the Lender such that the Borrower is only required to repay the amount funded and the Borrower is not required to repay any unfunded portion of this Note, nor shall any interest or other rights or remedies granted herein extend to any unfunded portion of this Note.

1. Maturity Date . The Maturity Date is twelve ( 12 ) months from the Effective Date (the "Maturity Date") and is the date upon which the Principal Sum of this Note and unpaid interest and fees (the "Note Amount") shall be due and payable. Within thirty (30) days prior to the Maturity Date, the Lender may provide the Borrower with a written notice to extend the Maturity Date and the Note Amount shall then be payable upon demand, but in no event later than sixty (60) months from the Effective Date (the "Extended Maturity Date"). The Lender shall provide the Borrower with ten (10) days written notice to make a demand for payment (the "Demand Payment Date"), and the Demand Payment Date shall be considered to be the Extended Maturity Date.

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

3. Conversion . The Lender has the right, at any time after the Effective Date, at its election, to convert all or part of the Note Amount into shares of fully paid and non-assessable shares of common stock of the Borrower (the "Common Stock"). The conversion price (the "Conversion Price") shall be the lesser of (a) $0.003 per share of Common Stock or (b) Fifty Percent ( 50% ) of the average of the three ( 3 ) lowest trade prices on three ( 3 ) separate trading days of Common Stock recorded after the original Effective Date of this Note, April 7, 2016 , or (c) the lowest effective price per share granted to any person or entity after the Effective Date to acquire Common Stock or adjust, whether by operation of purchase price adjustment, settlement agreements, exchange agreements, reset provision, floating conversion or otherwise, any outstanding warrant, option or other right to acquire Common Stock or outstanding Common Stock equivalents; however, this Section 3(c) shall exclude any lower price per share offered to officers and directors of the Borrower (the "Conversion Price"). The conversion formula shall be as follows: Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price. A conversion notice (the "Conversion Notice") may be delivered to Borrower by method of Lender's choice (including but not limited to email, facsimile, mail, overnight courier, or personal delivery), and all conversions shall be cashless and not require further payment from the Lender. If no objection is delivered from the Borrower to the Lender, with respect to any variable or calculation reflected in the Conversion Notice within 24 hours of delivery of the Conversion Notice, the Borrower shall have been thereafter deemed to have irrevocably confirmed and irrevocably ratified such notice of conversion and waived any objection thereto. The Borrower shall deliver the shares of Common Stock from any conversion to the Lender within three (3) business days of Conversion Notice delivery. The Lender shall pay the transfer agent fees for the issuance of share certificates. If the Borrower is participating in the Depository Trust Company ("DTC") Fast Automated Securities Transfer ("FAST") program, then upon request of the Lender and provided that the shares to be issued are eligible for transfer under Rule 144 of the Securities Act of 1933, as amended (the "Securities Act"), or are effectively registered under the Securities Act, the Borrower shall cause its transfer agent to electronically issue the Common Stock issuable upon conversion to the Lender through the DTC Direct Registration System ("DRS"). If the Borrower is not participating in the DTC FAST program, then after receiving the Initial Consideration, the Borrower agrees to begin a good faith effort to apply and cause the approval for participation in the DTC FAST program. The Conversion Price shall be subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower's securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events.

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

6. Payment . The Borrower may not prepay this Note prior to the Maturity Date or the Extended Maturity Date, if extended by the Lender. Within six (6) days prior to the Maturity Date or Extended Maturity Date, the Borrower shall provide the Lender with a written notice to pay the Note Amount on the Maturity Date or Extended Maturity Date. Within three (3) days of receiving written notice, the Lender shall elect to either (a) accept payment of the Note Amount or (b) convert any part of the Note Amount into shares of Common Stock. If the Lender elects to convert part of the Note Amount into shares of Common Stock, then the Borrower shall pay the remaining balance of the Note Amount by the Maturity Date or Extended Maturity Date.

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

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

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

11. Remedies . In the event of any default, the funded portion of the Note Amount shall become immediately due and payable at the Mandatory Default Amount. The Mandatory Default Amount shall be 150% of the funded portion of the Note Amount. Commencing five (5) days after the occurrence of any event of default that results in the eventual acceleration of this Note, the interest rate on the Mandatory Default Amount shall accrue at a default interest rate equal to the lesser of ten percent (10%) per annum or the maximum rate permitted under applicable law. In connection with such acceleration described herein, the Lender need not provide, and the Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and the Lender may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. While the Mandatory Default Amount is outstanding and default interest is accruing, the Lender shall have all rights as a holder of this Note until such time as the Lender receives full payment pursuant to this paragraph, or has converted all the remaining Mandatory Default Amount and any other outstanding fees and interest into Common Stock under the terms of this Note. In the event of any default and at the request of the Lender, the Borrower shall file a registration statement with the SEC to register all shares of Common Stock issuable upon conversion of this Note that are otherwise eligible to have their restrictive transfer legend removed under Rule 144 of the Securities Act. Nothing herein shall limit Lender's right to pursue any other remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Borrower's failure to timely deliver certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof. The Borrower may only pay the full balance of the Mandatory Default Amount, and may not make partial payments unless agreed upon by the Lender. If the Borrower desires to pay the Mandatory Default Amount, then the Borrower shall provide the Lender with six (6) days prior written notice of payment. Within three (3) days of receiving written notice, the Lender shall elect to either (a) accept payment, or (b) convert any part of the payment into shares of Common Stock. If the Lender elects to convert part of the payment into shares of Common Stock, then the Borrower shall pay the remaining balance of the Mandatory Default Amount.

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

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

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

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

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 15, 2016

By:

/s/ Craig Holland

Craig Holland

Chief Executive Officer

EXHIBIT 31.2

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

I, Mick Donahoo, certify that:

Dated: August 15, 2016

By:

/s/ Mick Donahoo

Mick Donahoo

Chief Financial Officer

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, 2016, 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 15, 2016

By:

/s/ Craig Holland

Craig Holland

Chief Executive Officer

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

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, 2016, 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:

Dated: August 15, 2016

By:

/s/ Mick Donahoo

Mick Donahoo

Chief Financial Officer

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)

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if a smaller reporting company)


PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28

	June 30, 2016			December 31, 2015
	(Unaudited)
ASSETS

Current assets:
Cash	$	21,156		$	42,052
Accounts receivable, net of allowance of $5,600		3,725			4,504
Prepaid expenses and other current assets		4,455			5,249
Total current assets		29,336			51,805

Total assets	$	29,336		$	51,805

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Accounts payable	$	119,207		$	124,163
Accrued expenses		495,569			492,012
Accrued interest payable – related party		281,417			209,461
Accrued interest payable		262,917			154,925
Unearned royalties		191,538			195,033
Notes payable		58,096			-
Convertible notes payable – related party		1,447,041			1,447,041
Convertible notes payable, net of discount of $232,993 and $21,646, respectively		1,673,176			718,923
Derivative liabilities		941,152			841,677
Total current liabilities		5,470,113			4,183,235

Long-term liabilities:
Convertible notes payable, net of discount of $0 and $158,562, respectively		-			686,438

Total liabilities		5,470,113			4,869,673

Commitments and contingencies

Stockholders' deficit:
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock; $0.00001 par value, 2,000,000,000 shares authorized, 297,593,541 and 280,442,125 shares issued and outstanding, respectively		2,976			2,804
Additional paid-in capital		4,167,395			4,147,038
Common stock payable		16,800			16,800
Accumulated deficit		(9,627,948	)		(8,984,510	)
Total stockholders' deficit		(5,440,777	)		(4,817,868	)

Total liabilities and stockholders' deficit	$	29,336		$	51,805

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015

Revenues	$	25,048		$	7,623		$	46,825		$	15,526

Operating costs and expenses:
Cost of sales		89,171			114,045			146,998			241,369
Selling, general and administrative expenses		140,037			133,861			293,129			284,540

Total operating costs and expenses		229,208			247,906			440,127			525,909

Loss from operations		(204,160	)		(240,283	)		(393,302	)		(510,383	)

Other income (expense):
Interest expense, net		(227,372	)		(226,697	)		(442,046	)		(444,445	)
Gain (loss) on change in derivative liabilities		139,297			(211,769	)		194,276			(220,522	)

Total other income (expense)		(88,075	)		(438,466	)		(247,770	)		(664,967	)

Loss before income taxes		(292,235	)		(678,749	)		(641,072	)		(1,175,350	)
Provision for income taxes		641			-			2,366			400

Net loss	$	(292,876	)	$	(678,749	)	$	(643,438	)	$	(1,175,750	)

Weighted average number of common shares outstanding – basic and diluted		297,305,853			229,781,350			291,099,961			210,761,012

Loss per common share – basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)

	June 30, 2016		December 31, 2015

Accrued vacation	$	68,728	$	64,461
Accrued royalties		408,576		408,134
Technology payable		18,000		18,000
Other		265		1,417
	$	495,569	$	492,012

	June 30, 2016		December 31, 2015

Convertible note payable to the Holland Family Trust, maturing on September 30, 2016, with interest at 10%	$	222,572	$	222,572
Convertible note payable to Craig Holland, maturing on September 30, 2016, with interest at 10%		813,602		813,602
Convertible note payable to Craig Holland, maturing on December 31, 2016, with interest at 10%		186,450		186,450
Convertible note payable to Mick Donahoo, maturing on December 31, 2016, with interest at 10%		186,450		186,450
Convertible note payable to Craig Holland, maturing on December 31, 2016, with interest at 10%		6,925		6,925
Convertible note payable to Mick Donahoo, maturing on December 31, 2016, with interest at 10%		31,042		31,042
Total	$	1,447,041	$	1,447,041

	June 30, 2016			December 31, 2015

Convertible note payable to Robert Cowdell, maturing on December 31, 2016, with interest at 10%	$	61,443		$	61,443
Tranche #2 from 12/20/2013 $500,000 convertible note payable to an accredited investor, maturing on September 30, 2016, with interest at 10%		26,726			31,126
Tranche #3 from 12/20/2013 $500,000 convertible note payable to an accredited investor, maturing on September 30, 2016, with interest at 10%		50,000			50,000
Tranche #4 from 12/20/2013 $500,000 convertible note payable to an accredited investor, maturing on September 30, 2016, with interest at 10%		50,000			50,000
Tranche #5 from 12/20/2013 $500,000 convertible note payable to an accredited investor, maturing on September 30, 2016, with interest at 10%		50,000			50,000
Tranche #6 from 12/20/2013 $500,000 convertible note payable to an accredited investor, maturing on September 30, 2016, with interest at 10%		50,000			50,000
Tranche #1 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		48,000			50,000
Tranche #2 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000			50,000
Tranche #3 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000			50,000
Tranche #4 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000			50,000
Tranche #5 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000			50,000
Tranche #6 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		100,000			100,000
Tranche #7 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000			50,000
Tranche #8 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		70,000			70,000
Tranche #9 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		30,000			30,000
Tranche #1 from 2/11/15 $500,000 convertible note payable to an accredited investor, maturing on November 11, 2016, with interest at 10%		30,000			30,000
Tranche #2 from 2/11/15 $500,000 convertible note payable to an accredited investor, maturing on November 11, 2016, with interest at 10%		40,000			40,000
Tranche #3 from 2/11/15 $500,000 convertible note payable to an accredited investor, maturing on November 11, 2016, with interest at 10%		110,000			110,000
Tranche #4 from 2/11/15 $500,000 convertible note payable to an accredited investor, maturing on November 11, 2016, with interest at 10%		88,000			88,000
Tranche #5 from 2/11/15 $500,000 convertible note payable to an accredited investor, maturing on November 11, 2016, with interest at 10%		90,000			90,000
Tranche #6 from 2/11/15 $500,000 convertible note payable to an accredited investor, maturing on November 11, 2016, with interest at 10%		90,000			90,000
Tranche #1 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%		65,000			65,000
Tranche #2 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%		65,000			65,000
Tranche #3 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%		60,000			60,000
Tranche #4 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%		50,000			50,000
Tranche #5 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%		50,000			50,000
Tranche #6 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%		55,000			55,000
Tranche #7 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%		25,000			-
Tranche #8 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%		55,000			-
Tranche #9 from 7/28/15 $500,000 convertible note payable to an accredited investor, maturing on April 28, 2017, with interest at 10%		50,000			-
Tranche #1 from 4/7/16 $500,000 convertible note payable to an accredited investor, maturing on April 7, 2017, with interest at 10%		60,000			-
Tranche #2 from 4/7/16 $500,000 convertible note payable to an accredited investor, maturing on April 7, 2017, with interest at 10%		45,000			-
Tranche #3 from 4/7/16 $500,000 convertible note payable to an accredited investor, maturing on April 7, 2017, with interest at 10%		55,000			-
Tranche #4 from 4/7/16 $500,000 convertible note payable to an accredited investor, maturing on April 7, 2017, with interest at 10%		27,000			-
Tranche #5 from 4/7/16 $500,000 convertible note payable to an accredited investor, maturing on April 7, 2017, with interest at 10%		10,000			-
Total		1,906,169			1,585,569
Less discount		(232,993	)		(180,208	)
Net		1,673,176			1,405,361
Less current portion		1,673,176			718,923
Long-term portion	$	-		$	686,438

June 30, 2016	Total		Level 1		Level 2		Level 3		Losses (Gains)

Derivative liabilities	$	941,152	$	-	$	-	$	941,152	$	(194,276	)

December 31, 2015	Total		Level 1		Level 2		Level 3		Losses (Gains)

Derivative liabilities	$	841,677	$	-	$	-	$	841,677	$	(106,543	)

Balance, December 31, 2015	$	841,677
Increases in derivative value due to new issuances of notes		306,562
Derivative adjustment due to debt conversion		(12,811	)
Change in fair value of derivative liabilities		(194,276	)
Balance, June 30, 2016	$	941,152

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

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

	·	The probability of future financing was estimated at 100%

	·	Computed volatility ranging from 265% to 280%

			Weighted Average
	Shares		Exercise Price

Outstanding, December 31, 2015		560,000	$	0.10

Granted		-		-
Canceled / Expired		-		-
Exercised		-		-

Outstanding, June 30, 2016		560,000	$	0.10

3.1 (1)		Articles of Incorporation of Freeze Tag, Inc.

3.2 (1)		Articles of Amendment to Articles of Incorporation

3.3 (1)		Bylaws of Freeze Tag, Inc.

3.4 (10)		Articles of Amendment to Certificate of Incorporation February 4, 2014

3.5 (14)		Articles of Amendment to Certificate of Incorporation filed on February 18, 2016

4.1 (1)		Freeze Tag, Inc. 2006 Stock Plan

10.1 (1)		10% Convertible Promissory Note dated July 1, 2010 with The Holland Family Trust

10.2 (1)		Support Services Agreement with Cardiff Partners, LLC dated October 12, 2009

10.3 (1)		Amendment No. 1 to Support Services Agreement with Cardiff Partners, LLC dated March 2, 2010

10.4 (1)		Amendment No. 2 to Support Services Agreement with Cardiff Partners, LLC dated March 3, 2010

10.5 (1)		Form of Conversion Agreement for October 2009 Conversions

10.6 (1)		Form of Option Conversion Agreement for October 2009 Conversions

10.7 (1)		Placement Agent and Advisory Services Agreement with Monarch Bay Associates, LLC dated October 12, 2009

10.8 (1)		Corporate Communications Consulting Agreement Michael Southworth dated September 25, 2009

10.9 (1)		Lock-Up Agreement dated November 10, 2009

10.14 (5)		Securities Purchase Agreement with Asher Enterprises, Inc. dated September 16, 2011

10.15 (5)		Convertible Promissory Note with Asher Enterprises, Inc. dated September 16, 2011

10.16 (6)		Securities Purchase Agreement with Asher Enterprises, Inc. dated December 6, 2011

10.16 (6)		Convertible Promissory Note with Asher Enterprises, Inc. dated December 6, 2011

10.17 (7)		Letter Agreement with Crucible Capital, Inc. dated February 29, 2012

10.18 (8)		Amendment No. 1 to Securities Purchase Agreement with Asher Enterprises, Inc. dated July 21, 2011

10.19 (8)		Amendment No. 1 to Securities Purchase Agreement with Asher Enterprises, Inc. dated September 16, 2011

10.20 (8)		Amendment No. 1 to Securities Purchase Agreement with Asher Enterprises, Inc. dated December 6, 2011

10.21 (8)		Amendment No. 1 to Promissory Note with The Lebrecht Group, APLC dated November 17, 2011

32.1*		Section 1350 Certification of Chief Executive Officer

32.2*		Section 1350 Certification of Chief Financial Officer.

101.INS**		XBRL Instance Document

101.SCH**		XBRL Taxonomy Extension Schema Document

101.CAL**		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**		XBRL Taxonomy Extension Label Linkbase Document

101.PRE**		XBRL Taxonomy Extension Presentation Linkbase Document

(1)	Incorporated by reference from our Registration Statement on Form S-1, filed with the Commission on August 16, 2010.

(2)	Incorporated by reference from Amendment No. 2 to our Registration Statement on Form S-1/A2, filed with the Commission on October 25, 2010.

(3)	Incorporated by reference from Current Report on Form 8-K filed with the Commission on August 3, 2011.

(4)	Incorporated by reference from Quarterly Report on Form 10-Q for the period ended June 30, 2011 filed with the Commission on August 15, 2011.

(5)	Incorporated by reference from Current Report on Form 8-K filed with the Commission on September 21, 2011.

(6)	Incorporated by reference from Current Report on Form 8-K filed with the Commission on December 23, 2011.

(7)	Incorporated by reference from Current Report on Form 8-K filed with the Commission on March 8, 2012.

(8)	Incorporated by reference from Annual Report on Form 10-K filed with the Commission on March 30, 2012.

(9)	Incorporated by reference from Current Report on Form 8-K filed with the Commission on October 4, 2013.

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

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

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

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

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

	Freeze Tag, Inc.

Dated: August 15, 2016	By:	/s/ Craig Holland
	Name:	Craig Holland
	Its:	President and Chief Executive Officer

Freeze Tag, Inc. (the "Borrower")

By:	/s/ Craig Holland
	Craig Holland
	Chief Executive Officer

Accredited Investor (the "Lender")

By:
	Accredited Investor Name
	Accredited Investor Title

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

	(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 15, 2016	By:	/s/ Mick Donahoo
		Mick Donahoo
		Chief Financial Officer

	(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.