10-K: Freeze Tag, Inc. Reports Losses in 2024, Exploring Strategic Alternatives

Freeze Tag, Inc. reports a net loss of $492,605 for 2024 and is exploring strategic options due to increased costs of being a public company.

Summary

• Freeze Tag, Inc. reported a net loss of $492,605 for the year ended December 31, 2024, compared to a net loss of $205,198 in 2023.
• The company's revenue decreased to $1,976,989 in 2024 from $2,115,547 in 2023.
• Cost of sales increased to $605,716 in 2024 from $428,656 in 2023, due to capitalized software amortization and impairment of capitalized software costs.
• Selling, general, and administrative expenses decreased slightly to $1,814,854 in 2024 from $1,844,861 in 2023.
• As of December 31, 2024, the company had a working capital deficit of $876,001 and a total stockholders' deficit of $686,853.
• The company's management is exploring strategic options, including taking out loans, selling stock, acquiring a synergistic business, or selling the current business.
• Space Coast Geo Store, LLC, a wholly-owned subsidiary, began shutting down in October 2024 and is expected to be completely shut down by April 30, 2025.
• The company's independent auditor has expressed doubt about its ability to continue as a going concern.
• The company is focusing on its free-to-play business model and developing mobile social games.
• The company is working to improve its cybersecurity approach.

Sentiment

Score: 3

Explanation: The document presents a negative outlook due to the company's increased losses, declining revenue, auditor concerns, and exploration of strategic alternatives. While there are some positive developments, the overall tone is concerning from an investment perspective.

Positives

• The company continues to develop its Munzee product offering, adding new features and improving the user experience.
• The Eventzee platform is expanding its customer base, adding high-profile clients.
• The company has improved its Munzee backend technology, leading to a more flexible development cycle.
• The company is focused on managing cash flow and reducing costs.
• The company is exploring potential acquisitions to grow the business.

Negatives

• The company experienced a net loss of $492,605 in 2024.
• Revenue decreased from $2,115,547 in 2023 to $1,976,989 in 2024.
• The company has a working capital deficit of $876,001 and a total stockholders' deficit of $686,853 as of December 31, 2024.
• The company's auditor has raised concerns about its ability to continue as a going concern.
• Space Coast Geo Store, LLC is being shut down.
• The company's disclosure controls and procedures were not effective as of the end of the period ended December 31, 2024.
• The company did not maintain effective internal control over financial reporting as of December 31, 2024.

Risks

• The company may never generate substantial revenue or become profitable.
• The company may be required to reduce or curtail operations if it is unable to meet its future capital needs.
• The company faces intense competition in the mobile gaming market.
• The company may be unable to attract and retain key personnel.
• The company's business may be negatively impacted by a slowing economy.
• The company may not be able to effectively manage its growth and operations.
• The company may be unable to adequately protect its proprietary rights.
• The company's planned venture into augmented reality and geolocation games could subject it to greater liability risks.
• The company's financing decisions may be made without stockholder approval.
• The company's independent registered public accounting firm has expressed doubts about its ability to continue as a going concern.

Future Outlook

The company will continue to look for acquisition candidates and propose transactions in cases where it makes sense for both parties and will enhance the value of the company; the company is exploring options related to its business, including taking out loans, selling stock, acquiring a synergistic business, or selling the current business.

Management Comments

• Due to the significant increase in costs related to being a public company, our management has been exploring options related to our business.
• Management believes that by continuing cost reductions and realizing cost efficiencies, operating cash flows will be sufficient to support our business plan.
• We will also continue to update and launch new components of our games to maximize revenues.

Industry Context

The company operates in the competitive mobile gaming market, facing competition from companies like Niantic and Geocaching. The company is focused on the free-to-play business model, which has been successful for other mobile game developers.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• However, the document mentions Niantic (makers of Pokemon Go) and Geocaching as competitors.
• These companies are significantly larger and have greater financial resources than Freeze Tag, Inc.

Related Party Transactions

• The company had notes payable to Craig Holland, its Chief Executive Officer, and Mick Donahoo, its Chief Financial Officer, totaling $379,825 as of December 31, 2024.
• These notes are non-interest bearing and mature on December 31, 2024.
• The company has imputed interest on these notes payable using an annual rate of 10%.

Stakeholder Impact

• Shareholders may be concerned about the company's financial performance and ability to continue as a going concern.
• Employees may be affected by potential cost reductions or strategic changes.
• Customers may be impacted by changes in the company's product offerings or services.
• Creditors may be concerned about the company's ability to repay its debts.

Next Steps

• Continue development of Munzee and Eventzee platforms.
• Explore potential acquisitions.
• Implement cost reductions and improve cash management.
• Evaluate alternative financing sources.

Key Dates

Keywords

Munzee, Eventzee, mobile games, free-to-play, location-based games, financial results, Freeze Tag, acquisition, loss, revenue