10-Q: Freeze Tag, Inc. Reports Q1 2025 Results, Revenue Declines and Going Concern Uncertainty Highlighted

Freeze Tag, Inc. reports a net loss for Q1 2025 with declining revenues and expresses substantial doubt about its ability to continue as a going concern.

Summary

• Freeze Tag, Inc. reported a net loss of $116,426 for the three months ended March 31, 2025, compared to a net loss of $218,098 for the same period in 2024.
• Revenues decreased to $395,039 from $468,946 year-over-year, primarily due to reduced demand for some product types.
• The company's operating costs and expenses totaled $500,421, a decrease from $676,078 in the prior year.
• As of March 31, 2025, Freeze Tag had a working capital deficit of $960,045 and a total stockholders deficit of $793,913.
• The company's management expresses substantial doubt about its ability to continue as a going concern, citing historical losses and increased costs related to being a public company.
• Management is exploring options including cost reductions, revenue increases from updated product lines, and alternative financing sources.
• The company closed down the business operations of Space Coast Geo Store, LLC as of April 30, 2025.
• As of May 15, 2025, there were 75,056,123 shares of common stock issued and outstanding.

Sentiment

Score: 3

Explanation: The sentiment is negative due to declining revenues, a significant working capital deficit, and management's doubt about the company's ability to continue as a going concern.

Positives

• The net loss decreased from $218,098 in Q1 2024 to $116,426 in Q1 2025.
• Selling, general and administrative expenses decreased by $169,770 year-over-year.
• Cost of sales decreased $5,887 to $100,378 for the three months ended March 31, 2025 from $106,265 for the three months ended March 31, 2024.

Negatives

• Revenues decreased by $73,907 year-over-year.
• The company has a significant working capital deficit of $960,045.
• Management expresses substantial doubt about the company's ability to continue as a going concern.
• The company is exploring options related to our business including selling our current business and trying to find another business, either within or outside of our current segment, to take over the public corporation.

Risks

• The company's ability to continue as a going concern is uncertain.
• Decreased revenues may impact the company's ability to fund operations.
• The company's high level of debt could limit its financial flexibility.
• Failure to successfully implement cost reductions or increase revenue could negatively impact the company's financial position.
• The company's disclosure controls and procedures were not 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 SECs 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.

Future Outlook

Management believes that by continuing to implement cost reductions, and by increasing revenue from updated product lines, operating cash flows will be sufficient to support the Company's business plan; however, management is currently evaluating alternative financing sources to fund the Company's current business plan should cash provided by operations be insufficient.

Management Comments

• Management believes that by continuing to implement cost reductions, and by increasing revenue from updated product lines, operating cash flows will be sufficient to support the Company's business plan.
• Management is currently evaluating alternative financing sources to fund the Company's current business plan should cash provided by operations be insufficient.
• Due to the significant increase in costs related to being a public company, as well as our historical losses, our management has been exploring options related to our business.
• These options include, but are not limited to, selling our current business and trying to find another business, either within or outside of our current segment, to take over the public corporation.

Industry Context

The company operates in the competitive mobile gaming market, where success depends on creating engaging content and effectively monetizing users; the company is also exploring options related to our business including selling our current business and trying to find another business, either within or outside of our current segment, to take over the public corporation.

Comparison to Industry Standards

• It is difficult to compare Freeze Tag directly to industry standards due to its unique business model and small size.
• Larger mobile gaming companies like Activision Blizzard and Electronic Arts have significantly higher revenues and resources.
• Smaller companies often struggle to compete with the marketing budgets and established user bases of larger players.
• Freeze Tag's focus on location-based games differentiates it from many competitors, but also limits its potential market size.

Related Party Transactions

• As of March 31, 2025, the company had notes payable totaling $379,825 to Craig Holland, its Chief Executive Officer, and Mick Donahoo, its Chief Financial Officer.
• These notes are non-interest bearing and mature on December 31, 2025.
• Messrs. Holland and Donahoo have the right, at any time, at their election, to convert all or part of the amount due into shares of fully paid and non-assessable shares of common stock of the Company at a fixed conversion price of $0.02 per share.
• The Company has imputed interest expense on the notes payable related party using an annual rate of 10%.

Stakeholder Impact

• Shareholders may be concerned about the company's ability to continue as a going concern.
• Employees may be affected by potential cost reductions or changes in business strategy.
• Customers may be impacted by changes in product offerings or service levels.
• Creditors face increased risk due to the company's financial difficulties.

Next Steps

• Continue to implement cost reductions.
• Increase revenue from updated product lines.
• Evaluate alternative financing sources.
• Explore options related to our business including selling our current business and trying to find another business, either within or outside of our current segment, to take over the public corporation.

Key Dates

Keywords

Freeze Tag, financial results, going concern, mobile games, location-based games, revenue, net loss, working capital, Munzee, Eventzee