Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 30, 2020 | Jun. 30, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | Freeze Tag, Inc. | ||
Entity Central Index Key | 0001485074 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 | ||
Entity Common Stock Shares Outstanding | 75,056,123 | ||
Entity Public Float | $ 886,287 | ||
EntityFileNumber | 000-54267 | ||
EntityAddressAddressLine1 | 18062 Irvine Blvd. | ||
EntityAddressAddressLine2 | Suite 103 | ||
EntityAddressPostalZipCode | 92780 | ||
EntityTaxIdentificationNumber | 204532392 | ||
EntityAddressCityOrTown | Tustin | ||
LocalPhoneNumber | 210-3850 | ||
CityAreaCode | 714 | ||
EntityAddressStateOrProvince | CALIFORNIA |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 254,776 | $ 309,216 |
Accounts receivable | 9,772 | 5,079 |
Prepaid expenses and other current assets | 17,628 | 27,001 |
Total current assets | 282,176 | 341,296 |
Property and equipment, net | 9,563 | 13,051 |
Intangible assets, net | 249,680 | 341,160 |
Other assets | 64,612 | 2,850 |
Total assets | 606,031 | 698,357 |
Current liabilities: | ||
Accounts payable | 162,476 | 176,020 |
Accrued expenses | 458,025 | 452,655 |
Unearned royalties | 7,543 | 127,182 |
Notes payable-related party | 379,825 | |
Other current liabilities | 49,715 | |
Total current liabilities | 677,759 | 1,135,682 |
Notes payable - related party | 379,825 | |
Other long-term liabilities | 32,417 | |
Total liabilities | 1,090,001 | 1,135,682 |
Commitments and contingencies | ||
Stockholders' deficit: | ||
Preferred stock value | ||
Common stock; $0.00001 par value, 800,000,000 shares authorized, 75,056,123 shares issued and outstanding at December 31, 2019 and 2018 | 751 | 751 |
Additional paid-in capital | 9,093,439 | 8,997,457 |
Common stock payable | 16,800 | 16,800 |
Accumulated deficit | (9,595,029) | (9,452,402) |
Total stockholders' deficit | (483,970) | (437,325) |
Total liabilities and stockholders' deficit | 606,031 | 698,357 |
Series C Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Preferred stock value | 44 | 44 |
Series B Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Preferred stock value | $ 25 | $ 25 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Stockholders' deficit | ||
Common stock, shares par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 800,000,000 | 800,000,000 |
Common stock, shares issued | 75,056,123 | 75,056,123 |
Common stock, shares outstanding | 75,056,123 | 75,056,123 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares par value | $ 0.00001 | $ 0.00001 |
Series C Preferred Stock [Member] | ||
Stockholders' deficit | ||
Preferred stock, shares issued | 4,355,000 | 4,355,000 |
Preferred stock, shares outstanding | 4,355,000 | 4,355,000 |
Series B Preferred Stock [Member] | ||
Stockholders' deficit | ||
Preferred stock, shares issued | 2,480,482 | 2,480,482 |
Preferred stock, shares outstanding | 2,480,482 | 2,480,482 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
STATEMENTS OF OPERATIONS | ||
Revenues | $ 2,083,461 | $ 2,113,147 |
Operating costs and expenses: | ||
Cost of sales | 286,985 | 282,633 |
Selling, general and administrative expenses | 1,898,987 | 1,825,829 |
Total operating costs and expenses | 2,185,972 | 2,108,462 |
Income (loss) from operations | (102,511) | 4,685 |
Other income (expense): | ||
Interest expense | (40,465) | (57,295) |
Other income | 1,149 | |
Total other income (expense) | (39,316) | (57,295) |
Loss before income taxes | (141,827) | (52,610) |
Provision for income taxes | 800 | (7,552) |
Net loss | $ (142,627) | $ (60,162) |
Weighted average number of common shares outstanding - basic and diluted | 75,056,123 | 73,052,150 |
Net loss per common share - basic and diluted | $ 0 | $ 0 |
CONDENSED STATEMENTS OF STOCKHO
CONDENSED STATEMENTS OF STOCKHOLDERS DEFICIT - USD ($) | Total | Series C Preferred Stock [Member] | Series B Preferred Stock [Member] | Series A Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Common Stock payable [Member] | Common Stock Subscription Receivables [Member] | Retained Earnings (Deficit) [Member] |
Balance, shares at Dec. 31, 2017 | 4,355,000 | 2,585,882 | 69,786,123 | ||||||
Balance, amount at Dec. 31, 2017 | $ (459,692) | $ 44 | $ 26 | $ 698 | $ 8,919,980 | $ 16,800 | $ (5,000) | $ (9,392,240) | |
Stock-based compensation | 23,000 | 23,000 | |||||||
Issuance of common stock for conversion of Series B preferred Stock, shares | (105,400) | 5,270,000 | |||||||
Collection of stock subscription Receivables | 5,000 | 5,000 | |||||||
Imputed interest on related party | 54,529 | 54,529 | |||||||
Net Income (Loss) | (60,162) | $ (60,162) | |||||||
Issuance of common stock for conversion of Series B preferred Stock, amount | $ (1) | $ 53 | $ (52) | ||||||
Balance, shares at Dec. 31, 2018 | 4,355,000 | 2,480,482 | 75,056,123 | ||||||
Balance, amount at Dec. 31, 2018 | $ (437,325) | $ 44 | $ 25 | $ 751 | $ 8,997,457 | $ 16,800 | $ (9,452,402) | ||
Stock-based compensation | 57,999 | 57,999 | |||||||
Issuance of common stock for conversion of Series B preferred Stock, shares | |||||||||
Imputed interest on related party | 37,983 | $ 37,983 | |||||||
Net Income (Loss) | $ (142,627) | $ (142,627) | |||||||
Balance, shares at Dec. 31, 2019 | 4,355,000 | 2,480,482 | 75,056,123 | ||||||
Balance, amount at Dec. 31, 2019 | $ (483,970) | $ 44 | $ 25 | $ 751 | $ 9,093,439 | $ 16,800 | $ (9,595,029) |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities | ||
Net loss | $ (142,627) | $ (60,162) |
Adjustments to reconcile net loss to net cash provided (used) by operating activities: | ||
Depreciation and amortization expense | 94,968 | 94,811 |
Imputed interest on related party debt | 37,983 | 54,529 |
Stock-based compensation | 57,999 | 23,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (4,693) | 2,316 |
Prepaid expenses and other current assets | 9,373 | 12,356 |
Other assets | 12,150 | |
Accounts payable | (13,544) | 20,526 |
Accrued expenses | 25,740 | (19,155) |
Unearned royalties | (119,639) | (5) |
Net cash provided (used) by operating activities | (54,440) | 140,366 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (3,642) | |
Net cash provided (used) by investing activities | (3,642) | |
Cash flows from financing activities: | ||
Proceeds from stock subscription receivable | 5,000 | |
Net cash provided (used) by financing activities | 5,000 | |
Net increase (decrease) in cash | (54,440) | 141,724 |
Cash at the end of the year | 254,776 | 309,216 |
Supplemental disclosure: | ||
Cash paid for income taxes | 800 | |
Cash paid for interest | 2,766 | |
Non-cash investing and financing transactions: | ||
Issuance of common stock in conversion of Series B preferred stock | 53 | |
Right-of-use asset obtained in exchange for lease obligations | $ 88,325 |
THE COMPANY AND NATURE OF BUSIN
THE COMPANY AND NATURE OF BUSINESS | 12 Months Ended |
Dec. 31, 2019 | |
THE COMPANY AND NATURE OF BUSINESS | |
NOTE 1 - THE COMPANY AND NATURE OF BUSINESS | Nature of Operations Freeze Tag, Inc. (“Freeze Tag” or the “Company”) is a leading creator of mobile location-based games for consumers and businesses. We also offer our gaming technology and services to businesses that want to leverage mobile gaming in their marketing and branding programs. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Revenue Recognition The Company’s revenues are derived primarily by licensing software products in the form of mobile games for smartphone and tablet platforms. On January 1, 2018, we adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition (Topic 605). Results for reporting periods beginning after January 1, 2018 are presented under Topic 606. The impact of adopting the new revenue standard was not material to our financial statements and there was no adjustment to beginning retained earnings on January 1, 2018. Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We determine revenue recognition through the following steps: • identification of the contract, or contracts, with a customer; • identification of the performance obligations in the contract; • determination of the transaction price; • allocation of the transaction price to the performance obligations in the contract; and • recognition of revenue when, or as, we satisfy a performance obligation. Cash and Cash Equivalents For purposes of the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be cash equivalents. The Company places its cash and cash equivalents with large commercial banks. The Federal Deposit Insurance Corporation (“FDIC”) insures these balances, up to $250,000. At December 31, 2019 and 2018 there were no cash equivalents. Allowances for Sales Returns and Doubtful Accounts The allowance for sales returns is based on the Company’s estimates of potential future product returns and other allowances related to current period product revenue. The Company analyzes historical returns, current economic trends and changes in customer demand and acceptance of the Company's products. The allowance for doubtful accounts is based on the Company’s assessment of the collectability of customer accounts and the aging of the related invoices, and represents the Company's best estimate of probable credit losses in its existing trade accounts receivable. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. We determined that no allowances for sales returns and doubtful accounts were required at December 31, 2019 and 2018. Property and Equipment Property and equipment is stated at cost and is depreciated or amortized using the straight-line method over the estimated useful life of the related asset as follows: Computer equipment 5 years Office furniture and equipment 7 years Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments will be capitalized. At the time of retirement or other disposition of equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations. The Company will assess the recoverability of property and equipment by determining whether the depreciation and amortization of these assets over their remaining life can be recovered through projected undiscounted future cash flows. The amount of equipment impairment, if any, will be measured based on fair value and is charged to operations in the period in which such impairment is determined by management. Intangible Assets Intangible assets consist primarily of intellectual property, customer base and non-compete agreements acquired in the Merger, which are amortized on a straight-line basis over their estimated useful lives of 5 years. Intangible assets are reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations. At December 31, 2019 and 2018, the Company reviewed the intangible assets and determined that no impairment was required. Concentrations of Credit Risk, Major Customers and Major Vendors The Company’s customers are the end-consumers that purchase its games from the websites where the Company has its games listed for sale. Therefore, the Company does not have any individual customers that represent any more than a fraction of its revenue. Income Taxes We account for income taxes using ASC Topic 740, Income Taxes. Under ASC Topic 740, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. ASC Topic 740 includes accounting guidance which clarifies the accounting for the uncertainty in recognizing income taxes in an organization by providing detailed guidance for financial statement recognition, measurement and disclosure involving uncertain tax positions. This guidance requires an uncertain tax position to meet a more-likely-than-not recognition threshold at the effective date to be recognized both upon the adoption of the related guidance and in subsequent periods. The Company has no uncertain tax positions at any of the dates presented. Foreign Currency Translation The Company derives a portion of its revenue from foreign countries, but customers pay in U.S. Dollars. Therefore, no adjustments are required in the accompanying financial statements for foreign currency transactions. Accounting for Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC Topic 718-10, Compensation-Stock Compensation and ASC Subtopic 505-50, Equity-Based Payments to Non-Employees ("ASC stock-based compensation guidance"). Stock-based compensation expense recognized during the requisite services period is based on the value of share-based payment awards after reduction for estimated forfeitures. Forfeitures are estimated at the time of grant and are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company had stock-based compensation expense recognized in its statements of operations of $57,999 and $23,000 for the years ended December 31, 2019 and 2018 respectively. Earnings per Share The computation of basic earnings per common share is based on the weighted average number of shares outstanding during the period. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the weighted average common stock equivalents which would arise from the exercise of stock options, warrants, convertible preferred stock and other rights during the period. For the years ended December 31, 2019 and 2018, the diluted weighted average number of shares is the same as the basic weighted average number of shares as the inclusion of any common stock equivalents would be anti-dilutive. Fair Value of Financial Instruments In accordance with current accounting standards, certain assets and liabilities must be measured at fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. ASC 820 requires that certain assets and liabilities must be measured at fair value, and the standard details the disclosures that are required for items measured at fair value. The Company had no assets and liabilities required to be measured on a recurring basis at December 31, 2019 and 2018. The current assets and current liabilities reported on the Company’s balance sheets are estimated by management to approximate fair market value due to their short-term nature. Use of Estimates The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in its financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates and these differences may be material. Research and Development Costs The Company charges costs related to research and development of products to general and administrative expense as incurred. The types of costs included in research and development expenses include research materials, salaries, contractor fees, and support material. Recent Accounting Pronouncements In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-09, “Compensation-Stock Compensation: Scope of Modification Accounting.” The amendments of ASU No. 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The guidance of ASU No. 2017-09 is effective for years beginning after December 15, 2017, including interim periods within those years. The adoption of this ASU did not have a significant impact on our financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers and has subsequently issued a number of amendments to ASU 2014-09. The new standard, now codified as ASC 606, Revenue from Contracts with Customers, as amended, provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific guidance. The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, ASC 606 includes provisions within a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We adopted the new revenue guidance effective January 1, 2018 using the cumulative effect method, and did not have an adjustment to retained earnings upon adoption. In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842),” which amends existing accounting standards for leases. The ASU requires lessees to recognize most leases on their balance sheet as a lease liability with a corresponding right-of-use asset. Right-of-use assets and lease liabilities are recorded at the present value of minimum lease payments. The Company adopted the ASU effective January 1, 2019. We recognized an $88,325 right-of-use asset and $88,325 related lease liability as of January 1, 2019 for our operating lease. For our operating lease, the asset is included in Other long-term assets on the consolidated balance sheet and is amortized within operating income over the lease term. The long-term component of the lease liability is included in Other long-term liabilities, net, and the current component is included in Other current liabilities. The adoption of ASC 842 did not have a material impact on the Company’s consolidated results of operations, stockholders' deficit or cash flows as of the adoption date. Under the alternative method of adoption, comparative information was not restated, but will continue to be reported under the standards in effect for those periods. See Note 7 for further details regarding Freeze Tag’s leases. Although there were new accounting pronouncements issued or proposed by the FASB during the year ended December 31, 2019 and through the date of filing of this report, the Company does not believe any of these accounting pronouncements, other than the item listed above, has had or will have a material impact on its financial position or results of operations. |
GOING CONCERN
GOING CONCERN | 12 Months Ended |
Dec. 31, 2019 | |
GOING CONCERN | |
NOTE 3 - GOING CONCERN | The accompanying financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. As shown in the accompanying financial statements, the Company incurred a net loss of $142,627 for the year ended December 31, 2019. As of December 31, 2019, the Company had a working capital deficit of $395,583 and a total stockholders’ deficit of $483,970. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. Management believes that by implementing cost reductions and realizing cost efficiencies from the Merger, operating cash flows will be sufficient to support the Company’s business plan. The Company will also continue to increase its user base and refine its existing stable of games to maximize revenues. However, management is currently evaluating alternative financing sources to fund the Company’s current business plan should cash provided by operations be insufficient. The Company’s ability to continue as a going concern is dependent upon successfully executing its plans to attain a successful level of operations. The Company’s financial statements do not include any adjustments that might be necessary if it were unable to continue as a going concern. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT | |
NOTE 4 - PROPERTY AND EQUIPMENT | Property and equipment consisted of the following at December 31: 2019 2018 Computer equipment $ 7,971 $ 7,971 Office furniture and equipment 10,055 10,055 Total 18,026 18,026 Less accumulated depreciation and amortization (8,463 ) (4,975 ) Net $ 9,563 $ 13,051 Depreciation and amortization expense was $3,488 and $3,331 for the years ended December 31, 2019 and 2018, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
INTANGIBLE ASSETS | |
NOTE 5 - INTANGIBLE ASSETS | Intangible assets consisted of the following at December 31: 2019 2018 Intellectual property $ 307,100 $ 307,100 Customer base 142,000 142,000 Non-compete agreements 8,300 8,300 Less accumulated amortization (207,720 ) (116,240 ) Net $ 249,680 $ 341,160 Amortization expense was $91,480 for the years ended December 31, 2019 and 2018. The intangible assets are amortized on a straight-line basis over an estimated useful life of 5 years. Estimated annual aggregate amortization expense for the intangible assets subsequent to 2018 is as follows: 2020 $ 91,480 2021 91,480 2022 66,720 Total $ 249,680 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | |
NOTE 6 - LEASES | Our adoption of ASU 2016-02, Leases (Topic 842), and subsequent ASUs related to Topic 842, requires us to recognize substantially all leases on the balance sheet as an ROU asset and a corresponding lease liability. The new guidance also requires additional disclosures as detailed below. We adopted this standard on the effective date of January 1, 2019 and used this effective date as the date of initial application. Under this application method, we were not required to restate prior period financial information or provide Topic 842 disclosures for prior periods. We elected the ‘package of practical expedients,’ which permitted us to not reassess our prior conclusions related to lease identification, lease classification, and initial direct costs, and we did not elect the use of hindsight. We determine if a contract is a lease at the inception of the arrangement. We review all options to extend, terminate, or purchase the ROU assets, and when reasonably certain to exercise, we include the option in the determination of the lease term and lease liability. We have one operating lease related to our office space in Texas with a remaining lease terms of 3 years. We recognized $34,200 in operating lease costs for the year ended December 31, 2019. Lease ROU assets and liabilities are recognized at commencement date of the lease, based on the present value of lease payments over the lease term. The lease ROU asset also includes any lease payments made and excludes any lease incentives. When readily determinable, we use the implicit rate in determining the present value of lease payments. When leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date, including the lease term. Short-term leases with an initial term of 12 months or less are not recorded on the Balance Sheet. Lease expense for short-term leases is recognized on a straight-line basis over the lease term. As of December 31, 2019, we did not have any short-term leases. The tables below present financial information associated with our lease. This information is only presented as of, and for the year ended, December 31, 2019. As noted above, we adopted Topic 842 using a transition method that does not require application to periods prior to adoption. Balance Sheet Classification December 31,2019 Right-of-use assets Other assets $ 61,762 Current lease liabilities Other current liabilities 29,345 Non-current lease liabilities Other long-term liabilities 32,417 As of December 31, 2019, our maturities of our lease liability is as follows: 2020 $ 34,200 2021 34,200 Total $ 68,400 Less: Imputed interest (6,638 ) Present value of lease liabilities $ 61,762 |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2019 | |
NOTES PAYABLE | |
NOTE 7 - NOTES PAYABLE | Notes payable - related party consisted of Freeze Tag notes payable that were assumed in the Merger and were as follows at December 31: 2019 2018 Note payable to Craig Holland, non-interest bearing,maturing on December 31, 2021 $ 6,925 $ 6,925 Convertible note payable to Craig Holland, non-interestbearing, maturing on December 31, 2021 186,450 186,450 Convertible note payable to Mick Donahoo, non-interestbearing, maturing on December 31, 2021 186,450 186,450 Total $ 379,825 $ 379,825 The notes payable were extended in December 2019. The notes payable – related party were included in long-term liabilities at December 31, 2019 and current liabilities at December 31, 2018. The convertible notes payable to Craig Holland and Mick Donahoo, our Chief Financial Officer, consist of amounts relating to accrued salary. The notes were amended on July 25, 2017 to change the conversion terms of the notes and to make the notes non-interest bearing. The Company has imputed interest on these notes payable using an annual rate of 10%. This imputed interest does not represent on obligation payable in cash, but is recorded as a contribution to capital. Imputed interest expense on related party debt was $37,983 and $54,529 for the years ended December 31, 2019 and 2018, respectively. Messrs. Holland and Donahoo have the right, at any time, at their election, to convert all or part of the amount due into shares of fully paid and non-assessable shares of common stock of the Company. The fixed conversion price is $0.02 per share. |
STOCKHOLDERS' DEFICIT
STOCKHOLDERS' DEFICIT | 12 Months Ended |
Dec. 31, 2019 | |
STOCKHOLDERS' DEFICIT | |
NOTE 8 - STOCKHOLDERS' DEFICIT | Common Stock The Company is authorized to issue up to 800,000,000 shares of its $0.00001 par value common stock and had 75,056,123 common shares issued and outstanding as of December 31, 2019 and 2018. There was no common stock activity during year ended December 31, 2019. During the year ended December 31, 2018, the Company issued a total of 5,270,000 shares of its common stock recorded at par value of $53 to an accredited investor in conversion of a total of 105,400 shares of its Series B preferred stock. As the conversion was within the terms of the preferred stock, no gain or loss was recognized. Also, a stock subscription receivable of $5,000 was collected. As of December 31, 2019 and 2018, the Company had common stock payable of $16,800 resulting from a technology transfer agreement with an unrelated party that obligated the Company to issue a total of 960 shares of its common stock, payable in 8 quarterly installments of 120 shares. Preferred Stock The Company is authorized to issue up to 25,000,000 shares of its $0.00001 par value preferred stock. The shares of preferred stock may be issued from time to time in one or more series. As of December 31, 2019 and 2018, there were 2,480,482 shares of Series B preferred stock issued and outstanding. As of December 31, 2019 and 2018, the Company had 4,355,000 shares of Series C preferred stock issued and outstanding. Series A Preferred Stock The Company’s Series A Preferred Stock has 1,000 shares authorized and the following rights: (i) no dividend rights; (ii) no liquidation preference over the Company’s common stock; (iii) no conversion rights; (iv) the shares are automatically redeemed by the Company in the event: (a) Mr. Holland is no longer an officer, director or consultant with the Company, or (b) the Company’s common stock is listed on a national exchange, if the listing rules require the shares to be eliminated; (v) no call rights by the Company; (vi) non-transferable; and (vii) the aggregate 1,000 shares have votes equal to 51% of the then-outstanding voting rights of the Company (including all common stock and any other series of preferred stock) on any matter properly brought before the Company’s stockholders for a vote. There was no Series A Preferred Stock activity during years ended December 31, 2019 and 2018. Series B Preferred Stock The Company’s Series B preferred stock has 2,700,000 shares authorized and the following rights: (i) dividend rights equal to the Company’s common stock; (ii) no liquidation preference over the Company’s common stock; (iii) each share is convertible into 50 shares of the Company’s common stock; (iv) no redemption rights; (v) no call rights by the Company; and (vi) no voting rights. The holders of the Series B preferred stock cannot convert their shares of Series B preferred stock if such conversion would cause the holder to beneficially own more than 4.99% of our then-outstanding common stock. There was no Series B Preferred Stock activity during year ended December 31, 2019. During the year ended December 31, 2018, the Company issued a total of 5,270,000 shares of its common stock recorded at par value of $53 to an accredited investor in conversion of a total of 105,400 shares of its Series B preferred stock. Series C Preferred Stock The Company’s Series C Preferred Stock has 4,500,000 shares authorized and the following rights: (i) dividend rights equal to the Company’s common stock; (ii) no liquidation preference over the Company’s common stock; (iii) each share is convertible into 50 shares of the Company’s common stock; (iv) no redemption rights; (v) no call rights by the Company; and (vi) each shares votes on an “as converted” basis, such that each share currently has 50 votes on all matters brought before the Company’s common stockholders for a vote. There was no Series C Preferred Stock activity during years ended December 31, 2019 and 2018. Stock Options 2017 Non-Qualified Stock Option Plan On December 4, 2017, our Board of Directors approved the Freeze Tag, Inc. 2017 Non-Qualified Stock Option Plan (the “Plan”). Under the Plan, our Board of Directors may issue options to purchase up to an aggregate of 10,000,000 shares of common stock to individuals, including, but not limited to, our Board of Directors and/or our executive management. 2006 Stock Option Plan The Company’s 2006 Stock Option Plan adopted by our Board of Directors in March of 2006 terminated in the year ended December 31, 2016. As of December 31, 2019 and 2018, there were 5,600 stock options outstanding under the 2006 Stock Option Plan. We account for stock-based compensation in accordance with ASC Topic 718, Compensation – Stock Compensation. The Company recorded stock-based compensation expense of $57,999 and $23,000 during the years ended December 31, 2019 and 2018. As of December 31, 2019, future compensation cost related to non-vested stock options not yet recognized in the statements of operations totaled $83,334. A summary of the status of the stock options issued by the Company under both plans as of December 31, 2019, and changes during the years ended December 31, 2018 and 2019 is presented below: Weighted Average Shares Exercise Price Outstanding, December 31, 2017 1,518,421 $ 0.076 Granted - - Canceled / Expired - - Exercised - - Outstanding, December 31, 2018 1,518,421 $ 0.076 Granted 6,250,000 $ 0.020 Canceled / Expired - - Exercised - - Outstanding, December 31, 2019 7,768,421 $ 0.031 The outstanding options expire on various dates beginning in 2020 through 2029. On December 5, 2017, our Board of Directors granted options to purchase a total of 1,512,821 shares of our common stock. This included 1,025,641 options issued to Mick Donahoo in lieu of $40,000 of accrued vacation time, 256,410 options issued to Cecie Newman, and 230,769 options issued to Other Employees / Consultants. All options were issued at an exercise price of $0.039 and have a ten year expiration. On December 18, 2019, our Board of Direcetors granted options to purchase an additional 6,250,000 shares of our common stock. All options have an exercise price of $0.020 and a ten year expiration. 3,750,000 options to purchase stock were issued to Mick Donahoo, our CFO, and the remaining 2,500,000 shares were issued to employees or independent consultants. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2019 | |
RELATED PARTY TRANSACTIONS | |
NOTE 9 - RELATED PARTY TRANSACTIONS | The Company had a note payable to Craig Holland, its Chief Executive Officer, with a balance of $6,925 at December 31, 2019 and 2018. The Company also had convertible notes payable to Mr. Holland and Mick Donahoo, its Chief Financial Officer, with a total balance of $372,900 as of December 31, 2019 and 2018. See Note 7 for detailed disclosure of this related party debt, including interest rates, terms of conversion and other repayment terms. Imputed interest expense on the notes payable – related party totaled $37,983 and $54,529 for the years ended December 31, 2019 and 2018, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
NOTE 10 - COMMITMENTS AND CONTINGENCIES | Leases The Company leases its California office facilities on a month-to-month lease with either party having the option to terminate with 30 days’ notice. The Company also leases its Texas office facilities pursuant to a long-term operating lease agreement requiring an initial deposit of $2,850 and 36 montly payments of $2,850 commencing January 2019 through December 2021. See Note 7 for more details. Total rent expense under all operating leases was $51,876 and $94,214 for the years ended December 31, 2019 and 2018, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
NOTE 11 - INCOME TAXES | The Company accounts for income taxes in accordance with standards of disclosure propounded by the FASB, and any related interpretations of those standards sanctioned by the FASB. Accordingly, deferred tax assets and liabilities are determined based on differences between the financial statement and tax bases of assets and liabilities, as well as a consideration of net operating loss and credit carry forwards, using enacted tax rates in effect for the period in which the differences are expected to impact taxable income. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. Due to the uncertainty as to the utilization of net operating loss carry forwards, a valuation allowance has been made to the extent of any tax benefit that net operating losses may generate. The provision for income taxes was $800 and $7,552 for the years ended December 31, 2019 and 2018, respectively. For Federal and California income tax purposes, the Company has net operating loss carry forwards that expire through 2037. The net operating loss as of December 31, 2019 and 2018 was $4,711,990 and $4,620,078, respectively. The Company experienced a Section 382 change of ownership in connection with the Merger in 2017, thereby subjecting net operating loss carryovers generated previously to limitations on utilization. To-date, these limitations have not had an impact on the Company’s reported income tax. The deferred tax asset and the valuation allowance consist of the following at December 31: 2019 2018 Deferred tax asset $ 1,501,638 $ 1,582,829 Valuation allowance (1,501,638 ) (1,582,829 ) Net $ - $ - The ultimate realization of our deferred tax asset is dependent, in part, upon the tax laws in effect, our future earnings, and other events. As of December 31, 2019 and 2018, we recorded a 100% allowance against our deferred tax asset since we were unable to conclude that it is more likely than not that our deferred tax asset will be realized. The Company is also currently under an Internal Revenue Service tax audit for 2015 and 2016. The Company is undergoing negotiations relating to tax matters with the taxing authorities and believes that it has provided adequate reserves related to all matters contained in tax periods open to examination. The years open to examination by taxing authorities vary by jurisdiction; no years prior to 2016 are open. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
SUBSEQUENT EVENTS | |
NOTE 12 - SUBSEQUENT EVENTS | Management has evaluated subsequent events according to the requirements of ASC TOPIC 855, and there are currently no subsequent events to report. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Revenue Recognition | The Company’s revenues are derived primarily by licensing software products in the form of mobile games for smartphone and tablet platforms. On January 1, 2018, we adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition (Topic 605). Results for reporting periods beginning after January 1, 2018 are presented under Topic 606. The impact of adopting the new revenue standard was not material to our financial statements and there was no adjustment to beginning retained earnings on January 1, 2018. Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We determine revenue recognition through the following steps: • identification of the contract, or contracts, with a customer; • identification of the performance obligations in the contract; • determination of the transaction price; • allocation of the transaction price to the performance obligations in the contract; and • recognition of revenue when, or as, we satisfy a performance obligation. |
Cash and Cash Equivalents | For purposes of the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be cash equivalents. The Company places its cash and cash equivalents with large commercial banks. The Federal Deposit Insurance Corporation (“FDIC”) insures these balances, up to $250,000. At December 31, 2019 and 2018 there were no cash equivalents. |
Allowances for Sales Returns and Doubtful Accounts | The allowance for sales returns is based on the Company’s estimates of potential future product returns and other allowances related to current period product revenue. The Company analyzes historical returns, current economic trends and changes in customer demand and acceptance of the Company's products. The allowance for doubtful accounts is based on the Company’s assessment of the collectability of customer accounts and the aging of the related invoices, and represents the Company's best estimate of probable credit losses in its existing trade accounts receivable. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. We determined that no allowances for sales returns and doubtful accounts were required at December 31, 2019 and 2018. |
Property and Equipment | Property and equipment is stated at cost and is depreciated or amortized using the straight-line method over the estimated useful life of the related asset as follows: Computer equipment 5 years Office furniture and equipment 7 years Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments will be capitalized. At the time of retirement or other disposition of equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations. The Company will assess the recoverability of property and equipment by determining whether the depreciation and amortization of these assets over their remaining life can be recovered through projected undiscounted future cash flows. The amount of equipment impairment, if any, will be measured based on fair value and is charged to operations in the period in which such impairment is determined by management. |
Intangible Assets | Intangible assets consist primarily of intellectual property, customer base and non-compete agreements acquired in the Merger, which are amortized on a straight-line basis over their estimated useful lives of 5 years. Intangible assets are reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations. At December 31, 2019 and 2018, the Company reviewed the intangible assets and determined that no impairment was required. |
Concentrations of Credit Risk, Major Customers and Major Vendors | The Company’s customers are the end-consumers that purchase its games from the websites where the Company has its games listed for sale. Therefore, the Company does not have any individual customers that represent any more than a fraction of its revenue. |
Income Taxes | We account for income taxes using ASC Topic 740, Income Taxes. Under ASC Topic 740, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. ASC Topic 740 includes accounting guidance which clarifies the accounting for the uncertainty in recognizing income taxes in an organization by providing detailed guidance for financial statement recognition, measurement and disclosure involving uncertain tax positions. This guidance requires an uncertain tax position to meet a more-likely-than-not recognition threshold at the effective date to be recognized both upon the adoption of the related guidance and in subsequent periods. The Company has no uncertain tax positions at any of the dates presented. |
Foreign Currency Translation | The Company derives a portion of its revenue from foreign countries, but customers pay in U.S. Dollars. Therefore, no adjustments are required in the accompanying financial statements for foreign currency transactions. |
Accounting for Stock-Based Compensation | The Company accounts for stock-based compensation in accordance with ASC Topic 718-10, Compensation-Stock Compensation and ASC Subtopic 505-50, Equity-Based Payments to Non-Employees ("ASC stock-based compensation guidance"). Stock-based compensation expense recognized during the requisite services period is based on the value of share-based payment awards after reduction for estimated forfeitures. Forfeitures are estimated at the time of grant and are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company had stock-based compensation expense recognized in its statements of operations of $57,999 and $23,000 for the years ended December 31, 2019 and 2018 respectively. |
Earnings per Share | The computation of basic earnings per common share is based on the weighted average number of shares outstanding during the period. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the weighted average common stock equivalents which would arise from the exercise of stock options, warrants, convertible preferred stock and other rights during the period. For the years ended December 31, 2019 and 2018, the diluted weighted average number of shares is the same as the basic weighted average number of shares as the inclusion of any common stock equivalents would be anti-dilutive. |
Fair Value of Financial Instruments | In accordance with current accounting standards, certain assets and liabilities must be measured at fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. ASC 820 requires that certain assets and liabilities must be measured at fair value, and the standard details the disclosures that are required for items measured at fair value. The Company had no assets and liabilities required to be measured on a recurring basis at December 31, 2019 and 2018. The current assets and current liabilities reported on the Company’s balance sheets are estimated by management to approximate fair market value due to their short-term nature. |
Use of Estimates | The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in its financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates and these differences may be material. |
Research and Development Costs | The Company charges costs related to research and development of products to general and administrative expense as incurred. The types of costs included in research and development expenses include research materials, salaries, contractor fees, and support material. |
Recent Accounting Pronouncements | In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-09, “Compensation-Stock Compensation: Scope of Modification Accounting.” The amendments of ASU No. 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The guidance of ASU No. 2017-09 is effective for years beginning after December 15, 2017, including interim periods within those years. The adoption of this ASU did not have a significant impact on our financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers and has subsequently issued a number of amendments to ASU 2014-09. The new standard, now codified as ASC 606, Revenue from Contracts with Customers, as amended, provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific guidance. The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, ASC 606 includes provisions within a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We adopted the new revenue guidance effective January 1, 2018 using the cumulative effect method, and did not have an adjustment to retained earnings upon adoption. In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842),” which amends existing accounting standards for leases. The ASU requires lessees to recognize most leases on their balance sheet as a lease liability with a corresponding right-of-use asset. Right-of-use assets and lease liabilities are recorded at the present value of minimum lease payments. The Company adopted the ASU effective January 1, 2019. We recognized an $88,325 right-of-use asset and $88,325 related lease liability as of January 1, 2019 for our operating lease. For our operating lease, the asset is included in Other long-term assets on the consolidated balance sheet and is amortized within operating income over the lease term. The long-term component of the lease liability is included in Other long-term liabilities, net, and the current component is included in Other current liabilities. The adoption of ASC 842 did not have a material impact on the Company’s consolidated results of operations, stockholders' deficit or cash flows as of the adoption date. Under the alternative method of adoption, comparative information was not restated, but will continue to be reported under the standards in effect for those periods. See Note 7 for further details regarding Freeze Tag’s leases. Although there were new accounting pronouncements issued or proposed by the FASB during the year ended December 31, 2019 and through the date of filing of this report, the Company does not believe any of these accounting pronouncements, other than the item listed above, has had or will have a material impact on its financial position or results of operations. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Property and equipment , estimated useful life | Computer equipment 5 years Office furniture and equipment 7 years |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT | |
Schedule of Property and equipment | 2019 2018 Computer equipment $ 7,971 $ 7,971 Office furniture and equipment 10,055 10,055 Total 18,026 18,026 Less accumulated depreciation and amortization (8,463 ) (4,975 ) Net $ 9,563 $ 13,051 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INTANGIBLE ASSETS | |
Schedule of Intangible assets | 2019 2018 Intellectual property $ 307,100 $ 307,100 Customer base 142,000 142,000 Non-compete agreements 8,300 8,300 Less accumulated amortization (207,720 ) (116,240 ) Net $ 249,680 $ 341,160 |
Schedule of annual aggregate amortization expense | 2020 $ 91,480 2021 91,480 2022 66,720 Total $ 249,680 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
LEASES (Tables) | |
Summary of financial information associated with lease | Balance Sheet Classification December 31,2019 Right-of-use assets Other assets $ 61,762 Current lease liabilities Other current liabilities 29,345 Non-current lease liabilities Other long-term liabilities 32,417 |
Operating lease liability, maturity | 2020 $ 34,200 2021 34,200 Total $ 68,400 Less: Imputed interest (6,638 ) Present value of lease liabilities $ 61,762 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
NOTES PAYABLE | |
Schedule of notes payable - related party | 2019 2018 Note payable to Craig Holland, non-interest bearing,maturing on December 31, 2021 $ 6,925 $ 6,925 Convertible note payable to Craig Holland, non-interestbearing, maturing on December 31, 2021 186,450 186,450 Convertible note payable to Mick Donahoo, non-interestbearing, maturing on December 31, 2021 186,450 186,450 Total $ 379,825 $ 379,825 |
STOCKHOLDERS' DEFICIT (Tables)
STOCKHOLDERS' DEFICIT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
STOCKHOLDERS' DEFICIT (Tables) | |
Schedule of status of warrants and options issued | Weighted Average Shares Exercise Price Outstanding, December 31, 2017 1,518,421 $ 0.076 Granted - - Canceled / Expired - - Exercised - - Outstanding, December 31, 2018 1,518,421 $ 0.076 Granted 6,250,000 $ 0.020 Canceled / Expired - - Exercised - - Outstanding, December 31, 2019 7,768,421 $ 0.031 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
Schedule of deferred tax asset and valuation allowance | 2019 2018 Deferred tax asset $ 1,501,638 $ 1,582,829 Valuation allowance (1,501,638 ) (1,582,829 ) Net $ - $ - |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Computer equipment [Member] | |
Property, plant and equipment, estimated useful lives | 5 years |
Office furniture and equipment [Member] | |
Property, plant and equipment, estimated useful lives | 7 years |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Intangible assets estimated useful lives | 5 years | |
Stock-based compensation | $ 57,999 | $ 23,000 |
Common stock shares issuable for related party convertible debt | ||
Cash, FDIC Insured Amount | 250,000 | $ 250,000 |
January 1, 2019 [Member] | ||
Lease liability | 88,325 | |
Right of use asset | $ 88,325 |
GOING CONCERN UNCERTAINTY (Deta
GOING CONCERN UNCERTAINTY (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
GOING CONCERN | ||
Net income (loss) | $ (142,627) | $ (60,162) |
Stockholders' deficit | (483,970) | |
Working capital deficit | $ (395,583) |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Property and equipment, gross | $ 18,026 | $ 18,026 |
Less accumulated depreciation and amortization | (8,463) | (4,975) |
Property and equipment, net | 9,563 | 13,051 |
Computer equipment [Member] | ||
Property and equipment, gross | 7,971 | 7,971 |
Office furniture and equipment [Member] | ||
Property and equipment, gross | $ 10,055 | $ 10,055 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
PROPERTY AND EQUIPMENT | ||
Depreciation and amortization expense | $ 3,488 | $ 3,331 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Less accumulated amortization | $ (207,720) | $ (116,240) |
Intangible assets, net | 249,680 | 341,160 |
Intellectual property [Member] | ||
Intangible assets, gross | 307,100 | 307,100 |
Customer base [Member] | ||
Intangible assets, gross | 142,000 | 142,000 |
Non-compete agreements [Member] | ||
Intangible assets, gross | $ 8,300 | $ 8,300 |
INTANGIBLE ASSETS (Details1)
INTANGIBLE ASSETS (Details1) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
INTANGIBLE ASSETS | ||
2020 | $ 91,480 | |
2021 | 91,480 | |
2022 | 66,720 | |
Total | $ 249,680 | $ 341,160 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
INTANGIBLE ASSETS | ||
Amortization expense | $ 91,480 | $ 91,480 |
Intangible assets estimated useful lives | 5 years |
LEASES (Details)
LEASES (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Other assets | $ 61,762 | |
Other current liabilities | 49,715 | |
Other long-term liabilities | 32,417 | |
Balance Sheet Classification Topic 842 [Member] | ||
Other assets | 61,762 | |
Other current liabilities | 29,345 | |
Other long-term liabilities | $ 32,417 |
LEASES (Details 1)
LEASES (Details 1) | Dec. 31, 2019USD ($) |
LEASES (Tables) | |
2020 | $ 34,200 |
2021 | 34,200 |
Total | 68,400 |
Less: Imputed interest | (6,638) |
Present value of lease liabilities | $ 61,762 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
LEASES (Tables) | |
Operating lease cost | $ 34,200 |
Operating lease term, description | We have one operating lease related to our office space in Texas with a remaining lease terms of 3 years. |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Notes payable | $ 379,825 | $ 379,825 |
Notes Payable [Member] | Craig Holland [Member] | ||
Notes payable | 6,925 | 6,925 |
Convertible Notes Payable [Member] | Craig Holland [Member] | ||
Notes payable | 186,450 | 186,450 |
Convertible Notes Payable [Member] | Mick Donahoo [Member] | ||
Notes payable | $ 186,450 | $ 186,450 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 12 Months Ended | 24 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2018 | |
Debt instrument, convertible, conversion price | $ 0.02 | ||
Imputed interest on related party debt | $ 37,983 | $ 54,529 | $ 54,529 |
Convertible Notes Payable [Member] | Craig Holland [Member] | |||
Debt instrument maturity date | December 31, 2019 | ||
Interest rate | 10.00% | ||
Convertible Notes Payable [Member] | Mick Donahoo [Member] | |||
Debt instrument maturity date | December 31, 2019 | ||
Interest rate | 10.00% |
STOCKHOLDERS' DEFICIT (Details)
STOCKHOLDERS' DEFICIT (Details) - $ / shares | Dec. 05, 2017 | Dec. 18, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Number of shares | ||||
Outstanding, December 31, 2018 | 1,518,421 | 1,518,421 | ||
Granted | 1,512,821 | 6,250,000 | 6,250,000 | |
Canceled / Expired | ||||
Exercised | ||||
Outstanding, December 31, 2019 | 7,768,421 | 1,518,421 | ||
Weighted Average Exercise Price | ||||
Outstanding, December 31, 2018 | $ 0.076 | $ 0.076 | ||
Granted | 0.020 | |||
Canceled / Expired | ||||
Exercised | ||||
Outstanding, December 31, 2019 | $ 0.031 | $ 0.076 |
STOCKHOLDERS' DEFICIT (Details
STOCKHOLDERS' DEFICIT (Details Narrative) | Dec. 05, 2017USD ($)shares | Dec. 18, 2018$ / sharesshares | Dec. 31, 2019USD ($)integer$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 04, 2017shares |
Common stock, par value | $ / shares | $ 0.00001 | $ 0.00001 | |||
Common stock, authorized shares | 800,000,000 | 800,000,000 | |||
Common stock, issued shares | 75,056,123 | 75,056,123 | |||
Common stock, outstanding shares | 75,056,123 | 75,056,123 | |||
Common stock payable | $ | $ 16,800 | $ 16,800 | |||
Preferred stock, par value | $ / shares | $ 0.00001 | $ 0.00001 | |||
Preferred stock, authorized shares | 25,000,000 | 25,000,000 | |||
Stock-based compensation | $ | $ 57,999 | $ 23,000 | |||
Stock subscription receivable | $ | $ (5,000) | ||||
Technology transfer agreement Description | A total of 960 shares of its common stock, payable in 8 quarterly installments of 120 shares. | ||||
Description of stock options expiration | All options were issued at an exercise price of $0.039 and have a ten year expiration. | ||||
Future compensation cost related to novested options not yet recognized | $ | $ 83,334 | ||||
Exercise price | $ / shares | $ 0.020 | ||||
Options, Term of Expiration | 10 years | ||||
Stock options issued, shares | 1,025,641 | ||||
Stock options granted, value | $ | $ 40,000 | ||||
Stock Options granted to purchase common stock | 1,512,821 | 6,250,000 | 6,250,000 | ||
Description of Options expiration period | The outstanding options expire on various dates beginning in 2020 through 2029. | ||||
2017 Non-Qualified Stock Option Plan [Member] | Maximum [Member] | |||||
Option granted to purchase common shares | 10,000,000 | ||||
2006 Stock Option Plan [Member] | |||||
Beginning Balance | 5,600 | 5,600 | |||
Common Shares [Member] | |||||
Issuance of common stock for conversion of Series B preferred stock, Shares | 5,270,000 | ||||
Common stock, shares issued upon conversion of preferred stock Series B | 105,400 | ||||
Issuance of common stock for conversion of Series B preferred stock, Amount | $ | $ 53 | ||||
Series B Preferred Shares [Member] | |||||
Common stock, shares issued upon conversion of preferred stock Series B | 105,400 | ||||
Preferred stock, issued shares | 2,480,482 | 2,480,482 | |||
Preferred stock series B, shares authorized | $ | $ 2,700,000 | ||||
Preferred stock, outstanding shares | 2,480,482 | 2,480,482 | |||
Preferred Stock voting rights description | (i) dividend rights equal to the Company’s common stock; (ii) no liquidation preference over the Company’s common stock; (iii) each share is convertible into 50 shares of the Company’s common stock; (iv) no redemption rights; (v) no call rights by the Company; and (vi) no voting rights. The holders of the Series B preferred stock cannot convert their shares of Series B preferred stock if such conversion would cause the holder to beneficially own more than 4.99% of our then-outstanding common stock | ||||
Issuance of common stock for conversion of Series B preferred stock, Shares | (105,400) | ||||
Series C Preferred Stock [Member] | |||||
Issuance of common stock for conversion of Series B preferred stock, Shares | |||||
Issuance of common stock for conversion of Series B preferred stock, Amount | $ | |||||
Preferred stock, issued shares | 4,355,000 | 4,355,000 | |||
Preferred stock, outstanding shares | 4,355,000 | 4,355,000 | |||
Preferred stock series C, shares authorized | $ | $ 4,500,000 | ||||
Description of voting rights | (i) dividend rights equal to the Company’s common stock; (ii) no liquidation preference over the Company’s common stock; (iii) each share is convertible into 50 shares of the Company’s common stock; (iv) no redemption rights; (v) no call rights by the Company; and (vi) each shares votes on an “as converted” basis, such that each share currently has 50 votes on all matters brought before the Company’s common stockholders for a vote | ||||
Mick Donahoo [Member] | |||||
Stock Options granted to purchase common stock | 3,750,000 | ||||
Unrelated Party [Member] | |||||
Common stock, issued shares | 960 | ||||
Shares per installment | 120 | ||||
Number of quarterly installments | integer | 8 | ||||
Craig Holland [Member] | Series A Preferred Shares [Member] | |||||
Preferred stock, authorized shares | 1,000 | ||||
Preferred Stock voting rights description | The aggregate 1,000 shares have votes equal to 51% of the then-outstanding voting rights of the Company (including all common stock and any other series of preferred stock) on any matter properly brought before the Company’s stockholders for a vote. | ||||
Cecie Newman [Member] | |||||
Stock options issued, shares | 256,410 | ||||
Other Employees / Consultants [Member] | |||||
Stock options issued, shares | 230,769 | ||||
Consultant [Member] | |||||
Stock Options granted to purchase common stock | 2,500,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | 24 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2018 | |
Imputed interest on related party debt | $ 37,983 | $ 54,529 | $ 54,529 |
CEO [Member] | |||
Notes payable | 6,925 | 6,925 | 6,925 |
Mr. Holland and Mr. Donahoo [Member] | |||
Convertible notes payable - related party | $ 372,900 | $ 372,900 | $ 372,900 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES (Details Narrative) | ||
Operating lease agreement, description | Operating lease agreement requiring an initial deposit of $2,850 and 36 montly payments of $2,850 commencing January 2019 through December 2021. | |
Operating lease expire period | December 2021 | |
Other assets | $ 2,850 | |
Operating lease rental expense | $ 51,876 | $ 94,214 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
INCOME TAXES | ||
Deferred tax asset | $ 1,501,638 | $ 1,582,829 |
Valuation allowance | (1,501,638) | (1,582,829) |
Net |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
INCOME TAXES | ||
Provision for income taxes | $ 800 | $ 7,552 |
Net Operating Loss | $ 4,711,990 | $ 4,620,078 |
Net operating loss carry forwards expire period | 2037 | |
Deferred tax asset allowance, percentage | 100.00% | 100.00% |