OTC:FRZT
Freeze Tag, Inc.
An OTC-traded entity reporting flat revenues and recent losses driven by high operating expenses and significant interest costs.
Key Metrics
Investment Thesis
Bull Case
Investors might consider this stock if they believe the massive non-cash adjustments of $235k will eventually convert to realized value or tax benefits. The stable revenue stream over three years suggests a resilient business model that could recover profitability once the accumulated deficits are managed.
Bear Case
The stock presents severe bearish risks including negative equity, a deep retained earnings deficit, and a cash burn rate that depleted reserves by $167k in the latest period. High interest expenses and operating losses indicate that current operations are not self-sustaining without external capital injection.
About Freeze Tag, Inc.
Freeze Tag, Inc. (FRZT) operates within the OTC market, generating revenue primarily through general and administrative services alongside other operational streams. The company reports a stable revenue trend around $2.0M to $2.1M annually but has recently shifted from profitability to a net loss of approximately $0.5M in 2024.
Analysis
Management Discussion
Management has successfully stabilized revenue at approximately $2.0M despite a sharp decline in profitability as net income dropped to a loss of $492k. Cash flow from operations turned negative at -$267k while cash reserves decreased significantly from $383k to $216k, primarily due to the accumulation of accrued expenses and interest obligations.
Industry Overview
This company operates in a sector where general and administrative costs dominate the expense structure, typical of small-cap OTC entities with low fixed asset bases. The industry landscape often rewards companies that can manage high accrued liabilities while maintaining steady revenue streams amidst competitive pressures.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $2.1M | $2.1M | $2.0M |
| Cost of Revenue | $366.6K | $428.7K | $605.7K |
| Gross Profit | $1.7M | $1.7M | $1.4M |
| Operating Expenses | $1.7M | $1.8M | $1.8M |
| Operating Income | $73.2K | $-158.0K | $-443.6K |
| G&A | $1.7M | $1.8M | $1.8M |
| Stock-Based Comp | $0 | $0 | — |
| D&A | $78.7K | $40.0K | $101.4K |
| Depreciation | $12.0K | $9.3K | $9.3K |
| Amortization | $66.7K | $0 | — |
| Other OpEx | $-23.9K | $-6.6K | $0 |
| Non-Operating Income | $129.1K | $-45.4K | $-48.2K |
| Interest Expense | $47.3K | $45.4K | $46.7K |
| Pre-Tax Income | $202.3K | $-203.4K | $-491.8K |
| Income Tax | $1.6K | $1.8K | $800 |
| Continuing Ops | $200.7K | $-205.2K | $-492.6K |
| Discontinued Ops | $0 | $410.4K | $0 |
| Net Income | $200.7K | $205.2K | $-492.6K |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $200.7K | $205.2K | $-492.6K |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $771.5K | $423.8K | $255.1K |
| Accounts Receivable | — | — | $24.5K |
| Prepaid Expenses | — | — | $14.0K |
| Other Current Assets | — | — | $216.6K |
| Long-Term Assets | $391.7K | $533.8K | $339.1K |
| PP&E (Net) | $20.2K | $10.9K | $0 |
| Other LT Assets | $371.5K | $522.9K | $339.1K |
| Total Assets | $1.2M | $957.6K | $594.3K |
| Current Liabilities | $1.1M | $1.0M | $1.1M |
| Accounts Payable | $164.5K | $143.8K | $142.2K |
| Other Current Liab | $397.6K | $397.9K | $500.6K |
| Long-Term Liabilities | $172.2K | $158.5K | $150.0K |
| Total Liabilities | $1.2M | $1.2M | $1.3M |
| Shareholders' Equity | $-65.1K | $-232.3K | $-686.9K |
| Paid-In Capital | $9.3M | $9.3M | $9.4M |
| Retained Earnings | — | $-9.6M | $-10.1M |
| Total L&E | $1.2M | $957.6K | $594.3K |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $200.7K | $205.2K | $-492.6K |
| Non-Cash Adjustments | $-62.2K | $-350.3K | $235.7K |
| Working Capital Changes | $26.9K | $-20.3K | $-9.9K |
| Cash from Operations | $165.3K | $-165.4K | $-266.8K |
| Cash from Investing | $-167.0K | $-182.1K | $0 |
| Cash from Financing | $-10.0K | $-10.3K | $100.0K |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $-11.7K | $-357.8K | $-166.8K |
| Beginning Cash | $752.8K | $741.2K | $383.4K |
| Ending Cash | $741.2K | $383.4K | $216.6K |
Frequently Asked Questions
How does Freeze Tag, Inc. make money?
General and administrative services generating roughly $1.8M in annual spend, other operational activities contributing to the remaining revenue, and financing activities which provided over $100k in cash inflows during the period.
What are the main risks for FRZT?
The company carries a massive retained earnings deficit of $10.1M and negative shareholders' equity of nearly $0.7M, operates with high current liabilities exceeding $1.1M against limited current assets, and faces significant interest expense pressure of roughly $46k impacting operating profit.
What is FRZT's competitive advantage?
The company maintains a substantial paid-in capital base of $9.4M relative to its asset base, possesses significant non-cash adjustments indicating potential tax shields or restructuring benefits, and demonstrates zero investing outflows suggesting a hold-on-asset strategy.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.