Business context and reporting period
The filing is a Form 10-Q for the quarter and six months ended June 30, 2022. The document identifies the issuer as Thumzup Media Corporation, a Nevada software company developing an influencer-marketing mobile app; this conflicts with the request metadata identifying Datacentrex, Inc.
The app launched in limited capacity in November 2021. Management reported more than 75 creators paid to post for initial advertisers and more than 800 posts made. Revenue remained nominal.
Financial results and liquidity
| Metric | Three months ended June 30, 2022 | Six months ended June 30, 2022 | Comparable 2021 period |
|---|---|---|---|
| Revenue | $1,398 | $4,892 | $0 |
| Operating expenses | $272,093 | $495,516 | $129,601 / $226,550 |
| Operating loss | $(270,695) | $(490,624) | $(129,601) / $(226,550) |
| Net loss | $(275,138) | $(499,510) | $(132,515) / $(233,764) |
| Loss per share, basic and diluted | $(0.05) | $(0.08) | $(0.03) / $(0.04) |
For the six months, research and development was $285,998, sales and marketing $65,359, general and administrative $143,079, and depreciation $1,080. Gross margin is not separately presented; revenue was too small to offset expenses.
At June 30, cash was $653,856, total current liabilities $254,773, and stockholders’ equity $402,716. Cash increased from $424,445 at December 31, 2021. Operating cash use was $474,889 for the first half; financing provided $704,300, mainly from common-stock sales. No investing cash use was reported in 2022. The six-month accumulated deficit was $1,362,452. The company had $215,300 of senior secured convertible notes, bearing 8% interest and maturing November 21, 2022.
Material changes versus the prior comparable period
First-half revenue rose from zero to $4,892, while net loss increased to $499,510 from $233,764. Operating expenses more than doubled, led by higher R&D, marketing, and general and administrative costs. Management attributed the G&A increase largely to legal and accounting, consulting, travel for capital raising, transfer-agent, administrative, and office costs. First-half operating cash use also increased from $263,490 in 2021 to $474,889 in 2022.
During the first half, the company issued 275,834 shares for approximately $704,000 and issued 2,000 shares for services valued at $18,380. Shares outstanding were 6,315,670 at June 30, versus 6,037,836 at year-end 2021.
Outlook, risks, and unusual items
Management said it intended to ramp revenue, expand advertiser and creator acquisition, and continue app development, and anticipated raising additional capital. There is no quantified revenue or earnings guidance. The filing states that substantial doubt exists about the company’s ability to continue as a going concern, citing recurring losses, minimal revenue, and dependence on financing; additional funding and profitable operations are not assured.
Management’s liquidity statements differ: the MD&A says funds as of July 31 were sufficient for the next 12 months, but its June 30 cash-burn calculation estimates about 8.25 months of runway and says additional cash may be needed beyond approximately February 28, 2023, assuming costs remain unchanged.
The notes are convertible at $0.11 per share and include a down-round adjustment if qualifying securities are issued below that price. The notes are secured by company intellectual property and founders’ stock. The filing cites risks including capital availability, debt management, revenue generation, competition, economic conditions, COVID-19, and regulatory compliance. It reports no legal proceedings and no defaults upon senior securities. Management concluded disclosure controls were effective at a reasonable-assurance level and reported no material quarterly change in internal control over financial reporting.
Important facts for investors to verify
- Confirm issuer identity: the filing is for Thumzup Media Corporation, not Datacentrex, Inc.
- Reconcile the differing runway statements and assess near-term financing needs, especially against the November 2022 note maturity.
- Review the note conversion, down-round, collateral, and repayment terms and their potential dilution implications.
- Verify the filing’s checked response indicating the company had not filed all required reports during the preceding 12 months.
- Reconcile the company’s formation date: the introduction says October 27, 2019, while the business note says October 27, 2020.