Datacentrex, Inc. — 2021 Q2 10-Q summary
Filing-identity note: The supplied filing is for Thumzup Media Corporation, not Datacentrex, Inc. The summary below reflects the filing’s named registrant. The report covers the quarter and six months ended June 30, 2021; the company was incorporated in October 2020 and had no comparable prior-year period presented.
Business context and financial performance
Thumzup describes itself as a pre-revenue software company developing a mobile app intended to connect advertisers with people promoting products on social media. It had not yet established profitable operations.
| Metric | Three months ended June 30, 2021 | Six months ended June 30, 2021 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $129,601 | $226,550 |
| Operating loss | $129,601 | $226,550 |
| Interest expense | $2,914 | $7,214 |
| Net loss | $132,515 | $233,764 |
| Basic and diluted loss per share | $0.03 | $0.04 |
Six-month operating expenses included $206,330 of research and development, $17,623 of general and administrative costs, $2,121 of sales and marketing, and $476 of depreciation. With no revenue, gross margin is not applicable.
Liquidity, debt, and cash flow
- At June 30, 2021, cash and cash equivalents were $570,280, with another $83,500 of restricted cash; total current assets were $701,196. Restricted cash was set aside under the note agreement for share-registration costs, with any remaining balance available for general corporate purposes.
- Total assets were $709,267; total liabilities were $224,218, including $215,000 of senior secured convertible notes and $9,218 of accrued liabilities. Stockholders’ equity was $485,049, compared with a deficit of $5,687 at December 31, 2020.
- The notes bear 8% interest and mature November 21, 2021. They are convertible at $0.11 per share, subject to stated ownership limits and a down-round adjustment provision. Intellectual property and founders’ shares serve as collateral.
- The cash-flow statement reports six-month operating cash use of $263,490, investing cash use of $8,547, and financing cash inflow of $724,500. Cash and restricted cash together increased from $201,317 to $653,780.
- Shares outstanding were 5,754,500 at June 30 and August 10, 2021. The filing describes 724,500 shares sold to investors during the six months, while the cash-flow statement labels $724,500 of financing as proceeds from senior secured convertible notes.
Changes, outlook, and risks
There is no prior-year comparable-period income statement. Compared with December 31, 2020, cash and cash equivalents rose from $101,317 to $570,280, restricted cash declined from $100,000 to $83,500, and equity moved from a deficit to positive equity. The company issued shares for advisory services and investment during the first half.
Management disclosed substantial doubt about the company’s ability to continue as a going concern. It expects it may need additional loans or equity financing and cautions there is no assurance it can raise capital or achieve profitability. No specific revenue or earnings guidance was provided. Management said COVID-19 had not significantly affected operations as of the financial statement issuance date, but the effects remained uncertain.
Disclosure controls and procedures were judged ineffective as of quarter-end. The company reported no material changes in internal control over financial reporting during the quarter and said it would continue developing and documenting controls. Management reported no current lawsuits, no defaults upon senior securities, and no other subsequent events to disclose.
Important facts for investors to verify
- Confirm the registrant identity: the provided filing is for Thumzup Media Corporation, not Datacentrex, Inc.
- Reconcile operating cash use: the cash-flow statement reports $263,490, while MD&A and the going-concern note cite $246,990, a $16,500 difference.
- Clarify the $724,500 financing classification, given the cash-flow statement’s note-proceeds label and the note’s description of shares sold to investors.
- Assess the ability to fund operations and address the November 2021 note maturity, including conversion, collateral, and potential dilution terms.
- Review the disclosed ineffective controls and the company’s progress in remediation, alongside the app’s development status and path to revenue.