Filing and reporting period
The supplied filing is Thumzup Media Corporation’s unaudited Form 10-Q for the quarter ended March 31, 2023, not a filing identified as Datacentrex, Inc. The company describes itself as an early-stage social-media marketing software-as-a-service business. It reported nominal revenue and continued investment in its mobile app and marketing.
Financial results and liquidity
- Revenue was $1,770, down 49% from $3,494 in Q1 2022. Management says the decrease reflects a change to net revenue presentation; it reports increased advertiser activity but provides no activity figures.
- Operating expenses were $722,075, up 223%. Sales and marketing rose to $268,717 from $14,861, and general and administrative expense rose to $324,954 from $61,976. Research and development declined to $125,881 from $146,046, partly because certain software costs were capitalized.
- Operating loss was $720,305, versus $219,929; net loss available to common stockholders was $722,752, versus $224,372. Basic and diluted loss per share was $0.10, versus $0.04.
- Operating cash use was $607,725, compared with $222,969 in Q1 2022. Investing cash use was $52,288, primarily for capitalized software; financing provided $33,000 from collection of a prior-period stock subscription receivable. Cash fell to $528,330 from $1,155,343 at year-end.
- At March 31, current assets were $531,233 and current liabilities were $69,532; total assets were $583,667 and stockholders’ equity was $514,135. The company reported no interest expense in Q1 2023 and no debt balance on the balance sheet; prior debt notes had been converted to equity in September 2022.
- Capitalized software was $50,421 net of amortization. The accumulated deficit was $2,807,459. The filing reports $278,330 of cash above the FDIC-insured limit at March 31.
Material changes, outlook, and risks
- Management disclosed substantial doubt about the company’s ability to continue as a going concern, citing recurring losses, minimal revenue, and operating cash use. It expects to seek additional funding through loans or stock sales; success and timing are not assured.
- The company was conducting a Regulation A+ offering of up to 2 million shares at $4.50 per share. Subscriptions for 74,903 shares, totaling $333,418.50, were in escrow and would not provide funds or result in issued shares until released.
- No formal financial guidance was provided. Management said growth depends on attracting advertisers and creators, achieving adoption and scalability, and raising capital. It noted the need to add staff to grow the business.
- Risks highlighted include the ability to raise capital, generate revenue, manage growth and competition, retain management, and comply with laws and regulations. The filing reports no material lawsuit and no direct operational exposure to Russia or Ukraine, while noting possible indirect effects.
- Related-party arrangements include a media-relations agreement with an entity associated with a director for $6,500 per month, plus previously paid marketing fees. A director-affiliated entity also subscribed to the offering and received Series A preferred shares as a dividend.
- 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 to verify
- Confirm the issuer: the filing names Thumzup Media Corporation, while the request metadata names Datacentrex, Inc.
- Verify the offering’s escrow status, actual proceeds received, and available liquidity after quarter-end; escrow subscriptions were not available cash at the filing date.
- Assess the company’s cash burn, financing prospects, and going-concern risk, including whether additional capital was raised after the reporting date.
- Reconcile stockholders’ equity at December 31, 2022: the balance sheet shows $1,069,440, while MD&A states $1,069,799.
- Review the cover-page response indicating the company had not filed all required reports during the preceding 12 months, and determine the status and implications.