Datacentrex, Inc. 10-K/A

ITEM 9A. CONTROLS AND PROCEDURES. a) Disclosure and control procedures Our management, with the participation of our Principal Executive Officer and Principal Financial and Accounting Officer, evaluated the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act ) as of the end of the period covered by this report on Form 10-K/A, and have concluded that, based on such evaluation, our disclosure controls and procedures were not effective due to the material weakness in our internal control over financial reporting as of December 31, 2022 as described below. Notwithstanding the conclusion that our disclosure controls and procedures were not effective as of the end of the period covered by this report, we believe that our consolidated financial statements and other information contained in our annual report on Form 10-K present fairly, in all material respects, our business, financial condition and results of operations for the periods presented. b) Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a -15(f) under the Exchange Act . Our internal control was designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (issued in 2013). Based upon the assessments, management has concluded that as of December 31, 2022, there was a material weakness in our internal control over financial reporting due to the fact that we did not have an adequate process established to ensure appropriate levels of review of accounting and financial reporting matters, which resulted in our closing process not identifying all required adjustments and disclosures in a timely fashion. We plan to take steps to enhance and improve the design of our internal control over financial reporting. To remediate our material weaknesses, we plan to appoint additional qualified personnel with the requisite knowledge to improve the levels of review of accounting and financial reporting matters; however, such remediation efforts are largely dependent upon our securing additional financing or generating significant revenue to cover the costs of implementing the changes required. The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, in designing and evaluating the disclosure controls and procedures, management recognizes that any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting. ITEM 9B. OTHER INFORMATION. None. 33 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. Management The name and age of our Directors and Executive Officers are set forth below. All Directors are elected annually by the stockholders to serve until the next annual meeting of the stockholders and until their successors are duly elected and qualified. The officers are elected by our Board of Directors (the “Board”). Name Age Title Robert Steele 56 Chairman of the Board of Directors and Chief Executive Officer Robert Haag 57 Director All directors serve for one year and until their successors are elected and qualified. All officers serve at the pleasure of the Board of Directors. There are no family relationships among any of our officers and directors. The Bylaws provide that the Company shall be managed by a Board of at least one (1) and up to five (5) Directors. As of the date of this Annual Report on Form 10-K, we have two (2) sitting directors. Information concerning our executive officers and directors is set forth below. Executive Officers Robert Steele: Chief Executive Officer, President, Secretary, Treasurer, Director Mr. Steele is the Chief Executive Officer and a director of Thumzup Media Corporation. From October 2019 until present Mr. Steele has operated a consulting business that has provided investor relations, financial, sales and marketing consulting services to various clients. Mr. Steele was the Director of Client Positioning at IRTH Communications, LLC from January 2017 to September 2019. From May 2016 through December 2016 Mr. Steele was an independent consultant rendering sales, marketing and investor relations services. From January 2010 to May 2016 Mr. Steele was the President of Rightscorp, Inc. While at Rightscorp, Mr. Steele designed and deployed patented intellectual property software as a service (SaaS) tools that were used by major brands like Warner Bros. to protect their intellectual property. As President of Rightscorp, Mr. Steele led the design of the software used by clients like Sony/ATV and BMG. BMG successfully used Mr. Steele’s technology to win a landmark $25 million judgment against Cox Communications for copyright infringement. Mr. Steele holds a BS in Electronic and Computer Engineering from George Mason University. 34 Directors Robert Haag: Director Robert Haag is the Managing Member and sole owner of Westside Strategic Partners LLC, which is an investor in the Company. Since 2012, Mr. Haag has been a Managing Director of IRTH Communications, LLC, which provides financial communications services, and strategic consulting to its clients . He was previously employed in the brokerage, investment banking industries from about 1993 - 2001 and formerly held the Series 7, 24 and 63 licenses. Based in Asia from 2008-2012, he held senior positions with an investment fund and also an investment bank based in Saigon, Vietnam in 2008. From 2009-2012 he served as Managing Director of Asia for IRTH Communications, LLC and was based out of Shanghai, China. From approximately 2002 -2007 he was Director of Speculative Investments at KMVI, a family office / holding company which invested in restaurants, oil, private equity, publicly traded companies, real estate and a wide array of other industries. While at KMVI, he was also President and CEO of Utopia Optics (majority owned by KMVI), an eyewear and apparel company focused on consumers in the action sports markets. Mr. Haag graduated from Hamilton College with a Bachelor of Arts in History in 1988. ITEM 11. EXECUTIVE COMPENSATION. Summary Compensation Table The following table sets forth information regarding compensation earned during fiscal 2022 and 2021 by our principal executive officer and our other most highly compensated executive officers, or the named executive officers, as of the end of the 2022 fiscal year. Name and Principal Position Fiscal Year Salary Bonus Other Compensation Options Restricted Stock Awards Total Robert Steele 2022 $ 15,000 $ 1,653 $ - $ - $ - $ 16,653 Chief Executive Officer 2021 $ - $ - $ - $ - $ - $ - Robert Steele, CEO, President, Secretary, and Treasurer is compensated $5,000 per month for his services as Chief Executive Officer of the Company, commencing on October 1, 2022. Mr. Steele is not compensated for his services as a director of the Company. Mr. Steele received a bonus of $1,653 during the year ended December 31, 2022. Director Compensation The following table presents the total compensation for the non-employee director of our Board during the fiscal year ended December 31, 2022. Other than as set forth in the table and described more fully below, we did not pay any compensation, reimburse any expense of, make any equity awards or non-equity awards to, or pay any other compensation to any of the other members of our Board in such period. Name Fees Earned or Paid in Cash ($) Stock Awards ($) Option Awards ($) All Other Compensation ($) Total ($) Robert Haag $ 2,000 $ - $ - - $ 2,000 Mr. Haag is compensated $1,000 per quarter for his services as a director, which commenced on July 1, 2022. As of December 31, 2022, $1,000 is owed to Mr. Haag for his services as a director. 35 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The following table sets forth certain information regarding the beneficial ownership of our Common Stock, and Series A Preferred Convertible Voting Stock by (i) each person who, to our knowledge, owns more than 5% of our Common Stock or Series A Preferred Convertible Voting Stock (“Series A Preferred”), (ii) our current directors and the named executive officers identified under the heading “Executive Compensation” and (iii) all of our current directors and executive officers as a group. We have determined beneficial ownership in accordance with applicable rules of the SEC, and the information reflected in the table below is not necessarily indicative of beneficial ownership for any other purpose. Under applicable SEC rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power and any shares which the person has the right to acquire within 60 days after March 29, 2023 through the exercise of any option, warrant or right or through the conversion of any convertible security. Unless otherwise indicated in the footnotes to the table below and subject to community property laws where applicable, we believe, based on the information furnished to us that each of the persons named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. The Certificate of Designation of the Series A Preferred contains a blocker which prohibits the conversion of the Series A Preferred into shares of common stock if the number of shares of common stock to be issued pursuant to such conversion would exceed, when aggregated with all other shares of common stock owned by the holder at such time, the number of shares of Common Stock that would result in the holder beneficially owning (as determined in accordance with Section 13(d) of the 1934 Act and the rules thereunder) more than 4.99% of all of the common stock outstanding at such time (the “4.99% Beneficial Ownership Limitation”); provided, however, that, upon the holder providing the Company with sixty-one (61) days’ advance notice (the “4.99% Waiver Notice”) that the holder would like to waive Section 4(f) of the Certificate of Designations with regard to any or all shares of common stock issuable upon conversion of the Series A Preferred, Section 4(f) will be of no force or effect with regard to all or a portion of the Series A Preferred referenced in the 4.99% Waiver Notice but shall in no event waive the 9.99% Beneficial Ownership Limitation (the “9.99% Beneficial Ownership Limitation”). The paragraph forgoing constituting the (“Series A Blocker”). The information set forth in the table below is based on 7,126,336 shares of our Common Stock and 128,312 shares of Series A Preferred issued and outstanding on March 29, 2023. In computing the number of shares of Common Stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of Common Stock subject to options, warrants, rights or other convertible securities held by that person that are currently exercisable or will be exercisable within 60 days after March 29, 2023. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the principal address of each of the Stockholders below is in care of Thumzup™ Media Corporation, 11845 W. Olympic Blvd, Ste 1100W #13, Los Angeles, CA 90064. Number of Shares of Common Stock Beneficially Owned Percentage of Common Stock Beneficially Owned Number of Shares of Series A Preferred Owned Percentage of Series A Preferred Beneficially Owned % of Total Voting Power Directors and Named Executive Officers Robert Steele 3,400,000 47.71 % - - 47.71 % Robert Haag (1) 355,604 (2) 4.99 % 27,307 (3) 21.28 % 4.99 % All directors and named executive officers as a group (2 people) 3,755,754 52.70 % 27,307 21.28 % 52.70 % Other 5% Stockholder Daniel Lupinelli 1,500,000 (4) 21.05 % - - 21.05 % Joe Thomas (5) 446,794 (6) 6.27 % 47,730 (7) 37.20 % 6.27 % Andrew Haag (8) 421,689 (9) 5.92 % 48,076 (10) 37.47 % 5.92 % (1) Robert Haag, a Director of the Company, is the Managing Member and sole owner of Westside Strategic Partners, LLC. Robert Haag has voting control and investment discretion over securities held by Westside Strategic Partners, LLC. As such, Robert Haag may be deemed to be the beneficial owner (as determined under Section 13(d) of the Exchange Act) of the securities held by Westside Strategic Partners, LLC. (2) Consists of (i) 244,645 shares of common stock held by Westside Strategic Partners, LLC, (ii) 125 shares of common stock held by Robert Haag, and (iii) 110,735 shares of common stock underlying 27,307 shares of Series A Preferred held by Westside Strategic Partners, LLC. Excludes (i) 299,163 shares of common stock underlying 27,307 shares of Series A Preferred held by Westside Strategic Partners, LLC as such conversion is prohibited by the Series A Blocker and (ii) 11,150 shares of common stock for which Westside Strategic Partners, LLC has subscribed under the Company’s qualified offering under Regulation A+ as the subscription proceeds and agreement are being held in escrow until such time that the Company chooses to conduct the first closing of the offering. As the Company may elect to never conduct a closing under its qualified offering under Regulation A+, the Company has determined these shares are not under the control of Mr. Haag as of March 29, 2023. 36 (3) Consists of 27,307 shares of Series A Preferred held by Westside Strategic Partners, LLC. (4) Consists of 1,500,000 shares of common stock held by Mr. Lupinelli. Excludes 223 shares of common stock for which Mr. Lupinelli has subscribed under the Company’s qualified offering under Regulation A+ as the subscription proceeds and agreement are being held in escrow until such time that the Company chooses to conduct the first closing of the offering. As the Company may elect to never conduct a closing under its qualified offering under Regulation A+, the Company has determined these shares are not under the control of Mr. Lupinelli as of March 29, 2023. (5) Joe Thomas is the Managing Member of SLS Group, LLC and Optimum Holdings, Inc. Joe Thomas has voting control and investment discretion over securities held by SLS Group, LLC and Optimum Holdings, LLC. As such, Joe Thomas may be deemed to be the beneficial owner (as determined under Section 13(d) of the Exchange Act) of the securities held by SLS Group, LLC and Optimum Holdings, Inc. The address of Mr. Thomas is 4580 S Thousand Oaks Drive Salt Lake City, UT 84124. (6) Consists of (i) 92,088 shares of common stock held by SLS Group, LLC and (ii) 354,706 shares of common stock held by Optimum Holdings, Inc. Excludes (i) 715,953 shares of common stock underlying 47,730 shares of Series A Preferred held by Optimum Holdings, Inc. as such conversion is prohibited by the Series A Blocker and (ii) 22,245 shares of common stock for which SLS Group, LLC has subscribed under the Company’s qualified offering under Regulation A+ as the subscription proceeds and agreement are being held in escrow until such time that the Company chooses to conduct the first closing of the offering. As the Company may elect to never conduct a closing under its qualified offering under Regulation A+, the Company has determined these shares are not under the control of Mr. Thomas as of March 29, 2023. (7) Consists of 47,730 shares of Series A Preferred held by Optimum Holdings, Inc. (8) Andrew Haag is the Managing Member of Hampton Growth Resources, LLC. Andrew Haag has voting control and investment discretion over securities held by Hampton Growth Resources, LLC. As such, Andrew Haag may be deemed to be the beneficial owner (as determined under Section 13(d) of the Exchange Act) of the securities held by Hampton Growth Resources, LLC. The address of Mr. Haag is 1688 Meridian Ave, Ste 700 Miami Beach, FL 33139. (9) Consists of 411,418 shares of common stock held by Hampton Growth Resources, LLC. Excludes (i) 721,144 shares of common stock underlying 48,076 shares of Series A Preferred held by Hampton Growth Resources, LLC as such conversion is prohibited by the Series A Blocker and (ii) 22,444 shares of common stock for which Hampton Growth Resources, LLC has subscribed under the Company’s qualified offering under Regulation A+ as the subscription proceeds and agreement are being held in escrow until such time that the Company chooses to conduct the first closing of the offering. As the Company may elect to never conduct a closing under its qualified offering under Regulation A+, the Company has determined these shares are not under the control of Mr. Haag as of March 29, 2023. (10) Consists of 48,076 shares of Series A Preferred held by Hampton Growth Resources, LLC. Lockup Agreements On September 21, 2022, Robert Steele, and Danny Lupinelli entered into Lockup Agreements (the “Lockup Agreement’) with holders of the Series A Preferred Convertible Stock over the ownership of their securities. Other than with respect to certain issuances, without the prior consent of 51% of the holders of the Series A Preferred Convertible Stock of the Company, will not (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company; (ii) file or cause to be filed any registration statement with the Securities and Exchange Commission relating to the offering of any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. We have not been a party to any transaction or arrangement in which the amount involved in the transaction exceeded 1% of the average of our total assets at December 31, 2022 and 2021 and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of any class of our voting securities or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest. On November 19, 2020, Westside Strategic Partners, LLC, of which one of our Directors, Robert Haag, is the Managing Member and sole owner, purchased a convertible note in the principal amount of $50,000 convertible for $50,000 in consideration. The convertible note was converted into common stock and preferred shares on September 28, 2022 and the note is now retired. 37 On March 16, 2021, Westside Strategic Partners, LLC, of which one of our Directors, Robert Haag, is the Managing Member and sole owner, acquired 25,000 shares of Common Stock at $1.00 per share for a subscription in the amount of $25,000. On January 7, 2022, Westside Strategic Partners, LLC, of which one of our Directors, Robert Haag, is the Managing Member and sole owner, acquired 33,334 shares of Common Stock at $1.50 per share for a subscription in the amount of $50,000. On July 7, 2022, Westside Strategic Partners, LLC, of which one of our Directors, Robert Haag, is the Managing Member and sole owner, acquired 16,667 shares of Common Stock at $3.00 per share for a subscription in the amount of $50,000. On September 27, 2022, Westside Strategic Partners, LLC, of which one of our Directors, Robert Haag, is the Managing Member and sole owner, acquired 2,223 shares of our Series A Preferred Stock at $45 per share for a subscription in the amount of $100,000. On September 28, 2022, Westside Strategic Partners, LLC, of which one of our Directors, Robert Haag, is the Managing Member and sole owner, exchanged convertible debt in the amount of $37,887.16 in principal and accrued interest for 22,962 shares of Series A Preferred Stock. On September 28, 2022, Westside Strategic Partners, LLC, of which one of our Directors, Robert Haag, is the Managing Member and sole owner, acquired 169,644 shares of Common Stock for the conversion of debt in the amount of $18,660.88 in principal and accrued interest. On June 29, 2022, Robert Steele, our Chief Executive Officer and a Director, sold 100,000 shares of Common Stock for $30,000.00 in a private transaction to an accredited investor. On November 18, 2022, the Company entered into a Media Relations Services Agreement (the “Media Relations Services Agreement”) with Elev8 New Media, LLC (“Elev8”), of which one of our directors, Robert Haag, is a member and one of our investors Andrew Haag is also a member. Under the terms of the agreement, the Company will pay Elev8 $6,500 per month for six months and the Media Relations Services Agreement will automatically renew into consecutive monthly periods unless either party provides 30 days written notice of cancellation. This price is a discounted rate off Elev8’s normal monthly price of $9,500 per month. On December 15, 2022, Westside Strategic Partners, LLC, of which one of our Directors, Robert Haag, is the Managing Member and sole owner, received a dividend of 490 shares of Series A Preferred Stock, per the terms of its Certificate of Designation. On December 30, 2022, Westside Strategic Partners, LLC, of which one of our Directors, Robert Haag, is the Managing Member and sole owner, acquired 1,111 shares of our Series A Preferred Stock at $45 per share for a subscription in the amount of $50,000. On February 22, 2023, Daniel Lupinelli, a 10%+ shareholder of the Company, subscribed to purchase 223 shares of common stock at $4.50 per share for a subscription amount of $1,003.50 under the Company’s qualified offering under Regulation A+. The subscription is currently in escrow. On February 28, 2023, Westside Strategic Partners, LLC, of which one of our Directors, Robert Haag, is the Managing Member and sole owner, subscribed to purchase 11,150 shares of common stock at $4.50 per share for a subscription amount of $50,175 under the Company’s qualified offering under Regulation A+. Westside Strategic Partners, LLC will receive 1,115 shares of common stock as bonus shares under the terms of the qualified offering under Regulation A+. The subscription is currently in escrow. On March 15, 2023, Westside Strategic Partners, LLC, of which one of our Directors, Robert Haag, is the Managing Member and sole owner, received a dividend of 521 shares of Series A Preferred Stock, per the terms of its Certificate of Designation. 38 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Our independent registered public accounting firm is Haynie & Company LLP, Auditor Firm ID 457. Set forth below are approximate fees for services rendered by Haynie & Company for the fiscal years ended December 31, 2022 and December 31, 2021. Haynie & Company 2022 2021 Audit Fees $ 30,500 $ 25,000 Audit-Related Fees - - Tax Fees - 1,050 Other Fees 30,500 - Totals $ 30,500 $ 26,050 Audit Fees The aggregate fees billed for each of the last two fiscal years for professional services rendered by Haynie & Company for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s annual report on Form 10-K and in the Company’s quarterly reports on Form 10-Q, or services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements for the fiscal years ending December 31, 2022 and 2021 were $30,500 and $25,000, respectively. Audit-Related Fees The aggregate fees billed in either of the last two fiscal years for assurance and related services by Haynie & Company that are reasonably related to the performance of the audit or review of the registrant’s financial statements and are not reported under “Audit Fees” for the fiscal years ending December 31, 2022 and 2021 were $0 and $0, respectively. Tax Fees The aggregate fees were billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning for the fiscal years ending December 31, 2022 and 2021 was $0 and $1,050, respectively, for Haynie & Company. All Other Fees Other fees billed for professional services provided by the principal accountant, other than the services reported above, for the fiscal years ending December 31, 2022 and 2021 were $0 and $0, respectively, for Haynie & Company. The Company’s Board of Directors approves all auditing services and the terms thereof and non-audit services (other than non-audit services published under Section 10A(g) of the Exchange Act or the applicable rules of the SEC or the Pubic Company Accounting Oversight Board) to be provided to the Company by the independent auditor; provided, however, the pre-approval requirement is waived with respect to the provisions of non-audit services for the Company if the “de minimis” provisions of Section 10A(i)(1)(B) of the Exchange Act are satisfied. PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. (a) Documents filed as part of this Annual Report: (1) Financial Statements. The following documents are included on pages F-1 through F-6 attached hereto and are filed as part of this Annual Report on Form 10-K. Report of Independent Registered Public Accounting Firm (PCAOB ID: 457 ) F-1 Balance Sheets as of December 31, 2022 and 2021 F-2 Statements of Operations for the Years Ended December 31, 2022 and 2021 F-3 Statements of Stockholders’ Deficit for the Years Ended December 31, 2022 and 2021 F-4 Statements of Cash Flows for the Years Ended December 31, 2022 and 2021 F-5 Notes to Financial Statements F-6 39 (2) Financial Statement Schedules. No financial statement schedules have been submitted because they are not required or are not applicable or because the information required is included in the financial statements or the notes thereto. (3) Exhibits. Incorporated by Reference No. Description Form File No. Exhibit Filing Date 3.1 Articles of Incorporation S-1/A 333-255624 3.1 June 23, 2021 3.2 Certificate of Amendment to the Articles of Incorporation filed November 4, 2022 1-A/A 024-12067 3.2 December 9, 2022 3.3 Amended and Restated Bylaws 1-A/A 024-12067 3.3 December 9, 2022 3.4 Form of Amended and Restated Certificate of Designation of Rights, Powers, Preferences, Privileges and Restrictions of Series A Preferred Convertible Voting Stock 8-K 333-255624 3.1 September 27, 2022 4.1 Form of Common Stock Certificate S-1/A 333-196735 4.1 June 23, 2021 10.1 Form of Stock Purchase Agreement 10-K 333-255624 10.1 March 17, 2022 10.2 Form of Common Stock Financing Term Sheet 10-K 333-255624 10.2 March 17, 2022 10.3 Form of Registration Rights Agreement 10-K 333-255624 10.3 March 17, 2022 10.4 Form of Securities Purchase Agreement 8-K 333-255624 10.1 September 27, 2022 10.5 Form of Escrow Agreement 1-A/A 024-12067 10.5 December 9, 2022 10.6 Form of Subscription Agreement 1-A/A 024-12067 10.6 December 9, 2022 10.7 + Employment Agreement by and between the Company and Robert Steele dated October 18, 2022 1-A/A 024-12067 10.7 December 9, 2022 31.1* Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * filed herewith. + Denotes a management contract or compensatory plan. ITEM 16. FORM 10-K Summary None. 40 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on May 25, 2023. Thumzup Media Corporation By: /s/ Robert Steele Robert Steele Chief Executive Officer (Principal Executive Officer) By: /s/ Robert Steele Robert Steele Chief Financial Officer (Principal Financial/Accounting Officer) In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ Robert Steele Chief Executive Officer (Principal Executive Officer) and May 25, 2023 Robert Steele Chairman of the Board of Directors /s/ Robert Steele Chief Financial Officer May 25, 2023 Robert Steele (Principal Financial and Accounting Officer) /s/ Robert Haag Director May 25, 2023 Robert Haag 41 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Thumzup Media Corporation Opinion on the Financial Statements We have audited the accompanying balance sheets of Thumzup Media Corporation (the Company) as of December 31, 2022 and 2020, and the related statements of operations,, stockholders’ deficit, and cash flows for each of the years in the years ended December 31, 2022 and 2021, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Consideration of the Company’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 3 to the financial statements, the Company has yet to generate significant revenue, has incurred net losses and has an accumulated deficit. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 3 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /S/ Haynie & Company Salt Lake City, Utah March 30, 2023 We have served as the Company’s auditor since 2021 F- 1 THUMZUP MEDIA CORPORATION BALANCE SHEETS December 31, 2022 2021 ASSETS Current assets: Cash $ 1,155,343 $ 424,445 Prepaid expenses 2,903 - Total current assets 1,158,246 424,445 Property and equipment, net 2,553 4,713 Total assets $ 1,160,799 $ 429,158 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 91,359 $ 34,313 Senior secured convertible promissory notes - 215,000 Total current liabilities 91,359 249,313 Total liabilities 91,359 249,313 Commitments and contingencies - - Stockholders’ equity: Preferred stock - 20,000,000 shares authorized: - - Preferred stock - Series A, $ 0.001 par value, $ 45,000 stated value, 1,000,000 shares authorized; 125,865 shares issued and outstanding 126 - Preferred stock, value - - Common stock, $ 0.001 par value, 250,000,000 shares authorized; 7,108,336 and 6,037,836 shares issued and outstanding, respectively 7,108 6,038 Additional paid in capital 3,179,913 1,036,749 Subscription receivable ( 33,000 ) - Accumulated deficit ( 2,084,707 ) ( 862,942 ) Total stockholders’ equity 1,069,440 179,845 Total liabilities and stockholders’ equity $ 1,160,799 $ 429,158 The accompanying notes are an integral part of these financial statements. F- 2 THUMZUP MEDIA CORPORATION STATEMENTS OF OPERATIONS For the Years Ended December 31, 2022 2021 Revenues $ 2,421 $ 2,446 Operating Expenses: Cost of revenues 439 - Sales and marketing 224,088 21,257 Research and development 567,408 716,524 General and administrative 418,940 102,698 Depreciation and amortization 2,160 1,736 Total Operating Expenses 1,213,035 842,215 Loss From Operations ( 1,210,614 ) ( 839,769 ) Other Income (Expense): Interest expense ( 11,151 ) ( 17,486 ) Total Other Income (Expense) ( 11,151 ) ( 17,486 ) Net Loss Before Income Taxes ( 1,221,765 ) ( 857,255 ) Provision for Income Taxes (Benefit) - - Net Loss ( 1,221,765 ) ( 857,255 ) Net Income (Loss) Available to Common Stockholders $ ( 1,221,765 ) $ ( 857,255 ) Net Income (Loss) Per Common Share: Basic $ ( 0.20 ) $ ( 0.16 ) Diluted $ ( 0.20 ) $ ( 0.16 ) Weighted Average Common Shares Outstanding: Basic 6,215,753 5,420,833 Diluted 6,215,753 5,420,833 The accompanying notes are an integral part of these financial statements. F- 3 THUMZUP MEDIA CORPORATION STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 Preferred Stock Additional Series A Common Stock Paid Subscription Accumulated Shares Amount Shares Amount In Capital Receivable Deficit Total Balance at December 31, 2020 - - 5,000,000 $ 5,000.00 $ ( 5,000 ) - $ ( 5,687 ) $ ( 5,687 ) Beginning balance, value - - 5,000,000 $ 5,000.00 $ ( 5,000 ) $ ( 5,687 ) $ ( 5,687 ) Common stock issued for advisory - - 30,000 $ 30.00 $ ( 30 ) - $ - $ - Common Stock issued for investment - - 1,007,836 $ 1,008.00 $ 1,148,492 - $ - $ 1,149,500 Offering costs - - - $ - $ ( 106,713 ) - $ - $ ( 106,713 ) Net loss - - - - $ - - $ ( 857,255 ) $ ( 857,255 ) Balance at December 31, 2021 - $ - 6,037,836 $ 6,038 $ 1,036,749 $ 0 $ ( 862,942 ) $ 179,845 Beginning balance, value - $ - 6,037,836 $ 6,038 $ 1,036,749 0 $ ( 862,942 ) $ 179,845 Preferred Series A issued for cash 28,004 $ 28 - - $ 1,259,967 - - $ 1,259,995 Preferred Series A issued for exchange of notes and interest 95,596 $ 96 - - $ 157,638 - - $ 157,733 Preferred Series A issued for dividends 2,265 $ 2 - - $ 2,263 - - $ 2,265 Common Stock issued for cash - - 286,834 $ 286 $ 736,714 $ ( 33,000 ) - $ 704,000 Common Stock issued for services - - 6,000 $ 6 $ 50,954 - - $ 50,960 Common Stock issued for conversion of notes - - 777,663 $ 778 $ 84,765 - - $ 85,543 Stock issuance costs - - - - $ ( 149,137 ) - - $ ( 149,137 ) Net loss - - - - - - ( 1,221,765 ) $ ( 1,221,765 ) Rounding - - - - - - $ 1 Balance at December 31, 2022 125,865 $ 124 7,108,333 $ 7,108 $ 3,179,913 $ ( 33,000 ) $ ( 2,084,707 ) $ 1,069,440 Ending balance, value 125,865 $ 124 7,108,333 $ 7,108 $ 3,179,913 ( 33,000 ) $ ( 2,084,707 ) $ 1,069,440 The accompanying notes are an integral part of these financial statements. F- 4 THUMZUP MEDIA CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2022 2021 Cash flows from operating activities: Net loss $ ( 1,221,765 ) $ ( 857,255 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization expense 2,160 1,736 Stock issued for services 50,960 - Preferred stock dividend paid with stock 2,265 - Interest expense paid with stock on conversion 8,886 - Changes in operating assets and liabilities: Prepaid expenses ( 2,903 ) 10,000 Accounts payable and accrued expenses 76,437 32,308 Net cash used in operating activities ( 1,083,960 ) ( 813,211 ) Cash flows from investing activities: Purchases of property and equipment - ( 6,449 ) Net cash used in investing activities - ( 6,449 ) Cash flows from financing activities: Proceeds from sale of common stock 737,000 1,042,788 Proceeds from sale of preferred stock 1,259,995 - Subscription receivable ( 33,000 ) - Costs incurred for equity sales ( 149,137 ) - Net cash provided by financing activities 1,814,858 1,042,788 Net (decrease) increase in cash 730,898 223,128 Cash, beginning of year 424,445 201,317 Cash, end of year $ 1,155,343 $ 424,445 Supplemental disclosures of cash flow information: Cash paid during period for interest $ - $ - Cash paid during period for taxes $ - $ - Supplemental disclosure of non-cash investing and financing activities: Preferred Series A issued for exchange of convertible notes and accrued interest $ 157,733 $ - Common shares issued upon conversion of convertible notes and accrued interest $ 85,543 $ - The accompanying notes are an integral part of these financial statements. F- 5 Thumzup™ Media Corporation Notes to Financial Statements December 31, 2022 Note 1 - Business Organization and Nature of Operations Thumzup Media Corporation (“Thumzup” or “Company”) was incorporated on October 27, 2020, under the laws of the State of Nevada, and its headquarters is located in Los Angeles, California. The Company’s primary business is software as a service provider dedicated to connecting businesses with consumers and allowing the business to incentivize consumers to post about their experience on social media. Thumzup’s mission is to democratize social media marketing by connecting advertisers with non-professional people, who can be paid for their posts about products and services they love through its technology which utilizes a proprietary mobile app (“App”). The App generates scalable word-of-mouth product posts and recommendations for advertisers on social media and is designed to connect advertisers with individuals who are willing to promote their products online. The Company is an “emerging growth company” as that term is used in the Jumpstart our Business Startups Act of 2012, and as such, has elected to comply with certain reduced public company reporting requirements. Note 2 - Summary of Significant Accounting Policies Basis of Presentation - The accompanying financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-K. Use of Estimates The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America, which requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures at the date of the financial statements and the reported amounts of expenses during the reported period. These assumptions and estimates could have a material effect on the financial statements. Actual results may differ materially from those estimates. The Company’s management periodically reviews estimates on an ongoing basis based on information currently available, and changes in facts and circumstances may cause the Company to revise these estimates. Significant estimates include estimates used in the valuation allowance related to deferred tax assets. Actual results may differ from these estimates. Cash and Cash Equivalents Cash and cash equivalents include all cash on hand, demand deposits and short-term investments with original maturities of three months or less when purchased. As of December 31, 2022 and 2021, the Company’s cash and cash equivalents consisted of $ 1,155,343 and $ 424,445 , respectively. The Company maintains its cash in banks insured by the Federal Deposit Insurance Corporation in accounts that at times may be in excess of the federally insured limit of $ 250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. At December 31, 2022 and 2021, the uninsured balances amounted to $ 905,343 and $ 174,445 , respectively. There is a risk the Company may lose uninsured balances over the FDIC insurance limit. F- 6 Prepaid Expenses As of December 31, 2022 and December 31, 2021, the Company had $ 2,903 and $ 0 in prepaid expenses, respectively. The Company’s prepaid expenses as of December 2022 consisted primarily of fees paid to a consultant for business development services which were rendered in January 2023. Property and Equipment Property and equipment, which consists of computer equipment is recorded at cost and depreciated using the straight-line method over the estimated useful lives. Ordinary repair and maintenance costs are included in general and administrative expenses on our statement of operations. However, expenditures for additions or improvements that significantly extend the useful life of the asset are capitalized in the period incurred. At the time assets are sold or disposed of, the cost and accumulated depreciation are removed from their respective accounts and the related gains or losses are reflected in the statements of operations in gains from sales of property and equipment, net. The estimated useful life for computer equipment is three years. We evaluate the appropriateness of remaining depreciable lives assigned to computer equipment at the end of each fiscal year. Depreciation expense for the years ended December 31, 2022 and December 31, 2021 were $ 2,160 and $ 1,736 , respectively. Revenue Recognition The Company recognizes revenue when services are realized. The Company’s revenues are accounted for under ASC Topic 606, “Revenue From Contracts With Customers” (“ASC 606”). The fees are generally fixed at the point of sale and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. In accordance with ASC 606, the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company recognizes revenue in accordance with that core principle by applying the following: (i) Identify the contract(s) with a customer; (ii) Identify the performance obligation in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to the performance obligations in the contract; and (v) Recognize revenue when (or as) the Company satisfies a performance obligation. F- 7 We derive our revenue principally from service fees paid by the client for the use of our platform in connection with our advertising technology platform which incentivizes users to leave reviews of our clients. Our sole performance obligation in the transaction is to connect clients with end-users to facilitate the completion of a successful review on the user’s social media accounts. Judgment is required in evaluating the presentation of revenue on a gross versus net basis based on whether we control the service provided to the end-user and are the principal in the transaction (gross), or we arrange for other parties to provide the service to the end-user and are the agent in the transaction (net). We have concluded that we are the agent in our current transactions as we arrange for users to provide the service to the clients and the users post reviews on social media accounts controlled by the users. The assessment of whether we are considered the principal or the agent in a transaction could impact the accounting for these transactions and change the timing and amount of revenue recognized. The percentage fee the Company charges is not variable. Cost of Goods Sold The Company classifies its credit card transaction fees as cost of goods sold. Client Deposits Thumzup’s clients generally prepay to utilize the Company’s technology platform. All client deposits for services are recorded as a client deposit liability upon receipt. Upon a user leaving a qualified review for the client, as defined in Thumzup’s Mobile Terms and Conditions, the Company transfers the fee payable to the user to a user account balances liability account and realizes the fees payable to the Company as revenue. The Company holds all client deposits and user account balances in cash or cash-equivalents, including money market accounts. Income Taxes The Company utilizes the asset and liability approach to measure deferred tax assets and liabilities based on temporary differences existing at each balance sheet date using currently enacted tax rates in accordance with ASC 740. ASC 740 considers the differences between financial statement treatment and tax treatment of certain transactions. 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. 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 of a change in tax rate is recognized as income or expense in the period that includes the enactment date of that rate. The Company has no tax positions as of December 31, 2022 and 2021 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company recognizes any interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. For the years ending December 31, 2022 and 2021, the Company recognized no interest and penalties. Net Earnings (Loss) Per Common Share The Company computes earnings (loss) per share under ASC subtopic 260-10, Earnings Per Share. Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods, as applicable. F- 8 The computation of basic and diluted income (loss) per share, for the year ended December 31, 2022 and 2021 excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period. Potentially dilutive securities excluded from the computation of basic and diluted net loss per share are as follows: Schedule of Potentially Dilutive Securities Excluded From Computation of Basic and Diluted Net Loss Per Share December 31, December 31, 2022 2021 Common shares issuable upon conversion of convertible notes - 2,130,818 Common shares issuable upon conversion of preferred stock 1,887,976 - Total potentially dilutive shares 1,887,976 2,130,818 Recent Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06, which simplifies the guidance on accounting for convertible debt instruments by removing the separation models for: (1) convertible debt with a cash conversion feature; and (2) convertible instruments with a beneficial conversion feature. As a result, the Company will not separately present in equity an embedded conversion feature in such debt. Instead, we will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. We expect the elimination of these models will reduce reported interest expense and increase reported net income for the Company’s convertible instruments falling under the scope of those models before the adoption of ASU 2020-06. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The adoption of this update did not have a material impact on the Company’s consolidated financial statements and related disclosures. There are other various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company ’ s financial position, results of operations or cash flows. Note 3 - Going Concern The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company was only recently formed, has not yet established profitable operations and has incurred losses since inception. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management is proposing to raise additional funds not provided by operations through loans or through sales of its common stock. There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable operations. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties. The Company recognized its first revenues in December 2021. It relies on short-term debt and equity funding for its operations. At December 31, 2022 and 2021, the Company had a cash balance of $ 1,155,343 and $ 424,445 , and the Company used $ 1,083,960 and $ 813,211 to fund operating activities for the years ending December 31, 2022 and 2021, respectively. For the year ended December 31, 2022 the Company raised approximately $ 737,000 from the sale of 286,834 shares of its common stock and approximately $ 1,260,000 from the sale of 28,004 shares of Preferred Series A stock and incurred offering costs of $ 149,137 . The Company raised approximately $ 1,042,788 in capital contributions (net of offering costs of $ 106,731 ) during 2021. The Company may need to raise additional funding and manage expenses in order to continue as a going concern. Note 4 - Senior Secured Convertible Promissory Notes On November 19, 2020, the Company issued $ 215,000 in Senior Secured Convertible Promissory Notes (“Senior Notes”). The Senior Notes originally matured on November 21, 2021 and accrued interest at eight ( 8 %) per annum. Accrued interest maybe paid quarterly or converted in to shares of common stock. The note holders issued an extension of the due date on these notes to November 19, 2022. During September 2022, the Company issued 777,663 shares of its common stock upon conversion of the Senior Notes and the associated accrued interest payable of $ 85,543 and issued 95,596 shares of its Series A Preferred upon exchange of the remaining principal balance and accrued interest of the Senior Notes of $ 157,733 . The balance of the Senior Notes payable at December 31, 2022 and December 31, 2021 was $ 0 and $ 215,000 , respectively. At any time while the Senior Notes were outstanding, and at the sole option of the note holder, the Senior Notes were convertible into shares of the Company’s common stock, $ 0.001 par value, or any shares of capital stock or other securities of the Company into which such common stock could have been changed or reclassified. A holder was not entitled to convert any portion of the Senior Note in excess of that portion of the Senior Note upon conversion of which the sum of (1) the number of shares of common stock beneficially owned by the Holder and its affiliates and (2) the number of conversion shares issuable upon the conversion would have resulted in beneficial ownership by a Holder and its affiliates of more than 4.50 % of the then outstanding shares of common stock. F- 9 The per share conversion price into which principal and interest outstanding of the Senior Notes were convertible into shares of common stock was equal to $ 0.11 cents per share. The Senior Notes contained a protection feature whereupon any issuance by the Company of common stock, or a security that was convertible into common stock, at a price lower than a net receipt to the Company of $ 0.11 per share, would result in the conversion price being adjusted to equal the lower price per share. The Company had classified this protection as a contingent beneficial feature and would have recorded it as a benefit to a holder in the event a conversion price adjustment occurred. The conversion price adjustment for the Senior Notes never occurred. In September 2022, the Company entered into separate exchange agreements with the Holders of the Senior Secured Promissory Notes to allow the conversion of their notes and accrued interest into shares of preferred stock. In September 2022 the Holders of the Senior Secured Promissory Notes exercised their option to convert their notes and accrued interest of $ 85,543 into 777,663 shares of common stock, and $ 157,733 of notes and accrued interest were converted into 95,596 shares of Preferred Series A stock. The balance of the Senior Secured Promissory Notes and the associated accrued interest payable at December 31, 2022 was $ 0 . Note 5 - Shareholders’ Equity Preferred Stock The Company is authorized to issue 25,000,000 shares of preferred stock, par value $ 0.001 per share. On September 26, 2022, the Company amended a Certificate of Designation to the Secretary of State of Nevada designating 1,000,000 shares of preferred stock as Series A Preferred which was originally submitted on September 21, 2022 (“Series A COD”). Each shareholder shall have the right, at any time and from time to time, at the shareholder’s option to convert any or all of such holder’s shares of Series A Preferred into the number of shares of Common Stock. Each share of Series A Preferred initially converts into 15 shares of Common Stock at a reference rate of $ 3.00 per share of Common Stock subject to adjustments. The holders of Series A Preferred shall be entitled to receive dividends, in cash or in-kind at Company’s election, in an amount equal to $ 3.50 per share. If paid in kind, the dividend shall be in shares of Series A Preferred (the “Dividend Shares”) valued at the $ 45.00 per share of Series A Preferred (the “Purchase Price”) unless the closing price of the common stock on the trading day prior to the issuance of the dividend is below the reference rate, in which case the dividend shares shall be valued at the purchase price adjusted pursuant to the formula set forth in Section 3 of the Certificate of Designations. For the year ended December 31, 2022 the Company entered into a Securities Purchase Agreement with accredited investors. Pursuant to the Securities Purchase Agreements, the company sold 28,004 Shares of its Series A Preferred at $ 45.00 per preferred share and received gross proceeds of approximately $ 1,259,995 . The Company issued 95,596 shares of its Series A Preferred for the exchange of the Senior Notes and the associated accrued interest payable of $ 157,733 . On December 30, 2022, the Company issued 2,265 shares of Series A Preferred as Dividend Shares per the Series A COD. As of December 31, 2022, there were 125,865 shares of Series A Preferred outstanding. Common Stock The Company is authorized to issue 250,000,000 million shares of common stock, par value $ 0.001 per share. As of December 31, 2022 and 2021, the Company had 7,108,336 and 6,037,836 shares issued and outstanding, respectively. During the year ended December 31, 2021, the Company issued 30,000 shares of common stock at par value of $ 30 for services rendered. During the year ended December 31, 2021, the Company issued 1,007,836 shares of common stock for investment of $ 1,042,787 , net offering costs of $ 106,731 . During the year ended December 31, 2022, the Company issued 6,000 shares valued at $ 50,960 based on the market value of $ 8.49 per share on the date of the stock grant for services rendered. During the year ended December 31, 2022, the Company issued 286,834 shares of common stock for investment of $ 587,863 , net offering expenses of $ 149,137 . During the year ended December 31, 2022, the Company issued 777,663 shares of common stock for the conversion of convertible debt and accrued interest of $ 85,543 . F- 10 Note 6 - Income Taxes As of December 31, 2022, the Company has net operating loss carryforwards (“NOL”) of approximately $ 1,796,000 , which is available to reduce future taxable income, for federal and state income taxes, respectively. The NOL is scheduled to expire in 2037. At the current federal tax rate of 21% and including book to tax differences result in the current NOL of $ 319,000 at December 31, 2022. The Company has no income tax effect due to the recognition of a full valuation allowance on the expected tax benefits of future loss carry forwards based on uncertainty surrounding realization of such assets. During the year ended December 31, 2022, the Company has increased the valuation allowance from $ 181,000 to $ 319,000 . The tax effect of the carry forwards that give rise to deferred tax assets at December 31, 2022 consists of the following: Schedule of Deferred Tax Assets 2022 2021 Deferred tax assets: Net operating loss $ 319,000 $ 181,000 Total deferred tax assets 319,000 $ 181,000 Valuation allowance ( 319,000 ) ( 181,000 ) Deferred tax asset, net of allowance $ - $ - A reconciliation of the statutory income tax rate and the Company’s effective tax rate is as follows: Schedule of Effective Income Tax Rate Reconciliation 2022 2021 Statutory U.S. federal rate 21.0 % 21.0 % Book to tax differences ( 6.0 )% ( 6.0 )% Valuation allowance ( 15.0 )% ( 15.0 )% Effective tax rate 0.0 % 0.0 % Note 7 - Subsequent Events The Company has evaluated subsequent events from the balance sheet date through the date which the financial statements were issued. On March 15, 2023, the Company issued 2,447 Series A Preferred Convertible Voting Shares (“Series A Preferred”) for a dividend per the terms of the Series A Preferred Certificate of Designation. The Company is currently conducting an offering under Regulation A+, pursuant to an Offering Statement on Form 1-A/A filed on December 23, 2022 and qualified on January 9, 2023, through which the Company is offering up to 2 million shares of common stock at a purchase price of $ 4.50 per share. The Company currently has subscriptions for 64,894 shares for an aggregate subscription amount of $ 292,023 in escrow as fully described in the Company’s Form 1-A/A filed on December 23, 2022. F- 11