Item 1. Financial Statements
ITEM
1. FINANCIAL STATEMENTS
Thumzup
Media Corporation
June
30, 2023
Index
to the Condensed Financial Statements
Condensed Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022 (As Restated)
3
Condensed Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)
4
Condensed Statements of Shareholder’s Equity (Deficit) for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)
5
Condensed Statements of Cash Flows for the Six Months ended June 30, 2023 and 2022 (unaudited)
6
Notes to the Condensed Financial Statements (unaudited)
7
2
THUMZUP
MEDIA CORPORATION
BALANCE
SHEETS
June 30,
December 31,
2023
2022
(Unaudited)
(As Restated)
ASSETS
Current assets:
Cash
$ 393,143
$ 1,155,343
Prepaid expenses
53,538
2,903
Total current assets
446,681
1,158,246
Property and equipment, net
6,366
2,553
Capitalized software costs, net
66,334
-
Total assets
$ 519,381
$ 1,160,799
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses
$ 64,146
$ 91,359
Liquidated damages and accrued interest
685,064
282,916
Total current liabilities
749,210
374,275
Total liabilities
749,210
374,275
Commitments and contingencies (See Note 5)
-
-
Stockholders’ equity (deficit):
Preferred stock - 20,000,000 shares authorized:
Preferred stock - Series A, $ 0.001 par value, $ 45,000 stated value, 1,000,000 shares authorized; 130,807 and 125,865 shares issued and outstanding, respectively
131
126
Preferred Stock Value
Common stock, $ 0.001 par value, 250,000,000 shares authorized; 7,288,171 and 7,108,336 shares issued and outstanding, respectively
7,288
7,108
Additional paid in capital
3,966,044
3,179,913
Subscriptions receivable
-
( 33,000 )
Accumulated deficit
( 4,203,292 )
( 2,367,623 )
Total stockholders’ equity (deficit)
( 229,829 )
786,524
Total liabilities and stockholders’ equity (deficit)
$ 519,381
$ 1,160,799
The
accompanying notes are an integral part of these unaudited condensed financial statements.
3
THUMZUP
MEDIA CORPORATION
STATEMENTS
OF OPERATIONS
(Unaudited)
2023
2022
2023
2022
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2023
2022
2023
2022
Revenues
$ 580
$ 1,398
$ 2,350
$ 4,892
Operating Expenses:
Cost of revenues
-
-
116
-
Sales and marketing
252,957
50,498
521,674
65,359
Research and development
192,105
139,952
317,986
285,998
General and administrative
258,101
81,103
583,055
143,079
Depreciation and amortization
5,690
540
8,097
1,080
Total Operating Expenses
708,853
272,093
1,430,928
495,516
Loss From Operations
( 708,273 )
( 270,695 )
( 1,428,578 )
( 490,624 )
Other Income (Expense):
Liquidated damages expense
( 190,806 )
-
( 366,923 )
-
Interest expense
( 22,856 )
( 4,443 )
( 35,224 )
( 8,886 )
Total Other Income (Expense)
( 213,662 )
( 4,443 )
( 402,147 )
( 8,886 )
Net Loss Before Income Taxes
( 921,935 )
( 275,138 )
( 1,830,725 )
( 499,510 )
Provision for Income Taxes (Benefit)
-
-
-
-
Net Loss
$ ( 921,935 )
$ ( 275,138 )
$ ( 1,830,725 )
$ ( 499,510 )
Dividends on preferred stock
( 2,495 )
-
( 4,942 )
-
Net Loss Attributable to Common Stockholders
$ ( 924,430 )
$ ( 275,138 )
$ ( 1,835,667 )
$ ( 499,510 )
Net Income (Loss) Per Common Share:
Basic
$ ( 0.13 )
$ ( 0.04 )
$ ( 0.26 )
$ ( 0.04 )
Diluted
$ ( 0.13 )
$ ( 0.04 )
$ ( 0.26 )
$ ( 0.04 )
Weighted Average Common Shares Outstanding:
Basic
7,118,933
6,093,703
7,118,933
6,093,703
Diluted
7,118,933
6,093,703
7,118,933
6,093,703
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
THUMZUP
MEDIA CORPORATION
STATEMENTS
OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(Unaudited)
Shares
Amount
Shares
Amount
In Capital
Receivable
Deficit
Total
Preferred Stock
Additional
Series A
Common Stock
Paid
Subscriptions
Accumulated
Shares
Amount
Shares
Amount
In Capital
Receivable
Deficit
Total
Balance at December 31, 2021
-
-
6,037,836
$ 6,038.00
$ 1,036,749
$ -
$ ( 862,942 )
$ 179,845
Common Stock issued for investment
-
-
275,834
$ 276.00
$ 703,725
-
$ 704,001
Common stock issued for services
-
-
2,000
$ 2.00
$ 18,378
-
-
$ 18,380
Net loss
-
-
-
-
-
-
$ ( 499,510 )
$ ( 499,510 )
Balance at June 30, 2022
-
$ -
6,315,670
$ 6,316
$ 1,758,852
$ -
$ ( 1,362,452 )
$ 402,716
Preferred Stock
Additional
Series A
Common Stock
Paid
Subscriptions
Accumulated
Shares
Amount
Shares
Amount
In
Capital
Receivable
Deficit
Total
Balance at December 31, 2022 (as restated)
125,865
$ 126.00
7,108,336
$ 7,108.00
$ 3,179,913
$ ( 33,000 )
$ ( 2,367,623 )
$ 786,524
Common Stock issued for services rendered
-
-
20,000
$ 20.00
$ 146,058
$ -
$ -
$ 146,078
Common Stock issued for investment
-
-
159,835
$ 160.00
$ 641,553
$ -
$ -
$ 641,713
Common Stock offering costs
-
-
-
$ -
$ ( 6,417 )
$ -
$ -
$ ( 6,417 )
Stock subscription receivable received
-
-
-
$ -
$ -
$ 33,000
$ -
$ 33,000
Preferred Series A issued for dividends
4,942
5
-
$ -
$ 4,937
$ -
$ ( 4,942 )
$ -
Net loss
-
-
-
-
$ -
$ -
$ ( 1,830,725 )
$ ( 1,830,725 )
Balance at June 30, 2023
130,807
$ 131
7,288,171
$ 7,288
$ 3,966,044
$ -
$ ( 4,203,292 )
$ ( 229,829 )
Preferred Stock
Additional
Series A
Common
Stock
Paid
Subscriptions
Accumulated
Shares
Amount
Shares
Amount
In
Capital
Receivable
Deficit
Total
Balance at March 31, 2022
-
-
6,120,169
$ 6,121.00
$ 1,160,166
$ -
$ ( 1,087,314 )
$ 78,973
Common Stock issued for investment
-
-
193,501
$ 193.00
$ 580,308
-
-
$ 580,501
Common stock issued for services
-
-
2,000
$ 2.00
$ 18,378
-
-
$ 18,380
Net loss
-
-
-
-
-
-
$ ( 275,138 )
$ ( 275,138 )
Balance at June 30, 2022
-
$ -
6,315,670
6,316
1,758,852
-
( 1,362,452 )
402,716
Preferred Stock
Additional
Series
A
Common
Stock
Paid
Subscriptions
Accumulated
Shares
Amount
Shares
Amount
In
Capital
Receivable
Deficit
Total
Balance at March 31, 2023 (as restated)
128,312
$ 128.00
7,126,336
$ 7,126.00
$ 3,314,340
$ -
$ ( 3,278,861 )
$ 42,733
Common Stock issued for services rendered
-
-
2,000
$ 2.00
$ 14,076
$ -
$ -
$ 14,078
Common Stock issued for investment
-
-
159,835
$ 160.00
$ 641,553
$ -
$ -
$ 641,713
Common Stock offering costs
-
-
-
$ -
$ ( 6,417 )
$ -
$ -
$ ( 6,417 )
Stock subscription receivable received
-
-
-
$ -
$ -
$ -
$ -
$ -
Preferred Series A issued for dividends
2,495
3
-
$ -
$ 2,492
$ -
$ ( 2,495 )
$ -
Net loss
-
-
-
-
$ -
$ -
$ ( 921,935 )
$ ( 921,935 )
Balance at June 30, 2023
130,807
$ 131
7,288,171
$ 7,288
$ 3,966,044
$ -
$ ( 4,203,292 )
$ ( 229,829 )
The
accompanying notes are an integral part of these unaudited condensed financial statements.
5
THUMZUP
MEDIA CORPORATION
CONSOLIDATED
STATEMENTS OF CASHFLOWS
(Unaudited)
2023
2022
For the Six Months Ended June 30,
2023
2022
Cash flows from operating activities:
Net loss
$ ( 1,830,725 )
$ ( 499,510 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense
8,097
1,080
Stock issued for services
146,078
18,380
Changes in operating assets and liabilities:
Liquidated damages and accrued interest
402,147
-
Prepaid expenses
( 50,635 )
-
Accounts payable and accrued expenses
( 27,215 )
5,161
Net cash used in operating activities
( 1,352,253 )
( 474,889 )
Cash flows from investing activities:
Purchases of property and equipment
( 5,105 )
Capitalized software costs
( 73,138 )
-
Net cash used in investing activities
( 78,243 )
-
Cash flows from financing activities:
Proceeds from sale of common stock
674,713
704,000
Proceeds from loan
-
300
Proceeds from sale of preferred stock
-
-
Costs incurred for equity sales
( 6,417 )
-
Net cash provided by financing activities
668,296
704,300
Net (decrease) increase in cash
( 762,200 )
229,411
Cash, beginning of period
1,155,343
424,445
Cash, end of period
$ 393,143
$ 653,856
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 shares issued for dividends
$ 4,942
$ -
The accompanying notes are an integral part of these unaudited condensed financial statements.
6
Thumzup
Media Corporation
Notes
to the Condensed Financial Statements (Unaudited)
June
30, 2023
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 - Unaudited Interim Financial Information
The
accompanying unaudited condensed financial statements and related notes have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules
and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article
8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial
statements. The unaudited condensed financial statements reflect all adjustments (consisting of normal recurring accruals) which are,
in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not
necessarily indicative of the results for the full year.
Certain information and disclosures
normally included in the notes to the annual consolidated financial statements have been condensed or omitted from these interim unaudited
condensed consolidated financial statements. Accordingly, these interim unaudited condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes thereto included in our Amendment No. 2 to the Annual Report
on Form 10-K for the fiscal year ended December 31, 2022 as filed and restated with the SEC August 16, 2023 (the “Annual Report”).
The December 31, 2022 balance sheet is derived from those restated financial statements.
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 and capitalized software costs. 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 June 30, 2023 and December 31, 2022, the Company’s cash and cash equivalents consisted of $ 393,143 and $ 1,155,343 , 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 June 30, 2023 and December 31, 2022, the uninsured balances amounted to $ 143,143
and $ 905,343 , respectively. There is a risk the Company may lose uninsured balances over the FDIC insurance limit.
7
Prepaid
Expenses
As
of June 30, 2023 and December 31, 2022, the Company had $ 53,538 and $ 2,903 in prepaid expenses, respectively. The Company’s prepaid
expenses as of June 30, 2023 were primarily for marketing, filing, and listing fees for services not yet rendered. The Company’s
prepaid expenses as of December 31, 2022 consisted primarily of fees paid to a consultant for business development services which were
rendered in 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 three months ended June 30, 2023 and 2022 was $ 753
and $ 540 , respectively. Depreciation expense for the six months ended June 30, 2023 and 2022 was $ 1,293 and $ 1,080 , respectively.
Capitalized
Software Development Costs
We
capitalize certain costs related to the development and enhancement of the Thumzup platform. In accordance with authoritative
guidance, we began to capitalize these costs when the technological feasibility was established and preliminary development efforts
were successfully completed, management has authorized and committed project funding, and it was probable that the project would be
completed and the software would be used as intended. Such costs are amortized when placed in service, on a straight-line basis over
the estimated useful life of the related asset, generally estimated to be three years. Costs incurred prior to meeting these
criteria together with costs incurred for training and maintenance are expensed as incurred and recorded in product development
expenses on our consolidated statements of operations. Costs incurred for enhancements that were expected to result in additional
features or functionality that would generate additional revenue are capitalized and expensed over the estimated useful life of the
enhancements, generally three years. The Company does not capitalize any testing or maintenance costs. The accounting for these
capitalized software costs requires us to make significant judgments, assumptions and estimates related to the timing and amount of
recognized capitalized software development costs. For the six months ended June 30, 2023 and 2022, we capitalized $ 73,138 and
$ 0 of
costs related to the development of software applications, respectively. Amortization of capitalized software costs was $ 4,937 and
$ 0 for
the three months ended June 30, 2023 and 2022, respectively, and $ 6,804 and
$ 0 for
the six months ended June 30, 2023, respectively. Capitalized software was $ 66,334 and
$ 0 ,
net of accumulated amortization of $ 6,804 and
$ 0 at
June 30, 2023 and December 31, 2022, respectively.
Revenue
Recognition
The
Company recognizes revenue when services are performed.
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.
8
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.
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 June 30, 2023 and December 31, 2022 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 three and six months ending June 30, 2023 and 2022, 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.
9
Denotes
a management contract or compensatory plan. The computation of basic and diluted income (loss) per share, for the three and six months
ended June 30, 2023 and 2022 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
June 30,
June 30,
2023
2022
Common shares issuable upon conversion of convertible notes
-
2,211,600
Common shares issuable upon conversion of preferred stock
1,962,111
-
Total potentially dilutive shares
1,962,111
2,221,600
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 June 30,
2023 and December 31, 2022, the Company had a cash balance of $ 393,143 and $ 1,155,343 , respectively, and the Company used $ 1,352,253
and $ 474,889 to fund operating activities for the six months ending June 30, 2023 and 2022, respectively. The Company may need to raise
additional funding and manage expenses in order to continue as a going concern.
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. As of June 30, 2023, the Company had sold 159,835 shares under the offering for proceeds of $ 635,136 , net offering
costs. On July 10, 2023, Thumzup closed on subscriptions for 18,887 shares of common stock for proceeds of $ 74,780 , net offering costs
of $ 983 . Further, as of August 10, 2023, the Company had subscriptions for 17,288 shares for an aggregate subscription amount of $ 82,381
in escrow as fully described in the Company’s Form 1-A/A filed on December 23, 2022. The Company will not receive any funds and
will not issue any shares of common stock until the transactions are released from escrow.
10
Note
4 – 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 submitted
a Certificate of Designation to the Secretary of State of Nevada designating 1,000,000 shares of preferred stock as Series A Preferred
(“Series A Preferred”). 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 the 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.
On
March 15, 2023, the Company issued 2,447 Series A Dividend Shares per the terms of the Series A Preferred Certificate of Designation.
On
June 15, 2023, the Company issued 2,495 Series A Dividend Shares per the terms of the Series A Preferred Certificate of Designation.
As
June 30, 2023 and December 31, 2022, the Company had 130,807 and 125,865 Series A preferred shares
issued and outstanding, respectively.
Common
Stock
The
Company is authorized to issue 250,000,000 million shares of common stock, par value $ 0.001 per share.
During
the six months ended June 30, 2023, the Company issued 20,000 shares of common stock valued at $ 146,080 for services rendered.
During
the six months ended June 30, 2023, the Company issued 159,835 shares of common stock for proceeds of $ 635,136 , net offering costs of
$ 6,417 .
As
June 30, 2023 and December 31, 2022, the Company had 7,288,171 and 7,108,336 shares issued and outstanding, respectively.
During
the three and six months ended June 30, 2023, the Company has realized expenses of $ 190,806 and $ 402,127 , respectively, for liquidated
damages contained in the Registration Rights Agreements in certain of the Company’s equity offerings for failing to file and maintain
a Registration Statement covering the shares sold in those offerings. As of June 30, 2023 and December 31, 2022, the accrued liquidated
damages and accrued interest is $ 685,064 and $ 282,916 , respectively.
11
Note
5 – Contingencies
Russia-Ukraine
conflict
The
Russian-Ukraine conflict is a global concern. The Company does not have any direct exposure to Russia or Ukraine through its operations,
employee base, investments or sanctions. However, if the conflict escalates, it is unknown whether its direct or indirect effects may
impact our business.
Note
6 – Related Party Transactions
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. 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. In addition to the monthly fee, through July 25, 2023 the Company has paid Elev8 an aggregate
of $ 25,000 for a social media marketing campaign and an aggregate of $ 15,000 for a marketing plan aimed at garnering more followers for
the Company’s social media accounts.
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 closed
on May 16, 2023.
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 received 1,115 shares of common stock as bonus shares under
the terms of the qualified offering under Regulation A+. The subscription closed on May 16, 2023.
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 the Company’s Certificate of Designation.
On
June 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 531 shares of Series A Preferred Stock, per the terms of the Company’s Certificate of Designation.
On
June 27, 2023, Westside Strategic Partners, LLC, of which one of our Directors, Robert Haag, is the managing member and sole owner, subscribed
to purchase 11,140 shares of common stock at $ 4.50 per share for a subscription amount of $ 50,130 under the Company’s qualified
offering under Regulation A+. Westside Strategic Partners, LLC received 1,114 shares of common stock as bonus shares under the terms
of the qualified offering under Regulation A+. The subscription closed on June 29, 2023.
Note
7 – Subsequent Events
The
Company has evaluated subsequent events from the balance sheet date through the date which the financial statements were issued.
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. On July 10, 2023, Thumzup closed on subscriptions for 18,887 shares of common stock for proceeds of $ 74,780 , net
offering costs of $ 983 . Further, as of August 10, 2023, the Company had subscriptions for 17,288 shares for an aggregate subscription
amount of $ 82,381 in escrow as fully described in the Company’s Form 1-A/A filed on December 23, 2022. The Company will not receive
any funds and will not issue any shares of common stock until the transactions are released from escrow.
12
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.