UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the Period Ended June 30, 2024
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR
THE TRANSITION PERIOD FROM ______ TO _________
Commission
File Number: 333-255624
Thumzup
Media Corporation
(Exact
name of registrant as Specified in its Charter)
Nevada
511210
85-3651036
(State
or Other Jurisdiction of
(Primary
Standard Industrial
(Internal
Revenue Service
Incorporation
or Organization)
Classification
Code Number)
Employer
Identification Number)
11845
W. Olympic Blvd. , Ste 1100W #13
Los
Angeles , CA
90064
(Address
of Principal Executive Offices)
(Zip
Code)
Registrant’s
telephone number, including area code:
(800)
403-6150
Securities
registered pursuant to Section 12(b) of the Exchange Act:
None
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer , ” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer ☐
Accelerated
filer ☐
Non-accelerated
filer ☒
Smaller
reporting company ☒
Emerging
growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes ☐ No ☒
State
the number of shares of the issuer’s common stock outstanding, as of the latest practicable date: 7,741,731 shares of common stock
issued and outstanding as of August 8, 2024.
PART
I – FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
Thumzup
Media Corporation
June
30, 2024
Index
to the Condensed Financial Statements
Condensed Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023
3
Condensed Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)
4
Condensed Statements of Changes in Stockholder’s Equity (Deficit) for the Three and Six Months
Ended June 30, 2024 and 2023 (unaudited)
5
Condensed Statements of Cash Flows for the Three and Six Months ended June 30, 2024 and 2023 (unaudited)
7
Notes to the Condensed Financial Statements (unaudited)
8
2
THUMZUP
MEDIA CORPORATION
CONDENSED
BALANCE SHEETS
June 30,
December 31,
2024
2023
(Unaudited)
ASSETS
Current assets:
Cash
$ 398,450
$ 259,212
Other receivable
25,000
-
Prepaid expenses
73,411
6,321
Total current assets
496,861
265,533
Property and equipment, net
5,315
7,040
Capitalized software costs, net
230,842
142,614
Total assets
$ 733,018
$ 415,187
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses
$ 113,816
$ 65,860
Total current liabilities
113,816
65,860
Total liabilities
113,816
65,860
Commitments and contingencies (See Note 5)
-
-
Stockholders’ equity:
Preferred stock - 25,000,000 shares authorized:
Preferred stock - Series A, $ 0.001 par value, $ 45,000 stated value, 1,000,000 shares authorized; 147,798 and 142,769 shares issued and outstanding, respectively
148
143
Preferred stock - Series B, $ 0.001 par value, $ 50,000 stated value, 40,000 shares authorized; 16,100 and 0 shares issued and outstanding, respectively
16
-
Preferred stock
16
-
Common stock, $ 0.001 par value, 250,000,000 shares authorized; 7,741,731 and 7,656,488 shares issued and outstanding, respectively
7,742
7,656
Additional paid in capital
7,184,531
6,033,331
Accumulated deficit
( 6,573,235 )
( 5,691,803 )
Total stockholders’ equity
619,202
349,327
Total liabilities and stockholders’ equity
$ 733,018
$ 415,187
The
accompanying notes are an integral part of these unaudited condensed financial statements.
3
THUMZUP
MEDIA CORPORATION
CONDENSED
STATEMENTS OF OPERATIONS
(Unaudited)
2024
2023
2024
2023
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2024
2023
2024
2023
Revenues
$ 30
$ 580
$ 435
$ 2,350
Operating Expenses:
Cost of revenues
-
-
-
116
Sales and marketing
96,674
252,957
148,440
521,674
Research and development
49,665
192,105
87,087
317,986
General and administrative
359,827
258,101
581,755
583,055
Depreciation and amortization
22,925
5,690
40,163
8,097
Total Operating Expenses
529,091
708,853
857,445
1,430,928
Loss From Operations
( 529,061 )
( 708,273 )
( 857,010 )
( 1,428,578 )
Other Income (Expense):
Liquidated damages expense
-
( 190,806 )
-
( 366,923 )
Interest income (expense)
1,288
( 22,856 )
1,288
( 35,224 )
Total Other Income (Expense)
1,288
( 213,662 )
1,288
( 402,147 )
Net Loss Before Income Taxes
( 527,773 )
( 921,935 )
( 855,722 )
( 1,830,725 )
Provision for Income Taxes (Benefit)
-
-
-
-
Net Loss
$ ( 527,773 )
$ ( 921,935 )
$ ( 855,722 )
$ ( 1,830,725 )
Dividends on preferred stock
( 22,944 )
( 2,495 )
( 25,710 )
( 4,942 )
Net Loss Attributable to Common Stockholders
$ ( 550,717 )
$ ( 924,430 )
$ ( 881,432 )
$ ( 1,835,667 )
Net Income (Loss) Per Common Share:
Basic
$ ( 0.07 )
$ ( 0.13 )
$ ( 0.11 )
$ ( 0.26 )
Diluted
$ ( 0.07 )
$ ( 0.13 )
$ ( 0.11 )
$ ( 0.26 )
Weighted Average Common Shares Outstanding:
Basic
7,724,297
7,118,933
7,704,580
7,118,933
Diluted
7,724,297
7,118,933
7,704,580
7,118,933
The
accompanying notes are an integral part of these unaudited condensed financial statements.
4
THUMZUP
MEDIA CORPORATION
CONDENSED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR
THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023
(Unaudited)
Shares
Amount
Shares
Amount
Shares
Amount
In Capital
Receivable
Deficit
Total
Preferred Stock
Preferred Stock
Additional
Series A
Series B
Common Stock
Paid
Subscriptions
Accumulated
Shares
Amount
Shares
Amount
Shares
Amount
In Capital
Receivable
Deficit
Total
Balance at March 31, 2024
144,978
$ 145
3,800
$ 4
7,720,084
$ 7,720
$ 6,494,965
$ -
$ ( 6,022,515 )
$ 480,318
Common Stock issued for services rendered and to be rendered
-
-
-
-
17,000
$ 17
$ 75,633
-
-
$ 75,650
Refund of investment - Reg A+
-
-
-
-
-
-
$ 1,009
-
$ ( 3 )
$ 1,007
Common Stock issued for Series B dividend
-
-
-
-
4,647
$ 5
$ 20,120
-
$ ( 20,125 )
-
Series B issued for investment
-
-
12,300
$ 12
-
-
$ 614,988
-
-
$ 615,000
Issuance costs - preferred Series B
-
-
-
-
-
-
$ ( 25,000 )
-
-
$ ( 25,000 )
Preferred Series A issued for dividends
2,820
$ 3
-
-
-
-
$ 2,816
-
$ ( 2,819 )
-
Net loss
-
-
-
-
-
-
-
-
$ ( 527,773 )
$ ( 527,773 )
Balance at June 30, 2024
147,798
$ 148
16,100
$ 16
7,741,731
$ 7,742
$ 7,184,531
$ -
$ ( 6,573,235 )
$ 619,202
Preferred Stock
Preferred Stock
Additional
Series A
Series B
Common Stock
Paid
Subscriptions
Accumulated
Shares
Amount
Shares
Amount
Shares
Amount
In Capital
Receivable
Deficit
Total
Balance at March 31, 2023
128,312
$ 128
-
$ -
7,126,336
$ 7,126
$ 3,314,340
$ -
$ ( 3,278,861 )
$ 42,733
Common Stock issued for services rendered
-
-
-
-
2,000
$ 2
$ 14,076
-
-
$ 14,078
Common Stock issued for investment
-
-
-
-
159,835
$ 160
$ 641,553
-
-
$ 641,713
Common Stock offering costs
-
-
-
-
-
-
$ ( 6,417 )
-
-
$ ( 6,417 )
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
CONDENSED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR
THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023
(Unaudited)
Preferred Stock
Preferred Stock
Additional
Series A
Series B
Common Stock
Paid
Subscriptions
Accumulated
Shares
Amount
Shares
Amount
Shares
Amount
In Capital
Receivable
Deficit
Total
Balance at December 31, 2023
142,769
$ 143
-
$ -
7,656,488
$ 7,656
$ 6,033,331
$ -
$ ( 5,691,803 )
$ 349,327
Common Stock issued for investment, net
-
-
-
-
36,256
$ 36
$ 161,190
-
-
$ 161,226
Common Stock issued for services rendered and to be rendered
-
-
-
-
36,000
$ 36
$ 184,334
-
-
$ 184,370
Common Stock issued for Series A conversion
( 556 )
$ ( 1 )
-
-
8,340
$ 9
$ ( 7 )
-
-
$ 1
Common Stock issued for Series B dividend
-
-
-
-
4,647
$ 5
$ 20,120
-
$ ( 20,125 )
-
Series B issued for investment
-
-
16,100
$ 16
-
-
$ 804,984
-
-
$ 805,000
Preferred Series A issued for dividends
5,585
$ 6
-
-
-
-
$ 5,579
-
$ ( 5,585 )
-
Issuance costs - Preferred Series B
-
-
-
-
-
-
$ ( 25,000 )
-
-
$ ( 25,000 )
Net loss
-
-
-
-
-
-
-
-
$ ( 855,722 )
$ ( 855,722 )
Balance at June 30, 2024
147,798
$ 148
16,100
$ 16
7,741,731
$ 7,742
$ 7,184,531
$ -
$ ( 6,573,235 )
$ 619,202
Preferred Stock
Preferred Stock
Additional
Series A
Series B
Common Stock
Paid
Subscriptions
Accumulated
Shares
Amount
Shares
Amount
Shares
Amount
In Capital
Receivable
Deficit
Total
Balance at December 31, 2022
125,865
$ 126
-
$ -
7,108,336
$ 7,108
$ 3,179,913
$ ( 33,000 )
$ ( 2,367,623 )
$ 786,524
Balance
125,865
$ 126
-
$ -
7,108,336
$ 7,108
$ 3,179,913
$ ( 33,000 )
$ ( 2,367,623 )
$ 786,524
Common Stock issued for services rendered
-
-
-
-
20,000
$ 20
$ 146,058
-
-
$ 146,078
Common Stock issued for investment
-
-
-
-
159,835
$ 160
$ 641,553
-
-
$ 641,712
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 )
Balance
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.
6
THUMZUP
MEDIA CORPORATION
CONDENSED
STATEMENTS OF CASHFLOWS
(Unaudited)
2024
2023
For the Six Months Ended June 30,
2024
2023
Cash flows from operating activities:
Net loss
$ ( 855,722 )
$ ( 1,830,725 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense
40,163
8,097
Stock issued for services
184,370
146,078
Changes in operating assets and liabilities:
Other accounts receivable
( 25,000 )
-
Prepaid expenses
( 67,090 )
( 50,635 )
Liquidated damages and accrued interest
-
402,147
Accounts payable and accrued expenses
47,956
( 27,215 )
Net cash used in operating activities
( 675,323 )
( 1,352,253 )
Cash flows from investing activities:
Purchases of property and equipment
-
( 5,105 )
Capitalized software costs
( 126,665 )
( 73,138 )
Net cash used in investing activities
( 126,665 )
( 78,243 )
Cash flows from financing activities:
Proceeds from sale of common stock
161,226
674,713
Proceeds from sale of preferred stock - Series B
805,000
-
Costs incurred for equity sales
( 25,000 )
( 6,417 )
Net cash provided by financing activities
941,226
668,296
Net (decrease) increase in cash
139,238
( 762,200 )
Cash, beginning of period
259,212
1,155,343
Cash, end of period
$ 398,450
$ 393,143
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
$ 5,585
$ 4,942
Common shares issued for Preferred Series B dividends
$ 20,125
$ -
The
accompanying notes are an integral part of these unaudited condensed financial statements.
7
Thumzup
Media Corporation
Notes
to the Condensed Financial Statements (Unaudited)
June
30, 2024
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 – 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 has been reliant on equity funding for its operations. At June 30, 2024 and
December 31, 2023, the Company had a cash balance of $ 398,450 and $ 259,212 , respectively. For the six months ended June 30, 2024 and
2023, the Company used $ 675,323 and $ 1,352,253 to fund operating activities, respectively. For the six ended June 30, 2024, the Company
raised approximately $ 161,846 , net offering expenses of $ 1,789 , from the sale of 63,596 shares of its common stock and approximately
$ 805,000 from the sale of 16,100 shares of Preferred Series B stock. The Company may need to raise additional funding and manage expenses
in order to continue as a going concern.
Note
3 – 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 financial statements have been condensed or omitted from these interim unaudited condensed financial statements. Accordingly, these
interim unaudited condensed financial statements should be read in conjunction with the financial statements and notes thereto included
in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 as filed with the SEC on March 20, 2024 (the “Annual
Report”). The December 31, 2023 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.
8
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, 2024 and December 31, 2023, the Company’s cash and cash equivalents consisted of $ 398,450 and $ 259,212 , 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, 2024 and December 31, 2023, the uninsured balances amounted to $ 81,313 and $ 1,850 , respectively. There is a
risk the Company may lose uninsured balances over the FDIC insurance limit.
Prepaid
Expenses
As
of June 30, 2024 and December 31, 2023, the Company had $ 73,411 and $ 6,321 in prepaid expenses, respectively. The Company’s prepaid
expenses as of June 30, 2024 and December 31, 2023 were primarily for marketing, filing, and listing fees for services not yet rendered.
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, 2024 and 2023 was $ 1,067
and $ 753 , respectively. Depreciation expense for the six months ended June 30, 2024 and 2023 was $ 1,725 and $ 1,293 , respectively.
Capitalized
Software Development Costs
We
capitalize certain costs related to the development and enhancement of the Thumzup platform. In accordance with authoritative guidance,
including ASC 350-40, 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
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 June 30, 2024 and 2023, we capitalized $ 126,665 and $ 73,138 of costs
related to the development of software applications, respectively. Amortization of capitalized software costs was $ 21,858 and $ 4,937
for the for the three months ended June 30, 2024 and 2023, respectively. Amortization of capitalized software costs was $ 38,438 and $ 6,804
for the for the six months ended June 30, 2024 and 2023, respectively. The balance of capitalized software was $ 295,178 and $ 142,614 ,
net of accumulated amortization of $ 64,337 and $ 25,899 at June 30, 2024 and December 31, 2023, respectively.
The
Company evaluates its capitalized software costs for impairment annually, at year-end. As of December 31, 2023, the Company determined
no impairment of its capitalized software costs was warranted.
9
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 upon 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.
10
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, 2024 and December 31, 2023 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 June 30, 2024 and December 31, 2023, 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 period. 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.
The
computation of basic and diluted income (loss) per share, for the three and six months ended June 30, 2024 and 2023 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,
2024
2023
Common shares issuable upon conversion of convertible notes
-
-
Common shares issuable upon conversion of preferred stock
2,377,970
1,962,111
Total potentially dilutive shares
2,377,970
1,962,111
Recent
Accounting Pronouncements
In
November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,”
which will add required disclosures of significant expenses for each reportable segment, as well as certain other disclosures to help
investors understand how the chief operating decision maker (“CODM”) evaluates segment expenses and operating results. The
new standard will also allow disclosure of multiple measures of segment profitability, if those measures are used to allocate resources
and assess performance. The amendments will be effective for public companies for fiscal years beginning after December 15, 2023, and
interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact
of this accounting standard update on our financial statements.
In
December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires
disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.
The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital
allocation decisions. The standard will be effective for public companies for fiscal years beginning after December 15, 2024. Early adoption
is permitted. We are currently evaluating the impact of this accounting standard update on our financial statements.
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.
11
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.
Series
A Preferred
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 $ 0.875 per share per quarter. 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
January 18, 2024, a holder converted 556 shares of Series A preferred into 8,340 shares of common stock.
On
March 15, 2024, the Company issued 2,765 Series A shares as a dividend.
On
June 15, 2024, the Company issued 2,819 Series A shares as a dividend.
As
June 30, 2024 and December 31, 2023, the Company had 147,798 and 142,769 Series A preferred shares issued and outstanding, respectively.
Series
B Preferred
On
March 5, 2024, the Company submitted a Certificate of Designation to the Secretary of State of Nevada designating 40,000 shares of preferred
stock as Series B Preferred (“Series B 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 B Preferred into the number of shares
of Common Stock. Each share of Series A Preferred initially converts into 10 shares of Common Stock at a reference rate of $ 5.00 per
share of Common Stock subject to adjustments.
Once
the company up-lists on a National Stock Exchange, the Series B Preferred converts at a 20% discount to the price of the offering in
this S-1 and the downside price protections are eliminated. There is a call provision that goes into effect six (6) months from the listing
on a National Exchange, that if the common stock trades at a 100% premium to the conversion price for 10 days or more, the Company can
force the conversion of the Series B Preferred into common stock. The Company has agreed to pay the costs of Rule 144 legal opinions
for the holders of the Series B Preferred.
The
holders of Series B Preferred shall be entitled to receive dividends, in cash or in-kind at the Company’s election, in an amount
equal to $ 1.25 per share per quarter. If paid in kind, the number of common shares issued for the dividend shall be equal to the quotient
of the dividend payable divided by the volume weighted average price on the dividend date.
During
the six months ended June 30, 2024, the Company issued 16,100 Series B shares for cash proceeds of $ 805,000 .
On
June 15, 2024, issued 4,647 common shares with a value of $ 18,588 as a dividend for the Series B.
As
June 30, 2024 and December 31, 2023, the Company had 16,100 and 0 Series B preferred shares issued and outstanding, respectively.
12
Common
Stock
The
Company is authorized to issue 250,000,000 million shares of common stock, par value $ 0.001 per share. As June 30, 2024 and December
31, 2023, the Company had 7,741,731 and 7,656,488 shares issued and outstanding, respectively.
During
the six months ended June 30, 2024, the Company issued 36,000 shares of common stock with a fair market value of $ 160,344 for services
rendered and to be rendered to the Company.
During
the six months ended June 30, 2024, the Company issued 36,256 shares of common stock for proceeds of $ 160,218 , net offering expenses
of $ 1,789 .
During
the six months ended June 30, 2024, the Company issued 8,340 shares of common stock for the conversion of 556 shares of Series A preferred.
During
the six months ended June 30, 2024, the Company issued 4,647 common shares with a value of $ 18,588 as a dividend for the Series B.
During
the three months ended June 30, 2024 and 2023, the Company realized losses of $ 0 and $ 190,806 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. During the six months ended June 30, 2024 and 2023, the Company realized losses
of $ 0 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. From September
1 to 14, 2023, the Company entered into Waiver Agreements with certain investors pursuant to which the Investors waived certain liquidated
damages owed to the Investors by the Company in exchange for the issuance to the Investors by the Company of 130,259 and 6,579 shares
of common and Series A preferred stock, par value $ 0.001 and $ 0.001 per share, respectively. As of June 30, 2024 and December 31, 2023,
the accrued liquidated damages with accrued interest is $ 0 and $ 0 , respectively.
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
March 14, 2024, Westside Strategic Partners, LLC, which is controlled by one of the Company’s directors, Robert Haag, acquired
1,000 shares of our Series B Preferred Stock at $ 50 per share for a subscription in the amount of $ 50,000 .
On
March 20, 2024, Joanna Massey, acquired 800 shares of our Series B Preferred Stock at $ 50 per share for a subscription in the amount
of $ 40,000 .
On
March 15, 2024, Westside received a dividend of 580 shares of Series A Preferred Stock, per the terms of the Company’s Certificate
of Designation.
On
March 15, 2024, Isaac Dietrich received a dividend of 14 shares of Series A Preferred Stock, per the terms of its Certificate of Designation.
On
June 15, 2024, Westside received a dividend of 591 shares of Series A Preferred Stock, per the terms of the Company’s Certificate
of Designation.
On
June 15, 2024, Joanna Massey received a dividend of 29 shares of Series A Preferred Stock, per the terms of the Company’s Certificate
of Designation.
On
June 15, 2024, Westside received 289 common shares for a dividend for the Series B Preferred Stock, per the terms of the Company’s
Certificate of Designation.
On
June 15, 2024, Joanna Massey received 231 common shares for a dividend for the Series B Preferred Stock, per the terms of the Company’s
Certificate of Designation.
On
June 15, 2024, Isaac Dietrich received a dividend of 15 shares of Series A Preferred Stock, per the terms of its Certificate of Designation.
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
July 5, 2024, holders of a majority of the Company’s
common shares amended the 2024 Equity Incentive Plan to increase the number of shares issuable thereunder to 2,000,000 .
13
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This
quarterly report including this Management’s Discussion and Analysis of Financial Condition and Results of Operations contains
forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements
about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded by, followed
by or that include the words “may”, “could”, “would”, “should”, “believe”,
“expect”, “anticipate”, “plan”, “estimate”, “target”, “project”,
“intend”, “foresee” and similar expressions. These statements include, among others, statements regarding our
expected business outlook, anticipated financial and operating results, our business strategy and means to implement the strategy, our
objectives, the amount and timing of capital expenditures, the likelihood of our success in expanding our business, financing plans,
budgets, working capital needs and sources of liquidity. By their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not occur in the future.
Forward-looking
statements are only predictions and are not guarantees of performance. These statements are based on our management’s beliefs and
assumptions, which in turn are based on currently available information. Important assumptions relating to the forward-looking statements
include, among others, assumptions regarding demand for our products, the expansion of product offerings geographically or through new
marketing applications, the timing and cost of planned capital expenditures, competitive conditions and general economic conditions.
These assumptions could prove inaccurate. Forward-looking statements also involve known and unknown risks and uncertainties, which could
cause actual results to differ materially from those contained in any forward-looking statement. In addition, even if our actual results
are consistent with the forward-looking statements contained in this quarterly report, those results may not be indicative of results
or developments in subsequent periods. Many of these factors are beyond our ability to control or predict. Such factors include, but
are not limited to, the following:
●
risks
related to the impact of the COVID-19 global pandemic, such as the scope and duration of the outbreak, government actions and restrictive
measures implemented in response, material delays and cancellations of projects, and other impacts to the business;
●
our
ability to raise capital when needed and on acceptable terms and conditions;
●
our
ability to manage credit and debt structures from debt holders;
●
our
ability to generate revenues and manage the growth of our business;
●
competitive
pressures;
●
general
economic conditions;
●
our
ability to attract and retain management, and to integrate and maintain technical information and management information systems.
●
compliance
with laws and regulations, including those relating to corporate governance matters and tax matters, as well as any future changes
to such laws and regulations.
Except
as required by applicable law, including the securities laws of the United States and the rules and regulations of the Securities and
Exchange Commission (“SEC”), we are under no obligation to publicly update or revise any forward-looking statements, whether
as a result of any new information, future events or otherwise. Investors, potential investors and other readers are urged to consider
the above-mentioned factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such
forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we
cannot guarantee future results or performance.
14
Overview
As
used herein, “we,” “us,” “our,” the “Company,” “Thumzup®,” means Thumzup®
Media Corporation unless otherwise indicated. Thumzup® operates in a single business segment which is social media marketing. Thumzup®
has a mobile iPhone and Android application called “Thumzup®” that connects brands and people who use and love these
brands. For the advertiser, Thumzup® incentivizes ordinary people to become paid content creators and post authentic valuable posts
on social media about the advertiser and its products.
The
Company was incorporated on October 27, 2020, under the laws of the State of Nevada. Its headquarters are located in Los Angeles, CA.
The Company has never been the subject of any bankruptcy or receivership. The Company has never engaged in any material reclassification,
merger, or consolidation of the Company. The Company has not acquired or disposed of any material amount of assets except in the normal
course of business.
In
February 2022, the Company was admitted to the Over-The-Counter Venture Market quotation system (OTCQB) under the symbol TZUP. We intend
to list our common stock on the Nasdaq under the symbol “TZUP”. This offering will not be consummated until we have received
Nasdaq approval of our application. There is currently very limited trading of our Common Stock,
and an active trading market may never develop.
Thumzup®
Products and Services
The
Company operates in a single business segment which is social media marketing and advertising. The Thumzup® App works on both iPhone
and Android mobile operating systems and connects brands and people who use and love these brands. For the Advertiser, Thumzup® incentivizes
ordinary people to become paid content Creators and post authentic valuable posts on social media about the Advertiser and its products.
The
Company seeks to capitalize on nationwide-wide gig economy and business democratization trends. Immense value and opportunity have been
created through the democratization of ride sharing, hospitality, finance and other industries. The Thumzup® tools are designed to
facilitate this democratization trend for the consumer and the Advertiser within the online marketing and advertising space.
The
Company has built the technology to support an influencer and “gig” economy community around its Thumzup® App. This technology
and community are designed to generate scalable authentic product posts and recommendations for advertisers on social media. It is designed
to connect advertisers with individuals who are willing to tell their friends about the advertisers’ products online and offline.
15
Social
Media Marketing Software Technology
The
Thumzup® mobile App enables Creators, to select from brands advertising on the App and get paid to post about the advertiser on social
media. Once the Thumzup® Creator selects the brand and takes a photo using the Thumzup® App, the Thumzup® App posts the photo
and a caption to the Creator’s social media accounts. The advertiser then reviews and approves the post for payment and the Creator
can cash out whenever they choose through popular digital payment systems. For the advertiser, the Thumzup® system enables brands
to get real people to promote their products to their friends. In 2023, $148 billion was spent on digital display ads in the United States
and while 43% of marketers consider display ads to be the least effective channel, 84% of marketers were still investing in them(1).
We feel this demonstrates a significant need among advertisers for new methods of messaging to potential customers. We believe Thumzup’s
ability to scale brand messages from the general population on social media could be part of addressing this substantial need in the
market.
A
recent Nielsen report found 81% of consumers believe friends and family are the most reliable sources of information about products(2).
According to a Emplifi article, 64% of millennials recommend a product at least once a month(3), and according to a 2019 Morning Consult
survey, 86% of Gen Z and millennials would post content for monetary compensation(4). Further, according to a 2020 IZEA Insights Study,
67% of social media consumers aspire to be paid social media influencers(5). According to a 2023 Bankrate, 48% of social media users
have impulsively purchased a product seen on social media(6). Lastly, 85% of Gen Z says social media impacts purchase decisions according
to a 2023 Retail Dive Survey(7).
The
average American adult spent 7 hours and 58 minutes per day using digital media in 2020 according to a 2020 eMarketer Report(8). The
amount of daily usage has increased significantly since 2019, again according to an eMarketer Report(8), and the Company believes such
usage will continue to accelerate. The Company empowers businesses that want to interact with these Creators and provides tools and data
so they can increase consumer awareness and expand their customer bases.
In
the past decade, social media platforms like Instagram, Facebook, Twitter, Pinterest, and TikTok have achieved mass worldwide consumer
acceptance and created hundreds of billions of dollars in shareholder value. This worldwide viral growth demonstrates that compelling
new social media platforms which present the right combination of experience and value, will attract Creators who will invest significant
amounts of time on the platforms.
The
Company is an early-stage entity building a new real-time platform which enables Advertisers to pay their customers and fans cash for
their positive social media posts about their products and services, which in turn supports those individuals who earn money from various
gig economy opportunities. The Company believes that acceptance of its App and subsequent revenue growth can be driven by empowering
everyday people to make money by posting about brands and services that they already find enjoyable and attractive on social media. The
Company believes that the Thumzup® App is a conduit for Advertisers to connect directly with consumers. The Company will need to
secure enough advertisers to make the App an attractive platform for adoption and scalability, and to ensure that the platform is interesting
enough for the Creators to return to on a regular basis. No assurance can be given that the Company will be able to achieve these results.
(1)
https://meetanshi.com/blog/display-advertising-statistics/)
(2)
https://www.nielsen.com/news-center/2015/still-recommended-by-friends-and-relatives-the-most-authentic-advertising-according-to-consumers-the-most-trusted-on-brand-websites/
(3)
https://emplifi.io/resources/blog/the-user-generated-content-stats-you-need-to-know?utm_source=pixlee.com
(4)
https://morningconsult.com/wp-content/uploads/2019/11/The-Influencer-Report-Engaging-Gen-Z-and-Millennials.pdf
(5)
https://www.cnn.com/business/newsfeeds/globenewswire/7812666.html
(6)
https://www.bankrate.com/personal-finance/social-media-survey/
(7)
https://www.retaildive.com/news/generation-z-social-media-influence-shopping-behavior-purchases-tiktok-instagram/652576/
(8)
https://www.emarketer.com/content/us-time-spent-with-media-2021-update
16
Intellectual
Property
The
Company owns the copyrights to the source code for the Thumzup® App on the iPhone iOS and Android operating mobile operating systems
as used on the majority of mobile phone and tablet devices. The Company also owns the source code for the “backend” system
that administrates the Thumzup® App, tracks payments and advertising campaigns.
The
Thumzup® thumb logo is a registered trademark owned by
Thumzup® Media Corporation, Reg. No. 6,842,424, registered Sep. 13, 2022. On April 13, 2021, the Company filed a trademark
application ser. No. 90642789 with the U.S. Patent and Trademark Office (“USPTO”) for the word mark THUMZUP, which was
granted registration on June 21, 2022, resulting in reg. no. 6764158. Also on April 13, 2021, the Company filed a trademark
application ser. No. 90642848 for the Thumzup® logo, featuring a stylized hand with an upwardly extended thumb. Meta Platforms,
Inc. (which owns and operates Facebook and Instagram) initially filed opposition to the logo on June 30, 2022. Thumzup® agreed
to not use the logo as a reaction to a post and Meta Platforms, Inc. subsequently withdrew their opposition on August 5, 2022 and it
was dismissed without prejudice.
Business
Model
Advertisers
purchase an ad campaign on the Thumzup® advertiser dashboard website. Once the Advertiser approves a post for payment, the platform
facilitates the payment to Creators’ a monetary amount per screened post which may range from $1.00 to $1,000.00. The Thumzup®
platform enables the Advertiser to screen posts so that the Advertiser only pays for posts that are commercially valuable and rewards
Creators for posts that have images and text that represent the Advertiser in a positive manner.
Per
Post Fee . Thumzup® Advertisers are charged a “Per Post Fee.” By way of illustration, an Advertiser that buys 100,000
posts from Thumzup®, to pay out $10 per post to Thumzup® Creators, would purchase the posts for $13.00 each or $1,300,000. The
Creators in this illustration would receive a total of $1,000,000 and Thumzup® would retain $300,000 for its services. The Thumzup®
platform would facilitate 100,000 posts for the Advertiser from Thumzup® Creators sharing with their friends about their endorsed
products on social media.
Value
Proposition
The
Thumzup® App is designed to generate scalable social media authentic social media content for Advertisers. It is designed to connect
Advertisers with individuals who are willing to authentically promote their products online. The Company envisions that many gig economy
workers will be ideal candidates to become Creators posting on Thumzup®. Imagine a gig economy driver waiting for their next fare
who takes a moment to post about the good experience they had at their lunch spot where they are waiting. Imagine a gig economy worker
on a laptop at a coffee shop doing a graphic design project from a gig economy site who takes a moment to post about the coffee shop
where they are working on Thumzup®. The Company believes that Thumzup® can readily provide extra income for this existing pool
of gig economy workers. The Company believes these gig economy workers will be able to provide quality Thumzup® posts on social media
for which Advertisers will be willing to pay.
The
Thumzup® App can also facilitate digital word of mouth recommendations of products and services from people who do not need to make
extra money doing gigs, who are in fact quite affluent. The Company believes that many people who are well off may also use the App to
recommend products and services to their network of friends on social media, many of whom may also be affluent.
Key
Metrics as of May 10, 2024
Thumzup
has paid out on 19,182 approved posts to 1,127 Thumzup users regarding 223 advertisers since inception.
Thumzup
advertisers have grown by a 148% CAGR since May 10, 2023.
Since
May 10, 2023, the reach of the last 15,605 posts was 25,784,957 followers. Many of these campaigns were promotional campaigns but at
list price this would have been $0.006 per reach, which is below many citations for other leading social media advertising costs.
The
average number of followers for an individual Thumzup user since May 10, 2023 has been about 1,600. Many users with tens of thousands
of followers posted about our advertisers, including one with more than 600,000 followers. We find that even though we are targeting
the general public, in aggregate a Thumzup campaign can reach an average of more than 1,600 followers per post. So, a Thumzup campaign
combines the high trust factor of the general public with less followers and also draws in some professional influencers who post because
they like the product at a lower cost per post than if they were hired as an influencer.
17
Regulatory
Compliance
The
Federal Trade Commission regulates and requires certain disclosures by social media influencers, specifying when disclosure is required,
and how the disclosure should be presented. These rules are codified in the Code of Federal Regulations, 16 CFR Part 255. Specifically,
the FTC requires that influencers disclose any financial, employment, personal, or family relationship with a brand. Influencers must
disclose financial relationships and consideration paid including any money, discounted products or other benefits paid to the influencer.
Creators on the Thumzup® platform are being paid to post about Thumzup® advertisers. Thumzup® puts #ad in each post made
on its platform to disclose that the creator has been paid to make the post.
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 is a beginning revenue, software and services company that has primarily relied on equity funding for its operations. At June
30, 2024 and December 31, 2023, the Company had cash balances of $398,450 and $1,155,343, respectively. For the six months ended June
30, 2024 and 2023, the Company used $675,323 and $1,352,253 in operating activities, respectively. The Company has an accumulated deficit
at June 30, 2024 and December 31, 2023 of $6,573,235 and $5,691,803 respectively, and the Company may need to raise additional funding
in order to continue as a going concern.
RESULTS
OF OPERATIONS
THREE
MONTHS ENDED JUNE 30, 2024 AND 2023
The
following table sets forth certain selected unaudited condensed statements of operations data for the three months ended June 30, 2024
and 2023.
For the Three Months ended
June 30, 2024
June 30, 2023
$ Change
%Change
Revenues
$ 30
$ 580
$ (550 )
(94.83 )%
Operating Expenses
529,091
708,853
(179,762 )
(25.36 )%
Loss from Operations
(529,061 )
(708,273 )
179,212
(25.30 )%
Other Income (Expense)
1,288
(213,662 )
214,950
(100.60 )%
Net Income (Loss) Available to Common Stockholders
$ (550,717 )
$ (924,430 )
$ 373,713
(40.43 )%
18
Revenues
The
Company generated revenues of $30 and $580 for the six months ended June 30, 2024 and 2023, respectively, a decrease of $550. The Company
has prioritized expanding its footprint of listed businesses before focusing on converting them to paying clients.
Operating
expenses
For
the six months ended June 30, 2024 and 2023, the Company incurred operating expenses of $529,091 and $708,853, respectively, a decrease
of $179,762. The decrease in operating expenses was caused by: marketing expenses decreasing $156,283 from $252,957 during the three
months ended June 30, 2023 to $96,674 during the same period in 2024, general and administrative expenses increasing $101,726 from $258,101
during the three months ended June 30, 2023 to $359,827 during the same period in 2024, depreciation and amortization expenses increasing
$17,235 from $5,690 during the three months ended June 30, 2023 to $22,925 during the same period in 2024, offset by a decrease in software
research development expenses of $142,440 from $192,105 during the three months ended June 30, 2023 to $49,665 during the same period
in 2024. The decrease in operating expenses is a result of the Company better managing its overhead and cashflows.
Net
Loss from operations
The
Company realized a net loss from operations of $529,061 and $708,273 for the three months ended June 30, 2024 and 2023, respectively,
an decrease of $179,212 for the reasons stated above.
Other
expenses
For
the three months ended June 30, 2024 and 2023, the Company had $0 and $(190,806) in liquidated damages expense, respectively. For the
three months ended June 30, 2024 and 2023, the Company had $1,288 and $(22,856) in interest income and expense, respectively, primarily
related to interest on the liquidated damages in 2023.
Net
Loss available to common shareholders
The
Company realized a net loss available to common shareholders of $550,717 and $924,430 for the three months ended June 30, 2024 and 2023,
respectively, a decrease of $373,713 for the reasons stated above.
SIX
MONTHS ENDED JUNE 30, 2024 AND 2023
The
following table sets forth certain selected unaudited condensed statements of operations data for the six months ended June 30, 2024
and 2023.
For the Six Months ended
June 30, 2024
June 30, 2023
$ Change
%Change
Revenues
$ 435
$ 2,350
$ (1,915 )
(81.49 )%
Operating Expenses
857,445
1,430,928
(573,483 )
(40.08 )%
Loss from Operations
(857,010 )
(1,428,578 )
571,568
(40.01 )%
Other Income (Expense)
1,288
(402,147 )
403,435
(100.32 )%
Net Income (Loss) Available to Common Stockholders
$ (881,432 )
$ (1,835,667 )
$ 954,235
(51.98 )%
Revenues
The
Company generated revenues of $435 and $2,350 for the three months ended June 30, 2024 and 2023, respectively, a decrease of $1,915.
The Company has prioritized expanding its footprint of listed businesses before focusing on converting them to paying clients.
19
Operating
expenses
For
the three months ended June 30, 2024 and 2023, the Company incurred operating expenses of $857,445 and $1,430,928, respectively, a decrease
of $573,483. The decrease in operating expenses was caused by: costs of revenues decreasing by $116 from $116 during the six months ended
June 30, 2023 to $0 during the same period in 2024, marketing expenses decreasing $373,234 from $521,674 during the six months ended
June 30, 2023 to $148,440 during the same period in 2024, general and administrative expenses decreasing $1,300 from $583,055 during
the six months ended June 30, 2023 to $581,755 during the same period in 2024, depreciation and amortization expenses increasing $32,066
from $8,097 during the six months ended June 30, 2023 to $40,163 during the same period in 2024, offset by a decrease in software research
development expenses of $230,899 from $317,986 during the six months ended June 30, 2023 to $87,087 during the same period in 2024. The
decrease in operating expenses is a result of the Company better managing its overhead and cashflows.
Net
Loss from operations
The
Company realized a net loss from operations of $857,010 and $1,428,578 for the six months ended June 30, 2024 and 2023, respectively,
an decrease of $571,568 for the reasons stated above.
Other
expenses
For
the six months ended June 30, 2024 and 2023, the Company had $0 and $366,923 in liquidated damages expense, respectively. For the six
months ended June 30, 2024 and 2023, the Company had $1,288 and $35,224 in interest income and expense, respectively, primarily related
to interest on the liquidated damages in 2023.
Net
Loss available to common shareholders
The
Company realized a net loss available to common shareholders of $881,432 and $1,835,667 for the six months ended June 30, 2024 and 2023,
respectively, a decrease of $954,235 for the reasons stated above.
Liquidity
and capital resources
As
of June 30, 2024 and December 31, 2023, the Company had cash in the amount of $398,450 and $259,212, respectively. As of June 30, 2024
and December 31, 2023, the Company had stockholders’ equity of $619,202 and $349,327, respectively.
The
Company’s accumulated deficit was $6,573,235 and $5,691,803 as of June 30, 2024 and December 31, 2023, respectively.
The
Company used net cash in operations of $675,323 and $1,352,253 for six three months ended June 30, 2024 and 2023, respectively.
Net
cash used in investing activities for six months ending June 30, 2024 and 2023 was $126,665 and $73,138, respectively. During
the six months ended June 30, 2024, there were $126,665 in capitalized development costs and $0used for the purchase of equipment. During
the six months ended June 30, 2023, there were $73,138 in capitalized development costs and $5,105 used for the purchase of equipment.
Net
cash provided by financing activities was $941,226 for the six months ended June 30, 2024, comprised of $805,000 from the sale of preferred
stock – Series B and $161,226 from the sale of common stock ,
net offering expenses of $25,000 related to the preferred stock – Series B. Net cash provided by financing activities was $668,296
for the six months ended June 30, 2023, comprised of $674,713 from the sale of common stock related to the sale of common stock in a
prior period and the Company’s offering under Regulation A+, with offering costs of $6,417.
20
Inflation
The
Company’s results of operations have not been affected by inflation and management cannot predict the impact, if any, inflation
might have on its operations in the future.
Item
3. Quantitative and Qualitative Disclosures about Market Risk
The
Company is not required to provide the information required by this Item as it is a smaller reporting company.
Item
4. 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-Q, 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 June 30, 2024 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 financial statements and other information contained in our quarterly report on Form 10-Q 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 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 June 30, 2024, 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.
21
PART
II - OTHER INFORMATION
ITEM
1.
LEGAL
PROCEEDINGS
We
are not currently a party to any lawsuit or proceeding which, in the opinion of management, is likely to have a material adverse effect
on us or our business.
Item
1A.
Risk
Factors.
Not
required of a smaller reporting company.
Item
2.
Unregistered
Sales of Equity Securities and Use of Proceeds
During
the three months ended June 30, 2024, the Company issued 2,820 shares of Series A Preferred Stock as a dividend pursuant to the Certificate
of Designation of the Company’s Series A Preferred Shares.
During
the three months ended June 30, 2024, the Company issued 12,300 shares of the Company’s Series B Preferred Stock at $50 per share
for a subscription in the amount of $615,000. The Company used the funds for working capital and general corporate purposes.
During
the three months ended June 30, 2024, the Company issued 17,000 shares of common stock with a value of $75,650 for services rendered
and to be rendered.
Item
3.
Defaults
upon Senior Securities
None.
Item
4.
Mine
Safety Disclosures
Not
applicable.
Item
5.
Other
Information
Except
as set forth under Item 2 above, there is no other information required to be disclosed under this item which has not been previously
disclosed.
Item
6.
Exhibit
Incorporated
by Reference
No.
Description
Form
File
No.
Exhibit
Filing
Date
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.
22
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Thumzup
Media Corporation
By:
/s/
Robert Steele
Robert
Steele
Chief
Executive Officer and Chief Financial Officer
(Principal
Executive Officer and Principal Financial Officer)
Date:
August 12, 2024
23
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.