Datacentrex, Inc. 10-Q

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. 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. 17 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. Since May of 2024, Thumzup has expanded its AdTech platform to include Hollywood and Beverly Grove, significantly broadening its influence across Greater Los Angeles. This expansion is designed to revolutionize how local businesses engage with potential and current customers through enhanced social media interaction. 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. 18 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 New Advisory Board Member Thumzup® has expanded its Advisory Board with the appointment of Jon Bond, co-founder of Kirshenbaum Bond & Partners. Known for his work in innovative marketing strategies, Jon brings a wealth of expertise and a track record to the Thumzup® team. His extensive background in guerrilla marketing and digital advertising will be crucial as Thumzup® continues to grow its platform. Jon will play a key role in guiding strategic marketing initiatives and leveraging emerging advertising technologies to further Thumzup®’s market position. 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. 19 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 November 8, 2024 Thumzup has paid out on 25,996 approved posts to 1,472 Thumzup users regarding 559 advertisers since inception. Thumzup advertisers have grown by a 209% CAGR since November 8, 2023. 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. 20 The Company is a beginning revenue, software and services company that has primarily relied on equity funding for its operations. At September 30, 2024 and December 31, 2023, the Company had cash balances of $110,246 and $259,212, respectively. For the nine months ended September 30, 2024 and 2023, the Company used $1,053,175 and $ 1,911,767 in operating activities, respectively. The Company has an accumulated deficit at September 30, 2024 and December 31, 2023 of $7,038,071 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 SEPTEMBER 30, 2024 AND 2023 The following table sets forth certain selected unaudited condensed statements of operations data for the three months ended September 30, 2024 and 2023. For the Three Months ended September 30, 2024 September 30, 2023 $ Change %Change Revenues $ 150 $ 72 $ 78 108.33 % Operating Expenses 442,847 718,517 (275,670 ) (38.37 )% Loss from Operations (442,697 ) (718,445 ) 275,748 (38.38 )% Other Income (Expense) 859 (392,665 ) 393,524 (100.22 )% Net Income (Loss) Available to Common Stockholders $ (464,837 ) $ (1,113,781 ) $ 648,944 (58.26 )% Revenues The Company generated revenues of $150 and $72 for the three months ended September 30, 2024 and 2023, respectively, an increase of $78. The Company has prioritized expanding its footprint of listed businesses before focusing on converting them to paying clients. Operating expenses For the three months ended September 30, 2024 and 2023, the Company incurred operating expenses of $442,847 and $718,517, respectively, a decrease of $275,670. The decrease in operating expenses was caused by: marketing expenses decreasing $131,603 from $228,685 during the three months ended September 30, 2023 to $97,082 during the same period in 2024, general and administrative expenses decreasing $52,785 from $321,352 during the three months ended September 30, 2023 to $268,567 during the same period in 2024, depreciation and amortization expenses increasing $18,786 from $8,560 during the three months ended September 30, 2023 to $27,346 during the same period in 2024, offset by a decrease in software research development expenses of $110,068 from $159,920 during the three months ended September 30, 2023 to $49,852 during the same period in 2024. The decrease in operating expenses is a result of the Company better managing its overhead and cashflows. 21 Net Loss from operations The Company realized a net loss from operations of $442,697 and $718,445 for the three months ended September 30, 2024 and 2023, respectively, an decrease of $275,748 for the reasons stated above. Other expenses For the three months ended September 30, 2024 and 2023, the Company had $0 and $(364,729) in liquidated damages expense, respectively. For the three months ended September 30, 2024 and 2023, the Company had $859 and $(27,937) 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 $464,837 and $1,113,781 for the three months ended September 30, 2024 and 2023, respectively, a decrease of $648,944 for the reasons stated above. NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 The following table sets forth certain selected unaudited condensed statements of operations data for the nine months ended September 30, 2024 and 2023. For the Nine Months ended September 30, 2024 September 30, 2023 $ Change %Change Revenues $ 585 $ 2,422 $ (1,837 ) (75.85 )% Operating Expenses 1,300,292 2,149,445 (849,153 ) (39.51 )% Loss from Operations (1,299,707 ) (2,147,023 ) 847,316 (39.46 )% Other Income (Expense) 2,147 (794,813 ) 796,960 (100.27 )% Net Income (Loss) Available to Common Stockholders $ (1,346,269 ) $ (2,949,450 ) $ 1,603,181 (54.36 )% Revenues The Company generated revenues of $585 and $2,422 for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $1,837. The Company has prioritized expanding its footprint of listed businesses before focusing on converting them to paying clients. Operating expenses For the nine months ended September 30, 2024 and 2023, the Company incurred operating expenses of $1,300,292 and $2,149,445, respectively, a decrease of $849,153. The decrease in operating expenses was caused by: costs of revenues decreasing by $116 from $116 during the nine months ended September 30, 2023 to $0 during the same period in 2024, marketing expenses decreasing $504,837 from $750,359 during the nine months ended September 30, 2023 to $245,522 during the same period in 2024, general and administrative expenses decreasing $54,084 from $904,406 during the nine months ended September 30, 2023 to $850,322 during the same period in 2024, depreciation and amortization expenses increasing $50,852 from $16,657 during the nine months ended September 30, 2023 to $67,509 during the same period in 2024, offset by a decrease in software research development expenses of $340,967 from $477,906 during the nine months ended September 30, 2023 to $136,939 during the same period in 2024. The decrease in operating expenses is a result of the Company better managing its overhead and cashflows. 22 Net Loss from operations The Company realized a net loss from operations of $1,299,707 and $2,147,023 for the nine months ended September 30, 2024 and 2023, respectively, an decrease of $847,316 for the reasons stated above. Other expenses For the nine months ended September 30, 2024 and 2023, the Company had $0 and $ 731,652 in liquidated damages expense, respectively. For the nine months ended September 30, 2024 and 2023, the Company had $2,147 and $63,161 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 $1,346,269 and $2,949,450 for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $1,603,181 for the reasons stated above. Liquidity and capital resources As of September 30, 2024 and December 31, 2023, the Company had cash in the amount of $110,246 and $259,212, respectively. As of September 30, 2024 and December 31, 2023, the Company had stockholders’ equity of $187,964 and $349,327, respectively. The Company’s accumulated deficit was $7,038,071 and $5,691,803 as of September 30, 2024 and December 31, 2023, respectively. The Company used net cash in operations of $1,053,175 and $ 1,911,767 for nine months ended September 30, 2024 and 2023, respectively. Net cash used in investing activities for nine months ending September 30, 2024 and 2023 was $177,017 and $ 114,640 , respectively. During the nine months ended September 30, 2024, there were $175,770 in capitalized development costs and $1,247 used for the purchase of equipment. During the nine months ended September 30, 2023, there were $108,313 in capitalized development costs and $6,327 used for the purchase of equipment. Net cash provided by financing activities was $1,081,228 for the nine months ended September 30, 2024, comprised of $140,000 from the issuance of non-convertible notes, $805,000 from the sale of preferred stock – Series B, less offering costs of $25,000 and $161,228 net proceeds from the sale of common stock. . Net cash provided by financing activities was $1,017,304 for the nine months ended September 30, 2023, comprised of $33,000 from the sale of common stock related to the sale of common stock in a prior period and $984,304 from the Company’s offering under Regulation A+, net offering costs of $9,946. 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. Cybersecurity Risk Management and Strategy We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data. Managing Material Risks & Integrated Overall Risk Management We have strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity risk management. This integration ensures that cybersecurity considerations are an integral part of our decision-making processes at every level. Our management team continuously evaluates and addresses cybersecurity risks in alignment with our business objectives and operational needs. Oversee Third-party Risk Because we are aware of the risks associated with third-party service providers, we have implemented stringent processes to oversee and manage these risks. We conduct thorough security assessments of all third-party providers before engagement and maintain ongoing monitoring to ensure compliance with our cybersecurity standards. The monitoring includes annual assessments of the SOC reports of our providers and implementing complementary controls. This approach is designed to mitigate risks related to data breaches or other security incidents originating from third parties. Risks from Cybersecurity Threats We have not encountered cybersecurity challenges that have materially impaired our operations or financial standing. Recent Developments The Company has entered into several material agreements during the most recent fiscal quarter. References in this section to any of our contracts or other documents are not necessarily complete, and each such reference is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the relevant Current Report on Form 8-K. Entry into Underwriting Agreement On October 28, 2024, Thumzup Media Corporation (the “Company”), entered into an underwriting agreement (the “Underwriting Agreement”) with Dawson James Securities, Inc., as representative (the “Representative”) of the underwriters named therein (the “Underwriters”), pursuant to which the Company agreed to sell to the Underwriters, in a firm commitment public offering (the “Offering”), an aggregate of 1,425,000 of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a public offering price of $5.00 per share. The Common Stock was offered pursuant to a registration statement on Form S-1, as amended (File No. 333-279828), originally filed with the U.S. Securities and Exchange Commission (the “Commission”) on May 30, 2024, as amended, and which was declared effective by the Commission on October 28, 2024. 23 The Underwriting Agreement contains customary representations and warranties that the parties thereto made to, and solely for the benefit of, the other party in the context of all of the terms and conditions of that Underwriting Agreement and in the context of the specific relationship between the parties. The provisions of the Underwriting Agreement and schedules and exhibits thereto, including the representations and warranties contained therein respectively, are not for the benefit of any party other than the parties to such documents and agreements and are not intended as documents for investors and the public to obtain factual information about the current state of affairs of the parties to those documents and agreements. Rather, investors and the public should look to other disclosures contained in the Company’s filings with the Commission. On October 30, 2024, the Company closed the Offering. The total gross proceeds to the Company from the Offering, not including the exercise of the underwriter’s over-allotment option, and before deducting discounts and expenses, were approximately $7,125,000. A final prospectus relating to this Offering was filed with the Commission on October 30, 2024. The Common Stock was previously approved for listing on The Nasdaq Capital Market and commenced trading under the ticker symbol “TZUP” on October 29, 2024. The foregoing summary of the terms of the Underwriting Agreement is subject to, and qualified in its entirety by reference to a copy of the Underwriting Agreement that is filed as Exhibit 1.1 to the relevant Current Report on Form 8-K. Grant of Stock Options On October 30, 2024, Thumzup issued Stock Option Agreements under its 2024 Equity Incentive Plan to nine non-executive and non-director employees and contractors (“Stock Option Agreements”). The Stock Option Agreements are for an aggregate of 155,000 option shares and have a $5.47 strike price (“Option Shares”). The Stock Option Agreements vest in four equal tranches, each consisting of 25% of the Option Shares, on the first day of each of January in 2025, 2026, 2027, and 2028. Robert Steele, Executive Employment Agreement On May 30, 2024, the Company and Mr. Steele entered into an Executive Employment Agreement, which, among other things, employs Mr. Steele as the Chief Executive Officer of the Company. Effective upon the listing of the Company’s common stock on a national stock exchange, Mr. Steele will be paid a salary of $168,000 in periodic installments in accordance with the Company’s customary payroll practices and applicable wage payment and withholdings laws and requirements. Additionally, the Executive’s Base Salary will increase from $168,000 to $250,000, effective upon the Company’s achievement of $100,000 net monthly ad revenue from Thumzup advertisers for paid posters for twelve consecutive months, (ii) the Executive’s Base Salary will increase to $350,000 upon the Company achieving $250,000 in net monthly ad revenue from Thumzup advertisers for paid posters for twelve consecutive months, and (iii) effective upon the Company’s receipt of an aggregate of $800,000 in net monthly ad revenue from Thumzup advertisers for paid posters for twelve consecutive months, the Base Salary will increase to $500,000. The Company shall pay Executive a past performance bonus of $50,000 within 5 days of up-listing to a national stock exchange (i.e., Nasdaq), provided that Executive is employed by the Company at the time of the up-listing. Isaac Dietrich, Executive Employment Agreement On May 30, 2024, the Company and Mr. Dietrich entered into an Executive Employment Agreement, which, among other things, employes Mr. Dietrich as the Chief Financial Officer of the Company effective upon the listing of the Company’s common stock on a national stock exchange. Mr. Dietrich will be paid a salary of $168,000 in periodic installments in accordance with the Company’s customary payroll practices and applicable wage payment and withholdings laws and requirements. Additionally, the Executive’s Base Salary will increase from $168,000 to $250,000, effective upon the Company’s achievement of $100,000 net monthly ad revenue from Thumzup advertisers for paid posters for twelve consecutive months, (ii) the Executive’s Base Salary will increase to $250,000 upon the Company achieving $250,000 in net monthly ad revenue from Thumzup advertisers for paid posters for twelve consecutive months, and (iii) effective upon the Company’s receipt of an aggregate of $800,000 in net monthly ad revenue from Thumzup advertisers for paid posters for twelve consecutive months, the Base Salary will increase to $350,000. The Company shall pay Executive a past performance bonus of $25,000 within 5 days of up-listing to a national stock exchange (i.e., Nasdaq), provided that Executive is employed by the Company at the time of the up-listing. 24 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.