Datacentrex, Inc. 10-K

ITEM 1. BUSINESS. Overview General 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 applications called “Thumzup™” that connects brands and people who use and love these brands. For the advertiser, Thumzup™ incentivizes real people to become content creators and post authentic valuable posts on social media about the advertiser and its products. Thumzup™ was incorporated October 27, 2020, under the laws of the State of Nevada. Its headquarters are located in Carson City, Nevada. We have never been the subject of any bankruptcy or receivership. We have never engaged in any material reclassification, merger, or consolidation of the company. We have not acquired or disposed of any material amount of assets except in the normal course of business. Thumzup™ seeks to capitalize on industry-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. Thumzup™ tools are designed to facilitate this democratization trend for the consumer and the advertiser within the online advertising space. Thumzup™ has built the technology to support an influencer and “gig” economy community around its Thumzup™ mobile app. This technology and community is 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. Social Media Marketing Software Technology The Thumzup™ mobile app enables users, also referred to as 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, rather than displaying banner ads that people are tuning out. The average American adult is estimated to spend 7.5 hours a day using digital media in 2020. [1] The amount of daily usage has increased every year since 2008 and we believe the recent rate of increase is accelerating. [2] We empower businesses that want to interact with these creators. We provide 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 new social media platforms which present the right combination of experience and value, will attract creators who will invest significant amounts of time on compelling new platforms. [1] https://www.statista.com/statistics/565628/time-spent-digital-traditional-media-usa/ [2] https://www.bondcap.com/report/itr19/ 2 We are an early-stage entity building a new real-time platform to support the gig economy. We believe that acceptance of our app and revenue growth can be driven by our empowering everyday people to make money by posting about what they find to be enjoyable or attractive on social media. Thumzup™ in our view, is a conduit for advertisers to connect directly with consumers and we will need to secure enough advertisers to make our app an attractive platform for adoption, scalability and that the platform is interesting for the creators to return to on a regular basis. No assurance can be given that we will be able to achieve these results. Our Industry—Influencer Marketing We sell our services into the rapidly growing subset of online advertising called “influencer marketing”. As social media influencers become more plentiful and proven, advertising spending has increased in this space. Brands are estimated to spend up to $5 billion on influencer marketing by 2023 [3] . Major brands recognize that having their happy customers post on social media is valuable. Most existing paid influencer marketing platforms were designed for professional and semi-professional online personalities. Some of these platforms have expanded to accommodate what they term as micro-influencers, people with 5,000 to 30,000 social media followers. In our opinion, none of these influencer platforms has entered the public consciousness and found mass adoption. Nielsen’s study “Global Trust In Advertising” found that 83% of respondents say they completely or somewhat trust the recommendations of friends and family. [4] Influencer marketing content delivers 11 times higher return on investment than traditional forms of digital marketing, and approximately 66% of marketing firms now deploy influencer marketing. [5] In Mary Meeker’s 2019 Internet Trends report she highlighted that the primary reason people chose to make new e-commerce purchases was that the product had been recommended by a friend. [6] · Accounts with over a million followers currently can earn $10,000 to $15,000 for a single sponsored post (depending on its engagement). [7] · The key finding of our data is that as an influencer’s follower total rises, the rate of engagement (likes and comments) with followers decreases. Those with less than 1,000 followers, also referred to as nano influencers, generally received likes on their posts 8% of the time. Creators with over 10 million followers only received likes 1.6% of the time. There thus appears in our view a clear downward correlation between follower sizes and post likes. · Around 66% of marketers now use influencers. · Nearly half of U.S. marketers plan to increase their influencer budgets. · According to Chute, 64% of millennials recommend a product at least once a month through social media and one-third of millennials aspire to be or currently act as influencers. [8] We have designed Thumzup™ “from the ground up” to make it easy for brands and service providers to activate people who are not professional influencers but who are passionate about the products, services, or establishments they enjoy or frequent and then are willing to relate those experiences to their friends and other social media followers. We have designed Thumzup™ app and advertiser dashboard with Apple-style simplicity and intuitive features to make participation by all individuals seamless with their existing use of social media. [3] https://www.marketingcharts.com/charts/us-advertising-media-market-sizes-2019-vs-2023/attachment/pwc-us-ad-market-sizes-2019-2023-june2019 [4] https://www.nielsen.com/us/en/insights/report/2015/global-trust-in-advertising-2015/ [5] https://cdn2.hubspot.net/hubfs/1882019/TapInfluence/Resources/1009%20-%20Nielsen_Study_Case_Study.pdf [6] https://www.scribd.com/document/413048704/Internet-Trends-2019#download&from_embed [7] https://mediakix.com/blog/influencer-rates/ [8] https://www.marketingdive.com/news/social-nfluencer-marketing-evolution-2016/432185/ 3 Our first product—Thumzup™ app We operate in a single business segment which is social media marketing. Our mobile iPhone and Android applications called “Thumzup™” connects brands, products and services to the people who use and love these brands, products and services. For advertisers, Thumzup™ activates real people to post real product reviews and testimonials on social media which may enhance brand awareness, reach targeted consumers more directly and effectively while driving profitable traffic to their goods and services. We are building an influencer and gig economy community around our Thumzup™ mobile app that will generate scalable authentic product posts and recommendations for advertisers on social media and create a technology platform making person-to-person advertising easy, cost-effective, and scalable. Our app and advertiser dashboard is designed to connect advertisers with individuals who are willing to promote their products online and offline. Social Media Marketing Software Technology Our Services 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, rather than displaying banner ads that people are tuning out. With the Thumzup™ app we are targeting and seeking to sign up everyday people and gig economy workers who like specific brands and present them with opportunities to be paid for posting about the brands on social media. We believe that our management team has the sales relationships, legal and technology expertise for our current level of development. We will need to add additional staff to rapidly grow our business. Intellectual Property We own the copyrights to the source code for the Thumzup™ applications on the iPhone iOS and Android operating mobile operating systems used on the majority of mobile phone and tablet devices. We also own the copyrighted source code for the “backend” system that administrates the Thumzup™ app, tracks payments and advertising campaigns. On April 13, 2021, Thumzup™ Media Corporation filed application 90642789 with the U.S. Patent and Trademark Office to trademark "Thumzup™" and application 90642848 to trademark the Thumzup™ logo, with the latter published in the Trademark Official Gazette (TMOG) on March 1, 2022. Business Model Advertisers purchase a campaign on the Thumzup 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 $1000.00. 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 $12.00 each or $1,200,000. The creators in this illustration would receive a total of $1,000,000 and Thumzup™ would retain $200,000 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. 4 FTC disclosure The Federal Trade Commission requires that paid posts are disclosed. Thumzup™ includes a disclosure in every post to comply with these FTC requirements. 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. We envision 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™. We believe that Thumzup™ can readily provide extra income for this existing pool of gig economy workers. We believe these gig economy workers will be able to provide quality Thumzup™ posts on social media for which advertisers will be willing to pay. 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. We plan on implementing compliance controls to ensure proper disclosure of all material relationships and consideration for an influencer’s endorsements. We do not believe our compliance with existing FTC regulations will have a material effect on capital expenditures, earnings and competitive position of the company and its subsidiaries, for the current fiscal year and any other material future period Thumzup™ App Workflow For direct-to-consumer (DTC) brands, a customer might get a postcard in the box upon receiving a purchase in the mail. A postcard would inform the customer about the opportunity to get cashback by sharing a picture of the purchase with friends on social media. If the creator takes a picture of the postcard, a link to download the Thumzup™ app will appear on the customer’s phone. The illustration to the left and those below are intended as examples only and will not necessarily correlate to a final version or an amount. Actual wording and amounts will depend on agreements with advertisers, products or brands seeking recommendations and other market factors as may be assessed by management. 5 For physical stores and restaurants, we offer signage to make patrons aware that they can be paid to tell their friends about their positive experience in the store or restaurant. When creators open the Thumzup™ app on their phones, they will reach a welcome screen which establishes the idea that they can get paid to post about brands, services and places they like with the app. 6 The Main screen appears after a creator enters the unique code we sent. The main screen enables each creator to easily select brands, nearby restaurants, and stores that will pay the Thumzup™ creator to post to friends and other followers about products and places recommended by the creator on social media. The main screen has seven main areas where the creator can take action. There is what we call a “hamburger” menu in the upper left to access administrative functions and there is a balance due to the creator displayed on the upper right. Next, going down the screen there is a search bar, a map tool, a left to the right slider to select brands that will pay for posts, and an up and down slider to select locations nearby that will pay to post. The “hamburger” menu in the upper left gives the creator access to change bank or payment information, to link to social media, and to invite friends. The balance due to the creator number in the upper right has the total of monies pending and monies due but not yet transferred to the creator. 7 When creators select a brand or location tile from the main menu, the app enables them to take pictures of their enjoying the product or experience. The app then enables them to customize the caption that will be posted to social media. Once creators submit the pictures and captions, they get uploaded and displayed on the social media account of those creators. 8 Thumzup™ inserts the tag required to disclose that the post is a paid promotion. If the advertiser, in this case at left, a fictional brand called “Wearclick” has chosen to offer a discount code to the Thumzup™ creator’s friends on social media, that discount code gets embedded in the post along with the offer. When the creator makes a new post, the post is reviewed by Thumzup™ on behalf of the client to assure that it meets community standards, does not include sexually explicit images or text, and that the post reflects the client in a commercially favorable light. For instance, if images are poorly lit or irrelevant to the brand, creators may be sent text messages to the creators giving them this feedback and explaining that the post is not due for payment. When creators want to receive the money they have earned they tap on the PayMe! Selection on the app menu. The app then pays the creator via online payment systems, such as Venmo or Paypal, the amount due from all screened posts made by that creator. The mobile app enables the creator to search for brands they like that will pay them to post. This is useful so that Thumzup™ creators can easily discover brands they like to post about. The app pays creators to post about brands. 9 In our opinion, paid posts from happy customers posting about brands and services they like offer attractive, compelling values to advertisers and creators compared to traditional online advertising because those posts should yield higher response rates. To date our clients have paid more than 75 creators between $5.00 and $10.00 each to post about our initial advertisers. This post, for example, received about 40 “likes” from an Instagram creator who has about 900 followers. That is a 4.4percent response rate which is about eight times the average response rate of Instagram ads. [9] [9] https://blog.adstage.io/instagram-ads-cpm-cpc-ctr- benchmarks#:~:text=The%20average%20click%2Dthrough%20rate,all%20the%20major%20ad%20networks 10 The system provides advertisers with quality control by enabling the advertiser to review posts to make sure that the posts meet community standards and are commercially useful to the advertiser. This helps reduce the number of people who may try to game the system to otherwise not use it properly. Thumzup™ creators can opt-in to receive text message from brands. This opt-in opportunity is valuable to brands because text messages have higher visibility to potential customers than emails. [10] The system enables “campaign spend” to be limited by a total dollar amount determined by the advertiser. Once the posts that the advertiser has paid for in a campaign have been posted and approved for payment, the campaign expires and the advertiser incurs no additional cost until it chooses to increase the amount. It also enables the advertiser to limit the number of posts made by an individual creator by day, week and month. We believe that this feature enables more efficient budgetary control while reducing unintended cost overruns. Creator. This feature may eliminate abuse or saturation by creators who post more than what may be commercially valuable to advertisers. Financing Plan In November 2020, we raised an aggregate of $215,000 through sales of senior secured convertible promissory notes to four investors. Since December 31, 2020 we have raised an additional $ $1,273,000 through the sale of our shares to accredited investors as that term is defined under federal securities laws . These funds have been used to build and beta test the Thumzup™ app and to cover operating costs including and other administrative costs and expenses. During the year 2021 the company was pre-revenue and transitioned into beta testing. The Thumzup commercial launch is planned in 2022. Competition Top 10 Influencer Marketing Platforms Market Research firm G2 ranks the top ten influencer marketing software companies as GRIN, #paid, CreatorIQ, Mavrck, Popular Pays, Tribe Dynamics, AspireIQ, Influenster, Traackr ,and Hivency. [11] This influencer marketing software space is focused on influencers who see themselves as professional influencers. None of these companies is building a platform designed to turn social media creators into micro-influencers in the manner that we seek to accomplish. Rep is also an app that connects brands with influencers who are interesting in promoting brands. It is different from Thumzup because it is targeting people who consider themselves an influencer . We do not currently know of a company that is seeking to build a community of everyday people and empowering them to post about brands that they love. Nevertheless, the influencer marketing industry segments are rapidly evolving and competitive and we expect competition to intensify in the future with the emergence of new technologies and market entrants. Our competitors may enjoy competitive advantages, such as greater name recognition, longer operating histories, substantially greater market share, established marketing relationships with, and access to, large existing advertisers and user bases, and substantially greater financial, technical and other resources. These companies may use these advantages to offer apps or other products similar to ours at a lower price, develop different products to compete with our current solutions and respond more quickly and effectively than we do to new or changing opportunities, technologies, standards or client requirements particularly across different cities and geographical regions. Certain competitors could also use strong or dominant positions in one or more markets to gain competitive advantage against us in markets in which we operate in the future. We believe our ability to compete successfully for users, content, and advertising and other customers depends upon many factors both within and beyond our control, including: ●the popularity, usefulness, ease of use, performance and reliability of our apps and services compared to those of our competitors; ●our ability, in and of itself as well as in comparison to the ability of our competitors, to develop new apps, other products and services and enhancements to then existing apps, products and services; ●our ad targeting and measurement capabilities, and those of our competitors; ●the size, composition and level of engagement of our app user communities relative to those of our competitors; ●our marketing and selling efforts, and those of our competitors; ●the pricing of our apps and services relative to those of our competitors; ●the actual or perceived return our customers receive from the deployment of our apps within our user communities relative to returns from our competitors; and ●our reputation and brand strength relative to our competitors. Problems in the market that we solve In March 2019, JetBlue Airways did a promotion where it offered free travel to people in exchange for posting about JetBlue on social media. The promotion was deemed not to be a success because many of the people reportedly deleted the posts after claiming the reward. JetBlue had no platform for tracking the influencers and holding them accountable. [12] The Thumzup™ platform can sample the creator’s Instagram feed to assure that the post is up before the payment is due. [10] https://www.mediapost.com/publications/article/339343/study-texting-is-more-efficient-than-email.html [11] https://www.g2.com/categories/influencer-marketing-platforms [12] https://mediakix.com/blog/influencer-marketing-fails/ 11 Employees We have one full-time employee and have retained an outsourced management consultant, who on a part-time basis performs accounting and financial reporting services on our behalf. We also utilize the services of approximately eight to ten part-time software developers. Legal Proceedings From time to time, we may become involved in litigation or other legal proceedings. We are not currently a party to any litigation or legal proceedings. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Available Information: Thumzup™ is located at 711 S. Carson Street Suite 4 Carson City, Nevada 89701. Our telephone number is (310) 237-2887 and our Internet website address is www.Thumzupmedia.com. We file or furnish electronically with the U.S. Securities and Exchange Commission ("SEC") annual reports on Form 10-K, quarterly reports on Form 10- Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. We make copies of these reports available free of charge through our investor relations website as soon as reasonably practicable after we file or furnish them with the SEC. These reports are also accessible through the SEC website at www.sec.gov. Information contained on or accessible through our website www.thumzupmedia.com is not incorporated into, and does not form a part of, this Annual Report or any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 12