Datacentrex, Inc. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Sections of this Form 10-K, including the Management’s Discussion and Analysis or Plan of Operation, contain “forward-looking statements”. These forward-looking statements are subject to risks and uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. You should not unduly rely on these statements. Forward-looking statements involve assumptions and describe our plans, strategies, and expectations. You can generally identify a forward-looking statement by words such as “may,” “will,” “should,” “would,” “could,” “plans,” “goal,” “potential,” “expect,” “anticipate,” “estimate,” “believe,” “intent,” “project,” and similar words and variations thereof. INTRODUCTION Thumzup™ Media Corporation (“Thumzup™” or “Company”) was incorporated October 27, 2020, under the laws of the State of Nevada, and its headquarters are located in Carson City, Nevada. The Company recognized its first revenues in December 2021 as a software company dedicated to building an influencer community around its mobile app (“App”). Once fully developed, the Company anticipates that the App will generate scalable posts and recommendations for advertisers on social media and is designed to connect advertisers with individuals who are willing to promote advertiser’s products online. The Thumzup™ App will enable creators to select brands they want to post about on social media. Once a Thumzup™ creator selects a brand and takes a photo (using the App), the App will post the photo and a caption to the user’s social media accounts. 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. 23 Emerging Growth Company We are an emerging growth company under the JOBS Act. We shall continue to be deemed an emerging growth company until the earliest of: (a) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1.07 billion (as such amount is indexed for inflation every five years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (b) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective IPO registration statement; (c) the date on which such issuer has, during the previous three-year period, issued more than $1.0 billion in nonconvertible debt; or (d) the date on which such issuer is deemed to be a ‘large accelerated filer’, as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto.’ The Section 107 of the JOBS Act provides that we may elect to utilize the extended transition period for complying with new or revised accounting standards and such election is irrevocable if made. As such, we have made the election to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. OVERVIEW We were formed in October 2020 and have not yet established profitable operations. For the year ended December 31, 2021, we incurred $857,255 in net losses due to $716,524 in software research and development expenses, $21,257 in marketing expenses, $102,698 in general and administrative expenses, $17,486 in interest expense and $1,736 in depreciation expense. The Company recognized its first revenues in December 2021 of $2,446. For the year ended December 31, 2020, we incurred $5,687 in net losses due to $2,732 in software research and development expenses and $1,051 in general and administrative expenses. The Company was organized in October 2020 resulting in limited time for operating activities. The Company had no revenues for the year ending December 31, 2020. SUBSEQUENT EVENTS The Company has raised $123,500 from the sale of 72,335 shares of unregistered common stock subsequent to December 31, 2021 and has evaluated subsequent events from the balance sheet date through the date which the financial statements were available to be issued and determined there are no other events to disclose. 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 pre-revenue, software and services company that relies on short-term debt and equity funding for its operations. The Company recognized its first revenues during December 2021. At December 31, 2021 and 2020, the Company had a cash balance (net of restricted cash) of $424,445 and $101,317, respectively. The Company used $713,211 and $113,683 to fund operating activities for the years ending December 31, 2021 and 2020, respectively. The Company expects that it will need to raise additional funding and manage expenses in order to continue as a going concern. No assurances can be given that it will be able to raise funds on acceptable terms or at all. 24 RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2021 and 2020 Revenues The Company recorded its first revenues in December 2021 in the net amount of $2,446. The Company was a pre-revenue software development company, which still relies on raising capital to fund its operations. No revenues were recorded in 2020. Operating expenses For the years ended December 31, 2021 and 2020 the Company recognized a total of $842,215 and $3,783, respectively, in operating expenses. The operating expenses were comprised of $716,524 in software research and development expenses ($2,732 in 2020), $21,257 in marketing expenses ($0 in 2020), $102,698 in general and administrative expenses ($1,051 in 2020) and $1,736 in depreciation expense ($0 in 2020). Other expenses For the years ended December 31, 2021 and 2020, the Company had $17,486 and $1,904 in interest expense related to the senior secured convertible promissory notes, respectively. Net Loss from operations The Company realized a net loss from operations of $839,769 and $5,687 for the years ended December 31, 2021 and 2020, respectively. The Company was organized in October 2020 and had limited operations in 2020. Liquidity and capital resources As of December 31, 2021 and 2020, the Company had cash in the amount of $424,445 and $101,317, respectively, of which $0 and $100,000 was restricted. As of December 31, 2021, the Company had stockholders’ equity of $179,845 compared to a stockholders’ deficit of $5,687, as of December 31, 2020. The Company’s accumulated deficit was $862,942 and $5,687 as of December 31, 2021 and 2020, respectively. The Company used net cash in operations of $713,211 and $113,683 for the years ending December 31, 2021 and 2020, respectively. Net cash used in investing activities for years ending December 31, 2021 and 2020 was $6,449 and $0, respectively, used to purchase computer equipment. Net cash provided by financing activities or capital raise efforts was $1,042,788 net of offering costs of $106,713 for the year ended December 31, 2021 as compared to $0 in 2020. The Company received proceeds from the issuance of senior convertible promissory notes of $215,000 in 2020 and $0 proceeds from loans in 2021. 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. 25 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).