UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ANNUAL REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2025
☐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 001-40729
MYSEUM, INC.
(Exact name of registrant as specified in its charter)
65 Church Street, Suite 230 New Brunswick, NJ 08901
(Address of principal executive offices) (Zip Code)
(732)374-3529
(Registrant’s telephone number, including
area code)
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.0001 per share MYSE The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g)
of the Exchange Act: None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 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 definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filter ☐ Accelerated filer ☐
Non-accelerated filter ☒ 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
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act) Yes ☐ No ☒
The aggregate market value of the voting and non-voting
common equity held by non-affiliates of the registrant as of June 30, 2025, the last business day of the registrant’s most recently
completed second fiscal quarter, was approximately $9,989,568 based upon the closing price of $2.54 reported for such date on The Nasdaq
Capital Market as of that date.
As of March 29, 2026, there were 4,324,329
shares of the Registrant’s common stock, par value $0.0001 per share, outstanding.
Documents Incorporated by Reference: None.
Table of Contents
Part I 1
Item 1. Business 1
Item 1A. Risk Factors 5
Item 1B. Unresolved Staff Comments 22
Item 1C. Cybersecurity 23
Item 2. Properties 23
Item 3. Legal Proceedings 23
Item 4. Mine Safety Disclosures 23
Item 6. [Reserved] 24
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 32
Item 8. Financial Statements and Supplementary Data 32
Item 9A. Controls and Procedures 33
Item 9B. Other Information 33
Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections 33
Part III 35
Item 10. Directors, Executive Officers and Corporate Governance 34
Item 11. Executive Compensation 37
Item 14. Principal Accountant Fees and Services 41
Item 15. Exhibit and Financial Statement Schedules 42
Signatures 45
i
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains certain
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”),
and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements in this Annual Report
on Form 10-K about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts
and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “believe,”
“will,” “expect,” “anticipate,” “estimate,” “intend,” “plan” and
“would.” For example, statements concerning financial condition, possible or assumed future results of operations, growth
opportunities, industry ranking, plans and objectives of management, markets for our common stock and future management and organizational
structure are all forward-looking statements. Forward-looking statements are not guarantees of performance. They involve known and unknown
risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially
from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement.
Any forward-looking statements are qualified in
their entirety by reference to the risk factors discussed throughout this Annual Report on Form 10-K. Some of the risks, uncertainties
and assumptions that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements
include, but are not limited to:
● our business strategies;
● the timing of regulatory submissions;
● risks related to market acceptance of products;
● intellectual property risks;
● risks associated to our reliance on third party organizations;
● our competitive position;
● our industry environment;
● management’s expectation with respect to future acquisitions;
● our cash needs and financing plans.
The foregoing list sets forth some, but not all,
of the factors that could affect our ability to achieve results described in any forward-looking statements. You should read this Annual
Report on Form 10-K and the documents that we reference herein and have filed as exhibits to the Annual Report on Form 10-K, completely
and with the understanding that our actual future results may be materially different from what we expect. You should assume that the
information appearing in this Annual Report on Form 10-K is accurate as of the date hereof. Because the risk factors referred to on page
5 of this Annual Report on Form 10-K, could cause actual results or outcomes to differ materially from those expressed in any
forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements. Further,
any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation
to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect
the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors
will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of the
information presented in this Annual Report on Form 10-K, and particularly our forward-looking statements, by these cautionary statements.
ii
RISK FACTOR SUMMARY
Our business is subject to significant risks and
uncertainties that make an investment in us speculative and risky. Below we summarize what we believe are the principal risk factors but
these risks are not the only ones we face, and you should carefully review and consider the full discussion of our risk factors in the
section titled “Risk Factors,” together with the other information in this Annual Report on Form 10-K. If any of the following
risks actually occurs (or if any of those listed elsewhere in this Annual Report on Form 10-K occur), our business, reputation, financial
condition, results of operations, revenue, and future prospects could be seriously harmed. Additional risks and uncertainties that we
are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. Further,
any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation
to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect
the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors will
arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of the information
presented in this Annual Report on Form 10-K, and particularly our forward-looking statements, by these cautionary statements.
Risks Related to our Business and Industry
● We have a limited operating history
Risks Related to Information Technology Systems,
Intellectual Property and Privacy Laws
● Major network failures could have an adverse effect on our business.
Risks Related to Our Common Stock and Series
A Warrants
iii
PART I
ITEM 1. BUSINESS
Overview
We are a privacy and social media technology company
focused on innovative and creative user platforms. Our flagship platform is “Picture Party by Myseum”, a next-generation on
demand social networking platform that makes it easier and private to share your photos, videos and messages both today, and for generations
to come. Our innovative social media platform brings a fresh and needed approach to digital media and content management, allowing users
to create a digital legacy that makes it easier to share both today, and with future generations. The platform is backed by both patented
technology and proprietary software.
We also operate the DatChat Messenger & Private
Social Network, which presents technology that allows users to change how long their messages can be viewed before or after users send
them, prevents screenshots, and hides encrypted photos in plain sight on camera rolls. The patented technology offers users a traditional
texting experience while providing control and security for their messages. With the DatChat Messenger, a user can decide how long their
messages last on a recipient’s device while feeling secure that at any time, and delete individual messages or entire message threads,
making it like the conversation never happened.
DatChat Messenger & Private Social Network
Our platform allows users to exercise control
over their messages and posts, even after they are sent. Through our application, users can delete messages that they have sent, on their
own device and the recipient’s device as well. There is no set time limit within which they must exercise this choice. A user can
elect at any time to delete a message that they previously sent to a recipient’s device.
The application also enables users to hide secret
and encrypted messages behind a cover, which messages can only be unlocked by the recipient and which are automatically destroyed after
a fixed number of views or fixed amount of time. Users can decide how long their messages last on the recipient’s device. The application
also includes a screenshot protection system, which makes it virtually impossible for the recipient to screenshot a message or picture
before it gets destroyed. In addition, users can delete entire conversations at any time, making it like the conversation never even happened.
In addition to the foregoing, the application
also provides users with the ability to connect via an encrypted live video chat that also is designed to prevent screenshots or screen
grabs. The application integrates with iMessage, making private messages potentially available to hundreds of millions of users.
Myseum Social Media Platform
In March 2025, we launched our Myseum social media
platform, an innovative social media platform that brings a fresh approach to digital media and content management, allowing users
to create a digital legacy that can be easily shared today and with future generations. Backed by proprietary software, the multi-tiered
social media ecosystem enables individuals, families, and other groups to store and share digital content such as messages, photos, videos,
and documents within a highly secure and private family library. Myseum allows users to create amazing albums and galleries for everyone
to see, create special private and secure galleries with limited access, personalize a user’s newsfeed with updates from other Myseums
and leave time released video messages for both now and future generations.
Picture Party Platform
In December 2025, we launched Picture Party
by Myseum, a new on demand social networking and social sharing platform designed to address growing concerns around content control,
security, and intentional digital connection. The platform was developed to capitalize on the widespread need for a more controlled and
purposeful way to share photos and videos-one that solves persistent privacy and ownership challenges not adequately addressed by existing
social media offerings. Picture Party by Myseum introduces a new way to make sharing photos, videos and messages easier, a lot more fun
and private. Picture Party is much more than a shared album; it’s a complete personal and private social network with a live feed that
updates instantly as all guests’ posts. A user can share a post with dozens of pictures, comment and react. It even organizes the photos
in an album, or the user can relive the Picture Party with all the comments and posts as they happened. Unlike group chats that are unorganized,
no matter when a user joins the Picture Party, they can see everything from the beginning. Picture Party makes it easier and more fun
to share with the people right next to the user, or anywhere in the world.
Picture Party solves everyday sharing frustrations
by eliminating the common headaches of modern photo sharing:
● No more passing around a phone for others to view photos and videos.
● No more crowds gathering over a user’s shoulder to see a clip.
● No more debating whether to text, drop, email, or tag group photos.
1
RPM Interactive, Inc.
In October 2024, our majority owned subsidiary,
Dragon Interact, Inc. (“Dragon”), entered into a Share Exchange Agreement with RPM Interactive, Inc., a Florida corporation
(“RPM”), pursuant to which Dragon acquired 100% of the equity interests of RPM, including all assets of RPM in consideration
for the issuance of 3,500,000 restricted shares of Dragon’s common stock. RPM’s assets included an artificial intelligence
(“AI”) tool used for publishing AI-generated consumer gaming and podcasting/vodcasting applications and certain intellectual
property. As part of the acquisition, Dragon has changed its corporate name to RPM Interactive, Inc. and shifted its focus to developing
AI-driven podcast and gaming technologies.
Following the acquisition, in January 2025,
we returned 3,500,000 shares of RPM’s common stock held by us to RPM, which shares were cancelled and are no longer
outstanding on RPM’s stock ledger. Following these transactions, we held 12,500,000 shares of the RPM’s common stock, or
approximately 34% of its outstanding shares. On December 12, 2025, RPM entered into an Agreement and Plan of Merger with Avalon
GloboCare Corp., a Delaware corporation (“Avalon”), and certain other parties, pursuant to which the Company sold its
minority interest in RPM to Avalon. Upon the closing of the transaction, the Company received 6,561.71 shares of Series E Preferred
Stock of Avalon as consideration. As a result of the closing, the Company no longer holds a controlling interest in and is no longer
the primary beneficiary of RPM, which was a variable interest entity, and as of December 12, 2025, has deconsolidated RPM. In
accordance with ASC 205-20, the results of operations and the assets and liabilities of RPM have been classified as discontinued
operations for all periods presented in the accompanying consolidated financial statements.
The Habytat
Prior to the acquisition of RPM, we had developed
and launched, in November 2022, the Habytat, a virtual space that blends real world and virtual realities into one, in real time, using
emerging technology like virtual and augmented reality, to create a highly immersive 3D environment. We had further contemplated spinning-off
our Habytat platform business into a new standalone public company pursuant to a distribution of shares to our shareholders. As discussed
above, following our acquisition of RPM in October 2024, we ceased our development of the Habytat platform.
Competition
DatChat Messenger & Private Social Network
The current market for mobile messenger applications
is highly competitive, and we expect that it will remain competitive. There are currently several large companies that provide mobile
messenger applications and we expect several more competitors to enter into this market in the next few years. Well-established competitors
include Snapchat, WhatsApp, Facebook Messenger, Facebook, Telegram, MeWe, Confide and Apple iMessage. We believe that it is the range
of privacy and security features that we offer that sets us apart from our competitors.
Our flagship applications are the DatChat Privacy
Platform and Private Encrypted Social Network and Picture Party by Myseum, which both address the needs of consumers and businesses to
communicate with increased levels of privacy and control over messages and social posts, even after they are sent or shared.
Observing that mobile messaging and social media
users are drawn to several different messaging platforms by specific capabilities, we set out to create the application to consolidate
popular messaging and social media features such as group chats, emoticons and video sharing, offer new and unique features such as being
able to “nuke” a conversation to remove all traces of it from all parties involved, and deliver increased levels of privacy
and security. As public concerns over privacy in an ever-expanding digital society grow, the application offers comfort to its users with
extensive control over their messages and posts, even after they are sent or shared. The application allows users to not only control
how long or how many times a message or post may be viewed by the recipient, but also allows the sender to erase the message or entire
conversation after it is sent. Our goal is to make the application a leader in the mobile secure messaging and social media market based
upon our proprietary technology and enhanced privacy and security features. We intend to roll out additional features including video
chat, attachments, unique social posts and other features to enhance the messaging and social media experience.
Myseum and Picture Party by Myseum Social Media
Platform
The current market for social media and photo
sharing applications is highly competitive, and we expect that it will remain competitive. There are currently several large companies
that provide social media applications, and we expect several more competitors to enter into this market in the next few years. Well established
competitors include Facebook, Instagram, Snapchat, TikTok, iCloud Shared Photo, Pinterest, Google Photos, Amazon Drive, Photobucket and
Shutterfly. We believe that it is the range of privacy, security and social networking features that we offer that sets us apart from
our competitors.
Our Myseum and Picture Party by Myseum applications
address the needs of both consumers and businesses by bringing a fresh approach to digital media and content management, allowing users
to create a digital legacy that can be easily shared today and with future generations. The innovative social media platform brings a
fresh approach to digital media and content management, allowing users to create a digital legacy that can be easily shared today and
with future generations. Backed by privacy technology and proprietary software, the multi-tiered social media ecosystem enables individuals,
families, and other groups to store and share digital content such as messages, photos, videos, and documents within a secure and private
media library. In addition, we are developing a blockchain-based, decentralized media storage and sharing platform that is being designed
to allow consumers and businesses to connect directly with each other. Recognizing that currently our media is more often stored in digital
form, it can make it harder to share both now and with future generations we set out to build the Myseum and Picture Party by Myseum Social
Media platform to solve this problem.
2
Software and Development
DatChat Messenger & Myseum Social Media
Platform
Our ability to compete depends in large part on
our continuous commitment to research and development, our ability to rapidly introduce new features and functionality and our ability
to improve proven applications for established markets in which we have competitive advantages. We intend to work closely with our customers
to continuously enhance the performance, functionality, usability, reliability and flexibility of the application.
Our software and development team is responsible
for the design enhancements, development, testing and certification of the application. In addition, we may, in the future, utilize third
parties for our automated testing, managed upgrades, software development and other technology services. We are also developing video
messages that can be distributed at a future time. We anticipate that the video messaging currently under development will allow users
to set a specific date to release a video message to their social network at a set time in the future. Additionally, we are developing
an instantly created media sharing space that can either be deleted, or shared and saved in the Myseum of everyone involved.
Marketing and Monetization
DatChat Messenger & Myseum Social Media
Platform
The applications are currently offered for free
on Apple’s App Store and Google Play. Initial marketing is expected to consist of public relations, “cost-per-install”
campaigns, social media marketing using the Facebook’s ad platform and other readily available advertising platforms.
We anticipate utilizing social influencers and
additional public relations strategies to promote the application on a global basis, which also includes making the application available
for use in other languages.
We also plan to add in-app purchases such as user
customization features, increased storage, AI media organizers and time released videos messages to monetize the application.
We anticipate monetizing the Myseum Platform
with a subscription-based service for small businesses. In the future, we may develop other mobile applications and services for consumers
once our user base reaches a level at which we deem it to be economically feasible. No assurance can be given that we will successfully
develop new or future applications that will be embraced by users or generate revenue.
Intellectual Property Portfolio
DatChat Messenger & Private Social Network
and Picture Party by Myseum
We strive to protect and enhance the proprietary
technology and inventions that are commercially important to our business, including seeking, maintaining and defending patent rights.
Our policy is to seek to protect our proprietary position through a combination of intellectual property rights in the United States,
including patents, trademarks, copyrights, trade secret laws and internal procedures. Our commercial success will depend in part on our
ability to protect our intellectual property and proprietary technologies.
As of March 28, 2026, we had 20 issued patents,
no notices of allowance and 1 filed patent applications in the United States relating to our encryption technologies, blockchain platform
and digital assets. Our issued patents will expire in 2036. In addition, we plan to continue expanding and strengthening our IP portfolio
with additional patent applications in the future. We may not be able to obtain protection for our intellectual property, and our existing
and future patents, trademarks, and other intellectual property rights may not provide us with competitive advantages or distinguish our
products and services from those of our competitors. Our pending patent application and future applications may not result in the issuance
of patents, and any resulting issued patents may have claims narrower than those in our patent applications. Additionally, our current
and future patents, trademarks, and other intellectual property rights may be contested, circumvented, or found unenforceable or invalid,
and we may not be able to prevent third parties from infringing them. Our internal controls may not always be effective at preventing
unauthorized parties from obtaining our intellectual property and proprietary technologies.
Other companies that own patents, copyrights,
trademarks, trade secrets, and other intellectual property rights related to the mobile, encryption, blockchain, communication, privacy,
internet, and other technology-related industries frequently enter into litigation based on allegations of infringement, misappropriation,
and other violations of intellectual property or other rights. Third parties, including our competitors, may make claims from time to
time that we have infringed their patents, trademarks, copyrights, trade secrets, or other intellectual property rights. As our business
grows and competition rises, the risk of facing claims related to intellectual property and litigation matters will likely increase.
3
Our Privacy Policy
Privacy and security are the foundations of our
Company. We recognize that this is why users are drawn to the application and that our users care deeply about how their personal information
is collected, used and shared. When you read our Privacy Policy, we hope that you notice that it has been written to advance our core
principles and protect the integrity of the application.
When users sign up for the application, they are
required to provide us with certain personal information such as their name, email address and phone number. We take commercially reasonable
and appropriate measures to protect this personal information from accidental loss, misuse, and unauthorized access, disclosure, alteration,
or destruction, taking into account the risks involved in processing and the nature of such data, and comply with applicable laws and
regulations. We do not currently transfer any personal information to third-parties that do not act on our behalf, and we will not do
so without users’ opt-in consent. Similarly, we do not currently collect sensitive personal information from users without opt-in
consent. We may disclose personal information to certain types of third-party companies, but only to the extent needed to enable them
to provide such services. The types of companies that may receive personal information and their functions are: marketing assistance,
analytics and reporting, customer support, email and SMS delivery, cloud infrastructure, and systems monitoring. All such third parties
function as our agents, performing services at our instruction and on our behalf pursuant to contracts which require them to provide at
least the same level of privacy protection as is required by our Privacy Policy. In addition, we may be required to disclose personal
information in response to lawful requests by public authorities, including for the purpose of meeting national security or law enforcement
requirements. We may also disclose personal information to other third parties when compelled to do so by government authorities or required
by law or regulation including, but not limited to, in response to court orders and subpoenas.
With respect to retention of personal information,
we may only retain such users’ personal information in a form that identifies them only for as long as it serves the purpose(s)
for which it was initially collected as stated in our Privacy Policy, or subsequently authorized. We may continue processing users’
personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of statistical
analysis, and subject to the protection of our Privacy Policy. After such time periods have expired, we may either delete the personal
information or retain it in a form that it does not identify the user personally.
Most importantly, when users send an encrypted
message through the application, we may only temporarily process and store the message in its encrypted form. We do not (and cannot) read
our users’ encrypted messages and we delete our users’ messages as soon as they have been successfully self-destructed or
deleted. Our end-to-end encryption ensures that we will never have access to the contents of our users’ messages. Moreover, we recognize
the privacy rights of our users and are committed to complying with data protection laws to the extent they apply to us, and to assist
our users in exercising their rights under applicable law. For example, users may exercise their rights pursuant to the EU General Data
Protection Regulation (“GDPR”) or Section 1798.83 of the California Civil Code, simply by submitting a request via email to
privacy@DatChat.com.
Employees
As of March 29, 2026, we have a total of 11 full-time
employees and no part-time employees. We have established a network of external professionals and consultants to which we outsource various
research and development and operational tasks in an effort to minimize administrative overhead. We are not a party to any collective
bargaining agreements. We believe that we maintain good relations with our employees.
Our Corporate Information
DatChat, Inc. was initially incorporated in Nevada
on December 4, 2014 under the name YssUp, Inc. On March 4, 2015, an amendment to our articles of incorporation was filed with the Nevada
Secretary of State, changing YssUp, Inc.’s name to “DatChat, Inc.” On September 22, 2016, we filed amended and restated
articles of incorporation were filed with the Nevada Secretary of State in order to, among other things, authorize the Company to issue
preferred stock. On August 7, 2025, we filed a Certificate of Amendment to our Amended and Restated Articles of Incorporation with the
Secretary of State of the State of Nevada to change our name to “Myseum, Inc.”
4
Available Information
Our website address is www.myseum.com. The
contents of, or information accessible through, our website is not part of this Annual Report on Form 10-K, and our website address is
included in this document as an inactive textual reference only. We make our filings with the U.S. Securities and Exchange Commission
(“SEC”), including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments
to those reports, available free of charge on our website as soon as reasonably practicable after we file such reports with, or furnish
such reports to, the SEC. The public may read and copy the materials we file with the SEC at the SEC’s Public Reference Room at
100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. Additionally, the SEC maintains an internet site that contains reports, proxy and information statements and other
information. The address of the SEC’s website is www.sec.gov. The information contained in the SEC’s website is not intended
to be a part of this filing.
ITEM 1A. RISK FACTORS
An investment in our common stock involves
a high degree of risk. You should carefully consider the following risk factors and the other information in this Annual Report on Form
10-K before investing in our common stock. Our business and results of operations could be seriously harmed by any of the following risks.
The risks set out below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently
deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. If any of the following
events occur, our business, financial condition and results of operations could be materially adversely affected. In such case, the value
and trading price of our common stock could decline, and you may lose all or part of your investment.
Risks Related to our Business and Industry
We have a limited operating history and
have not yet generated any revenues.
Our limited operating history makes evaluating
the business and future prospects difficult and may increase the risk of your investment. We were incorporated in 2014, and since then
there have been a limited amount of downloads of the application. To date, we have minimal revenues. As reflected in the accompanying
consolidated financial statements, for the years ended December 31, 2025 and 2024, we incurred a net loss of $3,040,119 and $5,025,007,
respectively. Additionally, for the years ended December 31, 2025 and 2024, we used cash in operations of $4,267,074 and $4,811,145, respectively.
As of December 31, 2025, we had working capital of $3,045,399. We intend, in the long term, to derive revenues from advertisement sales,
technology licensing, and other forms of revenue. The application is available for download on certain mobile platforms and we are developing
compatibility with other platforms. We also continue to develop and refine functions of the application.
We have not developed a strong customer
base, and we have not generated sustainable revenue since inception. We cannot assure you that we ever will. We will incur significant
losses in launching products and we may not realize sufficient subscriptions or profits in order to sustain our business.
We have not yet developed a strong customer base
and we have not generated sustainable revenue since inception. We are subject to the substantial risk of failure facing businesses seeking
to develop and commercialize new products and technologies. Maintaining and improving our platform will require significant capital. We
will also incur substantial accounting, legal and other overhead costs as a public company. If our offerings to customers are unsuccessful,
result in insufficient revenue or result in us not being able to sustain revenue, we will be forced to reduce expenses, which may result
in an inability to gain new customers.
We may fail to develop new products or may
incur unexpected expenses or delays.
Although the application is currently available
for download, we may need to develop various new technologies, products and product features to remain competitive. Due to the risks inherent
in developing new products and technologies, limited financing, loss of key personnel, and other factors, we may fail to develop these
technologies and products or may experience lengthy and costly delays in doing so. Although we are able to license some of our technologies
in their current stage of development, we cannot assure that we will be able to develop new products or enhancements to our existing products
in order to remain competitive.
5
We are dependent on the services of certain
key management personnel, employees, and advisors. If we are unable to retain or motivate such individuals or hire qualified personnel,
we may not be able to grow effectively.
We depend on the services of a number of key management
personnel, employees, and advisors and our future performance will largely depend on the talents and efforts of such individuals. We do
not currently maintain “key person” life insurance on any of our employees. The loss of one or more of such key individuals,
or failure to find a suitable successor, could hamper our efforts to successfully operate our business and achieve our business objectives.
Our future success will also depend on our ability to identify, hire, develop, motivate and retain highly skilled personnel. Competition
in our industry for qualified employees is intense, and our compensation arrangements may not always be successful in attracting new employees
and/or retaining and motivating our existing employees. Future acquisitions by us may also cause uncertainty among our current employees
and employees of the acquired entity, which could lead to the departure of key individuals. Such departures could have an adverse impact
on the anticipated benefits of an acquisition.
We may face intense competition and expect
competition to increase in the future, which could prohibit us from developing a customer base and generating revenue.
We are focused on the mobile application and social
sharing platform industries, which is already saturated with established companies. Many of these companies, including Apple Inc., Alphabet
Inc., Facebook, Inc., Snap Inc., TikTok, iCloud Shared Photo, Pinterest, Google Photos, Amazon Drive, Photobucket and Shutterfly, already
have an established market in our industry. Most of these companies have significantly greater financial and other resources than us and
have been developing their products and services longer than we have been developing ours.
The application is based on new and unproven
technologies and is subject to the risks of failure inherent in the development of new products and services.
Because the application is based on certain new
technologies, it is subject to risks of failure that are particular to new technologies, including the possibility that:
● the application may not gain market acceptance;
● the application may not receive the exposure required to obtain new users; or
● third parties may market superior products or services.
If we are unable to maintain a good relationship
with the markets where the application is distributed, our business will suffer.
The Apple App Store is the primary distribution,
marketing, promotion and payment platform for the application. Any deterioration in our relationship with Apple or any application marketplace
we utilize in the future would harm our business and adversely affect the value of our common stock.
We are subject to Apple’s standard terms
and conditions for application developers, which govern the promotion, distribution and operation of mobile applications on its platform.
Our business would be harmed if:
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We expect to benefit from Apple’s strong
brand recognition and large user base. If Apple loses its market position or otherwise falls out of favor with mobile users, we would
need to identify alternative channels for marketing, promoting and distributing our application, which would consume substantial resources
and may not be effective. In addition, Apple has broad discretion to change their terms of service and other policies with respect to
us and other developers, and those changes may be unfavorable to us. Any such changes in the future could significantly alter our users
experience or how they interact within our application, which may harm our business.
In the event that Apple’s standard terms
and conditions become prohibitively costly or unduly burdensome, we plan to host our own servers in a co-location facility and create
a web-based, desktop version of the application that does not require users to install the application from the App store.
The mobile application industry is subject
to rapid technological change and, to compete, we must continually enhance the application.
We must continue to enhance and improve the performance,
functionality and reliability of the application. The mobile application industry is characterized by rapid technological change, changes
in user requirements and preferences, frequent new product and services introductions embodying new technologies and the emergence of
new industry standards and practices that could render our product and services obsolete. We have discovered that some of our customers’
desire additional performance and functionality that the application, and the underlying technology, does not currently support. Our success
will depend, in part, on our ability to both internally develop leading technologies to enhance the application, develop new mobile applications
and services that address the increasingly sophisticated and varied needs of our customers, and respond to technological advances and
emerging industry standards and practices on a cost-effective and timely basis. The development of our technology and other proprietary
technology involves significant technical and business risks. We may fail to use new technologies effectively or to adapt our proprietary
technology and systems to customer requirements or emerging industry standards. If we are unable to adapt to changing market conditions,
customer requirements or emerging industry standards, we may not be able to create revenue and expand our business.
Defects in the application and the technology
powering it may adversely affect our business.
Tools, code, subroutines and processes contained
within the application may contain defects not yet discovered or contained in updates and new versions. Our introduction of new mobile
applications or updates and new versions with defects or quality problems may result in adverse publicity, reduced downloads and use,
product redevelopment costs, loss of or delay in market acceptance of our products or claims by customers or others against us. Such problems
or claims may have a material and adverse effect on our business, prospects, financial condition and results of operations.
If we fail to retain current users or add
new users, or if our users engage less with the application, our business would be seriously harmed.
Adding, maintaining, and engaging daily monthly
users will be essential to attaining our growth targets and sustaining operations. If current and potential users do not perceive our
products to be effective and useful, we may not be able to attract new users, retain existing users, or maintain or increase the frequency
and duration of their engagement. In addition, our products typically require high bandwidth data capabilities, high-end mobile device
penetration and high bandwidth capacity cellular networks with large coverage areas. We therefore do not expect to experience rapid user
growth or engagement in countries with low smartphone penetration even if such countries have well-established and high bandwidth capacity
cellular networks. We may also not experience rapid user growth or engagement in regions where, even though smartphone penetration is
high, due to the lack of sufficient cellular based data networks, consumers rely heavily on Wi-Fi and may not access our products regularly.
There are many factors that could negatively affect
user retention, growth, and engagement, including if:
● users increasingly engage with competing products instead of ours;
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● we are unable to combat hostile or inappropriate usage of our products;
● we fail to provide adequate service to users;
● we are the subject of adverse media reports or other negative publicity; and
● we do not maintain our brand image or our reputation is damaged.
Any decrease in user retention, growth, or engagement
could render our products less attractive to users, advertisers, or partners, and would seriously harm our business.
There is a risk that the public will not
perceive the privacy protections that we offer to be necessary or useful and therefore will not be interested in our services.
No matter how effective our products might be
in affording users control over their privacy, the general public may not perceive our products to be necessary or useful. In general,
although people are more aware than in the past of the amount of personal data that is tracked on a daily basis with the advent of social
media and targeted advertising, mere awareness does not necessarily translate into a desire to take affirmative action with respect to
one’s privacy. For us, this could mean that the average person might not feel the need to have the ability to delete messages that
they have sent. While we believe that the general public will recognize the value of our products and feel empowered to take control of
their privacy, it is possible that a great number of people have come to believe that their personal information cannot be protected and
that any attempt to do so would be ineffective. As such, regardless of how effective our products might be, there is a risk that the general
public might deem our products to be unnecessary and will not be drawn to download and use the application.
Users may not want to change the way that
they send messages and therefore would not be interested in our products.
Our success is dependent in part on users altering
their behavior and changing the way that they send text messages. Although the application is fully integrated with iMessage, the application
requires the user to send the message through a separate text bar, which is located below the ordinary iMessage bar. Even if users have
downloaded the application, it is possible that users will bypass this option when they go to send a text message. In addition, our user
experience may not be received positively, as some users might find it inconvenient to have two text bars appearing on the screen at the
same time when they go to send a text message. The iMessage integration figure does not currently allow a user to remove the iMessage
bar so that only the application’s bar appears and it is doubtful that Apple would ever allow such a feature. Moreover, because
both text bars are displayed on the screen at the same time, users may inadvertently send a private message through iMessage that they
intended to send through the application, thereby defeating the data protection and privacy benefits that the application offers. If users
do not adapt to seeing and typing messages with two texts bars displayed, our user retention may suffer.
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The characteristics of the application,
including but not limited to privacy and encryption, may be exploited to facilitate illegal activity; if any of our users do so or are
alleged to have done so, it could adversely affect us and generate negative perception of our products in the marketplace.
For all of the same reasons that our products
are attractive to the general public, the privacy, data protection and encryption features could appeal to persons and groups engaged
in illegal activities due to the ability of the application to delete messages from a recipient’s phone. In this context, the application
may be used to facilitate both illegal activity and the destruction of evidence, which could potentially draw scrutiny from regulators.
In addition, the application could develop a stigma that it is associated with illegal activity and deter certain people from communicating
through the application.
Negative publicity could adversely affect
our reputation, our business, and our operating results.
Negative publicity about our company, including
about the quality and reliability of our products, content shared by users through the application, changes to our products, policies
and services, our privacy and security practices, litigation, regulatory activity, the actions of users on the application, or user experience
with our products, even if inaccurate, could adversely affect our reputation and the confidence in and the use of our product. Such negative
publicity could also have an adverse effect on the size, engagement, and loyalty of our user base and, in turn, adversely affect our business,
results of operations and financial condition.
We expect to derive substantially all of
our revenue from a limited number of products.
Currently, we expect to derive substantially all
of our revenue from a limited number of products and applications. As such, the continued growth in market demand for and market acceptance
of the product or application is critical to our continued success. Demand for our products or the applications is affected by a number
of factors, many of which are beyond our control, such as continued market acceptance; the timing of development and release of competing
new products; consumer preferences; the development and acceptance of new features, integrations, and capabilities; price or product changes
by us or our competitors; technological changes and developments within the markets we serve; growth, contraction, and rapid evolution
of our market; and general economic conditions and trends. If we are unable to continue to meet the demands of our users or trends in
preferences or to achieve more widespread market acceptance of our products and applications, our business, results of operations, and
financial condition could be harmed. Changes in preferences of users may have a disproportionately greater impact on us than if we offered
multiple products. In addition, competitors may develop or acquire their own tools or software and people may continue to rely on traditional
tools and software, such as text message and email, which would reduce or eliminate the demand for our products and applications. If demand
declines for any of these or other reasons, our business could be adversely affected.
The application depends on effectively operating
with mobile operating systems, hardware, networks, regulations, and standards that we do not control. Changes in our products or to those
operating systems, hardware, networks, regulations, or standards may seriously harm our user growth, retention, and engagement.
Because the application is used primarily on mobile
devices, the application must remain interoperable with popular mobile operating systems, Android and iOS. The owners of such operating
systems, Google and Apple, respectively, each provide consumers with products that compete with ours. We have no control over these operating
systems or hardware, and any changes to these systems or hardware that degrade our products’ functionality, or give preferential
treatment to competitive products, could seriously harm DatChat usage on mobile devices. Our competitors that control the operating systems
and related hardware the application runs on could make the interoperability of our products with those mobile operating systems more
difficult or display their competitive offerings more prominently than ours. When introducing new products, it takes time to optimize
such products to function with these operating systems and hardware, impacting the popularity of such products, and we expect this trend
to continue. Moreover, our products require high-bandwidth data capabilities. If the costs of data usage increase, our user growth, retention,
and engagement may be seriously harmed.
We may not successfully cultivate relationships
with key industry participants or develop products that operate effectively with these technologies, systems, networks, regulations, or
standards. If it becomes more difficult for our users to access and use the application on their mobile devices, if our users choose not
to access or use the application on their mobile devices, or if our users choose to use mobile products that do not offer access to the
application, our user growth, retention, and engagement could be seriously harmed.
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Moreover, the adoption of any laws or regulations
that adversely affect the popularity or growth in use of the internet or mobile applications, including laws or regulations that undermine
open and neutrally administered internet access, could decrease user demand for the application and increase our cost of doing business.
For example, in December 2017, the Federal Communications Commission adopted an order reversing net neutrality protections in the United
States, including the repeal of specific rules against blocking, throttling or “paid prioritization” of content or services
by internet service providers. To the extent internet service providers engage in such blocking, throttling or “paid prioritization”
of content or similar actions as a result of this order and the adoption of similar laws or regulations, our business, financial condition
and results of operations could be materially adversely affected.
Risks Related to Information Technology Systems,
Intellectual Property and Privacy Laws
We rely on a single third-party provider,
Amazon Web Services (“AWS”), for computing infrastructure, secure network connectivity, and other technology-related services
needed to deliver our products. Any disruption in the services provided by such third-party provider could adversely affect our business.
Our products are hosted by, and use computing
infrastructure, secure network connectivity, and other technology-related services provided by AWS. We do not control the operations of
this third-party provider or own the equipment used to provide such services. Because we cannot easily switch our AWS-serviced operations
to another cloud provider, any disruption of or interference with our use of AWS, for example, due to natural disasters, cyber-attacks,
terrorist attacks, power losses, telecommunications failures, or similar events, would impact our operations and may adversely affect
our business, financial condition, operating results and cash flows. In addition, AWS has no obligation to renew its agreement with us
on commercially reasonable terms or at all. If we are unable to renew our agreement on commercially reasonable terms or develop our blockchain
capabilities, we may be required to transition to a new provider, and we may incur significant costs and possible service interruption
in connection with doing so.
In addition, Amazon may take actions beyond our
control that could seriously harm our business, including:
● discontinuing or limiting our access to its cloud platform
● increasing pricing terms;
● terminating or seeking to terminate our contractual relationship altogether;
Amazon has broad discretion to change and interpret
its terms of service and other policies with respect to us, and those actions may be unfavorable to us. They may also alter how we are
able to process data on their cloud platform. If Amazon makes changes or interpretations that are unfavorable to us, our business could
be seriously harmed.