ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
You should read the following discussion and
analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes
appearing elsewhere in this Annual Report on Form 10-K. In addition to historical information, this discussion and analysis contains forward-looking
statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors
that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the
section titled “Risk Factors” included elsewhere in this Annual Report on Form 10-K. All amounts in this report are in U.S.
dollars, unless otherwise noted.
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 social
sharing platform that makes it easier to share your photos and videos 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.
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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 technology, 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 instant 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 and videos 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 by Myseum makes it easier and more fun
to share with the people right next to the user, or anywhere in the world.
Picture Party by Myseum 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.
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 the RPM 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.
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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 is no longer a primary beneficiary of
RPM 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 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 the shares. As discussed above, following
our acquisition of RPM in October 2024, we ceased our development of the Habytat platform and are evaluating ways to utilize the technology
that had been developed by our subsidiary.
Recent Events
Name and Symbol Changes
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 the name of the Company
to “Myseum, Inc.”In connection with the name change, the trading symbols for our common stock and Series A warrants
began trading on the Nasdaq Capital Market on August 11, 2025 as “MYSE” and “MYSEW”, respectively.
Basis of Presentation
The financial statements contained herein have
been prepared in accordance with accounting principles generally accepted in the United States of America (the “U.S. GAAP”)
and the requirements of the Securities and Exchange Commission.
Critical Estimates
This management’s discussion and analysis
of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S.
GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements,
and the reported amounts of revenue and expenses during the reported period. In accordance with U.S. GAAP, we base our estimates on historical
experience and on various other assumptions we believe to be reasonable under the circumstances. Actual results may differ from these
estimates if conditions differ from our assumptions. While our significant accounting policies and significant estimates are more fully
described in Note 2 in the “Notes to Financial Statements”, we believe the following estimates are critical to the process
of making significant judgments and estimates in preparation of our consolidated financial statements.
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Capitalized internal-use software costs
The Company capitalizes costs to develop or purchase
internal-use software in accordance with ASC section 350-40, Intangibles — Goodwill and Other — Internal-Use
Software. Costs incurred to develop internal-use software are expensed as incurred during the preliminary project stage. Internal-use
software development costs are capitalized upon purchase and during the application development stage, which is after: (i) the preliminary
project stage is completed; and (ii) management authorizes and commits to funding the project and it is probable the project will be completed
and used to perform the intended function. Capitalization ceases at the point where the software project is substantially complete and
ready for its intended use, and after all substantial testing is completed. Upgrades and enhancements are capitalized if it is probable
that those expenditures will result in additional functionality. Amortization is provided for on a straight-line basis over the expected
useful life of the internal-use software development costs and related upgrades and enhancements. When the existing software is replaced
with new software, the unamortized costs of the old software are expensed when the new software is ready for its intended use.
Noncontrolling interests
The Company follows ASC Topic 810, “Consolidation,”
governing the accounting for and reporting of noncontrolling interests (“NCI”) in partially owned consolidated subsidiaries
and the loss of control of subsidiaries. In accordance with ASC Topic 810-10-45, the Company presented noncontrolling interests as a separate
component of total shareholders’ equity on the consolidated balance sheets. Certain provisions of this standard indicate, among
other things, that that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity
transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially-owned consolidated subsidiary
be allocated to noncontrolling interests even when such allocation might result in a deficit balance. For the years ended December 31,
2025 and 2024, the net loss attributed to NCI was included in the accompanying consolidated statements of operations and comprehensive
loss as part of discontinued operations. Losses attributable to NCI in a subsidiary may exceed a NCI’s interests in the subsidiary’s
equity. The excess attributable to NCI is attributed to those interests. NCI shall continue to be attributed their share of losses even
if that attribution results in a deficit NCI balance.
The Company allocated certain corporate common
expenses to its subsidiaries based on the ratio of direct subsidiary expenses to total consolidated expenses. Management believes that
this allocation method is reasonable.
Through January 10, 2024, the date that VR Interactive
purchased 8,000,000 shares of RPM from Metabizz LLC, any noncontrolling interest was eliminated in consolidation. Subsequent to January
10, 2024, the Company ceased eliminating the noncontrolling interest in consolidation and recorded an initial negative noncontrolling
interest in total equity for the portion of equity ownership not attributable to Myseum based on the minority interest holders’
ownership interest in the carrying value of RPM’s equity. Due to the issuance of common shares by RPM, during the year ended December
31, 2024, the Company recorded aggregate initial negative noncontrolling interest of $1,351,942 in total equity for the portion of additional
equity ownership not attributable to the Company based on the minority interest holders’ ownership interest in the carrying value
of RPM’s equity. During the year ended December 31, 2024, the Company also allocated $785,847 of the net loss of the subsidiary
to noncontrolling interest resulting in a total noncontrolling interest deficit of $2,137,789 as of December 31, 2024. Due to the cancellation
of common shares by RPM, during the year ended December 31, 2025, the Company recorded aggregate initial negative noncontrolling interest
of $188,810 in total equity for the portion of additional equity ownership not attributable to the Company based on the minority interest
holders’ ownership interest in the carrying value of RPM’s equity. The Company also allocated $432,847 of the net loss of
the subsidiary to noncontrolling interest during the year ended December 31, 2025. Immediately prior to the sale and deconsolidation of
RPM on December 12, 2025, aggregate accumulated noncontrolling interest deficit amounted to $2,759,446. Upon deconsolidation, this balance
was eliminated and included in the calculation of the gain on deconsolidation (see Note 3). As of December 31, 2025, there is no noncontrolling
interest balance remaining on the consolidated balance sheet.
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Variable interest entities
Pursuant to ASC 810-10-25-22, an entity
is defined as a VIE if it either lacks sufficient equity to finance its activities without additional subordinated financial support,
or it is structured such that the holders of the voting rights do not substantively participate in the gains and losses of the entity.
When determining whether an entity that meets the definition of a business qualifies for a scope exception from applying VIE guidance,
the Company considers whether: (i) it has participated significantly in the design of the entity, (ii) it has provided more than half
of the total financial support to the entity, and (iii) substantially all of the activities of the VIE are conducted on its behalf. A
VIE is consolidated by its primary beneficiary, the party that has the power to direct the activities that most significantly impact the
VIE’s economic performance and has the right to receive benefits or the obligation to absorb losses of the entity that could be
potentially significant to the VIE. The primary beneficiary assessment must be re-evaluated on an ongoing basis.
Based on the Company’s analysis, on February
14, 2023, Metabizz, LLC, a Florida corporation, and Metabizz SAS, a company incorporated under the laws of Columbia (collectively “Metabizz”),
were determined to be VIE entities in accordance with ASC 810-10-25-22 because the equity owners in Metabizz did not
have the characteristics of a controlling financial interest and the initial equity investments in these entities may be or are insufficient
to meet or sustain its operations without additional subordinated financial support from Myseum. The equity owners of Metabizz had only
a nominal equity investment at risk, and the Company absorbed or received a majority of the entity’s expected losses or benefits.
The Company participated significantly in the design of Metabizz. The Company previously provided working capital advances to Metabizz
to allow Metabizz to fund its day-to-day obligations. Substantially all of the activities of Metabizz were conducted for the Company’s
benefit, as evidenced by the fact that the operations of Metabizz consisted of development of software and technologies to be used by
RPM and the Company provided working capital to Metabizz to pay employees and independent contractors to perform the development services
on behalf of the Company. Repayment of the working capital advances is not guaranteed by the equity owner of Metabizz and creditors of
Metabizz do not have recourse against the Company. Accordingly, the Company was required to consolidate the assets, liabilities, revenues
and expenses of Metabizz using the fair value method. Additionally, the managing partner of Metabizz was also the Chief Innovation Officer
of RPM. Since Metabizz, LLC and Metabizz SAS were considered VIE’s, any noncontrolling interest eliminated in consolidation. On
March 31, 2024, based on the Company’s analysis, the Company deconsolidated Metabizz, LLC and Metabizz SAS. During the three months
ended March 31, 2024, the Company ceased doing business with Metabizz, LLC and Metabizz SAS and began paying technology professionals
directly. In connection with the deconsolidation of Metabizz, LLC and Metabizz SAS, during the year ended December 31, 2024, the Company
recorded a gain on deconsolidation of $107.
Immediately following the August 27, 2024 Asset
Purchase Agreement with the Seller (See Note 1), the Company owned 46.7% of RPM. Based on the Company’s analysis, on August 27,
2024, the Company determined that RPM met the definition of a VIE under the VIE model, which provides for situations in which control
may be demonstrated other than by the possession of voting rights in RPM. Until the date of sale on December 12, 2025, the Company continued
to have the power to direct the activities of RPM that most significantly impact RPM’s economic performance and the obligation to
absorb losses of RPM that could potentially be significant to RPM or the right to receive benefits from RPM that could potentially be
significant to RPM. Immediately prior to the sale and deconsolidation, the Company retained approximately 33.7% ownership of RPM. As of
December 31, 2024, the Company retained approximately 39.7%. As a result of the sale and deconsolidation on December 12, 2025, the Company
no longer consolidates RPM and does not hold a variable interest in any entity.
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Stock-based compensation
Stock-based compensation is accounted for based
on the requirements of ASC 718 – “Compensation–Stock Compensation”, which requires recognition in the
consolidated financial statements of the cost of employee, non-employee and director services received in exchange for an award of equity
instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the
vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based
on the grant-date fair value of the award. The Company has elected to account for forfeitures as they occur.
Recently Issued Accounting Pronouncements
Refer to the notes to the audited financial statements.
Results of Operations
Revenue
During the years ended December 31, 2025 and 2024,
we generated revenues of $550 and $436, respectively, which consisted of subscription revenues.
Operating expenses
For the year ended December 31, 2025, operating
expenses amounted to $5,490,608 as compared to $3,217,603 for the year ended December 31 2024, an increase of $2,273,005, or 70.6%. For
the years ended December 31 2025 and 2024, operating expenses consisted of the following:
Year Ended December 31,
Research and development - 166,667
Compensation and related expenses
Compensation and related expenses include salaries,
stock-based compensation, health insurance and other benefits.
During the year ended December 31, 2025 and 2024,
compensation and related expenses amounted to $3,108,633 and $1,794,611, respectively, an increase of $1,314,022, or 73.2%. The increase
was attributable to an increase in stock-based compensation of $723,890 due to the issuance of new stock options in 2025, an increase
in bonus of $50,000, and an overall increase in compensation and other related expenses of $540,132 as a result of a decrease in the
allocation of compensation and related expenses to RPM, which is included in loss from discontinued operations.
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Marketing and advertising expenses
During the years ended December 31, 2025 and 2024,
marketing and advertising expenses amounted to $238,992 and $84,163, respectively, an increase of $154,829, or 184.0%, primarily due to
an overall increase in promotions, branding and digital marketing strategies and social media advertisements.
Professional and consulting expenses
During the years ended December 31, 2025 and 2024,
we reported professional and consulting expenses of $1,412,792 and $582,267, respectively, an increase of $830,525, or 142.6%. The increase
was attributable to an increase in legal fees of $400,931, an increase in investor relations fees of $217,850, an increase in accounting
fees of $24,776, an increase in stock-based consulting fees of $19,135, an increase in other consulting fees of $9,908, and an increase
in other professional fees of $157,925, primarily due to a decrease in the allocation of professional and consulting expenses to RPM,
which is included in loss from discontinued operations.
Research and development expenses
During the years ended December 31, 2025 and
2024, we incurred $0 and $166,667 in research and development expenses, a decrease of $166,667, or 100.0%. Research and development
expenses in 2024 were incurred in connection with an Asset Purchase Agreement dated August 27, 2024 pursuant to which we acquired certain software and recorded research and development
expense.
General and administrative expenses
During the years ended December 31, 2025 and 2024,
general and administrative expenses amounted to $730,191 and $589,895, respectively, an increase of $140,296, or 23.8%. The increase was
primarily attributable to an increase in travel expenses of $57,566, an increase in internet and computer expenses of $52,892, and an
increase in other general and administrative expenses of $96,449. These increases were offset by a decrease in settlement expense of $66,611
recorded in connection with the Ambassador Settlement discussed elsewhere.
Loss from Operations
During the year ended December 31, 2025, loss
from operations amounted to $5,490,058 as compared to $3,217,167 during the year ended December 31, 2024, an increase of $2,272,891, or
70.6%.
Other Income (Expense)
Other income (expenses) primarily consisted of
interest income, gain on extinguishment of liabilities. During the years ended December 31, 2025 and 2024, we reported other income, net
of $235,412 and $268,752, respectively, a decrease of $33,340, or 12.4%.
During the year ended December 31, 2025, other
income, net primarily consisted of interest income, net of $172,754 and gain on extinguishment of liabilities of $62,658.
During the year ended December 31, 2024, other
income, net solely consisted of interest income of $268,752.
Loss from Continuing Operations
During the year ended December 31, 2025, loss
from continuing operations amounted to $5,254,646 as compared to $2,948,415 during the year ended December 31, 2024, an increase of $2,306,231,
or 78.2%.
Gain (Loss) from Discontinued Operations
For the year ended December 31, 2025, gain from
discontinued operations amounted to $2,214,527 as compared to a loss from discontinued operations of $2,076,592 for the year ended December
31 2024, a positive increase of $4,291,119, or 206.6%. The following table summarizes the results of the discontinued operations for the
years ended December 31, 2025 and 2024:
Loss from discontinued operations, net of tax (661,365 ) (2,076,699 )
Gain on sale and deconsolidation of variable interest entities 2,875,892 107
Total gain (loss) from discontinued operations, net $ 2,214,527 $ (2,076,592 )
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Net Loss and Net Loss Attributable Common
Shareholders
Due to the foregoing reasons, during the years
ended December 31, 2025 and 2024, our net loss was $3,040,119 and $5,025,007, respectively, a decrease of $1,984,888, or 39.5%. During
the years ended December 31, 2025 and 2024, our net loss attributable to Myseum, Inc. shareholders was $2,607,272 and $4,239,160, respectively,
a decrease of $1,631,888, or 38.5%.
During the year ended December 31, 2025, our total basic and diluted net loss per common share attributable to Myseum, Inc. shareholders
was $(0.62). During the year ended December 31, 2024, our total basic and diluted net loss per common share attributable to Myseum, Inc.
shareholders was $(1.43).
Liquidity, Capital Resources and Plan of Operations
Liquidity is the ability of a company to generate
funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. On December 31,
2025, we had a cash balance of $749,030, short-term investments of $2,981,909, and working capital of $3,045,399. Short-term investments
include U.S. Treasury zero coupon bills that are all highly rated and have initial maturities between one and five months. During the
year ended December 31, 2025, we incurred a net loss of $3,040,119 and used net cash in operations of $4,267,074. Additionally, the Company had nominal revenues in 2025.
The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction
of liabilities in the normal course of business. The Company’s ability to continue as a going concern is dependent on its ability
to raise additional capital to fund its research and development (“R&D”) activities and meet its obligations on a timely
basis. There can be no assurance that sufficient funding will be available to allow the Company to successfully continue its R&D activities
and meet its obligations. If the Company is unable to obtain the necessary funds, significant reductions in spending and the delay or
cancellation of planned activities may be necessary. These actions would have a material adverse effect on the Company’s business,
results of operations, and prospects. These conditions raise substantial doubt about the Company’s ability to continue as a going
concern within one year from the date these consolidated financial statements are issued. These consolidated financial statements do not
include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification
of liabilities that might result from the outcome of this uncertainty. As of December 31, 2025,
Our primary uses of cash has been for research
and development, compensation and related expenses, fees paid to third parties for professional services, marketing and advertising expenses,
and general and administrative expenses. All funds received have been expended in the furtherance of growing the business. We received
funds from the sale of our common stock, sale of common stock of RPM, and the exercise of warrants. The following trends are reasonably
likely to result in changes in our liquidity over the near to long term:
● An increase in working capital requirements to finance our current business,
● Cost of research and development,
● The cost of being a public company.
Cash Flows from Operating Activities
Net cash used in operating activities totaled
$4,267,074 and $4,811,145 for the years ended December 31, 2025 and 2024, respectively, an increase of $544,071.
Net cash flow used in operating activities for
the year ended December 31, 2025 primarily reflected a net loss of $3,040,119 adjusted for the add-back (reduction) of non-cash items
consisting of depreciation and amortization of $41,430, amortization of right of use assets of $33,590, accretion of stock-based stock
option and common stock expense of $866,325, gain on deconsolidation of variable interest entities of $(2,875,892), and gain on extinguishment
of liabilities of $(62,658), offset by changes in operating assets and liabilities primarily consisting of a decrease in accounts receivable
of $124, an increase in prepaid expenses of $117,519, a decrease in assets of discontinued operations of $446,670, an increase in accounts
payable and accrued expenses of $493,667, a decrease in contract liabilities of $29, a decrease in liabilities of discontinued operations
of $26,845, and a decrease in operating lease liabilities of $25,818.
Net cash flow used in operating activities for
the year ended December 31, 2024 primarily reflected a net loss of $5,025,007, adjusted for the add-back (reduction) of non-cash items
consisting of depreciation and amortization of $23,129, amortization of right of use assets of $73,977, accretion of stock-based stock
option and common stock expense of $123,300, common stock expense of RPM of $22,500, a non-cash gain from deconsolidation of variable
interest entities of $(107), foreign currency exchange loss of $12,965, and non-cash research and development expense of $166,667, offset
by changes in operating assets and liabilities primarily consisting of an increase in prepaid expenses of $4,639, an increase in assets
of discontinued operations of $437,048, an increase in accounts payable and accrued expenses of $282,697, an increase in liabilities of
discontinued operations of $24,871, and a decrease in operating lease liabilities of $83,674.
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Cash Flows from Investing Activities
Net cash provided (used in) by investing activities
amounted to $(244,236) and $2,236,751 for the years ended December 31, 2025 and 2024, respectively, a decrease of $2,480,987.
During the year ended December 31, 2025, cash
flows used in investing activities comprised of gross proceeds from the sale of short-term investments of $6,385,797, purchase of short-term
investments of $6,415,194, purchase of property and equipment of $4,475, a decrease of in cash from sale of RPM of $14,026, and an increase
in the capitalization of internal-use software of $196,338.
During the year ended December 31, 2024, we purchased
short-term investments of $10,767,288 and received gross proceeds from the sale of short-term investments of $13,004,039.
Cash Flows from Financing Activities
Net cash provided by financing activities totaled
$4,493,355 and $2,394,971 for the years ended December 31, 2025 and 2024, respectively, an increase of $2,098,384.
During the year ended December 31, 2025, we received
$4,532,000 from the sale of common stock, net, received proceeds from notes payable of $40,000, and paid deferred offering costs of $78,645.
During the year ended December 31, 2024, we received
$559,251 from the sale of common stock, net, received $974,198 from the sale of subsidiary common stock, net, and received $861,522 from
the sale of pre-funded warrants.
Off-Balance Sheet Arrangements
We have not entered into any other financial guarantees
or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that
are indexed to our shares and classified as shareholders’ equity or that are not reflected in our financial statements. Furthermore,
we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity
or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity,
market risk or credit support to us or engages in leasing, hedging or research and development services with us.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
As a smaller reporting company, we are not required
to provide the information required by this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
Our financial statements are contained in pages
F-1 through F-30, which appear at the end of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls
Our principal executive officer and principal
financial officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined
in Exchange Act Rule 13a-15(e) and 15d-15(e)) as of December 31, 2025, the end of the period covered by this Annual Report on Form 10-K,
have concluded that our disclosure controls and procedures were not effective such that the information required to be disclosed by us
in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s
rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial
officer, as appropriate to allow timely decisions regarding disclosure. In designing and evaluating the disclosure controls and procedures,
management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance that
the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and
instances of fraud, if any, within a company have been detected.
Management’s Report on Internal Control
Over Financial Reporting
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a-15(f). Internal control
over financial reporting is a process designed under the supervision and with the participation of our management, including our principal
executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of consolidated financial statements for external purposes in accordance with GAAP. All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance
with respect to financial statement preparation and presentation.
As of December 31, 2025, under the supervision
and with the participation of our management, including our principal executive officer and principal financial officer, we conducted
an evaluation of the effectiveness of our internal control over financial reporting based on the Committee of Sponsoring Organizations
of the Treadway Commission in Internal Control-Integrated Framework - 2013. Based on this assessment, our management concluded that, as
of December 31, 2024, our internal control over financial reporting was not effective because it identified a material weakness. A material
weakness is a significant deficiency or a combination of significant deficiencies in internal control over financial reporting such that
there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or
detected on a timely basis.
Specifically, management concluded that the ineffectiveness
of our internal controls over financial reporting was due to the following material weaknesses:
● We have not implemented adequate system and manual controls.
While we used the services of a third-party accountant
to provide accounting and financial reporting services to us, we lack both an adequate number of personnel with requisite expertise in
the key functional areas of finance and accounting and an adequate number of personnel to properly implement internal control over financial
reporting. These factors represent material weaknesses in our internal control over financial reporting. Although we believe the possibility
of errors in our financial statements is remote and expect to continue to use a third-party accountant to address shortfalls in staffing
and to assist us with accounting and financial reporting responsibilities in an effort to mitigate the lack of segregation of duties,
until such time as we expand our staff with qualified personnel, we expect to continue to report material weaknesses in our internal control
over financial reporting.
Attestation Report of our Registered Public
Accounting Firm
This Annual Report on Form 10-K does not include
an attestation report of our registered public accounting firm regarding internal control over financial reporting. As a smaller reporting
company, our management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the
SEC that permit us to provide only management’s report in this annual report.
Changes in Internal Control Over Financial
Reporting
There have been no changes in our internal control
over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
During our last fiscal quarter ended December
31, 2025, none of our directors or executive officers adopted, modified or terminated a “Rule 10b5-1 trading arrangement”
or a “non-Rule 10b5-1 trading arrangement” as such terms are defined under Item 408 of Regulation S K.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS
THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
The following table sets forth the name, age and
positions of our executive officers and directors.
NAME AGE POSITION
Darin Myman 61 Chief Executive Officer and Chairman
Peter Shelus 42 Chief Technology Officer and Director
Brett Blumberg 47 Chief Financial Officer
Wayne Linsley 69 Director
Joseph Nelson 42 Director
Carly Luogameno 37 Director
The business background and certain other information
about our directors and executive officers is set forth below.
Darin Myman - Chief Executive Officer
and Director
Darin Myman has served as Chief Executive Officer
and Chairman of the board of directors since January 2015. Previously, Mr. Myman served as co-founder and Chief Executive Officer of Wally
World Media, Inc., (OTC:WLYW). He also has served as the Chief Executive Officer and a member of PeopleString’s board of directors
since PeopleString’s inception. Mr. Myman developed extensive Internet skills through a variety of positions. He has executive management
and founder experience, having served as a co-founder and Chief Executive Officer of BigString Corporation, a publicly traded company,
since October 2005. He also has corporate governance and board experience having served as a member of BigString’s board of directors
since BigString’s inception. Prior to BigString, Mr. Myman was a co-founder and Chief Executive Officer of LiveInsurance.com, the
first online insurance broker that pioneered the electronic storefront for large national insurance agencies. Prior to co-founding LiveInsurance.com,
he served as a Vice President of the online brokerage services unit of Westminster Securities Corporation. We believe that Mr. Myman is
qualified to serve as a member of our board of directors because of his background in business and experience in senior leadership and
as a board member of public companies.
Peter Shelus - Chief Technology Officer
and Director
Peter Shelus is a co-founder of DatChat and has
served as our Chief Technology Officer since January 2016 and a member of our board of directors since December 2022. Mr. Shelus has over
10 years of ephemeral messaging and mobile video development experience. Mr. Shelus has been at the forefront of the secure messaging
industry, having served as a lead engineer for one of the first ephemeral messaging platforms, “BigString,” where he helped
develop the patented technology that became a cornerstone of self-destructing messaging. Mr. Shelus holds Bachelor of Science degree in
computer science from Rutgers University. We believe that Mr. Shelus is qualified to serve as a member of our board of directors because
of his experience in the secure messaging industry and background in technology engineering and development.
Brett Blumberg – Chief Financial
Officer
Brett Blumberg has served as our Chief Financial
Officer since February 2022. Mr. Blumberg has extensive experience in finance and accounting. He is a certified public accountant and
has been a partner of the public accounting firm Jubran, Shorr & Company since 2015. Mr. Blumberg was a senior accountant at
CohnReznick, LLP from 2013 to 2014. Prior to obtaining his CPA license Mr. Blumberg was a private banker at Wells Fargo and owned and
operated a Mortgage Brokerage/Banking Company, Canyon Financial Group, LLC from 2006 to 2012. He previously worked in recruitment and
talent acquisition for accounting and finance firms from 2000 to 2006. Mr. Blumberg holds a Bachelor of Art degree in economics and psychology
from SUNY Binghamton University.
Wayne D. Linsley – Director
Wayne D. Linsley has served as a member of the
board of directors since August 2021. Mr. Linsley has over 40 years of experience in business management. Since April 2020, Mr. Linsley
has served as a member of the board of directors of Hoth Therapeutics, Inc. (NASDAQ: HOTH), a clinical-stage biopharmaceutical company
and since January 2020, he has served as a member of the board of directors of Silo Pharma, Inc. (NASDAQ: SILO) a biopharmaceutical company
focused on merging traditional therapeutics with psychedelic research. From 2014 to September 2021, Mr. Linsley served as the Vice President
of Operations at CFO Oncall, Inc., a company that provides financial reporting and controller services on an outsourced basis and previously,
from 2012 to 2014, Mr. Linsley worked at CFO Oncall, Inc. as an independent contractor. Mr. Linsley holds Bachelor of Science degree in
Business Administration from Siena College.
Joseph Nelson – Director
Joseph Nelson has served as a member of our board of directors since
August 2021. Since February 2026, Mr. Nelson has been the Chief Financial Officer of Deep Isolation Nuclear, Inc., the first company to
undertake the development of technologies for nuclear waste disposal in deep boreholes. From April 2022 through January 2026, Mr. Nelson
served as Chief Financial Officer of Delta Corp Holdings Limited, a global, asset-light, fully integrated company engaged in transportation/logistic
services, asset management and servicing the maritime industry supply chain. From December 2017 to March 2022, Mr. Nelson served as the
Head of Investor Relations for GasLog Ltd., and GasLog Partners LP, a leading international owner, operator and manager of liquefied natural
gas carriers providing support to many of the world’s largest energy companies. From November 2014 to November 2017, Mr. Nelson
served as an Equity Research Analyst at Credit Suisse. Mr. Nelson holds a Master of Business Administration degree from New York University’s
Stern School of Business; a Bachelor of Science degree in chemistry and a Bachelor of Art degree in philosophy from the Stevens Institute
of Technology. We believe that Mr. Nelson is qualified to serve as a member of our board of directors because of his experience in investor
relations and background in business and finance.
34
Carly Luogameno – Director
Carly Luogameno has served as a member of our
board of directors since August 2021. Since May 2011, Mrs. Luogameno has worked as a digital consultant at ShmeeLive. From May 2018 to
June 2020, Mrs. Luogameno served as a digital director for Lust For Life, LLC, a subsidiary of Renewable Energy & Power, Inc. (OTCQB:
RBNW). From August 2013 to September 2015, Mrs. Luogameno served as the Marketing Director for Jerrick Media (OTC: JMDA, now Creatd, OTC:
VOCL). Mrs. Luogameno has in-depth experience in ecommerce and digital industries with specializations in digital marketing campaign development,
content marketing strategy, SEO and paid media management. Her digital marketing background is rooted in inbound marketing strategies
and her approach focuses on listening to user needs and communicating to them via high quality content in order to attract return visitors
and engagements. Mrs. Luogameno specializes in working with start-up companies, across the technology, healthcare and fashion industries.
Mrs. Luogameno holds Bachelor of Art degree in arts, entertainment & media management from Columbia College Chicago.
Family Relationships
There are no family relationships among any of
our executive officers and directors.
Arrangements between Officers and Directors
Except as set forth herein, to our knowledge,
there is no arrangement or understanding between any of our officers or directors and any other person pursuant to which the officer or
director was selected to serve as an officer or director.
Involvement in Certain Legal Proceedings
We are not aware of any of our directors or officers
being involved in any legal proceedings in the past ten years relating to any matters in bankruptcy, insolvency, criminal proceedings
(other than traffic and other minor offenses), or being subject to any of the items set forth under Item 401(f) of Regulation S-K.
Committees of Our Board of Directors
Our board of directors directs the management
of our business and affairs, as provided by Nevada law, and conducts its business through meetings of the board of directors and its standing
committees. We will have a standing audit committee, compensation committee and nominating and corporate governance committee. In addition,
from time to time, special committees may be established under the direction of the board of directors when necessary to address specific
issues.
Audit Committee. The audit committee is
appointed by the board to assist the board in its duty to oversee the Company’s accounting, financial reporting and internal control
functions and the audit of the Company’s financial statements. The role of the audit committee is to oversee management in the performance
of its responsibility for the integrity of the Company’s accounting and financial reporting and its systems of internal controls,
the performance and qualifications of the Company’s independent auditor, including the independent auditor’s independence,
the performance of the Company’s internal audit function; and the Company’s compliance with legal and regulatory requirements.
Our audit committee consists of Wayne D. Linsley,
Carly Luogameno and Joseph Nelson, with Mr. Linsley serving as chair. Our board of directors has affirmatively determined that each meet
the definition of “independent director” under the rules of The Nasdaq Capital Market, and that they meet the independence
standards under Rule 10A-3. Each member of our audit committee meets the financial literacy requirements of Nasdaq rules. In addition,
our board of directors has determined that Wayne D. Linsley qualifies as an “audit committee financial expert,” as such term
is defined in Item 407(d)(5) of Regulation S-K. Our board of directors adopted a written charter for the audit committee, which
is available on our principal corporate website at www.myseum.com.
Compensation Committee. The compensation
committee is responsible for reviewing and recommending, among other things:
● the adequacy and form of compensation of the board;
35
Our compensation committee consists of Wayne
D. Linsley, Carly Luogameno and Joseph Nelson, with Mr. Linsley serving as chair. Our board of directors has adopted a written charter
for the compensation committee, which is available on our principal corporate website at www.myseum.com.
Nominating and Corporate Governance Committee. We
do not have a designated nominating and corporate governance committee. Our independent directors, acting as a group, are responsible
for:
Our nominating and corporate governance committee
is responsible for, among other things:
● developing criteria for membership on the board of directors and committees;
● identifying individuals qualified to become members of the board of directors;
● annually reviewing our corporate governance guidelines; and
Our nominating and corporate governance committee
consists of Wayne D. Linsley, Carly Luogameno and Joseph Nelson, with Mr. Linsley serving as chair. Our board of directors has adopted
a written charter for the nominating and corporate governance committee, which is available on our principal corporate website at www.myseum.com.
Insider Trading Policy
We have adopted an insider trading policy governing
the purchase, sale and/or any other disposition of the Company’s securities and material non-public information that is reasonable
designed to promote compliance with insider trading laws, rules, regulations and applicable Nasdaq standards. Our insider trading policy
applies to the Company’s directors, officers, employees of the Company and any other persons, such as consultants, contractors,
temporary staff, family members, and controlled entities who have access to material nonpublic information or are designated by the Company
as subject to such policy. A copy of the Company’s insider trading policy is filed as Exhibit 19.1 to this Annual Report on Form
10-K.
Code of Business and Ethics Conduct
We have adopted a written code of business conduct
and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar functions. A copy of the code posted on our website, www.myseum.com.
In addition, we intend to post on our website all disclosures that are required by law or rules concerning any amendments to, or waivers
from, any provision of the code.
Anti-hedging
We do not currently have a policy prohibiting
employees, officers, or directors from engaging in transactions that hedge or offset, or are designed to hedge or offset, any decrease
in the market value of the Company’s equity securities.
Changes in Nominating Procedures
None.
36
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth for the year ended
December 31, 2025 and 2024, the compensation awarded to, paid to, or earned by, our Chief Executive Officer and two other most highly
compensated executive officers, whose total compensation during such years exceeded $100,000. We refer to these officers as our “named
executive officers.”
Outstanding
Equity Awards at December 31, 2025
The following table provides information regarding
option awards held by each of our named executive officers that were outstanding as of December 31, 2025.
STOCK AWARDS Equity Incentive Plan Equity Incentive Plan Awards:
37
Non-Employee Director Compensation
The following table presents the total compensation
for each person who served as a non-employee member of our Board of Directors and received compensation for such service during the
fiscal year ended December 31, 2025.
Equity Award Grant Timing
We do not have a written policy in place regarding
the timing of the grant and issuance of stock options in relation to the release of material non-public information. Historically, we
have granted stock option awards on an annual basis and as may otherwise be deemed appropriate by our Board or compensation committee
from time to time based on the facts and circumstances, as applicable. We have not intentionally timed the grant of stock options in anticipation
of the release of material nonpublic information, nor have we intentionally timed the release of material nonpublic information based
on stock option grant dates. During fiscal year 2024, we did not grant stock options (or similar awards) to any of our named executive
officers during the period beginning four business days before and ending one business day after the filing of any Company periodic report
on Form 10-Q or Form 10-K, or the filing or furnishing of any Company Form 8-K that disclosed any material non-public information.
Employment Agreements
Darin Myman Employment Agreement
On August 27, 2021, we entered into an agreement
(the “Employment Agreement”) with Darin Myman effective as of August 15, 2021 pursuant to which Mr. Myman’s (i) base
salary will increase to $450,000 per year, and (ii) Mr. Myman shall be entitled to receive an annual bonus in an amount up to $350,000,
which annual bonus may be increased by the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”),
in its sole discretion, upon the achievement of additional criteria established by the Compensation Committee from time to time (the “Annual
Bonus”). The term of the Employment Agreement will continue for a period of one year from the effective date and automatically renews
for successive one year periods at the end of each term until either party delivers written notice of their intent not to review at least
six (6) months prior to the expiration of the applicable term. In addition, pursuant to the Employment Agreement, upon termination of
Mr. Myman’s employment for death or Total Disability (as defined in the Employment Agreement), in addition to any accrued but unpaid
compensation and vacation pay through the date of his termination and any other benefits accrued to him under any Benefit Plans (as defined
in the Employment Agreement) outstanding at such time and the reimbursement of documented, unreimbursed expenses incurred prior to such
termination date (collectively, the “Payments”), Mr. Myman shall be entitled to the following severance benefits: (i) 24 months
of his then base salary; (ii) if Mr. Myman elects continuation coverage for group health coverage pursuant to COBRA Rights (as defined
in the Employment Agreement), then for a period of 24 months following Mr. Myman’s termination he will be obligated to pay only
the portion of the full COBRA Rights cost of the coverage equal to an active employee’s share of premiums (if any) for coverage
for the respective plan year; and (iii) payment on a pro-rated basis of any Annual Bonus or other payments earned in connection with any