Item 1. Business
ITEM 1. BUSINESS
Overview
We are a private messaging, cybersecurity, and
social media company that not only focuses on protecting privacy on personal devices, but also protects user information after it is shared
with others. We believe that one’s right to privacy should not end the moment they click “send”, and that we all deserve
the same right to privacy online that we enjoy in our own living rooms. Our flagship product, DatChat Messenger & Private Social Network,
is a privacy platform and mobile application that gives users the ability to communicate with the privacy and protection they deserve.
Recently, we have expanded our business and product offerings to include the development of our Myseum platform, a secure digital content
management and storage solution for families, groups and individuals. In addition, as a result of our acquisition of RPM Interactive,
Inc. in October 2024, we have repositioned our majority-owned subsidiary, Dragon Interact, Inc. (recently renamed RPM Interactive, Inc.)
away from the development of the Habytat platform to focus on becoming an AI generated publishing company of trivia mobile game apps and
vodcasts/podcasts designed to publish content across hundreds of evergreen topics every day and be distributed to all major streaming
platforms. See “Business – RPM Interactive, Inc.” and “Business – The Habytat.”
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 screen shot 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.
1
Myseum Social Media
Platform
We recently 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 AI 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 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.
RPM Interactive, Inc.
In October 2024, our majority owned subsidiary,
Dragon Interact, Inc. (“Dragon”), e ntered 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. (“RPM
Interactive”) and shifted its focus to developing AI-driven podcast and gaming technologies.
Following the acquisition, i n
January 2025, we returned 3,500,000 shares of the RPM Interactive common stock held by us to RPM Interactive, which shares were cancelled
and are no longer outstanding on RPM Interactive’s stock ledger. Following these transactions, we hold 9,000,000 shares of the RPM
Interactive’s common stock, or approximately 34% of its outstanding shares.
The Habytat
Prior ot 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 the shares of the our shareholders. 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.
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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, which 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 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 application addresses 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 Social Media platform to solve this problem.
3
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.
RPM Interactive, Inc.
The RPM products are still under development
and the marketing and monetization strategies are being developed as well.
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Intellectual Property Portfolio
DatChat Messenger & Private Social Network
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, 2024, we had 15 issued
patents, no notices of allowance and 2 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.
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.
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Employees
As of March 26, 2025, we have a total of 10
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, 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.
Available Information
Our website address is www.datchat.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.