What changed in this filing

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Item 9A. Controls and Procedures

2026-03-30 compared with 2025-03-31 · 1143 added, 944 removed, 1187 unchanged (64% of the section changed)

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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.

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

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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.

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

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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.

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.

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.

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 lack segregation of duties within accounting functions duties as

a result of our limited financial resources to support hiring of personnel.

The lack of multiples levels of management review on complex business,

accounting and financial reporting issues.

We lack segregation of duties within accounting functions duties as a result of our limited financial resources to support hiring of personnel.

The lack of multiples levels of management review of complex business, accounting and financial reporting issues.

We have not implemented adequate system and manual controls.

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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

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

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CORPORATE GOVERNANCE

The following table sets forth the name, age

and positions of our executive officers and directors.

The following table sets forth the name, age and

positions of our executive officers and directors.

Chief Executive Officer and Chairman

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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.

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.

Myman developed extensive Internet skills through a variety of positions.

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.

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.

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.

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.

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

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served as our Chief Technology Officer since January 2016 and a member of our board of directors since December 2022.

over 10 years of ephemeral messaging and mobile video development experience.

Shelus has over

10 years of ephemeral messaging and mobile video development experience.

Shelus has been at the forefront of the secure messaging

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develop the patented technology that became a cornerstone of self-destructing messaging.

Shelus holds Bachelor of Science degree

in computer science from Rutgers University.

Shelus holds Bachelor of Science degree in

computer science from Rutgers University.

We believe that Mr.

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as an independent contractor.

Linsley holds Bachelor of Science degree

in Business Administration from Siena College.

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 April 2022, Mr.

Nelson has 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.

Joseph Nelson has served as a member of our board of directors since

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.

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.

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

Nelson holds a Master of Business Administration degree from New York University’s Stern School of Business;

of Science degree in chemistry and a Bachelor of Art degree in philosophy from the Stevens Institute of Technology.

We believe that

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.

served as an Equity Research Analyst at Credit Suisse.

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.

Carly Luogameno – Director

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Luogameno served as the Marketing Director for Jerrick Media (OTC:

JMDA, now Creatd,

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.

Luogameno specializes in working with start-up companies, across the technology, healthcare and

fashion industries.

JMDA, now Creatd, OTC:

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.

Luogameno specializes in working with start-up companies, across the technology, healthcare and fashion industries.

Luogameno holds Bachelor of Art degree in arts, entertainment & media management from Columbia College Chicago.

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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.

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

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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.

of our business and affairs, as provided by Nevada law, and conducts its business through meetings of the board of directors and its standing

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.

from time to time, special committees may be established under the direction of the board of directors when necessary to address specific

Audit Committee .

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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 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;

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Our board of directors adopted a written charter for the audit committee, which

is available on our principal corporate website at www.datchat.com .

is available on our principal corporate website at www.myseum.com .

Compensation Committee .

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committee is responsible for reviewing and recommending, among other things:

the adequacy and form of compensation of the

the compensation of Chief Executive Officer,

including base salary, incentive bonus, stock option and other grant, award and benefits upon hiring and on an annual basis;

the compensation of other senior management upon

hiring and on an annual basis;

the Company’s incentive compensation and

other equity-based plans and recommending changes to such plans to our board of directors, when necessary.

Our compensation committee will consists of Wayne

the adequacy and form of compensation of the board;

the compensation of Chief Executive Officer, including base salary, incentive bonus, stock option and other grant, award and benefits upon hiring and on an annual basis;

the compensation of other senior management upon hiring and on an annual basis;

the Company’s incentive compensation and other equity-based plans and recommending changes to such plans to our board of directors, when necessary.

Our compensation committee consists of Wayne

Linsley, Carly Luogameno and Joseph Nelson, with Mr.

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Our board of directors has adopted a written charter

for the compensation committee, which is available on our principal corporate website at www.datchat.com .

for the compensation committee, which is available on our principal corporate website at www.myseum.com .

Nominating and Corporate Governance Committee.

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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;

recommending persons to be nominated for election

as directors and to each committee of the board of directors;

developing criteria for membership on the board of directors and committees;

identifying individuals qualified to become members of the board of directors;

recommending persons to be nominated for election as directors and to each committee of the board of directors;

annually reviewing our corporate governance guidelines;

monitoring and evaluating the performance of

the board of directors and leading the board in an annual self-assessment of its practices and effectiveness.

monitoring and evaluating the performance of the board of directors and leading the board in an annual self-assessment of its practices and effectiveness.

Our nominating and corporate governance committee

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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.datchat.com .

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.

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

Code of Business and Ethics Conduct

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principal accounting officer or controller, or persons performing similar functions.

A copy of the code posted on our website, www.datchat.com .

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

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Name and Principal Position

Option Awards

Incentive Plan

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Chief Technology Officer

As required by SEC rules, the amounts in this column reflect the grant

date or modification date fair value as required by FASB ASC Topic 718.

A discussion of the assumptions and methodologies used to

calculate these amounts is contained in the notes to our financial statements under “Shareholders’ Deficit”.

Outstanding Equity

Awards at December 31, 2024

As required by SEC rules, the amounts in this column reflect the grant date or modification date fair value as required by FASB ASC Topic 718.

A discussion of the assumptions and methodologies used to calculate these amounts is contained in the notes to our consolidated financial statements under “Shareholders’ Deficit”.

Equity Awards at December 31, 2025

The following table provides information regarding

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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, 2024.

Other than as set forth in the table and described more fully below, we did not pay any

compensation, make any equity awards or non-equity awards to, or pay any other compensation to any of the non-employee members

of our Board of Directors in 2024.

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.

Incentive Plan

compensation earnings

All Other Compensation

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Wayne Linsley

As required by SEC rules, the amounts in this column reflect the grant

date or modification date fair value as required by FASB ASC Topic 718.

A discussion of the assumptions and methodologies used to

calculate these amounts is contained in the notes to our financial statements under “Shareholders’ Deficit”.

As required by SEC rules, the amounts in this column reflect the grant date or modification date fair value as required by FASB ASC Topic 718.

A discussion of the assumptions and methodologies used to calculate these amounts is contained in the notes to our consolidated financial statements under “Shareholders’ Deficit”.

Equity Award Grant Timing

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Employment Agreements

Darin Myman Employment Agreement

On August 27, 2021, we entered into an agreement

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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;

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 bonus plan to which Mr.

Myman was a participant as of the date of his termination (together with the Payments,

the “Severance”).

in its sole discretion, upon the achievement of additional criteria established by the Compensation Committee from time to time (the “Annual

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

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;

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

bonus plan to which Mr.

Myman was a participant as of the date of his termination (together with the Payments, the “Severance”).

Furthermore, pursuant to the Employment Agreement, upon Mr.

Myman’s termination (i) at his option

(A) upon 90 days prior written notice to the Company or (B) for Good Reason (as defined in the Employment Agreement), (ii) termination

by the Company without Cause (as defined in the Employment Agreement) or (iii) termination of Mr.

Myman’s employment within 40

days of the consummation of a Change in Control Transaction (as defined in the Employment Agreement), Mr.

Myman’s termination (i) at his option (A) upon 90 days prior written

notice to the Company or (B) for Good Reason (as defined in the Employment Agreement), (ii) termination by the Company without Cause (as

defined in the Employment Agreement) or (iii) termination of Mr.

Myman’s employment within 40 days of the consummation of a Change

in Control Transaction (as defined in the Employment Agreement), Mr.

Myman shall receive the Severance;

provided, however, Mr.

Myman shall be entitled to a pro-rated Annual Bonus of at least $200,000.

In addition, any equity grants issued

Myman shall immediately vest upon termination of Mr.

Myman’s employment by him for Good Reason or by the Company at its

option upon 90 days prior written notice to Mr.

be entitled to a pro-rated Annual Bonus of at least $200,000.

In addition, any equity grants issued to Mr.

Myman shall immediately vest

upon termination of Mr.

Myman’s employment by him for Good Reason or by the Company at its option upon 90 days prior written notice

Myman, without Cause.

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agreement with Brett Blumberg effective as of February 15, 2022 pursuant to which Mr.

Blumberg will serve as Chief Financial Officer

of the Company (the “Blumberg Employment Agreement”).

Blumberg will serve as Chief Financial Officer of

the Company (the “Blumberg Employment Agreement”).

The term of the Blumberg Employment Agreement will continue for a period

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Blumberg is also entitled to participate in any and all Employee Benefit Plans (as defined in the Blumberg Employment Agreement),

from time to time, that are then in effect along with vacation, sick and holiday pay in accordance with the Company’s policies

established and in effect from time to time.

from time to time, that are then in effect along with vacation, sick and holiday pay in accordance with the Company’s policies established

and in effect from time to time.

The Blumberg Employment Agreement may be terminated by either the Company or Mr.

at any time and for any reason upon 10 days prior written notice.

Blumberg at any time

and for any reason upon 10 days prior written notice.

Upon termination of the Blumberg Employment Agreement, Mr.

shall be entitled to (i) any equity award that has vested prior to the termination date, (ii) reimbursement of expenses incurred on or

prior to such termination date and (iii) such employee benefits to which Mr.

Blumberg may be entitled as of the termination date (collectively,

the “Accrued Amounts”).

Blumberg shall be entitled

to (i) any equity award that has vested prior to the termination date, (ii) reimbursement of expenses incurred on or prior to such termination

date and (iii) such employee benefits to which Mr.

Blumberg may be entitled as of the termination date (collectively, the “Accrued

The Blumberg Employment Agreement shall also terminate upon Mr.

Blumberg’s death or the Company

may terminate Mr.

Blumberg’s death or the Company may terminate Mr.

Blumberg’s employment upon his Disability (as defined in the Blumberg Employment Agreement).

Upon the termination

Blumberg’s employment for death or Disability, Mr.

Upon the termination of Mr.

employment for death or Disability, Mr.

Blumberg shall be entitled to receive the Accrued Amounts.

Employment Agreement also contains covenants prohibiting Mr.

The Blumberg Employment Agreement also

contains covenants prohibiting Mr.

Blumberg from disclosing confidential information with respect to the Company.

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OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding beneficial

ownership of shares of our common stock as of March 26, 2025 by (i) each person known to beneficially own more than 5% of our outstanding

common stock, (ii) each of our directors, (iii) each of our named executive officers and (iv) all of our directors and named executive

officers as a group.

Except as otherwise indicated, the persons named in the table below have sole voting and investment power with respect

to all shares beneficially owned, subject to community property laws, where applicable.

The following table sets forth certain information

regarding beneficial ownership of shares of our common stock as of March 29, 2026 by (i) each person known to beneficially own more than

5% of our outstanding common stock, (ii) each of our directors, (iii) each of our named executive officers and (iv) all of our directors

and named executive officers as a group.

Except as otherwise indicated, the persons named in the table below have sole voting and investment

power with respect to all shares beneficially owned, subject to community property laws, where applicable.

Percentage (2)

Darin Myman (3)

Peter Shelus (6)

Brett Blumberg (4)

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Represents beneficial ownership of less than 1%.

The address of each holder listed below, except

as otherwise indicated, is 204 Neilson Street, New Brunswick, New Jersey 08901.

The calculation in this column is based upon 4,276,274 shares of common

stock outstanding on March 24, 2025.

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes

voting or investment power with respect to the subject securities.

Shares of common stock that are currently exercisable or convertible

within 60 days of March 26, 2025 are deemed to be beneficially owned by the person holding such securities for the purpose of computing

the percentage beneficial ownership of such person, but are not treated as outstanding for the purpose of computing the percentage beneficial

ownership of any other person.

The address of each holder listed below, except as otherwise indicated, is 65 Church Street, Suite 230, New Brunswick, New Jersey 08901.

The calculation in this column is based upon 4,276,274 shares of common stock outstanding on March 29, 2026.

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to the subject securities.

Shares of common stock that are currently exercisable or convertible within 60 days of March 29, 2026 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage beneficial ownership of such person, but are not treated as outstanding for the purpose of computing the percentage beneficial ownership of any other person.

Includes 125,000 vested stock options.

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Includes 13,750 vested stock options.

Includes 11,250 vested stock options.

Securities Authorized for Issuance Under Equity

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outstanding options, warrants

securities remaining

available for future

securities remaining available for future

issuance under

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years, and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock

or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other

than equity and other compensation, termination, change in control and other arrangements, which are described elsewhere in this Annual

Report on Form 10-K.

We are not otherwise a party to a current related party transaction, and no transaction is currently proposed, in

which the amount of the transaction exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last

two completed fiscal years and in which a related person had or will have a direct or indirect material interest.

or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than

equity and other compensation, termination, change in control and other arrangements, which are described elsewhere in this Annual Report

on Form 10-K.

We are not otherwise a party to a current related party transaction, and no transaction is currently proposed, in which

the amount of the transaction exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed

fiscal years and in which a related person had or will have a direct or indirect material interest.

Transactions with Related Persons

Except as described below and except for employment

arrangements which are described under “executive compensation,” since January 1, 2019, there has not been, nor is there

currently proposed, any transaction in which we are or were a participant, the amount involved exceeds the lesser of $120,000 or 1% of

the average of the total assets at December 31, 2024 and 2023, and any of our directors, executive officers, holders of more than 5%

of our common stock or any immediate family member of any of the foregoing had or will have a direct or indirect material interest.

On January 10, 2024, VR Interactive LLC (“VR

Interactive”), a company 45% owned by Darin Myman, the Company’s CEO and 3.75% owned by Peter Shelus, the Company’s

chief technology officer and director, purchased 8,000,000 shares of RPM Interactive from the Metabizz shareholders for cash amounting

Myman is a partner in VR Interactive.

Upon purchase of the shares, VR Interactive, a related party, became a 25% non-controlling

interest in RPM Interactive.].

arrangements which are described under “executive compensation,” since January 1, 2024, there has not been, nor is there currently

proposed, any transaction in which we are or were a participant, the amount involved exceeds the lesser of $120,000 or 1% of the average

of the total assets at December 31, 2025 and 2024, and any of our directors, executive officers, holders of more than 5% of our common

stock or any immediate family member of any of the foregoing had or will have a direct or indirect material interest.

Related Persons Transaction Policy

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of transactions with related parties.

For purposes of our policy only, a related person transaction is a transaction, arrangement or

relationship, or any series of similar transactions, arrangements or relationships, in which we and any related person are, were or will

be participants in which the amount involved exceeds the lesser of $120,000 or one percent of our total assets at year-end for our last

two completed fiscal years.

Transactions involving compensation for services provided to us as an employee or director are not covered

by this policy.

A related person is any executive officer, director or beneficial owner of more than 5% of any class of our voting securities,

including any of their immediate family members and any entity owned or controlled by such persons.

For purposes of our policy only, a related person transaction is a transaction, arrangement or relationship,

or any series of similar transactions, arrangements or relationships, in which we and any related person are, were or will be participants

in which the amount involved exceeds the lesser of $120,000 or one percent of our total assets at year-end for our last two completed

fiscal years.

Transactions involving compensation for services provided to us as an employee or director are not covered by this policy.

A related person is any executive officer, director or beneficial owner of more than 5% of any class of our voting securities, including

any of their immediate family members and any entity owned or controlled by such persons.

Under the policy, if a transaction has been identified

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the risks, costs and benefits to us;

the impact on a director’s independence

in the event that the related person is a director, immediate family member of a director or an entity with which a director is affiliated;

the availability of other sources for comparable

services or products;

the terms available to or from, as the case may

be, unrelated third parties or to or from employees generally.

the impact on a director’s independence in the event that the related person is a director, immediate family member of a director or an entity with which a director is affiliated;

the availability of other sources for comparable services or products;

the terms available to or from, as the case may be, unrelated third parties or to or from employees generally.

The policy requires that, in determining whether

to approve, ratify or reject a related person transaction, our audit committee, or other independent body of our board of directors,

must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those

of our shareholders, as our audit committee, or other independent body of our board of directors, determines in the good faith exercise

of its discretion.

to approve, ratify or reject a related person transaction, our audit committee, or other independent body of our board of directors, must

consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those of

our shareholders, as our audit committee, or other independent body of our board of directors, determines in the good faith exercise of

its discretion.

Independence of the Board of Directors

Our board of directors undertook a review of

the independence of our directors and considered whether any director has a relationship with us that could compromise that director’s

Our board of directors undertook a review of the

independence of our directors and considered whether any director has a relationship with us that could compromise that director’s

ability to exercise independent judgment in carrying out that director’s responsibilities.

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determined that Wayne D.

Linsley, Carly Luogameno and Joseph Nelson are each an “independent director,” as defined under

Nasdaq rules.

Linsley, Carly Luogameno and Joseph Nelson are each an “independent director,” as defined under Nasdaq

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth the aggregate

fees billed by Salberg & Company, P.A.

The following table sets forth the aggregate fees

billed by Salberg & Company, P.A.

for the year ended December 31, 2025 and 2024:

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All Other Fees

fees consist of fees billed for the professional services rendered to us for the audit of our annual consolidated financial statements

for the years ended December 31, 2024 and 2023, reviews of the quarterly financial statements during the periods, the issuance of consent

and comfort letters in connection with registration statement filings, and all other services that are normally provided by the accounting

firm in connection with statutory and regulatory filings and engagements.

2024 and 2023 audit fees

include approximately $91,200 and $78,600, respectively, in Salberg & Company, P.A.

fees in connection with the audits and quarterly

reviews for the year ended December 31, 2023.

Audit fees consist of

fees billed for the professional services rendered to us for the audit of our annual consolidated financial statements for the years

ended December 31, 2025 and 2024 and reviews of the quarterly financial statements during the periods.

Audit-Related Fees:

not included in audit fees that are billed by the auditor for assurance and related services that are reasonably related to the performance

of the audit of the financial statements.

for professional services rendered for tax compliance, tax advice, and tax planning.

Fees not included

in audit fees that are billed by the auditor for assurance and related services that are reasonably related to the performance of the

audit of the financial statements, including registration statements and comfort letters.

Fees for professional services

rendered for tax compliance, tax advice, and tax planning.

All Other Fees:

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firm were pre-approved by the audit committee.

EXHIBITS AND FINANCIAL STATEMENT

The following documents are filed as part

of this report:

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this report:

Financial Statements:

Report of Independent Registered Public Accounting Firm (PCAOB Firm ID:

Consolidated Balance Sheets – For the Years Ended December 31, 2024 and 2023

Consolidated Statements of Operations and Comprehensive Loss – For the Years Ended December 31, 2024 and 2023

Consolidated Statements of Changes in Stockholders’ Equity– For the Years Ended December 31, 2024 and 2023

Consolidated Statements of Cash Flows– For the Years Ended December 31, 2024 and 2023

Notes to Consolidated Financial Statements

of Independent Registered Public Accounting Firm (PCAOB Firm ID:

Balance Sheets – For the Years Ended December 31, 2025 and 2024

Statements of Operations and Comprehensive Loss – For the Years Ended December 31, 2025 and 2024

Statements of Changes in Stockholders’ Equity– For the Years Ended December 31, 2025 and 2024

Statements of Cash Flows– For the Years Ended December 31, 2025 and 2024

to Consolidated Financial Statements

The consolidated financial statements required

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to this report.

and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Company’s Form S-1 filed on July 2,

and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to the Company’s Form S-1/A filed on August 9, 2021)

No.1 to Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on October 26,

of Designation of Series A Preferred Stock (Incorporated by reference to Exhibit 3.3 to the Company’s Form S-1/A filed on August

of Designation of Series B Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form

8-K filed on August 7, 2023)

of Amendment to Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.4 to the Company’s Form

S-1/A filed on August 9, 2021)

of Change to Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.5 to the Company’s Form

S-1/A filed on August 9 2021)

of Change to Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Company’s Current

Report on Form 8-K filed on September 19, 2023)

of Correction to Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 of the Company’s

Quarterly Report on Form 10-Q filed on November 13, 2023)

of Change to Amended and Restated Articles of Incorporation (Incorporated by reference to the Company’s Current Report on Form

8-K filed on December 28, 2023)

of Series A Warrant Agent Agreement including Form of Series A Warrant (Incorporated by reference to Exhibit 4.1 to the Company’s

Form S-1/A filed on August 9, 2021)

of Representative’s Warrant (Incorporated by reference to Exhibit 4.2 to the Company’s Form S-1/A filed on August 9,

of Stock Certificate (Incorporated by reference to Exhibit 4.3 to the Company’s Form S-1/A filed on August 9, 2021)

Equity Incentive Plan and forms of award agreements thereunder (Incorporated by reference to Exhibit 10.2 to the Company’s

Form S-1/A filed on August 9, 2021)

and Restated 2021 Omnibus Equity Incentive Plan (Incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report

on Form 10-Q filed on November 13, 2023)

Agreement dated January 16, 2024 between DatChat, Inc.

and EF Hutton LLC (Incorporated by reference to Exhibit 1.1 to the Company’s

Form 8-K filed on January 19, 2024)

Title of Document

Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Company’s Form S-1 filed on July 2, 2021)

Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to the Company’s Form S-1/A filed on August 9, 2021)

Amendment No.1 to Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on October 26, 2022)

Certificate of Designation of Series A Preferred Stock (Incorporated by reference to Exhibit 3.3 to the Company’s Form S-1/A filed on August 9, 2021)

Certificate of Designation of Series B Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on August 7, 2023)

Certificate of Amendment to Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.4 to the Company’s Form S-1/A filed on August 9, 2021)

Certificate of Change to Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.5 to the Company’s Form S-1/A filed on August 9 2021)

Certificate of Change to Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on September 19, 2023)

Certificate of Correction to Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q filed on November 13, 2023)

Certificate of Change to Amended and Restated Articles of Incorporation (Incorporated by reference to the Company’s Current Report on Form 8-K filed on December 28, 2023)

Certificate of Amendment to Amended and Restated Articles of Incorporation dated August 7, 2025 (Incorporated by reference to the Company’s Current Report on Form 8-K filed on August 8, 2025)

Form of Series A Warrant Agent Agreement including Form of Series A Warrant (Incorporated by reference to Exhibit 4.1 to the Company’s Form S-1/A filed on August 9, 2021)

Form of Representative’s Warrant (Incorporated by reference to Exhibit 4.2 to the Company’s Form S-1/A filed on August 9, 2021)

Form of Stock Certificate (Incorporated by reference to Exhibit 4.3 to the Company’s Form S-1/A filed on August 9, 2021)

2021 Equity Incentive Plan and forms of award agreements thereunder (Incorporated by reference to Exhibit 10.2 to the Company’s Form S-1/A filed on August 9, 2021)

Amended and Restated 2021 Omnibus Equity Incentive Plan (Incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q filed on November 13, 2023)

Underwriting Agreement dated January 16, 2024 between DatChat, Inc.

and EF Hutton LLC (Incorporated by reference to Exhibit 1.1 to the Company’s Form 8-K filed on January 19, 2024)

Form of Pre-Funded Warrant (included as Exhibit A to Exhibit 1.1) (Incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on January 19, 2024)

Form of Placement Agent Warrant (Incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on January 10, 2025)

Description of Registrant’s Securities

Agreement between the Company and Brett Blumberg (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed

on February 16, 2022)

of Subscription and Investment Representation Agreement (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K

filed on August 7, 2023)

Insider Trading Policy

Subsidiaries (Incorporated by reference to Exhibit 21.1 to the Company’s Form 10-K filed on March 29, 2024)

Employment Agreement between the Company and Brett Blumberg (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on February 16, 2022)

Form of Subscription and Investment Representation Agreement (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on August 7, 2023)

Form of Securities Purchase Agreement (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on January 10, 2025)

Sales Agreement between DatChat, Inc.

and The Benchmark Company, LLC (Incorporated by reference to Exhibit 1.1 to the Company’s Form 8-K filed on February 10, 2025)

Amended and Restated 2021 Omnibus Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on August 6, 2025)

Form of Stock Option Award pursuant to the Amended and Restated 2021 Omnibus Equity Incentive Plan (Incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-8 filed with the SEC on November 13, 2025)

Debt Forgiveness and Contribution Agreement, dated December 11, 2025, between the Company and RPM Interactive, Inc.

(Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 15, 2025)

First Amendment to Sales Agreement between Myseum, Inc.

and The Benchmark Company, LLC dated February 6, 2026 (Incorporated by reference to Exhibit 1.2 to the Company’s Current Report on Form 8-K filed with the SEC on February 6, 2026)

Insider Trading Policy (Incorporated by reference to Exhibit 19.1 to the Company’s Form 10-K filed on March 31, 2025)

Consent of Salberg & Company, P.A.

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Inline XBRL Taxonomy Extension Definition Linkbase Document

Cover Page Interactive Data File - the cover page of the Registrant’s

Annual Report on Form 10-K for the year ended December 31, 2024 is formatted in Inline XBRL

Cover Page Interactive Data File - the cover page of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2024 is formatted in Inline XBRL

Filed herewith.

Indicates a management contract or any compensatory

plan, contract or arrangement.

Indicates a management contract or any compensatory plan, contract or arrangement.

FORM 10-K SUMMARY

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Pursuant to the requirements

of Section 13 and 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be

signed on its behalf by the undersigned, thereunto duly authorized on this 28th day of March, 2025.

DATCHAT, INC.

of Section 13 and 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed

on its behalf by the undersigned, thereunto duly authorized on this 30th day of March, 2026.

/s/ Darin Myman

8 unchanged sentences

PRESENTS, that each person whose signature appears below hereby constitutes and appoints, Darin Myman, as his or her attorney-in-fact,

with full power of substitution and resubstitution, for him or her in any and all capacities, to sign any and all amendments to this

Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities

and Exchange Commission, granting unto said attorney-in-fact full power and authority to do and perform each and every act and thing

requisite and necessary to be done in connection therewith as fully to all intents and purposes as he might or could do in person, hereby

ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to be done by virtue

with full power of substitution and resubstitution, for him or her in any and all capacities, to sign any and all amendments to this Annual

Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and

Exchange Commission, granting unto said attorney-in-fact full power and authority to do and perform each and every act and thing requisite

and necessary to be done in connection therewith as fully to all intents and purposes as he might or could do in person, hereby ratifying

and confirming all that said attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements

1 unchanged sentence

and in the capacities and on the dates indicated.

Chief Executive Officer

/s/ Darin Myman

Chief Executive Officer and Director

March 30, 2026

(Principal Executive Officer)

Brett Blumberg

/s/ Brett Blumberg

Chief Financial Officer

2 unchanged sentences

(Principal Financial and Accounting Officer)

Chief Technology Officer

/s/ Peter Shelus

Chief Technology Officer and Director

March 30, 2026

Joseph Nelson

/s/ Joseph Nelson

March 30, 2026

Joseph Nelson

Carly Luogameno

/s/ Carly Luogameno

March 30, 2026

Carly Luogameno

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED

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Notes to Consolidated Financial Statements F-7

Report of Independent Registered Public Accounting

Report of Independent Registered

Public Accounting Firm

To the Stockholders and the Board of Directors

DatChat, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheet of DatChat, Inc.

balance sheet of Myseum, Inc.

and subsidiaries and consolidated entities (the “Company”) as of December 31, 2025 and 2024,

the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the two years in the

period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of

the Company as of December 31, 2024 and 2023, and the consolidated results of its operations and its cash flows for each of the two years

in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for each

of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial

statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial

position of the Company as of December 31, 2025 and 2024, and the consolidated results of its operations and its cash flows for each of

the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States

Going Concern

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the consolidated financial statements,

the Company has suffered operating losses since inception and in fiscal 2025 has a net loss of $3,040,119 and cash used in operations

of $4,267,074 and had nominal revenues.

The Company also had an accumulated deficit as of December 31, 2025 of $54,980,520.

These matters

raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s Plans in regard to these

matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that might result from the

outcome of this uncertainty.

Basis for Opinion

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a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated

below are matters arising from the current period audit of the financial statements that were communicated or required to be

communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit

matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by

communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or

disclosures to which they relate.

/s/ Salberg & Company, P.A.

SALBERG & COMPANY, P.A.

We have served as the Company’s auditor

Boca Raton, Florida

March 30, 2026

2295 NW Corporate Blvd., Suite 240 • Boca

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• Member AICPA Center for Audit Quality

Accounting Treatment of Non-Controlling Interests

As described in footnote 2 to the consolidated financial statements,

the Company entered into several transactions in 2024 that involved the equity of its subsidiary RPM Interactive, Inc.

(the “subsidiary”)

which created interests in the subsidiary to be accounted for as non-controlling interests.

Additionally, to properly allocate the net

loss of the subsidiary to non-controlling interests, management had to allocate certain shared expenses from the parent entity to the

The determination of the date to initially start accounting for non-controlling interests and the dates and method to record

additional initial non-controlling interests, and the method and accuracy of the allocation of shared expenses involved management’s

analysis, judgments and estimates which were complex and subjective.

We identified the above determinations as a critical audit matter.

Auditing management’s analysis, judgments and estimates regarding the above determinations was especially challenging.

The primary procedures we performed to address this critical audit

matter included (a) reviewed authoritative and interpretive literature about non-controlling interests, (b) audited management’s

analysis as to when to start, when to update, and how to record initial non-controlling interests, (c) assessed the reasonableness of

the shared expenses allocation method selected by management and (d) audited the mathematical accuracy of the allocation of the shared

We agreed with management’s conclusions.

/s/ Salberg & Company, P.A.

SALBERG & COMPANY, P.A.

We have served as the Company’s auditor

Boca Raton, Florida

March 28, 2025

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED

CONSOLIDATED BALANCE SHEETS

AND SUBSIDIARIES

AND CONSOLIDATED ENTITIES

CONSOLIDATED BALANCE

CURRENT ASSETS:

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Prepaid expenses

Assets of discontinued operations

Total Current Assets

N0N-CURRENT ASSETS:

NON-CURRENT ASSETS:

Deferred offering costs

Property and equipment, net

Internal-use software

Investment in equity securities, at fair value

Assets of discontinued operations

Operating lease right-of-use asset, net

3 unchanged sentences

Accounts payable and accrued expenses

Operating lease liability

Operating lease liability, current portion

Contract liabilities

Liabilities of discontinued operations

Total Current Liabilities

LONG-TERM LIABILITIES:

Operating lease liability, less current portion

Total Long-Term Liabilities

Total Liabilities

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2,000,000 Share designated;

2,000,000 issued and outstanding on December 31, 2024 and 2023)

0 and 2,000,000 shares issued and outstanding on December 31, 2025 and 2024, respectively)

Common stock ($ 0.0001 par value;

4 unchanged sentences

Treasury stock, at cost ( 66,945 shares on December 31, 2025 and 2024)

Accumulated other comprehensive gain

Accumulated deficit

1 unchanged sentence

( 52,373,248 )

Total DatChat, Inc.

Total Myseum, Inc.

Stockholders’ Equity

Noncontrolling interest

Noncontrolling interest of discontinued operations

( 2,137,789 )

1 unchanged sentence

Total Liabilities and Stockholders’ Equity

See accompanying notes to consolidated financial

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

See accompanying notes to consolidated financial statements.

AND SUBSIDIARIES

AND CONSOLIDATED ENTITIES

CONSOLIDATED STATEMENTS

OF OPERATIONS AND COMPREHENSIVE LOSS

For the Year Ended

3 unchanged sentences

Professional and consulting expenses

Research and development expense

Research and development expenses

General and administrative expenses

Impairment loss on property and equipment

Impairment loss on digital currencies and other digital assets

Total operating expenses

2 unchanged sentences

( 3,217,167 )

OTHER INCOME (EXPENSES):

OTHER INCOME:

Interest income, net

Gain on initial consolidation of variable interest entities

Gain on deconsolidation of variable interest entities

Foreign currency exchange loss

Realized loss on short-term investments

Total other income (expenses), net

Gain on extinguishment of liabilities

Total other income

LOSS FROM CONTINUING OPERATIONS

( 5,254,646 )

( 2,948,415 )

Net loss of subsidiary attributable to noncontrolling interest

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

DISCONTINUED OPERATIONS:

Loss from discontinued operations, net of tax

( 2,076,699 )

Gain on sale and deconsolidation of variable interest entities

Total gain (loss) from discontinued operations, net

( 2,076,592 )

( 3,040,119 )

( 5,025,007 )

Net loss of subsidiary attributable to noncontrolling interest of discontinued operations

NET LOSS ATTRIBUTABLE TO MYSEUM, INC.

$ ( 2,607,272 )

$ ( 4,239,160 )

COMPREHENSIVE LOSS:

Net loss attributable to Myseum, Inc.

$ ( 2,607,272 )

$ ( 4,239,160 )

Other comprehensive (loss) gain:

Unrealized gain on short-term investments

Unrealized foreign currency translation gain (loss)

Other comprehensive gain:

Unrealized foreign currency translation gain

Comprehensive loss

1 unchanged sentence

$ ( 4,226,195 )

NET LOSS PER COMMON SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS:

Basic and diluted

NET INCOME (LOSS) PER COMMON SHARE:

Basic and diluted - continuing operations

Basic and diluted - discontinued operations

Basic and diluted net loss per common share attributable to Myseum, Inc.

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

Basic and diluted

See accompanying notes to consolidated financial

See accompanying notes to consolidated financial statements.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

THE YEARS ENDED DECEMBER 31, 2024 AND 2023

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Accumulated Other

Preferred Stock

Treasury Stock

Comprehensive

1 unchanged sentence

Stockholders’

December 31, 2022

Balance, December 31, 2023

$ ( 397,969 )

of stock based compensation in connection with stock option grants

of stock-based professional fees in connection with stock option grants and shares

of common stock for professional services

of treasury stock

other comprehensive gain

of Series B preferred stock

for reverse split

loss for the period

$ ( 48,134,088 )

Accretion of stock-based compensation in connection with stock option grants

Accretion of stock-based professional fees in connection with stock option grants

Issuance of common shares in subsidiary for services

Issuance of common shares in subsidiary for cash

Issuance of common stock for cash, net of allocated offering costs of $ 149,248

Sale of pre-funded warrants, net of allocated offering costs of $ 229,919

Cashless exercise of pre-funded warrants

Issuance of subsidiary common stock for asset acquisition

Initial recording and changes in noncontrolling interest from RPM Interactive ownership changes

( 1,351,942 )

December 31, 2023

Accumulated other comprehensive loss

Net loss for the year

( 4,239,160 )

of stock based compensation in connection with stock option grants

of stock-based professional fees in connection with stock option grants

of common shares in subsidiary for services

of common shares in subsidiary for cash

( 5,025,007 )

Balance, December 31, 2024

( 52,373,248 )

( 2,137,789 )

Accretion of stock based compensation in connection with stock option grants

Accretion of stock based professional fees in connection with stock option grants

Issuance of common stock for cash, net of allocated offering costs of $ 568,000

Sale of pre-funded warrants, net of allocated offering costs of $ 229,918

exercise of pre-funded warrants

of subsidiary common stock for asset acquisition

Initial recording

and changes in noncontrolling interest from RPM Interactive ownership changes

Common stock issued for services

Initial recording on noncontrolling interest

Cancellation of Series B Preferred Stock

( 2,000,000 )

other comprehensive loss

loss for the period

Sale and deconsolidation of RPM Interactive

( 3,754,116 )

Net loss for the year

( 2,607,272 )

December 31, 2024

( 3,040,119 )

Balance, December 31, 2025

$ ( 397,969 )

$ ( 54,980,520 )

See accompanying notes to

consolidated financial statements.

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes to consolidated financial statements.

AND SUBSIDIARIES

AND CONSOLIDATED ENTITIES

CONSOLIDATED STATEMENTS

OF CASH FLOWS

For the Year Ended

2 unchanged sentences

$ ( 5,025,007 )

Adjustments to reconcile net loss to net cash

used in operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

2 unchanged sentences

Stock-based professional fees

Stock-based professional fees - Dragon Interactive

Gain from initial consolidation of variable interest

Stock-based professional fees - RPM Interactive

Gain on deconsolidation of variable interest entities

( 2,875,892 )

Gain on extinguishment of liabilities

Foreign currency exchange loss

Non-cash research and development expense

Impairment loss on property and equipment

Impairment loss on digital currencies and other

digital assets

Accrued interest included in short-term investments

Unrealized loss on short-term investments

Changes in operating assets and liabilities:

1 unchanged sentence

Prepaid expenses

Assets of discontinued operations

Accounts payable and accrued expenses

Contract liabilities

Liabilities of discontinued operations

Operating lease liability

7 unchanged sentences

( 10,767,288 )

Purchase of property and equipment

Increase in cash from consolidation of variable

interest entities

NET CASH PROVIDED BY INVESTING ACTIVITIES

Purchases of property and equipment

Decrease in cash from sale of RPM Interactive

Increase in intangible assets - capitalization of internal-use software

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayment of related party advances

Proceeds from sale of Series B preferred stock

Proceeds from sale of common stock, net

Proceeds from sale of subsidiary common stock

Proceeds from sale of subsidiary common stock - discontinued operations

Proceeds from sale of pre-funded warrants

Purchase of treasury stock

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

Effect of exchange rate changes on cash

Proceeds from notes payable - discontinued operations

Payment of deferred offering costs

NET CASH PROVIDED BY FINANCING ACTIVITIES

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS - beginning of year

3 unchanged sentences

NON-CASH INVESTING AND FINANCING ACTIVITIES:

Initial recording and changes in noncontrolling

interest deficit

Common stock issued for future

Acquisition of intangible

assets for common stock of subsidiary

See accompanying notes to consolidated financial

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

Initial recording and changes in noncontrolling interest deficit

Common stock issued for future sale pursuant to ATM offering

Initial recognition of right-of-use asset and lease liability

Common stock issued for future services

Acquisition of intangible assets for common stock of subsidiary - discontinued operations

See accompanying notes to consolidated financial statements.

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

NOTE 1 – ORGANIZATION

DatChat, Inc.

(the “Company”) was

incorporated in the State of Nevada on December 4, 2014 under the name of YssUp, Inc.

(the “Company” or “Myseum”)

was incorporated in the State of Nevada on December 4, 2014 under the name of YssUp, Inc.

On March 4, 2015, the Company’s corporate

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to DatChat, Inc.

The Company established a fiscal year end of December 31.

The Company is a 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.

The Company’s 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, the Company has expanded its business and

product offerings to include the development of Myseum, a social network and multi-media storage platform for consumers and enterprises.

On August 7, 2025, the Company filed a Certificate of Amendment to its 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.” The Company

established a fiscal year end of December 31.

The Company is a 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.

The Company’s 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.

In March 2025, the Company expanded its business and product offerings to include the development

of “Myseum”, a social network and multi-media storage platform for consumers and enterprises.

On June 16, 2022, the Company formed a majority

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On January 10, 2024, VR Interactive LLC (“VR

Interactive”), a company 45 % owned by Darin Myman, the Company’s CEO and 3.75 % owned by Peter Shelus, the Company’s

chief technology officer and director, purchased 8,000,000 shares of RPM Interactive from the Metabizz shareholders.

Myman is a partner

in VR Interactive.

Interactive”), a company that was 45 % owned by Darin Myman, the Company’s Chief Executive Officer and 3.75 % owned by Peter

Shelus, the Company’s chief technology officer and director, purchased 8,000,000 shares of RPM Interactive from the Metabizz shareholders.

Myman is a partner in VR Interactive.

Therefore, VR Interactive, a related party, became a 25 % non-controlling interest in RPM Interactive.

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RPM Florida is a web publishing company that leverages

generative AI systems to offer consumers entertaining gaming apps and podcasting offerings in the sports, finance, entertainment and politics

categories (See Note 5).

generative AI systems to offer consumers entertaining gaming apps and podcasting offerings in the sports, finance, entertainment, and

politics categories (See Note 7).

On December 12, 2025, RPM Interactive entered

into an Agreement and Plan of Merger (the “Merger Agreement”) with Avalon GloboCare Corp., a Delaware corporation (“Avalon”),

and certain other parties, pursuant to which the Company sold its minority interest in RPM Interactive 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 Interactive and as of December 12, 2025, has deconsolidated RPM Interactive.

accordance with ASC 205-20, the results of operations and the assets and liabilities of RPM Interactive have been classified as discontinued

operations for all periods presented in the accompanying consolidated financial statements (See Note 3).

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING

Basis of presentation

On September 19, 2023, the Company filed a Certificate

of Change (the “Certificate of Change”) with the Secretary of State of the State of Nevada to effectuate a 1-for-10 reverse

stock split (the “Reverse Stock Split”) of the Company’s issued and outstanding and authorized shares of common stock,

par value $ 0.0001 per share (“Common Stock”).

The Reverse Stock Split became effective on September 19, 2023.

adjustments for the Reverse Stock Split were made to the Company’s outstanding stock options, warrants and equity incentive plans,

and authorized shares.

On December 27, 2023, the Company filed a Certificate of Change (the “Certificate of Change”) with

the Secretary of State of the State of Nevada to increase the number of authorized common stock from 18,000,000 shares to 180,000,000

All share and per-share data and amounts have been retroactively adjusted as of the earliest period presented in the consolidated

financial statements to reflect the Reverse Stock Split.

The Company consolidates its subsidiaries that

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Inc., its wholly-owned subsidiary, DatChat Patents II, LLC, and RPM Interactive, which was a majority-owned subsidiary through August

27, 2024 and became a VIE after August 27, 2024, and VIE entities, Metabizz, LLC and Metabizz SAS through March 31, 2024, at which date

the Metabizz VIE entities were deconsolidated.

All intercompany accounts and transactions have been eliminated in consolidation.

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

27, 2024, became a VIE after August 27, 2024, and was deconsolidated on December 12, 2025, and VIE entities, Metabizz, LLC and Metabizz

SAS through March 31, 2024, at which date the Metabizz VIE entities were deconsolidated.

All intercompany accounts and transactions have

been eliminated in consolidation.

On March 31, 2024, based on the Company’s

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LLC and Metabizz SAS, during the year ended December 31, 2024, the Company recorded a gain on deconsolidation of $ 107 .

On December 12, 2025, based on the Company’s

analysis, the Company deconsolidated RPM Interactive following the sale of its interest in this VIE (see Note 3).

In connection with this

deconsolidation, the Company recorded a gain on deconsolidation of $ 2,875,892 .

In accordance with ASC 205-20, the results of operations

and the gains on deconsolidation for both RPM Interactive and the Metabizz VIE entities are presented as discontinued operations for all

periods presented.

As of December 31, 2025, the assets and liabilities of these entities are no longer included in the consolidated balance

Going concern considerations

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

As of December 31, 2025, the Company had cash and cash equivalents 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, the Company incurred a net loss of $ 3,040,119 and net cash used

in operations amounted to $ 4,267,074 and had nominal revenues.

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

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.

Noncontrolling interests

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and the loss of control of subsidiaries.

Certain provisions of this standard indicate, among other things, that NCI be treated as a separate

component of equity, not as a liability, 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.

The net loss attributed

to NCI was separately designated in the accompanying consolidated statements of operations and comprehensive loss.

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 allocates certain corporate common

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 separately designated in the accompanying consolidated statements of operations and

comprehensive loss.

Losses attributable to NCI in a subsidiary may exceed a NCI’s interests in the subsidiary’s equity.

excess attributable to NCI is attributed to those interests.

NCI was attributed to their share of losses even if that attribution resulted

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.

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this allocation method is reasonable.

The Company accounts for its noncontrolling interest

in RPM Interactive in accordance with ASC Topic 810-10-45, which requires the Company to present noncontrolling interests as a separate

component of total shareholders’ equity on the consolidated balance sheets and the consolidated net loss attributable to its noncontrolling

interest be clearly identified and presented on the face of the consolidated statements of operations.

Through January 10, 2024, the date

that VR Interactive purchased 8,000,000 shares of RPM Interactive from Metabizz LLC, any noncontrolling interest eliminated in consolidation.

Because this change in ownership moved from a consolidated entity (the VIE entities) to a nonconsolidated entity (VR Interactive), subsequent

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

Through January 10, 2024, the date that VR Interactive

purchased 8,000,000 shares of RPM Interactive from Metabizz LLC, any noncontrolling interest was eliminated in consolidation.

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 DatChat based on the minority interest holders’

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 Interactive’s equity.

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interest in the carrying value of RPM Interactive’s equity.

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.

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 Interactive, 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 Interactive’s

The Company also allocated $ 432,847 of the net loss of the subsidiary to noncontrolling interest during the year ended December

Immediately prior to the sale and deconsolidation of RPM Interactive 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

Variable interest entities

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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 DatChat.

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 has provided working capital advances to Metabizz to allow Metabizz to fund its day-to-day

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 Interactive 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 Interactive.

Metabizz, LLC and Metabizz SAS were considered VIE’s, any noncontrolling interest eliminated in consolidation.

In connection with

the initial consolidation of Metabizz, on February 14, 2023 (the initial consolidation date), the Company recorded a gain on initial consolidation

of variable interest entities of $ 42,737 .

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 will pay 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 .

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

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 Interactive 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 Interactive.

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

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 .

RPM Interactive

Immediately following the August 27, 2024 Asset

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in which control may be demonstrated other than by the possession of voting rights in RPM Interactive.

Based on Company’s analysis,

the Company continues to have the power to direct the activities of RPM Interactive that most significantly impact RPM Interactive’s

Until the date of sale on December

12, 2025, the Company continued to have the power to direct the activities of RPM Interactive that most significantly impact RPM Interactive’s

economic performance and the obligation to absorb losses of RPM Interactive that could potentially be significant to RPM Interactive or

the right to receive benefits from RPM Interactive that could potentially be significant to RPM Interactive.

As of December 31, 2024,

the Company retains approximately 39.7 % ownership of RPM Interactive.

Immediately prior to the

sale and deconsolidation, the Company retained approximately 33.7 % ownership of RPM Interactive.

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

Interactive and does not hold a variable interest in any entity.

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

The Company’s consolidated balance sheets

included the following assets and liabilities from its VIEs:

included the following assets and liabilities from its VIEs, which were included in discontinued operations:

Prepaid expenses

Intangible assets, net

Due to DatChat (eliminates in consolidation)

Due to Myseum (eliminates in consolidation)

Accounts payable and accrued expenses

Total liabilities

The accompanying consolidated financial statements have been prepared

on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course

As of December 31, 2024, we had cash and cash equivalents of $ 1,196,699 , short-term investments of $ 2,952,512 , and working

capital of $ 3,657,711 .

Short-term investments include U.S.

Treasury zero coupon bills that are all highly rated and have initial maturities

between four and twelve months .

Additionally, on January 8, 2025, the Company entered into a securities purchase agreement (the “Purchase

Agreement”) with certain institutional investors pursuant to which the Company agreed to sell to such investors 1,200,000 shares

of common stock of the Company at a purchase price of $ 4.25 per share of Common Stock (the “Offering”).

The closing of the

sales of these securities under the Purchase Agreement took place on January 9, 2025 and the Company received net proceeds of $ 4,537,000

(See Note 10).

Net cash used in operations was $ 4,388,385 for the year ended December 31, 2024.

Until such time that the Company implements

its growth strategy, it expects to continue to generate operating losses in the foreseeable future, mostly due to corporate overhead,

research and development, and costs of being a public company.

The Company believes that its existing working capital of $ 3,657,711 plus

cash raised in 2025 of $ 4,537,000 will provide sufficient cash to enable the Company to meet its operating needs and debt requirements

for the next twelve months from the issuance date of this report.

See Note 3 – Discontinued Operations And Deconsolidation.

Use of estimates

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Significant estimates include

assumptions used in assessing impairment of long-term assets, the valuation of intangible assets, the valuation of digital currencies

and other digital assets, the valuation of lease liabilities and related right of use assets, the valuation of short-term investments,

the valuation of deferred tax assets, the fair value of assets and liabilities of VIE’s on the initial VIE consolidation date, the

allocation of corporate expenses to subsidiaries which impacts noncontrolling interest, and the fair value of non-cash equity transactions.

assumptions used in assessing impairment of long-term assets, the valuation of intangible assets, the valuation of lease liabilities and

related right of use assets, the valuation of short-term investments, the valuation of deferred tax assets, the fair value of assets and

liabilities of VIE’s on the initial VIE consolidation date, the allocation of corporate expenses to subsidiaries which impacts noncontrolling

interest, and the fair value of non-cash equity transactions.

Cash and cash equivalents

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The Company’s account at this institution is insured by the FDIC up to $ 250,000 .

On December 31, 2024 and 2023, the Company had

cash in excess of FDIC limits of approximately $ 524,000 and $ 446,000 , respectively.

To reduce its risk associated with the failure of

such financial institution, the Company evaluates at least annually the rating of the financial institution in which it holds deposits.

Any material loss that the Company may experience in the future could have an adverse effect on its ability to pay its operational expenses

or make other payments and may require the Company to move its cash to other high quality financial institutions.

On December 31, 2025, the Company had cash in excess

of FDIC limits of approximately $ 237,000 .

To reduce its risk associated with the failure of such financial institution, the Company evaluates

at least annually the rating of the financial institution in which it holds deposits.

Any material loss that the Company may experience

in the future could have an adverse effect on its ability to pay its operational expenses or make other payments and may require the Company

to move its cash to other high quality financial institutions.

Fair value measurements and fair value of

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level of input that is significant to the fair value measurement.

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

The guidance requires that assets and liabilities

carried at fair value be classified and disclosed in one of the following categories:

Quoted market prices in active markets for identical assets or liabilities.

Observable market-based inputs or unobservable inputs that are corroborated by market data.

Unobservable inputs that are not corroborated by market data.

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5 unchanged sentences

Short-term investments

The Company’s short-term investments are

level 1 measurements and are based on redemption value at each date.

Equity securities

The Company’s short-term

investments are level 1 measurements and are based on redemption value at each date.

The Company’s investment in equity securities

are level 3 measurements Fair values are considered Level 3 when management makes significant assumptions to determine the fair of

the equity securities.

On December 12, 2025 and December 31, 2025, the Company recorded the investment in equity securities, which consisted

of Avalon Series E preferred shares, at estimated fair value using a dribble out method using the following assumptions:

discount for the five-month prohibition on conversion

● A liquidity discount resulting from the 4.99 % ownership limitation

volatility and time value considerations associated with phased conversion

The level 3 investment value may fluctuate from period to period based on changes in the market volatility and trading volume of the investees

common stock.

The change in the fair value measurement using significant inputs (Level 3)

is summarized below:

Investment in equity securities:

Balance at December 31, 2024

Additional at fair value

Change in fair value

Balance at December 31, 2025

Short-term investments

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government securities with maturities of more than

three months, but less than one year.

two months, but less than one year.

The Company classifies these as available-for-sale at purchase date and will reevaluate such designation

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to sell the security before recovery of its amortized cost basis.

Investment in equity securities, at fair

Equity investments are carried at fair value with

unrealized gains or losses recorded on the accompanying consolidated statement of operations and comprehensive loss.

Realized gains

and losses are determined on a specific identification basis which is recorded in earnings or loss as a net realized gain (loss) on equity

investments in the consolidated statement of operations and comprehensive loss.

The Company reviews investments in equity securities,

at fair value, for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts

may not be recovered.

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

Accounts receivable

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As of December 31, 2025 and 2024, accounts receivable amounted to $ 83 and $ 207 , respectively,

and for the years ended December 31, 2024 and 2023, the Company did not recognize any bad debt expense.

Accounting for digital currencies and other

digital assets

The Company accounts for digital currencies and

other digital assets held as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other

The Company has ownership of and control over its digital currencies and digital assets and the Company may use

third-party custodial services to secure them.

The digital currencies and digital assets are initially recorded at cost and are subsequently

remeasured, net of any impairment losses incurred since acquisition.

The Company believes that digital currencies and other digital assets

meet the definition of indefinite-lived intangible assets and accounts for them at historical cost less impairment, applying the guidance

The Company monitors any standard-setting, regulatory or technological developments that may affect the Company’s accounting

for digital currencies or its controls and processes related to digital currencies.

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

The Company determines the fair value of its digital

currencies and other digital assets on a nonrecurring basis in accordance with ASC 820, Fair Value Measurement, based on quoted prices

on the active exchange(s) that it has determined is the principal market for Ethereum (Level 1 inputs) and other digital assets.

The Company performs an analysis each quarter to identify whether events or changes in circumstances, principally decreases in the quoted

prices on active exchanges, indicate that it is more likely than not that its digital assets are impaired.

In determining if an impairment

has occurred, the Company considers the lowest market price quoted on an active exchange since acquiring the respective digital asset.

If the then current carrying value of a digital asset exceeds the fair value, an impairment loss has occurred with respect to those digital

assets in the amount equal to the difference between their carrying values and the fair value.

The impaired digital assets are written

down to their fair value at the time of impairment and this new cost basis will not be adjusted upward for any subsequent increase in

Gains are not recorded until realized upon sale, at which point they are presented net of any impairment losses for the same

digital assets held.

In determining the gain or loss to be recognized upon sale, the Company calculates the difference between the sales

price and carrying value of the digital assets sold immediately prior to sale.

Impairment losses and gains or losses on sales are recognized

within operating expenses in the consolidated statements of operations.

which are presented net of allowance for doubtful accounts of $ 150 and $ 0 .

During the years ended December 31, 2025 and 2024, the Company

recorded an impairment loss of $0 and $ 23,381 , respectively, which consists of the impairment of virtual real estate and digital currencies.

Based on the Company’s impairment analysis, the decrease in value of the virtual real estate and digital currencies, which was based

on the lowest market price quoted on an active exchange, was deemed to be other than temporary.

Additionally, the Company determined that

it will not utilize its virtual real estate.

recognized bad debt expense of $ 150 and $ 0 , respectively.

Property and equipment

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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 function intended.

Capitalization

ceases at the point 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 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.

During the years ended December 31, 2024 and

2023, software development costs incurred internally, other than purchased software, were expensed since the Company’s

software development projects were in the preliminary project stage.

Such costs were included in research and development costs on

the accompanying consolidated statement of operations.

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

The Company capitalizes costs to develop or purchase

internal-use software in accordance with ASC section 350-40, Intangibles — Goodwill and Other — Internal-Use

Costs incurred to develop internal-use software are expensed as incurred during the preliminary project stage.

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.

Impairment of long-lived assets

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estimated fair value and its book value.

Deferred offering costs

The Company complies with the requirements of

ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A.

Deferred offering costs consist of legal, accounting, and underwriting fees

directly related to proposed equity offerings.

Deferred offering costs will be deferred until the completion of the private offerings,

at which time they will be reclassified to additional paid-in capital as a reduction of the offering proceeds.

Should a proposed offering

be abandoned, these deferred costs are charged to operations in the period the abandonment occurs.

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

As of December 31, 2025, the Company has capitalized

certain offering costs related to its efforts to raise capital through the sale of its common stock pursuant to an Equity Sales Agreement

of $ 54,028 (see Note 11) and additional capitalized costs of $ 24,617 related to the preparation of its registration statement on Form

S-3 (File No.

During the year ended December 31, 2025, the Company wrote off $ 172,500 of previously capitalized offering

costs of RPM Interactive, which is included in loss from discontinued operations, as RPM Interactive’s initial public offering was

abandoned following the sale of the Company’s interest in RPM on December 12, 2025 (see Note 3).

As of December 31, 2025 and 2024,

capitalized deferred offering costs amounted to $ 78,645 and $0 , respectively, which is reflected on the accompanying consolidated balance

Revenue recognition

1 unchanged sentence

ASC Topic 606 Revenue from Contracts with Customers, which requires revenue to be recognized in a manner that depicts the transfer of

goods or services to customers in amounts that reflect the consideration to which the entity expects to be entitled in exchange for those

goods or services to customers in amounts that reflect the consideration which the entity expects to be entitled in exchange for those

goods or services.

10 unchanged sentences

The Company recognizes revenues from subscription

fees on the Company’s messaging application in the month they are earned.

fees from the Company’s messaging application in the month they are earned.

Annual and lifetime subscription payments received that

7 unchanged sentences

other allocated costs incurred.

During the years ended December 31, 2024 and 2023, research and development costs incurred in the development

of the Company’s software products were $ 857,668 and $ 1,351,415 , respectively.

Research and development costs are included in research

and development expense on the accompanying consolidated statements of operations.

Research and development costs are included in research and development expense on the accompanying consolidated

statements of operations.

On August 27, 2024, the Company entered into an

5 unchanged sentences

In connection with this asset acquisition, the Company recorded research and development expense

of $ 166,667 since the Company is still in the development stage and spends most of its time and efforts planning, raising capital, and

performing research and development and accordingly, the recoverability of the cost was not certain.

Research and development expense

was calculated as follows:

of $ 166,667 , as the recoverability of the cost was not certain at the time of acquisition.

During the year ended December 31, 2024, this

expense is included in research and development expense on the accompanying consolidated statement of operations and comprehensive loss.

Research and development expense was calculated as follows:

Fair value of 8,000,000 shares RPM Interactive shares transferred based on recent sales of RPM Interactive shares at $ 0.30 per share

2 unchanged sentences

Research and development expense recorded, net

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5 unchanged sentences

costs were $ 238,992 and $ 84,163 for the years ended December 31, 2025 and 2024, respectively, and are included in marketing and advertising

expenses on the consolidated statements of operations.

expenses on the consolidated statements of operations and comprehensive loss.

The Company applied ASC Topic 842, Leases (Topic

51 unchanged sentences

The Company has elected to account for forfeitures as they occur.

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14 unchanged sentences

The cumulative translation adjustment and effect of exchange rate changes on cash for the years ended December 31, 2025 and 2024

was $0 and $ 12,965 , respectively.

Transactions denominated in foreign currencies are translated into the functional currency at the exchange

rates prevailing on the transaction dates.

Assets and liabilities denominated in foreign currencies are translated into the functional

currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate

fluctuations on transactions denominated in a currency other than the functional currency included in the results of operations as incurred.

On March 31, 2024, based on the Company’s analysis, the Company deconsolidated Metabizz SAS (See Note 1).

For Metabizz SAS, which is located in Columbia,

asset and liability accounts on December 31, 2023 were translated at 0.0002582 COP to $ 1.00 , which was the exchange rate on the balance

sheet date, and results of operations and cash flows are translated at the average exchange rates during the period of 0.00023415 COP

were $0 in both periods.

Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates

prevailing on the transaction dates.

Assets and liabilities denominated in foreign currencies are translated into the functional currency

at the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations

on transactions denominated in a currency other than the functional currency included in the results of operations as incurred.

31, 2024, based on the Company’s analysis, the Company deconsolidated Metabizz SAS (See Note 1).

Basic and diluted net loss per share

9 unchanged sentences

Segment reporting

The Company operates as a single operating segment as a technology-based

company that is developing social media applications and technologies.

In accordance with ASC 280 – “ Segment Reporting ”,

the Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews operating results to

make decisions about allocating resources and assessing performance for the entire Company.

Existing guidance, which is based on a management

approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide

disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue.

All material operating units qualify for aggregation under “Segment Reporting” due to their similarities in economic characteristics

such as nature of services;

The Company operates as a single operating segment

as a technology-based company that is developing social media applications and technologies.

In accordance with ASC 280 – “ Segment

Reporting ”, the Company’s chief operating decision maker has been identified as the Chief Executive Officer , who reviews

operating results to make decisions about allocating resources and assessing performance for the entire Company.

Existing guidance, which

is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and

to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material

assets and reports revenue.

All material operating units qualify for aggregation under “Segment Reporting” due to their similarities

in economic characteristics such as nature of services;

and procurement processes.

All revenues and expenses as reflected in the accompanying consolidated statements

of operations and comprehensive loss are allocated to the one segment.

Reclassification

Certain line items on the consolidated statements

of operations and comprehensive loss and statements of cash flows for the year ended December 31, 2023 have been reclassified to conform

to the current period presentation.

For the year ended December 31, 2023, on the consolidated statement of operations and comprehensive

loss, realized gain on short-term investments of $ 374,817 was reclassified to interest income.

Additionally, for the year ended December

31, 2023, on the consolidated statement of cash flows, realized gain on short-term investments of $ 374,817 was reclassified to accrued

interest included in short-term investments.

These reclassifications did not change the Company’s reported net loss or comprehensive

loss or net cash used in operating activities on the consolidated statement of cash flows for the ended December 31, 2023.

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

All revenues and expenses as reflected in the accompanying

consolidated statements of operations and comprehensive loss are allocated to the one segment.

Recent accounting pronouncements

In December 2023, the FASB issued ASU 2023-09,

Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid.

2023-09 requires a public business entity (PBE) to disclose, on an annual basis, a tabular rate reconciliation using both percentages

and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction

to the extent those items exceed a specified threshold.

In addition, all entities are required to disclose income taxes paid, net of refunds

received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments,

net of refunds received.

This pronouncement was effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company adopted ASU 2023-09 on January 1, 2025 on a prospective basis, and the implementation of this standard is reflected

The adoption of this ASU had no impact on the Company’s consolidated financial position, results of operations,

or cash flows.

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

Recent accounting pronouncements

In November 2024, the FASB issued ASU 2024-03,

9 unchanged sentences

adoption permitted.

The Company does not expect the adoption of this new guidance to have a material impact on the consolidated financial

The Company does not expect the adoption of this new guidance to have a material impact on its consolidated financial

In September 2025, the FASB issued ASU 2025-06,

Targeted Improvements to the Accounting for Internal-Use Software .

The amendments in this update require internal-use software

development cost capitalization to begin when both of the following occur:

management has authorized and committed to funding the software

project, and it is probable that the project will be completed and that the software will be used to perform its intended function.

amendments also eliminate the accounting considerations of software development stages.

The amendments in ASU 2025-06 are effective for

fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The Company is evaluating the impact ASC 2025-06 will have

on its consolidated financial statements.

Management does not believe that any other recently

issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on its consolidated financial statements.

NOTE 3 – DISCONTINUED OPERATIONS AND

DECONSOLIDATION

Sale and deconsolidation of RPM Interactive

On December 11, 2025, in anticipation of the sale

of RPM Interactive as discussed below, the Company entered into a debt forgiveness and capital contribution agreement with RPM Interactive.

Pursuant to the agreement, the Company forgave outstanding intercompany debt owed by RPM Interactive of $ 5,221,025 .

In accordance with

ASC 470-50-40-2, this forgiveness was recorded as a contribution to the capital of RPM Interactive and an investment in subsidiaries on

the books of the parent, to facilitate the subsequent merger and deconsolidation.

On December 12, 2025, the Company completed a

merger pursuant to the Merger Agreement by and among the Company, RPM Interactive, and Avalon.

Under the terms of the Merger Agreement,

RPM Interactive merged with and into a wholly-owned subsidiary of Avalon, and the Company ceased to have a controlling financial interest

in or be a primary beneficiary of RPM Interactive.

In consideration for the merger, Avalon issued 19,500 shares of its Series E Preferred

Stock to the stockholders of RPM Interactive with an aggregate stated and liquidation value of $ 19,500,000 .

Of this total consideration,

the Company received 6,561.71 shares of Avalon Series E Preferred Stock, representing an aggregate stated value of $ 6,561,710 .

Each share of Series E Preferred Stock has a stated

value of $ 1,000 per share and is convertible into shares of Avalon common stock at a conversion price of $ 1.50 per share, subject to certain

restrictive periods.

Due to the lack of marketability and conversion restrictions, the Company determined that the stated value did not

represent the immediate fair value.

Utilizing a valuation model incorporating market volume and liquidity constraints, the Company determined

the fair value of the Avalon Series E Preferred Stock to be $ 2,920,000 as of the date of the transaction and as of December 31, 2025.

This valuation accounted for the estimated time required to liquidate the shares in the open market and the associated marketability discounts.

Pursuant to ASC 810-10-40-4, on December 12, 2025,

the Company deconsolidated RPM Interactive since it no longer had a controlling financial interest in and was no longer a primary beneficiary

of RPM Interactive and RPM Interactive became a wholly-owned subsidiary of Avalon.

The Company will have no continuing involvement in

RPM Interactive after it has been deconsolidated.

Upon the completion of the sale and deconsolidation of RPM Interactive, the Company

recognized a gain on deconsolidation of $ 2,875,892 for the year ended December 31, 2025.

This gain was calculated as follows:

Fair value of the Avalon Preferred Stock received

write-off of Myseum Inc.’s investment in RPM Interactive

( 5,554,358 )

deconsolidation of RPM Interactive’s net liabilities

Gain on deconsolidation

the year ended December 31, 2025, the net loss from discontinued operations of $ 661,365 represents the operating results of RPM Interactive

through the date of deconsolidation.

In accordance with ASC 205-20, the results of RPM Interactive have been classified as discontinued

operations in the Company’s consolidated statements of operations for all periods presented.

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

In accordance with ASC 205-20, the disposal of

RPM Interactive represents a strategic shift away from the development and costs with RPM Interactive products in order to concentrate

on the Company’s product offerings.

Accordingly, the results of operations of RPM interactive have been classified as discontinued

operations in the accompanying consolidated statements of operations for all periods presented.

The following table summarizes the results

of the discontinued operations for the years ended December 31, 2025 and 2024:

Operating expenses

Other expenses

Loss from discontinued operations

( 2,076,669 )

Gain on sale and deconsolidation of variable interest entities

Total gain (loss) from discontinued operations, net

$ ( 2,076,592 )

As of December 31, 2025 and 2024, assets and liabilities

of discontinued operations consisted of the following:

Assets of discontinued operations:

Prepaid expenses – current

Assets of discontinued operations, current portion

Intangible assets

Total assets of discontinued operations

Liabilities of discontinued operations:

Accounts payable and accrued expenses

Total liabilities of discontinued operations

NOTE 4 – INVESTMENT IN EQUITY SECURITIES

On December 12, 2025, in connection with the merger

and deconsolidation of RPM Interactive (see Note 3), the Company received 6,561.71 shares of Series E Preferred Stock of Avalon GloboCare

Each share of Series E Preferred Stock has a stated value of $ 1,000 per share and is convertible into shares

of Avalon common stock at a conversion price of $ 1.50 per share, subject to certain restrictive periods.

As the Company does not have

the ability to exercise significant influence over Avalon, this investment is recorded at fair value.

As of December 31, 2025, the fair

value of the Series E Preferred Stock was determined to be $ 2,920,000 .

Due to the lack of marketability and conversion restrictions, the

Company determined that the stated value did not represent the immediate fair value.

Utilizing a valuation model incorporating market

volume and liquidity constraints, the Company determined the fair value of the Avalon Series E Preferred Stock to be $ 2,920,000 as of

the date of the transaction and as of December 31, 2025.

This valuation accounted for the estimated time required to liquidate the shares

in the open market and the associated marketability discounts.

NOTE 5 – SHORT-TERM INVESTMENTS

6 unchanged sentences

As of December 31, 2025, short-term investments

mature between January 2025 and November 2025.

mature between January 2026 and May 2026.

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

NOTE 6 – PROPERTY AND EQUIPMENT

5 unchanged sentences

accumulated depreciation

For the year ended December 31, 2024 and 2023,

For the years ended December 31, 2025 and 2024,

depreciation of property and equipment amounted to $ 20,540 and $ 23,129 , respectively.

NOTE 7 – INTERNAL-USE SOFTWARE

As of December 31, 2024 and 2023, internal-use softwares, net consists

of the following:

As of December 31, 2025 and 2024, internal-use

software, net consists of the following:

2025 December 31,

1 unchanged sentence

Less accumulated amortization -

Internal-use software, net $ 1,050,000 $ -

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

Internal-use software, net (included in assets of discontinued operations) $ -

On October 29, 2024 (the “Closing Date”

and measurement date), RPM Interactive entered into and closed on a Share Exchange Agreement (the “Share Exchange Agreement”)

with (i) RPM Florida and (ii) the shareholders of RPM Florida (See Note 1).

Pursuant to the Share Exchange Agreement, RPM Interactive

acquired 100 % of the shares of RPM Florida in exchange for 3,500,000 shares of RPM Interactive’s common stock.

RPM Florida is a

web publishing company that leverages generative AI systems to offer consumers entertaining gaming apps and podcasting offerings in the

sports, finance, entertainment and politics categories.

These shares were valued at $ 1,050,000 , or $ 0.30 per share, on the measurement

date based on recent sales of shares of RPM Interactive’s common stock.

Pursuant to ASU 2017-01 and ASC 805, RPM Interactive analyzed

the Exchange Agreement and the business of RPM Florida to determine if RPM Interactive acquired a business or acquired assets.

owning certain in-development internal-use software, RPM Florida had no operations or no employees and was not considered a business.

Based on this analysis, it was determined that RPM Interactive acquired an asset.

No goodwill was recorded since the Exchange Agreement

was accounted for as an asset purchase.

In accordance with ASC 805, the fair value of the assets acquired is based on either the fair

value of the consideration given or the fair value of the assets acquired, whichever is more clearly evident, and thus, more reliably

RPM Interactive used the market price of the 3,500,000 common shares issued of $ 1,050,000 as the fair value of the assets

acquired since this value was more clearly evident, and thus, more reliable measurable than the fair value of the assets.

This acquisition

was treated as an asset acquisition under ASC 805 “ Business Combinations” since RPM Interactive did not meet the definition

of a business under ASC 805.

ASC 805 requires the use of the relative fair value method for asset acquisitions to allocate the purchase

price, however, since only a single internal-use software asset was acquired, the entire purchase price shall be allocated to this asset.

During the year ending December 31, 2025, the

Company capitalized certain software development costs incurred amounting to $ 196,338 since the Company’s software development projects

were in the application development stage.

For the year ended December 31, 2025, amortization

of intangible assets amounted to $ 20,890 .

In accordance with ASC 205-20, this amortization expense is included in loss from discontinued

operations on the accompanying consolidated statement of operations.

Certain internal-use software was placed in service during August

2025 and such capitalized software development costs are being amortized since then on a straight-line basis over the expected useful

life of three years .

The internal-use software had not yet been placed in service as of December 31, 2024.

Upon the sale and deconsolidation

of RPM Interactive on December 12, 2025 (see Note 3), all associated internal-use software assets were removed from the Company’s

consolidated balance sheet.

Accordingly, the balance of internal-use software as of December 31, 2025 was $ 0 .

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

On October 29, 2024 (the “Closing Date” and measurement

date), RPM Interactive entered into and closed on a Share Exchange Agreement (the “Share Exchange Agreement”) with (i) RPM

Florida and (ii) the shareholders of RPM Florida (See Note 1).

Pursuant to the Share Exchange Agreement, RPM Interactive acquired 100 %

of the shares of RPM Florida in exchange for 3,500,000 shares of RPM Interactive’s common stock.

RPM Florida is a web publishing

company that leverages generative AI systems to offer consumers entertaining gaming apps and podcasting offerings in the sports, finance,

entertainment and politics categories.

These shares were valued at $ 1,050,000 , or $ 0.30 per share, on the measurement date based on recent

sales of shares of RPM Interactive’s common stock.

Pursuant to ASU 2017-01 and ASC 805, RPM Interactive analyzed the Exchange Agreement

and the business of RPM Florida to determine if RPM Interactive acquired a business or acquired assets.

Other than owning certain in-development

internal-use software, RPM Florida had no operations or no employees and was not considered a business.

Based on this analysis, it was

determined that RPM Interactive acquired an asset.

No goodwill was recorded since the Exchange Agreement was accounted for as an asset

In accordance with ASC 805, the fair value of the assets acquired is based on either the fair value of the consideration given

or the fair value of the assets acquired, whichever is more clearly evident, and thus, more reliably measurable.

RPM Interactive used

the market price of the 3,500,000 common shares issued of $ 1,050,000 as the fair value of the assets acquired since this value was more

clearly evident, and thus, more reliable measurable than the fair value of the assets.

This acquisition was treated as an asset acquisition

under ASC 805 “ Business Combinations” since RPM Interactive did not meet the definition of a business under ASC 805.

ASC 805 requires the use of the relative fair value method for asset acquisitions to allocate the purchase price, however, since only

a single internal-use software asset was acquired, the entire purchase price shall be allocated to this asset.

For the years ended December 31, 2024 and 2023,

amortization of intangible assets amounted to $0 .

The internal-use software has not yet been placed in service as of December 31, 2024.

NOTE 8 – OPERATING LEASE RIGHT-OF-USE

ASSETS AND OPERATING LEASE LIABILITIES

In January 2019, the Company renewed and extended the term of its lease

facility for a three-year period from January 2019 to December 2021 starting with a monthly base rent of $ 2,567 plus a pro rata share

of operating expenses beginning January 2019.

The base rent was subject to annual increases beginning the 2 nd and 3 rd

lease year as defined in the lease agreement.

In addition to the monthly base rent, the Company is charged separately for common area

maintenance which is considered a non-lease component.

These non-lease component payments are expensed as incurred and are not included

in operating lease assets or liabilities.

On August 27, 2021, the Company entered into an amendment agreement with the same landlord

to modify the facility lease to relocate and increase the square footage of the lease premises.

The lease term commenced on October 1,

2021 with a new monthly base rent of $ 7,156 plus a pro rata share of operating expenses beginning January 2022 and the lease expired on

December 31, 2024 .

The base rent was subject to a 3 % annual increase beginning in the 2 nd and 3 rd lease year as

defined in the amended lease agreement.

For the years ended December 31, 2024 and 2023, rent expense amounted to $ 90,955 and $ 95,310 ,

respectively, and were included in general and administrative expenses.

As of the date of this report, the Company has not renewed the

lease and is leasing on a month-to-month basis.

The Company does not record ROU assets or lease liabilities for short-term leases that

have a term of twelve months or less at lease commencement, The Company can vacate the premises without any disruption and find alternative

space, if needed.

On August 27, 2021, upon the execution of the

amendment agreement, the Company recorded right-of-use assets and operating lease liabilities of $ 198,898 calculated using an incremental

borrowing rate is 18.0 % (based on historical borrowing rates).

On August 27, 2021, the Company entered into an

amendment to its lease agreement with its landlord to modify the facility lease to relocate and increase the square footage of the lease

The term of the lease commenced on October 1, 2021 with a new monthly base rent of $ 7,156 plus a pro rata share of operating

expenses beginning January 2022.

This lease expired on December 31, 2024 .

The base rent was subject to 3 % annual increases beginning in

the 2 nd and 3 rd lease year as defined in the amended lease agreement.

On April 24, 2025, the Company entered into

an amendment agreement with the same landlord to modify the facility lease to relocate and reduce the square footage of the lease premises.

The term of the lease commenced on May 1, 2025 and shall expire on May 31, 2029 with a new monthly base rent of $ 6,417 plus a pro rata

share of operating expenses beginning on June 1, 2025.

The base rent is subject to 3 % annual increases beginning in the 2 nd ,

3 rd and 4 th lease year as defined in the amended lease agreement.

In addition to the monthly base rent, the Company

is charged separately for a monthly payment of $ 307 for electrical use which is considered a non-lease component.

These non-lease component

payments are expensed as incurred and are not included in operating lease assets or liabilities.

For the years ended December 31, 2025

and 2024, rent expense amounted to $ 89,383 and $ 90,955 , respectively, and were included in general and administrative expenses.

On April 24, 2025, upon the execution of the amendment

agreement, the Company recorded right-of-use assets and operating lease liabilities of $ 244,793 .

The remaining lease term for the operating

lease is 41 months as of December 31, 2025 and the incremental borrowing rate is 14.0 % (based on historical borrowing rates).

Right-of- use assets are summarized below:

1 unchanged sentence

Right-of-use asset, net

Operating lease liabilities are summarized

Operating lease liabilities are summarized below:

Reduction of lease liability

2 unchanged sentences

Long term portion of lease liability

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

Minimum lease payments under the non-cancelable

operating lease on December 31, 2025 are as follows:

For the year ended December 31:

present value discount

Total operating lease liability

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

NOTE 9 – NOTES PAYABLE

On September 17, 2025, RPM Interactive received

$ 40,000 from certain investors in exchange for promissory notes (the “Notes”) dated September 17, 2025 (the “Issuance

Date”) and warrants (the “Warrants”).

The Notes bear interest at the rate of 7.0 % per annum and matures on September

17, 2026 (the “Maturity Date”).

Interest on the outstanding principal sum of the Notes commences accruing on the Issuance

Date, is computed on the basis of a 365-day year and the actual number of days elapsed, and shall be payable on the Maturity Date.

Interactive may prepay the Notes at any time without penalty.

The Warrants are exercisable into an amount of shares of RPM Interactive’s

common stock at an exercise price that is contingent upon and subject to adjustment based on the per-share price of a future equity financing.

The exercise price per share of common stock under the Warrants shall be equal to 50 % of the public offing price per share of common stock

in the initial public offering (“IPO”) (or if the IPO involves the issuance only of common stock equivalents, then the conversion,

exercise or exchange price of such common stock equivalent for one share of common stock), subject to adjustment .

number of shares of Warrants was to equal to the quotient of (a) the initial principal amount of the Note purchased by the Holder divided

by (ii) the public offing price per share of common stock in the IPO (or if the IPO involves the issuance only of common stock equivalents,

then the conversion, exercise or exchange price of such common stock equivalent for one share of common stock.

As of December 10, 2025 (see below), the pricing

of the contingent future financing has not occurred, and the fair value of the Warrant component is not reliably determinable due to the

uncertainty of the future inputs.

Accordingly, the full proceeds of $ 40,000 from the offering were initially recorded as Notes Payable.

Upon the occurrence of the future financing, RPM Interactive would have been required to evaluate the Warrants and potentially allocate

the proceeds between the Notes and the Warrants, which may have resulted in recording a debt discount on the Notes and a corresponding

increase to paid-in capital.

On December 10, 2025, RPM Interactive entered

into exchange agreements with the holders of the Notes and Warrants.

Pursuant to these agreements, the aggregate outstanding principal

of $ 40,000 and all unpaid accrued interest were exchanged for a total of 400,000 shares of RPM Interactive common stock.

Upon the issuance

of these shares, all obligations under the Notes and Warrants were extinguished in full.

This exchange was recorded at the carrying value

of the debt and accrued interest and no gain or loss was recognized.

During the year ended December 31, 2025, the Company

recorded $ 752 in interest expense related to these Notes.

In accordance with ASC 205-20, this interest expense has been classified within

interest expense from discontinued operations on the accompanying consolidated statement of operations and comprehensive loss.

As of December

31, 2025, following the debt extinguishment and the subsequent deconsolidation of RPM Interactive (see Note 3), the outstanding principal

balance and accrued interest payable of the notes payable is $ 0 .

NOTE 10 – RELATED PARTY TRANSACTIONS

2 unchanged sentences

from time to time, provided advances to the Company for working capital purposes.

During the year ended December 31, 2023, the Company

repaid $ 1,315 of advances.

On December 31, 2024 and 2023, the Company had no payable to the officer.

Research and Development

On July 19, 2022, the Company entered into a software

development agreement with Metabizz.

On February 14, 2023, the Company began consolidating Metabizz as VIEs.

For the period from January

1, 2023 to date of consolidation (February 14, 2023), the Company paid Metabizz $ 185,600 for software development services which is included

in research and development expense on the accompanying consolidated statements of operations.

See Note 9 for Employment Agreement with the Company’s

chief executive officer, Darin Myman .

On December 31, 2025 and 2024, the Company had no payable

to the officer.

See Note 12 for Employment Agreement with the

Company’s chief executive officer, Darin Myman .

During the years ended December 31, 2025 and 2024,

the wife of the Company’s chief executive officer was employed as an executive secretary and earned $ 72,000 and $ 72,000 , respectively.

Additionally, during the years ended December 31, 2025 and 2024, the daughter of the Company’s chief executive officer was employed

and earned $ 52,000 and $ 42,900 , respectively.

On January 10, 2024, VR Interactive LLC (“VR

5 unchanged sentences

in RPM Interactive.

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

NOTE 11 – STOCKHOLDERS’ EQUITY

Shares Authorized

On September 19, 2023, the Company filed a Certificate

of Change (the “Certificate of Change”) with the Secretary of State of the State of Nevada to effectuate a 1-for-10 reverse

stock split (the “Reverse Stock Split”) of the Company’s issued and outstanding and authorized shares of common stock,

par value $ 0.0001 per share (“Common Stock”).

The Reverse Stock Split became effective on September 19, 2023.

adjustments for the Reverse Stock Split were made to the Company’s outstanding stock options, warrants and equity incentive plans,

and authorized shares.

On November 9, 2023, the Company filed a Certificate

of Correction with the Secretary of State of the State of Nevada to correct a typographical error contained in the Certificate of Change

that was filed with the Secretary of State of the State of Nevada on September 19, 2023 in order to effectuate the Reverse Stock Split.

The Certificate of Change incorrectly stated that the authorized shares of preferred stock, par value $ 0.0001 per share following the

change was 1,000,000 .

The Reverse Stock Split had no impact on the number of authorized shares of preferred, par value $ 0.0001 , which

remains unchanged at 20,000,000 shares.

On December 27, 2023, the Company filed a Certificate

of Change (the “Certificate of Change”) with the Secretary of State of the State of Nevada to increase the number of authorized

common stock from 18,000,000 shares to 180,000,000 shares.

All share and per-share data and amounts have

been retroactively adjusted as of the earliest period presented in the consolidated financial statements to reflect the Reverse Stock

The authorized capital stock consists of 200,000,000

16 unchanged sentences

to 600,000 shares from 300,000 .

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

On August 6, 2025, the Company held its 2025 annual meeting of stockholders, and the shareholders approved

to amend the 2021 Equity Plan to increase the number of shares reserved for issuances thereunder to 1,000,000 shares from 600,000 .

Preferred Stock

28 unchanged sentences

Stock or any other security of the Company, and shall not be entitled to any dividends or distributions.

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

The outstanding shares of Series B preferred shall

12 unchanged sentences

of Series B preferred for aggregate cash of $ 1,000 .

As of December 31, 2024, there were 2,000,000

shares of Series B Preferred Stock outstanding.

Pursuant to the automatic cancellation terms set forth in the Certificate of Designation,

Rights and Limitations, in 2025 all 2,000,000 shares of Series B Preferred Stock were deemed cancelled and retired due to an authorized

stock increase.

As of December 31, 2025, there were no shares of Series B Preferred Stock issued or outstanding.

These shares have been

restored to the status of authorized but unissued shares of Preferred Stock.

No consideration was paid by the Company in connection with

this cancellation.

Sale of Common Stock and Warrants

15 unchanged sentences

and will not be listed for trading on any national securities exchange or other nationally recognized trading system.

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

The Company is using the net proceeds from the

17 unchanged sentences

arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of capital stock of the Company.

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

During the year ended December 31, 2024, RPM Interactive

2 unchanged sentences

or $ 0.30 per share.

Common Stock Sold for Cash

On January 7, 2025, the Company entered into an

engagement agreement with The Benchmark Company, LLC, as exclusive placement agent (“Benchmark” or the “Placement Agent”),

pursuant to which the Placement Agent agreed to act as placement agent on a reasonable “best efforts” basis in connection

with the Offering.

The Company agreed to pay the Placement Agent an aggregate cash fee equal to 7.0 % of the gross proceeds from the sale

of securities in the Offering and a non-accountable expense allowance equal to 1.0 % of the gross proceeds raised in the Offering.

Company also agreed to issue the Placement Agent (or its designees) a warrant (the “Placement Agent Warrant”) to

purchase up to 5 % of the aggregate number of shares of Common Stock sold in the offering or warrants to purchase up to 60,000 shares of

Common Stock, at an exercise price equal to 100.0 % of the offering price per share of Common Stock, or $ 4.25 per share.

The Placement

Agent Warrant is exercisable during the four-and-a-half year period commencing six months after the date of the closing of this Offering.

In addition, the Company agreed to pay the Placement Agent $ 80,000 for legal expenses and other out-of-pocket expenses.

On January 8, 2025, in connection with the Benchmark

engagement letter, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional

investors, pursuant to which the Company agreed to sell to such investors 1,200,000 shares (the “Shares”) of common stock

of the Company (the “Common Stock”), at a purchase price of $ 4.25 per share of Common Stock (the “Offering”),

for gross proceeds from the offering of $ 5.1 million, prior to deducting placement agent’s fees and other offering expenses payable

by the Company.

The shares of Common Stock were offered by the Company pursuant to its shelf registration statement on Form S-3 (File

333-268058), which was declared effective by the Securities and Exchange Commission on December 6, 2022, a base prospectus dated December

6, 2022 and a prospectus supplement dated January 8, 2025.

The closing of the sales of these securities under the Purchase Agreement took

place on January 9, 2025 and the Company received net proceeds of $ 4,532,000 after deducting placement fees and expenses of $ 568,000 .

The Company intends to use the net proceeds from the offering for working capital and other general corporate purposes.

Equity Sales Agreement

On February 10, 2025, the Company entered into

a Sales Agreement (the “Sales Agreement”) with The Benchmark Company, LLC (“Benchmark”) to sell shares of the

Company’s common shares (the “Shares”) having an aggregate sales price of up to $ 6,000,000 , from time to time, through

an “at the market offering” program under which Benchmark will act as sales agent.

The sales, if any, of the Shares made under

the Sales Agreement will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule

415 promulgated under the Securities Act of 1933, as amended.

On February 6, 2026, the Company entered into an amendment to the Sales

Agreement to reflect the filing of a new registration statement on Form S-3 (File No.

Under the amended agreement, the Company

may offer and sell shares having an aggregate offering price of up to $ 3,500,000 .

The Company will pay Benchmark a commission rate

equal to 4.0 % of the aggregate gross proceeds from each sale of Shares;

provided however, that in the event that the amount of Shares

sold under the Sales Agreement increases to $ 1 million or more, then the commission rate will be reduced to 3 %.

In addition, the Company

agreed to provide Benchmark with customary indemnification and contribution rights.

The Company will also reimburse Benchmark for certain

specified expenses in connection with entering into the Sales Agreement.

The Sales Agreement contains customary representations and warranties

and conditions to the sale of the Shares pursuant thereto.

The Company is not obligated to sell any of the Shares under the Sales Agreement

and may at any time suspend solicitation and offers thereunder.

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

The offering of Shares pursuant to the Sales Agreement

will terminate on the earlier of (1) the sale, pursuant to the Sales Agreement, of Shares having an aggregate offering price of $ 3,500,000

and (2) the termination of the Sales Agreement by either us or Benchmark, as permitted therein.

The Shares will be issued pursuant

to our shelf registration statement on Form S-3 (File No.

333-291818) filed by the Company with the SEC on November

26, 2025 and declared effective by the SEC on December 3, 2025.

On March 27, 2025, the Company issued 750,000 shares of its common stock

to Benchmark to be held and issued to future investors pursuant to the Sales Agreement.

As of December 31, 2025, no proceeds from the

sale of these shares have been received.

These shares are not considered issued and outstanding for accounting purposes, Upon the receipt

of proceeds from the sale of the common shares, the Company shall record the net proceeds from the sale of such shares to additional paid-in

During the year ended December 31, 2025, the Company paid $ 54,028 of offering costs related to the Sales Agreement and capitalized

an additional $ 24,617 related to the preparation of the new registration statement, which has been reflected as part of deferred offering

costs on the accompanying consolidated balance sheet as of December 31, 2025 (See Note 2 – Deferred Offering Costs).

The sale Agreement

is still active and the Company plans on raising capital pursuant to the Sales Agreement in the future.

2023 Stock Repurchase Plan

5 unchanged sentences

reflected as treasury stock on the accompanying consolidated balance sheet on December 31, 2025 and 2024.

During the year ended December

31, 2024, the Company did not purchase any treasury shares.

During the years ended December

31, 2025 and 2024, the Company did not purchase any treasury shares.

Common Stock Issued for Professional Services

On March 6, 2023, the Company entered into a six-month

consulting agreement with an entity for investor relations services.

In connection with this consulting agreement, the Company issued

14,300 restricted common shares of the Company to the consultant.

These shares vest immediately.

These shares were valued at $ 100,000 ,

or $ 6.99 per common share, based on the quoted closing price of the Company’s common stock on the measurement date.

In connection

with this consulting agreement, during the year ended December 31, 2024 and 2023, the Company recorded stock-based professional fees of

$ 0 and $ 100,000 , respectively.

On July 25, 2023, the Company issued 19,802 of

4 unchanged sentences

ended December 31, 2025 and 2024, the Company recorded stock-based professional fees of $ 0 and $ 56,720 , respectively.

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

On January 25, 2024, RPM Interactive entered into

7 unchanged sentences

stock-based compensation of $ 22,500 .

As this expense related to RPM Interactive, it has been reclassified to loss from discontinued operations

for the year ended December 31, 2024, on the accompanying consolidated statements of operations to conform to the current year’s presentation

(see Note 3).

On September 9, 2025, the Company entered into

a 6-month consulting agreement for media campaign services to the Company.

As compensation to the consultant, the Company shall pay $ 25,000

per month for six months and issued 55,000 of its common shares.

These shares were valued at $ 111,650 or $ 2.03 per share, based on the

underlying market value of the share price on the date of the issuance which is on September 9, 2025.

In December 2025, the agreement

was terminated upon breach by consultant due to the nonperformance of services.

In connection with the issuance of these shares, during

the year ended December 31, 2025, the Company recorded stock-based professional fees of $ 111,650 .

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

RPM Interactive Shares Issued for Asset

Purchase – discontinued operations

On October 29, 2024, in connection with a Share

1 unchanged sentence

per share, on the measurement date based on recent sales of shares of RPM Interactive’s common stock (See Note 7).

Cancellation of RPM Interactive Shares

On January 14, 2025, the Company agreed to cancel

3,500,000 shares of RPM Common Stock for no consideration.

RPM Interactive Share Exchange

On December 10, 2025, RPM Interactive entered

into exchange agreements with the holders of the Notes.

Pursuant to these agreements, the aggregate outstanding principal of $ 40,000 and

all unpaid accrued interest were exchanged for a total of 400,000 shares of RPM Interactive common stock.

Upon the issuance of these shares,

all obligations under the Notes and Warrants were extinguished in full.

This exchange was recorded at the carrying value of the debt and

accrued interest of $ 40,752 and no gain or loss was recognized.

For the year ended December 31, 2025, the Company

recorded $ 752 in interest expense related to these Notes.

In accordance with ASC 205-20, this expense is classified within loss from discontinued

operations on the accompanying consolidated statement of operations.

Following the exchange and the subsequent sale of RPM Interactive

on December 12, 2025, the Company has no further obligations under these Notes.

As of December 31, 2025, the outstanding principal balance

and accrued interest payable is $ 0 .

Stock Options

On February 3, 2023, the Company granted an aggregate

of 7,500 options to purchase the Company’s common stock to the Company’s board of directors.

The options each have a term

of 5 years from the date of grant and are exercisable at an exercise price of $ 12.50 per share.

The options vest six months from date

The stock options were valued at the grant date using a Black-Scholes option pricing model which will be recognized as stock-based

compensation expense over the vesting period.

On February 3, 2023, the Company granted an aggregate

of 21,500 options to purchase the Company’s common stock to an officers, employees and consultants of the Company.

The options each

have a term of 5 years from the date of grant and are exercisable at an exercise price of $ 12.50 per share.

The options vest 25 % every

six months from date of grant for 2 years.

The stock options were valued at the grant date using a Black-Scholes option pricing model

which will be recognized as stock-based compensation expense over the vesting period.

On September 6, 2023, the Company granted an aggregate

of 10,000 options to purchase the Company’s common stock to the Company’s chief financial officer ( 5,000 options) and to an

employee of the Company ( 5,000 options).

The options each have a term of 5 years from the date of grant and are exercisable at an exercise

price of $ 15.00 per share.

The options vest immediately.

The stock options were valued at the grant date using a Black-Scholes option

pricing model which will be recognized as stock-based compensation expense over the vesting period.

The 2023 stock option grants were valued at the

respective grant dates using a Black-Scholes option pricing model using the assumptions discussed below.

In connection with the stock

option grants, the Company valued these stock options at a fair value of $ 185,628 , or an average of $ 4.76 per option.

and records stock-based

compensation expense over the vesting period.

Upon cancellation of unvested stock options, the fair value of these cancelled options will

During the year ended December 31, 2023, certain

employees and consultants were terminated.

Accordingly, 33,775 unvested options were forfeited and $ 133,190 of previously recognized stock-based

compensation and $ 26,144 of previously recognized stock-based professional fees was reversed.

During the year ended December 31, 2024, accretion

of stock-based expense related to stock options, which is net of the reversal of previously recognized stock-based expense due to forfeiture,

amounted to $ 2,110,799 of which $ 2,002,777 was recorded in compensation and related expenses and $ 108,022 was recorded in professional

and consulting expenses as reflected in the consolidated statements of operations.

During the year ended December 31, 2024, accretion

of stock-based expense related to stock options, which is net of the reversal of previously recognized stock-based expense due to forfeiture,

amounted to $ 66,580 , of which $ 16,816 was recorded in compensation and related expenses and $ 49,764 was recorded in professional and consulting

expenses as reflected in the consolidated statements of operations.

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

On January 14, 2025, the Company granted an aggregate

of 260,000 options to purchase the Company’s common stock, consisting of 30,000 options to the Company’s board of directors

and 230,000 options to an officer and employees of the Company.

The options each have a term of 10 years from the date of grant and are

exercisable at an exercise price of $ 5.50 per share.

The options vest in equal 25 % installments every 6 months beginning on the 6-month

anniversary of the date of grant.

The stock options were valued at $ 1,239,324 on the grant date using a Black-Scholes option pricing model

which will be recognized as stock-based compensation expense over the vesting period.

On June 8, 2025, the Company granted an aggregate

of 65,000 options to purchase the Company’s common stock, consisting of 45,000 options to the employees of the Company and 20,000

options to consultants of the Company.

The options each have a term of 5 years from the date of grant and are exercisable at an exercise

price of $ 4.00 per share.

The options vest in equal 25 % installments every 6 months beginning on the 6-month anniversary of the date of

The stock options were valued at $ 159,575 on the grant date using a Black-Scholes option pricing model which will be recognized

as stock-based compensation expense and stock-based professional fees over the vesting period.

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

As of December 31, 2024, a balance of $ 994 remains

to be expensed over future vesting periods related to unvested stock options issued for services to be expensed over a weighted average

period of 0.05 years.

On August 18, 2025, the Company granted an aggregate

of 265,000 options to purchase the Company’s common stock to the board of directors and officers of the Company.

The options each

have a term of 5 years from the date of grant and are exercisable at an exercise price of $ 3.00 per share.

The options vest in equal 25 %

installments every 6 months beginning on the 6-month anniversary of the date of grant.

The stock options were valued at $ 490,955 on the

grant date using a Black-Scholes option pricing model which will be recognized as stock-based compensation expense over the vesting period.

During the year ended December 31, 2025, accretion

of stock-based expense related to stock options amounted to $754,675 of which $ 740,705 was recorded in compensation and related expenses

and $ 13,970 was recorded in professional and consulting expenses as reflected in the consolidated statements of operations.

As of December 31, 2025, a balance of $ 1,116,289

remains to be expensed over future vesting periods related to unvested stock options issued for services to be expensed over a weighted

average period of 1.39 years.

During the year ended December 31, 2025, the stock

options were valued at the grant date using a Black-Scholes option pricing model with the following assumptions.

The simplified method

was used for the expected option term and expected volatility was based on historical volatility:

The Company did not issue

any stock options during the year ended December 31, 2024.

The simplified method was used for the expected option term and expected volatility

was based on historical volatility:

Dividend rate

Term (in years)

Estimated expected term (in years)

3.5 to 6 years

164.0 % to 189.1 %

Risk—free interest rate

3.96 % - 4.73 %

3.73 % to 4.59 %

The following is a summary of the Company’s

3 unchanged sentences

Balance on December 31, 2023 158,670 $ 105.30 3.12

Granted 39,000 13.14 -

Cancelled ( 44,100 ) 49.13 -

Balance on December 31, 2024 114,570 126.92 2.08

Granted 590,000 4.21

Cancelled ( 12,750 ) ( 34.07 ) -

12 unchanged sentences

the 590,000 Pre-Funded Warrants and the Underwriters received 589,981 shares of Common Stock since the exercise was cashless.

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

On January 7, 2025, in connection with the engagement

agreement with The Benchmark Company, LLC (“Benchmark” or the “Placement Agent”), the Company issued the Placement

Agent a warrant (“Placement Agent Warrant”) to purchase up to 60,000 shares of Common Stock, at an exercise price equal to

100.0 % of the offering price per share of Common Stock, or $ 4.25 per share.

The Placement Agent Warrant is exercisable during the four-and-a-half

year period commencing six months after the date of the closing of this Offering.

A summary of the Company’s outstanding stock

3 unchanged sentences

Balance on December 31, 2023 67,385 $ 49.80 2.65

Granted 590,000

Cancelled ( 590,000 )

Balance on December 31, 2024 67,385 49.80 1.65

Granted 60,000 4.25 -

Exercised ( 590,000 ) -

Balance on December 31, 2025 127,385 $ 28.35 2.23

4 unchanged sentences

Operating Lease Agreement

See Note 6 for disclosure on the Company’s operating lease for

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

See Note 8 for disclosure on the Company’s

operating lease for its offices.

Employment Agreement

Chief Executive Officer of Myseum, Inc.

On August 27, 2021 (the “Effective Date”),

43 unchanged sentences

executive officer in the amount of $ 350,000 and $ 300,000 , respectively.

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

Ambassador Settlement

12 unchanged sentences

The claim of reward payments has no expiration date.

As of December 31, 2024, the Company accrued $ 76,428

of such claim and recorded settlement expense of $ 76,428 , which is included and general and administrative expenses on the accompanying

statement of operation and comprehensive loss.

Such claim shall be recorded as settlement expense which

is included in general and administrative expenses on the accompanying statement of operation and comprehensive loss.

During the year

ended December 31, 2025, the Company recorded settlement expense of $ 9,817 and paid settlement expenses of $ 22,105 .

During the year ended

December 31, 2024, the Company accrued $ 76,428 of such claim and recorded settlement expense of $ 76,428 , which is included and general

and administrative expenses on the accompanying statement of operation and comprehensive loss.

In December 2025, based on a management

assessment of actual participation and claim patterns, the Company reduced the liability by $ 62,658 and recognized a corresponding gain

on extinguishment of liabilities, which is included in other income (expense) on the accompanying consolidated statement of operations.

As of December 31, 2025 and 2024, the Company’s accrued balance of such claim was $ 1,482 and $ 76,428 , respectively, which is included

in accounts payable and accrued expenses on the accompanying consolidated balance sheets.

NOTE 13 – INCOME TAXES

6 unchanged sentences

the attainment of future taxable income.

The Company has incurred aggregate net operating losses of approximately

$ 31,494,900 for income tax purposes as of December 31, 2024.

The net operating losses carry forward for United States income taxes, which

may be available to reduce future years’ taxable income.

Management believes that the realization of the benefits from these losses

appears unlikely due to the Company’s limited operating history and continuing losses for United States income tax purposes.

the Company has provided a 100 % valuation allowance on the deferred tax asset resulting from the net operating losses to reduce the asset

Management will review this valuation allowance periodically and make adjustments as necessary.

The items accounting for the difference between

income taxes at the effective statutory rate and the provision for income taxes for the years ended December 31, 2024 and 2023 were as

The Company has incurred aggregate net operating

losses of approximately $ 33,668,721 for income tax purposes as of December 31, 2025.

The net operating losses carry forward for United

States income taxes, which may be available to reduce future years’ taxable income.

Management believes that the realization of

the benefits from these losses appears unlikely due to the Company’s limited operating history and continuing losses for United

States income tax purposes.

Accordingly, the Company has provided a 100 % valuation allowance on the deferred tax asset resulting from

the net operating losses to reduce the asset to zero .

Management will review this valuation allowance periodically and make adjustments

as necessary.

The components of loss before income taxes were

$ ( 3,040,119 )

$ ( 5,025,007 )

Total loss before income taxes

$ ( 3,040,119 )

$ ( 5,025,007 )

The Company has not recorded a current or deferred

tax provision for years ended December 31, 2025 and 2024.

The following table reconciles the U.S.

statutory income tax rate to the Company’s effective income tax rate for the year ended December 31, 2025:

December 31, 2025

Income tax benefit at U.S.

1 unchanged sentence

$ ( 638,425 )

$ ( 1,765,044 )

Income tax benefit – State

2 unchanged sentences

Total provision for income tax

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

As previously disclosed for the year ended December

31, 2024, prior to the adoption of ASU 2023-09, the effective income tax rate differed from the federal statutory income tax rate as follows:

December 31, 2024

Income tax benefit at U.S.

statutory rate

$ ( 1,055,252 )

Income tax benefit – State

Non-deductible expenses

Change in valuation allowance

Total provision for income tax

The Company’s approximate net deferred tax

9 unchanged sentences

usage limitations.

The Company provided a valuation allowance equal to the deferred income

tax asset for the years ended December 31, 2024 and 2023 because it was not known whether future taxable income will be sufficient to

utilize the loss carryforward.

The Company provided a valuation allowance equal

to the deferred income tax asset for the years ended December 31, 2025 and 2024 because it was not known whether future taxable income

will be sufficient to utilize the loss carryforward.

The increase in the allowance was $ 565,186 and $ 1,225,288 in years 2025 and 2024.

AND SUBSIDIARIES AND CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 and 2024

Additionally, the future utilization of the net

8 unchanged sentences

NOTE 14 – SUBSEQUENT EVENTS

Sale of Common Shares

On January 8, 2025, the Company entered into a

securities purchase agreement (the “Purchase Agreement”) with certain institutional investors, pursuant to which the Company

agreed to sell to such investors 1,200,000 shares (the “Shares”) of common stock of the Company (the “Common Stock”),

at a purchase price of $ 4.25 per share of Common Stock (the “Offering”), for gross proceeds from the offering were approximately

$ 5.1 million, prior to deducting placement agent’s fees and other offering expenses payable by the Company.

The shares of Common

Stock were offered by the Company pursuant to its shelf registration statement on Form S-3 (File No.

333-268058), which was declared effective

by the Securities and Exchange Commission on December 6, 2022, a base prospectus dated December 6, 2022 and a prospectus supplement dated

January 8, 2025.

The closing of the sales of these securities under the Purchase Agreement took place on January 9, 2025 and the Company

received net proceeds of $ 4,537,000 after deducting placement fees and expenses of $ 563,000 .

The Company intends to use the net proceeds

from the offering for working capital and other general corporate purposes.

On January 7, 2025, the Company entered into an

engagement agreement with The Benchmark Company, LLC, as exclusive placement agent (“Benchmark” or the “Placement Agent”),

pursuant to which the Placement Agent agreed to act as placement agent on a reasonable “best efforts” basis in connection

with the Offering.

The Company agreed to pay the Placement Agent an aggregate cash fee equal to 7.0 % of the gross proceeds from the sale

of securities in the Offering and a non-accountable expense allowance equal to 1.0 % of the gross proceeds raised in the Offering.

Company also agreed to issue the Placement Agent (or its designees) a warrant (the “Placement Agent Warrant”) to

purchase up to 5 % of the aggregate number of shares of Common Stock sold in the offering, or warrants to purchase up to 60,000 shares

of Common Stock, at an exercise price equal to 100.0 % of the offering price per share of Common Stock, or $ 4.25 per share.

The Placement

Agent Warrant is exercisable during the four-and-a-half year period commencing six months after the date of the closing of this Offering.

In addition, the Company agreed to pay the Placement Agent $ 80,000 for legal expenses and other out-of-pocket expenses.

DATCHAT, INC.

AND SUBSIDIARIES AND CONSOLIDATED ENTITIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

Executive Bonus

On January 14, 2025, the compensation committee

of the board of directors of the Company approved and the Company paid a one-time bonus to the Company’s chief executive officer

in the amount of $ 350,000 .

Cancellation of RPM Interactive Shares

On January 14, 2025, the Company agreed to cancel

3,500,000 shares of RPM Common Stock for no consideration.

Stock Options

On January 14, 2025, the Company granted an aggregate

of 30,000 options to purchase the Company’s common stock to the Company’s board of directors.

The options each have a term

of 10 years from the date of grant and are exercisable at an exercise price of $ 5.50 per share.

The options vest in equal 25 % installments

every 6 months beginning on the 6-month anniversary of the date of grant.

The stock options were valued at the grant date using a Black-Scholes

option pricing model which will be recognized as stock-based compensation expense over the vesting period.

On January 14, 2025, the Company granted an aggregate of 230,000 options

to purchase the Company’s common stock to an officer, employees and consultants of the Company.

The options each have a term of

10 years from the date of grant and are exercisable at an exercise price of $ 5.50 per share.

The options vest in equal 25 % installments

every 6 months beginning on the 6-month anniversary of the date of grant.

The stock options were valued at the grant date using a Black-Scholes

option pricing model which will be recognized as stock-based compensation expense over the vesting period.

Equity Sales Agreement

On February 10, 2025, the Company entered into a Sales Agreement (the

“Sales Agreement”) with The Benchmark Company, LLC (“Benchmark”) to sell shares of the Company’s common

shares (the “Shares”) having an aggregate sales price of up to $ 6,000,000 , from time to time, through an “at the market

offering” program under which Benchmark will act as sales agent.

The sales, if any, of the Shares made under the Sales Agreement

will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 promulgated under

the Securities Act of 1933, as amended.

The Company will pay Benchmark a commission rate equal to 4.0 % of the

aggregate gross proceeds from each sale of Shares;

provided however, that in the event that the amount of Shares sold under the Sales

Agreement increases to $ 1 million or more, then the commission rate will be reduced to 3 %.

In addition, the Company agreed to provide

Benchmark with customary indemnification and contribution rights.

The Company will also reimburse Benchmark for certain specified expenses

in connection with entering into the Sales Agreement.

The Sales Agreement contains customary representations and warranties and conditions

to the sale of the Shares pursuant thereto.

The Company is not obligated to sell any of the Shares under the Sales Agreement and may at

any time suspend solicitation and offers thereunder.

The offering of Shares pursuant to the Sales Agreement will terminate on the earlier

of (1) the sale, pursuant to the Sales Agreement, of Shares having an aggregate offering price of $ 6,000,000 and (2) the termination

of the Sales Agreement by either us or Benchmark, as permitted therein.

The Shares will be issued pursuant to our shelf registration statement

on Form S-3 (File No.

333-268058) filed by the Company with the SEC on October 28, 2022 and declared effective

by the SEC on December 6, 2022.

First Amendment to Equity Sales Agreement

On February 6, 2026, the Company entered into

a First Amendment to Sales Agreement (the “First Amendment”) with Benchmark, which amends the Sales Agreement dated February

The First Amendment was executed to (i) reflect the Company’s name change to Myseum, Inc.

and (ii) update the shelf registration

statement to Form S-3 (File No.

333-291818), which was filed on November 26, 2025, and declared effective on December 3, 2025.

Sales Agreement, as amended, the Company may offer and sell shares of common stock having an aggregate sales price of up to $ 3,500,000

through an “at the market offering” program.

Concurrently with the First Amendment, the Company filed a prospectus supplement

dated February 6, 2026, in connection with the offer and sale of the Shares.

All other material terms of the original Sales Agreement

remain in full force and effect (see Note 11).

Common Shares and Warrants issued for Services

On March 5, 2026, pursuant to a 6-month marketing

services agreement, the Company granted 200,000 warrants to purchase 200,000 shares of the Company’s common stock to a consultant

for investor relations services.

The warrants have a term of 2 years from the date of grant, are exercisable at an exercise price of $ 2.00

per share, and vest immediately.

The warrants will be valued on the grant date using a Black-Scholes option pricing model which will be

recognized as stock-based professional fees over the term of the agreement.

On March 2, 2026, the Company issued 60,000 of

its common shares pursuant to a one-year consulting agreement.

These shares were valued at $ 111,000 , or a per share price of $ 1.85 , based

on the quoted closing price of the Company’s common stock on the measurement date, which will be recognized as stock-based professional

fees over the term of the agreement.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures