Snail, Inc.
For the period ended Mar 31, 2026. Filed May 13, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 13, 2026
SNAL$1.95+7.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-12.
0001493152-25-021909
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-13.
0001493152-26-022718
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 174 previous paragraphs and 152 current paragraphs.
83 unchanged; 43 reworded; 26 added; 43 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (26)
Current report
During the first quarter of 2026, we continued to execute on our multi-year expansion strategy for our foundationalARK franchise. Building upon the successful launch and reception ofARK: Lost Colony late last year, we outlined an ambitious roadmap consisting of four major downloadable content (DLC) expansions forARK: Survival Ascended in 2026 and three subsequent releases planned for 2027. We anticipate this cadence will provide significant revenue visibility. Upcoming scheduled releases in 2026 includeARK: Survival of the Fittest, ARK: Bob’s True Tales – Tides of Fortune, ARK: World Creator, andARK: Dragontopia.
Current report
A core component of our long-term growth strategy is diversifying our revenue profile beyond the ARK ecosystem by investing in internally developed.Bellwright, our medieval survival/strategy title, maintained strong momentum through the Steam Spring Sale and has officially surpassed 1 million units sold. We are actively developing console ports to further monetize this IP. As part of our ongoing initiative to expand our third-party publishing portfolio and diversify our revenue profile, on January 27, 2026, the Company, in partnership with developer Loric Games, successfully launchedEchoes of Elysium into Early Access on the Steam platform.
Current report
At GDC 2026, we provided key updates regarding our product pipeline and unveiled new intellectual property. We provided an exclusive look at For the Stars, our upcoming open-universe AAA space survival RPG. The title continues to progress, with demonstrations of its open-ended exploration and player-driven research systems presented at the GDC Tech Demo Stage. We introduced PixARK Worlds, a new title in development by Studio Sirens and Snail Games, created with guidance from Studio Wildcard, featuring revolutionary user-generated content designed. In broadening our indie portfolio, we officially announced Gobby Gang, a new cooperative multiplayer party game on the Steam platform.
Current report
As part of our strategy to explore adjacent digital entertainment markets, we introduced our new “Interactive Films” publishing initiative at GDC 2026. This experimental approach is designed to transform high-engagement, vertical narrative content into interactive Full Motion Video (FMV) RPG experiences, bridging modern digital storytelling formats with gameplay-driven interactivity.
Current report
On April 6, 2026, we entered into Amendment No. 3 to the Amended and Restated Exclusive Software License Agreement (the “Amendment”) with SDE Inc., a California corporation (“SDE”) through our wholly-owned subsidiary, Snail Games USA, Inc. SDE is controlled by Ying Zhou, our director and the spouse of Hai Shi, our Chief Executive Officer, Chief Strategy Officer, Chairman of the Board and Founder. The Amendment amends that certain Amended and Restated Exclusive Software License Agreement, dated January 1, 2022, which was previously amended on December 13, 2022, March 10, 2023, and October 1, 2023 (as amended, the “ARK1 License Agreement”) pursuant to which we hold an exclusive worldwide license from SDE to publish and sell ARK: Survival Evolved (“ASE Game”) and ARK: Survival Ascended (“ASA Game”). The Amendment is effective as of April 1, 2026. Prior to the Amendment, the ARK1 License Agreement provided for us to pay to SDE (i) licensing fees of $2 million per month, provided that such obligation shall cease upon the public release of the sequel ARK 2; (ii) following the ASA Launch Date (as defined in the ARK1 License Agreement), royalties of 25% of our total revenue related to ASA Game and 40% of our total revenue related to ASE Game; and (iii) a one-time payment of $5 million upon the release of any DLC after October 1, 2023. The Amendment reduces the licensing fees to $1.5 million per month, provided that such obligation shall cease upon the public release of the sequel ARK 2, and replaces the one-time payment set forth above for each DLC with a one-time payment of $5 million upon the release of certain DLCs after October 1, 2023, excluding, among others, DLCs that were originally included in ASA Game.
Current report
On April 6, 2026, we entered into a Software Development Outsourcing Agreement (the “Development Agreement”) with Suzhou Snail Digital Technology Co., Ltd. (“Suzhou Snail”) through our subsidiary Snail Games USA, Inc. Mr. Shi is the founder and a director of Suzhou Snail, and Ms. Zhou is a vice president and director of Suzhou Snail. The Development Agreement provides for Suzhou Snail to carry out technical development for our Project Aether game. We agreed to pay to Suzhou Snail an aggregate of $1.966 million in four quarterly installments of $491,500, beginning in the second quarter of 2026.
Current report
Nasdaq Compliance
Current report
On December 30, 2025, we received written notice from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that for thirty (30) consecutive business days from November 11, 2025 through December 29, 2025, our Class A common stock did not maintain a minimum closing bid price of $1.00 per share (the “Minimum Bid Price Requirement”) as required by Nasdaq Listing Rule 5550(a)(2). The notice had no immediate effect on the listing or trading of our Class A common stock, and the Class A common stock continues to trade on The Nasdaq Capital Market under the symbol “SNAL.”
Current report
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have a compliance period of 180 calendar days, or until June 29, 2026, to regain compliance with Nasdaq Listing Rule 5550(a)(2). Compliance may be achieved without further action if the closing bid price of our Class A common stock is at or above $1.00 for a minimum of ten (10) consecutive business days at any time during the 180-day compliance period, in which case Nasdaq will notify us if it determines it is in compliance and the matter will be closed; however, Nasdaq may require the closing bid price to equal or to exceed the $1.00 minimum bid price requirement for more than ten (10) consecutive business days before determining that a company complies.
Current report
If we do not achieve compliance with the Minimum Bid Price Requirement by June 29, 2026, we will not be eligible for additional time to comply because of the second Nasdaq deficiency described below.
Current report
On March 26, 2026, we received another deficiency letter (the “Letter”) from the Nasdaq Staff notifying us that we were not in compliance with the requirement to maintain a minimum of $500,000 in net income from continuing operations in the most recently completed fiscal year, or two of the last three fiscal years (the “Net Income Requirement”). In our Annual Reports on Form 10-K for the year ended December 31, 2023, 2024, and 2025, we reported net income from continuing operations in 2024 and net loss from continuing operations in 2025 and 2023. Additionally, we did not meet either of the alternative Nasdaq continued listing standards under the Nasdaq Listing Rules, which include (i) a market value of listed securities of at least $35 million or (ii) a minimum stockholders’ equity requirement of at least $2,500,000 (collectively with the Net Income Requirement, the “Nasdaq Requirements”).
Current report
In accordance with Nasdaq rules, we had 45 calendar days, or until May 11, 2026, to submit a plan to the Staff to regain compliance (the “Compliance Plan”) with the Nasdaq Requirements. We submitted the Compliance Plan on May 11, 2026, and it is currently under Nasdaq review. If the Compliance Plan is accepted, Nasdaq can grant an extension of up to 180 calendar days from the date of the Letter for us to evidence compliance.
Current report
Revenues
Current report
Cost of revenues
Current report
Impairment of film assets
Current report
Revenues
Current report
Net revenues for the three months ended March 31, 2026 increased by $7.2 million, or 35.7%, compared to the three months ended March 31, 2025. Total revenue increased by $7.2 million primarily attributed to a $4.2 million increase fromARK: Survival Ascended,an increase in revenues related toBellwrightof $2.1 million, and an increase in deferred revenues recognized of $2.5 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase in revenue was partially offset by a decrease in revenue fromARK: Ultimate Mobile Editionof $0.8 million and a decrease in revenue fromARK: Survival Evolved of $0.8 million in the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
Current report
Cost of revenues
Current report
Cost of revenues for the three months ended March 31, 2026 increased by $1.4 million, or 9.6% when compared to the three months ended March 31, 2025, primarily due to higher licensed royalties costs driven by a growth in revenue during the period.
Current report
Impairment of film assets
Current report
(Provision for) benefit from income taxes
Current report
Revolving Loan and First Term Loan
Current report
In October 2025, we issued a convertible note (the “October 2025 Convertible Note”) with an aggregate principal amount of $2,200,000 for gross proceeds of $2,000,000. The October 2025 Convertible Note, which matures on October 24, 2026, carries an original issue discount of 10%, and is subject to a guaranteed interest equal to 5% of the principal amount. The principal and interest charges are payable in 10 equal monthly payments starting January 24, 2026. We are accounting for the convertible note at fair value.
Current report
In November 2025, we issued a convertible note (the “November 2025 Convertible Note” and, together with the February 2025 Convertible Notes, and the October 2025 Convertible Note, and the “2025 Convertible Notes”) with an aggregate principal amount of $1,100,000 for gross proceeds of $1,000,000. The November 2025 Convertible Note, which matures on November 26, 2026, carries an original issue discount of 10%, and is subject to a guaranteed interest equal to 5% of the principal amount. The principal and interest charges are payable in 10 equal monthly payments starting February 26, 2026. We are accounting for the convertible note at fair value.
Current report
Determining the Fair Value of Debt
Current report
The fair value of debt instruments for which we have elected the fair value option is estimated using an industry-standard binomial lattice framework incorporating unobservable inputs — including our own credit spread, equity volatility derived from historical stock prices, and risk-free rates — resulting in a Level 3 classification within the fair value hierarchy. These estimates are affected by fluctuations in our stock price, changes in our creditworthiness, shifts in market interest rates, and the probability and timing of conversion, prepayment and other settlement events. While most of these inputs are derived from objective market data or contractual terms, expected volatility requires significant management judgement as it is not directly observable. Changes in these inputs, including our credit spread or assumed equity volatility, could result in material fluctuations in the reported fair value of these liabilities, with corresponding gains or losses recognized in earnings.
Removed paragraphs (43)
Previous report
In February 2025, we released a brand new DLC map forARK: Survival Ascended,ARK: Astraeos. This expansive Greek methodology map offers over 264-square kilometers of playable area, filled with stunning scenery, ancient ruins, sacred temples, and powerful new bosses. Since release, we sold 574K units across Steam, PlayStation, and Xbox. We have also completed two new game acquisitions through our gaming network and partners as part of the larger effort to expand our games portfolio.
Previous report
At GDC 2025, we officially announced the 10-year celebration ofARK: Survival Evolved with a brand new DLC,ARK: Aquatica, released in July 2025. The new non-canonical expansion map features an ambitious underwater setting where 95% of gameplay will take place beneath the surface. ForARK: Survival Ascended,we announced a new full-size canonical expansion,Lost Colony, that sets in a frozen world where players follow legendary survivor Mei Yin on a perilous quest to uncover ARK’s buried secrets. Furthermore, we announcedBellwright will be released on the Xbox platform as a next step to broaden the game’s exposure and player base. We have also debut teaser trailers for two in-house developed projects,Nine Yin Sutra: Wushu andNine Yin Sutra: Immortal. These two original titles invite players into vast, immersive worlds shaped by martial arts mastery and cultivation.
Previous report
Shortly after GDC, on April 23, 2025, we released a major content update toBellwright in the way of celebrating its one-year anniversary. Content update includes 200+ enhancements across visual, audio & gameplay quality-of-life. In the subsequent month, we saw 1.5x units sold compared to one month prior.
Previous report
In keeping up with the momentum of Lost Colony announcement,ARK: Survival Ascended (“ASA”) was added to the PlayStation Plus subscription program and made available free of charge to any PlayStation Plus subscribers. The inclusion proved a major success, driving a surge in downloads with over 8 million installs and significantly expanding the player base, further cementing ARK’s presence on console. During the inclusion month, we also saw a healthy uplift in ASA DLC sales on PlayStation.
Previous report
On June 18, 2025, the Lost Colony Expansion Pass pre-sale went live across Steam, PlayStation, and Xbox. The DLC is expected to be released later this year. To deepen our commitment to ourARK fans, we have included a brand-newARK: Fantastic Tames – Drakelings as part of the expansion pass. The pre-sale exceeded our expectations, selling over 306K units through September 30, 2025. On October 7 th, 2025, we further enhanced the value of the Lost Colony Expansion Pass by adding a completely new Fantastic Tames, Elderclaw to the bundle.
Previous report
Furthermore, in an effort to broaden our portfolio offerings beyond the sandbox survival genre, we have released five indies games that cater to a broader set of audience in the second quarter of 2025;The Cecil: The Journey Begins, Chasmal Fear, Castle of Secrets, Zombie Rollerz: The Last Ship, and Robots at Midnight. Towards the end of the year, we have two exciting releases to round out 2025 in Rebel Engine, a fusion of the stylish combat of a hack-n’-slash with the lightning speed and bombastic gunplay of a ‘90s FPS into a wholly unique, fast-paced action game, and Echoes of Elysium, an airship-survival RPG set in the world of “Elysium” where players gather resources, craft, survive, build/customize airships, explore, and combat.
Previous report
Digital Asset
Previous report
In addition, the Company recently announced on July 15, 2025, of its intention to explore a strategic digital asset initiative that includes the evaluation and feasibility for introduction of its own proprietary stablecoin. This initiative would be subject to a range of factors, including but not limited to, regulatory approvals, market conditions, technical feasibility, cybersecurity safeguards, financial controls, and internal governance. The Company believe that exploring stablecoin infrastructure may position us as an early mover within the digital entertainment industry. While no definitive decisions have been made to integrate such technology into the Company’s corporate strategy, the Company continues to evaluate and explore opportunities as part of our broader innovation roadmap.
Previous report
Net revenues for the three months ended September 30, 2025 decreased by $8.7 million, or 38.7%, compared to the three months ended September 30, 2024. TotalARK sales increased $2.2 million mainly attributed to $2.1 million fromARK: Survival Ascendedand $0.5 million from the release ofARK: Aquatica, andSaltyTV sales increased $0.3 million during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. The increase in sales was more than offset by the increase in deferred revenue of $10.9 million primarily fromARK: Survival Ascended and a decrease in revenues related toBellwrightof $0.5 million in the three months ended September 30, 2025 compared to the three months ended September 30, 2024.
Previous report
Cost of revenues for the three months ended September 30, 2025 remained consistent when compared to the three months ended September 30, 2024.
Previous report
Research and development expenses for the three months ended September 30, 2025 decreased by $0.2 million, or 4.0%, compared to the three months ended September 30, 2024. The decrease in research and development expenses was due to lower development milestone payments of the Suzhou Snail development contract forFor the StarsandNine Yin Sutra: Immortal offset by increases in internal research and development salaries as the Company continues to expand its internal development team*.*
Previous report
Interest income
Previous report
Interest income was $0.5 million and $0.1 million for the three months ended September 30, 2025 and September 30, 2024, respectively. The increase was due to the interest portion of the IRS refunds received during the three months ended September 30, 2025.
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(Benefit from) Provision for income taxes
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Comparison of the nine months ended September 30, 2025 versus the nine months ended September 30, 2024
Previous report
Net revenues for the nine months ended September 30, 2025 decreased by $2.2 million, or 3.7%, compared to the nine months ended September 30, 2024. TotalARK sales increased $13.7 million andSaltyTV increased $0.6 million during the nine months ended September 30, 2025 compared to September 30, 2024. The sales increase was more than offset by the increase in deferred revenue of $11.9 million primarily fromARK: Survival Ascended, a decrease in revenues related toBellwright of $2.6 million, a decrease in Angela Games revenues of $1.2 million and a non-recurring Angela Games settlement of $0.6 million occurring in 2024.
Previous report
Cost of revenues for the nine months ended September 30, 2025 increased by $3.9 million, or 10.0%, compared to the nine months ended September 30, 2024.
Previous report
The increase in cost of revenues for the nine months ended September 30, 2025 was due to an increase of $1.1 million in software license royalties – related parties, a result of increasedARKrevenues, an increase of $1.2 million in license and amortization due to the increased depreciable base of intangible assets in 2025, an increase in merchant fees of $0.8 million related to the increasedARK: Ultimate Mobile Editionrevenues, an increase of $0.6 million in internet, server and data center and other costs related to advertising of $0.1 million, an increase in engine fees of $0.4 million, partially offset by decreased software license royalties of $0.4 million.
Previous report
General and administrative expenses
Previous report
General and administrative expenses for the nine months ended September 30, 2025 increased by $4.3 million, or 48.9%, compared to the nine months ended September 30, 2024. The increase in general and administrative expenses was due to an increase in salaries and wages of $2.5 million, the result of the Company recording $0.3 million in stock compensation expense in 2025 versus an income related to stock based income compensation of ($0.8) million in 2024 and the Company’s increased headcount in 2025, an increase in contractors expense of $0.7 million, an increase in office expense of $0.4 million, an increase in legal and professional fees of $0.3 million, an increase in insurance expenses of $0.2 million, an increase in travel expense of $0.1 million, partially offset by a decrease in other tax expense of $0.1 million.
Previous report
Research and development expenses
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Advertising and marketing expenses
Previous report
Advertising and marketing expenses for the nine months ended September 30, 2025 increased by $2.4 million, or 178.8%, compared to the nine months ended September 30, 2024. The increase in advertising and marketing expenses was due to the Company’s presence at the Game Developers Conference (“GDC”) during the nine months ended September 30, 2025, and increased advertising campaigns for ourARK: Aquatica DLCandWandering Wizard titles andSaltyTVapplication and related offerings in 2025.
Previous report
Impairment of film assets for the nine months ended September 30, 2025 increased by $0.8 million, or 100.0%, compared to the nine months ended September 30, 2024. The increase in impairment of film assets was due to the Company’s underperformance of certain short films and changes in the market conditions affecting expected future cash flow during the nine months ended September 30, 2025. There were no such impairments during the nine months ended September 30, 2024.
Previous report
Interest income
Previous report
Interest income was $0.6 million and $0.2 million for the nine months ended September 30, 2025 and September 30, 2024, respectively. The increase was due to the interest portion of IRS refunds received during the nine months ended September 30, 2025.
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Interest expense
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Other income
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Other income decreased by $0.3 million for the nine months ended September 30, 2025, in comparison to the nine months ended September 30, 2024. The decrease is due to the recognition of a $0.5 million expense attributable from the revaluation of warrant liabilities and recognized litigation revenues of $0.1 million related to a revenue share agreement resulting for a settlement of Angela Games in the nine months ended September 30, 2025. This is partially offset by the revaluation of the convertible notes of $0.3 million during the nine months ended September 30, 2025.
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Provision for income taxes
Previous report
The Company had provision of income taxes of $10.8 million and $0.3 million for the nine months ended September 30, 2025 and 2024, respectively. This is primarily due to the impact of the valuation allowance recorded against U.S. net deferred tax assets. Our effective income tax rate was (69.7%) and 27.6% during the nine months ended September 30, 2025 and 2024, respectively.
Previous report
Units sold increased during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, by 1.3 million units, or 38.7%. The Company’s units sold increased due to an increase in sales ofARK: Survival Evolvedand its related DLC’s of 0.8 million units*,and an increase in sales ofARK: Survival Ascendedand its related DLC’s of 0.7 million units. This increase was partially offset by the decrease of units sold ofBellwright*of 0.2 million during the nine months ended September 30, 2025.
Previous report
For the nine months ended September 30, 2025, bookings increased by $8.4 million, or 14.3%, compared to the nine months ended September 30, 2024, because of the releases ofARK: Survival AscendedDLCAstraeosin the first quarter of 2025, sales promotions that were the first of their kind onARK: Survival Evolvedin 2025, the release ofARK: Lost Colony to presale in 2025, and the release ofARK: Aquatica.
Previous report
For the nine months ended September 30, 2025, EBITDA decreased by $17.2 million, or 1,053.9%, compared to the nine months ended September 30, 2024, primarily because of an increase in net loss of $27.1 million, a decrease in interest expense of $0.2 million, partially offset by an increase in provision for income taxes of $10.5 million and increase in interest income and interest income – related parties of $0.4 million.
Previous report
In September 2022, we filed a Registration Statement on Form S-1 with the United States Securities and Exchange Commission (the “SEC”) in connection with our initial public offering (the “IPO”). As of the effective date of the Registration Statement, we became the parent company of Snail Games USA and a holding company, with our principal asset consisting of all the shares of common stock of Snail Games USA.
Previous report
In the IPO, we issued 3,000,000 shares of our Class A common stock and net proceeds from the issuance were distributed to Snail Games USA in November 2022 in the amount of $12.0 million. In connection with the IPO, $1.0 million of the net proceeds were remitted to an escrow account which was held to provide a source of funding for our indemnification obligations to the underwriters. The amount in escrow was released to the Company’s unrestricted cash and cash equivalents in November 2023.
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Revolving Loan
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2023 Note Payable
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In July 2023, the Company entered into a cooperation agreement with its IDC vendor. The Company agreed to make the vendor the official server host ofArk: Survival Evolved and future iterations and sequels of the game for a period of 7 years. In return, the vendor has agreed to provide the Company with funds in cash of up to $3.0 million without discount and free of charges and costs to the Company. The funds were repaid in monthly installments starting in November 2023 and were based on 20% of the gross monthlyARK: Survival Ascendedrevenues. The Company has imputed interest at 8.0% on draws made. As of December 31, 2024, we had repaid the remaining $1.5 million outstanding under the Note Payable.
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Deferred Revenue
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Our mission is to provide high-quality entertainment experiences to audiences around the world. We are a leading, global independent developer and publisher of interactive digital entertainment for consumers around the world. We have built a premier portfolio of premium games designed for use on a variety of platforms, including consoles, PCs, and mobile devices.ARK: Survival Evolved has been a top-25 selling game on the Steam platform by gross revenue in each year we released anARK DLC. Our expertise in technology, in-game ecosystems and monetization of online multiplayer games has enabled us to assemble a broad portfolio of intellectual property across multiple media formats and technology platforms. Our flagship franchise from which we generate the substantial majority of our revenues,ARK, is a leader within the sandbox survival genre with 107.4 million console and PC installs through September 30, 2025. See below for discussion of key performance metrics and non-GAAP measures. In the three and nine months ended September 30, 2025,ARK: Survival Evolved andARK: Survival Ascendedcombined for an average total of 216,000 and 233,000 daily active users (“DAUs”) on the Steam and Epic platforms, as compared to 210,000 and 212,000 in the three and nine months ended September 30, 2024, respectively. We define “daily active users” as the number of unique users who play any given game on any given day. For the three months ended September 30, 2025 and 2024, we generated 88.4% and 88.7%, respectively, of our revenues from theARK franchise. For the nine months ended September 30, 2025 and 2024, we generated 90.3% and 82.0%, respectively, of our revenues from theARKfranchise.
Current wording
Our mission is to provide high-quality entertainment experiences to audiences around the world. We are a leading, global independent developer and publisher of interactive digital entertainment for consumers around the world. We have built a premier portfolio of premium games designed for use on a variety of platforms, including consoles, PCs, and mobile devices.ARK: Survival Evolved,which has consistently ranked among top-grossing titles on Steam. Our expertise in technology, in-game ecosystems and monetization of online multiplayer games has enabled us to assemble a broad portfolio of intellectual property across multiple media formats and technology platforms. Our flagship franchise from which we generate the substantial majority of our revenues,ARK, is a leader within the sandbox survival genre with 110.6 million console and PC installs through March 31, 2026. See below for discussion of key performance metrics and non-GAAP measures. In the three months ended March 31, 2026,ARK: Survival Evolved andARK: Survival Ascendedcombined for an average total of 244,000 daily active users (“DAUs”) on the Steam and Epic platforms, as compared to 243,000 in the three months ended March 31, 2025. We define “daily active users” as the number of unique users who play any given game on any given day. For the three months ended March 31, 2026 and 2025, we generated 85.7% and 91.6%, respectively, of our revenues from theARK franchise.
Previous wording
Our dedication to providing audiences with high-quality entertainment experiences utilizing the latest gaming technology has produced strong user engagement, continued revenue growth, and increased cash flows. Through September 30, 2025, ourARK franchise game has been played for 4.2 billion hours with an average playing time per user of 161 hours and with the top 21.4% of all players spending over 100 hours in the game, according to data from the Steam platform. For the three months ended September 30, 2025 and 2024, our net revenue was $13.8 million and $22.5 million, respectively. For the nine months ended September 30, 2025 and 2024, our net revenue was $56.1 million and $58.3 million, respectively. During the three months ended September 30, 2025, approximately 33.2% of our revenue came from consoles, 49.5% from PC and 13.1% from mobile as compared to 44.3% from consoles, 45.6% from PC and 4.6% from mobile during the three months ended September 30, 2024. During the nine month ended September 30, 2025, approximately 39.9% of our revenue came from consoles, 46.1% came from PC and 11.0% from mobile as compared to 41.7% from consoles, 46.7% from PC and 5.4% from mobile platforms during the nine month ended September 30, 2024. We had a net loss of $7.9 million compared to a net income of $0.2 million, for the three months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025, we had a net loss of $26.4 million as compared to net income of $0.7 million for the nine months ended September 30, 2024.
Current wording
Our dedication to providing audiences with high-quality entertainment experiences utilizing the latest gaming technology has produced strong user engagement, continued revenue growth, and increased cash flows. Through March 31, 2026, ourARK franchise game has been played for 4.4 billion hours with an average playing time per user of 160 hours and with the top 21.3% of all players spending over 100 hours in the game, according to data from the Steam platform. For the three months ended March 31, 2026 and 2025, our net revenue was $27.3 million and $20.1 million, respectively. During the three months ended March 31, 2026, approximately 30.3% of our revenue came from consoles, 62.9% from PC and 5.3% from mobile as compared to 41.3% from consoles, 44.8% from PC and 11.7% from mobile during the three months ended March 31, 2025. We had a net income of $2.1 million compared to a net loss of $1.9 million, for the three months ended March 31, 2026 and 2025, respectively.
Previous wording
We continuously evaluate and invest in content strategy to improve and innovate our games and features and to develop current technological platforms. We are currently actively investing in expanding our gaming pipeline as well as developing media related to our gaming intellectual property. We also continue to invest to grow our micro-influencer platform,NOIZ, by attracting new influencers and brand customers. We have established a new division internally under the Interactive Films brand. This division will focus on creating content in the vertical short film segment of the digital entertainment market. The mobile application has already launched on iOS and Android platforms. As of September 30, 2025, we have released sixty-seven short film dramas including licensed films from external organizations and expect a consistent roll out of new short film dramas.
Current wording
We continuously evaluate and invest in content strategy to improve and innovate our games and features and to develop current technological platforms. We are currently actively investing in expanding our gaming pipeline as well as developing media related to our gaming intellectual property. We also continue to invest to grow our micro-influencer platform,NOIZ, by attracting new influencers and brand customers. We have established a new division internally under the Interactive Films brand. This division will focus on creating content in the vertical short film segment of the digital entertainment market. The mobile application has already launched on iOS and Android platforms. As of March 31, 2026, we have released over 250 short film dramas on theSaltyTVapp. We expect a consistent roll out of new short film dramas. Short film dramas include internally produced and licensed films from external organizations.
Previous wording
We have experienced significant growth in our number of downloads over the last several years. We have sold 54.6 million units between January 1, 2016 and September 30, 2025. During the three months ended September 30, 2025, we sold 1.1 million units consistent with 1.1 million in the three months ended September 30, 2024. Our video games provide highly engaging, differentiated entertainment experiences where the combination of challenge and progress drives player engagement, high average player times, and long-term franchise value. The success of our franchise hinges on our ability to keep our current players engaged while also growing our user base by innovating our platform and monetizing new offerings. The degree to which gamers are willing to engage with our platform is driven by our ability to create interactive and unique content that will enhance the game-play experience. We sell DLCs which are supplementary to our master games and expand the gaming universe to continuously evolve the game and retain players. Our master games are the base versions of a specific title, for example,ARK: Survival Evolved is our master game andARK: Genesis is a DLC.
Current wording
We have experienced significant growth in our number of downloads over the last several years. We have sold 58.4 million units between January 1, 2016 and March 31, 2026. During the three months ended March 31, 2026, we sold 2.2 million units compared to 1.5 million in the three months ended March 31, 2025. Our video games provide highly engaging, differentiated entertainment experiences where the combination of challenge and progress drives player engagement, high average player times, and long-term franchise value. The success of our franchise hinges on our ability to keep our current players engaged while also growing our user base by innovating our platform and monetizing new offerings. The degree to which gamers are willing to engage with our platform is driven by our ability to create interactive and unique content that will enhance the game-play experience. We sell DLCs which are supplementary to our master games and expand the gaming universe to continuously evolve the game and retain players. Our master games are the base versions of a specific title, for example,ARK: Survival Evolved is our master game andARK: Genesis is a DLC.
Previous wording
We derive nearly all of our revenue from third-party distribution platforms, these include but are not limited to, Xbox Live and Game Pass, PlayStation Network, Steam, Epic Games Store, the Apple App Store, the Google Play Store, My Nintendo Store and the Amazon Appstore. These digital distribution platforms have policies that may impact our reachability to our potential audience, including the discretion to amend their terms of service, which could affect our current operations and our financial performance. As we expand to new markets, we anticipate similar relationships with additional distribution partners that could similarly impact our performance.
Current wording
We derive nearly all of our revenue from third-party distribution platforms, these include but are not limited to, Xbox Live and Game Pass, PlayStation Network, Steam, Epic Games Store, the Apple App Store, the Google Play Store and My Nintendo Store. These digital distribution platforms have policies that may impact our reachability to our potential audience, including the discretion to amend their terms of service, which could affect our current operations and our financial performance. As we expand to new markets, we anticipate similar relationships with additional distribution partners that could similarly impact our performance.
Previous wording
To bring more entertainment to our users, our short film mobile application,SaltyTV, brings exclusive, original stories from heart-racing thrillers to jaw-dropping romances to our viewers. We have released sixty-seven short film dramas through September 30, 2025 and expect a consistent roll out of new short film dramas throughout 2025 and beyond. In a strategic step forward in advancing the short-film business line, Snail Inc. subsidiary Interactive Films signed a Memorandum of Understanding (MOU) with Mega Matrix Inc. (NYSE American: MPU) for a joint development, production, and global distribution of short dramas. Furthermore, we expanded the short film dramas’ product scope with the release of a new game based on the produced stories; The Fame Game: Welcome to Hollywood, an adventure that follows an up-and-coming actor as he navigates the complexities of romance, ambition, and the unexpected truths hiding beneath the red carpet.
Current wording
We continue to build on our short film mobile application,SaltyTV, to bring more exclusive, original stories from heart-racing thrillers to jaw-dropping romances to our viewers. We have released over 250 short film dramas through March 31, 2026, on theSaltyTVapp. We expect a consistent roll out of new short film dramas throughout 2026 and beyond.
Previous wording
We primarily derive revenue from the sale of our games through various gaming platforms. Through these platforms, users can download our games and, for certain games, purchase virtual items to enhance their game-playing experience. We offer certain software products through third-party digital storefronts, such as Xbox Live and Game Pass, PlayStation Network, Steam, Epic Games Store, the Apple App Store, the Google Play Store, My Nintendo Store and the Amazon Appstore, and certain retail distributors.
Current wording
We primarily derive revenue from the sale of our games through various gaming platforms. Through these platforms, users can download our games and, for certain games, purchase virtual items to enhance their game-playing experience. We offer certain software products through third-party digital storefronts, such as Xbox Live and Game Pass, PlayStation Network, Steam, Epic Games Store, the Apple App Store, the Google Play Store and My Nintendo Store, and certain retail distributors.
Previous wording
Impairment of film assets consists of costs related to short films produced by Snail. When projected future cash flows were no longer expected to recover from the carrying value of film projects, we recognized an impairment charge to write down the assets in full, or in part, to their estimated fair value. Impairments during the period primarily resulted from changes in marketing strategies, underperformance of certain titles, or shifts in market demand. These charges negatively impact operating income and reflect our continuous assessment of content performance in a rapidly evolving landscape.
Current wording
Impairment expenses consists of costs related to short films and game titles produced or licensed by Snail. When projected future cash flows were no longer expected to recover from the carrying value of film projects and game licenses, we recognize an impairment charge to write down the assets in full, or in part, to their estimated fair value. Impairments during the period primarily resulted from changes in marketing strategies, underperformance of certain titles, or shifts in market demand. These charges negatively impact operating income and reflect our continuous assessment of content performance in a rapidly evolving landscape.
Previous wording
The provision for income taxes consists of current income taxes in the various jurisdictions where we are subject to taxation, primarily the United States, as well as deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities in each of these jurisdictions for financial reporting purposes and the amounts used for income tax purposes. Under current U.S. tax law, the federal statutory tax rate applicable to corporations is 21%. Our effective tax rate of 16.6% differed from the federal statutory tax rate of 21% primarily due to state income taxes, foreign withholding taxes, and permanent differences.
Current wording
The provision for income taxes consists of current income taxes in the various jurisdictions where we are subject to taxation, primarily the United States, as well as deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities in each of these jurisdictions for financial reporting purposes and the amounts used for income tax purposes. Under current U.S. tax law, the federal statutory tax rate applicable to corporations is 21%. Our effective tax rate of 5% differed from the federal statutory tax rate of 21% primarily due to state income taxes, permanent differences, and change in valuation allowance.
Previous wording
Cost of revenues for the three months ended September 30, 2025 included a decrease of $2.0 million in software license royalties – related parties, attributable to the deferred revenues recognition ofARKsales, a decrease of $0.3 million in software license royalties, partially offset by an increase in engine fees of $1.0 million due to a one time engine fee expense, an increase of $0.5 million in license and amortization due to the increased depreciable base of intangible assets in 2025, an increase of $0.5 million in internet, server and data center and an increase in merchant fees of $0.3 million related to the increasedARK: Ultimate Mobile Editionrevenues.
Current wording
Cost of revenues for the three months ended March 31, 2026 was due to an increase of $1.1 million in software license royalties – related parties, resulting from increasedARKsales, an increase in license and amortization– related party of $0.3 million due to the release of DLCLost Colony, an increase in license and amortization of $0.1 million primarily due to a larger depreciable base, and an increase in engine fees of $0.2 million, partially offset by a decrease in merchant fees of $0.2 million related toARK: Ultimate Mobile Editionrevenues.
Previous wording
General and administrative expenses for the three months ended September 30, 2025 increased by $1.0 million, or 26.0%, compared to the three months ended September 30, 2024. The increase in general and administrative expenses was due to an increase in salaries and wages of $0.5 million, an increase in contractors expense of $0.4 million, an increase in legal and professional fees of $0.1 million, an increase in insurance costs of $0.1 million and an increase in office expenses of $0.1 million, partially offset by a decrease in other tax expenses of $0.2 million.
Current wording
General and administrative expenses for the three months ended March 31, 2026 decreased by $0.3 million, or 6.3%, compared to the three months ended March 31, 2025. The decrease in general and administrative expenses was due to a decrease in salaries and wages of $0.6 million and a decrease in rent expense of $0.1 million, partially offset by an increase in contractors expense of $0.4 million.
Previous wording
Research and development expenses for the nine months ended September 30, 2025 increased by $3.1 million, or 41.4%, compared to the nine months ended September 30, 2024. The increase in research and development expenses was due to the outsourced development ofFor the StarsandNine Yin Sutra: Immortalpaid through Suzhou Snail and an increase in internal research and development salaries as the Company continues to expand its internal development team*.*
Current wording
Research and development expenses for the three months ended March 31, 2026 increased by $0.4 million, or 11.2%, compared to the three months ended March 31, 2025. The increase in research and development expenses was due to an increase in internal research and development salaries as the Company continues to expand its internal development team*.*
Previous wording
Advertising and marketing expenses for the three months ended September 30, 2025 increased by $0.4 million, or 78.4%, compared to the three months ended September 30, 2024. The increase in advertising and marketing expenses was due to the increased advertising campaigns for ourARK: Aquatica DLC andSaltyTVapplication and related offerings.
Current wording
Advertising and marketing expenses for the three months ended March 31, 2026 decreased by $0.4 million, or 33.5%, compared to the three months ended March 31, 2025. The decrease in advertising and marketing expenses was primarily attributable to lower costs associated with the Company’s presence at Game Developers Conference (“GDC”).
Previous wording
Impairment of film assets for the three months ended September 30, 2025 increased by $0.3 million, or 100.0%, compared to the three months ended September 30, 2024. The increase in impairment of film assets was due to the underperformance of specific film assets and changes in the market conditions affecting expected future cash flow during the three months ended September 30, 2025.
Current wording
Impairment of film assets for the three months ended March 31, 2026 increased by $0.1 million, or 100.0%, compared to the three months ended March 31, 2025. The increase in impairment of film assets was due to the underperformance of specific film assets and changes in the market conditions affecting expected future cash flow during the three months ended March 31, 2026.
Previous wording
Interest expense primarily related to our outstanding indebtedness with third-party lenders. Interest expense increased slightly for the three months ended September 30, 2025 due to the increased the average debt during the three months ended September 30, 2025.
Current wording
Interest expense primarily related to our outstanding indebtedness with third-party lenders. Interest expense increased slightly for the three months ended March 31, 2026 due to the increased average debt during the three months ended March 31, 2026.
Previous wording
Other income was $0.1 million for the three months ended September 30, 2025 and 2024. There was an increase in the revaluation of convertible notes of $0.2 million that was offset by a decrease in the revaluation of warrant liabilities of $0.3 million in the three months ended September 30, 2025 in comparison to the recognition of $0.1 million in other income during the three months ended September 30, 2024 for the revaluation of the Company’s warrant liabilities.
Current wording
Other income was $0.4 million and $0.8 million for the three months ended March 31, 2026 and 2025, respectively. There was a decrease in the revaluation of convertible notes of $0.2 million and a decrease in the revaluation of warrant liabilities of $0.2 million in the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
Previous wording
The Company had an income tax benefit of $1.6 million and an income tax provision of $0.2 million for the three months ended September 30, 2025 and 2024, respectively. This is primarily due to the Company being in a net loss position during the three months ended September 30, 2025 while recognizing a net income in the three months ended September 30, 2024. Our effective income tax rate was 16.6% and 40.4% during the three months ended September 30, 2025 and 2024, respectively.
Current wording
The Company had an income tax provision of $0.1 million and an income tax benefit of $1.5 million for the three months ended March 31, 2026 and 2025, respectively. This is primarily due to the utilization of net operating loss carryforwards during three months ended March 31, 2026, compared to being in a net loss position during the three months ended March 31, 2025. Our effective income tax rate was 5% and 43% during the three months ended March 31, 2026 and 2025, respectively.
Previous wording
Units sold remained consistent at 1.1 million during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The Company’s units sold increased due to sales of ARK franchise IPs by 0.1 million units. This was offset by the decline in sales of ARK: Survival Evolved and its related DLC’s of 0.1 million units.
Current wording
Units sold increased during the three months ended March 31, 2026, by 0.7 million units or 42.6%, as compared to the three months ended March 31, 2025. The Company’s units sold increased due to sales ofARK franchise IPs by 0.5 million units and an increase in sales ofBellwrightof 0.2 million units.
Previous wording
For the three months ended September 30, 2025, bookings increased by $1.5 million or 9.3%, compared to the three months ended September 30, 2024, driven by various sales promotions in 2025 that did not occur in 2024, specifically aroundARK: Survival Evolvedand the release ofARK: Lost Colony andARK: Aquatica in 2025.
Current wording
For the three months ended March 31, 2026, bookings increased by $4.7 million or 21.1%, compared to the three months ended March 31, 2025, driven by improved sales promotions in 2026 compared to 2025, continued benefit from the December 2025ARK: Lost Colony DLCrelease andBellwright’shighly regarded content update in late 2025.
Previous wording
We define EBITDA as net income (loss) before (i) interest income, (ii) interest expense, (iii) (benefit from) provision for income taxes, and (iv) depreciation expense, property and equipment.
Current wording
We define EBITDA as net income (loss) before (i) interest expense, (ii) provision for (benefit from) income taxes, and (iii) depreciation expense, property and equipment.
Previous wording
For the three months ended September 30, 2025, EBITDA decreased by $10.2 million, or 2,038.6%, compared to the three months ended September 30, 2024, primarily because of an increase in net loss of $8.1 and a decrease in the provision for income taxes of $1.8 million, partially offset an increase in interest income and interest income – related parties of $0.4 million.
Current wording
For the three months ended March 31, 2026, EBITDA increased by $5.7 million, or 173.3%, compared to the three months ended March 31, 2025, primarily because of an increase in net income of $4.1 million and a decrease in the benefit from income taxes of $1.6 million.
Previous wording
Our primary sources of liquidity are the cash flows generated from our operations, that are currently available as unrestricted cash. Our unrestricted cash was $12.3 million and $7.3 million as of September 30, 2025 and December 31, 2024, respectively.
Current wording
Our primary sources of liquidity are the cash flows generated from our operations, that are currently available as unrestricted cash. Our unrestricted cash was $14.3 million and $8.6 million as of March 31, 2026 and December 31, 2025, respectively.
Previous wording
Our restricted cash and cash equivalents were $0.9 million as of September 30, 2025 and December 31, 2024. Our restricted cash primarily consists of time deposits and is used as security for certain of our debt instruments and to secure standby letters of credit with certain of our landlords.
Current wording
Our restricted cash and cash equivalents were $1.9 and $1.9 million as of March 31, 2026 and December 31, 2025, respectively. Our restricted cash primarily consists of time deposits and is used to secure standby letters of credit with certain of our landlords and hold collateral in reserve related to our revolving line of credit.
Previous wording
As of September 30, 2025, our 2021 Revolving Loan has a balance of $3.0 million and is due and payable in June 2026. Additionally, in February 2025 the Company issued convertible notes with a par value of $3.3 million which mature in February 2026. The Company also obtained a term loan note of $3.5 million in June 2025 with a maturity date of June 2028. In concurrence with the registration of the 2023 convertible notes shares the Company registered shares for distribution in an equity line of credit. The Company has the right, but not the obligation, to sell up to $5.0 million in Class A common stock to the investor. The Company was not in compliance with its debt covenants related to the 2021 Revolving Note, 2021 Promissory note and 2025 Term Loan for the trailing twelve months ended September 30, 2025. The Company received a waiver for the covenant breach during the trailing twelve months ended September 30, 2025. As such, the Company has classified the long-term portion of its promissory note and term loan as current. There is no guarantee that the Company will receive a waiver from the lender if the covenants of the loans are breached in the future. In the event of a future breach of the debt covenants the lender has the right, but not the obligation, to declare all or any part of the debt as due immediately and cease making any advances or extend any further credit to the Company.
Current wording
As of March 31, 2026, our 2021 Revolving Loan has a balance of $2.5 million and is due and payable in March 2030. Additionally, in February 2025 we issued convertible notes with a stated value of $3.3 million which matured in February 2026 and have been fully repaid as of March 31, 2026. We obtained a term loan note of $3.5 million in June 2025 with a maturity date of June 2028. In October 2025, we issued a convertible note with a stated value of $2.2 million, which matures in October 2026; and in November 2025, we issued a convertible note with a par value of $1.1 million, which matures in November 2026. Additionally, we have available to issue up to $4.4 million of convertible notes to our existing noteholders. We are in compliance with our debt covenants related to the 2021 Revolving Loan, 2021 Promissory note and 2025 Term Loan for the trailing twelve months ended March 31, 2026. For the trailing twelve months ended December 31, 2025, the Company was in compliance with its debt covenants related to the 2021 Revolving Note, 2021 Promissory Note and 2025 Term Loan. There is no guarantee we will receive a waiver from the applicable lender if the covenants of the loans are breached in the future. In the event of a future breach of the debt covenants the lender has the right, but not the obligation, to declare all or any part of the debt as due immediately and cease making any advances or extend any further credit to us.
Previous wording
The Company has raised capital through the issuance of the convertible notes, equity line of credit, and the distribution agreement entered into with our retail partner which provided advanced royalties. For example, on October 24, 2025, the Company entered into a Securities Purchase Agreement with CROM Structured Opportunities Fund I, LP (“CROM”), whereby it issued an unsecured convertible note with a principal amount of $2.2 million for total gross proceeds of $2.0 million, reflecting a 10% original issue discount. Nonetheless, we may need to raise additional capital and issue registered shares to draw on an equity line of credit if needed. The need for additional capital depends on many factors, including, among other things, whether we can successfully renegotiate the terms of our debt arrangements, the rate at which our business grows, demands for working capital, revenue generated from existing DLCs and game titles and launches of new DLCs and new game titles, and any acquisitions that we may pursue. From time to time, we could be required, or may otherwise attempt, to seek additional sources of capital, including, but not limited to, equity and/or debt financings. We cannot provide assurance that we will be able to successfully access any such equity or debt financings, that the required equity or debt financings would be available on terms acceptable to us, if at all, or that any such financings would not be dilutive to our stockholders.
Current wording
The Company has raised capital through the issuance of the convertible notes and the distribution agreement entered into with our retail partner which provided advanced royalties. We may need to raise additional capital and issue registered shares to draw on an equity line of credit if needed. The need for additional capital depends on many factors, including, among other things, whether we can successfully renegotiate the terms of our debt arrangements, the rate at which our business grows, demands for working capital, revenue generated from existing DLCs and game titles and launches of new DLCs and new game titles, and any acquisitions that we may pursue. From time to time, we could be required, or may otherwise attempt, to seek additional sources of capital, including, but not limited to, equity and/or debt financings. We cannot provide assurance that we will be able to successfully access any such equity or debt financings, that the required equity or debt financings would be available on terms acceptable to us, if at all, or that any such financings would not be dilutive to our stockholders.
Previous wording
Our current unrestricted cash position of approximately $12.3 million, and our expected revenue receipts will allow the Company to continue operations beyond the next 12 months and service its current debts.
Current wording
Our current unrestricted cash position of approximately $14.3 million, and our expected revenue receipts will allow the Company to continue operations beyond the next 12 months and service its current debts.
Previous wording
Net cash flows provided by operating activities for the nine months ended September 30, 2025 increased by $2.2 million as compared to the nine months ended September 30, 2024, which resulted primarily from an increase in accounts payable and accounts payable – related parties of $15.6 million, an increase in noncash reconciling items of $13.4 million, an increase in deferred revenue of $11.9 million, an increase in prepaid expenses related party and prepaid expenses and other current assets of $1.7 million, increase in accrued expenses and other liabilities of $0.9 million, partially offset by an increase in net accounts receivable and account receivable related party of $13.6 million, an decrease in net loss of $27.1 million, and an increase in other noncurrent assets of $0.7 million.
Current wording
Net cash flows provided by operating activities for the three months ended March 31, 2026 increased by $9.4 million as compared to the three months ended March 31, 2025, which resulted primarily from an increase in net income of $4.2 million, an increase in prepaid taxes of $3.6 million, an increase in deferred taxes of $2.0 million, an increase in accrued expenses and other liabilities of $1.1 million and an increase in prepaid expenses related party and prepaid expenses and other current assets of $1.0 million, partially offset by a decrease in deferred revenue of $2.5 million.
Previous wording
The Company had a net loss and net income of ($26.4) million and $0.7 million, for the nine months ended September 30, 2025 and 2024, respectively, representing a decrease of $27.1 million. The decrease was primarily due to an increase in provision for income taxes of $10.5 million, increase in general and administrative expenses of $4.3 million, an increase in research and development of $3.1 million, an increase in advertising and marketing of $2.4 million, a decrease in revenue of $2.2 million, an increase in impairment of film assets of $0.8 million, an increase in cost of revenues of $3.9 million, partially offset by an increase in total other income of $0.1 million.
Current wording
The Company had a net income of $2.1 million and net loss of $1.9 million, for the three months ended March 31, 2026 and 2025, respectively, representing an increase of $4.0 million. The increase was primarily due to an increase in revenue of $7.2 million and a decrease in total operating expense of $0.3 million, partially offset by an increase in provision for income taxes of $1.6 million, an increase in cost of revenues of $1.4 million and a decrease in total other income of $0.5 million
Previous wording
Non-cash reconciling items were $13.1 million and ($0.4) million for the nine months ended September 30, 2025 and 2024, respectively, representing an increase of $13.5 million. The increase in the non-cash reconciling items was due to an increase in deferred taxes of $10.8 million, an increase in stock based compensation expense (income) of $1.2 million, an increase in impairment charges of $0.8 million, an increase in the gain of change in fair value of warrant liabilities of $0.5 million, an increase in amortization expense of $1.1 million, partially offset by an increase in the loss on change in fair value of convertible notes of $0.3 million, and a decrease in accretion of convertible debt of $0.2 million.
Current wording
Non-cash reconciling items were $0.3 million and ($1.6) million for the three months ended March 31, 2026 and 2025, respectively, representing an increase of $1.9 million. The increase in the non-cash reconciling items was due to an increase in deferred taxes of $2.0 million, an increase in amortization expense of $0.3 million, a decrease in the gain of change in fair value of warrant liabilities of $0.2 million and an increase in the loss on change in fair value of convertible notes of $0.2 million, partially offset by a decrease in stock compensation expense of $0.8 million.
Previous wording
Our accounts receivable - related party represent revenues attributable to certain mobile games that, for administrative reasons, were collected on our behalf by SDE Inc. (“SDE”), an affiliated entity, from fiscal year 2018 through 2021. SDE no longer collects such payments on our behalf; all such payments are received directly from the platforms through which we offer the relevant games. As of September 30, 2025 and December 31, 2024, the net outstanding balances of receivables due from SDE were $3.0 million and $7.5 million, respectively. We expect accounts receivables owed to us by SDE will be repaid within the next fiscal year and intend to exercise all legally available means of collection. The Company and SDE have entered into an agreement to offset uncollected amounts against monthly payments due to SDE for operating expenses and costs of revenue. See Note 5-Accounts (Payable) Receivable - Related Party to our unaudited condensed consolidated financial statements included in this Quarterly Report.
Current wording
Our accounts receivable – related party represent revenues attributable to certain mobile games that, for administrative reasons, were collected on our behalf by SDE Inc. (“SDE”), an affiliated entity, from fiscal year 2018 through 2021. SDE no longer collects such payments on our behalf; all such payments are received directly from the platforms through which we offer the relevant games. As of March 31, 2026 and December 31, 2025, the net outstanding balances of receivables due from SDE were $0.0 million and $1.5 million, respectively. The Company and SDE have entered into an agreement to offset uncollected amounts against monthly payments due to SDE for operating expenses and costs of revenue. See Note 5-Accounts (Payable) Receivable - Related Party to our unaudited condensed consolidated financial statements included in this Quarterly Report.
Previous wording
Net cash flows used in investing activities for the nine months ended September 30, 2025 were $4.1 million compared to none in the nine months ended September 30, 2024. Investing activities for the nine months ended September 30, 2025 included $0.3 million for the acquisition of software applications, $3.0 million for the acquisition of license rights to certain titles, and $0.8 million in capitalized research and development expenditures for the development of software to be sold or marketed.
Current wording
Net cash flows used in investing activities for the three months ended March 31, 2026 were $0.2 million compared to $1.9 million in the three months ended March 31, 2025. Investing activities for the three months ended March 31, 2026 included $0.2 million for the acquisition of license rights to certain titles that are capitalized as research and development expenditures to be sold or marketed. Investing activities for the three months ended March 31, 2025 included $0.3 million for the acquisition of software applications, $1.4 million for the acquisition of license rights to certain titles, and $0.2 million in capitalized research and development expenditures for the development of software to be sold or marketed.
Previous wording
Net cash flows provided by (used in) financing activities for the nine months ended September 30, 2025 were $4.9 million compared to ($6.7) million for the nine months ended September 30, 2024. Financing activities for the nine months ended September 30, 2025 included $3.0 million from the issuance of convertible notes, $3.5 million obtained from the new term loan, and $0.2 million received upon the exercise of warrants during the period. This was partially offset by the repayments of the convertible notes of $1.4 million and repayments on the notes payable of $0.3 million. Financing activities for the nine months ended September 30, 2024 included debt repayments of $6.4 million and $0.3 million in payments of capitalized offering costs in accounts payable.
Current wording
Net cash flows (used in) provided by financing activities for the three months ended March 31, 2026 were ($4.3) million compared to $3.1 million for the three months ended March 31, 2025. Financing activities for the three months ended March 31, 2026 included a $2.5 million repayment on the 2021 Revolving Loan, $1.5 million repayment on the February 2025, October 2025 and November 2025 Convertible Notes and a $0.3 million repayment on the 2021 Promissory Note and 2025 Term Loan. Financing activities for the three months ended March 31, 2025 included $3.0 million from the issuance of convertible notes and $0.2 million received upon the exercise of warrants during the period.
Previous wording
On May 8, 2025, we filed a Registration Statement on Form S-1 with the SEC in connection with our Class A shares of common stock underlying the convertible notes issued in the aggregate principal amount of $3.3 million maturing February 2026. The notes bear a 5% interest rate, repayable in 10 monthly installments starting May 21, 2025. These notes are convertible into Class A common stock at $5.00 per share.
Current wording
On December 15, 2025, we filed a Registration Statement on Form S-1 with the SEC registering shares of our Class A common stock underlying two convertible notes issued in the aggregate principal amount of $3.3 million. The first note, issued October 24, 2025, has a principal amount of $2.2 million for proceeds of $2.0 million, bears a 5% interest rate, repayable in 10 monthly installments starting January 24, 2026 and maturing October 24, 2026. The second note, issued November 26, 2025, has a principal amount of $1.1 million for proceeds of $1.0 million, bears a 5% interest rate, repayable in 10 monthly installments starting February 26, 2026 and maturing November 26, 2026. These notes are convertible into Class A common stock at $5.00 per share, subject to certain exceptions as discussed below.
Previous wording
In December 2018, we entered into a revolving loan and security agreement with a financial institution for a revolving note in the amount of $5.5 million. On June 17, 2021, we amended and restated our revolving loan and security agreement (the “2021 Revolving Loan”) to increase our revolving line of credit to $9.0 million. On June 21, 2023, the Company amended its revolving loan agreement and decreased the maximum balance from $9.0 million to $6.0 million. As amended, the 2021 Revolving Loan matured on December 31, 2023 and bore interest at a rate equal to the prime rate less 0.25% and a floor rate of 6.50%. Interest is due and payable under the 2021 Revolving Loan on a monthly basis. The Company amended the revolving loan agreement in December 2024, to extend the 2021 Revolving Loan maturity date to June 2026. As of September 30, 2025, we had borrowings of $3.0 million outstanding under our 2021 Revolving Loan.
Current wording
We have outstanding borrowings pursuant to a Third Amended and Restated Loan and Security Agreement dated June 21, 2023, with Cathay Bank, as subsequently amended on December 28, 2023, December 31, 2024, June 10, 2025, January 2, 2026, and March 16, 2026 (as so amended, the “2023 Loan Agreement”), consisting of (i) a term loan in the original principal amount of Ten Million and No/100 Dollars ($10,000,000) (the “First Term Loan”), and (ii) a revolving line of credit in the maximum principal amount of Six Million and No/100 Dollars ($6,000,000.00) (the “Revolving Loan”). As of March 31, 2026, there is no outstanding balance under the First Term Loan, and the outstanding balance under the Revolving Loan is $2,500,000. The Revolving Loan has a maximum principal balance of $5,000,000 and bears interest at a rate equal to the prime rate less 0.25% and a floor rate of 6.50%. Interest is due and payable under the Revolving Loan on a monthly basis. On and after March 31, 2027, we will no longer be permitted to borrow any further amounts under the Revolving Loan. At such time, the revolving Loan will be converted to a term loan with maturity date of March 31, 2030, and we will be required to repay any principal balance then outstanding in monthly installments.
Previous wording
In June 2025, we entered into a loan agreement with a financial institution provided for a term loan in an aggregate principal amount of $3.5 million. This loan is set to mature in June 2028, bears interest at a floating rate of 0.50% in excess of Wall Street Journal prime rate or a floor of 6.50% rate until maturity.
Current wording
In June 2025, we entered into a loan agreement with a financial institution providing for a term loan (the “2025 Term Loan”) in an aggregate principal amount of $3.5 million. This loan is set to mature in June 2028, bears interest at a floating rate of 0.50% in excess of Wall Street Journal prime rate or a floor of 6.50% rate until maturity.
Previous wording
In February 2025, the Company issued convertible notes (the “February 2025 Convertible Notes”) with an aggregate principal amount of $3,300,000 for gross proceeds of $3,000,000. The February 2025 Convertible Notes, which mature on February 21, 2026, carry an original issue discount of 10%, and are subject to a guaranteed interest equal to 5% of the principal amount. The principal and interest charges are payable in 10 equal monthly payments starting May 21, 2025. The Company is accounting for the convertible notes at fair value.
Current wording
In February 2025, we issued convertible notes (the “February 2025 Convertible Notes”) with an aggregate principal amount of $3,300,000 for gross proceeds of $3,000,000. The February 2025 Convertible Notes, which matured on February 21, 2026, carried an original issue discount of 10%, and were subject to a guaranteed interest equal to 5% of the principal amount. The principal and interest charges were payable in 10 equal monthly payments starting May 21, 2025. We have accounted for the convertible notes at fair value. As of February 28, 2026, the February 2025 Convertible Notes have been fully repaid and no amounts remain outstanding.
Previous wording
Subject to certain ownership limitations, all or portion of the then outstanding and unpaid principal and interest of the February 2025 Convertible Notes and the October 2025 Convertible Note can be converted at the option of the holder at any time into shares of the Company’s Class A common, at a conversion price of $5.00 per share, except that except that, for an aggregate of $866,250 of the conversion amount with respect to the February 2025 Convertible Notes and an aggregate of $577,500 of the conversion amount with respect to the October 2025 Convertible Note, the conversion price is equal to the lesser of $5.00 per share or 92% of the lowest daily volume weighted average price of the Class A common stock during the 5 trading days period prior the receipt of the notice of conversion. The conversion price may be adjusted for certain customary dilutive events.
Current wording
The 2025 Convertible Notes are ranked as a senior unsecured obligation of the Company with priority over all existing and future unsecured indebtedness. Subject to certain ownership limitations, all or portion of the then outstanding and unpaid principal and interest of the 2025 Convertible Notes can be converted at the option of the holder at any time into shares of our Class A common stock, at a conversion price of $5.00 per share, except that, for an aggregate of $577,500 of the conversion amount with respect to the October 2025 Convertible Note, and an aggregate of $288,750 of the conversion amount with respect to the November 2025 Convertible Note, the conversion price will be equal to the lesser of $5.00 per share or 92% of the lowest daily volume weighted average price of the Class A common stock during the 5 trading days period prior the receipt of the notice of conversion. The conversion price may be adjusted for certain customary dilutive events. We have registered the resale by the holders of the October 2025 Convertible Note and the November 2025 Convertible Note of an aggregate of 5,414,991 shares of Class A common stock issuable upon the conversion of such notes.
Previous wording
On August 24, 2023, the Company entered into a common stock purchase agreement (the “Equity Line Purchase Agreement”) and a registration rights agreement (the “Registration Rights Agreement”) with an investor, pursuant to which the investor has committed to purchase up to $5,000,000 in shares of the Company’s Class A common stock, subject to certain limitations and conditions set forth in the Equity Line Purchase Agreement. The Company shall not issue or sell any shares of common stock under the Equity Line Purchase Agreement which, when aggregated with all other shares of common stock beneficially owned by the investor, would result in beneficial ownership of more than 9.99% of the Company’s outstanding shares of common stock.
Current wording
On August 24, 2023, we entered into a common stock purchase agreement (the “Equity Line Purchase Agreement”) and a registration rights agreement (the “Registration Rights Agreement”) with an investor, pursuant to which the investor has committed to purchase up to $5,000,000 in shares of the Class A common stock, subject to certain limitations and conditions set forth in the Equity Line Purchase Agreement.
Previous wording
Under the terms of the Equity Line Purchase Agreement, the Company has the right, but not the obligation, to sell to the investor, shares of Class A common stock over the period commencing on the execution date of the Equity Line Purchase Agreement and ending on the earlier of (i) December 31, 2025, or (ii) the date on which the investor shall have purchased Securities pursuant to the Equity Line Purchase Agreement for an aggregate purchase price of the $5,000,000, provided that a registration statement covering the resale of shares of Class A common stock that have been and may be issued under the Equity Line Purchase Agreement is declared effective by the SEC. The Company has registered shares for potential issuance on exercise of the warrants, or drawing of the equity line, on Form S-1 that was declared effective on October 30, 2023. As of September 30, 2025, the Company has not sold any Class A common stock under the Equity Line Purchase Agreement, and the investor has exercised 33,333 warrants.
Current wording
We have registered shares for potential issuance on exercise of the warrants, or drawing of the equity line, on a Registration Statement on Form S-1 that was declared effective on October 30, 2023. As of March 31, 2026, we have not sold any Class A common stock under the Equity Line Purchase Agreement and the agreement has expired. The investor has exercised 33,333 warrants.
Previous wording
On August 7, 2025, we entered into an At The Market Offering Agreement (the “ATM Sales Agreement”) with H.C. Wainwright & Co., LLC, as sales agent (the “Sales Agent” or “Wainwright”), to sell its shares of Class A Common Stock from time to time, in an “at the market offering” program through Wainwright, with certain limitations on the amount of Class A Common Stock (the “Shares”) that may be offered and sold thereunder. The sales, if any, of the Shares made under the ATM Sales Agreement will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on or through the Nasdaq Capital Market (the “Nasdaq”) or on any other existing trading market for the Company’s Class A Common Stock, directly to Wainwright as principal, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, and/or in any other method permitted by law (the “Offering”).
Current wording
On August 7, 2025, we entered into an At The Market Offering Agreement (the “ATM Sales Agreement”) with H.C. Wainwright & Co., LLC, as sales agent (the “Sales Agent” or “Wainwright”) to sell shares of our Class A common stock from time to time, in an “at the market offering” program through Wainwright, with certain limitations on the amount of Class A common stock that may be offered and sold thereunder. The sales, if any, of the shares of Class A common stock made under the ATM Sales Agreement will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on or through the Nasdaq or on any other existing trading market for the Class A common stock, directly to Wainwright as principal, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, and/or in any other method permitted by law. Offers and sales of shares of Class A common stock by the Company, if any, under the ATM Sales Agreement, will be made through a prospectus supplement, dated August 7, 2025 and an accompanying base prospectus, dated September 20, 2024, contained therein (the “ATM Prospectus Supplement”), which ATM Prospectus Supplement forms a part of our shelf registration statement on Form S-3 (File 333-282030), initially filed by the Company with the SEC on September 11, 2024, and declared effective by the SEC on September 20, 2024. The aggregate market value of the shares of Class A common stock that were initially registered for sale under the ATM Prospectus Supplement was $4,500,000, which was based on the limitations of General Instruction I.B.6 of Form S-3. During the three months ended March 31, 2026, there were no sales of Class A common stock under the ATM Sales Agreement. Subsequent to March 31, 2026, we have sold 2,478,068 shares of Class A common stock under the ATM Sales Agreement for gross proceeds of $3.4 million, and approximately $1.1 million shares of Class A common stock remain available for sale.
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Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
Offers and sales of shares of Class A Common Stock by the Company, if any, under the ATM Sales Agreement, will be made through a prospectus supplement, dated August 7, 2025 and an accompanying base prospectus, dated September 20, 2024, contained therein (the “ATM Prospectus Supplement”), which ATM Prospectus Supplement forms a part of the Company’s shelf registration statement on Form S-3 (File 333-282030), initially filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”) on September 11, 2024 (the “Registration Statement”) and declared effective by the SEC on September 20, 2024. The aggregate market value of the shares of Class A Common Stock eligible for sale under the ATM Prospectus Supplement is currently $4,500,000, which is based on the limitations of General Instruction I.B.6 of Form S-3.
Previous report — wording carried elsewhere
Cost of revenues for the nine months ended September 30, 2025 and 2024 comprised the following:
Previous report — wording carried elsewhere
Other Factors Affecting Net Income (Loss)
Previous report — wording carried elsewhere
Interest expense primarily related to our outstanding indebtedness with third-party lenders. Interest expense decreased by $0.2 million for the nine months ended September 30, 2025 because of lower average debt during the nine months ended September 30, 2025.
Previous report — wording carried elsewhere
On August 7, 2025, we entered into an ATM Sales Agreement with Wainwright to sell shares of our Class A common stock from time to time, in an “at the market offering” program through Wainwright, with certain limitations on the amount of Class A common stock that may be offered and sold thereunder. The sales, if any, of the shares of Class A common stock made under the ATM Sales Agreement will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly on or through the Nasdaq Capital Market (the “Nasdaq”) or on any other existing trading market for the Class A common stock, directly to Wainwright as principal, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, and/or in any other method permitted by law.