false FY 0001886894 No No Yes Yes 25.72 20.88 P3Y

 2024-06-28

 2025-03-20

 2025-03-20

 us-gaap: NonrelatedPartyMember

 us-gaap: NonrelatedPartyMember

 us-gaap: OtherIntangibleAssetsMember

 us-gaap: OtherIntangibleAssetsMember

 us-gaap: NonrelatedPartyMember

 us-gaap: NonrelatedPartyMember

 us-gaap: OtherIntangibleAssetsMember

 us-gaap: OtherIntangibleAssetsMember

 SNAL:SnailGamesUsaIncMember

 SNAL:SnailInnovationInstituteMember

 SNAL:FrostkeepStudiosIncMember

 SNAL:EminenceCorpMember

 SNAL:WanderingWizardLlcMember

 SNAL:DonkeyCrewLimitedLiabilityCompanyMember

 SNAL:InteractiveFilmsLlcMember

 SNAL:ProjectAWKProductionsLlcMember

 SNAL:BTBXioLlcMember

 SNAL:LongTermTitleLicenseAgreementMember
 SNAL:ARKIIMember

 SNAL:DistributionAgreementMember
 SNAL:ARKSurvivalAscendedMember

 2023-07-31

 SNAL:DistributionAgreementMember

 SNAL:DistributionAgreementMember
 SNAL:ARKIIMember

 us-gaap: GeneralAndAdministrativeExpenseMember

 us-gaap: GeneralAndAdministrativeExpenseMember

 us-gaap: ResearchAndDevelopmentExpenseMember

 us-gaap: ResearchAndDevelopmentExpenseMember

 SNAL:INDIEVIncMember

 SNAL:LicenseUsageRightsMember

 SNAL:PromissoryNoteMember

 SNAL:FourCustomersMember

 SNAL:FourCustomersMember

 SNAL:CustomerOneMember

 SNAL:CustomerTwoMember

 SNAL:CustomerThreeMember

 SNAL:CustomerFourMember

 SNAL:CustomerOneMember

 SNAL:CustomerTwoMember

 SNAL:CustomerThreeMember

 SNAL:CustomerFourMember

 SNAL:CustomerOneMember

 SNAL:CustomerTwoMember

 SNAL:CustomerThreeMember

 SNAL:CustomerFourMember

 SNAL:CustomerOneMember

 SNAL:CustomerTwoMember

 SNAL:CustomerThreeMember

 us-gaap: AccountsPayableMember
 us-gaap: SupplierConcentrationRiskMember
 SNAL:OneVendorMember

 us-gaap: AccountsPayableMember
 us-gaap: SupplierConcentrationRiskMember
 SNAL:OneVendorMember

 SNAL:CostOfRevenuesAndOperatingExpensesMember
 us-gaap: SupplierConcentrationRiskMember

 SNAL:CostOfRevenuesAndOperatingExpensesMember
 us-gaap: SupplierConcentrationRiskMember

 SNAL:OmnibusIncentivePlanTwentyTwentyTwoPlanMember

 SNAL:OmnibusIncentivePlanTwentyTwentyTwoPlanMember

 SNAL:OmnibusIncentivePlanTwentyTwentyTwoPlanMember

 2022-11-10

 SNAL:SnailInnovationInstituteMember

 SNAL:SnailInnovationInstituteMember

 SNAL:BTBXioLlcMember

 SNAL:BTBXioLlcMember

 SNAL:DonkeyCrewLimitedLiabilityCompanyMember

 SNAL:DonkeyCrewLimitedLiabilityCompanyMember

 us-gaap: BuildingMember

 us-gaap: BuildingImprovementsMember

 us-gaap: LeaseholdImprovementsMember

 us-gaap: LeaseholdImprovementsMember

 us-gaap: ComputerEquipmentMember

 us-gaap: ComputerEquipmentMember

 us-gaap: FurnitureAndFixturesMember

 us-gaap: VehiclesMember

 SNAL:ConvertibleNotesWarrantsMember

 SNAL:UnderwriterWarrantsMember

 us-gaap: TransferredOverTimeMember

 us-gaap: TransferredOverTimeMember

 us-gaap: TransferredAtPointInTimeMember

 us-gaap: TransferredAtPointInTimeMember

 country: US

 country: US

 srt: EuropeMember

 srt: EuropeMember

 us-gaap: NonUsMember

 us-gaap: NonUsMember

 SNAL:ConsoleMember

 SNAL:ConsoleMember

 SNAL:PcMember

 SNAL:PcMember

 SNAL:MobileMember

 SNAL:MobileMember

 SNAL:PhysicalRetailAndOtherMember

 SNAL:PhysicalRetailAndOtherMember

 SNAL:PlatformOneMember

 SNAL:PlatformOneMember

 SNAL:PlatformTwoMember

 SNAL:PlatformTwoMember

 SNAL:PlatformThreeMember

 SNAL:PlatformThreeMember

 SNAL:PlatformFourMember

 SNAL:PlatformFourMember

 us-gaap: ServiceOtherMember

 us-gaap: ServiceOtherMember

 SNAL:SalesChannelDirectlyToConsumerDigitalOnlineServiceMember

 SNAL:SalesChannelDirectlyToConsumerDigitalOnlineServiceMember

 SNAL:SalesChannelDirectlyToConsumerMobileSaleMember

 SNAL:SalesChannelDirectlyToConsumerMobileSaleMember

 us-gaap: SalesChannelThroughIntermediaryMember

 us-gaap: SalesChannelThroughIntermediaryMember

 SNAL:DLCAndARKIPMember

 SNAL:DLCAndARKIPMember

 SNAL:DLCAndARKIPMember

 us-gaap: ImmediateFamilyMemberOfManagementOrPrincipalOwnerMember

 us-gaap: RoyaltyMember

 SNAL:InternetMember

 us-gaap: RoyaltyMember

 SNAL:InternetMember

 SNAL:RelatedPartySDEIncMember

 SNAL:RelatedPartySDEIncMember

 SNAL:SoftwareLicenseAgreementMember
 SNAL:ARKSurvivalAscendedMember

 2023-03-10
 2023-03-10

 SNAL:SoftwareLicenseAgreementMember
 SNAL:ARKSurvivalAscendedMember

 2023-03-10

 SNAL:ARKSurvivalAscendedMember

 SNAL:Ark1Member

 us-gaap: BuildingMember

 us-gaap: LandMember

 us-gaap: LandMember

 us-gaap: BuildingImprovementsMember

 us-gaap: LeaseholdImprovementsMember

 us-gaap: LeaseholdImprovementsMember

 us-gaap: TrucksMember

 us-gaap: TrucksMember

 us-gaap: ComputerEquipmentMember

 us-gaap: ComputerEquipmentMember

 us-gaap: FurnitureAndFixturesMember

 us-gaap: TrademarksMember

 us-gaap: TrademarksMember

 us-gaap: PatentsMember

 us-gaap: TrademarksMember

 us-gaap: TrademarksMember

 us-gaap: PatentsMember

 SNAL:OutsourceAgreementMember

 2024-07-01
 2024-07-31

 SNAL:SuzhouMember

 SNAL:SuzhouMember

 SNAL:SDEMember

 SNAL:SDEMember

 SNAL:SubsidiaryOfSuzhouSnailMember

 2021-02-01
 2021-02-28

 SNAL:SubsidiaryOfSuzhouSnailMember

 2022-02-01
 2022-02-28

 SNAL:SnailDigitalTechnologyCo. Ltd. Member

 2022-02-01
 2022-02-28

 2022-02-01
 2022-02-28

 us-gaap: NotesPayableOtherPayablesMember

 us-gaap: NotesPayableOtherPayablesMember

 2023-06-20

 us-gaap: PrimeRateMember

 SNAL:ForFirstFiveYearsMember

 SNAL:ForFirstFiveYearsMember

 SNAL:WallStreetJournalPrimeRateMember

 2022-11-01
 2022-11-30

 2024-01-31

 2024-01-31

 us-gaap: NotesPayableOtherPayablesMember

 2023-07-31

 us-gaap: NotesPayableOtherPayablesMember

 2023-07-01
 2023-07-31

 SNAL:RevolverLoanMember

 SNAL:RevolverLoanMember

 SNAL:RevolverLoanMember

 SNAL:RevolverLoanMember

 us-gaap: DomesticCountryMember

 us-gaap: DomesticCountryMember

 us-gaap: ForeignCountryMember

 us-gaap: ForeignCountryMember

 us-gaap: CaliforniaFranchiseTaxBoardMember

 us-gaap: StateAndLocalJurisdictionMember

 us-gaap: ResearchMember

 us-gaap: ForeignCountryMember
 us-gaap: ResearchMember

 us-gaap: StandbyLettersOfCreditMember

 2018-04-30

 us-gaap: StandbyLettersOfCreditMember

 us-gaap: StandbyLettersOfCreditMember

 us-gaap: StandbyLettersOfCreditMember

 SNAL:LeaseTerminatedAndExpiredMember

 SNAL:LeaseTerminatedAndExpiredMember

 2023-03-14
 2023-03-14

 2023-03-14

 SNAL:EquityLineOfCreditWarrantsMember

 SNAL:EquityLineOfCreditWarrantsMember

 SNAL:UnderwriterWarrantsMember

 SNAL:UnderwriterWarrantsMember

 us-gaap: ConvertibleDebtSecuritiesMember

 us-gaap: ConvertibleDebtSecuritiesMember

 SNAL:ConvertibleNotesWarrantsMember

 SNAL:ConvertibleNotesWarrantsMember

 us-gaap: IPOMember

 2022-11-09

 us-gaap: IPOMember
 us-gaap: WarrantMember

 2022-11-09
 2022-11-09

 us-gaap: WarrantMember
 us-gaap: IPOMember

 2022-11-09

 2023-08-31

 2023-08-01
 2023-08-31

 2023-10-10
 2023-10-10

 us-gaap: EmployeeStockMember

 2023-08-01
 2023-08-31

 us-gaap: OperatingSegmentsMember

 us-gaap: OperatingSegmentsMember

 us-gaap: SubsequentEventMember
 SNAL:DevelopmentAgreementMember

 2025-01-01
 2025-01-31

 us-gaap: SubsequentEventMember
 SNAL:DevelopmentAgreementMember

 2025-01-01

 us-gaap: SubsequentEventMember

 2025-02-01
 2025-02-28

 us-gaap: SubsequentEventMember

 2025-02-28

 SNAL:Integer

 SNAL:entity

 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
D.C. 20549

 FORM

 (Mark
One)

 ANNUAL
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended December 31, 2024

 OR

 TRANSITION
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

 Commission
File Number 001-41556

 SNAIL,
INC.

 (Exact
name of Registrant as specified in its Charter)

 Delaware

 88-4146991

 (State
 or other jurisdiction of

 incorporation
 or organization)

 (I.R.S.
 Employer

 Identification
 No.)

 12049
 Jefferson Blvd

 Culver
 City, CA

 90230

 (Address
 of principal executive offices)

 (Zip
 code)

 Registrant's
telephone number, including area code: +1 (310) 988-0643

 Securities
registered pursuant to Section 12(b) of the Act:

 Title
 of each class

 Trading
 Symbol (s)

 Name
 of each exchange on which registered

 Class
 A common stock, par value $0.0001 per share

 SNAL

 The
 Nasdaq Stock Market LLC

 (The Nasdaq Capital Market)

 Securities
registered pursuant to Section 12(g) of the Act: None

by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES NO

by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES NO

by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. YES NO

by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
 YES NO

by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company,
or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller
reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large
 accelerated filer

 Accelerated
 filer

 Non-accelerated
 filer

 Smaller
 reporting company

 Emerging
 growth company

 If
an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

by check mark whether the Registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO

 As
of June 28, 2024, the last business day of the Registrant's most recently completed second quarter, there was no public market
for the Registrant's class B common stock. The aggregate market value of voting and non-voting common equity held by non-affiliates
of the Registrant, based on the closing price of the Registrant's Class A common stock on the Nasdaq Capital Market on June 28,
2024, was $ 6,903,794.

the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.

 Class
 of Common Stock

 Outstanding
 Shares as of March 20, 2025

 Class
 A Common Stock, par value $ 0.0001 per share

 8,465,080

 Class
 B Common Stock, par value $ 0.0001 per share

 DOCUMENTS
INCORPORATED BY REFERENCE

 Part
III of this Annual Report on Form 10-K incorporates certain information by reference from the definitive proxy statement for the Registrant's
2025 Annual Meeting of Stockholders to be filed within 120 days of the Registrant's fiscal year ended December 31, 2024 (the "Proxy
Statement"). Except with respect to information specifically incorporated by reference in this Form 10-K, the Proxy Statement is
not deemed to be filed as part of this Form 10-K.

 SNAIL,
INC. AND SUBSIDIARIES

 Form

 For
the Year Ended December 31, 2024

 Table
of Contents

 Page

 Cautionary Statement

 ii

 PART I.

 Item
 1.

 Business

 Item
 1A.

 Risk Factors

 Item
 1B.

 Unresolved Staff Comments

 Item
 1C.

 Cybersecurity Risk Management, Strategy and Governance

 Item
 2.

 Properties

 Item
 3.

 Legal Proceedings

 Item
 4.

 Mine Safety Disclosures

 PART
 II.

 Item
 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item
 6.

 [Reserved]

 Item
 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item
 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Item
 8.

 Financial Statements and Supplementary Data

 Item
 9.

 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item
 9A.

 Controls and Procedures

 Item
 9B.

 Other Information

 Item
 9C.

 Disclosures Regarding Foreign Jurisdictions That Prevent Inspections

 PART III.

 Item
 10.

 Directors, Executive Officers and Corporate Governance

 Item
 11.

 Executive Compensation

 Item
 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item
 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item
 14.

 Principal Accountant Fees and Services

 PART IV.

 Item
 15.

 Exhibits and Financial Statement Schedules

 Item
 16.

 Form 10-K Summary

 Signatures

 i

 CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 This
Annual Report on Form 10-K (the "Annual Report") contains statements that constitute forward-looking statements. Many of
the forward-looking statements contained in this Annual Report can be identified by the use of forward-looking words such as "anticipate,"
"believe," "could," "expect," "should," "plan," "intend," "may,"
"predict," "continue," "estimate" and "potential," or the negative of these terms or
other similar expressions.

 Forward-looking
statements appear in a number of places in this Annual Report and include, but are not limited to, statements regarding our intent, belief
or current expectations. These forward-looking statements include information about possible or assumed future results of our business,
financial condition, results of operations, liquidity, plans and objectives. Forward-looking statements are based on our management's
beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties,
and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including,
but not limited to, those identified described in "Part I, Item 1A.—Risk Factors," of this Annual Report. The statements
we make regarding the following matters are forward-looking by their nature:

 our
 ability to re-establish profitable operations, raise additional capital or renegotiate our debt arrangements;

 our
 growth prospects and strategies;

 launching
 new games and additional functionality to games that are commercially successful;

 our
 expectations regarding significant drivers of our future growth;

 our
 ability to retain and increase our player base and develop new video games and enhance our existing games;

 competition
 from companies in a number of industries, including other casual game developers and publishers and both large and small, public
 and private multimedia companies;

 our
 ability to attract and retain a qualified management team and other team members while controlling our labor costs;

 our
 relationships with third-party platforms 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;

 our
 ability to successfully enter new markets and manage our international expansion;

 protecting
 and developing our brand and intellectual property portfolio;

 costs
 associated with defending intellectual property infringement and other claims;

 our
 future business development, results of operations and financial condition;

 rulings
 by courts or other governmental authorities;

 our
 Share Repurchase Program (as defined below), including expectations regarding the timing and manner of repurchases made under the
 Share Repurchase Program;

 our
 plans to pursue and successfully integrate strategic acquisitions;

 other
 risks and uncertainties described in this Annual Report, including those described in Item 1A of Part I, "Risk Factors";
 and

 assumptions
 underlying any of the foregoing.

 Further
information on risks, uncertainties and other factors that could affect our financial results are included in our filings with the United
States Securities and Exchange Commission (the "SEC") from time to time, including in Item 1A of Part I, "Risk Factors,"
of this Annual Report and other periodic reports on Form 10-K and 10-Q filed or to be filed with the SEC. You should not rely on these
forward-looking statements, as actual outcomes and results may differ materially from those expressed or implied in the forward-looking
statements as a result of such risks and uncertainties. All forward-looking statements in this Annual Report are based on management's
beliefs and assumptions and on information currently available to us as of the date of this filing, and we do not assume any obligation
to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they
were made.

 ii

 PART
I

 Item
1. Business.

 Overview

 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 each year we released ARK downloadable content ("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 over 94.8 million console and PC installs through December
31, 2024. See Item 7 of Part II, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Key
Performance Metrics." In the year ended December 31, 2024, ARK: Survival Evolved and ARK: Survival Ascended combined
for an average total of 213,000 daily active users ("DAUs") on the Steam and Epic platforms. We define "daily active
users" as the number of unique users who play any given game on any given day. For the years ended December 31, 2024 and 2023,
we generated 85.1% and 87.8%, respectively, of our revenues from the ARK franchise.

 Our
roots trace back to the beginnings of the massively multiplayer online role-playing games ("MMORPG"), with early titles including
 Age of Wushu. Our long history provides us with substantial experience that we leverage to identify and invest in promising game
development studios and to manage the growth of our games into AAA titles. We collaborate with talented development teams, providing
our expertise, capital, technological resources, customer service, marketing strategy and other services to achieve a successful outcome.

 We
optimize our development pipeline and target specific market segments by publishing games under several specialized brands through our
two publishing labels, Snail Games USA and Wandering Wizard. Our distribution strategy utilizes Steam's early access feature ("Early
Access"), which allows us to publish a title while it is still in development, to achieve faster go-to-market times. We utilize
proprietary technology, including a versatile game engine and advanced server technology, to heighten artistic detail and increase player
engagement.

 We
attribute our continued success to several differentiating elements.

 Perseverance:
We are called Snail because we admire a snail's perseverance in achieving its goals. We maintain a disciplined approach to our
game development, financial management and strategic acquisitions as we seek to deliver long-term value.

 Innovation:
We believe innovation is at the core of a highly engaging entertainment experience. Our titles span from indie games to our AAA franchise
 ARK: Survival Ascended. We created the Wandering Wizard label to allow us to invest and grow indie titles built by bright, passionate
teams.

 Technology:
We utilize advanced and proprietary technologies to drive demand and optimize costs. The Company is strategically integrating artificial
intelligence technology into our game development process. We will transform our art pipeline with an innovative text to 3D model and
pioneer the generation of resources and biomes on a planetary scale. Our proprietary micro-influencer platform, NOIZ, operated
by our subsidiary Eminence Corp, enables us to substantially broaden our influencer base at an advantaged cost, and our game and server
technology provide a highly customizable development infrastructure.

 Collaboration:
We partner with talented independent studios for game development. Development teams, some of which are our wholly owned subsidiaries,
are provided capital and other critical resources and are afforded a high degree of autonomy. We believe this model best preserves the
culture and creativity of the development team and encourages the development of successful games.

 Developers:
We believe in the importance of maintaining a broad developer network to ensure the simultaneous development of high-quality games. We
have seven internal development studios and we partner with two related-party development studios from AAA to indie located in the United
States and internationally.

 Experience:
Our management team has deep knowledge of the gaming landscape based on more than two decades of experience in the gaming industry. Our
Founder, Co-Chief Executive Officer, Chief Strategy Officer, and Chairman Mr. Hai Shi, was a pioneer in sandbox and MMORPG games, and
our Vice President and Director of Business Development and Operations, Peter Kang, who has a deep understanding of game development
and publishing. Our industry experience is foundational to our success in development and publishing and helps us to quickly identify
attractive acquisition and partnership opportunities.

 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 December 31, 2024, our ARK series games have been
played for 3.9 billion hours with an average playing time per user of 162.1 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 years ending December 31, 2024 and 2023, our net revenue was
$84.5 million and $60.9 million, respectively. We have maintained a diversified revenue base across platforms. During fiscal year 2024,
approximately 42.4% of our revenue came from consoles, 48.1% from PC and 5.5% from mobile platforms; as compared to 43.7% from consoles,
43.4% from PC and 9.6% from mobile platforms during the year ended December 31, 2023. We had a net income of $1.8 million for the year
ending December 31, 2024 as compared to a net loss of $9.1 million for the year ending December 31, 2023.

 Recent
Developments

 Game
portfolio expansion: In December 2024, we released the highly anticipated next-gen ARK mobile game, ARK Ultimate Mobile Edition on
iOS and Android platforms. In the launch month, over 2 million users downloaded the mobile game across the two mobile platforms. In an
effort to further broaden our game portfolio. In 2024, we acquired eleven games through our gaming network and partners. We expect to
release nine acquired games in 2025. A few notable titles include Honeycomb: The World Beyond – A sci-fi survival adventure where
players assume the role of a bioengineer navigating the mysterious planet Sota7, Echoes of Elysium – an airship survival RPG set
in a breathtaking procedural world of mystery and discovery, and Robots at Midnight – a retro-futuristic action-RPG aiming to captivate
players with its dynamic gameplay and immersive storytelling.

 New
product segment: To bring more entertainment to our users, we have soft launched a short film mobile application on iOS and Android
platforms. The short film mobile application, SaltyTV, brings exclusive, original stories from heart-racing thrillers to jaw-dropping
romances to our viewers. We have released thirty-one short film dramas to date and expect a consistent roll out of new short film dramas
throughout 2025 and beyond.

 Market
Opportunity

 We
serve a large addressable market in a dynamic industry with strong growth tailwinds. Video games are rapidly growing as an entertainment
platform on a global scale given the proliferation of mobile devices and numerous vectors of gaming experience. We are well-positioned
to capitalize on economic trends in our markets as we own and/or maintain exclusive license rights to valuable intellectual property
("IP") that can be monetized through various channels across gaming and digital entertainment. We believe that our current
market leadership in video games and growing presence in influencer platform through NOIZ is just our beginning.

 We
have developed and invested in various successful sandbox survival titles since 2015. Our video game production quality, our history
of franchise success, and our technological leadership have contributed to a deeply engaged, global player community, many members of
which continue to purchase DLCs for our existing games and related games published under our brand or co-brands. We also offer the advantage
of providing equal accessibility to gamers of all experience levels and demographics for our sandbox survival games, allowing us to maximize
audience reach. Furthermore, depending on players' experience and intensity, our platform gives players the flexibility to play
on our servers, user-created servers, or private servers, which allows us to target a wider range of gamers and lower operating expenses.

 Our
Value Proposition

 Value
proposition for gamers: We aim to provide high-quality entertainment experience to end users. We strive to create the best game
play experience for gamers by offering frequent new content and endless game play possibility as key value propositions to our players.

 New
Content: We continuously incorporate feedback from players to improve existing games and build expansion packs, which are released
periodically. DLCs offer gamers a familiar game play in a new virtual world with a different fantasy twist from dinosaurs to Sci-Fi.

 Endless
Possibility: Our games provide hours of entertainment with features that permit dynamic environmental changes of the virtual
world, user-directed conquests, and cooperative or competitive gameplay with other users. Our sandbox games provide players with freedom,
without the rules found in other genres such as racing games.

 Value
proposition for developers: Our business model is dependent on partnerships with developers, and we offer key value propositions
of collaborative partnership, culture of innovation and technology to our developers.

 Value
proposition for creators: In the first quarter of 2024 the Company has launched its premium modding program through ARK: Survival
Ascended which will allow publishing of modified content to the PC, Xbox and PlayStation platforms. This is revolutionary as these
platforms were previously locked for modified content. Our proprietary technology will allow capable developers familiar with the cutting-edge
Unreal Engine 5 to publish their creations onto console platforms with the click of a button. The premium mods program for ARK: Survival
Ascended represents a forward-thinking approach to community engagement and rewards creators with an industry leading 50% of
the revenue generated.

 Collaborative
Partnership: We provide capital, technological resources, customer service, marketing strategy and other services to our video
game development partners. We strategize with developers to customize marketing campaigns tailored to target markets. Our founder also
provides developers with creative and other advice based on his deep expertise in the industry.

 Culture
of Innovation: We believe high-quality experiences result from a combination of forward thinking and fearless creativity. We
encourage our development teams to experiment with emerging technologies and unique fantasy twists.

 Technology:
Our developers have access to our advanced development infrastructure as well as our proprietary technology including our micro-influencer
technology, NOIZ, which helps brands engage with previously untapped small- to mid-sized influencers.

 Our
Platform

 Our
strategic flywheel is anchored by our dedication to delivering high-quality, compelling entertainment experiences and is driven by our
capabilities in publishing, developing and creating proprietary technology. Growth in the number of published titles allows us to invest
in new development teams and proprietary technology, which expand the number of titles we publish in a self-reinforcing loop. As the
quality of our games increases, we are well-positioned to attract more users and more influencers. With increased influencers through
our propriety micro-influencer platform, NOIZ, we are able to reach a broader audience and increase user engagement within our
games. This drives additional revenue, which we use to increase our developer network and to build proprietary technology. Our technology,
along with our collaborative, innovative culture attracts talented developers, which in turn result in an increased number of high-quality
games.

 Publishing:
We derive the majority of our revenue from titles we offer through licensing and publishing agreements. Our ARK franchise is led
by our strategic partnership with Studio Wildcard. Our typical publishing cycle includes annual DLC releases for our major franchises,
after which we repeat the same publishing cycle to attract new players and continue to entertain our existing players. We seek to bring
new fantasy twists and genres to our players with innovative, creative content cultivated from strong partnerships with independent developers
and published through our Wandering Wizard label.

 Development:
We also develop titles using a partnership approach in which we acquire ownership stakes in independent development teams. We preserve
a development team's culture by allowing a high degree of autonomy in its operations, which we believe allows development teams
to retain their creative license, while also extracting synergies by utilizing our shared resources including customer service and backend
functions. Furthermore, we foster a culture of communication where employees at all levels at our partner studios are able to receive
direct feedback from our CEO. We partnered with Donkey Crew to produce Last Oasis, a nomadic survival massively multiplayer online
game ("MMO") with melee combat conquests, and Bellwright, an open-world survival game set in medieval times and includes
town building, resource management and combat strategy.

 Technology:
We are early adopters of the latest technology in our games and develop proprietary technology when necessary to address market opportunities.
We maintain a flexible infrastructure to efficiently develop virtual worlds with advanced rendering and atmospheric effects across a
wide array of video game types. We developed a proprietary micro-influencer marketing platform, NOIZ, to help game streamers and
game companies reach a wider audience and diversify marketing spend. We work with our developers to create custom campaigns to optimize
reach.

 Our
Key Strengths

 Top-ranked
category defining franchise with a track record of growth: Our dedication to our customers and innovative game development has
resulted in our position as a top-ranked, category-defining franchise with a track record of growth. Our flagship franchise, ARK,
is a leader within the sandbox survival genre with over 94.8 million console and PC installs through December 31, 2024. ARK has
been a top-25 selling game on the Steam platform by gross revenue each year we released an ARK DLC. As of December 31, 2024, ARK
 has been played for 3.9 billion hours since its release on the Steam platform.

 Proven
expertise in creating successful gaming franchises: We have proven expertise in creating successful gaming franchises. We are
a multi-platform publisher with over 15 years of experience in creating culturally influential game titles, while demonstrating financial
growth. As of December 31, 2024, we had 30 game titles. By recognizing the lucrative potential of the sandbox survival category at its
nascent stages, we became a first mover in the category, and we now license and publish leading IP, including the global franchise ARK:
Survival Evolved, ARK: Survival Ascended, Bellwright, Atlas, Last Oasis, Dark and Light and Outlaws of the
Old West. Our approach to the industry is to create a one-size-fits-all game to draw people into the overall sandbox survival genre.
In order to retain players, we invest in game quality to generate additional interest, in addition to spending on advertising. Our collaborative
relationships with video game development studios, industry leaders, technology providers and distribution platforms allow us to invest
in promising video game projects and manage their growth into AAA video games and entertainment franchises. Our approach creates a continuous
cycle of monetization opportunities across our gaming portfolio.

 IP
portfolio spanning across multiple media formats and technology platforms to captivate end user: We license and own an IP portfolio
spanning across multiple media formats and technology platforms to captivate end users. Our primary use of IP is to generate successful
video games within and beyond the sandbox survival genre. Currently, our games are available on 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, as well as through
traditional retail channels. However, our vision for our valuable IP rights extend far beyond just gaming: our vision extends into media
formats such as animation, TV, movies, eSports, and reality TV and interactive media, which we believe has tremendous potential. We have
high aspirations across digital media and we have entered the animation and television industry with ARK, the Animated Series
 in 2024.

 Collaborative
development process between developers and management: We continue to evolve with the industry with our deep pipeline of leading
video game franchises such as ARK: Survival Evolved, ARK: Survival Ascended, Atlas, Survivor Mercs, Last Oasis,
 Bellwright, Dark and Light and Outlaws of the Old West. Our success in game development and in keeping up with industry
trends is partially attributed to our collaborative relationships with video game development studios, industry leaders, technology providers
and distribution platforms. Our cooperative development process provides for a proprietary scalable model to publish multiple AAA video
games based on current trends. We are proud of our collaborative relationship with our developers, as we believe it is truly unique in
our industry and one of our main differentiators. We offer developers an ecosystem that aligns incentives and creates an environment
for creativity to thrive. In addition to wonderful ideas for games, we value partners who share our vision and culture. After a partnership
is formed, we offer developers a direct line of communication to Mr. Shi, our Founder, Co-Chief Executive Officer, Chief Strategy Officer
and Chairman, who is viewed as a pioneer in the video game industry and business world. We offer developers freedom by giving them access
to the wide breadth of the Snail platform and resources so they can do what they do best: create.

 Innovative
use and creation of next-gen technologies and platforms: We use innovative technology to serve our customers, allowing us to
provide high-quality user experiences and services. Our proprietary video game technology includes a versatile development pipeline tools,
advanced rendering technology and advanced server and network operations, in addition to our use of currently accepted standard industry
technologies. Additionally, our customizable development infrastructure provides a framework for efficiently developing all types of
video game projects using advanced rendering technologies for realistic lighting, weather and atmospheric effects, for creating new types
of virtual assets and for other effects that heighten artistic detail and increase player engagement. Our ARK: Survival Ascended
premium mod program unlocks the power of Unreal Engine 5 for our player base to create limitless content and rewards their creativity
through the most competitive revenue sharing models in the industry. Modders will be able to amplify their reach through this technology
by publishing their mods across multiple platforms. Our micro-influencer business, NOIZ, strives to build an influencer marketing
platform for brands to directly engage with small to-midsized influencers, through which influencers can reach millions of video game
consumers and generate additional revenue at a cost advantage.

 Visionary
management team well versed in industry and business: We attribute much of our success to our visionary senior management and
business development teams, which have a deep understanding of games and global video markets and aim to build innovative products for
gamers. Our Founder, Co-Chief Executive Officer, Chief Strategy Officer and Chairman, Mr. Shi, is also the founder and Chief Executive
Officer of Suzhou Snail Digital Technology Co., Ltd. ("Suzhou Snail"), a related party, and is a pioneer in the video game
industry and the sandbox survival genre. Mr. Shi is responsible for our overall vision, which has included adapting our business model
for the global markets, focusing on premium games and investing in video game development and publishing in North America and Europe.
Our founder and other members of our management and business development teams are seasoned gamers, who lead and provide insight into
gaming development from a first-hand user's perspective. We operate in an ecosystem in which our leaders employ a hands-on approach,
as each developer is able to get direct contact with our founder and receive one-on-one feedback and mentorship.

 Our
Growth Strategy

 Continue
to grow our successful ARK franchise: As one of the most creative and innovative companies in our industry, our primary
strategy is to capitalize on our franchise and focus on delivering unique games and content, offering services that extend and enhance
the experience, and connecting more players across more platforms. We believe the breadth and depth of our multi-platform, services offerings,
and our use of multiple business models and distribution channels provide us with strategic advantages. We have established ourselves
as a market leader based on our continued ability to release titles which rank in the top 20 of Steam sales and will continue to enhance
our market-leading gaming franchises including ARK: Survival Evolved, ARK: Survival Ascended, ARK: Ultimate Mobile Edition,
Voyage, Bellwright, West Hunt and PixArk. We focus on publishing high-quality content, regularly updating our games
after launch to encourage social interactions, adding new content and features, and improving monetization. For example, we have released
five paid DLCs since the original release of ARK: Survival Evolved to support further growth in our ARK franchise. Furthermore,
we have released ARK: Survival Ascended to revolutionize the ARK experience for our players through leveraging the Unreal
 Engine 5 and have implemented thorough quality of life revamps in all aspects of the game. We continue to release new DLCs such as Bob's
Tall Tales, Fantastic Tames, Astraeos, etc. to further enhance the player experience and growth of the ARK franchise. We will
also continue to support the modding community through the premium mod program.

 Continue
to build a strong pipeline of new content via Snail Games USA and our independent label, Wandering Wizard: Building on our strong
established franchises and creating new franchises through compelling new content is at the core of our business. We are always seeking
ways to expand our portfolio of franchises, launching new intellectual property or rolling out innovative platforms for gamers to remain
engaged and have a unique experience. We endeavor to reach as many consumers as possible by offering our content on multiple platforms
and delivering compelling experiences across multiple business models. Currently, we have seven console and PC games under development
that are expected to be released in the next five years. Our independent label, Wandering Wizard, allows us to publish independent games
of different graphical quality and different genres at a lower acquisition cost while utilizing our proven development and distribution
strategies. Titles published under Wandering Wizard include West Hunt, Expedition Agartha, Survivor Mercs, and Zombie
Within. In addition to spending on advertising, we invest in the research and development of new games as a form of marketing to
increase our exposure. We believe that utilizing resources in this manner allows us to better leverage our areas of developmental expertise
before launching a title. Each new game serves as an opportunity to market ourselves, expose audiences to the sandbox survival genre,
engage with existing players, and monetize our platform's full breadth of opportunities.

 Continue
to expand NOIZ, our micro-influencer marketing business, and use the platform to bolster our marketing initiatives and eCommerce
revenue: We are focused on reaching more players whenever and wherever they want to play. We believe that we can add value to
our network by utilizing content creators and micro-influencers to connect to a world of play by offering an interactive platform for
players to engage in. We created our proprietary, full-service marketing platform, NOIZ, where we have direct relationships with
influencers and save on third-party costs. NOIZ helps aspiring game streamers and game companies reach a wider audience, diversify
marketing spend and income streams, and build their own brands easily and professionally at a large scale. Influencers can join the platform
and play for free over a three day period. NOIZ provides speed and payment to influencers, in addition to speed in the execution
of marketing campaigns since no large scale agencies are involved. NOIZ benefits all of our marketing and promotional initiatives
and serves as a source of eCommerce revenue. NOIZ is designed so that clients can choose to work on campaigns on their own or
directly with our creative campaign managers in an end-to-end managed campaign process, with 24/7 support, by paying a fee. The management
team at NOIZ is comprised of eSports and gaming industry veterans and has worked with clients such as Square Enix, Sega, Stunlock
Studios, Facebook, Sansar, TikTok, Bose, Softgiving, and Omaze. NOIZ directly contributes to our video game growth because each
influencer's stream of our games to their followers is a sales opportunity. Micro- and macro-influencers have taken advantage of
 NOIZ 's unique program, through which they receive a portion of the revenue from the video games they help sell. Through
 NOIZ, we can also collect data used to analyze new trends and self-market our products.

 Continue
investing in new technologies and platforms to efficiently capitalize on emerging trends: We provide a variety of digitally delivered
products and games that are played online and on mobile platforms, such as tablets and smartphones; as such, there are various opportunities
for us to grow and enhance profitability. We will continue investing in new distribution channels such as streaming media, animation,
television and eSports as opportunities in platform distribution as well as DLCs arise to expand our reach and grow our business. We
invest in the development of interactive entertainment products for new distribution channels, which incorporate a new technology or
business model that enables us to compete more effectively against our peers. For our future games, we ultimately aim to build a metaverse
in which users can create their own gameplay content and interact in a virtual world with other players over a secured network. We intend
to hold competitions where players can submit created content and receive rewards, with the potential of incorporation into a new map
as DLC with the assistance of our development team. We continuously evaluate and integrate AI advancements into our development pipeline,
leveraging emerging technologies to enhance efficiency, creativity, and overall productivity. As AI evolves, we are strategically adopting
tools that optimize workflows and expand creative possibilities, including AI-driven image and video generation, AI-assisted photogrammetry
for 3D models, AI-enhanced textures for realistic lighting, and AI-powered coding with large language models. These innovations are already
driving significant productivity gains across all aspects of game development, allowing us to invest in the future while maintaining
the handcrafted quality that defines our products.

 Scale
our operations through international market expansion and strategic acquisitions: In line with our growth strategy, we plan to
complete acquisitions to expand our gaming offerings, obtain talent, and expand into new markets. We continue to evaluate strategic acquisition
opportunities in areas such as studios, publishers, and agencies. We may also pursue joint ventures or establish subsidiaries with strategic
partners as well as make investments in interactive gaming and entertainment business as part of our long-term business strategy. The
global market for interactive entertainment continues to grow, and we seek to increase our presence internationally, particularly in
South America, where video game demand is expected to increase as the region advances in technology. We have existing relationships and
customers in South America which we hope will continue to grow. We retain licensing rights to our intellectual properties in certain
regions and intend to build on our existing licensing relationships and also continue to expand on license distribution strategies to
grow our international business. As a result, we are actively exploring international strategic opportunities that fit our needs and
culture. We are currently iterating on an updated interface and product model for NOIZ which we will be terming NOIZ 3.0. This will update our
interface with our current base and provide our clients with a more versatile way to issue campaigns to NOIZ's userbase. We also seek to expand our licensing opportunities to new
platforms and other geographies. We are continuing to execute on our growth initiatives, where our strategy is to broaden the distribution
of our licensing opportunities. We intend to continue to build on our licensing relationships and also continue to expand on distribution
strategies to grow our business. Furthermore, the growth and development of electronic commerce will enable us to explore more licensing
opportunities across various geographic regions.

 Our
Games

 ARK:
Survival Evolved: is an action-adventure survival sandbox game set in an open-world environment with a dynamic day-night cycle. Players
must survive being stranded on an island filled with roaming dinosaurs and other prehistoric animals, natural hazards, and potentially
hostile human players. The game released to Early Access in June 2015 and to retail in August 2017. The game was ranked #1 by market
share within the sandbox survival genre, based on Steam sales, within one year of its release to Early Access. The game supports consoles
(PS4, PS5, Xbox One, Xbox Series X/S, and Nintendo Switch), PCs and mobile (Android, iOS). We developed ARK in partnership with
Studio Wildcard, and have released five expansion packs, or DLCs.

 Scorched
 Earth. A desert map with minimum water and extreme weathers. The DLC was released on September 2016.

 Aberration.
 A radiation style expansion pack to explore the mysterious underground world. The DLC was released on December 2017.

 Extinction.
 A mechanical style expansion pack themed to fight against giant titans and save the post-apocalyptic earth. The DLC was released
 on November 2018.

 Genesis
 1 & 2. A mission-based gameplay DLC with the ability to explore new worlds and mysterious stories. The DLCs were released
 in February 2020 and in June 2021, respectively.

 ARK:
Survival Ascended: Uses the latest in videogame technology, Unreal Engine 5 ("UE5"), to deliver the next evolution of
the ARK franchise. ARK: Survival Ascended is reimagined from the ground up with updated artwork, high end graphics, new
physics systems and quality of life revamps in every area of the game. ARK: Survival Ascended also includes cross-platform multiplayer
and modding capabilities. Players who purchase the game can currently access the island, Scorched Earth, Aberration, and Extinction,
 and will have access to ARK Genesis Parts 1 and 2 and more. The game currently supports consoles and PCs and was developed
in partnership with Studio Wildcard and Grove Street Games.

 ARK
Ultimate Mobile Edition: A complete dinosaur survival experience tailored for iOS and Android mobile devices. This new free adaptation
includes the massive content from PC and console versions of ARK: Survival Evolved and its acclaimed Expansion Packs—Scorched Earth,
Aberration, Extinction, Genesis Parts 1 & 2, and fan-favorite maps like Ragnarok. With its debut, players can explore massive worlds,
tame and train over 150 dinosaurs, and build and craft in an expansive multiplayer environment.

 Bellwright:
Developed in connection with our wholly owned subsidiary, Donkey Crew, Bellwright is an open-world strategy survival game based in the
medieval period. The game offers a compelling blend of survival, strategy, combat, and town building in a richly imagined world. Players
are challenged to build, sustain, and defend their town against the elements and adversaries all while building a rebellion force to
take on the crown. Bellwright to launched in Early Access in the second quarter of 2024.

 PixARK:
An open-world, voxel type, survival sandbox game. To survive in the PixARK world players must tame creatures, craft high tech
and magical tools and build their bases using cubes. The game has a robust character creator, an infinite number of voxel-based maps
and procedurally generated quests making every PixARK adventure unique to the player. Players can play on their own or band together
to form tribes. The game was released by Early Access on Microsoft Windows and Xbox One, then in 2019 the full version was launched on
Steam, PlayStation 4 and Nintendo Switch.

 Voyage
Century Online: A free-to-play MMORPG set in the Age of Sail. Launched in 2007, the game focuses on maritime exploration, trading,
naval battles, and empire-building. Players can choose different professions such as merchants, explorers, or naval warriors, and engage
in real-time ship combat, city sieges, and treasure hunting. The game features an open world based on real historical locations, with
a strong emphasis on upgrading ships, crafting, and economic systems.

 West
Hunt: Launched in Early Access in June 2022 and v1.0 in March 2023, West Hunt is a multiplayer social deduction game set in the Wild
West. Developed by NewGen, it features 1v1 or team-based gameplay where one player takes on the role of an outlaw blending in with NPCs,
while the other plays as a sheriff trying to identify and eliminate the criminal before time runs out. The outlaw must complete secret
objectives without raising suspicion, while the sheriff uses clues and deduction to track them down.

 Our
Technology

 We
employ industry standard game engines for the majority of our games, which allows flexibility and accelerated game development. Our proprietary
code modifies the game engines to fit the needs and features of our games as necessary, and for franchises like ARK, we are able
to leverage that proprietary code in the development of new DLCs for existing games and development of entirely new games. We retain
ownership of all code developed for our proprietary engine, Flexi, which is currently being used to develop certain games in our pipeline
with the expectation of launching to external developers in the near future.

 We
offer an industry-leading micro-influencer platform, NOIZ, through which influencers can connect with brands in need. We continue
to make technological enhancements to NOIZ, with a focus on streamlining the process to connect brands with influencers, and facilitating
and simplifying the agreements that need to be executed between the two parties.

 Our
Competition

 The
interactive entertainment market is highly competitive and evolves rapidly as new games, content and features are introduced. We compete
with other interactive entertainment companies such as Activision Blizzard, Inc., Electronic Arts Inc., Take-Two Interactive, Zynga,
Ubisoft, Epic Games, Tencent, Netmarble, Sony, Microsoft and Nintendo primarily for game development on consoles, PCs and mobile devices.
Across the sandbox survival game genre, we primarily compete with Embracer Group, Saber Group, Enand Global 7, FunCom, Axolot Games,
and Facepunch Studios. We also face competition from other independent developer studios. Important factors in the video game development
and publishing industries include innovation, creative and technical talent, game quality, brand recognition, platform compatibility,
pricing, accessibility to distribution channels and customer service.

 Our
broader competitors include other providers of digital entertainment, such as film, television, social networking, streaming and music.

 Regulatory
Matters

 We
are subject to various federal, state and international laws and regulations that affect companies conducting business on the Internet
and mobile platforms, including those relating to privacy, use and protection of player and employee personal information and data (including
the collection of data from minors), the Internet, behavioral tracking, mobile application, content, advertising and marketing activities
(including sweepstakes, contests and giveaways) and anti-corruption. Additional laws in all of these areas are likely to be passed in
the future, which could result in significant limitations on or changes to the ways in which we can collect, use, host, store or transmit
the personal information and data of our customers or employees, communicate with our players and deliver products and services, which
significantly increase our compliance costs. As our business expands to include new uses or collection of data that are subject to privacy
or security regulations and our operations continue to expand across the globe, our compliance requirements and costs will increase and
we may be subject to increased regulatory scrutiny.

 For
more information regarding risks relating to data privacy and security, see Item 1A of Part I, "Risk Factors — Risks
Related to Legal or Regulatory Compliance — Changing data privacy and security laws and regulations in the jurisdictions
in which we or our consumers do business could increase the cost of our operations and subject us to possible sanctions, civil lawsuits
(including class action or similar representative lawsuits) and other penalties; such laws and regulations are continually evolving.
Our platform and service providers' actual or perceived failure to comply with these laws and regulations could harm our business,
financial condition and results of operations."

 Intellectual
Property

 Similar
to other interactive entertainment companies, our business is significantly dependent on the creation, acquisition, use and protection
of intellectual property. Some of this intellectual property is in the form of software code, other technology, and trade secrets that
we use to run our games. Other intellectual property includes copyrighted audio-visual elements that consumers can see, hear, and interact
with when they are playing our games. Most of the intellectual property we use is licensed to us by third-party game developers. We obtain
such intellectual property rights through licenses and service agreements, and such licenses may limit our use of such intellectual property
to specific uses and for specific time periods. We seek to advance and maintain our business through both a combination of licensed and
owned intellectual property.

 As
of December 31, 2024, we owned the following trademarks related to the business: 15 registered trademarks in the United States, two registered
trademarks in non-U.S. jurisdictions, thirteen registered United States copyrights and one pending U.S. design patent application through
one of our subsidiaries, which is scheduled to expire in 2033, assuming payment of all appropriate maintenance, renewal, annuity or other
governmental fees. As of December 31, 2024, we did not have any pending trademark registration applications and we did not have any issued
U.S. design patents. Additionally, we have registered domain names for websites that we use in our business, such as snailgamesusa.com
 and playark.com.

 A
majority of our revenue is derived from licensed intellectual property, such as our ARK franchise. We license the intellectual
property underlying our ARK franchise from SDE Inc. ("SDE"), the parent company of Studio Wildcard. SDE is controlled
by the spouse of Mr. Shi, our Founder, Co-Chief Executive Officer, Chief Strategy Officer and Chairman. We entered into an original exclusive
software license agreement with SDE in November 2015, for the rights to ARK: Survival Evolved, and subsequently, in December 2022,
we amended the ARK1 License Agreement. The license fee has been restructured so that we will pay 45% of total revenue of ARK I
as a royalty instead of the $1.5 million monthly fee plus 25% of the total ARK I revenue once the sequel, ARK II, is publicly
released.

 In
March 2023, we amended the ARK1 License Agreement with SDE to include DLC prepayments. The Company will prepay a maximum of $5.0 million
for each DLC, in whole or in part, in advance of a DLC release. No payment with respect to any DLC will exceed $5.0 million. In October
2023, we made an additional amendment to the ARK1 License Agreement to clarify the delineation of the ARK I, ARK II, and
 ARK: Survival Ascended monthly license fees, royalty percentages for each, and applicability of the $5.0 million DLC payments.
Following the launch date of ARK: Survival Ascended we will pay a monthly license fee of $2.0 million, which will be terminated
upon the public release of ARK II. The $2.0 million monthly license fee replaces the $1.5 million monthly license fee we were
previously paying for ARK: Survival Evolved. Additionally, following the launch of ARK: Survival Ascended, we will pay
25% of the total ARK: Survival Ascended revenues as a monthly royalty and 40% of the total ARK: Survival Evolved revenue
as a monthly royalty. The previously released 5 DLCs, mini-packs or add-ons to the 5 DLCs and any non-canonical maps on ARK: Survival
Ascended are not subject to DLC payments required under the existing agreement. In 2024 and 2023, we incurred $24.0 million and $19.1
million, respectively, in license costs and $19.7 million and $14.1 million, respectively, in royalty costs pursuant to the ARK License
Agreements.

 In
addition to our primary licenses for the ARK franchise, we are also party to other licensing agreements with Suzhou Snail, relating
to the intellectual property for our current mobile and upcoming PC games. Under these license agreements, we receive an exclusive, sublicensable
license to use, publish, distribute, market, operate and service games from third parties. The license agreements call for the developers
to develop a certain number of titles for us, while we are responsible for the operation and launch of such games including the marketing,
strategy, billing, and server maintenance for such games. In these agreements, payment terms will frequently include royalty payments
to developers in the low to mid double-digit percentages range and will occasionally include up-front licensing payments and development
payments based on scheduled deliverable milestones. Under these agreements, the developer will often own all of the intellectual property,
and the agreements can be terminated for breach with a period to cure, for insolvency, or for our nonpayment. In 2024 and 2023, we accrued
$0.7 million and $0.3 million, respectively, in license, royalty and development costs, which we record as accounts payable - related
party.

 Further,
our products that play on consoles and mobile platforms include technology that is owned by the platform provider and is licensed non-exclusively
to us for use in the relevant product. We also license technology from providers other than console manufacturers in developing our content
and services. While we may have renewal rights for some licenses, our business is dependent on our ability to continue to obtain the
intellectual property rights from the owners of these rights on reasonable terms and at reasonable rates.

 We
are actively engaged in enforcement of our copyright, trademark, patent and trade secret rights against potential infringers of those
rights along with other protective activities, including monitoring online channels for distribution of pirated copies and participating
in various enforcement initiatives, education programs, and legislative activity around the world. For our PC products, we use technological
protection measures to prevent piracy and the use of unauthorized copies of our products. For other platforms, the platform providers
typically incorporate technological protections and other security measures in their platforms to prevent the use of unlicensed products
on those platforms.

 For
more information regarding risks relating to intellectual property, see Item 1A of Part I, "Risk Factors — Risks
Related to Intellectual Property."

 Facilities

 Our
principal executive office, which we own, is located at 12049 Jefferson Boulevard, Culver City, California 90230. Certain debt agreements
are secured by our principal executive offices. We also lease additional facilities to support our operations. We believe our existing
facilities are sufficient for our current needs. We may add new facilities and expand our existing facilities as we add employees and
expand into new locations. We believe suitable additional space will be available as needed to accommodate our needs.

 Human
Capital Resources

 As
of December 31, 2024, we had 149 full-time employees worldwide, of whom approximately 77% are based in North America and approximately
23% are based in Europe, the Middle East and Africa ("EMEA") region. We have approximately 69% of our employees dedicated
to technology and content development, 9% to marketing and 22% to general administration. We do not have any part-time employees, nor
do we have any unions or collective bargaining agreements with any of our employees. We work to identify, attract and retain employees
who are aligned with and will help us progress towards our mission, and we seek to provide competitive cash and equity compensation.

 Corporate
Information

 Snail
Games USA, Inc. ("Snail Games USA") was incorporated in the State of California on September 22, 2009. Snail, Inc. ("Snail")
was incorporated in the State of Delaware on January 11, 2022. Concurrently with our initial public offering in November 2022, Snail
and Snail Games USA consummated transactions, as a result of which, (i) Snail became a holding company, with its principal asset consisting
of all of the shares of common stock of Snail Games USA and (ii) Snail controls the business and affairs of Snail Games USA and its subsidiaries.

 Our
principal executive office is located at 12049 Jefferson Boulevard, Culver City, California 90230. Our telephone number at this address
is (310) 988-0643. Our main website is  The information contained in, or accessible through, our website
is not incorporated by reference in, and should not be considered part of, this Annual Report.

 We
have proprietary rights to trademarks, trade names and service marks appearing in this Annual Report that are important to our business.
Solely for convenience, the trademarks, trade names and service marks may appear in this Annual Report without the and
 symbols, but any such references are not intended to indicate, in any way, that we forgo or will not assert, to the
fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, trade names and service
marks. All trademarks, trade names and service marks appearing in this Annual Report are the property of their respective owners.

 We
make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, available
free of charge at our website as soon as reasonably practicable after they have been filed with the SEC.

 Item
1A. Risk Factors.

 A
description of the risks and uncertainties associated with our business is set forth below. You should carefully consider the risks and
uncertainties described below, as well as the other information in this Annual Report, including our consolidated financial statements
and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
The occurrence of any of the events or developments described below, or of additional risks and uncertainties not presently known to
us or that we currently deem immaterial, could materially and adversely affect our business, results of operations, financial condition
and growth prospects. In such an event, the market price of our common stock could decline, and you could lose all or part of your investment.

 Our
business is subject to numerous risks and uncertainties, including those highlighted in this section titled Item 1A. "Risk Factors,"
that represent challenges that we face in connection with the successful implementation of our strategy and growth of our business. The
occurrence of one or more of the events or circumstances described in this section titled Item 1A. "Risk Factors," alone
or in combination with other events or circumstances, may have an adverse effect on our business, cash flows, financial condition and
results of operations. Such risks include, but are not limited to, the following:

 We
 are dependent on the future success of our ARK franchise, and we must continue to publish
 "hit" titles or sequels to such "hit" titles in order to compete
 successfully in our industry.

 If
 we do not consistently deliver popular, high-quality content in a timely manner, if we are
 not successful in meaningfully expanding our existing franchise, or if consumers prefer products
 from our competitors, our business may be negatively impacted.

 We
 rely on license agreements to publish certain games, including games in our ARK franchise.
 Failure to renew our existing content licenses on favorable terms or at all or to obtain
 additional licenses would impair our ability to introduce new games, improvements or enhancements
 or to continue to offer our current games, which would materially harm our business, results
 of operations, financial condition and prospects.

 We
 depend on our key management and product development personnel.

 Our
 management team has limited experience managing a public company.

 Our
 business is subject to the risks of earthquakes, fire, floods, public health crises and other
 natural catastrophes and to interruption by man-made problems such as power disruptions,
 computer viruses, data security breaches or other incidents or terrorism.

 Our
 industry is subject to rapid technological change, and if we do not adapt to, and appropriately
 allocate our resources among, emerging technologies and business models, our business may
 be negatively impacted.

 We
 rely on third-party platforms, 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, to distribute our games and collect revenues generated on such platforms and rely
 on third-party payment service providers to collect revenues generated on our own platforms.

 We
 depend on servers and networks to operate our games with online features. If we were to lose
 functionality in any of these areas for any reason, our business may be negatively impacted.

 We
 may be unable to effectively manage the continued growth and the scope and complexity of
 our business, including our expansion into new business models that are untested and into
 adjacent business opportunities with large, established competitors.

 The
 interactive entertainment software industry is highly competitive.

 We
 are subject to product development risks, which could result in delays and additional costs,
 and often times we must adapt to changes in software technologies.

 Our
 business is subject to our ability to develop commercially successful products for the current
 video game platforms, which may not generate immediate or near-term revenues, and as a result,
 our business and operating results may be more volatile and difficult to predict during console
 transitions than during other times.

 Our
 results of operations or reputation may be harmed as a result of objectionable consumer,
 or other third party-created content, or if our distributors, retailers, development, and
 licensing partners, or other third parties with whom we are affiliated, act in ways that
 put our brand at risk.

 The
 products or services we release may contain defects, bugs or errors.

 External
 game developers may not meet product development schedules or otherwise fulfill their contractual
 obligations.

 Any
 cybersecurity-related attack, significant data breach, or disruption of the information technology
 systems or networks on which we rely could negatively impact our business.

 If
 we do not successfully invest in, establish and maintain awareness of our brand and games
 or if we incur excessive expenses promoting and maintaining our brand or our games, our business,
 financial condition, results of operations or reputation could be harmed.

 Our
 operating results may fluctuate from quarter to quarter, which makes our future results difficult
 to predict.

 We
 have experienced rapid growth and expect to invest in our growth for the foreseeable future.
 If we fail to manage our growth effectively, then our business, operating results and financial
 condition would be adversely affected.

 If
 general economic conditions decline, demand for our games could decline. In addition, our
 business is vulnerable to changing economic conditions and to other factors that adversely
 affect the gaming industry, which could negatively impact our business.

 economic factors, domestically and internationally, may adversely affect our business, financial
 condition, and results of operations.

 We
 utilize artificial intelligence ("AI"), which could expose us to liability or
 adversely affect our business.

 If
 we are unable to protect the intellectual property relating to our material software, the
 commercial value of our products will be adversely affected, and our competitive position
 could be harmed.

 If
 we infringe, misappropriate, or otherwise violate or are alleged to infringe, misappropriate
 or otherwise violate the intellectual property rights of third parties, our business could
 be adversely affected.

 The
 Company has debt obligations with short term durations that are coming due within one year.

 We
 are a "controlled company" under the corporate governance rules of Nasdaq and,
 as a result, qualify for and rely on exemptions from certain corporate governance requirements.
 Since we elected to rely on the exemptions available to a "controlled company,"
 you do not have the same protections afforded to stockholders of companies that are subject
 to such corporate governance requirements.

 Mr.
 Shi, our Founder, Co-Chief Executive Officer, Chief Strategy Officer and Chairman, controls
 us, and his ownership of our common stock prevents you and other stockholders from influencing
 significant decisions.

 We
 cannot guarantee that our Share Repurchase Program will be fully implemented, nor that it
 will enhance stockholder value, and share repurchases could affect the price of our Class
 A common stock.

 The
 realization of the Company's deferred tax assets is contingent upon the Company's
 upcoming new game releases to generate sufficient taxable income.

 Risks
Related to Our Business and Industry

 We
are dependent on the future success of our ARK franchise, and we must continue to publish "hit" titles or sequels to such
"hit" titles in order to compete successfully in our industry.

 ARK
 is a "hit" product and has historically accounted for a substantial portion of our revenue. The ARK franchise
contributed 85.1% of our net revenue for the year ended December 31, 2024, and our five best-selling franchises (including ARK),
which may change year over year, in the aggregate accounted for 94.0% of our net revenue for the year ended December 31, 2024. If we
fail to continue to develop and sell new commercially successful "hit" titles or sequels to such "hit" titles
or experience any delays in product releases or disruptions following the commercial release of our "hit" titles or their
sequels, our revenue and profits may decrease substantially, and we may incur losses. In addition, competition in our industry is intense
and a relatively small number of hit titles account for a large portion of total revenue in our industry. Hit products offered by our
competitors may take a larger share of consumer spending than we anticipate, which could cause revenue generated from our products to
fall below our expectations. If our competitors develop more successful products or services at lower price points or based on payment
models perceived as offering better value, or if we do not continue to develop consistently high-quality and well-received products and
services, our revenue and profitability may decline.

 If
we do not consistently deliver popular, high-quality content in a timely manner, if we are not successful in meaningfully expanding our
existing franchise, or if consumers prefer products from our competitors, our business may be negatively impacted.

 Consumer
preferences for games are usually cyclical and difficult to predict. Even the most successful games can lose consumer audiences over
time, and remaining popular is increasingly dependent on the games being refreshed with new content or other enhancements. In order to
remain competitive and maximize the chances that consumers select our products as opposed to the various entertainment options available
to them and with which we compete, we must continuously develop new products or new content for, or other enhancements to, our existing
products. These products or enhancements may not be well-received by consumers, even if well-reviewed and of high quality. Our competitors
include very large corporations with significantly greater financial, marketing and product development resources than we have and many
smaller competitors, particularly on the mobile platform. Our larger competitors may be able to leverage their greater financial, technical,
personnel and other resources to provide larger budgets for development and marketing and make higher offers to licensors and developers
for commercially desirable properties, as well as adopt more aggressive pricing policies to develop more commercially successful video
game products than we do. Further, competitors may develop content that imitates or competes with our best-selling games, potentially
reducing our sales or our ability to charge the same prices we have historically charged for our products. These competing products may
take a larger share of consumer spending than anticipated, which could cause product sales to fall below expectations. If we do not continue
to develop consistently high-quality and well-received games or enhancements to those games, if our marketing fails to resonate with
our consumers, if we are not successful in meaningfully expanding our franchises further on the mobile platform or if consumers lose
interest in a genre of games we produce, our revenues and profit margins could decline. In addition, our own best-selling products could
compete with our other games, reducing sales for those other games. Further, a failure by us to develop a high-quality product, or our
development of a product that is otherwise not well-received, could potentially result in additional expenditures to respond to consumer
demands, harm our reputation, and increase the likelihood that our future products will not be well-received. The increased importance
of DLC to our business amplifies these risks, as DLC for poorly-received games typically generates lower-than-expected sales. The increased
demand for consistent enhancements to our products also requires a greater allocation of financial resources to those products.

consumer expectations regarding the quality, performance and integrity of our products and services are high. Consumers may be critical
of our brands, games, services and/or business practices for a wide variety of reasons, and such negative reactions may not be foreseeable
or within our control to manage effectively. For example, if our games or services, such as our proprietary online gaming service, do
not function as consumers expect, whether because they fail to function as advertised or otherwise, our sales may suffer. The risk that
this may occur is particularly pronounced with respect to our games with online features because they involve ongoing consumer expectations,
which we may not be able to consistently satisfy. Our games with online features are also frequently updated, increasing the risk that
a game may contain significant errors, or "bugs." If any of these issues occur, consumers may stop playing the game and may
be less likely to return to the game as often in the future, which may negatively impact our business.

 Further,
delays in product releases or disruptions following the commercial release of one or more new products could negatively impact our business
and reputation and could cause our results of operations to be materially different from expectations. If we fail to release our products
in a timely manner, or if we are unable to continue to extend the life of existing games by adding features and functionality that will
encourage continued engagement with the game, our business may be negatively impacted.

the amount of lead time and cost involved in the development of high-quality products is increasing, and the longer the lead time involved
in developing a product and the greater the allocation of financial resources to such product, the more critical it is that we accurately
predict consumer demand for such product. If our future products do not achieve expected consumer acceptance or generate sufficient revenues
upon introduction, we may not be able to recover the substantial up-front development and marketing costs associated with those products.

 We
rely on license agreements to publish certain games, including games in our ARK franchise. Failure to renew our existing content licenses
on favorable terms or at all or to obtain additional licenses would impair our ability to introduce new games, improvements or enhancements
or to continue to offer our current games, which would materially harm our business, results of operations, financial condition and prospects.

 We
license certain intellectual property rights from third parties, including related parties, and in the future, we may enter into additional
agreements that provide us with licenses to valuable intellectual property rights or technology. In particular, we license intellectual
property rights related to our ARK franchise from SDE, the parent company of Studio Wildcard, which is also an entity that is
owned and controlled by the spouse of our Founder, Co-Chief Executive Officer, Chief Strategy Officer and Chairman, Mr. Shi. We entered
into an original exclusive software license agreement with SDE in November 2015, for the rights to ARK: Survival Evolved, and
subsequently entered into the amended and restated ARK1 License Agreement. In December 2022 and October 2023, we amended the ARK1 License
Agreement. The terms of our license agreements with SDE may differ from those terms which would be negotiated with independent parties.
In addition, we may have disputes with SDE that may impact our business, results of operations, financial condition and/or prospects.
The ARK franchise contributed 85.1% of our net revenue for the year ended December 31, 2024. Even if our games that are dependent
on third-party license agreements remain popular, any of our licensors could decide not to renew our existing license agreements or not
to license additional intellectual property rights to us and instead license to our competitors or develop and publish its own games
or other applications, competing with us in the marketplace. Moreover, many of our licensors develop games for other platforms and may
have significant experience and development resources available to them should they decide to compete with us rather than license to
us. For additional information concerning our license arrangements, including licensing agreements with affiliated third parties, see
Item 1 of Part I, "Business—Intellectual Property," included in this Annual Report for the fiscal year ended December
31, 2024.

to maintain or renew our existing material licenses or to obtain additional licenses could impair our ability to introduce new games
and new content or to continue to offer our current games, which could materially harm our business, results of operations and financial
condition. If we breach our obligations under existing or future licenses, we may be required to pay damages and our licensors may have
the right to terminate the license or change an exclusive license to a non-exclusive license. Termination of our license agreements by
a material licensor, such as SDE, would cause us to lose valuable rights, such as the rights to our ARK franchise, and would inhibit
our ability to commercialize future games, which would harm our business, results of operations and financial condition. In addition,
certain intellectual property rights may be licensed to us on a non-exclusive basis. The owners of nonexclusively licensed intellectual
property rights would be free to license such rights to third parties, including our competitors, on terms that may be superior to those
offered to us, which could place us at a competitive disadvantage. Moreover, our licensors may own or control intellectual property rights
that have not been licensed to us and, as a result, we may be subject to claims, regardless of their merit, that we are infringing or
otherwise violating the licensor's rights. In addition, the agreements under which we license intellectual property rights or technology
from third parties and related parties are generally complex, and certain provisions in such agreements may be susceptible to multiple
interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope
of our rights to the relevant intellectual property or technology or increase what we believe to be our financial or other obligations
under the relevant agreement. Any of the foregoing could harm our competitive position, business, financial condition, results of operations

 We
depend on our key management and product development personnel.

 Our
continued success will depend to a significant extent on our senior management team and maintaining positive relationships with our games'
developers, including Studio Wildcard, and the product development personnel responsible for content creation and development of our
 ARK franchise.

 On
April 15, 2024, Jim S. Tsai notified the Company of his decision to resign from his position as the Chief Executive Officer of the Company
and all of the Company's subsidiaries, including, Snail Games USA, Inc., with such resignation effective April 15, 2024; however,
Mr. Tsai remained with the Company for a 30-day transition period. In conjunction with Mr. Tsai's resignation as the Company's
Chief Executive Officer, the Company appointed Hai Shi and Xuedong (Tony) Tian to serve as the Company's new Co-Chief Executive
Officers, effective April 15, 2024. We are highly dependent on the expertise, skill and knowledge of Mr. Shi, our Founder, Co-Chief Executive
Officer, Chief Strategy Officer and Chairman, Mr. Tian, our other Co-Chief Executive Officer, and Mr. Peter Kang, our Vice President
and Director of Business Development and Operations.

 The
loss of the services of any or all of these executive officers, or certain key product development personnel, including those employed
by studio partners, such as Studio Wildcard, could significantly harm our business. In addition, if one or more key employees were to
join a competitor or form a competing company, we may lose additional personnel, experience material interruptions in product development,
delays in bringing products to market and difficulties in our relationships with licensors, suppliers and customers, which would significantly
harm our business. Failure to continue to attract and retain qualified management and creative personnel could adversely affect our business

 Our
management team has limited experience managing a public company.

 Most
members of our management team have limited experience managing a publicly traded company, interacting with public company investors
and regulators and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully
or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations
under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents
will require significant attention from our senior management and could divert their attention away from the day-to-day management of
our business, which could adversely impact our business, operating results and financial condition.

 Our
business is subject to the risks of earthquakes, fire, floods, public health crises and other natural catastrophes and to interruption
by man-made problems such as power disruptions, computer viruses, data security breaches or other incidents, war or terrorism.

 Our
corporate headquarters is located in Culver City, California. Additionally, we rely on third-party infrastructure, enterprise applications
and internal technology systems for our development, marketing, operational support and sales activities. The West Coast of the United
States, where our corporate headquarters are located, contains active earthquake zones and has been subject to numerous devastating wildfires
and associated electrical blackouts. In the event of a catastrophic event, including a natural disaster such as an earthquake, hurricane,
fire, flood, tsunami or tornado, or other catastrophic event such as power loss, telecommunications failure, software or hardware malfunction,
cyber-attack, war, terrorist attack or incident of mass violence in the Los Angeles area or elsewhere where our operations are located
or where certain other systems and applications that we rely on are hosted, we may be unable to continue our operations and may endure
significant system interruptions, reputational harm, delays in our application development, lengthy interruptions in our platform, breaches
of data security and loss of critical data, all of which could have an adverse effect on our future operating results. In addition, natural
disasters, cyber-attacks, escalation of geopolitical tensions, including as a result of escalations in the ongoing conflict between Russia
and Ukraine or Israel and Hamas, acts of terrorism, public health crises, such as pandemics and epidemics, or other catastrophic events
could cause disruptions in our or our customers' businesses, national economies or the world economy as a whole.

 Our
industry is subject to rapid technological change, and if we do not adapt to, and appropriately allocate our resources among, emerging
technologies and business models, our business may be negatively impacted.

 Technology
changes rapidly in the interactive entertainment industry. We must continually anticipate and adapt to emerging technologies, such as
cloud-based game streaming, and business models, such as free-to-play and subscription-based access to a portfolio of interactive content,
to stay competitive. Forecasting the financial impact of these rapidly changing technologies and business models is inherently uncertain
and volatile. Supporting a new technology or business model may require partnering with a new platform, business, or technology partner,
which may be on terms that are less favorable to us than those for more traditional technologies or business models. If we invest in
the development of interactive entertainment products for distribution channels that incorporate a new technology or business model that
does not achieve significant commercial success, whether because of competition or otherwise, we may not recover the often substantial
up-front costs of developing and marketing those products, or recover the opportunity cost of diverting management and financial resources
away from other products or opportunities. Further, our competitors may adapt to an emerging technology or business model more quickly
or effectively than we do, creating products that are technologically superior to ours, more appealing to consumers, or both.

 If,
on the other hand, we elect not to pursue the development of products incorporating a new technology, or otherwise elect not to pursue
new business models that achieve significant commercial success, it may have adverse consequences. It may take significant time and expenditures
to shift product development resources to that technology or business model, and it may be more difficult to compete against existing
products incorporating that technology or using that business model.

 In
addition, the pace of change in product offerings and consumer tastes in the electronics and digital gaming areas is great and this pace
of change is expected to accelerate as artificial intelligence is further incorporated into the development of games. If a digital game
fails to gain consumer acceptance early in its life cycle, there are limited opportunities to gain such acceptance through secondary
launches or distribution through alternative platforms. This pace of change or lack of consumer acceptance means that the window in which
a digital gaming product can achieve and maintain consumer interest may be even shorter than traditional toys and games.

 We
rely on third-party platforms, such as Xbox Live and Game Pass, PlayStation Network, Steam, Epic Games Store, My Nintendo Store, the
Apple App Store, the Google Play Store, and the Amazon Appstore, to distribute our games and collect revenues generated on such platforms
and rely on third-party payment service providers to collect revenues generated on our own platforms.

 Our
games are primarily purchased, accessed and operated through Xbox Live and Game Pass, PlayStation Network, Steam, Epic Games Store, My
Nintendo Store, and in the case of our mobile games, the Apple App Store, the Google Play Store and the Amazon Appstore. Substantially
all of the games, DLC and in-game virtual items that we sell are purchased using the payment processing systems of these platforms and,
for the year ended December 31, 2024, 94.6% of our revenues were generated through Xbox Live and Game Pass, PlayStation Network, Steam,
Epic Games Store, My Nintendo Store, the Apple App Store, the Google Play Store, and the Amazon Appstore. Consequently, our expansion
and prospects depend on our continued relationships with these providers, and any other emerging platform providers that are widely adopted
by our target players. In addition, having such a large portion of our total net revenues concentrated in a few counterparties reduces
our negotiating leverage. We are subject to the standard terms and conditions that these platform providers have for game developers,
which govern the content, promotion, distribution, operation of games and other applications on their platforms, as well as the terms
of the payment processing services provided by the platforms, and which the platform providers can change unilaterally on short notice
or without notice. As such, our business would be harmed if:

 the
 platform providers discontinue or limit our access to their platforms;

 governments
 or private parties, such as internet providers, impose bandwidth restrictions, increase charges or restrict or prohibit access to
 those platforms;

 the
 platforms increase the fees they charge us;

 the
 platforms modify their algorithms, communication channels available to developers, respective terms of service or other policies;

 the
 platforms decline in popularity;

 the
 platforms adopt changes or updates to their technology that impede integration with other software systems or otherwise require us
 to modify our technology or update our games in order to ensure players can continue to access our games and content with ease;

 the
 platforms elect or are required to change how they label free-to-play games or take payment for in-game purchases;

 the
 platforms block or limit access to the genres of games that we provide in any jurisdiction;

 the
 platform experiences a bankruptcy or other form of insolvency event; or

 we
 are unable to comply with the platform providers' terms of service.

 Moreover,
if our platform providers do not perform their obligations in accordance with our platform agreements or otherwise meet our business
requirements, we could be adversely impacted. For example, in the past, some of these platform providers have experienced outages for
short periods of time, unexpectedly changed their terms or conditions, or experienced issues with their features that permit our players
to purchase games or in-game virtual items. In addition, if we do not adhere to the terms and conditions of our platform providers, the
platform providers may take actions to limit the operations of, suspend or remove our games from the platform, and/or we may be exposed
to liability or litigation. For example, in August 2020, Epic Games, Inc. ("Epic Games"), attempted to bypass Apple and Google's
payment systems for in-game purchases with an update that allowed users to make purchases directly through Epic Games in its game, Fortnite.
Apple and Google promptly removed Fortnite from their respective app stores, and Apple filed a lawsuit seeking injunctive relief to block
the use of Epic Games' payment system and sought monetary damages to recover funds made while the updated version of Fortnite was
active.

 If
any such events described above occur on a short-term or long-term basis, or if these third-party platforms and online payment service
providers otherwise experience issues that impact the ability of players to download or access our games, access social features, or
make in-game purchases, it would have a material adverse effect on our brands and reputation, as well as our business, financial condition
and results of operations.

 We
depend on servers and networks to operate our games with online features. If we were to lose functionality in any of these areas for
any reason, our business may be negatively impacted.

 Our
business relies on the continuous operation of servers, the vast majority of which are owned and operated by third parties. Although
we strive to maintain more than sufficient server capacity, and provide for active redundancy in the event of limited hardware failure,
any broad-based catastrophic server malfunction, a significant service-disrupting attack or intrusion by hackers that circumvents security
measures, a failure of disaster recovery service or the failure of a company on which we are relying for server capacity to provide that
capacity for whatever reason would likely degrade or interrupt the functionality of our games with online features, and could prevent
the operation of such games altogether, any of which could result in the loss of sales for, or in, such games. The risk is particularly
pronounced with respect to our multiplayer game services, which rely on systems hosted in a hybrid of data centers across the world as
well as cloud providers. Further, insufficient server capacity, in particular during times of peak player activity corresponding with
the release of new games or DLC, could affect our ability to provide game services, which could negatively impact our business. Conversely,
if we overestimate the amount of server capacity required by our business, we may incur additional operating costs.

 We
also rely on platforms and networks operated by third parties, such as Xbox Live and Game Pass, PlayStation Network, Steam, My Nintendo
Store and Epic Games Store for the sale and digital delivery of downloadable console and PC game content, the functionality of our games
with online features. Similarly, we rely on those platforms and networks, as well as the continued operation of the Apple App Store,
the Google Play Store and the Amazon Appstore for our free-to-play games. An extended interruption to any of these services could adversely
affect our ability to sell and distribute our digital products and operate our games with online features, which could result in a loss
of revenue and otherwise negatively impact our business.

 Risk
of Service Disruptions Due to Large-Scale Distributed Denial-of-Service (DDoS) Attacks

 Our
online game servers are vulnerable to Distributed Denial-of-Service ("DDoS) attacks, we are increasingly targeted by large-scale
DDoS attacks, which have, at times, overwhelmed our game servers despite our implementation of advanced DDoS protection measures, it
can disrupt gameplay, impact players experience, and harm our reputation. Recently, we have experienced waves of exceptionally large
DDoS attacks that exceeded our mitigation capacity, causing prolonged server outages and disrupting player access to our games.

 If
we are unable to effectively prevent or mitigate future DDoS attacks, our services may experience repeated disruptions, negatively impacting
the player experience, damaging our reputation, and leading to decreased user engagement and retention. Additionally, prolonged downtime
could result in lost revenue, increased customer support costs, and potential refunds. Furthermore, as cyber threats continue to evolve
in complexity and scale, strengthening our defenses may require significant additional investment in infrastructure, third-party security
services, or other protective measures. If such attacks persist or escalate, they could materially and adversely affect our business,
financial condition, and results of operations.

 We
may be unable to effectively manage the continued growth and the scope and complexity of our business, including our expansion into new
business models that are untested and into adjacent business opportunities with large, established competitors.

 In
recent years, we have experienced significant growth in the scope and complexity of our business. From time to time we seek to establish
and implement new business models, including eSports offerings, our NOIZ influencer platform and animation ventures. Forecasting
the success of any new business model is inherently uncertain and depends on a number of factors both within and outside of our control.
Our actual revenue and profit for these businesses may be significantly greater or less than our forecasts. In addition, these new business
models could fail, resulting in the loss of our investment in the development and infrastructure needed to support these new business
models, as well as the opportunity cost of diverting management and financial resources away from more successful and established businesses.
While we anticipate growth in these areas of our business, consumer demand is difficult to predict as a result of a number of factors,
including satisfaction with our products and services, our ability to provide engaging products and services, reliability of our infrastructure
and the infrastructure of our partners, pricing, the actual or perceived security of our and our partners' information technology
systems and reductions in consumer spending levels.

 We
do not know to what extent these and any future expansions into new business models will be successful. Further, even if successful,
our aspirations for growth in our core businesses and these adjacent businesses could create significant challenges for our management,
operational, and financial resources. If not managed effectively, this growth could result in the over-extension of our operating infrastructure,
and our management systems, information technology systems, and internal controls and procedures may not be adequate to support this
growth. Failure by these new businesses or failure to adequately manage our growth in any of these ways may damage our brand or otherwise
negatively impact our core business. Further, the success of these new businesses is largely contingent on the success of our underlying
franchises and as such, a decline in the popularity of a franchise may impact the success of the new businesses adjacent to that franchise.

 The
interactive entertainment software industry is highly competitive.

 We
compete for the sale of interactive entertainment software with Sony and Microsoft, each of which is a large developer and marketer of
software for its own platforms. We also compete with game publishers, such as Activision Blizzard, Inc., Electronic Arts Inc., Take-Two
Interactive, Ubisoft, Epic Games, Tencent, Zynga, Netmarble, Sony, Microsoft and Nintendo primarily for game development on consoles,
PCs and mobile devices. Across the sandbox survival game genre, we primarily compete with Embracer Group, Saber Group, Enand Global 7,
FunCom, Axolot Games and Facepunch Studios. As our business is dependent upon our ability to develop hit titles, which require increasing
budgets for development and marketing, the availability of significant financial resources has become a major competitive factor in developing
and marketing software games. Some of our competitors have greater financial, technical, personnel and other resources than we do and
are able to finance larger budgets for development and marketing and make higher offers to licensors and developers for commercially
desirable properties. Our titles also compete with other forms of entertainment, such as social media and casual games, in addition to
film, television and audio and video products featuring similar themes, online computer programs and other entertainment, which may be
less expensive or provide other advantages to consumers.

 A
number of software publishers who compete with us have developed and commercialized or are currently developing online games. As technological
advances significantly increase the availability of online games and as consumer acceptance of online gaming grows substantially, it
could result in a decline in our platform-based software sales and negatively affect sales of such products.

we compete with other forms of entertainment and leisure activities. While we monitor general market conditions, significant shifts in
consumer demand that could materially alter public preferences for different forms of entertainment and leisure activities are difficult
to predict. Failure to adequately identify and adapt to these competitive pressures could have a negative impact on our business.

 We
are subject to product development risks, which could result in delays and additional costs, and often times we must adapt to changes
in software technologies.

 We
depend on our internal development studios and related-party developers to develop new interactive entertainment software within anticipated
release schedules and cost projections. Our development costs can be substantial. If we or our related-party developers experience unanticipated
development delays, financial difficulties or additional costs, for example, as a result of the increasing costs due to inflation or
the ongoing geopolitical conflicts, we may not be able to release titles according to our schedule and at budgeted costs. There can be
no assurance that our products will be sufficiently successful so that we can recoup these costs or make a profit on these products.

in order to stay competitive, our internal development studios must anticipate and adapt to rapid technological changes affecting software
development, such as cloud-based game streaming. Any inability to respond to technological advances and implement new technologies could
render our products obsolete or less marketable. Further, the failure to pursue the development of new technology, platforms, or business
models that obtain meaningful commercial success in a timely manner may negatively affect our business, resulting in increased production
or development costs and more strenuous competition.

 Our
business is subject to our ability to develop commercially successful products for the current video game platforms, which may not generate
immediate or near-term revenues, and as a result, our business and operating results may be more volatile and difficult to predict during
console transitions than during other times.

 We
derive most of our revenue from publishing video games on third-party platform providers, 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, which, in the
aggregate, comprised 94.6% of our net revenue by product platform for the year ended December 31, 2024. The success of our business is
subject to the continued popularity of these platforms and our ability to develop commercially successful products for these platforms.

 Historically,
when next generation consoles are announced or introduced into the market, consumers have typically reduced their purchases of products
for prior-generation consoles in anticipation of purchasing a next-generation console and products for that console. During these periods,
sales of the products we publish may decline until new platforms achieve wide consumer acceptance. Console transitions may have a comparable
impact on sales of DLC, amplifying the impact on our revenues. This decline may not be offset by increased sales of products for the
next-generation consoles. In addition, as console hardware moves through its life cycle, hardware manufacturers typically enact price
reductions, and decreasing prices may put downward pressure on software prices. During console transitions, we may simultaneously incur
costs both in continuing to develop and market new titles for prior-generation video game platforms, which may not sell at premium prices,
and also in developing products for next-generation platforms, which may not generate immediate or near-term revenues. As a result, our
business and operating results may be more volatile and difficult to predict during console transitions than during other times.

 Our
results of operations or reputation may be harmed as a result of objectionable consumer, or other third party-created content, or if
our distributors, retailers, development and licensing partners, or other third parties with whom we are affiliated, act in ways that
put our brand at risk.

 Certain
of our games support collaborative online features that allow consumers to communicate with one another and post narrative comments,
in real time, that are visible to other consumers. Additionally, certain of our games allow consumers to create and share "user-generated
content" that is visible to other consumers. From time to time, objectionable and offensive consumer content may be distributed
within our games and on our broadcasts through these features or to gaming websites or other sites or forums with online chat features
or that otherwise allow consumers to post comments. We may be subject to lawsuits, governmental regulation or restrictions, and consumer
backlash (including decreased sales and harmed reputation), as a result of consumers posting offensive content.

 In
many cases, our business partners and other third party affiliates are given access to sensitive and proprietary information or control
over our intellectual property to provide services and support to our team. These third parties may misappropriate or misuse our information
or intellectual property and engage in unauthorized use of it. Further, the failure of these third parties to provide adequate services
and technologies or to adequately maintain or update their services and technologies could result in a disruption to our business operations
or an adverse effect on our reputation and may negatively impact our business. At the same time, if the media, consumers or employees
raise any concerns about our actions vis- -vis third parties, including consumers who play our games, this could also harm our
business, results of operations or our reputation.

 The
products or services we release may contain defects, bugs or errors.

 Our
products and services contain or rely upon extremely complex software programs and are difficult to develop and distribute. We have quality
controls in place to detect defects, bugs or other errors in our products and services before they are released. Nonetheless, these quality
controls are subject to human error, overriding and resource or technical constraints. In addition, the effectiveness of our quality
controls and preventative measures may be negatively affected by the distribution of our workforce resulting from, among other things,
the COVID-19 pandemic. As such, these quality controls and preventative measures may not be effective in detecting all defects, bugs
or errors in our products and services before they have been released into the marketplace. In such an event, the technological reliability
and stability of our products and services could be below our standards and the standards of our players, and our reputation, brand and
sales could be adversely affected. In addition, we could be required to, or may find it necessary to, offer a refund for the product
or service, suspend the availability or sale of the product or service or expend significant resources to cure the defect, bug or error
each of which could significantly harm our business and operating results.

 External
game developers may not meet product development schedules or otherwise fulfill their contractual obligations.

 We
are heavily reliant upon contracts with external game developers to develop our games or distribute our games. While we maintain contractual
protections, we have less control over the product development schedules of games developed by external developers. We depend on their
ability to meet product development schedules which could be negatively affected by, among other things, the distributed workforce model
resulting from the COVID-19 pandemic or the loss of key development personnel. In addition, disputes occasionally arise with external
developers, including with respect to game content, launch timing, achievement of certain milestones, the game development timeline,
marketing campaigns, contractual terms and interpretation of such terms. If we have disputes with external developers or they cannot
meet product development schedules, acquire certain approvals or are otherwise unable or unwilling to fulfill their contractual obligations
to us, we may delay or cancel previously announced games, alter our launch schedule or experience increased costs and expenses, which
could result in a delay or significant shortfall in anticipated revenue, harm our profitability and reputation and cause our financial
results to be materially affected.

 Any
cybersecurity-related attack, significant data breach or disruption of the information technology systems or networks on which we rely
could negatively impact our business.

 In
the course of our day-to-day business, we and third parties operating on our behalf and from which we license certain intellectual property
create, store, and/or use commercially sensitive information, such as the source code and game assets for our interactive entertainment
software products and sensitive and confidential information with respect to our customers, consumers, and employees. Our ability to
effectively manage our business and coordinate the manufacturing, sourcing, distribution and sale of our interactive entertainment software
products depends significantly on the reliability and capacity of these systems. We are critically dependent on the integrity, security
and consistent operations of these systems. A malicious cybersecurity-related attack, intrusion or disruption by hackers (including through
spyware, ransomware, viruses, phishing, denial of service and similar attacks) or other breach of the systems on which such source code
and assets, account information (including personal information) and other sensitive data is stored could lead to piracy of our software,
fraudulent activity, disclosure or misappropriation of, or access to, our customers', consumers' or employees' personal
information, or our own business data. Such incidents could also lead to product code-base and game distribution platform exploitation,
should undetected viruses, spyware, or other malware be inserted into our products, services, or networks, or systems used by our consumers.
We have implemented cybersecurity programs and the tools, technologies, processes, and procedures intended to secure our data and systems,
and prevent and detect unauthorized access to, or loss of, our data, or the data of our customers, consumers or employees. However, because
these cyberattacks may remain undetected for prolonged periods of time and the techniques used by criminal hackers and other third parties
to breach systems are constantly evolving, change frequently and we may be unable to anticipate these techniques or implement adequate
preventative measures. A data intrusion into a server for a game with online features or for our proprietary online gaming service could
also disrupt the operation of such game or platform. If we are subject to cybersecurity breaches, or a security-related incident that
materially disrupts the availability of our products and services, we may have a loss in sales or subscriptions or be forced to pay damages
or incur other costs, including from the implementation of additional cyber and physical security measures, or suffer reputational damage.
If there were a public perception that our data protection measures are inadequate, whether or not the case, it could result in reputational
damage and potential harm to our business relationships or the public perception of our business model. In addition, such cybersecurity
breaches may subject us to legal claims or proceedings, like individual claims and regulatory investigations and actions, including fines,
especially if there is loss, disclosure, or misappropriation of, or access to, our customers' personal information or other sensitive
information, or there is otherwise an intrusion into our customers' privacy.

 If
we do not successfully invest in, establish and maintain awareness of our brand and games or if we incur excessive expenses promoting
and maintaining our brand or our games, our business, financial condition, results of operations or reputation could be harmed.

 We
believe that establishing and maintaining our brand is critical to maintaining and creating favorable relationships with players, platform
providers, advertisers and content licensors, as well as competing for key talent. Increasing awareness of our brand and recognition
of our games is particularly important in connection with our strategic focus on in-licensing games successfully cross-promoting such
games. In addition, globalizing and extending our brand and recognition of our games requires significant investment and extensive management
time to execute successfully. Although we make significant sales and marketing expenditures in connection with the launch of our games,
these efforts may not succeed in increasing awareness of our brand or the new games. If we fail to increase and maintain brand awareness
and consumer recognition of our games, our potential revenues could be limited, our costs could increase and our business, financial
condition, results of operations or reputation could suffer.

 In
addition, if a game contains objectionable content or the messaging functionality of our games is abused, we could experience damage
to our reputation and brand. Despite reasonable precautions, some consumers may be offended by certain game content, including user-generated
content, the third-party advertisements displayed in our mobile games, or by treatment of other users. If consumers believe that a game
we published or third-party advertisement displayed in a game contains objectionable content, it could harm our brand and consumers could
refuse to play it and could pressure the platform providers to remove the game from their platforms. For example, we rely on third-party
advertising partners to display advertisements within our mobile games, and may experience in the future instances where offensive or
objectionable content has been displayed in our games through our advertising partners. While this may violate the terms of our agreements
with these advertising partners, our reputation and player experience may suffer. Furthermore, steps that we may take in response to
such instances, such as temporarily or permanently shutting off access of such advertising partner to our network, may negatively impact
our revenue in such period.

 Our
operating results may fluctuate from quarter to quarter, which makes our future results difficult to predict.

 Our
quarterly operating results have fluctuated in the past and may fluctuate in the future. Additionally, we have a limited operating history
with the current scale of our business, which makes it difficult to forecast our future results and subjects us to a number of uncertainties,
including our ability to plan for and anticipate future growth. As a result, you should not rely upon our past quarterly operating results
as indicators of future performance. We have encountered, and will continue to encounter, risks and uncertainties frequently experienced
by growing companies in rapidly evolving markets, such as the risks and uncertainties described herein. Our operating results in any
given quarter can be influenced by numerous factors, many of which are unpredictable or are outside of our control, including:

 our
 ability to maintain and grow our player base;

 our
 ability to retain and increase revenue from existing customers;

 our
 ability to introduce new features and functionalities and enhance existing features and functionalities;

 our
 ability to respond to competitive developments, including pricing changes and the introduction of new products and features by our
 competitors, or the emergence of new competitors;

 seasonal
 purchasing patterns of our consumers;

 impact
 of downtime or defects in our game and reputational harm;

 changes
 to financial accounting standards and the interpretation of those standards that may affect the way we recognize and report our financial
 results, including changes in accounting rules governing recognition of revenue;

 general
 economic and political conditions and government regulations in the countries where we currently operate or plan to expand;

 decisions
 by us to incur additional expenses, such as increases in sales and marketing or research and development; and

 potential
 costs to attract, onboard, retain and motivate qualified personnel.

 The
impact of one or more of the foregoing and other factors may cause our operating results to vary significantly. As such, we believe that
quarter-to-quarter comparisons of our operating results may not be meaningful and should not be relied upon as an indication of future
performance. The variability and unpredictability of our operating results could result in our failure to meet our expectations or those
of analysts that cover us or investors with respect to revenue or other operating results for a particular period. If we fail to meet
or exceed such expectations, then the trading price of our Class A common stock could fall substantially, and we could face costly lawsuits,
including securities class action suits.

 We
have experienced rapid growth and expect to invest in our growth for the foreseeable future. If we fail to manage our growth effectively,
then our business, operating results and financial condition would be adversely affected.

 We
have experienced rapid growth in recent periods, and we expect to continue to invest broadly across our organization to support our growth.
Although we have experienced rapid growth historically, we may not sustain our current growth rates, nor can we assure you that our investments
to support our growth will be successful. The growth and expansion of our business will require us to invest significant financial and
operational resources and the continuous dedication of our management team.

to manage growth effectively could result in difficulty or delays in attracting new players, declines in quality or player satisfaction
and demand for our games, increases in costs, difficulties in introducing new products and features or enhancing our offerings, loss
of customers or consumers, difficulties in attracting or retaining talent or other operational difficulties, any of which could adversely
affect our business, operating results and financial condition. Effectively managing our growth may also be more difficult to accomplish
the longer that our employees, our customers and the overall economy is impacted by rising interest rates, inflation, uncertainties related
to government fiscal and tax policies, including changes in tax rates, duties, tariffs, or other restrictions, sovereign debt crises,
and other economic factors and the ongoing conflicts in Ukraine and Gaza.

 User
metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics could
harm our business, revenue and financial results.

 We
intend to regularly review our engagement metrics, including the number of our active users, paying users, and other measures to evaluate
growth trends, performance and to make informed strategic decisions. These metrics are calculated using internal company data and have
not been validated by an independent third party. While these numbers are based on what we currently believe to be reasonable estimates
for the applicable period of measurement, there are inherent challenges in measuring, thus metrics calculations may be inaccurate, and
we may not be able to identify those inaccuracies. In addition, we may implement new methodologies for calculating these metrics, which
may result in the metrics changing or decreasing from prior periods or not being comparable to prior periods.

 Expansion
of the Company's operations into new products, services and technologies, including content categories, is inherently risky and
may subject it to additional business, legal, financial and competitive risks.

 Expansion
of the Company's operations and its marketplace into additional products and services, such as short film drama involve numerous
risks and challenges, including potential new competition, increased capital requirements and increased marketing spent to achieve customer
awareness of these new products and services. Growth into additional content, product and service areas may require changes to the Company's
existing business model and cost structure and modifications to its infrastructure and may expose the Company to new regulatory and legal
risks, any of which may require expertise in areas in which the Company has little or no experience. There is no guarantee that the Company
will be able to generate sufficient revenue from sales of such products and services to offset the costs of developing, acquiring, managing
and monetizing such products and services and the Company's business may be adversely affected.

 If
our efforts to attract and retain users are not successful, our business will be adversely affected.

 Our
short film revenue is derived from in-app currency spend. We must continually add users and convert them to paying users. The video streaming
business is new to us and our ability to penetrate and grow our user base may fluctuate. Our ability to attract and retain users and
convert them to paying users will depend in part on our ability to consistently provide our users in countries around the globe with
compelling content choices that keep our users engaged with our service, effectively drive conversation around our content and service,
as well as provide quality experience for choosing and enjoying our short film dramas. Furthermore, the relative service levels, content
offerings, pricing and related features of competitors to our service may adversely impact on our ability to attract and retain users.
Competitors include other entertainment video providers, such as linear television, and streaming entertainment providers.

 Paying
user growth is also impacted by adverse macroeconomic conditions, including inflation, may also adversely impact our ability to attract
and retain paying users our business will be adversely affected.

 If
we do not continuously provide value to our users, including making improvements to our service in a manner that is favorably received
by them, our revenue, results of operations and business will be adversely affected.

 If
consumers do not perceive our service offering to be of value, including if we introduce new or adjust existing features, adjust pricing
or service offerings, or change the mix of content in a manner that is not favorably received by them, we may not be able to attract
and retain paying users, and accordingly, our revenue, including revenue per paying user, and results of operations may be adversely
affected.

 We
may, from time to time, adjust our in-app pricing, or our pricing model itself. Any adjustments we make may not be well received by our
users and could negatively impact our ability to attract and retain paying users, and as a result, our ability to grow our business will
be adversely affected.

 If
we fail to grow and maintain our active user base, our business, financial condition and operating results may be materially and adversely
affected.

 The
size of our active user base with our products are critical to our success. We are new to the short film drama business. Our financial
performance has been and will continue to be significantly affected by our ability to grow and engage our active user base. In addition,
we may fail to maintain or increase our user base or our users' engagement if, among other things:

 we
 fail to innovate or develop new products and services that provide relevant content and satisfactory
 experience;

 we
 fail to produce new dramas that are attractive to our users;

 we
 fail to respond to or adopt evolving technologies for product development on a timely and
 cost-effective basis;

 we
 fail to successfully market and monetize our existing and new mobile applications throughout
 their life cycles;

 we
 fail to maintain or improve our technology infrastructure and security measures designed
 to protect our users' personal privacy and cyber security;

 we
 lose users to competing products and services or due to concerns related to personal privacy
 and cyber security or other reasons;

 we
 fail to successfully implement our strategies related to the continued expansion of our global
 user base; or

 we
 are required by existing or new laws, regulations or government policies to implement changes
 to our products or services that are adverse to our business.

 We
utilize artificial intelligence ("AI"), which could expose us to liability or adversely affect our business.

 We
have integrated, or are in the process of integrating, artificial intelligence ("AI") into various aspects of our business
operations. These include, but are not limited to, customer service automation, data analytics, game development, and generation of resources.
We evaluate and adapt our AI strategies to optimize operational efficiency and enhance customer experiences. We have made and expect
to continue to make investments in AI, including software acquisitions, development of proprietary algorithms, and talent recruitment.
These investments are expected to drive innovation, improve operational efficiencies, and contribute to long-term growth. While AI presents
substantial opportunities, it also poses certain risks. These include reliance on complex algorithms, potential biases in AI decision-making,
cybersecurity threats, and regulatory changes. If the AI tools that we use are deficient, inaccurate or controversial, we could incur
operational inefficiencies, competitive harm, legal liability, brand or reputational harm, or other adverse impacts on our business and
financial results. If we do not have sufficient rights to use the data or other material or content on which the AI tools we use rely,
we also may incur liability through the violation of applicable laws and regulations, third-party intellectual property, privacy or other
rights, or contracts to which we are a party. We seek to mitigate these risks through regular audits, risk assessments, review of privacy
standards, security protocols, monitoring, and adaptive AI models. The integration of AI technologies has also led to changes in workforce
requirements. We invest in employee training and development to adapt to AI-driven changes. While AI automates certain tasks, it also
creates new roles and opportunities within our organization. We anticipate that AI will play an increasingly significant role in our
operations and strategy. Ongoing investments and research in AI are expected to yield new capabilities and efficiencies, aligning with
our long-term vision for innovation and growth.

 In
addition, regulation of AI is rapidly evolving worldwide as legislators and regulators are increasingly focused on these powerful emerging
technologies. The technologies underlying AI and its uses are subject to a variety of laws and regulations, including intellectual property,
data privacy and security, consumer protection, competition, and equal opportunity laws, and are expected to be subject to increased
regulation and new laws or new applications of existing laws and regulations. AI is the subject of ongoing review by various U.S. governmental
and regulatory agencies, and various U.S. states and other foreign jurisdictions are applying, or are considering applying, their platform
moderation, cybersecurity, and data protection laws and regulations to AI or are considering general legal frameworks for AI. We may
not be able to anticipate how to respond to these rapidly evolving frameworks, and we may need to expend resources to adjust our operations
or offerings in certain jurisdictions if the legal frameworks are inconsistent across jurisdictions. Furthermore, because AI technology
itself is highly complex and rapidly developing, it is not possible to predict all of the legal, operational or technological risks that
may arise relating to the use of AI.

to meet Nasdaq's continued listing requirements could result in the delisting of our Class A common stock, negatively impact the
price of our Class A common stock and negatively impact our ability to raise additional capital.

 On
June 27, 2024, we received a deficiency letter from the Listing Qualifications Department (the "Staff") of the Nasdaq Stock
Market ("Nasdaq") notifying us that, for thirty (30) consecutive business days (from May 10, 2024 to June 26, 2024), the
bid price for our Class A common stock had closed below the minimum $1.00 per share requirement for continued inclusion on the Nasdaq
Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the "Bid Price Rule"). In accordance with Nasdaq rules, we were
provided an initial period of 180 calendar days, or until December 24, 2024 (the "Compliance Date"), to regain compliance
with the Bid Price Rule. The Staff informed the Company that if, at any time before the Compliance Date, the bid price for the Class
A common stock closed at $1.00 or more for a minimum of ten (10) consecutive business days, the Staff would provide written notification
to the Company that it complied with the Bid Price Rule and the matter will be closed.

 On
October 18, 2024, Nasdaq notified the Company that the Staff had determined that for ten (10) consecutive business days, from October
4, 2024, to October 17, 2024, the closing bid price of our Class A common stock has been at $1.00 per share or greater. Accordingly,
the Staff informed us that we had regained compliance with Nasdaq Listing Rule 5550(a)(2) and this matter is now closed.

 If
at any time we do not satisfy the continued listing requirements of the Nasdaq, including compliance with the Bid Price Rule, within
the time frame granted by Nasdaq, our Class A common stock will be delisted from the Nasdaq. Any perception that we may not regain compliance
or a delisting of our Class A common stock by Nasdaq could adversely affect our ability to attract new investors, decrease the liquidity
of the outstanding shares of our Class A common stock, reduce the price at which such shares trade and increase the transaction costs
inherent in trading such shares with overall negative effects for our stockholder. In addition, delisting of our Class A common stock
from Nasdaq could deter broker-dealers from making a market in or otherwise seeking or generating interest in our Class A common stock,
and might deter certain institutions and persons from investing in our Class A common stock. In addition, if our Class A common stock
was delisted, our Class A common stock would be subject to rules that impose additional sales practice requirements on broker-dealers
who sell our securities. The additional burdens imposed upon broker-dealers by these requirements could discourage broker-dealers from
effecting transactions in our Class A common stock. This would adversely affect the ability of investors to trade our Class A common
stock and would adversely affect the value of our Class A common stock. These factors could contribute to lower prices and larger spreads
in the bid and ask prices for our Class A common stock.

 The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the
sale of certain securities, which are referred to as "covered securities." Because our Class A common stock is listed on
Nasdaq, our shares of Class A common stock are "covered securities". Although the states are preempted from regulating the
sale of covered securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and,
if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case.
Further, if we were to be delisted from Nasdaq, our shares of Class A common stock would cease to be recognized as covered securities
and we would be subject to regulation in each state in which we offer our securities.

 As
mentioned above, in the event of a delisting, we would take actions to restore our compliance with the Nasdaq listing requirements, but
we can provide no assurance that any such action taken by us would allow our Class A common stock to become listed again, stabilize the
market price or improve the liquidity of our Class A common stock or prevent our Class A common stock from meeting the mandatory Nasdaq
listing requirements.

 Risks
Related to Intellectual Property

 If
we are unable to protect the intellectual property relating to our material software, the commercial value of our products will be adversely
affected, and our competitive position could be harmed.

 We
are highly reliant upon in-licensed intellectual property and developing proprietary software, where we have obtained the rights to publish
and distribute software developed by third parties and related parties. We and our licensors attempt to protect our software and production
techniques under patent, copyright, trademark and trade secret laws as well as through contractual restrictions on disclosure, copying
and distribution. Nonetheless, our software is susceptible to piracy and unauthorized copying, and third parties may potentially exploit,
misappropriate or otherwise violate our intellectual property and proprietary information, causing significant reputational damage. Unauthorized
third parties, for example, may be able to copy or to reverse engineer our software to obtain and use programming or production techniques
that we regard as proprietary. Well-organized piracy operations have also proliferated in recent years, resulting in the ability to download
pirated copies of our software over the Internet. Although we attempt to incorporate protective measures into our software, piracy of
our products could negatively affect our future profitability. In addition, "cheating" programs or other unauthorized software
tools and modifications that enable consumers to cheat in games harm the experience of players who play fairly and could negatively impact
the volume of microtransactions or purchases of DLC. Also, vulnerabilities in the design of our applications and of the platforms upon
which they run could be discovered after their release. This may lead to lost revenues from paying consumers or increased cost of developing
technological measures to respond to these vulnerabilities, either of which could negatively affect our business.

 If
we infringe, misappropriate, or otherwise violate or are alleged to infringe, misappropriate or otherwise violate the intellectual property
rights of third parties, our business could be adversely affected.

 As
our industry grows, we may be subject to an increasing amount of litigation that is common in the software industry based on allegations
of infringement or other alleged violations of patent, copyright, or trademarks. In addition, we believe that interactive entertainment
software will increasingly become the subject of claims that such software infringes on the intellectual property rights of others with
both the growth of online functionality and advances in technology, game content and software graphics as games become more realistic.
From time to time, we may receive notices from third parties or be named in lawsuits by third parties alleging infringement of their
proprietary rights. Although we believe that our software and technologies and the software and technologies of third-party developers
and publishers with whom we have contractual relations do not and will not infringe or violate proprietary rights of others, it is possible
that infringement of proprietary rights of others may occur. Any claims of infringement, with or without merit, could be time-consuming,
costly and difficult to defend. Moreover, intellectual property litigation or claims could require us to discontinue the distribution
of products, obtain a license or redesign our products, which could result in additional substantial costs and material delays.

 If
we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

 We
rely on trade secrets and proprietary knowledge to protect our unpatented know-how, expertise, technology and other proprietary information
and to maintain our competitive position. We enter into nondisclosure and confidentiality agreements with our employees and independent
contractors regarding our trade secrets and proprietary information in order to limit access to, and disclosure and use of, our trade
secrets and proprietary information. Nevertheless, we cannot guarantee that we have entered into such agreements with each party that
may have or has had access to our trade secrets or proprietary information. Furthermore, trade secrets are difficult to protect. We cannot
assure you that the obligation to maintain the confidentiality of our trade secrets and proprietary information will be honored. Any
of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able
to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is
difficult, expensive, and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States
are less willing or unwilling to protect trade secrets. Monitoring unauthorized disclosure is difficult, and we do not know whether the
steps we have taken to prevent such disclosure are, or will be, adequate. If we were to enforce a claim that a third party had illegally
obtained and was using our trade secrets, it would be expensive and time-consuming, and the outcome would be unpredictable. If any of
our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right
to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. If any of our material
trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed. In general,
any loss of trade secret protection or other unpatented proprietary rights could harm our business, financial condition, results of operations,

 We
may be subject to claims that our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their
current or former employers or claims asserting ownership of what we regard as our own intellectual property.

 Many
of our employees, consultants and advisors are currently or were previously employed at other companies in our field, including our competitors
or potential competitors. Many of them executed proprietary rights, non-disclosure and/or non-competition agreements in connection with
such previous employment or engagement. Although we try to ensure that our employees, consultants, and advisors do not use the intellectual
property rights, proprietary information know-how or trade secrets of others in their work for us, we may be subject to claims that we
or they have, inadvertently or otherwise, used, infringed, misappropriated or otherwise violated intellectual property rights, or disclosed
the alleged trade secrets or other proprietary information, of any such individual's current or former employer. Litigation may
be necessary to defend against these claims. Any litigation or the threat of litigation may adversely affect our ability to hire employees
or engage consultants and contractors. A loss of key personnel or their work product could hamper or prevent us from developing and commercializing
products and product candidates, which could harm our business. If we fail in defending any such claims, in addition to paying monetary
damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims,
litigation could result in substantial costs and be a distraction to management.

 In
addition, while it is our policy to require our employees, consultants and contractors who may be involved in the conception or development
of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an
agreement with each party who, in fact, conceives, develops and/or reduces to practice intellectual property that we regard as our own.
The assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, and we may be
forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we
regard as our intellectual property. Any of the foregoing could harm our competitive position, business, financial condition, results
of operations and prospects.

 Accordingly,
if we fail in prosecuting or defending any such claims, we may be required to pay monetary damages, and we may also lose valuable intellectual
property rights or personnel, which could harm our competitive position and prospects. Such intellectual property rights could be awarded
to a third-party, and we could be required to obtain a license from such third-party to commercialize our technology or products, which
license may not be available on commercially reasonable terms, or at all, or such license may be non-exclusive. Even if we are successful
in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to our management
and employees.

 We
may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time-consuming and unsuccessful.

 Third
parties, including our competitors, could be infringing, misappropriating or otherwise violating our owned and licensed trademarks, trade
secrets or other intellectual property rights. Monitoring unauthorized use of our intellectual property is difficult, time-consuming
and costly. The steps we have taken to protect our proprietary rights may not be adequate to enforce our rights against infringement,
misappropriation or other violation of our intellectual property. We may not be able to detect unauthorized use of, or take appropriate
steps to enforce, our intellectual property rights. Any inability to meaningfully enforce our intellectual property rights could harm
our ability to compete and reduce demand for our games.

 In
the future, we may make claims of infringement or misappropriation against third parties, or make claims that third-party intellectual
property rights are invalid or unenforceable. These claims could:

 cause
 us to incur greater costs and expenses in the protection of our intellectual property;

 potentially
 negatively impact our intellectual property rights, for example, by causing one or more of our intellectual property rights to be
 ruled or rendered unenforceable or invalid; or

 divert
 our technical personnel's or management's attention and our resources. In any lawsuit we bring to enforce our intellectual
 property rights, a court may refuse to stop the other party from using the technology at issue on grounds that our intellectual property
 rights do not cover the technology in question, are not valid, or otherwise not enforceable against such other party. Further, in
 such proceedings, the defendant could counterclaim that our intellectual property is invalid or unenforceable and the court may agree,
 in which case we could lose valuable intellectual property rights. The outcome in any such lawsuit is unpredictable.

 Litigation
or other legal proceedings relating to intellectual property claims, even if resolved in our favor, may cause us to incur significant
expenses and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public
announcements of the results of hearings, motions, or other interim proceedings or developments, and if securities analysts or investors
perceive these results to be negative, it could have a substantial adverse effect on the price of our Class A common stock or cause reputational
harm. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors
may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources
and more mature and developed intellectual property portfolios. Uncertainties resulting from the initiation and continuation of intellectual
property proceedings could harm our ability to compete in the marketplace. In addition, because of the substantial amount of discovery
required in connection with intellectual property litigation, there is a risk that some of our confidential information or trade secrets
could be compromised by disclosure during this type of litigation. Any of the foregoing could harm our competitive position, business,
financial condition, results of operations and prospects. For more information, see Item 3 of Part I, "Legal Proceedings."

 We
or our licensors may not be able to enforce our intellectual property rights throughout the world.

 We
or our licensors may be required to protect our proprietary technology and content in an increasing number of jurisdictions, a process
that is expensive and may not be successful, or which we or our licensors may not pursue in every location due to costs, complexities
or other reasons. Filing, prosecuting, maintaining, defending, and enforcing our owned or in-licensed intellectual property rights in
all jurisdictions throughout the world would be prohibitively expensive, and our intellectual property rights in some jurisdictions outside
the United States may be less extensive than those in the United States. Competitors may use our technologies in jurisdictions where
we have not obtained intellectual property protection to develop their own games and, further, may export otherwise infringing, misappropriating,
or otherwise violating games to territories where we have intellectual property protection, but enforcement is not as strong as that
in the United States. These games may compete with our games, and our intellectual property rights may not be effective or sufficient
to prevent such competition. In addition, the laws of some foreign jurisdictions do not protect proprietary rights to the same extent
as the laws of the United States, and many companies have encountered significant challenges in establishing and enforcing their proprietary
rights outside of the United States. These challenges can be caused by the absence or inconsistency of the application of rules and methods
for the establishment and enforcement of intellectual property rights outside of the United States. In addition, the legal systems of
some jurisdictions, particularly developing countries, do not favor the enforcement of intellectual property protection. This could make
it difficult for us to stop the infringement, misappropriation or other violation of our intellectual property rights. Accordingly, we
or our licensors may choose not to seek protection in certain jurisdictions, and we will not have the benefit of protection in such jurisdictions.
Proceedings to enforce our intellectual property rights in foreign jurisdictions could result in substantial costs and divert our efforts
and attention from other aspects of our business. Accordingly, our or our licensors' efforts to protect our intellectual property
rights in such jurisdictions may be inadequate. In addition, changes in the law and legal decisions by courts in the United States and
foreign jurisdictions may affect our ability to obtain adequate protection for our games and other technologies and the enforcement of
intellectual property rights. Any of the foregoing could harm our competitive position, business, financial condition, results of operations

 If
our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of interest
and our competitive position may be harmed.

 The
registered or unregistered trademarks or trade names that we own or license may be challenged, infringed, circumvented, declared generic,
lapsed or determined to be infringing on or dilutive of other trademarks. We may not be able to protect our rights in these trademarks
and trade names, which we need in order to build name recognition. In addition, third parties have filed, and may in the future file,
for registration of trademarks similar or identical to our owned or licensed trademarks, thereby impeding our ability to build brand
identity and possibly leading to market confusion. If such third parties succeed in registering or developing common law rights in such
trademarks, and if we are not successful in challenging such third-party rights, we may not be able to use these trademarks to develop
brand recognition of our games. In addition, there could be potential trade name or trademark infringement claims brought by owners of
other registered trademarks or trademarks that incorporate variations of our registered or unregistered owned or licensed trademarks
or trade names. If we are unable to establish or protect our trademarks and trade names, or if we are unable to build name recognition
based on our owned or licensed trademarks and trade names, we may not be able to compete effectively, which could harm our competitive
position, business, financial condition, results of operations and prospects.

 We
use open source software in connection with certain of our games and services, which may pose particular risks to our proprietary software,
products, and services in a manner that could have a negative impact on our business.

 We
use open source software in connection with some of the games and services we offer and may continue to use open source software in the
future. Some open source software licenses require users who distribute open source software as part of their software to publicly disclose
all or part of the source code to such software or make available any derivative works of the open source code on unfavorable terms or
at no cost. The terms of various open source licenses have not been interpreted by courts, and there is a risk that such licenses could
be construed in a manner that imposes unanticipated conditions or restrictions on our use of the open source software. Were it determined
that our use was not in compliance with a particular license, we may be required to release our proprietary source code, pay damages
for breach of contract, re-engineer our games or products, discontinue distribution in the event re-engineering cannot be accomplished
on a timely basis, or take other remedial action that may divert resources away from our game development efforts, any of which could
negatively impact our business.

 Risks
Related to Legal or Regulatory Compliance

 Changing
data privacy and security laws and regulations in the jurisdictions in which we or our consumers do business could increase the cost
of our operations and subject us to possible sanctions, civil lawsuits (including class action or similar representative lawsuits) and
other penalties; such laws and regulations are continually evolving. Our platform and service providers' actual or perceived failure
to comply with these laws and regulations could harm our business financial condition and results of operations.

 We
collect, process, store, use and share data in our operations. While our business receives limited, if any, personal information of our
end users from our platform providers, we may elect to collect such information in the future. Our business and the business of our platform
providers are therefore subject to a number of federal, state, local and foreign laws, regulations, regulatory codes and guidelines governing
data privacy, data protection and security, including with respect to the collection, storage, use, processing, transmission, sharing
and protection of personal information. Such laws, regulations, regulatory codes and guidelines may be inconsistent across jurisdictions
or conflict with other rules.

 The
legislative and regulatory landscapes for data privacy and security continue to evolve in jurisdictions worldwide, with an increasing
focus on privacy and data protection issues with the potential to affect our business. In the United States, such privacy and data security
laws and regulations include federal laws and regulations like the federal Controlling the Assault of Non-Solicited Pornography and Marketing
Act, the Telephone Consumer Protection Act, the Do-Not-Call Implementation Act, and rules and regulations promulgated under the authority
of the Federal Trade Commission and state laws like the California Consumer Privacy Act ("CCPA") and the varying data breach
notification laws that have been enacted in all 50 U.S. states and the District of Columbia. The CCPA, which became effective on January
1, 2020 and became enforceable by the California Attorney General on July 1, 2020, along with related regulations that came into force
on August 14, 2020, provides additional individual privacy rights for California residents and places increased data privacy and security
obligations on entities handling certain personal information of California residents and households. Among other things, the CCPA expands
rights related to such individual's personal information, including the right to access and require deletion of their personal
information, opt out of certain personal information sharing, and receive detailed information about how their personal information is
collected, used, and shared by covered business. Many of the CCPA's requirements as applied to personal information obtained in
a business to business context, as well as personal information of a business's personnel and related individuals, were subject
to a moratorium that expired on January 1, 2023. The CCPA provides for civil penalties for violations, as well as a private right of
action and statutory damages for security breaches that may increase security breach litigation. The effects of the CCPA are significant
and have required, and could continue to require, us to modify our data collection or processing practices and policies and to incur
substantial costs and expenses in an effort to comply. Some observers have noted that the CCPA could mark the beginning of a trend toward
more stringent state privacy legislation in the U.S., which could increase our potential liability and adversely affect our business.
Further, in November 2020, California voters passed the California Privacy Rights Act ("CPRA"). The CPRA, which came into
effect in most material respects on January 1, 2023 with a one-year look back period, significantly amended and expanded existing CCPA
requirements, including, among other things, by introducing additional obligations such as data minimization and storage limitations
on the sharing of personal information for cross on text behavioral advertising and on the use of "sensitive" personal information,
granting additional rights to consumers, such as correction of personal information and additional opt-out rights, and creating a new
entity, the California Privacy Protection Agency, to implement and enforce the law and impose administrative fines. There currently are
a number of additional proposals related to data privacy or security pending before federal, state, and foreign legislative and regulatory
bodies, including in a number of U.S. states considering comprehensive consumer protection laws. States such as Virginia, Colorado, Utah
and Connecticut have passed comprehensive data privacy laws that have become effective, or will become effective in the near future.
Such legislation may add complexity, variation in requirements, restrictions and potential legal risk, require additional investment
in resources to compliance programs, and could impact strategies and availability of previously useful data and could result in increased
compliance costs and/or changes in business practices and policies.

 Many
of the other jurisdictions where we or our customers do business, including the EU, also have restrictive laws and regulations dealing
with the processing of personal information. In addition to regulating the processing of personal information within the relevant jurisdictions,
these legal requirements often also apply to the processing of personal information outside these jurisdictions, where there is some
specified link to the relevant jurisdiction. For example, the European Union's Regulation (EU) 2016/679 of the European Parliament
and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free
movement of such data, and repealing Directive 95/46/EC (the "General Data Protection Regulation" or "GDPR")
became effective in May 2018, imposes strict requirements on controllers and processors of personal data in the European Economic Area
("EEA"), including, for example, higher standards for obtaining consent from individuals to process their personal data,
more robust disclosures to individuals and a strengthened individual data rights regime, greater control for data subjects (including
the "right to be forgotten" and data portability) and shortened timelines for data breach notifications. The GDPR created
new compliance obligations applicable to our business and our platform and service providers, which could require us to self-determine
how to interpret and implement these obligations, change our business practices and expose us to lawsuits (including class action or
similar representative lawsuits) by consumers or consumer organizations for alleged breach of data protection laws. Failure to comply
with the requirements of GDPR may result in significant fines of up to 20,000,000 or up to 4% of the total worldwide annual turnover
of the preceding financial year, whichever is higher, and other administrative penalties. The United Kingdom operates a separate but
similar regime to the European Union with which we will have to comply and that allows for fines of up to the greater of 17.5
million or 4% of the total worldwide annual turn over of the preceding financial year. Further, beginning January 1, 2021, we have been
required to comply with the GDPR and also the United Kingdom GDPR ("UK GDPR"), which, together with the amended United Kingdom
Data Protection Act 2018, retains the GDPR in United Kingdom national law. The relationship between the United Kingdom and the European
Union in relation to certain aspects of data protection law remains unclear, and it is unclear how the United Kingdom's data protection
laws and regulations will develop in the medium to longer term, and how data transfers to and from the United Kingdom will be regulated
in the long term. For example, while the EU Commission has adopted an adequacy decision in favor of the United Kingdom, enabling data
transfers from European Union member states to the United Kingdom without additional safeguards, the decision will automatically expire
in June 2025 unless the EU Commission re-assesses and renews/extends it. These changes may lead to additional costs and increase our
overall risk exposure.

 Recent
legal developments also have created compliance uncertainty regarding the transfer of personal information from the U.K. and EEA to certain
locations outside of the U.K. and EEA where we or our clients operate or conduct business. In July 2020, the Court of Justice of the
European Union ("CJEU") ruled the EU-US Privacy Shield Framework, one of the primary safeguards that allowed U.S. companies
to import personal data from the EU to the U.S., was invalid. The CJEU's decision also raised questions about whether the most
commonly used mechanism for cross-border transfers of personal data out of the EEA, namely, the European Commission's Standard
Contractual Clauses, can lawfully be used for personal data transfers from the EU to the U.S. or other third countries the European Commission
has determined do not provide adequate data protections under their laws. On June 4, 2021, the European Commission published new Standard
Contractual Clauses (which became effective on June 27, 2021), which impose on companies additional obligations relating to data transfers,
including in the transfer, to implement additional security measures and update internal privacy practices. If we elect to rely on the
new Standard Contractual Clauses for applicable data transfers, we may be required to incur significant time and resources to update
our contractual arrangements and to comply with new obligations. If we are unable to implement a valid mechanism for personal data transfers
from the EEA, we could face increased exposure to regulatory actions, substantial fines and injunctions against processing personal data
from the EEA. As discussed above, these same considerations must currently be taken into account with regard to the UK GDPR as well.
Additionally, other countries outside of the EU have enacted or are considering enacting similar cross order data transfer restrictions
and laws requiring local data residency, which could increase the cost and complexity of delivering our services and operating our business.
The type of challenges we face in the EU and U.K. will likely also arise in other jurisdictions that adopt regulatory frameworks of equivalent
complexity. Accordingly, any actual or perceived failure to comply with these laws and regulations could harm our business, financial
condition and results of operations.

 Our
business and products are subject to potential legislation and other governmental restrictions. The adoption of such proposed legislation
and restrictions could limit the retail market for our products.

 Several
proposals have been made for federal legislation to regulate our industry. Such proposals seek to prohibit the sale of products containing
certain content included in some of our games. If any such proposals are enacted into law, it may limit the potential market for some
of our games in the United States, and adversely affect our business, financial condition and operating results. Other countries have
adopted laws regulating content both in packaged games and those transmitted over the Internet that are stricter than current U.S. law.
While no such laws are currently in place in the United States, the adoption into law of such legislation in jurisdictions in which we
do significant business could severely limit the retail market for some of our games.

 On
August 30, 2021, China's National Press and Publication Administration announced a new regulation that required online gaming companies
limit their services provided to minors to one hour per day on Fridays, Saturdays, Sundays and public holidays. We continue to assess
the impact this new regulation may have on our results of operations however, at this time, the impact of this new regulation remains
uncertain.

 Changes
in government regulations relating to the Internet could have a negative impact on our business.

 We
rely on our consumers' access to significant levels of Internet bandwidth for the sale and digital delivery of our content and
the functionality of our games with online features. Changes in laws or regulations that adversely affect the growth, popularity, or
use of the Internet, including laws affecting "net neutrality" or measures enacted in certain jurisdictions as a result of
the COVID-19 pandemic, could decrease the demand for our products and services or increase our cost of doing business.

 Although
certain jurisdictions have implemented laws and regulations intended to prevent Internet service providers from discriminating against
particular types of legal traffic on their networks, other jurisdictions may lack such laws and regulations or repeal existing laws or
regulations. For example, on December 14, 2017, the Federal Communications Commission voted to repeal net neutrality regulations in the
United States, and, following that decision, several states enacted net neutrality regulations. Given the uncertainty around these rules,
including changing interpretations, amendments or repeal, coupled with the potentially significant political and economic power of local
Internet service providers and the relatively significant level of Internet bandwidth access our products and services require, we could
experience discriminatory or anti-competitive practices that could impede our growth, cause us to incur additional expenses, or otherwise
negatively affect our business.

 We
may be involved in legal proceedings that have a negative impact on our business.

 From
time to time, we have been, and in the future may be, involved in claims, suits, investigations, audits and proceedings arising in the
ordinary course of our business, including with respect to labor and employment, intellectual property, competition and antitrust, regulatory,
tax, privacy and/or commercial matters. In addition, negative consumer sentiment about our business practices may result in inquiries
or investigations from regulatory agencies and consumer groups, as well as litigation.

 Claims,
suits, investigations, audits and proceedings are inherently difficult to predict, and their results are subject to significant uncertainties,
many of which are outside of our control. Regardless of the outcome, such legal proceedings can have a negative impact on us due to reputational
harm, legal costs, diversion of management resources and other factors. It is also possible that a resolution of one or more such proceedings
could result in substantial settlements, judgments, fines or penalties, injunctions, criminal sanctions, consent decrees or orders preventing
us from offering certain features, functionalities, products or services, requiring us to change our development process or other business
practices.

 There
is also inherent uncertainty in determining reserves for these matters. Significant judgment is required in the analysis of these matters,
including assessing the probability of potential outcomes and determining whether a potential exposure can be reasonably estimated. In
making these determinations, we, in consultation with outside counsel, examine the relevant facts and circumstances on a quarterly basis
assuming, as applicable, a combination of settlement and litigated outcomes and strategies. Further, it may take time to develop factors
on which reasonable judgments and estimates can be based.

 We
regard our software as proprietary and rely on a variety of methods, including a combination of copyright, patent, trademark and trade
secret laws, and employee and third-party non-disclosure and invention assignment agreements, to protect our proprietary rights. We own
or license various copyrights, patents, trademarks and trade secrets. The process of registering and protecting these rights in various
jurisdictions is expensive and time-consuming. Further, we are aware that some unauthorized copying and piracy occurs, and if a significantly
greater amount of unauthorized copying or piracy of our software products were to occur, it could negatively impact our business. We
also cannot be certain that existing intellectual property laws will provide adequate protection for our products in connection with
emerging technologies or that we will be able to effectively protect our intellectual property through litigation and other means.

 Financial
and Economic Risks

 If
general economic conditions decline, demand for our games could decline. In addition, our business is vulnerable to changing economic
conditions and to other factors that adversely affect the gaming industry, which could negatively impact our business.

 In-game
purchases involve discretionary spending on the part of consumers. Consumers are generally more willing to make discretionary purchases,
including purchases of games and services like ours, during periods in which favorable economic conditions prevail. As a result, our
games may be sensitive to general economic conditions and economic cycles. A reduction or shift in domestic or international consumer
spending could result in an increase in our marketing and promotional expenses, in an effort to offset that reduction, and could negatively
impact our business. Discretionary spending on entertainment activities could further decline for reasons beyond our control, such as
natural disasters, acts of war, pandemics, terrorism, transportation disruptions or the results of adverse weather conditions. Additionally,
disposable income available for discretionary spending may be reduced by unemployment, higher housing, energy, interest or other costs,
or where the actual or perceived wealth of customers has decreased because of circumstances such as lower residential real estate values,
increased foreclosure rates, inflation, increased tax rates or other economic disruptions. Any prolonged or significant decrease in consumer
spending on entertainment activities could result in reduced play levels and decreased spending on our games, and could adversely impact
our results of operations, cash flows and financial condition.

economic factors, domestically and internationally, may adversely affect our business, financial condition, and results of operations.

 Higher
energy and gasoline costs, inflation, levels of unemployment, healthcare costs, consumer debt levels, foreign-currency exchange rates,
unsettled financial markets, weaknesses in housing and real estate markets, reduced consumer confidence, changes and uncertainties related
to government fiscal and tax policies including changes in tax rates, duties, tariffs, or other restrictions, sovereign debt crises,
and other economic factors could adversely affect demand for our products, require a change in product mix, or impact the cost of or
ability to purchase inventory. Additionally, actions in various countries, particularly China and the United States, have created uncertainty
with respect to tariff impacts on the costs of some of our merchandise. The degree of our exposure is dependent on (among other things)
the type of goods, rates imposed, and timing of the tariffs. The impact to our business, including net sales and gross margin, will be
influenced in part by merchandising and pricing strategies in response to potential cost increases by us and our competitors. While these
potential impacts are uncertain, they could have an adverse affect on our business, financial condition and results of operations.

 Prices
of certain commodities, including gasoline and consumable goods used in manufacturing and our warehouse retail operations, are historically
volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, labor costs, competition,
market speculation, government regulations, taxes and periodic delays in delivery. Rapid and significant changes in commodity prices
and our ability and desire to pass them through to our customers may affect our sales and profit margins. These factors could also increase
our merchandise costs and selling, general and administrative expenses, and otherwise adversely affect our operations and financial results.
General economic conditions can also be affected by changes to the U.S.'s participation in, withdrawal out of, renegotiation of
certain international trade agreements or other major trade related issues, including the non-renewal of expiring favorable tariffs granted
to developing countries, tariff quotas and retaliatory tariffs, trade sanctions, new or onerous trade restrictions, embargoes and other
stringent government controls.

 Tariffs
may cause cost increases and disruptions in technical R&D operations.

 We
rely substantially on third-party providers located in China and Europe to support our technical research and development initiatives.
As a result, a significant portion of our R&D functions, including critical technical development and software engineering, are outsourced
internationally. Recent and potential future trade policy changes, including the imposition or extension of tariffs on imported goods
and services from China and Europe pose a material risk to our cost structure. Such tariffs may increase the costs of components, services,
and skilled labor sourced from these regions, potentially resulting in higher operating expenses and reduced profit margins. In addition,
tariff-induced supply chain disruptions could delay project timelines and necessitate a re-evaluation of our global outsourcing strategy,
thereby adversely affecting our competitive position and financial performance.

 Changes
in tax laws or tax rulings, or the examination of our tax positions, could materially affect our financial condition and results of operations.

 Tax
laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. Our existing
corporate structure and intercompany arrangements have been implemented in a manner we believe is in compliance with current prevailing
tax laws. However, the tax benefits that we intend to eventually take advantage of could be undermined due to changing tax laws, both
in the United States and in other applicable jurisdictions. In addition, the taxing authorities in the United States and other jurisdictions
where we do business regularly examine income and other tax returns and we expect that they may examine our income and other tax returns.
The ultimate outcome of these examinations cannot be predicted with certainty.

 Tax
law or tax rate changes could affect our effective tax rate and future profitability.

 Our
effective tax rate was 25.7% for the year ended December 31, 2024 and 20.9% for the year ended December 31, 2023. In general, changes
in applicable U.S. federal and state and foreign tax laws and regulations, or their interpretation and application, including the possibility
of retroactive effect, could affect our tax expense. In addition, taxing authorities in many jurisdictions in which we operate may propose
changes to their tax laws and regulations. These potential changes could have a material impact on our effective tax rate, long-term
tax planning and financial results.

 The
realization of the Company's deferred tax assets is contingent upon the Company's upcoming new game releases to generate
sufficient taxable income.

 The
Company assesses the need for valuation allowances against deferred tax assets based on estimates and judgements about future
taxable income. In the event the Company's game releases are delayed, are ill received, or do not meet the Company's
estimates, the deferred tax assets may not be realizable. As such, the Company may need to record a valuation allowance to reflect
the likelihood that the deferred tax assets will not be realized, which could have a material impact on our financial position. See
Note 13 - Income Taxes to our audited consolidated financial statements included in this Annual Report.

 Our
reported financial results could be significantly impacted by changes in financial accounting standards or by the application of existing
or future accounting standards to our business as it evolves.

 Our
reported financial results are impacted by the accounting policies promulgated by the SEC and national accounting standards bodies and
the methods, estimates and judgments that we use in applying our accounting policies. Policies affecting revenue recognition have affected,
and could further significantly affect, the way we report revenues related to our products and services. We recognize a majority of the
revenues from video games that include an online service on a deferred basis over an estimated service period for such games. In addition,
we defer the cost of revenues of those products. Further, as we increase our DLC and add new features to our online services, our estimate
of the service period may change, and we could be required to recognize revenues, and defer related costs, over a shorter or longer period
of time. As we enhance, expand and diversify our business and product offerings, the application of existing or future financial accounting
standards, particularly those relating to the way we account for revenues and income taxes, could have a significant impact on our reported
net revenues, net income and earnings per share under generally accepted accounting principles in the United States in any given period.

 The
Company has debt obligations with short term durations that are coming due within one year.

 We
have significant debt obligations coming due within one year. Our current revolving loan has a balance of $3.0 million as of
December 31, 2024, and is due for repayment on June 30, 2025. The Company intends to extend the revolving loan and renew our
short-term note debt arrangement and faces the risk that we will be unable to. See Note 12 - Revolving Loan, Short Term Note and
Long-Term Debt to our audited consolidated financial statements included in this Annual Report.

 Risks
Related to Our Corporate Structure

 We
are a "controlled company" under the corporate governance rules of Nasdaq and, as a result, qualify for and rely on exemptions
from certain corporate governance requirements. Since we elected to rely on the exemptions available to a "controlled company,"
you do not have the same protections afforded to stockholders of companies that are subject to such corporate governance requirements.

 Our
controlling stockholder, Founder, Co-Chief Executive Officer, Chief Strategy Officer and Chairman, Mr. Shi, controls a majority of our
outstanding common stock. As a result, we are a "controlled company" within the meaning of the corporate governance standards
of the Nasdaq rules. Under these rules, a listed company of which more than 50% of the voting power is held by an individual, group or
another company is a "controlled company" and may elect not to comply with certain corporate governance requirements, including:

 requirement
 that a majority of its board of directors consist of independent directors;

 the
 requirement that its director nominations be made, or recommended to the full board of directors, by its independent directors or
 by a nominations committee that is comprised entirely of independent directors and that it adopts a written charter or board resolution
 addressing the nominations process; and

 the
 requirement that it has a compensation committee that is composed entirely of independent directors with a written charter addressing
 the committee's purpose and responsibilities.

 We
elected to rely on these exemptions. As a result, our board of directors does not have a majority of independent directors, our compensation
committee does not consist entirely of independent directors and our directors are not nominated or selected by independent directors.
Accordingly, you do not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance
requirements of the Nasdaq rules.

 Mr.
Shi, our Founder, Co-Chief Executive Officer, Chief Strategy Officer and Chairman, controls us, and his ownership of our common stock
prevents you and other stockholders from influencing significant decisions.

 Mr.
Shi controls shares representing a majority of our combined voting power. As long as Mr. Shi continues to control shares representing
a majority of our voting power, he will generally be able to determine the outcome of all corporate actions requiring stockholder approval,
including the election and removal of directors (unless supermajority approval of such matter is required by applicable law and our amended
and restated certificate of incorporation). In the ordinary course of his business activities, Mr. Shi may engage in activities where
his interests may not be the same as, or may conflict with, the interests of our other stockholders. Even if Mr. Shi were to control
less than a majority of our voting power, he may be able to influence the outcome of corporate actions so long as he controls a significant
portion of our voting power.

 Our
stockholders are not able to affect the outcome of any stockholder vote while Mr. Shi controls the majority of our voting power (or,
in the case of removal of directors, two-thirds of our voting power). Due to his ownership and rights under our amended and restated
certificate of incorporation and our amended and restated bylaws, Mr. Shi controls, subject to applicable law, the composition of our
board of directors, which in turn controls all matters affecting us, including, among other things:

 any
 determination with respect to our business direction and policies, including the appointment
 and removal of officers and, in the event of a vacancy on our board of directors, additional
 or replacement directors;

 any
 determinations with respect to mergers, business combinations or dispositions of assets;

 determination
 of our management policies;

 determination
 of the composition of the committees on our board of directors;

 our
 financing policy;

 our
 compensation and benefit programs and other human resources policy decisions;

 changes
 to any other agreements that may adversely affect us;

 the
 payment of dividends on our common stock; and

 determinations
 with respect to our tax returns.

 In
addition, the concentration of Mr. Shi's ownership could also discourage others from making tender offers, which could prevent
holders from receiving a premium for their common stock. Because Mr. Shi's interests may differ from ours or from those of our
other stockholders, actions that he takes with respect to us, as our controlling stockholder, may not be favorable to us or to you or
our other stockholders.

 Mr.
Shi, our Founder, Co-Chief Executive Officer, Chief Strategy Officer and Chairman, is a Chinese national. For so long as a Chinese individual
continues to exercise majority voting control over us, changes in U.S. and Chinese laws in the future may make it more difficult for
us to operate as a publicly traded company in the United States.

 Future
developments in U.S. and Chinese laws may restrict our ability or willingness to operate as a publicly traded company in the United States
for so long as Mr. Shi, who is a Chinese national, or other Chinese investors, continue to beneficially own a significant percentage
of our outstanding shares of common stock. The relations between the United States and China are constantly changing. During his administration,
President Donald J. Trump issued a memorandum directing the President's Working Group on Financial Markets to convene to discuss
the risks faced by U.S. investors in Chinese companies and issued several executive orders restricting the operations of Chinese companies,
such as the company that owns TikTok, in the United States. Additionally, the federal government has recently proposed legislation intended
to protect American investments in Chinese companies. President In
addition, various equity-based research organizations have published reports on Chinese companies after examining their corporate governance
practices, related party transactions, sales practices and financial statements, and these reports have led to special investigations
and listing suspensions on U.S. national exchanges. While we are not a Chinese company, any similar scrutiny of us, regardless of its
merit, could have an adverse effect upon our business, including our results of operations, financial condition, cash flows and prospects.
Additionally, should we be the subject of or indirectly covered by new legislation or executive orders addressed at protecting American
investments in Chinese or Chinese-owned companies, our revenues and profitability would be materially reduced, and our business and results
of operations would be seriously harmed.

 The
Committee on Foreign Investment in the United States may modify, delay or prevent our future acquisition or investment activities.

 For
so long as Mr. Shi retains a material ownership interest in us, we will be deemed a "foreign person" under the regulations
relating to the Committee on Foreign Investment in the United States ("CFIUS"). As such, acquisitions of or investments in
U.S. businesses or foreign businesses with U.S. subsidiaries that we may wish to pursue may be subject to CFIUS review, the scope of
which was expanded by the Foreign Investment Risk Review Modernization Act of 2018 ("FIRRMA") to include certain non-passive,
non-controlling investments (including certain investments in entities that hold or process personal information about U.S. nationals),
certain acquisitions of real estate even with no underlying U.S. business, transactions designed or intended to evade or circumvent CFIUS
jurisdiction and any transaction resulting in a "change in the rights" of a foreign person in a U.S. business if that change
could result in either control of the business or a covered non-controlling investment. FIRRMA also subjects certain categories of investments
to mandatory filings. If a particular proposed acquisition or investment in a U.S. business falls within CFIUS's jurisdiction,
we may determine that we are required to make a mandatory filing or that we will submit to CFIUS review on a voluntary basis, or to proceed
with the transaction without submitting to CFIUS and risk CFIUS intervention, before or after closing the transaction. CFIUS may decide
to block or delay an acquisition or investment by us, impose conditions with respect to such acquisition or investment or order us to
divest all or a portion of a U.S. business that we acquired without first obtaining CFIUS approval, which may limit the attractiveness
of or prevent us from pursuing certain acquisitions or investments that we believe would otherwise be beneficial to us and our stockholders.
Our inability to complete acquisitions and integrate those businesses successfully could limit our growth or disrupt our plans and operations.
In addition, among other things, FIRRMA authorizes CFIUS to prescribe regulations defining "foreign person" differently in
different contexts, which could result in less favorable treatment for investments and acquisitions by companies from countries of "special
concern." If CFIUS were to promulgate regulations imposing additional burdens on acquisition and investment activities involving
China or Chinese investor-controlled entities, our ability to consummate transactions falling within CFIUS's jurisdiction that
might otherwise be beneficial to us and our stockholders would be hindered.

Risk Factors

 We
are subject to risks related to corporate and social responsibility and reputation.

 Many
factors influence our reputation including the perception held by our customers, business partners and other key stakeholders. Our business
faces increasing scrutiny related to environmental, social and governance activities. We risk damage to our reputation if we fail to
act responsibly in a number of areas, such as diversity and inclusion, environmental stewardship, supply chain management, climate change,
workplace conduct, human rights and philanthropy. Any harm to our reputation could impact employee engagement and retention and the willingness
of customers and our partners to do business with us, which could have a material adverse effect on our business, results of operations
and cash flows.

 We
cannot predict the impact our dual class structure may have on the market price of our Class A common stock.

 We
cannot predict whether our dual class structure will result in a lower or more volatile market price of our Class A common stock or in
adverse publicity or other adverse consequences. For example, certain index providers have restrictions on including companies with multiple-class
share structures in certain of their indexes. In July 2017, FTSE Russell and Standard & Poor's announced that they would cease
to allow most newly public companies utilizing dual or multi-class capital structures to be included in their indices. Affected indices
include the Russell 2000 and the S&P 500, S&P MidCap 400, and S&P SmallCap 600, which together make up the S&P Composite
1500. Under these policies, our dual class capital structure would make us ineligible for inclusion in certain indices, and as a result,
mutual funds, exchange-traded funds, and other investment vehicles that attempt to passively track those indices will not be investing
in our stock. Because of our dual class structure, we will likely be excluded from certain of these indexes and we cannot assure you
that other stock indexes will not take similar actions. Given the sustained flow of investment funds into passive strategies that seek
to track certain indexes, exclusion from stock indexes would likely preclude investment by many of these funds and could make our Class
A common stock less attractive to other investors. As a result, the market price of our Class A common stock could be adversely affected.

 Securities
analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our
stock price or trading volume to decline.

 Our
stock price and trading volume may be heavily influenced by the way analysts and investors interpret our financial information and other
disclosures. If securities or industry analysts do not publish research or reports about our business, delay publishing reports about
our business, or publish negative reports about our business, regardless of accuracy, our Class A common stock price and trading volume
could decline.

 The
trading market for our Class A common stock is influenced to some extent by the research and reports that industry or financial analysts
publish about us and our business. We do not control these analysts. As a newly public company, we may be slow to attract research coverage
and the analysts who publish information about our Class A common stock may have relatively little experience with us or our industry,
which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates.
If any of the analysts who cover us provide inaccurate or unfavorable research or issue an adverse opinion regarding our stock price,
our stock price could decline. If one or more of these analysts cease coverage of us or fail to publish reports covering us regularly,
we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline.

 Even
if our Class A common stock is actively covered by analysts, we do not have any control over the analysts or the measures that analysts
or investors may rely upon to forecast our future results. Over-reliance by analysts or investors on any particular metric to forecast
our future results may lead to forecasts that differ significantly from our own.

 If
our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect,
our results of operations could fall below our publicly announced guidance or the expectations of securities analysts and investors,
resulting in a decline in the market price of our Class A common stock.

 The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in our financial statements and accompanying notes. We base our estimates on historical
experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets, liabilities, equity, revenues and expenses that are not readily apparent from
other sources. If our assumptions change or if actual circumstances differ from our assumptions, our results of operations may be adversely
affected and could fall below our publicly announced guidance or the expectations of securities analysts and investors, resulting in
a decline in the market price of our Class A common stock.

 We
cannot guarantee that our share repurchase program will be fully implemented or it will enhance stockholder value, and share repurchases
could affect the price of our Class A common stock.

 In
November 2022, our board of directors authorized a share repurchase program of up to $5 million of our outstanding Class A common stock
(the "Share Repurchase Program"), which does not have a fixed expiration date. Share repurchases under the program may be
made from time to time through open market transactions, block trades, privately negotiated transactions or otherwise and are subject
to market and business conditions, levels of available liquidity, cash requirements for other purposes, regulatory, and other relevant
factors, at the discretion of management and in accordance with applicable federal securities laws and other applicable legal requirements
and Nasdaq listing rules. The timing, pricing, and size of share repurchases will depend on a number of factors, including, but not limited
to, price, corporate and regulatory requirements, and general market and economic conditions. As of December 31, 2024, approximately
$1.3 million of the Share Repurchase Program remains available for future repurchases. The Share Repurchase Program does not obligate
us to repurchase any dollar amount or number of shares, and the program may be suspended or discontinued at any time, which may result
in a decrease in the price of our Class A common stock.

 Repurchases
under our Share Repurchase Program will decrease the number of outstanding shares of our Class A common stock and therefore could affect
the price of our Class A common stock and increase its volatility. The existence of our Share Repurchase Program could also cause the
price of our Class A common stock to be higher than it would be in the absence of such a program and could reduce the market liquidity
for our Class A common stock. Additionally, repurchases under our Share Repurchase Program will diminish our cash reserves, which could
impact our ability to further develop our business and service our indebtedness. There can be no assurance that any share repurchases
will enhance stockholder value because the market price of our Class A common stock may decline below the levels at which we repurchased
such shares. Any failure to repurchase shares after we have announced our intention to do so may negatively impact our reputation and
investor confidence in us and may negatively impact our Class A common stock price. Although our Share Repurchase Program is intended
to enhance long-term stockholder value, short-term price fluctuations could reduce the program's effectiveness.

 Provisions
in our amended and restated certificate of incorporation and bylaws and under Delaware law could make an acquisition of us more difficult
and may prevent attempts by our stockholders to replace or remove our current management.

 Provisions
in our amended and restated certificate of incorporation and our amended and restated bylaws may discourage, delay or prevent a merger,
acquisition or other change in control of us that stockholders may consider favorable, including transactions in which stockholders might
otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the
future for shares of our Class A common stock, thereby depressing the market price of our Class A common stock. In addition, these provisions
may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for
stockholders to replace members of our board of directors. Because our board of directors is responsible for appointing the members of
our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management
team.

 Because
we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be
your sole source of gain.

 We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. Any determination to pay dividends in the future will be at the discretion of our board of directors and may be restricted by our credit facilities or any future debt or preferred securities or future debt agreements we may enter into. As a result, capital appreciation, if any, of our Class A common stock will be your sole source of gain for the foreseeable future. See Part II, Item 5 "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Dividend Policy" for a more detailed description of our dividend policy.

 If
we default on our credit obligations, our operations may be interrupted, and our business could be seriously harmed.

 We
have a credit facility that we may draw on to finance our operations and other corporate purposes. If we default on these credit obligations,
our lenders may accelerate the debt and/or foreclose on property securing the debt.

 If
any of these events occur, our operations may be interrupted and our ability to fund our operations or obligations, as well as our business,
could be seriously harmed. In addition, our credit facility contains operating covenants, including maintenance of certain financial
ratios. Our ability to comply with these covenants may be affected by events beyond our control, and breaches of these covenants have
in the past, and could in the future, result in a default under the credit facility and any future financial agreements into which we
may enter. If not waived, defaults could cause our outstanding indebtedness under our credit facility and any future financing agreements
that we may enter into to become immediately due and payable. For more information on our credit facility, see Item 7 of Part II, "Management's
Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources."

 If
we fail to maintain effective internal control over financial reporting, as well as required disclosure controls and procedures, our
ability to produce timely and accurate consolidated financial statements or comply with applicable regulations could be impaired.

 The
Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over
financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure
that information required to be disclosed by us in the reports that we file with the SEC is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange
Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to develop and refine our
internal control over financial reporting. Some members of our management team have limited or no experience managing a publicly traded
company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies,
and we have limited accounting and financial reporting personnel and other resources with which to address our internal controls and
related procedures. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control
over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related
costs and significant management oversight.

 Our
current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. In addition,
changes in accounting principles or interpretations could also challenge our internal controls and require that we establish new business
processes, systems and controls to accommodate such changes. We have limited experience with implementing the systems and controls that
are necessary to operate as a public company, as well as adopting changes in accounting principles or interpretations mandated by the
relevant regulatory bodies. Additionally, if these new systems, controls or standards and the associated process changes do not give
rise to the benefits that we expect or do not operate as intended, it could adversely affect our financial reporting systems and processes,
our ability to produce timely and accurate financial reports or the effectiveness of our internal control over financial reporting. Moreover,
our business may be harmed if we experience problems with any new systems and controls that result in delays in their implementation
or increased costs to correct any post-implementation issues that may arise.

 Further,
any failure to implement and maintain effective internal control over financial reporting could also adversely affect the results of
periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness
of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be
filed with the SEC. Ineffective disclosure controls and procedures or internal control over financial reporting could also cause investors
to lose confidence in the accuracy and completeness of our reported financial and other information, which would likely have a negative
effect on the trading price of our Class A common stock. In addition, if we are unable to continue to meet these requirements, we may
not be able to remain listed on the Nasdaq. As a public company, we are required to provide an annual management report on the effectiveness
of our internal control over financial reporting commencing with our second Annual Report on Form 10-K.

 Our
independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial
reporting until the later of (1) our second Annual Report on Form 10-K or (2) the Annual Report on Form 10-K for the first year we no
longer qualify as an emerging growth company. At such time, our independent registered public accounting firm may issue a report that
is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed
or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could harm our business
and could cause a decline in the trading price of our Class A common stock. In addition, we could become subject to investigations by
the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial
and management resources. These events could have a material and adverse effect on our business, results of operations, financial condition

 We
identified material weaknesses in our internal control over financial reporting and we may identify additional material weaknesses in
the future that may cause us to fail to meet our reporting obligations or result in material misstatements of our financial statements.
If we do not effectively remediate the material weaknesses or if we otherwise fail to maintain effective internal control over financial
reporting, we may not be able to accurately and timely report our financial results.

 Our
management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose
any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency,
or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

 Our
management identified a material weakness in our internal control over financial reporting involving the failure to properly value
the fair value of warrants related to the convertible notes and equity line of credit. See Part II, Item 9A, "Controls and
Procedures," in this Annual Report for information regarding the identified material weaknesses and our actions to date to
remediate the material weakness. As a result of the material weakness, our management has concluded that our internal control
over financial reporting were not effective as of December 31, 2024.

 We
are taking steps to remediate the material weakness, which include to enhancing our financial reporting close control procedures by
implementing additional reviews of fair value measurements and hiring appropriate valuation experts as needed. However, our efforts
to remediate the material weakness may not be effective in preventing a future material weakness in our
internal control over financial reporting. If we do not effectively remediate the material weakness or if we otherwise fail to
maintain effective internal control over financial reporting, we may not be able to accurately and timely report our financial
results, which could cause our reported financial results to be materially misstated, result in the loss of investor confidence and
cause the market price of our Class A common stock to decline.

 We
can give no assurance that the measures we have taken or plans to take in the future will remediate the material weakness identified
or that any additional material weakness or restatements of financial results will not arise in the future due to a failure to implement
and maintain adequate internal control over financial reporting or circumvention of these controls.

 Our
amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware (or, if the Court of Chancery
does not have jurisdiction, another State court in Delaware or the U.S. District Court for the District of Delaware) is the sole and
exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders' abilities to
obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

 Our
amended and restated certificate of incorporation specifies that, unless we consent in writing to the selection of an alternative forum,
to the fullest extent permitted by law, the Court of Chancery of the State of Delaware is the sole and exclusive forum for most legal
actions involving actions brought against us by stockholders; provided that, the exclusive forum provision will not apply to suits brought
to enforce any liability or duty created by the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction;
and provided further that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject
matter jurisdiction, such action may be brought in another state or federal court sitting in the State of Delaware. Our amended and restated
certificate of incorporation also provides that the federal district courts of the United States of America is the exclusive forum for
the resolution of any complaint asserting a cause of action against us or any of our directors, officers, employees or agents and arising
under the Securities Act of 1933, as amended (the "Securities Act"). We believe these provisions may benefit us by providing
increased consistency in the application of Delaware law and federal securities laws by chancellors and judges, as applicable, particularly
experienced in resolving corporate disputes, efficient administration of cases on a more expedited schedule relative to other forums
and protection against the burdens of multi-forum litigation. However, these provisions may have the effect of discouraging lawsuits
against our directors and officers. The enforceability of similar choice of forum provisions in other companies' certificates of
incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against
us, a court could find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable
or unenforceable in such action.

 We
are an "emerging growth company," and the reduced disclosure requirements applicable to emerging growth companies may make
our Class A common stock less attractive to investors.

 We
are an "emerging growth company," as defined in the JOBS Act. We could continue to be considered an emerging growth company
for up to five years, although we would lose that status sooner if our annual gross revenues exceed $1.235 billion, if we issue more
than $1.0 billion in nonconvertible debt in a three-year period or if the fair value of our Class A common stock held by non-affiliates
exceeds $700.0 million (and we have been a public company for at least 12 months and have filed at least one Annual Report on Form 10-K).
For the fiscal year ended December 31, 2024, our total net revenue was $84.5 million.

 For
as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that
are applicable to other public companies that are not emerging growth companies, including reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote
on executive compensation and stockholder approval of any golden parachute payments not previously approved. It is unclear whether investors
will find our Class A common stock less attractive because we may rely on these exemptions. If some investors find our Class A common
stock less attractive as a result, there may be a less active trading market for our Class A common stock and the trading price of our
Class A common stock may be more volatile.

 Risks
Related to Convertible Notes and Equity Line Credit Financing

 Investors
who buy shares in the convertible notes and equity line credit financing offering at different times will likely pay different prices.

 Investors
who purchase shares of common stock at different times will likely pay different prices, and so may experience different levels of dilution
and different outcomes in their investment results. In connection with the Equity Line of Credit Financing, we will have discretion,
subject to market demand, to vary the timing, prices, and numbers of shares of common stock sold to the Equity Line Investor. Similarly,
the Equity Line Investor may sell such shares of common stock at different times and at different prices. Investors may experience a
decline in the value of the shares they purchase from the Equity Line Investor because of sales made by us in future transactions to
the Equity Line Investor at prices lower than the prices they paid. Sales to the Equity Line Investor by us could result in substantial
dilution to the interests of other holders of our Class A common stock. Additionally, the sale of a substantial number of shares of our
Class A common stock to the Equity Line Investor, or the anticipation of such sales, could make it more difficult for us to sell equity
or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales, which could have a
materially adverse effect on our business and operations.

 Our
management will have broad discretion over the use of the net proceeds from our sale of shares of common stock to the Equity Line Investor,
and you may not agree with how we use the proceeds and the proceeds may not be invested successfully.

 Our
management will have broad discretion with respect to the use of proceeds from the sale of any shares of our common stock to the Equity
Line Investor. You will be relying on the judgment of our management regarding the application of the proceeds from the sale of any shares
of our common stock to the Equity Line Investor. The results and effectiveness of the use of proceeds are uncertain, and we could spend
the proceeds in ways that you do not agree with or that do not improve our results of operations or enhance the value of our common stock.
Our failure to apply these funds effectively could harm our business, delay the development of our pipeline product candidates and cause
the price of our common stock to decline.

 We
may require additional financing to sustain our operations, without which we may not be able to continue operations, and the terms of
subsequent financings may adversely impact our stockholders.

 We
may direct the Equity Line Investor to purchase up to $5,000,000 worth of shares of our Class A common stock under the Equity Line Purchase
Agreement until December 31, 2025, in amounts up to $1,000,000 in shares of our Class A common stock depending on market prices.

 Our
ability to sell shares to the Equity Line Investor and obtain funds under the Equity Line Purchase Agreement is limited by the terms
and conditions in the Equity Line Purchase Agreement, including restrictions on the amounts we may sell to the Equity Line Investor at
any one time, and a limitation on our ability to sell shares to the Equity Line Investor to the extent that it would cause the Equity
Line Investor to beneficially own more than 9.99% of our outstanding shares of Class A common stock. Additionally, we will only be able
to sell or issue to the Equity Line Investor (subject to certain reductions and other adjustments pursuant to the Equity Line Purchase
Agreement, the "Exchange Cap") in total under the Equity Line Purchase Agreement, which is equal to 19.99% of the aggregate
number of shares of Class A common stock outstanding prior to execution of the Equity Line Purchase Agreement, unless stockholder approval
is obtained to issue in excess of such amount. Therefore, we may not in the future have access to the full amount available to us under
the Equity Line Purchase Agreement, depending on the price of our Class A common stock. In addition, any amounts we sell under the Equity
Line Purchase Agreement may not satisfy all of our funding needs, even if we are able and choose to sell and issue all of our Class A
common stock currently registered.

 The
extent we rely on the Equity Line Investor as a source of funding will depend on a number of factors including the prevailing market
price of our Class A common stock and the extent to which we are able to secure working capital from other sources. If obtaining sufficient
funding from the Equity Line Investor were to prove unavailable or prohibitively dilutive, we will need to secure another source of funding
in order to satisfy our working capital needs. Even if we sell all $5,000,000 in shares of our Class A common stock under the Equity
Line Purchase Agreement to the Equity Line Investor, we may still need additional capital to finance our future plans and working capital
needs, and we may have to raise funds through the issuance of equity or debt securities. Depending on the type and the terms of any financing
we pursue, stockholders' rights and the value of their investment in our Class A common stock could be reduced. A financing could
involve one or more types of securities including Class A common stock, convertible debt, or warrants to acquire Class A common stock.
These securities could be issued at or below the then prevailing market price for our Class A common stock. If the issuance of new securities
results in diminished rights to holders of our Class A common stock, the market price of our Class A common stock could be negatively
impacted. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require
it, the consequences could be a material adverse effect on our business, operating results, financial condition, and prospects.

 Item
1B. Unresolved Staff Comments.

 None.

 Item
1C. Cybersecurity Risk Management, Strategy and Governance.

 Cybersecurity
Risk Management

 Due
to the nature of our business, we face a variety of potential cybersecurity risks that are ever evolving and include unauthorized access
to our systems and data, disruption of our online game services, theft of intellectual property, and third-party risks as a result of
our use of various third party service providers and cloud service providers. The Company's risks related to our end user data
is borne by our platform partners as we do not maintain any sensitive information of our players within our infrastructure. There have
been no cybersecurity threat events identified during the year ended December 31, 2024, which have resulted in a material incident, or
are reasonably likely to result in a material impact on our business strategy, results of operations or financial condition. For more
information regarding risks relating to intellectual property and cybersecurity related attacks, see Item 1A of Part I, "Risk Factors — Risks
Related to Intellectual Property" and "Risk Factors — Risks Related to Our Business and Industry" of this Annual
Report.

 Cybersecurity
Strategy

 We
are working towards the implementation of relevant controls within the National Institute of Standards and Technology
("NIST") Cybersecurity Framework to better address cybersecurity threats and we actively maintain a risk
management plan that outlines the processes and procedures we use to identify, assess, mitigate and respond to cybersecurity
risks. The plan is designed to protect the Company's assets and safeguard the confidentiality, integrity and
availability of its data and operations. Our
cybersecurity risk management plan is integrated
into the Company's overall risk management process and establishes a clear framework with roles and responsibilities for
managing cybersecurity risks. The Company currently uses a variety of security controls, including but not limited to
firewalls, intrusion detection systems, data encryption in transit and at rest, and multi-factor authentication. We provide regular
training to our employees and educate them on cybersecurity risks and best practices to mitigate these risks. The Company also maintains
a comprehensive incident response plan to detect, respond to, assess the materiality of, and recover from cybersecurity incidents
effectively.

 Cybersecurity
Governance

 The
Company's executive management considers cybersecurity risk and other information technology risk as part of its risk
oversight and has the ultimate responsibility for overseeing our cybersecurity strategy. Furthermore, during the year ended
December 31, 2024, we
have bolstered our Board of Directors through the appointment of a Director with an extensive history in cybersecurity and a deep
understanding of cybersecurity threats which may have a material impact on our business and the video game industry as a
whole. Our Director of IT holds operational responsibility for cybersecurity and
maintains a suite of industry-standard tools to consistent confidentiality, integrity and availability of Company systems and data.
Suspicious activity within Company networks and systems are investigated and assessed by the Director of IT and then reported to the
executive management team. Verified incidents are also communicated to the Board of Directors. On a quarterly basis, the Director of IT
reports cybersecurity monitoring updates to the CEO, coordinates with our newly appointed Board Member to implement our information
technology and cybersecurity programs, as well as with our HR Manager to ensure that the Company's employees have the adequate
training on cybersecurity best practices.

 Item
2. Properties.

 As
of December 31, 2024, we lease approximately 16,900 square feet of office space located in Beverly Hills, California under an operating
lease that expires on November 13, 2025. We also own a two-story office building consisting of approximately 5,910 square feet of office
space on 7,163 square feet of land in Culver City, California. We believe that these facilities are sufficient to meet our current and
anticipated needs in the near term and that additional space can be obtained on commercially reasonable terms as needed.

 Item
3. Legal Proceedings.

 See
Item 8 of Part II, "Consolidated Financial Statements—Note 18—Commitments and Contingencies-Litigation."

 Item
4. Mine Safety Disclosures.

 Not
applicable.

 PART
II

 Item
5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 Market
Information for Class A Common Stock

 Our
Class A common stock is listed on the Nasdaq Capital Market and trades under the symbol "SNAL". Public trading of our stock
began on November 10, 2022. Prior to that, there was no public market for our Class A common stock.

 Holders
of Record

 The
approximate number of record holders of our Class A common stock as of March 20, 2025 was three, including Equiniti Trust Company,
LLC, which holds shares of our Class A common stock on behalf of an indeterminate number of beneficial owners. The number of record
holders of our Class B common stock as of March 20, 2025 was two.

 Dividend
Policy

 We
currently intend to retain all available funds and any future earnings, if any, to fund the development and expansion of our business
and we do not anticipate paying any cash dividends in the foreseeable future. Except for a one-time special dividend in connection with
our distribution of the Shareholder Loan (as defined herein), we have not paid any cash dividends. Any future determination related to
our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations,
capital requirements, business prospects and other factors our board of directors deems relevant, and subject to the restrictions contained
in any future financing instruments. In addition, our ability to pay cash dividends is currently restricted by the terms of our credit
facilities. Our ability to pay cash dividends on our capital stock in the future may also be limited by the terms of any preferred securities
we may issue or agreements governing any additional indebtedness we may incur.

 Stock
Performance Graph

 As
a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 Unregistered
Sales of Equity Securities and Use of Proceeds

 We
issued the following securities that were not registered under the Securities Act.

 On
November 14, 2022, concurrently with the initial public offering ("IPO") of our Class A common stock, and pursuant to the
certain reorganization transactions, the pre-IPO stockholders of Snail Games USA collectively exchanged 500,000 shares of SGUSA common
stock for 6,251,420 shares of our Class A common stock and 28,748,580 shares of our Class B common stock. The Company did not issue any
securities that were not registered under the Securities Act during the year ended December 31, 2024.

 The
foregoing transactions were exempt from registration under the Securities Act, in reliance on Section 4(a)(2) of the Act.

 Purchases
of Equity Securities by the Issuer and Affiliated Purchasers

 Total Number of Shares Purchased

 Average Price Paid per Share

 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

 Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs

 In thousands, except per share amounts

 Period

 January 2024

 —

 —

 —

 —

 February 2024

 —

 —

 —

 —

 March 2024

 —

 —

 —

 —

 April 2024

 —

 —

 —

 —

 May 2024

 —

 —

 —

 —

 June 2024

 —

 —

 —

 —

 July 2024

 —

 —

 —

 —

 August 2024

 —

 —

 —

 —

 September 2024

 —

 —

 —

 —

 October 2024

 —

 —

 —

 —

 November 2024

 —

 —

 —

 —

 December 2024

 —

 —

 —

 —

 Total

 —

 $
 —

 —

 $
 —

 On
November 10, 2022, our board of directors authorized a Share Repurchase Program under which we may repurchase up to $5 million in outstanding
shares of our Class A common stock, subject to ongoing compliance with Nasdaq listing rules. The program does not have a fixed expiration
date. The share repurchases may be made from time to time through open market transactions, block trades, privately negotiated transactions
or otherwise and are subject to market and business conditions, levels of available liquidity, cash requirements for other purposes,
regulatory, and other relevant factors. All share repurchases settled in the fiscal years ended December 31, 2024 and 2023 were open
market transactions. As of December 31, 2024, 1,350,275 shares of Class A common stock were repurchased pursuant to the Share Repurchase
Program for an aggregate purchase price of approximately $3.7 million. The average price paid per share was $2.72 and approximately $1.3
million aggregate amount of shares of Class A common stock remain available for repurchase under the Share Repurchase Program. For more
information regarding the Share Repurchase Program refer to Note 2— Summary of Significant Accounting Policies to our
consolidated financial statements included in this Annual Report.

 Item
6. [Reserved.]

 Item
7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

 The
following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes included
elsewhere in this Annual Report on Form 10-K (the "Annual Report"). This discussion and analysis contains forward-looking
statements that involve certain risks and uncertainties. Our actual results could differ materially from those discussed in these statements.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly
under "Risk Factors," in Part I, Item 1A of this Annual Report, and the "Cautionary Statement Regarding Forward-Looking
Statements" section of this Annual Report.

 Overview

 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 an ARK 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 94.8 million console and PC installs through December 31, 2024 and repeated
releases within the top-25 selling games on the Steam platform. See below for discussion of key performance metrics and non-GAAP measures.
During the fiscal year ended December 31, 2024, ARK: Survival Evolved and ARK: Survival Ascended combined for an average
total of 213,000 daily active users ("DAUs") on the Steam and Epic platforms, as compared to 416,479 in the fiscal year ended
December 31, 2023. We define "daily active users" as the number of unique users who play any given game on any given day.
For the years ended December 31, 2024 and 2023, we generated 85.1% and 87.8%, respectively, of our revenues from the ARK franchise.

 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 December 31, 2024, our ARK franchise game has been
played for 3.9 billion hours with an average playing time per user of 162.1 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 years ended December 31, 2024 and 2023, our net revenue was $84.5
million and $60.9 million, respectively. During the year ended December 31, 2024, approximately 42.4% of our revenue came from consoles,
48.1% from PC and 5.5% from mobile platforms as compared to 43.7% from consoles, 43.4% from PC and 9.6% from mobile platforms during
the year ended December 31, 2023. For the year ended December 31, 2024 we had a net income of $1.8 million, as compared to net loss of
$9.1 million for the year ended December 31, 2023.

 Key
Factors Affecting Our Business

 There
are a number of factors that affect the performance of our business, and the comparability of our results from period to period, including:

 Investments
in our content strategy

 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 and eSports content 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
soft launched on iOS and Android platforms. We have released thirty-one short film dramas to date and expect a consistent roll out of
new short film dramas.

 Growth
of user base

 We
have experienced significant growth in our number of downloads over the last several years. We have sold 49.9 million units between January
1, 2016 and December 31, 2024. During the year ended December 31, 2024, we sold 4.7 million units compared to 6.3 million in the year
ended December 31, 2023. 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 and ARK: Genesis is a DLC.

 While
we believe we have a significant opportunity to grow our installed base, we anticipate that our overall user growth rate will fluctuate
over time as we continue to release new master games and companion DLCs. Download rates and user engagement may increase or decrease
based on other factors such as growth in console, PC and mobile games, ability to release content, market effectively and distribute
to users.

 Investments
in our technology platform

 We
are focused on innovation and technology leadership in order to maintain our competitive advantage. We spend a portion of our capital
on our research and development platform to continuously improve our technological offerings and gaming platform. Our proprietary video
game technology includes a versatile game engine, development pipeline tools, advanced rendering technology and advanced server and network
operations. Continued investment in improving the technology behind our existing gaming platforms as well as developing new software
tools for new product offerings is important to maintaining our strategic goals, developer and creator talent, and financial objectives.
For us to continue providing cutting-edge technology to our users and bringing digital interactive entertainment to market, we must also
continue to invest in developmental and creative resources. For our users, we regularly invest in user-friendly features and enhance
user experience in our games and platforms. As our industry moves towards increased use of cloud gaming and gaming as a service technology,
our ability to bring interactive technologies to market will be an increasingly important part of our business. To accompany our entry
into the vertical short film market, we have developed a distribution platform, the Salty TV mobile application that allows users
to access the content on demand.

 Ability
to release content, market effectively through cross media and expand the gaming group

 Establishing
and maintaining a loyal network of players for our premium games is vital for our business and drives revenue growth. To grow and maintain
our player base, we invest in developing new games to attract and engage players, and in providing existing audiences with proven content
in the form of new DLCs. In the near-term, we may increase spending on original content creation with new studios, and on sales and marketing
as a percentage of revenue to grow our player network. The scale of our player base is determined by a number of factors, including our
ability to strengthen player engagement by producing content that players play regularly and our effectiveness in attracting new players,
both of which may in turn affect our financial performance.

 Strategic
relationship with developers, Studio Wildcard & Suzhou Snail

 We
have grown and expect to continue to grow our business by collaborating with game studios that we believe can benefit from our team's
decades of experience developing successful games. We have strategic relationships with many developer studios that create original content
for us. The relationships allow for valuable knowledge sharing between Suzhou Snail, a related party, and the developer studios. We enjoy
a long-term relationship with Studio Wildcard, a related party, which develops our ARK franchise. We have an exclusive license
with Studio Wildcard for rights to ARK, and we work with them and our other studio developer partners to provide ongoing support
across numerous aspects of game development. Our financial results may be affected by our relationship with game studios, including Studio
Wildcard, and our ability to create self-developed titles.

 Relationship
with third party distribution platforms

 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.

 Seasonality

 We
experience fluctuations in quarterly and annual operating results as a result of the timing of the introduction of new titles, variations
in sales of titles developed for particular platforms, market acceptance of our titles, development and promotional activities relating
to the introduction of new titles, releases of expansion packs and DLCs, and to coincide with the global holiday season in the fourth
and first quarters of each year. Seasonality in our revenue also tends to coincide with promotional cycles on platforms, typically on
a quarterly basis.

 Recent
Developments

 In
December 2024, we released the highly anticipated next-gen ARK mobile game, ARK Ultimate Mobile Edition on iOS and Android platforms.
In the launch month, over 2 million users downloaded the mobile game across the two mobile platforms. In an effort to further broaden
our game portfolio. In 2024, we acquired eleven games through our gaming network and partners. We expect to release nine acquired games
in 2025. A few notable titles include Honeycomb: The World Beyond – A sci-fi survival adventure where players assume the role of
a bioengineer navigating the mysterious planet Sota7, Echoes of Elysium – an airship survival RPG set in a breathtaking procedural
world of mystery and discovery, and Robots at Midnight – a retro-futuristic action-RPG aiming to captivate players with its dynamic
gameplay and immersive storytelling.

 To
bring more entertainment to our users, we have soft launched a short film mobile application on iOS and Android platforms. The short
film mobile application, SaltyTV, brings exclusive, original stories from heart-racing thrillers to jaw-dropping romances to our viewers.
We have released thirty-nine short film dramas to date and expect a consistent roll out of new short film dramas throughout 2025 and
beyond.

 Components
of Results of Operations

 Revenues

 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. For sales arrangements through Xbox
Live and Game Pass, PlayStation Network, Steam, Epic Game Stores, My Nintendo Store and retail distributors, the digital platforms and
distributors have discretion in establishing the price for the specified good or service, and we have determined we are the agent in
the sales transaction to the end user and therefore report revenue on a net basis based on the consideration received from the digital
storefront. For sales arrangements through the Apple App Store and the Google Play Store, we have discretion in establishing the price
for the specified good or service and have determined that we are the principal to the end user and therefore report revenue on a gross
basis. Mobile platform fees charged by these digital storefronts are expensed as incurred and reported within cost of revenue as merchant
fees.

 We
record deferred revenue when payments are due or received in advance of the fulfillment of our associated performance obligations.

 Cost
of revenues

 Cost
of revenues includes license royalty fees, merchant fees, engine fees, server and database cost centers, game licenses and license right
amortization. For a description of our licensing arrangements, please see Note 2 - Summary of Significant Accounting Policies to
our consolidated financial statements included in this Annual Report. We generally expect cost of revenues to fluctuate proportionately
with revenues.

and administrative

and administrative expenses include rent expense, salaries, stock-based compensation, legal and professional expenses, administrative
internet and server expenses, contract costs, insurance expenses, license and permits, other taxes and travel expenses. We expect salaries and wages to increase as we increase headcount as we expand our product offerings. Stock-based compensation will be recorded
within research and development and general and administrative expense. We also record legal settlement expenses as components of general
and administrative expenses. We expect general and administrative expenses will increase in absolute dollars due to the additional administrative
and regulatory burden of becoming and operating as a public company and the inflationary pressures of recent years.

and development

and development consists primarily of consulting expenses and salaries and wages devoted towards the development of new games and related
technologies and development costs outsourced through Suzhou Snail. We do not fund or enter into arrangements relating to the research
and development activities from third-party developers from whom we license games. We expect our research and development to increase
as we develop new content, games or technologies.

and marketing

and marketing consists of costs related to advertising and user acquisition efforts, including payments to third-party marketing agencies.
We occasionally offer our early access trial, through which we sell our games that are in development and testing. The early access trial
allows us to both monetize and receive feedback on how to improve our games over time. We plan to continue to invest in advertising and
marketing to retain and acquire players. However, sales and marketing expenses may fluctuate as a percentage of revenues depending on
the timing and efficiency of our marketing efforts.

 Provision
for (benefit from) income taxes

 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 25.7% differed from the federal statutory rate of 21% primarily due to the foreign research and development deduction, permanent differences, change in valuation allowance,
and change in warrant valuation.

 Results
of Operations

 Comparison
of the year ended December 31, 2024 versus the year ended December 31, 2023

 Years ended
 December 31,

 2024

 2023

 Revenues, net

 $
 84.5

 $
 60.9

 $
 23.6

 38.7
 %

 Cost of revenues

 54.2

 48.3

 5.9

 12.3
 %

 Gross profit

 30.3

 12.6

 17.7

 140.0
 %

 Operating expenses:

 General and administrative

 12.9

 15.8

 (2.9
)

 (18.6
)%

 Research and development

 11.6

 5.1

 6.5

 130.3
 %

 Advertising and marketing

 1.5

 1.6

 (0.1
)

 (3.7
)%

 Depreciation

 0.4

 0.4

 -

 (29.7
)%

 Total operating expenses

 26.4

 22.9

 3.5

 15.1
 %

 Income (loss) from operations

 $
 3.9

 $
 (10.3
)

 $
 14.2

 137.8
 %

 Revenues

 Net
revenues for the year ended December 31, 2024 increased by $23.6 million, or 38.7%, compared to the year ended December 31, 2023. The
increase in net revenues was due to an increase in recognition of deferred revenues of $32.2 million related to the Ark franchise, an
increase in sales Bellwright of $5.9 million, partially offset by a decrease in total Ark sales of $13.0 million, a decrease in
Ark Mobile sales of $1.0 million and a decrease in the Company's other titles of $0.7 million.

 Cost
of revenues

 Cost
of revenues for the year ended December 31, 2024 increased by $5.9 million, or 12.3%, compared to the year ended December 31, 2023.

 Cost
of revenues for the years ended December 31, 2024 and 2023 comprised the following:

 Years ended
 December 31,

 2024

 2023

 Software license royalties - related parties

 $
 19.9

 $
 14.4

 $
 5.5

 38.3
 %

 Software license royalties

 0.6

 1.1

 (0.5
)

 (49.1
)%

 License and amortization - related parties

 24.0

 20.5

 3.5

 17.1
 %

 Merchant fees

 0.9

 1.4

 (0.5
)

 (34.9
)%

 Engine fees

 3.8

 4.3

 (0.5
)

 (11.1
)%

 Internet, server and data center

 4.9

 6.5

 (1.6
)

 (23.3
)%

 Costs related to other revenues

 0.1

 0.1

 -

 (56.5

)%

 Total:

 $
 54.2

 $
 48.3

 $
 5.9

 12.3
 %

 The
increase in cost of revenues for the year ended December 31, 2024 was due to an increase of $5.5 million in software license royalties
– related parties, a result of increased deferred royalty recognition related to ARK franchise, an increase of $3.5 million
in license and amortization – related parties due to the increased license fee paid to SDE partially offset by lower amortization
expense due to a lower depreciable base of intangible assets in 2024, a decrease in engine fees of $0.5 million, decrease in internet,
server and data center fees of $1.6 million, a decrease in merchant fees of $0.5 million and a decrease in software license royalties
of $0.5 million.

and administrative expenses

and administrative expenses for the year ended December 31, 2024 decreased by $2.9 million, or 18.6%, compared to the year ended
December 31, 2023. The decrease in general and administrative expenses was due to a decrease in salaries and wages of $1.3 million
due to the reversal of $0.9 million in previously expensed stock based compensation, a decrease in legal and professional expenses
of $1.1 million, a decrease in bad debt expense of $0.6 million, a decrease in administrative internet and server costs of $0.4
million, and a decrease in expenses of $0.4 million for SEC filing fees, investor relations, NASDAQ listing fees and compliance
expenses; partially offset by an increase in non-income related taxes of $0.4 million and general office expenses of $0.2
million.

and development expenses

and development expenses for the year ended December 31, 2024 increased by $6.5 million, or 130.3%, compared to the year ended December
31, 2023. The increase in research and development expenses was due to the outsourced development of For the Stars and project
 Aether paid through Suzhou Snail and increased internal research and development salaries as we continue to build our internal
development team.

and marketing expenses

and marketing expenses for the year ended December 31, 2024 decreased by $0.1 million, or 3.7%, compared to the year ended December 31,
2023.

 Other
Factors Affecting Net Income (Loss)

 Years ended
 December 31,

 2024

 2023

 Interest income

 $
 0.3

 $
 0.1

 $
 0.2

 100.7
 %

 Interest expense

 (0.7
)

 (1.5
)

 0.8

 (52.8
)%

 Other income (expense)

 (1.0
)

 0.3

 (1.3
)

 (468.9
)%

 Income tax (provision) benefit

 (0.6
)

 2.4

 (3.0
)

 (126.3
)%

income

income was $0.3 million and $0.1 million for the year ended December 31, 2024 and 2023, respectively. The increase was due to the balance
of our cash deposits being higher on average during the year ended December 31, 2024.

expense

expense primarily related to our outstanding indebtedness with third-party lenders. Interest expense decreased by $0.8 million for the
year ended December 31, 2024 because of the Company having a lower average debt balance during the year ended December 31, 2024.

 Other
income (expense)

 Other
income (expense) decreased by $1.3 million for the year ended December 31, 2024, in comparison to the year ended December 31, 2023.
The decrease is due to the revaluation of the Company's outstanding warrant liabilities and exercised warrant
contracts.

 Provision
for (benefit from) income taxes

 The
Company had an income tax provision of $0.6 million for the year ended December 31, 2024 and a benefit of ($2.4) million for the
year ended December 31, 2023. Our effective income tax rate was 25.7% and 20.9% during the years ended December 31, 2024 and
2023, respectively.

 Key
Performance Metrics

 Units
Sold

 We
monitor Units Sold as a key performance metric in evaluating the performance of our console and PC game business. We define Units Sold
as the number of game titles purchased through digital channels by an individual end user. Under this metric, the purchase of a standalone
game, DLC, Season Pass or bundle on a specific platform are individually counted as a unit. For example, an individual who purchases
a standalone game and DLC on one platform, a Season Pass on another platform, and a bundle on a third platform would count as four Units
Sold. Similarly, an individual who purchases three standalone game titles on the same platform would count as three Units Sold.

 Units
Sold may be impacted by several factors that could cause fluctuations on a quarterly basis, such as game releases, our promotional activities,
which most often coincide with the global holiday season in the fourth and first quarters of each year, promotional sales on digital
platforms, console release cycles and new digital platforms. Future growth in Units Sold will depend on our ability to launch new games
and features and the effectiveness of marketing strategies.

 Years ended December 31,

 2024

 2023

 Units Sold (1)

 4.7

 6.3

 (1.6
)

 (25.3
)%

 (1)

 Units
 include master games, DLCs, season pass and bundles and excludes skins, soundtracks and other items.

 Units
sold decreased during the year ended December 31, 2024, as compared to the year ended December 31, 2023, by 1.6 million units, or 25.3%.
Units sold of ARK: Survival Evolved decreased by 2.1 million units, partially offset by an increase in ARK: Survival
Ascended units sold of 0.3 million and an increase in Bellwright sales of 0.4 million units.

 Bookings

 Bookings
is a key operating metric in assessing our financial performance. Bookings adjusts for the impact of deferrals and, we believe, provides
a useful indicator of sales in a given period. It reflects the net amount of products and services sold digitally or physically in a
given period, excluding the impact of revenue deferrals. Bookings is used by management to understand sales trends and assess the volume
of our sales activity over time. Bookings should not be considered as alternatives to net income (loss), as measures of financial performance
or any other performance measure derived in accordance with GAAP. Below is a reconciliation of total net revenue to Bookings, the closest
GAAP financial measure.

 Years ended December 31,

 2024

 2023

 Total net revenue

 $
 84.5

 $
 60.9

 $
 23.6

 38.7
 %

 Change in deferred net revenue

 (8.8
)

 24.8

 (33.6
)

 (135.7
)%

 Bookings

 $
 75.7

 $
 85.7

 $
 (10.0
)

 (11.7
)%

 For
the year ended December 31, 2024, bookings decreased by $10.0 million, or 11.7%, compared to the year ended December 31, 2023, because
of increased sales at a higher ASP driven by the release of ARK: Survival Ascended in the fourth quarter of 2023. The releases
of Bobs Tall Tales and Bellwright along with the ARK: Survival Ascended DLCs, Scorched Earth in April 2024,
 Aberration in September 2024 and Extinction in December 2024 partially offset the decrease in unit sales in 2024 but each
product release was at a lower ASP than the initial release of ARK: Survival Ascended. Additionally, the Company recognized $13.2
million from deferred revenue upon the release of Scorched Earth, Aberration and Extinction in 2024 and deferred $6.7 million
in revenues during the year ended December 31, 2024 for the ARK: Survival Ascended DLC's have not yet released as compared
to $22.0 million in revenues deferred during the year ended December 31, 2023 for the ARK: Survival Ascended DLC's and parts
of Bobs Tall Tales that had not yet launched.

 Non-GAAP
Measures

 In
addition to our financial results determined in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"
or "GAAP"), we believe EBITDA, as a non-GAAP measure, is useful in evaluating our operating performance. EBITDA, as used
in this Annual Report on Form 10-K, is a non-GAAP financial measure that is presented as supplemental disclosures and should not be construed
as an alternative to net income (loss) or any other GAAP measure as an indicator of operating performance.

 We
present EBITDA because it is used by management to assess our financial performance, excluding certain expenses that management believes
do not reflect the ongoing operating performance of the business. Management uses EBITDA to supplement GAAP measures of performance when
evaluating our business strategies, making budgeting decisions and comparing performance against peer companies.

 EBITDA

 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.

 EBITDA
as calculated herein may not be comparable to similarly titled measures reported by other companies within the industry and is not determined
in accordance with GAAP. Our presentation of EBITDA should not be construed as an inference that our future results will be unaffected
by unusual or unexpected items. We may also incur expenses that are the same, or similar to, some of the adjustments in this presentation.

 Below
is a reconciliation of net income (loss) to EBITDA, the closest GAAP financial measure.

 Years ended December 31,

 2024

 2023

 $
 1.8

 $
 (9.1
)

 $
 10.9

 120.1
 %

 Interest income and interest income – related parties

 (0.3
)

 (0.1
)

 (0.2
)

 99.2
 %

 Interest expense and interest expense – related parties

 0.7

 1.5

 (0.8
)

 (52.8
)%

 Provision for (benefit from) income taxes

 0.6

 (2.4
)

 3.0

 (126.3
)%

 Depreciation expense

 0.4

 0.4

 -

 (29.7
)%

 EBITDA

 $
 3.2

 $
 (9.7
)

 $
 12.9

 133.4
 %

 For
the year ended December 31, 2024, EBITDA increased by $12.9 million, or 133.4%, compared to the year ended December 31, 2023, primarily
because of an increase in net income of $10.9 million and a decrease in the benefit from income taxes of $3.0 million, partially offset
by a decrease in interest expense and interest expense – related parties of $0.8 million and an increase in interest income and interest income – related parties of $0.2 million.

 Liquidity
and Capital Resources

spending

 We
incur capital expenditures in the normal course of business and perform ongoing enhancements and updates to our social and mobile games
to maintain their quality standards. Cash used for capital expenditures in the normal course of business is typically made available
from cash flows generated by operating activities. We may also pursue acquisition opportunities for additional businesses or games that
meet our strategic and return on investment criteria. Capital needs for investment opportunities are evaluated on an individual opportunity
basis and may require significant capital commitments.

 Liquidity

 Our
primary sources of liquidity are the cash flows generated from our operations, that are currently available as unrestricted cash. Our
unrestricted cash was $7.3 million and $15.2 million as of December 31, 2024 and 2023, respectively.

 Our
restricted cash and cash equivalents were $0.9 million and $1.1 million as of December 31, 2024 and 2023, respectively. 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.

 As
of December 31, 2024, our 2021 Revolving Loan has a balance of $3.0 million and is due in June 2025. The Company has repaid its
Convertible Notes balance of $1.1 million, its $1.5 million financing arrangement, and the remaining $0.8 million of its short term
notes balance during the twelve months ended December 31, 2024. In concurrence with the registration of the 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. We intend to renegotiate with the lender to extend the maturity
date of the 2021 Revolving Loan and to negotiate a new Short Term Note. However, there is no guarantee that we will be able to
renegotiate the terms of the 2021 Revolving Loan or obtain a new short term note with the lender at terms acceptable to us or at
all. The Company was in compliance with its debt covenants related to the 2021 Revolving Note and 2021 Promissory note for the
trailing twelve months ended December 31, 2024, however it is probable that the Company will fail the covenants within the next 12
months. As such, the Company has classified the long-term portion of its promissory note 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.

 The
Company has raised capital through the issuance of the convertible notes, equity line of credit, a short term financing arrangement with
the Company's internet and data center ("IDC") vendor, 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.

 Our
current unrestricted cash position of approximately $7.3 million, and our expected revenue receipts will allow the Company to continue
operations beyond the next 12 months and service its current debts.

 Cash
flows

 The
following tables present a summary of our cash flows for the periods indicated:

 Years
 ended
 31,

 2024

 2023

 $
 Change

 %
 Change

 (in
 millions)

 Net
 cash flows provided by (used in) operating activities

 $
 (1.6
)

 $
 0.5

 $
 (2.1
)

 (436.0
)%

 Net
 cash flows used in financing activities

 (6.5
)

 (3.4
)

 (3.1
)

 (88.5
)%

 Net
 decrease in cash and cash equivalents and restricted cash and cash equivalents

 $
 (8.1
)

 $
 (2.9
)

 $
 (5.2
)

 (170.6
)%

activities

 Net
cash flows provided by (used in) operating activities for the year ended December 31, 2024 decreased $2.1 million as compared to the
year ended December 31, 2023, which resulted primarily from a decrease in deferred revenues of $33.6 million, a decrease in accounts
payable and accounts payable – related parties of $21.4 million, an increase in other noncurrent assets of $1.5 million, a
decrease in accrued expenses of $0.6 million, a decrease in non-cash reconciling items of $0.6 million; partially offset by a
decrease in accounts receivable and accounts receivable - related party of $34.1 million, increase in net income of $10.9 million, a
decrease in prepaids expenses and prepaid expenses – related party of $8.5 million and an increase in prepaid taxes of $2.2 million.

 The
Company had a net income of $1.8 million and a net loss of $9.1 million, for the years ended December 31, 2024 and 2023,
respectively, representing an increase of $10.9 million. The increase was primarily due to an increase in net revenue of $23.6
million, decreased general and administrative expenses of $2.9 million, partially offset by increased research and development costs
of $6.5 million, increased costs of revenues of $5.9 million, an increase in expenses related to the revaluation of outstanding and
exercised warrants of $1.2 million and a decrease in income tax benefit of $3.0 million.

 Non-cash
reconciling items were $0.5 million and $1.1 million for the years ended December 31, 2024 and 2023, respectively, representing a decrease
of $0.6 million. The decrease in the non-cash reconciling items was due to a decrease in amortization of intangible assets of $1.4 million,
a decrease in stock based compensation expense of $1.7 million, a decrease in allowance for credit losses of $0.6 million, partially
offset by an increase on the loss in fair value of warrant liabilities of $1.3 million, and an increase in deferred taxes of $2.1 million.

 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 December 31, 2024 and 2023, the net outstanding balances of receivables due from SDE were $7.5 million and $13.5 million,
respectively. We expect accounts receivables owed to us by SDE will be repaid within the next two fiscal years 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 Receivable - Related Party
to our consolidated financial statements included in this Annual Report.

 Financing
activities

 Net
cash flows used in financing activities for the year ended December 31, 2024 were $6.5 million compared to $3.4 million for the year
ended December 31, 2023. Financing activities for the year ended December 31, 2024 included $6.4 million in debt payments, $0.3 million
in payments of capitalized offering costs in accounts payable and proceeds of $0.2 million resulting from the exercise of liability classified
warrants. Financing activities for the year ended December 31, 2023 included debt repayments of $9.5 million, the purchases of treasury
stock in the amount of $0.3 million, and $0.3 million in payments of capitalized offering costs partially offset by $3.0 million in borrowings
on a term loan, $0.8 million for the issuance of convertible notes, $1.9 million received for the refund of a dividend withholding tax
overpayment and $1.0 million from the release of the Company's restricted escrow deposit.

 Registered
Offering

 In
September 2022, we filed a Form S-1 Registration Statement with the United States Securities and Exchange Commission in connection with
our 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.

 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.

 In
October 2023, we filed a Form S-1 Registration Statement with the SEC in connection with our issuance of convertible note, equity line
of credit and warrants related to each financing as noted below.

resources

 We
fund our operations from our net cash flows provided by operating activities. In addition to these cash flows, we have entered into certain
debt arrangements to provide additional liquidity and to finance our operations.

 Revolving
Loan

 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 21, 2023, the Company amended its revolving loan agreement ("amended revolver") and
decreased the maximum balance from $9,000,000 to $6,000,000. The revolving maturity date of revolving loan is extended to June 30,
2025 and has an annual interest rate equal to the prime rate less 0.25%. At December 31, 2024, the interest rate on this loan was
7.25%. As of December 31, 2024, we had borrowings of $3.0 million outstanding under our 2021 Revolving Loan.

 Term
Loan

 In
June 2021, we entered into a loan agreement with a financial institution providing for a term loan in an aggregate principal amount of
$3.0 million (the "Term Loan"). The Term Loan, which was originally set to mature in June 2031, bears interest at a fixed
rate of 3.5% for the first five years and then at a floating rate of the Wall Street Journal prime rate until maturity. The Term Loan
is secured by our principal headquarters.

 2022
Short Term Note

 In
January 2022, we amended and restated our 2021 Revolving Loan and we executed a promissory note to obtain an additional long-term loan
with a principal balance of $10.0 million which was set to mature on January 26, 2023 (the "2022 Short Term Note"). In November
2022, the maturity date was extended to January 26, 2024. Interest was equal to the higher of 3.75% and the Wall Street Journal prime
rate plus 0.50%. The 2022 Short Term Note is secured and collateralized by our existing assets. The Company completed the last payment
obligation on the 2022 Short Term Note during the year ended December 31, 2024.

 Convertible
Notes

 On
August 24, 2023, the Company issued convertible notes at a 7.4% discount and a principal balance of $1,080,000. The notes had an interest
rate of 7.5%, were paid in consecutive monthly installments beginning February 24, 2024 and matured on May 24, 2024. In connection with
the Convertible Notes the Company issued to the investors warrants to purchase an aggregate of 714,285 shares that were accounted for
under the fair value method and allocated a value of $445,754. The difference of $525,754 between the proceeds allocated to the Convertible
Notes and the aggregate principal amount were accreted over the life of the notes and accounted for the fair value of the warrants and
the stated discount. Additionally, $152,500 of transaction costs incurred by the Company were recorded as a debt discount. The discount
was amortized using the effective interest rate of 103.4%. The effective interest rate is based on the principal balance discounted by
stated interest, debt issuance costs and fair value allocated to the related warrants. As of December 31, 2024, the Convertible Notes
have been repaid. The Company has registered shares for potential issuance on exercise of the warrants, or conversion of the note, on
Form S-1 that was declared effective on October 30, 2023. As of December 31, 2024, the note holders have exercised 202,379 warrants.
During the year ended December 31, 2024, prior to repayment, the noteholders exercised the option to convert $60,000 in principal of
the notes to 71,460 shares of the Company's Class A common stock.

Line Purchase Agreement

 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.

 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 December 31, 2024 the Company has not sold any Class A common stock under the Equity Line
Purchase Agreement and the investor has exercised 33,333 warrants.

 2023
Note Payable

 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 of ARK: 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 monthly ARK: Survival Ascended
 revenues. 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.

 Financial
covenants

 The
2021 Revolving Loan, Term Loan and the 2022 Short Term Note require us to maintain a minimum debt service coverage ratio of 1.5 to
1.0. Additionally, the 2021 Revolving Loan requires us to maintain an outstanding principal balance of no more than $3.0 million for
30 consecutive days during any twelve-month period. For the trailing twelve months ended December 31, 2024, the Company met the
minimum debt service coverage ratio required by its debt covenants. The Company repaid the $0.8 million term note that was one of
three debt facilities with the lender, in January 2024. The Company's ability to comply with the covenants, or receive waivers
for the covenants, can lead to the acceleration of payments due under the debt facilities with the lender, cause the lender to cease
making advances under the revolving agreement, or allow the lender to take possession of collateral. Due to the projected failure to
comply with the debt covenant within the next twelve months, the Company classifies its long term debt as current.

 For
additional information regarding our indebtedness, see Note 12, Revolving Loan, Short Term Note and Long-Term Debt to our consolidated
financial statements included in this Annual Report.

 Critical
Accounting Policies and Estimates

 Our
discussion and analysis of results of operations, financial condition, and liquidity are based upon our consolidated financial statements,
which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make
estimates and judgements that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We
based our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.
Actual results may materially differ from these estimates under different assumptions or conditions. On an on-going basis, we review
our estimates to ensure that they appropriately reflect changes in our business or new information as it becomes available. For additional
information on our significant accounting policies, please refer to Note 2 - Summary of Significant Accounting Policies to our
consolidated financial statements included in this Annual Report. We believe that the following critical accounting policies and estimates
have the greatest potential impact on our consolidated financial statements.

Revenue

 The
Company recognizes, defers, and classifies the timing of deferred revenues from the sale of its products based on estimates of the release
date, technical support obligations and timing of its performance obligations. The estimated timing of release dates is dependent on
development milestones met by developers and compliance with platform requirements. At any time, platform requirements may change, or
the developers may miss milestones. Estimates in technical support obligations will vary by platform and could change from period to
period depending on user trends. Changes in estimates of our release schedule may affect the classification of short and long term deferred
revenues and the rate at which deferred revenue is recognized, which could have a material impact on the Company's Consolidated
Financial Statements.

 Selling
Prices of Performance Obligations

 The
Company uses the following reasonably available information in developing the standalone selling prices of the performance obligations:

 Reasonably
 available data points, including third party or industry pricing, and contractually stated prices.

 Market
 conditions such as market demand, competition, market constraints, awareness of the product and market trends.

 Entity-specific
 factors including pricing strategies and objectives, market share and pricing practices for bundled arrangements.

Income Taxes

 The
Company's deferred income tax assets reflect the net tax effects of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for income tax purposes. Changes in tax laws or the level of future
taxable income could affect the realizability of deferred income tax assets. The Company recognizes deferred income taxes based on estimates
of future taxable income and the utilization of tax loss carryforwards. In evaluating the realizability of deferred taxes, the Company
evaluates all available positive and negative evidence of whether sufficient future taxable income will be generated to realize the deferred
tax assets, including the results of recent operations and projections of future taxable income. The weighting of positive and negative
evidence and the projection of future taxable income requires significant judgment and estimates. In addition, changes in these estimates
may have a material impact on the Company's consolidated financial statements.

 Recently
Issued Accounting Pronouncements

 For
a description of recently issued and adopted accounting pronouncements, including the respective dates of adoption and expected effects
on our results of operations and financial condition, please see Note 2 - Summary of Significant Accounting Policies to our Consolidated
Financial Statements included in this Annual Report.

 Emerging
Growth Company and Smaller Reporting Company Status

 We
are an "emerging growth company," as defined in the JOBS Act. As such, we are eligible for exemptions from various reporting
requirements applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required
to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation, and an exemption from the requirements to obtain a non-binding advisory vote on executive compensation or golden
parachute arrangements. We have elected to take advantage of certain of the reduced disclosure obligations and may elect to take advantage
of other reduced reporting requirements in our future filings with the SEC. As a result, the information that we provide to our stockholders
may be different than you might receive from other public reporting companies in which you hold equity interests.

 In
addition, an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting
standards. This provision allows an emerging growth company to delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We have elected to avail ourselves of this provision of the JOBS Act. As a result, we will
not be subject to new or revised accounting standards at the same time as other public companies that are not emerging growth companies.
Therefore, our Consolidated Financial Statements may not be comparable to those of companies that comply with new or revised accounting
pronouncements as of public company effective dates.

 We
will remain an emerging growth company until the earliest of: (a)(i) the last day of the fiscal year following the fifth anniversary
of the closing of our initial public offering; (ii) the last day of the fiscal year in which we have total annual gross revenue of at
least $1.235 billion; or (iii) the last day of the fiscal year in which we are deemed to be a "large accelerated filer" as
defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded
$700.0 million as of the last business day of the second fiscal quarter of such year and (b) the date on which we have issued more than
$1.0 billion in non-convertible debt securities during the prior three-year period.

 We
are also a "smaller reporting company" as defined in the Exchange Act. We may continue to be a smaller reporting company
even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller
reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock
held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue
is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates
is less than $700.0 million measured on the last business day of our second fiscal quarter.

 Item
7A. Quantitative and Qualitative Disclosures About Market Risk.

 As
a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide the information
required by this item.

 Item 8. Financial Statements and Supplementary
Data.

TO FINANCIAL STATEMENTS

Inc.

Financial Statements

 Page

 Report of Independent Registered Public Accounting Firm (BDO USA, P.C.; Costa Mesa, California; PCAOB ID No. 243)

 Consolidated Balance Sheets

 Consolidated Statements of Operations and Comprehensive Income (Loss)

 Consolidated Statements of Equity

 Consolidated Statements of Cash Flows

 Notes to Consolidated Financial Statements

 F- 1

 UPDATE

 Report
of Independent Registered Public Accounting Firm

 Stockholders
and Board of Directors

Inc.

 Culver
City, California

 Opinion
on the Consolidated Financial Statements

 We
have audited the accompanying consolidated balance sheets of Snail, Inc. (the "Company") as of December
31, 2024 and 2023, the related consolidated statements of operations and comprehensive income (loss), equity, and cash flows for each
of the years then ended, 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 financial position of the Company at
December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.

 Basis
for Opinion

 These
consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.

 /s/
 BDO USA, P.C.

 We
have served as the Company's auditor since 2021.

 Costa
Mesa, California

 March

 F- 2

 Item
1. Consolidated Financial Statements

Balance Sheets as of December 31, 2024 and 2023

 31, 2024

 31, 2023

 ASSETS

 Assets:

 Cash
 and cash equivalents

 $
 7,303,944

 $
 15,198,123

 receivable, net of allowances for credit losses of $ 523,500 as of December 31, 2024 and 2023

 9,814,822

 25,134,808

 receivable - related party

 2,336,274

 -

 receivable

 2,336,274

 -

 Loan
 and interest receivable - related party

 105,759

 103,753

 Prepaid
 expenses - related party

 2,521,291

 6,044,404

 Prepaid
 expenses and other current assets

 1,846,024

 639,693

 Prepaid
 taxes

 7,318,424

 9,529,755

 Total
 current assets

 31,246,538

 56,650,536

 cash and cash equivalents

 935,000

 1,116,196

 receivable – related party, net of current portion

 1,500,592

 7,500,592

 Prepaid
 expenses - related party, net of current portion

 9,378,594

 7,784,062

 Property
 and equipment, net

 4,378,352

 4,682,066

 Intangible
 assets, net

 973,914

 271,717

 income taxes

 10,817,112

 10,247,500

 Other
 noncurrent assets

 1,683,932

 164,170

 lease right-of-use assets, net

 1,279,330

 2,440,690

 Total
 assets

 $
 62,193,364

 $
 90,857,529

 LIABILITIES,
 NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY

 Liabilities:

 payable

 $
 4,656,367

 $
 12,102,929

 payable - related parties

 15,383,171

 23,094,436

 payable

 15,383,171

 23,094,436

 Accrued
 expenses and other liabilities

 4,499,280

 2,887,193

 payable - related parties

 527,770

 527,770

 Revolving
 loan

 6,000,000

 Notes
 payable

 -

 2,333,333

 Convertible
 notes, net of discount

 -

 797,361

 portion of long-term promissory note

 2,722,548

 2,811,923

 portion of deferred revenue

 3,947,559

 19,252,628

 portion of operating lease liabilities

 1,444,385

 1,505,034

 Total
 current liabilities

 36,181,080

 71,312,607

 Accrued
 expenses

 265,251

 254,731

 revenue, net of current portion

 21,519,888

 15,064,078

 lease liabilities, net of current portion

 57,983

 1,425,494

 Total
 liabilities

 58,024,202

 88,056,910

 Commitments
 and contingencies

 -

 -

 Stockholders'
 Equity:

 Class
 A common stock, $ 0.0001 par value, 500,000,000 shares authorized; 9,626,070 shares issued and 8,275,795 shares outstanding as of
 December 31, 2024, and 9,275,420 shares issued and 7,925,145 shares outstanding as of December 31, 2023

 Class
 B common stock, $ 0.0001 par value, 100,000,000 shares authorized; 28,748,580 shares issued and outstanding as of December 31, 2024
 and December 31, 2023

 2,875

 2,875

 Common stock, value

 2,875

 2,875

 Additional
 paid-in capital

 25,738,082

 26,171,575

 other comprehensive loss

 ( 279,457
)

 ( 254,383
)

 deficit

 ( 12,117,385
)

 ( 13,949,325
)

 stock at cost ( 1,350,275 shares as of December 31, 2024 and 2023)

)

)

 Total
 Snail, Inc. equity

 9,673,271

 8,299,863

 Noncontrolling
 interests

 ( 5,504,109
)

 ( 5,499,244
)

 Total
 stockholders' equity

 4,169,162

 2,800,619

 Total
 liabilities, noncontrolling interests and stockholders' equity

 $
 62,193,364

 $
 90,857,529

 See
accompanying notes to the consolidated financial statements

 F- 3

 Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2024 and
2023

 2024

 2023

 Revenues, net

 $

 $

 Cost of revenues

 54,236,342

 48,306,403

 Gross profit

 30,230,705

 12,595,695

 Operating expenses:

 General and administrative

 12,867,210

 15,816,088

 Research and development

 11,647,293

 5,057,421

 Advertising and marketing

 1,523,398

 1,582,464

 Depreciation

 303,714

 432,306

 Loss
 on disposal of fixed assets

 -

 Total
 operating expenses

 26,341,615

 22,888,706

 Income (loss) from operations

 3,889,090

 ( 10,293,011
)

 Other income (expense):

 Interest income

 260,679

 129,854

 Interest income - related
 parties

 2,005

 2,000

 Interest income

 2,005

 2,000

 Interest expense

 ( 723,038
)

 ( 1,531,719
)

 Other income (expense)

 ( 981,223
)

 265,980

 currency transaction gain (loss)

 11,686

 ( 68,180
)

 Total other income (expense),
 net

 ( 1,429,891
)

 ( 1,202,065
)

 Income (loss) before provision for (benefit
 from) income taxes

 2,459,199

 ( 11,495,076
)

 Provision for (benefit
 from) income taxes

 632,124

 ( 2,400,652
)

)

 Net loss attributable
 to non-controlling interests

 ( 4,865
)

 ( 8,349
)

 Net income (loss) attributable to Snail, Inc.

 ( 9,086,075
)

 Comprehensive income (loss)
 statement:

 $

)

 Other comprehensive income
 (loss) related to foreign currency translation adjustments, net of tax

 ( 25,074
)

 52,817

 Total comprehensive
 income (loss)

 $
 1,802,001

 $
 ( 9,041,607
)

 Net income (loss) attributable
 to Class A common stockholders:

 Basic

 $
 400,576

 $
 ( 1,960,813
)

 $
 400,576

 $
 ( 1,960,813
)

 Net income (loss) attributable
 to Class B common stockholders:

 Net income (loss) attributable
 to common stockholders:

 Basic

 $

 $
)

 $

 $
)

 Income (loss) per share
 attributable to Class A and B common stockholders:

 Basic

 $
 0.05

 $
)

 $
 0.05

 $
)

 Weighted-average shares
 used to compute income (loss) per share attributable to Class A common stockholders:

 Basic

 Weighted-average shares
 used to compute income (loss) per share attributable to Class B common stockholders:

 Weighted-average shares
 used to compute income (loss) per share attributable to common stockholders:

 Basic

 See
accompanying notes to the consolidated financial statements

 F- 4

Statements of Equity for the Years Ended December 31, 2024 and 2023

 Loss

 Deficit

 interests

 Class
 A
 Common
 Stock

 Class
 B
 Common
 Stock

 Additional
 Paid-In-

 Other
 Comprehensive

 Stock

 Inc.

 Non

 controlling

 Total

 Loss

 Deficit

 interests

 Balance at December 31, 2022

 9,251,420

 $

 $
 2,875

 $
 23,436,942

 $
 ( 307,200
)

 $
 ( 4,863,250
)

 ( 1,197,649
)

 $
 ( 3,414,713
)

 $
 14,855,579

 $
 ( 5,490,895
)

 $
 9,364,684

 Conversion of notes payable

 Conversion of notes payable, shares

 Exercise of warrants

 Exercise of warrants, shares

 Return of dividend distribution tax withholding
 payment

 -

 -

 -

 -

 1,886,600

 -

 -

 -

 -

 1,886,600

 -

 1,886,600

 Stock based compensation related to restricted
 stock units

 -

 -

 -

 -

 848,035

 -

 -

 -

 -

 848,035

 -

 848,035

 Common stock issued for service

 24,000

 -

 -

 ( 2
)

 -

 -

 -

 -

 -

 -

 -

 Repurchase of common stock

 -

 -

 -

 -

 -

 -

 -

 ( 152,626
)

 ( 257,093
)

 ( 257,093
)

 -

 ( 257,093
)

 Foreign currency translation

 -

 -

 -

 -

 -

 52,817

 -

 -

 -

 52,817

 -

 52,817

 Net loss

 -

 -

 -

 -

 -

 -

 ( 9,086,075
)

 -

 -

 ( 9,086,075
)

 ( 8,349
)

)

 Balance at December
 31, 2023

 9,275,420

 $

 $
 2,875

 $
 26,171,575

 $
 ( 254,383
)

 $
 ( 13,949,325
)

)

 $
)

 $
 8,299,863

 $
 ( 5,499,244
)

 $
 2,800,619

 F- 5

 Class
 A

 Common
 Stock

 Class
 B

 Common
 Stock

 Additional
 Paid-In-

 Other

 Comprehensive

 Stock

 Inc.

 Non

 controlling

 Total

 Loss

 Deficit

 interests

 Balance at December 31, 2023

 9,275,420

 $

 $

 2,875

 $

 26,171,575

 $

 ( 254,383

)

 $

 ( 13,949,325

)

)

 $

)

 $

 8,299,863

 $

 ( 5,499,244

)

 $

 2,800,619

 Balance

 9,275,420

 $

 $

 2,875

 $

 26,171,575

 $

 ( 254,383

)

 $

 ( 13,949,325

)

)

 $

)

 $

 8,299,863

 $

 ( 5,499,244

)

 $

 2,800,619

 Conversion of notes payable

 71,460

 -

 -

 59,993

 -

 -

 -

 -

 60,000

 -

 60,000

 Exercise of warrants

 235,712

 -

 -

 396,726

 -

 -

 -

 -

 396,750

 -

 396,750

 Stock based compensation related to restricted
 stock units

 -

 -

 -

 -

 ( 890,208

)

 -

 -

 -

 -

 ( 890,208

)

 -

 ( 890,208

)

 Common stock issued for service

 43,478

 -

 -

 ( 4

)

 -

 -

 -

 -

 -

 -

 -

 Foreign currency translation

 -

 -

 -

 -

 -

 ( 25,074

)

 -

 -

 -

 ( 25,074

)

 -

 ( 25,074

)

 -

 -

 -

 -

 -

 -

 -

 -

 ( 4,865

)

 -

 -

 -

 -

 -

 -

 -

 -

 ( 4,865

)

 Balance at December
 31, 2024

 9,626,070

 $

 $

 2,875

 $

 25,738,082

 $

 ( 279,457

)

 $

 ( 12,117,385

)

)

 $

)

 $

 9,673,271

 $

 ( 5,504,109

)

 $

 4,169,162

 Balance

 9,626,070

 $

 $

 2,875

 $

 25,738,082

 $

 ( 279,457

)

 $

 ( 12,117,385

)

)

 $

)

 $

 9,673,271

 $

 ( 5,504,109

)

 $

 4,169,162

 See
accompanying notes to the consolidated financial statements

 F- 6

Statements of Cash Flows for the Years Ended December 31, 2024 and 2023

 2024

 2023

 Cash flows from operating
 activities:

 $

 $

)

 Adjustments to reconcile net income (loss)
 to net cash provided by (used in) operating activities:

 Amortization - intangible
 assets, net

 7,804

 1,384,862

 Amortization - loan origination
 fees and debt discounts

 62,855

 124,595

 Accretion – convertible
 notes

 222,628

 306,664

 Loss on change in fair
 value of warrant liabilities

 1,332,815

 32,883

 Depreciation - property and equipment

 303,714

 432,306

 Stock-based compensation
 expense (income)

 ( 890,208

)

 848,035

 Loss on
 disposal of fixed assets

 -

 Credit losses

 -

 581,498

 Deferred taxes, net

 ( 569,601

)

 ( 2,644,964

)

 Changes in assets and liabilities:

 Accounts receivable

 15,319,987

 ( 18,939,465

)

 Accounts receivable - related
 party

 3,663,726

 3,824,775

 Prepaid expenses - related
 party

 1,928,581

 ( 8,245,966

)

 Prepaid expenses and other
 current assets

 ( 1,206,331

)

 501,104

 Prepaid taxes

 2,211,331

 -

 Other noncurrent assets

 ( 1,523,065

)

 -

 Accounts payable

 ( 7,183,648

)

 2,992,856

 Accounts payable - related
 parties

 ( 8,001,265

)

 3,176,177

 Accrued expenses and other
 liabilities

 46,542

 626,764

 Interest receivable - related
 parties

 ( 2,005

)

 ( 2,000

)

 Lease liabilities

 ( 266,800

)

 ( 205,520

)

 revenue

 ( 8,849,259

)

 24,765,261

 Net cash provided by (used in) operating activities

 ( 1,565,124

)

 465,868

 Cash flows from financing
 activities:

 Repayments on promissory
 note

 ( 89,374

)

 ( 79,897

)

 Repayments on notes payable

 ( 2,333,333

)

 ( 6,500,000

)

 Repayments on convertible
 notes

 ( 1,020,000

)

 -

 Repayments on revolving
 loan

 ( 3,000,000

)

 ( 3,000,000

)

 Borrowings on notes payable

 -

 Proceeds from issuance
 of convertible notes

 -

 847,500

 Cash proceeds from exercise
 of warrants

 220,000

 -

 Refund of dividend withholding
 tax overpayment

 -

 1,886,600

 Purchase of treasury stock

 -

 ( 257,093

)

 Payments of offering costs
 in accounts payable

 ( 262,914

)

 ( 342,318

)

 Release
 of escrow deposit

 -

 1,003,804

 Net cash used in financing
 activities

 ( 6,485,621

)

 ( 3,441,404

)

 Effect of foreign currency
 translation on cash and cash equivalents

 ( 24,630

)

 51,670

 Net decrease in cash and cash equivalents,
 and restricted cash and cash equivalents

 ( 8,075,375

)

 ( 2,923,866

)

 Cash and cash equivalents,
 and restricted cash and cash equivalents - beginning of the period

 16,314,319

 19,238,185

 Cash
 and cash equivalents, and restricted cash and cash equivalents – end of the period

 $

 8,238,944

 $

 16,314,319

 Supplemental disclosures
 of cash flow information

 Cash paid during the period
 for:

 $

 467,188

 $

 934,523

 Income
 taxes

 $

 ( 1,100,302

)

 $

 248,388

 Noncash
 transactions during the period for:

 Issuance
 of warrants in connection with the equity line of credit

 $

 -

 $

 ( 105,411

)

 Debt
 converted to equity

 $

 ( 60,000

)

 $

 -

 Right-of-use
 assets obtained in exchange for a lease liability

 $

 ( 85,588

)

 $

 -

 Liabilities
 converted to equity upon exercise of warrants

 $

 176,750

 $

 -

 Acquisition
 of software in accounts payable – related parties

 $

 290,000

 -

 Acquisition
 of license rights in accrued expenses and other liabilities

 $

 420,000

 See
accompanying notes to the consolidated financial statements

 F- 7

 Snail

 Notes

 NOTE
1 – PRESENTATION AND NATURE OF OPERATIONS

Inc. was incorporated under the laws of Delaware in January 2022. The terms "Snail, Inc," "Snail Games," "our"
and the "Company" are used to refer collectively to Snail, Inc. and its subsidiaries. The Company's fiscal year end
is December 31. The Company was formed for the purpose of completing an initial public offering ("IPO") and related transactions
to carry on the business of Snail Games USA Inc. and its subsidiaries. Snail Games USA Inc. was founded in 2009 as a wholly owned subsidiary
of Suzhou Snail Digital Technology Co., Ltd. ("Suzhou Snail") located in Suzhou, China and is the operating entity that continues
post IPO. Snail Games USA Inc. is devoted to researching, developing, marketing, publishing, and distributing games, content and support
that can be played on a variety of platforms including game consoles, PCs, mobile phones and tablets.

 Basis
of Presentation and Consolidation

 The
accompanying consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC and generally
accepted accounting principles as promulgated in the United States of America ("U.S. GAAP").

 In
the opinion of management, all adjustments considered necessary for the fair presentation of the Company's financial position and
its results of operations in accordance with U.S. GAAP (consisting of normal recurring adjustments) have been included in the accompanying
consolidated financial statements.

 F- 8

 Snail

 Notes

 The
Consolidated Financial Statements include the accounts of Snail, Inc. and the following subsidiaries:

OF SUBSIDIARIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS

 Equity %

 Subsidiary
 Name

 Owned

 Snail Games USA Inc.

 %

 Snail Innovation Institute

 %

 Frostkeep Studios, Inc.

 %

 Eminence Corp

 %

 Wandering Wizard, LLC

 %

 Donkey Crew, LLC

 %

 Interactive Films, LLC

 %

 Project AWK Productions, LLC

 %

 BTBX.IO, LLC

 %

 All
intercompany accounts, transactions, and profits have been eliminated upon consolidation.

 Use
of Estimates

 The
preparation of Consolidated Financial Statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions
that affect the amounts reported in our consolidated financial statements and the accompanying notes. Such estimates include revenue
recognition, see Note 2 – Revenue Recognition, provisions for credit losses, deferred income tax assets and associated valuation
allowances, deferred revenue, stock-based compensation and fair value of warrants. These estimates generally involve complex issues and
require management to make judgments, involve analysis of historical and future trends that can require extended periods of time to resolve,
and are subject to change from period to period. In all cases, actual results could differ materially from estimates.

 Segment
Reporting

 The
Company has one operating and reportable segment, as the Company's chief operating decision maker, who is the Company's Chief Executive Officer, reviews
financial information on a consolidated basis for purposes of allocating resources and evaluating performance. Our operations involve similar products and customers worldwide. Revenue earned is
primarily derived from the sale of software titles, which are developed internally or licensed from related and third parties. Financial
information about our geographic regions is included in Note 3 – Revenue from Contracts with Customers and information about our reportable operating segment is included in Note 18 – Operating Segments.

 F- 9

 Snail

 Notes

 NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Revenue
Recognition

 The
Company's revenue is generated from the publishing of software games sold digitally and through physical discs (e.g., packaged
goods), the publishing of separate downloadable content that are new feature releases to existing digital full-game downloads that are
sold digitally, and in-app purchases of virtual goods used by players of its free-to-play mobile games. When control of the promised
products and services is transferred to the end users, the Company recognizes revenue in the amount that reflects the consideration it
expects to receive in exchange for these products and services. Revenue from delivery of products is recognized at a point in time when
the end consumers purchase the games, and the control of the license is transferred to them.

 The
virtual goods that the Company sells to players of our free-to-play mobile-games, include virtual currency or in-game purchases of additional
game play functionality. For virtual goods, the satisfaction of our performance obligation is dependent on the nature of the virtual
good purchased and as a result, the Company categorizes its virtual goods as follows:

 Consumable:
 c onsumable virtual items represent items that can be consumed by a specific player action.
 Consumable virtual items do not result in a direct benefit that the player keeps or provide the player any continuing benefit
 following consumption, and they often enable a player to perform an in-game action immediately. For the sale of consumable virtual
 items, the Company recognizes revenue ratably over the estimated service period, or as items are consumed, as applicable to the game
 (i.e., over time).

 Durable:
 d urable virtual items represent items that are accessible to the player over an extended
 period of time. The Company recognizes revenue from the sale of durable virtual items ratably over the estimated service period for
 the applicable game (i.e., over time), which represents our best estimate of the average life of the durable virtual item or the
 life of the user.

 For
the ARK: Survival Ascended and Bob's Tall Tales games that were sold in a bundle with downloadable content ("DLC")
that have not yet been launched and been reported in deferred revenue in the consolidated balance sheets, the Company has used the adjusted
market assessment approach per ASC 606-10-32-34 to assign a value for the Company's remaining performance obligation. The Company
uses the following reasonably available information in developing the standalone selling prices of the performance obligations:

 Reasonably
 available data points, including third party or industry pricing, and contractually stated prices.

 Market
 conditions such as market demand, competition, market constraints, awareness of the product and market trends.

 Entity-specific
 factors including pricing strategies and objectives, market share and pricing practices for bundled arrangements.

 The
Company recognizes revenue using the following five steps as provided by Accounting Standards Codification ("ASC") Topic
606 Revenue from Contracts with Customers: 1) identify the contract(s) with the customer; 2) identify the performance obligations
in each contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize
revenue when, or as, the entity satisfies a performance obligation. The Company's terms and conditions vary by customers and typically
provide payment terms of net 30 to 75 days.

 Principal
vs. Agent Consideration

 The
Company offers certain software products via third-party digital storefronts, such as Microsoft's Xbox Live, Sony's PlayStation
Network, Valve's Steam, Epic Games Store, My Nintendo Store, Apple's App Store, the Google Play Store, and retail distributors.
For sales of our software products via third-party digital storefronts and retail distributor, the Company determines whether or not
it is acting as the principal in the sale to the end user, which the Company considers in determining if revenue should be reported based
on the gross transaction price to the end user or based on the transaction price net of fees retained by the third-party digital storefront.
An entity is the principal if it controls a good or service before it is transferred to the customer. Key indicators that the Company
uses in evaluating these sales transactions include, but are not limited to, the following:

 The
 underlying contract terms and conditions between the various parties to the transaction;

 Which
 party is primarily responsible for fulfilling the promise to provide the specified good or service; and

 Which
 party has discretion in establishing the price for the specified good or service.

 F- 10

 Snail

 Notes

 Based
on our evaluation of the above indicators, for sales arrangements via Microsoft's Xbox Live, Sony's PlayStation Network,
Valve's Steam, Epic Games Store, My Nintendo Store, and our retail distributor, the digital platforms and distributors have discretion
in establishing the price for the specified good or service and the Company has determined it is the agent in the sales transaction to
the end user and therefore the Company reports revenue on a net basis based on the consideration received from the digital storefront.
For sales arrangements via Apple's App Store and the Google Play Store, the Company has discretion in establishing the price for
the specified good or service and it has determined that the Company is the principal to the end user and thus reports revenue on a gross
basis and mobile platform fees charged by these digital storefronts are expensed as incurred and reported within cost of revenues.

 Contract
Balance

 The
Company records deferred revenue when cash payments are received or due in advance of its performance, even if amounts are refundable.

revenue is comprised of the transaction price allocable to the Company's performance obligation on technical support and the sale
of virtual goods available for in-app purchase, and payments received from customers prior to launching the games on the platforms. The
Company recognizes revenues from the sale of virtual goods ratably over their estimated service period. The Company's estimated
service period for players of our current software games is generally 30 to 100 days from the date of purchase.

 The
Company has a long-term title license agreement with a platform which makes ARK 1 available on the platform in perpetuity, and
puts ARK II on the platform for three years upon release. The Company deferred $ 2.3
 million related to ARK II that is included
in the long-term portion of deferred revenue and will be recognized upon the release of ARK II on the platform.

 In
July 2023, the Company entered into a distribution agreement with its retail distribution partner for the distribution of ARK: Survival
Ascended and ARK II. The initial term is two years and will renew each subsequent year unless it is cancelled. Upon executing
the distribution agreement, the Company received $ 1.8 million as prepaid royalties. During the year ended December 31, 2024, the Company
recognized $ 0.7 million of the revenue related to the retail release of ARK: Survival Ascended. As of December 31, 2024, the Company
reported the remaining $ 1.1 million related to ARK II as long-term deferred revenue until the disc releases occur.

 Estimated
Service Period

 For
certain performance obligations satisfied over time, the Company has determined that the estimated service period is the time period
in which an average user plays our software games ("user life") which most faithfully depicts the timing of satisfying our
performance obligation. The Company considers a variety of data points when determining and subsequently reassessing the estimated service
period for players of our software games. Primarily, the Company reviews the weighted average number of days between players' first
and last day playing online or the subscription trend. The Company also considers publicly available online trends.

 The
Company believes this provides a reasonable depiction of the transfer of our game related services to our players, as it is the best
representation of the period during which our players play our software games. Future usage patterns may differ from historical usage
patterns, and therefore the estimated service period may change in the future. The estimated service periods for players of our current
software games are generally between 30 and 100 days depending on the software games.

 Shipping,
Handling and Value Added Taxes ("VAT")

 The
distributor, as the principal, is responsible for the shipping of the game discs to retail stores and incurring the shipping and VAT
costs. The Company is paid the net sales amount after deducting shipping costs, VAT and other related expenses by the distributor.

 F- 11

 Snail

 Notes

 Cost
of Revenues

 Cost
of revenues include software license royalty fees, merchant fees, server and database center costs, game localization costs, game licenses,
engine fees and amortization costs. Cost of revenues for the years ended December 31, 2024 and 2023 were comprised of the following:

 SCHEDULE OF COST OF REVENUES

 2024

 2023

 Software license royalties –
 related parties

 $
 19,908,982

 $
 14,398,482

 Software license royalties

 574,520

 1,128,517

 License and amortization – related parties

 24,000,000

 20,496,961

 License and amortization

 7,804

 Merchant fees

 890,999

 1,369,595

 Engine fees

 3,823,215

 4,301,104

 Internet, server and data center

 4,977,076

 6,487,340

 Costs related to other
 revenue

 53,746

 123,600

 Total:

 $
 54,236,342

 $
 48,306,403

and Administrative Costs

and administrative costs include rent, salaries, stock-based compensation, legal and professional expenses, expenses related to
being a publicly traded company, administrative internet and server, contractor costs, insurance expense, licenses and permits,
other taxes and travel expenses. These costs are expensed as they are incurred. Stock-based compensation expense (income) of $ ( 828,495)
and $ 799,955
was incurred during the years ended December 31, 2024 and 2023, respectively.

and Marketing Costs

 The
Company expenses advertising and marketing costs as incurred. Advertising and marketing costs of $ 1,523,398 and $ 1,582,464 were incurred during the years ended December 31,
2024 and 2023, respectively

and Development

and development costs are expensed as incurred. Research and development costs include travel, payroll, and other general expenses
specific to research and development activities. Stock-based compensation expense (income) of $ ( 61,713)
and $ 48,080
was incurred during the years ended December 31, 2024 and 2023, respectively.

 We
account for software products intended to be sold, leased or otherwise marketed in accordance with ASC 985. Accordingly, we
capitalize certain development costs incurred after technological feasibility is established but before the general release of the
game. In some cases, there may be capitalized costs for the development of significant additions or improvements to a game or for
porting to a different console. These capitalized costs may include labor, materials, and an allocation of overhead directly related
to development activities or outsourced development services. There have not been any software costs capitalized to date under ASC
985 as the related titles have not yet reached technological feasibility thresholds.

 Non-controlling
Interests

 Non-controlling
interests on the consolidated balance sheets and consolidated statements of operations and comprehensive income (loss) include the equity
allocated to non-controlling interest holders. As of December 31, 2024 and 2023, there were non-controlling interests with the following
subsidiaries:

 SCHEDULE OF EQUITY INTEREST AND NON CONTROLLING INTEREST IN SUBSIDIARIES

 Subsidiary
 Name

 % Owned

 Non-Controlling
 %

 Snail Innovative Institute

 %

 %

 BTBX.IO, LLC

 %

 %

 Donkey Crew, LLC

 %

 %

 F- 12

 Snail

 Notes

 Cash
and Cash Equivalents and Restricted Cash and Cash Equivalents

 Cash
is available for use in current operations or other activities such as capital expenditures. Restricted cash
and cash equivalents are time deposits, that are currently provided as a standby letter of credit to landlords. The Company's policy
for determining whether an item is treated as cash, or a cash equivalent, is based on its original maturity, liquidity, and risk profile.
Investments with maturities of three months or less, are highly liquid and have insignificant risk are considered to be cash equivalents.

Receivable

 The
Company generally records a receivable related to revenue when it has an unconditional right to invoice and receive payment. Accounts
receivable are carried at original invoice amount less an allowance made for credit losses. The Company uses a combination of quantitative
and qualitative risk factors to estimate the allowance, including an analysis of the customers' creditworthiness, historical experience,
age of current accounts receivable balances, changes in financial condition or payment terms of our customers, and reasonable forecasts
of the collectability of the accounts receivable. The Company evaluates the allowance for credit losses on a periodic basis and adjusts
it as necessary based on the risk factors mentioned above. Any increase in the provision for credit losses is recorded as a charge to
general and administrative expense in the current period. Any amounts deemed uncollectible are written off against the allowance for
credit losses. Management judgment is required to estimate our allowance for credit losses in any accounting period. The amount and timing
of our credit losses and cash collection could change significantly because of a change in any of the risk factors mentioned above. There
were no credit losses recognized during the year ended December 31, 2024. During the year ended December 31, 2023, the Company's
allowance for credit losses increased from $ 19,929 to $ 523,500 due to an increase in credit risk of one of the Company's platform
partners as a result of continued delays in payments. There was an additional $ 77,928 recognized as credit losses due to the bankruptcy
of the Company's related party, INDIEV, Inc. ("INDIEV") during the year ended December 31, 2023.

 Property,
Plant and Equipment, Net

 Property,
plant and equipment, net, are stated at cost. Depreciation is calculated using the straight-line method over the following useful lives:

OF USEFUL LIVES OF PROPERTY, PLANT AND EQUIPMENT

 Buildings

 years

 Building
 improvements

 years

 Leasehold
 improvements

 Lesser
 of the lease term or the estimated useful lives of the improvements, generally 5 to 15 years

 Computer
 equipment and software

 to 5 years

 Furniture
 and fixtures

 years

 Auto
 and trucks

 years

 When
assets are retired or disposed of, the cost and accumulated depreciation thereon are removed, and any resulting gains or losses are included
in the consolidated statements of operations and comprehensive income (loss). Leasehold improvements are amortized using the straight-line
method over the estimated life of the asset, not to exceed the length of the lease. Repairs and maintenance costs are expensed as incurred.

Currency

 The
functional currency for our foreign operations is primarily the applicable local currency. Accounts of foreign operations are translated
into U.S. dollars using exchange rates for assets and liabilities at the balance sheet date and average prevailing exchange rates for
the period for revenue and expense accounts. Adjustments resulting from the translation are included in accumulated other comprehensive
loss. Realized and unrealized transaction gains and losses arising from transactions denominated in foreign currencies different than
the relevant functional currency are included in our consolidated statements of operations and comprehensive income (loss) in the period
in which they occur. Foreign currency transaction gains and (losses) were $ 11,686 and ($ 68,180) during the twelve months ended December
31, 2024 and 2023, respectively.

 Intangible
Assets – License Usage Rights

 The
Company enters into license agreements with third-party developers and related party developers that require the Company to make payments
for license usage rights and game development and production services. These license agreements grant the Company the exclusive publishing
and distribution rights to game titles as well as, in some cases, the underlying intellectual property rights. These license agreements
also specify the payment schedules, royalty rates and the relevant licensing period. The Company capitalizes the cost of license usage
rights as intangible assets and amortizes them over the terms of the respective licensing rights. The Company capitalized $ 420,000 in license usage rights during the twelve months ended December 31, 2024 which are
included within intangible assets, net, within the consolidated balance sheets. There were no such acquisitions during the twelve months
ended December 31, 2023.

 Film
Costs, net

 The
Company capitalizes costs to produce short videos in accordance with Financial Accounting Standards Board ("FASB") ASC Topic
926, including direct production costs, production overhead, interest, acquisition costs and development costs. The Company will account
for each episodic series as a unit for which capitalized film costs will be amortized by the Company using the individual-film forecast-computation
method. Each reporting period the Company will reassess its estimate of ultimate revenues used to determine the amortization rate for
each episodic series. If the estimate is revised, the Company will account for the change prospectively. The Company will then remeasure
the amortization based on the portion of ultimate revenues that have been recognized and that are yet to be recognized. Unamortized film
costs shall be tested for impairment whenever events or changes in circumstances indicate that fair value of the film may be less than
its unamortized film costs. If the fair value of an episodic series is less than its unamortized film costs, the Company will write off
the excess amount. The Company groups its film and content rights by monetization strategy. As of December 31, 2024 and 2023, $ 1,512,960
and $ 0 of film costs are capitalized and included in other noncurrent assets in the accompanying consolidated balance sheets.

 Fair
Value Measurements

 The
Company follows FASB ASC Topic 820, Fair Value Measurements. ASC 820 defines fair value, establishes a framework for measuring fair value
under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC
820 as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market
for the asset or liability in an orderly transaction between market participants.

 ASC
820 establishes a hierarchy of valuation inputs based on the extent to which the inputs are observable in the marketplace. Observable
inputs reflect market data obtained from sources independent of the reporting entity and unobservable inputs reflect the entity's
own assumptions about how market participants would value an asset or liability based on the best information available. Valuation techniques
used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The
standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last
unobservable, that may be used to measure fair value.

 The
following describes the hierarchy of inputs used to measure fair value and the primary valuation methodologies used by the Company for
financial instruments measured at fair value.

 The
three levels of inputs are as follows:

 Level
 1: Quoted prices in active markets for identical assets or liabilities that the Company has an ability to access as of the measurement
 date.

 Level
 2: Inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted
 prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially
 the same term of the assets or liabilities.

 Level
 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets
 or liabilities.

 F- 13

 Snail

 Notes

 A
financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is
significant to the fair value measurement. Our financial instruments include cash and cash equivalents, restricted cash and cash
equivalents, short-term financial instruments, short-term loans, accounts receivable and accounts payable. The carrying values of
receivables, payables, and other amounts arising out of the normal course of business approximate their fair value due to their
short maturities or economic substance. The carrying amount of the Company's short-term and long-term borrowings,
which are considered level 2 liabilities, approximates fair value based on current rates and terms available to the Company for similar
debt. The Company's promissory note has a fixed rate until June 2026, then a floating rate
that approximates the Wall Street Journal Prime Rate plus 0.50 %.
The Company considers the carrying amount of the loan to approximate fair value as the discounted cost in comparison to market rates
would not be materially different than the cost to acquire a loan with similar terms. See Note 17 – Equity for the fair
value disclosures related to the Company's convertible notes, and the Company's warrant liability and derivative
instruments. The Company does not have any other assets or liabilities measured at fair value on a recurring or non-recurring basis
as of December 31, 2024 and 2023.

 Amortizable
Intangibles and Other Long-lived Assets

 The
Company's long-lived assets and other assets consisting of property and equipment and purchased intangible assets, are reviewed
for impairment in accordance with the guidance of FASB Topic ASC 360, Property and Equipment. Intangible assets subject to amortization
are carried at cost less accumulated amortization and amortized over the estimated useful life in proportion to the economic benefits
received. The Company evaluates the recoverability of definite-lived intangible assets and other long-lived assets in accordance with
ASC Subtopic 360-10, which generally requires the assessment of these assets for recoverability when events or circumstances indicate
a potential impairment exists. The Company considers certain events and circumstances in determining whether the carrying value of identifiable
intangible assets and other long-lived assets, other than indefinite lived intangible assets, may not be recoverable including, but not
limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets;
significant negative industry or economic trends; and changes in the Company's business strategy. If the Company determines that
the carrying value may not be recoverable, the Company estimates the undiscounted cash flows to be generated from the use and ultimate
disposition of the asset group to determine whether an impairment exists. If an impairment is indicated based on a comparison of the
asset groups' carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying
amount of the asset group exceeds its fair value. Fair value is determined through various valuation techniques including discounted
cash flow models, quoted market values and third-party independent appraisals, as considered necessary. There can be no assurance, however,
that market conditions will not change or demand for the Company's products under development will continue. Either of these could
result in future impairment of long-lived assets. Actual useful lives and cash flows could be different from those estimated by management
which could have a material effect on our consolidated reporting results and financial positions.

 Income
Taxes

 Income
taxes are provided for the tax effects of transactions reported in the Consolidated Financial Statements and consisted of taxes currently
due and deferred taxes. Deferred taxes are recognized for the differences between the basis of assets and liabilities for financial statement
and income tax purposes.

 The
Company follows FASB Topic ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the consolidated financial statements or tax returns.

 Under
this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable
to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized.

 FASB
ASC 740-10-25 provides criteria for the recognition, measurement, presentation, and disclosure of uncertain tax positions. The Company
must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained
on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated
financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized
upon ultimate resolution. The Company recognizes liabilities for uncertain tax positions pursuant to FASB ASC 740-10-25. Such amounts
are included in the long-term accrued expenses on the accompanying consolidated balance sheets in the amount of $ 265,251 and $ 254,731, as of December
31, 2024 and 2023, respectively. The Company accrues and recognizes interest and penalties related to unrecognized tax benefits in operating expenses.

 F- 14

 Snail

 Notes

 Concentration
of Credit Risk and Significant Customers

 The
Company maintains cash balances at several major financial institutions. While the Company attempts to limit credit exposure with any
single institution, balances often exceed insurable amounts. As of December 31, 2024 and 2023, the Company had deposits of $ 6,610,066
and $ 14,716,652, respectively, that were not insured by the Federal Deposit Insurance Corporation and are included in the cash and cash
equivalents, and restricted cash and cash equivalents, in the accompanying consolidated balance sheets.

 The
Company extends credit to various digital resellers and partners. Collection of trade receivables may be affected by changes in economic
or other industry conditions and may, accordingly, impact our overall credit risk. The Company does not require collateral or other security
to support financial instruments subject to credit risk. The Company performs ongoing credit evaluations of customers and maintains reserves
for potentially uncollectible accounts. The Company has four customers as of December 31, 2024 and 2023, who accounted for approximately
 85 % and 95 % of consolidated gross receivables, respectively. Among four customers as of December 31, 2024 and 2023, each customer accounted
for 42 %, 19 %, 14 % and 10 % as of December 31, 2024, and 43 %, 20 %, 16 % and 16 % as of December 31, 2023 of the consolidated gross receivables
outstanding. The Company had four customers in the year ended December 31, 2024, and three customers in the year ended December 31, 2023,
that accounted for 46 %, 15 %, 14 %, 11 %, and 42 %, 18 %, and 11 % of the Company's net revenue, respectively. The loss of these customers
or declines in the forecasts of their accounts receivable collectability would have a significant impact on the Company's financial
performance.

 As
of December 31, 2024, the Company had one vendor who accounted for approximately 36 % of consolidated gross payables, respectively, and
as of December 31, 2023 the Company had one vendor who accounted for approximately 69 % of consolidated gross payables. The loss of these
vendors could have a significant impact on the Company's financial performance.

 The
Company had one vendor, SDE, Inc., a related party, that accounted for 55 % and 51 % of the Company's combined cost of revenues and
operating expenses during the years ended December 31, 2024 and 2023, respectively. Amounts payable to SDE are included in accounts receivable
– related party and accounts payable - related parties in the consolidated balance sheets as of December 31, 2024 and 2023, respectively.
The loss of SDE as a vendor would significantly and adversely affect the Company's core business.

 Leases

 The
Company has a lease relating primarily to office facilities. The Company determines if an arrangement is or contains a lease at contract
inception. Right-of-use assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities
represent the Company's obligation to make lease payments arising from the lease. The lease liability is measured as the present
value of the unpaid lease payments, and the right-of-use asset value is derived from the calculation of the lease liability. Lease payments
include fixed and in-substance fixed payments, variable payments based on an index or rate, variable payments based on the level of services
provided by the landlords of our leases, reasonably certain purchase options, and termination penalties. Variable lease payments related
to the services provided by the landlords are non-lease components that are recognized as rent expenses as incurred. For leased assets
with similar lease terms and asset types, the Company applied a portfolio approach in determining a single incremental borrowing rate
for the leased assets. The Company uses its estimated incremental borrowing rate, which is derived from information available at the
lease commencement date, in determining the present value of lease payments because the Company does not have the information necessary
to determine the rate implicit in the lease. Lease expense for operating lease payments is recognized on a straight-line basis over the
lease term. The Company's lease term includes any option to extend the lease when it is reasonably certain to be exercised based
on considering all relevant factors. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets
and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Operating leases are included
in operating lease right-of-use assets, net, current portion of operating lease liabilities, and operating lease liabilities, net of
current portion on the consolidated balance sheets.

 Recently
Adopted Accounting Pronouncements

 In
August 2020, the FASB issued ASU 2020-06, Contracts in Entity's Own Equity (Subtopic 815-40) – Accounting for Convertible
Instruments and Contracts in an Entity's Own Equity, to simplify the application of GAAP for certain financial instruments
with characteristics of liabilities and equity. The FASB decided to eliminate certain accounting models to simplify the accounting for
convertible instruments, reduce complexity for preparers and practitioners, and improve the decision usefulness and relevance of the
information provided to financial statement users. The FASB also amended the guidance for derivatives scope exception for contracts in
an entity's own equity to reduce form-over-substance-based accounting conclusion and amended the related earnings per share guidance.
The Company has adopted this standard on January 1, 2024 and it did not have a material impact on the Company's financial statements.

 In
November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosure (Topic 280), to improve financial
reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities. The
update does not change how a public entity identifies its operating segments, aggregates those operating segments, or applied the
quantitative thresholds to determine its reportable segments. The amendments in this update are effective for fiscal years beginning
after December 15, 2023, and the Company has adopted this standard as of the effective date. See Note 18 – Operating
Segments for required disclosures.

 Recently
Issued Accounting Pronouncements

 In
December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to improve the transparency
of income tax disclosures requiring consistent categories and greater disaggregation of information in the rate reconciliation and income
taxes paid disaggregated by jurisdiction. The amendments in the update requires that public business entities, on an annual basis, disclose
specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.
The amendments in this update are effective for annual periods beginning after December 15, 2024. The Company is evaluating the impact
of adopting the new standard.

 In
November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation
Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, to improve the disclosures about a public business entity's
expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense
captions. The amendments in this update are effective for annual periods beginning after December 15, 2026, and interim reporting periods
beginning after December 15, 2027, though early adoption is permitted. The Company is evaluating the impact of adopting the new standard.

 In
November 2024, the FASB issued ASU 2024-04, Debt – Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions
of Convertible Debt Instruments, to clarify the requirements for determining whether certain settlements of convertible debt instruments
should be accounted for as an induced conversion. The amendments in this update are effective for annual periods beginning after December
15, 2025, and interim reporting periods within show annual periods. Early adoption is permitted for all entities that have adopted the
amendments in update 2020-06. The Company is evaluating the impact of adopting the new standard.

 F- 15

 Snail

 Notes

 Employee
Savings Plans

 The
Company maintains a 401(k) for its United States based employees. The plan is offered to all eligible employees to make voluntary contributions.
Employer contributions to the plan are reported under general and administrative costs in the amounts of $ 102,406 and $ 88,756 for the
years ended December 31, 2024 and 2023, respectively.

 Stock-Based
Compensation

 The
Company recognizes compensation cost for stock-based awards to employees based on the awards' estimated grant-date fair value using
a straight-line approach over the service period for which such awards are expected to vest. The Company accounts for forfeitures as
they occur. The Company did not issue any restricted stock units ("Restricted Stock Units" or "restricted stock units")
during the years ended December 31, 2024, and 2023. The fair value of Restricted Stock Units is determined based on the quoted market
price of our common stock on the date of grant.

 The
Company's 2022 Omnibus Incentive Plan (the "2022 Plan") became effective upon the consummation of the IPO. The 2022
Omnibus Incentive allows us to grant options to purchase our common stock and to grant stock options, stock appreciation rights, restricted
stock, restricted stock units and performance awards and other cash-based awards and other stock-based awards to our employees, officers,
and directors, up to a maximum of 5,718,000 shares. Stock options may be granted to employees and officers and non-qualified options
may be granted to employees, officers, and directors, at not less than the fair market value on the date of grant. The number of shares
of common stock available for issuance under the 2022 Plan will be increased annually on the first day of each fiscal year during the
term of the 2022 Plan, beginning with the 2023 fiscal year, by an amount equal to the lesser of (a) 5,718,000 shares, (b) 1 % of the shares
of the Company's Class B common stock outstanding (on a fully diluted basis) on the final day of the immediately preceding calendar
year or (c) such smaller number of shares as determined by the Company's board of directors. As of December 31, 2024 there were
 4,508,239 shares reserved for issuance under the 2022 Plan.

 The
Company granted restricted stock units under our 2022 Omnibus Incentive Plan to employees and directors. Restricted stock units are unfunded,
unsecured rights to receive common stock upon the satisfaction of certain vesting criteria. Upon vesting, a number of shares of common
stock equivalent to the number of restricted stock units is typically issued net of required tax withholding requirements, if any. Restricted
stock units are subject to forfeiture and transfer restrictions.

 Warrants

 The
Company accounts for Warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's
specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity ("ASC 480")
and ASC 815, Derivatives and Hedging ("ASC 815"). The assessment considers whether the Warrants are freestanding financial
instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the Warrants meet all of the requirements
for equity classification under ASC 815, including whether the Warrants are indexed to the Company's own shares of Class A common
stock and whether the warrant holders could potentially require "net cash settlement" in a circumstance outside of the Company's
control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted
at the time of warrant issuance and as of each subsequent quarterly period end date while the Warrants are outstanding.

 For
issued or modified Warrants that meet all of the criteria for equity classification, the Warrants are required to be recorded as a
component of equity at the time of issuance. For issued or modified Warrants that do not meet all the criteria for equity
classification, the Warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and
each balance sheet date thereafter. Changes in the estimated fair value of the Warrants are recognized as a non-cash gain or loss on
the statements of operations. Each of the outstanding warrants is convertible on a one-for-one basis into the Company's common
stock and are fully exercisable as of December 31, 2024. A summary of our outstanding warrants as of December 31, 2024 is included
below:

 SUMMARY OF OUTSTANDING WARRANTS

 Number Outstanding

 Exercise Price

 Class

 Expiration Date

 Equity line of credit warrants

 334,314

 $
 1.50

 Liability

 August 24, 2028

 Convertible notes warrants

 1,405,470

.84

 Liability

 November 24, 2028

 Underwriters warrants

 120,000

 6.25

 November 9, 2025

 Total warrants:

 1,859,784

 Share
Repurchase Program

 On
November 10, 2022, the Company's board of directors authorized a share repurchase program under which the Company may repurchase
up to $ 5 million of outstanding shares of Class A common stock of the Company, subject to ongoing compliance with the Nasdaq listing
rules. The program does not have a fixed expiration date. Repurchased shares are accounted for at cost and reported as a reduction of
equity in the consolidated balance sheets under treasury stock. No treasury stock was sold during the years ended December 31, 2024 and
2023. As of December 31, 2024 and 2023, 1,350,275 shares of Class A common stock were repurchased pursuant to the Share Repurchase Program
for an aggregate purchase price of approximately $ 3.7 million. The average price paid per share was $ 2.72 and approximately $ 1.3 million
aggregate amount of shares of Class A common stock remain available for repurchase under the Share Repurchase Program.

 F- 16

 Snail

 Notes

 Earnings
(loss) Per Share

 Earnings
(loss) per share ("EPS") is calculated by dividing the net income (loss) that is applicable to the common stockholders for
the period by the weighted average number of shares of common stock during that period. The diluted EPS for the period is calculated
by dividing the net earnings (loss) applicable to common stockholders for the period by the weighted average number of shares of common
stock and common stock equivalents outstanding during the period. The Company's common stock equivalents are measured using the
treasury stock method and represent unvested restricted stock units and warrants. The Company issues two classes of common stock with
differing voting rights, and as such, reports EPS using the dual class method. For more information see Note 16 Earnings (Loss) Per
Share.

 Dividend
Restrictions

 Our
ability to pay cash dividends is currently restricted by the terms of our credit facilities.

 NOTE
3 – REVENUE FROM CONTRACTS WITH CUSTOMERS

 Disaggregation
of revenue

 Timing
of recognition

 The
Company recognizes revenue at a point in time for performance obligations that are met at the time of sale or at the time of a release.
The Company recognizes revenue over a period based on the estimated service period of the product and additional performance obligations
met over time for technical support. Net revenue by timing of recognition during the years ended December 31, 2024 and 2023 were as follows:

OF DISAGGREGATION OF REVENUE

 2024

 2023

 Over time

 $
 4,520,499

 $
 6,437,618

 Point in time

 79,946,548

 54,464,480

 Total
 revenue from contracts with customers:

 $

 $

 Geography

 The
Company attributes net revenue to geographic regions based on platform location. Net revenue by geographic region for the years ended
December 31, 2024 and 2023 were as follows:

 2024

 2023

 United States

 $
 73,117,378

 $
 53,577,666

 Europe

 9,207,537

 5,470,504

 Other international

 2,142,132

 1,853,928

 Total
 revenue from contracts with customers:

 $

 $

 Platform

 Net
revenue by platform for the years ended December 31, 2024 and 2023 were as follows:

 2024

 2023

 Console

 $
 35,791,684

 $
 26,628,037

 PC

 40,659,044

 26,402,330

 Mobile

 4,632,413

 5,830,671

 Physical retail and other

 3,383,906

 2,041,060

 Total
 revenue from contracts with customers:

 $

 $

 Our
net revenues through our top four platform providers, as a proportion of our total net revenue, for the years ended December 31, 2024
and 2023 were as follows:

 2024

 2023

 Platform 1

 $
 39,217,130

 $
 25,647,528

 Platform 2

 12,434,911

 11,101,190

 Platform 3

 21,056,125

 12,224,100

 Platform 4

 2,298,946

 3,288,488

 All Other Revenue

 9,459,935

 8,640,792

 Total

 $

 $

 Distribution
channel

 Our
products are delivered through digital online services (digital download, online platforms, and cloud streaming), mobile, and retail
distribution and other. Net revenue by distribution channel for the years ended December 31, 2024 and 2023 was as follows:

 2024

 2023

 Digital

 $
 76,450,728

 $
 53,030,367

 Mobile

 4,632,413

 5,830,671

 Physical retail and other

 3,383,906

 2,041,060

 Total
 revenue from contracts with customers:

 $

 $

 As
discussed in Note 15, the Company recognized the $ 1.2 million payment related to the Angela Games settlement upon satisfaction of performance
obligations included in the contract. This amount is included in other revenues for the year ended December 31, 2024.

 F- 17

 Snail

 Notes

Revenue

 The
Company records deferred revenue when payments are due or received in advance of the fulfillment of our associated performance obligations;
reductions to deferred revenue balance were primarily due to the recognition of revenue upon fulfillment of its performance obligations,
which were in the ordinary course of business. As of December 31, 2024, the balance of deferred revenue was $ 25.5
million, of which $ 24.3
million is due to non-refundable payments. The
Company is expecting to recognize $ 17.8
million of non-refundable payments in the next
 to 60
 months through the release of DLC's and
additional ARK titles. The remaining $ 3.9
million of current non-refundable deferred revenues
and $ 2.6
million of long term non-refundable deferred
revenue will be recognized as revenue primarily on a straight-line basis over the next 60
 months, based on our estimates of technical support
obligations, the usage of consumable virtual goods and estimated period of time an end user will play the game. The Company's refundable
deferred revenue consists of $ 1.1 million
in advance payments received in accordance with the agreement the Company has made with its retail distributor. Activities in the Company's
deferred revenue as of December 31, 2024 and 2023 were as follows:

OF DEFERRED REVENUE

 2024

 2023

 Deferred revenue, beginning balance
 in advance of revenue recognition billing

 $
 34,316,706

 $
 9,551,446

 Revenue recognized

 ( 18,506,635
)

 ( 6,437,618
)

 Revenue deferred

 9,657,376

 31,202,878

 Deferred revenue, ending balance

 25,467,447

 34,316,706

 Less: current portion

 ( 3,947,559
)

 ( 19,252,628
)

 Deferred revenue, long
 term

 $
 21,519,888

 $
 15,064,078

 NOTE
4 – CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS

 Cash
equivalents are valued using quoted market prices or other readily available market information. The Company has restricted cash and
cash equivalents of $ 935,000 and $ 1,116,196 as of December 31, 2024 and 2023, respectively. The amounts of restricted cash and cash equivalents
held as of December 31, 2024 and 2023, are to secure the standby letter of credit with landlords. On June 21, 2023, the Company amended
its revolving loan and $ 5,273,391 of restricted cash and cash equivalents was released. The following table summarizes the components
of the Company's cash and cash equivalents, and restricted cash and cash equivalents as of December 31, 2024 and 2023:

 SUMMARY
OF COMPONENTS OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS

 2024

 2023

 Cash and cash equivalents

 $
 7,303,944

 $
 15,198,123

 Restricted cash and cash
 equivalents

 935,000

 1,116,196

 Cash and cash equivalents,
 and restricted cash and cash equivalents

 $
 8,238,944

 $
 16,314,319

 NOTE
5 – ACCOUNTS RECEIVABLE (PAYABLE) – RELATED PARTY

receivable — related party represents receivables in the ordinary course of business attributable to certain mobile game
revenues that, for administrative reasons, were collected by a related party and that the related party has not yet remitted back to
the Company. Accounts receivable — related party is non-interest bearing and due on demand. The related party, SDE Inc.
("SDE"), is 100 %
owned and controlled by the wife of the Founder, Co-Chief Executive Officer, Chief Strategy Officer and Chairman of the Company. In
January 2024, the Company entered into an offset agreement with SDE. The Company has the right to offset payables due to the related
party for royalties, internet, server, and datacenter costs ("IDC") and marketing costs as they are determinable,
mutual, and the right is enforceable by law. The Company will offset $ 0.5
million per month, or $ 6.0
million annually, beginning in January 2024, until the receivable has been collected or offset in full. To reflect the timing of the
offset agreement, a portion of the SDE receivable is presented as a long-term asset. During the years ended December 31, 2024 and
2023, the Company made cash payments to SDE in the amount of $ 43.5
million and $ 33.1 million, respectively and anticipates continuing to make cash payment to SDE in future years. Of the $ 43.5 million paid to SDE in 2024, $ 42.8 million were for royalties and licenses, and $ 0.7 million were for
internet, server and datacenter costs reported in the cost of revenue. Of the $ 33.1 million paid to SDE in 2023, $ 29.8 million were for
royalties and licenses and $ 0.7 million were for internet, server and datacenter costs reported in the cost of revenue, $ 0.1 million
for marketing costs, and $ 2.5 million was prepaid DLC development fee. As of December 31,
2024 and 2023, the outstanding balance of net accounts receivable from related party was as follows:

OF ACCOUNTS RECEIVABLE (PAYABLE) - RELATED PARTY

 2024

 2023

 Accounts receivable – related
 party

 $
 7,500,592

 $
 13,500,592

 Less: accounts payable
 – related party – SDE

 ( 3,663,726
)

 ( 10,946,478
)

 Net accounts receivable, related party - SDE

 3,836,866

 2,554,114

 Less: accounts receivable
 – related party, net of current portion

 1,500,592

 7,500,592

 Net accounts receivable
 (payable), related party, current - SDE

 $
 2,336,274

 $
 ( 4,946,478
)

 F- 18

 Snail

 Notes

 NOTE
6 – PREPAID EXPENSES - RELATED PARTY

 On
March 10, 2023, the Company amended its exclusive software license agreement with SDE relating to the ARK franchise. For DLC's,
the Company plans to release during the term of the agreement, the Company has the option to pay the $ 5.0 million DLC payment in whole
or in part, when paid in advance; or in full, upon the DLC release. No payment for any DLC under this agreement will exceed $ 5.0 million.

the year ended December 31, 2024, the Company made $ 1.7 million in prepaid royalty payments related to ARK: Survival Ascended DLC's
which have not yet been released. During the year ended December 31, 2023, the Company prepaid $ 2.5 million for exclusive license rights
for an ARK: Survival Ascended DLC to SDE and $ 5.5 million in prepaid royalties related to ARK: Survival Ascended DLC's
which had not yet been released. Prepaid expenses — related party consisted of the following as of December 31, 2024 and 2023:

OF PREPAID EXPENSES - RELATED PARTY

 2024

 2023

 Prepaid royalties

 $
 4,378,594

 $
 6,086,406

 Prepaid licenses

 7,500,000

 7,500,000

 Other prepaids

 21,291

 242,060

 Prepaid expenses - related party, ending balance

 11,899,885

 13,828,466

 Less: short-term portion

 ( 2,521,291
)

 ( 6,044,404
)

 Total prepaid expenses
 - related party, long-term

 $
 9,378,594

 $
 7,784,062

 The
amount classified as short-term, as of December 31, 2024, and 2023, includes prepaid royalties for ARK: Survival Evolved DLC's
which have not yet been released and various operational software licenses obtained through SDE.

 NOTE
7 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

 In
October 2024, the Company entered into a collaborative arrangement for the development and publishing of a new title with a third party developer. In accordance
with the agreement, the Company will pay $ 1.5
million to the developer as prepaid royalties, to be recovered prior to any profit sharing on sales of the title. In addition to the
financial responsibilities, the Company is responsible for the marketing, publishing, and distribution of the game and is providing
substantial creative and technical input in the development of the game. The developer will retain ownership of the IP and is
responsible for the overall development of the game. The game has not yet been released and accordingly is not reflected in the
consolidated statements of operations and comprehensive income (loss). The Company made $ 0.5
million of the prepaid royalty payments in 2024, and the amount is capitalized in the other prepaids. Prepaid expenses and other
current assets consisted of the following as of December 31, 2024 and 2023:

OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

 2024

 2023

 Other receivables

 $
 549,103

 $
 -

 Deferred offering costs

 105,411

 105,411

 Other prepaids

 550,270

 70,967

 Other current assets

 641,240

 463,315

 Total prepaid expenses
 and other current assets

 $
 1,846,024

 $
 639,693

 Other
receivables consist of receivables related to Myth of Empires and our ARK animated series.

 F- 19

 Snail

 Notes

 NOTE
8 – PROPERTY AND EQUIPMENT, NET

 Property
and equipment, net consisted of the following as of December 31, 2024 and 2023:

 SCHEDULE OF PROPERTY, PLANT AND
EQUIPMENT, NET

 2024

 2023

 Building

 $
 1,874,049

 $
 1,874,049

 Land

 2,700,000

 2,700,000

 Building improvements

 1,010,218

 1,010,218

 Leasehold improvements

 1,537,775

 1,537,775

 Autos and trucks

 178,695

 178,695

 Computer and equipment

 1,809,214

 1,809,214

 Furniture and fixtures

 411,801

 411,801

 Property and equipment

 9,521,752

 9,521,752

 Accumulated depreciation

 ( 5,143,400
)

 ( 4,839,686
)

 Property and equipment,
 net

 $
 4,378,352

 $
 4,682,066

 Depreciation expense was $ 303,714 and $ 432,306 for the years ended December 31, 2024 and 2023, respectively. The Company did not
have any disposals in the year ended December 31, 2024. During the year ended December 31, 2023, the Company disposed of $ 12,605 in computer
equipment with an accumulated depreciation of $ 12,178. The total loss resulting from the disposal of the assets amounted to $ 427 for
the year ended December 31, 2023

 F- 20

 Snail

 Notes

 NOTE
9 – INTANGIBLE ASSETS

 Intangible
assets consist of game licenses, game software underlying intellectual property rights, game trademarks and other branding items. The
Company amortizes the intangible assets over its useful life.

 The
following tables reflect all the intangible assets presented on the consolidated balance sheets as of December 31, 2024 and 2023:

OF INTANGIBLE ASSETS

 31, 2024

 Gross

 Carrying

 Impairment

 Net
 Book

 Amortization

 Loss

 Value

 Useful
 Life

 Software and license
 rights from related parties

 $
 136,955,000

 $
 ( 136,665,000
)

 $
 —

 $
 290,000

 3 - 5
 years

 License
 rights

 3,420,000

 ( 3,007,000
)

 —

 413,000

 years

 Software

 51,784

 ( 51,784
)

 —

 -

 - 5 years

 Trademark

 10,745

 ( 10,717
)

 —

 years

 In-progress
 patent

 —

 —

 Total:

 $
 140,708,415

 $
 ( 139,734,501
)

 $
 —

 $
 973,914

 F- 21

 Snail

 Notes

 31, 2023

 Gross

 Carrying

 Impairment

 Net
 Book

 Amortization

 Loss

 Value

 Useful
 Life

 Software and license
 rights from related parties

 $
 136,665,000

 $
 ( 136,665,000
)

 $
 —

 $
 —

 3 - 5
 years

 License
 rights

 ( 3,000,000
)

 —

 —

 years

 Software

 51,784

 ( 51,784
)

 —

 —

 - 5 years

 Trademark

 10,745

 ( 9,914
)

 —

 years

 In-progress
 patent

 —

 —

 Total:

 $
 139,998,415

 $
 ( 139,726,698
)

 $
 —

 $
 271,717

 Amortization
expense was $ 7,804 and $ 1,384,862 for the years ended December 31, 2024 and 2023, respectively. These amounts are included in cost of
revenues in the accompanying consolidated statements of operations and comprehensive income (loss). The weighted average remaining useful
life for which amortization expense will be recognized is 3.0 years as of December 31, 2024. Future amortization expense of intangible
assets is as follows:

OF FUTURE AMORTIZATION EXPENSE OF INTANGIBLE ASSETS

 Years
 ending December 31,

 2025

 $
 142,028

 2026

 142,000

 2027

 142,000

 2028

 142,000

 2029

 135,000

 Thereafter

 Total

 $
 973,914

 NOTE
10 – ACCOUNTS PAYABLE — RELATED PARTIES

payable due to related parties represents payables in the ordinary course of business primarily for purchases of game distribution
licenses, research and development costs and also the royalties due to Suzhou Snail and SDE. As of December 31, 2024 and 2023, the
Company had $ 15,383,171
and $ 18,147,958,
respectively, as accounts payable due to Suzhou Snail; and $ 2,336,274,
as net accounts receivable due from SDE as of December 31, 2024, see Note 5 — Accounts Receivable (Payable) — Related
Party. During the years ended December 31, 2024 and 2023, the Company incurred $ 192,213
and $ 279,699,
respectively as license costs due to Suzhou Snail and included in cost of revenues. In March 2024, the Company entered into an
outsource agreement with Suzhou Snail for the research and development of a new title. In consideration, the Company paid Suzhou
Snail twelve equal monthly payments of $ 253,000,
beginning on January 1, 2024. In July 2024, the Company entered into another software development, publishing and distribution
agreement with Suzhou Snail. Under the terms of the agreements Suzhou Snail will develop a game for distribution by the Company and
the Company will make $ 4.5
million in milestone payments during the development of the game and an ongoing royalty on sales of the game. The Company made $ 1.5
 million in milestone payments under the July contract, in 2024. In December 2024, the Company entered into an agreement with Suzhou
Snail for the development of an application to deliver short film content to end users. In accordance with the agreement Suzhou
Snail will develop the app for release and will receive $ 290,000
as a development fee. As of December 31, 2024, the development fee has been capitalized as an intangible asset in the
Company's consolidated balance sheet and accrued as accounts payable – related parties. During the years ended December
31, 2024 and 2023, respectively, there were $ 7,783,000
and $ 2,050,000
in payments to Suzhou Snail for royalties and research and development costs. The royalty payments are included in costs of revenues
and research and development costs are included in operating expenses in the consolidated statements of operations and comprehensive
income (loss). Accounts payable – related parties consisted of the following as of December 31, 2024 and 2023:

OF ACCOUNTS PAYABLE- RELATED PARTIES

 2024

 2023

 payable - Suzhou

 $
 52,998,084

 $
 55,762,870

 Less:
 accounts receivable - Suzhou

 ( 37,614,913
)

 ( 37,614,912
)

 payable - SDE

 -

 4,946,478

 payable

 -

 4,946,478

 Total
 accounts payable – related parties

 $
 15,383,171

 $
 23,094,436

 NOTE
11 – LOAN AND INTEREST RECEIVABLE — RELATED PARTY

 In
February 2021, the Company loaned $ 200,000 to a wholly owned subsidiary of Suzhou Snail. The loan bears 2.0 % per annum interest, interest
and principal were due in February 2022. In February 2022, Suzhou Snail signed an agreement with this subsidiary and assumed the loan
and related interest for a total of $ 203,890. Subsequently, $ 103,890 was offset against the loan and interest payable owed to Suzhou
Snail on a separate note. The total amount of loan and interest receivable — related party was $ 105,759 and $ 103,753, as of December
31, 2024 and 2023, respectively. The Company earned $ 2,005 and $ 2,000 in interest on the related party loans receivable during years
ended December 31, 2024 and 2023, respectively.

 F- 22

 Snail

 Notes

 NOTE
12 – REVOLVING LOAN, SHORT TERM NOTES AND LONG - TERM DEBT

OF LONG TERM DEBT

 31, 2024

 31, 2023

 2021
 Revolving Loan - On June 21, 2023, the Company amended its revolving loan agreement ("amended revolver") and decreased
 the maximum balance from $ 9,000,000 to $ 6,000,000. The revolving maturity date of revolving loan is extended to June 30, 2025 and
 has an annual interest rate equal to the prime rate less 0.25 %. At December 31, 2024, the interest rate on this loan was 7.25 %. Debt
 covenants of this loan require the Company to maintain a minimum debt service coverage ratio of at least 1.5 to 1. The Company was
 in compliance with the debt service coverage ratio for the trailing twelve month period ended December 31, 2024 and is expected to be in non-compliance within the next twelve months.

 $

 $

 6,000,000

 2021
 Promissory Note – On June 17, 2021, the Company amended its loan agreement to reduce the principal amount with financial
 institution for 10 years, annual interest rate of 3.5 % for the first 5 years, and then floating at Wall Street Journal rate from
 years 6 to 10. The loan is secured by the Company's building, with a carrying value of $ 4.2 million, and matures on June 30,
 2031. The note is subject to a prepayment penalty. Debt covenants of this loan require the Company to maintain a minimum debt service
 coverage ratio of at least 1.5 to 1. The Company was in compliance with the debt covenants of this loan for the trailing twelve month
 period ended December 31, 2024 and is expected to be in non-compliance within the next twelve months.

 2,722,549

 2,811,923

 2022
 Short Term Note - On January 26, 2022, the Company amended its revolving loan and long-term debt agreements to obtain an additional
 note with a principal balance of $ 10,000,000 which was originally set to mature on January 26, 2023. Interest was equal to the higher
 of 3.75 % or the Wall Street Journal Prime Rate plus 0.50 %. The loan was secured by the Company's assets. In the event of a
 default, all outstanding amounts under the note would bear interest at a default rate equal to 5 % over the note rate. Debt covenants
 of this loan required the Company to maintain a minimum debt service coverage ratio of at least 1.5 to 1 and would be measured quarterly.
 In November 2022, the maturity was extended to January 26, 2024 and at December 31, 2023, the interest rate on this loan was 8.25 %.
 The Company repaid the balance of $ 833,333 in January 2024.

 -

 833,333

 2023
 Convertible Notes – On August 24, 2023, the Company issued convertible notes at a 7.4 % discount and a principal balance
 of $ 1,080,000. The notes had an interest rate of 7.5 %, were paid in consecutive monthly installments beginning February 24, 2024
 and matured on May 24, 2024. In the event of a default the interest rate was to be increased to the lower of 16 % per annum or the
 highest amount permitted by applicable law. The Company had the option to prepay the notes at any time and the note holders had the
 option to convert the notes, in whole or in part, at any time. The Company recognized a discount of $ 678,254 on the notes to account
 for the stated discount, the fair value of the warrants issued in connection with the notes and the costs of issuance. The discount
 was amortized using the effective interest rate of 103.4 %. The Company repaid $ 1,020,000 of the balance, and the investors converted
 $ 60,000 of the debt into class A common stock, during the twelve month period ended December 31, 2024.

 -

 1,080,000

 2023
Note Payable – In July 2023, the Company entered into a cooperation agreement with its internet, server and datacenter vendor.
The Company agreed to make the vendor the official server host of Ark: 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 are repaid based on 20% of the gross monthly ARK: Survival Ascended revenues. The
Company has imputed interest at 8.0 %
on draws made. If in default, the interest rate is levied on the outstanding balances at a rate of 12.0 %
per annum. The Company repaid the remaining balance of the loan in February, 2024.

 -

 1,500,000

 Total
 debt

 5,722,549

 12,225,256

 Less:
 discount on convertible notes

 -

 282,639

 Less:
 current portion of promissory note

 2,722,549

 2,811,923

 Less:
 revolving loan

 6,000,000

 Less:
 notes payable

 -

 2,333,333

 Less:
 convertible notes, net of discount

 -

 797,361

 Total
 long-term debt

 $

 -

 $

 -

 Total
interest expense for the above debt and revolver loan amounted to $ 713,475 and $ 1,485,241 for the year ended December 31, 2024 and 2023,
respectively. Accretion of the convertible notes and amortization of loan origination expenses and loan discounts of $ 345,837 and $ 462,284
are included as part of interest expense for the years ended December 31, 2024 and 2023, respectively. The Company has a weighted average
interest rate of 5.6 % and 8.1 % on its short-term obligations as of December 31, 2024 and 2023, respectively. The Company was in compliance
with its debt covenants related to the 2021 Revolving Note and 2021 Promissory note for the trailing twelve months ended December 31,
2024, however it is probable that the Company will fail the covenants within the next 12 months. As such, the Company has classified
the long-term portion of its promissory note as current.

 F- 23

 Snail

 Notes

 The
following table provides future minimum payments of its long-term debt based on contractual payments, as of December 31, 2024:

OF FUTURE MINIMUM PAYMENTS OF LONG TERM DEBT

 Years ending December 31,

 2025

 $
 3,086,013

 2026

 89,115

 2027

 92,329

 2028

 95,414

 2029

 99,101

 Thereafter

 2,260,577

 Long
 term debt

 $
 5,722,549

 NOTE
13 – INCOME TAXES

 The
components of income (loss) before income taxes for the years ended December 31, 2024 and 2023 are as follows:

OF INCOME (LOSS) BEFORE INCOME TAXES

 2024

 2023

 United States

 $
 2,233,247

 $
 ( 11,666,676
)

 225,952

 171,600

 Total

 $
 2,459,199

 $
 ( 11,495,076
)

 The
income tax provision (benefit) for the years ended December 31, 2024 and 2023 are as follows:

OF INCOME TAX PROVISION (BENEFIT)

 2024

 2023

 Current:

 U.S. federal

 $
 872,061

 $
 112,344

 U.S. State

 417,447

 82,595

 ( 87,783
)

 49,373

 Total current income taxes

 1,201,725

 244,312

 Deferred:

 U.S. federal

 ( 194,622
)

 ( 2,577,737
)

 U.S. State

 ( 374,979
)

 ( 67,227
)

 —

 -

 Total deferred income tax benefit

 ( 569,601
)

 ( 2,644,964
)

 Income tax provision (benefit)

 $
 632,124

 $
 ( 2,400,652
)

 The
benefits for income taxes differs from the amounts computed by applying the federal statutory tax rate of 21.0 % to earnings before income
taxes, as follows:

OF PROVISION (BENEFITS) FOR INCOME TAXES RATE RECONCILIATION

 2024

 2023

 Federal statutory income tax rate

 21.00
 %

 21.00
 %

 Valuation allowance

 11.94
 %

 ( 1.21
)%

 FIN 48

 1.01
 %

 1.13
 %

 Return to provision

 0.08
 %

 ( 0.78
)%

 GILTI

 0.90
 %

 ( 0.43
)%

 FDII

 ( 6.80
)%

 -

 State taxes

 0.86
 %

 ( 0.10
)%

 Foreign withholding tax

 0.19
 %

 ( 0.43
)%

 R&D credit true-up

 ( 12.10
)%

 1.76
 %

 Rate change

 ( 5.36
)%

 ( 0.02
)%

 Penalties

 1.32
 %

 ( 0.07
)%

 Warrant revaluation

 11.38
 %

 ( 0.06
)%

 Other

 1.30
 %

 0.09
 %

 Effective
 tax rate

 25.72
 %

 20.88
 %

 The
Company recognized an income tax expense of $ 632,124 and
income tax benefit of $ 2,400,652 for
the years ended December 31, 2024 and 2023, respectively; and reflects a tax rate of 25.7 %
and 20.9 %,
respectively. As of December 31, 2024, the Company's effective tax rate differed from the federal statutory rate of 21 %
primarily due to foreign research and development deduction, permanent differences, change in valuation allowance, and change in warrant valuation.

 The
tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities consisted of the
following as of December 31, 2024 and 2023:

OF DEFERRED TAX ASSETS AND LIABILITIES

 2024

 2023

 Deferred tax assets (noncurrent):

 Net operating losses

 $
 6,414,780

 $
 9,941,478

 Deferred revenue

 3,792,971

 1,564,708

 Research and development credit

 945,554

 664,877

 Book lease liability (ASC 842)

 337,056

 640,414

 Fixed assets and intangibles

 314,109

 286,902

 Section 174 capitalized research and experimental expenditures

 4,641,794

 2,101,923

 Interest limitation carryforward

 -

 329,383

 Stock based compensation

 234,110

 Other

 907,859

 960,471

 Total deferred tax assets

 17,354,365

 16,724,266

 Deferred tax liabilities (noncurrent):

 Book ROU assets (ASC 842)

 ( 287,017
)

 ( 533,369
)

 Basis difference in subsidiary

 ( 820,883
)

 ( 799,595
)

 Total deferred tax liabilities:

 ( 1,107,900
)

 ( 1,332,964
)

 Long-term deferred tax asset, net

 16,246,465

 15,391,302

 Valuation allowance

 ( 5,429,353
)

 ( 5,143,802
)

 Net deferred tax asset

 $
 10,817,112

 $
 10,247,500

 F- 24

 Snail

 Notes

 Included in these consolidated financial statements
are two entities that are not consolidated in the U.S. tax return filing due to one entity being less than 80% ownership by Snail Games
USA Inc. and the other classified as pass-through entity.

 The Company maintained a total valuation allowance
of $ 5,429,353 and $ 5,143,802 as of December 31, 2024 and 2023, respectively, the valuation allowance relates primarily to the net operating loss ("NOL") of the
non-includable entities mentioned above, which have had historical losses, and which management has assessed are not more likely than
not to be able to realize those NOLs. The non-includable entities had a valuation allowance of $ 4,024,497 and $ 4,022,729 as of December
31, 2024 and 2023. The Company's consolidated tax filing group had a domestic valuation allowance of $ 673,049 and $ 686,808 as of
December 31, 2024 and 2023, respectively. The Company had a foreign valuation allowance of $ 731,807 and $ 434,265 as of December 31, 2024
and 2023, respectively. Overall, the Company's valuation allowance had net increase by $ 285,551 during 2024, and $ 138,607 during
2023.

 The Company has assessed all available positive and
negative evidence, including the results of recent operations, continued release of games and DLC's, and projections of future taxable
income. After evaluating the positive and negative evidence, management believes that the positive evidence above outweighs the negative
evidence. Accordingly, the Company has concluded the realization of DTAs is more-likely-than-not, and no valuation allowance is required
at this time for majority of the net deferred tax assets. In the event that negative evidence outweighs
positive evidence in future periods, the Company may need to record additional valuation allowance, which could have a material impact
on our financial position. The Company continues to maintain a valuation allowance against certain deferred tax assets that are not more
likely than not to be realized.

 As of December 31, 2024, the non-includable entities
have U.S. federal NOL carryforwards of $ 2,867,153 which begin to expire in 2037 and $ 11,528,474 with
an indefinite carryforward period. As of December 31, 2024, the non-includable entities have $ 14,339,528 of California net operating loss
carryforwards, which begin to expire in 2037. The Company's consolidated group federal NOL carryforwards are $ 9,828,604 with an
indefinite carryforward period. The Company's consolidated group state NOL carryforwards are $ 5,103,345 and begin to expire in 2039.
As of December 31, 2024, the Company did not have any foreign NOL carryforwards.

 As of December 31, 2024, the Company has foreign tax
credit carryforwards of $ 192,180 which begin to expire in 2027 and has foreign R&D credit carryforwards of $ 731,807 which begin to
expire in 2027. The Company has California R&D credit carryforwards of $ 340,088 with an indefinite carryforward period.

 Under Section 382/383 of the
Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an "ownership change,"
which generally occurs if the percentage of the corporation's stock owned by 5% stockholders increases by more than 50% over a three
year period, the corporation's ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its
post-change income may be limited. The annual limitation may result in the expiration of net operating losses and credits before utilization.
The Company has not performed a Section 382 analysis through December 31, 2024. Subsequent ownership changes may affect the limitation
in future years.

 The Company and its subsidiaries currently file tax
returns in the United States (federal and states) and Poland. The statute of limitations for its consolidated federal income tax returns
are open for tax years ended December 31, 2021 and after. The statute of limitations for its consolidated state income tax returns are
open for tax years ended December 31, 2019 and after. The statute of limitations for its Polish tax returns are open for tax years ended
December 31, 2019 and after.

 Management intends to permanently reinvest any future
foreign earnings to support operations and business growth of its affiliated company in Poland. As such, no deferred tax liability was
recorded on the unremitted earnings of the foreign subsidiary as of December 31, 2024 and 2023. As of December 31, 2024, the Company had
$ 1,374,706 of unremitted earnings that will be indefinitely reinvested in its Poland subsidiary.

 The
following table reflects changes in gross unrecognized tax benefits for the years ended December 31, 2024 and 2023:

OF UNRECOGNIZED TAX BENEFITS

 2024

 2023

 Unrecognized tax benefits at beginning of year

 $
 487,608

 $
 696,895

 Gross Increases – current year positions

 —

 —

 Gross Increases – prior year positions

 219,128

 —

 Gross Decreases – prior year positions

 ( 33,831
)

 —

 Gross Decreases – expiration of statute of limitations

 ( 160,550

)

 ( 37,550

)

 Gross Decreases – settlements

 —

 ( 171,737
)

 Unrecognized tax benefits at end of year

 $
 512,355

 $
 487,608

 As
of December 31, 2024 and 2023, the Company had $ 265,251
 and $ 295,428,
respectively, of unrecognized tax benefits that if recognized would impact the Company's effective tax rate. The Company accrued
and recognized interest and penalties related to unrecognized tax benefits in operating expense. As of December 31, 2024 and 2023, the
Company had accrued $ 143,020
 and $ 0
 of interest and penalties, respectively. The
Company does not expect the amount to change materially within 12 months.

 The Company is under audit by the IRS for the 2022
tax year federal income tax return. There are currently no proposed adjustments.

 F- 25

 Snail

 Notes

 NOTE
14 – OPERATING LEASE RIGHT-OF-USE ASSETS

 The
Company's right-of-use assets represent arrangements related primarily to office facilities used in the ordinary business operations
of the Company and its subsidiaries. In April 2018, a commercial bank issued an irrevocable standby letter of credit on behalf of the
Company to the landlord for $ 1,075,000 to lease office space. The standby letter of credit was valid for a one-year term and was amended
in January 2021 to extend to January 31, 2026. As of December 31, 2024 and 2023, the Company's net operating lease right-of-use
assets amounted to $ 1,279,330 and $ 2,440,690, respectively. The Company had variable lease payments of approximately $ 129,752 and $ 125,207
during the years ended December 31, 2024 and 2023, respectively, which consisted primarily of common area maintenance charges and administrative
fees.

lease costs included in the general and administrative expenses in our consolidated statements of operations and comprehensive income
(loss) for the years ended December 31, 2024 and 2023, are as follows:

OF OPERATING LEASE COSTS

 2024

 2023

 lease costs

 $

 $ 1,624,257

 $

 1,578,751

 Supplemental
information related to operating leases for lease liabilities as of December 31, 2024 and, 2023, is as follows:

OF SUPPLEMENTAL INFORMATION RELATED TO OPERATING LEASES

 2024

 2023

 Cash paid for amounts included in the measurement of lease liabilities

 $
 1,619,689

 $
 1,548,889

 Weighted average remaining lease term

 1.0 years

 1.9 years

 Weighted average discount rate

 5.14
 %

 5.00
 %

 Future
undiscounted lease payments for operating leases and a reconciliation of these payments to our operating lease liabilities as of December
31, 2024 are as follows:

OF FUTURE UNDISCOUNTED LEASE PAYMENTS FOR OPERATING LEASES AND RECONCILIATION OF THESE PAYMENTS TO OUR OPERATING LEASE LIABILITIES

 Years ending December 31,

 Future lease
 payments

 Imputed

 Lease
 Liabilities

 2025

 $
 1,477,622

 $
 33,237

 $
 1,444,385

 2026

 24,736

 3,455

 21,281

 2027

 25,636

 1,778

 23,858

 2028

 13,043

 12,844

 2029

 -

 -

 -

 Total future lease payments

 $
 1,541,037

 $
 38,669

 $
 1,502,368

 NOTE
15 – COMMITMENTS AND CONTINGENCIES

 Litigation

 The
Company is subject to claims and contingencies related to lawsuits and other matters arising out of the normal course of business. In
addition, the Company may receive notifications alleging infringement of patent or other intellectual property rights. The Company has
elected to expense legal costs associated with legal contingencies as incurred.

 F- 26

 Snail

 Notes

 On
December 1, 2021, the Company and Studio Wildcard sent a notice of claimed infringement (the "DCMA Takedown Notice") to Valve
Corporation, which operates the Steam platform, pursuant to the Digital Millennium Copyright Act ("DCMA"). The DCMA Takedown
Notice concerned a videogame titled Myth of Empires, which was developed by Suzhou Angela Online Game Technology Co., Ltd. ("Angela
Game") and published by Imperium Interactive Entertainment Limited ("Imperium").

 On
December 9, 2021, Angela Game and Imperium sued the Company and Studio Wildcard in the United States District Court for the Central District
of California (the "District Court") in response to the DCMA Takedown Notice. The lawsuit sought a declaratory judgment on
non-liability for copyright infringement and non-liability for trade secret misappropriation, as well as unspecified damages for alleged
misrepresentations in the DCMA Takedown Notice. Angela Game and Imperium also filed an application for a temporary restraining order
asking the court to order us and Studio Wildcard to rescind the DCMA Takedown Notice so that Steam could reinstate Myth of Empires for
download. On December 20, 2021, the Company and Studio Wildcard filed an answer to the complaint, which included counterclaims against
Angela Game and Imperium and a third-party complaint against Tencent seeking unspecified damages resulting from the alleged copyright
infringement and misappropriation of trade secrets in connection with the ARK: Survival Evolved source code.

 On
September 8, 2023, the Company entered into a settlement agreement with Angela Game. The settlement agreement includes an upfront
payment from Angela Game to the Company plus ongoing payments. The upfront payment of $ 1.5
million was recorded as deferred revenue as of December 31, 2023, with $ 0.3
million of the payment included in "other income" in the 2023 statement of operations and the remaining amount was
recognized upon the satisfaction of performance obligations during the twelve months ended December 31, 2024.

 On
March 14, 2023, Bel Air Soto, LLC ("Plaintiff") filed suit in the Superior Court of California, County of Los Angeles, against
Snail Games USA Inc. and INDIEV, an affiliate company that is owned by Mr. Hai Shi, the Company's Founder, Co-Chief Executive Officer,
Chief Strategy Officer, and Chairman, for breach of contract and related claims arising out of a commercial lease for premises located
in Los Angeles County. Plaintiff alleges that the defendants exercised an option to extend the lease and was harmed when defendants instead
terminated the lease and vacated the premises. The complaint seeks damages in excess of $ 3 million. Snail Games USA Inc. disputes the
allegations and the amount of damages. The Company has responded to the complaint with an answer and cross-complaint. The cross-complaint
seeks return for the $ 130,000 security deposit. The landlord has answered and denied the allegations of the cross-complaint. The Company
intends to vigorously defend against the claims asserted.

 There
was a mandatory settlement conference in the case which did not yield a settlement. As a result, the Company has filed a motion for
summary judgement, which is scheduled to be heard on June 24, 2025. The trial is presently scheduled to commence in February 2026.

 On
April 21, 2023, Snail Games USA Inc. entered into an indemnity and reimbursement agreement with INDIEV, dated as of April 1, 2023, pursuant
to which INDIEV agrees to assume all obligations and liabilities pursuant to the lease and indemnify and reimburse Snail Games USA Inc.
for any amounts, damages, expenses, costs or other liability incurred by Snail Games USA Inc. arising under or pursuant to the lease
or relating to the premises.

 In
October 2023, INDIEV has filed for bankruptcy and the Company does not expect to recover its costs from INDIEV. Accordingly, it is uncertain
whether INDIEV would be able to indemnify the Company due to its bankruptcy. At this time, the Company is unable to quantify the magnitude
of the potential loss should the plaintiffs' lawsuit succeed and accordingly no accrual for loss has been recorded in the accompanying
financial statements.

 Commitments

 The
Company routinely enters contracts with related party developers for the development of new games. These agreements ordinarily include
contractual payments to the developers for several milestones that occur at various times through 2026. The aggregate amount of development
commitments to related party developers is $ 6.6 million as of December 31, 2024, Our commitments assume satisfactory performance by our
related party software developer. See Note 10 – Accounts Payable – Related Parties and Note 19 – Subsequent
Events for more information.

 F- 27

 Snail

 Notes

 NOTE
16 – EARNINGS (LOSS) PER SHARE

 The
Company uses the two class method to compute its basic earnings (loss) per share ("Basic EPS") and diluted earnings (loss)
per share ("Diluted EPS"). The following table summarizes the computations of basic EPS and diluted EPS. The allocation of
earnings between Class A and Class B shares is based on their respective economic rights to the undistributed earnings of the Company.
Basic EPS is computed as net income (loss) divided by the weighted-average number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution that could occur using the treasury stock and if-converted methods. The following table provides
a reconciliation of the weighted average number of shares used in the calculation of Basic and Diluted EPS.

OF EARNINGS PER SHARE

 For the year ended

December 31,

 2024

 2023

 Basic Earnings (Loss) Per Share:

 Net income (loss) attributable to Class A common stockholders

 $
 400,576

 $
 ( 1,960,813
)

 Net income (loss) attributable to Class B common stockholders

)

 Net income (loss) attributable to common stockholders

)

 Total net income (loss) attributable to Snail Inc.

 $

 $
 ( 9,086,075
)

 Class A weighted average shares outstanding - basic

 Class B weighted average shares outstanding - basic

 average shares outstanding - basic

 Class A and B basic earnings (loss) per share

 $
 0.05

 $
)

 Diluted Earnings (Loss) Per Share:

 Net income (loss) attributable to Class A common stockholders

 $
 400,576

 $
 ( 1,960,813
)

 Net income (loss) attributable to Class B common stockholders

 $

 $
)

 Net income (loss) attributable to common stockholders

 $

 $
)

 Class A weighted average shares outstanding - basic

 Dilutive effects of common stock equivalents

 -

 -

 Class A weighted average shares outstanding - diluted

 Class B weighted average shares outstanding - basic

 average shares outstanding - basic

 Dilutive effects of common stock equivalents

 -

 -

 Class B weighted average shares outstanding - diluted

 average shares outstanding - diluted

 Diluted earnings (loss) per Class A share

 $
 0.05

 $
)

 Diluted earnings (loss) per Class B share

 $
 0.05

 $
)

 Diluted earnings (loss) per share

 $
 0.05

 $
)

 The
following table provides a listing of shares excluded from the calculation of Diluted EPS due to their anti-dilutive effects:

 SCHEDULE OF ANTI-DILUTIVE SHARES AND SECURITIES

 2024

 2023

 Method

 Excluded Shares:

 Restricted stock units outstanding

 1,142,284

 1,232,725

 Equity line of credit warrants

 334,314

 367,647

 Underwriters warrants

 120,000

 120,000

 Convertible notes

 -

 862,275

 If-Converted

 Convertible notes warrants

 1,405,470

 1,607,849

 Antidilutive securities excluded from computation of earnings per share, amount

 1,405,470

 1,607,849

 NOTE
17 – EQUITY

 The
Company has authorized two classes of common stock, Class A and Class B. The rights of the holders of both Class A and Class B common
stock will be identical, except with respect to voting, conversion and transfer restrictions applicable to the Class B common stock.
Each share of Class A common stock will be entitled to one vote. Each share of Class B common stock will be entitled to ten votes and
will be convertible into one share of Class A common stock automatically upon transfer, subject to certain exceptions. Holders of Class
A common stock and Class B common stock will vote together as a single class on all matters unless otherwise required by law.

 In
connection with our IPO, on November 9, 2022, the Company issued to the Underwriters warrants to purchase 120,000 shares of Class A common
stock (the "Underwriters Warrants"). The Underwriters Warrants may be exercised at a price per share equal to 125 % of the
IPO price, or $ 6.25 per share. The Underwriters Warrants are exercisable, in whole or in part, commencing on November 9, 2022, and expiring
on the three -year anniversary thereof. The Underwriters Warrants have not been exercised as of the filing of this Annual Report.

 F- 28

 Snail

 Notes

 The
Underwriters Warrants are legally detachable and separately exercisable from the Class A common stock; therefore, they meet the definition
of freestanding and are not considered embedded in the Firm Shares.

 The
Underwriters Warrants are considered indexed to the Company's own stock. Additionally, the Company concludes that the Underwriters
Warrants meet all requirements for equity classification. Because the Underwriters Warrants were issued to the Underwriters for their
services and can be exercised immediately (subject to certain transfer conditions) they were measured at their fair value on their date
of issuance and recorded within stockholders' equity. As long as the Underwriters Warrants remain classified as equity, they shall
not be revalued.

 Convertible
Debt

 In
August 2023, pursuant to a securities purchase agreement (the "SPA"), the Company issued to two accredited investors (the
convertible debt "Investors") convertible notes with an aggregate principal amount of $ 1,080,000 (the "Convertible
Notes") and warrants to purchase up to an aggregate of 714,285 shares of the Company's Class A common stock for gross proceeds
of $ 1,000,000 (the "Convertible Notes Financing").

 In
connection with the Convertible Notes Financing, the Company also entered into a registration rights agreement with the Investors. So
long as the Company complies with certain conditions set forth in the SPA and the registration rights agreement, the Company will sell
and the Investors will purchase, an additional $ 1,080,000 of aggregate principal amount of notes and warrants in the second tranche of
the Convertible Note Financing. The second tranche closing has not yet taken place.

 The
Convertible Notes carried an original issue discount of approximately 7.4 %, bear interest at a rate of 7.5 % per annum ( 16 % per annum
in case of an event of default), and were repaid in equal consecutive monthly installments that began in February 2024 and matured on
 May 24, 2024 (the "Maturity Date").

 Subject
to certain ownership limitations, starting three months after their issuance, the Convertible Notes could be converted at the option
of the holder at any time into shares of the Company's Class A common, at a conversion price equal to 90% (85% in case of an event
of default) of the average of the three the lowest daily volume weighted average price ("VWAP") of the Class A common stock
during the ten (10) trading days period prior the receipt of the notice of conversion. The conversion price may be adjusted if the Company
issues a qualifying security at a lower price than the then conversion price.

 If,
upon receipt of conversion notice, the Company cannot issue shares of Class A common stock for any reason, then it is required to issue
as many shares of Class A common stock as it is able to issue and, with respect to the unconverted principle portion, the Noteholder
may elect for the Company to pay for each shares of Class A common stock that could not be issued at a price equal to the higher of the
then conversion price or the VWAP as of the date of the conversion notice.

 The
Company determined that the Convertible Notes included features that required bifurcation from the debt host and met the criteria to
be accounted for as a derivative liability that is accounted for at fair value. On the date of issuance, the compound derivative had
an estimated fair value that was not significant due to the remoteness of the events that would trigger the redemption features. The
derivative liability uses level 3 inputs, is to be measured at fair value each reporting date with change in fair value being
reported in other income. The change in fair value during the years ended December 31, 2024 and 2023, was not significant and as such, was
not recorded.

 On
the date of issuance, the Company allocated the proceeds between the instruments issued using fair value for the derivative liability
with the residual amounts allocated to the convertible notes and warrants using relative fair value as follows:

OF PROCEEDS BETWEEN INSTRUMENTS ISSUED

 Convertible notes

 $
 554,246

 Derivative liability

 -

 Warrants

 445,754

 Total proceeds

 $
 1,000,000

 F- 29

 Snail

 Notes

 The
difference of $ 525,754 between the allocated proceeds to the Convertible Notes and the aggregate principal amount will be accreted during
the life of the notes. Additionally, $ 152,500 of transaction costs incurred by the Company were recorded as debt discount. As of December
31, 2024, the Company has repaid the balance of the convertible notes.

 The
following is a summary of the Convertible Notes as of December 31, 2023:

OF CONVERTIBLE NOTES

 Principal

 Unamortized
debt discount
and issuance

 Net carrying

 Fair value

 costs

 amount

 Levelling

 Convertible Notes

 $
 860,910

 $
 ( 63,549
)

 $
 797,361

 $
 536,170

 Level 3

 The
debt discount was amortized to interest expense over the maturity period using the effective interest method at a rate of 103.4 %. The
effective interest rate is based on the principal balance discounted by stated interest, debt issuance costs and fair value allocated
to the related warrants. For the year ended December 31, 2024, the Company recognized $ 309,433 of interest expense related to the Convertible
Notes, comprising of $ 22,725 of contractual interest expense, $ 222,628 in accretion and $ 64,080 of amortization of debt discount and
issuance costs. For the year ended December 31, 2023, the Company recognized $ 424,460 of interest expense related to the Convertible
Notes, comprising of $ 29,025 of contractual interest expense, $ 306,664 in accretion and $ 88,951 of amortization of debt discount and
issuance costs.

the year ended December 31, 2024, the Company repaid $ 1,071,750 of principal and accrued interest and the investors converted $ 60,000
of principal into 71,460 shares of Class A common stock.

 Convertible
Note Warrants

 On
August 24, 2023, the Company issued warrants in connection with its convertible debt for the purchase of 714,285 shares (the "Convertible
Note Warrants"). The Convertible Note Warrants are accounted for as liabilities and are included in the accrued expenses and other
liabilities in the consolidated balance sheets. The Convertible Note Warrants may require partial cash settlement in the future, include
various adjustment provisions, meet the definition of a derivative and are classified as a liability, as such the warrants are measured
at fair value in accordance with ASC 815 – "Derivatives and Hedging".

 The
convertible note warrants allow the Investors to purchase an aggregate of 714,285 shares of the Company's Class A common stock
at an exercise price of $ 1.89. The warrants can be exercised, subject to certain ownership limitations, in whole or in part during the
exercise period commencing on November 24, 2023 and ending on the date that is five years thereafter.

 The
exercise price and the number of shares of the warrants are subject to adjustment for standard anti-dilution provisions and also for
subsequent issuance at a price lower than the then exercise price and adjustments to the strike price of other equity-linked instruments
to a lower price than the then exercise price.

 Due
to their adjustment provisions, the warrants are classified as a liability on the consolidated balance sheet. The fair value of the warrants
at issuance has been estimated using a Monte-Carlo model as follows:

OF FAIR VALUE OF WARRANTS

 December 31, 2024

 December 31, 2023

 Stock price

 $
 1.86

 $
 1.21

 Exercise price

 $
 0.84

 $
 1.89

 Contractual term (years)

 3.65

 4.65

 Volatility

 60.0
 %

 50.0
 %

 Risk-free rate

 4.31
 %

 3.87
 %

 Expected
volatility is the estimate of the expected volatility of the Company's Class A common stock, based on the Company's weekly
trading history then reduced by 5 %
as it is generally accepted that market participants to not pay for the full volatility.

 The
warrant liability, which uses level 3 inputs, is to be measured at fair value each reporting period with the change in fair value
being recognized in other income (expense). The measured fair value may be uncertain due to the use of unobservable inputs. At
December 31, 2024 and 2023, the fair value of the warrant liability was $ 1,448,109
and $ 480,281,
respectively, and was included in the accrued expenses and other liabilities in the Company's consolidated balance sheets. The
changes in fair value during the years ended December 31, 2024 and 2023, amounted to a loss of $ 1,006,294
and $ 34,527,
respectively, included in other income (expense) in our consolidated statements of operations and comprehensive income (loss).

the year ended December 31, 2024, the Investors exercised 202,379
warrants, for which the Company received $ 170,000
in proceeds and recorded a loss of $ 115,800
upon revaluation of the exercised warrants. The loss is included in other income (expense) in our consolidated statements of
operations and comprehensive income (loss).

 F- 30

 Snail

 Notes

Line Purchase Agreement

 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.

 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. As of
December 31, 2024, the Company has not sold any Class A common stock under the Equity Line Purchase Agreement.

 The
registration statement covering the offer and sale of up 15,093,768 shares of Class A common stock was effective on October 10, 2023.
The purchase price will be calculated as 92% of the volume weighted average prices of the Company's common stock during normal
trading hours for five business days prior to the closing date with respect of a purchase notice.

 Concurrently
with the signing of the Equity Line Purchase Agreement, the Company issued the equity line warrant to purchase 367,647 shares of its
Class A common stock to the investor as a commitment fee. The total fair value, at the date of issuance, of the equity line warrant of
approximately $ 105,411 was recorded as a liability and deferred offering cost and is included in other assets on our consolidated balance
sheets.

Line Warrants

 On
August 24, 2023, the Company issued a warrant to an investor (the "Equity Line Warrant") for the purchase of 367,647 shares
of Class A common stock in consideration of the investor's commitment to purchase Class A common stock. The fair value of the Equity
Line Warrant is recorded as a warrant liability and is included in the accrued expenses and other liabilities in the Company's
consolidated balance sheets. The Equity Line Warrants may require partial cash settlement in the future, include various adjustment provisions,
meet the definition of a derivative and are classified as a liability, as such the warrants are measured at fair value in accordance
with ASC 815 – "Derivatives and Hedging".

 The
Investors warrants allow them to purchase the 367,647 shares of the Company's Class A common stock for an exercise price of $ 1.50.
The warrants can be exercised, subject to certain ownership limitations, in whole or in part during the exercise period commencing on
August 24, 2023 and ending on the date that is five years thereafter.

 The
exercise price and the number of shares of the warrants are subject to adjustment for standard anti-dilution provisions, for subsequent
common share issuance at a price lower than the then exercise price of the warrants and adjustments to the strike price of other equity-linked
instruments to a lower price than the then exercise price of the warrants.

 Due
to their adjustment provision, the warrants are classified as a liability on the consolidated balance sheet. The fair value of the warrants
has been estimated using a Monte-Carlo model as follows:

OF FAIR VALUE OF WARRANTS

 December 31, 2024

 December 31, 2023

 Stock price

 $
 1.86

 $
 1.21

 Exercise price

 $
 1.50

 $
 1.50

 Contractual term (years)

 3.65

 4.65

 Volatility

 60.0
 %

 50.0
 %

 Risk-free rate

 4.31
 %

 3.87
 %

 Expected
volatility is the estimate of the expected volatility of the Company's Class A common stock, based on the Company's weekly
trading history then reduced by 5 %.

 The
warrant liability, which uses level 3 inputs, is to be measured at fair value at each reporting period and with the change in fair
value being recognized in earnings. The measured fair value may be uncertain due to the use of unobservable inputs. At December 31,
2024 and 2023, the fair value of the warrant liability was $ 292,004
and $ 103,767,
respectively, and included in the accrued expenses and other liabilities in the Company's consolidated balance sheets. The
changes in fair value during the years ended December 31, 2024 and 2023, amounted to a loss of ($ 192,945)
and income of $ 1,644,
respectively, and is included in other income (expense) in our consolidated statements of operations and comprehensive income
(loss).

the year ended December 31, 2024, the Investor exercised 33,333
warrants, for which the Company received $ 50,000
in proceeds and recorded a loss of $ 17,776
upon revaluation of the exercised warrants. The loss is included in other income (expense) in our consolidated statements of
operations and comprehensive income (loss).

Stock Units ("RSUs")

 RSUs
granted to directors vest based on the directors' continued employment with us through each applicable vest date, which is generally
over one year. If the vesting conditions are not met, unvested RSUs will be forfeited. The following table summarizes our RSU units activity
with directors for the years ended December 31, 2024 and 2023.

OF RESTRICTED STOCK UNITS ACTIVITY

 Weighted-
 Grant-Date
 Fair Values

 Outstanding as of January 1, 2024

 43,478

 $
 1.38

 Granted

 —

 —

 Vested

 ( 43,478
)

 ( 1.38
)

 Forfeited or cancelled

 —

 —

 Outstanding as of December 31, 2024

 —

 $
 -

 Weighted-
 Grant-Date
 Fair Values

 Outstanding as of January 1, 2023

 24,000

 $
 5.00

 Granted

 43,478

 1.38

 Vested

 ( 24,000
)

 ( 5.00
)

 Forfeited or cancelled

 —

 —

 Outstanding as of December 31, 2023

 43,478

 $
 1.38

 The
grant date fair value of RSUs granted to directors is based on the quoted market price of our common stock on the date of grant. The total fair value of RSUs vested during the years ended December 31, 2024 and 2023, were $ 60,000 and $ 120,000,
respectively.

 F- 31

 Snail

 Notes

 Our
RSUs granted to employees vest upon the achievement of pre-determined performance-based milestones as well as service conditions ("PSUs").
The pre-determined performance-based milestones are based on specified percentages of the PSUs that would vest at each of the first five
anniversaries of the IPO date if the Company's average annual growth rate ("AAGR") is calculated to be at a target
percentage or above during the period between the Company's IPO Date and the annual revenue for each of the anniversary year. If
these performance-based milestones are not met but service conditions are met, the PSUs will not vest, in which case any compensation
expense the Company has recognized to date will be reversed. Generally, the total aggregate measurement period of our PSUs is 5 years,
with awards cliff-vesting after each annual measurement period during the total aggregate measurement period.

 Each
quarter, the Company updates our assessment of the probability that the performance milestones will be achieved. The Company amortizes
the fair values of PSUs over the requisite service period. Each performance-based milestone is weighted evenly and the number of shares
that vest based on each performance-based milestone is independent from the other.

 The
following table summarizes our PSU activity with employees, presented with the maximum number of shares that could potentially vest,
for the years ended December 31, 2024 and 2023.

OF RESTRICTED STOCK UNITS ACTIVITY

 Weighted-
 Grant-Date
 Fair Values

 Outstanding as of January 1, 2024

 1,165,247

 $
 5.00

 Granted

 —

 —

 Vested

 —

 —

 Forfeited or cancelled

 ( 22,963
)

 ( 5.00
)

 Outstanding as of December 31, 2024

 1,142,284

 $
 5.00

 Weighted-
 Grant-Date
 Fair Values

 Outstanding as of January 1, 2023

 1,197,552

 $
 5.00

 Granted

 —

 —

 Vested

 —

 —

 Forfeited or cancelled

 ( 32,305
)

 ( 5.00
)

 Outstanding as of December 31, 2023

 1,165,247

 $
 5.00

 The
grant date fair value of PSUs granted to employees is based on the quoted market price of our common stock on the date of grant.

 Repurchase
Activity

 All
share repurchases settled in the year ended December 31, 2023 were open market transactions. As of December 31, 2024 and 2023, 1,350,275
shares of Class A common stock were repurchased pursuant to the Share Repurchase Program for an aggregate purchase price of approximately
$ 3.7 million. The average price paid per share was $ 2.72 and approximately $ 1.3 million aggregate amount of shares of Class A common
stock remain available for repurchase under the Share Repurchase Program.

 There
were no share repurchases made during the year ended December 31, 2024. During the year ended December 31, 2023, 152,626 shares of Class
A common stock were repurchased pursuant to the Share Repurchase Program for an aggregate purchase price of approximately $ 0.3 million.
The average price paid per share during the year ended December 31, 2023 was $ 1.68.

 Stock-Based
Compensation Expense (Income)

the year ended December 31, 2024, the Company determined that it is probable that the Company will not meet the performance-based milestones
required by the RSU's granted to employees. Accordingly, the Company has reversed the previously recognized compensation expense
related to RSU's. Stock-based compensation expense (income) resulting from RSUs and PSUs of ($ 828,495) and 799,955 are recorded
under general and administrative expenses included in our consolidated statements of operations and comprehensive income (loss) for the
years ended December 31, 2024 and 2023, respectively. Stock-based compensation expense (income) resulting from PSUs of ($ 61,713) and
$ 48,080 are recorded under research and development expenses included in our consolidated statements of operations and comprehensive
income (loss) for the years ended December 31, 2024 and 2023, respectively.

the twelve months ended December 31, 2024 and 2023, the Company recognized approximately $ 201,815 of deferred income tax expense, and
$ 185,432 of deferred income tax benefit, respectively, related to our stock-based compensation expense.

 As
of December 31, 2024, our total unrecognized compensation cost related to RSUs and PSUs was approximately $ 2.1 million and is expected
to be recognized over a weighted-average service period of 2.0 years.

 NOTE
18 – OPERATING SEGMENTS

 The
Company's Chief Operating Decision Maker ("CODM") is our Founder, Co-Chief Executive Officer, Chief Strategy
Officer, and Chairman Mr. Hai Shi. The CODM assesses performance and decides how to allocate resources based on net income (loss) to evaluate operational efficiency and direct resources of the Company. Segment assets are
reported on the consolidated balance sheet as total assets. The table below presents segment revenue, operating profit and
significant expenses for the years ended December 31, 2024 and 2023:

OF SEGMENT REVENUE, OPERATING PROFIT AND SIGNIFICANT EXPENSES

 2024

 2023

 Revenues, net

 $

 $

 Cost of revenues

 54,236,342

 48,306,403

 Gross profit

 30,230,705

 12,595,695

 Operating expenses:

 Salaries and Wages

 4,962,697

 6,288,594

 Public Company Expenses

 567,285

 963,109

 General and administrative

 7,337,228

 8,564,812

 Research and development

 11,647,293

 5,057,421

 Advertising and marketing

 1,523,398

 1,582,464

 Depreciation

 303,714

 432,306

 Total operating expenses

 26,341,615

 22,888,706

 Income (loss) from operations

 3,889,090

 ( 10,293,011
)

 Total other income (expense), net

 ( 1,429,891
)

 ( 1,202,065
)

 Income (loss) before provision for (benefit from) income taxes

 $
 2,459,199

 $
 ( 11,495,076
)

 Provision for (benefit from) income taxes

 632,124

 ( 2,400,652
)

 $

)

 There
are no additional segment items requiring separate disclosure. Interest income, interest expense, other income and foreign currency transactions
are captured in the total other income (expense), net line item. The Company continues to report revenue by geographic region as part
of its revenue disclosures, see Note 3 – Revenue from Contracts with Customers. The CFO provides reports to the CODM for
key decision making purposes.

 NOTE
19 – SUBSEQUENT EVENTS

 In January 2025, the Company extended its development with its related party, Suzhou Snail, to outsource completion of the For the Stars
project. Under the terms of the agreement, Suzhou Snail will develop and outsource development need to complete the project For the Stars.
The Company will retain all rights, title and interest, including the intellectual property for the project. In return, the Company will
pay Suzhou Snail $ 4.1 million in twelve equal monthly installments of $ 340,600, beginning on January 1, 2025.

 In February 2025, the Company issued $ 3.3 million of convertible debt to the holders of the Company's previous convertible notes.
 The Company issued the notes at a 10% discount and the notes bear interest at a rate of 5%. The convertible notes initial conversion price
is $ 5.00 or the market price subject to certain adjustments. The notes are repayable in equal monthly amounts beginning in May 2025 and
ending in February 2026.

 In
February 2025, the Company entered into a subscription agreement with one of its platforms for a period of five weeks. In return, the
Company will receive a one time payment.

 F- 32

 Item
9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

 None.

 Item
9A. Controls and Procedures.

 Disclosure
Controls and Procedures

 The
Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure
that information required to be disclosed in the Company's reports under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information
is accumulated and communicated to the Company's management, including the Co-Chief Executive Officers and the Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosure.

 Under
the supervision and with the participation of our management, including the Co-Chief Executive Officers and Chief Financial Officer,
we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act), as of December 31, 2024. A material weakness is a deficiency, or combination of deficiencies, in internal control over
financial reporting, such that there is a reasonable possibility that a material misstatement of our annual and interim financial statements
will not be prevented or detected in a timely manner. Based on that evaluation, the Company's Co-Chief Executive Officer and Chief
Financial Officer have concluded that our disclosure controls and procedures were not effective as of such date due to a material weakness
in the internal control over financial reporting as discussed below.

 Management's
Report on Internal Control over Financial Reporting

 Our
management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal
control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for
external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over
financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing
reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; because of its inherent
limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial
statements would be prevented or detected.

 Under
the supervision and with the participation of management, including the persons serving as our Co-Chief Executive officers and Chief
Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the
framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission ("COSO"). Based on this evaluation, management has concluded that our internal control over
financial reporting was not effective as of December 31, 2024, due to the material weakness related to the failure to properly value
the fair value of warrants related to the convertible notes and equity line of credit in accordance with ASC 820 Fair Value
Measurement.

 We
are taking steps to remediate the material weakness, which include enhancing our financial reporting close control procedures by improving our review over fair value and hire experts to assist in performing valuations of complex financial instruments. However, our efforts to remediate the material weaknesses may not be effective in preventing a future material weakness or
significant deficiency in our internal control over financial reporting. See "Risk Factors—General Risk Factors—We
identified a material weakness in our internal controls over financial reporting and we may identify additional material weaknesses in
the future that may cause us to fail to meet our reporting obligations or result in material misstatements of our financial statements.
If we do not effectively remediate the material weakness or if we otherwise fail to maintain effective internal controls over financial
reporting, we may not be able to accurately and timely report our financial results."

 In
light of the material weakness, we performed additional analyses of the assumptions used and valuations performed over complex
financial instruments to determine that our consolidated financial statements are prepared in accordance with U.S. GAAP.
Accordingly, the Co-Chief Executive Officers and Chief Financial Officer concluded that the consolidated financial statements
included in this Annual Report fairly present in all material respects our financial condition, results of operations and cash flows
for the periods presented.

 Remediation
of Prior Material Weaknesses

 As
previously disclosed in our Annual Report on Form 10-K, for the year ended December 31, 2023, we identified material weaknesses in our
internal control over financial reporting. The material weaknesses identified are listed below inclusive of the remediation efforts designed
and implemented by management.

 to properly design and implement controls related to the accounting for income taxes and
 disclosure controls related to deferred taxes in the consolidated financial statements;

 management
 engaged a new third party income tax expert, enhanced our controls over income tax provisions and designed and implemented a new control on income tax disclosures.

 to properly classify certain operating expenses and games server costs as cost of revenues
 in the consolidated financial statements;

 management implemented additional reviews over quarterly operating expenses and costs of revenues,
 strengthened the review and approval controls and developed and defined clear criteria for
 each type of expense category.

 to identify and allocate the consideration received from a settlement between the settlement
 gain and revenues generating activities;

 management
 engaged third party qualified experts to assist in developing accounting policies for complex
 revenue arrangements and analyzing non-routine transactions in accordance with the applicable accounting standards. Management implemented review controls related to the review
of complex accounting transactions. This enhanced control directed addressed the causal factors that contributed to the reported material weakness.

 to properly determine the stand-alone selling prices of each performance obligation for certain
 digital revenue contracts;

 management developed a formal and clear framework for assessing stand-alone selling prices of each
 performance obligation in accordance with Topic 606, developed a pricing model based on market data and implemented review process over the assumptions used in determining the stand-alone selling prices.

 to design and implement information technology general controls related to segregation of
 duties within an information system relevant to the preparation of the Company's consolidated
 financial statements.

 Management
 revoked administrative access from certain accounting personnel to enforce segregation of duties in the ERP system.

as previously disclosed in our Quarterly Report on Form 10-Q, for the six month period ended June 30, 2024, we identified a material
weakness in our internal control over financial reporting related to the disclosure of the amount of revenue recognized over time
and at a point in time. The Company believes the lack of review procedures over this disclosure gave rise to a material weakness.
Accordingly, to remediate the identified material weakness, management has created a separate control process to clearly identify
revenues that are recognized at a point in time or over time and has separated the review process for this footnote disclosure from
our ordinary disclosure review process.

 Management
has completed the execution of the remediation plan to address these listed material weaknesses and tested the effectiveness of these
changes to internal control over financial reporting. We have verified the effective design and operating effectiveness of these procedures
and ensured they have operated for a sufficient period of time to conclude that the previously identified material weaknesses have been
remediated as of December 31, 2024.

 Changes
in Internal Control Over Financial Reporting

 Except for the remediation efforts described above, we have not made changes in our internal control over financial reporting (as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2024, which have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting other than the remediation efforts described above.

 Attestation
Report of Independent Registered Public Accounting Firm

 This
Annual Report does not include an attestation report of our registered independent public accounting firm regarding internal control
over financial reporting due to an exemption established by the JOBS Act for "emerging growth companies."

 Item
9B. Other Information.

 Insider
Trading Arrangements

the twelve months ended December 31, 2024, no director or officer of the Company adopted or terminated a "Rule
10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a)
of Regulation S-K.

 Item
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

 Not
applicable.

 PART
III

 Item
10. Directors, Executive Officers and Corporate Governance.

 Except
as set forth below, the information required by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated
by reference from our Proxy Statement.

 We
have adopted a written code of business conduct and ethics (the "Code") which applies to all of our directors, officers,
and employees, including our co-chief executive officers and chief financial officer. The Code is available on our website, www.snail.com
(under the tab entitled "Investor—Corporate Governance"). Any waiver of the provisions in the Code for our executive
officers or directors may only be granted by our Board of Directors and will be disclosed to our shareholders within four business days.

 We
also have an insider trading policy which governs the purchase, sale and/or other dispositions of our securities by our directors, executive
officers and employees that we believe is reasonably designed to promote compliance with insider trading laws, rules and regulations,
and the exchange listing standards applicable to us. A copy of our insider trading policy is filed as Exhibit 19.1 to this Annual Report
on Form 10-K.

 Item
11. Executive Compensation.

 The
information required by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from
our Proxy Statement.

 Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 The
information required by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from
our Proxy Statement.

 Item
13. Certain Relationships and Related Transactions, and Director Independence.

 The
information required by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from
our Proxy Statement.

 Item
14. Principal Accountant Fees and Services.

 The
information required by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from
our Proxy Statement.

 PART
IV

 Item
15. Exhibits, Financial Statement Schedules.

 1.

 Financial Statements. For a list of the financial statements included herein, see Index to the Consolidated Financial Statements
 in "Item 8. Financial Statements and Supplementary Data."

 2.

 Financial
 Statement Schedule: All schedules have been omitted because they are not required or because the required information is given in
 the consolidated financial statements or notes thereto.

 3.

 Exhibits:
 The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Annual Report on
 Form 10-K.

 Exhibit

 Exhibit

 Incorporation by Reference

 Number

 Description

 Form

 File
 No.

 Exhibit

 Filing
 Date

 3.1

 Amended and Restated Certificate of Incorporation of Snail, Inc.

 3.1

 November
 15, 2022

 3.2

 Amended and Restated Bylaws of Snail, Inc.

 3.2

 November
 15, 2022

 4.1

 Form of Certificate of Class A Common Stock

 S-1

 4.1

 4.2

 Form of Underwriters' Warrants

 S-1/A

 4.2

 4.3

 Description of the Registrant's Securities

 4.3

 March
 29, 2023

 4.4

 Form of Warrant

 4.1

 4.5

 Form of Equity Line Warrant

 4.2

 4.6

 Form of Note

 4.3

 4.7

 Form of Indenture

 S-3

 333-282030

 4.7

 11, 2024

 4.8

 Form of Convertible Promissory Notes

 4.1

 February 25, 2025

 10.1

 Amended and Restated Exclusive Software License Agreement, effective as of January 1, 2022, by and between Snail Games USA, Inc. and SDE Inc.

 S-1/A

 10.12

 10.2

 Amendment No. 1 to Amended and Restated Exclusive Software License Agreement, effective as of December 13, 2022, by and between Snail Games USA, Inc. and SDE Inc.

 10.2

 15, 2022

 10.3

 Exclusive License Agreement, effective as of April 27, 2022, by and between Snail Games USA, Inc. and SDE Inc.

 S-1/A

 10.5

 10.4

 Snail, Inc. 2022 Omnibus Incentive Plan

 S-1/A

 10.11

 26, 2022

 10.5

 Form of RSU Award Agreement (Employee) pursuant to the Snail, Inc. Omnibus Incentive Plan

 S-1/A

 10.15

 10.6

 Form of RSU Award Agreement (Non-Employee) pursuant to the Snail, Inc. Omnibus Incentive Plan

 S-1/A

 10.16

 10.7

 Form of Indemnification Agreement between Snail, Inc. and Its Directors and Officers

 S-1

 10.1

 10.8

 Second Amended and Restated Revolving Loan and Security Agreement, dated as of January 26, 2022, by and between Snail Games USA, Inc. and Cathay Bank

 S-1

 10.2

 10.9

 Promissory Note, dated January 26, 2022, by and between Snail Games USA, Inc. and Cathay Bank

 S-1

 10.3

 10.10

 Form of Independent Director Agreement between Snail, Inc. and each of Its Independent Directors

 S-1/A

 10.13

 10.11

 Form of Securities Exchange Agreement by and among Snail, Inc. and each Securityholder of Snail Games USA, Inc.

 S-1/A

 10.14

 10.12

 Loan Agreement, dated as of June 17, 2021, by and between Snail Games USA, Inc. and Cathay Bank

 S-1

 10.4

 10.13

 Offer Letter, dated as of August 31, 2020, between Jim S. Tsai and Snail Games USA, Inc.

 S-1

 10.6

 10.14

 Amendment, effective as of November 1, 2021, to Offer Letter between Jim S. Tsai and Snail Games USA, Inc.

 S-1

 10.7

 10.15

 Offer Letter, dated as of August 28, 2020, between Heidy Chow and Snail Games USA, Inc.

 S-1

 10.8

 10.16

 Employment Agreement, dated as of December 10, 2012, between Peter Kang and Snail Games USA, Inc.

 S-1

 10.9

 10.17

 Amendment, effective as of December 1, 2021, to Employment Agreement between Peter Kang and Snail Games USA, Inc.

 S-1

 10.10

 10.18

 Offer Letter, dated as of March 27, 2023, between Hai Shi and Snail Games USA, Inc.

 10.18

 March
 29, 2023

 10.19

 First Amendment to Amended and Restated Exclusive Software License Agreement, effective as of March 10, 2023, between SDE Inc. and Snail Games USA, Inc.

 10.19

 March
 29, 2023

 10.20

 Cooperation Agreement between Snail Games USA, Inc. and Marbis GmbH, dated July 26, 2023

 10.1

 1, 2023

 10.21

 Form of Purchase Agreement

 10.1

 10.22

 Form of Registration Rights Agreement

 10.2

 10.23

 Form of Equity Line Purchase Agreement

 10.3

 10.24

 Independent Director Agreement

 10.1

 November
 16, 2023

 10.25

 Offer Letter, dated as of April 15, 2024, between Xuedong (Tony) Tian and Snail Games USA, Inc.

 10.1

 April
 19, 2024

 10.26

 Form of Securities Purchase Agreements, dated February 21, 2025

 10.1

 February 25, 2025

 10.27

 Form of Registration Rights Agreements, dated February 21, 2025

 10.2

 February 25, 2025

 19.1*

 Insider Trading Policy

 21.1

 Subsidiaries of the Registrant

 S-1/A

 21.1

 23.1*

 Consent of BDO USA, P.C., Independent Registered Public Accounting Firm

 31.1*

 Certification of Co-Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a), under the Securities Exchange Act of 1934, as Adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 31.2*

 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 32.1**

 Certification of Co-Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 32.2**

 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 97.1

 Snail, Inc. Clawback Policy, adopted November 30, 2023

 97.1

 April 1, 2024

 101.INS

 101.SCH

 101.CAL

 101.DEF

 101.LAB

 101.PRE

 Cover

 *

 Filed
 herewith.

 **

 These
 certifications are being furnished solely to accompany this Annual Report on Form 10-K pursuant to 18 U.S.C. Section 1350, and are
 not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and are not to be incorporated by reference into
 any filing of Snail, Inc., whether made before or after the date hereof, regardless of any general incorporation language in such
 filing.

 Indicates
 management contract or compensatory plan.

 Item
16. Form 10-K Summary.

 None.

 SIGNATURES

 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report
to be signed on its behalf by the undersigned, thereunto duly authorized, in Culver City, California, on March 26, 2025.

 Inc.

 Date:

 March

 By:

 /s/
 Xuedong Tian

 Xuedong
 Tian

 Co-Chief
 Executive Officer

 Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on
behalf of the Registrant in the capacities and on the dates indicated.

 Signature

 Title

 Date

 By:

 /s/
 Xuedong Tian

 Co-Chief
 Executive Officer and Director

 March

 Xuedong
 Tian

 (Co-Principal
 Executive Officer)

 By:

 /s/
 Hai Shi

 Founder,
 Co-Chief Executive Officer,

 Chief
 Strategy Officer and Chairman

 March

 Hai
 Shi

 of
 the Board (Co-Principal Executive Officer)

 By:

 /s/
 Heidy Chow

 Chief
 Financial Officer and Director

 March

 Heidy
 Chow

 (Principal
 Financial and Accounting Officer)

 By:

 /s/
 Jim S. Tsai

 March

 Jim
 S. Tsai

 By:

 /s/
 Peter Kang

 March

 Peter
 Kang

 By:

 /s/
 Ying Zhou

 March

 Ying
 Zhou

 By:

 /s/
 Neil Foster

 March

 Neil
 Foster

 By:

 /s/
 Sandra Pundman

 March

 Sandra
 Pundman

 By:

 /s/
 Ryan Jamieson

 March

 Ryan
 Jamieson