Snail(SNAL) - 2024 Q2 - Quarterly Report

Cautionary Statement Regarding Forward-Looking Statements This section warns that forward-looking statements are based on management's beliefs and assumptions, and actual results may differ materially due to various risks - This report contains forward-looking statements identifiable by terms like "anticipate," "believe," "expect," and "plan," which are based on management's beliefs and assumptions[4] - Key forward-looking matters include the company's ability to re-establish profitable operations, raise capital, launch successful games, retain players, manage competition, and comply with Nasdaq listing requirements[4] - Actual results may differ materially due to various risks and uncertainties, particularly those described in "Part II, Item 1A. – Risk Factors"[4] Part I. Financial Information Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations and comprehensive income (loss), statements of equity, and statements of cash flows, along with detailed notes explaining the company's financial position, performance, and accounting policies for the periods ended June 30, 2024 and 2023 Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2024, and December 31, 2023 | Metric | June 30, 2024 | December 31, 2023 | | :----- | :------------ | :---------------- | | Total Assets | $75,387,570 | $90,857,529 | | Total Current Assets | $41,583,622 | $56,650,536 | | Total Liabilities | $72,993,276 | $88,056,910 | | Total Current Liabilities | $53,256,283 | $71,312,607 | | Total Stockholders' Equity | $2,394,294 | $2,800,619 | - Total assets decreased by approximately $15.47 million from December 31, 2023, to June 30, 2024, primarily driven by a reduction in accounts receivable[5] - Total liabilities decreased by approximately $15.06 million, largely due to a reduction in current liabilities, including accounts payable and repayments on revolving loans and notes payable[5] Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) This section details the company's financial performance, including revenues, gross profit, and net income (loss) for the three and six months ended June 30, 2024 and 2023 | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues, net | $21,606,650 | $9,892,253 | $35,722,379 | $23,350,741 | | Gross profit | $8,102,476 | $556,488 | $10,176,507 | $3,154,039 | | Income (loss) from operations | $2,670,962 | $(4,867,990) | $463,063 | $(8,389,596) | | Net income (loss) | $2,254,616 | $(4,083,895) | $474,158 | $(7,056,492) | | Net income (loss) attributable to Snail, Inc. | $2,256,151 | $(4,079,431) | $476,822 | $(7,050,809) | | Basic EPS (Class A & B) | $0.06 | $(0.11) | $0.01 | $(0.19) | | Diluted EPS (Class A & B) | $0.06 | $(0.11) | $0.01 | $(0.19) | - Net revenues for the three months ended June 30, 2024, increased by 118.4% to $21.6 million, and for the six months, increased by 53.0% to $35.7 million, primarily due to increased ARK sales and new game releases[6][122][127] - The company reported a net income of $2.3 million for the three months ended June 30, 2024, a significant improvement from a net loss of $4.1 million in the prior-year period. For the six months, net income was $0.5 million, up from a $7.1 million net loss[6][95] Condensed Consolidated Statements of Equity This section outlines changes in the company's equity, including stock-based compensation, net income, and convertible note conversions, for the periods presented - Total Snail, Inc. equity decreased from $8,299,863 as of December 31, 2023, to $7,896,202 as of June 30, 2024[5][15] - Key changes in equity during the six months ended June 30, 2024, include a decrease in additional paid-in capital due to stock-based compensation reversals and an increase in accumulated deficit, partially offset by net income[14][15] - The company converted $60,000 of convertible notes into 71,460 shares of Class A common stock during the six months ended June 30, 2024[14][143] Condensed Consolidated Statements of Cash Flows This section presents the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2024 and 2023 | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :----------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $6,983,748 | $(8,872,566) | | Net cash used in financing activities | $(6,657,130) | $(6,312,594) | | Net increase (decrease) in cash and cash equivalents, and restricted cash and cash equivalents | $298,274 | $(15,164,065) | | Cash and cash equivalents, and restricted cash and cash equivalents – end of the period | $16,612,593 | $4,074,120 | - Net cash provided by operating activities significantly improved, increasing by $15.9 million to $7.0 million for the six months ended June 30, 2024, compared to a net cash outflow in the prior year[17][134] - Net cash used in financing activities increased slightly to $6.7 million, primarily due to debt repayments, including $6.4 million in debt payments during the six months ended June 30, 2024[17][136] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, revenue recognition, and other financial commitments Note 1 – Presentation and Nature of Operations This note describes Snail, Inc.'s incorporation, business focus on game development and publishing, and the basis of financial statement preparation - Snail, Inc. was incorporated in Delaware in January 2022, formed to complete an IPO and carry on the business of Snail Games USA Inc., which focuses on researching, developing, marketing, publishing, and distributing games across various platforms[18] - The condensed consolidated financial statements are prepared in accordance with SEC rules and U.S. GAAP for interim reporting, with certain disclosures condensed or omitted if they duplicate annual audited statements[19] - The company operates as one operating and reportable