Good afternoon, welcome to the Snail Inc 2026 Annual Meeting of Stockholders. It is my pleasure to welcome you here for this meeting and to introduce the management team. My name is Heidy Chow, CFO of the company. With us today also with Mr. Hai Shi, Chairman of the Board, Chief Executive Officer, and Chief Strategy Officer, and Mr. Peter Kang, Senior Vice President, Director of Business Development and Operations.
It is now 10:00 A.M. Pacific Time on May 27, 2026, and this meeting is officially called to order. We're excited to be hosting our 2026 stockholder meeting virtually, which allows us to be more inclusive and reach a greater number of our stockholders. We have stockholders attending via the web portal. We will first present a 15-minute business overview video from the executives.
Once the video is completed, we will come back live to conduct the business portion of our meeting, and then follow with the Q&A session. If you have any questions that we aren't able to address during the meeting, they will be answered and addressed after the meeting by our investor relations team.
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Diversification is very important to the company's future because it is not just a strategy, it's our foundation. It allows us to capture new audiences and diversify our revenue streams on a global scale.
From a development perspective, a lot has changed at Snail Games over the last few years. We've really focused on creating teams with the ability to execute long-term visions. In recent years, we have slowly but surely modified our approach to include indie titles as well in hopes that we can extend our pipeline and continue to execute at a high level. Upcoming ARK roadmap contains many surprises, first of which is ARK: Tides of Fortune.
Tides of Fortune is a DLC based on oceanic gameplay and ship gameplay. This is something that Snail has pursued on several occasions, starting from ATLAS, a sandbox survival game based on ship gameplay. This was released several years ago with over 800,000 copies sold. This game was extremely exciting in a very competitive PVP environment. Next, we also released ARK: Aquatica last year.
ARK: Aquatica" contained elements of gameplay that had to do with underwater adventures. "ARK: Tides of Fortune" will seek to combine both of these previous experiences into a new DLC. Later in the year, we will release "ARK: Dragontopia," and this DLC will contain fantasies and gameplay surrounding dragons. "ARK" has had the Wyvern creature in the game for years, and we hope to finally specialize and show the world what a true dragon game could be. "ARK: Survival of the Fittest" is definitely a name that has been heard before. "ARK: Survival of the Fittest" will bring a new esports phenomenon to "ARK" as well.
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ARK" is always going to be a massive for us, essential to the future of Snail Games. What's really cool right now is how we are expanding our indie publishing sites. We're backing some incredibly creative new voices and bringing out some awesome titles. By funding these smaller, agile projects, we are able to test innovative concepts at a lower risk profile. At the same time, we are leveling up our development talents and building a vibrant, forward-thinking studio culture that ultimately benefits our entire portfolio.
In order for us to not be so reliant on ARK, we must dig deep into our own creatives and create new IPs that we wholly own with our own internal development teams in order to take more shots on goal.
We really wanted from the very beginning to make a game where you walk around the town and you feel like, "I built that, and I built that, and I built that, and I made every single decision that made everything happen to get here." The team here at Donkey Crew is really proud and really happy for the support we've been getting.
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Snail has been developing our own games since 2001. With Mr. Shi's experience and his know-how in operating multiple development studios at the same time, there wasn't much to transition from. We simply started doing so. It's been a long journey, but it's a very exciting journey, and we're at a point where we're about to reap the benefits of a lot of seeds we planted a few years ago.
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You can explore the universe one planet at a time. You can hop into a planet undiscovered, underexplored, and find out what's at the core of the planet. You can seize territories, control domains, and wage war upon other factions. As we come closer and closer to the early testing phases, the early prototype phases, my excitement not only grows, but I'm starting to tell my friends, "Watch out, there's a big game coming.
By now, many of you have realized that For The Stars is a very ambitious game.
The storytelling in For the Stars is hidden inside of the gameplay experience. It's on the planet, it's in the creatures, it's in the biomes, it's in the ancient ruins that you uncover inside of caves or inside of ancient temples. It's a story that you discover at your own pace as you explore these planets and get to know the universe.
Exploring the universe is one of the core pillars our game is built on, so players will use various in-game technologies to overcome each planet's specific environment or hazards.
Previously, we had launched a game called Age of Wushu. Age of Wushu is the romanticized naming of the Nine Yin Sutra IP. As we bring back the sequel of this IP, we have decided to use Nine Yin, the traditional naming of this IP, to truly distinguish the root reason why we pursue this flagship IP of ours.
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I learned about cultivation on this project and quickly fell in love with it. The themes of transcendence, harmony with nature, spiritual discipline, mythic landscapes, they are all the ingredients for an experience that I think the world can enjoy. I'm really excited to bring this truly Chinese and beloved genre into the world.
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On the AI Ranch project, we're building what we call NHPs or non-human players. They are autonomous AI characters that can actually perceive, reason, remember, and act inside games and virtual worlds, much like a human player. Instead of scripted NPC behaviors, these agents observe the environment, understand context, make decisions, and interact dynamically in real time. Our long-term vision is to create AI companions that feel less like game characters and more like teammates or human players, something we believe could fundamentally change how people interact with digital worlds.
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Q2 is expected to benefit from several key product initiatives across the portfolio. Our team is currently working on porting Bellwright onto console. Bellwright is expected to launch on PlayStation and Xbox following its strong PC performance, where the title has already surpassed 1 million units sold. The console release is expected to further support revenue growth and expand the player base. Even excluding the impact of major content releases, the company has continued to demonstrate a stable and healthy baseline revenue foundation. For example, in Q2 of 2025, after adjusting for The Lost Colony pre-sale contribution, the company still generated approximately $23.5 million in baseline bookings. In Q3 2025, despite having no major release contribution, the business organically generated approximately $17.6 million in bookings.
This consistent operational performance provides reliable recurring cash flow and positions the company's upcoming 2026 release pipeline as meaningful incremental upside on top of an already stable business foundation. The company continues to advance several upcoming titles, including the console version of Bellwright and indie titles such as Dead Party, Gobby Gang, and Stoneguard. Additionally, we also expect to release two interactive games. These projects are expected to further diversify and strengthen the company's revenue mix. Looking ahead, ARK: Dragontopia is scheduled for release in Q4 this year. In addition, internally developed Unreal Engine 5 titles are currently in development and expected to significantly shift the company's revenue structure towards wholly-owned intellectual property.
The company has shown incredible poise navigating the ever-changing environment of the public markets for the past three years, while simultaneously making great strides in diversifying their revenue streams beyond the ARK franchise.
Gateway has been a valued investor relations partner to Snail, supporting the company in navigating the capital markets, strengthening investor communications, and executing a disciplined and effective IR program aligned with the company's long-term strategic objectives. The team has demonstrated a proven ability to develop and publish compelling titles, and I'm particularly impressed by the skilled management team's execution and the integrity with which they operate the business.
Turning to the business portion of our meeting. I would like to introduce the members of the board. Hai Shi has served as Chairman of the Board since January 2022 and is the Chief Executive Officer. Heidy Chow has served as one of our directors since January 2022. She's currently CFO of Snail Inc. Peter Kang has served as one of our directors since January 2022, is currently Senior Vice President, Director of Business Development and Operations of Snail, Inc. Jim Tsai has served as one of our directors since January 2022. Ying Zhou has served as one of our directors since January 2022. Sandra Pundmann has served as one of our directors since November 2022. She's also our Audit Committee Chairwoman. Neil Foster has served as one of our directors and a member of our Audit Committee since November 2022.
Ryan Jamieson has served as one of our directors and a member of our Audit Committee since November 2022. We are also here joined today by our independent auditors, BDO USA, P.C. They will be available during the questions and answer session after the meeting to respond to appropriate questions. Finally, the company has appointed Broadridge Financial Solutions, Inc. to act as Inspector of Election. Cynthia Scotland from Broadridge is with us today and has taken the oath of Inspector of Election earlier today. Commencement of formal meeting. After the formal meeting has been adjourned, we will provide time for general questions. Only validated stockholders may ask questions that comply with the meeting's rules of conduct and procedures in the designated field on the web portal. Out of consideration for others, please limit yourself to three questions. Please note that this meeting is being recorded.
However, no one attending via the webcast or telephone is permitted to use any audio recording device. Proof of notice of meeting quorum. The Board of Directors fixed April 15, 2026 as the record day for determining stockholders entitled to vote at this meeting. An affidavit has been delivered and attesting to the fact that mailing of the notice of the 2026 Annual Meeting of the Shareholders, the proxy statement, and the 2025 Annual Report to Shareholders commenced on or about April 16, 2026, to all stockholders as of the record date. This affidavit will be incorporated into the minutes of this meeting. The shareholder list showed that as of the record date, there were 13,873,422 shares of Class A common stock and 28,748,580 shares of Class B common stock outstanding and entitled to vote this meeting.
We have been informed by the Inspector of Election that a majority of the voting power of all issued and outstanding stock entitled to vote as of the record date is represented in person or by proxy. Therefore, a quorum is present for the purpose of the transaction of business at this meeting. Proposals. The polls are now open. I will now present the matters to be voted upon. Please note that we will give stockholders an opportunity to comment on proposals after all proposals have been presented. Proposal one is to elect the following eight nominees for directors named in the proxy statement to our board of directors to hold office until our next Annual Meeting of Shareholders and until their successors are duly elected and qualified. Hai Shi, Jim Tsai, Heidy Chow, Peter Kang, Ying Zhou, Neil Foster, Sandra Pundmann, and Ryan Jamieson.
Proposal two is to ratify the selection of BDO USA, P.C. as the independent registered public accounting firm for Snail Games for the fiscal year ended December 31, 2026. We will now to the proposals. There being no questions on the proposals, if you have not already done so, please submit your vote on the aforementioned matters through the web portal. If you have already sent in your proxy, unless you wish to change your vote, you do not need to do anything at this time. I will now pause for voting. Now that everyone had an opportunity to vote, I now declare the polls for the 2026 Annual Meeting of Shareholders closed. We have been informed by the Inspector of Election that the preliminary vote report shows that the nominees for election to the board have been duly elected, and the selection of independent auditor as approved.
We will be reporting the final vote results in the Form 8-K to be filed within four business days. We would like to open things up for stockholder questions and comments. Please note any questions we do not address during the meeting will be answered and addressed after the meeting by our investor relations team.
Thanks, Heidy. First question. Great visibility into other AAA pipeline, particularly the Nine Yin Sutra titles, which are perfectly positioned to capture a massive existing fan base in the Asian gaming market. How does management forecast their global revenue mix shifting once these titles launch?
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Mr. Shi is actually the producer of the Nine Yin Sutra IP himself. As you have said, the predecessor to the Nine Yin Sutra IP, which is the Age of Wushu, already has a very large fan base in Asia. It also has a very pretty large fan base around the world, but the majority of the players are still in Asia, and Age of Wushu was actually released in 2010.
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Before we released our Age of Wushu, there actually wasn't really a 3D multiplayer Wuxia game ever. Just as we have seen in the video, with Age of Wushu, we had created a lot of innovative things and that really defined this Wuxia genre. After we released our Age of Wushu IP, we can estimate that per year globally, the market size is around $3 billion.
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A very good advantage for our Nine Yin Sutra IP right now is that a lot of old players of our Age of Wushu are expecting to have this new IP, the sequel to Age of Wushu, which is the Nine Yin Sutra IP. We have also accumulated a lot of technology experience over the years. If we look at the market, it's really been 10 years since the release of Age of Wushu.
However, if we look at the other Wuxia games, we can see that they are making the games within the framework that we have created in the very beginning, including the lightness skills, the different Wushu techniques, and also the miracle encounters. Even though they are making small innovations, however, they were not able to make very big breakthroughs. This is why we think that releasing another Nine Yin Sutra IP right now is a very good timing.
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For our Nine Yin Sutra IP, the technology foundation is still multiplayer. However, when we release this game for the first time, it will still be single player co-op mode. Down the line, we will find a good timing to release the game again as a MMO online game, because we do have a lot of MMO players who are really looking forward to this release of the new Nine Yin Sutra IP.
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We expect to take up around 10% of the market with this new Nine Yin Sutra IP, and we have already been developing this IP for around two years. During this summer, we will conduct internal testing and then we will announce this game for the first time in August in Gamescom.
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That was for Nine Yin Sutra: Wushu. Now Mr. Shi would like to talk about Nine Yin Sutra: Immortal. Nine Yin Sutra: Immortal and Nine Yin Sutra: Wushu all belong to the overall Nine Yin Sutra IP. Because Mr. Shi does not want these two games to be scattered. He would like these two games to become a global IP overall. In the future, we hope that when players think about Eastern Asian games, they can think of our Nine Yin Sutra IP.
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Currently we have a very good opportunity with Nine Yin Sutra: Immortal, because already a lot of Chinese people are very familiar with the cultivation concept. We also looked into a lot of other global novel platforms and we can see a lot of cultivation novels available. We can tell that the Western audience is also pretty familiar with the cultivation concept already. Currently within the market, we don't really have a very good game that kind of defines this genre. When we were making Age of Wushu back in China, we also encounter a similar issue, which is that we found that a lot of games out in the market have the Wushu skin. It doesn't really have the core Wushu game place. Currently we are in a very similar situations and we don't really have a true cultivation game.
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Just like what we did with Age of Wushu, we hope to create this real authentic 3D cultivation world with Nine Yin Sutra: Immortal. In this cultivation world, we will want the immortal to really survive and to grow and cultivate. We want this cultivation world to be really aligned with the cultivation concepts brought up in the cultivation novels. Similar to Nine Yin Sutra: Wushu, Nine Yin Sutra: Immortal has also been development for around two years.
Since we don't really have a standard or a benchmark that we can look at, so there has been a lot of back and forth in the work that the team has done. However, Mr. Shi expects that we can probably start to playtest the game around summer this year, and then Mr. Shi thinks that Nine Yin Sutra: Immortal will be very competitive once it's out, because it's nothing that we have seen in the market so far. They will also be a very good business opportunity for us.
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Our current plan is to officially announce the Nine Yin Sutra: Immortal in China around July or August this year. Mr. Shi expects that the market size for the cultivation games will be around $1 billion- $2 billion. Currently, the market size is still pretty small because we only have some mobile games, 2D games, or some not very well-done 3D cultivation games out in the market right now, and the market hasn't fully grown yet. Mr. Shi does think that in around three to five years, this cultivation market will also grow very fast, just like how Wuxia market did. Probably the market size of cultivation will exceed that of the Wuxia market. We, as a trailblazer, do have some challenges because we have to create something that is unseen in the market.
This really does pose some challenges to our creative thoughts. Also our cost will be higher than that of latecomers. We do have some advantages because we're starting this first, and then if we can really grasp this opportunity, then it will also be a very good business opportunity and our game probably will have a very good reputation too.
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We don't really need to worry too much about these two IPs, Nine Yin Sutra: Immortal and Nine Yin Sutra: Wushu, because our technologies and teams are very mature, we are also very clear on our market goals. Mr. Shi himself has already been in the industry for around 25 years, so there really isn't a big risk with these two IPs. We hope that everyone can give us more patience and more time for us to polish these two products.
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Mr. Shi would like to add one more thing. Mr. Shi has actually started to think about Nine Yin Sutra cultivation before the COVID pandemic. Back then, Mr. Shi has already read a lot of cultivation novels, and he really likes the cultivation genre. He really hoped that someone within the industry can make a cultivation game. However, he waited for several years. However, no one really came out. Mr. Shi also played a lot of 2D cultivation games and talked to their teams, and they also discussed why no one has truly created this cultivation genre game. Mr. Shi felt like it was really a shame. That really shaped how Mr. Shi constructed this Nine Yin Sutra cultivation game.
Mr. Shi would like to tell everyone that the thoughts put into this game are very mature, and that we really hope to bring a very good experience to the players, just like how we did with Age of Wushu.
Thank you. Another question. Net profit margin will be positively impacted by the $6 million annualized reduction in ARK licensing costs. Have we fully maxed out these operational cost savings or is there more to be had? How should we think about margins, specifically with R&D and marketing costs, as the company prepares to launch new upcoming AAA titles in late 2026 and 2027?
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Thank you. I'll address this question. As the company, we actually remain committed to a high-cost optimization, balancing our strategic investment into our upcoming pipeline. As Mr. Shi mentioned earlier, the Nine Yin Sutra is coming out soon. We also have, earlier in the video, you guys will see that we have For The Stars that's also coming out soon. As far as with this cost saving, it significantly increased our profit margin. On a quarterly basis, actually, we are saving approximately $1.5 million on a monthly basis. We're remaining efficient. While a baseline contract is optimized, we continue to pursue further margin improvement by scaling high-margin internal publishing titles, as we mentioned multiple times, the Nine Yin Sutra: Immortal model, and the For The Stars game. For our R&D margins, the games that we're internally publishing, they are at the very last stage already.
We don't have significant costs that we will have to fund those projects. Because they are in the final stage and pretty mature right now, we're expecting that, if it's not the end of this year, the game will be coming out next year with a high profitable margin on those. Overall, the $6 million savings of the license that we signed is directly going to fuel our finish line to our next generation of our game.
Thank you. Another question. The company has been below the $1 bid price for almost five months now. Can you expand on what the company's plan is? Why did the company not ask shareholders to approve a reverse stock split?
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I'll answer first, and I'll see if Mr. Shi and Peter have anything to add on to it. Our primary plan is to adjust the share price by building our structural sustainable value through our financial execution, rather than just the accounting changes. In Q1, as we filed our 10-Q, we already turned the company from a loss to generating a net income of more than $2 million of net income in Q1. With our various game pipeline that we lined up for the remaining of the years, and also going into 2027, we are expecting that the company's revenue is going to keep growing. The profitability, we're hoping the company will keep growing onto the next stage. Why have we not asked for a reverse stock split? We know that we could request that. We want to utilize what the company can expand to.
At the end, we could also request for a special meeting and request for a reverse stock split. We want to keep our organic growth first. We want to gain the capital market to believe into the company that our valuation is there. We not to worry about the bid price.
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First of all, our company is a very good one, and we are also heading into a better direction, as everyone can see. A lot of analysis institutions have said that our stock prices are actually very underestimated.
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If we want to double our stock price right now, it's actually not something very hard for us. It's not really our current goal. If we look at our company 10 years ago, our valuations were already over $700 million. You can see that a lot of our shareholders that have been with us a long time, including Mr. Shi, as well as the management people, they weren't really trying to sell a lot of stocks when we released games, because we think that our company really is really valuable.
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Including Mr. Shi, even if our stock price is around $30 today, he wouldn't really sell his stocks right now. This is the case for the management level, as well as the stakeholders who are shareholders who have been with us for a long time. Mr. Shi would like to say that everyone is actually very confident in our company right now.
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Mr. Shi himself thinks that with the products that will be within this year, we will be releasing a few hit products. The short term goal for our company is to at least double our revenue within 19 months. This is definitely something achievable looking at the products that we are currently developing and all the things that we are currently doing. If you are someone who is invested into the long-term development of our company, then Mr. Shi thinks that now is a good time to invest in our company, because currently our cost is not increasing. However, we will be able to double our revenue within a short period of time.
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Now Mr. Shi would like to talk about the long-term goal of the company. If within a short period of time we only work within the gaming industry, then it will actually take us a longer time for us to reach the valuation that we had around 10 years ago. However, we have already actually done some layouts. For example, we will be announcing our AI product in August, which is not only a concept, but actually will be able to bring us revenues. Mr. Shi hopes that everyone can also take that factor into consideration when you think about the long-term development of our company.
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The budget for our company this year is around 20%-30% higher compared to last year, and our revenue will also definitely exceed $100 million. That's why we think that our stocks are very underestimated.
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Even though our public company structure has only been existing for around a dozen of years, however, Snail itself actually existed ever since 2000, and the company has gone through a lot of different ages, including the Internet age. Our company is actually very mature. If we look at the AI age, it will probably continue for another 10-30 years. Snail as a public company that has weathered and survived the Internet age and looking at our current stock price, Mr. Shi thinks that we actually are a very good option, at least coming from a big shareholder himself.
I definitely have some stuff to add, too. I just want to remind all the viewers out there, all the shareholders, that Snail has been operating for over 25 years. In this space, it is very difficult to survive this long. We have done so on the development side through multiple mediums, browser games, to mobile games, to PC games, to even VR games. For us to survive this long as a developer, just incredible, right? A little luck, mostly the ability to keep our ears on the street. We're big players of games ourselves, we make sure that we know the most about the activities, the genres that are trending, and the new genres that are emerging year after year.
That is really our secret weapon, the fact that we're big gamers ourselves, and we're able to understand where trends are going in this new digital medium, and we're able to capitalize at the correct time. We're constantly out looking for new games, just as some of the viewers here are constantly out looking for great stocks to pick. We're very similar in that aspect, that we do our research and we make sure we pick winning horses.
Thank you, Peter and Mr. Shi. That concludes our meeting. As mentioned, if we did not address your question during the meeting, our investor relations team will handle that after the meeting. We thank you for your attendance today and continued support. Thank you and have a great day.