Snail, Inc. Leases Disclosure
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 is valid for a seven-year term and was amended in December 2025 to extend to March 31, 2033. The Company leases office space in Beverly Hills, California pursuant to a lease agreement, as amended, with an original commencement date of April 5, 2018, which was extended for an additional 86-month term commencing December 1, 2025 and expiring January 31, 2033, with one five-year renewal option but the Company is not reasonably certain to exercise the option at lease commencement. For purposes of measuring the right-of-use asset and lease liability under ASC 842, the Company applied an incremental borrowing rate of 8.50%. The incremental borrowing rate is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In determining that rate, the company considers prevailing economic conditions at the commencement date, as well as factors such as company-specific credit risk, term of the lease and options, and the effect of collateralization based on the nature and quality of the underlying asset As of December 31, 2025 and 2024, the Company’s net operating lease right-of-use assets amounted to $4,722,366 and $1,279,330, respectively. The Company had variable lease payments of approximately $139,930 and $129,752 during the years ended December 31, 2025 and 2024, respectively, which consisted primarily of common area maintenance charges and administrative fees.
Operating 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, 2025 and 2024, are as follows:
| 2025 | 2024 | |||||||
| Operating lease costs | $ | 1,736,513 | $ | 1,624,257 | ||||
Supplemental information related to operating leases for lease liabilities as of December 31, 2025 and, 2024, is as follows:
| 2025 | 2024 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities | $ | 1,571,305 | $ | 1,619,689 | ||||
| Weighted average remaining lease term | 6.9 years | 1.0 years | ||||||
| Weighted average discount rate | 8.42 | % | 5.14 | % | ||||
Future undiscounted lease payments for operating leases and a reconciliation of these payments to our operating lease liabilities as of December 31, 2025 are as follows:
| Years ending December 31, | Future lease payments | Imputed Interest Amount | Lease Liabilities | |||||||||
| 2026 | $ | 772,570 | $ | 379,123 | $ | 393,447 | ||||||
| 2027 | 855,801 | 342,602 | 513,199 | |||||||||
| 2028 | 870,897 | 296,320 | 574,577 | |||||||||
| 2029 | 885,514 | 245,404 | 640,110 | |||||||||
| 2030 | 920,933 | 187,156 | 733,777 | |||||||||
| Thereafter | 2,039,891 | 165,313 | 1,874,578 | |||||||||
| Total future lease payments | $ | 6,345,606 | $ | 1,615,918 | $ | 4,729,688 | ||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 19, 2026 | Showing above |
| 2024 | Mar 26, 2025 | |
| 2023 | Apr 1, 2024 | |
| 2022 | Mar 29, 2023 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.