S-1/A: Snail, Inc. Registers Shares for Resale Amidst Losses

Sentiment:

Amendment to Registration Statement 19 December 2025 9:58 AM

Snail, Inc. files an S-1/A to register 5.4 million Class A common stock shares for resale by investors, following significant net losses and a decline in revenue.

Capital raiseThe company entered into Securities Purchase Agreements in October and November 2025 for private placements of unsecured convertible promissory notes totaling $3,300,000 (with a 10% OID) to Crom and Monroe Street.An At The Market Offering Agreement was established on August 7, 2025, with H.C. Wainwright & Co., LLC, to sell up to $4,500,000 in Class A common stock.An Equity Line Purchase Agreement from August 24, 2023, allows the company to sell up to $5,000,000 in Class A common stock to an accredited investor until December 31, 2025.In February 2025, the company issued $3,300,000 in unsecured convertible promissory notes to Crom and Jefferson Street Capital LLC, with an additional $7,700,000 of aggregate principal amount of convertible promissory notes remaining available for issuance.

Worse than expectedThe company reported a net loss of $7.9 million for the three months ended September 30, 2025, a significant deterioration from a net income of $0.2 million in the prior year period.Net revenue declined to $13.8 million for the three months ended September 30, 2025, from $22.5 million in the same period of 2024.For the nine months ended September 30, 2025, the company incurred a net loss of $26.4 million, compared to a net income of $0.7 million in the corresponding period of 2024.The nine-month net revenue also saw a decrease to $56.1 million from $58.3 million year-over-year.

Summary

Snail, Inc. filed an S-1/A registration statement to allow Selling Stockholders (Crom Structured Opportunities Fund I, LP and Monroe Street Capital Partners, LP) to resell up to 5,414,991 shares of Class A common stock.
These shares are issuable upon conversion of unsecured convertible promissory notes totaling $3,300,000 (with a 10% original issuance discount) purchased by the Selling Stockholders in private placements in October and November 2025.
The company reported a net loss of $7.9 million for the three months ended September 30, 2025, compared to a net income of $0.2 million for the same period in 2024.
Net revenue for the three months ended September 30, 2025, was $13.8 million, a decrease from $22.5 million in the prior year period.
For the nine months ended September 30, 2025, net revenue was $56.1 million, down from $58.3 million in 2024, and the net loss was $26.4 million, compared to a net income of $0.7 million in 2024.
The ARK franchise continues to be the primary revenue driver, accounting for 88.4% and 90.3% of revenues for the three and nine months ended September 30, 2025, respectively.
Daily active users (DAUs) for ARK: Survival Evolved and ARK: Survival Ascended combined increased to an average of 216,000 for the three months ended September 30, 2025, from 210,000 in 2024.
Snail, Inc. is expanding its content strategy, including new game acquisitions, DLC releases (ARK: Astraeos, ARK: Aquatica, Lost Colony), and in-house developed projects (Nine Yin Sutra: Wushu, Nine Yin Sutra: Immortal).
The company launched a short film mobile application, SaltyTV, with 67 short film dramas released through September 30, 2025, and entered into an MOU with Mega Matrix Inc. for joint development and distribution.
Snail, Inc. is exploring a strategic digital asset initiative, including the evaluation of a proprietary stablecoin, subject to various factors including regulatory approvals.
The company has an At The Market (ATM) offering program to sell up to $4,500,000 in Class A common stock and an Equity Line of Credit for up to $5,000,000, though no shares have been sold under the Equity Line as of September 30, 2025.

Sentiment

Score: 3

Explanation: The company faces significant financial challenges with substantial net losses and declining revenue. While there are positive developments in user engagement for its flagship franchise and strategic expansions into new content and digital assets, these are overshadowed by the poor financial performance and the potential for significant shareholder dilution from multiple capital-raising activities.

Positives

Daily active users (DAUs) for the ARK franchise increased to an average of 216,000 for the three months ended September 30, 2025, up from 210,000 in the prior year, and to 233,000 for the nine months ended September 30, 2025, up from 212,000.
The ARK franchise has achieved 107.4 million console and PC installs and 4.2 billion hours played through September 30, 2025, demonstrating strong user engagement.
The release of the ARK: Astraeos DLC in February 2025 sold 574,000 units across Steam, PlayStation, and Xbox.
ARK: Survival Ascended's inclusion in the PlayStation Plus subscription program resulted in over 8 million installs and a healthy uplift in ASA DLC sales on PlayStation.
The pre-sale for the Lost Colony Expansion Pass exceeded expectations, selling over 306,000 units through September 30, 2025.
The company is actively expanding its gaming portfolio with two new game acquisitions and the development of in-house projects like Nine Yin Sutra: Wushu and Nine Yin Sutra: Immortal.
Expansion into the vertical short film market with the SaltyTV mobile application and a strategic MOU with Mega Matrix Inc. diversifies entertainment offerings.
Exploration of a proprietary stablecoin initiative positions the company as an early mover in digital assets within the entertainment industry.

Negatives

Net revenue for the three months ended September 30, 2025, decreased to $13.8 million from $22.5 million in the same period of 2024.
Net revenue for the nine months ended September 30, 2025, decreased to $56.1 million from $58.3 million in the same period of 2024.
The company reported a net loss of $7.9 million for the three months ended September 30, 2025, a significant decline from a net income of $0.2 million in 2024.
A net loss of $26.4 million was recorded for the nine months ended September 30, 2025, compared to a net income of $0.7 million in 2024.
The company's reliance on the ARK franchise for revenue increased, generating 90.3% of revenues for the nine months ended September 30, 2025, indicating a lack of diversification in core gaming revenue.
The issuance of a significant number of shares (up to 5,414,991) upon conversion of notes could cause substantial dilution to existing stockholders.
The company may require additional financing to sustain operations, and the terms of subsequent financings may adversely impact stockholders.
The company does not anticipate paying any cash dividends in the foreseeable future, making capital appreciation the sole source of gain for investors.

Risks

It is not possible to predict the actual number of Class A common stock shares that will be issued upon conversion of the Notes, and a significant issuance could cause additional substantial dilution to stockholders.
The Selling Stockholders may sell shares at different times and prices, which could cause the price of Class A common stock to decline.
Investors who buy shares in this offering at different times will likely pay different prices and may experience different levels of dilution and investment outcomes.
Sales to the Equity Line Investor could result in substantial dilution to other Class A common stock holders and make it more difficult to sell equity in the future.
The company may require additional financing to sustain operations, and if unavailable or prohibitively expensive, it could materially adversely affect the business.
Defaulting on credit obligations could interrupt operations and seriously harm the business.
The company does not intend to apply for listing of the Notes on any exchange, and a market for unregistered securities is not expected to develop, limiting liquidity.
The existence of the Note without an active registration statement for Conversion Shares may reduce the trading volume and price of Class A common stock.
Ability to re-establish profitable operations, raise additional capital, or renegotiate debt arrangements is uncertain.
Success depends on launching new, commercially successful games and enhancing existing ones.
Competition from other casual game developers, publishers, and multimedia companies poses a threat.
Ability to attract and retain a qualified management team and other team members while controlling labor costs is crucial.
Reliance on third-party platforms (Xbox Live, PlayStation Network, Steam, etc.) means their policies and terms of service can impact operations and financial performance.
Operating results are subject to seasonality due to new title introductions, platform sales variations, and promotional cycles.

Future Outlook

The company intends to continue investing in its content strategy, expanding its gaming pipeline, and developing media related to its gaming intellectual property. It plans to consistently roll out new short film dramas and has two exciting game releases planned for the end of 2025. The company is also exploring a strategic digital asset initiative, including a proprietary stablecoin, to position itself as an early mover in the digital entertainment industry.

Management Comments

Our mission is to provide high-quality entertainment experiences to audiences around the world.
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.

Industry Context

Snail, Inc. operates in the highly competitive interactive digital entertainment industry, focusing on consoles, PCs, and mobile devices. The company is expanding beyond its core sandbox survival genre (ARK franchise) into new game acquisitions and in-house developments. Its foray into vertical short film dramas with SaltyTV and a partnership with Mega Matrix Inc. indicates a diversification strategy into broader digital entertainment. The exploration of a proprietary stablecoin suggests an attempt to innovate and potentially gain a first-mover advantage in integrating digital assets within the gaming and entertainment sectors, aligning with broader trends towards Web3 and blockchain technologies in media.

Comparison to Industry Standards

The filing does not provide specific comparisons to industry benchmarks or comparable companies, projects, or results.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Stockholder Voting Rights	The company has a dual-class stock structure where Class A common stock holders have one vote per share and Class B common stock holders have ten votes per share. Hai Shi and Ying Zhou, as a married couple, control 97.0% of the total voting power.	N/A	Concentrates voting power in the hands of the founders, potentially limiting the influence of Class A common stockholders on corporate decisions and making hostile takeovers more difficult.
Anti-Takeover Provisions	Provisions include no cumulative voting, special meetings called only by a majority of the board, chair, or CEO (or 50% voting power if controlled company), advance notice requirements for stockholder actions, and supermajority vote requirements (66 2/3%) to amend certain corporate documents once no longer a controlled company (50% while controlled).	N/A	Intended to enhance board stability and discourage unsolicited acquisition proposals, but may also deter tender offers and delay changes in control or management, potentially inhibiting stock price fluctuations from takeover attempts.
Board Classification	The board of directors will be divided into three staggered classes (Class I, II, III) once the company ceases to be a controlled company under Nasdaq rules or Mr. Hai Shi and Ms. Ying Zhou no longer hold more than 50% of voting power.	Upon cessation of controlled company status or change in founder voting power	Makes it more difficult for existing stockholders to replace the board and for another party to obtain control, contributing to management stability but potentially reducing accountability.
Exclusive Forum Provisions	The Certificate of Incorporation designates Delaware state or federal courts as the exclusive forum for certain corporate actions and federal district courts for Securities Act claims.	N/A	Aims to provide consistency in legal interpretations but may discourage lawsuits against the company or its directors and officers.
Indemnification of Directors and Officers	The company indemnifies directors and executive officers to the fullest extent permitted by Delaware law and has entered into indemnification agreements, which may be broader than statutory provisions.	N/A	Protects directors and officers from liabilities, potentially encouraging qualified individuals to serve, but the SEC views indemnification for Securities Act liabilities as against public policy.

Related Party Transactions

The company has strategic relationships with Studio Wildcard, which develops the ARK franchise, and Suzhou Snail, which facilitates knowledge sharing. Both are related parties.
Hai Shi, the Founder, CEO, Chief Strategy Officer, and Chair of the Board, controls Olive Wood Global Development Limited, which holds 24,103,590 shares of Class B common stock.
Ying Zhou, a director and spouse of Hai Shi, controls Amethyst Fortune Development Limited, which holds 4,644,990 shares of Class B common stock.

Stakeholder Impact

Shareholders face significant potential dilution from the conversion of convertible notes and ongoing capital raising activities, which could negatively impact the per-share value and trading price of Class A common stock.
Investors in the current offering may experience different levels of dilution and investment outcomes due to varying purchase prices and timing of sales by Selling Stockholders and the Equity Line Investor.
Creditors (holders of convertible notes and credit facility lenders) have senior unsecured claims, but the company's ongoing net losses and need for additional financing could raise concerns about repayment capacity.
Employees and management may benefit from continued investment in content and technology, but the company's financial performance and need to control labor costs could create uncertainty.
Customers and players are impacted by the company's ability to continuously develop and release new games, DLCs, and entertainment content, which is crucial for user engagement and franchise value.

Next Steps

Consistent roll out of new short film dramas throughout 2025 and beyond.
Release of the Lost Colony Expansion Pass for ARK: Survival Ascended later in 2025.
Release of two new games, Rebel Engine, towards the end of 2025.
Continued evaluation and exploration of opportunities for the strategic digital asset initiative, including a proprietary stablecoin.

Key Dates

Date	Description
2016-01-01	Start date for cumulative unit sales data (54.6 million units sold between Jan 1, 2016 and Sep 30, 2025).
2023-07-01	Cooperation agreement with IDC vendor for $3.0 million note payable.
2023-08-24	Entered into securities purchase agreements for October 2023 Private Placement ($1,080,000 convertible notes and warrants) and Equity Line Purchase Agreement ($5,000,000 Class A common stock with Equity Line Investor).
2023-11-24	Commencement of exercise period for October 2023 Warrants.
2023-11-01	Monthly installments began for the 2023 Note Payable.
2024-12-31	Repayment of remaining $1.5 million outstanding under the 2023 Note Payable.
2025-02-20	Stockholder approval for the sale of Notes and issuance of Class A common stock exceeding 20% of outstanding shares.
2025-02-21	Entered into February 2025 Securities Purchase Agreements for $3,300,000 unsecured convertible promissory notes with Crom and Jefferson Street Capital LLC.
2025-02-01	Release of ARK: Astraeos DLC for ARK: Survival Ascended.
2025-03-31	End of first fiscal quarter 2025.
2025-04-23	Released a major content update to Bellwright; Definitive information statement on Schedule 14C filed with the SEC regarding Stockholder Approval.
2025-06-18	Lost Colony Expansion Pass pre-sale went live across Steam, PlayStation, and Xbox.
2025-06-30	End of second fiscal quarter 2025; Release of five indie games in Q2 2025.
2025-07-01	Release of ARK: Aquatica DLC for ARK: Survival Evolved.
2025-07-15	Announcement of intention to explore a strategic digital asset initiative, including a proprietary stablecoin.
2025-08-07	Entered into an At The Market Offering Agreement with H.C. Wainwright & Co., LLC.
2025-09-30	End of third fiscal quarter 2025; Cumulative ARK franchise installs reached 107.4 million; 67 short film dramas released on SaltyTV.
2025-10-07	Added Elderclaw to the Lost Colony Expansion Pass bundle.
2025-10-24	Entered into Securities Purchase Agreements and Registration Rights Agreements with Crom and Monroe Street for convertible notes.
2025-11-26	Entered into additional Securities Purchase Agreements and Registration Rights Agreements with Crom and Monroe Street for convertible notes.
2025-12-11	Date for beneficial ownership calculations (8,998,728 shares of Class A common stock and 28,748,580 shares of Class B common stock outstanding).
2025-12-17	Last sale price of Class A common stock on Nasdaq was $0.89.
2025-12-18	Filing date of Amendment No. 1 to Form S-1.
2025-12-31	End date for the Equity Line Purchase Agreement term.

Recommendation

sell

The company is experiencing significant financial distress, reporting substantial net losses and declining revenue. While there are positive indicators in user engagement for its core franchise and strategic initiatives for diversification, these are heavily outweighed by the poor financial performance. The ongoing need for capital, evidenced by multiple convertible note issuances and an ATM offering, presents a high risk of substantial dilution for existing shareholders. The current stock price of $0.89, combined with the potential for further dilution and the company's inability to achieve profitability, suggests a strong likelihood of continued downward pressure on the stock. A seasoned investor would likely view the current financial trajectory and dilution risks as highly unfavorable, warranting a 'sell' recommendation.

Keywords

Snail Inc., SNAL, SEC filing, S-1/A, convertible notes, private placement, Class A common stock, dilution, ARK: Survival Evolved, ARK: Survival Ascended, video games, gaming industry, digital entertainment, DLC, mobile gaming, PC gaming, console gaming, SaltyTV, short film dramas, stablecoin, digital assets, capital raise, equity line, financial performance, net loss, revenue decline, corporate governance, risk factors

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