Snail (SNAL) risk factors, FY2025 10-K

Snail's FY2025 10-K, filed Mar 19, 2026, lists 64 risk factors in 7 groups. Against the prior year's 58: 9 new, 3 dropped, 10 substantially reworded.

Risk factors listed
647 groups
New this year
9vs 58 last year
Dropped
3since the prior 10-K
Substantially reworded
10of those kept
Section length
26k wordsItem 1A

What the changes say

  • Snail added nine new risks highlighting executive leadership changes, foreign jurisdiction hurdles, debt covenants, and stablecoin initiatives.
  • Financial pressures intensified with new Nasdaq delisting notices, short-term debt updates, and expanding convertible note dilution.
  • Tax volatility spiked as the effective tax rate dropped to negative 64.6 percent.

What changed since the prior 10-K

New

  • NewRisks Related to Our Business and Industry

    We depend on our key management and product development personnel

    We depend heavily on our senior management and key development partners like Studio Wildcard for our ARK franchise.

  • NewRisks Related to Our Business and Industry

    We appointed Hai Shi, our founder, Chairman of the Board of Directors and Chief Strategy Officer, to serve as our sole Chief Executive Officer effective October 1, 2025

    Founder Hai Shi was appointed sole CEO, and losing him or key personnel could disrupt our product development and business.

  • NewFinancial and Economic Risks

    We are exposed to exchange rate fluctuations in the international markets in which we operate

    International currency fluctuations and local conversion restrictions may cause economic losses and limit our hedging abilities.

  • NewFinancial and Economic Risks

    We are subject to restrictive covenants as a result of our outstanding debt obligations. If we were to default in our obligation to repay any outstanding debt or otherwise violate the terms of the applicable note or loan agreement, the lenders thereunder could foreclose on our assets

    We must maintain a minimum debt service coverage ratio of 1.5 to 1.0, and default could lead lenders to foreclose on our headquarters and other assets.

  • NewRisks Related to Our Corporate Structure

    Our Chief Executive Officer and Chairman is a Chinese national, and should he choose to reside in China you may not be able to bring suit against him, or enforce a judgment obtained against him in the United States

    Our CEO is a Chinese national residing in China, which may make it difficult for investors to serve process or enforce U.S. judgments against him.

  • NewRisks Related to Convertible Notes Offerings, Equity Line Credit Financing and our At the Market Offering Program

    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 rely on an Equity Line Purchase Agreement up to $5.0 million, $6.6 million in convertible notes, and a $4.5 million ATM Offering for financing.

  • NewRisks Related to Convertible Notes Offerings, Equity Line Credit Financing and our At the Market Offering Program

    The issuance of Class A common stock to the holders of the 2025 Convertible Notes may cause substantial dilution to our existing stockholders, and the sale of such shares acquired by the holders of our 2025 Convertible Note could cause the price of our Class A common stock to decline

    Issuing Class A common stock for our 2025 Convertible Notes risks substantial stockholder dilution and potential downward pressure on our stock price.

  • NewRisks Relating to Stablecoins

    We recently announced our intention to explore a strategic digital asset initiative that includes the evaluation and feasibility of our own proprietary stablecoin backed by U.S. dollars

    Developing a proprietary U.S. dollar-backed stablecoin exposes us to evolving regulations, potential licensing requirements, and significant compliance costs.

  • NewRisks Relating to Stablecoins

    Any negative publicity regarding stablecoins or the broader digital asset industry may have an outsized negative effect on consumer confidence in our proposed proprietary stablecoins

    Negative publicity regarding the broader digital asset and blockchain industry could undermine consumer confidence in our proposed stablecoins.

Dropped

  • DroppedRisks Related to Our Business and Industry

    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

  • DroppedFinancial and Economic Risks

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

  • DroppedRisks Related to Convertible Notes and Equity Line Credit Financing

    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

    Former CEO Jim S. Tsai resigned and completed a 30-day transition period in April 2024.

Reworded

  • 92% rewrittenFinancial and Economic Risks

    We have debt obligations with short term durations that are coming due within one year

    Updated revolving loan balance to $5.0 million due June 30, 2026, noted subsequent extension to March 2030, and added October and November 2025 convertible note obligations.

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

  • 90% rewrittenRisks Related to Our Corporate Structure

    We are an “emerging growth company” and a “smaller reporting company,” and we cannot be certain if the reduced SEC reporting and disclosure requirements applicable to emerging growth companies or smaller reporting companies will make our securities less attractive to investors

    Expanded disclosure details exemptions utilized as an emerging growth company under the JOBS Act, including Sarbanes-Oxley auditor attestation and executive compensation rules.

    Was: 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

  • 77% rewrittenRisks Related to Legal or Regulatory Compliance

    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

    Retained identical risk language regarding cybersecurity threats to source code, game assets, and customer information.

  • 44% rewrittenRisks Related to Our Business and Industry

    Failure 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

    Updated Nasdaq non-compliance, noting a new deficiency letter received on December 30, 2025, for closing below the minimum $1.00 bid price.

  • 44% rewrittenRisks Related to Our Corporate Structure

    In addition to our outstanding convertible notes, we also 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

    Maintained existing warnings that credit facility covenant breaches could cause outstanding debt to become immediately due and payable.

    Was: 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

  • 37% rewrittenRisks Related to Convertible Notes Offerings, Equity Line Credit Financing and our At the Market Offering Program

    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 the ATM Offering, and you may not agree with how we use the proceeds and the proceeds may not be invested successfully

    Added the ATM Offering alongside the Equity Line Investor regarding management's broad discretion over net proceeds usage.

    Was: 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

  • 30% rewrittenFinancial and Economic Risks

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

    Updated the effective tax rate figure from 25.7 percent in 2024 to negative 64.6 percent for the year ended December 31, 2025.

  • 26% rewrittenRisks Related to Our Business and Industry

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

    Retained identical risk text detailing opportunities and regulatory, algorithmic, and cybersecurity risks associated with artificial intelligence integration.

  • 22% rewrittenRisks Related to Our Corporate Structure

    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

  • 21% rewrittenRisks Related to Convertible Notes Offerings, Equity Line Credit Financing and our At the Market Offering Program

    Investors who buy shares in the convertible notes, equity line credit financing offering and in the “at the market offering program” at different times will likely pay different prices

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

All 64 risk factors

Headings as the filing states them, in filing order.

Risks Related to Our Business and Industry

  1. 01We 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
  2. 02If 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
  3. 03We depend on our key management and product development personnelNew
  4. 04We appointed Hai Shi, our founder, Chairman of the Board of Directors and Chief Strategy Officer, to serve as our sole Chief Executive Officer effective October 1, 2025New
  5. 05Our management team has limited experience managing a public company
  6. 06Our 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
  7. 07Our 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
  8. 08We 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
  9. 09Our online games are vulnerable to the risk of Service Disruptions Due to Large-Scale Distributed Denial-of-Service (DDoS) Attacks
  10. 10We 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
  11. 11The interactive entertainment software industry is highly competitive
  12. 12We 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
  13. 13Our 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
  14. 14The products or services we release may contain defects, bugs or errors
  15. 15External game developers may not meet product development schedules or otherwise fulfill their contractual obligations
  16. 16If 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
  17. 17Our operating results may fluctuate from quarter to quarter, which makes our future results difficult to predict
  18. 18We 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
  19. 19User 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
  20. 20Expansion 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
  21. 21If our efforts to attract and retain users are not successful, our business will be adversely affected
  22. 22If 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
  23. 23If we fail to grow and maintain our active user base, our business, financial condition and operating results may be materially and adversely affected
  24. 24We utilize artificial intelligence (“AI”), which could expose us to liability or adversely affect our business26% rewritten
  25. 25Failure 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 capital44% rewritten

Risks Related to Intellectual Property

  1. 26If 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
  2. 27If 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
  3. 28If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed
  4. 29We 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
  5. 30We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time-consuming and unsuccessful
  6. 31We or our licensors may not be able to enforce our intellectual property rights throughout the world
  7. 32If 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
  8. 33We 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

Risks Related to Legal or Regulatory Compliance

  1. 34Any cybersecurity-related attack, significant data breach or disruption of the information technology systems or networks on which we rely could negatively impact our business77% rewritten
  2. 35Our 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
  3. 36Changes in government regulations relating to the Internet could have a negative impact on our business
  4. 37We may be involved in legal proceedings that have a negative impact on our business

Financial and Economic Risks

  1. 38If 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
  2. 39General economic factors, domestically and internationally, may adversely affect our business, financial condition, and results of operations
  3. 40Tariffs may cause cost increases and disruptions in technical R&D operations
  4. 41Changes in tax laws or tax rulings, or the examination of our tax positions, could materially affect our financial condition and results of operations
  5. 42Tax law or tax rate changes could affect our effective tax rate and future profitability30% rewritten
  6. 43We are exposed to exchange rate fluctuations in the international markets in which we operateNew
  7. 44Our 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
  8. 45We have debt obligations with short term durations that are coming due within one year92% rewritten
  9. 46We are subject to restrictive covenants as a result of our outstanding debt obligations. If we were to default in our obligation to repay any outstanding debt or otherwise violate the terms of the applicable note or loan agreement, the lenders thereunder could foreclose on our assetsNew

Risks Related to Our Corporate Structure

  1. 47Mr. Shi, our Founder, 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
  2. 48The Committee on Foreign Investment in the United States may modify, delay or prevent our future acquisition or investment activities
  3. 49Our Chief Executive Officer and Chairman is a Chinese national, and should he choose to reside in China you may not be able to bring suit against him, or enforce a judgment obtained against him in the United StatesNew
  4. 50We are subject to risks related to corporate and social responsibility and reputation
  5. 51We cannot predict the impact our dual class structure may have on the market price of our Class A common stock
  6. 52Securities 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
  7. 53We 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
  8. 54Provisions 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
  9. 55Because 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
  10. 56In addition to our outstanding convertible notes, we also 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 debt44% rewritten
  11. 57If 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 impaired22% rewritten
  12. 58We are an “emerging growth company” and a “smaller reporting company,” and we cannot be certain if the reduced SEC reporting and disclosure requirements applicable to emerging growth companies or smaller reporting companies will make our securities less attractive to investors90% rewritten

Risks Related to Convertible Notes Offerings, Equity Line Credit Financing and our At the Market Offering Program

  1. 59Investors who buy shares in the convertible notes, equity line credit financing offering and in the “at the market offering program” at different times will likely pay different prices21% rewritten
  2. 60Our 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 the ATM Offering, and you may not agree with how we use the proceeds and the proceeds may not be invested successfully37% rewritten
  3. 61We 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 stockholdersNew
  4. 62The issuance of Class A common stock to the holders of the 2025 Convertible Notes may cause substantial dilution to our existing stockholders, and the sale of such shares acquired by the holders of our 2025 Convertible Note could cause the price of our Class A common stock to declineNew

Risks Relating to Stablecoins

  1. 63We recently announced our intention to explore a strategic digital asset initiative that includes the evaluation and feasibility of our own proprietary stablecoin backed by U.S. dollarsNew
  2. 64Any negative publicity regarding stablecoins or the broader digital asset industry may have an outsized negative effect on consumer confidence in our proposed proprietary stablecoinsNew

Other Snail 10-Ks

  • FY2024 10-K risk factors
    58 risks

    This company has no prior year risk disclosures on file. Dominant risks include heavy revenue concentration in the ARK franchise, management transition and public company inexperience, Nasdaq listing compliance issues, and intellectual property dependencies.

    Filed Mar 26, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.