Snail, Inc.
For the period ended Jun 30, 2025. Filed Aug 19, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 19, 2025
SNAL$1.95+7.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-14.
0001641172-25-010394
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-19.
0001641172-25-024806
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 135 previous paragraphs and 166 current paragraphs.
94 unchanged; 33 reworded; 32 added; 7 removed; 1 previous and 7 current paragraphs rearranged.
Tables are not compared: 9 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (32)
Current report
Shortly after GDC, on April 23, 2025, we released a major content update toBellwright in the way of celebrating its one-year anniversary. Content update includes 200+ enhancements across visual, audio & gameplay quality-of-life. In the subsequent month, we saw 1.5x units sold compared to one month prior.
Current report
In keeping up with the momentum of Lost Colony announcement,ARK: Survival Ascended (“ASA”) was added to the PlayStation Plus subscription program and made available free of charge to any PlayStation Plus subscribers. The inclusion proved a major success, driving a surge in downloads with over 8 million installs and significantly expanding the player base, further cementing ARK’s presence on console. During the inclusion month, we also saw a healthy uplift in ASA DLC sales on PlayStation.
Current report
On June 18, 2025, the Lost Colony Expansion Pass pre-sale went live across Steam, PlayStation, and Xbox. The DLC is expected to be released later this year. To deepen our commitment to ourARK fans, we have included a brand-newARK: Fantastic Tames – Drakelings as part of the expansion pass. The pre-sale exceeded our expectations, selling over 160K units through June 30, 2025.
Current report
Furthermore, in an effort to broaden our portfolio offerings beyond the sandbox survival genre, we have released five indies games that cater to a broader set of audience in the second quarter of 2025;The Cecil: The Journey Begins, Chasmal Fear, Castle of Secrets, Zombie Rollerz: The Last Ship, and Robots at Midnight.
Current report
In addition, the Company recently announced on July 15, 2025, of its intention to explore a strategic digital asset initiative that includes the evaluation and feasibility for introduction of its own proprietary stablecoin. This initiative would be subject to a range of factors, including but not limited to, regulatory approvals, market conditions, technical feasibility, cybersecurity safeguards, financial controls, and internal governance. The Company believe that exploring stablecoin infrastructure may position us as an early mover within the digital entertainment industry. While no definitive decisions have been made to integrate such technology into the Company’s corporate strategy, the Company continues to evaluate and explore opportunities as part of our broader innovation roadmap.
Current report
On June 19, 2025, the Company held its 2025 Annual Meeting of Stockholders (the “2025 Annual Meeting”). The Company’s stockholders approved the following proposals at the 2025 Annual Meeting: (i) election of the eight (8) named director nominees to the Company’s Board of Directors, each for a term of one year expiring at the 2026 Annual Meeting of Stockholders and until such director’s successor has been duly elected and qualified, and (ii) the stockholders ratified the appointment of BDO USA, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2025.
Current report
On August 7, 2025, we entered into an At The Market Offering Agreement (the “ATM Sales Agreement”) with H.C. Wainwright & Co., LLC, as sales agent (the “Sales Agent” or “Wainwright”), to sell its shares of Class A Common Stock from time to time, in an “at the market offering” program through Wainwright, with certain limitations on the amount of Class A Common Stock (the “Shares”) that may be offered and sold thereunder. The sales, if any, of the Shares made under the ATM Sales Agreement will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on or through the Nasdaq Capital Market (the “Nasdaq”) or on any other existing trading market for the Company’s Class A Common Stock, directly to Wainwright as principal, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, and/or in any other method permitted by law (the “Offering”).
Current report
Offers and sales of shares of Class A Common Stock by the Company, if any, under the ATM Sales Agreement, will be made through a prospectus supplement, dated August 7, 2025 and an accompanying base prospectus, dated September 20, 2024, contained therein (the “ATM Prospectus Supplement”), which ATM Prospectus Supplement forms a part of the Company’s shelf registration statement on Form S-3 (File 333-282030), initially filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”) on September 11, 2024 (the “Registration Statement”) and declared effective by the SEC on September 20, 2024. The aggregate market value of the shares of Class A Common Stock eligible for sale under the ATM Prospectus Supplement is currently $4,500,000, which is based on the limitations of General Instruction I.B.6 of Form S-3.
Current report
Pursuant to the ATM Sales Agreement, the Company will set the parameters for the sale of shares of Class A Common Stock, including the number of shares to be issued, the time period during which sales are requested to be made, limitation on the number of shares that may be sold in any one trading day and any minimum price below which sales may not be made. Upon delivery of a placement notice and subject to the terms and conditions of the ATM Sales Agreement, the Sales Agent will use its commercially reasonable efforts, consistent with its normal trading and sales practices, applicable state and federal law, rules and regulations, and the rules of the Nasdaq, to sell shares of Class A Common Stock from time to time based upon the Company’s instructions. The Company has no obligation to sell any shares of Class A Common Stock under the ATM Sales Agreement and may at any time suspend solicitation and offers under the ATM Sales Agreement. The Sales Agent is not obligated to purchase any shares of Class A Common Stock on a principal basis pursuant to the ATM Sales Agreement.
Current report
Impairment of film assets consists of costs related to short films produced by Snail. When projected future cash flows were no longer expected to recover from the carrying value of film projects, we recognized an impairment charge to write down the assets in full, or in part, to their estimated fair value. Impairments during the period primarily resulted from changes in marketing strategies, underperformance of certain titles, or shifts in market demand. These charges negatively impact operating income and reflect our continuous assessment of content performance in a rapidly evolving landscape.
Current report
Net revenues for the three months ended June 30, 2025 increased by $0.6 million, or 2.7%, compared to the three months ended June 30, 2024. The increase in net revenues was due to an increase in totalARK sales of $3.3 million, $3.0 million recognized for the inclusion ofARK: Survival Ascendedin a platform subscription program in 2025, an increase in sales of theARK Mobileof $0.6 million that was driven by the release ofARK: Ultimate Mobile Edition, and an increase in revenues related to other games of $0.3 million due to the release of various games during the three months ended June 30, 2025 as compared to June 30, 2024. The increase inARKrelated sales is due to sales and discount promotions that did not occur in 2024. These increases were partially offset by the increase in deferred revenues of $3.7 million and a decrease in revenues related toBellwright of $3.0 million in the three months ended June 30, 2025 compared to the three months ended June 30, 2024.
Current report
Cost of revenues for the three months ended June 30, 2025 increased by $1.7 million, or 12.8%, compared to the three months ended June 30, 2024.
Current report
Advertising and marketing expenses for the three months ended June 30, 2025 increased by $0.8 million, or 119.0%, compared to the three months ended June 30, 2024. The increase in advertising and marketing expenses was due to the increased advertising campaigns for ourARK: Aquatica andRobots at Midnighttitles andSaltyTVapplication and related offerings.
Current report
Impairment of film assets for the three months ended June 30, 2025 increased by $0.4 million, or 100.0%, compared to the three months ended June 30, 2024. The increase in impairment of film assets was due to the underperformance of specific film assets and changes in the market conditions affecting expected future cash flow during the three months ended June 30, 2025.
Current report
Interest expense primarily related to our outstanding indebtedness with third-party lenders. Interest expense increased slightly for the three months ended June 30, 2025 due to the new term loan initiated on June 10, 2025. The new term loan increased the average debt during the three months ended June 30, 2025.
Current report
Comparison of the six months ended June 30, 2025 versus the six months ended June 30, 2024
Current report
Cost of revenues for the six months ended June 30, 2025 increased by $4.0 million, or 15.5%, compared to the six months ended June 30, 2024.
Current report
General and administrative expenses
Current report
Research and development expenses
Current report
Advertising and marketing expenses
Current report
Impairment of film assets for the six months ended June 30, 2025 increased by $0.4 million, or 100.0%, compared to the six months ended June 30, 2024. The increase in impairment of film assets was due to the Company’s underperformance of four films and changes in the market conditions affecting expected future cash flow during the six months ended June 30, 2025. There were no such impairments during the six months ended June 30, 2025.
Current report
Interest income
Current report
Interest expense
Current report
Other income
Current report
Other income decreased by $0.4 million for the six months ended June 30, 2025, in comparison to the six months ended June 30, 2024. The decrease is due to the recognition of a $0.4 million expense due to the revaluation of warrant liabilities in the six months ended June 30, 2025. In the six months ended June 30, 2024 the company recognized a $0.2 million expense due to the revaluation of warrant liabilities and recognized litigation revenues related to a revenue share agreement resulting for the settlement with Angela Games.
Current report
The Company had provision of income taxes of $12.4 million and $0.1 million for the six months ended June 30, 2025 and 2024, respectively. This is primarily due to the impact of the valuation allowance recorded against U.S. net deferred tax assets. Our effective income tax rate was (203%) and 19% during the six months ended June 30, 2025 and 2024, respectively.
Current report
Units sold increased during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, by 0.8 million units, or 58.4%. The Company’s units sold increased due to an increase in sales ofARK: Survival Evolved and its related DLC’s of 0.7 million units andARK: Survival Ascended and its related DLC’s by 0.3 million units. This was offset by the decline in sales of other various games of 0.2 million units.
Current report
For the three months ended June 30, 2025, bookings increased by $4.2 million or 18.5%, compared to the three months ended June 30, 2024, driven by various sales promotions in 2025 that did not occur in 2024, specifically aroundARK: Survival Evolvedand the release ofARK: Lost Colonyto presale in 2025.
Current report
For the six months ended June 30, 2025, EBITDA decreased by $7.0 million, or 616.3%, compared to the six months ended June 30, 2024, primarily because of an increase in net loss of $19.0 million, a decrease in interest expense of $0.3 million, partially offset by an increase in provision for income taxes of $12.3 million.
Current report
On May 8, 2025, we filed a Form S-1 Registration Statement with the United States Securities and Exchange Commission in connection with our issuance of our convertible notes in the amount of $3.3 million maturing February 2026. The notes bear a 5% interest rate, repayable in 10 monthly installments starting May 21, 2025. These notes are convertible into Class A common stock at $5.00 per share.
Current report
Promissory Note
Current report
2025 Term Loan
Removed paragraphs (7)
Previous report
Revenues
Previous report
Cost of revenues
Previous report
Benefit from income taxes
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Revenues
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Cost of revenues
Previous report
Benefit from income taxes
Reworded paragraphs (33)
Previous wording
Our mission is to provide high-quality entertainment experiences to audiences around the world. We are a leading, global independent developer and publisher of interactive digital entertainment for consumers around the world. We have built a premier portfolio of premium games designed for use on a variety of platforms, including consoles, PCs, and mobile devices.ARK: Survival Evolved has been a top-25 selling game on the Steam platform by gross revenue in each year we released anARK DLC. Our expertise in technology, in-game ecosystems and monetization of online multiplayer games has enabled us to assemble a broad portfolio of intellectual property across multiple media formats and technology platforms. Our flagship franchise from which we generate the substantial majority of our revenues,ARK, is a leader within the sandbox survival genre with 96.3 million console and PC installs through March 31, 2025 and repeated releases within the top-25 selling games on the Steam platform. See below for discussion of key performance metrics and non-GAAP measures. In the three months ended March 31, 2025,ARK: Survival Evolved andARK: Survival Ascendedcombined for an average total of 243,000 daily active users (“DAUs”) on the Steam and Epic platforms, as compared to 209,000 in the three months ended March 31, 2024, respectively. We define “daily active users” as the number of unique users who play any given game on any given day. For the three months ended March 31, 2025 and 2024, we generated 91.6% and 78.6%, respectively, of our revenues from theARKfranchise.
Current wording
Our mission is to provide high-quality entertainment experiences to audiences around the world. We are a leading, global independent developer and publisher of interactive digital entertainment for consumers around the world. We have built a premier portfolio of premium games designed for use on a variety of platforms, including consoles, PCs, and mobile devices.ARK: Survival Evolved has been a top-25 selling game on the Steam platform by gross revenue in each year we released anARK DLC. Our expertise in technology, in-game ecosystems and monetization of online multiplayer games has enabled us to assemble a broad portfolio of intellectual property across multiple media formats and technology platforms. Our flagship franchise from which we generate the substantial majority of our revenues,ARK, is a leader within the sandbox survival genre with 106.3 million console and PC installs through June 30, 2025 and repeated releases within the top-25 selling games on the Steam platform. See below for discussion of key performance metrics and non-GAAP measures. In the three and six months ended June 30, 2025,ARK: Survival Evolved andARK: Survival Ascendedcombined for an average total of 242,000 and 242,000 daily active users (“DAUs”) on the Steam and Epic platforms, as compared to 218,241 and 213,691 in the three and six months ended June 30, 2024, respectively. We define “daily active users” as the number of unique users who play any given game on any given day. For the three months ended June 30, 2025 and 2024, we generated 90.1% and 77.2%, respectively, of our revenues from theARK franchise. For the six months ended June 30, 2025 and 2024, we generated 90.8% and 77.7%, respectively, of our revenues from theARKfranchise.
Previous wording
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. Through March 31, 2025, ourARK franchise game has been played for 4.0 billion hours with an average playing time per user of 162 hours and with the top 21.3% of all players spending over 100 hours in the game, according to data from the Steam platform. For the three months ended March 31, 2025 and 2024, our net revenue was $20.1 million and $14.1 million, respectively. During the three months ended March 31, 2025, approximately 41.3% of our revenue came from consoles, 44.8% from PC and 11.7% from mobile and other platforms as compared to 42.5% from consoles, 36.2% from PC and 6.8% from mobile and other platforms during the three months ended March, 31, 2024. We had a net loss of $1.9 million and $1.8 million, for the three months ended March 31, 2025 and 2024, respectively.
Current wording
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. Through June 30, 2025, ourARK franchise game has been played for 4.1 billion hours with an average playing time per user of 161 hours and with the top 21.3% of all players spending over 100 hours in the game, according to data from the Steam platform. For the three months ended June 30, 2025 and 2024, our net revenue was $22.2 million and $21.6 million, respectively. For the six months ended June 30, 2025 and 2024, our net revenue was $42.3 million and $35.7 million, respectively. During the three months ended June 30, 2025, approximately 42.8% of our revenue came from consoles, 45.2% from PC and 9.2% from mobile as compared to 38.6% from consoles, 54.7% from PC and 5.2% from mobile during the three months ended June 30, 2024. During the six month ended June 30, 2025, approximately 42.1% of our revenue came from consoles, 45.0% came from PC and 10.4% from mobile platforms as compared to 40.1% from consoles, 47.4% from PC and 5.9% from mobile platforms during the six month ended June 30, 2024. We had a net loss of $16.6 million compared to a net income of $2.3 million, for the three months ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025, we had a net loss of $18.5 million as compared to net income of $0.5 million for the six months ended June 30, 2024.
Previous wording
We continuously evaluate and invest in content strategy to improve and innovate our games and features and to develop current technological platforms. We are currently actively investing in expanding our gaming pipeline as well as developing media and eSports content related to our gaming intellectual property. We also continue to invest to grow our micro-influencer platform,NOIZ, by attracting new influencers and brand customers. We have established a new division internally under the Interactive Films brand. This division will focus on creating content in the vertical short film segment of the digital entertainment market. The mobile application has already soft launched on iOS and Android platforms. We have released forty-nine short film dramas and expect a consistent roll out of new short film dramas.
Current wording
We continuously evaluate and invest in content strategy to improve and innovate our games and features and to develop current technological platforms. We are currently actively investing in expanding our gaming pipeline as well as developing media and eSports content related to our gaming intellectual property. We also continue to invest to grow our micro-influencer platform,NOIZ, by attracting new influencers and brand customers. We have established a new division internally under the Interactive Films brand. This division will focus on creating content in the vertical short film segment of the digital entertainment market. The mobile application has already soft launched on iOS and Android platforms. We have released fifty-five short film dramas including licensed films from external organizations and expect a consistent roll out of new short film dramas.
Previous wording
We have experienced significant growth in our number of downloads over the last several years. We have sold 51.5 million units between January 1, 2016 and March 31, 2025. During the three months ended March 31, 2025, we sold 1.5 million units compared to 1.1 million in the three months ended March 31, 2024. Our video games provide highly engaging, differentiated entertainment experiences where the combination of challenge and progress drives player engagement, high average player times, and long-term franchise value. The success of our franchise hinges on our ability to keep our current players engaged while also growing our user base by innovating our platform and monetizing new offerings. The degree to which gamers are willing to engage with our platform is driven by our ability to create interactive and unique content that will enhance the game-play experience. We sell DLCs which are supplementary to our master games and expand the gaming universe to continuously evolve the game and retain players. Our master games are the base versions of a specific title, for example,ARK: Survival Evolved is our master game andARK: Genesis is a DLC.
Current wording
We have experienced significant growth in our number of downloads over the last several years. We have sold 53.6 million units between January 1, 2016 and June 30, 2025. During the three months ended June 30, 2025, we sold 2.1 million units compared to 1.3 million in the three months ended June 30, 2024. Our video games provide highly engaging, differentiated entertainment experiences where the combination of challenge and progress drives player engagement, high average player times, and long-term franchise value. The success of our franchise hinges on our ability to keep our current players engaged while also growing our user base by innovating our platform and monetizing new offerings. The degree to which gamers are willing to engage with our platform is driven by our ability to create interactive and unique content that will enhance the game-play experience. We sell DLCs which are supplementary to our master games and expand the gaming universe to continuously evolve the game and retain players. Our master games are the base versions of a specific title, for example,ARK: Survival Evolved is our master game andARK: Genesis is a DLC.
Previous wording
In February 2025, we released a brand new DLC map forARK: Survival Ascended, ARK: Astraeos. This expansive Greek methodology map offers over 264-square kilometers of playable area, filled with stunning scenery, ancient ruins, sacred temples, and powerful new bosses. Since release, we sold 253K units across Steam, PlayStation, and Xbox. We have also completed two new game acquisitions through our gaming network and partners as part of the larger effort to expand our games portfolio.
Current wording
In February 2025, we released a brand new DLC map forARK: Survival Ascended,ARK: Astraeos. This expansive Greek methodology map offers over 264-square kilometers of playable area, filled with stunning scenery, ancient ruins, sacred temples, and powerful new bosses. Since release, we sold 480K units across Steam, PlayStation, and Xbox. We have also completed two new game acquisitions through our gaming network and partners as part of the larger effort to expand our games portfolio.
Previous wording
At GDC 2025, we officially announced the 10-year celebration ofARK: Survival Evolved with a brand new DLC, ARK: Aquatica, set to release in June 2025. The new non-canonical expansion map features an ambitious underwater setting where 95% of gameplay will take place beneath the surface. ForARK: Survival Ascended,we announced a new full-size canonical expansion that sets in a frozen world where players follow legendary survivor Mei Yin on a perilous quest to uncover ARK’s buried secrets. Furthermore, we announced Bellwright will be released on the Xbox platform as a next step to broaden the game’s exposure and player base. We have also debut teaser trailers for two in-house developed projects, Nine Yin Sutra: Wushu and Nine Yin Sutra: Immortal. These two original titles invite players into vast, immersive worlds shaped by martial arts mastery and cultivation.
Current wording
At GDC 2025, we officially announced the 10-year celebration ofARK: Survival Evolved with a brand new DLC,ARK: Aquatica, released in July 2025. The new non-canonical expansion map features an ambitious underwater setting where 95% of gameplay will take place beneath the surface. ForARK: Survival Ascended,we announced a new full-size canonical expansion,Lost Colony, that sets in a frozen world where players follow legendary survivor Mei Yin on a perilous quest to uncover ARK’s buried secrets. Furthermore, we announcedBellwright will be released on the Xbox platform as a next step to broaden the game’s exposure and player base. We have also debut teaser trailers for two in-house developed projects,Nine Yin Sutra: Wushu andNine Yin Sutra: Immortal. These two original titles invite players into vast, immersive worlds shaped by martial arts mastery and cultivation.
Previous wording
To bring more entertainment to our users, our short film mobile application,Salty TV, brings exclusive, original stories from heart-racing thrillers to jaw-dropping romances to our viewers. We have released forty-nine short film dramas through March 31, 2025 and expect a consistent roll out of new short film dramas throughout 2025 and beyond. In a strategic step forward in advancing the short-film business line, Snail Inc. subsidiary Interactive Films signed a Memorandum of Understanding (MOU) with Mega Matrix Inc. (NYSE American: MPU) for a joint development, production, and global distribution of short dramas.
Current wording
To bring more entertainment to our users, our short film mobile application,Salty TV, brings exclusive, original stories from heart-racing thrillers to jaw-dropping romances to our viewers. We have released fifty-five short film dramas through June 30, 2025 and expect a consistent roll out of new short film dramas throughout 2025 and beyond. In a strategic step forward in advancing the short-film business line, Snail Inc. subsidiary Interactive Films signed a Memorandum of Understanding (MOU) with Mega Matrix Inc. (NYSE American: MPU) for a joint development, production, and global distribution of short dramas.
Previous wording
Research and development consists primarily of consulting expenses and salaries and wages devoted towards the development of new games and related technologies and development costs outsourced through Suzhou Snail. We do not fund or enter into arrangements relating to the research and development activities from third-party developers from whom we license games. We expect our research and development to increase as we develop new content, games or technologies.
Current wording
Research and development consists primarily of consulting expenses and salaries and wages devoted towards the development of new games and related technologies and development costs outsourced through Suzhou Snail. We expect our research and development to increase as we develop new content, games or technologies.
Previous wording
The benefit from income taxes consists of current income taxes in the various jurisdictions where we are subject to taxation, primarily the United States, as well as deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities in each of these jurisdictions for financial reporting purposes and the amounts used for income tax purposes. Under current U.S. tax law, the federal statutory tax rate applicable to corporations is 21%. Our effective tax rate of 43% differed from the federal statutory rate of 21% due to permanent differences and state taxes.
Current wording
The provision for income taxes consists of current income taxes in the various jurisdictions where we are subject to taxation, primarily the United States, as well as deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities in each of these jurisdictions for financial reporting purposes and the amounts used for income tax purposes. Under current U.S. tax law, the federal statutory tax rate applicable to corporations is 21%. Our effective tax rate of (515%) differed materially from the federal statutory tax rate of 21% primarily due to the impact of the valuation allowance recorded against U.S. net deferred tax assets.
Previous wording
The increase in cost of revenues for the three months ended March 31, 2025 was due to an increase of $2.0 million in software license royalties – related parties, a result of increasedARKsales, an increase of $0.3 million in license and amortization due to the increased depreciable base of intangible assets in 2025, an increase in merchant fees of $0.3 million related to the increasedARK: Ultimate Mobile Editionrevenues, partially offset by decreased engine fees of $0.2 million, decreased internet, server and data center fees of $0.1 million and decreased software license royalties of $0.1 million.
Current wording
The increase in cost of revenues for the three months ended June 30, 2025 was due to an increase of $1.1 million in software license royalties – related parties, a result of increasedARKsales, an increase of $0.4 million in license and amortization due to the increased depreciable base of intangible assets in 2025, an increase in merchant fees of $0.3 million related to the increasedARK: Ultimate Mobile Editionrevenues, an increase of $0.3 million in internet, server and data center, partially offset by decreased engine fees of $0.4 million.
Previous wording
General and administrative expenses for the three months ended March 31, 2025 increased by $2.6 million, or 117.5%, compared to the three months ended March 31, 2024. The increase in general and administrative expenses was due to an increase in salaries and wages of $2.1 million, the result of the Company recording $0.8 million in stock compensation expense in 2025 versus an income related to stock compensation of ($0.9) million in 2024, an increase in office expense of $0.2 million, an increase in contractors expense of $0.1 million and travel expense of $0.1 million.
Current wording
General and administrative expenses for the three months ended June 30, 2025 increased by $0.7 million, or 24.3%, compared to the three months ended June 30, 2024. The increase in general and administrative expenses was due to an increase in contractors expense of $0.2 million, an increase in public company expense of $0.1 million, an increase in office expense of $0.1 million, an increase in insurance expense of $0.1 million, and an increase in legal and professional expense of $0.1 million.
Previous wording
Research and development expenses for the three months ended March 31, 2025 increased by $1.8 million, or 103.2%, compared to the three months ended March 31, 2024. The increase in research and development expenses was due to the outsourced development ofFor the StarsandProject Aetherpaid through Suzhou Snail and an increase in internal research and development salaries as the Company continues to expand its internal development team*.*
Current wording
Research and development expenses for the three months ended June 30, 2025 increased by $1.4 million, or 77.0%, compared to the three months ended June 30, 2024. The increase in research and development expenses was due to the outsourced development ofFor the StarsandNine Yin Sutra: Immortal paid through Suzhou Snail and an increase in internal research and development salaries as the Company continues to expand its internal development team*.*
Previous wording
Other income increased by $0.6 million for the three months ended March 31, 2025, in comparison to the three months ended March 31, 2024. The increase is due to the recognition of $0.6 million due to the revaluation of warrant liabilities in the three months ended March 31, 2025.
Current wording
Other income decreased by $0.9 million for the three months ended June 30, 2025, in comparison to the three months ended June 30, 2024. The decrease is due to the recognition of $0.5 million due to the revaluation of warrant liabilities and $0.4 million due to the revaluation of the convertible notes in the three months ended June 30, 2025 in comparison to the recognition of $0.2 million in the other income during the three months ended June 30, 2024 for the revaluation of the Company’s warrant liabilities.
Previous wording
The Company had benefit from income taxes of $1.5 million for the three months ended March 31, 2025, and a benefit of $0.5 million for the three months ended March 31, 2024. Our effective income tax rate was 43% during the three months ended March 31, 2025 and 21% during the three months ended March 31, 2024.
Current wording
The Company had an income tax provision of $13.9 million and an income tax benefit of $0.6 million for the three months ended June 30, 2025 and 2024, respectively. This is primarily due to the impact of the valuation allowance recorded against U.S. net deferred tax assets. Our effective income tax rate was (515%) and 21% during the three months ended June 30, 2025 and 2024, respectively.
Previous wording
Net revenues for the three months ended March 31, 2025 increased by $6.0 million, or 42.5%, compared to the three months ended March 31, 2024. The increase in net revenues was due to an increase in total Ark sales of $2.7 million, an increase in sales of theARK Mobileof $1.3 million that was driven by the release ofARK: Ultimate Mobile Edition, and the Company deferred $3.3 million less of its sales during the three months ended March 31, 2025 than it deferred in the three months ended March 31, 2024. These increases were partially offset by a decrease in revenues related toother games of $1.6 million.
Current wording
Net revenues for the six months ended June 30, 2025 increased by $6.6 million, or 18.4%, compared to the six months ended June 30, 2024. The increase in net revenues was due to an increase in totalARK sales of $6.1 million, $3.0 million in revenues for the inclusion ofARK: Survival Ascendedin a platform subscription program and an increase in sales of theARK Mobileof $1.9 million that was driven by the release ofARK: Ultimate Mobile Edition. These increases were partially offset by the decrease in revenue specific toBellwrightof $2.2 million, a non-reoccurring Angela Games settlement of $1.2 million occurring in 2024, the related decrease in Angela Games revenues of $0.7 million, and the increase in deferred revenue of $0.3 million during the six months ended June 30, 2025 compared to June 30, 2024.
Previous wording
Advertising and marketing expenses for the three months ended March 31, 2025 increased by $1.2 million, or 826.3%, compared to the three months ended March 31, 2024. The increase in advertising and marketing expenses was due to the Company’s presence at the Game Developers Conference (“GDC”) during the three months ended March 31, 2025, and increased advertising campaigns for our Wandering Wizard titles andSaltyTVapplication and related offerings.
Current wording
Advertising and marketing expenses for the six months ended June 30, 2025 increased by $2.0 million, or 238.4%, compared to the six months ended June 30, 2024. The increase in advertising and marketing expenses was due to the Company’s presence at the Game Developers Conference (“GDC”) during the six months ended June 30, 2025, and increased advertising campaigns for ourARK: AquaticaandWandering Wizard titles andSaltyTVapplication and related offerings in 2025.
Previous wording
Interest expense primarily related to our outstanding indebtedness with third-party lenders. Interest expense decreased by $0.3 million for the three months ended March 31, 2025 because of lower average debt during the three months ended March 31, 2025.
Current wording
Interest expense primarily related to our outstanding indebtedness with third-party lenders. Interest expense decreased by $0.2 million for the six months ended June 30, 2025 because of lower average debt during the six months ended June 30, 2025.
Previous wording
Units sold increased during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, by 0.4 million units, or 44.8%. The Company’s units sold increased due to an increase in sales ofARK: Survival Evolvedof 0.1 million units*,and an increase in sales ofARK: Survival Ascended*of 0.3 million units during the three months ended March 31, 2025.
Current wording
Units sold increased during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, by 1.3 million units, or 52.4%. The Company’s units sold increased due to an increase in sales ofARK: Survival Evolvedand its related DLC’s of 0.8 million units*,and an increase in sales ofARK: Survival Ascendedand its related DLC’s of 0.6 million units. This increase was partially offset by the decrease of units sold ofBellwright*of 0.1 million during the six months ended June 30, 2025.
Previous wording
For the three months ended March 31, 2025, bookings increased by $2.6 million, or 13.6%, compared to the three months ended March 31, 2024, because of the releases ofARK: Survival AscendedDLCAstraeosin the first quarter of 2025, and the releases ofBobs Tall Tales, andBellwright in the latter quarters of 2024.
Current wording
For the six months ended June 30, 2025, bookings increased by $7.0 million, or 16.3%, compared to the six months ended June 30, 2024, because of the releases ofARK: Survival AscendedDLCAstraeosin the first quarter of 2025, sales promotions that were the first of their kind onARK: Survival Evolvedin 2025, and the release ofARK: Lost Colony to presale in 2025.
Previous wording
We define EBITDA as net loss before (i) interest income, (ii) interest expense, (iii) (benefit from) provision for income taxes, and (iv) depreciation expense, property and equipment.
Current wording
We define EBITDA as net income (loss) before (i) interest income, (ii) interest expense, (iii) (benefit from) provision for income taxes, and (iv) depreciation expense, property and equipment.
Previous wording
Below is a reconciliation of net loss to EBITDA, the closest GAAP financial measure.
Current wording
Below is a reconciliation of net income (loss) to EBITDA, the closest GAAP financial measure.
Previous wording
For the three months ended March 31, 2025, EBITDA decreased by $1.3 million, or 75.5%, compared to the three months ended March 31, 2024, primarily because of an increase in benefit from income taxes of $1.0 million, a decrease in interest expense, and an increase in net loss of $0.1 million, partially offset by a decrease in interest income and interest income – related parties of $0.1 million.
Current wording
For the three months ended June 30, 2025, EBITDA decreased by $5.5 million, or 182.9%, compared to the three months ended June 30, 2024, primarily because of an increase in net loss of $18.9 million, partially offset by an increase in provision for income taxes of $13.3 million and an increase in interest income and interest income – related parties of $0.1 million.
Previous wording
Our primary sources of liquidity are the cash flows generated from our operations, that are currently available as unrestricted cash. Our unrestricted cash was $9.4 million and $7.3 million as of March 31, 2025 and December 31, 2024, respectively.
Current wording
Our primary sources of liquidity are the cash flows generated from our operations, that are currently available as unrestricted cash. Our unrestricted cash was $7.9 million and $7.3 million as of June 30, 2025 and December 31, 2024, respectively.
Previous wording
As of March 31, 2025, our 2021 Revolving Loan has a balance of $3.0 million and is due in June 2025. Additionally, in February 2025 the Company issued convertible notes with a par value of $3.3 million which mature in February 2026. In concurrence with the registration of the 2023 convertible notes shares the Company registered shares for distribution in an equity line of credit. The Company has the right, but not the obligation, to sell up to $5.0 million in Class A common stock to the investor. We intend to renegotiate with the lender to extend the maturity date of the 2021 Revolving Loan and to negotiate a new Short Term Note. However, there is no guarantee that we will be able to renegotiate the terms of the 2021 Revolving Loan or obtain a new short term note with the lender at terms acceptable to us or at all. The Company was in compliance with its debt covenants related to the 2021 Revolving Note and 2021 Promissory note for the trailing twelve months ended March 31, 2025, however it is probable that the Company will fail the covenants within the next 12 months. As such, the Company has classified the long-term portion of its promissory note as current. There is no guarantee that the Company will receive a waiver from the lender if the covenants of the loans are breached in the future. In the event of a future breach of the debt covenants the lender has the right, but not the obligation, to declare all or any part of the debt as due immediately and cease making any advances or extend any further credit to the Company.
Current wording
As of June 30, 2025, our 2021 Revolving Loan has a balance of $3.0 million and is due and payable in June 2026. Additionally, in February 2025 the Company issued convertible notes with a par value of $3.3 million which mature in February 2026. The Company also obtained a term loan note of $3.5 million in June 2025 with a maturity date of June 2028. In concurrence with the registration of the 2023 convertible notes shares the Company registered shares for distribution in an equity line of credit. The Company has the right, but not the obligation, to sell up to $5.0 million in Class A common stock to the investor. The Company was not in compliance with its debt covenants related to the 2021 Revolving Note, 2021 Promissory note and 2025 Term Loan for the trailing twelve months ended June 30, 2025. The Company received a waiver for the covenant breach during the trailing twelve months ended June 30, 2025. As such, the Company has classified the long-term portion of its promissory note and term loan as current. There is no guarantee that the Company will receive a waiver from the lender if the covenants of the loans are breached in the future. In the event of a future breach of the debt covenants the lender has the right, but not the obligation, to declare all or any part of the debt as due immediately and cease making any advances or extend any further credit to the Company.
Previous wording
Our current unrestricted cash position of approximately $9.4 million, and our expected revenue receipts will allow the Company to continue operations beyond the next 12 months and service its current debts.
Current wording
Our current unrestricted cash position of approximately $7.9 million, and our expected revenue receipts will allow the Company to continue operations beyond the next 12 months and service its current debts.
Previous wording
Net cash flows provided by operating activities for the three months ended March 31, 2025 decreased $6.0 million as compared to the three months ended March 31, 2024, which resulted primarily from a decrease in net accounts receivable and account receivable related party of $13.5 million, a decrease in deferred revenues of $2.6 million, a decrease in non-cash reconciling items of $0.5 million and an increase in other noncurrent assets of $0.7 million, partially offset by a decrease in prepaid expenses and prepaid expenses – related parties of $3.0 million, a decrease in net loss of $0.1 million, an increase in accounts payable and accounts payable – related parties of $8.5 million.
Current wording
Net cash flows (used in) provided by operating activities for the six months ended June 30, 2025 decreased by $9.4 million as compared to the six months ended June 30, 2024, which resulted primarily from a decrease in net accounts receivable and account receivable related party of $21.2 million, an increase in net loss of $19.0 million, an increase in other noncurrent assets of $1.1 million, and an increase in noncash reconciling items of $12.7 million, partially offset by an increase in accrued expenses and other liabilities of $1.7 million, an increase in prepaid expenses related party and prepaid expenses and other current assets of $1.0 million, an increase in deferred revenue of $1.1 million and an increase in accounts payable and accounts payable – related parties of $14.1 million.
Previous wording
The Company had a net loss of $1.9 million and $1.8 million, for the three months ended March 31, 2025 and 2024, respectively, representing an decrease of $0.1 million. The decrease was primarily due to an increase in general and administrative expenses of $2.6 million, an increase in research and development of $1.8 million, an increase in advertising and marketing of $1.2 million and an increase in cost of revenues of $2.2 million, partially offset by increased revenues of $6.0 million, increased benefit from tax income taxes of $1.0 million, and an increase in total other income (expense) of $0.5 million.
Current wording
The Company had a net loss and net income of ($18.5) million and $0.5 million, for the six months ended June 30, 2025 and 2024, respectively, representing a decrease of $19.0 million. The decrease was primarily due to an increase in provision for income taxes of $12.3 million, increase in general and administrative expenses of $3.4 million, an increase in research and development of $3.3 million, an increase in advertising and marketing of $2.0 million, an increase in impairment of film assets of $0.4 million, a decrease in total other income (expense) of $0.3 million, and an increase in cost of revenues of $3.9 million, partially offset by increased revenues of $6.6 million.
Previous wording
Non-cash reconciling items were ($1.6) million and ($1.2) million for the three months ended March 31, 2025 and 2024, respectively, representing a decrease of $0.4 million. The decrease in the non-cash reconciling items was due to a decrease in deferred taxes of $1.5 million, an increase in the gain on change in fair value of warrant liabilities of $0.6 million, partially offset by an increase in stock based compensation expense (income) of $1.8 million, and an increase in amortization expense of $0.2 million.
Current wording
Non-cash reconciling items were $12.3 million and ($0.4) million for the six months ended June 30, 2025 and 2024, respectively, representing an increase of $12.7 million. The increase in the non-cash reconciling items was due to an increase in deferred taxes of $10.7 million, an increase in stock based compensation expense (income) of $1.2 million, an increase in impairment charges of $0.4 million, and an increase in amortization expense of $0.6 million, partially offset by an increase in the loss on change in fair value of warrant liabilities of $0.1 million, and a decrease in accretion of convertible debt of $0.2 million.
Previous wording
Our accounts receivable - related party represent revenues attributable to certain mobile games that, for administrative reasons, were collected on our behalf by SDE Inc. (“SDE”), an affiliated entity, from fiscal year 2018 through 2021. SDE no longer collects such payments on our behalf; all such payments are received directly from the platforms through which we offer the relevant games. As of March 31, 2025 and December 31, 2024, the net outstanding balances of receivables due from SDE were $6.0 million and $7.5 million, respectively. We expect accounts receivables owed to us by SDE will be repaid within the next two fiscal years and intend to exercise all legally available means of collection. The Company and SDE have entered into an agreement to offset uncollected amounts against monthly payments due to SDE for operating expenses and costs of revenue. See Note 5-Accounts Receivable - Related Party to our unaudited condensed consolidated financial statements included in this Quarterly Report.
Current wording
Our accounts receivable - related party represent revenues attributable to certain mobile games that, for administrative reasons, were collected on our behalf by SDE Inc. (“SDE”), an affiliated entity, from fiscal year 2018 through 2021. SDE no longer collects such payments on our behalf; all such payments are received directly from the platforms through which we offer the relevant games. As of June 30, 2025 and December 31, 2024, the net outstanding balances of receivables due from SDE were $4.5 million and $7.5 million, respectively. We expect accounts receivables owed to us by SDE will be repaid within the next fiscal year and intend to exercise all legally available means of collection. The Company and SDE have entered into an agreement to offset uncollected amounts against monthly payments due to SDE for operating expenses and costs of revenue. See Note 5-Accounts (Payable) Receivable - Related Party to our unaudited condensed consolidated financial statements included in this Quarterly Report.
Previous wording
Net cash flows used in investing activities for the three months ended March 31, 2025 were $1.9 million compared to none in the three months ended March 31, 2024. Investing activities for the three months ended March 31, 2025 included $0.3 million for the acquisition of software applications, $1.4 million for the acquisition of license rights to certain titles, and $0.2 million in capitalized research and development expenditures for the development of software to be sold or marketed.
Current wording
Net cash flows used in investing activities for the six months ended June 30, 2025 were $3.0 million compared to none in the six months ended June 30, 2024. Investing activities for the six months ended June 30, 2025 included $0.3 million for the acquisition of software applications, $2.0 million for the acquisition of license rights to certain titles, and $0.7 million in capitalized research and development expenditures for the development of software to be sold or marketed.
Previous wording
Net cash flows provided by (used in) financing activities for the three months ended March 31, 2025 were $3.1 million compared to ($5.9) million for the three months ended March 31, 2024. Financing activities for the three months ended March 31, 2025 included $3.0 million from the issuance of convertible notes and $0.2 million received upon the exercise of warrants during the period. Financing activities for the three months ended March 31, 2024 included debt repayments of $5.6 million and $0.3 million in payments of capitalized offering costs in accounts payable.
Current wording
Net cash flows provided by (used in) financing activities for the six months ended June 30, 2025 were $6.0 million compared to ($6.7) million for the six months ended June 30, 2024. Financing activities for the six months ended June 30, 2025 included $3.0 million from the issuance of convertible notes, $3.5 million obtained from the new term loan, and $0.2 million received upon the exercise of warrants during the period. This was partially offset by the repayments of the convertible notes of $0.6 million. Financing activities for the six months ended June 30, 2024 included debt repayments of $6.4 million and $0.3 million in payments of capitalized offering costs in accounts payable.
Previous wording
In December 2018, we entered into a revolving loan and security agreement with a financial institution for a revolving note in the amount of $5.5 million. On June 17, 2021, we amended and restated our revolving loan and security agreement (the “2021 Revolving Loan”) to increase our revolving line of credit to $9.0 million. As amended, the 2021 Revolving Loan matured on December 31, 2023 and bore interest at a rate equal to the prime rate less 0.25%. Interest is due and payable under the 2021 Revolving Loan on a monthly basis. The Company amended the revolving loan agreement in December 2024, to extend the 2021 Revolving Loan maturity date to June 30, 2025. As of March 31, 2025, we had borrowings of $3.0 million outstanding under our 2021 Revolving Loan.
Current wording
In December 2018, we entered into a revolving loan and security agreement with a financial institution for a revolving note in the amount of $5.5 million. On June 17, 2021, we amended and restated our revolving loan and security agreement (the “2021 Revolving Loan”) to increase our revolving line of credit to $9.0 million. As amended, the 2021 Revolving Loan matured on December 31, 2023 and bore interest at a rate equal to the prime rate less 0.25% and a floor rate of 6.50%. Interest is due and payable under the 2021 Revolving Loan on a monthly basis. The Company amended the revolving loan agreement in December 2024, to extend the 2021 Revolving Loan maturity date to June 2026. As of June 30, 2025, we had borrowings of $3.0 million outstanding under our 2021 Revolving Loan.
Previous wording
The 2021 Revolving Loan, Term Loan and the 2022 Short Term Note require us to maintain a minimum debt service coverage ratio of 1.5 to 1.0. Additionally, the 2021 Revolving Loan requires us to maintain an outstanding principal balance of no more than $3.0 million for 30 consecutive days during any twelve-month period. For the trailing twelve months ended March 31, 2025, the Company met the minimum debt service coverage ratio required by its debt covenants. The Company repaid the $0.8 million term note that was one of three debt facilities with the lender, in January 2024. The Company’s ability to comply with the covenants, or receive waivers for the covenants, can lead to the acceleration of payments due under the debt facilities with the lender, cause the lender to cease making advances under the revolving agreement, or allow the lender to take possession of collateral. Due to the projected failure to comply with the debt covenant the Company classifies the long-term portion of its promissory note as current.
Current wording
The 2021 Revolving Loan, 2021 Term Loan, 2022 Short Term Note, and the 2025 Term Loan require us to maintain a minimum debt service coverage ratio of 1.5 to 1.0. Additionally, the 2021 Revolving Loan requires us to maintain an outstanding principal balance of no more than $3.0 million for 30 consecutive days during any twelve-month period. For the trailing twelve months ended June 30, 2025, the Company has not met the minimum debt service coverage ratio required by its debt covenants. The Company received a waiver for the breach of the debt service coverage ratio covenant for the trailing twelve months ended June 30, 2025. The Company repaid the $0.8 million term note that was one of three debt facilities with the lender, in January 2024. The Company’s ability to comply with the covenants, or receive waivers for the covenants, can lead to the acceleration of payments due under the debt facilities with the lender, cause the lender to cease making advances under the revolving agreement, or allow the lender to take possession of collateral. As a result of non-compliance with debt covenants and the projected failure to comply, the Company has reclassified the long-term portion of its promissory note as a current liability.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
Cost of revenues for the six months ended June 30, 2025 and 2024 comprised the following:
Current report — wording carried from elsewhere
The increase in cost of revenues for the six months ended June 30, 2025 was due to an increase of $3.0 million in software license royalties – related parties, a result of increasedARKrevenues, an increase of $0.7 million in license and amortization due to the increased depreciable base of intangible assets in 2025, an increase in merchant fees of $0.6 million related to the increasedARK: Ultimate Mobile Editionrevenues, an increase of $0.2 million in internet, server and data center, partially offset by decreased engine fees of $0.5 million.
Current report — wording carried from elsewhere
General and administrative expenses for the six months ended June 30, 2025 increased by $3.4 million, or 66.2%, compared to the six months ended June 30, 2024. The increase in general and administrative expenses was due to an increase in salaries and wages of $2.1 million, the result of the Company recording $0.3 million in stock compensation expense in 2025 versus an income related to stock based income compensation of ($0.8) million in 2024 and the Company’s increased headcount in 2025, an increase in office expense of $0.3 million, an increase in contractors expense of $0.3 million, an increase in legal and professional fees of $0.2 million, an increase in travel expense of $0.1 million, an increase in insurance expenses of $0.1 million, an increase in other tax expense of $0.1 million, and an increase in public company expenses of $0.1 million.
Current report — wording carried from elsewhere
Research and development expenses for the six months ended June 30, 2025 increased by $3.3 million, or 89.8%, compared to the six months ended June 30, 2024. The increase in research and development expenses was due to the outsourced development ofFor the StarsandNine Yin Sutra: Immortalpaid through Suzhou Snail and an increase in internal research and development salaries as the Company continues to expand its internal development team*.*
Current report — wording carried from elsewhere
Other Factors Affecting Net Income (Loss)
Current report — wording carried from elsewhere
Interest income was $0.1 million and $0.2 million for the six months ended June 30, 2025 and June 30, 2024, respectively. The decrease was due to the balance of our cash deposits being lower on average during the six months ended June 30, 2025.
Current report — wording carried from elsewhere
In June 2025, we entered into a loan agreement with a financial institution provided for a term loan in an aggregate principal amount of $3.5 million. This loan is set to mature in June 2028, bears interest at a floating rate of 0.50% in excess of Wall Street Journal prime rate or a floor of 6.50% rate until maturity.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Cost of revenues for the three months ended March 31, 2025 increased by $2.2 million, or 18.4%, compared to the three months ended March 31, 2024.