Snail (NASDAQ: SNAL) cites ASC 606 review, expects Q2 loss and tax hit

Rhea-AI Filing Summary

Snail, Inc. notified regulators that it will file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 after the deadline, using the standard five-day extension. The company says it needs more time to complete its review of certain accounting matters.

Snail is evaluating revenue recognition under ASC 606, focusing on promised goods or services and performance obligations in customer contracts, and is updating management estimates for the user life of its digital games. These assessments require additional analysis and support.

The company currently expects significant changes in results versus the same quarter in 2024. It recorded a valuation allowance against its deferred tax assets as of March 31, 2025, leading to a non-cash income tax expense and a substantial increase in tax expense compared with last year. Higher research, development, advertising and marketing spending has also turned income from operations in the prior-year quarter into a loss from operations for the current quarter. These expectations are preliminary and may change when the unaudited financial statements are finalized.

Positive

• None.

Negative

• Significant earnings deterioration: Snail expects Q2 2025 to show a loss from operations versus income from operations a year earlier, driven by higher research, development, advertising and marketing expenses and a non-cash income tax expense from a valuation allowance on deferred tax assets.

Insights

Equity analyst – financial reporting and earnings quality

Snail flags a delayed 10-Q, non-cash tax hit, and a swing to operating loss.

Snail, Inc. is using the permitted extension window to complete its Q2 2025 Form 10-Q, mainly to finish work on revenue recognition under ASC 606 and updated estimates for the user life of digital games. That suggests management is revisiting how it identifies performance obligations and allocates revenue in its gaming business, an area that can meaningfully affect reported revenue timing.

The company also discloses a material change in earnings drivers. It recorded a valuation allowance against its deferred tax assets as of March 31, 2025, creating a non-cash income tax expense and significantly increasing tax expense versus Q2 2024. At the same time, higher research, development, advertising and marketing spending has turned prior-year operating income into a current-year loss from operations. While the tax charge is non-cash, both the allowance and the operating loss point to weaker near-term profitability, and the company notes that final Q2 2025 results may differ from these preliminary expectations.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 12b-25

NOTIFICATION OF LATE FILING

(Check One)	☐ Form 10-K	☐ Form 20-F	☐ Form 11-K
	☒ Form 10-Q	☐ Form 10-D	☐ Form N-CEN	☐ Form N-CSR

For Period Ended: June 30, 2025

☐ Transition Report on Form 10-K

☐ Transition Report on Form 20-F

☐ Transition Report on Form 11-K

☐ Transition Report on Form 10-Q

For the Transition Period Ended:          

Read Instruction (on back page) Before Preparing Form. Please Print or Type.

Nothing in this form shall be construed to imply that the Commission has verified any information contained herein.

If the notification relates to a portion of the filing checked above, identify the Item(s) to which the notification relates:

PART I — REGISTRANT INFORMATION

Snail, Inc.

(Full Name of Registrant)

(Former Name if Applicable)

12049 Jefferson Blvd

(Address of Principal Executive Office (Street and Number))

Culver City, CA 90230

(City, State and Zip Code)

PART II — RULES 12b-25(b) AND (c)

If the subject report could not be filed without unreasonable effort or expense and the registrant seeks relief pursuant to Rule 12b-25(b), the following should be completed. (Check box if appropriate)

	(a)	The reason described in reasonable detail in Part III of this form could not be eliminated without unreasonable effort or expense;
☒	(b)	The subject annual report, semi-annual report, transition report on Form 10-K, Form 20-F, Form 11-K, Form N-CEN or Form N-CSR, or portion thereof, will be filed on or before the fifteenth calendar day following the prescribed due date; or the subject quarterly report or transition report on Form 10-Q or subject distribution report on Form 10-D, or portion thereof, will be filed on or before the fifth calendar day following the prescribed due date; and
	(c)	The accountant’s statement or other exhibit required by Rule 12b-25(c) has been attached if applicable.

PART III — NARRATIVE

State below in reasonable detail why Forms 10-K, 20-F, 11-K, 10-Q, 10-D, N-CEN, N-CSR, or the transition report or portion thereof, could not be filed within the prescribed time period. (Attach Extra Sheets if Needed)

Snail, Inc. (the “Company”) will not be able to file its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025 (the “Second Quarter Form 10-Q”) within the prescribed time period without unreasonable effort and expense because the Company requires additional time to complete its assessment of the matter described below.

During the final stages of preparation, certain accounting matters, including the evaluation and testing of the Accounting Standards Codification Topic 606: Revenue from Contracts with Customers (“ASC 606”), specifically for promised goods or services for purposes of identifying performance obligation in the context of the contract and updated management estimates related to the estimated user life of digital games, which require additional analysis and supporting documentation.

The Company is working diligently and plans to file its Second Quarter Form 10-Q as soon as practicable. The Company currently expects to file the Second Quarter Form 10-Q within the five-day extension period provided under Rule 12b-25 of the Securities Exchange Act of 1934, as amended.

PART IV — OTHER INFORMATION

(1) Name and telephone number of person to contact in regard to this notification

Heidy Chow		(310)		988-0643
(Name)		(Area Code)		(Telephone Number)

(2)	Have all other periodic reports required under Section 13 or 15(d) of the Securities Exchange Act of 1934 or Section 30 of the Investment Company Act of 1940 during the preceding 12 months or for such shorter period that the registrant was required to file such report(s) been filed? If answer is no, identify report(s). ☒ Yes ☐ No
(3)	Is it anticipated that any significant change in results of operations from the corresponding period for the last fiscal year will be reflected by the earnings statements to be included in the subject report or portion thereof? ☒ Yes ☐ No
	If so, attach an explanation of the anticipated change, both narratively and quantitatively, and, if appropriate, state the reasons why a reasonable estimate of the results cannot be made. The Company currently anticipates that its results of operations for the fiscal quarter ended June 30, 2025 will contain significant changes from its results of operations for the fiscal quarter ended June 30, 2024. During the quarter ended June 30, 2025 the Company recorded a valuation allowance against its March 31, 2025 balance of deferred tax assets and a non-cash income tax expense in the same amount. The estimated income tax expense for the quarter ended June 30, 2025 has increased significantly in comparison to the prior year period representing a significant change in earnings from the corresponding period of the previous fiscal year. Additionally, the Company experienced increases in research, development, advertising and marketing expenses resulting in a loss from operations in the current year period as compared to an income from operations in the prior year period. The foregoing expectations are preliminary and subject to change upon the finalization of the Company’s unaudited consolidated financial statements for the quarter ended June 30, 2025. There can be no assurance that the final results will not differ materially from the foregoing preliminary results.

Snail, Inc.

(Name of Registrant as Specified in Charter)

has caused this notification to be signed on its behalf by the undersigned hereunto duly authorized.

Date	August 15, 2025		By	/s/ Heidy Chow
				Heidy Chow
				Chief Financial Officer

INSTRUCTION: The Form may be signed by an executive officer of the registrant or by any other duly authorized representative. The name and title of the person signing the Form shall be typed or printed beneath the signature. If the statement is signed on behalf of the registrant by an authorized representative (other than an executive officer), evidence of the representative’s authority to sign on behalf of the registrant shall be filed with the Form.

ATTENTION

Intentional misstatements or omissions of fact constitute Federal Criminal Violations (See 18 U.S.C. 1001).

FAQ

Why is Snail, Inc. (SNAL) filing its Q2 2025 Form 10-Q late?

Snail, Inc. says it cannot file its Form 10-Q for the quarter ended June 30, 2025 on time without unreasonable effort and expense because it needs additional time to complete its assessment of certain accounting matters, including revenue recognition under ASC 606 and updated estimates for the user life of its digital games.

When does Snail expect to file its delayed Q2 2025 Form 10-Q?

Snail, Inc. states that it is working diligently and currently expects to file its Form 10-Q for the quarter ended June 30, 2025 within the five-day extension period allowed under Rule 12b-25.

What accounting issues is Snail reviewing for its Q2 2025 results?

The company is reviewing accounting matters related to ASC 606, specifically how promised goods or services are evaluated for identifying performance obligations in contracts with customers, and it is updating management estimates related to the estimated user life of its digital games, which requires additional analysis and supporting documentation.

Does Snail, Inc. expect significant changes in its Q2 2025 results versus last year?

Yes. Snail, Inc. currently anticipates that results of operations for the quarter ended June 30, 2025 will contain significant changes compared with the quarter ended June 30, 2024, including a valuation allowance against deferred tax assets that creates a non-cash income tax expense and higher research, development, advertising and marketing expenses.

How will the valuation allowance affect Snail’s Q2 2025 earnings?

During the quarter ended June 30, 2025, Snail recorded a valuation allowance against its March 31, 2025 balance of deferred tax assets and a non-cash income tax expense in the same amount. This significantly increases income tax expense compared with the prior-year period and represents a significant change in earnings from the corresponding quarter of the previous fiscal year.

What change does Snail, Inc. expect in operating performance for Q2 2025?

Snail, Inc. reports that increased research, development, advertising and marketing expenses during the quarter ended June 30, 2025 are expected to result in a loss from operations, compared with income from operations in the same quarter of the prior year.

Are Snail’s preliminary Q2 2025 expectations final?

No. The company states that its expectations are preliminary and subject to change upon finalization of its unaudited consolidated financial statements for the quarter ended June 30, 2025, and there can be no assurance that final results will not differ materially from these preliminary results.