Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | May 10, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
Entity File Number | 001-41556 | |
Entity Registrant Name | SNAIL, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 88-4146991 | |
Entity Address, Address Line One | 12049 Jefferson Blvd | |
Entity Address, City or Town | Culver City | |
Entity Address State Or Province | CA | |
Entity Address, Postal Zip Code | 90230 | |
City Area Code | 310 | |
Local Phone Number | 988-0643 | |
Title of 12(b) Security | Class A Common Stock, par value $0.0001 per share | |
Trading Symbol | SNAL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001886894 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Class A Common Stock | ||
Document and Entity Information | ||
Entity Common Stock, Shares Outstanding | 7,901,145 | |
Class B Common Stock | ||
Document and Entity Information | ||
Entity Common Stock, Shares Outstanding | 28,748,580 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 4,108,251 | $ 12,863,817 |
Restricted escrow deposit | 1,013,678 | 1,003,804 |
Accounts receivable, net of allowances for credit losses of $19,929 and $31,525, respectively | 6,988,909 | 6,758,024 |
Accounts receivable - related party, net | 11,296,440 | 11,344,184 |
Loan and interest receivable - related party | 102,247 | 101,753 |
Prepaid expenses - related party | 2,500,000 | |
Prepaid expenses and other current assets | 11,197,381 | 10,565,141 |
Total current assets | 37,206,906 | 42,636,723 |
Restricted cash and cash equivalents | 6,380,657 | 6,374,368 |
Prepaid expenses - related party | 5,582,500 | 5,582,500 |
Property, plant and equipment, net | 4,999,739 | 5,114,799 |
Deferred income taxes | 7,602,536 | 7,602,536 |
Other noncurrent assets | 190,005 | 198,668 |
Operating lease right-of-use assets, net | 3,321,332 | 3,606,398 |
Total assets | 66,244,401 | 72,772,571 |
Current Liabilities: | ||
Accounts payable | 8,111,718 | 9,452,391 |
Accounts payable - related party | 19,540,783 | 19,918,259 |
Accrued expenses and other liabilities | 1,990,490 | 1,474,088 |
Interest payable - related parties | 527,770 | 527,770 |
Revolving loan | 9,000,000 | 9,000,000 |
Short term note | 4,166,667 | 5,416,666 |
Current portion of long-term debt | 80,568 | 86,524 |
Current portion of deferred revenue | 4,517,573 | 4,335,404 |
Current portion of operating lease liabilities | 1,403,978 | 1,371,227 |
Total current liabilities | 49,339,547 | 51,582,329 |
Accrued expenses | 384,150 | 457,024 |
Long-term debt, net of current portion | 2,784,749 | 3,221,963 |
Deferred revenue, net of current portion | 4,882,744 | 5,216,042 |
Operating lease liabilities, net of current portion | 2,563,302 | 2,930,529 |
Total liabilities | 59,954,492 | 63,407,887 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Additional paid-in capital | 23,589,537 | 23,436,942 |
Accumulated other comprehensive loss | (304,880) | (307,200) |
Accumulated deficit | (7,834,628) | (4,863,250) |
Stockholders' Equity | 15,453,829 | 18,270,292 |
Treasury stock at cost (1,350,275 and 1,197,649 shares, respectively) | (3,671,806) | (3,414,713) |
Total Snail, Inc. equity | 11,782,023 | 14,855,579 |
Noncontrolling interests | (5,492,114) | (5,490,895) |
Total stockholders' equity | 6,289,909 | 9,364,684 |
Total liabilities, noncontrolling interests and stockholders' equity | 66,244,401 | 72,772,571 |
Class A Common Stock | ||
Stockholders' Equity: | ||
Common stock | 925 | 925 |
Class B Common Stock | ||
Stockholders' Equity: | ||
Common stock | 2,875 | 2,875 |
License rights from related parties | ||
Current Assets: | ||
Intangible assets, net | 688,406 | 1,384,058 |
Other | ||
Current Assets: | ||
Intangible assets, net | $ 272,320 | $ 272,521 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Accounts receivable, net of allowances for doubtful accounts | $ 19,929 | $ 31,525 |
Treasury Stock, Shares | 1,350,275 | 1,197,649 |
Class A Common Stock | ||
Common stock, par value (per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 9,251,420 | 9,251,420 |
Common stock, shares outstanding | 7,901,145 | 8,053,771 |
Class B Common Stock | ||
Common stock, par value (per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 28,748,580 | 28,748,580 |
Common stock, shares outstanding | 28,748,580 | 28,748,580 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenues, net | $ 13,458,488 | $ 28,054,591 |
Cost of revenues | 9,816,397 | 14,889,017 |
Gross profit | 3,642,091 | 13,165,574 |
Operating expenses: | ||
General and administrative (including stock-based compensation expense of $152,595 and $0, respectively) | 5,570,291 | 5,620,010 |
Research and development | 1,373,797 | 183,956 |
Advertising and marketing | 104,549 | 158,670 |
Depreciation and amortization | 115,060 | 168,317 |
Total operating expenses | 7,163,697 | 6,130,953 |
Income (loss) from operations | (3,521,606) | 7,034,621 |
Other income (expense): | ||
Interest income | 31,473 | 15,372 |
Interest income - related parties | 493 | 450,928 |
Interest expense | (294,583) | (166,055) |
Interest expense - related parties | 0 | (1,726) |
Other income | 8,175 | 2,684 |
Foreign currency transaction loss | (2,367) | (2,406) |
Total other income, net | (256,809) | 298,797 |
Income (loss) before (benefit from) provision for income taxes | (3,778,415) | 7,333,418 |
(Benefit from) provision for income taxes | (805,818) | 1,529,651 |
Net income (loss) | (2,972,597) | 5,803,767 |
Net (loss) attributable to non-controlling interests | (1,219) | (7,290) |
Net income (loss) attributable to Snail, Inc. and Snail Games USA Inc | (2,971,378) | 5,811,057 |
Comprehensive income statement: | ||
Other comprehensive income (loss) related to currency translation adjustments, net of tax | 2,320 | (51,203) |
Total comprehensive income (loss) | $ (2,969,058) | $ 5,759,854 |
Income per share attributable to: | ||
Basic | $ (0.08) | $ 0.17 |
Diluted | $ (0.08) | $ 0.17 |
Class A common stock | ||
Net income (loss) attributable to: | ||
Basic | $ (642,340) | $ 5,811,057 |
Diluted | $ (642,340) | $ 5,811,057 |
Income per share attributable to: | ||
Basic | $ (0.08) | $ 0.17 |
Diluted | $ (0.08) | $ 0.17 |
Weighted-average shares used to compute income per share: | ||
Basic | 7,928,742 | 35,000,000 |
Diluted | 7,928,742 | 35,000,000 |
Class B common stock | ||
Net income (loss) attributable to: | ||
Basic | $ (2,329,038) | |
Diluted | $ (2,329,038) | |
Income per share attributable to: | ||
Basic | $ (0.08) | $ 0.17 |
Diluted | $ (0.08) | $ 0.17 |
Weighted-average shares used to compute income per share: | ||
Basic | 28,748,580 | |
Diluted | 28,748,580 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) (Parenthetical) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) | ||
Stock-based compensation expense | $ 152,595 | $ 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Equity - USD ($) | Snail Games USA Common Stock | Common Stock Class A Common Stock | Common Stock Class B Common Stock | Additional Paid-In-Capital | Due from Shareholder Loan and Interest Receivable | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Snail Games USA Inc./Snail Inc. Equity | Non controlling Interests | Class A Common Stock | Total |
Balance at Dec. 31, 2021 | $ 5,000 | $ 94,159,167 | $ (94,353,522) | $ (266,557) | $ 16,045,231 | $ 15,589,319 | $ (5,537,266) | $ 10,052,053 | ||||
Balance (in shares) at Dec. 31, 2021 | 500,000 | |||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Loan to shareholder | (450,681) | (450,681) | (450,681) | |||||||||
Foreign currency translation | (51,203) | (51,203) | (51,203) | |||||||||
Net income (loss) | 5,811,057 | 5,811,057 | (7,290) | 5,803,767 | ||||||||
Balance at Mar. 31, 2022 | $ 5,000 | 94,159,167 | $ (94,804,203) | (317,760) | 21,856,288 | 20,898,492 | (5,544,556) | 15,353,936 | ||||
Balance (in shares) at Mar. 31, 2022 | 500,000 | |||||||||||
Balance at Dec. 31, 2022 | $ 925 | $ 2,875 | 23,436,942 | (307,200) | (4,863,250) | $ (3,414,713) | 14,855,579 | (5,490,895) | 9,364,684 | |||
Balance (in shares) at Dec. 31, 2022 | 9,251,420 | 28,748,580 | (1,197,649) | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Foreign currency translation | 2,320 | 2,320 | 2,320 | |||||||||
Stock based compensation related to restricted stock units | 152,595 | 152,595 | 152,595 | |||||||||
Repurchase of common stock | $ (257,093) | (257,093) | $ (3,700,000) | (257,093) | ||||||||
Repurchase of common stock (in shares) | (152,626) | 1,350,275 | ||||||||||
Net income (loss) | (2,971,378) | (2,971,378) | (1,219) | (2,972,597) | ||||||||
Balance at Mar. 31, 2023 | $ 925 | $ 2,875 | $ 23,589,537 | $ (304,880) | $ (7,834,628) | $ (3,671,806) | $ 11,782,023 | $ (5,492,114) | $ 6,289,909 | |||
Balance (in shares) at Mar. 31, 2023 | 9,251,420 | 28,748,580 | (1,350,275) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (2,972,597) | $ 5,803,767 |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||
Amortization - intangible assets - license | 695,853 | 2,001,203 |
Amortization - loan origination fees | 8,911 | 5,966 |
Depreciation and amortization - property and equipment | 115,060 | 168,317 |
Stock-based compensation expense | 152,595 | |
Loss on disposal of fixed assets | 2,433 | |
Interest income from shareholder loan | (450,681) | |
Interest income from restricted escrow deposit | (9,874) | |
Changes in assets and liabilities: | ||
Accounts receivable | (230,885) | 1,240,699 |
Accounts receivable - related party | 47,744 | (1,792,450) |
Prepaid expenses - related party | (2,500,000) | (1,375,000) |
Prepaid expenses and other current assets | (632,240) | (208,180) |
Other noncurrent assets | (9,035) | |
Accounts payable | (1,248,355) | 1,665,542 |
Accounts payable - related party | (377,476) | (317,976) |
Accrued expenses | 443,528 | 930,942 |
Interest receivable - related parties | (493) | (247) |
Interest payable - related parties | 1,244 | |
Lease liabilities | (49,411) | (34,595) |
Deferred revenue | (151,130) | (2,636,431) |
Net cash (used in) provided by operating activities | (6,708,770) | 4,995,518 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (5,256) | |
Repayment on Pound Sand note | 1,496,063 | |
Net cash provided by investing activities | 1,490,807 | |
Cash flows from financing activities: | ||
Repayments on long-term debt | (26,503) | (19,438) |
Repayments on short-term note | (1,666,667) | (833,333) |
Borrowings on short-term note | 10,000,000 | |
Payments on paycheck protection program and economic injury disaster loan | (90,198) | |
Purchase of treasury stock | (257,093) | |
Payments of offering costs in accounts payable | (92,318) | |
Net cash (used in) provided by financing activities | (2,042,581) | 9,057,031 |
Effect of currency translation on cash and cash equivalents | 2,074 | (40,485) |
Net increase (decrease) in cash and cash equivalents, and restricted cash and cash equivalents | (8,749,277) | 15,502,871 |
Cash and cash equivalents, and restricted cash and cash equivalents - beginning of period | 19,238,185 | 16,554,115 |
Cash and cash equivalents, and restricted cash and cash equivalents - end of period | 10,488,908 | 32,056,986 |
Cash paid during the period for: | ||
Interest | 285,672 | 160,089 |
Income taxes | 182,387 | 94,421 |
Noncash transactions during the period for: | ||
Loan and interest payable - related parties | 103,890 | |
Loan and interest receivable - related parties | (103,890) | |
License, related parties | ||
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||
Amortization - intangible assets - license | 150,000 | |
License rights | ||
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||
Amortization - intangible assets - license | 695,652 | 1,850,979 |
Other | ||
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||
Amortization - intangible assets - license | $ 201 | $ 224 |
PRESENTATION AND NATURE OF OPER
PRESENTATION AND NATURE OF OPERATIONS | 3 Months Ended |
Mar. 31, 2023 | |
PRESENTATION AND NATURE OF OPERATIONS | |
PRESENTATION AND NATURE OF OPERATIONS | NOTE 1 Snail, Inc. was incorporated under the laws of Delaware in January 2022. The terms “Snail, Inc,” “Snail Games,” “our” and the “Company” are used to refer collectively to Snail, Inc. and its subsidiaries. The Company’s fiscal year end is December 31. The Registrant was formed for the purpose of completing an initial public offering (“IPO”) and related transactions to carry on the business of Snail Games USA Inc. and its subsidiaries. Snail Games USA Inc. was founded in 2009 as a wholly owned subsidiary of Suzhou Snail Digital Technology Co., Ltd. (“Suzhou Snail”) located in Suzhou, China and is the operating entity that continues post IPO. Snail Games USA Inc. is devoted to researching, developing, marketing, publishing, and distributing games, content and support that can be played on a variety of platforms including game consoles, PCs, mobile phones and tablets. The Company is a global developer and publisher of interactive entertainment content and support on video game consoles, personal computers, mobile devices, and other platforms. On July 13, 2022, Suzhou Snail transferred all of its right, title, and interest to all of the 500,000 shares of common stock of the Company (“Shares”) to Snail Technology (HK) Limited (“Snail Technology”), an entity organized under the laws of Hong Kong, pursuant to the certain Share Transfer Agreement dated July 13, 2022 between Suzhou Snail and Snail Technology. Subsequently, Snail Technology transferred all of its right, title, and interest in the shares to certain individuals per the Share Transfer Agreement. In connection with the reorganization transaction described below the individuals contributed their interest in the Company to Snail, Inc. in return for common stock of Snail, Inc in connection with Snail, Inc.’s IPO. Because the Company and Suzhou Snail are owned by the same shareholders, Suzhou Snail is considered a related party to the Company. Reorganization Transaction and IPO On September 16, 2022, Snail, Inc., filed a Registration Statement on Form S-1 with the United States Securities and Exchange Commission in connection with its IPO. On November 9, 2022, effective as of the IPO pricing, Snail Games USA Inc.’s existing shareholders transferred their 500,000 shares of common stock of Snail Games USA Inc. to Snail, Inc. in exchange for 6,251,420 shares of Class A common stock and 28,748,580 shares of Class B common stock of Snail, Inc., and Snail, Inc. became the parent of Snail Games USA Inc. Because the reorganization transaction was considered a transaction between entities under common control, the financial statements for periods prior to the reorganization transaction and the IPO have been adjusted to combine the previously separate entities for presentation purposes. On November 9, 2022, Snail, Inc. priced its IPO, and on November 10, 2022, Snail, Inc.’s Class A common stock began trading on The Nasdaq Capital Market under the ticker symbol SNAL. In the IPO, Snail, Inc. issued 3,000,000 shares of Class A common stock at $5.00 per share and net proceeds from the IPO were distributed to Snail Games USA Inc. in November 2022 in the amount of approximately $12.0 million, net of the underwriting discount and offering costs of $3.0 million. In connection with the IPO, $1.0 million of the IPO proceeds were remitted to an escrow account which is held to provide a source of funding for certain indemnification obligations of Snail, Inc. to the underwriters. The amount in escrow is reported as a restricted escrow deposit in the consolidated balance sheets for 12 months from the date of the offering, at which time the restrictions will be removed and the balance will be reverted to unrestricted cash. Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC and generally accepted accounting principles as promulgated in the United States of America (“U.S. GAAP”) for interim reporting. Accordingly, certain notes or other information that are normally required by U.S. GAAP have been condensed or omitted if they substantially duplicate the disclosures contained in our annual audited consolidated financial statements. Additionally, the year-end condensed consolidated balance sheet data was derived from audited consolidated financial statements but does not include all disclosures required by U.S. GAAP. Accordingly, the unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed on March 29, 2023. The condensed consolidated results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future annual or interim period. In the opinion of management, all adjustments considered necessary for the fair presentation of the Company’s financial position and its results of operations in accordance with U.S. GAAP (consisting of normal recurring adjustments) have been included in the accompanying unaudited condensed consolidated financial statements. Certain comparative amounts have been reclassified to conform with the current period presentation. The common stock of Snail Games USA Inc., as of March 31, 2022, has been reclassified as Class A common stock as the stockholders of the Snail Games USA Inc. common stock had their shares converted to Class A shares of Snail Inc. during the reorganization transaction that occurred amongst a common controlled group. For more information regarding the reorganization transaction see Note 20 - Equity The condensed consolidated financial statements include the accounts of Snail, Inc. and the following subsidiaries: Equity % Subsidiary Name Owned Snail Games USA Inc. 100 % Snail Innovation Institute 70 % Frostkeep Studios, Inc. 100 % Eminence Corp 100 % Wandering Wizard, LLC 100 % Donkey Crew, LLC 99 % Interactive Films, LLC 100 % Project AWK Productions, LLC 100 % BTBX.IO, LLC 70 % All intercompany accounts, transactions, and profits have been eliminated upon consolidation. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and the accompanying notes. Such estimates include revenue recognition, provisions for credit losses, deferred income tax assets and associated valuation allowances, deferred revenue, income taxes, valuation of intangibles, including those with related parties, impairment of intangible assets, stock-based compensation and fair value of warrants. These estimates generally involve complex issues and require management to make judgments, involve analysis of historical and future trends that can require extended periods of time to resolve, and are subject to change from period to period. In all cases, actual results could differ materially from estimates. Segment Reporting The Company has one operating and reportable Revenue from Contracts with Customers Liquidity and Going Concern The Company incurred a net loss of $3.0 As of March 31, 2023, the Company’s 2021 Revolving Loan (as defined below) and 2022 Short Term Note (as defined below) of $9.0 million and $4.2 million are due in December 2023 and January 2024, respectively. Management intends to renegotiate with the lender to extend the maturity date of the 2021 Revolving Loan. However, there is no guarantee that management will be able to renegotiate the terms of the 2021 Revolving Loan with its lender at terms acceptable to the Company or at all. Additionally, management plans to repay the outstanding amounts under the 2022 Short Term Note pursuant to the terms of the 2022 Short Term Note agreement and to secure an additional debt arrangement. Currently, management expects that the Company will not be in compliance with its quarterly debt covenant for the three months ending June 30, 2023. Management is working with the lender to resolve the expected non-compliance with the debt covenant. The Company may need to raise additional capital. The need for additional capital depends on many factors, including, among other things, whether the Company can successfully renegotiate the terms of its debt arrangements, the rate at which the Company’s business grows, demands for working capital, revenue generated from existing DLCs and game titles and launches of new DLCs and new game titles, and any acquisitions that the Company may pursue. From time to time, the Company could be required, or may otherwise attempt, to seek additional sources of capital, including, but not limited to, equity and/or debt financings. The Company cannot provide assurance that it will be able to successfully access any such equity or debt financings or that the required equity or debt financings would be available on terms acceptable to the Company, if at all, or that any such financings would not be dilutive to its stockholders. The Company’s recent net loss, level of cash used in operations, debt obligations coming due in less than 12 months, potential need for additional capital, and the uncertainties surrounding its ability to raise additional capital and renegotiate its debt arrangements raise substantial doubt about its ability to continue as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. In order for the Company to continue operations beyond the next 12 months and be able to discharge its liabilities and commitments in the normal course of business, the Company must re-establish profitable operations in order to generate cash from operations by increasing revenue or controlling or potentially reducing expenses, renegotiate the terms of its debt arrangements, or obtain additional funds when needed. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 Revenue Recognition The Company’s revenue includes the publishing of software games delivered digitally and through physical discs (e.g., packaged goods). The Company’s digital games may include additional downloadable content that are new feature releases to digital full-game downloads. Revenue also includes sales of mobile in-app purchases that require the Company’s hosting support in order to utilize the game or related content. Such games include virtual goods that can be purchased by the end users, as desired. When control of the promised products and services is transferred to the customers, the Company recognizes revenue in the amount that reflects the consideration it expects to receive in exchange for these products and services. Revenue from delivery of products is recognized at a point in time when the end consumers download the games and the control of the license is transferred to them. The Company recognizes revenue using the following five steps as provided by Accounting Standards Codification (“ASC”) Topic 606 Revenue from Contracts with Customers 75 Principal vs Agent Consideration The Company offers certain software products via third-party digital storefronts, such as Microsoft’s Xbox Live, Sony’s PlayStation Network, Valve’s Steam, Epic Games Store, My Nintendo Store, Apple’s App Store, the Google Play Store, and retail distributors. For sales of our software products via third-party digital storefronts and retail distributor, the Company determines whether or not it is acting as the principal in the sale to the end user, which the Company considers in determining if revenue should be reported based on the gross transaction price to the end user or based on the transaction price net of fees retained by the third-party digital storefront. An entity is the principal if it controls a good or service before it is transferred to the customer. Key indicators that the Company uses in evaluating these sales transactions include, but are not limited to, the following: ● The underlying contract terms and conditions between the various parties to the transaction; ● Which party is primarily responsible for fulfilling the promise to provide the specified good or service; and ● Which party has discretion in establishing the price for the specified good or service. Based on our evaluation of the above indicators, for sales arrangements via Microsoft’s Xbox Live, Sony’s PlayStation Network, Valve’s Steam, Epic Games Store, and retail distributor, the digital platforms and distributors have discretion in establishing the price for the specified good or service and the Company has determined it is the agent in the sales transaction to the end user and therefore the Company reports revenue on a net basis based on the consideration received from the digital storefront. For sales arrangements via Apple’s App Store and the Google Play Store, the Company has discretion in establishing the price for the specified good or service and it has determined that the Company is the principal to the end user and thus reports revenue on a gross basis and mobile platform fees charged by these digital storefronts are expensed as incurred and reported within cost of revenues. Contract Balance The Company records deferred revenue when cash payments are received or due in advance of its performance, even if amounts are refundable. Deferred revenue is comprised of the transaction price allocable to the Company’s performance obligation on technical support and the sale of virtual goods available for in-app purchases, and payments received from customers prior to launching the games on the platforms. The Company categorizes the virtual goods as either “consumable” or “durable.” Consumable virtual goods represent goods that can be consumed by a specific player action; accordingly, the Company recognizes revenues from the sale of consumable virtual goods as the goods are consumed and the performance obligation is satisfied. Durable virtual goods represent goods that are accessible to the players over an extended period of time; accordingly, the Company recognize revenues from the sale of durable virtual goods ratably over the period of time the goods are available to the player and the performance obligation is satisfied, which is generally the estimated service period, 30 to 90 days from date of activation. The Company has a long-term title license agreement with a platform. The agreement was initially made between the parties in November 2018 and valid through December 31, 2021. The agreement was subsequently amended in June 2020 to extend the ARK 1 ARK 2 three years ARK 1 ARK 2 In November 2021, the Company entered an agreement with a platform to make ARK 1 Estimated Service Period For certain performance obligations satisfied over time, the Company has determined that the estimated service period is the time period in which an average user plays our software products (“user life”) which most faithfully depicts the timing of satisfying our performance obligation. Shipping, Handling and Value Added Taxes (“VAT”) The distributor, as the principal, is responsible for the shipping of the game discs to the retail stores and incurring the shipping and VAT costs. The Company is paid the net sales amount after deducting shipping costs, VAT and other related expenses by the distributor. Cost of Revenues Cost of revenues include software license royalty fees, merchant fees, server and database center costs, game localization costs, game licenses, engine fees and amortization costs. Cost of revenues for the three months ended March 31, 2023 and 2022 were comprised of the following: 2023 2022 Software license royalties - related parties $ 2,863,013 $ 6,521,178 Software license royalties 352,439 — License and amortization - related parties 5,195,651 6,350,979 License and amortization 201 150,224 Merchant fees 459,471 657,536 Engine fees 424,227 713,993 Internet, server and data center 496,150 495,107 Costs related to advertising revenue 25,245 — Total: $ 9,816,397 $ 14,889,017 General and Administrative Costs General and administrative costs include rents, salaries, stock-based compensation, legal and professional expenses, internet and server, contractor costs, insurance expense, licenses and permits, other taxes and travel expenses. These costs are expensed as they are incurred. For the three months ended March 31, 2023 and 2022, general and administrative expenses totaled $5,570,291 and $5,620,010, respectively. Stock-based compensation of $152,595 was incurred during the three months ended March 31, 2023; no such compensation was incurred in the three months ended March 31, 2022. Advertising and Marketing Costs The Company expenses advertising costs as incurred. For the three months ended March 31, 2023 and 2022, advertising expenses totaled $104,549 and $158,670, respectively. Research and Development Research and development costs are expensed as incurred. Research and development costs include travel, payroll, and other general expenses specific to research and development activities. Research and development costs for the three months ended March 31, 2023 and 2022 were $1,373,797 and $183,956, respectively. Non-controlling Interests Non-controlling interests on the condensed consolidated balance sheets and condensed consolidated statements of operations and comprehensive income (loss) include the equity allocated to non-controlling interest holders. As of March 31, 2023 and December 31, 2022, there were non-controlling interests with the following subsidiaries: Subsidiary Name Equity % Owned Non-Controlling % Snail Innovative Institute 70 % 30 % BTBX.IO, LLC 70 % 30 % Donkey Crew, LLC 99 % 1 % Cash and Restricted Cash and Cash Equivalents Cash is available for use in current operations or other activities such as capital expenditures and business combinations. Restricted cash and cash equivalents are time deposits, that are currently provided as security to our debts with a financial institution and the issuance of a standby letter of credit to landlords. Restricted Escrow Deposits Our restricted deposits held in escrow are to provide a source of funding for certain indemnification obligations of Snail, Inc. to our underwriters in connection with our IPO. The deposit and related interest earnings are restricted for one year from the IPO date. Accounts Receivable The Company generally records a receivable related to revenue when it has an unconditional right to invoice and receive payment. Accounts receivable are carried at original invoice amount less a allowance made for credit losses. The Company uses a combination of quantitative and qualitative factors to estimate the allowance, including an analysis of the customers’ creditworthiness, historical experience, age of current accounts receivable balances, changes in financial condition or payment terms of our customers, and reasonable forecasts of the collectability of the accounts receivable. The Company evaluates the allowance for credit losses on a periodic basis and adjusts it as necessary based on the risk factors mentioned above. Any increase in the provision for credit losses is recorded as a charge to general and administrative expense in the current period. Any amounts deemed uncollectible are written off against the allowance for credit losses. Management judgment is required to estimate our allowance for credit losses in any accounting period. The amount and timing of our credit losses and cash collection could change significantly because of a change in any of the risk factors mentioned above. Fair Value Measurements The Company follows FASB ASC Topic 820, Fair Value Measurements. ASC 820 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. ASC 820 establishes a hierarchy of valuation inputs based on the extent to which the inputs are observable in the marketplace. Observable inputs reflect market data obtained from sources independent of the reporting entity and unobservable inputs reflect the entity’s own assumptions about how market participants would value an asset or liability based on the best information available. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The following describes the hierarchy of inputs used to measure fair value and the primary valuation methodologies used by the Company for financial instruments measured at fair value. The three levels of inputs are as follows: ● Level 1 : Quoted prices in active markets for identical assets or liabilities that the Company has an ability to access as of the measurement date. ● Level 2 : Inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the same term of the assets or liabilities. ● Level 3 : Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Our financial instruments include cash and cash equivalents, restricted cash and cash equivalents, short-term financial instruments, short-term loans, accounts receivable, accounts payable and current liabilities. The carrying values of these financial instruments approximate their fair value due to their short maturities. The carrying amount of our debt approximates fair value because the interest rates on these instruments approximate the interest rate on debt with similar terms available to us for a similar duration with the exception of the Company’s promissory note which has a fixed rate for 5 years, then a floating rate that approximates the Wall Street Journal Prime Rate plus 0.50%. The Company considers the carrying amount of the loan to approximate fair value as the discounted cost in comparison to market rates would not be materially different than the cost to acquire a loan with similar terms. The Company does not have any other assets or liabilities measured at fair value on a recurring or non-recurring basis as of March 31, 2023 and December 31, 2022. Amortizable Intangibles and Other Long-lived Assets The Company’s long-lived assets and other assets consisting of property, plant and equipment and purchased intangible assets, are reviewed for impairment in accordance with the guidance of Financial Accounting Standards Board (“FASB”) Topic ASC 360, Property, Plant, and Equipment. Intangible assets subject to amortization are carried at cost less accumulated amortization and amortized over the estimated useful life in proportion to the economic benefits received. The Company evaluates the recoverability of definite-lived intangible assets and other long-lived assets in accordance with ASC Subtopic 360-10, which generally requires the assessment of these assets for recoverability when events or circumstances indicate a potential impairment exists. The Company considers certain events and circumstances in determining whether the carrying value of identifiable intangible assets and other long-lived assets, other than indefinite lived intangible assets, may not be recoverable including, but not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in the Company’s business strategy. If the Company determines that the carrying value may not be recoverable, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of the asset group to determine whether an impairment exists. If an impairment is indicated based on a comparison of the asset groups’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the asset group exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. There can be no assurance, however, that market conditions will not change or demand for the Company’s products under development will continue. Either of these could result in future impairment of long-lived assets. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our consolidated reporting results and financial positions. Income Taxes Income taxes are provided for the tax effects of transactions reported in the condensed consolidated financial statements and consisted of taxes currently due and deferred taxes. Deferred taxes are recognized for the differences between the basis of assets and liabilities for financial statement and income tax purposes. The Company follows FASB Topic ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. FASB ASC 740-10-25 provides criteria for the recognition, measurement, presentation, and disclosure of uncertain tax positions. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the condensed consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company recognizes liabilities for uncertain tax positions pursuant to FASB ASC 740-10-25. Such amounts are included in the current and long-term accrued expenses on the accompanying condensed consolidated balance sheets in the amount of $457,024 as of March 31, 2023 and December 31, 2022. The Company accrues and recognizes interest and penalties related to unrecognized tax benefits in operating expenses. Concentration of Credit Risk and Significant Customers The Company maintains cash balances at several major financial institutions. While the Company attempts to limit credit exposure with any single institution, balances often exceed insurable amounts. As of March 31, 2023 and December 31, 2022, the Company had deposits of $9,443,584 and $17,929,308, respectively, that were not insured by the Federal Deposit Insurance Corporation and are included in the cash and cash equivalents, restricted escrow deposit and restricted cash and cash equivalents, in the accompanying condensed consolidated balance sheets. The Company extends credit to various digital resellers and partners. Collection of trade receivables may be affected by changes in economic or other industry conditions and may, accordingly, impact our overall credit risk. The Company performs ongoing credit evaluations of customers and maintains reserves for potentially uncollectible accounts. As of March 31, 2023 and December 31, 2022, the Company had three customers who accounted for approximately 71% and two customers who accounted for approximately 57% of consolidated gross receivables, respectively. Among the three customers as of March 31, 2023 and two customers as of December 31, 2022, each customer accounted for 30%, 23% and 18% as of March 31, 2023, and 29% and 28% as of December 31, 2022 of the consolidated gross receivables outstanding. During the three months ended March 31, 2023 and 2022, approximately 60% and 61%, respectively, of net revenue was derived from these customers. The loss of these customers or declines in the forecasts of their accounts receivable collectability would have a significant impact on the Company’s financial performance. As of March 31, 2023 and December 31, 2022, the Company had two vendors who accounted for approximately 67% and two vendors who accounted for approximately 55% of consolidated gross payables, respectively. Among the two vendors as of March 31, 2023 and December 31, 2022, each vendor accounted for 55% and 12% as of March 31, 2023, and 43% and 12% as of December 31, 2022 of our consolidated gross payables outstanding. The loss of these vendors could have a significant impact on the Company’s financial performance and regulatory compliance. The Company had one vendor, SDE Inc. (“SDE”), a related party, that accounted for 58% and 53% of the Company’s combined cost of revenues and operating expenses during the three months ended March 31, 2023 and 2022, respectively. Amounts payable to SDE are netted with receivables from them and presented as accounts receivable - related party in the condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022. The loss of SDE as a vendor would significantly and adversely affect the Company’s core business. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses In August 2020, the FASB issued ASU 2020-06, Contracts in Entity’s Own Equity (Subtopic 815-40) – Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity Employee Savings Plans The Company maintains a 401(k) for its United States based employees. The plan is offered to all eligible employees to make voluntary contributions. Employer contributions to the plan are reported under general and administrative costs in the amounts of $26,619 and $13,182 for the three months ended March 31, 2023 and 2022. Stock-Based Compensation The Company recognizes compensation cost for stock-based awards to employees based on the awards’ estimated grant-date fair value using a straight-line approach over the service period for which such awards are expected to vest. The Company accounts for forfeitures as they occur. The Company issued restricted stock units (“Restricted Stock Units” or “restricted stock units”) during the year ended December 31, 2022. The fair value of Restricted Stock Units is determined based on the quoted market price of our common stock on the date of grant. The Company’s 2022 Omnibus Incentive Plan (the “2022 Plan”) became effective upon the consummation of the IPO. The 2022 Omnibus Incentive allows us to grant options to purchase our common stock and to grant stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards and other cash-based awards and other stock-based awards to our employees, officers, and directors, up to a maximum of 5,718,000 shares. Stock options may be granted to employees and officers and non-qualified options may be granted to employees, officers, and directors, at not less than the fair market value on the date of grant. The number of shares of common stock available for issuance under the 2022 Plan will be increased annually on the first day of each fiscal year during the term of the 2022 Plan, beginning with the 2023 fiscal year, by an amount equal to the lesser of (a) 5,718,000 shares, (b) 1% of the shares of the Company’s Class B common stock outstanding (on a fully diluted basis) on the final day of the immediately preceding calendar year or (c) such smaller number of shares as determined by the Company’s board of directors. As of March 31, 2023, there were 4,498,666 shares reserved for issuance under the 2022 Plan. Restricted Stock Units The Company granted restricted stock units under our 2022 Omnibus Incentive Plan to employees and directors. Restricted stock units are unfunded, unsecured rights to receive common stock upon the satisfaction of certain vesting criteria. Upon vesting, a number of shares of common stock equivalent to the number of restricted stock units is typically issued net of required tax withholding requirements, if any. Restricted stock units are subject to forfeiture and transfer restrictions. Warrants In connection with the IPO, offering costs related to legal, accounting, and underwriting costs were net with the proceeds and recorded as a reduction in additional paid in capital, in the stockholders’ equity section of the condensed consolidated balance sheets. The Company also issued Underwriters Warrants (as defined below) for services provided during the IPO to purchase 120,000 shares of Class A common stock. The Underwriters Warrants are accounted for as equity instruments and are included in the stockholders’ equity section of the condensed consolidated balance sheets. The fair value of the Underwriters Warrants has been estimated using the Black-Scholes option pricing model. Share Repurchase Program On November 10, 2022, the Company’s board of directors authorized a share repurchase program under which the Company may repurchase up to $5 million of outstanding shares of Class A common stock of the Company, subject to ongoing compliance with the Nasdaq listing rules. The program does not have a fixed expiration date. Repurchased shares are accounted for at cost and reported as a reduction of equity in the condensed consolidated balance sheets under treasury stock. No treasury stock was sold during the three months ended March 31, 2023. As of March 31, 2023, 1,350,275 shares of Class A common stock were repurchased pursuant to the Share Repurchase Program for an aggregate purchase price of approximately $3.7 million. The average price paid per share was $2.72 and approximately $1.3 million aggregate amount of shares of Class A common stock remain available for repurchase under the Share Repurchase Program. Earnings (Loss) Per Share Earnings (loss) per share (“EPS”) is calculated by dividing the net income (loss) that is applicable to the common stockholders for the period by the weighted average number of shares of common stock during that period. The diluted EPS for the period is calculated by dividing the net income (loss) applicable to common stockholders for the period by the weighted average number of shares of common stock and common stock equivalents outstanding during the period. The Company’s common stock equivalents are measured using the treasury stock method and represent unvested restricted stock units and warrants. The Company issues two classes of common stock with differing voting rights, and as such, reports EPS using the dual class method. For comparative purposes the Company has presented EPS for the three months ended March 31, 2022 using the number of shares exchanged in the reorganization of the Company as the denominator. For more information see Note 19 – Earnings (Loss) Per Share. Dividend Restrictions Our ability to pay cash dividends is currently restricted by the terms of our credit facilities. |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 3 Months Ended |
Mar. 31, 2023 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | NOTE 3 Disaggregation of revenue Geography The Company attributes net revenue to geographic regions based on customer location. Net revenue by geographic region for the three months ended March 31, 2023 and 2022 were as follows: 2023 2022 United States $ 11,777,874 $ 26,286,796 International 1,680,614 1,767,795 Total revenue from contracts with customers: $ 13,458,488 $ 28,054,591 Platform Net revenue by platform for the three months ended March 31, 2023 and 2022 were as follows: 2023 2022 Console $ 5,773,590 $ 17,991,579 PC 5,012,180 6,684,436 Mobile 1,718,032 2,791,320 Other 954,686 587,256 Total revenue from contracts with customers: $ 13,458,488 $ 28,054,591 Distribution channel Our products are delivered through digital online services (digital download, online platforms, and cloud streaming), mobile, and retail distribution and other. Net revenue by distribution channel for the three months ended March 31, 2023 and 2022 was as follows: 2023 2022 Digital $ 10,785,770 $ 24,676,015 Mobile 1,718,032 2,791,320 Physical retail and other 954,686 587,256 Total revenue from contracts with customers: $ 13,458,488 $ 28,054,591 Deferred Revenue The Company records deferred revenue when payments are due or received in advance of the fulfillment of our associated performance obligations; reductions to deferred revenue balance were primarily due to the recognition of revenue upon fulfillment of our performance obligations, which were in the ordinary course of business. As of March 31, 2023, the balance of deferred revenue was $9,400,317, of which $3.0 million is due to non-refundable payments. The Company is expecting to recognize $0.7 million of the $3.0 million in the next 12 months through the platform releases of certain DLCs and the remaining $2.3 million in the next 24 months through the release of ARK 2 current deferred long technical support obligations and activation of durable virtual goods. Activities in the Company’s deferred revenue as of March 31, 2023 and December 31, 2022 were as follows: 2023 2022 Deferred revenue, beginning balance in advance of revenue recognition billing $ 9,551,446 $ 20,280,934 Revenue recognized (453,223) (18,832,396) Revenue deferred 302,094 8,102,908 Deferred revenue, ending balance 9,400,317 9,551,446 Less: short term portion (4,517,573) (4,335,404) Deferred revenue, long term $ 4,882,744 $ 5,216,042 |
CASH AND CASH EQUIVALENTS, AND
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS | 3 Months Ended |
Mar. 31, 2023 | |
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS | |
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS | NOTE 4 Cash equivalents are valued using quoted market prices or other readily available market information. The Company has $6,380,657 and $6,374,368 as of March 31, 2023 and December 31, 2022, respectively, as security for the debt with a financial institution (see Note 15 — Revolving Loan, Short Term Note, and Long-Term Debt 2023 2022 Cash and cash equivalents $ 4,108,251 $ 12,863,817 Restricted cash and cash equivalents 6,380,657 6,374,368 Cash and cash equivalents, and restricted cash and cash equivalents $ 10,488,908 $ 19,238,185 |
ACCOUNTS RECEIVABLE - RELATED P
ACCOUNTS RECEIVABLE - RELATED PARTY | 3 Months Ended |
Mar. 31, 2023 | |
ACCOUNTS RECEIVABLE - RELATED PARTY | |
ACCOUNTS RECEIVABLE - RELATED PARTY | NOTE 5 Accounts receivable — related party represents receivables in the ordinary course of business attributable to certain mobile game revenues that, for administrative reasons, are collected by a related party and that the related party has not remitted back to the Company. The accounts receivable is offset by payables due to the related party for royalties, internet data center (“IDC”) and marketing costs. Accounts receivable — related party is non-interest bearing and due on demand. The related party is 100% owned and controlled by the wife of the Founder, Chief Strategy Officer and Chairman of the Company. As of March 31, 2023 and December 31, 2022, the outstanding balance of net accounts receivable from related party was as follows: 2023 2022 Accounts receivable - related party $ 13,519,409 $ 13,519,409 Less: Accounts payable - related party (2,222,969) (2,175,225) Accounts receivable - related party, net $ 11,296,440 $ 11,344,184 |
DUE FROM SHAREHOLDER
DUE FROM SHAREHOLDER | 3 Months Ended |
Mar. 31, 2023 | |
DUE FROM SHAREHOLDER | |
DUE FROM SHAREHOLDER | NOTE 6 Other receivables from related party consisted of monies that the Company lent to the Company’s Founder, Chief Strategy Officer and Chairman, who is also the majority shareholder of Suzhou Snail. The loan bore 2.0% per annum interest. On April 26, 2022, the Company, with approval from its Board of Directors and in accordance with applicable laws and regulations, assigned the other receivables – – Dividend Distribution |
DIVIDEND DISTRIBUTION
DIVIDEND DISTRIBUTION | 3 Months Ended |
Mar. 31, 2023 | |
DIVIDEND DISTRIBUTION | |
DIVIDEND DISTRIBUTION | NOTE 7 On April 26, 2022, the Company declared an in-kind dividend of $94,934,400 for the assignment of the due from shareholder and a cash dividend of $8,200,000 to pay the related withholding taxes; see Note 6 – Due from Shareholder. |
PREPAID EXPENSES - RELATED PART
PREPAID EXPENSES - RELATED PARTY | 3 Months Ended |
Mar. 31, 2023 | |
PREPAID EXPENSES - RELATED PARTY | |
PREPAID EXPENSES - RELATED PARTY | NOTE 8 On March 10, 2023, the Company amended its exclusive software license agreement with SDE relating to the ARK During the three months ended March 31, 2023, the Company prepaid $2,500,000 for exclusive license rights for an ARK 1 ARK 2 2023 2022 Prepaid royalties $ 582,500 $ 582,500 Prepaid licenses 7,500,000 5,000,000 Prepaid expenses - related party, ending balance 8,082,500 5,582,500 Less: short-term portion (2,500,000) — Total prepaid expenses - related party, long-term $ 5,582,500 $ 5,582,500 |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 3 Months Ended |
Mar. 31, 2023 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 9 Prepaid expenses and other current assets consisted of the following as of March 31, 2023 and December 31, 2022: 2023 2022 Prepaid income taxes $ 10,637,171 $ 9,822,603 Other prepaids 51,753 80,271 Other current assets 508,457 662,267 Total prepaid expenses and other current assets $ 11,197,381 $ 10,565,141 |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 3 Months Ended |
Mar. 31, 2023 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 10 – PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following as of March 31, 2023 and December 31, 2022: 2023 2022 Building $ 1,874,049 $ 1,874,049 Land 2,700,000 2,700,000 Building improvements 1,010,218 1,010,218 Leasehold improvements 1,537,775 1,537,775 Autos and trucks 178,695 178,695 Computer and equipment 1,821,819 1,821,819 Furniture and fixtures 411,801 411,801 9,534,357 9,534,357 Accumulated depreciation (4,534,618) (4,419,558) Property, plant and equipment, net $ 4,999,739 $ 5,114,799 Depreciation and amortization expense was $115,060 and $168,317 for the three months ended March 31, 2023 and 2022, respectively. The Company did not have any disposals during the three months ended March 31, 2023. During the three months ended March 31, 2022, the Company disposed of $11,615 in computer equipment with an accumulated depreciation of $9,182. The total loss resulting from the disposal of the assets amounted to $2,433. The Company’s subsidiary, Donkey Crew, LLC, held net property, plant and equipment outside of the United States in the amount of $9,751 and $13,569, as of March 31, 2023 and December 31, 2022, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2023 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 11 – INTANGIBLE ASSETS Intangible assets consist of game licenses, game software underlying intellectual property rights, game trademarks and other branding items. The Company amortizes the intangible assets over its useful life. The following tables reflect all the intangible assets presented on the condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022: March 31, 2023 Gross Weighted Carrying Accumulated Impairment Net Book Average Amount Amortization Loss Value Useful Life License rights from related parties $ 136,665,000 $ (135,976,594) $ — $ 688,406 3 - 5 years License rights $ 3,000,000 $ (3,000,000) $ — $ — 5 years Intangible assets - other: Software $ 51,784 $ (51,784) $ — $ — 3 years Trademark 10,745 (9,311) — 1,434 12 years In-progress patent 270,886 — — 270,886 Total: $ 333,415 $ (61,095) $ — $ 272,320 December 31, 2022 Gross Weighted Carrying Accumulated Impairment Net Book Average Amount Amortization Loss Value Useful Life License rights from related parties $ 136,665,000 $ (135,280,942) $ — $ 1,384,058 3 - 5 years License rights $ 3,000,000 $ (3,000,000) $ — $ — 5 years Intangible assets - other: Software $ 51,784 $ (51,784) $ — $ — 3 years Trademark 10,745 (9,110) — 1,635 12 years In-progress patent 270,886 — — 270,886 Total: $ 333,415 $ (60,894) $ — $ 272,521 Amortization expense was $695,853 and $2,001,203 for the three months ended March 31, 2023 and 2022, respectively. These amounts are included in cost of revenues in the accompanying condensed consolidated statements of operations and comprehensive income (loss). The weighted average remaining useful life for which amortization expense will be recognized is 0.8 years as of March 31, 2023. Future amortization expense of intangible assets is as follows: Years ending December 31, Amount Remainder of 2023 $ 689,009 2024 804 2025 27 2026 — 2027 — Thereafter 270,886 $ 960,726 |
ACCOUNTS PAYABLE - RELATED PART
ACCOUNTS PAYABLE - RELATED PARTY | 3 Months Ended |
Mar. 31, 2023 | |
ACCOUNTS PAYABLE - RELATED PARTY | |
ACCOUNTS PAYABLE - RELATED PARTY | NOTE 12 – ACCOUNTS PAYABLE — RELATED PARTY Accounts payable due to related party represents payables in the ordinary course of business primarily for purchases of game distribution licenses and also the royalties due to Suzhou Snail. As of March 31, 2023 and December 31, 2022, the Company had $19,540,783 and $19,918,259, respectively, as accounts payable due to Suzhou Snail. During the three months ended March 31, 2023 and 2022, the Company incurred $72,524 and $126,460, respectively as license costs due to Suzhou Snail. During the three months ended March 31, 2023 and 2022, respectively, there were $450,000 and $444,263 in payments to Suzhou Snail for royalties. |
LOAN AND INTEREST RECEIVABLE -
LOAN AND INTEREST RECEIVABLE - RELATED PARTY | 3 Months Ended |
Mar. 31, 2023 | |
LOAN AND INTEREST RECEIVABLE - RELATED PARTY | |
LOAN AND INTEREST RECEIVABLE - RELATED PARTY | NOTE 13 – LOAN AND INTEREST RECEIVABLE — RELATED PARTY In February 2021, the Company lent $200,000 to a wholly owned subsidiary of Suzhou Snail, the loan bears 2.0% per annum interest, interest and principal are due in February 2022. In February 2022, Suzhou Snail signed an agreement with this subsidiary and assumed the loan and related interest for a total of $203,890. Subsequently, $103,890 was offset against the loan and interest payable owed to Suzhou Snail on a separate note. Please refer to Note 14 — Loan Payable and Interest Payable — Related Parties |
LOAN PAYABLE AND INTEREST PAYAB
LOAN PAYABLE AND INTEREST PAYABLE - RELATED PARTIES | 3 Months Ended |
Mar. 31, 2023 | |
LOAN PAYABLE AND INTEREST PAYABLE - RELATED PARTIES | |
LOAN PAYABLE AND INTEREST PAYABLE - RELATED PARTIES | NOTE 14 – LOAN PAYABLE AND INTEREST PAYABLE — RELATED PARTIES The Company had a loan amount due to related parties of $400,000 bearing 2.00% per annum interest. $300,000 of the loan is from a wholly owned subsidiary of Suzhou Snail and due in June 2022, and $100,000 is from Suzhou Snail and due in December 2023. The $100,000 loan along with $3,890 interest payable to Suzhou Snail was offset by the loan receivable Suzhou Snail assumed in February 2022. Please refer to Note 13 — Loan and Interest Receivable — Related Party |
REVOLVING LOAN, SHORT TERM NOTE
REVOLVING LOAN, SHORT TERM NOTE AND LONG -TERM DEBT | 3 Months Ended |
Mar. 31, 2023 | |
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT | |
REVOLVING LOAN, SHORT TERM NOTE AND LONG - TERM DEBT | NOTE 15 – REVOLVING LOAN, SHORT TERM NOTE AND LONG - TERM DEBT March 31, December 31, 2022 2021 2021 Revolving Loan $ 9,000,000 $ 9,000,000 2021 Promissory Note 6 10 2,865,317 2,891,820 2022 Short Term Note 4,166,667 5,833,333 Total 16,031,984 17,725,153 Less: current portion of long-term debt 80,568 86,524 Less: revolving loan 9,000,000 9,000,000 Less: current portion of short term note 4,166,667 5,416,666 Total long-term debt $ 2,784,749 $ 3,221,963 Total interest expense for above debt and revolver loan amounted to $294,245 and $166,055 for the three months ended March 31, 2023 and 2022, respectively. Amortization of loan origination expenses of $8,911 and $5,966 are included as part of interest expense for the three months ended March 31, 2023 and 2022, respectively. The Company is in compliance with, or received waivers for, its debt covenants as of March 31, 2023 and December 31, 2022. The following table provides future minimum payments of its long-term debt as of December 31: Years ending December 31, Amount Remainder of 2023 $ 12,810,021 2024 499,414 2025 86,013 2026 89,115 2027 92,329 Thereafter 2,455,092 $ 16,031,984 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2023 | |
INCOME TAXES | |
INCOME TAXES | NOTE 16 – INCOME TAXES The Company recognized an income tax benefit of $805,818 and an income tax expense of $1,529,651 for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023 and 2022, the Company’s effective tax rate did not differ from the federal statutory rate of 21% The Company has assessed all positive and negative evidence of whether sufficient future taxable income will be generated to realize the deferred tax assets, including the level of historical taxable income and projections of future taxable income over the periods during which the deferred tax assets are deductible. The Company has a history of significant book income and taxable income for the three most recent years – with a three-year cumulative pre-tax book income of $49.2 million and three-year cumulative taxable income of $71.7 million. Therefore management believes it is more likely than not that the Company will realize the benefits of these deductible differences. The Company and its subsidiaries currently file tax returns in the United States (federal and state) and Poland. The statute of limitations for its consolidated federal income tax returns are open for tax years ended December 31, 2019 and after. The statute of limitations for its consolidated state income tax returns are open for tax years ended December 31, 2018 and after. All tax periods for its Polish subsidiary are currently subject to examination since its inception in 2018. While the Company has historically only filed a state tax return in California, the management has accrued income tax liabilities for additional states as of March 31, 2023 and December 31, 2022, respectively and is also undergoing the Voluntary Disclosure Agreement process in additional states. |
OPERATING LEASE RIGHT-OF-USE AS
OPERATING LEASE RIGHT-OF-USE ASSETS | 3 Months Ended |
Mar. 31, 2023 | |
OPERATING LEASE RIGHT-OF-USE ASSETS | |
OPERATING LEASE RIGHT-OF-USE ASSETS | NOTE 17 – OPERATING LEASE RIGHT-OF-USE ASSETS The Company’s right-of-use assets represent arrangements related primarily to office facilities used in the ordinary business operations of the Company and its subsidiaries. In April, 2018, a commercial bank issued an irrevocable standby letter of credit on behalf of the Company to the landlord for $1,075,000 to lease office space. The standby letter of credit was valid for a one-year term and was amended in January 2021 to extend to January 31, 2026. As of March 31, 2023 and December 31, 2022, the Company’s net operating lease right-of-use assets amounted to $3,321,332 and $3,606,398, respectively. The Company had variable lease payments of approximately $24,510 and $18,333 during the three months ended March 31, 2023 and 2022, respectively; which consisted primarily of common area maintenance charges and administrative fees. Operating lease costs for the three months ended March 31, 2023 and 2022 are as follows: 2023 2022 Operating lease costs $ 397,562 $ 391,860 Short term lease costs — — Total operating lease costs $ 397,562 $ 391,860 Supplemental information related to operating leases is as follows for lease liabilities as of March 31, 2023 and December 31, 2022: 2023 2022 Cash paid for amounts included in the measurement of lease liabilities $ 385,254 $ 378,010 Weighted average remaining lease term 2.7 years 2.9 years Weighted average discount rate 5.00 % 5.00 % Future undiscounted lease payments for operating leases and a reconciliation of these payments to our operating lease liabilities as of March 31, 2023 are as follows: Future lease payments Imputed Interest Lease Liabilities Years ending December 31, Amount Remainder of 2023 $ 1,163,636 $ 126,885 $ 1,036,751 2024 1,610,844 105,810 1,505,034 2025 1,453,785 28,290 1,425,495 Thereafter — — — Total future lease payments $ 4,228,265 $ 260,985 $ 3,967,280 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 18 – COMMITMENTS AND CONTINGENCIES Litigation The Company is subject to claims and contingencies related to lawsuits and other matters arising out of the normal course of business. In addition, the Company may receive notifications alleging infringement of patent or other intellectual property rights. The Company has elected to expense legal costs associated with legal contingencies as incurred. On December 1, 2021, the Company and Studio Wildcard sent a notice of claimed infringement (the “DCMA Takedown Notice”) to Valve Corporation, which operates the Steam platform, pursuant to the Digital Millennium Copyright Act (“DCMA”). The DCMA Takedown Notice concerns a videogame titled Myth of Empires ARK: Survival Evolved Myth of Empires Myth of Empires Myth of Empires On December 9, 2021, Angela Game and Imperium filed a complaint against the Company and Studio Wildcard in the United States District Court for the Central District of California (the “District Court”) in response to the DCMA Takedown Notice. The lawsuit seeks a declaratory judgment on non-liability for copyright infringement and non-liability for trade secret misappropriation, as well as unspecified damages for alleged misrepresentations in the DCMA Takedown Notice. Angela Game and Imperium also filed an application for a temporary restraining order asking the court to order us and Studio Wildcard to rescind the DCMA Takedown Notice so that Steam could once again reinstate Myth of Empires ARK: Survival Evolved On February 3, 2022, Angela Game and Imperium appealed the order to the Ninth Circuit Court of Appeals (“Ninth Circuit”), claiming that the District Court judge abused her discretion in denying the injunction. On October 6, 2022, the Ninth Circuit issued an order affirming the District Court’s denial of the injunction. Meanwhile, the District Court has appointed a neutral expert to compare the parties’ computer code and issue a report about the extent of similarities. The parties also retained their own experts to compare the code. The expert served his report and in it detailed the basis for his conclusion that Angela copied substantial portions of the ARK: Survival Evolved As of May 9, 2023, both parties are in the midst of fact discovery, and anticipate beginning the exchange of electronically stored information in the near future. Fact discovery is expected to end around June 2023 and the District Court has set a January 2024 trial date. At this time, the Company is unable to quantify the magnitude of the potential loss should the plaintiffs’ lawsuit succeed. On March 14, 2023, Bel Air Soto, LLC (“Plaintiff”) filed suit in the Superior Court of California, County of Los Angeles, against Snail Games USA Inc. and INDIEV, Inc. (“INDIEV”), an affiliate company that is owned by Mr. Hai Shi, the Company’s Founder, Chief Strategy Officer, and Chairman, for breach of contract and related claims arising out of a commercial lease for premises located in Los Angeles County. Plaintiff alleges that the defendants exercised an option to extend the lease and was harmed when defendants instead terminated the lease and vacated the premises. The complaint seeks damages in excess of $3 million. Snail Games USA Inc. disputes the allegations and the amount of damages. Snail Games USA Inc. has not yet responded to the complaint or otherwise appeared in the action, but does intend to vigorously defend against the claims asserted. On April 21, 2023, Snail Games USA Inc. entered into an indemnity and reimbursement agreement with INDIEV, dated as of April 1, 2023, pursuant to which INDIEV agrees to assume all obligations and liabilities pursuant to the lease and indemnify and reimburse Snail Games USA Inc. for any amounts, damages, expenses, costs or other liability incurred by Snail Games USA Inc. arising under or pursuant to the lease or relating to the premises. At this time, the Company is unable to quantify the magnitude of the potential loss should the plaintiffs’ lawsuit succeed. |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 3 Months Ended |
Mar. 31, 2023 | |
EARNINGS (LOSS) PER SHARE | |
EARNINGS (LOSS) PER SHARE | NOTE 19 – EARNINGS (LOSS) PER SHARE The Company uses the two class method to compute its basic earnings (loss) per share (“Basic EPS”) and diluted earnings per share (“Diluted EPS”). The following table summarizes the computations of basic EPS and diluted EPS. The allocation of earnings between Class A and Class B shares is based on their respective economic rights to the undistributed earnings of the Company. Basic EPS is computed as net income (loss) divided by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock-based compensation plans including restricted stock units using the treasury stock method. The restricted stock units were excluded from the treasury stock method computation of diluted shares as their inclusion would have had an antidilutive effect for the three months ended March 31, 2023. There were no such exclusions made in the 2022 calculation. For the three months ended March 31, 2022, the Company has used the number of shares transferred in the reorganization transaction for the denominator in the EPS calculation. The following table provides a reconciliation of the weighted average number of shares used in the calculation of basic and diluted EPS. 2023 2022 Basic Earnings Per Share: Net income (loss) attributable to Class A common stockholders $ (642,340) $ 5,811,057 Net income (loss) attributable to Class B common stockholders (2,329,038) — Total net income (loss) attributable to Snail Inc and Snail Games USA Inc. $ (2,971,378) $ 5,811,057 Class A weighted average shares outstanding - basic 7,928,742 35,000,000 Class B weighted average shares outstanding - basic 28,748,580 — Class A and B basic earnings per share $ (0.08) $ 0.17 Diluted Earnings Per Share: Net income (loss) attributable to Class A common stockholders $ (642,340) $ 5,811,057 Net income (loss) attributable to Class B common stockholders $ (2,329,038) $ — Class A weighted average shares outstanding - basic 7,928,742 35,000,000 Dilutive effects of common stock equivalents — — Class A weighted average shares outstanding - diluted 7,928,742 35,000,000 Class B weighted average shares outstanding - basic 28,748,580 — Dilutive effects of common stock equivalents — — Class B weighted average shares outstanding - diluted 28,748,580 — Diluted earnings (loss) per Class A and B share $ (0.08) $ 0.17 |
EQUITY
EQUITY | 3 Months Ended |
Mar. 31, 2023 | |
EQUITY | |
EQUITY | NOTE 20 – EQUITY The Company has authorized two classes of common stock, Class A and Class B. The rights of the holders of both Class A and Class B common stock will be identical, except with respect to voting, conversion and transfer restrictions applicable to the Class B common stock. Each share of Class A common stock will be entitled to one vote. Each share of Class B common stock will be entitled to ten votes and will be convertible into one share of Class A common stock automatically upon transfer, subject to certain exceptions. Holders of Class A common stock and Class B common stock will vote together as a single class on all matters unless otherwise required by law. On November 9, 2022, in connection with the IPO, the Company entered into an underwriting agreement (the “Underwriting Agreement” with the underwriters (the “Underwriters”), pursuant to which the Company agreed to issue and sell 3,000,000 shares of Class A common stock (the “Firm Shares”) at a purchase price of $4.675 per share to the Underwriters and granted the Underwriters an option (the “Over-Allotment Option”) to purchase up to 450,000 additional shares of Class A common stock (the “Option Shares”) at a purchase price of $4.675 per share. The Underwriters may exercise the Over-Allotment Option at any time in whole, or from time to time in part, on or before the forty-fifth day following the effectiveness of the IPO. The Over-Allotment Option was not exercised by the Underwriters prior to its expiration. In connection with the Underwriting Agreement, on November 9, 2022, the Company also issued to the Underwriters warrants to purchase such number of shares of the Company’s Class A common stock in an amount equal to four percent of the total number of shares of Class A common stock sold in the IPO, or 120,000 shares of Class A common stock (the “Underwriters Warrants”). The Underwriters Warrants may be exercised at a price per share equal to 125% of the IPO price, or $6.25 per share. The Underwriters Warrants are exercisable, in whole or in part, commencing on November 9, 2022, and expiring on the three-year anniversary thereof. The Underwriters Warrants have not been exercised as of the filing of this Quarterly Report. The Underwriters Warrants and Over-Allotment Option are legally detachable and separately exercisable from each other and from the Firm Shares; therefore, they meet the definition of freestanding and are not considered embedded in the Firm Shares. The Underwriters Warrants are considered indexed to the Company’s own stock. Additionally, the Company concludes that the Underwriters Warrants meet all requirements for equity classification. Because the Underwriters Warrants are issued to the Underwriters for their services and can be exercised immediately (subject to certain transfer conditions) they will be measured at their fair value on their date of issuance and recorded within stockholders’ equity. As long as the Underwriters Warrants remain classified as equity, they shall not be revalued. The fair value of the Underwriters Warrants was determined using the Black-Scholes model. The key assumptions used in the valuation were a average expected volatility of 53%, discount rate of 4.49% and remaining term of 3 years. The Company allocates all the issuance costs to the firm shares as a reduction of proceeds. Restricted Stock Units Vesting for restricted stock units granted to directors vest based on the directors’ continued employment with us through each applicable vest date, which is generally over one year. If the vesting conditions are not met, unvested restricted stock units will be forfeited. The following table summarizes our restricted stock units activity with directors for the three months ended March 31, 2023. There were no activities during the three months ended March 31, 2022. Restricted Stock Weighted-Average Units Grant-Date Fair Values Outstanding as of January 1, 2023 24,000 $ 5.00 Granted — — Vested — — Forfeited or cancelled — — Outstanding as of March 31, 2023 24,000 $ 5.00 The grant date fair value of restricted stock units granted to directors is based on the quoted market price of our common stock on the date of grant. Our restricted stock units granted to employees vest upon the achievement of pre-determined performance-based milestones as well as service conditions. The pre-determined performance-based milestones are based on specified percentages of the restricted stock units that would vest at each of the first five Each quarter, the Company updates our assessment of the probability that the performance milestones will be achieved. The Company amortizes the fair values of performance-based restricted stock units over the requisite service period. Each performance-based milestone is weighted evenly and the number of shares that vest based on each performance-based milestone is independent from the other. The following table summarizes our restricted stock unit activity with employees, presented with the maximum number of shares that could potentially vest, for the three months ended March 31, 2023. There were no activities during the three months ended March 31, 2022. Restricted Stock Weighted-Average Units Grant-Date Fair Values Outstanding as of January 1, 2023 1,197,552 $ 5.00 Granted — — Vested — — Forfeited or cancelled (2,218) 5.00 Outstanding as of March 31, 2023 1,195,334 $ 5.00 The grant date fair value of restricted stock units granted to employees is based on the quoted market price of our common stock on the date of grant. Repurchase Activity All share repurchases settled in the three months ended March 31, 2023 were open market transactions. As of March 31, 2023, 1,350,275 shares of Class A common stock were repurchased pursuant to the Share Repurchase Program for an aggregate purchase price of approximately $3.7 million. The average price paid per share was $2.72 and approximately $1.3 million aggregate amount of shares of Class A common stock remain available for repurchase under the Share Repurchase Program. Stock-Based Compensation Expense Stock-based compensation expense resulting from restricted stock units and performance-based restricted stock units of $152,595 and $0 are recorded under General and Administrative expenses included in our condensed consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023 and 2022, the Company recognized approximately $32,045 and $0 respectively, of deferred income tax benefit related to our stock-based compensation expense. As of March 31, 2023, our total unrecognized compensation cost related to restricted stock units was approximately $1.8 million and is expected to be recognized over a weighted-average service period of 3.1 years. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 21 – SUBSEQUENT EVENTS In April 2023, Snail Games USA Inc. entered into an indemnity and reimbursement agreement with INDIEV pursuant to which INDIEV agreed to assume all obligations and liabilities pursuant to the lease with Bel Air Soto, LLC and indemnify and reimburse Snail Games USA Inc. for any amounts, damages, expenses, costs or other liability incurred by it arising under or pursuant to the lease or relating to the premises. See Note 18 — Commitments and Contingencies |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Revenue Recognition | Revenue Recognition The Company’s revenue includes the publishing of software games delivered digitally and through physical discs (e.g., packaged goods). The Company’s digital games may include additional downloadable content that are new feature releases to digital full-game downloads. Revenue also includes sales of mobile in-app purchases that require the Company’s hosting support in order to utilize the game or related content. Such games include virtual goods that can be purchased by the end users, as desired. When control of the promised products and services is transferred to the customers, the Company recognizes revenue in the amount that reflects the consideration it expects to receive in exchange for these products and services. Revenue from delivery of products is recognized at a point in time when the end consumers download the games and the control of the license is transferred to them. The Company recognizes revenue using the following five steps as provided by Accounting Standards Codification (“ASC”) Topic 606 Revenue from Contracts with Customers 75 Principal vs Agent Consideration The Company offers certain software products via third-party digital storefronts, such as Microsoft’s Xbox Live, Sony’s PlayStation Network, Valve’s Steam, Epic Games Store, My Nintendo Store, Apple’s App Store, the Google Play Store, and retail distributors. For sales of our software products via third-party digital storefronts and retail distributor, the Company determines whether or not it is acting as the principal in the sale to the end user, which the Company considers in determining if revenue should be reported based on the gross transaction price to the end user or based on the transaction price net of fees retained by the third-party digital storefront. An entity is the principal if it controls a good or service before it is transferred to the customer. Key indicators that the Company uses in evaluating these sales transactions include, but are not limited to, the following: ● The underlying contract terms and conditions between the various parties to the transaction; ● Which party is primarily responsible for fulfilling the promise to provide the specified good or service; and ● Which party has discretion in establishing the price for the specified good or service. Based on our evaluation of the above indicators, for sales arrangements via Microsoft’s Xbox Live, Sony’s PlayStation Network, Valve’s Steam, Epic Games Store, and retail distributor, the digital platforms and distributors have discretion in establishing the price for the specified good or service and the Company has determined it is the agent in the sales transaction to the end user and therefore the Company reports revenue on a net basis based on the consideration received from the digital storefront. For sales arrangements via Apple’s App Store and the Google Play Store, the Company has discretion in establishing the price for the specified good or service and it has determined that the Company is the principal to the end user and thus reports revenue on a gross basis and mobile platform fees charged by these digital storefronts are expensed as incurred and reported within cost of revenues. Contract Balance The Company records deferred revenue when cash payments are received or due in advance of its performance, even if amounts are refundable. Deferred revenue is comprised of the transaction price allocable to the Company’s performance obligation on technical support and the sale of virtual goods available for in-app purchases, and payments received from customers prior to launching the games on the platforms. The Company categorizes the virtual goods as either “consumable” or “durable.” Consumable virtual goods represent goods that can be consumed by a specific player action; accordingly, the Company recognizes revenues from the sale of consumable virtual goods as the goods are consumed and the performance obligation is satisfied. Durable virtual goods represent goods that are accessible to the players over an extended period of time; accordingly, the Company recognize revenues from the sale of durable virtual goods ratably over the period of time the goods are available to the player and the performance obligation is satisfied, which is generally the estimated service period, 30 to 90 days from date of activation. The Company has a long-term title license agreement with a platform. The agreement was initially made between the parties in November 2018 and valid through December 31, 2021. The agreement was subsequently amended in June 2020 to extend the ARK 1 ARK 2 three years ARK 1 ARK 2 In November 2021, the Company entered an agreement with a platform to make ARK 1 Estimated Service Period For certain performance obligations satisfied over time, the Company has determined that the estimated service period is the time period in which an average user plays our software products (“user life”) which most faithfully depicts the timing of satisfying our performance obligation. Shipping, Handling and Value Added Taxes (“VAT”) The distributor, as the principal, is responsible for the shipping of the game discs to the retail stores and incurring the shipping and VAT costs. The Company is paid the net sales amount after deducting shipping costs, VAT and other related expenses by the distributor. |
Cost of Revenues | Cost of Revenues Cost of revenues include software license royalty fees, merchant fees, server and database center costs, game localization costs, game licenses, engine fees and amortization costs. Cost of revenues for the three months ended March 31, 2023 and 2022 were comprised of the following: 2023 2022 Software license royalties - related parties $ 2,863,013 $ 6,521,178 Software license royalties 352,439 — License and amortization - related parties 5,195,651 6,350,979 License and amortization 201 150,224 Merchant fees 459,471 657,536 Engine fees 424,227 713,993 Internet, server and data center 496,150 495,107 Costs related to advertising revenue 25,245 — Total: $ 9,816,397 $ 14,889,017 |
General and Administrative Costs | General and Administrative Costs General and administrative costs include rents, salaries, stock-based compensation, legal and professional expenses, internet and server, contractor costs, insurance expense, licenses and permits, other taxes and travel expenses. These costs are expensed as they are incurred. For the three months ended March 31, 2023 and 2022, general and administrative expenses totaled $5,570,291 and $5,620,010, respectively. Stock-based compensation of $152,595 was incurred during the three months ended March 31, 2023; no such compensation was incurred in the three months ended March 31, 2022. |
Advertising and Marketing Costs | Advertising and Marketing Costs The Company expenses advertising costs as incurred. For the three months ended March 31, 2023 and 2022, advertising expenses totaled $104,549 and $158,670, respectively. |
Research and Development | Research and Development Research and development costs are expensed as incurred. Research and development costs include travel, payroll, and other general expenses specific to research and development activities. Research and development costs for the three months ended March 31, 2023 and 2022 were $1,373,797 and $183,956, respectively. |
Non-controlling Interests | Non-controlling Interests Non-controlling interests on the condensed consolidated balance sheets and condensed consolidated statements of operations and comprehensive income (loss) include the equity allocated to non-controlling interest holders. As of March 31, 2023 and December 31, 2022, there were non-controlling interests with the following subsidiaries: Subsidiary Name Equity % Owned Non-Controlling % Snail Innovative Institute 70 % 30 % BTBX.IO, LLC 70 % 30 % Donkey Crew, LLC 99 % 1 % |
Cash and Restricted Cash and Cash Equivalents | Cash and Restricted Cash and Cash Equivalents Cash is available for use in current operations or other activities such as capital expenditures and business combinations. Restricted cash and cash equivalents are time deposits, that are currently provided as security to our debts with a financial institution and the issuance of a standby letter of credit to landlords. |
Restricted Escrow Deposits | Restricted Escrow Deposits Our restricted deposits held in escrow are to provide a source of funding for certain indemnification obligations of Snail, Inc. to our underwriters in connection with our IPO. The deposit and related interest earnings are restricted for one year from the IPO date. |
Accounts Receivable | Accounts Receivable The Company generally records a receivable related to revenue when it has an unconditional right to invoice and receive payment. Accounts receivable are carried at original invoice amount less a allowance made for credit losses. The Company uses a combination of quantitative and qualitative factors to estimate the allowance, including an analysis of the customers’ creditworthiness, historical experience, age of current accounts receivable balances, changes in financial condition or payment terms of our customers, and reasonable forecasts of the collectability of the accounts receivable. The Company evaluates the allowance for credit losses on a periodic basis and adjusts it as necessary based on the risk factors mentioned above. Any increase in the provision for credit losses is recorded as a charge to general and administrative expense in the current period. Any amounts deemed uncollectible are written off against the allowance for credit losses. Management judgment is required to estimate our allowance for credit losses in any accounting period. The amount and timing of our credit losses and cash collection could change significantly because of a change in any of the risk factors mentioned above. |
Fair Value Measurements | Fair Value Measurements The Company follows FASB ASC Topic 820, Fair Value Measurements. ASC 820 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. ASC 820 establishes a hierarchy of valuation inputs based on the extent to which the inputs are observable in the marketplace. Observable inputs reflect market data obtained from sources independent of the reporting entity and unobservable inputs reflect the entity’s own assumptions about how market participants would value an asset or liability based on the best information available. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The following describes the hierarchy of inputs used to measure fair value and the primary valuation methodologies used by the Company for financial instruments measured at fair value. The three levels of inputs are as follows: ● Level 1 : Quoted prices in active markets for identical assets or liabilities that the Company has an ability to access as of the measurement date. ● Level 2 : Inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the same term of the assets or liabilities. ● Level 3 : Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Our financial instruments include cash and cash equivalents, restricted cash and cash equivalents, short-term financial instruments, short-term loans, accounts receivable, accounts payable and current liabilities. The carrying values of these financial instruments approximate their fair value due to their short maturities. The carrying amount of our debt approximates fair value because the interest rates on these instruments approximate the interest rate on debt with similar terms available to us for a similar duration with the exception of the Company’s promissory note which has a fixed rate for 5 years, then a floating rate that approximates the Wall Street Journal Prime Rate plus 0.50%. The Company considers the carrying amount of the loan to approximate fair value as the discounted cost in comparison to market rates would not be materially different than the cost to acquire a loan with similar terms. The Company does not have any other assets or liabilities measured at fair value on a recurring or non-recurring basis as of March 31, 2023 and December 31, 2022. |
Amortizable Intangibles and Other Long-lived Assets | Amortizable Intangibles and Other Long-lived Assets The Company’s long-lived assets and other assets consisting of property, plant and equipment and purchased intangible assets, are reviewed for impairment in accordance with the guidance of Financial Accounting Standards Board (“FASB”) Topic ASC 360, Property, Plant, and Equipment. Intangible assets subject to amortization are carried at cost less accumulated amortization and amortized over the estimated useful life in proportion to the economic benefits received. The Company evaluates the recoverability of definite-lived intangible assets and other long-lived assets in accordance with ASC Subtopic 360-10, which generally requires the assessment of these assets for recoverability when events or circumstances indicate a potential impairment exists. The Company considers certain events and circumstances in determining whether the carrying value of identifiable intangible assets and other long-lived assets, other than indefinite lived intangible assets, may not be recoverable including, but not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in the Company’s business strategy. If the Company determines that the carrying value may not be recoverable, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of the asset group to determine whether an impairment exists. If an impairment is indicated based on a comparison of the asset groups’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the asset group exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. There can be no assurance, however, that market conditions will not change or demand for the Company’s products under development will continue. Either of these could result in future impairment of long-lived assets. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our consolidated reporting results and financial positions. |
Income Taxes | Income Taxes Income taxes are provided for the tax effects of transactions reported in the condensed consolidated financial statements and consisted of taxes currently due and deferred taxes. Deferred taxes are recognized for the differences between the basis of assets and liabilities for financial statement and income tax purposes. The Company follows FASB Topic ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. FASB ASC 740-10-25 provides criteria for the recognition, measurement, presentation, and disclosure of uncertain tax positions. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the condensed consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company recognizes liabilities for uncertain tax positions pursuant to FASB ASC 740-10-25. Such amounts are included in the current and long-term accrued expenses on the accompanying condensed consolidated balance sheets in the amount of $457,024 as of March 31, 2023 and December 31, 2022. The Company accrues and recognizes interest and penalties related to unrecognized tax benefits in operating expenses. |
Concentration of Credit Risk and Significant Customers | Concentration of Credit Risk and Significant Customers The Company maintains cash balances at several major financial institutions. While the Company attempts to limit credit exposure with any single institution, balances often exceed insurable amounts. As of March 31, 2023 and December 31, 2022, the Company had deposits of $9,443,584 and $17,929,308, respectively, that were not insured by the Federal Deposit Insurance Corporation and are included in the cash and cash equivalents, restricted escrow deposit and restricted cash and cash equivalents, in the accompanying condensed consolidated balance sheets. The Company extends credit to various digital resellers and partners. Collection of trade receivables may be affected by changes in economic or other industry conditions and may, accordingly, impact our overall credit risk. The Company performs ongoing credit evaluations of customers and maintains reserves for potentially uncollectible accounts. As of March 31, 2023 and December 31, 2022, the Company had three customers who accounted for approximately 71% and two customers who accounted for approximately 57% of consolidated gross receivables, respectively. Among the three customers as of March 31, 2023 and two customers as of December 31, 2022, each customer accounted for 30%, 23% and 18% as of March 31, 2023, and 29% and 28% as of December 31, 2022 of the consolidated gross receivables outstanding. During the three months ended March 31, 2023 and 2022, approximately 60% and 61%, respectively, of net revenue was derived from these customers. The loss of these customers or declines in the forecasts of their accounts receivable collectability would have a significant impact on the Company’s financial performance. As of March 31, 2023 and December 31, 2022, the Company had two vendors who accounted for approximately 67% and two vendors who accounted for approximately 55% of consolidated gross payables, respectively. Among the two vendors as of March 31, 2023 and December 31, 2022, each vendor accounted for 55% and 12% as of March 31, 2023, and 43% and 12% as of December 31, 2022 of our consolidated gross payables outstanding. The loss of these vendors could have a significant impact on the Company’s financial performance and regulatory compliance. The Company had one vendor, SDE Inc. (“SDE”), a related party, that accounted for 58% and 53% of the Company’s combined cost of revenues and operating expenses during the three months ended March 31, 2023 and 2022, respectively. Amounts payable to SDE are netted with receivables from them and presented as accounts receivable - related party in the condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022. The loss of SDE as a vendor would significantly and adversely affect the Company’s core business. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses In August 2020, the FASB issued ASU 2020-06, Contracts in Entity’s Own Equity (Subtopic 815-40) – Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity Employee Savings Plans The Company maintains a 401(k) for its United States based employees. The plan is offered to all eligible employees to make voluntary contributions. Employer contributions to the plan are reported under general and administrative costs in the amounts of $26,619 and $13,182 for the three months ended March 31, 2023 and 2022. Stock-Based Compensation The Company recognizes compensation cost for stock-based awards to employees based on the awards’ estimated grant-date fair value using a straight-line approach over the service period for which such awards are expected to vest. The Company accounts for forfeitures as they occur. The Company issued restricted stock units (“Restricted Stock Units” or “restricted stock units”) during the year ended December 31, 2022. The fair value of Restricted Stock Units is determined based on the quoted market price of our common stock on the date of grant. The Company’s 2022 Omnibus Incentive Plan (the “2022 Plan”) became effective upon the consummation of the IPO. The 2022 Omnibus Incentive allows us to grant options to purchase our common stock and to grant stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards and other cash-based awards and other stock-based awards to our employees, officers, and directors, up to a maximum of 5,718,000 shares. Stock options may be granted to employees and officers and non-qualified options may be granted to employees, officers, and directors, at not less than the fair market value on the date of grant. The number of shares of common stock available for issuance under the 2022 Plan will be increased annually on the first day of each fiscal year during the term of the 2022 Plan, beginning with the 2023 fiscal year, by an amount equal to the lesser of (a) 5,718,000 shares, (b) 1% of the shares of the Company’s Class B common stock outstanding (on a fully diluted basis) on the final day of the immediately preceding calendar year or (c) such smaller number of shares as determined by the Company’s board of directors. As of March 31, 2023, there were 4,498,666 shares reserved for issuance under the 2022 Plan. Restricted Stock Units The Company granted restricted stock units under our 2022 Omnibus Incentive Plan to employees and directors. Restricted stock units are unfunded, unsecured rights to receive common stock upon the satisfaction of certain vesting criteria. Upon vesting, a number of shares of common stock equivalent to the number of restricted stock units is typically issued net of required tax withholding requirements, if any. Restricted stock units are subject to forfeiture and transfer restrictions. Warrants In connection with the IPO, offering costs related to legal, accounting, and underwriting costs were net with the proceeds and recorded as a reduction in additional paid in capital, in the stockholders’ equity section of the condensed consolidated balance sheets. The Company also issued Underwriters Warrants (as defined below) for services provided during the IPO to purchase 120,000 shares of Class A common stock. The Underwriters Warrants are accounted for as equity instruments and are included in the stockholders’ equity section of the condensed consolidated balance sheets. The fair value of the Underwriters Warrants has been estimated using the Black-Scholes option pricing model. Share Repurchase Program On November 10, 2022, the Company’s board of directors authorized a share repurchase program under which the Company may repurchase up to $5 million of outstanding shares of Class A common stock of the Company, subject to ongoing compliance with the Nasdaq listing rules. The program does not have a fixed expiration date. Repurchased shares are accounted for at cost and reported as a reduction of equity in the condensed consolidated balance sheets under treasury stock. No treasury stock was sold during the three months ended March 31, 2023. As of March 31, 2023, 1,350,275 shares of Class A common stock were repurchased pursuant to the Share Repurchase Program for an aggregate purchase price of approximately $3.7 million. The average price paid per share was $2.72 and approximately $1.3 million aggregate amount of shares of Class A common stock remain available for repurchase under the Share Repurchase Program. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Earnings (loss) per share (“EPS”) is calculated by dividing the net income (loss) that is applicable to the common stockholders for the period by the weighted average number of shares of common stock during that period. The diluted EPS for the period is calculated by dividing the net income (loss) applicable to common stockholders for the period by the weighted average number of shares of common stock and common stock equivalents outstanding during the period. The Company’s common stock equivalents are measured using the treasury stock method and represent unvested restricted stock units and warrants. The Company issues two classes of common stock with differing voting rights, and as such, reports EPS using the dual class method. For comparative purposes the Company has presented EPS for the three months ended March 31, 2022 using the number of shares exchanged in the reorganization of the Company as the denominator. For more information see Note 19 – Earnings (Loss) Per Share. |
Dividend Restrictions | Dividend Restrictions Our ability to pay cash dividends is currently restricted by the terms of our credit facilities. |
PRESENTATION AND NATURE OF OP_2
PRESENTATION AND NATURE OF OPERATIONS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
PRESENTATION AND NATURE OF OPERATIONS | |
Schedule of subsidiaries included in the consolidated financial statements | Equity % Subsidiary Name Owned Snail Games USA Inc. 100 % Snail Innovation Institute 70 % Frostkeep Studios, Inc. 100 % Eminence Corp 100 % Wandering Wizard, LLC 100 % Donkey Crew, LLC 99 % Interactive Films, LLC 100 % Project AWK Productions, LLC 100 % BTBX.IO, LLC 70 % |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of Cost of revenues | 2023 2022 Software license royalties - related parties $ 2,863,013 $ 6,521,178 Software license royalties 352,439 — License and amortization - related parties 5,195,651 6,350,979 License and amortization 201 150,224 Merchant fees 459,471 657,536 Engine fees 424,227 713,993 Internet, server and data center 496,150 495,107 Costs related to advertising revenue 25,245 — Total: $ 9,816,397 $ 14,889,017 |
Schedule of Equity interest and Non controlling interest in subsidiaries | Subsidiary Name Equity % Owned Non-Controlling % Snail Innovative Institute 70 % 30 % BTBX.IO, LLC 70 % 30 % Donkey Crew, LLC 99 % 1 % |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | |
Schedule of disaggregation of revenue | 2023 2022 United States $ 11,777,874 $ 26,286,796 International 1,680,614 1,767,795 Total revenue from contracts with customers: $ 13,458,488 $ 28,054,591 2023 2022 Console $ 5,773,590 $ 17,991,579 PC 5,012,180 6,684,436 Mobile 1,718,032 2,791,320 Other 954,686 587,256 Total revenue from contracts with customers: $ 13,458,488 $ 28,054,591 2023 2022 Digital $ 10,785,770 $ 24,676,015 Mobile 1,718,032 2,791,320 Physical retail and other 954,686 587,256 Total revenue from contracts with customers: $ 13,458,488 $ 28,054,591 |
Schedule of deferred Revenue | 2023 2022 Deferred revenue, beginning balance in advance of revenue recognition billing $ 9,551,446 $ 20,280,934 Revenue recognized (453,223) (18,832,396) Revenue deferred 302,094 8,102,908 Deferred revenue, ending balance 9,400,317 9,551,446 Less: short term portion (4,517,573) (4,335,404) Deferred revenue, long term $ 4,882,744 $ 5,216,042 |
CASH AND CASH EQUIVALENTS, AN_2
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS | |
Summary of components of the company's cash and cash equivalents, and restricted cash and cash equivalents | 2023 2022 Cash and cash equivalents $ 4,108,251 $ 12,863,817 Restricted cash and cash equivalents 6,380,657 6,374,368 Cash and cash equivalents, and restricted cash and cash equivalents $ 10,488,908 $ 19,238,185 |
ACCOUNTS RECEIVABLE - RELATED_2
ACCOUNTS RECEIVABLE - RELATED PARTY (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
ACCOUNTS RECEIVABLE - RELATED PARTY | |
Schedule of outstanding balance of net accounts receivable from related party | 2023 2022 Accounts receivable - related party $ 13,519,409 $ 13,519,409 Less: Accounts payable - related party (2,222,969) (2,175,225) Accounts receivable - related party, net $ 11,296,440 $ 11,344,184 |
PREPAID EXPENSES - RELATED PA_2
PREPAID EXPENSES - RELATED PARTY (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
PREPAID EXPENSES - RELATED PARTY | |
Schedule of prepaid expenses - related party | 2023 2022 Prepaid royalties $ 582,500 $ 582,500 Prepaid licenses 7,500,000 5,000,000 Prepaid expenses - related party, ending balance 8,082,500 5,582,500 Less: short-term portion (2,500,000) — Total prepaid expenses - related party, long-term $ 5,582,500 $ 5,582,500 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
Schedule of prepaid expenses and other current assets | 2023 2022 Prepaid income taxes $ 10,637,171 $ 9,822,603 Other prepaids 51,753 80,271 Other current assets 508,457 662,267 Total prepaid expenses and other current assets $ 11,197,381 $ 10,565,141 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |
Schedule of property, plant and equipment, net | 2023 2022 Building $ 1,874,049 $ 1,874,049 Land 2,700,000 2,700,000 Building improvements 1,010,218 1,010,218 Leasehold improvements 1,537,775 1,537,775 Autos and trucks 178,695 178,695 Computer and equipment 1,821,819 1,821,819 Furniture and fixtures 411,801 411,801 9,534,357 9,534,357 Accumulated depreciation (4,534,618) (4,419,558) Property, plant and equipment, net $ 4,999,739 $ 5,114,799 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets | March 31, 2023 Gross Weighted Carrying Accumulated Impairment Net Book Average Amount Amortization Loss Value Useful Life License rights from related parties $ 136,665,000 $ (135,976,594) $ — $ 688,406 3 - 5 years License rights $ 3,000,000 $ (3,000,000) $ — $ — 5 years Intangible assets - other: Software $ 51,784 $ (51,784) $ — $ — 3 years Trademark 10,745 (9,311) — 1,434 12 years In-progress patent 270,886 — — 270,886 Total: $ 333,415 $ (61,095) $ — $ 272,320 December 31, 2022 Gross Weighted Carrying Accumulated Impairment Net Book Average Amount Amortization Loss Value Useful Life License rights from related parties $ 136,665,000 $ (135,280,942) $ — $ 1,384,058 3 - 5 years License rights $ 3,000,000 $ (3,000,000) $ — $ — 5 years Intangible assets - other: Software $ 51,784 $ (51,784) $ — $ — 3 years Trademark 10,745 (9,110) — 1,635 12 years In-progress patent 270,886 — — 270,886 Total: $ 333,415 $ (60,894) $ — $ 272,521 |
Schedule of future amortization expense of intangible assets | Years ending December 31, Amount Remainder of 2023 $ 689,009 2024 804 2025 27 2026 — 2027 — Thereafter 270,886 $ 960,726 |
REVOLVING LOAN, SHORT TERM NO_2
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT | |
Schedule of long-term debt | March 31, December 31, 2022 2021 2021 Revolving Loan $ 9,000,000 $ 9,000,000 2021 Promissory Note 6 10 2,865,317 2,891,820 2022 Short Term Note 4,166,667 5,833,333 Total 16,031,984 17,725,153 Less: current portion of long-term debt 80,568 86,524 Less: revolving loan 9,000,000 9,000,000 Less: current portion of short term note 4,166,667 5,416,666 Total long-term debt $ 2,784,749 $ 3,221,963 |
Schedule of future minimum payments of its long-term debt | Years ending December 31, Amount Remainder of 2023 $ 12,810,021 2024 499,414 2025 86,013 2026 89,115 2027 92,329 Thereafter 2,455,092 $ 16,031,984 |
OPERATING LEASE RIGHT-OF-USE _2
OPERATING LEASE RIGHT-OF-USE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
OPERATING LEASE RIGHT-OF-USE ASSETS | |
Schedule of operating lease costs | 2023 2022 Operating lease costs $ 397,562 $ 391,860 Short term lease costs — — Total operating lease costs $ 397,562 $ 391,860 |
Schedule of supplemental information related to operating leases | 2023 2022 Cash paid for amounts included in the measurement of lease liabilities $ 385,254 $ 378,010 Weighted average remaining lease term 2.7 years 2.9 years Weighted average discount rate 5.00 % 5.00 % |
Schedule of future undiscounted lease payments for operating leases and reconciliation of these payments to our operating lease liabilities | Future undiscounted lease payments for operating leases and a reconciliation of these payments to our operating lease liabilities as of March 31, 2023 are as follows: Future lease payments Imputed Interest Lease Liabilities Years ending December 31, Amount Remainder of 2023 $ 1,163,636 $ 126,885 $ 1,036,751 2024 1,610,844 105,810 1,505,034 2025 1,453,785 28,290 1,425,495 Thereafter — — — Total future lease payments $ 4,228,265 $ 260,985 $ 3,967,280 |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
EARNINGS (LOSS) PER SHARE | |
Schedule of earnings per share | 2023 2022 Basic Earnings Per Share: Net income (loss) attributable to Class A common stockholders $ (642,340) $ 5,811,057 Net income (loss) attributable to Class B common stockholders (2,329,038) — Total net income (loss) attributable to Snail Inc and Snail Games USA Inc. $ (2,971,378) $ 5,811,057 Class A weighted average shares outstanding - basic 7,928,742 35,000,000 Class B weighted average shares outstanding - basic 28,748,580 — Class A and B basic earnings per share $ (0.08) $ 0.17 Diluted Earnings Per Share: Net income (loss) attributable to Class A common stockholders $ (642,340) $ 5,811,057 Net income (loss) attributable to Class B common stockholders $ (2,329,038) $ — Class A weighted average shares outstanding - basic 7,928,742 35,000,000 Dilutive effects of common stock equivalents — — Class A weighted average shares outstanding - diluted 7,928,742 35,000,000 Class B weighted average shares outstanding - basic 28,748,580 — Dilutive effects of common stock equivalents — — Class B weighted average shares outstanding - diluted 28,748,580 — Diluted earnings (loss) per Class A and B share $ (0.08) $ 0.17 |
EQUITY (Tables)
EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Directors | |
EQUITY | |
Schedule of restricted stock units activity | Restricted Stock Weighted-Average Units Grant-Date Fair Values Outstanding as of January 1, 2023 24,000 $ 5.00 Granted — — Vested — — Forfeited or cancelled — — Outstanding as of March 31, 2023 24,000 $ 5.00 |
Employees | |
EQUITY | |
Schedule of restricted stock units activity | Restricted Stock Weighted-Average Units Grant-Date Fair Values Outstanding as of January 1, 2023 1,197,552 $ 5.00 Granted — — Vested — — Forfeited or cancelled (2,218) 5.00 Outstanding as of March 31, 2023 1,195,334 $ 5.00 |
PRESENTATION AND NATURE OF OP_3
PRESENTATION AND NATURE OF OPERATIONS - (Details) | 3 Months Ended | |
Jul. 13, 2022 shares | Mar. 31, 2023 segment | |
PRESENTATION AND NATURE OF OPERATIONS | ||
Number of operating segments | 1 | |
Number of reportable segments | 1 | |
Snail Innovation Institute | ||
PRESENTATION AND NATURE OF OPERATIONS | ||
Equity interest owned by the company | 70% | |
Donkey Crew, LLC | ||
PRESENTATION AND NATURE OF OPERATIONS | ||
Equity interest owned by the company | 99% | |
BTBX.IO, LLC | ||
PRESENTATION AND NATURE OF OPERATIONS | ||
Equity interest owned by the company | 70% | |
Snail Technology | ||
PRESENTATION AND NATURE OF OPERATIONS | ||
Number of shares of common stock issued as per agreement | shares | 500,000 | |
Snail Games USA | Snail Games USA Inc | ||
PRESENTATION AND NATURE OF OPERATIONS | ||
Equity interest owned by the company | 100% | |
Snail Games USA | Snail Innovation Institute | ||
PRESENTATION AND NATURE OF OPERATIONS | ||
Equity interest owned by the company | 70% | |
Snail Games USA | Frostkeep Studios, Inc. | ||
PRESENTATION AND NATURE OF OPERATIONS | ||
Equity interest owned by the company | 100% | |
Snail Games USA | Eminence Corp | ||
PRESENTATION AND NATURE OF OPERATIONS | ||
Equity interest owned by the company | 100% | |
Snail Games USA | Wandering Wizard, LLC | ||
PRESENTATION AND NATURE OF OPERATIONS | ||
Equity interest owned by the company | 100% | |
Snail Games USA | Donkey Crew, LLC | ||
PRESENTATION AND NATURE OF OPERATIONS | ||
Equity interest owned by the company | 99% | |
Snail Games USA | Interactive Films, LLC | ||
PRESENTATION AND NATURE OF OPERATIONS | ||
Equity interest owned by the company | 100% | |
Snail Games USA | Project AWK Productions, LLC | ||
PRESENTATION AND NATURE OF OPERATIONS | ||
Equity interest owned by the company | 100% | |
Snail Games USA | BTBX.IO, LLC | ||
PRESENTATION AND NATURE OF OPERATIONS | ||
Equity interest owned by the company | 70% |
PRESENTATION AND NATURE OF OP_4
PRESENTATION AND NATURE OF OPERATIONS - Reorganization Transaction and IPO (Details) - USD ($) | 1 Months Ended | |||
Nov. 09, 2022 | Nov. 30, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
PRESENTATION AND NATURE OF OPERATIONS | ||||
Net proceeds from shares issued in IPO | $ 12,000,000 | |||
Amount deposited in escrow account | $ 1,013,678 | $ 1,003,804 | ||
IPO | ||||
PRESENTATION AND NATURE OF OPERATIONS | ||||
Offering costs | 3,000,000 | |||
Amount deposited in escrow account | $ 1,000,000 | |||
Period amount in escrow is restricted | 12 months | |||
Snail Games Usa Stockholders | ||||
PRESENTATION AND NATURE OF OPERATIONS | ||||
Number of Snail Games USA shares transferred in exchange for Class A common stock | 500,000 | |||
Class A common stock | ||||
PRESENTATION AND NATURE OF OPERATIONS | ||||
Number of shares of common stock issued as per agreement | 6,251,420 | |||
Class A common stock | IPO | ||||
PRESENTATION AND NATURE OF OPERATIONS | ||||
Number of shares of common stock issued as per agreement | 3,000,000 | 3,000,000 | ||
Number of shares of common stock issued as per agreement (in dollars per share) | $ 5 | |||
Class B common stock | ||||
PRESENTATION AND NATURE OF OPERATIONS | ||||
Number of shares of common stock issued as per agreement | 28,748,580 |
PRESENTATION AND NATURE OF OP_5
PRESENTATION AND NATURE OF OPERATIONS - Liquidity (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
PRESENTATION AND NATURE OF OPERATIONS | |||
Net loss | $ (2,972,597) | $ 5,803,767 | |
Negative cash flows | 6,708,770 | $ (4,995,518) | |
Cash and cash equivalents | 4,108,251 | $ 12,863,817 | |
Restricted cash | 7,300,000 | ||
Current debt | 13,200,000 | ||
Revolving loan | 9,000,000 | $ 9,000,000 | |
Term debt | $ 4,200,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) | 3 Months Ended |
Mar. 31, 2023 | |
Minimum | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Typical customer terms | 30 days |
Maximum | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Typical customer terms | 75 days |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Contract Balance (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Nov. 30, 2021 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Long term deferred revenue | $ 4,882,744 | $ 5,216,042 | ||
Employer contributions to the plan | $ 26,619 | $ 13,182 | ||
ARK 1 | Long-term title license agreement with platform | ||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Revenue recognized | $ 2,500,000 | |||
ARK 1 | Agreement with platform | ||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Period of agreement | 35 days | |||
Proceeds from agreement with customers | $ 3,500,000 | |||
ARK 2 | Long-term title license agreement with platform | ||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Period of agreement | 3 years | |||
Long term deferred revenue | $ 2,300,000 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cost of Revenues (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Software license royalties - related parties | $ 2,863,013 | $ 6,521,178 |
Software license royalties | 352,439 | |
License and amortization - related parties | 5,195,651 | 6,350,979 |
License and amortization | 201 | 150,224 |
Merchant fees | 459,471 | 657,536 |
Engine fees | 424,227 | 713,993 |
Internet, server and data center | 496,150 | 495,107 |
Costs related to advertising revenue | 25,245 | |
Total: | $ 9,816,397 | $ 14,889,017 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - General and Administrative (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
General and administrative expenses | $ 5,570,291 | $ 5,620,010 |
Stock based compensation | $ 152,595 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising Costs (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Advertising expense | $ 104,549 | $ 158,670 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Research and Development (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Research and development expense | $ 1,373,797 | $ 183,956 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Non controlling interest in subsidiaries (Details) | Mar. 31, 2023 |
Snail Innovation Institute | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Equity interest owned by the company | 70% |
Non controlling interest held in a subsidiary | 30% |
BTBX.IO, LLC | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Equity interest owned by the company | 70% |
Non controlling interest held in a subsidiary | 30% |
Donkey Crew, LLC | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Equity interest owned by the company | 99% |
Non controlling interest held in a subsidiary | 1% |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Restricted Escrow Deposits (Details) | 3 Months Ended |
Mar. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Escrow deposit period from IPO date | 1 year |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value Measurements (Details) - 2021 Promissory Note - Wall Street Journal Prime Rate | 3 Months Ended |
Mar. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Debt instrument, interest rate, stated percentage, period | 5 years |
Floating prime rate | 0.50% |
SUMMARY OF SIGNIFICANT ACCOU_13
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) | Mar. 31, 2023 USD ($) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Liabilities for uncertain tax positions included in current and long term accrued expenses | $ 457,024 |
SUMMARY OF SIGNIFICANT ACCOU_14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentration of Credit Risk (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 USD ($) item customer | Mar. 31, 2022 item | Dec. 31, 2022 USD ($) customer item | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Deposits not insured by FDIC | $ | $ 9,443,584 | $ 17,929,308 | |
Customer concentration risk | Gross receivables | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Number of customers | customer | 3 | 2 | |
Customer concentration risk | Gross receivables | Customers | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Concentration percentage | 71% | 57% | |
Customer concentration risk | Gross receivables | Customer One | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Concentration percentage | 30% | 29% | |
Customer concentration risk | Gross receivables | Customer Two | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Concentration percentage | 23% | 28% | |
Customer concentration risk | Gross receivables | Customer Three | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Concentration percentage | 18% | ||
Customer concentration risk | Revenues | Customers | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Concentration percentage | 60% | 61% | |
Supplier Concentration Risk [Member] | Gross payables | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Number of vendors | 2 | 2 | |
Supplier Concentration Risk [Member] | Gross payables | Major Vendors [Member] | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Concentration percentage | 67% | 55% | |
Supplier Concentration Risk [Member] | Gross payables | Major Vendor One [Member] | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Concentration percentage | 55% | 43% | |
Supplier Concentration Risk [Member] | Gross payables | Major Vendor Two [Member] | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Concentration percentage | 12% | 12% | |
Supplier Concentration Risk [Member] | Combined gross cost of revenues and operating expenses | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Number of vendors | 1 | 1 | |
Supplier Concentration Risk [Member] | Combined gross cost of revenues and operating expenses | Major Vendors [Member] | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Concentration percentage | 58% | 53% |
SUMMARY OF SIGNIFICANT ACCOU_15
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Employee Savings Plan (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Employer contributions to the plan | $ 26,619 | $ 13,182 |
SUMMARY OF SIGNIFICANT ACCOU_16
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Stock Based Compensation (Details) - Omnibus Incentive Plan (Twenty Twenty-Two Plan) | Mar. 31, 2023 shares |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of shares available for issuance | 5,718,000 |
Minimum | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of shares available for issuance | 4,498,666 |
Class B common stock | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Annual increase in shares reserve for issuance (as a percent) | 1% |
SUMMARY OF SIGNIFICANT ACCOU_17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Warrants (Details) | Mar. 31, 2023 shares |
Class A Common Stock | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of warrants issued to purchase common stock | 120,000 |
SUMMARY OF SIGNIFICANT ACCOU_18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Share Repurchase Program (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Nov. 10, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Number of treasury stock sold | 0 | |
Aggregate purchase price of shares repurchased | $ 257,093 | |
Class A Common Stock | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Shares authorized to repurchase | $ 5,000,000 | |
Number of shares repurchased | 1,350,275 | |
Aggregate purchase price of shares repurchased | $ 3,700,000 | |
Average price paid per share for repurchase of shares | $ 2.72 | |
Shares remain available for repurchase | $ 1,300,000 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS - Disaggregation of revenue (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | ||
Total revenue from contracts with customers: | $ 13,458,488 | $ 28,054,591 |
Digital | ||
REVENUE FROM CONTRACTS WITH CUSTOMERS | ||
Total revenue from contracts with customers: | 10,785,770 | 24,676,015 |
Mobile | ||
REVENUE FROM CONTRACTS WITH CUSTOMERS | ||
Total revenue from contracts with customers: | 1,718,032 | 2,791,320 |
Physical retail and other | ||
REVENUE FROM CONTRACTS WITH CUSTOMERS | ||
Total revenue from contracts with customers: | 954,686 | 587,256 |
Console | ||
REVENUE FROM CONTRACTS WITH CUSTOMERS | ||
Total revenue from contracts with customers: | 5,773,590 | 17,991,579 |
PC | ||
REVENUE FROM CONTRACTS WITH CUSTOMERS | ||
Total revenue from contracts with customers: | 5,012,180 | 6,684,436 |
Mobile | ||
REVENUE FROM CONTRACTS WITH CUSTOMERS | ||
Total revenue from contracts with customers: | 1,718,032 | 2,791,320 |
Other | ||
REVENUE FROM CONTRACTS WITH CUSTOMERS | ||
Total revenue from contracts with customers: | 954,686 | 587,256 |
United States | ||
REVENUE FROM CONTRACTS WITH CUSTOMERS | ||
Total revenue from contracts with customers: | 11,777,874 | 26,286,796 |
International | ||
REVENUE FROM CONTRACTS WITH CUSTOMERS | ||
Total revenue from contracts with customers: | $ 1,680,614 | $ 1,767,795 |
REVENUE FROM CONTRACTS WITH C_4
REVENUE FROM CONTRACTS WITH CUSTOMERS - Deferred Revenue (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
REVENUE FROM CONTRACTS WITH CUSTOMERS | ||
Deferred revenue | $ 9,400,317 | |
Deferred revenue, non-refundable amount | 3,000,000 | |
Current portion of deferred revenue | 4,517,573 | $ 4,335,404 |
Deferred revenue, long term | $ 4,882,744 | $ 5,216,042 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | Minimum | ||
REVENUE FROM CONTRACTS WITH CUSTOMERS | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months | |
Current portion of deferred revenue | $ 4,500,000 | |
Deferred revenue, long term | $ 4,900,000 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | Maximum | ||
REVENUE FROM CONTRACTS WITH CUSTOMERS | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 60 months | |
Current portion of deferred revenue | $ 4,500,000 | |
Deferred revenue, long term | 4,900,000 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | ARK 1 | ||
REVENUE FROM CONTRACTS WITH CUSTOMERS | ||
Deferred revenue | 700,000 | |
Deferred revenue, non-refundable amount | $ 3,000,000 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | ARK 2 | ||
REVENUE FROM CONTRACTS WITH CUSTOMERS | ||
Deferred revenue | $ 2,300,000 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 24 months |
REVENUE FROM CONTRACTS WITH C_5
REVENUE FROM CONTRACTS WITH CUSTOMERS - Activity (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | ||
Deferred revenue, beginning balance in advance of revenue recognition billing | $ 9,551,446 | $ 20,280,934 |
Revenue recognized | (453,223) | (18,832,396) |
Revenue deferred | 302,094 | 8,102,908 |
Deferred revenue, ending balance | 9,400,317 | 9,551,446 |
Less: short term portion | (4,517,573) | (4,335,404) |
Deferred revenue, long term | $ 4,882,744 | $ 5,216,042 |
CASH AND CASH EQUIVALENTS, AN_3
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS | ||||
Cash and cash equivalents | $ 4,108,251 | $ 12,863,817 | ||
Restricted cash and cash equivalents | 6,380,657 | 6,374,368 | ||
Cash and cash equivalents, and restricted cash and cash equivalents | $ 10,488,908 | $ 19,238,185 | $ 32,056,986 | $ 16,554,115 |
ACCOUNTS RECEIVABLE - RELATED_3
ACCOUNTS RECEIVABLE - RELATED PARTY (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Statements | ||
Accounts receivable - related party | $ 13,519,409 | $ 13,519,409 |
Less: Accounts payable - related party | (2,222,969) | (2,175,225) |
Accounts receivable - related party, net | $ 11,296,440 | $ 11,344,184 |
Immediate family member of management or principal owner | ||
Statements | ||
Ownership percentage (as percent) | 100% |
DUE FROM SHAREHOLDER (Details)
DUE FROM SHAREHOLDER (Details) - USD ($) | 3 Months Ended | ||||
Apr. 26, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Statements | |||||
Equity | $ 6,289,909 | $ 15,353,936 | $ 9,364,684 | $ 10,052,053 | |
Other receivables-related party | $ 0 | ||||
Loan accrued interest | $ 0 | $ 450,681 | |||
Snail Digital Technology Co. Ltd. | |||||
Statements | |||||
Due from shareholder and interest assigned | $ 94,934,400 | ||||
Paid in-kind dividend | $ 94,934,400 | ||||
Receivables from stockholder | |||||
Statements | |||||
Interest rate per annum | 2% |
DIVIDEND DISTRIBUTION (Details)
DIVIDEND DISTRIBUTION (Details) - Snail Digital Technology Co. Ltd. | Apr. 26, 2022 USD ($) |
DIVIDEND DISTRIBUTION | |
Paid in-kind dividend | $ 94,934,400 |
Payment, Tax Withholding, Share-Based Payment Arrangement | $ 8,200,000 |
PREPAID EXPENSES - RELATED PA_3
PREPAID EXPENSES - RELATED PARTY (Details) - USD ($) | Mar. 10, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
DLC amount prepaid | $ 5,000,000 | ||
Maximum DLC amount payable under the exclusive software license agreement with SDE | $ 5,000,000 | ||
Prepaid royalties | $ 582,500 | $ 582,500 | |
Prepaid licenses | 7,500,000 | 5,000,000 | |
Prepaid expenses - related party, ending balance | 8,082,500 | 5,582,500 | |
Less: short-term portion | (2,500,000) | ||
Total prepaid expenses - related party, long-term | 5,582,500 | 5,582,500 | |
ARK 1 | |||
Prepaid licenses | $ 2,500,000 | ||
ARK 2 | |||
Prepaid licenses | $ 5,000,000 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | ||
Prepaid income taxes | $ 10,637,171 | $ 9,822,603 |
Other prepaids | 51,753 | 80,271 |
Other current assets | 508,457 | 662,267 |
Total prepaid expenses and other current assets | $ 11,197,381 | $ 10,565,141 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
PROPERTY, PLANT AND EQUIPMENT, NET | ||
Property, plant and equipment, gross | $ 9,534,357 | $ 9,534,357 |
Accumulated depreciation | (4,534,618) | (4,419,558) |
Property, plant and equipment, net | 4,999,739 | 5,114,799 |
Building | ||
PROPERTY, PLANT AND EQUIPMENT, NET | ||
Property, plant and equipment, gross | 1,874,049 | 1,874,049 |
Land | ||
PROPERTY, PLANT AND EQUIPMENT, NET | ||
Property, plant and equipment, gross | 2,700,000 | 2,700,000 |
Building improvements | ||
PROPERTY, PLANT AND EQUIPMENT, NET | ||
Property, plant and equipment, gross | 1,010,218 | 1,010,218 |
Leasehold improvements | ||
PROPERTY, PLANT AND EQUIPMENT, NET | ||
Property, plant and equipment, gross | 1,537,775 | 1,537,775 |
Autos and trucks | ||
PROPERTY, PLANT AND EQUIPMENT, NET | ||
Property, plant and equipment, gross | 178,695 | 178,695 |
Computer and equipment | ||
PROPERTY, PLANT AND EQUIPMENT, NET | ||
Property, plant and equipment, gross | 1,821,819 | 1,821,819 |
Furniture and fixtures | ||
PROPERTY, PLANT AND EQUIPMENT, NET | ||
Property, plant and equipment, gross | $ 411,801 | $ 411,801 |
PROPERTY, PLANT AND EQUIPMENT_4
PROPERTY, PLANT AND EQUIPMENT, NET- Disposal (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Depreciation and amortization - property and equipment | $ 115,060 | $ 168,317 | |
Property, plant and equipment, net | 4,999,739 | $ 5,114,799 | |
Property, plant and equipment disposed | 11,615 | ||
Accumulated depreciation for property, plant and equipment disposed | 9,182 | ||
Gain on disposal of fixed assets | $ (2,433) | ||
Donkey Crew Limited Liability Company | Outside US | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, plant and equipment, net | $ 9,751 | $ 13,569 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
INTANGIBLE ASSETS | ||
Net Book Value | $ 960,726 | |
License rights from related parties | ||
INTANGIBLE ASSETS | ||
Gross Carrying Amount | 136,665,000 | $ 136,665,000 |
Accumulated Amortization | (135,976,594) | (135,280,942) |
Net Book Value | $ 688,406 | $ 1,384,058 |
License rights from related parties | Minimum | ||
INTANGIBLE ASSETS | ||
Weighted Average Useful Life | 3 years | 3 years |
License rights from related parties | Maximum | ||
INTANGIBLE ASSETS | ||
Weighted Average Useful Life | 5 years | |
License rights | ||
INTANGIBLE ASSETS | ||
Gross Carrying Amount | $ 3,000,000 | $ 3,000,000 |
Accumulated Amortization | $ (3,000,000) | $ (3,000,000) |
Weighted Average Useful Life | 5 years | 5 years |
Software | ||
INTANGIBLE ASSETS | ||
Gross Carrying Amount | $ 51,784 | $ 51,784 |
Accumulated Amortization | $ (51,784) | $ (51,784) |
Weighted Average Useful Life | 3 years | 3 years |
Trademark | ||
INTANGIBLE ASSETS | ||
Gross Carrying Amount | $ 10,745 | $ 10,745 |
Accumulated Amortization | (9,311) | (9,110) |
Net Book Value | $ 1,434 | $ 1,635 |
Weighted Average Useful Life | 12 years | 12 years |
In-progress patent | ||
INTANGIBLE ASSETS | ||
Gross Carrying Amount | $ 270,886 | $ 270,886 |
Net Book Value | 270,886 | 270,886 |
Other | ||
INTANGIBLE ASSETS | ||
Gross Carrying Amount | 333,415 | 333,415 |
Accumulated Amortization | (61,095) | (60,894) |
Net Book Value | $ 272,320 | $ 272,521 |
INTANGIBLE ASSETS - Amortizatio
INTANGIBLE ASSETS - Amortization (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
INTANGIBLE ASSETS | ||
Amortization expense | $ 695,853 | $ 2,001,203 |
Remaining useful life - Amortization expense | 9 months 18 days | |
Future amortization expense | ||
Remainder of 2023 | $ 689,009 | |
2024 | 804 | |
2025 | 27 | |
Thereafter | 270,886 | |
Total | $ 960,726 |
ACCOUNTS PAYABLE - RELATED PA_2
ACCOUNTS PAYABLE - RELATED PARTY (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
LOAN PAYABLE AND INTEREST PAYABLE - RELATED PARTY | |||
Accounts payable to parent | $ 19,540,783 | $ 19,918,259 | |
Parent | |||
LOAN PAYABLE AND INTEREST PAYABLE - RELATED PARTY | |||
License costs to related party | 72,524 | $ 126,460 | |
Royalty payments | $ 450,000 | $ 444,263 |
LOAN AND INTEREST RECEIVABLE _2
LOAN AND INTEREST RECEIVABLE - RELATED PARTY (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Feb. 28, 2022 | Feb. 28, 2021 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
LOAN PAYABLE AND INTEREST PAYABLE - RELATED PARTY | |||||
Loan and interest receivable - related party | $ 102,247 | $ 101,753 | |||
Interest income earned | 493 | $ 450,928 | |||
A Subsidiary of Suzhou Snail | |||||
LOAN PAYABLE AND INTEREST PAYABLE - RELATED PARTY | |||||
Loan to related party | $ 200,000 | ||||
Interest rate per annum | 2% | ||||
Interest income earned | $ 493 | $ 247 | |||
Suzhou Snail [Member] | |||||
LOAN PAYABLE AND INTEREST PAYABLE - RELATED PARTY | |||||
Amount of loan and interest receivable offset | $ 103,890 | ||||
Snail Digital Technology Co. Ltd. | Suzhou Snail [Member] | |||||
LOAN PAYABLE AND INTEREST PAYABLE - RELATED PARTY | |||||
Loan amount and interest assumed | $ 203,890 |
LOAN PAYABLE AND INTEREST PAY_2
LOAN PAYABLE AND INTEREST PAYABLE - RELATED PARTIES (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Jul. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Feb. 28, 2022 | |
LOAN PAYABLE AND INTEREST PAYABLE - RELATED PARTY | |||||
Loan payable - related parties | $ 0 | $ 0 | |||
Interest payable - related parties | 527,770 | 527,770 | |||
Interest expense-related parties | $ 0 | $ 1,726 | 1,726 | ||
Loan Payable | |||||
LOAN PAYABLE AND INTEREST PAYABLE - RELATED PARTY | |||||
Loan payable - related parties | $ 400,000 | ||||
Interest rate per annum | 2% | ||||
A Subsidiary of Suzhou Snail | Loan from related party due in June 2022 | |||||
LOAN PAYABLE AND INTEREST PAYABLE - RELATED PARTY | |||||
Loan payable - related parties | $ 300,000 | ||||
Payment of related party debt | $ 300,000 | ||||
Snail Digital Technology Co. Ltd. | Loan from related party due in December 2023 | |||||
LOAN PAYABLE AND INTEREST PAYABLE - RELATED PARTY | |||||
Loan payable - related parties | $ 100,000 | ||||
Loans payable offset against receivable | $ 100,000 | ||||
Amount of interest payable offset by interest receivable | $ 3,890 |
REVOLVING LOAN, SHORT TERM NO_3
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT - Schedule Table (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Jan. 26, 2022 | Jun. 17, 2021 | Nov. 30, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT | |||||
Total | $ 16,031,984 | $ 17,725,153 | |||
Less: current portion of long-term debt | 80,568 | 86,524 | |||
Less: revolving loan | 9,000,000 | 9,000,000 | |||
Less: current portion of short term note | 4,166,667 | 5,416,666 | |||
Total long-term debt | $ 2,784,749 | 3,221,963 | |||
Interest rate | 7.75% | ||||
Restricted cash and cash equivalents | $ 6,380,657 | 6,374,368 | |||
2021 Revolving Loan | |||||
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT | |||||
Total | $ 9,000,000 | 9,000,000 | |||
Maximum borrowing capacity | $ 9,000,000 | ||||
Interest rate | 7.75% | ||||
Restricted cash and cash equivalents | $ 5,267,819 | 5,262,627 | |||
Debt service coverage ratio | 1.5 | ||||
2021 Revolving Loan | Prime Rate | |||||
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT | |||||
Percentage reduction from prime rate | 0.25% | ||||
2021 Promissory Note | |||||
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT | |||||
Total | $ 2,865,317 | 2,891,820 | |||
Debt service coverage ratio | 1.5 | ||||
Debt term | 10 years | ||||
2021 Promissory Note | For first 5 years | |||||
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT | |||||
Interest rate | 3.50% | ||||
Debt instrument, interest rate, stated percentage, period | 5 years | ||||
2021 Promissory Note | Wall Street Journal Prime Rate | |||||
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT | |||||
Debt instrument, interest rate, stated percentage, period | 5 years | ||||
Annual interest rate, basis spread | 0.50% | ||||
2021 Promissory Note | Wall Street Journal Prime Rate | From Six To 10 Years [Member] | |||||
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT | |||||
Annual interest rate, basis spread | 0% | ||||
2022 Short Term Note | |||||
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT | |||||
Total | $ 4,166,667 | $ 5,833,333 | |||
Interest rate | 5.75% | ||||
Debt service coverage ratio | 1.5 | ||||
Principal payment of loan | $ 10,000,000 | ||||
Annual interest rate, basis spread | 3.75% | ||||
Default interest rate | 5% | ||||
2022 Short Term Note | Wall Street Journal Prime Rate | |||||
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT | |||||
Annual interest rate, basis spread | 0.50% | 0.25% |
REVOLVING LOAN, SHORT TERM NO_4
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT - Paragraph (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT | ||
Interest expense | $ 294,583 | $ 166,055 |
Amortization of loan origination expenses | 8,911 | 5,966 |
Revolver | ||
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT | ||
Interest expense | $ 294,245 | $ 166,055 |
REVOLVING LOAN, SHORT TERM NO_5
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT - Future minimum payments (Details) | Mar. 31, 2023 USD ($) |
REVOLVING LOAN, SHORT TERM NOTE AND LONG-TERM DEBT | |
Remainder of 2023 | $ 12,810,021 |
2024 | 499,414 |
2025 | 86,013 |
2026 | 89,115 |
2027 | 92,329 |
Thereafter | 2,455,092 |
Long term debt | $ 16,031,984 |
INCOME TAXES - Components of in
INCOME TAXES - Components of income tax (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
INCOME TAXES | ||
Income tax expense (benefit) | $ (805,818) | $ 1,529,651 |
Federal statutory income tax rate | 21% | |
Three-year cumulative pre-tax book income | $ 49,200,000 | |
Three-year cumulative taxable income | $ 71,700,000 |
OPERATING LEASE RIGHT-OF-USE _3
OPERATING LEASE RIGHT-OF-USE ASSETS - Leases (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Apr. 30, 2018 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
OPERATING LEASE RIGHT-OF-USE ASSETS | ||||
Variable lease payments | $ 24,510 | $ 18,333 | ||
Operating lease right-of-use assets | $ 3,321,332 | $ 3,606,398 | ||
Standby Letters of Credit | ||||
OPERATING LEASE RIGHT-OF-USE ASSETS | ||||
Maximum borrowing capacity | $ 1,075,000 | |||
Letter of credit term | 1 year |
OPERATING LEASE RIGHT-OF-USE _4
OPERATING LEASE RIGHT-OF-USE ASSETS - Lease cost (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Operating lease | ||
Operating lease costs | $ 397,562 | $ 391,860 |
Total operating lease costs | $ 397,562 | $ 391,860 |
OPERATING LEASE RIGHT-OF-USE _5
OPERATING LEASE RIGHT-OF-USE ASSETS - Supplemental information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Operating lease | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 385,254 | $ 378,010 |
Weighted average remaining lease term | 2 years 8 months 12 days | 2 years 10 months 24 days |
Weighted average discount rate | 5% | 5% |
OPERATING LEASE RIGHT-OF-USE _6
OPERATING LEASE RIGHT-OF-USE ASSETS - Lease payments (Details) | Mar. 31, 2023 USD ($) |
Future lease payments | |
Remainder of 2023, Future lease payments | $ 1,163,636 |
2024, Future lease payments | 1,610,844 |
2025, Future lease payments | 1,453,785 |
Total future lease payments | 4,228,265 |
Imputed Interest | |
Remainder of 2023, Imputed Interest | 126,885 |
2024, Imputed Interest | 105,810 |
2025, Imputed Interest | 28,290 |
Total Imputed Interest | 260,985 |
Lease Liabilities | |
Remainder of 2023, Lease Liabilities | 1,036,751 |
2024, Lease Liabilities | 1,505,034 |
2025, Lease Liabilities | 1,425,495 |
Total Lease Liabilities | $ 3,967,280 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 3 Months Ended | |
Feb. 27, 2023 | Mar. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES | ||
Amount of bond to support an award of costs and fees | $ 3,000,000 | |
Amount of bond | $ 750,000 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Basic Earnings Per Share: | ||
Total net income (loss) attributable to Snail Inc and Snail Games USA Inc | $ (2,971,378) | $ 5,811,057 |
Basic earnings per share | $ (0.08) | $ 0.17 |
Diluted Earnings Per Share: | ||
Diluted earnings (loss) per share | $ (0.08) | $ 0.17 |
Class A common stock | ||
Basic Earnings Per Share: | ||
Net income (loss) attributable to common stockholders, Basic | $ (642,340) | $ 5,811,057 |
Weighted average shares outstanding - basic | 7,928,742 | 35,000,000 |
Basic earnings per share | $ (0.08) | $ 0.17 |
Diluted Earnings Per Share: | ||
Net income (loss) attributable to common stockholders, Diluted | $ (642,340) | $ 5,811,057 |
Weighted average shares outstanding - basic | 7,928,742 | 35,000,000 |
Weighted average shares outstanding - diluted | 7,928,742 | 35,000,000 |
Diluted earnings (loss) per share | $ (0.08) | $ 0.17 |
Class B common stock | ||
Basic Earnings Per Share: | ||
Net income (loss) attributable to common stockholders, Basic | $ (2,329,038) | |
Weighted average shares outstanding - basic | 28,748,580 | |
Basic earnings per share | $ (0.08) | 0.17 |
Diluted Earnings Per Share: | ||
Net income (loss) attributable to common stockholders, Diluted | $ (2,329,038) | |
Weighted average shares outstanding - basic | 28,748,580 | |
Weighted average shares outstanding - diluted | 28,748,580 | |
Diluted earnings (loss) per share | $ (0.08) | $ 0.17 |
EQUITY (Details)
EQUITY (Details) | 1 Months Ended | 3 Months Ended | |
Nov. 09, 2022 $ / shares shares | Nov. 30, 2022 $ / shares shares | Mar. 31, 2023 Vote class shares | |
EQUITY | |||
Number of classes of common stock | class | 2 | ||
IPO | |||
EQUITY | |||
Period amount in escrow is restricted | 12 months | ||
Class A common stock | |||
EQUITY | |||
Number of votes per share | Vote | 1 | ||
Number of shares of common stock issued as per agreement | 6,251,420 | ||
Class A common stock | Over-Allotment Option | |||
EQUITY | |||
Number of shares of common stock issued as per agreement | 450,000 | ||
Price per share | $ / shares | $ 4.675 | ||
Class A common stock | IPO | |||
EQUITY | |||
Number of shares of common stock issued as per agreement | 3,000,000 | 3,000,000 | |
Price per share | $ / shares | $ 4.675 | ||
Price per share | $ / shares | $ 5 | ||
Class A common stock | Underwriting agreement | |||
EQUITY | |||
Percentage of warrants issued | 4% | ||
Number of warrants issued to purchase common stock | 120,000 | ||
Warrants term | 3 years | ||
Weighted average expected volatility (in percent) | 53% | ||
Discount rate (in percent) | 4.49% | ||
Remaining term (in years) | 3 years | ||
Class A common stock | Snail Inc | |||
EQUITY | |||
Percent of issue price at IPO price | 125% | ||
Issue price per share | $ / shares | $ 6.25 | ||
Class B common stock | |||
EQUITY | |||
Number of votes per share | Vote | 10 | ||
Number of Class A share issuable upon conversion | 1 | ||
Number of shares of common stock issued as per agreement | 28,748,580 |
EQUITY - Restricted Stock Units
EQUITY - Restricted Stock Units (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
RSU's | Directors | ||
EQUITY | ||
Vesting period | 1 year | |
Restricted Stock Units | ||
Outstanding as of January 1, 2023 | 24,000 | |
Outstanding as of March 31, 2023 | 24,000 | 24,000 |
Weighted-Average Grant Date Fair Value | ||
Outstanding as of January 1, 2023 | $ 5 | |
Outstanding as of March 31, 2023 | $ 5 | $ 5 |
Performance-based restricted stock units | Employees | ||
EQUITY | ||
Vesting period | 5 years | 5 years |
Restricted Stock Units | ||
Outstanding as of January 1, 2023 | 1,197,552 | |
Forfeited or cancelled | (2,218) | |
Outstanding as of March 31, 2023 | 1,195,334 | 1,197,552 |
Weighted-Average Grant Date Fair Value | ||
Outstanding as of January 1, 2023 | $ 5 | |
Forfeited or cancelled | 5 | |
Outstanding as of March 31, 2023 | $ 5 | $ 5 |
EQUITY - Repurchase Activity (D
EQUITY - Repurchase Activity (Details) - Class A Common Stock $ / shares in Units, $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
EQUITY | |
Number of share repurchased | shares | 1,350,275 |
Aggregate purchase price | $ 3.7 |
Average price paid per share | $ / shares | $ 2.72 |
Aggregate amount of stock remain available for repurchase | $ 1.3 |
EQUITY - Stock-Based Compensati
EQUITY - Stock-Based Compensation Expense (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
EQUITY | ||
Stock-based compensation expense | $ 152,595 | $ 0 |
Deferred income tax benefit related to our stock-based compensation expense | 32,045 | 0 |
RSU's | ||
EQUITY | ||
Stock-based compensation expense | 152,595 | $ 0 |
Total unrecognized compensation cost | $ 1,800,000 | |
Total unrecognized compensation cost expected to be recognized over a weighted-average service period | 3 years 1 month 6 days |