Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 13, 2023 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2023 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-41556 | |
Entity Registrant Name | SNAIL, INC. | |
Entity Central Index Key | 0001886894 | |
Entity Tax Identification Number | 88-4146991 | |
Entity Incorporation, State or Country Code | DE | |
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 $0.0001 per share | |
Trading Symbol | SNAL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Common Class A [Member] | ||
Entity Common Stock, Shares Outstanding | 7,901,145 | |
Common Class B [Member] | ||
Entity Common Stock, Shares Outstanding | 28,748,580 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 4,948,832 | $ 12,863,817 |
Restricted escrow deposit | 1,037,739 | 1,003,804 |
Prepaid expenses - related party | 2,500,000 | |
Prepaid expenses and other current assets | 11,482,303 | 10,565,141 |
Total current assets | 35,754,721 | 42,636,723 |
Restricted cash and cash equivalents | 1,115,084 | 6,374,368 |
Prepaid expenses - related party | 5,582,500 | 5,582,500 |
Property, plant and equipment, net | 4,768,715 | 5,114,799 |
Deferred income taxes | 10,902,503 | 7,602,536 |
Other noncurrent assets | 171,512 | 198,668 |
Operating lease right-of-use assets, net | 2,738,554 | 3,606,398 |
Total assets | 61,435,942 | 72,772,571 |
Current Liabilities: | ||
Accrued expenses and other liabilities | 2,305,132 | 1,474,088 |
Interest payable - related parties | 527,770 | 527,770 |
Revolving loan | 6,000,000 | 9,000,000 |
Notes payable | 4,358,333 | 5,416,666 |
Convertible notes, net of discount | 515,217 | |
Current portion of promissory note | 2,832,231 | 86,524 |
Current portion of deferred revenue | 5,848,320 | 4,335,404 |
Current portion of operating lease liabilities | 1,470,718 | 1,371,227 |
Total current liabilities | 53,484,215 | 51,582,329 |
Accrued expenses | 311,276 | 457,024 |
Promissory note, net of current portion | 3,221,963 | |
Deferred revenue, net of current portion | 5,680,439 | 5,216,042 |
Operating lease liabilities, net of current portion | 1,814,962 | 2,930,529 |
Total liabilities | 61,290,892 | 63,407,887 |
Commitments and contingencies | ||
Stockholders’ Equity: | ||
Common stock, value | ||
Additional paid-in capital | 25,945,549 | 23,436,942 |
Accumulated other comprehensive loss | (287,685) | (307,200) |
Accumulated deficit | (16,346,691) | (4,863,250) |
Stockholders Equity Excluding Treasury Stock | 9,314,973 | 18,270,292 |
Treasury stock at cost (1,350,275 and 1,197,649 shares as of September 30, 2023 and December 31, 2022, respectively) | (3,671,806) | (3,414,713) |
Total Snail, Inc. equity | 5,643,167 | 14,855,579 |
Noncontrolling interests | (5,498,117) | (5,490,895) |
Total stockholders’ equity | 145,050 | 9,364,684 |
Total liabilities, noncontrolling interests and stockholders’ equity | 61,435,942 | 72,772,571 |
Common Class A [Member] | ||
Stockholders’ Equity: | ||
Common stock, value | 925 | 925 |
Common Class B [Member] | ||
Stockholders’ Equity: | ||
Common stock, value | 2,875 | 2,875 |
License Rights, Related Parties [Member] | ||
Current Assets: | ||
Intangible assets, net - other | 130,435 | 1,384,058 |
Other Intangible Assets [Member] | ||
Current Assets: | ||
Intangible assets, net - other | 271,918 | 272,521 |
Nonrelated Party [Member] | ||
Current Assets: | ||
Accounts receivable - related party, net | 4,083,369 | 6,758,024 |
Current Liabilities: | ||
Accounts payable - related party | 9,956,626 | 9,452,391 |
Related Party [Member] | ||
Current Assets: | ||
Accounts receivable - related party, net | 11,599,229 | 11,344,184 |
Loan and interest receivable - related party | 103,249 | 101,753 |
Current Liabilities: | ||
Accounts payable - related party | $ 19,669,868 | $ 19,918,259 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Accounts receivable, allowance for credit loss, current | $ 19,929 | $ 31,525 |
Treasury stock, shares | 1,350,275 | 1,197,649 |
Common Class A [Member] | ||
Common stock, par value | $ 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 |
Treasury stock, shares | 1,350,275 | |
Common Class B [Member] | ||
Common stock, par value | $ 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 | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Defined Benefit Plan Disclosure [Line Items] | |||||
Revenues, net | $ 8,981,135 | $ 15,614,171 | $ 32,331,876 | $ 59,132,284 | |
Cost of revenues | 9,463,086 | 12,424,067 | 29,659,788 | 40,397,396 | |
Gross profit, (loss) | (481,951) | 3,190,104 | 2,672,088 | 18,734,888 | |
Operating expenses: | |||||
General and administrative | 3,452,141 | 4,478,907 | 11,915,126 | 13,525,001 | |
Research and development | 1,317,400 | 116,624 | 3,892,039 | 479,630 | |
Advertising and marketing | 215,477 | 198,417 | 488,318 | 569,127 | |
Depreciation and amortization | 112,914 | 128,536 | 346,084 | 435,644 | |
Total operating expenses | 5,097,932 | 4,922,484 | 16,641,567 | 15,009,402 | |
(Loss) income from operations | (5,579,883) | (1,732,380) | (13,969,479) | 3,725,486 | |
Other income (expense): | |||||
Other income | 313,156 | 19,500 | 321,331 | 319,153 | |
Foreign currency transaction (loss) gain | (1,394) | 16,169 | (25,606) | 21,679 | |
Total other income (expense), net | (10,963) | (212,184) | (565,564) | 352,189 | |
(Loss) income before (benefit from) provision for income taxes | (5,590,846) | (1,944,564) | (14,535,043) | 4,077,675 | |
(Benefit from) provision for income taxes | (1,156,675) | (398,998) | (3,044,380) | 803,305 | |
Net (loss) income | (4,434,171) | (1,545,566) | (11,490,663) | 3,274,370 | |
Net (loss) income attributable to non-controlling interests | (1,539) | (6,828) | (7,222) | 56,348 | |
Net (loss) income attributable to Snail, Inc. and Snail Games USA Inc. | (4,432,632) | (1,538,738) | (11,483,441) | 3,218,022 | |
Comprehensive income statement: | |||||
Other comprehensive income (loss) related to foreign currency translation adjustments, net of tax | (1,512) | 5,682 | 19,515 | (76,720) | |
Total comprehensive (loss) income | $ (4,434,144) | $ (1,533,056) | $ (11,463,926) | $ 3,141,302 | |
(Loss) income per share attributable to Class A and B common stockholders: | |||||
Common stock earnings par share - basic | $ (0.12) | $ (0.04) | $ (0.31) | $ 0.09 | |
Common stock earnings par share - diluted | $ (0.12) | $ (0.04) | $ (0.31) | $ 0.09 | |
Common Class A [Member] | |||||
Net loss attributable to Class B common stockholders: | |||||
Net (loss) income attributable to common stockholders - basic | $ (955,763) | $ (1,538,738) | $ (2,477,768) | $ 3,218,022 | |
Net (loss) income attributable to common stockholders - diluted | $ (955,763) | $ (1,538,738) | $ (2,477,768) | $ 3,218,022 | |
(Loss) income per share attributable to Class A and B common stockholders: | |||||
Common stock earnings par share - basic | $ (0.12) | $ (0.04) | $ (0.31) | $ 0.09 | |
Common stock earnings par share - diluted | $ (0.12) | $ (0.04) | $ (0.31) | $ 0.09 | |
Weighted-average shares used to compute income per share attributable to Class B common stockholders: | |||||
Weighted average shares used to compute income per share attributable to common stockholders - basic | [1] | 7,901,145 | 35,000,000 | 7,909,715 | 35,000,000 |
Weighted average shares used to compute income per share attributable to common stockholders - diluted | [1] | 7,901,145 | 35,000,000 | 7,909,715 | 35,000,000 |
Common Class B [Member] | |||||
Net loss attributable to Class B common stockholders: | |||||
Net (loss) income attributable to common stockholders - basic | $ (3,476,869) | $ (9,005,673) | |||
Net (loss) income attributable to common stockholders - diluted | $ (3,476,869) | $ (9,005,673) | |||
(Loss) income per share attributable to Class A and B common stockholders: | |||||
Common stock earnings par share - basic | $ (0.12) | $ (0.04) | $ (0.31) | $ 0.09 | |
Common stock earnings par share - diluted | $ (0.12) | $ (0.04) | $ (0.31) | $ 0.09 | |
Weighted-average shares used to compute income per share attributable to Class B common stockholders: | |||||
Weighted average shares used to compute income per share attributable to common stockholders - basic | [1] | 28,748,580 | 28,748,580 | ||
Weighted average shares used to compute income per share attributable to common stockholders - diluted | [1] | 28,748,580 | 28,748,580 | ||
Nonrelated Party [Member] | |||||
Other income (expense): | |||||
Interest income - related parties | $ 47,147 | $ 12,712 | $ 98,411 | $ 45,789 | |
Interest expense - related parties | (370,376) | (261,070) | (961,196) | (613,338) | |
Related Party [Member] | |||||
Other income (expense): | |||||
Interest income - related parties | 504 | 505 | 1,496 | 582,128 | |
Interest expense - related parties | $ (3,222) | ||||
[1]The shares used for the denominator in the calculation of EPS are the number of shares transferred in the reorganization transaction for comparative purposes. Snail Games USA Inc. did not have Class A common stock as of September 30, 2022. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - Common Class B [Member] - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Net (loss) income attributable to common stockholders - basic | $ (3,476,869) | $ (9,005,673) | ||
Net (loss) income attributable to common stockholders - diluted | $ (3,476,869) | $ (9,005,673) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Equity - USD ($) | Total | Common Stock [Member] Common Class A [Member] | Common Stock [Member] Common Class B [Member] | Additional Paid-in Capital [Member] | Due From Shareholder Loan And Interest Receivable [Member] | AOCI Attributable to Parent [Member] | Retained Earnings [Member] | Treasury Stock, Common [Member] | Parent [Member] | Noncontrolling Interest [Member] | Subsidiaries [Member] Common Stock [Member] |
Balance at June 30, 2023 at Dec. 31, 2021 | $ 10,052,053 | $ 94,159,167 | $ (94,353,522) | $ (266,557) | $ 16,045,231 | $ 15,589,319 | $ (5,537,266) | $ 5,000 | |||
Balance, shares at Dec. 31, 2021 | 500,000 | ||||||||||
Loan to shareholder | (450,681) | (450,681) | (450,681) | ||||||||
Foreign currency translation | (51,203) | (51,203) | (51,203) | ||||||||
Net Income (loss) | 5,803,767 | 5,811,057 | 5,811,057 | (7,290) | |||||||
Balance at September 30, 2023 at Mar. 31, 2022 | 15,353,936 | 94,159,167 | (94,804,203) | (317,760) | 21,856,288 | 20,898,492 | (5,544,556) | $ 5,000 | |||
Balance, shares at Mar. 31, 2022 | 500,000 | ||||||||||
Balance at June 30, 2023 at Dec. 31, 2021 | 10,052,053 | 94,159,167 | (94,353,522) | (266,557) | 16,045,231 | 15,589,319 | (5,537,266) | $ 5,000 | |||
Balance, shares at Dec. 31, 2021 | 500,000 | ||||||||||
Net Income (loss) | 3,274,370 | ||||||||||
Balance at September 30, 2023 at Sep. 30, 2022 | 4,468,825 | 12,881,055 | (343,277) | (2,593,035) | 9,949,743 | (5,480,918) | $ 5,000 | ||||
Balance, shares at Sep. 30, 2022 | 500,000 | ||||||||||
Balance at June 30, 2023 at Mar. 31, 2022 | 15,353,936 | 94,159,167 | (94,804,203) | (317,760) | 21,856,288 | 20,898,492 | (5,544,556) | $ 5,000 | |||
Balance, shares at Mar. 31, 2022 | 500,000 | ||||||||||
Loan to shareholder | (130,197) | (130,197) | (130,197) | ||||||||
Foreign currency translation | (31,199) | (31,199) | (31,199) | ||||||||
Net Income (loss) | (983,831) | (1,054,297) | (1,054,297) | 70,466 | |||||||
Dividend distribution | (8,200,000) | (81,278,112) | 94,934,400 | (21,856,288) | (8,200,000) | ||||||
Balance at September 30, 2023 at Jun. 30, 2022 | 6,008,709 | 12,881,055 | (348,959) | (1,054,297) | 11,482,799 | (5,474,090) | $ 5,000 | ||||
Balance, shares at Jun. 30, 2022 | 500,000 | ||||||||||
Foreign currency translation | 5,682 | 5,682 | 5,682 | ||||||||
Net Income (loss) | (1,545,566) | (1,538,738) | (1,538,738) | (6,828) | |||||||
Balance at September 30, 2023 at Sep. 30, 2022 | 4,468,825 | 12,881,055 | (343,277) | (2,593,035) | 9,949,743 | (5,480,918) | $ 5,000 | ||||
Balance, shares at Sep. 30, 2022 | 500,000 | ||||||||||
Balance at June 30, 2023 at Dec. 31, 2022 | 9,364,684 | $ 2,875 | 23,436,942 | (307,200) | (4,863,250) | $ (3,414,713) | 14,855,579 | (5,490,895) | $ 925 | ||
Balance, shares at Dec. 31, 2022 | 9,251,420 | 28,748,580 | (1,197,649) | ||||||||
Foreign currency translation | 2,320 | 2,320 | 2,320 | ||||||||
Stock based compensation related to restricted stock units | 152,595 | 152,595 | 152,595 | ||||||||
Net Income (loss) | (2,972,597) | (2,971,378) | (2,971,378) | (1,219) | |||||||
Balance at September 30, 2023 at Mar. 31, 2023 | 6,289,909 | $ 2,875 | 23,589,537 | (304,880) | (7,834,628) | $ (3,671,806) | 11,782,023 | (5,492,114) | 925 | ||
Balance, shares at Mar. 31, 2023 | 9,251,420 | 28,748,580 | (1,350,275) | ||||||||
Repurchase of common stock | (257,093) | $ (257,093) | (257,093) | ||||||||
Repurchase of common stock, shares | (152,626) | ||||||||||
Balance at June 30, 2023 at Dec. 31, 2022 | 9,364,684 | $ 2,875 | 23,436,942 | (307,200) | (4,863,250) | $ (3,414,713) | 14,855,579 | (5,490,895) | 925 | ||
Balance, shares at Dec. 31, 2022 | 9,251,420 | 28,748,580 | (1,197,649) | ||||||||
Net Income (loss) | (11,490,663) | ||||||||||
Balance at September 30, 2023 at Sep. 30, 2023 | 145,050 | $ 2,875 | 25,945,549 | (287,685) | (16,346,691) | $ (3,671,806) | 5,643,167 | (5,498,117) | 925 | ||
Balance, shares at Sep. 30, 2023 | 9,251,420 | 28,748,580 | (1,350,275) | ||||||||
Balance at June 30, 2023 at Mar. 31, 2023 | 6,289,909 | $ 2,875 | 23,589,537 | (304,880) | (7,834,628) | $ (3,671,806) | 11,782,023 | (5,492,114) | 925 | ||
Balance, shares at Mar. 31, 2023 | 9,251,420 | 28,748,580 | (1,350,275) | ||||||||
Foreign currency translation | 18,707 | 18,707 | 18,707 | ||||||||
Stock based compensation related to restricted stock units | 232,770 | 232,770 | 232,770 | ||||||||
Net Income (loss) | (4,083,895) | (4,079,431) | (4,079,431) | (4,464) | |||||||
Balance at September 30, 2023 at Jun. 30, 2023 | 4,344,091 | $ 2,875 | 25,708,907 | (286,173) | (11,914,059) | $ (3,671,806) | 9,840,669 | (5,496,578) | 925 | ||
Balance, shares at Jun. 30, 2023 | 9,251,420 | 28,748,580 | (1,350,275) | ||||||||
Return of dividend distribution tax withholding payment | 1,886,600 | 1,886,600 | 1,886,600 | ||||||||
Foreign currency translation | (1,512) | (1,512) | (1,512) | ||||||||
Stock based compensation related to restricted stock units | 236,642 | 236,642 | 236,642 | ||||||||
Net Income (loss) | (4,434,171) | (4,432,632) | (4,432,632) | (1,539) | |||||||
Balance at September 30, 2023 at Sep. 30, 2023 | $ 145,050 | $ 2,875 | $ 25,945,549 | $ (287,685) | $ (16,346,691) | $ (3,671,806) | $ 5,643,167 | $ (5,498,117) | $ 925 | ||
Balance, shares at Sep. 30, 2023 | 9,251,420 | 28,748,580 | (1,350,275) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (11,490,663) | $ 3,274,370 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Amortization - loan origination fees and debt discounts | 142,656 | 19,149 |
Depreciation and amortization - property and equipment | 346,084 | 435,644 |
Stock-based compensation expense | 622,007 | |
Gain on lease termination | (122,533) | |
Gain on paycheck protection program and economic injury disaster loan forgiveness | (174,436) | |
Gain on disposal of fixed assets | (17,067) | |
Interest income from shareholder loan | (580,878) | |
Interest income from restricted escrow deposit | (33,935) | |
Deferred taxes | (3,058,738) | |
Changes in assets and liabilities: | ||
Accounts receivable | 2,674,655 | 7,648,432 |
Accounts receivable - related party | (255,045) | (3,803,606) |
Prepaid expenses - related party | (2,500,000) | (4,875,000) |
Prepaid expenses and other current assets | 156,450 | (2,232,406) |
Other noncurrent assets | (2,903) | (15,228) |
Accounts payable | 846,553 | 2,905,024 |
Accounts payable - related party | (248,391) | (1,402,791) |
Accrued expenses and other liabilities | 134,131 | (127,993) |
Interest receivable - related parties | (1,496) | |
Interest payable - related parties | 1,490 | |
Lease liabilities | (148,233) | (103,782) |
Deferred revenue | 767,883 | (7,297,736) |
Net cash used in operating activities | (10,794,759) | (665,737) |
Cash flows from investing activities: | ||
Repayment on loan provided by related party | (300,000) | |
Purchases of property and equipment | (5,256) | |
Proceeds from sale of property and equipment | 19,500 | |
Repayment on Pound Sand note | 1,496,063 | |
Net cash provided by investing activities | 1,210,307 | |
Cash flows from financing activities: | ||
Repayments on promissory note | (59,589) | (57,967) |
Repayments on notes payable | (3,750,000) | (3,333,333) |
Repayments on revolving loan | (3,000,000) | |
Borrowings on notes payable | 2,275,000 | |
Borrowings on short-term note | 10,000,000 | |
Proceeds from issuance of convertible notes | 847,500 | |
Refund of dividend withholding tax overpayment | 1,886,600 | |
Payments on paycheck protection program and economic injury disaster loan | (90,198) | |
Refund of payments on paycheck protection program and economic injury disaster loan | 48,305 | |
Cash dividend declared and paid | (8,200,000) | |
Purchase of treasury stock | (257,093) | |
Payments of offering costs in accounts payable | (342,318) | |
Net cash used in financing activities | (2,399,900) | (1,633,193) |
Effect of foreign currency translation on cash and cash equivalents | 20,390 | (52,810) |
Net decrease in cash and cash equivalents, and restricted cash and cash equivalents | (13,174,269) | (1,141,433) |
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 | 6,063,916 | 15,412,682 |
Cash paid during the period for: | ||
Interest | 725,885 | 594,189 |
Income taxes | 504,581 | 831,400 |
Noncash transactions during the period for: | ||
Loan and interest payable - related parties | 103,890 | |
Loan and interest receivable - related parties | (103,890) | |
Loan and interest from shareholder | 94,934,400 | |
Dividend distribution | (94,934,400) | |
Deferred tax assets | (241,229) | |
Prepaid income taxes | 241,229 | |
Change in deferred revenues due to gain contingency | 1,209,430 | |
Change in other receivables due to gain contingency | (1,209,430) | |
Noncash finance activity during the period for: | ||
Issuance of warrants in connection with the equity line of credit | (105,411) | |
Gain on paycheck protection program and economic injury disaster loan forgiveness | (174,436) | |
License [Member] | ||
Adjustments to reconcile net income to net cash used in operating activities: | ||
Amortization - intangible assets | 250,000 | |
License Rights, Related Parties [Member] | ||
Adjustments to reconcile net income to net cash used in operating activities: | ||
Amortization - intangible assets | 1,253,623 | 5,552,938 |
Other Intangible Assets [Member] | ||
Adjustments to reconcile net income to net cash used in operating activities: | ||
Amortization - intangible assets | $ 603 | $ 672 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure [Table] | ||||
Net Income (Loss) Attributable to Parent | $ (4,432,632) | $ (1,538,738) | $ (11,483,441) | $ 3,218,022 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Insider Trading Arrangements [Line Items] | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
PRESENTATION AND NATURE OF OPER
PRESENTATION AND NATURE OF OPERATIONS | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
PRESENTATION AND NATURE OF OPERATIONS | NOTE 1 – PRESENTATION AND NATURE OF OPERATIONS 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 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 6,251,420 28,748,580 3,000,000 5.00 12.0 3.0 1.0 12 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. Snail Inc. and Subsidiaries Notes to 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 September 30, 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 During the nine months ended September 30, 2023, certain comparative amounts have been reclassified due to immaterial errors identified by the Company in its presentation of certain server hosting costs. During the three months ended June 30, 2023, the Company began reporting all of its server hosting costs as costs of revenue whereas they were previously reported within both cost of sales and general and administrative expenses. The Company has assessed the materiality of these errors on its prior annual and interim financial statements, assessing materiality both quantitatively and qualitatively, in accordance with the SEC’s Staff Accounting Bulletin (“SAB”) No. 99 and SAB No. 108 and concluded that the errors were not material to those consolidated financial statements. However, to correctly present cost of revenues, gross profit and general and administrative expenses, the reclassifications have been made throughout this report and accompanying note disclosures. The effects on the related captions in the condensed consolidated statements of operations and comprehensive income (loss) for all previously reported periods were as follows: SCHEDULE OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) For the three months ended September 30, 2022 As reported Adjustment As adjusted Cost of revenues $ 11,468,961 $ 955,106 $ 12,424,067 Gross profit 4,145,210 (955,106 ) 3,190,104 General and administrative 5,434,013 (955,106 ) 4,478,907 For the nine months ended September 30, 2022 As reported Adjustment As adjusted Cost of revenues $ 37,744,863 $ 2,652,533 $ 40,397,396 Gross profit 21,387,421 (2,652,533 ) 18,734,888 General and administrative 16,177,534 (2,652,533 ) 13,525,001 For the twelve months ended December 31, 2022 As reported Adjustment As adjusted Cost of revenues $ 49,507,888 $ 3,613,788 $ 53,121,676 Gross profit 24,936,253 (3,613,788 ) 21,322,465 General and administrative 22,327,746 (3,613,788 ) 18,713,958 For the three months ended March 31, 2023 As reported Adjustment As adjusted Cost of revenues $ 9,816,397 $ 1,044,540 $ 10,860,937 Gross profit 3,642,091 (1,044,540 ) 2,597,551 General and administrative 5,570,291 (1,044,540 ) 4,525,751 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements The condensed consolidated financial statements include the accounts of Snail, Inc. and the following subsidiaries: 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 % 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 Revenue from Contracts with Customers Liquidity and Going Concern The Company incurred a net loss of $ 11.5 13.2 4.9 1.1 13.7 As of September 30, 2023, the Company’s 2021 Revolving Loan (as defined below) and 2022 Short Term Note (as defined below) of $ 6.0 2.1 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 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 | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 30 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. Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 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, My Nintendo Store, and our 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 recognizes 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 100 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 2.5 ARK 1’s 2.3 ARK 2 In November 2021, the Company entered an agreement with a platform to make ARK 1 3.5 The Company entered into a non-exclusive license agreement with a platform in February 2020 to make ARK 1 8.0 ARK 1 4.0 4.0 In July 2023, the Company entered into a distribution agreement with its retail distribution partner for the distribution of ARK: Survival Ascended ARK II. 0.5 1.3 are ARK: Survival Ascended ARK II, 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 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. Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 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 and nine months ended September 30, 2023 and 2022 were comprised of the following: SCHEDULE OF COST OF REVENUES Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Software license royalties – related parties $ 2,108,764 $ 3,428,231 $ 6,878,563 $ 13,314,258 Software license royalties 372,666 47,020 979,505 47,020 License and amortization – related parties 4,695,652 6,350,979 14,753,623 19,052,938 License and amortization 201 224 603 250,672 Game localization - 840 - 840 Merchant fees 215,635 602,814 1,023,911 1,856,371 Engine fees 292,127 359,263 1,009,252 1,575,942 Internet, server and data center 1,777,894 1,490,505 4,929,631 4,155,164 Costs related to advertising revenue 147 144,191 84,700 144,191 Total: $ 9,463,086 $ 12,424,067 $ 29,659,788 $ 40,397,396 General and Administrative Costs General and administrative costs include rent, 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 September 30, 2023 and 2022, general and administrative expenses totaled $ 3,452,141 4,478,907 11,915,126 13,525,001 220,231 589,532 no Advertising and Marketing Costs The Company expenses advertising and marketing costs as incurred. For the three months ended September 30, 2023 and 2022, advertising and marketing expenses totaled $ 215,477 198,417 488,318 569,127 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 September 30, 2023 and 2022 were $ 1,317,400 116,624 3,892,039 479,630 16,411 32,475 no 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 September 30, 2023 and December 31, 2022, there were non-controlling interests with the following subsidiaries: 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 % Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 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 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 an 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 Financial Accounting Standards Board (“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 ● Level 2 ● Level 3 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 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, derivative instruments, short-term loans, accounts receivable and accounts payable. 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 except for the Company’s promissory note which has a fixed rate for 5 0.50 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 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 $ 384,150 457,024 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 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 September 30, 2023 and December 31, 2022, the Company had deposits of $ 5,089,118 17,929,308 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 September 30, 2023 and December 31, 2022, the Company had two customers who accounted for approximately 57 57 35 22 29 28 60 43 52 56 As of September 30, 2023 and December 31, 2022, the Company had three vendors who accounted for approximately 75 55 51 13 11 43 12 The Company had one vendor, SDE Inc. (“SDE”), a related party, that accounted for 45 43 49 47 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 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 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 $ 26,003 17,587 77,391 44,683 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 5,718,000 1 4,523,237 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. For the nine months ended September 30, 2023 and 2022, stock-based compensations expenses amounted to $ 622,007 0 236,642 0 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 On August 24, 2023, the Company issued warrants in connection with its convertible debt for the purchase of 714,285 Equity On August 24, 2023, the Company issued a warrant to an investor (the “equity line warrant”) for the purchase of 367,647 Equity. 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 No 1,350,275 3.7 2.72 1.3 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 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 and nine months ended September 30, 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 | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | NOTE 3 – REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregation of revenue Geography The Company attributes net revenue to geographic regions based on customer location. Net revenue by geographic region for the three and nine months ended September 30, 2023 and 2022 were as follows: SCHEDULE OF DISAGGREGATION OF REVENUE 2023 2022 2023 2022 Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 United States $ 8,615,877 $ 14,767,182 $ 28,757,507 $ 55,025,810 International 365,258 846,989 3,574,369 4,106,474 Total revenue from contracts with customers: $ 8,981,135 $ 15,614,171 $ 32,331,876 $ 59,132,284 Platform Net revenue by platform for the three and nine months ended September 30, 2023 and 2022 were as follows: 2023 2022 2023 2022 Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Console $ 3,862,923 $ 3,750,029 $ 13,262,988 $ 27,157,380 PC 3,717,627 9,315,721 12,097,176 22,943,193 Mobile 1,400,585 2,161,624 4,626,820 7,346,822 Other - 386,797 2,344,892 1,684,889 Total revenue from contracts with customers: $ 8,981,135 $ 15,614,171 $ 32,331,876 $ 59,132,284 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 and nine months ended September 30, 2023 and 2022 was as follows: 2023 2022 2023 2022 Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Digital $ 7,580,550 $ 13,065,750 $ 25,360,164 $ 50,100,573 Mobile 1,400,585 2,161,624 4,626,820 7,346,822 Physical retail and other - 386,797 2,344,892 1,684,889 Total revenue from contracts with customers: $ 8,981,135 $ 15,614,171 $ 32,331,876 $ 59,132,284 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 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 September 30, 2023, the balance of deferred revenue was $ 11,528,759 5.7 2.1 5.7 12 ARK: Survival Ascended, 3.6 24 ARK 2 5.8 5.7 12 60 SCHEDULE OF DEFERRED REVENUE 2023 2022 Deferred revenue, beginning balance in advance of revenue recognition billing $ 9,551,446 $ 20,280,934 Revenue recognized (5,223,331 ) (18,832,396 ) Revenue deferred 7,200,644 8,102,908 Deferred revenue, ending balance 11,528,759 9,551,446 Less: current portion (5,848,320 ) (4,335,404 ) Deferred revenue, long term $ 5,680,439 $ 5,216,042 |
CASH AND CASH EQUIVALENTS, AND
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS | 9 Months Ended |
Sep. 30, 2023 | |
Cash And Cash Equivalents And Restricted Cash And Cash Equivalents | |
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS | NOTE 4 – CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS Cash equivalents are valued using quoted market prices or other readily available market information. The Company has restricted cash and cash equivalents of $ 1,115,084 6,374,368 Revolving Loan, Short Term Note, and Long-Term Debt 5,273,391 SUMMARY OF COMPONENTS OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS 2023 2022 Cash and cash equivalents $ 4,948,832 $ 9,044,666 Restricted cash and cash equivalents 1,115,084 6,368,016 Cash and cash equivalents, and restricted cash and cash equivalents $ 6,063,916 $ 15,412,682 |
ACCOUNTS RECEIVABLE _ RELATED P
ACCOUNTS RECEIVABLE – RELATED PARTY | 9 Months Ended |
Sep. 30, 2023 | |
Accounts Receivable Related Party | |
ACCOUNTS RECEIVABLE – RELATED PARTY | NOTE 5 – ACCOUNTS RECEIVABLE – RELATED PARTY 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 SCHEDULE OF ACCOUNTS RECEIVABLE RELATED PARTY 2023 2022 Accounts receivable – related party $ 13,578,520 $ 13,519,409 Less: Accounts payable – related party (1,979,291 ) (2,175,225 ) Accounts receivable – related party, net $ 11,599,229 $ 11,344,184 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements |
DUE FROM SHAREHOLDER
DUE FROM SHAREHOLDER | 9 Months Ended |
Sep. 30, 2023 | |
Due From Shareholder | |
DUE FROM SHAREHOLDER | NOTE 6 – DUE FROM SHAREHOLDER Other receivables from related party consisted of monies that the Company loaned to the Company’s Founder, Chief Strategy Officer and Chairman, who is also the majority shareholder of Suzhou Snail. The loan bore 2.0 – 94,934,400 94,934,400 – Dividend Distribution 0 no 0 580,878 |
DIVIDEND DISTRIBUTION
DIVIDEND DISTRIBUTION | 9 Months Ended |
Sep. 30, 2023 | |
Dividend Distribution | |
DIVIDEND DISTRIBUTION | NOTE 7 – DIVIDEND DISTRIBUTION On April 26, 2022, the Company declared an in-kind dividend of $ 94,934,400 8,200,000 Due from Shareholder. no 1,886,600 |
PREPAID EXPENSES - RELATED PART
PREPAID EXPENSES - RELATED PARTY | 9 Months Ended |
Sep. 30, 2023 | |
Prepaid Expenses - Related Party | |
PREPAID EXPENSES - RELATED PARTY | NOTE 8 – PREPAID EXPENSES - RELATED PARTY On March 10, 2023, the Company amended its exclusive software license agreement with SDE relating to the ARK 5.0 5.0 During the nine months ended September 30, 2023, the Company prepaid $ 2,500,000 ARK 1 5,000,000 ARK 2 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 CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 9 Months Ended |
Sep. 30, 2023 | |
Prepaid Expenses And Other Current Assets | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 9 – PREPAID EXPENSES AND OTHER CURRENT ASSETS The Company’s other receivables consist of litigation receivables, which were received in October 2023. Prepaid expenses and other current assets consisted of the following as of September 30, 2023, and December 31, 2022: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS 2023 2022 Prepaid income taxes $ 9,655,160 $ 9,822,603 Other receivable 1,500,000 — Deferred offering costs 105,411 — Other prepaids 106,236 80,271 Other current assets 115,496 662,267 Total prepaid expenses and other current assets $ 11,482,303 $ 10,565,141 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 10 – PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following as of September 30, 2023 and December 31, 2022: 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 Property, plant and equipment, gross 9,534,357 9,534,357 Accumulated depreciation (4,765,642 ) (4,419,558 ) Property, plant and equipment, net $ 4,768,715 $ 5,114,799 Depreciation and amortization expense was $ 112,914 128,536 346,084 435,644 11,615 9,182 19,500 88,398 17,067 5,166 13,569 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
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 September 30, 2023 and December 31, 2022: SCHEDULE OF INTANGIBLE ASSETS September 30, 2023 Gross Weighted Carrying Accumulated Impairment Net Book Average Amount Amortization Loss Value Useful Life License rights from related parties $ 136,665,000 $ (136,534,565 ) $ — $ 130,435 3 5 License rights $ 3,000,000 $ (3,000,000 ) $ — $ — 5 Intangible assets - other: Software $ 51,784 $ (51,784 ) $ — $ — 3 Trademark 10,745 (9,713 ) — 1,032 12 In-progress patent 270,886 — — 270,886 Total: $ 333,415 $ (61,497 ) $ — $ 271,918 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 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 License rights $ 3,000,000 $ (3,000,000 ) $ — $ — 5 Intangible assets - other: Software $ 51,784 $ (51,784 ) $ — $ — 3 Trademark 10,745 (9,110 ) — 1,635 12 In-progress patent 270,886 — — 270,886 Total: $ 333,415 $ (60,894 ) $ — $ 272,521 Amortization expense was $ 195,853 1,851,203 1,254,226 5,803,610 0.3 SCHEDULE OF FUTURE AMORTIZATION EXPENSE OF INTANGIBLE ASSETS Years ending December 31, Amount Remainder of 2023 $ 130,636 2024 804 2025 27 2026 — 2027 — Thereafter 270,886 Total $ 402,353 |
ACCOUNTS PAYABLE _ RELATED PART
ACCOUNTS PAYABLE — RELATED PARTY | 9 Months Ended |
Sep. 30, 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 September 30, 2023 and December 31, 2022, the Company had $ 19,669,868 19,918,259 58,661 94,836 201,609 316,869 450,000 1,719,660 no 1,275,397 |
LOAN AND INTEREST RECEIVABLE _
LOAN AND INTEREST RECEIVABLE — RELATED PARTY | 9 Months Ended |
Sep. 30, 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 loaned $ 200,000 2.0 203,890 103,890 Loan Payable and Interest Payable — Related Parties 103,249 101,753 504 505 1,496 1,249 |
LOAN PAYABLE AND INTEREST PAYAB
LOAN PAYABLE AND INTEREST PAYABLE — RELATED PARTIES | 9 Months Ended |
Sep. 30, 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 2.0 300,000 100,000 100,000 3,890 Loan and Interest Receivable — Related Party 300,000 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements As of September 30, 2023 and December 31, 2022, the total loan payable — related parties amounted to $ 0 527,770 no 0 3,222 |
REVOLVING LOAN, SHORT TERM NOTE
REVOLVING LOAN, SHORT TERM NOTES AND LONG - TERM DEBT | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
REVOLVING LOAN, SHORT TERM NOTES AND LONG - TERM DEBT | NOTE 15 – REVOLVING LOAN, SHORT TERM NOTES AND LONG - TERM DEBT SCHEDULE OF LONG TERM DEBT September 30, 2023 December 31, 2022 2021 Revolving Loan - 6,000,000 December 31, 2023 0.25% 8.25% 1.5 to 1 $ 6,000,000 $ 9,000,000 2021 Promissory Note - 10 3.5% 5 6 to 10 June 30, 2031 1.5 to 1 2,832,231 2,891,820 2022 Short Term Note - 10,000,000 January 26, 2023 3.75% 0.50% 5% 1.5 to 1 0.25% 5.75% 8.25% 2,083,333 5,833,333 2023 Convertible Notes – 7.4% 1,080,000 7.5% February 24, 2024 May 24, 2024 16% 678,254 109.7% 515,217 - 2023 Note Payable – Ark: Survival Evolved 7 3.0 The funds are to be repaid in monthly installments starting in November 2023 and are to be based on 20% of the gross monthly Ark Survival revenues 8.0% 12.0% 2,275,000 - Total debt of $ 14,270,565 564,784 13,705,781 17,725,153 Total debt 13,705,781 17,725,153 Less: current portion of promissory note 2,832,231 86,524 Less: revolving loan 6,000,000 9,000,000 Less: notes payable 4,358,333 5,416,666 Less: convertible notes, net of discount 515,217 - Total long-term debt $ - $ 3,221,963 Total interest expense for the above debt and revolver loan amounted to $ 348,898 254,480 937,893 594,171 121,930 6,590 142,656 19,149 2,903 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements The following table provides future minimum payments of its long-term debt as of December 31: SCHEDULE OF FUTURE MINIMUM PAYMENTS OF LONG TERM DEBT Years ending December 31, Amount Remainder of 2023 $ 9,968,601 2024 1,579,415 2025 86,013 2026 89,115 2027 92,329 Thereafter 2,455,092 Long term debt $ 14,270,565 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 16 – INCOME TAXES The Company recognized an income tax benefit of $ 1,156,675 398,998 3,044,380 803,305 21% 20% 21% The Company assesses all positive and negative evidence in determining if, based on the weight of such evidence, a valuation allowance is required to be recorded against the deferred tax assets as of September 30, 2023. The Company has concluded that the positive evidence of reversing taxable temporary differences, indefinite lived nature of certain available tax attributes, level of historical taxable income, projections of future taxable income and cumulative pre-tax book income on a rolling twelve-quarter basis to outweigh the negative evidence of recent losses. Accordingly, the Company has not provided for additional valuation allowance as of September 30, 2023. The realization of the deferred tax assets is contingent upon the Company’s upcoming new game releases to generate sufficient future taxable income. In the event that negative evidence outweighs positive evidence in future periods, the Company may need to record additional valuation allowance, which could have a material impact on our financial position. 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, management has accrued income tax liabilities for additional states as of September 30, 2023 and December 31, 2022, respectively and is also undergoing the Voluntary Disclosure Agreement process in additional states. Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements |
OPERATING LEASE RIGHT-OF-USE AS
OPERATING LEASE RIGHT-OF-USE ASSETS | 9 Months Ended |
Sep. 30, 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 2,738,554 3,606,398 58,071 22,713 97,875 49,730 122,533 no SCHEDULE OF TERMINATIONS OPERATING LEASE Right of Accumulated Lease Liability Gain on Use Asset Amortization Current Long Term Termination Lease Terminations $ (1,301,571 ) $ 907,370 $ 442,704 $ 74,030 $ 122,533 Operating lease costs included in the general and administrative expenses in our condensed consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022, are as follows: SCHEDULE OF OPERATING LEASE COSTS 2023 2022 2023 2022 For the three months ended September 30, For the nine months ended September 30, 2023 2022 2023 2022 Operating lease costs $ 419,605 $ 397,428 $ 1,198,467 $ 1,213,386 Supplemental information related to operating leases for lease liabilities as of September 30, 2023 and September 30, 2022 is as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO OPERATING LEASES 2023 2022 Cash paid for amounts included in the measurement of lease liabilities $ 1,155,759 $ 1,120,111 Weighted average remaining lease term 2.2 3.2 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 September 30, 2023 are as follows: SCHEDULE OF FUTURE UNDISCOUNTED LEASE PAYMENTS FOR OPERATING LEASES AND RECONCILIATION OF THESE PAYMENTS TO OUR OPERATING LEASE LIABILITIES Years ending December 31, Future lease payments Imputed Interest Amount Lease Liabilities Remainder of 2023 $ 393,129 $ 37,978 $ 355,151 2024 1,610,844 105,810 1,505,034 2025 1,453,785 28,290 1,425,495 Thereafter — — — Total future lease payments $ 3,457,758 $ 172,078 $ 3,285,680 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
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 concerned a videogame titled Myth of Empires Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements On December 9, 2021, Angela Game and Imperium sued 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 sought 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 reinstate Myth of Empires for download. On December 20, 2021, the Company and Studio Wildcard filed an answer to the complaint, which included counterclaims against Angela Game and Imperium and a third-party complaint against Tencent seeking unspecified damages resulting from the alleged copyright infringement and misappropriation of trade secrets in connection with the ARK: Survival Evolved source code. On September 8, 2023, the Company entered into a settlement agreement with Angela Game. The settlement agreement includes an upfront payment from Angela Game to the Company plus ongoing payments. The upfront payment was recorded as deferred revenue, with a portion of the payment included in “other income” and the remaining amount to be recognized upon the satisfaction of certain performance obligations and future revenue sharing. 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 $ 3 130,000 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. In October 2023, INDIEV has filed for bankruptcy and the Company does not expect to recover its costs from INDIEV. At this time, the Company is unable to quantify the magnitude of the potential loss should the plaintiffs’ lawsuit succeed and accordingly no accrual for loss has been recorded in the accompanying financial statements. Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
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 using the treasury stock method. The restricted stock units, underwriters warrants and warrants issued in connection with the convertible debt and equity line of credit were excluded from the treasury stock method computation of diluted shares as their inclusion would have had an antidilutive effect for the three and nine months ended September 30, 2023. The convertible notes were excluded from the if-converted method computation of diluted shares as their inclusion would have had an antidilutive effect for the three and nine months ended September 30, 2023. There were no such exclusions made in the 2022 calculation. For the three and nine months ended September 30, 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. SCHEDULE OF EARNINGS PER SHARE 2023 2022 2023 2022 For the three months ended For the nine months ended 2023 2022 2023 2022 Basic Earnings Per Share: Net (loss) income attributable to Class A common stockholders $ (955,763 ) $ (1,538,738 ) $ (2,477,768 ) $ 3,218,022 Net (loss) attributable to Class B common stockholders (3,476,869 ) - (9,005,673 ) - Net (loss) attributable to common stockholders (3,476,869 ) - (9,005,673 ) - Total net (loss) income attributable to Snail Inc and Snail Games USA Inc. $ (4,432,632 ) $ (1,538,738 ) $ (11,483,441 ) $ 3,218,022 Class A weighted average shares outstanding - basic 7,901,145 35,000,000 7,909,715 35,000,000 Class B weighted average shares outstanding - basic 28,748,580 - 28,748,580 - weighted average shares outstanding - basic 28,748,580 - 28,748,580 - Class A and B basic earnings per share $ (0.12 ) $ (0.04 ) $ (0.31 ) $ 0.09 Diluted Earnings Per Share: Net (loss) income attributable to Class A common stockholders $ (955,763 ) $ (1,538,738 ) $ (2,477,768 ) $ 3,218,022 Net (loss) attributable to Class B common stockholders $ (3,476,869 ) $ - $ (9,005,673 ) $ - Net (loss) attributable to common stockholders $ (3,476,869 ) $ - $ (9,005,673 ) $ - Class A weighted average shares outstanding - basic 7,901,145 35,000,000 7,909,715 35,000,000 Dilutive effects of common stock equivalents - - - - Class A weighted average shares outstanding - diluted 7,901,145 35,000,000 7,909,715 35,000,000 Class B weighted average shares outstanding - basic 28,748,580 - 28,748,580 - weighted average shares outstanding - basic 28,748,580 - 28,748,580 - Dilutive effects of common stock equivalents - - - - Class B weighted average shares outstanding - diluted 28,748,580 - 28,748,580 - weighted average shares outstanding - diluted 28,748,580 - 28,748,580 - Diluted (loss) earnings per Class A and B share $ (0.12 ) $ (0.04 ) $ (0.31 ) $ 0.09 |
EQUITY
EQUITY | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
EQUITY | NOTE 20 – EQUITY The Company has authorized two one ten one 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 4.675 450,000 4.675 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 120,000 125 6.25 three Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 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 an average expected volatility of 53 4.49 3 The Company allocates all the issuance costs to the firm shares as a reduction of proceeds. Convertible Debt In August 2023, pursuant to a securities purchase agreement (the “SPA”), the Company issued to two accredited investors (the convertible debt “Investors”) convertible notes with an aggregate principal amount of $ 1,080,000 714,285 1,000,000 In connection with the Convertible Notes Financing, the Company also entered into a registration rights agreement with the Investors. So long as the Company complies with certain conditions set forth in the SPA and the registration rights agreement, the Company will sell and the Investors will purchase, an additional $ 1,080,000 The Convertible Notes carry an original issue discount of approximately 7.4 7.5 16 May 24, 2024 The Convertible Notes may be prepaid by the Company upon giving the Investors a fifteen-trading day notice by paying an amount equal to the then outstanding balance. If the Company enters into a qualifying financing it may be required by the Investors to repay part or all of the Convertible Notes at a 112.5% premium (limited to 10% of the proceeds of the qualified financing, if such financing results in gross proceeds to the Company at least $ 5,000,000 Subject to certain ownership limitations, starting three months after their issuance, the Convertible Notes can be converted at the option of the holder at any time into shares of the Company’s Class A common, at a conversion price equal 90% (85% in case of an event of default) of the average of the three the lowest daily volume weighted average price (“VWAP”) of the Class A common stock during the ten (10) trading days period prior the receipt of the notice of conversion. The conversion price may be adjusted if the Company issues a qualifying security at a lower price than the then conversion price. If, upon receipt of conversion notice, the Company cannot issue shares of Class A common stock for any reason, then it is required to issue as many shares of Class A common stock as it is able to issue and, with respect to the unconverted portion, the Noteholder may elect for the Company to pay for each shares of Class A common stock that could not be issued at a price equal to the higher of the then conversion price or the VWAP as of the date of the conversion notice. The Company determined that the Convertible Notes included features that required bifurcation from the debt host and met the criteria to be accounted for as a derivative liability that is accounted for at fair value. On the date of issuance, the compound derivative had an estimated fair value that was not significant due to the remoteness of the events that would trigger the redemption features. The derivative liability uses level 3 inputs, is to be measured at fair value each reporting date with change in fair value being reported in other income. The change in fair value during the three and nine months ended September 30, 2023, was not significant and as such, not recorded. On the date of issuance, the Company allocated the proceeds between the instruments issued using fair value for the derivative liability with the residual amounts allocated to the convertible notes and warrants using relative fair value as follows: SCHEDULE OF PROCEEDS BETWEEN THE INSTRUMENTS Convertible notes $ 554,246 Derivative liability - Warrants 445,754 Total proceeds $ 1,000,000 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements The difference of $ 525,754 152,500 The following is a summary of the Convertible Notes as of September 30, 2023: SCHEDULE OF CONVERTIBLE NOTES Fair value Principal Amount Unamortized debt discount and issuance costs Net carrying amount Amount Levelling Convertible Notes $ 642,204 $ (126,987 ) $ 515,217 $ 557,000 Level 3 The debt discount is being amortized to interest expense over the maturity period using the effective interest method. For the three and nine months ended September 30, 2023, the Company recognized $ 121,796 of interest expense related to the Convertible Notes, comprising of $ 8,325 of contractual interest expense, $ 87,958 25,513 of amortization of debt discount and issuance costs. Warrants The convertible note warrants allow the Investors to purchase an aggregate of 714,285 1.89 The exercise price and the number of shares of the warrants are subject to adjustment for standard anti-dilution provisions and also for subsequent issuance at a price lower than the then exercise price and adjustments to the strike price of other equity-linked instruments to a lower price than the then exercise price. Due to their adjustment provisions, the warrants are classified as a liability on the condensed consolidated balance sheet. The fair value of the warrants at issuance has been estimated using a Monte-Carlo model and the following significant inputs: SCHEDULE OF STOCK BASED WARRANTS Issuance date September 30, 2023 Stock price $ 1.35 $ 1.14 Exercise price $ 1.89 $ 1.89 Contractual term (years) 5.0 4.9 Volatility 60.0 % 45.0 % Risk-free rate 4.39 % 5.51 % The warrant liability, which uses level 3 inputs, is to be measured at fair value each reporting period with the change in fair value being recognized in other income (expense). At September 30, 2023, the fair value of the warrant liability was $ 452,351 6,597 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Equity Line Purchase Agreement On August 24, 2023, the Company entered into a common stock purchase agreement (the “Equity Line Purchase Agreement”) and a registration rights agreement (the “Registration Rights Agreement”) with an investor, pursuant to which the investor has committed to purchase up to $ 5,000,000 9.99 Under the terms of the Equity Line Purchase Agreement, the Company has the right, but not the obligation, to sell to the investor, shares of Class A common stock over the period commencing on the execution date of the Equity Line Purchase Agreement and ending on the earlier of (i) December 31, 2025, or (ii) the date on which the investor shall have purchased Securities pursuant to the Equity Line Purchase Agreement for an aggregate purchase price of the $ 5,000,000 The registration statement covering the offer and sale of up to 8,913,312 15,093,768 Concurrently with the signing of the Equity Line Purchase Agreement, the Company issued the equity line warrant to purchase 367,647 105,411 Warrants In connection with the equity line of credit the Company issued to the Investors warrants to purchase an aggregate 367,647 1.50 The exercise price and the number of shares of the warrants are subject to adjustment for standard anti-dilution provisions, for subsequent common share issuance at a price lower than the then exercise price of the warrants and adjustments to the strike price of other equity-linked instruments to a lower price than the then exercise price of the warrants. Due to their adjustment provision, the warrants are classified as a liability on the consolidated balance sheet. The fair value of the warrants at issuance has been estimated using a Monte-Carlo model and the following significant inputs: SCHEDULE OF STOCK BASED WARRANTS .Issuance date September 30, 2023 Stock price $ 1.35 $ 1.14 Exercise price $ 1.89 $ 1.89 Contractual term (years) 5.0 4.90 Volatility 40.0 % 40.0 % Risk-free rate 5.49 % 4.61 % The warrant liability, which uses level 3 inputs, is to be measured at fair value at each reporting period and with the change in fair value being recognized in earnings. At September 30, 2023, the fair value of the warrant liability was $ 76,346 29,065 Restricted Stock Units (“RSUs”) RSUs granted to directors vest based on the directors’ continued employment with us through each applicable vest date, which is generally over one year SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY Restricted Stock Units Weighted-Average Grant-Date Fair Values Outstanding as of January 1, 2023 24,000 $ 5.00 Granted — — Vested — — Forfeited or cancelled — — Outstanding as of September 30, 2023 24,000 $ 5.00 The grant date fair value of RSUs granted to directors is based on the quoted market price of our common stock on the date of grant. Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Our RSUs granted to employees vest upon the achievement of pre-determined performance-based milestones as well as service conditions (“PSUs”). The pre-determined performance-based milestones are based on specified percentages of the PSUs that would vest at each of the first five 5 years Each quarter, the Company updates our assessment of the probability that the performance milestones will be achieved. The Company amortizes the fair values of PSUs 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 PSU activity with employees, presented with the maximum number of shares that could potentially vest, for the nine months ended September 30, 2023. There were no activities during the nine months ended September 30, 2022. SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY Restricted Stock Units Weighted-Average Grant-Date Fair Values Outstanding as of January 1, 2023 1,197,552 $ 5.00 Granted — — Vested — — Forfeited or cancelled (26,789 ) 5.00 Outstanding as of September 30, 2023 1,170,763 $ 5.00 The grant date fair value of PSUs 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 nine months ended September 30, 2023 were open market transactions. As of September 30, 2023, 1,350,275 3.7 2.72 1.3 Stock-Based Compensation Expense Stock-based compensation expense resulting from RSUs and PSUs of $ 220,231 589,532 16,411 32,475 During the three months ended September 30, 2023 and 2022, the Company recognized approximately $ 48,308 0 131,185 0 As of September 30, 2023, our total unrecognized compensation cost related to RSUs and PSUs was approximately $ 1.3 2.6 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
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 30 75 |
Principal vs. Agent Consideration | 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. Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 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, My Nintendo Store, and our 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 | 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 recognizes 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 100 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 2.5 ARK 1’s 2.3 ARK 2 In November 2021, the Company entered an agreement with a platform to make ARK 1 3.5 The Company entered into a non-exclusive license agreement with a platform in February 2020 to make ARK 1 8.0 ARK 1 4.0 4.0 In July 2023, the Company entered into a distribution agreement with its retail distribution partner for the distribution of ARK: Survival Ascended ARK II. 0.5 1.3 are ARK: Survival Ascended ARK II, |
Estimated Service Period | 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”) | Shipping, Handling and Value Added Taxes (“VAT”) The distributor, as the principal, is responsible for the shipping of the game discs to 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. Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements |
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 and nine months ended September 30, 2023 and 2022 were comprised of the following: SCHEDULE OF COST OF REVENUES Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Software license royalties – related parties $ 2,108,764 $ 3,428,231 $ 6,878,563 $ 13,314,258 Software license royalties 372,666 47,020 979,505 47,020 License and amortization – related parties 4,695,652 6,350,979 14,753,623 19,052,938 License and amortization 201 224 603 250,672 Game localization - 840 - 840 Merchant fees 215,635 602,814 1,023,911 1,856,371 Engine fees 292,127 359,263 1,009,252 1,575,942 Internet, server and data center 1,777,894 1,490,505 4,929,631 4,155,164 Costs related to advertising revenue 147 144,191 84,700 144,191 Total: $ 9,463,086 $ 12,424,067 $ 29,659,788 $ 40,397,396 |
General and Administrative Costs | General and Administrative Costs General and administrative costs include rent, 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 September 30, 2023 and 2022, general and administrative expenses totaled $ 3,452,141 4,478,907 11,915,126 13,525,001 220,231 589,532 no |
Advertising and Marketing Costs | Advertising and Marketing Costs The Company expenses advertising and marketing costs as incurred. For the three months ended September 30, 2023 and 2022, advertising and marketing expenses totaled $ 215,477 198,417 488,318 569,127 |
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 September 30, 2023 and 2022 were $ 1,317,400 116,624 3,892,039 479,630 16,411 32,475 no |
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 September 30, 2023 and December 31, 2022, there were non-controlling interests with the following subsidiaries: 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 % Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements |
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 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 an 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 Financial Accounting Standards Board (“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 ● Level 2 ● Level 3 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 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, derivative instruments, short-term loans, accounts receivable and accounts payable. 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 except for the Company’s promissory note which has a fixed rate for 5 0.50 |
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 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 $ 384,150 457,024 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements |
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 September 30, 2023 and December 31, 2022, the Company had deposits of $ 5,089,118 17,929,308 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 September 30, 2023 and December 31, 2022, the Company had two customers who accounted for approximately 57 57 35 22 29 28 60 43 52 56 As of September 30, 2023 and December 31, 2022, the Company had three vendors who accounted for approximately 75 55 51 13 11 43 12 The Company had one vendor, SDE Inc. (“SDE”), a related party, that accounted for 45 43 49 47 |
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 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements |
Employee Savings Plans | 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 $ 26,003 17,587 77,391 44,683 |
Stock-Based Compensation | 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 5,718,000 1 4,523,237 |
Restricted Stock Units | 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. For the nine months ended September 30, 2023 and 2022, stock-based compensations expenses amounted to $ 622,007 0 236,642 0 |
Warrants | 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 On August 24, 2023, the Company issued warrants in connection with its convertible debt for the purchase of 714,285 Equity On August 24, 2023, the Company issued a warrant to an investor (the “equity line warrant”) for the purchase of 367,647 Equity. |
Share Repurchase Program | 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 No 1,350,275 3.7 2.72 1.3 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements |
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 and nine months ended September 30, 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) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SCHEDULE OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | SCHEDULE OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) For the three months ended September 30, 2022 As reported Adjustment As adjusted Cost of revenues $ 11,468,961 $ 955,106 $ 12,424,067 Gross profit 4,145,210 (955,106 ) 3,190,104 General and administrative 5,434,013 (955,106 ) 4,478,907 For the nine months ended September 30, 2022 As reported Adjustment As adjusted Cost of revenues $ 37,744,863 $ 2,652,533 $ 40,397,396 Gross profit 21,387,421 (2,652,533 ) 18,734,888 General and administrative 16,177,534 (2,652,533 ) 13,525,001 For the twelve months ended December 31, 2022 As reported Adjustment As adjusted Cost of revenues $ 49,507,888 $ 3,613,788 $ 53,121,676 Gross profit 24,936,253 (3,613,788 ) 21,322,465 General and administrative 22,327,746 (3,613,788 ) 18,713,958 For the three months ended March 31, 2023 As reported Adjustment As adjusted Cost of revenues $ 9,816,397 $ 1,044,540 $ 10,860,937 Gross profit 3,642,091 (1,044,540 ) 2,597,551 General and administrative 5,570,291 (1,044,540 ) 4,525,751 |
SCHEDULE OF SUBSIDIARIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS | The condensed consolidated financial statements include the accounts of Snail, Inc. and the following subsidiaries: 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) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
SCHEDULE OF COST OF REVENUES | SCHEDULE OF COST OF REVENUES Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Software license royalties – related parties $ 2,108,764 $ 3,428,231 $ 6,878,563 $ 13,314,258 Software license royalties 372,666 47,020 979,505 47,020 License and amortization – related parties 4,695,652 6,350,979 14,753,623 19,052,938 License and amortization 201 224 603 250,672 Game localization - 840 - 840 Merchant fees 215,635 602,814 1,023,911 1,856,371 Engine fees 292,127 359,263 1,009,252 1,575,942 Internet, server and data center 1,777,894 1,490,505 4,929,631 4,155,164 Costs related to advertising revenue 147 144,191 84,700 144,191 Total: $ 9,463,086 $ 12,424,067 $ 29,659,788 $ 40,397,396 |
SCHEDULE OF EQUITY INTEREST AND NON CONTROLLING INTEREST IN SUBSIDIARIES | 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) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
SCHEDULE OF DISAGGREGATION OF REVENUE | SCHEDULE OF DISAGGREGATION OF REVENUE 2023 2022 2023 2022 Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 United States $ 8,615,877 $ 14,767,182 $ 28,757,507 $ 55,025,810 International 365,258 846,989 3,574,369 4,106,474 Total revenue from contracts with customers: $ 8,981,135 $ 15,614,171 $ 32,331,876 $ 59,132,284 Platform Net revenue by platform for the three and nine months ended September 30, 2023 and 2022 were as follows: 2023 2022 2023 2022 Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Console $ 3,862,923 $ 3,750,029 $ 13,262,988 $ 27,157,380 PC 3,717,627 9,315,721 12,097,176 22,943,193 Mobile 1,400,585 2,161,624 4,626,820 7,346,822 Other - 386,797 2,344,892 1,684,889 Total revenue from contracts with customers: $ 8,981,135 $ 15,614,171 $ 32,331,876 $ 59,132,284 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 and nine months ended September 30, 2023 and 2022 was as follows: 2023 2022 2023 2022 Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Digital $ 7,580,550 $ 13,065,750 $ 25,360,164 $ 50,100,573 Mobile 1,400,585 2,161,624 4,626,820 7,346,822 Physical retail and other - 386,797 2,344,892 1,684,889 Total revenue from contracts with customers: $ 8,981,135 $ 15,614,171 $ 32,331,876 $ 59,132,284 |
SCHEDULE OF DEFERRED REVENUE | SCHEDULE OF DEFERRED REVENUE 2023 2022 Deferred revenue, beginning balance in advance of revenue recognition billing $ 9,551,446 $ 20,280,934 Revenue recognized (5,223,331 ) (18,832,396 ) Revenue deferred 7,200,644 8,102,908 Deferred revenue, ending balance 11,528,759 9,551,446 Less: current portion (5,848,320 ) (4,335,404 ) Deferred revenue, long term $ 5,680,439 $ 5,216,042 |
CASH AND CASH EQUIVALENTS, AN_2
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Cash And Cash Equivalents And Restricted Cash And Cash Equivalents | |
SUMMARY OF COMPONENTS OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS | SUMMARY OF COMPONENTS OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS 2023 2022 Cash and cash equivalents $ 4,948,832 $ 9,044,666 Restricted cash and cash equivalents 1,115,084 6,368,016 Cash and cash equivalents, and restricted cash and cash equivalents $ 6,063,916 $ 15,412,682 |
ACCOUNTS RECEIVABLE _ RELATED_2
ACCOUNTS RECEIVABLE – RELATED PARTY (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accounts Receivable Related Party | |
SCHEDULE OF ACCOUNTS RECEIVABLE RELATED PARTY | SCHEDULE OF ACCOUNTS RECEIVABLE RELATED PARTY 2023 2022 Accounts receivable – related party $ 13,578,520 $ 13,519,409 Less: Accounts payable – related party (1,979,291 ) (2,175,225 ) Accounts receivable – related party, net $ 11,599,229 $ 11,344,184 |
PREPAID EXPENSES - RELATED PA_2
PREPAID EXPENSES - RELATED PARTY (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Prepaid Expenses - Related Party | |
SCHEDULE OF 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) | 9 Months Ended |
Sep. 30, 2023 | |
Prepaid Expenses And Other Current Assets | |
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS | The Company’s other receivables consist of litigation receivables, which were received in October 2023. Prepaid expenses and other current assets consisted of the following as of September 30, 2023, and December 31, 2022: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS 2023 2022 Prepaid income taxes $ 9,655,160 $ 9,822,603 Other receivable 1,500,000 — Deferred offering costs 105,411 — Other prepaids 106,236 80,271 Other current assets 115,496 662,267 Total prepaid expenses and other current assets $ 11,482,303 $ 10,565,141 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT, NET | Property, plant and equipment, net consisted of the following as of September 30, 2023 and December 31, 2022: 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 Property, plant and equipment, gross 9,534,357 9,534,357 Accumulated depreciation (4,765,642 ) (4,419,558 ) Property, plant and equipment, net $ 4,768,715 $ 5,114,799 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
SCHEDULE OF INTANGIBLE ASSETS | The following tables reflect all the intangible assets presented on the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022: SCHEDULE OF INTANGIBLE ASSETS September 30, 2023 Gross Weighted Carrying Accumulated Impairment Net Book Average Amount Amortization Loss Value Useful Life License rights from related parties $ 136,665,000 $ (136,534,565 ) $ — $ 130,435 3 5 License rights $ 3,000,000 $ (3,000,000 ) $ — $ — 5 Intangible assets - other: Software $ 51,784 $ (51,784 ) $ — $ — 3 Trademark 10,745 (9,713 ) — 1,032 12 In-progress patent 270,886 — — 270,886 Total: $ 333,415 $ (61,497 ) $ — $ 271,918 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 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 License rights $ 3,000,000 $ (3,000,000 ) $ — $ — 5 Intangible assets - other: Software $ 51,784 $ (51,784 ) $ — $ — 3 Trademark 10,745 (9,110 ) — 1,635 12 In-progress patent 270,886 — — 270,886 Total: $ 333,415 $ (60,894 ) $ — $ 272,521 |
SCHEDULE OF FUTURE AMORTIZATION EXPENSE OF INTANGIBLE ASSETS | SCHEDULE OF FUTURE AMORTIZATION EXPENSE OF INTANGIBLE ASSETS Years ending December 31, Amount Remainder of 2023 $ 130,636 2024 804 2025 27 2026 — 2027 — Thereafter 270,886 Total $ 402,353 |
REVOLVING LOAN, SHORT TERM NO_2
REVOLVING LOAN, SHORT TERM NOTES AND LONG - TERM DEBT (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF LONG TERM DEBT | SCHEDULE OF LONG TERM DEBT September 30, 2023 December 31, 2022 2021 Revolving Loan - 6,000,000 December 31, 2023 0.25% 8.25% 1.5 to 1 $ 6,000,000 $ 9,000,000 2021 Promissory Note - 10 3.5% 5 6 to 10 June 30, 2031 1.5 to 1 2,832,231 2,891,820 2022 Short Term Note - 10,000,000 January 26, 2023 3.75% 0.50% 5% 1.5 to 1 0.25% 5.75% 8.25% 2,083,333 5,833,333 2023 Convertible Notes – 7.4% 1,080,000 7.5% February 24, 2024 May 24, 2024 16% 678,254 109.7% 515,217 - 2023 Note Payable – Ark: Survival Evolved 7 3.0 The funds are to be repaid in monthly installments starting in November 2023 and are to be based on 20% of the gross monthly Ark Survival revenues 8.0% 12.0% 2,275,000 - Total debt of $ 14,270,565 564,784 13,705,781 17,725,153 Total debt 13,705,781 17,725,153 Less: current portion of promissory note 2,832,231 86,524 Less: revolving loan 6,000,000 9,000,000 Less: notes payable 4,358,333 5,416,666 Less: convertible notes, net of discount 515,217 - Total long-term debt $ - $ 3,221,963 |
SCHEDULE OF FUTURE MINIMUM PAYMENTS OF LONG TERM DEBT | The following table provides future minimum payments of its long-term debt as of December 31: SCHEDULE OF FUTURE MINIMUM PAYMENTS OF LONG TERM DEBT Years ending December 31, Amount Remainder of 2023 $ 9,968,601 2024 1,579,415 2025 86,013 2026 89,115 2027 92,329 Thereafter 2,455,092 Long term debt $ 14,270,565 |
OPERATING LEASE RIGHT-OF-USE _2
OPERATING LEASE RIGHT-OF-USE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Operating Lease Right-of-use Assets | |
SCHEDULE OF TERMINATIONS OPERATING LEASE | SCHEDULE OF TERMINATIONS OPERATING LEASE Right of Accumulated Lease Liability Gain on Use Asset Amortization Current Long Term Termination Lease Terminations $ (1,301,571 ) $ 907,370 $ 442,704 $ 74,030 $ 122,533 |
SCHEDULE OF OPERATING LEASE COSTS | Operating lease costs included in the general and administrative expenses in our condensed consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022, are as follows: SCHEDULE OF OPERATING LEASE COSTS 2023 2022 2023 2022 For the three months ended September 30, For the nine months ended September 30, 2023 2022 2023 2022 Operating lease costs $ 419,605 $ 397,428 $ 1,198,467 $ 1,213,386 |
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO OPERATING LEASES | Supplemental information related to operating leases for lease liabilities as of September 30, 2023 and September 30, 2022 is as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO OPERATING LEASES 2023 2022 Cash paid for amounts included in the measurement of lease liabilities $ 1,155,759 $ 1,120,111 Weighted average remaining lease term 2.2 3.2 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 September 30, 2023 are as follows: SCHEDULE OF FUTURE UNDISCOUNTED LEASE PAYMENTS FOR OPERATING LEASES AND RECONCILIATION OF THESE PAYMENTS TO OUR OPERATING LEASE LIABILITIES Years ending December 31, Future lease payments Imputed Interest Amount Lease Liabilities Remainder of 2023 $ 393,129 $ 37,978 $ 355,151 2024 1,610,844 105,810 1,505,034 2025 1,453,785 28,290 1,425,495 Thereafter — — — Total future lease payments $ 3,457,758 $ 172,078 $ 3,285,680 |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
SCHEDULE OF EARNINGS PER SHARE | SCHEDULE OF EARNINGS PER SHARE 2023 2022 2023 2022 For the three months ended For the nine months ended 2023 2022 2023 2022 Basic Earnings Per Share: Net (loss) income attributable to Class A common stockholders $ (955,763 ) $ (1,538,738 ) $ (2,477,768 ) $ 3,218,022 Net (loss) attributable to Class B common stockholders (3,476,869 ) - (9,005,673 ) - Net (loss) attributable to common stockholders (3,476,869 ) - (9,005,673 ) - Total net (loss) income attributable to Snail Inc and Snail Games USA Inc. $ (4,432,632 ) $ (1,538,738 ) $ (11,483,441 ) $ 3,218,022 Class A weighted average shares outstanding - basic 7,901,145 35,000,000 7,909,715 35,000,000 Class B weighted average shares outstanding - basic 28,748,580 - 28,748,580 - weighted average shares outstanding - basic 28,748,580 - 28,748,580 - Class A and B basic earnings per share $ (0.12 ) $ (0.04 ) $ (0.31 ) $ 0.09 Diluted Earnings Per Share: Net (loss) income attributable to Class A common stockholders $ (955,763 ) $ (1,538,738 ) $ (2,477,768 ) $ 3,218,022 Net (loss) attributable to Class B common stockholders $ (3,476,869 ) $ - $ (9,005,673 ) $ - Net (loss) attributable to common stockholders $ (3,476,869 ) $ - $ (9,005,673 ) $ - Class A weighted average shares outstanding - basic 7,901,145 35,000,000 7,909,715 35,000,000 Dilutive effects of common stock equivalents - - - - Class A weighted average shares outstanding - diluted 7,901,145 35,000,000 7,909,715 35,000,000 Class B weighted average shares outstanding - basic 28,748,580 - 28,748,580 - weighted average shares outstanding - basic 28,748,580 - 28,748,580 - Dilutive effects of common stock equivalents - - - - Class B weighted average shares outstanding - diluted 28,748,580 - 28,748,580 - weighted average shares outstanding - diluted 28,748,580 - 28,748,580 - Diluted (loss) earnings per Class A and B share $ (0.12 ) $ (0.04 ) $ (0.31 ) $ 0.09 |
EQUITY (Tables)
EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
SCHEDULE OF PROCEEDS BETWEEN THE INSTRUMENTS | SCHEDULE OF PROCEEDS BETWEEN THE INSTRUMENTS Convertible notes $ 554,246 Derivative liability - Warrants 445,754 Total proceeds $ 1,000,000 |
SCHEDULE OF CONVERTIBLE NOTES | SCHEDULE OF CONVERTIBLE NOTES Fair value Principal Amount Unamortized debt discount and issuance costs Net carrying amount Amount Levelling Convertible Notes $ 642,204 $ (126,987 ) $ 515,217 $ 557,000 Level 3 |
SCHEDULE OF STOCK BASED WARRANTS | SCHEDULE OF STOCK BASED WARRANTS Issuance date September 30, 2023 Stock price $ 1.35 $ 1.14 Exercise price $ 1.89 $ 1.89 Contractual term (years) 5.0 4.9 Volatility 60.0 % 45.0 % Risk-free rate 4.39 % 5.51 % |
Director [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY | SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY Restricted Stock Units Weighted-Average Grant-Date Fair Values Outstanding as of January 1, 2023 24,000 $ 5.00 Granted — — Vested — — Forfeited or cancelled — — Outstanding as of September 30, 2023 24,000 $ 5.00 |
Employee Stock [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY | SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY Restricted Stock Units Weighted-Average Grant-Date Fair Values Outstanding as of January 1, 2023 1,197,552 $ 5.00 Granted — — Vested — — Forfeited or cancelled (26,789 ) 5.00 Outstanding as of September 30, 2023 1,170,763 $ 5.00 |
Warrant One [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
SCHEDULE OF STOCK BASED WARRANTS | SCHEDULE OF STOCK BASED WARRANTS .Issuance date September 30, 2023 Stock price $ 1.35 $ 1.14 Exercise price $ 1.89 $ 1.89 Contractual term (years) 5.0 4.90 Volatility 40.0 % 40.0 % Risk-free rate 5.49 % 4.61 % |
SCHEDULE OF OPERATIONS AND COMP
SCHEDULE OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Cost of revenues | $ 10,860,937 | $ 12,424,067 | $ 40,397,396 | $ 53,121,676 | ||
Gross profit | $ (481,951) | 2,597,551 | 3,190,104 | $ 2,672,088 | 18,734,888 | 21,322,465 |
General and administrative | 3,452,141 | 4,525,751 | 4,478,907 | 11,915,126 | 13,525,001 | 18,713,958 |
General and administrative | $ (3,452,141) | (4,525,751) | (4,478,907) | $ (11,915,126) | (13,525,001) | (18,713,958) |
Previously Reported [Member] | ||||||
Cost of revenues | 9,816,397 | 11,468,961 | 37,744,863 | 49,507,888 | ||
Gross profit | 3,642,091 | 4,145,210 | 21,387,421 | 24,936,253 | ||
General and administrative | 5,570,291 | 5,434,013 | 16,177,534 | 22,327,746 | ||
General and administrative | (5,570,291) | (5,434,013) | (16,177,534) | (22,327,746) | ||
Revision of Prior Period, Adjustment [Member] | ||||||
Cost of revenues | 1,044,540 | 955,106 | 2,652,533 | 3,613,788 | ||
Gross profit | (1,044,540) | (955,106) | (2,652,533) | (3,613,788) | ||
General and administrative | 1,044,540 | 955,106 | 2,652,533 | 3,613,788 | ||
General and administrative | $ (1,044,540) | $ (955,106) | $ (2,652,533) | $ (3,613,788) |
SCHEDULE OF SUBSIDIARIES INCLUD
SCHEDULE OF SUBSIDIARIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS (Details) | Sep. 30, 2023 | Dec. 31, 2022 |
Snail Innovation Institute [Member] | ||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
Equity interest owned by the company | 70% | 70% |
Donkey Crew, LLC [Member] | ||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
Equity interest owned by the company | 99% | 99% |
BTBX.IO, LLC [Member] | ||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
Equity interest owned by the company | 70% | 70% |
Subsidiaries [Member] | Snail Games Usa Inc [Member] | ||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
Equity interest owned by the company | 100% | |
Subsidiaries [Member] | Snail Innovation Institute [Member] | ||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
Equity interest owned by the company | 70% | |
Subsidiaries [Member] | Frostkeep Studios Inc [Member] | ||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
Equity interest owned by the company | 100% | |
Subsidiaries [Member] | Eminence Corp [Member] | ||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
Equity interest owned by the company | 100% | |
Subsidiaries [Member] | Wandering Wizard Llc [Member] | ||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
Equity interest owned by the company | 100% | |
Subsidiaries [Member] | Donkey Crew, LLC [Member] | ||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
Equity interest owned by the company | 99% | |
Subsidiaries [Member] | Interactive Films Llc [Member] | ||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
Equity interest owned by the company | 100% | |
Subsidiaries [Member] | Project AWK Productions Llc [Member] | ||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
Equity interest owned by the company | 100% | |
Subsidiaries [Member] | BTBX.IO, LLC [Member] | ||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
Equity interest owned by the company | 70% |
PRESENTATION AND NATURE OF OP_3
PRESENTATION AND NATURE OF OPERATIONS (Details Narrative) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Nov. 09, 2022 $ / shares shares | Jul. 13, 2022 shares | Nov. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) Integer | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Amount deposited in escrow account | $ 1,037,739 | $ 1,037,739 | $ 1,003,804 | |||||
Number of operating segments | Integer | 1 | |||||||
Net loss | 4,432,632 | $ 1,538,738 | $ 11,483,441 | $ (3,218,022) | ||||
Net cash flows | 13,174,269 | 1,141,433 | ||||||
Cash and cash equivalents | 4,948,832 | $ 9,044,666 | 4,948,832 | $ 9,044,666 | 12,863,817 | |||
Restricted cash | 1,100,000 | 1,100,000 | ||||||
Current debt | 13,700,000 | 13,700,000 | ||||||
Revolving loan | 6,000,000 | 6,000,000 | $ 9,000,000 | |||||
Term debt | $ 2,100,000 | $ 2,100,000 | ||||||
IPO [Member] | ||||||||
Net proceeds from shares issued in IPO | $ 12,000,000 | |||||||
Offering costs | 3,000,000 | |||||||
Amount deposited in escrow account | $ 1,000,000 | |||||||
Period amount in escrow is restricted | 12 months | |||||||
Common Class A [Member] | ||||||||
Number of shares of common stock issued as per agreement | shares | 6,251,420 | |||||||
Common Class A [Member] | IPO [Member] | ||||||||
Number of shares of common stock issued as per agreement | shares | 3,000,000 | |||||||
Share issued price per share | $ / shares | $ 5 | |||||||
Common Class B [Member] | ||||||||
Number of shares of common stock issued as per agreement | shares | 28,748,580 | |||||||
Snail Games USA Stock holders [Member] | ||||||||
Number of shares transferred | shares | 500,000 | |||||||
Snail Technology (HK) Limited [Member] | ||||||||
Number of shares transferred | shares | 500,000 |
SCHEDULE OF COST OF REVENUES (D
SCHEDULE OF COST OF REVENUES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Accounting Policies [Abstract] | ||||
Software license royalties – related parties | $ 2,108,764 | $ 3,428,231 | $ 6,878,563 | $ 13,314,258 |
Software license royalties | 372,666 | 47,020 | 979,505 | 47,020 |
License and amortization – related parties | 4,695,652 | 6,350,979 | 14,753,623 | 19,052,938 |
License and amortization | 201 | 224 | 603 | 250,672 |
Game localization | 840 | 840 | ||
Merchant fees | 215,635 | 602,814 | 1,023,911 | 1,856,371 |
Engine fees | 292,127 | 359,263 | 1,009,252 | 1,575,942 |
Internet, server and data center | 1,777,894 | 1,490,505 | 4,929,631 | 4,155,164 |
Costs related to advertising revenue | 147 | 144,191 | 84,700 | 144,191 |
Total: | $ 9,463,086 | $ 12,424,067 | $ 29,659,788 | $ 40,397,396 |
SCHEDULE OF EQUITY INTEREST AND
SCHEDULE OF EQUITY INTEREST AND NON CONTROLLING INTEREST IN SUBSIDIARIES (Details) | Sep. 30, 2023 | Dec. 31, 2022 |
Snail Innovation Institute [Member] | ||
Equity interest owned by the company | 70% | 70% |
Non controlling interest held in a subsidiary | 30% | 30% |
BTBX.IO, LLC [Member] | ||
Equity interest owned by the company | 70% | 70% |
Non controlling interest held in a subsidiary | 30% | 30% |
Donkey Crew, LLC [Member] | ||
Equity interest owned by the company | 99% | 99% |
Non controlling interest held in a subsidiary | 1% | 1% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Aug. 24, 2023 | Nov. 09, 2022 | Nov. 30, 2021 | Sep. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2020 | Jul. 31, 2023 | Nov. 10, 2022 | |
Product Information [Line Items] | ||||||||||||
Deferred revenue, net of current portion | $ 5,680,439 | $ 5,680,439 | $ 5,216,042 | |||||||||
General and administrative expenses | 3,452,141 | $ 4,525,751 | $ 4,478,907 | 11,915,126 | $ 13,525,001 | 18,713,958 | ||||||
Stock based compensation | 220,231 | 0 | 589,532 | 0 | ||||||||
Advertising expense | 215,477 | 198,417 | 488,318 | 569,127 | ||||||||
Research and development expense | 1,317,400 | 116,624 | 3,892,039 | 479,630 | ||||||||
Stock based compensation | 16,411 | 32,475 | ||||||||||
Liabilities for uncertain tax positions | 384,150 | 384,150 | 457,024 | |||||||||
Deposits not insured by FDIC | 5,089,118 | 5,089,118 | $ 17,929,308 | |||||||||
Employer contributions to the plan | 26,003 | 17,587 | 77,391 | 44,683 | ||||||||
Stock based compensation | $ 236,642 | $ 0 | $ 622,007 | $ 0 | ||||||||
Convertible debt shares | 714,285 | |||||||||||
Warrant [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Number of shares issued | 367,647 | |||||||||||
Common Class B [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Number of shares issued | 28,748,580 | |||||||||||
Common Class A [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Number of warrants issued to purchase common stock | 120,000 | 120,000 | ||||||||||
Number of shares issued | 6,251,420 | |||||||||||
Shares remain available for repurchase | $ 1,300,000 | $ 1,300,000 | ||||||||||
Omnibus Incentive Plan (2022 Plan) [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Number of shares available for issuance | 5,718,000 | 5,718,000 | ||||||||||
Omnibus Incentive Plan (2022 Plan) [Member] | Common Class B [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Annual increase in shares reserve for issuance (as a percent) | 1% | 1% | ||||||||||
Share Repurchase Program [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Number of treasury stock sold | 0 | 0 | ||||||||||
Share Repurchase Program [Member] | Common Class A [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
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 | $ 1,300,000 | ||||||||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Concentration percentage | 57% | 57% | ||||||||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | One Customer [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Concentration percentage | 35% | 29% | ||||||||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Two Customer [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Concentration percentage | 22% | 28% | ||||||||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Concentration percentage | 60% | 43% | 52% | 56% | ||||||||
Accounts Payable [Member] | Supplier Concentration Risk [Member] | Major Vendors [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Concentration percentage | 75% | 55% | ||||||||||
Accounts Payable [Member] | Supplier Concentration Risk [Member] | Major Vendors One [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Concentration percentage | 51% | 43% | ||||||||||
Accounts Payable [Member] | Supplier Concentration Risk [Member] | Major Vendors Two [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Concentration percentage | 13% | 12% | ||||||||||
Accounts Payable [Member] | Supplier Concentration Risk [Member] | Major Vendor Three [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Concentration percentage | 11% | |||||||||||
Accounts Payable [Member] | Supplier Concentration Risk [Member] | Two Vendors [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Concentration percentage | 49% | 47% | ||||||||||
Combined Gross Cost Of Revenues And Operating Expenses [Member] | Supplier Concentration Risk [Member] | Major Vendors [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Concentration percentage | 45% | 43% | ||||||||||
Promissory Note Two Thousand Twenty One [Member] | Wall Street Journal Prime Rate [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Debt instrument, interest rate, stated percentage, period | 5 years | |||||||||||
Floating prime rate | 0.50% | |||||||||||
ARK Survival Evolved [Member] | Long Term Title License Agreement With Platform [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Contract with customer, liability, revenue recognized | $ 2,500,000 | |||||||||||
ARK Survival Evolved [Member] | Agreement With Platform [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Proceeds from agreement with customers | $ 3,500,000 | |||||||||||
ARK Survival Evolved [Member] | Non Exclusive License Agreement With Platform [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Contract with customer, liability, revenue recognized | 4,000,000 | $ 4,000,000 | ||||||||||
Proceeds from agreement with customers | $ 8,000,000 | |||||||||||
ARK II [Member] | Long Term Title License Agreement With Platform [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Deferred revenue, net of current portion | $ 2,300,000 | $ 2,300,000 | ||||||||||
Minimum [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Typical customer terms | 30 days | |||||||||||
Prepaid royalities | $ 500,000 | |||||||||||
Minimum [Member] | Omnibus Incentive Plan (2022 Plan) [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Number of shares available for issuance | 4,523,237 | 4,523,237 | ||||||||||
Maximum [Member] | ||||||||||||
Product Information [Line Items] | ||||||||||||
Typical customer terms | 75 days | |||||||||||
Prepaid royalities | $ 1,300,000 |
SCHEDULE OF DISAGGREGATION OF R
SCHEDULE OF DISAGGREGATION OF REVENUE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers: | $ 8,981,135 | $ 15,614,171 | $ 32,331,876 | $ 59,132,284 |
Sales Channel Directly to Consumer Digital Online Service [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers: | 7,580,550 | 13,065,750 | 25,360,164 | 50,100,573 |
Sales Channel Directly to Consumer Mobile Sale [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers: | 1,400,585 | 2,161,624 | 4,626,820 | 7,346,822 |
Sales Channel, Through Intermediary [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers: | 386,797 | 2,344,892 | 1,684,889 | |
Console [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers: | 3,862,923 | 3,750,029 | 13,262,988 | 27,157,380 |
Pc [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers: | 3,717,627 | 9,315,721 | 12,097,176 | 22,943,193 |
Mobile [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers: | 1,400,585 | 2,161,624 | 4,626,820 | 7,346,822 |
Manufactured Product, Other [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers: | 386,797 | 2,344,892 | 1,684,889 | |
UNITED STATES | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers: | 8,615,877 | 14,767,182 | 28,757,507 | 55,025,810 |
Non-US [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers: | $ 365,258 | $ 846,989 | $ 3,574,369 | $ 4,106,474 |
SCHEDULE OF DEFERRED REVENUE (D
SCHEDULE OF DEFERRED REVENUE (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | ||
Deferred revenue, beginning balance in advance of revenue recognition billing | $ 9,551,446 | $ 20,280,934 |
Revenue recognized | (5,223,331) | (18,832,396) |
Revenue deferred | 7,200,644 | 8,102,908 |
Deferred revenue, ending balance | 11,528,759 | 9,551,446 |
Less short term portion | (5,848,320) | (4,335,404) |
Deferred revenue, long term | $ 5,680,439 | $ 5,216,042 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||
Revenue, remaining amount | $ 11,528,759 | $ 9,551,446 | $ 20,280,934 |
Deferred revenue due | 5,700,000 | ||
Contract with customer liability | $ 5,800,000 | ||
Maximum [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Deferred expected term | 60 months | ||
UNITED STATES | |||
Disaggregation of Revenue [Line Items] | |||
Deferred expected term | 12 months | ||
Next 12 To 60 Months [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Long term deferred revenue | $ 5,700,000 | ||
DLC [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue, remaining amount | 2,100,000 | ||
Deferred revenue due | $ 5,700,000 | ||
Deferred expected term | 12 months | ||
ARK II [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue, remaining amount | $ 3,600,000 | ||
Deferred expected term | 24 months |
SUMMARY OF COMPONENTS OF CASH A
SUMMARY OF COMPONENTS OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Cash And Cash Equivalents And Restricted Cash And Cash Equivalents | ||||
Cash and cash equivalents | $ 4,948,832 | $ 12,863,817 | $ 9,044,666 | |
Restricted cash and cash equivalents | 1,115,084 | 6,368,016 | ||
Cash and cash equivalents, and restricted cash and cash equivalents | $ 6,063,916 | $ 19,238,185 | $ 15,412,682 | $ 16,554,115 |
CASH AND CASH EQUIVALENTS, AN_3
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS (Details Narrative) - USD ($) | Sep. 30, 2023 | Jun. 21, 2023 | Dec. 31, 2022 |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |||
Restricted cash and cash equivalents, noncurrent | $ 1,115,084 | $ 6,374,368 | |
Restricted cash and cash equivalents | $ 5,273,391 | ||
Debt [Member] | |||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |||
Restricted cash and cash equivalents, noncurrent | $ 1,115,084 | $ 6,374,368 |
SCHEDULE OF ACCOUNTS RECEIVABLE
SCHEDULE OF ACCOUNTS RECEIVABLE RELATED PARTY (Details) - Related Party [Member] - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Defined Benefit Plan Disclosure [Line Items] | ||
Accounts receivable – related party | $ 13,578,520 | $ 13,519,409 |
Less: Accounts payable – related party | (1,979,291) | (2,175,225) |
Accounts receivable – related party, net | $ 11,599,229 | $ 11,344,184 |
ACCOUNTS RECEIVABLE _ RELATED_3
ACCOUNTS RECEIVABLE – RELATED PARTY (Details Narrative) | 9 Months Ended |
Sep. 30, 2023 | |
Immediate Family Member of Management or Principal Owner [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Ownership percentage | 100% |
DUE FROM SHAREHOLDER (Details N
DUE FROM SHAREHOLDER (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Apr. 26, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Dividend paid | $ 94,934,400 | $ 94,934,400 | ||||
Accrued interest | $ 0 | $ 0 | $ 0 | $ 580,878 | ||
Snail Digital Technology Co [Member] | ||||||
Due from shareholder assigned to related party | 94,934,400 | |||||
Dividend paid | $ 94,934,400 | |||||
Related Party [Member] | ||||||
Due from other related parties | $ 0 | |||||
Receivables from Stockholder [Member] | ||||||
Related party transaction, rate | 2% |
DIVIDEND DISTRIBUTION (Details
DIVIDEND DISTRIBUTION (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | ||
Apr. 26, 2022 | Apr. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | |
Dividend Distribution | ||||
Paid in-kind dividend | $ 94,934,400 | $ 94,934,400 | ||
Cash dividend | $ 8,200,000 | |||
Dividends | 0 | |||
Refund receivable related to withholding taxes | $ 1,886,600 | $ 1,886,600 |
SCHEDULE OF PREPAID EXPENSES -
SCHEDULE OF PREPAID EXPENSES - RELATED PARTY (Details) - Related Party [Member] - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Defined Benefit Plan Disclosure [Line Items] | ||
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 - RELATED PA_3
PREPAID EXPENSES - RELATED PARTY (Details Narrative) - USD ($) | Mar. 10, 2023 | Sep. 30, 2023 | Dec. 31, 2022 |
Amount prepaid in advance | $ 5,000,000 | ||
Maximum amount payable | $ 5,000,000 | ||
ARK I [Member] | |||
Prepaid expenses license rights | $ 2,500,000 | ||
ARK II [Member] | |||
Prepaid expenses license rights | $ 5,000,000 |
SCHEDULE OF PREPAID EXPENSES AN
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Prepaid Expenses And Other Current Assets | ||
Prepaid income taxes | $ 9,655,160 | $ 9,822,603 |
Other receivable | 1,500,000 | |
Deferred offering costs | 105,411 | |
Other prepaids | 106,236 | 80,271 |
Other current assets | 115,496 | 662,267 |
Total prepaid expenses and other current assets | $ 11,482,303 | $ 10,565,141 |
SCHEDULE OF PROPERTY, PLANT AND
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 9,534,357 | $ 9,534,357 |
Accumulated depreciation | (4,765,642) | (4,419,558) |
Property, plant and equipment, net | 4,768,715 | 5,114,799 |
Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 1,874,049 | 1,874,049 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 2,700,000 | 2,700,000 |
Building Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 1,010,218 | 1,010,218 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 1,537,775 | 1,537,775 |
Trucks [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 178,695 | 178,695 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 1,821,819 | 1,821,819 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 411,801 | $ 411,801 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | |||||
Depreciation and amortization expense | $ 112,914 | $ 128,536 | $ 346,084 | $ 435,644 | |
Property plant and equipment, disposals | 11,615 | ||||
Accumulated depreciation | 9,182 | ||||
Sale of fixed assets | $ 19,500 | ||||
Purchase of fixed assets | 9,534,357 | 9,534,357 | $ 9,534,357 | ||
Disposal of assets | 17,067 | ||||
Property plant and equipment net | 4,768,715 | 4,768,715 | 5,114,799 | ||
Donkey Crew, LLC [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Property plant and equipment net | 5,166 | 5,166 | $ 13,569 | ||
Vehicles [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Sale of fixed assets | 19,500 | ||||
Purchase of fixed assets | $ 88,398 | $ 88,398 |
SCHEDULE OF INTANGIBLE ASSETS (
SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Net | $ 402,353 | |
License Rights, Related Parties [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | 136,665,000 | $ 136,665,000 |
Finite-Lived Intangible Assets, Accumulated Amortization | (136,534,565) | (135,280,942) |
Finite-Lived Intangible Assets, Impairment Loss | ||
Finite-Lived Intangible Assets, Net | $ 130,435 | $ 1,384,058 |
License Rights, Related Parties [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Acquired Finite-Lived Intangible Assets, Weighted Average Useful Life | 3 years | 3 years |
License Rights, Related Parties [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Acquired Finite-Lived Intangible Assets, Weighted Average Useful Life | 5 years | 5 years |
License [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | $ 3,000,000 | $ 3,000,000 |
Finite-Lived Intangible Assets, Accumulated Amortization | (3,000,000) | (3,000,000) |
Finite-Lived Intangible Assets, Impairment Loss | ||
Acquired Finite-Lived Intangible Assets, Weighted Average Useful Life | 5 years | 5 years |
Computer Software, Intangible Asset [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | $ 51,784 | $ 51,784 |
Finite-Lived Intangible Assets, Accumulated Amortization | $ (51,784) | $ (51,784) |
Acquired Finite-Lived Intangible Assets, Weighted Average Useful Life | 3 years | 3 years |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | $ 10,745 | $ 10,745 |
Finite-Lived Intangible Assets, Accumulated Amortization | (9,713) | (9,110) |
Finite-Lived Intangible Assets, Net | $ 1,032 | $ 1,635 |
Acquired Finite-Lived Intangible Assets, Weighted Average Useful Life | 12 years | 12 years |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | $ 270,886 | $ 270,886 |
Finite-Lived Intangible Assets, Net | 270,886 | 270,886 |
Other Intangible Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | 333,415 | 333,415 |
Finite-Lived Intangible Assets, Accumulated Amortization | (61,497) | (60,894) |
Finite-Lived Intangible Assets, Impairment Loss | ||
Finite-Lived Intangible Assets, Net | $ 271,918 | $ 272,521 |
SCHEDULE OF FUTURE AMORTIZATION
SCHEDULE OF FUTURE AMORTIZATION EXPENSE OF INTANGIBLE ASSETS (Details) | Sep. 30, 2023 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remainder of 2023 | $ 130,636 |
2024 | 804 |
2025 | 27 |
2026 | |
2027 | |
Thereafter | 270,886 |
Total | $ 402,353 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 195,853 | $ 1,851,203 | $ 1,254,226 | $ 5,803,610 |
Finite-lived intangible assets, remaining amortization period | 3 months 18 days | 3 months 18 days |
ACCOUNTS PAYABLE _ RELATED PA_2
ACCOUNTS PAYABLE — RELATED PARTY (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Related Party [Member] | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Accounts payable to parent | $ 19,669,868 | $ 19,669,868 | $ 19,918,259 | ||
Snail Digital Technology Co. Ltd. [Member] | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
License costs to related party | 58,661 | $ 94,836 | 201,609 | $ 316,869 | |
Royalty payments | $ 0 | $ 1,275,397 | $ 450,000 | $ 1,719,660 |
LOAN AND INTEREST RECEIVABLE _2
LOAN AND INTEREST RECEIVABLE — RELATED PARTY (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Feb. 28, 2022 | Feb. 28, 2021 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Subsidiary of Suzhou Snail [Member] | |||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Loan to related party | $ 200,000 | ||||||
Loan to related party | 2% | ||||||
Suzhou Snail [Member] | |||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Amount of loan and interest receivable offset | $ 103,890 | ||||||
Suzhou Snail [Member] | Snail Digital Technology Co. Ltd. [Member] | |||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Loan amount and interest assumed | $ 203,890 | ||||||
Related Party [Member] | |||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Loan and interest receivable - related party | $ 103,249 | $ 103,249 | $ 101,753 | ||||
Interest income earned | $ 504 | $ 505 | $ 1,496 | $ 1,249 |
LOAN PAYABLE AND INTEREST PAY_2
LOAN PAYABLE AND INTEREST PAYABLE — RELATED PARTIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Jul. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Feb. 28, 2022 | |
Related Party [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Loan payable - related parties | $ 527,770 | ||||||
Interest expense-related parties | $ 3,222 | ||||||
Related Party [Member] | Loans Payable [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Interest expense-related parties | 3,222 | ||||||
Loan From Related Party [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Interest rate per annum | 2% | ||||||
Loan From Related Party [Member] | Related Party [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Loan payable - related parties | 400,000 | $ 400,000 | |||||
Loan From Related Party Due In June 2022 [Member] | Wholly Owned Subsidiary of Snail Digital Technology Co. Ltd. [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Loan payable - related parties | $ 300,000 | $ 300,000 | |||||
Payment of related party debt | $ 300,000 | ||||||
Loan From Related Party Due In December 2023 [Member] | Snail Digital Technology Co. Ltd. [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Loan payable - related parties | $ 100,000 | $ 100,000 | |||||
Loans payable offset against receivable, related party | $ 100,000 | ||||||
Loans payable offset against receivable | $ 3,890 |
SCHEDULE OF LONG TERM DEBT (Det
SCHEDULE OF LONG TERM DEBT (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Short-Term Debt [Line Items] | ||
Total debt | $ 13,705,781 | $ 17,725,153 |
Less: current portion of promissory note | 2,832,231 | 86,524 |
Less: revolving loan | 6,000,000 | 9,000,000 |
Less: notes payable | 4,358,333 | 5,416,666 |
Less: convertible notes, net of discount | 515,217 | |
Total long-term debt | 3,221,963 | |
Revolving Credit Facility [Member] | ||
Short-Term Debt [Line Items] | ||
Total debt | 6,000,000 | 9,000,000 |
Promissory Note Two Thousand Twenty One [Member] | ||
Short-Term Debt [Line Items] | ||
Total debt | 2,832,231 | 2,891,820 |
Short-Term Debt [Member] | ||
Short-Term Debt [Line Items] | ||
Total debt | 2,083,333 | 5,833,333 |
Convertible Notes Payable [Member] | ||
Short-Term Debt [Line Items] | ||
Total debt | 515,217 | |
Notes Payable, Other Payables [Member] | ||
Short-Term Debt [Line Items] | ||
Total debt | $ 2,275,000 |
SCHEDULE OF LONG TERM DEBT (D_2
SCHEDULE OF LONG TERM DEBT (Details) (Parenthetical) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Aug. 24, 2023 | Jun. 21, 2023 | Jan. 26, 2022 | Jun. 17, 2021 | Jul. 31, 2023 | Nov. 30, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | |
Short-Term Debt [Line Items] | ||||||||
Interest rate | 8.25% | |||||||
Long term debt | $ 14,270,565 | |||||||
Long term debt discount | $ 564,784 | |||||||
Revolving Credit Facility [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 6,000,000 | |||||||
Line of Credit Facility, Expiration Date | Dec. 31, 2023 | |||||||
Interest rate | 8.25% | |||||||
Minimum Requirement of Debt Service Coverage Ratio as Covenant | 1.5 to 1 | |||||||
Revolving Credit Facility [Member] | Prime Rate [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Annual interest rate | 0.25% | |||||||
Promissory Note Two Thousand Twenty One [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Minimum Requirement of Debt Service Coverage Ratio as Covenant | 1.5 to 1 | |||||||
Debt instrument term | 10 years | |||||||
Debt Instrument, Maturity Date | Jun. 30, 2031 | |||||||
Promissory Note Two Thousand Twenty One [Member] | For the First Five Years [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Interest rate | 3.50% | |||||||
Debt Instrument, Interest Rate, Stated Percentage, Period | 5 years | |||||||
Debt Instrument, Description of Variable Rate Basis | 6 to 10 | |||||||
Promissory Note Two Thousand Twenty One [Member] | Wall Street Journal Prime Rate [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Debt Instrument, Interest Rate, Stated Percentage, Period | 5 years | |||||||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | |||||||
Short-Term Debt [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Interest rate | 5.75% | |||||||
Minimum Requirement of Debt Service Coverage Ratio as Covenant | 1.5 to 1 | |||||||
Debt Instrument, Maturity Date | Jan. 26, 2023 | |||||||
Payments for Loans | $ 10,000,000 | |||||||
Debt Instrument, Basis Spread on Variable Rate | 3.75% | |||||||
Debt Instrument, Default Interest Rate | 5% | |||||||
Short-Term Debt [Member] | Wall Street Journal Prime Rate [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | 0.25% | ||||||
Convertible Notes Payable [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Interest rate | 7.50% | |||||||
Convertible note discount rate | 7.40% | |||||||
Convertible Notes Payable | $ 1,080,000 | |||||||
Debt Instrument, Maturity Date Range, Start | Feb. 24, 2024 | |||||||
Debt Instrument, Maturity Date Range, End | May 24, 2024 | |||||||
Debt Instrument, Interest Rate, Increase (Decrease) | 16% | |||||||
Debt Instrument, Unamortized Discount, Current | $ 678,254 | |||||||
Debt Instrument, Interest Rate, Effective Percentage | 109.70% | |||||||
Notes Payable, Other Payables [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Interest rate | 8% | |||||||
Debt instrument term | 7 years | |||||||
Funds in cash | $ 3,000,000 | |||||||
Monthly installments description | The funds are to be repaid in monthly installments starting in November 2023 and are to be based on 20% of the gross monthly Ark Survival revenues | |||||||
Interest rate outstanding | 12% |
SCHEDULE OF FUTURE MINIMUM PAYM
SCHEDULE OF FUTURE MINIMUM PAYMENTS OF LONG TERM DEBT (Details) | Sep. 30, 2023 USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 2023 | $ 9,968,601 |
2024 | 1,579,415 |
2025 | 86,013 |
2026 | 89,115 |
2027 | 92,329 |
Thereafter | 2,455,092 |
Long term debt | $ 14,270,565 |
REVOLVING LOAN, SHORT TERM NO_3
REVOLVING LOAN, SHORT TERM NOTES AND LONG - TERM DEBT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Short-Term Debt [Line Items] | ||||
Interest expense | $ 121,930 | $ 6,590 | $ 142,656 | $ 19,149 |
Revolver Loan [Member] | ||||
Short-Term Debt [Line Items] | ||||
Interest expense | $ 348,898 | $ 254,480 | 937,893 | $ 594,171 |
Interest expense | $ 2,903 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ 1,156,675 | $ 398,998 | $ 3,044,380 | $ (803,305) |
Income tax expense (benefit) | $ (1,156,675) | $ (398,998) | $ (3,044,380) | $ 803,305 |
Effective tax rate | 21% | 20% | ||
Federal statutory income tax rate | 21% |
SCHEDULE OF TERMINATIONS OPERAT
SCHEDULE OF TERMINATIONS OPERATING LEASE (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Lessee, Lease, Description [Line Items] | |||
Right of Use Asset | $ (2,738,554) | $ (3,606,398) | |
Lease Liability Current | 1,470,718 | 1,371,227 | |
Lease Liability Long Term | 1,814,962 | $ 2,930,529 | |
Gain on Termination | $ 122,533 | ||
Lease Terminated And Expired [Member] | |||
Lessee, Lease, Description [Line Items] | |||
Right of Use Asset | (1,301,571) | ||
Accumulated Amortization | 907,370 | ||
Lease Liability Current | 442,704 | ||
Lease Liability Long Term | 74,030 | ||
Gain on Termination | $ 122,533 |
SCHEDULE OF OPERATING LEASE COS
SCHEDULE OF OPERATING LEASE COSTS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Operating Lease Right-of-use Assets | ||||
Operating lease costs | $ 419,605 | $ 397,428 | $ 1,198,467 | $ 1,213,386 |
SCHEDULE OF SUPPLEMENTAL INFORM
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO OPERATING LEASES (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Operating Lease Right-of-use Assets | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 1,155,759 | $ 1,120,111 |
Weighted average remaining lease term | 2 years 2 months 12 days | 3 years 2 months 12 days |
Weighted average discount rate | 500% | 500% |
SCHEDULE OF FUTURE UNDISCOUNTED
SCHEDULE OF FUTURE UNDISCOUNTED LEASE PAYMENTS FOR OPERATING LEASES AND RECONCILIATION OF THESE PAYMENTS TO OUR OPERATING LEASE LIABILITIES (Details) | Sep. 30, 2023 USD ($) |
Operating Lease Right-of-use Assets | |
Remainder of 2023, Future lease payments | $ 393,129 |
Remainder of 2023, Imputed Interest | 37,978 |
Remainder of 2023, Lease Liabilities | 355,151 |
2024, Future lease payments | 1,610,844 |
2024, Imputed Interest | 105,810 |
2024, Lease Liabilities | 1,505,034 |
2025, Future lease payments | 1,453,785 |
2025, Imputed Interest | 28,290 |
2025, Lease Liabilities | 1,425,495 |
Thereafter, Future lease payments | |
Thereafter, Imputed Interest | |
Thereafter, Lease Liabilities | |
Total future lease payments | 3,457,758 |
Total Imputed Interest | 172,078 |
Total Lease Liabilities | $ 3,285,680 |
OPERATING LEASE RIGHT-OF-USE _3
OPERATING LEASE RIGHT-OF-USE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Apr. 30, 2018 | |
Short-Term Debt [Line Items] | ||||||
Operating lease right-of-use assets | $ 2,738,554 | $ 2,738,554 | $ 3,606,398 | |||
Lease termination | $ 122,533 | |||||
Lease Terminated And Expired [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Operating lease right-of-use assets | $ 1,301,571 | 1,301,571 | ||||
Variable lease payments | 58,071 | $ 22,713 | 97,875 | 49,730 | ||
Lease termination | $ 122,533 | |||||
Standby Letters of Credit [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Maximum borrowing capacity | $ 1,075,000 | |||||
Operating lease right-of-use assets | $ 2,738,554 | $ 2,738,554 | $ 3,606,398 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) | Mar. 14, 2023 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Damages value | $ 3,000,000 |
Security deposit | $ 130,000 |
SCHEDULE OF EARNINGS PER SHARE
SCHEDULE OF EARNINGS PER SHARE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Basic Earnings Per Share: | |||||
Total net (loss) income attributable to Snail Inc and Snail Games USA Inc. | $ (4,432,632) | $ (1,538,738) | $ (11,483,441) | $ 3,218,022 | |
Class A and B basic earnings per share | $ (0.12) | $ (0.04) | $ (0.31) | $ 0.09 | |
Diluted Earnings Per Share: | |||||
Diluted (loss) earnings per Class A and B share | $ (0.12) | $ (0.04) | $ (0.31) | $ 0.09 | |
Common Class A [Member] | |||||
Basic Earnings Per Share: | |||||
Net (loss) attributable to common stockholders | $ (955,763) | $ (1,538,738) | $ (2,477,768) | $ 3,218,022 | |
weighted average shares outstanding - basic | [1] | 7,901,145 | 35,000,000 | 7,909,715 | 35,000,000 |
Class A and B basic earnings per share | $ (0.12) | $ (0.04) | $ (0.31) | $ 0.09 | |
Diluted Earnings Per Share: | |||||
Net (loss) attributable to common stockholders | $ (955,763) | $ (1,538,738) | $ (2,477,768) | $ 3,218,022 | |
Dilutive effects of common stock equivalents | |||||
weighted average shares outstanding - diluted | [1] | 7,901,145 | 35,000,000 | 7,909,715 | 35,000,000 |
Diluted (loss) earnings per Class A and B share | $ (0.12) | $ (0.04) | $ (0.31) | $ 0.09 | |
Common Class B [Member] | |||||
Basic Earnings Per Share: | |||||
Net (loss) attributable to common stockholders | $ (3,476,869) | $ (9,005,673) | |||
weighted average shares outstanding - basic | [1] | 28,748,580 | 28,748,580 | ||
Class A and B basic earnings per share | $ (0.12) | $ (0.04) | $ (0.31) | $ 0.09 | |
Diluted Earnings Per Share: | |||||
Net (loss) attributable to common stockholders | $ (3,476,869) | $ (9,005,673) | |||
Dilutive effects of common stock equivalents | |||||
weighted average shares outstanding - diluted | [1] | 28,748,580 | 28,748,580 | ||
Diluted (loss) earnings per Class A and B share | $ (0.12) | $ (0.04) | $ (0.31) | $ 0.09 | |
[1]The shares used for the denominator in the calculation of EPS are the number of shares transferred in the reorganization transaction for comparative purposes. Snail Games USA Inc. did not have Class A common stock as of September 30, 2022. |
SCHEDULE OF PROCEEDS BETWEEN TH
SCHEDULE OF PROCEEDS BETWEEN THE INSTRUMENTS (Details) | 1 Months Ended |
Aug. 31, 2023 USD ($) | |
Equity [Abstract] | |
Convertible notes | $ 554,246 |
Derivative liability | |
Warrants | 445,754 |
Total proceeds | $ 1,000,000 |
SCHEDULE OF CONVERTIBLE NOTES (
SCHEDULE OF CONVERTIBLE NOTES (Details) - Convertible Debt [Member] - USD ($) | Sep. 30, 2023 | Aug. 31, 2023 |
Debt Instrument [Line Items] | ||
Principal Amount | $ 642,204 | $ 1,080,000 |
Unamortized debt discount and issuance costs | (126,987) | |
Net carrying amount | 515,217 | |
Fair value amount | $ 557,000 |
SCHEDULE OF STOCK BASED WARRANT
SCHEDULE OF STOCK BASED WARRANTS (Details) - $ / shares | 1 Months Ended | |
Sep. 30, 2023 | Aug. 31, 2023 | |
Warrant [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Stock price | $ 1.14 | $ 1.35 |
Stock price | $ 1.89 | $ 1.89 |
Stock price | 4 years 10 months 24 days | 5 years |
Stock price | 45% | 60% |
Stock price | 5.51% | 4.39% |
Warrant One [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Stock price | $ 1.14 | $ 1.35 |
Stock price | $ 1.89 | $ 1.89 |
Stock price | 4 years 10 months 24 days | 5 years |
Stock price | 40% | 40% |
Stock price | 4.61% | 5.49% |
SCHEDULE OF RESTRICTED STOCK UN
SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY (Details) | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Director [Member] | Restricted Stock Units (RSUs) [Member] | |
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |
Outstanding, beginning balance | shares | 24,000 |
Outstanding, beginning balance per share | $ / shares | $ 5 |
Outstanding, granted | shares | |
Outstanding, granted per share | $ / shares | |
Outstanding, vested | shares | |
Outstanding, vested per share | $ / shares | |
Outstanding, forfeited or cancelled | shares | |
Outstanding, forfeited or cancelled per share | $ / shares | |
Outstanding, ending balance | shares | 24,000 |
Outstanding, ending balance per share | $ / shares | $ 5 |
Employees [Member] | Performance Shares [Member] | |
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |
Outstanding, beginning balance | shares | 1,197,552 |
Outstanding, beginning balance per share | $ / shares | $ 5 |
Outstanding, granted | shares | |
Outstanding, granted per share | $ / shares | |
Outstanding, vested | shares | |
Outstanding, vested per share | $ / shares | |
Outstanding, forfeited or cancelled | shares | (26,789) |
Outstanding, forfeited or cancelled per share | $ / shares | $ 5 |
Outstanding, ending balance | shares | 1,170,763 |
Outstanding, ending balance per share | $ / shares | $ 5 |
EQUITY (Details Narrative)
EQUITY (Details Narrative) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
Oct. 30, 2023 shares | Oct. 10, 2023 shares | Aug. 31, 2023 USD ($) $ / shares shares | Aug. 24, 2023 USD ($) $ / shares shares | Nov. 09, 2022 $ / shares shares | Aug. 31, 2023 USD ($) $ / shares shares | Sep. 30, 2023 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) Integer $ / shares shares | Sep. 30, 2022 USD ($) | Dec. 31, 2022 $ / shares shares | |
Class of Stock [Line Items] | |||||||||||
Number of classes of common stock | Integer | 2 | ||||||||||
Proceeds from issuance of common stock3 | $ 1,000,000 | ||||||||||
Proceeds from convertible debt | 554,246 | ||||||||||
Proceeds from debt | $ 847,500 | ||||||||||
Number of share repurchased | shares | 1,350,275 | 1,350,275 | 1,197,649 | ||||||||
Stock based compensation | $ 220,231 | $ 0 | $ 589,532 | 0 | |||||||
Stock based compensation | 16,411 | 32,475 | |||||||||
Deferred income tax benefit related to our stock-based compensation expense | 48,308 | $ 0 | 131,185 | $ 0 | |||||||
Research And Development [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Stock based compensation | 16,411 | 32,475 | |||||||||
Restricted Stock Units (RSUs) [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Stock based compensation | 220,231 | 589,532 | |||||||||
Total unrecognized compensation cost | 1,300,000 | $ 1,300,000 | |||||||||
Total unrecognized compensation cost expected to be recognized over a weighted-average service period | 2 years 7 months 6 days | ||||||||||
Restricted Stock Units (RSUs) [Member] | Director [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Vesting period | 1 year | ||||||||||
Performance Shares [Member] | Employees [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Vesting period | 5 years | ||||||||||
Convertible Debt [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Convertible debt principal amount | $ 1,080,000 | $ 1,080,000 | $ 642,204 | $ 642,204 | |||||||
Convertible shares | shares | 714,285 | 714,285 | |||||||||
Convertible debt discount | 7.40% | 7.40% | |||||||||
Convertible debt discount | 7.50% | ||||||||||
Convertible debt discount | 16% | ||||||||||
Convertible debt maturity date | May 24, 2024 | ||||||||||
Debt instrument, description | The Convertible Notes may be prepaid by the Company upon giving the Investors a fifteen-trading day notice by paying an amount equal to the then outstanding balance. If the Company enters into a qualifying financing it may be required by the Investors to repay part or all of the Convertible Notes at a 112.5% premium (limited to 10% of the proceeds of the qualified financing, if such financing results in gross proceeds to the Company at least $5,000,000). In event of default or change of control, the Investors may require the Company to prepay the Convertible Notes at a 120% premium. | ||||||||||
Proceeds from convertible debt | $ 5,000,000 | ||||||||||
Proceeds from debt | $ 525,754 | ||||||||||
Debt discount | $ 152,500 | $ 152,500 | |||||||||
Interest Expense, Debt | 121,796 | ||||||||||
Contractual interest expense | 8,325 | ||||||||||
Accretion expense | 87,958 | ||||||||||
Amortization of debt discount | 25,513 | ||||||||||
Warrant [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued | shares | 367,647 | ||||||||||
Common stock, shares authorized | shares | 714,285 | 714,285 | |||||||||
Common stock, par value | $ / shares | $ 1.89 | $ 1.89 | |||||||||
Fair value of warrant liability | 452,351 | ||||||||||
Other income | 6,597 | ||||||||||
Common Stock [Member] | Equity Line Purchase Agreement [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Beneficial ownership | 9.99% | ||||||||||
Warrant One [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued | shares | 367,647 | ||||||||||
Common stock, par value | $ / shares | $ 1.50 | ||||||||||
Fair value of warrant liability | 76,346 | ||||||||||
Other income | $ 29,065 | ||||||||||
Equity Line Purchase Agreement [Member] | Common Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Common stock issued | $ 5,000,000 | ||||||||||
Warrant to purchase | shares | 367,647 | ||||||||||
Warrant to purchase deferred offering costs | $ 105,411 | ||||||||||
Equity Line Purchase Agreement [Member] | Common Stock [Member] | Subsequent Event [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Sale of shares | shares | 8,913,312 | 15,093,768 | |||||||||
Common Class A [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of votes per share | Integer | 1 | ||||||||||
Number of Class A share issuable upon conversion | Integer | 1 | ||||||||||
Number of warrants issued to purchase common stock | shares | 9,251,420 | 9,251,420 | 9,251,420 | ||||||||
Number of shares issued | shares | 6,251,420 | ||||||||||
Convertible shares | shares | 120,000 | 120,000 | |||||||||
Common stock, shares authorized | shares | 500,000,000 | 500,000,000 | 500,000,000 | ||||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||
Number of share repurchased | shares | 1,350,275 | 1,350,275 | |||||||||
Aggregate purchase price | $ 3,700,000 | $ 3,700,000 | |||||||||
Average price paid per share | $ / shares | $ 2.72 | ||||||||||
Aggregate purchase price | $ 1,300,000 | $ 1,300,000 | |||||||||
Common Class A [Member] | Convertible Debt [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Proceeds from issuance of common stock3 | $ 1,000,000 | ||||||||||
Common Class A [Member] | Underwriting Agreement [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of warrants issued to purchase common stock | shares | 120,000 | ||||||||||
Percentage of warrants issued | 400% | ||||||||||
Weighted average expected volatility (in percent) | 53% | ||||||||||
Discount rate (in percent) | 4.49% | ||||||||||
Remaining term (in years) | 3 years | ||||||||||
Common Class A [Member] | IPO [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of warrants issued to purchase common stock | shares | 3,000,000 | ||||||||||
Price per share | $ / shares | $ 4.675 | ||||||||||
Number of shares issued | shares | 3,000,000 | ||||||||||
Common Class A [Member] | IPO [Member] | Warrant [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Percent of issue price at IPO price | 125% | ||||||||||
Issue price per share | $ / shares | $ 6.25 | ||||||||||
Warrants term | 3 years | ||||||||||
Common Class A [Member] | Over-Allotment Option [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Price per share | $ / shares | $ 4.675 | ||||||||||
Number of shares issued | shares | 450,000 | ||||||||||
Common Class B [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of votes per share | Integer | 10 | ||||||||||
Number of warrants issued to purchase common stock | shares | 28,748,580 | 28,748,580 | 28,748,580 | ||||||||
Number of shares issued | shares | 28,748,580 | ||||||||||
Common stock, shares authorized | shares | 100,000,000 | 100,000,000 | 100,000,000 | ||||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 |