Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2024 | May 13, 2024 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2024 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2024 | |
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 $0.0001 per share | |
Trading Symbol | SNAL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Common Class A [Member] | ||
Entity Common Stock, Shares Outstanding | 8,007,474 | |
Common Class B [Member] | ||
Entity Common Stock, Shares Outstanding | 28,748,580 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Current Assets: | ||
Cash and cash equivalents | $ 16,068,729 | $ 15,198,123 |
Prepaid expenses - related party | 4,337,556 | 6,044,404 |
Prepaid expenses and other current assets | 2,419,201 | 639,693 |
Prepaid taxes | 9,459,348 | 9,529,755 |
Total current assets | 42,349,478 | 56,650,536 |
Restricted cash and cash equivalents | 1,117,310 | 1,116,196 |
Prepaid expenses - related party, net of current portion | 10,842,748 | 7,784,062 |
Property, plant and equipment, net | 4,599,728 | 4,682,066 |
Intangible assets, net - other | 271,517 | 271,717 |
Deferred income taxes | 10,803,281 | 10,247,500 |
Other noncurrent assets | 169,047 | 164,170 |
Operating lease right-of-use assets, net | 2,138,285 | 2,440,690 |
Total assets | 78,291,986 | 90,857,529 |
Current Liabilities: | ||
Accrued expenses and other liabilities | 2,425,882 | 2,887,193 |
Interest payable - related parties | 527,770 | 527,770 |
Revolving loan | 3,000,000 | 6,000,000 |
Notes payable | 2,333,333 | |
Convertible notes, net of discount | 702,284 | 797,361 |
Current portion of long-term promissory note | 2,791,438 | 2,811,923 |
Current portion of deferred revenue | 21,937,421 | 19,252,628 |
Current portion of operating lease liabilities | 1,540,086 | 1,505,034 |
Total current liabilities | 59,777,303 | 71,312,607 |
Accrued expenses | 254,731 | 254,731 |
Deferred revenue, net of current portion | 17,102,747 | 15,064,078 |
Operating lease liabilities, net of current portion | 1,023,216 | 1,425,494 |
Total liabilities | 78,157,997 | 88,056,910 |
Commitments and contingencies | ||
Stockholders’ Equity: | ||
Additional paid-in capital | 25,304,692 | 26,171,575 |
Accumulated other comprehensive loss | (273,680) | (254,383) |
Accumulated deficit | (15,728,654) | (13,949,325) |
Treasury stock at cost (1,350,275 shares as of March 31, 2024 and December 31, 2023) | (3,671,806) | (3,671,806) |
Total Snail, Inc. equity | 5,634,362 | 8,299,863 |
Noncontrolling interests | (5,500,373) | (5,499,244) |
Total stockholders’ equity (deficit) | 133,989 | 2,800,619 |
Total liabilities, noncontrolling interests and stockholders’ equity | 78,291,986 | 90,857,529 |
Common Class A [Member] | ||
Stockholders’ Equity: | ||
Common stock, value | 935 | 927 |
Common Class B [Member] | ||
Stockholders’ Equity: | ||
Common stock, value | 2,875 | 2,875 |
Nonrelated Party [Member] | ||
Current Assets: | ||
Accounts receivable | 7,375,179 | 25,134,808 |
Current Liabilities: | ||
Accounts payable | 9,901,360 | 12,102,929 |
Related Party [Member] | ||
Current Assets: | ||
Accounts receivable | 2,585,213 | |
Loan and interest receivable - related party | 104,252 | 103,753 |
Accounts receivable – related party, net of current portion | 6,000,592 | 7,500,592 |
Current Liabilities: | ||
Accounts payable | $ 16,951,062 | $ 23,094,436 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Accounts receivable, allowance for credit loss, current | $ 523,500 | $ 523,500 |
Treasury stock, shares | 1,350,275 | 1,350,275 |
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 | 9,357,749 | 9,275,420 |
Common stock, shares outstanding | 8,007,474 | 7,925,145 |
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 | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Revenues, net | $ 14,115,729 | $ 13,458,488 |
Cost of revenues | 12,041,698 | 10,860,937 |
Gross profit | 2,074,031 | 2,597,551 |
Operating expenses: | ||
General and administrative | 2,282,040 | 4,525,751 |
Research and development | 1,776,522 | 1,373,797 |
Advertising and marketing | 141,030 | 104,549 |
Depreciation and amortization | 82,338 | 115,060 |
Total operating expenses | 4,281,930 | 6,119,157 |
Loss from operations | (2,207,899) | (3,521,606) |
Other income (expense): | ||
Interest expense | (395,964) | (294,583) |
Other income | 227,066 | 8,175 |
Foreign currency transaction income (loss) | 18,128 | (2,367) |
Total other income (expense), net | (50,509) | (256,809) |
Loss before benefit from income taxes | (2,258,408) | (3,778,415) |
Benefit from income taxes | (477,950) | (805,818) |
Net loss | (1,780,458) | (2,972,597) |
Net loss attributable to non-controlling interests | (1,129) | (1,219) |
Net loss attributable to Snail, Inc. | (1,779,329) | (2,971,378) |
Comprehensive loss statement: | ||
Net loss | (1,780,458) | (2,972,597) |
Other comprehensive income (loss) related to foreign currency translation adjustments, net of tax | (19,297) | 2,320 |
Total comprehensive loss | $ (1,799,755) | $ (2,970,277) |
Loss per share attributable to Class A and B common stockholders: | ||
Basic | $ (0.05) | $ (0.08) |
Diluted | $ (0.05) | $ (0.08) |
Common Class A [Member] | ||
Net loss attributable to common stockholders: | ||
Basic | $ (385,722) | $ (642,340) |
Diluted | $ (385,722) | $ (642,340) |
Weighted-average shares used to compute income per share attributable to common stockholders: | ||
Basic | 7,957,031 | 7,928,742 |
Diluted | 7,957,031 | 7,928,742 |
Common Class B [Member] | ||
Net loss attributable to common stockholders: | ||
Basic | $ (1,393,607) | $ (2,329,038) |
Diluted | $ (1,393,607) | $ (2,329,038) |
Weighted-average shares used to compute income per share attributable to common stockholders: | ||
Basic | 28,748,580 | 28,748,580 |
Diluted | 28,748,580 | 28,748,580 |
Nonrelated Party [Member] | ||
Other income (expense): | ||
Interest income | $ 99,762 | $ 31,473 |
Related Party [Member] | ||
Other income (expense): | ||
Interest income | $ 499 | $ 493 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Equity - USD ($) | Total | Common Class A [Member] | Common Stock [Member] Common Class A [Member] | Common Stock [Member] Common Class B [Member] | Additional Paid-in Capital [Member] | AOCI Attributable to Parent [Member] | Retained Earnings [Member] | Treasury Stock, Common [Member] | Parent [Member] | Noncontrolling Interest [Member] |
Balance at Dec. 31, 2022 | $ 9,364,684 | $ 925 | $ 2,875 | $ 23,436,942 | $ (307,200) | $ (4,863,250) | $ (3,414,713) | $ 14,855,579 | $ (5,490,895) | |
Balance, shares at Dec. 31, 2022 | 9,251,420 | 28,748,580 | (1,197,649) | |||||||
Stock based compensation related to restricted stock units | 152,595 | 152,595 | 152,595 | |||||||
Repurchase of common stock | (257,093) | $ (257,093) | (257,093) | |||||||
Repurchase of common stock, shares | (152,626) | |||||||||
Foreign currency translation | 2,320 | 2,320 | 2,320 | |||||||
Net loss | (2,972,597) | (2,971,378) | (2,971,378) | (1,219) | ||||||
Balance at Mar. 31, 2023 | 6,289,909 | $ 925 | $ 2,875 | 23,589,537 | (304,880) | (7,834,628) | $ (3,671,806) | 11,782,023 | (5,492,114) | |
Balance, shares at Mar. 31, 2023 | 9,251,420 | 28,748,580 | (1,350,275) | |||||||
Balance at Dec. 31, 2023 | 2,800,619 | $ 927 | $ 2,875 | 26,171,575 | (254,383) | (13,949,325) | $ (3,671,806) | 8,299,863 | (5,499,244) | |
Balance, shares at Dec. 31, 2023 | 9,275,420 | 28,748,580 | (1,350,275) | |||||||
Conversion of notes payable | 60,000 | $ 60,000 | $ 7 | 59,993 | 60,000 | |||||
Conversion of notes payable, shares | 71,460 | 71,460 | ||||||||
Stock based compensation related to restricted stock units | (926,875) | (926,875) | (926,875) | |||||||
Common stock issued for service | $ 1 | (1) | ||||||||
Common stock issued for service, shares | 10,869 | |||||||||
Foreign currency translation | (19,297) | (19,297) | (19,297) | |||||||
Net loss | (1,780,458) | (1,779,329) | (1,779,329) | (1,129) | ||||||
Balance at Mar. 31, 2024 | $ 133,989 | $ 935 | $ 2,875 | $ 25,304,692 | $ (273,680) | $ (15,728,654) | $ (3,671,806) | $ 5,634,362 | $ (5,500,373) | |
Balance, shares at Mar. 31, 2024 | 9,357,749 | 28,748,580 | (1,350,275) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash flows from operating activities: | ||
Net loss | $ (1,780,458) | $ (2,972,597) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Amortization - loan origination fees and debt discounts | 47,729 | 8,911 |
Accretion – convertible notes | 181,754 | |
Depreciation and amortization - property and equipment | 82,338 | 115,060 |
Stock-based compensation expense | (926,875) | 152,595 |
Interest income from restricted escrow deposit | (9,874) | |
Deferred taxes, net | (555,781) | |
Changes in assets and liabilities: | ||
Accounts receivable | 17,759,629 | (230,885) |
Accounts receivable - related party | (1,085,213) | 47,744 |
Prepaid expenses - related party | (1,351,838) | (2,500,000) |
Prepaid expenses and other current assets | (1,779,508) | (632,240) |
Prepaid taxes | 70,407 | |
Accounts payable | (1,938,654) | (1,248,355) |
Accounts payable - related parties | (6,143,374) | (377,476) |
Accrued expenses and other liabilities | (461,311) | 443,528 |
Interest receivable - related party | (499) | (493) |
Lease liabilities | (64,821) | (49,411) |
Deferred revenue | 4,723,462 | (151,130) |
Net cash provided by (used in) operating activities | 6,777,187 | (6,708,770) |
Cash flows from financing activities: | ||
Repayments on promissory note | (20,484) | (26,503) |
Repayments on notes payable | (2,333,333) | (1,666,667) |
Repayments on convertible notes | (269,550) | |
Repayments on revolving loan | (3,000,000) | |
Purchase of treasury stock | (257,093) | |
Payments of capitalized offering costs | (92,318) | |
Payments of offering costs in accounts payable | (262,914) | |
Net cash used in financing activities | (5,886,281) | (2,042,581) |
Effect of foreign currency translation on cash and cash equivalents | (19,186) | 2,074 |
Net increase (decrease) in cash and cash equivalents, and restricted cash and cash equivalents | 871,720 | (8,749,277) |
Cash and cash equivalents, and restricted cash and cash equivalents - beginning of the period | 16,314,319 | 19,238,185 |
Cash and cash equivalents, and restricted cash and cash equivalents – end of the period | 17,186,039 | 10,488,908 |
Cash paid during the period for: | ||
Interest | 171,101 | 285,672 |
Income taxes | 1,871 | 182,387 |
Noncash finance activity during the period for: | ||
Debt converted to equity | (60,000) | |
License Rights, Related Parties [Member] | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Amortization - intangible assets | 695,652 | |
Other Intangible Assets [Member] | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Amortization - intangible assets | $ 200 | $ 201 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure [Table] | ||
Net Income (Loss) | $ (1,779,329) | $ (2,971,378) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
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 | 3 Months Ended |
Mar. 31, 2024 | |
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 Company 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. 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 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, 2023 included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on April 1, 2024. 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 During the year ended December 31, 2023, certain comparative amounts were 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 revenues 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 unaudited 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 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 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 consolidated financial statements and the accompanying notes. Such estimates include revenue recognition, see Note 2 – Revenue Recognition Segment Reporting The Company has one Revenue from Contracts with Customers Liquidity In October 2023, the Company released ARK: Survival Ascended, 6.8 3.0 0.8 0.3 1.5 0.5 The Company has debts coming due of $ 3.0 0.7 3.0 2.8 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 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 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 downloadable content (“DLCs”) and game titles, launches of new DLCs and new game titles, and any acquisitions that the Company may pursue. Our current unrestricted cash position of approximately $ 16.1 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition The Company’s revenue is generated from the publishing of software games sold digitally and through physical discs (e.g., packaged goods), the publishing of separate downloadable content that are new feature releases to existing digital full-game downloads that are sold digitally, and in-app purchases of virtual goods used by players of its free-to-play mobile games. When control of the promised products and services is transferred to the end users, 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 purchase the games, and the control of the license is transferred to them. The virtual goods that the Company sells to players of our free-to-play mobile-games, include virtual currency or in-game purchases of additional game play functionality. For virtual goods, the satisfaction of our performance obligation is dependent on the nature of the virtual good purchased and as a result, the Company categorizes its virtual goods as follows: ● Consumable: c onsumable virtual items represent items that can be consumed by a specific player action. Consumable virtual items do not result in a direct benefit that the player keeps or provide the player any continuing benefit following consumption, and they often enable a player to perform an in-game action immediately. For the sale of consumable virtual items, the Company recognizes revenue as the items are consumed (i.e., over time) ● Durable: d urable virtual items represent items that are accessible to the player over an extended period of time. The Company recognizes revenue from the sale of durable virtual items ratably over the estimated service period for the applicable game (i.e., over time), which represents our best estimate of the average life of the durable virtual item. For the ARK: Survival Ascended ● Reasonably available data points, including third party or industry pricing, and contractually stated prices. ● Market conditions such as market demand, competition, market constraints, awareness of the product and market trends. ● Entity-specific factors including pricing strategies and objectives, market share and pricing practices for bundled arrangements. 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 purchase, and payments received from customers prior to launching the games on the platforms. The Company recognizes revenues from the sale of virtual goods ratably over their estimated service period. The Company’s estimated service period for players of our current software games is generally 30 to 100 days from the date of purchase. 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 II 2.5 ARK 1’s 2.3 ARK II ARK II In July 2023, the Company entered into a distribution agreement with its retail distribution partner for the distribution of ARK: Survival Ascended ARK II. 1.8 , 0.3 . A reported 0.4 ARK: Survival Ascended deferred revenue 1.1 ARK II as 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 games (“user life”) which most faithfully depicts the timing of satisfying our performance obligation. The Company considers a variety of data points when determining and subsequently reassessing the estimated service period for players of our software games. Primarily, the Company reviews the weighted average number of days between players’ first and last day playing online or the subscription trend. The Company also considers publicly available online trends. The Company believes this provides a reasonable depiction of the transfer of our game related services to our players, as it is the best representation of the period during which our players play our software games. Determining the estimated service period is subjective and requires significant management judgment and estimates. Future usage patterns may differ from historical usage patterns, and therefore the estimated service period may change in the future. The estimated service periods for players of our current software games are generally between 30 and 100 days depending on the software games. 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 months ended March 31, 2024 and 2023 were comprised of the following: SCHEDULE OF COST OF REVENUES 2024 2023 Software license royalties – related parties $ 3,274,020 $ 2,863,011 Software license royalties 162,748 352,439 License and amortization – related parties 6,000,000 5,195,651 License and amortization 201 201 Merchant fees 221,449 459,471 Engine fees 961,442 424,227 Internet, server and data center 1,400,006 1,540,692 Costs related to advertising revenue 21,832 25,245 Total: $ 12,041,698 $ 10,860,937 General and Administrative Costs General and administrative costs include rent, salaries, stock-based compensation, legal and professional expenses, administrative internet and server, contractor costs, insurance expense, licenses and permits, other taxes and travel expenses. These costs are expensed as they are incurred. For the three months ended March 31, 2024 and 2023, general and administrative expenses totaled $ 2,282,040 4,525,751 ($862,634) 152,595 Advertising and Marketing Costs The Company expenses advertising and marketing costs as incurred. For the three months ended March 31, 2024 and 2023, advertising and marketing expenses totaled $ 141,030 104,549 Research and Development Research and development costs are expensed as incurred. Research and development costs include travel, payroll, and other general expenses specific to research and development activities. Research and development costs for the three months ended March 31, 2024 and 2023 were $ 1,776,522 1,373,797 ($64,241) 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 March 31, 2024 and December 31, 2023, 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 Cash Equivalents 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. The Company’s policy for determining whether an item is treated as cash, or a cash equivalent, is based on its original maturity, liquidity, and risk profile. Investments with maturities of three months or less, are highly liquid and have insignificant risk are considered to be cash equivalents. 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 were restricted for one year from the IPO date and were released from restrictions in November 2023. 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 risk 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. There were no credit losses recognized during the three months ended March 31, 2024 and 2023. 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, short-term loans, accounts receivable and accounts payable. The carrying values of these financial instruments approximate their fair value due to their short maturities or economic substance. The carrying amount of our revolving loan and notes payable 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. The fair value of 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 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 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 long-term accrued expenses on the accompanying condensed consolidated balance sheets in the amount of $ 254,731 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 March 31, 2024 and December 31, 2023, the Company had deposits of $ 15,410,350 14,716,652 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 does not require collateral or other security to support financial instruments subject to credit risk. The Company performs ongoing credit evaluations of customers and maintains reserves for potentially uncollectible accounts. The Company had three customers as of March 31, 2024, and four customers as of December 31, 2023, who accounted for approximately 72 % and 95 % of consolidated gross receivables, respectively. Among the three customers as of March 31, 2024, and four customers as of December 31, 2023, each customer accounted for 34 %, 21 %, and 17 % as of March 31, 2024, and 43 %, 20 %, 16 % and 16 % as of December 31, 2023 of the consolidated gross receivables outstanding. During the three months ended March 31, 2024 and 2023, approximately 62 % and 70 %, respectively, of net revenue was derived from these customers. The Company had four customers in the three months ended March 31, 2024, and three customers in the three months ended March 31, 2023, that accounted for 37 %, 15 %, 13 % and 11 %, and 36 %, 18 % and 10 % of the Company’s net revenue, respectively. The loss of these customers or declines in the forecasts of their accounts receivable collectability would have a significant impact on the Company’s financial performance. As of March 31, 2024 and December 31, 2023, the Company had one vendor who accounted for approximately 73 69 The Company had one vendor, SDE, a related party, that accounted for 66 58 Recently Issued Accounting Pronouncements 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 In October 2023, the FASB issued ASU 2023-06, Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosure (Topic 280), In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, 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 $ 24,274 26,619 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 did not issue any restricted stock units (“Restricted Stock Units” or “restricted stock units”) during the three months ended March 31, 2024, and 2023. 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 4,487,675 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 three months ended March 31, 2024 and 2023, stock-based compensations expenses amounted to ($926,875) 152,595 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 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 “Derivatives and Hedging” Equity On August 24, 2023, the Company issued a warrant to an investor (the “Equity Line Warrant”) for the purchase of 367,647 “Derivatives and Hedging” 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 Loss Per Share Loss per share (“EPS”) is calculated by dividing the net 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 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 more information see Note 15 – Loss Per Share. Dividend Restrictions Our ability to pay cash dividends is currently restricted by the terms of our credit facilities. |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 3 Months Ended |
Mar. 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | NOTE 3 – REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregation of revenue Timing of recognition The Company recognizes revenue at a point in time for performance obligations that are met at the time of sale or over a period based on the estimated service period of the product, additional performance obligations, or timing of releases. Net revenue by timing of recognition during the three months ended March 31, 2024 and 2023 were as follows: SCHEDULE OF DISAGGREGATION OF REVENUE 2024 2023 Over time $ 2,535,834 $ 1,936,375 Point in time 11,579,895 11,522,113 Total revenue from contracts with customers: $ 14,115,729 $ 13,458,488 Geography The Company attributes net revenue to geographic regions based on customer location. Net revenue by geographic region for the three months ended March 31, 2024 and 2023 were as follows: 2024 2023 United States $ 11,898,607 $ 11,777,874 International 2,217,122 1,680,614 Total revenue from contracts with customers: $ 14,115,729 $ 13,458,488 Platform Net revenue by platform for the three months ended March 31, 2024 and 2023 were as follows: 2024 2023 Console $ 6,002,817 $ 5,773,590 PC 5,104,723 5,012,180 Mobile 962,941 1,718,032 Other 2,045,248 954,686 Total revenue from contracts with customers: $ 14,115,729 $ 13,458,488 Distribution channel Our products are delivered through digital online services (digital download, online platforms, and cloud streaming), mobile, and retail distribution and other. Net revenue by distribution channel for the three months ended March 31, 2024 and 2023 was as follows: 2024 2023 Digital $ 11,107,540 $ 10,785,770 Mobile 962,941 1,718,032 Physical retail and other 2,045,248 954,686 Total revenue from contracts with customers: $ 14,115,729 $ 13,458,488 Other Revenues As discussed in Note 14, the Company recognized the $ 1.2 million payment related to the Angela Games settlement upon satisfaction of performance obligations included in the contract. This amount is included in other revenues. 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 its performance obligations, which were in the ordinary course of business. As of March 31, 2024, the balance of deferred revenue was $ 39.0 million, of which $ 37.5 million is due to non-refundable payments. The Company is expecting to recognize $ 17.1 million of the non-refundable payments in the next 12 months through the platform releases of certain DLCs, $ 0.6 Myth of Empires 13.4 million of non-refundable payments in the next 12 to 24 months through the release of DLC’s and additional ARK 3.8 million of current non-refundable deferred revenues and $ 2.6 million of long term non-refundable deferred revenue will be recognized as revenue primarily on a straight-line basis over the next 60 months, based on our estimates of technical support obligations, the usage of consumable virtual goods and estimated period of time an end user will play the game. The Company’s refundable deferred revenue consists of the advance payments received in accordance with the agreement the Company has made with its retail distributor. The Company expects to recognize $ 0.4 million in the next 12 months and the remainder of $ 1.1 million in fiscal year 2025. Activities in the Company’s deferred revenue as of March 31, 2024 and 2023 were as follows: SCHEDULE OF DEFERRED REVENUE 2024 2023 Deferred revenue, beginning balance in advance of revenue recognition billing $ 34,316,706 $ 9,551,446 Revenue recognized (2,535,834 ) (453,223 ) Revenue deferred 7,259,296 302,094 Deferred revenue, ending balance 39,040,168 9,400,317 Less: current portion (21,937,421 ) (4,517,573 ) Deferred revenue, long term $ 17,102,747 $ 4,882,744 |
CASH AND CASH EQUIVALENTS, AND
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS | 3 Months Ended |
Mar. 31, 2024 | |
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 $ 1,117,310 1,116,196 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 2024 2023 Cash and cash equivalents $ 16,068,729 $ 4,108,251 Restricted cash and cash equivalents 1,117,310 6,380,657 Cash and cash equivalents, and restricted cash and cash equivalents $ 17,186,039 $ 10,488,908 |
ACCOUNTS RECEIVABLE (PAYABLE) _
ACCOUNTS RECEIVABLE (PAYABLE) – RELATED PARTY | 3 Months Ended |
Mar. 31, 2024 | |
Accounts Receivable Payable Related Party | |
ACCOUNTS RECEIVABLE (PAYABLE) – RELATED PARTY | NOTE 5 – ACCOUNTS RECEIVABLE (PAYABLE) – RELATED PARTY Accounts receivable — related party represents receivables in the ordinary course of business attributable to certain mobile game revenues that, for administrative reasons, were collected by a related party and that the related party has not yet remitted back to the Company. Accounts receivable — related party is non-interest bearing and due on demand. The related party, SDE Inc. (“SDE”), is 100 0.5 6.0 16.8 SCHEDULE OF ACCOUNTS RECEIVABLE (PAYABLE) - RELATED PARTY 2024 2023 Accounts receivable – related party $ 12,000,592 $ 13,500,592 Less: accounts payable – related party – SDE (3,414,787 ) (10,946,478 ) Net accounts receivable, related party - SDE 8,585,805 2,554,114 Less: accounts receivable – related party, net of current portion 6,000,592 7,500,592 Net accounts receivable (payable), related party, current - SDE $ 2,585,213 $ (4,946,478 ) Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements |
PREPAID EXPENSES - RELATED PART
PREPAID EXPENSES - RELATED PARTY | 3 Months Ended |
Mar. 31, 2024 | |
Prepaid Expenses - Related Party | |
PREPAID EXPENSES - RELATED PARTY | NOTE 6 – 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 three months ended March 31, 2024, the Company made $ 1.4 ARK: Survival Ascended 2.5 ARK: Survival Ascended 5.5 ARK: Survival Ascended SCHEDULE OF PREPAID EXPENSES - RELATED PARTY 2024 2023 Prepaid royalties $ 7,483,120 $ 6,086,406 Prepaid licenses 7,500,000 7,500,000 Other prepaids 197,184 242,060 Prepaid expenses - related party, ending balance 15,180,304 13,828,466 Less: short-term portion (4,337,556 ) (6,044,404 ) Total prepaid expenses - related party, long-term $ 10,842,748 $ 7,784,062 The amount classified as short-term, as of March 31, 2024, includes prepaid royalties for ARK: Survival Ascended |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 3 Months Ended |
Mar. 31, 2024 | |
Prepaid Expenses And Other Current Assets | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 7 – PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consisted of the following as of March 31, 2024 and December 31, 2023: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS 2024 2023 Other receivables $ 1,814,274 $ - Deferred offering costs 105,411 105,411 Other prepaids 56,921 70,967 Other current assets 442,595 463,315 Total prepaid expenses and other current assets $ 2,419,201 $ 639,693 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 8 – PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following as of March 31, 2024 and December 31, 2023: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT, NET 2024 2023 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 1,809,214 1,809,214 Furniture and fixtures 411,801 411,801 Property, plant and equipment, gross 9,521,752 9,521,752 Accumulated depreciation (4,922,024 ) (4,839,686 ) Property, plant and equipment, net $ 4,599,728 $ 4,682,066 Depreciation and amortization expense was $ 82,338 and $ 115,060 for the three months ended March 31, 2024 and 2023, respectively. The Company did not have any disposals in the three months ended March 31, 2024 or 2023. Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements |
ACCOUNTS PAYABLE _ RELATED PART
ACCOUNTS PAYABLE — RELATED PARTIES | 3 Months Ended |
Mar. 31, 2024 | |
Accounts Payable Related Parties | |
ACCOUNTS PAYABLE — RELATED PARTIES | NOTE 9 – ACCOUNTS PAYABLE — RELATED PARTIES Accounts payable due to related parties represents payables in the ordinary course of business primarily for purchases of game distribution licenses, research and development costs and also the royalties due to Suzhou Snail and SDE. As of March 31, 2024 and December 31, 2023, the Company had $ 16,951,062 18,147,958 4,946,478 Accounts Receivable (Payable) — Related Party 47,105 72,524 253,000 759,000 no 1,575,000 450,000 SCHEDULE OF ACCOUNTS PAYABLE- RELATED PARTIES 2024 2023 Accounts payable - Suzhou $ 54,565,974 $ 55,762,870 Less: accounts receivable - Suzhou (37,614,912 ) (37,614,912 ) Less: accounts receivable (37,614,912 ) (37,614,912 ) Accounts payable - SDE - 4,946,478 Accounts payable - 4,946,478 Total accounts payable – related parties $ 16,951,062 $ 23,094,436 |
LOAN AND INTEREST RECEIVABLE _
LOAN AND INTEREST RECEIVABLE — RELATED PARTY | 3 Months Ended |
Mar. 31, 2024 | |
Loan And Interest Receivable Related Party | |
LOAN AND INTEREST RECEIVABLE — RELATED PARTY | NOTE 10 – LOAN AND INTEREST RECEIVABLE — RELATED PARTY In February 2021, the Company loaned $ 200,000 2.0 203,890 103,890 104,252 103,753 499 493 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements |
REVOLVING LOAN, SHORT TERM NOTE
REVOLVING LOAN, SHORT TERM NOTES AND LONG - TERM DEBT | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
REVOLVING LOAN, SHORT TERM NOTES AND LONG - TERM DEBT | NOTE 11 – REVOLVING LOAN, SHORT TERM NOTES AND LONG - TERM DEBT SCHEDULE OF LONG TERM DEBT March 31, 2024 December 31, 2023 2021 Revolving Loan - 9,000,000 6,000,000 December 31, 2024 0.25 8.25 1.5 to 1 $ 3,000,000 $ 6,000,000 2021 Promissory Note – 10 3.5 5 6 to 10. The loan is secured by the Company’s building, with a carrying value of $ 4.2 June 30, 2031 1.5 to 1 2,791,438 2,811,923 2022 Short Term Note - 10,000,000 January 26, 2023 3.75 0.50 5 1.5 to 1 January 26, 2024 8.25 833,333 - 833,333 2023 Convertible Notes – 7.4 1,080,000 7.5 February 24, 2024 May 24, 2024 16 678,254 103.4 750,450 1,080,000 2023 Note Payable – Ark: Survival Evolved 7 3.0 The funds are repaid based on 20% of the gross monthly ARK: Survival Ascended 8.0 12.0 1.5 - 1,500,000 Total debt 6,541,888 12,225,256 Less: discount on convertible notes 48,166 282,639 Less: current portion of promissory note 2,791,438 2,811,923 Less: revolving loan 3,000,000 6,000,000 Less: notes payable - 2,333,333 Less: convertible notes, net of discount 702,284 797,361 Total long-term debt $ - $ - Total interest expense for the above debt and revolver loan amounted to $ 395,964 294,245 294,683 8,911 8.0 8.1 Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements The following table provides future minimum payments of its long-term debt as of March 31, 2024: SCHEDULE OF FUTURE MINIMUM PAYMENTS OF LONG TERM DEBT Years ending December 31, Amount Remainder of 2024 $ 3,819,340 2025 86,013 2026 89,115 2027 92,329 2028 95,414 Thereafter 2,359,677 Long term debt $ 6,541,888 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 12 – INCOME TAXES The Company recognized an income tax benefit of $ 477,950 805,818 21 21 21 The Company has assessed all available positive and negative evidence of whether sufficient future taxable income will be generated to realize the deferred tax assets, including the results of recent operations and projections of future taxable income. After evaluating the positive and negative evidence, management believes it is more likely than not that the Company will realize the benefits of these deductible differences. 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 continues to maintain a valuation allowance against certain deferred tax assets that are not more likely than not to be realized. Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements |
OPERATING LEASE RIGHT-OF-USE AS
OPERATING LEASE RIGHT-OF-USE ASSETS | 3 Months Ended |
Mar. 31, 2024 | |
Operating Lease Right-of-use Assets | |
OPERATING LEASE RIGHT-OF-USE ASSETS | NOTE 13 – 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 2,138,285 2,440,690 27,332 24,510 Operating lease costs included in the general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2024 and 2023, are as follows: SCHEDULE OF OPERATING LEASE COSTS 2024 2023 Operating lease costs $ 396,515 $ 397,562 Supplemental information related to operating leases for lease liabilities as of March 31, 2024 and March 31, 2023, is as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO OPERATING LEASES 2024 2023 Cash paid for amounts included in the measurement of lease liabilities $ 400,662 $ 385,254 Weighted average remaining lease term 1.7 2.7 Weighted average discount rate 5.00 % 5.00 % Future undiscounted lease payments for operating leases and a reconciliation of these payments to our operating lease liabilities as of March 31, 2024 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 2024 $ 1,210,182 $ 72,374 $ 1,137,808 2025 1,453,784 28,290 1,425,494 Thereafter — — — Total future lease payments $ 2,663,966 $ 100,664 $ 2,563,302 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 14 – 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. Snail Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 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 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 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 of $ 1.2 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, an affiliate company that is owned by Mr. Hai Shi, the Company’s Founder, Co-Chief Executive Officer, 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. Accordingly, it is uncertain whether INDIEV would be able to indemnify the Company due to its bankruptcy. 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 |
LOSS PER SHARE
LOSS PER SHARE | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
LOSS PER SHARE | NOTE 15 – LOSS PER SHARE The Company uses the two class method to compute its basic loss per share (“Basic EPS”) and diluted loss 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 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 and if-converted methods. 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 months ended March 31, 2024 and 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 months ended March 31, 2024. There were no such exclusions made in the 2023 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 2024 2023 For the three months ended 2024 2023 Basic Loss Per Share: Net loss attributable to Class A common stockholders $ (385,722 ) $ (642,340 ) Net loss attributable to Class B common stockholders (1,393,607 ) (2,329,038 ) Net (loss) income attributable to common stockholders (1,393,607 ) (2,329,038 ) Total net loss attributable to Snail Inc and Snail Games USA Inc. $ (1,779,329 ) $ (2,971,378 ) Class A weighted average shares outstanding – basic 7,957,031 7,928,742 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 loss per share $ (0.05 ) $ (0.08 ) Diluted Loss Per Share: Net loss attributable to Class A common stockholders $ (385,722 ) $ (642,340 ) Net loss attributable to Class B common stockholders $ (1,393,607 ) $ (2,329,038 ) Net (loss) attributable to common stockholders $ (1,393,607 ) $ (2,329,038 ) Class A weighted average shares outstanding - basic 7,957,031 7,928,742 Dilutive effects of common stock equivalents - - Class A weighted average shares outstanding - diluted 7,957,031 7,928,742 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 per Class A and B share $ (0.05 ) $ (0.08 ) |
EQUITY
EQUITY | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
EQUITY | NOTE 16 – EQUITY The Company has authorized two one ten one 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 to 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 principle 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 months ended March 31, 2024, was not significant and as such, was 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 March 31, 2024: SCHEDULE OF CONVERTIBLE NOTES Principal Unamortized Net carrying Fair value Amount costs amount Amount Levelling Convertible Notes $ 713,114 $ (10,830 ) $ 702,284 $ 254,238 Level 3 The following is a summary of the Convertible Notes as of December 31, 2023: Principal Unamortized Net carrying Fair value Amount costs amount Amount Levelling Convertible Notes $ 860,910 $ (63,549 ) $ 797,361 $ 536,170 Level 3 The debt discount is being amortized to interest expense over the maturity period using the effective interest method at a rate of 103.4 252,820 18,347 181,754 52,719 During the three months ended March 31, 2024 the Company repaid $ 312,075 60,000 71,460 Convertible Note 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 March 31, Stock price $ 1.35 $ .99 Exercise price $ 1.89 $ 1.89 Contractual term (years) 5.0 4.4 Volatility 60.0 % 60.0 % Risk-free rate 4.39 % 4.27 % 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). The measured fair value may be uncertain due to the use of unobservable inputs. At March 31, 2024 and December 31, 2023, the fair value of the warrant liability was $ 485,382 480,281 5,101 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 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 Equity Line 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 March 31, Stock price $ 1.35 $ .99 Exercise price $ 1.50 $ 1.50 Contractual term (years) 5.0 4.4 Volatility 40.0 % 60.0 % Risk-free rate 5.49 % 4.27 % 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. The measured fair value may be uncertain due to the use of unobservable inputs. At March 31, 2024 and December 31, 2023, the fair value of the warrant liability was $ 94,147 103,767 9,620 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 Outstanding as of January 1, 2024 43,478 $ 1.38 Granted — — Vested (10,869 ) (1.38 ) Forfeited or cancelled — — Outstanding as of March 31, 2024 32,609 $ 1.38 Restricted Stock Units Weighted-Average Grant-Date Outstanding as of January 1, 2023 24,000 $ 5.00 Granted — — Vested — — Forfeited or cancelled — — Outstanding as of March 31, 2023 24,000 $ 5.00 The grant date fair value of 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 anniversaries of the IPO date if the Company’s average annual growth rate (“AAGR”) is calculated to be at a target percentage or above during the period between the Company’s IPO Date and the annual revenue for each of the anniversary year. If these performance-based milestones are not met but service conditions are met, the PSUs will not vest, in which case any compensation expense the Company has recognized to date will be reversed. Generally, the total aggregate measurement period of our PSUs is 5 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 three months ended March 31, 2024 and 2023. SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY Restricted Stock Units Weighted-Average Grant-Date Outstanding as of January 1, 2024 1,165,247 $ 5.00 Granted — — Vested — — Forfeited or cancelled (2,400 ) (5.00 ) Outstanding as of March 31, 2024 1,162,847 $ 5.00 Restricted Stock Units Weighted-Average Grant-Date Outstanding as of January 1, 2023 1,197,552 $ 5.00 Granted — — Vested — — Forfeited or cancelled (2,218 ) (5.00 ) Outstanding as of March 31, 2023 1,195,334 $ 5.00 The grant date fair value of 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 three months ended March 31, 2023 were open market transactions. As of March 31, 2024, 1,350,275 3.7 2.72 1.3 There were no share repurchases made during the three months ended March 31, 2024. During the three months ended March 31, 2023, 152,626 0.3 1.68 Stock-Based Compensation Expense During the three months ended March 31, 2024, the Company determined that it is probable that the Company will not meet the performance-based milestones required by the RSU’s granted to employees. Accordingly, the Company has reversed the previously recognized compensation expense related to RSU’s. Stock-based compensation expense resulting from RSUs and PSUs of ($862,634) 152,595 ($64,241) 0 During the three months ended March 31, 2024 the Company recognized approximately $ 194,644 32,045 As of March 31, 2024, our total unrecognized compensation cost related to RSUs and PSUs was approximately $ 1.2 2.3 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 17 – SUBSEQUENT EVENTS ● In April 2024, the Company paid $ 0.5 ● The Company has appointed Hai Shi and Xuedong Tian as the Company’s Co-Chief Executive Officers, effective April 15, 2024. The terms of Mr. Tian’s employment include an annual salary of $ 300,000 ● Mr. Tian was the Founder and President of Weitian Group LLC from May 2012 to October 2020, one of the Company’s investor relations vendors. During the three months ended March 31, 2024, the Company incurred expenses of $ 18,720 10,032 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Revenue Recognition | Revenue Recognition The Company’s revenue is generated from the publishing of software games sold digitally and through physical discs (e.g., packaged goods), the publishing of separate downloadable content that are new feature releases to existing digital full-game downloads that are sold digitally, and in-app purchases of virtual goods used by players of its free-to-play mobile games. When control of the promised products and services is transferred to the end users, 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 purchase the games, and the control of the license is transferred to them. The virtual goods that the Company sells to players of our free-to-play mobile-games, include virtual currency or in-game purchases of additional game play functionality. For virtual goods, the satisfaction of our performance obligation is dependent on the nature of the virtual good purchased and as a result, the Company categorizes its virtual goods as follows: ● Consumable: c onsumable virtual items represent items that can be consumed by a specific player action. Consumable virtual items do not result in a direct benefit that the player keeps or provide the player any continuing benefit following consumption, and they often enable a player to perform an in-game action immediately. For the sale of consumable virtual items, the Company recognizes revenue as the items are consumed (i.e., over time) ● Durable: d urable virtual items represent items that are accessible to the player over an extended period of time. The Company recognizes revenue from the sale of durable virtual items ratably over the estimated service period for the applicable game (i.e., over time), which represents our best estimate of the average life of the durable virtual item. For the ARK: Survival Ascended ● Reasonably available data points, including third party or industry pricing, and contractually stated prices. ● Market conditions such as market demand, competition, market constraints, awareness of the product and market trends. ● Entity-specific factors including pricing strategies and objectives, market share and pricing practices for bundled arrangements. 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 purchase, and payments received from customers prior to launching the games on the platforms. The Company recognizes revenues from the sale of virtual goods ratably over their estimated service period. The Company’s estimated service period for players of our current software games is generally 30 to 100 days from the date of purchase. 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 II 2.5 ARK 1’s 2.3 ARK II ARK II In July 2023, the Company entered into a distribution agreement with its retail distribution partner for the distribution of ARK: Survival Ascended ARK II. 1.8 , 0.3 . A reported 0.4 ARK: Survival Ascended deferred revenue 1.1 ARK II as |
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 games (“user life”) which most faithfully depicts the timing of satisfying our performance obligation. The Company considers a variety of data points when determining and subsequently reassessing the estimated service period for players of our software games. Primarily, the Company reviews the weighted average number of days between players’ first and last day playing online or the subscription trend. The Company also considers publicly available online trends. The Company believes this provides a reasonable depiction of the transfer of our game related services to our players, as it is the best representation of the period during which our players play our software games. Determining the estimated service period is subjective and requires significant management judgment and estimates. Future usage patterns may differ from historical usage patterns, and therefore the estimated service period may change in the future. The estimated service periods for players of our current software games are generally between 30 and 100 days depending on the software games. |
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 months ended March 31, 2024 and 2023 were comprised of the following: SCHEDULE OF COST OF REVENUES 2024 2023 Software license royalties – related parties $ 3,274,020 $ 2,863,011 Software license royalties 162,748 352,439 License and amortization – related parties 6,000,000 5,195,651 License and amortization 201 201 Merchant fees 221,449 459,471 Engine fees 961,442 424,227 Internet, server and data center 1,400,006 1,540,692 Costs related to advertising revenue 21,832 25,245 Total: $ 12,041,698 $ 10,860,937 |
General and Administrative Costs | General and Administrative Costs General and administrative costs include rent, salaries, stock-based compensation, legal and professional expenses, administrative internet and server, contractor costs, insurance expense, licenses and permits, other taxes and travel expenses. These costs are expensed as they are incurred. For the three months ended March 31, 2024 and 2023, general and administrative expenses totaled $ 2,282,040 4,525,751 ($862,634) 152,595 |
Advertising and Marketing Costs | Advertising and Marketing Costs The Company expenses advertising and marketing costs as incurred. For the three months ended March 31, 2024 and 2023, advertising and marketing expenses totaled $ 141,030 104,549 |
Research and Development | Research and Development Research and development costs are expensed as incurred. Research and development costs include travel, payroll, and other general expenses specific to research and development activities. Research and development costs for the three months ended March 31, 2024 and 2023 were $ 1,776,522 1,373,797 ($64,241) 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 March 31, 2024 and December 31, 2023, 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 Cash Equivalents and Restricted Cash and Cash Equivalents | Cash and Cash Equivalents 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. The Company’s policy for determining whether an item is treated as cash, or a cash equivalent, is based on its original maturity, liquidity, and risk profile. Investments with maturities of three months or less, are highly liquid and have insignificant risk are considered to be cash equivalents. |
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 were restricted for one year from the IPO date and were released from restrictions in November 2023. |
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 risk 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. There were no credit losses recognized during the three months ended March 31, 2024 and 2023. |
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, short-term loans, accounts receivable and accounts payable. The carrying values of these financial instruments approximate their fair value due to their short maturities or economic substance. The carrying amount of our revolving loan and notes payable 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. The fair value of 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 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 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 long-term accrued expenses on the accompanying condensed consolidated balance sheets in the amount of $ 254,731 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 March 31, 2024 and December 31, 2023, the Company had deposits of $ 15,410,350 14,716,652 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 does not require collateral or other security to support financial instruments subject to credit risk. The Company performs ongoing credit evaluations of customers and maintains reserves for potentially uncollectible accounts. The Company had three customers as of March 31, 2024, and four customers as of December 31, 2023, who accounted for approximately 72 % and 95 % of consolidated gross receivables, respectively. Among the three customers as of March 31, 2024, and four customers as of December 31, 2023, each customer accounted for 34 %, 21 %, and 17 % as of March 31, 2024, and 43 %, 20 %, 16 % and 16 % as of December 31, 2023 of the consolidated gross receivables outstanding. During the three months ended March 31, 2024 and 2023, approximately 62 % and 70 %, respectively, of net revenue was derived from these customers. The Company had four customers in the three months ended March 31, 2024, and three customers in the three months ended March 31, 2023, that accounted for 37 %, 15 %, 13 % and 11 %, and 36 %, 18 % and 10 % of the Company’s net revenue, respectively. The loss of these customers or declines in the forecasts of their accounts receivable collectability would have a significant impact on the Company’s financial performance. As of March 31, 2024 and December 31, 2023, the Company had one vendor who accounted for approximately 73 69 The Company had one vendor, SDE, a related party, that accounted for 66 58 |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements 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 In October 2023, the FASB issued ASU 2023-06, Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosure (Topic 280), In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, 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 $ 24,274 26,619 |
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 did not issue any restricted stock units (“Restricted Stock Units” or “restricted stock units”) during the three months ended March 31, 2024, and 2023. 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 4,487,675 |
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 three months ended March 31, 2024 and 2023, stock-based compensations expenses amounted to ($926,875) 152,595 |
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 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 “Derivatives and Hedging” Equity On August 24, 2023, the Company issued a warrant to an investor (the “Equity Line Warrant”) for the purchase of 367,647 “Derivatives and Hedging” 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 |
Loss Per Share | Loss Per Share Loss per share (“EPS”) is calculated by dividing the net 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 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 more information see Note 15 – Loss Per Share. |
Dividend Restrictions | Dividend Restrictions Our ability to pay cash dividends is currently restricted by the terms of our credit facilities. |
PRESENTATION AND NATURE OF OP_2
PRESENTATION AND NATURE OF OPERATIONS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 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) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
SCHEDULE OF COST OF REVENUES | SCHEDULE OF COST OF REVENUES 2024 2023 Software license royalties – related parties $ 3,274,020 $ 2,863,011 Software license royalties 162,748 352,439 License and amortization – related parties 6,000,000 5,195,651 License and amortization 201 201 Merchant fees 221,449 459,471 Engine fees 961,442 424,227 Internet, server and data center 1,400,006 1,540,692 Costs related to advertising revenue 21,832 25,245 Total: $ 12,041,698 $ 10,860,937 |
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) | 3 Months Ended |
Mar. 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
SCHEDULE OF DISAGGREGATION OF REVENUE | SCHEDULE OF DISAGGREGATION OF REVENUE 2024 2023 Over time $ 2,535,834 $ 1,936,375 Point in time 11,579,895 11,522,113 Total revenue from contracts with customers: $ 14,115,729 $ 13,458,488 Geography The Company attributes net revenue to geographic regions based on customer location. Net revenue by geographic region for the three months ended March 31, 2024 and 2023 were as follows: 2024 2023 United States $ 11,898,607 $ 11,777,874 International 2,217,122 1,680,614 Total revenue from contracts with customers: $ 14,115,729 $ 13,458,488 Platform Net revenue by platform for the three months ended March 31, 2024 and 2023 were as follows: 2024 2023 Console $ 6,002,817 $ 5,773,590 PC 5,104,723 5,012,180 Mobile 962,941 1,718,032 Other 2,045,248 954,686 Total revenue from contracts with customers: $ 14,115,729 $ 13,458,488 Distribution channel Our products are delivered through digital online services (digital download, online platforms, and cloud streaming), mobile, and retail distribution and other. Net revenue by distribution channel for the three months ended March 31, 2024 and 2023 was as follows: 2024 2023 Digital $ 11,107,540 $ 10,785,770 Mobile 962,941 1,718,032 Physical retail and other 2,045,248 954,686 Total revenue from contracts with customers: $ 14,115,729 $ 13,458,488 |
SCHEDULE OF DEFERRED REVENUE | SCHEDULE OF DEFERRED REVENUE 2024 2023 Deferred revenue, beginning balance in advance of revenue recognition billing $ 34,316,706 $ 9,551,446 Revenue recognized (2,535,834 ) (453,223 ) Revenue deferred 7,259,296 302,094 Deferred revenue, ending balance 39,040,168 9,400,317 Less: current portion (21,937,421 ) (4,517,573 ) Deferred revenue, long term $ 17,102,747 $ 4,882,744 |
CASH AND CASH EQUIVALENTS, AN_2
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 2024 2023 Cash and cash equivalents $ 16,068,729 $ 4,108,251 Restricted cash and cash equivalents 1,117,310 6,380,657 Cash and cash equivalents, and restricted cash and cash equivalents $ 17,186,039 $ 10,488,908 |
ACCOUNTS RECEIVABLE (PAYABLE)_2
ACCOUNTS RECEIVABLE (PAYABLE) – RELATED PARTY (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accounts Receivable Payable Related Party | |
SCHEDULE OF ACCOUNTS RECEIVABLE (PAYABLE) - RELATED PARTY | SCHEDULE OF ACCOUNTS RECEIVABLE (PAYABLE) - RELATED PARTY 2024 2023 Accounts receivable – related party $ 12,000,592 $ 13,500,592 Less: accounts payable – related party – SDE (3,414,787 ) (10,946,478 ) Net accounts receivable, related party - SDE 8,585,805 2,554,114 Less: accounts receivable – related party, net of current portion 6,000,592 7,500,592 Net accounts receivable (payable), related party, current - SDE $ 2,585,213 $ (4,946,478 ) |
PREPAID EXPENSES - RELATED PA_2
PREPAID EXPENSES - RELATED PARTY (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Prepaid Expenses - Related Party | |
SCHEDULE OF PREPAID EXPENSES - RELATED PARTY | SCHEDULE OF PREPAID EXPENSES - RELATED PARTY 2024 2023 Prepaid royalties $ 7,483,120 $ 6,086,406 Prepaid licenses 7,500,000 7,500,000 Other prepaids 197,184 242,060 Prepaid expenses - related party, ending balance 15,180,304 13,828,466 Less: short-term portion (4,337,556 ) (6,044,404 ) Total prepaid expenses - related party, long-term $ 10,842,748 $ 7,784,062 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Prepaid Expenses And Other Current Assets | |
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS | Prepaid expenses and other current assets consisted of the following as of March 31, 2024 and December 31, 2023: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS 2024 2023 Other receivables $ 1,814,274 $ - Deferred offering costs 105,411 105,411 Other prepaids 56,921 70,967 Other current assets 442,595 463,315 Total prepaid expenses and other current assets $ 2,419,201 $ 639,693 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT, NET | Property, plant and equipment, net consisted of the following as of March 31, 2024 and December 31, 2023: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT, NET 2024 2023 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 1,809,214 1,809,214 Furniture and fixtures 411,801 411,801 Property, plant and equipment, gross 9,521,752 9,521,752 Accumulated depreciation (4,922,024 ) (4,839,686 ) Property, plant and equipment, net $ 4,599,728 $ 4,682,066 |
ACCOUNTS PAYABLE _ RELATED PA_2
ACCOUNTS PAYABLE — RELATED PARTIES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accounts Payable Related Parties | |
SCHEDULE OF ACCOUNTS PAYABLE- RELATED PARTIES | SCHEDULE OF ACCOUNTS PAYABLE- RELATED PARTIES 2024 2023 Accounts payable - Suzhou $ 54,565,974 $ 55,762,870 Less: accounts receivable - Suzhou (37,614,912 ) (37,614,912 ) Less: accounts receivable (37,614,912 ) (37,614,912 ) Accounts payable - SDE - 4,946,478 Accounts payable - 4,946,478 Total accounts payable – related parties $ 16,951,062 $ 23,094,436 |
REVOLVING LOAN, SHORT TERM NO_2
REVOLVING LOAN, SHORT TERM NOTES AND LONG - TERM DEBT (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF LONG TERM DEBT | SCHEDULE OF LONG TERM DEBT March 31, 2024 December 31, 2023 2021 Revolving Loan - 9,000,000 6,000,000 December 31, 2024 0.25 8.25 1.5 to 1 $ 3,000,000 $ 6,000,000 2021 Promissory Note – 10 3.5 5 6 to 10. The loan is secured by the Company’s building, with a carrying value of $ 4.2 June 30, 2031 1.5 to 1 2,791,438 2,811,923 2022 Short Term Note - 10,000,000 January 26, 2023 3.75 0.50 5 1.5 to 1 January 26, 2024 8.25 833,333 - 833,333 2023 Convertible Notes – 7.4 1,080,000 7.5 February 24, 2024 May 24, 2024 16 678,254 103.4 750,450 1,080,000 2023 Note Payable – Ark: Survival Evolved 7 3.0 The funds are repaid based on 20% of the gross monthly ARK: Survival Ascended 8.0 12.0 1.5 - 1,500,000 Total debt 6,541,888 12,225,256 Less: discount on convertible notes 48,166 282,639 Less: current portion of promissory note 2,791,438 2,811,923 Less: revolving loan 3,000,000 6,000,000 Less: notes payable - 2,333,333 Less: convertible notes, net of discount 702,284 797,361 Total long-term debt $ - $ - |
SCHEDULE OF FUTURE MINIMUM PAYMENTS OF LONG TERM DEBT | The following table provides future minimum payments of its long-term debt as of March 31, 2024: SCHEDULE OF FUTURE MINIMUM PAYMENTS OF LONG TERM DEBT Years ending December 31, Amount Remainder of 2024 $ 3,819,340 2025 86,013 2026 89,115 2027 92,329 2028 95,414 Thereafter 2,359,677 Long term debt $ 6,541,888 |
OPERATING LEASE RIGHT-OF-USE _2
OPERATING LEASE RIGHT-OF-USE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Operating Lease Right-of-use Assets | |
SCHEDULE OF OPERATING LEASE COSTS | Operating lease costs included in the general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2024 and 2023, are as follows: SCHEDULE OF OPERATING LEASE COSTS 2024 2023 Operating lease costs $ 396,515 $ 397,562 |
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO OPERATING LEASES | Supplemental information related to operating leases for lease liabilities as of March 31, 2024 and March 31, 2023, is as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO OPERATING LEASES 2024 2023 Cash paid for amounts included in the measurement of lease liabilities $ 400,662 $ 385,254 Weighted average remaining lease term 1.7 2.7 Weighted average discount rate 5.00 % 5.00 % |
SCHEDULE OF FUTURE UNDISCOUNTED LEASE PAYMENTS FOR OPERATING LEASES AND RECONCILIATION OF THESE PAYMENTS TO OUR OPERATING LEASE LIABILITIES | Future undiscounted lease payments for operating leases and a reconciliation of these payments to our operating lease liabilities as of March 31, 2024 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 2024 $ 1,210,182 $ 72,374 $ 1,137,808 2025 1,453,784 28,290 1,425,494 Thereafter — — — Total future lease payments $ 2,663,966 $ 100,664 $ 2,563,302 |
LOSS PER SHARE (Tables)
LOSS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
SCHEDULE OF EARNINGS PER SHARE | SCHEDULE OF EARNINGS PER SHARE 2024 2023 For the three months ended 2024 2023 Basic Loss Per Share: Net loss attributable to Class A common stockholders $ (385,722 ) $ (642,340 ) Net loss attributable to Class B common stockholders (1,393,607 ) (2,329,038 ) Net (loss) income attributable to common stockholders (1,393,607 ) (2,329,038 ) Total net loss attributable to Snail Inc and Snail Games USA Inc. $ (1,779,329 ) $ (2,971,378 ) Class A weighted average shares outstanding – basic 7,957,031 7,928,742 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 loss per share $ (0.05 ) $ (0.08 ) Diluted Loss Per Share: Net loss attributable to Class A common stockholders $ (385,722 ) $ (642,340 ) Net loss attributable to Class B common stockholders $ (1,393,607 ) $ (2,329,038 ) Net (loss) attributable to common stockholders $ (1,393,607 ) $ (2,329,038 ) Class A weighted average shares outstanding - basic 7,957,031 7,928,742 Dilutive effects of common stock equivalents - - Class A weighted average shares outstanding - diluted 7,957,031 7,928,742 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 per Class A and B share $ (0.05 ) $ (0.08 ) |
EQUITY (Tables)
EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 Principal Unamortized Net carrying Fair value Amount costs amount Amount Levelling Convertible Notes $ 713,114 $ (10,830 ) $ 702,284 $ 254,238 Level 3 The following is a summary of the Convertible Notes as of December 31, 2023: Principal Unamortized Net carrying Fair value Amount costs amount Amount Levelling Convertible Notes $ 860,910 $ (63,549 ) $ 797,361 $ 536,170 Level 3 |
SCHEDULE OF STOCK BASED WARRANTS | SCHEDULE OF STOCK BASED WARRANTS Issuance March 31, Stock price $ 1.35 $ .99 Exercise price $ 1.89 $ 1.89 Contractual term (years) 5.0 4.4 Volatility 60.0 % 60.0 % Risk-free rate 4.39 % 4.27 % |
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 Outstanding as of January 1, 2024 43,478 $ 1.38 Granted — — Vested (10,869 ) (1.38 ) Forfeited or cancelled — — Outstanding as of March 31, 2024 32,609 $ 1.38 Restricted Stock Units Weighted-Average Grant-Date Outstanding as of January 1, 2023 24,000 $ 5.00 Granted — — Vested — — Forfeited or cancelled — — Outstanding as of March 31, 2023 24,000 $ 5.00 |
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 Outstanding as of January 1, 2024 1,165,247 $ 5.00 Granted — — Vested — — Forfeited or cancelled (2,400 ) (5.00 ) Outstanding as of March 31, 2024 1,162,847 $ 5.00 Restricted Stock Units Weighted-Average Grant-Date Outstanding as of January 1, 2023 1,197,552 $ 5.00 Granted — — Vested — — Forfeited or cancelled (2,218 ) (5.00 ) Outstanding as of March 31, 2023 1,195,334 $ 5.00 |
Warrant One [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
SCHEDULE OF STOCK BASED WARRANTS | SCHEDULE OF STOCK BASED WARRANTS Issuance March 31, Stock price $ 1.35 $ .99 Exercise price $ 1.50 $ 1.50 Contractual term (years) 5.0 4.4 Volatility 40.0 % 60.0 % Risk-free rate 5.49 % 4.27 % |
SCHEDULE OF OPERATIONS AND COMP
SCHEDULE OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cost of revenues | $ 10,860,937 | |
Gross profit | $ 2,074,031 | 2,597,551 |
General and administrative | $ 2,282,040 | 4,525,751 |
Previously Reported [Member] | ||
Cost of revenues | 9,816,397 | |
Gross profit | 3,642,091 | |
General and administrative | 5,570,291 | |
Revision of Prior Period, Adjustment [Member] | ||
Cost of revenues | 1,044,540 | |
Gross profit | (1,044,540) | |
General and administrative | $ (1,044,540) |
SCHEDULE OF SUBSIDIARIES INCLUD
SCHEDULE OF SUBSIDIARIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS (Details) | Mar. 31, 2024 | Dec. 31, 2023 |
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 | ||||
Apr. 30, 2024 USD ($) | Mar. 31, 2024 USD ($) Integer | Mar. 31, 2023 USD ($) | Dec. 31, 2024 USD ($) | May 31, 2024 USD ($) | Dec. 31, 2023 USD ($) | |
Short-Term Debt [Line Items] | ||||||
Number of operating segments | Integer | 1 | |||||
Operating activities, net cash provided | $ 6,777,187 | $ (6,708,770) | ||||
Revolving loan payable | 3,000,000 | |||||
Short term note loan | $ 2,333,333 | |||||
Accrued interest and principal | 300,000 | |||||
Revolving loan | 3,000,000 | $ 3,000,000 | $ 6,000,000 | |||
Promissory note | 2,800,000 | |||||
Unrestricted cash | 16,100,000 | |||||
Subsequent Event [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Revolving loan payable | $ 3,000,000 | |||||
Accrued interest | $ 500,000 | |||||
Convertible debt | $ 700,000 | |||||
Short-Term Debt [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Short term note loan | 800,000 | |||||
New Term Loan [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Short term note loan | $ 1,500,000 |
SCHEDULE OF COST OF REVENUES (D
SCHEDULE OF COST OF REVENUES (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Accounting Policies [Abstract] | ||
Software license royalties – related parties | $ 3,274,020 | $ 2,863,011 |
Software license royalties | 162,748 | 352,439 |
License and amortization – related parties | 6,000,000 | 5,195,651 |
License and amortization | 201 | 201 |
Merchant fees | 221,449 | 459,471 |
Engine fees | 961,442 | 424,227 |
Internet, server and data center | 1,400,006 | 1,540,692 |
Costs related to advertising revenue | 21,832 | 25,245 |
Total: | $ 12,041,698 | $ 10,860,937 |
SCHEDULE OF EQUITY INTEREST AND
SCHEDULE OF EQUITY INTEREST AND NON CONTROLLING INTEREST IN SUBSIDIARIES (Details) | Mar. 31, 2024 | Dec. 31, 2023 |
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 ($) | 3 Months Ended | 12 Months Ended | |||||
Aug. 24, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Jul. 31, 2023 | Nov. 10, 2022 | |
Product Information [Line Items] | |||||||
Revenue recognized | $ 2,535,834 | $ 453,223 | |||||
Deferred revenue, long-term portion | 17,102,747 | 4,882,744 | $ 15,064,078 | ||||
Deferred revenue, current | 21,937,421 | 4,517,573 | 19,252,628 | ||||
General and administrative expense | 2,282,040 | 4,525,751 | |||||
Advertising and marketing expenses | 141,030 | 104,549 | |||||
Research and development expense | 1,776,522 | 1,373,797 | |||||
Liabilities for uncertain tax positions | 254,731 | 254,731 | |||||
Deposits not insured by FDIC | 15,410,350 | $ 14,716,652 | |||||
Employer contributions toplan | 24,274 | 26,619 | |||||
Convertible debt shares | 714,285 | ||||||
Restricted Stock Units (RSUs) [Member] | |||||||
Product Information [Line Items] | |||||||
Stock-based compensation | (862,634) | 152,595 | |||||
Stock-based compensation | $ (926,875) | $ 152,595 | |||||
Common Class A [Member] | |||||||
Product Information [Line Items] | |||||||
Warrants issued to purchase common stock | 367,647 | 120,000 | |||||
Shares remain available for repurchase, amount | $ 1,300,000 | ||||||
Omnibus Incentive Plan (2022 Plan) [Member] | |||||||
Product Information [Line Items] | |||||||
Number of shares authorized for issuance | 5,718,000 | ||||||
Number of shares available for issuance | 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% | ||||||
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 for repurchase | $ 5,000,000 | ||||||
Number of shares repurchased | 1,350,275 | 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, amount | $ 1,300,000 | ||||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Three Customers [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration percentage | 72% | ||||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Four Customers [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration percentage | 95% | ||||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer One [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration percentage | 34% | 43% | |||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Two [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration percentage | 21% | 20% | |||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Three [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration percentage | 17% | 16% | |||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Four [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration percentage | 16% | ||||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Three Customers [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration percentage | 70% | ||||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Four Customers [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration percentage | 62% | ||||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer One [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration percentage | 37% | 36% | |||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Two [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration percentage | 15% | 18% | |||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Three [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration percentage | 13% | 10% | |||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Four [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration percentage | 11% | ||||||
Accounts Payable [Member] | Supplier Concentration Risk [Member] | One Vendor [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration percentage | 73% | 69% | |||||
Cost of Revenues and Operating Expenses [Member] | Supplier Concentration Risk [Member] | SDE Inc [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration percentage | 66% | 58% | |||||
Promissory Note [Member] | |||||||
Product Information [Line Items] | |||||||
Fixed interest rate duration | 5 years | ||||||
Floating prime rate | 0.50% | ||||||
General and Administrative Expense [Member] | |||||||
Product Information [Line Items] | |||||||
Stock-based compensation | $ (862,634) | $ 152,595 | |||||
Research and Development Expense [Member] | |||||||
Product Information [Line Items] | |||||||
Stock-based compensation | (64,241) | $ 0 | |||||
Distribution Agreement [Member] | |||||||
Product Information [Line Items] | |||||||
Revenue recognized | 300,000 | ||||||
ARK 1's Perpetual License [Member] | Long-term Title License Agreement [Member] | |||||||
Product Information [Line Items] | |||||||
Revenue recognized | $ 2,500,000 | ||||||
ARK II [Member] | Long-term Title License Agreement [Member] | |||||||
Product Information [Line Items] | |||||||
Deferred revenue, long-term portion | $ 2,300,000 | ||||||
ARK II [Member] | Distribution Agreement [Member] | |||||||
Product Information [Line Items] | |||||||
Deferred revenue, long-term portion | 1,100,000 | ||||||
ARK Survival Ascended [Member] | |||||||
Product Information [Line Items] | |||||||
Prepaid royalties | 1,400,000 | $ 5,500,000 | |||||
ARK Survival Ascended [Member] | Distribution Agreement [Member] | |||||||
Product Information [Line Items] | |||||||
Prepaid royalties | $ 1,800,000 | ||||||
Deferred revenue, current | $ 400,000 | ||||||
Minimum [Member] | |||||||
Product Information [Line Items] | |||||||
Typical customer terms | 30 days | ||||||
Minimum [Member] | Omnibus Incentive Plan (2022 Plan) [Member] | |||||||
Product Information [Line Items] | |||||||
Number of shares available for issuance | 4,487,675 | ||||||
Maximum [Member] | |||||||
Product Information [Line Items] | |||||||
Typical customer terms | 75 days | ||||||
Maximum [Member] | Omnibus Incentive Plan (2022 Plan) [Member] | |||||||
Product Information [Line Items] | |||||||
Number of shares available for issuance | 4,487,675 |
SCHEDULE OF DISAGGREGATION OF R
SCHEDULE OF DISAGGREGATION OF REVENUE (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers: | $ 14,115,729 | $ 13,458,488 |
Sales Channel Directly to Consumer Digital Online Service [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers: | 11,107,540 | 10,785,770 |
Sales Channel Directly to Consumer Mobile Sale [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers: | 962,941 | 1,718,032 |
Sales Channel, Through Intermediary [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers: | 2,045,248 | 954,686 |
Console [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers: | 6,002,817 | 5,773,590 |
PC [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers: | 5,104,723 | 5,012,180 |
Mobile [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers: | 962,941 | 1,718,032 |
Manufactured Product, Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers: | 2,045,248 | 954,686 |
UNITED STATES | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers: | 11,898,607 | 11,777,874 |
Non-US [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers: | 2,217,122 | 1,680,614 |
Transferred over Time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers: | 2,535,834 | 1,936,375 |
Transferred at Point in Time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers: | $ 11,579,895 | $ 11,522,113 |
SCHEDULE OF DEFERRED REVENUE (D
SCHEDULE OF DEFERRED REVENUE (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |||
Deferred revenue, beginning balance in advance of revenue recognition billing | $ 34,316,706 | $ 9,551,446 | |
Revenue recognized | (2,535,834) | (453,223) | |
Revenue deferred | 7,259,296 | 302,094 | |
Deferred revenue, ending balance | 39,040,168 | 9,400,317 | |
Less short term portion | (21,937,421) | (4,517,573) | $ (19,252,628) |
Deferred revenue, long term | $ 17,102,747 | $ 4,882,744 | $ 15,064,078 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details Narrative) - USD ($) | 3 Months Ended | |||
Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Deferred Revenue, Revenue Recognized | $ 1,200,000 | |||
Contract with Customer, Liability | 39,040,168 | $ 34,316,706 | $ 9,400,317 | $ 9,551,446 |
Revenue remaining performance obligation amount nonrefundable | $ 37,500,000 | |||
Expected timing of satisfaction period | 60 months | |||
Current portion of deferred revenue | $ 21,937,421 | $ 19,252,628 | $ 4,517,573 | |
Deferred revenue current to be recognized | 3,800,000 | |||
Deferred revenue noncurrent to be recognized | 2,600,000 | |||
Next 12 Months [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Deferred revenue to be recognized | 400,000 | |||
2025 [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Deferred revenue to be recognized | 1,100,000 | |||
DLC [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Deferred revenue to be recognized | $ 17,100,000 | |||
Expected timing of satisfaction period | 12 months | |||
Current portion of deferred revenue | $ 600,000 | |||
DLC and ARK IP [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Deferred revenue to be recognized | $ 13,400,000 | |||
DLC and ARK IP [Member] | Minimum [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Expected timing of satisfaction period | 12 months | |||
DLC and ARK IP [Member] | Maximum [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Expected timing of satisfaction period | 24 months |
SUMMARY OF COMPONENTS OF CASH A
SUMMARY OF COMPONENTS OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Cash And Cash Equivalents And Restricted Cash And Cash Equivalents | ||||
Cash and cash equivalents | $ 16,068,729 | $ 15,198,123 | $ 4,108,251 | |
Restricted cash and cash equivalents | 1,117,310 | 6,380,657 | ||
Cash and cash equivalents, and restricted cash and cash equivalents | $ 17,186,039 | $ 16,314,319 | $ 10,488,908 | $ 19,238,185 |
CASH AND CASH EQUIVALENTS, AN_3
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS (Details Narrative) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Jun. 21, 2023 |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |||
Restricted cash and cash equivalents, noncurrent | $ 1,117,310 | $ 1,116,196 | |
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 | $ 1,117,310 | $ 1,116,196 |
SCHEDULE OF ACCOUNTS RECEIVABLE
SCHEDULE OF ACCOUNTS RECEIVABLE (PAYABLE) - RELATED PARTY (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Related Party [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Accounts receivable – related party | $ 12,000,592 | $ 13,500,592 |
Less: accounts payable – related party – SDE | (16,951,062) | (23,094,436) |
Less: accounts receivable – related party, net of current portion | 6,000,592 | 7,500,592 |
Related Party SDE Inc [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Less: accounts payable – related party – SDE | (3,414,787) | (10,946,478) |
Net accounts receivable, related party - SDE | 8,585,805 | 2,554,114 |
Net accounts receivable (payable), related party, current - SDE | $ 2,585,213 | $ (4,946,478) |
ACCOUNTS RECEIVABLE (PAYABLE)_3
ACCOUNTS RECEIVABLE (PAYABLE) – RELATED PARTY (Details Narrative) $ in Millions | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Immediate Family Member of Management or Principal Owner [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Related party transaction ownership percentage | 100% |
SDE Inc [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Offset amount per month | $ 0.5 |
Offset amount per annum | 6 |
Payments for cash | $ 16.8 |
SCHEDULE OF PREPAID EXPENSES -
SCHEDULE OF PREPAID EXPENSES - RELATED PARTY (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Defined Benefit Plan Disclosure [Line Items] | ||
Other prepaids | $ 56,921 | $ 70,967 |
Related Party [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Prepaid royalties | 7,483,120 | 6,086,406 |
Prepaid licenses | 7,500,000 | 7,500,000 |
Other prepaids | 197,184 | 242,060 |
Prepaid expenses - related party, ending balance | 15,180,304 | 13,828,466 |
Less: short-term portion | (4,337,556) | (6,044,404) |
Total prepaid expenses - related party, long-term | $ 10,842,748 | $ 7,784,062 |
PREPAID EXPENSES - RELATED PA_3
PREPAID EXPENSES - RELATED PARTY (Details Narrative) - USD ($) $ in Millions | Mar. 10, 2023 | Mar. 31, 2024 | Dec. 31, 2023 |
Amount prepaid in advance | $ 5 | ||
Maximum amount payable | $ 5 | ||
ARK Survival Ascended [Member] | |||
Prepaid royalties | $ 1.4 | $ 5.5 | |
ARK I [Member] | |||
Prepaid expenses license rights | $ 2.5 |
SCHEDULE OF PREPAID EXPENSES AN
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Prepaid Expenses And Other Current Assets | ||
Other receivables | $ 1,814,274 | |
Deferred offering costs | 105,411 | 105,411 |
Other prepaids | 56,921 | 70,967 |
Other current assets | 442,595 | 463,315 |
Total prepaid expenses and other current assets | $ 2,419,201 | $ 639,693 |
SCHEDULE OF PROPERTY, PLANT AND
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 9,521,752 | $ 9,521,752 |
Accumulated depreciation | (4,922,024) | (4,839,686) |
Property, plant and equipment, net | 4,599,728 | 4,682,066 |
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 | 1,809,214 | 1,809,214 |
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 | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation, Depletion and Amortization | $ 82,338 | $ 115,060 |
SCHEDULE OF ACCOUNTS PAYABLE- R
SCHEDULE OF ACCOUNTS PAYABLE- RELATED PARTIES (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Suzhou [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Accounts payable | $ 54,565,974 | $ 55,762,870 |
Less: accounts receivable | (37,614,912) | (37,614,912) |
SDE Inc [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Accounts payable | 4,946,478 | |
Related Party [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Accounts payable | 16,951,062 | 23,094,436 |
Less: accounts receivable | (12,000,592) | (13,500,592) |
Total accounts payable – related parties | $ 16,951,062 | $ 23,094,436 |
ACCOUNTS PAYABLE _ RELATED PA_3
ACCOUNTS PAYABLE — RELATED PARTIES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Research and development expense | $ 1,776,522 | $ 1,373,797 | |
Development Agreement [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Installments | 253,000 | ||
Suzhou Snail [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Accounts payable to parent | 16,951,062 | $ 18,147,958 | |
SDE Inc [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Accounts payable to parent | 4,946,478 | ||
Snail Digital Technology Co. Ltd. [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
License costs to related party | 47,105 | $ 72,524 | |
Research and development expense | 759,000 | 0 | |
Royalty payments | $ 1,575,000 | $ 450,000 |
LOAN AND INTEREST RECEIVABLE _2
LOAN AND INTEREST RECEIVABLE — RELATED PARTY (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Feb. 28, 2022 | Feb. 28, 2021 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Subsidiary of Suzhou Snail [Member] | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Loan to related party | $ 200,000 | ||||
Percentage of loan interest | 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 | $ 104,252 | $ 103,753 | |||
Interest income earned | $ 499 | $ 493 |
SCHEDULE OF LONG TERM DEBT (Det
SCHEDULE OF LONG TERM DEBT (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||||||
Jan. 26, 2022 | Jun. 17, 2021 | Nov. 30, 2022 | Mar. 31, 2024 | Dec. 31, 2023 | Aug. 24, 2023 | Jul. 31, 2023 | Mar. 31, 2023 | |
Short-Term Debt [Line Items] | ||||||||
Total debt | $ 6,541,888 | $ 12,225,256 | ||||||
Interest rate | 8.25% | |||||||
Less: discount on convertible notes | $ 48,166 | 282,639 | ||||||
Less: current portion of promissory note | 2,791,438 | 2,811,923 | ||||||
Less: revolving loan | 3,000,000 | 6,000,000 | $ 3,000,000 | |||||
Less: notes payable | 2,333,333 | |||||||
Less: convertible notes, net of discount | 702,284 | 797,361 | ||||||
Total long-term debt | ||||||||
Revolving Credit Facility [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Total debt | $ 3,000,000 | 6,000,000 | ||||||
Minimum Requirement of Debt Service Coverage Ratio as Covenant | 1.5 to 1 | |||||||
2021 Promissory Note [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Total debt | $ 2,791,438 | 2,811,923 | ||||||
Secured Debt | $ 4,200,000 | |||||||
Debt instrument, maturity date | Jun. 30, 2031 | |||||||
Minimum Requirement of Debt Service Coverage Ratio as Covenant | 1.5 to 1 | |||||||
Short-Term Debt [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Total debt | $ 833,333 | |||||||
Debt instrument, maturity date | Jan. 26, 2023 | Jan. 26, 2024 | ||||||
Minimum Requirement of Debt Service Coverage Ratio as Covenant | 1.5 to 1 | |||||||
Interest rate | 8.25% | |||||||
Less: notes payable | 800,000 | |||||||
Convertible Notes Payable [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Total debt | 750,450 | $ 1,080,000 | ||||||
Interest rate | 7.50% | |||||||
Notes Payable, Other Payables [Member] | ||||||||
Short-Term Debt [Line Items] | ||||||||
Total debt | $ 1,500,000 | |||||||
Interest rate | 8% |
SCHEDULE OF LONG TERM DEBT (D_2
SCHEDULE OF LONG TERM DEBT (Details) (Parenthetical) - USD ($) | 1 Months Ended | 3 Months Ended | ||||||
Aug. 24, 2023 | Jun. 21, 2023 | Jan. 26, 2022 | Jun. 17, 2021 | Jul. 31, 2023 | Nov. 30, 2022 | Mar. 31, 2024 | Dec. 31, 2023 | |
Debt Instrument [Line Items] | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 8.25% | |||||||
Revolving Credit Facility [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of Credit Facility, Expiration Date | Dec. 31, 2024 | |||||||
Minimum Requirement of Debt Service Coverage Ratio as Covenant | 1.5 to 1 | |||||||
Revolving Credit Facility [Member] | Prime Rate [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument basis spread on variable rate less | 0.25% | |||||||
Revolving Credit Facility [Member] | Minimum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 9,000,000 | |||||||
Revolving Credit Facility [Member] | Maximum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 6,000,000 | |||||||
2021 Promissory Note [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Minimum Requirement of Debt Service Coverage Ratio as Covenant | 1.5 to 1 | |||||||
Debt Instrument, Interest Rate, Stated Percentage, Period | 10 years | |||||||
Debt Instrument, Maturity Date | Jun. 30, 2031 | |||||||
2021 Promissory Note [Member] | For the First Five Years [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 3.50% | |||||||
Debt Instrument, Interest Rate, Stated Percentage, Period | 5 years | |||||||
Debt Instrument, Description of Variable Rate Basis | 6 to 10. The loan is secured by the Company’s building, with a carrying value of $ | |||||||
Short-Term Debt [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 8.25% | |||||||
Minimum Requirement of Debt Service Coverage Ratio as Covenant | 1.5 to 1 | |||||||
Payments for Loans | $ 10,000,000 | |||||||
Debt Instrument, Maturity Date | Jan. 26, 2023 | Jan. 26, 2024 | ||||||
Debt Instrument, Basis Spread on Variable Rate | 3.75% | |||||||
Debt Instrument, Default Interest Rate | 5% | |||||||
Repaid balance | $ 833,333 | |||||||
Short-Term Debt [Member] | Wall Street Journal Prime Rate [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | |||||||
Convertible Notes Payable [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 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 | 103.40% | |||||||
Notes Payable, Other Payables [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 8% | |||||||
Repaid balance | $ 1,500,000 | |||||||
Debt instrument term | 7 years | |||||||
Short-term debt, refinanced, amount | $ 3,000,000 | |||||||
Debt instrument frequency of fee | The funds are repaid based on 20% of the gross monthly ARK: Survival Ascended revenues | |||||||
Default interest rate percentage | 12% |
SCHEDULE OF FUTURE MINIMUM PAYM
SCHEDULE OF FUTURE MINIMUM PAYMENTS OF LONG TERM DEBT (Details) | Mar. 31, 2024 USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 2024 | $ 3,819,340 |
2025 | 86,013 |
2026 | 89,115 |
2027 | 92,329 |
2028 | 95,414 |
Thereafter | 2,359,677 |
Long term debt | $ 6,541,888 |
REVOLVING LOAN, SHORT TERM NO_3
REVOLVING LOAN, SHORT TERM NOTES AND LONG - TERM DEBT (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Short-Term Debt [Line Items] | |||
Amortization of loan origination expenses | $ 294,683 | $ 8,911 | |
Revolver Loan [Member] | |||
Short-Term Debt [Line Items] | |||
Interest expense | $ 395,964 | $ 294,245 | |
Weighted average interest rate | 8% | 8.10% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) | $ 477,950 | $ 805,818 |
Effective tax rate | 21% | 21% |
Federal statutory income tax rate | 21% |
SCHEDULE OF OPERATING LEASE COS
SCHEDULE OF OPERATING LEASE COSTS (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Operating Lease Right-of-use Assets | ||
Operating lease costs | $ 396,515 | $ 397,562 |
SCHEDULE OF SUPPLEMENTAL INFORM
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO OPERATING LEASES (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Operating Lease Right-of-use Assets | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 400,662 | $ 385,254 |
Weighted average remaining lease term | 1 year 8 months 12 days | 2 years 8 months 12 days |
Weighted average discount rate | 5% | 5% |
SCHEDULE OF FUTURE UNDISCOUNTED
SCHEDULE OF FUTURE UNDISCOUNTED LEASE PAYMENTS FOR OPERATING LEASES AND RECONCILIATION OF THESE PAYMENTS TO OUR OPERATING LEASE LIABILITIES (Details) | Mar. 31, 2024 USD ($) |
Operating Lease Right-of-use Assets | |
2024, Future lease payments. | $ 1,210,182 |
2024, Imputed Interest | 72,374 |
2024, Lease Liabilities | 1,137,808 |
2025, Future lease payments. | 1,453,784 |
2025, Imputed Interest | 28,290 |
2025, Lease Liabilities | 1,425,494 |
Thereafter, Future lease payments | |
Thereafter, Imputed Interest | |
Thereafter, Lease Liabilities | |
Total future lease payments | 2,663,966 |
Total Imputed Interest | 100,664 |
Total Lease Liabilities | $ 2,563,302 |
OPERATING LEASE RIGHT-OF-USE _3
OPERATING LEASE RIGHT-OF-USE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Apr. 30, 2018 | |
Short-Term Debt [Line Items] | ||||
Operating lease right-of-use assets | $ 2,138,285 | $ 2,440,690 | ||
Lease Terminated And Expired [Member] | ||||
Short-Term Debt [Line Items] | ||||
Variable lease payments | 27,332 | $ 24,510 | ||
Standby Letters of Credit [Member] | ||||
Short-Term Debt [Line Items] | ||||
Maximum borrowing capacity | $ 1,075,000 | |||
Operating lease right-of-use assets | $ 2,138,285 | $ 2,440,690 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | Mar. 14, 2023 | Dec. 31, 2023 |
Commitments and Contingencies Disclosure [Abstract] | ||
Deferred revenue | $ 1,200,000 | |
Damages value | $ 3,000,000 | |
Security deposit | $ 130,000 |
SCHEDULE OF EARNINGS PER SHARE
SCHEDULE OF EARNINGS PER SHARE (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Total net loss attributable to Snail Inc and Snail Games USA Inc. | $ (1,779,329) | $ (2,971,378) |
Class A and B basic loss per share | $ (0.05) | $ (0.08) |
Diluted loss per Class A and B share | $ (0.05) | $ (0.08) |
Common Class A [Member] | ||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Net (loss) income attributable to common stockholders | $ (385,722) | $ (642,340) |
Weighted average shares outstanding - basic | 7,957,031 | 7,928,742 |
Net (loss) attributable to common stockholders | $ (385,722) | $ (642,340) |
Dilutive effects of common stock equivalents | ||
Weighted average shares outstanding - diluted | 7,957,031 | 7,928,742 |
Common Class B [Member] | ||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Net (loss) income attributable to common stockholders | $ (1,393,607) | $ (2,329,038) |
Weighted average shares outstanding - basic | 28,748,580 | 28,748,580 |
Net (loss) attributable to common stockholders | $ (1,393,607) | $ (2,329,038) |
Dilutive effects of common stock equivalents | ||
Weighted average shares outstanding - diluted | 28,748,580 | 28,748,580 |
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 ($) | Mar. 31, 2024 | Dec. 31, 2023 | Aug. 31, 2023 |
Debt Instrument [Line Items] | |||
Principal Amount | $ 713,114 | $ 860,910 | $ 1,080,000 |
Unamortized debt discount and issuance costs | (10,830) | (63,549) | |
Net carrying amount | 702,284 | 797,361 | |
Fair value amount | $ 254,238 | $ 536,170 |
SCHEDULE OF STOCK BASED WARRANT
SCHEDULE OF STOCK BASED WARRANTS (Details) - $ / shares | 1 Months Ended | |
Mar. 31, 2024 | Aug. 31, 2023 | |
Warrant [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Stock price | $ 0.99 | $ 1.35 |
Exercise price | $ 1.89 | $ 1.89 |
Contractual term (years) | 4 years 4 months 24 days | 5 years |
Volatility | 60% | 60% |
Risk-free rate | 4.27% | 4.39% |
Warrant One [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Stock price | $ 0.99 | $ 1.35 |
Exercise price | $ 1.50 | $ 1.50 |
Contractual term (years) | 4 years 4 months 24 days | 5 years |
Volatility | 60% | 40% |
Risk-free rate | 4.27% | 5.49% |
SCHEDULE OF RESTRICTED STOCK UN
SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Director [Member] | Restricted Stock Units (RSUs) [Member] | ||
Outstanding, beginning balance | 43,478 | 24,000 |
Outstanding, beginning balance per share | $ 1.38 | $ 5 |
Outstanding, granted | ||
Outstanding, granted per share | ||
Outstanding, vested | (10,869) | |
Outstanding, vested per share | $ (1.38) | |
Outstanding, forfeited or cancelled | ||
Outstanding, forfeited or cancelled per share | ||
Outstanding, ending balance | 32,609 | 24,000 |
Outstanding, ending balance per share | $ 1.38 | $ 5 |
Outstanding, granted per share | ||
Outstanding, vested per share | $ 1.38 | |
Employees [Member] | Performance Shares [Member] | ||
Outstanding, beginning balance | 1,165,247 | 1,197,552 |
Outstanding, beginning balance per share | $ 5 | $ 5 |
Outstanding, granted | ||
Outstanding, granted per share | ||
Outstanding, vested | ||
Outstanding, vested per share | ||
Outstanding, forfeited or cancelled | (2,400) | (2,218) |
Outstanding, forfeited or cancelled per share | $ (5) | $ (5) |
Outstanding, ending balance | 1,162,847 | 1,195,334 |
Outstanding, ending balance per share | $ 5 | $ 5 |
Outstanding, granted per share | ||
Outstanding, vested per share |
EQUITY (Details Narrative)
EQUITY (Details Narrative) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Oct. 10, 2023 shares | Aug. 24, 2023 USD ($) $ / shares shares | Nov. 09, 2022 $ / shares shares | Aug. 31, 2023 USD ($) $ / shares shares | Mar. 31, 2024 USD ($) Integer $ / shares shares | Mar. 31, 2023 USD ($) shares | Dec. 31, 2023 USD ($) $ / shares shares | |
Class of Stock [Line Items] | |||||||
Number of classes of common stock | Integer | 2 | ||||||
Proceeds from issuance of common stock | $ 1,000,000 | ||||||
Interest rate, stated percentage | 8.25% | ||||||
Proceeds from convertible debt | 554,246 | ||||||
Debt instrument annual principal payment | $ 312,075 | ||||||
Conversion of convertible securities value | $ 60,000 | ||||||
Number of share repurchased | shares | 1,350,275 | 1,350,275 | |||||
Payments for repurchase of equity | $ 257,093 | ||||||
Deferred income tax benefit related to stock-based compensation expense | 194,644 | 32,045 | |||||
Research And Development [Member] | |||||||
Class of Stock [Line Items] | |||||||
Stock based compensation | (64,241) | 0 | |||||
Restricted Stock Units (RSUs) [Member] | |||||||
Class of Stock [Line Items] | |||||||
Stock based compensation | (862,634) | $ 152,595 | |||||
Unrecognized compensation cost | $ 1,200,000 | ||||||
Unrecognized compensation cost recognized period | 2 years 3 months 18 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 | $ 713,114 | $ 860,910 | ||||
Convertible shares | shares | 714,285 | ||||||
Original issue discount percentage | 7.40% | ||||||
Interest rate, stated percentage | 7.50% | ||||||
Interest rate in case of default | 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 | ||||||
Effective interest rate percentage | 103.40% | ||||||
Interest expense | $ 252,820 | ||||||
Contractual interest expense | 18,347 | ||||||
Accretion expense | 181,754 | ||||||
Amortization of debt discount | 52,719 | ||||||
Warrant [Member] | |||||||
Class of Stock [Line Items] | |||||||
Common stock, shares authorized | shares | 714,285 | ||||||
Common stock, par value | $ / shares | $ 1.89 | ||||||
Fair value of warrant liability | 485,382 | 480,281 | |||||
Other income | 5,101 | ||||||
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] | |||||||
Common stock, par value | $ / shares | $ 1.50 | ||||||
Fair value of warrant liability | 94,147 | $ 103,767 | |||||
Other income | $ 9,620 | ||||||
Number of shares issued | shares | 367,647 | ||||||
Equity Line Purchase Agreement [Member] | Common Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Common stock issued | $ 5,000,000 | ||||||
Number of shares transferred | shares | 15,093,768 | ||||||
Warrant to purchase | shares | 367,647 | ||||||
Warrant to purchase deferred offering costs | $ 105,411 | ||||||
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 | 9,357,749 | 9,275,420 | |||||
Convertible shares | shares | 367,647 | 120,000 | |||||
Conversion of convertible securities value | $ 60,000 | ||||||
Conversion of convertible securities shares | shares | 71,460 | ||||||
Common stock, shares authorized | shares | 500,000,000 | 500,000,000 | |||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | |||||
Number of share repurchased | shares | 1,350,275 | 152,626 | |||||
Aggregate purchase price | $ 3,700,000 | $ 300,000 | |||||
Average price paid per share | $ / shares | $ 2.72 | ||||||
Aggregate purchase price | $ 1,300,000 | ||||||
Payments for repurchase of equity | $ 1,680,000 | ||||||
Common Class A [Member] | Convertible Debt [Member] | |||||||
Class of Stock [Line Items] | |||||||
Proceeds from issuance of common stock | $ 1,000,000 | ||||||
Common Class A [Member] | Common Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Conversion of convertible securities value | $ 7 | ||||||
Conversion of convertible securities shares | shares | 71,460 | ||||||
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] | Underwriting Agreement [Member] | |||||||
Class of Stock [Line Items] | |||||||
Percentage of warrants issued | 400% | ||||||
Number of warrants issued to purchase common stock | shares | 120,000 | ||||||
Weighted average expected volatility | 53% | ||||||
Discount rate | 4.49% | ||||||
Remaining term | 3 years | ||||||
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 | |||||
Common stock, shares authorized | shares | 100,000,000 | 100,000,000 | |||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | |||||
Common Class B [Member] | Common Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Conversion of convertible securities value |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |
Apr. 15, 2024 | Apr. 30, 2024 | Mar. 31, 2024 | |
Weitian Group LLC [Member] | |||
Subsequent Event [Line Items] | |||
Expenses incurred | $ 18,720 | ||
Accounts payable | $ 10,032 | ||
Weitian Group LLC [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Accrued interest and principal paid | $ 500,000 | ||
Chief Executive Officer [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Annual base salary | $ 300,000 |