January 23, 2006
Mail Stop 3561
Via US Mail and Facsimile
Mr. Arnie Geller
Chief Executive Officer
3340 Peachtree Road, NE, Suite 2250
Atlanta, Georgia 30326
Re: Premier Exhibitions, Inc.
Form SB-2 filed January 5, 2006
Commission file #: 333-130873
Dear Mr. Geller:
We have reviewed the above referenced filing and have the
following
comments. Where indicated, we think you should revise your
document
in response to these comments. Please file an amended
registration
form in response to our request for expanded or revised
disclosure.
If you disagree, we will consider your explanation as to why our
comment is inapplicable or a revision is unnecessary. Please be
as
detailed as necessary in your explanation. In some of our
comments,
we may ask you to provide us with supplemental information so we
may
better understand your disclosure. After reviewing this
information,
we may or may not raise additional comments.
Please understand that the purpose of our review process is to
assist
you in your compliance with the applicable disclosure requirements
and to enhance the overall disclosure in your filing. We look
forward to working with you in these respects. We welcome any
questions you may have about our comments or any other aspect of
our
review. Feel free to call us at the telephone numbers listed at
the
end of this letter.
* * * * * * * * * * * * * * * * * * * * * * *
General
1. We note that you have not responded to our previous comment
letter
dated March 11, 2003. Please ensure that in addition to the
comments
listed below, your current response letter addresses all comments
included within the March 2003 letter.
2. We note your use of a Form SB-2 registration statement even
though
you have not been previously filing exchange act reports as a
small
business issuer. If a registrant voluntarily exits the S-B
reporting system by using non-S-B forms (e.g. Form 10-K and Form
10-
Q), they may not re-enter the S-B reporting system until the
beginning of a new (following) fiscal year at which time they must
satisfy the requirements for a reporting company entering the S-B
system. In this regard, you also may not be able to re-enter the
S-B
reporting system at the beginning of fiscal 2007, as it appears
your
public float will have exceeded $25 million at the end of the last
two consecutive fiscal years (February 28, 2005 and 2006).
Therefore, please re-file this registration statement on Form S-1
and
ensure that all requirements of that form are furnished in the
filing.
In addition to Item differences as required in the Form S-1, as
compared to a Form SB-2, you should ensure that you provide any
additional disclosures required as a non S-B form filer. Noted
below
are some examples (which may not be all-inclusive) of additional
disclosures that are required as a non-S-B filer.
* Selected Financial required by Item 301 of Regulation S-K;
* Quantitative and Qualitative Disclosures about Market Risk as
required by Item 305 of Regulation S-K;
* A tabular disclosure of contractual obligations as required by
Item
303(a)(5) of Regulation S-K;
* MD&A discussion on results of operations that cover the three
(3)
most recent fiscal years covered by the financial statement
periods
presented;
* Financial Statements prepared in accordance with guidelines in
Regulation S-X.
Please revise accordingly.
Risk Factors, page 9
3. We note your disclosure on page 13 that because you list your
stock on the OTC Bulletin Board you are not required to adopt a
code
of ethics. Please note that on January 23, 2003 the SEC issued
Rule
33-8177 that requires all companies registered with the SEC to
disclose whether they have adopted a code of ethics that applies
to
the registrant`s principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions. If the company has not adopted such
a
code of ethics, it must explain why it has not done so. Also,
please
refer to the guidance in Item 406(a) of Regulation S-K. Please
revise your amended registration to include such disclosure.
Management`s Discussion and Analysis
- - Critical Accounting Policies, page 22
4. We note from your disclosure on page 22 that the only critical
accounting policy identified in your MD&A section is stock based
compensation. Please expand your critical accounting policies to
address the following areas:
* Types of assumptions underlying the most significant and
subjective
estimates;
* Sensitivity of those estimates to deviations of actual results
from
management`s assumptions; and
* Circumstances that have resulted in revised assumptions in the
past.
Refer to FR-72 (Release No. 33-8350) for guidance. In addition,
consider the disclosure of other accounting policies that may
require
significant assumptions and estimates (e.g., legal contingencies,
impairment of assets such as artifacts owned, property and
equipment
and other assets, accounts receivable, etc.) within your critical
accounting policies and estimates section.
- - Recent Accounting Pronouncements
5. We note from your disclosure on page 23 that you have adopted
SFAS
123(R) and expect the adoption of SFAS 123(R) will not have a
material impact on its net income and earnings per share. This
disclosure does not appear consistent with the disclosure in Note
1
to the annual financial statements which states that you expect to
adopt SFAS 123(R) on the effective date. Please resolve these
inconsistencies. If you have adopted SFAS 123(R) since the date
of
the audited financial statements, please revise your note in the
MD&A
section to state the date at which you adopted the accounting
literature. Additionally, if SFAS 123(R) was adopted during the
six
months ended August 30, 2005, please revise the notes to the
interim
financial statements to include disclosure of that adoption.
Audited Financial Statements for the year ended February 28, 2005
Consolidated Balance Sheets, page F-2
6. We note that during the year ending February 28, 2005 you have
recorded $879,000 of salvor-in-possession rights. Please tell us
and
disclose in the notes to the financial statements the nature of
the
asset, how the amount was determined or calculated and how you
will
evaluate the asset for impairment. Additionally, tell us the
circumstances that occurred in fiscal 2005 that resulted in a
determination that it was appropriate to record the asset at that
point in time.
7. Please provide us a detail of the prepaid expenses and other
current assets included on the balance sheet as of February 28,
2005
and August 31, 2005. Also, please disclose an accounting policy
for
each significant component that is included in this balance sheet
account.
Consolidated Statements of Operations, page F-3
8. We note that you have classified the loss on the sale of fixed
assets as a non-operating expense. Please explain to us and
disclose
in the notes to the financial statements a description of the
facts
and circumstances leading to the expected disposal, the expected
manner and timing of that disposal, and the carrying amount(s) of
the
major classes of assets and liabilities included as part of the
disposal group. See paragraph 47 of SFAS 144. Additionally,
please
revise your statements of operations to present the gain or loss
on
the sale of assets within "profit (loss) from operations". See
paragraph 45 of SFAS 144 as well as footnote 68 of Staff
Accounting
Bulletin No. 104 (Topic 13).
Note 1. Description of Business and Summary of Significant
Accounting Policies
9. We note from your discussion in MD&A on page 21 that you have
purchased multi-year license and exhibition rights for several
additional separate human anatomy exhibitions. Additionally, we
note
from the notes to the financial statements that you evaluate the
period of amortization of intangible assets at each balance sheet
date. Please tell us and disclose in the notes to your financial
statements how you account for these rights and licenses.
Additionally, please tell us and disclose in the notes to your
financial statements the nature and amount of all intangible
assets
on your balance sheet as of February 28, 2004 and 2005 with the
amount assigned to each major intangible asset class and the
weighted-average amortization period, in total and by major
intangible asset class. Also, disclose the gross carrying amount
and
accumulated amortization, in total and by major intangible asset
class, the aggregate amortization expense for the period, and the
estimated aggregate amortization expense for each of the five
succeeding years. See paragraphs 44-45 of SFAS No. 142.
10. We note from the Form 8-K dated October 14, 2004, that
effective
on that date, RMS Titanic reorganized into a holding company
structure whereby Premier Exhibitions, Inc. became the holding
company of RMS Titanic. Please revise your filing to include a
discussion of this transaction in Note 1 to the financial
statements
and in the MD&A section.
11. Please revise your notes to the financial statements to
include
disclosure of your accounting policies and methodologies for
accounting for accounts receivable. Include in your discussion
your
policies for recording an allowance for doubtful accounts, for
determining past due or delinquency status, and your policy for
writing off uncollectible accounts. See paragraph 13a-c of SOP
01-6.
Note 2. Artifacts, page F-11
12. We note from your disclosure in Notes 1 and 2 that Artifacts
recovered in the 1987 TITANIC are carried at the lower of cost of
recovery or NRV. Please describe in the notes to the financial
statements how you evaluate the Carapathia artifacts for
impairment.
Note 10. Other Related Party Transactions, page F-21
13. We note from page 38 that you have disclosed several related
party transactions that have not been disclosed in the notes to
the
financial statements. Please revise Note 10 to include disclosure
of
these related party transactions, as required by paragraph 2 of
SFAS
57.
Additionally, please tell us how you valued the 30,000 shares of
common stock issued in consideration of the loan and how they have
been accounted for in the statement of stockholders` equity. In
this
regard, the value of the common stock should be treated as a
discount
on the debt and amortized as additional interest expense over the
estimated life of the debt. Please advise and revise accordingly.
Interim Financial Statements as of August 31, 2005
Consolidated Balance Sheet, page F-24
14. Reference is made to Exhibition Licenses that represents
approximately 25% of total assets. In light of the materiality
of
this asset, please provide a separate note that contains tabular
data
detailing the gross amounts of each transaction (component) that
generated this asset with an offsetting amount of accumulated
amortization expense so that the net amount of the asset
reconciles
to the consolidated balance sheet. You should supplement the
table
with a narrative discussion in the note of each of the significant
transactions. As the Exhibition International ("EI") acquisition
discussed in note 3 generated a portion of this asset, you can
solely
cross-reference to that note as the narrative disclosure for that
transaction. In addition, please completely and clearly provide
disclosure of (i) the accounting policy for capitalizing
exhibition
license costs as well as the nature of any costs that are expensed
upon acquisition; (ii) the methodology for amortizing this asset;
and
(iii) how such estimated useful lives were determined for each
component of this asset.
Also, please revise your consolidated statement of cash flows,
page
F-26, so that the gross amount ($4,123,000) of the asset incurred
during fiscal year 2005 is reflected in the statement. You
currently only present an investing activity (purchase of
exhibition
license) for $2,082,000 in the consolidated statement of cash
flows.
Please revise accordingly.
Note 3 - Financing Agreement, page F-28
Form 8-K: March 7, 2005 (filed June 1, 2005)
Business - Exhibitions (Bodies), page 26
15. We note that you acquired all membership interests in
Exhibitions
International which enabled you to gain multi-year license and
exhibition rights to a number of human anatomy exhibitions which
contain a collection of human body specimens and human organs.
With
respect to this acquisition, it is unclear whether you solely
acquired license rights or if you also own the specimens and
organs.
If you acquired the physical items exhibited as well as the
exclusive
operating rights (license) to exhibit these items, it appears that
you may have acquired a business under the guidance in Item 11-
01(d)
of Regulation S-X. Please completely and clearly tell us the
nature
of all items acquired in this transaction as well as your
consideration of whether a business was acquired under the above
guidance. As part of your response, please furnish us and file
as
an exhibit the executed acquisition agreement for this
transaction.
If it is deemed that a business has been acquired, you should
provide
us with the computation of your significant subsidiary tests in
determining the significance level of such acquisition based on
the
guidance in Item 1-02(w) of Regulation S-X. Also, if required,
please provide the appropriate period audited and unaudited
financial
statements of Exhibitions International as well as the appropriate
pro forma financial information in an amendment to the Form 8-K
and
in the amended registration statement. Please refer to the
guidance
in Rule 3-05 and Article 11 of Regulation S-X, respectively.
Please advise and revise accordingly.
Note 4. Legal Proceedings
16. We note from your disclosure on page 32 that on December 7,
2005
the Florida court granted preliminary approval of a settlement in
the
Shuttle and D`Addario cases and the settlement includes adoption
of a
corporate governance plan and payment of $300,000 of the
plaintiffs`
attorneys` fees and costs. Please revise your notes to the
financial
statements to include disclosure of the details of the settlement.
Additionally, please tell us and include in your disclosure the
date
at which you recorded the $300,000 accrual under the guidance in
SFAS
No. 5.
Other
17. The financial statements should be updated to include the nine
months ended November 30, 2005, to comply with Rule 3-10 (g) of
Regulation S-B at the effective date of the registration
statement.
18. Please include a currently dated consent of the Independent
Registered Public Accounting Firm in any future amendments to your
Form SB-2 registration statement.
* * * * * * * * * * * * * * * * * * * * * * *
As appropriate, please respond via EDGAR to these comments within
10
business days or tell us when you will provide us with a response.
Please furnish a cover letter that keys your responses to our
comments and provides any requested supplemental information.
Please
understand that we may have additional comments after reviewing
your
responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy
of the disclosure in the filings reviewed by the staff to be
certain
that they have provided all information investors require for an
informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please provide, in
writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of Enforcement
has
access to all information you provide to the staff of the Division
of
Corporation Finance in our review of your filing or in response to
our comments on your filing.
You may contact Claire Erlanger at 202-551-3301 or Joe Foti at
202-
551-3816 if you have questions.
Sincerely,
Linda Cvrkel
Branch Chief
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Mr. Arnie Geller
Premier Exhibitions, Inc.
January 23, 2006
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