April 13, 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
Amendment No. 1 to Form SB-2 on Form S-1 filed April 7, 2006
Commission file #: 333-130873
Dear Mr. Geller:
We have reviewed your April 7, 2006 response letter and Amendment
No.
1 to Form SB-2 on Form S-1 and have the following comments.
Please
file an amended Form S-1 in response to our request for expanded
or
revised disclosure. If you disagree, we will consider your
explanation as to why our comments are inapplicable or a revision
is
unnecessary. We also ask you to provide us with supplemental
information so we may better understand your disclosure. Please
be
as detailed as necessary in your explanation. We look forward to
working with you in these respects and welcome any questions you
may
have about any aspects of our review.
* * * * * * * * * * * * * * * * * * * * * * *
Amendment No. 1 to Form SB-2 on Form S-1
Selected Financial Data, page 18
1. We note your disclosure that both basic and diluted income
(loss)
per share was (.04) for the year ended February 28, 2004, however
that amount is not consistent with the amount presented on the
statements of operations for 2004. Please revise this disclosure
to
make the amount consistent with the statement of operations.
Selected Quarterly Financial Information, page 19
2. Please discuss the nature of any unusual or infrequent items
that
impacted your quarterly results of operations for the various
periods
presented. Refer to the requirement outlined in Item 302(a)(3) of
Regulation S-K.
Management`s Discussion and Analysis, page 20
3. We note from your response to our previous comment 2 that you
believed all disclosures identified in our comment have been added
to
your filing. However, it does not appear that your MD&A
includes
tabular disclosure of contractual obligations as required by Item
303(a)(5) of Regulation S-K. We also refer you to FR-67 (Release
No. 33-8182) for additional guidance on the disclosures required
for
contractual obligations. As the table is aimed at increasing
transparency of cash flow, we believe registrants should include
scheduled interest payment in the table on their long-term debt
obligations. To the extent interest rates are variable and
unknown,
you may use judgment to determine whether or not to include
estimates
of future interest payments. You can also determine the
appropriate
methodology to estimate the future interest payments, such as the
currently applicable interest rates. A footnote to the table
should
provide appropriate disclosure to clarify the action taken.
Please
revise accordingly.
Consolidated Balance Sheets
4. We note from your response to our prior comment 7 that prepaid
consulting and services accounts of $1,079,000 of the $1,405,000
prepaid expenses balance. Please revise your filing to state
separately, in the balance sheet or in a note to the financial
statements, the amount of prepaid consulting and services as it is
greater than 5% of the total current assets. See Rule 5-02.8 of
Regulation S-X.
Statements of Operations
5. We note from your response to our previous comment 8 that you
reported the disposal of the SV Explorer as a discontinued
operation
in accordance with paragraph 43 of SFAS 144, however your
presentation on the face of the statement of operations is not
consistent with the accounting treatment of a discontinued
operations
as set forth in paragraph 43 of SFAS 144. Please explain to us
why
you believe that the SV Explorer was considered a "component of an
entity" as that term is used in paragraph 41 of SFAS 144, versus a
fixed asset and how it meets the requirements for discontinued
operations treatment as set forth in paragraph 42. Also, as
paragraph 43 sets forth, if the disposal can be considered a
component of an entity that qualifies as discontinued operations,
the
results of the discontinued operations, less applicable income
taxes
(benefit), shall be reported as a separate component of income
after
the provision for income taxes and before net income. The amounts
should be clearly labeled as a separate section on the statement
of
operations as loss from discontinued operations. However, if the
SV
Explorer does not meet the criteria to be considered a component
of
an entity, the loss on the sale of the asset should be included in
operating income (loss) as required by paragraph 45 of SFAS No.
144.
Note 1. Description of Business and Summary of Significant
Accounting
Policies
6. We note from your response to our prior comment 5 that you
revised
Note 1 to state that you adopted SFAS 123(R) in the fiscal year
ended
February 28, 2005. However, your disclosure in Note 8 does not
discuss the adoption of SFAS 123(R) and instead discusses and
discloses that the Company continues to apply the accounting under
APB No. 25 and provides the pro-forma disclosures required under
the
provisions of SFAS No. 123. Please tell us which accounting
literature you are following for the year ended February 28, 2005.
If you have adopted SFAS 123(R) during the fiscal year ended
February
28, 2005 please tell us which transition method was used and
revise
your notes to the financial statements to include the disclosures
required by paragraphs 64-65 and 84-85 of SFAS No. 123(R).
7. We note from your response to our prior comment 9 that in April
2004 you acquired exclusive rights to present a tour of polymer
preserved human specimens and the initial payment of $250,000 and
additional costs of $435,000 are recorded as a prepaid licensing
cost. We also note that your revised Note 4 to the Notes to the
Financial Statements presents Exhibition Licenses of $685,000 as
of
February 28, 2005 and $452,500 as of February 29, 2004. Please
explain to us the nature of the Exhibitions Licenses recorded as
of
February 29, 2004 since your response appears to indicate that the
entire $685,000 was incurred in fiscal 2005. Also, please explain
to
us where the Exhibition Licenses are recorded on the balance sheet
as
they do not appear to be a separate line item on the balance sheet
and from your response to our prior comment 7, they do not appear
to
be part of the prepaid expenses amount. If this asset is included
within "other assets" on your consolidated balance sheet, the
description of the asset should be revised to state "Exhibition
Licenses and Other Assets" with a cross-reference to Note 4.
8. We note from your response to our prior comment 10 that you
included a description of the transaction whereby you became the
holding company of RMS Titanic, Inc. in 2004 in both MD&A and
Note 1
to the financial statements. However, it does not appear that
Note 1
to the financial statements has been revised to include this
information. As previously requested, Please revise your filing
to
include a discussion of this transaction in Note 1 to the
financial
statements.
9. We note from your response to our prior comment 11 that you
have
revised Note 1 to add a disclosure on accounts receivable. Please
revise this disclosure to include your policies 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
10. We note from your response to our prior comment 6 that you
have
added disclosure in Note 2 addressing the salvor-in-possession
rights
asset of $879,000. However, we do not believe that your revised
disclosure addresses our previous comment. Please explain to us
how
the $879,000 asset relates to the impairment charge of an amount
equal to the costs of recovery for all expeditions after 1987, as
it
is unclear how the identification of an impairment charge would
lead
to the recording of an asset on the balance sheet. Also, explain
to
us how you have calculated or determined the value of $879,000
especially considering your disclosure in Note 2 that the salvor`s
lien could not be quantified other than for a de minimus amount.
Additionally, as previously requested, please 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. In your response, also tell us the offsetting
account
entry made when you recognized this asset in fiscal 2005.
Interim Financial Statements as of November 30, 2005
Consolidated Balance Sheet, page F-27
11. We note from your response to our prior comment 14 that you
state
you provided a separate note to the financial statements
discussing
the accounting policies for Exhibition Licenses, however that
disclosure does not appear to be in the notes to the interim
financial statements as of November 30, 2005. As previously
requested, 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. Additionally, please explain to us why the amounts related
to
the acquisition of Exhibitions International, LLC, as disclosed in
the statement of cash flows and provided in your response to
comment
9 do not agree with the amounts disclosed in Note 3 to the interim
financial statements as of November 30, 2005. Please resolve all
inconsistencies.
12. We note your prepaid expenses and other current assets balance
has increased significantly from August 31, 2005. Please provide
us
with a detail of prepaid expenses and other current assets
included
on the balance sheet as of November 30, 2005. Please revise your
filing to state separately, in the balance sheet or in a note to
the
financial statements, any amounts greater than 5% of the total
current assets. See Rule 5-02.8 of Regulation S-X.
13. The amount of Cash and Cash Equivalents is a material asset
representing approximately 25% of total assets. In the notes,
please
include disclosure of the significant component(s) that comprise
this
asset as well as any concentration of credit risk associated with
this financial instrument as provided in paragraph 531(d) of SFAS
133.
Note 4. Sale of Carapathia Interest
14. We note your disclosure that on November 30, 2005 you sold a
3%
ownership interest in the RMS Carapathia and you recorded a gain
of
$459,000 on the statement of operations. Please explain to us how
you calculated the gain recognized. Also, please explain your
accounting basis for recording a gain on the sale considering that
your disclosure in the Form 8-K filed April 10, 2006 the agreement
was terminated. Please add disclosure of this termination to the
subsequent events note to the interim financial statements. In
connection with the termination of this agreement, it appears that
your November 30, 2005 consolidated financial statements filed in
the
Form 10-Q should be amended to reverse or eliminate the gain
recognition recognized on this transaction. Additionally, please
revise the statement of operations to present all gains and losses
on
the sale of fixed assets as operating income. See paragraph 45 of
SFAS No. 144.
General
15. As the registrant does not meet the condition in Rule 3-
10(g)(2)(ii) of Regulation S-K, the Company should provided
updated
audited consolidated financial statements for the fiscal year
ending
February 28, 2006 if the registrant is not declared effective by
April 14, 2006 in an amended registration statement.
16. A manually signed, currently dated consent of the independent
public accountant should be furnished in the amended registration
statement.
Exhibit B: March 11, 2003 Comment Letter
17. We note from your response to our prior comment 41 in Exhibit
B
that you believe that since the gain on disposal of the Danepath
Ltd.
subsidiary was reflected in the February 28, 2002 financial
statements, you do not believe it is relevant to readers of the
current filing. However, because there was a question as to the
timing of the gain recognition and why it was not recorded in
fiscal
2003, we are reissuing this comment in part. In this regard,
please
tell us why a gain on disposal of the Danepath subsidiary was
reflected in your February 28, 2002 financial statements if the
sale
transaction did not occur until April 2, 2002. Also, please
explain
the rationale for the gain recognition considering that only a
minimal cash payment of $100,000 was received in connection with
the
transaction with the remainder financed by a note from the buyer.
Refer to the guidance outlined in SAB Topic 5:E. We may have
further
comment upon receipt of your response.
* * * * * * * * * * * * * * * * * * * * * * *
File an amendment to the S-1 and in response to the comments. To
expedite our review, Premier Exhibitions may wish to provide us
three
marked courtesy copies of the amendment. Include with the filing
any
supplemental information requested and a cover letter tagged as
correspondence that keys the responses to the comments. If
Premier
Exhibitions thinks that compliance with any of the comments is
inappropriate, provide the basis in the letter. We may have
additional comments after review of the amendment, the responses
to
the comments, and any supplemental information.
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
Mr. Arnie Geller
Premier Exhibitions, Inc.
April 13, 2006
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