Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas New York NY 10018
Tel 212 930 9700 Fax 212 930 9725 www.srff.com
December 16, 2005
Kathleen Krebs, Special Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Marine Growth Ventures, Inc.
Registration Statement on Form SB-2
File No. 333-128077
Filed September 2, 2005
Dear Ms. Krebs:
This firm represents Marine Growth Ventures, Inc. (the "Company") in
the above-referenced matters. Enclosed for filing is the Company's amended
Registration Statement on Form SB-2. Below please find our responses to your
September 2, 2005 comment letter:
1. We note that you have "entered into a term sheet" for the sale of $2.2
million principal amount of secured convertible notes and $5 million
Standby Equity Distribution Agreement Please disclose the material
terms of the proposed sale of secured convertible notes and the Standby
Equity Distribution Agreement. For example, describe the classes of
securities underlying the notes and issuable pursuant to the Standby
Equity Distribution Agreement. Disclose the formulas for determining
the number of shares issuable; indicate whether these formulas are
based on market prices. Disclose the updated status of this financing
and state whether the company expects the financing to be complete by
the time of the resale.
Please file the Standby Equity Distribution Agreement and the notes, if
available. Provide us with copies of the "term sheet" for the secured
convertible notes and the Standby Equity Distribution Agreement. In
your response letter, identify the investors involved with the sale of
the secured convertible notes and the Standby Equity Distribution
Agreement. Indicate whether any of the selling shareholders are related
to these investors. Confirm that the current registration statement is
not intended to cover the issuance of shares underlying the secured
convertible notes and issuable pursuant to the Standby Distribution
Agreement.
Response
The Company has terminated the term sheet and accordingly the
registration statement has been revised to remove references to such.
2. Please avoid defining terms that are clear from context (e.g., "Common
Stock" "we," "Marine Growth") or unnecessarily capitalizing the initial
letters of easily understood terms (e.g.. "Prospectus"). Please do not
use all-capitalized text in your prospectus. Please revise throughout
the prospectus.
Response
We have revised the registration statement to avoid defined terms and
unnecessary capitalization.
3. In general, the prospectus's discussion of your business should focus
on only current operations that have generated revenues or proposed
operations that are reasonably likely to occur in the near future. To
that end, your disclosure should clearly identify and discuss each step
that must be taken before the services can be offered and any
appreciable amount of revenues is generated. The specific timing and
funding requirements for each step must be disclosed clearly. For each
type of business operations that the company intends to conduct, you
must indicate the current status of the operations. Please revise
accordingly.
Response
We have revised the registration statement to focus the discussion of
the Company's business on its current operations and those likely to
occur in the near future.
4. State whether any of the subsidiaries currently conducts operations.
Based on your disclosure it appears that only Sophlex Ship Management,
Inc. conducted any operations, with its sole contract no longer
expected to generate any revenues. If none of your subsidiaries are
currently conducting meaningful business operations, please disclose
this fact clearly.
Response
We have revised the registration statement to clarify that currently
Sophlex Ship Management, Inc. is our only subsidiary conducting
meaningful business operations.
Prospectus Summary, page 6
5. Indicate with specificity when the company intends to take the steps
necessary for quotations on the OTC Bulletin Board, such as contacting
market-makers.
Response
We have revised the registration statement to indicate the steps being
taken by the Company for quotations on the OTC Bulletin Board.
6. Please briefly explain why the company is registering the shares for
resale and, as a result, subjecting itself to the Exchange Act
reporting obligations. For example, is the company registering the
resale due to a registration tights agreement with the selling
shareholders? Is the company registering the resale in order to enter
into the standby equity distribution agreement and secured convertible
notes agreement? Or are there other business purposes for this resale?
Response
We have revised the registration statement to explain why the Company
is registering the shares for resale.
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Risk Factors, Page 7
7. Please revise your subheadings so that they better describe the risks
discussed. Currently, some of your subheadings simply state facts about
the company or are so generic that they could apply to any company.
Examples include "Limited indications of acceptability of our cruise
timeshare concept" and "We are dependent upon key personnel an
consultants." The revised subheadings should clearly convey the risk
and the result of the risk as it specifically applies to the company.
Response
We have revised the subheadings to the Company's risk factors to the
extent necessary to clearly convey the risk and the result of the risk
as it specifically applies to the Company.
8. Many of your risk factors are generic disclosure that could apply to
any company. Please revise so the risk factors explain the risks as
they specifically apply to your company. Additional clarity and more
detailed factual disclosure should also be provided where appropriate.
The following are some examples of disclosure that require revision:
o There is no guarantee that we will be able to acquire or
finance a cruise vessel page 7 - identify and discuss, in a
meaningful way, the reasons why you may not "successfully
obtain and refurbish" a cruise vessel;
o There is no guarantee that we will complete an agreement with
Cruise Timeshare Two, Inc., page 7 - disclose the current
status of your efforts to complete an agreement with Cruise
Timeshare Two, Inc and discuss the reasons why you may not be
able to "successfully obtain this agreement;"
o Additional financing will be necessary., page 7 - quantify, if
known, the amount of additional financing that management
currently expects the company will need in the near future and
the "financing" you will need to raise in the future to fund
your operations, as discussed on page 8;
o If we fail to maintain effective internal controls..., page 8
- revise so that the discussion addresses the company's
specific situation (for example, has the company encountered
deficiencies in its internal controls? Does the fact that it
is a relatively new company increase the risk that it has
deficiencies in its internal controls?);
o A downturn in economic conditions..., page 8- describe in
greater detail the nature of the "cyclical variation" in the
vacation and leisure industry and explain more clearly how
this variation can affect your company's financial
performance;
o We have a limited operating history.. ., page 8 - explain more
clearly why there can be "no assurance" that your proposed
operations will be implemented successfully and why you "will
not be able to effectively implement [your) business plan;"
identify and describe "all risks inherent in a new business,"
"delays," and "other problems" that may affect your company's
business;
o We may be unable to manage our growth .., page 8 - explain
more clearly why you "may not be able to expand [your] product
and service offerings, [your] client base and markets, or
implement the other features of [your] business strategy at
the rate or to the extent presently planned;" arid
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o We are controlled by current officers..., page 10 - explain
more clearly the risks to investors.
Response
We have revised the Company's risk factors to explain the risks as they
specifically apply to the Company and to provide detailed factual
disclosure where appropriate.
9. In your response letter, please tell us whether the company expects its
common stock to be considered a "penny stock." If so, explain in the
risk factor section how the penny stock restrictions will limit
shareholders' ability to resell the common stock.
Response
We expect that the Company's common stock will be considered a "penny
stock" and accordingly have revised the registration statement to
include an appropriate risk factor.
We have a history of operating losses. . . , page 7
10. Please quantify the operating losses incurred since inception. In
addition, the discussion is overly generic; please describe the
"products" and "proposed products" that you intend to "discover and
develop" and for which you intend to obtain "regulatory approval" amid
enter into "agreements."
Response
We have revised the Company's risk factor to quantify the operating
losses incurred and clarify the operations that our profitability is
dependent on.
11. Please disclose clearly that your auditor has issued a going-concern
opinion.
Response
We have revised the Company's registration statement to clearly
disclose that the Company's auditor have issued a going-concern
opinion.
There is no guarantee that we will complete an agreement with Cruise Timeshare
Two, Inc., page 7
12. Please file the agreement with Cruise Timeshare Two, Inc., if
available. If not, please tell us when you expect the agreement to be
complete.
Response
As indicated in the revised registration statement, the Company
anticipates executing the agreement with Cruise Timeshare Two, Inc.
after it has entered into a contract to purchase a cruise vessel.
Limited indications of acceptability...., page 9
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13. Please clarify what you mean by the statement that you "received
limited indications as to the commercial acceptability of [your] cruise
timeshare program and fees."
Response
We have revised the Company's registration statement to clarify what
was meant by the statement that the Company "received limited
indications as to the commercial acceptability of cruise."
There is currently no public market for our common stock..., page 10
14. Because the OTC Bulletin Board is a dealer system, please revise to
clarify that the company will seek to have market-makers provide
quotations for the common stock and it is possible that no market-maker
may want to provide such quotations. Please discuss the relatively
limited liquidity in the OTC Bulletin Board market as compared to other
public trading markets.
Response
We have revised the Company's registration statement to clarify that
the Company will seek to have market-makers provide quotations for the
common stock and it is possible that no market-maker may want to
provide such quotations. In addition, we have provided a discussion of
the relatively limited liquidity in the OTC Bulletin Board market as
compared to other public trading markets
Management's Discussion and Analysis. . . , page 11
Background, page 11
15. You state here that you conduct your operations primarily through your
wholly-owned subsidiary, Sophlex Ship Management. Reconcile this
statement with the statement on page 6 that you operate through five
wholly-owned subsidiaries. Your revised disclosure should give readers
a better sense of each subsidiary's activities and the relative
importance of each subsidiary to the company's overall business. Revise
the Business and prospectus summary sections accordingly.
Response
We have revised the Company's registration statement to clarify that
the Company's current operations are conducted primarily through
Sophlex Ship Management.
16. Your Background discussion should provide a clearer overview of your
company's business. To that end, please describe more clearly the
business activities that the company is currently conducting. Explain
what kinds of "opportunities" the company is pursuing in cruise
timeshares, as well as the "other opportunities in the shipping
industry?' We note, for example, a reference to "consulting" fees on
page 12.
Response
We have revised the Company's registration statement to provide a
clearer overview of the Company's business.
Liquidity and Capital Resources, page 12
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17. Please clarify what you mean by "overdraft of $5,868" and describe the
factual circumstances surrounding this overdraft.
Response
We have revised the Company's registration statement to clarify what
was meant by an "overdraft of $5,868" and to describe the factual
circumstances surrounding this overdraft.
18. Please identify the "outstanding debt obligation" that was repaid with
the proceeds of your May 2005 private offering.
Response
We have revised the Company's registration statement to identify the
"outstanding debt obligation" that was repaid with the proceeds of the
Company's May 2005 private offering.
Plan of Operation and Financing Needs, page12
19. State when the company expects to acquire a cruise vessel. Disclose any
steps that must be taken, or conditions that must be satisfied, before
the company can acquire this vessel (e.g., entering into the Standby
Equity Distribution Agreement). Indicate, if known, when the company
intends to acquire any additional vessels. Also state whether the
company has identified the vessel it wishes to acquire.
Response
We have revised the Company's registration statement to provide
additional information in connection with the proposed acquisition of a
cruise vessel by the Company.
20. We note that management estimates that the vessel will cost between $4
million and $6 million. Explain how management determined this price
range. Disclose the anticipated cost of refurbishing the vessel.
Response
The management of the Company was able to arrive at its estimate due to
its worldwide network of marine contacts including brokers, ship
owners, shipyards and captains, as well as an internet search which
provided management with a good indication of all suitable ships
available for sale or charter. Furthermore, we have revised the
Company's registration statement to discuss the ship which management
has identified for purchase and to disclose the anticipated cost of
refurbishing the vessel.
21. Please discuss the costs of being a public company after the completion
of this offering. Disclose the anticipated costs, the expected sources
of funds, and effect on the company's overall liquidity.
Response
We have revised the Company's registration statement to discuss
anticipated costs of being a public company, the expected sources of
funds, and effect on the company's overall liquidity.
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22. Please indicate whether management expects loans from its stockholders
to continue to be a source of liquidity in the future. Please file any
written loan agreements as exhibits.
Response
We have revised the Company's registration statement to indicate that
management does expect loans from the Company's stockholders to
continue to be a source of liquidity in the future. We do not currently
have any written loans agreements which need to be filed as exhibits to
the registration statement.
23. Please list in a clear manner all expected sources of liquidity. It
appears from your disclosure that the only expected sources of
liquidity are the Standby Equity Distribution Agreement and sale of
secured convertible notes. If so, please state so clearly. Discuss
in a useful manner management's current expectations with respect to
future cash flow from operations. It appears that, with the burning
of the Rivera I, the company has no known source of operating
revenues. Discuss how management's business plans (e.g., plans to
purchase a cruise ship) will change or be curtailed if the expected
liquidity proves to be insufficient (e.g., explain how management
would react if the Standby Equity Distribution Agreement is not
completed). This discussion should not be limited to only a
statement that the company may "seek additional financing in the
future." Indicate the likelihood that the company will be able to
draw down any meaningful funding from the Standby Equity
Distribution Agreement
Response
We have revised the Company's registration statement to discuss
expected sources of liquidity and to remove references to the Standby
Equity Distribution Agreement.
Results of Operations, page 13
Year Ended December 31, 2004 and Period from November 6, 2003...., page 13
24. Please quantify the amount of the increase in revenues derived from the
acquisition of Sophlex Ship Management, Inc. and the amount of increase
derived from the "consulting fees" from "related parties." Your revised
disclosure should identify the factors contributing to a particular
financial result and quantify the effect of each identified factor.
Known trends and uncertainties, such as the impact of the loss of the
Rivera I, should be discussed in detail. Apply similar revisions
throughout the MD&A section, as applicable.
Response
We have revised the Company's registration statement to identify the
factors contributing to a particular financial result and quantify the
effect of each identified factor.
25. Disclose the nature of the "consulting fees" received during this
period. Identify the "related parties" and describe the consulting
services provided. Any relevant written agreements should be filed as
exhibits.
Response
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We have revised the Company's registration statement to disclose the
nature of the "consulting fees" received and identify the "related
parties" and describe the consulting services provided. There are no
written agreements to be filed as exhibits.
Critical Accounting Policies, page 14
26. Please identify the customer that accounted for 66% of the revenue.
Identify the two related parties who are the company's customers.
Indicate in the appropriate section whether these customers are
expected to generate similar levels of revenues in the future. Any
written agreements with significant customers or related parties should
be filed as exhibits.
Response
We have revised the Company's registration statement to identify the
requested customers of the Company and indicate whether such customers
are expected to generate similar levels of revenues in the future.
There are no written agreements to be filed as exhibits.
Business, page 14
27. In your response letter, please tell us the address of your website.
Consider disclosing this information in your registration statement.
See item l0l(c)(3) of Regulation S-B.
Response
The Company's website is http://www.marinegrowthventures.com and we
have revised the registration statement to disclose such.
28. Please disclose the consideration paid for your acquisition of Sophlex
Ship Management, Inc. The notes to the financial statements indicate
that $12,500, in the form of 1,000,000 common shares, were paid. In
your response letter, explain how the parties determined the amount of
consideration.
Response
We have revised the Company's registration statement to provide that
the purchase price paid by the Company for the acquisition of Sophlex
Ship Management, Inc. was 1,000,000 shares of its common stock. At the
time of the acquision both the Company and Sophlex were private
companies and mutually agreed on the purchase price as the appropriate
consideration for the transaction. It should be noted that at the time
of acquisition, Sophlex had only one customer.
Overview of Business, page 14
29. We note that the Rivera I burned down and no revenues are expected from
this contract. Indicate whether Sophiex Ship Management, Inc., has
contracts with any operating ships. If not, then disclose this fact
clearly and prominently in the Risk Factors and prospectus summary
sections. In addition, state the number of ships for which you have
provided management services in the past. If the Rivera I was the only
ship for which you provided services, clearly disclose this fact.
Response
8
We have revised the Company's registration statement to provide a risk
factor indicating that we currently have no contracts with any
operating ships to provide services and to state the number of ships
for which the Company has provided management services for in the past.
30. Please indicate whether and when management is planning to eventually
shift the company's focus from the ship crewing and management service
business to the cruise timeshare business.
Response
We have revised the Company's registration statement to clarify that
the Company will not be shifting the focus of its business, but intends
to expand its current operations.
31. Please explain the significance of being an "International Safety
Management Code-certified company holding a Document of Compliance
issued by the American Bureau of Shipping."
Response
We have revised the Company's registration statement to explain the
significance of being an "International Safety Management
Code-certified company holding a Document of Compliance issued by the
American Bureau of Shipping."
32. Refer to page 15. Clarify the nature of the "other entities" to whom
you provide crews upon request. Your revised disclosure should give a
clearer idea of the nature of your typical customers.
Response
We have revised the Company's registration statement to clarify the
nature of the "other entities" to whom the Company provides crews upon
request.
33. Provide support for the characterization of your crews as
"well-trained" and "highly-motivated." Otherwise, revise the
characterizations as your beliefs. This comment also applies to your
characterization of the cruise timeshare industry as "innovative."
Response
We have revised the Company's registration statement to support and
modify the Company's characterization of its crews and the cruise
timeshare industry.
34. Please state whether the company pays any form of consideration to the
employment agencies from whom the company obtains its crews. Explain
how the crews obtained from these agencies are compensated. For
example, clarify whether the company or the employment agencies are
responsible for the crews' compensation. Indicate whether the monthly
operating costs disclosed on page 12 include the cost of compensating
the crews.
Response
We have revised the Company's registration statement to state how the
employment agencies and the crews obtained from such agencies are
compensated.
35. Please disclose the extent to which you have provided each type of
management services you list in bullet points and discuss in the text
on page 15. If you have not provided particular services to date,
disclose this fact clearly.
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Response
We have revised the Company's registration statement to disclose the
extent to which the Company has provided its various listed types of
management services.
36. Please state the current number of "short-term agreements" for
providing specific management services." If none, please disclose this
fact clearly.
Response
We have revised the Company's registration statement to disclose the
fact that the Company has no agreements for providing management
services.
37. Explain in greater detail how the company "assist[s] in arranging for
the client's financing needs." Describe the nature and source of the
"financing" that the company will provide. To that end, describe the
$2,000,000 financing that the company procured, as mentioned on page
16. In addition, describe how you generate revenues from this service.
Response
We have revised the Company's registration statement to provide greater
detail of the Company's financing services.
38. Please explain the terms "pre-sale condition" and "pre-scrapping
condition." Also explain what means to "convert the ship."
Response
We have revised the Company's registration statement to explain the
terms "pre-sale condition" and "pre-scrapping condition" and to explain
what it means to "convert the ship."
39. Please explain how you "assist" a customer in obtaining a vessel.
Describe the nature of the "conversion management" services you
provide.
Response
We have revised the Company's registration statement to explain how the
Company will "assist" a customer in obtaining a vessel and to describe
the nature of the "conversion management" services provided by the
terms "pre-sale condition" and "pre-scrapping condition" and to explain
what it means to "convert the ship."
40. Please explain what it means to "hold" a ship for federal court.
Response
We have revised the Company's registration statement to explain what it
means to "hold" a ship for federal court.
Cruise Timeshare, page 16
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41. Disclose the basis of your belief that Cruise Timeshare Two, Inc. is
the only company that currently markets and sells timeshares on a
cruise vessel.
Response
We have revised the Company's registration statement to disclose the
basis of the Company's belief that Cruise Timeshare Two, Inc. is the
only company that currently markets and sells timeshares on a cruise
vessel.
42. Please provide us with copies of the relevant portions of the Cruise
Line International Association reports. In your response letter,
confirm, if true, that these reports are publicly available and were
not prepared in connection with the registration statement. Provide
supplemental support for the claim that "cruises are the fast growing
segment" of the travel industry.
Response
We are providing to you, on a supplemental basis, copies of the
relevant portions of the Cruise Line International Association reports.
These reports are publicly available at www.cruising.org (CLIA's web
site) and were not prepared in connection with the registration
statement.
Our Solution, page 16
43. Please provide supplemental support for the claim that the cost of a
cruise timeshare vacation would be less than a comparable cruise
vacation. Also provide support for the claim that the ability to
receive preferences for food, beverages, and recreational services is a
benefit that is not "available" with traditional commercial cruises.
Response
We are providing to you, on a supplemental basis, support for the
relevant claims made in the registration statement.
Our Strategy, page 16
44. Please refer to the first paragraph. Please clarify the nature of the
"expenses" that will be reimbursed by Cruise Timeshare Two, Inc.
Response
We have revised the Company's registration statement to clarify the
nature of the "expenses" that will be reimbursed by Cruise Timeshare
Two, Inc.
45. We note that the agreement with Cruise Timeshare Two, Inc. calls for
purchase of "between one and two" cruise ships "per year." Please
clarify whether the agreement requires this rate of purchase or if the
purchases are at the discretion of the parties. Your disclosure
elsewhere mentions plans to purchase only one ship, with no indication
that the company is obligated to make further purchases. Explain the
consequences under the agreement if you are financially unable to
purchase another ship.
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Response
We have revised the Company's registration statement to clarify the
Company's agreement with Cruise Timeshare Two, Inc.
46. Please describe in greater detail, and with additional clarity, the
duties of both companies under the agreement. Although unclear, it
appears from your disclosure that your company will purchase the ships
and Cruise Timeshare Two, Inc. will market the timeshares. If true,
please revise to clarify.
Response
We have revised the Company's registration statement to describe in
greater detail and clarify the duties of the Company and Cruise
Timeshare Two, Inc. under their agreement.
47. We note that you intend to offer "incentive discounts" for the cruise
timeshares, which appear to result in the average sale price of $3,125
to $6,615 (rather than the retail price of $6,500 to $9,500). Please
explain the basis of the amount of incentive discounts that the company
currently intends to offer. Explain, for example, why the company does
not expect the discounts to be greater.
Response
We have revised the Company's registration statement to provide that
the incentive discounts will be discretionary.
48. Describe in greater detail any other steps, aside from the agreement
with Cruise Timeshare Two, Inc., that the company has taken with
respect to its cruise timeshare business.
Response
We have revised the Company's registration statement to describe in
greater detail the steps taken by the Company with respect to its
cruise timeshare business.
Sales and Marketing, page 17
49. Provide supplemental support for the claim that there are "many
similarities" between the demographics of purchasers of real estate
timeshares and commercial cruise timeshares.
Response
We are providing to you, on a supplemental basis, support for the claim
that there are "many similarities" between the demographics of
purchasers of real estate timeshares and commercial cruise timeshares.
50. Please clarify how you intend to obtain the "existing lists of
potential real estate timeshare purchasers and/or commercial cruise
customers." Explain what you mean by the statement "our present
marketing capabilities are suf5cient to produce prospective buyers;"
explain the basis for this conclusion, given that you have not
commenced any cruise timeshare operations.
12
Response
We have revised the Company's registration statement to clarify how the
Company intends to obtain the "existing lists of potential real estate
timeshare purchasers and/or commercial cruise customers." We have
further revised the registration statement to indicate that it is the
Company's belief that its present marketing capabilities are sufficient
to produce prospective buyers.
51. We note that the cruise timeshares can be exchanged through a timeshare
industry exchange program. Please state whether this program will be
administered by your company and revenues are expected from this
exchange.
Response
We have revised the Company's registration statement to state that the
timeshare industry exchange program is administered by third parties
and that the Company does not expect any revenues from this exchange.
Competition, page 18
52. The discussion of vacation exchange companies, along with their
competitive disadvantages, is confusing. Please revise to explain more
clearly how these companies compete with your company and why your
company enjoys a competitive advantage. To that end, explain the "point
systems" and why this system makes the cost of acquiring commercial
cruises more expensive than obtaining a cruise timeshare. Explain the
basis of the company's expectation that its cruise timeshares will be
associated with a vacation club."
Response
We have revised the Company's registration statement to make the
discussion of vacation exchange companies less confusing.
Other Business Opportunities, page 18
53. Please describe in greater detail each of the bullet-pointed
opportunities and what the company seeks to accomplish with respect to
each opportunity. Describe the current status of the company's efforts
in pursuing these opportunities. Describe in greater detail the steps
taken with respect to the opportunities. If the company has not yet
taken any appreciable steps, disclose this fact clearly. Indicate the
timetable for pursuing these opportunities; if there is no timetable,
then disclose this fact clearly. Finally, your Liquidity section should
explain how the pursuit of these opportunities may affect the company's
financial condition and how the company intends to finance the pursuit
of the stated opportunities.
Response
Since no significant steps have been taken with respect to the other
business opportunities that the Company may explore, we have revised
the Company's registration statement to remove this discussion.
Government Regulation, page 18
54. Briefly describe the applicable and significant Coast Guard
regulations. Explain how they affect the company's business.
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Response
We have revised the Company's registration statement to describe the
applicable and significant Coast Guard regulations and how they affect
the Company's business.
55. Please clarify what you mean by the statement that you will "generally
attempt to comply with state real estate offering requirements,
although the materials will not be reviewed by the states." Describe
more clearly the nature of the "requirements." Do you mean that your
sale personnel will voluntarily apply for real estate licenses?
Response
We have revised the Company's registration statement to clarify what
the Company means by the statement that it will "generally attempt to
comply with state real estate offering requirements, although the
materials will not be reviewed by the states."
56. Please state whether your company will apply for the registration of
the cruise timeshares in Florida and elsewhere. Indicate whether such
registration is required for your company, not just Cruise Timeshares
Two, Inc.
Response
We have revised the Company's registration statement to state that the
Company will not apply for the registration of the cruise timeshares in
Florida and elsewhere and that this registration is required just for
Cruise Timeshares Two, Inc.
Legal Proceedings, page 19
57. Please discuss your lawsuit against Royal Pacific, as described in the
notes to your financial statement. Provide all information required by
Item 103 of Regulation, including the factual circumstances surrounding
the litigation. Also discuss the status of the insurance claim with
respect to the Rivera I; clarify what the company means by the
statement that its relationship with the customer will be
"re-evaluated" once the claim is complete.
Response
The lawsuit involved the breach of a loan made to Royal Pacific by the
Company and the Company's attempt to foreclose on a mortgage on the
vessel. This matter was resolved in April 2005 and neither the Company
nor Royal Pacific has filed any subsequent claims against the other.
With respect to the insurance claim, the Company is merely assisting
Royal Pacific in obtaining the insurance proceeds owed with respect to
the Rivera I. In light of the fact that the foregoing are not current
legal proceedings involving the Company it is our belief that
disclosure of the foregoing is not required in the legal proceedings
section.
Management, page 19
58. Please disclose each position, with corresponding dates, held by Ms.
Ostruszka within the past five years.
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Response
We have revised the Company's registration statement to disclose each
position, with corresponding dates, held by Ms. Ostruszka within the
past five years.
59. We note Mr. Levensaler's title as "Captain." Disclose his maritime or
sea-faring experience.
Response
We have revised the Company's registration statement to disclose the
maritime or sea-faring experience of Mr. Levensaler.
60. Please refer to the discussion of Mr. Hodgkins' employment agreement.
Disclose how much the compensation increases if the "predetermined
milestones" are met. Provide similar disclosure for Mr. Levensaler's
employment agreement as well. Discuss in the MD&A section the impact of
Messrs. Hodgkins' and Levensaler's compensation.
Response
We have revised the Company's registration statement to disclose and
discuss the compensation increases for Messrs. Hodgkins and Levensaler
if certain milestones are reached.
Plan of Distribution, page 23
61. We note your reference to "donees, pledges, transferees, or other
successors-in-interest" of the selling shareholders. Please note
that your registration statement must identify all selling
shareholders and provide Item 507 or Regulation S-B information with
respect to all selling shareholders. If you are currently aware of
any "donees, pledges, transferees, or other successors-in-interest"
who intends to use this registration statement, they must be
identified and Item 507 information must be provided. In your
response letter, confirm your understanding of this obligation. You
may add or substitute selling shareholders through the use of Rule
424(b) prospectus supplements only if certain conditions are
satisfied. For additional guidance, refer to the July 1997 Telephone
interpretations B.81 and H.3.
Response
We have revised the Company's registration statement to remove any
references to "donees, pledges, transferees, or other
successors-in-interest."
62. Please disclose the natural persons who exercise the voting and/or
dispositive powers over the securities to be offered for resale by your
selling stockholders that are non-reporting entities. For example,
disclose the natural persons who have such powers over the shares held
by Redwood Consultants, Tri-Cor, Inc., FEA, LLC, and Olympic Capital
Group, Inc. Please see Interpretation 1.60 of our July 1997 Manual of
Publicly Available Telephone Interpretations and Interpretation 4S of
the Regulation S-K portion of the March 1999 Supplement to our July 1
997 Manual of Publicly Available Telephone Interpretations.
Response
We have revised the Company's registration statement to disclose the
natural persons who exercise the voting and/or dispositive powers over
the securities to be offered for resale by your selling stockholders
that are non-reporting entities.
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63. In your response letter, please indicate whether any of the selling
shareholders is a broker-dealer or affiliate, as defined by Rule 405 of
Regulation C, of a broker-dealer.
Response
None of the selling shareholders is a broker-dealer or affiliate, as
defined by Rule 405 of Regulation C, of a broker-dealer.
Available Information, page 26
64. Please revise to set forth the SEC's new address: 100 F Street, NE,
Washington, DC 20549.
Response
We have revised the Company's registration statement to set forth the
SEC's new address.
Consent of Independent Registered Public Accounting Firm
65. Please revise to include a consent for the review report on page F-15,
dated August 30, 2005.
Response
We have revised the Company's registration statement to include a
consent for the review report dated November 30, 2005.
Financial Statements-December 31, 2004
Note A-Organization and Operations and Going Concern, page F-6 and Note G-
Capital Transactions, page F-10 and Note I-Business Combinations, page F-11
66. We note that you had no significant business operations prior to your
acquisition of Sophiex Ship Management, Inc. on September 1, 2004 and
the acquisition of Sophlex was effected through an exchange of your
common stock for all of the outstanding stock of Sophiex. Considering
these factors, it appears the transaction may be a reverse acquisition.
Please address the following:
o tell us how you determined that Marine Growth Ventures was the
acquiring entity using the guidance in paragraphs 15-19ofFAS
141;
o if you determine that Sopblex is the acquiring entity, you
should account for the transaction as a reverse acquisition
and revise the financial statements of the registrant to
include the operations of Sophlex for all period a presented;
and
o if you continue to believe that Marine Growth Ventures is the
accounting acquirer, please provide the audited financial
statements of Sophiex for the periods required by Item3lO(c)
of Regulation S-B.
Response
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The Company entered into a stock exchange agreement whereby it acquired
all of the outstanding stock of Sophlex. At the time of the acquisition
both the Company and Sophlex were private companies thus they are not
subject to Item 310(c) of Regulation S-B. The Company is considered
both the legal and accounting acquirer as the Company retained control
of more than 50% of the merged entity. With the merger, the Company's
stockholders retained 53% of the issued stock, while the founder and
sole shareholder of Sophlex at the time of the acquisition recieved 47%
of the issued stock. It should be noted that at the time of
acquisition, Sophlex had only one customer. In June of 2005, the sole
customer's ship was detroyed by a fire, thus ending ship management
fees for Sophlex. Sophlex has continued to aid the customer in the
pursuit of its insurance claim, however, once that is complete there
will be no further income from this customer. Additionally, the
consolidated entity will be changing focus from this area to the
timeshare cruise industry.
Note B -- Summary of Significant Accounting Policies, pages F-6 to F-8
67. Refer to Note B(9) and (10) on pages F-7 and F-8. We note on pages 14
and F-22 that Sophiex only had one contract for crew and ship
management services business. Tell us how you evaluated this
contractual arrangement and any other customer relationships in
assessing whether you should record an intangible asset for management
contracts or customer agreements in allocating the cost of the
acquisition. See paragraph 39 of SFAS 141 for guidance.
Response
We have been advised by the Company that the purchase of Sophlex by
the Company was not based upon customer contracts, but based on
acquiring an employee. Accordingly, the customer contract had no
value to the Company and therefore the entire purchase price in
excess of assets acquired was allocated to goodwill.
Note F -- Related Party Transaction, page F-9
68. Refer to the description of debt forgiveness by a majority owner in
Note F(3). Please revise your financial statements to reclassify the
forgiveness of debt as a capital contribution from the majority owner.
Refer to footnote I iii APB 26.
Response
We have revised the financial statements included in the Company's
registration statement to reclassify the debt forgiveness to
additional paid in capital.
Note K -- Subsequent Events, pages F-12_and F-13
69. Please revise Note K(l) to quantify the amount of additional advances
made subsequent to year end, if material. Also revise Note 5 on page
F-21 accordingly.
Response
We have revised Note K(l) to the financial statements included in the
Company's registration statement to quantify the amount of additional
advances made subsequent to year end.
70. Please revise Note K(3) to disclose the current status of the offering,
including the amount of equity raised in the offering.
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Response
We have revised Note K(3) to the financial statements included in the
Company's registration statement to disclose the current status of the
offering, including the amount of equity raised in the offering.
71. Please disclose the terms of the secured convertible notes, including
the conversion rate, the interest rate and maturity of the notes, if
the terms have been agreed upon as of the date of the term sheet on
April 28, 2005. Also revise Note 9 on page F-22 accordingly.
Response
We have revised Note 9 to the financial statements included in the
Company's registration statement to disclose the termination of the
term sheet.
Financial Statement -- June30. 2005
Note 2 -- Summary of Significant Accounting Policies, pages F-19 and F-20
72. Disclose the nature of the items included in the line labeled
"Deposits" on the balance sheet. Also disclose your accounting policy
for Deposits.
Response
We have revised the financial statements included in the Company's
registration statement to list out deposit items on the balance sheet
and note 2(d) was added to disclose the accounting policy regarding
deposits.
Note 10- Subsequent Events, page F-22
73. We also note on page F-22 that you are no longer providing services to
your only customer subsequent to the ship fire in June 2005. Tell us
how you determined that the loss of this customer did not trigger an
impairment loss pursuant to the guidance in paragraph 17 of FAS 142.
Response
It is the Company's belief that the fire did trigger an impairment loss
and we have revised the financial statements included in the Company's
registration statement to add note 2(H) to the financial statement
discussing this loss.
Undertakings, page 5
74. Please delete the undertaking relating to Rule 430A; your offering is
not relying on such rule.
Response
We have revised the Company's registration statement to delete the
undertaking relating to Rule 430A.
Signatures, page 5
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75. Please identify the persons signing as the principal accounting officer
(or controller), principal financial officer, and principal executive
officer.
Response
We have revised the Company's registration statement to identify the
persons signing as the principal accounting officer (or controller),
principal financial officer, and principal executive officer.
***
Should you have any further questions, please do not hesitate to
contact the undersigned at (212) 930-9700.
Sincerely,
/s/ Yoel Goldfeder
Yoel Goldfeder
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