United States securities and exchange commission logo
September 6, 2023
Hope Stawski
President and Chief Executive Officer
Amphitrite Digital Incorporated
6501 Red Hook Plaza, Suite 201-465
St. Thomas, Virgin Islands, U.S., 00802
Re: Amphitrite Digital
Incorporated
Amendment No. 1 to
Draft Registration Statement on Form S-1
Submitted August
21, 2023
CIK No. 0001933762
Dear Hope Stawski:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Amendment No. 1 to Draft Registration Statement on Form S-1
Prospectus Summary
Corporate Structure, page 2
1. We note that you
identify Ham and Cheese Events LLC as your predecessor in describing
the reorganization and
acquisitions on page 3, and have similar disclosures elsewhere in
the filing, as appear
on pages 21, 60, 89, 118, 119, and F-27. However, Section 2.2 of the
Asset Purchase
Agreement at Exhibit 2.3 appears to exclude certain aspects of the
business conducted by
the entity, such as Magens Hideaway and Seas the Day Dallas.
Tell us how you
considered the definition of predecessor in Rule 405 of Regulation C, in
applying this term to
Ham and Cheese Events LLC. For example, explain to us how you
Hope Stawski
Amphitrite Digital Incorporated
September 6, 2023
Page 2
evaluated the totality of the operations being conducted by the entity
in concluding that
you acquired the major portion of its business and assets, including a
quantitative analysis
of financial information for 2021 and up to the date of conveyance, in
formulating your
view.
Also provide us with a copy of the complete signed Asset Purchase
Agreement at Exhibit
2.3, including Addendum A, as referenced in Section 2.5, concerning
material assets
utilized in the business that were also excluded, Section 6, which
appears to be missing
from the exhibit, and any other attachments.
With regard to your disclosures of "Ham and Cheese Events, LLC d/b/a
Seas the Day
Charters USVI ( STDC )," and references to STDC as an entity, if
STDC is a business
segment rather than a legal entity, revise all corresponding
disclosures in the filing to
provide this clarification, and provide disclosures in the notes to
the annual and interim
financial statements of the periods for which activity and balances
pertaining to STDC is
based on carve-out financial information.
2. We note disclosure on page 92 explaining that you sublease a villa
named Magens
Hideaway, which is referenced in the comment as being among the
excluded assets. Tell
us the extent of any associated operations have been reflected in the
historical financial
statements in the absence of the underlying assets, and explain your
rationale. Also
provide details of the leasing arrangement, including the dates the
terms were negotiated
and finalized.
Summary Unaudited Pro Forma Consolidated Financial Information, page 16
3. We note that your presentation of non-GAAP measures along with the pro
forma financial
information on pages 16, 54 and 55 appears to be contrary to Item
(10)(e)(ii)(D) of
Regulation S-K. Please revise as necessary to conform to this
presentation requirement.
Use of Proceeds, page 45
4. We note your disclosure following the tabulation of expenditures that
appear to constitute
your intended use of proceeds, explaining that you also intend to use
$3,078,000 of the
offering proceeds to acquire Paradise Yacht Management LLC in
conjunction with the
offering. However, on page 51 you disclose that the consideration to
be paid in cash will
be $3,140,000.
Please resolve the discrepancy regarding the expenditure that would be
required to
complete the transaction and revise your tabulation of expenditures to
include this
intended use of proceeds to comply with Item 504 of Regulation S-K. Also
address the
FirstName LastNameHope Stawski
requirement in Instruction 1 to Item 504, regarding the priority to be
assigned to the listed
Comapany NameAmphitrite
expenditures, and yourDigital Incorporated
plans if substantially less than the maximum
proceeds are
obtained.
September 6, 2023 Page 2
FirstName LastName
Hope Stawski
FirstName
Amphitrite LastNameHope Stawski
Digital Incorporated
Comapany 6,
September NameAmphitrite
2023 Digital Incorporated
September
Page 3 6, 2023 Page 3
FirstName LastName
Dilution, page 49
5. We note that you have partially populated the tabulation that will be
used to provide a
comparison of the public contribution under the proposed public
offering and the effective
cash contribution of officers, directors, promoters and affiliated
persons.
However, you report total consideration of $6,067,396 in exchange for
11,368,601
common shares, which correspond to additional paid-in capital and the
number of
outstanding shares as of June 30, 2023, as reported on page F-6.
As the additional paid-in capital amount reflects various non-cash
transactions, please
revise the amount of consideration to be utilized in this presentation
to reflect only the
effective cash contribution to comply with Item 506 of Regulation S-K.
Unaudited Pro Forma Consolidated Financial Information
Introduction, page 51
6. We note your disclosure indicating that your pro forma information
gives effect to the
acquisition of Paradise Yacht Management LLC, including four
subsidiaries, which you
plan to complete in conjunction with the offering.
However, on pages F-53 through F-75 you present annual and interim
combined financial
statements for the Paradise Group of Companies, having disclosures
that describe the
association of the five entities as being under common control, rather
than four
subsidiaries of one parent.
Please revise disclosures throughout your filing as necessary to
accurately describe the
association between such entities to be acquired; identify the present
owners, including
details sufficient to understand the basis for the combined financial
presentation.
Please file the acquisition agreement with your next amendment.
7. We note your disclosure indicating the pro forma balance sheet gives
effect to the
acquisitions and offering as if these had been completed on January 1,
2022.
Please refer to Rule 11-02(a)(6)(i)(A) and (c)(1) of Regulation S-X,
regarding the
effective dates of reference to use when preparing the pro forma
balance sheet and revise
as necessary to conform to these requirements.
8. Please expand your disclosures to include a reference for each pro
forma adjustment in
your tabulation and a corresponding note that clearly explains your
basis or rationale for
the adjustment and any assumptions made in calculating the amount to
comply with Rule
11-02(a)(8) of Regulation S-X.
Also provide corresponding details regarding the components of any
adjustments that are
presented on a net basis, including quantification.
Hope Stawski
FirstName
Amphitrite LastNameHope Stawski
Digital Incorporated
Comapany 6,
September NameAmphitrite
2023 Digital Incorporated
September
Page 4 6, 2023 Page 4
FirstName LastName
Transaction Accounting Adjustments for Consolidated Statement of Operations,
page 57
9. We note your disclosure explaining that you have compiled various
adjustments to give
effect to events that you believe are "directly attributable to each
specific transaction,
factually supportable, and expected to have a continuing impact."
However, the criteria that you describe no longer governs the
adjustments that are
required in preparing pro forma financial statements pursuant to
Article 11 of Regulation
S-X. You may refer to SEC Release No. 33-10786 for clarification of
changes involving
terminology, adjustment classifications, and the basis for pro forma
adjustments.
Please revise your pro forma financial statements as necessary to
comply with the
applicable requirements.
10. We note you include adjustments to remove transaction costs and
nonrecurring expenses
related to the acquisitions and offering. Please refer to Rule
11-02(a)(6) of Regulation S-
X and Section II.D.1.c of SEC Release 33-10786 which includes guidance
regarding the
inclusion of transaction accounting adjustments for nonrecurring items
and revise your pro
forma statements of operations accordingly.
11. Please present a pro forma adjustment and accompanying note
disclosure, calculating the
tax expense (benefit) relating to the transaction accounting
adjustments. If there is no tax
effect due to the application of loss carryforwards or other aspects
of tax accounting, an
explanation should be provided in a note to the pro forma financial
statements to comply
with Rule 11-02(b)(5) of Regulation S-X.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations, page 63
12. We note that you present a summary of your results of operations for
the last two fiscal
years and comparative subsequent interim periods on page 65, which is
immediately
followed by a discussion of the interim periods on pages 65-67.
However, a separate
discussion covering the fiscal year ended December 31, 2022 in
comparison to December
31, 2021 does not appear until pages 78 and 79, following one of two
sections pertaining
to Liquidity and Capital Resources.
Please modify and expand this section of your filing to reposition
disclosures on the topics
prescribed by Item 303 of Regulation S-K, to gather and more closely
align content based
on the nature or focus of the discussion and analysis, and to also
encompass the activity
reported for the earliest year in your historical financial
statements.
Our Business
Company History, page 89
13. We note your response to our prior comment 13. Please disclose the
leases that are past
their listed expiration dates that have been filed as exhibits, and
discuss the status of any
Hope Stawski
FirstName
Amphitrite LastNameHope Stawski
Digital Incorporated
Comapany 6,
September NameAmphitrite
2023 Digital Incorporated
September
Page 5 6, 2023 Page 5
FirstName LastName
negotiations to extend the leases or plans to replace them.
Business
The Company Fleet of Maritime Charter and Tour Vessels, page 92
14. We note that in response to prior comment 15 you added various details
related to four
categories of vessels on page 93, such as the numbers of day charters,
executed
reservations, guests, and weeks of charters for the six months ended
June 30, 2023,
although without clarifying how such details reflect capacity and
utilization..
For example, you indicate the "available utilization" for private day
charters is 93%, and
20 weeks for private term charters, without clear association with any
measure of
capacity, or utilization using the number of day charters or weeks of
charters booked
during the six month period. We also note that you provide guest
counts in disclosures on
pages 91 and 92 covering a twelve month period ended March 31, 2023,
though also
without clear association with any measure of utilization relative to
capacity.
Please update such disclosures to coincide with the periods covered by
your financial
statements and expand your disclosures to explain how you define
capacity for each
material ship or category (i.e. the measure of availability for
service during the course of a
year), and indicate the periods of time that ships are generally
unavailable.
Please include percentages of utilization based on activity for the
twelve months ended
June 30, 2023, relative to the available capacity, adjusted as
necessary to reflect any
partial periods of ownership and clarify how seasonal factors impact
demand and have
been factored into any partial-year measures of utilization.
In addition, please identify the charter category to which each of the
vessels listed on
pages 93-96 have been assigned.
Financial Statements, page F-1
15. We note the audit report for the financial statements of Paradise
Adventures LLC on page
F-43 does not identify the auditor or indicate the report has been
signed, and that the audit
report for the financial statements of either Paradise Yacht
Management, LLC or Paradise
Group of Companies on page F-66 does not appear to be signed.
Please obtain and file audit opinions that identify the auditor and
include a conformed
signature to comply with Rule 2-02 of Regulation S-X.
16. We note that while the audit opinion on page F-66 indicates it covers
the
combined financial statements of Paradise Yacht Management, LLC and
its subsidiaries,
the accompanying financial statements are identified as those of
Paradise Group of
Companies, and are described on page F-71 as being comprised of five
entities that
are "related through common ownership," including Paradise Yacht
Management, LLC as
one of the five entities combined.
Hope Stawski
FirstName
Amphitrite LastNameHope Stawski
Digital Incorporated
Comapany 6,
September NameAmphitrite
2023 Digital Incorporated
September
Page 6 6, 2023 Page 6
FirstName LastName
Please discuss this observation with your auditor and arrange to
obtain and file a revised
audit opinion that clarifies whether the audit opinion covers combined
financial statements
of Paradise Yacht Management LLC, or combined financial statements of
Paradise Group
of Companies, including the five entities. However, as the disclosure
on page F-71 also
states that the yachts held by the entities combined are "...managed
by the Paradise Group
on behalf of yacht owners, in which the Paradise Group controls the
yacht through its
management services," the disclosures should be revised to clarify the
nature of support
for the combined financial presentation.
Provide us with a schedule listing the owners of and their relative
interests in the five
entities combined, and explain how they are related to one another if
this is not readily
apparent. Also identify the individuals that own or comprise the
Paradise Group, clarify
whether this is a separate legal entity, and explain how the variable
interest entity
guidance in FASB ASC 810 was applied in determining that control was
established via
the contractual arrangements if applicable.
Amphitrite Digital Incorporated
Six Months Ended June 30, 2023 and 2022, page F-2
17. We note that you have changed the composition of gross profit and cost
of revenue on
page F-5, relative to the corresponding presentation on page F-24,
whereby the figures for
the recent interim period appear to exclude costs that would be
attributable to cost of
revenue in accordance with GAAP.
Please revise your interim presentation of gross profit as necessary
to reflect all costs of
revenues in the measure as you appear to have done in the annual
presentation.
Fiscal Years ended December 31, 2022 and 2021
Consolidated Statements of Changes in Stockholders' Deficit, page F-25
18. We understand from your response to prior comment 18 that although you
completed a
reorganization of entities under common control, you do not regard
your departure from
the requirement to report this transaction by retrospectively
adjusting the Statement of
Changes in Stockholders' Deficit to be material.
However, we believe this requirement is fundamental to the
presentation and therefore do
not believe the disparate or incomplete approach may be supported as
you have expressed
and therefore continue to believe that you will need to comply with
this requirement.
Please also provide the information required by FASB ASC 250-10-50-7.
Given the nature of these changes, we expect that you will need to
obtain and file an
updated or dual dated opinion from your auditor, including explanatory
language
referencing the restatement, consistent with paragraph 18e of PCAOB
Auditing Standard
3101.
Hope Stawski
FirstName
Amphitrite LastNameHope Stawski
Digital Incorporated
Comapany 6,
September NameAmphitrite
2023 Digital Incorporated
September
Page 7 6, 2023 Page 7
FirstName LastName
Note 10 - Reorganization Between Entities Under Common Control, page F-35
19. We note your response to prior comment 19 referencing disclosure in
Note 1 on page F-
27, and revisions made to Note 10 to more clearly distinguish between
STDC and STDC
Holdings Inc. However, this note continues to include duplicative
disclosures in the
second and third points, regarding the conveyance of "certain
operating assets and
liabilities of Ham and Cheese, LLC d/b/a Seas the Day Charters USVI,"
inconsistent
descriptions of the counterparties involved in the transactions, and
unclear disclosure
describing the shareholders of Ham and Cheese Events LLC, as "the
super majority of
STDC Holdings Inc., through their ownership of AMDI common stock."
As STDC appears to refer to a business segment of Ham and Cheese
Events, LLC rather
than a legal entity, please further clarify all references to STDC as
the counterparty in the
conveyances throughout the filing to clarify that Ham and Cheese
Events, LLC was the
legal entity and counterparty in these transactions, where applicable.
It also appears that
disclosure on page F-27 stating that "STDC Holdings was part of Ham
and Cheese, LLC"
should be corrected to clarify that you are referring to the business
segment known as Seas
the Day Charters USVI, rather than STDC Holdings, which you have
indicated was
formed as a subsidiary of AMDI.
Please file as an exhibit the Vessel Purchase and Sale Agreement
between Windy of
Chicago Ltd. and Tall Ship Adventures of Chicago, Inc., as previously
requested.
Paradise Adventures LLC
Statements of Operations and Members' Equity, page F-45
20. We note the cost of revenue and gross profit measures do not reflect
depreciation. Please
revise the presentation as necessary to show the portion of
depreciation that is attributable
to cost of revenue within the measure of gross profit. For example, it
may be shown on a
separate line directly below cost of revenue excluding depreciation,
and above the
measure of gross profit.
Please refer to SAB Topic 11:B if you require further clarification or
guidance; the
accommodation for presenting cost of revenue excluding allocable
depreciation or other
amounts requires parenthetical notation and does not extend to
measures of gross profit.
Paradise Yacht Management LLC
Note 2 - Significant Accounting Policies
Revenue Recognition, page F-72
21. We note disclosure indicating the company may be regarded as the
principal for the
managed services provided to yacht owners and that revenue is
therefore recognized on a
gross basis.
Please provide us with the accounting analysis of the principal versus
agent considerations
Hope Stawski
Amphitrite Digital Incorporated
September 6, 2023
Page 8
in FASB ASC 606-10-55-36 through 55-40, along with a summary of the
relevant
contract provisions that are common to all of the underlying agreements,
and details of
any variations that may lead to different conclusions.
Exhibits
22. Given that you have included review reports from the independent
accountants on pages
F-2 and F-53, along with the unaudited interim financial statements of
AMDI and
Paradise Group of Companies, you will need to obtain and file as
exhibits, letters from
the independent accountants acknowledging their awareness of your use of
the review
reports in the registration statement to comply with Item 601(b)(15) of
Regulation S-K.
You may contact Jenifer Gallagher, Staff Accountant at (202) 551-3706
or Karl Hiller,
Accounting Branch Chief, at (202) 551-3686 if you have questions regarding
comments on the
financial statements and related matters. Please contact Anuja A. Majmudar,
Attorney-Adviser,
at (202) 551-3844 or Timothy S. Levenberg, Special Counsel, at (202) 551- 3707
with any other
questions.
Sincerely,
FirstName LastNameHope Stawski
Division of
Corporation Finance
Comapany NameAmphitrite Digital Incorporated
Office of Energy &
Transportation
September 6, 2023 Page 8
cc: Brenda Hamilton
FirstName LastName