Form S-1
We note your disclosure that you believe the government segment represents additional growth for you. Please elaborate your plans with respect to government segment of business.
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Please disclose whether you are subject to material cybersecurity risks in your supply chain based on third-party products, software, or services used in your products, services, or business and how a cybersecurity incident in your supply chain could impact your business. Discuss the measures you have taken to mitigate these risks.Rest of the question
Our amended and restated articles of incorporation will contain exclusive forum provisions that may discourage lawsuits, page 44
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We note that your forum selection provision identifies a state court located within the State of Nevada or, if no state court located within the State of Nevada has jurisdiction, the federal district court for the District of Nevada as the exclusive forum for certain litigation, including any “derivative action.” Please disclose whether this provision applies to actions arising under the Exchange Act.Rest of the question
If this provision does not apply to actions arising under the Exchange Act, please also ensure that the exclusive forum provision in the governing documents states this clearly, or tell us how you will inform investors in future filings that the provision does not apply to any actions arising under the Exchange Act.
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Revise the table to present an “actual” column reflecting the amounts from the registrant's balance sheet as of September 30, 2022. In addition, please revise the "combined" column to show a "pro forma combined" column that reflects the impact of the December 2022 consummation of the Exchange Agreement in which the operating entity, SRM Entertainment Limited, was combined with the registrant.Rest of the question
Further, revise the introductory paragraphs and include appropriate footnotes to reflect your revised presentation.
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Tell us the date on which the transactions related to the Exchange Agreement were consummated.
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In the table on page 49 the Total Consideration column appears to be incorrectly labeled as showing amounts in thousands of dollars, but the amounts presented are in actual dollars. Please revise, or advise us.
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We note that you present selected combined financial data here and that you include management's discussion and analysis based on that combined financial data. However, the combined data included on pages 51 and 52 does not appear to reflect any amounts reported on the financial statements of SRM Entertainment Inc.Rest of the question
Please address the following: • Reconcile for us the amounts presented on the combined balance sheet data as of September 30, 2022 to the balance sheets of SRM Entertainment Inc. and SRM Entertainment Limited at that same date. Provide a similar reconciliation for the combined statement of operations for the interim period ended September 30, 2022. • To the extent that you submit an amendment to the draft registration statement prior to the date on which an update to your financial statements is required by Rule 8-08 of Regulation S-X, please revise to include supporting pro forma financial statements compliant with Article 11 of Regulation S-X that reflect the consummation of the Exchange Agreement transactions and the combination of SRM Entertainment Inc. and SRM Entertainment Limited. Clearly explain how you accounted for the transactions that resulted in the combined financial statements, referencing the appropriate accounting guidance, and cross-referencing all pro forma adjustments to descriptive footnotes. Alternatively, expand the unaudited pro forma condensed combined financial statements beginning on page 53 to present that information (i.e., add columns to show how you arrived at the amounts in the “historical” columns) and relabel the presentation as appropriate.
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Please disclose the types of agreements that you enter into with your retailers, distributors and other channel partners. Please file any material agreements as exhibits to your registration statement.
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Please revise the last paragraph on page 68 to correctly indicate that your sales for the year-to-date period ended September 30, 2022 were $5,199,807, and not $3,682,261 as currently disclosed.
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Please revise to include disclosure on the current status of your research and development. Please elaborate on your timeline for certain products. For instance, please disclose timeline for adding "light up drinkware, stainless water bottles, plush back packs, melamine, and vinyl figures" and your timeline for adding integrating "Smart Toy" technology.
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We note your reference to licensing relationships on page 67. Please disclose the scope and term of any material license agreements and file any material license agreements as exhibits to your registration statement. Please also disclose the duration and scope of patents that are material to your business.
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We note your disclosure that you sell your products to customers throughout the world. Please revise to disclose the country where a majority of your sales are attributed to.
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We note you disclose your target market for domestic sales. Please revise to disclose your target market for international sales.
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Please update your compensation disclosure as of the fiscal year ended December 31, 2022. Financial Statements of SRM Entertainment, Inc.
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We note from page 4 that in November and December 2022, SRM Entertainment, Inc. entered into subscription agreements pursuant to which you issued an aggregate of 1,700,000 outstanding shares of common stock to certain founders of the registrant.Rest of the question
Please explain to us, and revise Note 4 to describe the circumstances relating to your issuance of these shares and to disclose why you have reflected the transactions in the financial statements of SRM Entertainment, Inc. as of and for the period ended September 30, 2022. Cite the accounting guidance on which you relied. Revise all other sections of the filing, as appropriate, to eliminate any inconsistencies in your disclosure.
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You disclose here that on November 30, 2020, Jupiter Wellness, Inc. acquired SRM Entertainment Limited. Please revise your disclosure throughout the filing to consistently disclose the correct date of this transaction. For example, on pages 3 and 67 you indicate that the transaction occurred in November 2019.
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In this regard, we note several inconsistences and typographical errors throughout the filing. For example, on page F-15 you show the statement of cash flows adjustment related to accrued liabilities as “$40,8834”; on page F-20 you disclose an allowance for doubtful collections at December 31, 2021 of $0 while on page F-27 you disclose an amount of $104,851; and the amounts disclosed for prepaid expenses andRest of the question
deposits on page F-20 are not consistent with the amounts shown on pages F-21 and F-29. In addition, on page 60 you refer to amounts reported as of December 31, 2017 instead of December 31, 2021; on page 64 you refer to your “unaudited” financial statements for the year ended December 31, 2021 and 2020; and on page 104 you refer to the financial statements of SRM Entertainment Limited as of December 31, 2021 and 2022 instead of December 31, 2021 and 2020. Please revise the filing throughout to eliminate these and other inconsistencies and errors.
No reply letter found.
We note your disclosure that you entered into a stock exchange agreement with Jupiter Wellness, Inc. in December 2022 where you exchanged 7,300,000 shares of your common stock for two ordinary shares of SRM Entertainment, Limited representing all of the issued and outstanding shares of SRM Entertainment, Limited.Rest of the question
Please revise to disclose your accounting for the transaction and to describe any resulting changes to the presentation of your financial statements in periods following consummation of the transaction. Tell us the accounting guidance on which you relied.
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Please indicate the section of the Securities Act of the rule of the Commission under which exemption from registration was claimed, and state briefly the facts relied upon to make the exemption available. See Item 701 of Regulation S-K.
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We note you have not yet entered into employment agreements with your executive officers, but you intend to do so. When you do so, please be sure to file these agreements as exhibits.
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We note your risk factor disclosure related to the COVID-19 pandemic. Please disclose (1) whether your business segments, products, lines of service, products, lines of service, projects, or operations are materially impacted by the pandemic-related lockdowns in China and (2) the impact of consumer demand declines in China. In addition, discuss any steps you are taking to mitigate adverse impacts to your business.
No reply letter found.
Please disclose whether and how your business segments, products, lines of service, projects, or operations are materially impacted by supply chain disruptions especially in light of the effectiveness of the UFLPA.Rest of the question
For example, discuss whether you have or expect to: • Suspend the production, purchase, sale or maintenance of certain items due to a lack of raw materials, parts, or equipment; inventory shortages; closed factories or stores; reduced headcount; or delayed projects; • Experience labor shortages that impact your business; • Experience cybersecurity attacks in your supply chain; • Experience higher costs due to constrained capacity or increased commodity prices or challenges sourcing materials; • Experience surges or declines in consumer demand for which you are unable to adequately adjust your supply; • Be unable to supply products at competitive prices or at all; or • Be exposed to supply chain risk in light of the effectiveness of the UFLPA Explain whether and how you have undertaken efforts to mitigate the impact and where possible quantify the impact to your business.
No reply letter found.
We note your disclosure on the cover page that you will not consummate the offering or distribution if your common stock is not approved for listing. Please update your disclosures on the cover page, pages 20, 43 and 102 to clarify that your offering and distribution is contingent on final approval of your NASDAQ listing.
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We note your response to prior comment 3. Please revise to clearly state, if true, that your exclusive forum provision does not apply to actions arising under the Exchange Act. Please ensure that your description of the scope of your exclusive forum provisions is consistent with your disclosures on page 89.
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Your disclosure that the exclusive forum, clauses do not apply to suits arising under the Securities Act is inconsistent with your disclosure that "the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act." Please advise or revise.
No reply letter found.
We note the changes made in response to prior comment 4. Please further revise the table to fully comply with the comment by presenting all components of your shareholders' deficit at September 30, 2022, including the captions showing your subscriptions receivable and retained deficit amounts.Rest of the question
Also, your total shareholders' deficit and total capitalization at September 30, 2022, appear to be $(1,374) and zero, respectively. Please revise accordingly.
No reply letter found.
We note your revisions in response to our prior comment 7. Please revise the introductory paragraphs to clearly explain how you will account for the separation and Exchange Agreement transactions upon consummation and how you have reflected that accounting in the pro forma financial statements.Rest of the question
If true, confirm to us that the agreements will be accounted for as a transaction between entities under common control, pursuant to the appropriate subsections of ASC 805-50, including ASC 805-50-15 and ASC 805-50-45, or provide us with a detailed analysis supporting your accounting for the planned transactions.
No reply letter found.
Revise the SRM Inc. column in the Pro Forma Condensed Combined Balance Sheet on page 51 to reflect all amounts shown on the SRM Inc. September 30, 2022 audited balance sheet presented on page F-3, including loans to Jupiter Wellness and all components of its shareholders' deficit. Similarly, please revise the SRM Inc.Rest of the question
column on the Pro Forma Condensed Combined Statement of Operations on page 52 to reflect the amounts (i.e., General and administrative expenses) presented on its audited statement of operations for the period ended September 30, 2022 on page F-4.
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To help us better understand your presentation, please provide us with the supporting calculations for the pro forma adjustments to Additional paid-in capital and Retained deficit on page 51.
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We note your revised disclosure indicating that your general and administrative expense for the nine months ended September 30, 2022 and 2021 were $470,673 and $38,735, respectively and that the "decrease" is due to COVID-19 related shut downs and limited activity during the period. Please revise to correctly discuss the reasons for the increase in your general and administrative expense during the periods.
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Please update your financial statements and related financial information throughout the filing in accordance with Rule 8-08 of Regulation S-X.
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Please revise footnote (1) to correctly disclose the principal balance of the Promissory Note at December 31, 2022. The amount currently disclosed is not consistent with the balance sheet on page F-13.
On behalf of SRM Entertainment, Inc. (the “Company”), this letter is accompanying our filing. We had no remaining comments to respond to but are filing to update our financial information and related disclosure to include the information for the quarter ended One letter for all the questions, without numbered answers. Read the reply ↗
We note the changes made in response to prior comment 3. Please explain to us the inconsistencies between the retained earnings and additional paid-in capital balances in the pro forma column of the capitalization table and the respective balances on the pro forma balance sheet on page 50, or revise as appropriate.
See the reply above.
We note several inconsistent and confusing disclosure in the dilution section. Please address the following: • In the last sentence of the second introductory paragraph you disclose an immediate increase in the pro forma as adjusted net tangible book value of $0.88 per share to the existing stockholder, Jupiter Wellness.Rest of the question
Explain to us why that amount differs from the $0.77 per share discussed in the preceding sentence and presented in the table below, or revise as appropriate. • Revise the table to correctly present per share amounts on the captions titled "Pro forma net tangible book value per share as of December 31, 2022" and "Pro forma as adjusted net tangible book value per share after this offering". • In the last sentence on page 47, revise to disclose both the "increase (decrease)" to your pro forma as adjusted net tangible book value and the "decrease (increase)" in the dilution per share to investors participating in this offering as a result of an increase (decrease) of 100,000 in the number of shares offered. • Revise the last paragraph on page 48 to disclose the correct number of shares of common stock that would be held by new investors if the Representative exercises its option to purchase additional shares of common stock in full in this offering.
See the reply above.
Refer to footnote (1) to the dilution table. Please revise to clarify, if true, that the 1,700,000 shares issued to the Founders were included in the denominator used to calculate pro forma net tangible book value per share as of December 31, 2022. Otherwise, advise us.
See the reply above.
In the first sentence of the last paragraph on page 47, you disclose that each $1.00 increase (decrease) in the assumed initial public offering price of $5.00 per share would "increase (decrease)" the dilution per share to investors participating in this offering by approximately $5.07 per share.Rest of the question
It appears that a decrease of $1.00 in the initial public offering price would result in a decrease in the $4.23 dilution per share to new investors currently presented in the table. Please revise, or advise us.
See the reply above.
We note your response to prior comment 6. Please include a footnote to the statement explaining the reasons for the reclassification of $367,262 from retained earnings to additional paid-in capital on the pro forma balance sheet on page 50. Tell us the accounting guidance on which you relied when recording that adjustment.Rest of the question
Explain to us why the amount adjusted is not based on your negative additional paid-in capital and retained earnings balances as of December 31, 2022, given the fact that the pro forma balance sheet assumes that the separation was consummated at that date.
See the reply above.
Revise the statement to also disclose the historical numbers of issued and outstanding shares of common stock for SRM Inc. as of December 31, 2022.
See the reply above.
Please revise the pro forma statements of operations on pages 51 and 52 and other sections of the filing, as applicable, to present your net income (loss) per share amounts rounded to the nearest cent (i.e., using only two decimal points), in order not to imply a greater degree of precision than exists.
See the reply above.
Please explain to us why, on page 52, the pro forma weighted-average shares used to compute pro forma net income per share for the year ended December 31, 2021 does not include the 1,700,000 Founder shares. Otherwise, revise as appropriate.
See the reply above.
Please disclose the loans you received from Jupiter Wellness.
See the reply above.
We note your disclosure of the pro forma balance sheet as of March 31, 2023. The historical balances of prepaid expenses and deposits and inventory for SRM Limited on the pro forma balance sheet are not consistent with the balances from the balance sheet on page F-21. In addition, those line items in the pro forma column do not appear to sum up correctly. Please revise the disclosure to eliminate the inconsistencies.
The Company acknowledges the Staff’s comment and has revised the disclosure on pages 48 and F-21 of Amendment No. 1. Read in the reply ↗
Please revise the table on page F-26 to correctly indicate that you are presenting information for the three months ended March 31, 2023 and 2022, respectively. General
The Company acknowledges the Staff’s comment and has revised the disclosure on page F-26 of Amendment No. 1. Read in the reply ↗
We note that Section 1.3 of the license agreement filed as Exhibit 10.6 grants you a license to develop art for an NFT. Please revise your disclosure to clarify whether you have any business plans with respect to NFTs.
The Company acknowledges the Staff’s comment and has revised the disclosure on page 62 of Amendment No. 1. Accordingly, the Company respectfully advises the Staff that the Company has no business plans with respect to NFTs.
Entertainment, Inc. Read in the reply ↗
