OLSHAN OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP PARK AVENUE TOWER 65 EAST 55TH STREET NEW YORK, NEW YORK 10022 TELEPHONE: 212.451.2300 FACSIMILE: 212.451.2222 WWW.OLSHANLAW.COM DIRECT DIAL: 212-451-2259 EMAIL: HKESNER@OLSHANLAW.COM May 22, 2006 United States Securities and Exchange Commission Division of Corporation Finance Mail Stop 3720 100 F. Street, N.E. Washington, D.C. 20549 Attn: Larry Spirgel, Assistant Director RE: AMENDMENT NO. 1 TO RELATIONSERVE MEDIA, INC. REGISTRATION STATEMENT ON FORM SB-2 FILED MAY 1, 2006 FILE NO. 333-132586 Dear Mr. Spirgel: We are securities counsel to RelationServe Media, Inc. (the "Company") and are submitting, on behalf of the Company, its responses to the comment letter from the Division of Corporation Finance, dated May 11, 2006, relating to the filing of the Company's Amendment No. 1 to Registration Statement on Form SB-2 filed May 1, 2006 ("Amendment No. 1"). The Company's responses are numbered to correspond to the Staff's comments and are filed together with Amendment No. 2 to Registration Statement on Form S-2 (the "Amendment No. 2"), which amends Amendment No. 1. Please be advised that Amendment No. 2 includes first quarter financials and associated disclosure. In addition, the Staff is advised that the requirement that the Company must register 130% of the shares of common stock that the debenture holders hold or are entitled to receive if they exercised or converted all of the warrants and debentures that they hold has been changed to 110%. If and when the Company receives stockholder approval to increase its authorized capital, the Company will be required to register the additional 20%. Moreover, as described below, no debenture holder purchased the additional debentures. Accordingly, the Company does have sufficient authorized capital so that it can register all of the shares that it is required to register pursuant to the Registration Statement, and the risk factor "We Need to Authorize Additional Shares so that we Can Register all of the Shares that we are Required to Register Pursuant to this Registration Statement" has been deleted. NEW JERSEY OFFICE 2001 ROUTE 46/SUITE 202 PARSIPPANY, NEW JERSEY 07054 TELEPHONE: 973.331.7200 FACSIMILE: 973.331.7222 May 22, 2006 Page 2 PROSPECTUS COVER PAGE 1. WE NOTE YOUR RESPONSE TO PRIOR COMMENT 1. PLEASE TELL US IN YOUR RESPONSE LETTER WHETHER ANY ADDITIONAL DEBENTURES WERE PURCHASED BY THE INVESTORS. IN ADDITION, IF ADDITIONAL DEBENTURES WERE PURCHASED BEFORE THE MAY 4, 2006 DEADLINE, TELL US IN YOUR RESPONSE LETTER WHETHER ALL OF THE CONDITIONS TO PURCHASING THE ADDITIONAL DEBENTURES WERE OUTSIDE THE CONTROL OF THE INVESTORS AT THE TIME YOU INITIALLY FILED THE REGISTRATION STATEMENT. IF ALL OF THE CONDITIONS WERE NOT OUTSIDE THE CONTROL OF THE INVESTORS, PLEASE REMOVE THE SHARES UNDERLYING THE ADDITIONAL DEBENTURES FROM THE REGISTRATION STATEMENT, AS IT WAS PREMATURE TO REGISTER THOSE SHARES FOR RESALE. The Staff is advised that none of the additional debentures were purchased by the investors. Accordingly, the shares underlying the additional debentures have been removed from Amendment No. 2. PROSPECTUS SUMMARY, PAGE 1 2. THE DISCLOSURE YOU ADDED REGARDING SENDTEC'S BUSINESS AND HOW IT GENERATES REVENUE IS VAGUE. FOR EXAMPLE, WHAT IS "DIRECT RESPONSE MARKETING" AND WHAT EXACTLY DOES SENDTEC DO TO "GENERATE MEDIA COMMISSIONS AS A PERCENTAGE OF MEDIA PURCHASED?" IN THIS REGARD, PLEASE AVOID THE USE OF INDUSTRY JARGON SUCH AS "BUSINESS VERTICALS" AND "ARBITRAGING PERFORMANCE FEES." SIMILARLY, BRIEFLY EXPLAIN WHAT "LIST SERVICES, CAMPAIGN PROCESSING, EMAIL CAMPAIGN MANAGEMENT AND CUSTOM LEAD GENERATION PROGRAMS" ARE WITH REGARD TO RELATIONSERVE ACCESS' BUSINESS. PLEASE REVISE TO CLEARLY DESCRIBE WHAT YOU DO USING CLEAR, EVERYDAY LANGUAGE. The Overview section of the Prospectus Summary has been revised to provide additional disclosure relating to SendTec's business as well as RelationServe Access' business. This section has also been revised to remove the use of industry jargon such as, "business verticals" and "arbitraging performance fees." CORPORATE HISTORY, PAGE 1 3. PLEASE SEE PRIOR COMMENT 4 AND CLARIFY IN THE FIRST PARAGRAPH THAT RELATIONSERVE HAD NO BUSINESS OR ASSETS UNTIL IT ACQUIRED ASSETS FROM OMNI POINT AND FRIENDSAND.COM. IN ADDITION, YOUR DISCLOSURE FOCUSES TOO MUCH ON THE SPECIFIC MECHANICS OF THE TRANSACTIONS. FOR EXAMPLE, THE LAST TWO PARAGRAPHS OF THIS SECTION DO NOT APPEAR NECESSARY IN YOUR SUMMARY TO EXPLAIN THAT YOU REINCORPORATED FROM NEVADA TO DELAWARE. PLEASE REVISE AND BRIEFLY EXPLAIN WHY YOU DECIDED TO REINCORPORATE IN DELAWARE. The Corporate History section has been revised to clarify that the Company had no business or assets until it acquired assets from Omni Point and Friendsand.com. The disclosure in Amendment No. 2 has also been revised to disclose the reasons the Company reincorporated in Delaware. May 22, 2006 Page 3 BACKGROUND OF THE SENDTEC ACQUISITION, PAGE 2 4. WE NOTE THE DISCLOSURE YOU ADDED IN RESPONSE TO PRIOR COMMENT 4; HOWEVER, YOUR DISCLOSURE IS STILL VAGUE. FOR EXAMPLE, IN THE FOREFRONT OF THIS SECTION WHERE YOU REFER TO YOUR REQUIREMENT TO OBTAIN FINANCING, DESCRIBE THE FINANCING, INCLUDING YOUR ISSUANCE OF DEBENTURES AND PREFERRED STOCK, RATHER THAN MERELY STATING IN THE NEXT PARAGRAPH THAT YOU "ASSUMED LIABILITY THROUGH GUARANTEES AND PLEDGES FOR CERTAIN DEBENTURES..." IN THIS REGARD, PLEASE AVOID THE USE OF THE WORD "CERTAIN" SINCE THIS TERM IS VAGUE. The Background of the SendTec Acquisition section has been revised to more fully describe the financing that SendTec Acquisition Corporation obtained to acquire the assets of SendTec, Inc. RATIONALIZATION PLAN, PAGE 3 5. PLEASE ADD ADDITIONAL CONTEXT TO EXPLAIN WHAT YOU MEAN BY "WHAT REPRESENTS LEGITIMATE CONTENT" AS IT RELATES TO FRIENDSAND'S BUSINESS. The Rationalization Plan section has been revised to explain what is meant by "what represents legitimate content." RISK FACTORS, PAGE 6 WE WERE REQUIRED TO AMEND COVENANTS IN THE DEBENTURES. . ., PAGE 7 6. PLEASE REVISE THE CAPTION AND THE TEXT TO DISCLOSE HOW YOUR BUSINESS AND FINANCIAL CONDITION COULD BE IMPACTED IF THE RISK YOU PRESENT MATERIALIZES. The caption in the text of this risk factor has been revised in accordance with the Staff's comment. Also, the Staff is advised that disclosure has been added to this risk factor to indicate that the Company did not comply with its first quarter EBITDA financial covenant requirement. Similar disclosure has been added to Management's Discussion and Analysis and a brief description as well as a cross-reference has been added to the Prospectus Summary section. 7. DISCLOSE WHEN THE COVENANTS WERE AMENDED. ALSO DISCLOSE YOUR EBITDA (AS DEFINED IN THE DEBENTURES) FOR THE FOURTH QUARTER OF 2005, FISCAL 2005 AND, IF AVAILABLE, FOR THE FIRST QUARTER OF 2006. PROVIDE CORRESPONDING DISCLOSURE IN YOUR MANAGEMENT'S DISCUSSION AND ANALYSIS. The risk factor has been revised to indicate when the covenants were amended as well as to indicate what the Company's EBITDA was for the fourth quarter of 2005, fiscal 2005 as well as the first quarter of 2006. May 22, 2006 Page 4 WE MAY BE UNABLE TO ATTRACT AND RETAIN KEY EMPLOYEES, PAGE 9 8. PLEASE BRIEFLY CLARIFY HOW "UNEXPECTED COSTS AND INEFFICIENCIES" CAUSED YOU TO HAVE POOR MORALE AND PROBLEMS RETAINING PERSONNEL. The risk factor has been revised in accordance with the Staff's comment. WE NEED TO AUTHORIZE ADDITIONAL SHARES SO THAT WE CAN REGISTER. . . . PAGE 21 9. PLEASE EXPLAIN WHY YOU HAVE RESERVED 3,569,400 SHARES FOR OPTIONS THAT HAVE NOT BEEN GRANTED. DISCLOSE WHETHER AND WHEN YOU ARE OBLIGATED TO GRANT THESE OPTIONS. The Staff is advised that these shares relate to options available to be granted under the Company's 2006 Stock Option Plan and Directors' Stock Options Plan. At this time, the Company is not obligated to grant any of these options. 10. PLEASE DISCLOSE THE AMOUNT OF ADDITIONAL SHARES THAT YOU ARE REQUIRED TO REGISTER PURSUANT TO THE SECURITIES PURCHASE AGREEMENT AND THE AMOUNT OF THESE SHARES THAT WOULD EXCEED YOUR CURRENTLY AUTHORIZED SHARES. The risk factor has been revised in accordance with the Staff's comment. DESCRIPTION OF BUSINESS, PAGE 41 BACKGROUND OF THE SENDTEC ACQUISITION, PAGE 43 11. DESCRIBE THE TERMS OF THE MANAGEMENT AGREEMENTS AND ESCROW AGREEMENT IN GREATER DETAIL IN YOUR CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS SECTION. The descriptions of the management agreements and escrow agreement have been described in greater detail in the Certain Relationships and Related Transactions section. SENDTEC BUSINESS, PAGE 46 12. PLEASE CLARIFY WHAT YOU MEAN BY PROVIDING "MEDIA TO SENDTEC ON A VENTURE BASIS." ALSO, PLEASE CLARIFY WHAT YOU MEAN BY THE TERMS "ACTION" AND "LEAD" AND PROVIDE EXAMPLES TO ILLUSTRATE HOW REVENUE CAN BE GENERATED. PLEASE DISCLOSE HOW MUCH IS TYPICALLY EARNED IN REVENUE BY EACH CONSUMER RESPONSE. The disclosure has been revised in the SendTec Business section in accordance with the Staff's comment. 13. PLEASE REFER TO PRIOR COMMENT 21. WE CANNOT LOCATE THE DISCLOSURE WE REQUESTED IN THE PRIOR COMMENT REGARDING YOUR TWO LARGEST CUSTOMERS. PLEASE REVISE OR ADVISE. The names of the two largest customers have been disclosed in the risk factor entitled, "Any Limitation On SendTec's Use Of Data Derived From Clients' Advertising Campaigns Could May 22, 2006 Page 5 Significantly Diminish The Value Of SendTec's Services And Cause SendTec To Lose Clients And Revenues." LEGAL PROCEEDINGS, PAGE 51 14. WE NOTE THE DISCLOSURE YOU HAVE ADDED IN RESPONSE TO PRIOR COMMENT 22; HOWEVER, YOU STILL DO NOT PROVIDE SUFFICIENT FACTUAL CONTEXT UNDERLYING THE CASES. FOR EXAMPLE, IT IS UNCLEAR WHY INFOLINK BELIEVES YOU HAVE VIOLATED THE FEDERAL CAN SPAM ACT OF 2003 AND THE LICENSING AGREEMENT. PLEASE REVISE TO PROVIDE SUFFICIENT DETAILS REGARDING THIS LEGAL PROCEEDING. The description of the InfoLink legal description has been revised in accordance with the Staff's comment. 15. WE NOTE THE DISCLOSURE YOU HAVE ADDED REGARDING THE SUIT COMMENCED IN THE STATE COURT OF INDIANA ON MARCH 3, 2006. YOU STATE THAT YOU BELIEVE THIS ACTION IS WITHOUT MERIT. PLEASE TELL US IN YOUR RESPONSE LETTER WHETHER YOU REGISTERED THE SHARES UNDER INDIANA LAW, ASSUMING THIS WAS REQUIRED. IN ADDITION, PLEASE TELL US WHETHER MR. ALTAVILIA SOLD SHARES ON YOUR BEHALF OR RECEIVED COMPENSATION IN CONNECTION WITH THE SALE OF YOUR SHARES. IN ADDITION, BECAUSE THE PLAINTIFF IS SEEKING RESCISSION OF THE COMMON STOCK PURCHASED BY THE PLAINTIFF, PLEASE DISCLOSE THE NUMBER OF SHARES OF RELATIONSERVE MEDIA PURCHASED BY THE PLAINTIFF IN JUNE 2005 AND THE PURCHASE PRICE. Disclosure has been added to the description of this legal proceeding in accordance with the Staff's comment. SELLING STOCKHOLDERS, PAGE 70 16. WE NOTE YOUR RESPONSE TO PRIOR COMMENT 29. PLEASE CLARIFY WHAT YOU MEAN BY YOUR STATEMENT THAT INFORMATION REGARDING NATURAL PERSON(S) "MAY BE UPDATED IN FUTURE FILINGS." ARE YOU REFERRING TO FUTURE PRE-EFFECTIVE AMENDMENTS TO THIS REGISTRATION STATEMENT? The Staff is advised that the Company requested written responses to prior comment 29 from all selling stockholders. The Company has received responses from all but a few selling stockholders. It is the intention of the Company to continue to request the information from such debenture holders so that the response to prior Comment 29 will be complete in a pre-effective amendment to this registration statement. CLOSING For your convenience, under separate cover we will deliver to you: o two (2) marked copies of the Amendment No. 2 (compared to Amendment No. 1); o two (2) clean copies of Amendment No. 2. May 22, 2006 Page 6 We welcome a further discussion on any of our points addressed within this response letter. Should you have any questions, please contact Kenneth Schlesinger at (212) 451-2252 or the undersigned at (212) 451-2259. Very truly yours, Harvey J. Kesner cc: Donald Gould Adam Wasserman bcc: Michael Brauser Paul Soltoff Steven Stowell Ed Hackert Nilene Evens Kenneth Schlesinger Mark Lakin Jonathan Deblinger
