SOUND REVOLUTION INC.
FILE NO. 333-118398
November 12, 2004
Larry Spirgel
Assistant Director
United States Securities and
Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
RE: SOUND REVOLUTION INC. ("SOUND REVOLUTION")
REGISTRATION STATEMENT ON FORM SB-2
AMENDMENT NO. 1
FILE NO. 333-118398
FILED AUGUST 20, 2004
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Dear Mr. Spirgel:
In response to your comment letter under date September 23, 2004, please find
enclosed three marked copies of Sound Revolution's Amended Registration
Statement No. 1 dated November 12, 2004 on Form SB-2/A for your review.
In response to your comments, Sound Revolution makes the following responses and
has made the following changes to its amended registration statement:
GENERAL
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1. WE NOTE THAT THIS EXCLUSIVELY SECONDARY OFFERING IS THE INITIAL
OFFERING OF YOUR SHARES. WE ALSO NOTE THAT WHILE YOU ARE NOT RECEIVING
ANY PROCEEDS FROM THE OFFERING, THE COMPANY IS PAYING THE COSTS
ASSOCIATED WITH THIS REGISTRATION STATEMENT EVEN THOUGH YOU APPARENTLY
ARE UNDER NO OBLIGATION TO DO SO. WE FURTHER NOTE THAT YOUR COMMON
SHARES DO NOT TRADE ON ANY MARKET OR QUOTATION SYSTEM, YET YOU INTEND
TO PURSUE A LISTING ON THE OTC BULLETIN BOARD AFTER THIS REGISTRATION
IS DECLARED EFFECTIVE. BASED UPON THESE AND OTHER FACTORS, IT APPEARS
THAT THE SELLING SHAREHOLDERS MAY BE STATUTORY UNDERWRITERS WITHIN THE
MEANING OF THE SECURITIES ACT. PLEASE TELL US WHETHER THE SELLING
SHAREHOLDERS HAVE PURCHASED FROM THE COMPANY WITH A VIEW TO, OR ARE
ENGAGING IN THE DIRECT OR INDIRECT PARTICIPATION IN, A DISTRIBUTION OF
YOUR SHARES. IF ANY OF THE SELLING SHAREHOLDERS ARE STATUTORY
UNDERWRITERS, THEN THEY MUST BE NAMED AS SUCH AND THE PROSPECTUS MUST
BE REVISED ACCORDINGLY.
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SOUND REVOLUTION INC.
FILE NO. 333-118398
YOUR RESPONSE ANALYZING WHETHER THE SELLING SHAREHOLDERS MAY BE
STATUTORY UNDERWRITERS SHOULD INCLUDE, BUT NOT BE LIMITED TO, THE
FOLLOWING FACTORS:
o HOW LONG THE SELLING SHAREHOLDERS HAVE HELD THE SHARES;
o THE CIRCUMSTANCES UNDER WHICH THEY RECEIVED THE SHARES;
o THEIR RELATIONSHIP TO THE ISSUER;
o THE AMOUNT OF SHARES INVOLVED;
o WHETHER THE SELLERS ARE IN THE BUSINESS OF UNDERWRITING
SECURITIES.
WE MAY HAVE ADDITIONAL COMMENTS BASED UPON YOUR RESPONSE.
RESPONSE:
None of the selling shareholders purchased from Sound Revolution with a
view to, or are engaging in the direct or indirect participation in a
distribution of our shares. We respectfully submit that none of the
selling shareholders are statutory underwriters, based on the following
facts:
1. The selling shareholders from our first offering, Paul
Addington and Cecelia Bravo, have held their shares for over
two years.
2. The remaining selling shareholders from the second offering
have held their shares for under one year. However, all these
shareholders purchased their shares as friends or family of
the directors of Sound Revolution, after receiving an Offering
Memorandum which described the business of Sound Revolution.
The Offering Memorandum contained the following statements,
(a) "These securities will be subject to a number of
resale restrictions, including a restriction on
trading. Until the restriction on trading expires,
you will not be able to trade the securities unless
you comply with an exemption from the prospectus and
registration requirements under securities
legislation.
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SOUND REVOLUTION INC.
FILE NO. 333-118398
(b) "No Market: There can be no assurance that an active
trading market will develop upon completion of this
Offering, or if such market develops, that it will
continue. Consequently, purchasers of the Shares
offered hereby may not find a ready market for the
underlying Shares."
3. Each of the selling shareholders signed a subscription
agreement which contained the following:
(a) "The Purchaser acknowledges receipt of an Offering
Memorandum;
(b) "No person has made to the Purchaser any written or
oral representation that the Shares will be listed
and posted for trading on a stock exchange or that
application has been made to list and post the Shares
for trading on a Stock Exchange;
(c) "The Shares are purchased hereby and are not
qualified for resale in the United States of America
and the Purchaser hereby undertakes not to knowingly
resell the underlying Shares to any resident or
citizen of the United States of America prior to
lawful registration or qualification of the
Shares...;
(d) "Hold Period. The purchaser further acknowledges
that: (a) These securities will be subject to a
number of resale restrictions, including a
restriction on trading. Until the restriction on
trading expires, you will not be able to trade the
securities unless you comply with an exemption from
the prospectus and registration requirements under
securities legislation..."
4. All of the selling shareholders purchased shares in amounts
between 1,000 and 52,000, and most of the selling shareholder
purchased 10,000 shares or less and do not have enough shares
to engage in a distribution of shares.
5. None of the selling shareholders are in the business of
selling or promoting shares and none of the selling
shareholders are in the business of underwriting securities.
6. None of the selling shareholders are under an obligation to
sell all or any portion of their shares and particular selling
shareholders may not have a present intention of selling their
shares.
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SOUND REVOLUTION INC.
FILE NO. 333-118398
7. The selling shareholders purchased in the ordinary course of
business.
8. At the time of the purchase of the securities to be resold,
none of the selling shareholders had any agreements or
understandings, directly or indirectly, with any person to
distribute the securities.
9. Other than Ryan Tunnicliffe, an officer of Sound Revolution
and Susanne Milka, a director of Sound Revolution, none of the
selling shareholders are directors, officers or affiliates of
Sound Revolution.
2. PLEASE SUPPLEMENTALLY ADVISE US WHETHER ANY OF THE SELLING SHAREHOLDERS
ARE BROKER-DEALERS OR AFFILIATED WITH BROKER-DEALERS. FOR ALL SELLING
SHAREHOLDERS THAT ARE BROKER-DEALERS, DISCLOSE THAT THEY ARE
"UNDERWRITERS" WITHIN THE MEANING OF THE SECURITIES ACT. YOU SHOULD
REVISE THE PLAN OF DISTRIBUTION TO STATE THE NAMES OF THE SELLING
SHAREHOLDERS WHO ARE BROKER-DEALERS, AND TO STATE THAT THEY ARE ALSO
UNDERWRITERS WITH RESPECT TO THE SHARES THAT THEY ARE OFFERING FOR
SALE.
RESPONSE:
None of the selling shareholders are broker-dealers or affiliated with
broker-dealers.
3. FOR SELLING SHAREHOLDERS WHO ARE AFFILIATES OF BROKER-DEALERS,
DISCLOSE, IF TRUE, THAT:
o THE SELLER PURCHASED IN THE ORDINARY COURSE OF BUSINESS, AND
o AT THE TIME OF THE PURCHASE OF THE SECURITIES TO BE RESOLD,
THE SELLER HAD NO AGREEMENTS OR UNDERSTANDINGS, DIRECTLY OR
INDIRECTLY, WITH ANY PERSON TO DISTRIBUTE THE SECURITIES.
RESPONSE:
None of the selling shareholders are affiliates of broker-dealers.
4. WE NOTE THAT YOU ARE A DEVELOPMENT STAGE COMPANY WITH LITTLE IF NO
BUSINESS OPERATIONS, A CAPITAL DEFICIT, AND A NEGATIVE FINANCIAL
CONDITION. WE ALSO NOTE THAT YOUR OFFICER, DIRECTOR AND PRINCIPAL
SHAREHOLDER PENNY GREEN PREVIOUSLY WAS AN OFFICER, DIRECTOR, AND
PRINCIPAL SHAREHOLDER OF ANOTHER PUBLIC COMPANY - MEDIATELEVISION.TV.
SIMILAR TO SOUND REVOLUTION'S PROPOSED OFFERING, MEDIATELEVISION BECAME
A PUBLIC COMPANY BY MEANS OF AN EXCLUSIVELY SECONDARY INITIAL PUBLIC
OFFERING IN 2002 DESPITE HAVING LITTLE IF NO BUSINESS OPERATIONS, A
CAPITAL DEFICIT, AND A NEGATIVE FINANCIAL CONDITION. IN THE TWO YEARS
SINCE, IT DOES NOT APPEAR THAT MEDIATELEVISION'S BUSINESS, INVESTMENT
OR FINANCIAL CONDITION CHANGED. THEN, IN APRIL 2004, MEDIATELEVISION
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SOUND REVOLUTION INC.
FILE NO. 333-118398
ANNOUNCED A REVERSE MERGER IN WHICH MS. GREEN SOLD HER SHARES IN A
CHANGE OF CONTROL TRANSACTION TO A COMPANY WITH BUSINESS OPERATIONS.
BASED UPON FILED FORMS 8-K, IT APPEARS THAT THE SALE CLOSED ON AUGUST
1, 2004. IN LIGHT OF THESE FACTS, PLEASE CONFIRM AND EXPLAIN TO US
WHETHER SOUND REVOLUTION ACTUALLY INTENDS TO PURSUE ITS BUSINESS MODEL
OR WHETHER IT ACTUALLY IS A BLANK CHECK COMPANY FOR WHICH MS. GREEN
REASONABLY INTENDS TO SEEK A BUYER OF A COMPANY WITH A REGISTERED CLASS
OF SHARES. WE MAY HAVE ADDITIONAL COMMENTS BASED ON YOUR RESPONSE.
RESPONSE:
Sound Revolution acknowledges that it is a development stage company
and it confirms that it fully intends to pursue its business model and
is not a blank check company. For the three months ended August 31,
2004, the company's liquidity has improved, with working capital of
$43,356 as opposed to a working capital deficit.
During the past few months, we have been active in developing our
website charitytunes.com and we have completed the site plan and are in
final negotiations with a web programming company to develop the
software programming required to make the website operational for
selling music downloads. Also, we have already entered into an
agreement with Ryan Tunnicliffe, our VP, Production, to complete all of
the graphic design, overall design and wording for the site. Also, we
are in the process of negotiating obtaining digital music rights from
several artists. We are informed by Penny Green that she does not
intend to seek a purchaser of her stock in Sound Revolution in the near
future, and instead is willing to provide support to Sound Revolution
to enable it to develop its business plan and improve its financial
condition, including arranging a loan by her company Bacchus
Entertainment Ltd. for up to $70,000 U.S. dollars to provide Sound
Revolution with additional resources to conduct its business.
5. PLEASE PROVIDE US WITH COPIES OF ANY ARTWORK YOU INTEND TO USE AS SOON
AS POSSIBLE FOR OUR REVIEW AND COMMENT. PLEASE KEEP IN MIND THAT WE MAY
HAVE COMMENTS ON THESE MATERIALS AND YOU SHOULD CONSIDER WAITING FOR
FURTHER COMMENTS BEFORE PRINTING AND CIRCULATING ANY ARTWORK.
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SOUND REVOLUTION INC.
FILE NO. 333-118398
RESPONSE: We do not intend to use any artwork on its registration
statement.
6. WHEN REFERRING TO DOLLAR AMOUNTS, UNIFORMLY REFER TO EITHER US OR
CANADIAN DOLLARS. REVISE THROUGHOUT THE FILING. ALSO, DISCLOSE IN THE
HEADING OF YOUR FINANCIAL STATEMENTS THAT YOUR FINANCIAL STATEMENTS ARE
IN US DOLLARS.
RESPONSE:
The filing has been revised so that all references are to U.S. dollars.
In some instances, where an agreement calls for a payment in Canadian
dollars, a reference to Canadian dollars has been made in parentheses.
Under "Prospectus Summary" on page 1, we have added, "All of the
references to dollar amounts in this registration statement are in U.S.
dollars unless otherwise noted."
The headings of all of our financial statements have been amended to
disclose that our financial statements are in U.S. dollars.
FRONT COVER OF PROSPECTUS
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7. PLEASE DELETE THE SECOND AND THIRD SENTENCES OF THE FIRST PARAGRAPH.
THOSE SENTENCES ARE NEITHER REQUIRED BY ITEM 501 OF REGULATION S-B, NOR
APPEAR KEY TO AN INVESTMENT DECISION.
RESPONSE: The second and third sentences of the first paragraph have
been deleted.
8. IN THE THIRD FULL PARAGRAPH, PLEASE ADD A SENTENCE BRIEFLY HIGHLIGHTING
THAT PURCHASER IN THIS OFFERING MAY BE RECEIVING AN ILLIQUID SECURITY.
RESPONSE:
The following has been added to the third paragraph, "The purchaser in
this offering may be receiving an illiquid security."
9. IF YOU INTEND TO CIRCULATE PRELIMINARY PROSPECTUSES, PLEASE REVISE TO
INCLUDE THE LEGEND REQUIRED BY ITEM 501(a)(10) OF REGULATION S-B.
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SOUND REVOLUTION INC.
FILE NO. 333-118398
RESPONSE: We do not intend to circulate preliminary prospectuses.
INSIDE FRONT COVER
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10. PLEASE PROVIDE THE DEALER DELIVERY OBLIGATION DISCLOSURE REQUIRED BY
ITEM 502(b).
RESPONSE:
The following has been added to the inside front cover of the
prospectus:
"Dealer Prospectus Delivery Obligation
"Until 90 days after the effective date of this Registration Statement,
all dealers that effect transactions in these securities, whether or
not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions."
PROSPECTUS SUMMARY, PAGE 1
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11. PLEASE REVISE THE SOUND REVOLUTION INC. DISCUSSION TO EMPHASIZE MORE
CLEARLY THAT YOU HAVE NO OPERATIONS, HAVE NOT GENERATED ANY REVENUES,
AND DO NOT EXPECT TO COMMENCE OPERATIONS AND GENERATE REVENUES UNTIL
THE MIDDLE OF 2005.
RESPONSE:
The following has been added under the title, "Prospectus Summary":
"Sound Revolution is a development stage company with no operations. We
have not generated any revenues from our intended business activities,
and we do not expect to commence operations and generate revenues until
the middle of 2005."
12. PLEASE REVISE TO INCLUDE A BRIEF STATEMENT INCLUDING WHAT PERCENTAGE OF
COMMON STOCK IS BEING OFFERED IN THIS PROSPECTUS. ALSO, CLARIFY THAT
BOTH BEFORE AND AFTER THE OFFERING, YOUR CURRENT DIRECTORS AND OFFICERS
WILL CONTROL THE COMPANY. NAME THOSE DIRECTORS AND OFFICERS AND STATE
THE PERCENTAGE THEY WILL HOLD IN YOUR COMMON STOCK. ALSO, STATE THAT
YOU ARE SUBSIDIARY OF BACCHUS ENTERTAINMENT LTD, A COMPANY WHICH IS
100% OWNED BY YOUR CHAIRMAN, PENNY GREEN. CLARIFY WHAT PERCENTAGE OF
YOUR SHARES ARE OWNED BY BACCHUS.
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SOUND REVOLUTION INC.
FILE NO. 333-118398
RESPONSE:
The following paragraph has been added under the heading, "Prospectus
Summary":
"2.6% of our issued and outstanding stock is being offered in this
prospectus. Both before and after the offering, our current directors
and officers will control Sound Revolution. After the offering, Heather
Remillard, a director and President of Sound Revolution will own 19.47%
of our issued and outstanding common stock and Penny Green, a director,
chairman and Chief Financial Officer of Sound Revolution will own 77.9%
of our issued and outstanding common stock. Sound Revolution is a
subsidiary of Bacchus Entertainment Ltd., a company which is 100% owned
by our chairman, Penny Green. Bacchus Entertainment Ltd. owns 58.42% of
the issued and outstanding common stock of Sound Revolution."
13. IN THE DISCUSSION OF FINANCIAL CONDITION, PLEASE REVISE TO INCLUDE A
BRIEF STATEMENT DISCLOSING THE AMOUNT OF FINANCING YOU EXPECT TO
REQUIRE TO CONTINUE IN OPERATIONS FOR THE NEXT YEAR.
RESPONSE:
The following has been added in our discussion of financial condition:
"We expect to require approximately an additional $16,000 in financing
to continue operations for the next year."
14. PLEASE GENERALLY REVISE YOUR REGISTRATION STATEMENT TO ELIMINATE
TECHNICAL AND BUSINESS JARGON FROM THE PROSPECTUS SUMMARY AND TO REDUCE
THE AMOUNT OF JARGON THROUGHOUT THE REST OF THE PROSPECTUS. EXAMPLES OF
TERMS THAT YOU SHOULD CONSIDER REPLACING WITH CLEAR CONCRETE EVERYDAY
LANGUAGE ARE:
o "FAN MANAGEMENT SOFTWARE PRODUCT"
o "SOFTWARE THAT WILL ALLOW ARTISTS AND RECORD LABELS TO
MAXIMIZE SALES POTENTIALS"
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SOUND REVOLUTION INC.
FILE NO. 333-118398
o "DEVELOPING DIGITAL MUSIC DISTRIBUTION SERVICES"
o "WE INTENT TO DISTRIBUTE OUR DIGITAL MUSIC ONLINE THROUGH
SEAMLESS DIGITAL INTEGRATION."
o "MUSIC DISTRIBUTION END TO END SOLUTIONS"
o "MAJOR LABELS ARE TOP-HEAVY AND HAVE HIGH OVERHEADS"
o "BREAK-EVEN POINTS"
o "DIGITAL CONTENT" AND VARIATIONS ON "CONTENT"
RESPONSE:
We have revised our registration to eliminate technical jargon and
business jargon. For example, the following replacements have been
made,
------------------------------------------------------- ----------------------------------------------------
PREVIOUS LANGUAGE NEW LANGUAGE
------------------------------------------------------- ----------------------------------------------------
"fan management software product" "email management software"
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"software that will allow artists and record labels "the software we are designing will enable
to maximize sales potentials" musicians to sell digital music and other products
to their customers using emails and the Internet"
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"developing digital music distribution services" "designing email management software"
------------------------------------------------------- ----------------------------------------------------
"we intend to distribute our digital music online "we intent to distribute our digital music through
through seamless digital integration" software which we own"
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"Music distribution end to end solutions" Deleted
------------------------------------------------------- ----------------------------------------------------
"major labels are top-heavy and have high overheads" "Major record labels that dominate North American music
sales have high overheads including
expensive management salaries."
------------------------------------------------------- ----------------------------------------------------
"break-even points" "we may be able to achieve profitability with much
lower revenues"
------------------------------------------------------- ----------------------------------------------------
"digital content" or "content" "songs", "what websites contain", "digital music
downloads", "content on our website"
------------------------------------------------------- ----------------------------------------------------
"an integrated system of products and services that "musicians software to enable them to sell their
we intend to offer" digital music directly to their customers as well as
an opportunity to sell their digital music though a
website which will offer music purchasers an
opportunity to benefit a charity of their choice"
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Page 9 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
RISK FACTORS, PAGE 2
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15. SOME OF YOUR RISK FACTORS ARE TOO LONG, TOO VAGUE, TOO GENERIC OR BUNDLE
MULTIPLE RISKS INTO ONE RISK FACTOR. MEANINGFUL RISK FACTOR DISCLOSURE
SHOULD CLEARLY PRESENT ADEQUATE BUT NOT EXCESSIVE DETAIL ABOUT DISTINCT
RISKS TO YOUR COMPANY OR YOUR OFFERING. FOR EXAMPLE, PLEASE REVISE THE
FOLLOWING RISK FACTORS:
o "BECAUSE OF OUR LACK OF OPERATING HISTORY, WE FACE A HIGH RISK OF
BUSINESS FAILURE," PAGE 2. THIS RISK FACTOR IS TOO VAGUE IN THAT
YOU DO NOT PRESENT SUFFICIENT, BUT NOT EXCESSIVE, INFORMATION FOR
INVESTORS TO ASSESS THE MAGNITUDE OF THE RISK. PLEASE REVISE
ACCORDINGLY. AS CURRENTLY DRAFTED THIS RISK FACTOR IS SO GENERIC
THAT IT COULD APPLY TO ANY COMPANY. PLEASE REVISE TO CLEARLY
EXPLAIN HOW EACH RISK APPLIES TO YOUR INDUSTRY, COMPANY, OR
OFFERING. ADDITIONALLY, PLEASE REVISE THE BODIES OF THIS AND YOUR
OTHER RISK FACTORS SO THAT THE BODIES OF THE RISK FACTORS EXPLAIN
HOW THE RISK DESCRIBED IN THE CAPTION MAY OCCUR.
RESPONSE: We have deleted this risk because after we amended the other
risks, we determined that this risk was repetitive and unnecessary (i.e.
some of its elements are contained in the risk "We are a development
stage company..." on page 2 and the risk, "Our poor financial
position..." on page 3).
o "OUR OPERATING RESULTS MAY PROVE UNPREDICTABLE...," PAGE 3. THIS
RISK FACTOR BUNDLES TOGETHER MULTIPLE DISTINCT RISKS. IN ORDER TO
GIVE THE PROPER PROMINENCE TO EACH RISK YOU PRESENT, PLEASE ASSIGN
EACH RISK ITS OWN DESCRIPTIVE SUBHEADING.
RESPONSE: This risk has been revised to refer only to the
unpredictability of our operating results.
o "WE ARE A DEVELOPMENT STAGE ONLINE MUSIC DISTRIBUTOR WITH NO
EXPERIENCE...," PAGE 4. THIS RISK FACTOR BUNDLES SEVERAL DISTINCT
RISKS. IN DOING SO, YOU DO NOT PROVIDE SUFFICIENT CONCRETE DETAIL
FOR INVESTORS TO UNDERSTAND THE MAGNITUDE OF THESE RISKS. PLEASE
REVISE ACCORDINGLY. ONCE YOU HAVE REVISED TO UNBUNDLED THIS AND
OTHER RISK FACTORS, AS CURRENTLY DRAFTED, YOU SHOULD CONSIDER
REPLACING REPETITIVE RISK DISCLOSURE WITH A SINGLE RISK FACTOR.
FOR EXAMPLE, THIS AND THE PRECEDING TWO RISK FACTORS DISCUSS THE
RISK THAT YOU MAY NOT BE ABLE TO CONTINUE IN OPERATIONS WITHOUT
RAISING SIGNIFICANT AMOUNTS OF NEW EQUITY FINANCING.
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SOUND REVOLUTION INC.
FILE NO. 333-118398
AGAIN, THE ABOVE ARE ONLY EXAMPLES. PLEASE REVISE THROUGHOUT.
RESPONSE:
Our risk factors have been revised, in accordance with your suggestions,
so that they are more meaningful. After our revisions, we deleted nine of
the risks, as the risks they described were already described in other
risks.
16. PLEASE AVOID THE GENERIC CONCLUSION THAT A RISK COULD HAVE A MATERIALLY
ADVERSE EFFECT ON YOU, AN ADVERSE EFFECT MAY RESULT FROM THE RISK, ETC.
THIS DOES NOT REPRESENT MEANINGFUL DISCLOSURE, WHETHER IN YOUR RISK
FACTOR CAPTIONS OR DISCUSSIONS. REVISE TO SPECIFICALLY DISCLOSE THE
ACTUAL RISK AND HOW IT COULD AFFECT YOUR OFFERING, OPERATING RESULTS,
BUSINESS STRATEGY, PROFITS, SHARE PRICE, ETC.
RESPONSE:
We have revised our risks section so that each risk specifically
discloses the actual risk and how it could affect us.
17. PLEASE REVISE TO MOVE THE FIRST RISK FACTOR FOLLOWING THE "RISKS RELATED
TO OUR BUSINESS" ON PAGE 4 SO THAT IT IS THE FIRST RISK FACTOR PRESENTED.
ALSO REVISE THAT RISK FACTOR TO CLARITY THAT YOU HAVE NO CUSTOMERS, NO
CURRENT PRODUCTS AND NO REVENUES.
RESPONSE:
We have moved this risk factor so that it is the first risk factor
presented. Also we have revised it to clarify that we have no customers,
no current products and no revenues.
RELIANCE OF CERTAIN ALLIANCES, PAGE 7
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18. PLEASE REVISE THIS CAPTION TO REFLECT THE RISK DISCUSSED IN THE BODY OF
THE RISK FACTOR. SIMILARLY REVISE YOUR OTHER RISK FACTOR CAPTIONS AS
APPROPRIATE, INCLUDING "CHANGE IN TECHNOLOGY ENVIRONMENT AND ACCESS" ON
PAGE 9.
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SOUND REVOLUTION INC.
FILE NO. 333-118398
RESPONSE: We have revised our captions as follows:
------------------------------------------------ ------------------------------------------------------------
OLD CAPTION NEW CAPTION
------------------------------------------------ ------------------------------------------------------------
"Reliance on certain alliances" "If are unable to build alliances with owners of
digital music rights we may not be able to generate
revenue."
------------------------------------------------ ------------------------------------------------------------
"Change in technology environment and access" "The technology we use could become outdated, preventing
us from launching our intended products and services and
preventing us from becoming profitable."
------------------------------------------------ ------------------------------------------------------------
"We have a poor financial position and a lack "Our poor financial position and a lack of recent profits
of recent profits from operations" from operations could prevent us from accessing
capital we need to continue operating and prevent us
from generating revenues."
------------------------------------------------ ------------------------------------------------------------
"We may encounter security risks on the "Security risks on the Internet may increase our costs
Internet" and prevent us from becoming profitable."
------------------------------------------------ ------------------------------------------------------------
"If we become subject to burdensome government "If we become subject to burdensome government
regulations affecting the Internet, our regulations affecting the Internet, our cost of doing
business could be adversely affected." business could increase, or we could become unable to carry
out our business plan"
------------------------------------------------ ------------------------------------------------------------
A LIMITED NUMBER OF STOCKHOLDERS CONTROL US...PAGE 12
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19. PLEASE REVISE THIS RISK FACTOR TO CLEARLY STATE AND EXPLAIN A RISK TO
INVESTORS. STATE WHAT ADVERSE EFFECT MAY OCCUR AND WHAT MAY CAUSE IT.
SIMILARLY, REVISE YOUR OTHER RISK FACTORS AS APPROPRIATE, INCLUDING, "WE
INDEMNIFY OUR DIRECTORS..." AND "WE HAVE NEVER PAID DIVIDENDS" ON PAGE
12.
We have deleted the risk "We have never paid dividends" because on
review, we determined that there was no risk associated with this item.
We revised "A limited number of stockholders..." as follows:
"Sound Revolution management beneficially own 97.37% of the shares of
common stock and their interest could conflict with the investors which
could cause the investor to lose all or part of the investment.
"Penny Green, our Chief Financial Officer and Chairman of the Board,
beneficially owns approximately 77.90% of our outstanding common stock
and Heather Remillard, our Chief Executive Officer, beneficially owns
19.47% of outstanding common stock. As a result, the directors and
executive officers collectively own 97.37% of our common stock and are
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SOUND REVOLUTION INC.
FILE NO. 333-118398
able to substantially influence all matters requiring stockholder
approval, including the election of directors and approval of significant
corporate transactions. Such concentration of ownership may also have the
effect of delaying or preventing a change in control, which may be to the
benefit of the directors and executive officers but not in the interest
of the shareholders. This beneficial ownership and potential effective
control on all matters relating to the business and operations of Sound
Revolution could eliminate the possibility of shareholders changing the
management in the event that the shareholders did not agree with the
conduct of the officers and directors. Additionally, the shareholders
would potentially not be able to obtain the necessary shareholder vote to
affect any change in the course of business of Sound Revolution. This
lack of shareholder control could cause the investor to lose all or part
of the investment."
We changed the risk, "We indemnify our directors..." to the following,
"We indemnify our directors against liability to Sound Revolution and our
stockholders, and the costs of this indemnification could prevent us from
achieving profitability.
"Sound Revolution's By-Laws allow for the indemnification of company
Officers and Directors in regard to their carrying out the duties of
their offices. The By-laws also allow for reimbursement of certain legal
defenses.
"As to indemnification for liabilities arising under the Securities Act
of 1933 for directors, officers or persons controlling Sound Revolution,
Sound Revolution has been informed that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy and
unenforceable.
"Since our directors and officers are aware that they may be indemnified
for carrying out the duties of their offices, they may be less motivated
to ensure that meet the standards required to properly carry out their
duties, which could have a negative impact on our operating results.
Also, if any director or officer claims against Sound Revolution for
indemnification, the costs could prevent us from achieving or maintaining
profitability."
Page 13 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
DETERMINATION OF OFFERING PRICE, PAGE 13
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20. PLEASE REVISE TO DISCLOSE THE FACTORS YOU CONSIDERED IN DETERMINING THE
OFFERING PRICE. SINCE THIS IS THE INITIAL OFFERING OF YOUR SHARES, IT IS
UNCLEAR HOW YOU OR THE SELLING SHAREHOLDERS - INDIVIDUALLY OR IN GROUPS
OF SHAREHOLDERS AND/OR WITH THE COMPANY ARRIVED AT THE INITIAL OFFERING
PRICE OF $0.20 PER SHARES. SIMILARLY, IT IS UNCLEAR WHAT PRIVATELY
NEGOTIATED FACTORS MIGHT LEAD THE SELLING SHAREHOLDER TO SELL SHARES AT A
PRICE DIFFERENT THAN $0.20 PER SHARE.
RESPONSE: Please see response to comment #21, below.
21. IN ADDITION, PLEASE BRIEFLY DESCRIBE IN THE SUMMARY HOW THE OFFERING
PRICE WAS DETERMINED.
RESPONSE: In response to comments #20 and #21, the following has been
added,
"The $ .20 per share offering price of our common stock was determined by
our management based on our internal assessment of what we feel the
market would support. There is no relationship whatsoever between this
price and our assets, earnings, book value or any other objective
"The number of shares that may be actually sold by a selling stockholder
will be determined by each selling shareholder. The selling shareholders
are under no obligation to sell all or any portion of the shares offered,
nor are the selling shareholders obligated to sell such shares
immediately under this prospectus. A shareholder may sell shares at a
price different than $0.20 per share depending on privately negotiated
factors such as a shareholder's own cash requirements, or based on our
assets, earnings, book value of other objective criteria of value."
PLAN OF DISTRIBUTION, PAGE 15
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22. PLEASE REVISE YOUR DISCLOSURE TO CLARITY THAT, IN ORDER TO BE QUOTED ON
THE OTC BULLETIN BOARD, A MARKET MAKER MUST FILE AN APPLICATION ON YOUR
BEHALF IN ORDER TO MAKE A MARKET FOR YOUR COMMON STOCK. CLARIFY HOW LONG
THIS TAKES AND WHETHER YOU HAVE ENGAGED A MARKET MAKER TO APPLY FOR A
QUOTATION ON THE OTC BULLETIN BOARD ON YOUR BEHALF. EXPLAIN WHAT EFFECT
QUOTATION ON THE OCT BULLETIN BOARD WILL HAVE ON YOUR LIQUIDITY.
Page 14 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
SIMILARLY, INCLUDE A VERY BRIEF STATEMENT ABOUT THESE ITEMS IN THE
PROSPECTUS SUMMARY. ALSO, PLEASE REVISE THE RISK FACTOR "THE SECURITIES
OFFERED MAY QUALIFY AS PENNY STOCKS..." ON PAGE 10, TO INCORPORATE THESE
DETAILS.
RESPONSE:
Under the heading, Plan of Distribution, the following paragraph has been
added,
"We intend to apply to the OTC Bulletin Board for the trading of our
common stock upon our becoming a reporting entity under the Securities
Exchange Act of 1934. We intend to file the application upon the
effective date of the registration statement of which this prospectus
forms a part. In order for Sound Revolution to be quoted on the OTC
Bulletin Board, a market maker must file an application on our behalf to
make a market for our common stock. This process takes at least 3 months
and can take longer than a year. Sound Revolution has not yet engaged a
market maker to apply for quotation on the OTC Bulletin Board on our
behalf. If our common stock becomes listed on the OTC Bulletin Board and
a market for the stock develops, the actual price of the shares sold
herein by the selling shareholders will be determined by prevailing
market prices at the time of sale or by private transactions negotiated
by the selling shareholders named in this prospectus. The offering price
would thus be determined by market factors and the independent decisions
of the selling shareholders named in this prospectus.
"Trading in stocks quoted on the OTC Bulletin Board is often thin and
characterized by wide fluctuations in trading prices, due to many factors
that may have little to do with a company's operations or business
prospects. Moreover, the OTC Bulletin Board is not a stock exchange, and
trading of securities on the OTC Bulletin Board is often more sporadic
than the trading of securities listed on a quotation system like the
Nasdaq Small Cap or a stock. In the absence of an active trading market:
(a) investors may have difficulty buying and selling or obtaining market
quotations; (b) market visibility for our common stock may be limited;
and (c) a lack of visibility for our common stock may have a depressive
effect on the market price for our common stock."
The following has been added to the prospectus summary:
Page 15 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
"There is no established market for the common stock being registered. We
intend to apply to the over the counter bulletin board (the "OTC Bulletin
Board") for the trading of our common stock. This process takes at least
3 months and the application must be made on our behalf by a market
maker, but we have not yet engaged a market maker to make the application
on our behalf. If our common stock becomes listed and a market for the
stock develops, the actual price of the shares will be determined by
prevailing market prices at the time of the sale. Trading of securities
on the OTC is often sporadic and investors may have difficulty buying and
selling or obtaining market quotations, which may have a depressive
effect on the market price for our common stock."
The following has been added to the risk factor, "The securities offered
may qualify as penny stocks..."
"There is no established market for the common stock being registered. We
intend to apply to the OTC Bulletin Board for the trading of our common
stock. This process takes at least 3 months and the application must be
made on our behalf by a market maker, but we have not yet engaged a
market maker to make the application on our behalf. If our common stock
becomes listed and a market for the stock develops, the actual price of
the shares will be determined by prevailing market prices at the time of
the sale. Trading of securities on the OTC Bulletin Board is often
sporadic and investors may have difficulty buying and selling or
obtaining market quotations, which may have a depressive effect on the
market price for our common stock. Accordingly you may have difficulty
reselling any of the shares you purchase from selling shareholders."
23. PLEASE IDENTIFY ANY SELLING SHAREHOLDERS THAT WILL ENGAGE IN ANY
ELECTRONIC OFFER, SALE OR DISTRIBUTION OF THE SHARES AND DESCRIBE THEIR
PROCEDURES TO US SUPPLEMENTALLY.
FURTHER, TELL US WHETHER YOU OR THE SELLING SHAREHOLDERS HAVE ANY
ARRANGEMENTS WITH A THIRD PARTY TO HOST OR ACCESS YOUR PROSPECTUS ON THE
INTERNET. IF SO, IDENTIFY THE PARTY AND THE WEBSITE, DESCRIBE THE
MATERIAL TERMS OF YOUR AGREEMENT, AND PROVIDE US WITH A COPY OF ANY
WRITTEN AGREEMENT. PROVIDE US ALSO WITH COPIES OF ALL INFORMATION
CONCERNING YOUR COMPANY OR PROSPECTUS THAT HAVE APPEARED ON THEIR
WEBSITE.
RESPONSE: No selling shareholders will engage in any electronic offer,
sale or distribution of the shares and neither Sound Revolution nor any
of the shareholders have any arrangements with a third party to host or
access our prospectus on the Internet.
Page 16 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
The following has been added under Plan of Distribution:
"None of the selling shareholders will engage in any electronic offer,
sale or distribution of the shares. Further, neither Sound Revolution nor
any of the selling shareholders have any arrangements with a third party
to host or access our prospectus on the Internet."
DIRECTORS AND OFFICERS, PAGE 16
- -------------------------------
24. PLEASE REMOVE YOUR DISCUSSION OF DIGITAL COLOR PRINT, INC.'S CURRENT
STOCK PRICE.
RESPONSE:
The discussion of Digital Color Print, Inc.'s current stock price has
been deleted.
AUDIT COMMITTEE, PAGE 18
- ------------------------
25. PLEASE REVISE TO NAME THE MEMBER OF YOUR AUDIT COMMITTEE.
RESPONSE:
The member of the audit committee, Susanne Milka, has been named.
DESCRIPTION OF SECURITIES, PAGE 19
- ----------------------------------
26. THE STATEMENT, "ALL OUTSTANDING SHARES OF COMMON STOCK ARE VALIDLY
AUTHORIZED AND ISSUED, FULLY PAID AND NON-ASSESSABLE" IS A LEGAL
CONCLUSION YOU ARE NOT QUALIFIED TO MAKE. EITHER ATTRIBUTE IT TO COUNSEL
OR DELETE IT.
RESPONSE:
The statement, "All outstanding shares of Common Stock are validly
authorized and issued, fully paid and non-assessable" has been deleted.
27. PLEASE REMOVE YOUR STATEMENT THAT THE DESCRIPTION OF COMMON STOCK DOES
NOT PURPORT TO BE COMPLETE. YOUR DESCRIPTION OF SECURITIES SHOULD BE
MATERIALLY COMPLETE. SEE ITEM 202 OF REGULATION S-B. PLEASE REVISE
ACCORDINGLY.
Page 17 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
RESPONSE:
The paragraph beginning with "The above description concerning the Common
Stock of Sound Revolution does not purport to be complete" has been
deleted.
28. PLEASE REVISE TO DESCRIBE YOUR PREFERRED STOCK. YOU SHOULD STATE HOW MANY
SHARES ARE OUTSTANDING AND IN WHAT SERIES, AND WHAT MATERIAL TERMS THEY
HAVE. SEE ITEM 202 OF REGULATION S-B. IN THIS REGARD, WE NOTE YOUR
DISCLOSURE ON PAGE 12 IN THE RISK FACTOR "SOME PROVISIONS OF OUR
ARTICLES..."
RESPONSE:
A description of our preferred stock has been added as follows:
"PREFERRED STOCK
"We are authorized to issue up to 20,000,000 shares of $.0001 par value
preferred stock. Sound Revolution has no shares of preferred stock
outstanding. Under our Articles of Incorporation, the Board of Directors
has the power, without further action by the holders of the common stock,
to determine the relative rights, preferences, privileges and
restrictions of the preferred stock, and to issue the preferred stock in
one or more series as determined by the Board of Directors. The
designation of rights, preferences, privileges and restrictions could
include preferences as to liquidation, redemption and conversion rights,
voting rights, dividends or other preferences, any of which may be
dilutive of the interest of the holders of the common stock or the
preferred stock of any other series."
DESCRIPTION OF BUSINESS, PAGE 21
- --------------------------------
29. PLEASE REVISE TO BEGIN YOUR BUSINESS DISCUSSION BY STATING, IF TRUE, THAT
YOU HAVE ONLY RECENTLY BEGUN YOUR CURRENT OPERATIONS AND THAT YOU HAVE A
LIMITED HISTORY OF REVENUES AND SIGNIFICANT OPERATIONAL LOSSES TO DATE AS
WELL AS ACCUMULATED SHAREHOLDER DEFICIT. PROVIDE QUANTITATIVE FIGURES FOR
THESE ITEMS AND STATE THE DATES THAT YOU COMMENCED EACH MATERIAL CATEGORY
OF YOUR OPERATIONS.
Page 18 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
RESPONSE:
The beginning of our business discussion has been revised to read as
follows:
"We have only recently begun our current operations and we have a limited
history of revenues and significant operational losses to date as well as
an accumulated shareholder deficit. As of August 31, 2004, we had no
total revenues, operational losses in the amount of $23,413 and an
accumulated shareholder deficit of $36,373.
"Since our inception, on June 4, 2001, we have been developing our
business plan and identifying potential products and services related to
digital music distribution that we could develop, market and sell. Since
June, 2001, we have intended to develop software that will enable
musicians to sell digital music and other products to their customers
using emails and the Internet, and we actively began developing the
specifications for this software in January, 2004. We have not yet
completed the specifications for this software and we have not yet
engaged a software developer to build this software for us.
"In the beginning of 2002 we developed our website,
www.soundrevolution.com and began working with musicians to assist them
in promoting their music on our website and through live events, the
proceeds of which were donated to charities. "In 2002 and 2003 we
co-produced and marketed several live events where some of the musicians
featured on our website performed live. For only one of these events,
SHOW!, did we record any revenues, and these are the sole revenues we
have generated to date.
"Since our inception, we have contemplated that we would sell digital
music online, and in July, 2004, we decided that we would develop a
website that will combine music and charitable causes for the sale of
digital music. In August, 2004 we registered the domain name
www.charitytunes.com and since then we have been actively developing this
website."
30. PLEASE GENERALLY REVISE YOUR BUSINESS DISCUSSION, FROM PAGE 21 THROUGH
26, TO CLARIFY WHAT SPECIFIC PRODUCTS YOU INTEND TO DISTRIBUTE IN WHAT
SPECIFIC MARKETS AND SPECIFICALLY HOW YOU PLAN TO GENERATE REVENUES. ALSO
PLEASE GENERALLY REVISE TO CLEARLY AND PRECISELY STATE THE STAGE OF
DEVELOPMENT FOR EACH OF YOUR MATERIAL PRODUCTS AND SERVICES. SIMILARLY,
CLARIFY THE STAGE OF ANY MATERIAL NEGOTIATIONS AND CLARIFY WHETHER YOU
HAVE BINDING WRITTEN AGREEMENTS. YOUR CURRENT DISCLOSURE IS TOO VAGUE.
FOR EXAMPLE, PLEASE REPLACE THE FOLLOWING STATEMENTS WITH CONCRETE
EVERYDAY LANGUAGE THAT CLEARLY EXPLAINS WHAT YOU SELL, WHO SUPPLIES IT TO
YOU AND TO WHO M YOU SELL IT:
Page 19 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
o YOU INDICATE ON PAGE 21 THAT YOU HAVE "BEEN DEVELOPING PRODUCTS
AND SERVICES THAT WILL ASSIST ARTISTS IN GENERATING NEW REVENUE
STREAMS AVAILABLE IN THE DIGITAL ECONOMY." IDENTIFY THESE PRODUCTS
AND SERVICES AND EXPLAIN HOW THEY WORK. IDENTIFY WHAT TYPE OF
ARTISTS YOU ARE REFERRING TO. SINCE YOU HAVE NOT GENERATED
SIGNIFICANT REVENUES, IT IS UNCLEAR WHAT YOUR BASIS IS TO SUGGEST
THESE PRODUCTS AND SERVICES WILL "GENERAT[E] NEW REVENUE STREAMS
AVAILABLE IN THE DIGITAL ECONOMY." PLEASE SUPPORT OR REMOVE THAT
AND SIMILAR STATEMENTS.
RESPONSE: This paragraph has been changed and now reads as follows:
"Since our inception, on June 4, 2001, we have been developing our
business plan and identifying potential products and services related to
digital music distribution that we could develop, market and sell. Since
June, 2001, we have intended to develop software that will enable
musicians to sell digital music and other products to their fans
(potential customers) using emails and the Internet, and we actively
began developing the outline containing the specifications for all of the
features for this software in January, 2004. We have not yet completed
the specifications for this software and we have not yet engaged a
software developer to build this software for us. The other principal
software we are developing will enable us to sell digital music downloads
through a website, www.charitytunes.com. Through this website, we hope to
generate revenues from the sale of digital music."
o ALSO ON PAGE 21, YOU INDICATE THAT YOU "HAVE BEEN DEVELOPING A
BUSINESS MODEL FOR A WEBSITE THAT WILL COMBINE MUSIC AND
CHARITABLE CAUSES FOR THE SALE OF DIGITAL MUSIC." PLEASE REVISE TO
PROVIDE MORE CONCRETE DETAILS OF THIS BUSINESS MODEL AND CLEARLY
STATE WHAT SPECIFIC STEPS YOU HAVE TAKEN TO IMPLEMENT IT AND WHAT
STEPS REMAIN. ALSO CLEARLY STATE THAT YOU HAVE NOT SIGNED UP ANY
CHARITIES TO PARTICIPATE IN THIS PROJECT.
RESPONSE: A new paragraph has been added as follows:
Page 20 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
"Since our inception, we have contemplated that we would sell digital
music online, and in July, 2004, we decided that we would develop a
website which will allow customers to purchase digital music downloads,
and allow customers to choose a charity that will receive a benefit equal
to a portion of the purchase price for each song that they purchase. In
August, 2004 we registered the domain name www.charitytunes.com for this
purpose and since then we have been actively developing this website. We
intend to make available other related products and services which will
assist musicians in marketing their music online, but so far we have not
commenced operations related to any other products or services."
o PLEASE REVISE TO CLARIFY HOW YOU INTEND TO BUILD YOUR CORE
SOFTWARE YOURSELVES, AS YOU STATE ON PAGE 22, AND HAVE IT
COMPLETED IN LESS THAN ONE YEAR'S TIME, AS YOU INDICATE ON PAGE
23, WHEN YOU ALSO STATE ON PAGE 26 THAT YOU HAVE "NO PART TIME OR
FULL TIME EMPLOYEES" AND THAT YOU HAVE "THREE CONTRACTORS WHO WORK
PART TIME ON A REGULAR BASIS," WHO HAPPEN TO BE OFFICERS AND NONE
OF WHOM APPEARS TO BE A COMPUTER SOFTWARE DEVELOPER. IF THIS
SOFTWARE IS BEING DEVELOPED BY THIRD PARTIES, REVISE TO CLARIFY
THAT AND FILE YOUR DEVELOPMENT AGREEMENTS AS EXHIBITS.
RESPONSE: The following has been added in relation to our email
management software:
"Our intention is to build the core software by hiring software
programmers as independent contractors to develop the software according
to our specifications, and to add special features through the
acquisition or licensing of software components already developed. We are
currently in the process of completing the detailed description of all of
the elements that we want this software to encompass. We have entered
into negotiations with a software engineer to assist us in completing
this description of our intended software. Once our description is
complete, we intend to approach several software development companies to
negotiate and enter into a contract for the development of the software."
The following has been added with regards to www.charitytunes.com:
"We have entered into a development agreement with Ryan Tunnicliffe, our
VP, Programming, whereby he has agreed to build our music library,
negotiate a software development contract with software programmers and
complete the graphic design for the website charitytunes.com. A copy of
the agreement has been attached as Exhibit 10.4 to this prospectus. We
Page 21 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
have completed the description of all of the functions and features we
want included on the site and we have written most of the copy for the
wording on the website. During the past few months, we have approached
several programming companies and we are currently in final negotiations
with one company to develop all of the programming for the website."
THESE ARE ONLY EXAMPLES, GENERALLY REVISE THIS SECTION.
RESPONSE:
Our business discussion has been revised to clarify the specific products
we intend to distribute in what markets and how we intend to generate
revenues, along with a description of the stage of development, and the
stage of material negotiations. We have more clearly identified what we
sell, who supplies it to us, and to whom we sell it. We have deleted
references to Digital Music Distribution, Music Production and Additional
Products and Services as our management has determined that we will focus
our efforts in two areas: building charitytunes.com and developing our
email management software.
Further, we have described what steps we have taken to implement our
plans, and what steps remain. Some statements have been deleted from the
prospectus where we cannot provide support for the statements.
31. IN MANY PLACES IN THE DISCUSSION OF YOUR BUSINESS, YOU MAKE ASSERTIONS
THAT REFLECT YOUR BELIEFS ABOUT YOUR FUTURE PROSPECTS. IN EACH CASE,
REVISE YOUR DISCUSSION AS NECESSARY TO CLEARLY CHARACTERIZE THOSE
ASSERTIONS AS YOUR BELIEFS AND TO SUBSTANTIATE THEM WITH SUPPORTING DATA
AND DETAILS. IF YOU CANNOT SUPPORT THE DETAILS, THEN YOU SHOULD DELETE
THEM. FOR EXAMPLE:
o CLARIFY THAT THE FINAL BULLET POINT ON PAGE 25 IS YOUR BELIEF AND
DISCLOSE YOUR BASIS FOR THIS BELIEF. FURTHER REGARDING THAT BULLET
ITEM, PLEASE RECONCILE YOUR STATEMENTS THAT YOU HAVE A
"COMPETITIVE EDGE" BECAUSE "THERE ARE PLENTY OF ARTISTS TO SIGN"
WITH YOUR STATEMENT ON PAGE 4 THAT "WE HAVE ONLY SIGNED ONE ARTIST
FOR OUR SERVICES."
o PLEASE REVISE TO EXPLAIN IN CONCRETE DETAIL YOUR BASIS FOR STATING
ON PAGE 28 THAT YOU BELIEVE YOU WILL GENERATE "REVENUES FROM
DIGITAL MUSIC SALES AND FAN MANAGEMENT SERVICES WITHIN THE YEAR."
Page 22 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
RESPONSE:
We have deleted the assertions, including the ones you specifically
referred to, that we could not support with details.
OUR COMPETITIVE POSITION, PAGE 23
- ---------------------------------
32. PLEASE REVISE TO CLEARLY STATE YOUR MARKET SHARE, TO WHICH YOU REFER ON
PAGE 24.
RESPONSE:
We have added at the beginning of this paragraph, the following, "We
currently have no share in the market for digital distribution, online
music sales, or in any of our planned online music services. Also, on
page 24, we have amended the third paragraph and removed the reference
"which could cause us to lose customers, revenue and market share", and
replaced it with "which could prevent us from building customers, revenue
and market share".
33. PLEASE SIGNIFICANTLY REVISE THE BULLET LIST OF YOUR COMPETITIVE STRENGTHS
ON PAGE 25. THE CURRENT DISCUSSION IS TOO VAGUE AND SHOULD BE REPLACED
WITH CONCRETE STATEMENTS, QUANTIFIED WHERE POSSIBLE.
RESPONSE:
We have revised our discussion of competitive strengths so that it is
more specific.
FOR EXAMPLE:
o IDENTIFY THE "LEADERS AND INNOVATORS FROM RELATED FIELDS" AND
STATE THEIR CREDENTIALS. RECONCILE THIS STATEMENT WITH YOUR
STATEMENT ON PAGE 6 THAT "THE MEMBERS OF OUR MANAGEMENT TEAM HAVE
LIMITED EXPERIENCE IN LEADERSHIP ROLES IN THE MUSIC INDUSTRY OR IN
A PUBLIC COMPANY."
REPONSE: the reference to "leaders and innovators" has been deleted.
Page 23 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
o ONE OF THE BULLET ITEMS IS NOT A SENTENCE, SO IT IS UNCLEAR HOW IT
GIVES YOU A COMPETITIVE EDGE. PLEASE REVISE TO CLARIFY.
RESPONSE: this item has been deleted.
CUSTOMER BASE, PAGE 25
- ----------------------
34. PLEASE REVISE TO QUANTIFY HOW MANY CUSTOMERS YOU HAVE AND HOW LONG, ON
AVERAGE, THEY HAVE BEEN YOUR CUSTOMERS. IF ONE OR MORE CUSTOMERS
INDIVIDUALLY REPRESENT 10% OR MORE OF YOUR REVENUES, NAME THEM. WE NOTE
DISCLOSURES THROUGHOUT THE REGISTRATION STATEMENT SUGGESTING THAT YOU
HAVE SIGNIFICANT NUMBERS OF CUSTOMERS THAT MIGHT BE LOST DUE TO
COMPETITION. CONSIDER GENERALLY REVISING TO REMOVE THAT SUGGESTION,
UNLESS YOU DO HAVE A SIZABLE STABLE CUSTOMER BASE. IN THIS REGARD, WE
NOTE YOUR STATEMENT ON PAGE 4 THAT "WE HAVE...NO CLIENT BASE." SIMILARLY,
WE NOTE YOUR STATEMENT ON PAGE 6 THAT "TO DATE, WE HAVE NOT SIGNED UP ANY
CHARITIES FOR PARTICIPATION."
RESPONSE:
Our discussion under this heading has been revised to state that we have
no customers. Similarly, on page 24, we have amended the third paragraph
and removed the reference "which could cause us to lose customers,
revenue and market share", and replaced it with "which could prevent us
from building customers, revenue and market share".
RESEARCH AND DEVELOPMENT, PAGE 26
- ---------------------------------
35. PLEASE REVISE TO CLARIFY WHAT THE "BUSINESS DEVELOPMENT THINK TANK" WAS.
EXPLAIN WHAT ITS PURPOSE WAS, WHO PARTICIPATED, WHY WERE THE PARTICIPANTS
GIVEN SHARES IN YOUR COMPANY AND WHAT DID THEY CONTRIBUTE IN EXCHANGE FOR
THE SHARES. DISCLOSE THE BASIS FOR VALUING THE SHARES AT $0.20 PER SHARE.
RESPONSE:
We have revised the discussion under Research and Development to include
more details on the Business Development Think Tank, as follows:
Page 24 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
"On July 23, 2004, Sound Revolution conducted its first Business
Development Think Tank. Participants included Sound Revolution's Chief
Financial Officer, Penny Green, our Vice President of Production, Ryan
Tunnicliffe, Chris Russell, Chief Technology Officer of View Assessments
Inc., Stephanie Hartman, an independent marketing consultant, George
Muenz, General Manager of Netnation Communications Inc., and Angela
Green, a software engineer and the sister of Penny Green, our Chief
Financial Officer. At the think tank, which took place at Sound
Revolution's offices, the participants together discussed the Internet,
digital media and digital music industries, where potential business
opportunities lay and how Sound Revolution might take advantage of new
opportunities by incorporating plans for new products or services into
its business plan. Each of the participants, except Ms. Green, were
compensated with 2,000 shares of our common stock, valued at $0.20 per
share, for total compensation of $2,000. Sound Revolution determined that
the price of $0.20 per share was appropriate because it was the offering
price of our common stock in the most recent private placement we had
completed at the time. Each of the participants in the Think Tank signed
an agreement in the same form of the Business Development Think Tank
Agreement which with Ryan Tunnicliffe which is attached as Exhibit 10.3
to the SB-2 filed by Sound Revolution on August 19, 2004."
EMPLOYEES, PAGE 26
- ------------------
36. PLEASE REVISE TO CLARIFY HOW MANY EMPLOYEES YOU HAVE. THE FIRST PARAGRAPH
UNDER THIS CAPTION SAYS YOU HAVE NONE, WHILE THE SECOND PARAGRAPH
INDICATES YOU HAVE ONE. IF YOUR AGREEMENTS WITH CONTACTS CONSTITUTE
MATERIAL AGREEMENTS, FILE THEM AS EXHIBITS. FOR EXAMPLE, CONSIDER FILING
AGREEMENTS TO DEVELOP YOUR CHARITY-RELATED MUSIC WEB SITE AND YOUR MUSIC
FAN SALES CONTACT SOFTWARE.
RESPONSE:
The second paragraph under this heading has been changed so that it does
not indicate we have an employee. We have filed as an exhibit the
following:
(a) Website Development Agreement with Ryan Tunnicliffe
attached to this registration statement as Exhibit 10.4
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS, PAGE 27
- -------------------------------------------------------------------
37. PLEASE GENERALLY REVISE TO PROVIDE GREATER CONCRETE DETAIL IN YOUR
DISCUSSION AND ANALYSIS OF YOUR RESULTS OF OPERATIONS AND YOU FINANCIAL
CONDITION. EXPLAIN IN GREATER CONCRETE DETAILS YOUR SPECIFIC PLANS TO
OBTAIN PROFITABILITY AND TO ADDRESS YOUR AUDITOR'S GOING CONCERN OPINION.
ALSO CLARIFY FOR HOW LONG INTO THE FUTURE YOU EXPECT TO INCUR SIGNIFICANT
Page 25 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
OPERATING LOSSES. THESE ARE ONLY EXAMPLES, GENERALLY REVISE YOUR
MANAGEMENT'S DISCUSSION AND ANALYSIS AND LIQUIDITY AND CAPITAL RESOURCES
DISCUSSIONS AND CONSIDER THE GUIDANCE IN SECURITIES ACT RELEASE NO.
33-8350 (DECEMBER 19, 2003), WHICH IS AVAILABLE ON OUR WEB SITE AT
HTTP://WWW.SEC.GOV/RULES/INTERP/33-8350.HTM.
RESPONSE:
The discussion has been revised to provide greater concrete detail and
analysis of our results of operations, our plans to achieve profitability
and how long we expect to incur operating losses.
38. PLEASE REVISE TO CLARIFY THE STATEMENT ON PAGE 27 BEGINNING "IF
OPERATIONS AND CASH FLOW CONTINUE TO IMPROVE." YOUR FINANCIAL STATEMENTS
THROUGH THE QUARTER ENDED MAY 31, 2004, DO NOT INDICATE THAT YOU HAVE
CONTINUING OPERATIONS, AND DO INDICATE THAT YOUR NET LOSS AND YOUR CASH
USED IN OPERATING ACTIVITIES ARE DETERIORATING RATHER THAN IMPROVING.
RESPONSE:
The statement has been revised to read as follows, "If operations and
cash flow improve through these efforts, management believes that Sound
Revolution can continue to operate."
RESULTS OF OPERATIONS, PAGE 28
- ------------------------------
39. REGARDING THE TWO PARAGRAPHS BEFORE THE LIQUIDITY AND CAPITAL RESOURCES
DISCUSSION ON PAGE 28, PLEASE REVISE TO CLARIFY WHETHER YOU CURRENTLY
GENERATE REVENUES FROM THESE SERVICES AND WHEN AND SPECIFICALLY HOW YOU
EXPECT TO DO SO. ALSO PROVIDE GREATER CONCRETE DESCRIPTIONS OF THESE
"PARTNERSHIP AND AFFILIATE AGREEMENTS" AND "MARKETING ALLIANCES."
SIMILARLY REVISE YOUR CORRESPONDING DISCLOSURE ON PAGE 22.
RESPONSE:
Our discussion under this heading has been revised so that it is more
specific about how we intend to generate revenues, and that " we hope to
be generating revenues from charitytunes.com by early 2006 and generating
revenues from our email management software by summer, 2006." Our
references to marketing alliances have been more fully described.
Page 26 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
40. PLEASE REVISE YOUR DISCLOSURE TO PROVIDE A MORE DETAILED DISCUSSION OF
CHANGES TO YOUR FINANCIAL CONDITION AND RESULTS FROM OPERATIONS AS
REQUIRED BY PARAGRAPH (B)(1) AND (B)(2) OF ITEM 303 OF REGULATION S-B.
SPECIFICALLY DISCUSS THE COMPONENTS OF, AND ANALYSIS OF CHANGES IN,
MARKETING FEE EXPENSE AND GENERAL AND ADMINISTRATIVE EXPENSES.
RESPONSE:
Detailed discussion has been added as follows:
"RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2004
AND AUGUST 31, 2003
"REVENUES:
"Sound Revolution recorded revenues of $4,052 for the six month period
ended August 31, 2003 verses no revenues in the six month period ended
August 31, 2004. The $4,052 in revenues are the only significant revenues
Sound Revolution has ever recorded. These revenues were generated from
ticket sales to an event called SHOW! which Sound Revolution co-produced
and which featured visual artists and live musical performances. Tickets
to SHOW! were sold at a price of approximately $11 each prior to the
event and for approximately $15 each at the door. At the time the event
SHOW! took place, Sound Revolution had contemplated that it would produce
live events on a regular basis in order to promote musicians that Sound
Revolution was doing business with. Since then, management has decided to
focus Sound Revolution's efforts on building our music download website,
www.charitytunes.com and on designing our email management software. We
therefore do not expect to generate significant revenues from ticket
sales for live events in the future.
"COST OF SALES:
"The cost of sales for the six month period ended August 31, 2003 were
$4,105, $2,249 of which were paid to Heather Remillard, our President,
for coordination fees of SHOW!, and the balance for the cost of producing
and marketing the event. The costs of sales for the three month period
ended August 31, 2003 were $4,105, $2,249 of which were paid to Heather
Remillard, our President, for coordination fees of SHOW!, and the balance
Page 27 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
for the cost of producing and marketing the event. Cost of Sales for both
of these periods are the same since the event took place in June, 2003
and was therefore included in the calculation of the three months ended
August 31, 2003. As Sound Revolution generated no revenues for the six
month period ended August 31, 2004, there are no cost of sales for this
period.
"EXPENSES:
"The major components of our expenses for the three months ended August
31, 2004 are marketing fees $468 consisting of website hosting fees,
professional fees of $8,698 which are mainly attributable to our auditor
costs, director fees of $1,293 which were paid to Susanne Milka, our
director and the sole member of our audit committee, research and
development of $2,900 which was paid in the form of shares to
participants in our business development think tank and other consultants
for research on the online music industry, and general and administrative
expenses of $2,788, which include telephone fees, couriers, office
supplies and $150 U.S. dollars ($200 Canadian) monthly for rent. Our
total expenses for the period were $16,175, an increase of $15,881 from
the three month period ended August 31, 2003. The difference is mainly
attributable to our auditor costs. In the three month period ended August
31, 2003 our marketing fees were $70. These fees consisted of web hosting
fees.
"The major components of our expenses for the six months ended August 31,
2004 are marketing fees $660, consisting of website hosting fees,
professional fees of $13,873 which are mainly attributable to our auditor
costs, director fees of $2,032 which were paid to Susanne Milka, our
director and the sole member of our audit committee, research and
development of $2,900 which was paid to participants in our business
development think tank and other consultants for research on the online
music industry, and general and administrative expenses of $3,920,
consisting of telephone fees, couriers, office supplies and approximately
$150 U.S. dollars ($200 Canadian) monthly for rent. Our total expenses
for the period were $23,413, an increase of $22,509 from the six month
period ended August 31, 2003. The difference is mainly attributable to
our auditor costs, director fees and research and administration. Our
monthly general and administrative fees were more in 2004 because on May
14, 2004 we entered into a lease agreement to rent offices with a studio
whereby we agreed to pay $150 U.S. dollars ($200 Canadian) in monthly
lease payments. Our first lease payment was made on June 1, 2004 and we
are obligated to pay $150 U.S. dollars ($200 Canadian) for the balance of
the lease term. The lease term ends on May 31, 2007 but may be terminated
by Sound Revolution at any time on one month's notice.
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SOUND REVOLUTION INC.
FILE NO. 333-118398
"The only executive compensation paid during the six months ended August
31, 2004 was $2,032 paid as director fees to Susanne Milka. There was no
executive compensation accrued.
"NET LOSSES
"Net loss for the three months ended August 31, 2004 was $16,175 and loss
per share was $0.0016 compared to a net loss of $347 and loss per share
of $0.0000 for the three months ended August 31, 2003. Net loss for the
six month period ended August 31, 2004 was $23,413 and loss per share was
$0.0023 compared to a net loss of $957 and loss per share of $0.0001 for
the six months ended August 31, 2003. The increase in losses was
primarily due to auditor fees, director fees, research and development
and an increase in general and administrative expenses.
"RESULTS OF OPERATIONS FOR THE YEAR ENDED FEBRUARY 29, 2004 AS COMPARED
TO THE YEAR ENDEND FEBRURARY 28, 2003
"REVENUES
"Revenues for the year ended February 29, 2004 were $4,117 as compared to
no revenue for the year ended February 28, 2003. All of the revenues
generated in the year ended February 29, 2004 were received pursuant to
ticket sales for the live event SHOW! which took place in June, 2003.
Sound Revolution intends to have one or two events over the next few
years, but does not anticipate that the production of events to be a
significant revenue source in the future.
"COST OF SALES
"The cost of sales for the year ended February 29, 2004 were $4,105,
$2,249 of which were paid to Heather Remillard, our President, for
coordination fees of SHOW!, and the balance for the cost of producing and
marketing the event. There were no costs of sales for the year ended
February 28, 2003 as we had no revenues during this period.
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SOUND REVOLUTION INC.
FILE NO. 333-118398
"EXPENSES
"The major components of our expenses for the year ended February 29,
2004 are $734 for marketing fees (consisting of web design and
development fees), $368 for professional fees, $478 for general and
administrative expenses for total expenses of $1,580. The results for the
twelve months ended February 28, 2003 were expenses of $967 for
marketing, $423 for professional fees, $1,246 for general and
administrative fees, totaling $2,636.
"There was no executive compensation paid or accrued in the years ended
February 29, 2004 and February 28, 2003.
"NET LOSSES
"Net loss decreased for the year ended February 29, 2004 to $1,632 as
compared with a net loss of $2,636 for the year ended February 28, 2003.
The decreased loss in the year ended February 29, 2004 attributable to
revenues of $4117 generated from ticket sales from one live event, SHOW!.
Sound Revolution does not anticipate that it will generate significant
revenues from live events in the future."
41. TELL US HOW THE MARKETING ALLIANCES YOU DISCUSS "MIGHT INVOLVE
SIGNIFICANT AMOUNTS OF INTANGIBLE ASSETS".
RESPONSE:
The reference to "intangible assets" has been deleted.
42. REVISE UNDER THIS HEADING TO DISCUSS EXPECTED SEASONAL EFFECTS ON YOUR
RESULTS OF OPERATIONS. IN THIS REGARD, WE NOTE YOUR RISK FACTOR
DISCLOSURE AT THE TOP OF PAGE 4 AND YOUR DISCLOSURE AT THE TOP OF PAGE
29.
RESPONSE:
This section has been revised to refer to the seasonal effects of our
operations. It now reads:
"We expect that once charitytunes.com is operational and we are selling
digital music to the public, we may experience a seasonality in our
business, reflecting traditional retail seasonality patterns affecting
sales of recorded music. Sales in the traditional retail music industry
are significantly higher in the fourth calendar quarter of each year than
in the preceding three quarters."
Page 30 of 37
SOUND REVOLUTION INC.
FILE NO. 333-118398
LIQUIDITY AND CAPITAL RESOURCES, PAGE 28
- ----------------------------------------
43. PLEASE GENERALLY REVISE YOUR DISCUSSION AND ANALYSIS OF LIQUIDITY AND
CAPITAL RESOURCES. FOR EXAMPLE, EXPLAIN YOUR SPECIFIC PLANS FOR OBTAINING
FINANCING FOR $23,000 OF ANTICIPATED DEVELOPMENT EXPENSES YOU DISCUSS AT
THE BOTTOM OF PAGE 27 AS WELL AS THE $15,000 OF ANTICIPATED ANNUAL
OPERATING EXPENSES YOU DISCUSS AT THE BOTTOM OF PAGE 28. EXPLAIN IN
GREATER DETAIL ON WHAT YOU WILL SPEND THESE FUNDS. PROVIDE GREATER DETAIL
ABOUT YOUR DEFINITE PLANS FOR DEBT AND EQUITY FINANCING OR CLEARLY STATE
THAT YOU HAVE NONE. PLEASE REVISE TO EXPLAIN YOUR BASIS FOR BELIEVING
THAT OBTAINING A LISTING WILL ALLOW YOU TO RAISE EQUITY FINANCING. THESE
ARE ONLY EXAMPLES, REVISE THIS DISCUSSION GENERALLY AND CONSIDER THE
GUIDANCE IN PART IV OF SECURITIES ACT RELEASE NO. 33-8350 (DECEMBER 19,
2003), WHICH IS AVAILABLE ON OUR WEB SITE, AS WELL AS THE OTHER RELEASES
IDENTIFIED ABOVE IN CONNECTION WITH YOUR MANAGEMENT'S DISCUSSION AND
ANALYSIS.
RESPONSE:
We have generally revised this section as follows:
"Our losses for the three months ended August 31, 2004 were $16,175 or
$5,392 per month. We estimate that our expenses over the next 12 months
will be approximately $63,050 as follows:
"$14,000 for development of the first phase of our website
charitytunes.com
"$20,000 in auditor and legal fees
"$10,000 for development of the first phase of our email management
software
"$2,050 in director's fees
"$12,000 general administration expenses
"$5,000 in marketing fees
"As of August 31, 2004, we had cash equivalents of $47,307, and we
believe that we need approximately an additional $16,000 to meet our
capital requirements over the next 12 months. Our intention is to obtain
this money by requesting loans from Bacchus according to the loan
agreement entered into on August 31, 2004. If, over the next twelve
months, opportunities arise, or other circumstances arise which
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SOUND REVOLUTION INC.
FILE NO. 333-118398
significantly alter our immediate capital needs, then we will seek equity
financing from our existing shareholders and from friends or family of
our officers and directors through private placements. Once phase one of
our website charitytunes.com is complete, we intend to seek financing of
between $500,000 and $1,000,000 to complete and launch our products into
the market."
44. WE NOTE YOUR DISCUSSION OF A "CASH FLOW DEFICIT OF $20,198" WHICH IS A
TERM NOT DEFINED BY GENERALLY ACCEPTED ACCOUNTING PRINCIPALS. REVISE YOUR
DESCRIPTION OF THIS AMOUNT TO INDICATE THAT IT REPRESENTS YOUR "DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE."
RESPONSE:
We have deleted the term "cash flow deficit" and replaced it with
"deficit accumulated during the development stage".
45. PLEASE REVISE TO PROVIDE GREATER DETAIL REGARDING THE AMOUNTS BORROWED
FROM YOUR CHAIRMAN. DISCUSS THE DATES AND AMOUNTS OF THESE BORROWINGS AND
FILE THE RELEVANT PROMISSORY NOTES AS EXHIBITS PURSUANT TO ITEM
601(b)(10).
RESPONSE:
This section has been revised as follows:
"As of August 31, 2004, we had received loans from Penny Green, our
Chairman and Chief Executive Officer, totaling $8,200 and loans from
Bacchus Entertainment Ltd. ("Bacchus"), a company owned by Penny Green,
in the amount of $13,040, for a combined total of $21,240. The loans were
made to Sound Revolution in the following amounts: $5,611 in the year
ended February 28, 2004, $9,258 in the three months ended May 31, 2004,
and $6,371 in the three months ended August 31, 2004.
"On August 31, 2004, Penny Green, Sound Revolution and Bacchus entered
into an agreement, whereby the parties agreed that the net amount of
monies borrowed by Sound Revolution from Penny Green and Bacchus would
all convert to a loan owed by Sound Revolution to Bacchus and that
Bacchus would make further loans to Sound Revolution from time to time as
requested by Sound Revolution up to an aggregate amount of $70,000, so
long as the request was made prior to August 31, 2006. It was also agreed
that interest would accrue on any outstanding balance at an annual rate
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SOUND REVOLUTION INC.
FILE NO. 333-118398
of 10% beginning on September 1, 2004. Pursuant to the monies received by
Sound Revolution and the loan agreement signed on August 31, 2004, the
total amount of monies owed by Sound Revolution to Bacchus as of August
31, 2004 was $21,240. A copy of the loan agreement is attached as Exhibit
10.5."
46. PLEASE REVISE TO PROVIDE GREATER DETAIL ABOUT THE COSTS YOU EXPECT TO
INCUR TO "CONTINUE TO OFFER COMPETITIVE SALARIES" AS WELL AS HOW YOU PLAN
TO FUND THESE SALARIES, WHICH YOU DISCUSS ON PAGE 29. IN THIS REGARD, WE
NOTE YOUR STATEMENT ON PAGE 28 THAT UNTIL YOU OBTAIN SUFFICIENT EQUITY
FINANCING TO CONTINUE OPERATIONS, YOU PLAN TO DEFER ANY CASH
COMPENSATION.
RESPONSE:
As we are not currently offering any salaries, this discussion has been
revised. We have also added, "We anticipate that we will need
approximately $200,000 per year beginning in 2006 to pay salaries to
employees in working in the areas of marketing, sales and accounting."
47. SIMILARLY, YOU STATE THAT YOUR PRESIDENT, CHAIRMAN AND CHIEF FINANCIAL
OFFICER WILL BE DEFERRING ANY CASH COMPENSATION UNTIL YOU OBTAIN
SUFFICIENT EQUITY FINANCING. CLARIFY FOR US WHETHER THESE OFFICERS ARE
CURRENTLY EARNING COMPENSATION, WHICH WILL BE PAID AT A FUTURE DATE. IF
SO, TELL US WHY YOU HAVE NOT ACCRUED THIS EXPENSE IN YOUR FINANCIAL
STATEMENTS FOR THE APPLICABLE PERIODS.
RESPONSE: The reference to the deferring of cash compensation has been
deleted.
UNDERTAKINGS, PAGE
- ------------------
48. PLEASE REVISE THIS DISCLOSURE TO INCLUDE THE UNDERTAKINGS THAT ARE
APPLICABLE TO YOU AND TO REMOVE THOSE THAT ARE NOT APPLICABLE. SEE ITEM
512 OF REGULATION S-B. IN THIS REGARD, WE NOTE THAT YOU INCLUDE SOME OF
THESE UNDERTAKINGS TWICE AND YOU INCLUDE THE UNDERTAKING IN ITEM 512(F),
WHICH DOES NOT APPLY TO THIS OFFERING.
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SOUND REVOLUTION INC.
FILE NO. 333-118398
RESPONSE:
The undertakings required under Item 512(f) and 512(e) where request for
acceleration of the effective date is made, have been removed.
SIGNATURES, PAGE 35
- -------------------
49. PLEASE REVISE TO INCLUDE THE SIGNATURE OF YOUR CONTROLLER OR PRINCIPAL
ACCOUNTING OFFICER. ANY PERSON WHO OCCUPIES MORE THAN ONE OF THE
SPECIFIED POSITIONS MUST INDICATE EACH CAPACITY IN WHICH HE OR SHE SIGNS
THE REGISTRATION STATEMENT. SEE INSTRUCTIONS FOR SIGNATURES, AT THE END
OF FORM SB-2.
RESPONSE: The signatures have been revised so that Penny Green is also
described as the Principal Accounting Officer.
INDEPENDENT AUDITORS' REPORT, PAGE F-3
- --------------------------------------
50. REFER TO YOUR INDEPENDENT AUDITORS REPORT WHERE YOUR AUDITORS STATE THAT
THEIR AUDITS ARE "IN ACCORDANCE WITH AUDITING STANDARDS GENERALLY
ACCEPTED IN THE UNITED STATES." ASK YOUR INDEPENDENT AUDITORS TO REVISE
THEIR REPORT TO COMPLY WITH PCAOB AUDITING STANDARD #1.
RESPONSE: Our auditors have revised their report as suggested.
CONSOLIDATED STATEMENT OF OPERATIONS, PAGE F-5
- ----------------------------------------------
51. DESCRIBE FOR US IN MORE DETAIL THE NATURE OF THE REVENUE GENERATED FROM
THE EVENT SHOW! IN ADDITION, TELL US THE NATURE OF THE COSTS INCURRED
RELATING TO THIS EVENT AND REVISE YOUR STATEMENT OF OPERATIONS TO PRESENT
THE AMOUNT OF COSTS DIRECTLY ASSOCIATED WITH THE GENERATION OF REVENUES
AS COSTS OF SALES.
RESPONSE: We have revised our statements of operations as suggested to
show cost of sales a reduction from sales and the resulting gross margin.
We also revised "Revenue Recognition" in note 1 to clarify the nature of
revenue generated and explain costs related to the revenue.
NOTE 1 - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------
GOING CONCERN, PAGE F-9
- -----------------------
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SOUND REVOLUTION INC.
FILE NO. 333-118398
52. IN YOUR GOING CONCERN PARAGRAPH YOU EXPLAIN THAT "CONTINUATION OF THE
COMPANY AS A GOING CONCERN IS DEPENDENT UPON OBTAINING THE ADDITIONAL
WORKING CAPITAL NECESSARY TO ACCOMPLISH ITS OBJECTIVE." DISCLOSE IN
FURTHER DETAIL YOUR PLAN FOR OBTAINING ADDITIONAL WORKING CAPITAL.
INCLUDE DISCUSSION OF YOUR TIMELINE FOR WHEN YOU ANTICIPATE ENTERING INTO
THESE FINANCING ARRANGEMENTS, THE LIKELIHOOD THAT YOU WILL BE ABLE TO
OBTAIN REQUIRED FINANCING, YOUR CONSIDERATIONS OF EQUITY VERSUS DEBT
FINANCING, AND ANY ENCUMBRANCES THAT MIGHT LIMIT YOUR FINANCING OPTIONS.
REFER TO FRC 607.02 FOR GUIDANCE.
RESPONSE: We have revised the going concern paragraph in note 1 as
suggested and added the following disclosure:
"The Company expects that its cash requirements over the next 12 months
will not exceed $65,000. A company controlled by the Company's majority
stockholder and CFO has agreed to loan the Company up to $70,000 ($5,611
has been drawn through February 29, 2004), to meet its capital
requirements for that period. For working capital beyond 12 months, the
Company plans to generate cash from the sale of stock to the public and
existing stockholders. When possible, the Company plans to issue stock
for professional services it may require."
MUSIC RIGHTS, PAGE F-9
- ----------------------
53. DESCRIBE FOR US IN MORE DETAIL THE NATURE OF THE MUSIC RIGHTS YOU
ACQUIRED. TELL US HOW YOU DETERMINED THAT THESE RIGHTS SHOULD BE RECORDED
AS AN INTANGIBLE ASSET UNDER THE GUIDANCE IN SFAS 141 AND YOUR
DETERMINATION OF THE USEFUL LIFE OF THE ASSET FOR AMORTIZATION PURPOSES
UNDER SFAS 142.
RESPONSE: We have revised our notes to the financial statements with
respect to "Music Rights" to better clarify the accounting for the music
rights as follows:
"Music rights include non-exclusive use of and distribution rights to the
songs in various multi-media formats from the musician's first album. The
music rights will be tested at least annually for impairment. The cost of
the music rights will be expensed upon the release of the musician's
first album and realization of the related royalties. The cost of music
rights will not be carried beyond expiration of the license term on
August 31, 2009."
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SOUND REVOLUTION INC.
FILE NO. 333-118398
CONSOLIDATED STATEMENT OF OPERATIONS, PAGE F-13
- -----------------------------------------------
54. REVISE THE HEADING TO READ "FOR THE THREE MONTHS ENDED MAY 31, 2004 AND
MAY 31, 2003" RATHER THAN "FOR THE THREE MONTHS ENDED MAY 31, 2004 AND
2003" TO PROVIDE CLEAR AND CONSISTENT FINANCIAL STATEMENT HEADINGS.
RESPONSE: We have revised the heading as suggested.
EXHIBITS
- --------
55. PLEASE REVISE TO REMOVE YOUR EXHIBITS FROM THE BODY OF THE REGISTRATION
STATEMENT. THE EXHIBITS SHOULD BE SEPARATELY FILED AND TAGGED ON EDGAR AS
EXHIBITS, AND NOT APPENDED TO THE BODY OF THE REGISTRATION STATEMENT.
RESPONSE: The exhibits have been removed from the body of the
registration statement. They were already separately filed and tagged on
EDGAR as exhibits.
EXHIBIT 5
- ---------
56. PLEASE REVISE AS APPROPRIATE TO CLARIFY WHAT COUNSEL MEANS BY "PROPOSED
ISSUANCE" OF THE SHARES AND WHY COUNSEL REFERS TO THE SHARES "WHEN
ISSUED." THE PROSPECTUS AND THE STRUCTURE OF THIS TRANSACTION AS A RESALE
OFFERING SUGGEST THAT THE SHARES ARE ALREADY OUTSTANDING. PLEASE REVISE
THE OPINION OR THE PROSPECTUS AS APPROPRIATE TO CLARIFY.
RESPONSE: A new opinion letter dated November 4, 2004 and attached and
filed as Exhibit 5.1 to this registration statement refers to shares
already issued. It reads as follows:
The proposed offering of 269,814 shares of Common Stock of Sound
Revolution Inc., $0.0001 par value, are to be offered and sold to the
public pursuant to a Form SB-2 Registration Statement. It is our opinion
that the shares of Common Stock are duly authorized, validly issued,
fully paid and non-assessable shares of Common Stock of Sound Revolution
Inc. in accordance with the Delaware General Corporation Law, the
applicable provisions of the Delaware Constitution, and reported judicial
decisions interpreting these laws.
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FILE NO. 333-118398
57. PLEASE REVISE TO CLARIFY WHY THE OPINION REFERS TO THE PRICE AS $0.20.
THE PROSPECTUS INDICATES THAT THE SALE PRICE MAY BE LOWER OR HIGHER.
RESPONSE: The new opinion letter filed as Exhibit 5.1 to this
registration statement does not refer to the selling price of the stock.
Please see the answer to comment #56, above.
58. WE NOTE THAT COUNSEL REFERS TO AND LIMITS THE OPINION TO "THE CORPORATION
LAWS OF THE STATE OF DELAWARE". PLEASE CONFIRM TO US IN WRITING THAT
COUNSEL CONCURS WITH OUR UNDERSTANDING THAT THIS REFERENCE AND LIMITATION
INCLUDES THE STATUTORY PROVISIONS AND ALSO ALL APPLICABLE PROVISIONS OF
THE DELAWARE CONSTITUTION AND REPORTED JUDICIAL DECISION INTERPRETING
THESE LAWS. PLEASE FILE THIS WRITTEN CONFIRMATION AS PART OF YOUR
CORRESPONDENCE ON EDGAR. SEE SECTION VIII.A.14 OF DIVISION OF CORPORATION
FINANCE, ISSUES OUTLINE, WHICH IS AVAILABLE ON OUR WEB SITE AT
WWW.SEC.GOV/PDF/CFCR112K.PDF.
RESPONSE: The new opinion letter filed as Exhibit 5.1 is made "in
accordance with the Delaware General Corporation Law, the applicable
provisions of the Delaware Constitution, and reported judicial decisions
interpreting these laws". Please see the answer to comment #56, above.
I trust the foregoing will assist you in your review of the company's amended
SB-2. Please let me know if you require any further information.
Yours truly,
SOUND REVOLUTION INC. per:
/S/ Heather Remillard
- ----------------------
Heather Remillard,
President and Chief Executive Officer
Enclosures (3)
Page 37 of 37