December 28, 2004
Mail Stop 4-6
Jeffrey M. Cavins
President and Chief Executive Officer
LOUDEYE Corporation
1130 Rainier Avenue South
Seattle, WA 98144
Re: LOUDEYE Corporation
Form S-1 filed November 23, 2004
Registration no. 333-120006
Forms 10-Q/A filed October 7, 2004 and November 17, 2004
File no. 0-29583
Dear Mr. Cavins:
We have limited our review of the referenced registration
statement to issues relating to the disclosure requirements of
Items
507 and 508 of Regulation S-K and other limited matters, and with
respect to the referenced periodic reports to text that concerns
the
disclosure controls and procedures responsive to Item 307 of
Regulation S-K. Based on that limited review of the filings, we
and
have the following comments.
Where indicated, we think you should revise your document in
response to these comments. If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Selling Stockholders, pages 89-92
1. Please concisely describe the transactions in which the selling
stockholders received their shares. Such discussion should
include,
for each transaction, the date, the nature of the transaction such
as
manner in which the shareholders acquired the stock, the specific
stockholders who received their shares in each transaction, and
the
specific exemption from registration claimed for that transaction
as
well as the facts to support that claimed exemption.
2. Please confirm, if true, that there are no registered broker-
dealers among the selling stockholders. Please also disclose
whether
or not there are any affiliates of registered broker-dealers among
the selling stockholders and, if so, whether or not their shares
were
acquired in the normal course of business and whether or not there
were any agreements to resell these shares at the time they were
acquired.
3. Please identify the natural persons who exercise voting and/or
dispositive powers over the securities held by any of the selling
shareholders that are not natural persons, such as the Association
of
Independent Musicians, BMG Entertainment International UK &
Ireland,
Ltd., the various investment Enterprise Partnerships, NIF Ventures
Co., Ltd., Playlouder Ltd., Quester VCT 2, 3, and 4 plcs, Quester
Venture Partners, Real World Records Ltd., Universal Music
International Ltd., and WEA International Inc. See Interpretation
I.60 of the July 1997 manual of publicly available CF telephone
interpretations, as well as interpretation 4S of the Regulation S-
K
portion of the March 1999 supplement to the CF telephone
interpretation manual.
Plan of Distribution, page 93
4. We note that the selling stockholders may use the shares
registered herewith to settle short accounts. Please confirm that
they are aware of Corporation Finance Telephone Interpretation
A.65.
In your response letter, describe the steps the issuer and each of
the selling security holders have taken to ensure compliance with
Regulation M. See paragraph (b)(7) of Rule 461.
Forms 10-Q/A
Controls and Procedures
5. We note the disclosure, in the above two amended Forms 10-Q for
Jun 30, 2004 and for September 30, 2004, that your audit firm of
Pricewaterhouse Coopers LLP reported two significant areas of
deficiency in your controls and procedures for timely and complete
reporting of financial matters. Clarify when the auditor informed
the audit committee of the existence of the material weaknesses.
Please disclose with greater specificity the exact nature of these
deficiencies and the specific actions being taken by Loudeye to
correct them. In what respects are your personnel "insufficently
skilled" and to what extent were you experiencing turnover of the
accounting and financial reporting employees? Describe the
specific
nature of the "insufficient analysis and review of the selection
and
application of generally accepted accounting principles to
significant non-routine transactions." What were the "non-
routine"
transactions that prompted this concern? In what respect was the
analysis and review of those transactions inadequate?
6. Provide additional context for the staffing departures and
additions you reference. What functions do the referenced
employees
discharge and what is their role and significance within the
aggregate body of accounting and financial reporting employees?
7. You state that there have been no "material" changes in your
disclosure controls and procedures that have materially affected
or
are reasonably likely to materially affect your disclosure
controls
and procedures. Please note that Item 308(c) of Regulation S-K
requires the disclosure of "any" change in the registrant`s
internal
control over financial reporting that has materially affected or,
or
is reasonably likely to materially affect the registrant`s
internal
control over financial reporting. Please revise accordingly, and
ensure that each periodic report describes the changes in internal
control over financial reporting that were implemented during the
quarter. Your current disclosure is also ambiguous as to which
changes took place during the quarter and which ones took place
thereafter or are planned.
8. Additionally, the changes that were made during the applicable
quarter in implementing each phase of your remediation plan are
not
described with clarity. Please expand to describe what was done
and
what remains to be done to implement the plan fully. Your
disclosure
will be more readily understandable, if you explain what is meant
by
such technical terms as "control documentation", "control gap
remediation", "information technology audit" and the like. In
concrete terms, what is planned and what was and was not
accomplished
with respect to each of these aspects of the remediation plan?
Closing
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert this action as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
Please contact Hugh Fuller at (202) 942-1813 if you have any
questions. If you need further assistance, you should contact me
at
(202) 942-1818. If you thereafter require additional assistance,
you
may contact Barbara C. Jacobs, Assistant Director, at (202) 942-
1800.
Sincerely,
Mark P. Shuman
Branch Chief-Legal
CC: Timothy M. Woodland
Eric S. Carnell