Via Facsimile and U.S. Mail
Mail Stop 6010
November 3, 2005
Mr. Terry M. Deru
President and Director
Prime Resource, Inc.
1245 East Brickyard Road
Suite 590
Salt Lake City, UT 84106
Re: Prime Resource, Inc.
Form 10-KSB for Fiscal Year Ended December 31, 2004
Forms 10-QSB for Fiscal Quarters Ended
March 31, 2005, June 30, 2005 and September 30, 2005
File No. 333-88480
Dear Mr. Deru:
We have reviewed your October 28, 2005 response letter to
our
October 21, 2005 comment letter and have the following comments.
Where indicated, we think you should revise your documents 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 ask you to provide us with more
information so we may better understand your disclosure.
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.
General
1. Please file your proposed amendments under cover of the form
amended, marked with the letter "A" to designate the document as
an
amendment. Please sequentially number each amendment on the cover
page. Please refer to Rule 12b-15 of the Exchange Act.
Form 10-KSB for the year ended December 31, 2004
Item 6. Plan of Operations, page 13
Results of Operations, page 14
2. We acknowledge your response to our previous comment one. We
note
that the total revenues in the table on page 15 agree to your
segment
disclosure amounts in Note 7, however the 2004 amounts for fringe
benefit analysts and Belsen Getty do not agree with your
statements
of operations commissions revenue and investment and business
advisory fees amounts, respectively. Please revise your document
to
be consistent or disclose why the segment amounts do not agree
with
your statements of operations. In addition, please revise your
discussion of operating expenses to be consistent with the amounts
presented on your statements of operations. We note that you do
not
separately disclose officers` salaries and compensation on your
statements of operations and that your subtotal of operating
expenses
presented in results of operations does not agree with the
comparable
subtotal in your statement of operations. Please revise your 2005
Forms 10-QSB disclosures, accordingly.
3. You indicate in your response to our previous comment two that
you
will remove the disclosure indicating that you do not segregate
expenses by subsidiary or division, however this disclosure still
appears in the first paragraph under the table on page 16 of your
draft disclosure. Please revise your filing to remove this
disclosure.
4. Please revise the title of the disclosure you added in response
to
our previous comment three to be "Critical Accounting Estimates."
In
addition, it appears that your revenue recognition and commissions
accruals estimates are critical to your financial results. Please
revise your disclosure to include a discussion of these critical
accounting estimates or explain to us why you believe these
estimates
are not critical. Also, please revise your 2005 Forms 10-QSB to
update your historical experience with these critical estimates.
Item 7. Financial Statements
5. Please expand your disclosures to address the following
regarding
the restatement of your previously issued financial statements:
* Please have Child, Sullivan & Company revise their report to
include an explanatory paragraph discussing the impact of your
restatement on their opinion as required by AU 420.12.
* Revise Note 12 to your financial statements to disclose the
effect
of the restatement on the related per share amounts as required by
paragraph 37 of APB Opinion 20.
* Please refer to the requirement to file an Item 4.02 Form 8-K
when
previously issued financial statements can no longer be relied
upon
because of an error in the financial statements.
Note 1. Significant Accounting Policies, page F-7
Trading Securities, page F-11
6. Please revise your proposed disclosure provided in response to
our
previous comment six to indicate that you account for these
investments under the cost method because you do not exert
significant influence as that term in defined in paragraph 17 of
APB
18. Otherwise, please revise your accounting and disclosure to
account for your investment in these securities under the equity
method. In any regard, please remove your disclosures regarding
how
you value publicly and non-publicly traded securities at various
discounts or explain to us why these disclosures are still
applicable.
Note 11. Income Taxes, page F-17
7. We acknowledge your response to our previous comment seven.
Although the transaction giving rise to your deferred tax asset
relates to stock-based compensation in 2002, please revise your
filing to discuss the nature of this deferred tax asset. We
believe
that your stock-based compensation deferred tax asset is a
material
component of your net deferred tax assets.
Item 8A. Controls and Procedures, page 18
8. We acknowledge your response to our previous comment eight. As
previously requested, please revise your disclosure to
specifically
indicate whether you concluded that your disclosure controls and
procedures were effective or ineffective as required by Rule 307
of
Regulation S-B. In addition, please confirm that you considered
whether the disclosures provided under Item 307 of Regulation S-B
in
the original filing needed to be modified, supplemented or
corrected
in order to explain the relationship between the failure of the
disclosure controls and procedures and the restated financial
statements.
Exhibits 31, pages 29 and 31
9. Please revise your proposed certifications provided in response
to
our previous comment nine to:
* remove your reference to "annual report" except in paragraph 4d;
* please note your reference in paragraphs 4 and 4b to internal
control over financial reporting may be removed as indicated in
Section IIIE of Release No. 33-8238 issued June 5, 2003; and,
* currently date your revised certifications.
Please revise your 2005 Forms 10-QSB certifications, accordingly.
Form 10-QSB for the three months ended March 31, 2005
Item 1. Financial Statements, page 4
10. Please revise the financial statements contained in the
amendment
to clearly label the fiscal periods which have been restated and
provide the disclosures required by paragraph 37 of APB Opinion
20.
This comment also applies to the disclosures in your amendment to
the
June 30, 2005 Form 10-QSB.
Form 10-QSB for the six months ended June 30, 2005
Item 1. Financial Statements, page F-3
Notes to Financial Statements, page F-7
Note 3. Note receivable, page F-7
11. We acknowledge your response to our previous comment 10.
Please
expand your liquidity discussion to address the purpose of the
loan
and its ultimate collection. In addition, please revise your
September 30, 2005 Form 10-QSB, accordingly.
Note 4. Segment information, page F-8
12. Please revise your disclosure provided in response to our
previous comment 11 to include the reconciliation of segment
profit
or loss to consolidated profit or loss as required by paragraph
33f
of SFAS 131. In addition, please revise your March 31, 2005 and
September 30, 2005 Forms 10-QSB to provide all disclosure required
by
paragraph 33 of SFAS 131.
Item 2. Management`s Discussion and Analysis of Financial
Condition
or Plan of Operation, page F- 8
Plan of Operations, page F-8
13. Please revise your disclosure consistent with your response to
our previous comment 13 to discuss the reason for the material
increases in commission expenses and employee costs in the second
quarter of 2005. Please revise your September 30, 2005 Form 10-
QSB
accordingly.
Form 10-QSB for the nine months ended September 30, 2005
Item 1. Financial Statements
14. Please revise your disclosure to add the affirmative statement
that your financial statements include all adjustments which in
the
opinion of management are necessary to make the financial
statements
not misleading as required by Instruction 2 to Rule 310(b) of
Regulation S-B.
General
15. Please amend your September 30, 2005 Form 10-QSB to comply
with
the preceding comments and the comments in our October 21, 2005
letter.
* * * *
As appropriate, please amend your Form 10-KSB for the year
ended December 31, 2004 and Forms 10-QSB for the quarters ended
March
31, 2005, June 30, 2005 and September 30, 2005 and respond to
these
comments within 10 business days or tell us when you will respond.
Please consider including an introductory headnote to each amended
filing explaining the reason(s) for the amendment including the
restatement. You may wish to provide us with marked copies of the
amendments to expedite our review. Please furnish a cover letter
with your amendments that keys your responses to our comments and
provides any requested information. Detailed cover letters
greatly
facilitate our review. Please file the letter on EDGAR under the
form type label CORRESP. Please understand that we may have
additional comments after reviewing your amendments and responses
to
our comments.
If you have any questions, please contact Mark Brunhofer,
Staff
Accountant, at (202) 551-3638 or Donald Abbott, Senior Staff
Accountant, at (202) 551-3608. In this regard, do not hesitate to
contact me, at (202) 551-3679.
Sincerely,
Jim B. Rosenberg
Senior Assistant Chief Accountant
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Mr. Terry M. Deru
Prime Resource, Inc.
November 3, 2005
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