Mail Stop 6010
November 16, 2005
Tom Hatton
President
Firstline Environmental Solutions, Inc.
#203-20189 56th Avenue, Langley
British Columbia, Canada V3A 3Y6
Re: Firstline Environmental Solutions, Inc.
Amendment No. 1 to Registration Statement on Form 10-SB
Filed November 2, 2005
File No. 000-51523
Dear Mr. Hatton:
We have the following comments to your filing. 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 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 any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Item 1. Description of Business, page 2
b. Business of Issuer, page 2
Natural Mineral Products - FLRS, page 5
1. We note your response to prior comment 9 and your inclusion of
a
web site address in the revised disclosure. Tell us whether you
intend to incorporate the cited information by reference into your
registration statement. See Exchange Act Release No. 34-42728,
especially footnotes 41 and 42 and the accompanying text.
Item 5. Director and Executive Officers, Promoters, and Control
Persons, page 13
2. We reissue prior comment 22 with respect to the tables on page
13.
Item 6. Executive Compensation, page 14
3. It is unclear, from your response to prior comment 26 and the
additional corresponding disclosure on pages 14-15 of the filing,
whether Pro-Act has raised or will raise funds in connection with
the
offering described on page 17. Please clearly state whether Pro-
Act
has raised or will raise funds in connection with the proposed
offering, and if so, quantify the commission paid or to be paid.
Financial Statements, page F-1
4. Please refer to previous comment 30. We note that you have
amended
the filing to include audited financial statements for the three-
months ended August 31, 2005 in accordance with Item 310(g) of
Regulation S-B. However, please amend the filing to comply with
the
following:
* As required by Item 310(a) of Regulation S-B, you are required
to
present the audited statements of income, cash flows and changes
in
stockholders` equity for each of the two fiscal years preceding
the
date of your most recent fiscal year. Accordingly, please amend
the
filing to include the statements of income and cash flows for the
year-end May 31, 2004.
* As required by Item 310(b) of Regulation S-B, your interim
financial statements should include a balance sheet as of the end
of
your most recent fiscal quarter and income statements and
statements
of cash flows for the interim period up to the date of such
balance
sheet and the comparable period of the preceding fiscal year.
According, please amend the filing to include the statements of
income and cash flows for the three months ended August 31, 2004.
We
note that these financial statements are not required to be
audited.
Also, please have your auditors revise their opinion to clearly
identify that they have audited the consolidated statements of
operations, cash flows and stockholders` equity for the year ended
May 24, 2004.
Report of Independent Registered Public Accounting Firm, page F-2
5. Please refer to previous comment 32. As previously requested,
please tell us how you determined that you meet the requirements
of
Rule 2-01(a) of Regulation S-X and what consideration you and your
auditors gave to Florida state laws governing audits of Florida
companies performed by foreign auditors. We may have further
comments after reviewing your response.
6. Please refer to previous comment 34. We note that you restated
your financial statements for the year ended May 31, 2005 to
expense
the amount originally listed as a subscription receivable.
Accordingly, each financial statement for the year ended May 31,
2005
should be labeled as "restated." Additionally, please include the
disclosure required by paragraph 37 of APB 20 detailing the nature
of
the error and the effect of its correction on net income and the
related per share amounts. Finally, please have your auditor`s
consider the following:
* the need to revise their report to include an explanatory
paragraph
describing any restatements and
* the need to dual date their report.
Consolidated Statement of Cash Flows, page F-5
7. Please refer to previous comment 38. We note the column
heading
of the statement of cash flows for the year ended May 31, 2005 is
improperly labeled "May 31, 2004." Please revise.
Note E - Mineral Claims, page F-11
8. Please refer to previous comments 42. We note your response to
our
comment and the amendment to your filing. Based on your current
disclosure, it appears that the all three of the claims were
acquired
by your subsidiary prior to your May 31, 2004 year-end. However,
during the year-ended May 31, 2005 you increased your mineral
claims
asset by $33,129. Please tell us the reason for this increase.
Also,
please reconcile for us the increase in your mineral claims assets
with the amounts reported as a disposition of mineral claims in
the
investing portion of your statement of cash flows for year ended
May
31, 2005.
Note L - Income Taxes, page F-15
9. Please refer to previous comment 45. We note your response to
our
comment and amendment to your filing. We note that according to
Appendix A.I. of "International Reporting and Disclosure Issues in
the Division of Corporation Finance" issued on November 1, 2004,
the
FASB staff has taken the view that under SFAS 109 the proceeds
from
issuance of flow-through shares should be allocated between the
offering of shares and the sale of tax benefits. The allocation is
made based on the difference between the quoted price of the
existing
shares and the amount the investor pays for the shares and a
liability is recognized for this difference. The liability is then
reversed when tax benefits are renounced and a deferred tax
liability
is recognized at that time. Income tax expense is the difference
between the amount of the deferred tax liability and the liability
recognized on issuance. Please tell us how your sale of these
flow-
through shares intends to comply with this guidance. In a related
matter, tell us how your accounting for your valuation allowance
complies with paragraph 17 of SFAS 109 which requires
realizability
of your deferred tax assets be determined based on gross deferred
tax
assets, not after netting deferred tax liabilities against them.
We
may have further comments after a review of your response.
Closing Comments
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. 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 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.
You may contact Kevin Kuhar at (202) 551- 3662 or Jay Webb,
Reviewing Accountant, at (202) 551- 3603 if you have questions
regarding comments on the financial statements and related
matters.
Please contact Adelaja Heyliger at (202) 551-3636 or me at (202)
551-
3625 with any other questions.
Sincerely,
Mary Beth Breslin
Special Counsel
cc (via fax): Dorlyn Evancic, 604.468.3955
Tom Hatton
Firstline Environmental Solutions, Inc.
November 16, 2005
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