HQ SUSTAINABLE MARITIME INDUSTRIES, INC.
Melbourne Towers ,
1511 Third Avenue, Suite 788,
Seattle, WA. 98101
June 6, 2006
Via EDGAR
Securities and Exchange Commission
Division of Corporation Finance
Washington, DC 20549
Form SB-2
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General
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1. We note that Norbert Spoors, your President and CEO, participated in an
interview dated February 23, 2006. Please include, in your disclosure, material
information that did not appear in the registration statement.
We have noted this comment included additional information not previously
discussed in the registration statement.
2. In your previous forms 10-Q filings, you provide various disclosures
concerning "significant" or "material" changes in internal controls over
financial reporting. In the 3/31/2005 Form 10-Q, you state that there were no
significant changes that could "significantly affect" internal controls over
financial reporting. Please explain the differences in your internal controls
over financial reporting.
From time to time, the Company and its management have conducted, and will
continue to conduct, further reviews and, from time to time will put in place
additional documentation of the Company's disclosure controls and procedures, as
well as its internal control over financial reporting. The Company may, from
time to time, make changes aimed at enhancing their effectiveness, as well as
changes aimed at ensuring that the Company's systems evolve with, and meet the
needs of, the Company's business. These changes may include changes necessary or
desirable to address recommendations of the Company's management, its counsel
and/or its independent auditors, including any recommendations of its
independent auditors arising out of their audits and reviews of the Company's
financial statements. These changes may include changes to the Company's own
systems, as well as to the systems of businesses that the Company has acquired
or that the Company may acquire in the future and will, if made, be intended to
enhance the effectiveness of the Company's controls and procedures. The Company
is also continually striving to improve its management and operational
efficiency and the Company expects that its efforts in that regard will, from
time to time, directly or indirectly affect the Company's disclosure controls
and procedures, as well as the Company's internal control over financial
reporting.
For the year ended December 31, 2005, the Company's independent auditors advised
management and the Board of Directors that in connection with its audit of the
Company's consolidated financial statements for the year ended December 31,
2005, that it had noted no matters involving the Company's internal control and
the Company's operations that it considered to be reportable conditions under
standards established by the American Institute of Certified Public Accountants.
Reportable conditions are matters coming to an independent auditors' attention
that, in their judgment, relate to significant deficiencies in the design or
operation of internal control and could adversely affect the organization's
ability to record, process, summarize, and report financial data consistent with
the assertions of management in the financial statements.
Further, a material weakness is a reportable condition in which the design or
operation of one or more internal control components does not reduce to a
relatively low level the risk that errors or fraud in amounts that would be
material in relation to the financial statements being audited may occur and not
be detected within a timely period by employees in the normal course of
performing their assigned functions.
Although the independent auditors did not report any material weaknesses in
internal controls, as noted above, the Company has made and is continuing to
make changes in its controls and procedures, (including its internal control
over financial reporting), aimed at enhancing their effectiveness and ensuring
that the Company's systems evolve with, and meet the needs of, the Company's
business. As further noted above, the Company is also continually striving to
improve its management and operational efficiency and the Company expects that
its efforts in that regard will from time to time directly or indirectly affect
the Company's controls and procedures, including its internal control over
financial reporting.
During the fiscal year 2005, we evaluated regularly the procedures in our
internal control system in order to improve efficiency over financial reporting.
For example, we isolated situations that require management's attention, i.e.
exceptional transactions as opposed to routine transactions (material purchases,
leases, debt/equity financing, material contracts, etc). In such cases,
management intervenes (using their experience and judgment and with the
assistance of specialists) to assure the financial reporting on such
transactions is respectful of the related regulations. During this period, while
there were no changes in internal controls over financial reporting, we were in
the process of upgrading the Company's controls and procedures to ensure full
compliance and proper reporting. Accordingly, we reported our review in a
cautionary manner. At present, we are satisfied that our internal controls and
procedures are compliant with the requirements of Regulation SB.
The Company hereby acknowledges that:
o the Company is responsible for the adequacy and accuracy of the
disclosure in the filings;
o staff comments or changes to disclosure in response to staff comments
do not foreclose the Commission from talking any action with respect to
the fling; and
o the Company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
Yours truly,
/s/ Norbert Sporns
Norbert Sporns
President
And Chief Executive Officer