Mail Stop 6010
July 19, 2005
Jonathan Wax, Chief Executive Officer
Digital Power Corporation
41920 Christy Street
Fremont, California 94538
Via U S Mail and FAX [ (510) 353-4023 ]
Re: Digital Power Corporation
Form 10-K for the fiscal year December 31, 2004 and
Amendment No. 1
Form 10-Q for the fiscal quarter March 31, 2005
File No. 1-12711
Dear Mr. Wax:
We have reviewed your filings and have the following
comments.
We have limited our review to only your financial statements and
related disclosures, and do not intend to expand our review to
other
portions of your documents. Where indicated, we think you should
revise your documents in response to these comments in all future
filings with the Commission. 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 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.
Mr. Jonathan Wax
Digital Power Corporation
July 19, 2005
Page 2
Form 10-KSB for fiscal 12/31/04 and Amendment No. 1
Management`s Discussion and Analysis - General, page 10
1. Under Item 11 in Amendment No. 1 we read that Telkoor holds
43.2%
of your stock and has a convertible note for an additional 3.7%.
In
addition, the Chairman of Telkoor holds 4.4% of your stock and the
General Manager holds 1.6 %. In future filings, disclose more
details
of the relationship with Telkoor and its significant ownership
interest. Tell us whether all the significant related party
transactions are disclosed in the financial statements as required
by
SFAS 57.
2. As a related matter, please tell and disclose in future filings
details about the accounting for the interest free convertible
note
disclosed in Note 12 on page F-22, including whether the $1.06
conversion price was at fair value and how this was determined.
Financial Statements
Report of Independent Registered Public Accounting Firm, page F-1
3. We note that your audit report was signed by an audit firm
based
in Tel Aviv, Israel. Please tell us how you concluded that it is
appropriate to have an audit report issued by an auditor licensed
outside of the United States. In accordance with Article 2 of
Regulation S-X, we believe that the audit report of a registrant
(that is not a foreign private issuer) should ordinarily be
rendered
by an auditor licensed in the United States. Further guidance may
be
found in Section 5.K of "International Reporting and Disclosure
Issues in the Division of Corporation Finance" on the Commission`s
website at:
http://www.sec.gov/divisions/corpfin/internatl/cfirdissues1104.htm
#P4
42_69217. Please tell us (1) where the majority of your revenues
are
earned, (2) where the majority of your assets are located, (3)
where
your management and accounting records are located and (4) where
the
majority of the audit work is conducted. We may have further
comments.
Note 2 (l) Accounting for stock-based compensation, page F-9
4. In future filings clarify how you account for options issued to
non-employees and how it differs from accounting for options
issued
to employees.
Mr. Jonathan Wax
Digital Power Corporation
July 19, 2005
Page 3
Certifications, Exhibits 31
5. We see differences between your Certifications and the language
specified in Item 601(b)(31) of Regulation S-B. Please revise to
include the specified language in all Certifications.
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a response letter that keys your responses to our
comments and provides the requested information. Confirm that you
will comply with these comments in all future filings with the
Commission. Detailed response letters greatly facilitate our
review.
Please understand that we may have additional comments after
reviewing your responses to our comments and the requested
information.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that the filing includes all information required under
the
Securities Exchange Act of 1934 and 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.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* 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.
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 our review of your filing or in response to
our comments on your filing.
Mr. Jonathan Wax
Digital Power Corporation
July 19, 2005
Page 4
You may contact Jeanne Bennett at (202) 551-3606, or me at
(202) 551-3676, if you have questions regarding our comments. In
our
absence you may contact at Martin F. James, Senior Assistant Chief
Accountant at (202) 551-3671}
Sincerely,
Brian R. Cascio
Accounting Branch Chief,
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