SecProbe.io

<DOCUMENT>
<TYPE>LETTER
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
Mail Stop 0407

      							April 28, 2005

Via U.S. Mail and Fax
Mr. Andrew Dosch
Chief Financial Officer
Applied Innovation, Inc.
5800 Innovation Drive
Dublin, Ohio  43016

	RE:	Applied Innovation, Inc.
      Form 10-K for the fiscal year ended December 31, 2004
		Filed March 7, 2005
		File No. 000-21352

Dear Mr. Dosch:

      We have reviewed the above referenced filings and have the
following comments.  We have limited our review to only your
financial statements and related disclosures and will make no
further
review of your documents.  Please address the following comments
in
future filings.  If you disagree, we will consider your
explanation
as to why our comment is inapplicable or a future 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 any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.

Form 10-K for the Fiscal Year Ended December 31, 2004

Management`s Discussion and Analysis of Financial Condition and
Results of Operations

Application of Critical Accounting Policies
1. You have identified eight critical accounting policies, several
of
which are not materially different from your accounting policy
disclosures presented in Note 1 to your financial statements.
Your
critical accounting estimate disclosures should supplement, not
duplicate, your accounting policies, and they should provide
greater
insight into the quality and variability of information regarding
your financial condition and operating performance.  Below, please
find several  policy specific comments for you to consider as you
review all of your critical accounting policies in response to
this
comment.
* Revenue Recognition - Your current disclosures provide your
accounting policy for revenue recognition.  However, it is not
clear
if the accounting estimates or assumptions used in the
determination
of revenue are material due to the levels of subjectivity and
judgment necessary to account for highly uncertain matters or the
susceptibility of such matters to change and if the impact of the
estimates and assumptions are material to your financial condition
or
operating performance.
* Allowance for Doubtful Accounts - It is not clear which
estimates
or assumptions in your determination of the allowance for doubtful
accounts are material.  In your analysis, you should address the
questions that arise once the critical accounting estimate or
assumption has been identified by analyzing, to the extent
material,
such factors as how you arrived at the estimate, how accurate the
estimate or assumption has been in the past, how much the estimate
or
assumption has changed in the past, and whether the estimate or
assumption is reasonably likely to change in the future.
* Intangible Assets and Goodwill - You state that goodwill and
intangible assets are reviewed for recoverability annually or more
frequently if certain events occur or circumstances change.
However,
you have not identified any estimates or assumptions that you
believe
are material and critical to your financial condition or operating
performance.  If the impact of estimates and assumptions is
material,
you should present an analysis of the uncertainties involved in
applying a principle at a given time or the variability that is
reasonably likely to result from its application over time.  For
example, with respect to your goodwill impairment test, you should
consider a discussion indicating if the difference between the
carrying value and fair value of your reporting units is material
to
an investor and how sensitive the estimates, including long-term
revenue and cash flow projections, discount rate and terminal
values,
are to change.
Refer to section V of the Commission`s Interpretive Release on
Management`s Discussion and Analysis of Financial Condition and
Results of Operation which is located on our website at:
http://www.sec.gov/rules/interp/33-8350.htm, analyze those
critical
accounting policies you have disclosed and those you have not
disclosed and in future filings, revise accordingly to discuss
those
estimates and assumptions that bear the risk of change and provide
sensitivity analysis and other material quantitative information
to
indicate the impact that other reasonably likely assumptions would
have on your results of operations, statement of position and cash
flows and whether the estimate/assumption is likely to change in
the
future.  In your response, please provide us with your proposed
revised disclosures.

Financial Statements and Supplementary Data

Note 1. Summary of Significant Accounting Policies

2. Revenue Recognition
You state that you sell some products under bill and hold
arrangements.  Please tell us how you evaluated SAB Topic 13.3(a)
in
your determination to recognize revenue for products held on a
customer`s behalf.  Expand your accounting policy in Note 1 of
your
financial statements to clarify how you meet the criteria for
revenue
recognition.  Also revise your critical accounting policy
disclosure,
if applicable.

Note 11.  Income Taxes
3. Tell us how you applied SFAS 109 in assessing the need for a
valuation allowance against your deferred tax asset.  Refer to the
guidance provided by the Division of Corporation Finance on
financial
reporting matters, which is located on our website at:
http://www.
sec.gov/divisions/corpfin/guidance/cfactfaq.htm#P198_34687.
Noting
your history of operating losses, disclose if the asset`s
realization
is dependent on material improvements over present levels of
consolidated pre-tax income, material changes in the present
relationship between income reported for financial and tax
purposes,
or material asset sales or other non-routine transactions.
Discuss
the uncertainties surrounding realization of your deferred tax
asset
and describe these assumed future events, quantified to the extent
practicable, in your MD&A.  Also describe in MD&A the tax planning
strategies that you refer to in Note 11.

4. Please tell us about the basis for and provide us with a roll-
forward schedule of your tax contingency reserves.  In MD&A, you
state that you reversed these reserves based on corresponding
reduction in the related income tax exposures.  Please explain and
provide us with the facts and circumstances that support the
reversal
of portions of these reserves in 2004 and 2003.

Note 14.  Restructuring Charges
5. We note that you enacted restructuring plans in 2002, 2004 and
2005.  Disclose your accounting policy for restructuring charges.

6. Provide a description of the exit or disposal activity,
including
the facts and circumstances leading to the activity and the
expected
completion date.

*    *    *    *

      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 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.

      Please respond to these comments within 10 business days or
tell us when you will provide us with a response.  Furnish a
letter
that keys your responses to our comments and provides any
requested
supplemental information.  Please file your response letter on
EDGAR.

      You may contact Christine Bashaw, Staff Accountant, at (202)
551-3363 or Terry French, Accountant Branch Chief, at (202) 551-
3828
if you have questions regarding comments on the financial
statements
and related matters.  Please contact me at (202) 551-3810 with any
other questions.

								Sincerely,

/s/
								Larry Spirgel
								Assistant Director
??

??

??

??

Mr. Andrew Dosch
Applied Innovation, Inc.
April 28, 2005
Page 4

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

         DIVISION OF
CORPORATION FINANCE

</TEXT>
</DOCUMENT>