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    fhcfeb112008responsetosec.htm

    February
      11, 2008

    SENT
      VIA
      EDGAR

    Mr.
      John
      Cash

    Accounting
      Branch Chief

    United
      States Securities and Exchange Commission

    Division
      of Corporation Finance

    Washington,
      D.C. 20549

    Re:
The
      Female Health Company Form 10-KSB
      for the year ended September 30, 2007

           File
      No. 1-13602

    Dear
      Mr.
      Cash:

    The
      following are the responses of The Female Health Company (the "Company") to
      the
      comments in the letter of the staff of the Securities and Exchange Commission
      dated January 30, 2008 relating to the Company's Form 10-KSB for the year
      ended September 30, 2007.  For reference purposes, the text of
      the staff's comment letter has been reproduced below with responses below for
      each numbered paragraph.

    Form
      10-KSB for the Year
      Ended September 30, 2007

    General

    Comment
      No.
      1

    It
      appears that your public float may have exceeded $25 million in the years ended
      September 30, 2007, 2006 and 2005. Please clarify for us how you determined
      that you qualify as a small business issuer.  Reference Item 10
      of Regulation S-B.

    Response
      to Comment No.
      1

    With
      respect to the public float limit, Item 10(a)(2)(iii) of
      Regulation S-B provides that once a small business issuer becomes a
      reporting company it will remain a small business issuer until it exceeds the
      public float limit at the end of two consecutive years.  The public
      float limit is tested by use of a price at which the Company's stock was last
      sold, or the average of the bid and asked prices of such stock, on a date within
      60 days prior to the end of the Company's fiscal year end.

    As
      of
      September 30, 2006, there were 24,208,391 shares of the Company's $0.01 par
      value common stock (the "Common Stock") outstanding, the only class of common
      equity of the Company.  Directors and executive officers of the
      Company (who are all affiliates of the Company) collectively held 7,602,788
      shares of Common Stock as of September 30, 2006.  As a result, the
      number of shares of Common Stock held by non-affiliates was
      16,605,603.  On September 25, 2006, a date within 60 days of the
      Company's fiscal year end of September 30, 2006, the Common Stock closed at
      $1.20 per share on the OTC Bulletin Board.  At that price, the
      Company's public float was $19,926,724 (16,605,603 shares x $1.20 =
      $19,926,724).  Because that number is less than $25 million, the
      Company was under the public float limit for its fiscal year ended
      September 30, 2006, and because ending small business issuer status
      requires that an issuer exceed the public float limit for two consecutive years,
      the Company was also a small business issuer for its fiscal years ended
      September 30, 2007 and September 30, 2005.

    Item
      1. Description of
      Business, page 5

    Product,
      page
      5

    Comment
      No.
      2.

    Please
      revise future filings to disclose and discuss the process and expected timing
      for FDA approval of FC2.

    Response
      to Comment No.
      2:

    The
      disclosure in the Company’s Form 10-QSB for the quarter ended
      December 31, 2007 will be expanded to read as follows:

    The
      FC2
      pre-market approval application (PMA) submitted by the Company on January 8,
      2008, was accepted for FDA review on January 28, 2008.  That
      acceptance marks the beginning of the FDA review process, which generally can
      take up to 180 active review days.  During this process, the FDA may
      ask questions regarding the submission.  The time spent on answering
      such questions is not counted as review process time.  Following the
      FDA review, the submission’s merits will be reviewed and discussed by FDA’s
      OB-GYN Device Advisory Panel.  The final step to approval is
      negotiation and approval of the product’s labeling.  The entire
      process may typically take up to 360 days.

    Item
      6. MD&A – Liquidity
      and Sources of Capital, page 20

    Comment
      3

    With
      a view towards future disclosure, please explain to us why your accounts
      receivable balance significantly increased and help us understand why days
      outstanding are so significant in light of the fact that your disclosed payments
      terms are a net 30 day basis.

        2

    Response
      to Comment No.
      3:

    Historically,
      the Company’s “standard” credit terms to its largest customer class has been 30
      days net.  However, as the Company business with distribution partners
      expanded, it was necessary to offer competitive credit terms typical for that
      customer class.  Such terms vary from 60 to 90 days net, depending on
      what is customary in the country where the distributor does
      business.  Also, as is typical in the Company's business, the Company
      occasionally offers extended credit terms as a sales promotion.  The
      increased sales to distributors and the occasional credit extension have
      increased days outstanding for sales in recent periods.  An analysis
      of the past five quarters reveals that days’ sales outstanding average is about
      60 days.

    To
      understand the accounts receivable balance at year end, it is necessary to
      know
      the Company’s production and sales pattern.  A typical quarter falls
      like this:  In the first half of each quarter, the Company's UK
      subsidiary produces goods to be sold by its North American parent.  As
      a result, a significant portion of the sales in the first half of the quarter
      are inter-company transactions which have no impact on accounts receivable
      as it
      eliminates in consolidation.  These inter-company sales arrive in the
      US from about mid-quarter and onward.  So the US parent’s sales occur
      primarily in the second half of the quarter, a function of when its inventory
      arrives. Production of inter-company sales in months one and two also reduces
      the UK subsidiary’s third party sales in the first half of the
      quarter.  Thus, the Company’s pattern of production and sales tends to
      cause accounts receivable to spike near the quarter end.

    At
      September 30, 2007, the accounts receivable balance of $6.1 million
      represented approximately 74 days’ sales outstanding.  This was due to
      both the Company’s typical production and sales pattern and the inclusion of a
      $1 million invoice with extended terms (120 days).

    In
      future
      filings, the Company will expand the credit terms disclosure to describe the
      Company's terms and reflect the current average days’ sales
      outstanding.

    Note
      1. Nature of Business
      and Significant Accounting Policies, page F-7

    Deferred
      Grant Income, page
      F-9

    Comment
      No.
      4:

    Please
      provide us a more comprehensive discussion of the nature of the project for
      which you received grant money from the British Linkage Challenge
      Fund.  In this regard, please also more fully describe how you
      determined that the contributions should be recognized as income.

        3

    Response
      to Comment No.
      4:

    The
      Company receives grant monies from the British Linkage Challenge Fund (the
      "BLCF").  This fund was set up by the UK Department for International
      Development and is a cost and risk sharing grant scheme to develop partnerships
      between businesses nationally and internationally and to carry out innovative
      pilot projects. The grants are provided on the basis of a 1:1 funding by the
      BLCF and the companies involved. The BLCF's goal is to improve access to
      sustainable livelihood opportunities for poor people by improving the
      competitiveness and ability of business to access markets. This is done through
      linkages that exchange technology, skill, information and market access. The
      BLCF's expected outcomes are productive inter-firm linkages among firms of
      all
      sizes and all activity, involved in export or domestic markets, services as
      well
      as processed goods.

    The
      project for which the Company receives this grant relates to the development
      of
      a linkage with Hindustan Latex Limited, in India, to manufacture the
      female condom in India and develop the market for the product in that
      country.

    The
      grant
      received is split between the Company and Hindustan Latex Limited pro-rata
      to
      their respective expenditure on the project.

    The
      Company recognized that there are no U.S. accounting pronouncements that
      specifically address how to account for government grants.  The
      Company utilized the general precepts of U.S. GAAP and the principles of
      matching and conservatism to determine how to account for the grant monies
      received.  The Company also utilized the guidance of International
      Accounting Standard No. 20 – Accounting for Government Grants and Disclosure of
      Government Assistance to further support the Company's accounting treatment
      of
      the grant received.  The Company allocates its share of the grant
      monies to capital and expense pro-rata to the respective cost allocated to
      the
      project.  Grant proceeds for expenses are credited to income in the quarter
      incurred.  Grant proceeds for capital expenditure are deferred and released
      to income in line with the depreciation of the relevant assets.

    Note
      6. Income Taxes, page
      F-12

    Comment
      No.
      5

    Please
      revise future filings to disclose and discuss how you determined the amount
      of
      tax valuation allowance that you released and how you will assess the remaining
      allowance in future periods.

    Response
      to Comment No.
      5:

    We
      account for income taxes using the liability method, which requires the
      recognition of deferred tax assets or liabilities for the tax-affected temporary
      differences between the financial reporting and tax bases of our assets and
      liabilities, and for net operating loss and tax credit
      carryforwards.

        4

    During
      fiscal year 2007, we recorded an income tax benefit of $825,000. This benefit
      consisted of an $825,000 reduction in the valuation allowance related to a
      portion of our deferred tax assets that will more likely than not be realized,
      based on future projected taxable income. In evaluating our ability to realize
      our deferred tax assets we consider all available positive and negative evidence
      including our past operating results and our forecast of future taxable income.
      In determining future taxable income, we make assumptions to forecast U.S.
      federal, U.S. state, and international operating income, the reversal of
      temporary differences, and the implementation of any feasible and prudent tax
      planning strategies. These assumptions require significant judgment regarding
      the forecasts of future taxable income, and are consistent with the forecasts
      used to manage our business. We intend to maintain the remaining valuation
      allowance until sufficient further positive evidence exists to support further
      reversals of the valuation allowance. Our income tax expense recorded in the
      future will be reduced to the extent of offsetting decreases in our valuation
      allowance.  We will expand the discussion of the determination of our
      tax valuation allowance in future filings.

    The
      Company acknowledges that (i) it is responsible for the adequacy and accuracy
      of
      the disclosure in its filings; (ii) 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 (iii) it 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.

    Please
      contact me at (312) 595-9742 if you have any questions on any of the responses
      to your comments.

    Best
      regards,

    The
      Female Health Company

    /s/
      Donna
      Felch

    Donna
      Felch

    Vice
      President and Chief Financial Officer

    5