SecProbe.io

<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
<PAGE>

November 24, 2004

Mr. Brian Cascio
Accounting Branch Chief
Securities and Exchange Commission

RE:      Allied Healthcare Products, Inc.
         Form 10-K/A for the year ended June 30, 2004
         Filed October 1, 2004
         File No.  000-19266

Dear Mr. Cascio,

As requested, listed below are Allied Healthcare Products, Inc.'s ("Allied" or
the "Company") responses to the comments raised in your letter dated October 26,
2004 relative to the Form 10-K filing for the fiscal year ended June 30, 2004.

AMENDMENT NO. 1 TO FORM 10-K FOR THE YEAR ENDED JUNE 30, 2004

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

CRITICAL ACCOUNTING POLICIES - PAGE 13

1. REGARDING YOUR REVENUE RECOGNITION CRITICAL ACCOUNTING POLICY DISCLOSURE,
PLEASE SUPPLEMENTALLY AND IN FUTURE FILINGS DISCUSS THE JUDGMENTS THAT ARE
INHERENT IN YOUR RECOGNITION OF REVENUE, INCLUDING:

o        THE TYPES OF UNCERTAINTIES REGARDING CUSTOMER ACCEPTANCE,
         COLLECTIBILITY AND SALES PRICE THAT MAY AFFECT THE TIMING OF YOUR
         REVENUE RECOGNITION;

o        HOW YOU ESTIMATE SALES DISCOUNTS AND RETURNS AND ALLOWANCES;

o        WHETHER YOU OFFER WARRANTIES AND HOW YOU ESTIMATE THE RELATED
         LIABILITY.

The Company's revenue recognition policy is to recognize revenues at the time
products are shipped and title has transferred, provided that a purchase order
has been received or a contract executed, there are not uncertainties regarding
customer acceptance, the sales price is fixed and determinable and
collectibility is reasonably assured.

The sales price is fixed by Allied's acceptance of the buyer's firm purchase
order. The sales price is not contingent, or subject to additional discounts.
Allied's shipment terms are "F.O.B. shipping point" as stated in Allied's Terms
and Conditions of Sale. The customer is responsible for obtaining insurance for
and bears the risk of loss for product in-transit. Additionally, sales to
customers do not include the right to return merchandise without the prior
consent of Allied. In those cases where returns are accepted, product must be
current and restocking fees must be paid by the respective customer. A provision
has been made for estimated sales returns and allowances. These estimates are
based on historical analysis of credit memo data.

<PAGE>

Allied does not provide installation services for its products. Most products
shipped are ready for immediate use by the customer. The Company's in-wall
medical system components, central station pumps and compressors, and headwalls
do require installation by the customer. These products are typically purchased
by a third-party contractor who is ultimately responsible for installation
services. Accordingly, the customer purchase order or contract does not require
customer acceptance of the installation prior to completion of the sale
transaction and revenue recognition. Allied's standard payment terms are net 30
days from the date of shipment, and payment is specifically not subject to
customer inspection of acceptance, as stated in Allied's Terms and Conditions of
Sale. The buyer becomes obligated to pay Allied at the time of shipment. Allied
requires credit applications from its customers and performs credit reviews to
determine the creditworthiness of new customers. Allied requires letters of
credit, where warranted, for international transactions. Allied also protects
its legal rights under mechanics lien laws when selling to contractors.

Allied does offer limited warranties on its products. The standard warranty
period is one year, however, most claims occur within the first six months. The
related liability resulting from these transactions is low. The Company's cost
of providing warranty service for its products for the year ended June 30, 2004
was $82,809. Given these results, the Company has not recorded a liability for
future warranty claims.

Allied will expand the description of its revenue recognition policy to include
the additional information described herein in all applicable future filings
with the SEC.

2. WE NOTE THAT YOU IMPLEMENTED A DETAILED ANALYSIS OF INVENTORY FOR THE FISCAL
YEAR ENDED JUNE 30, 2002 THAT RESULTED IN AN INCREASE TO YOUR RESERVE FOR
OBSOLETE AND EXCESS INVENTORY OF $3.2 MILLION. SUPPLEMENTALLY AND IN FUTURE
FILING CLARIFY THE SPECIFIC EVENTS THAT RESULTED IN THE SIGNIFICANT INVENTORY
WRITE-DOWN AND CLARIFY WHETHER THIS INVENTORY WILL BE SOLD OR OTHERWISE
DISPOSED. THE IMPACT OF SALES OF THIS INVENTORY ON GROSS MARGINS SHOULD BE
DISCLOSED EACH PERIOD. IN ADDITION, CLARIFY WHETHER THERE WERE ANY ADDITIONAL
WRITE-DOWNS SINCE FISCAL 2002.

As discussed, an analysis of inventory during the fiscal year ended June 30,
2002 resulted in an increase to the reserve for obsolete and excess inventory of
$3.2 million. The Company had experienced a significant decrease in sales during
the years prior to fiscal 2002. Sales decreased from approximately $74.7 million
for the fiscal year ended June 30, 1999 to $60.4 million for the fiscal year
ended June 30, 2002. This decrease in sales reflects loss of market share, the
effect of product lifecycles, and changes in product mix. In addition, changes
were also made in the manufacturing processes of many of the Company's products
to lower cost as the Company made changes to return to profitability.

The Company performs rigorous reviews of its inventory to determine its reserve
for obsolete and excess inventory, and determine alternative uses for
potentially obsolete inventory items.

The following table displays the Company's write-down and disposal of inventory
for each of the last three fiscal years.

<PAGE>

                    Reserve for Excess and Obsolete Inventory

<Table>
<Caption>
                              Fiscal         Fiscal         Fiscal
                               2002           2003           2004
                            -----------    -----------    -----------
<S>                         <C>            <C>            <C>
Beginning Balance           $ 2,572,967    $ 4,812,074    $ 2,324,258

Inventory scrapped,
salvaged, or otherwise
disposed of                 $  (977,809)   $(2,323,843)   $  (897,347)

Inventory Sold at cost             --      $  (278,047)   $   (69,872)

Inventory Revaluation (1)          --             --      $   385,451

Additional Write-Down       $ 3,216,916    $   114,074           --
                            -----------    -----------    -----------
                            $ 4,812,074    $ 2,324,258    $ 1,742,490
                            ===========    ===========    ===========
</Table>

         (1) During fiscal 2004, the standard cost used to value inventory was
         recalculated to reflect the current replacement cost of inventory. The
         standard cost is changed for each component to reflect the current
         material and labor cost to produce that component. As a result of these
         changes, the standard cost of some obsolete parts increased by
         $385,451. To properly reflect this change, the reserve was increased by
         $385,451. This standard cost revaluation resulted in no change to net
         inventories or to income.

As shown on the table above, only a small portion of the obsolete components
have been sold. Where obsolete inventory has been sold for less than cost, the
loss on the sale has been charged to the inventory reserve. Therefore, there has
not been an effect on gross margins of the Company. It is the Company's
expectation that most of the remaining obsolete inventory will be scrapped or
salvaged, and not sold.

Future filings of the Company on Form 10-K will disclose any impact on gross
margins as a result of the sale of this inventory.

3. SUPPLEMENTALLY AND IN FUTURE FILINGS PROVIDE MORE SPECIFIC DETAILS OF THE
SIGNIFICANT DECREASE IN DOMESTIC SALES IN FISCAL 2004.

As reported in the Form 10-K, net sales for fiscal 2004 of $59.1 million were
$1.8 million less than net sales of $60.9 million in fiscal 2003. Of this $1.8
million decrease in sales $1.6 million dollars is attributable to the Company's
"Eastern Region" (primarily the northeastern United States). The Company
believes that this decrease in sales is a personnel problem, and is due to poor
performance of our sales organization in that region. The Company has taken
action to correct that problem, reorganizing its sales force. To date, the sales
manager and several of the sales people have been replaced in that region. The
Company does not believe that it has permanently lost market share in

<PAGE>

that region, and feels that sales in that region should return to normal levels.
The Company continues to review its sales organization in that region, and will
make changes if necessary.

Future filings of the Form 10-K will provide more specific details of the
significant decrease in sales in fiscal 2004.

4. REFER TO YOUR DISCUSSION OF THE DECREASE IN SG&A EXPENSE FROM 2003 TO 2004,
WHICH IS RELATED TO THE WORKFORCE REDUCTION OF 14 POSITIONS FROM YOUR MANAGERIAL
AND ADMINISTRATIVE STAFF. TO THE EXTENT THESE COST WERE INCURRED AS PART OF A
FORMAL RESTRUCTURING PLAN ACCOUNTED FOR PURSUANT TO SFAS 146, PLEASE REVISE
FUTURE FILINGS IF MATERIAL TO PROVIDE THE FINANCIAL STATEMENT DISCLOSURES
REQUIRED BY PARAGRAPH 20 OF THE STATEMENT AS WELL AS THE MD&A DISCUSSIONS CALLED
FOR IN SAB TOPIC 5-P.

The workforce reduction of 14 positions was not part of a formal restructuring
plan pursuant to SFAS 146. This reduction was an employee layoff due to
declining sales. This workforce reduction did not change either the scope of a
business undertaken by Allied Healthcare Products or the manner in which
business is conducted. Furthermore, this workforce reduction did not result from
a sale or termination of a line of business, the closure of a business location,
a change in management structure, or a fundamental reorganization of the company
as stated in IAS 37 paragraph 70.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES - PAGE 19

5. IN FUTURE FILINGS, PLEASE ELABORATE ON THE INVENTORY REDUCTION PROGRAM,
INCLUDING THE DETAILS OF THE PROGRAM AND HOW YOU EXPECT THE PROGRAM TO AFFECT
FUTURE OPERATIONS AND INVENTORY LEVELS.

The Company's inventory reduction programs involve consistent, detailed
management review of order quantities, lead times, safety stocks, inventory
levels, and other material planning parameters. These reviews have allowed the
Company to better control its inventory levels, resulting in the $2.1 million
decrease in inventory over the last two fiscal years. We do not expect these
programs to significantly further reduce inventory levels. In future filings of
the Company's Form 10-K our disclosures will be enhanced to include these
disclosures.

6. PROVIDE MORE DETAILS OF THE SHORT AND LONG-TERM LIQUIDITY AND INDICATE HOW
LONG THE REGISTRANT CAN SATISFY ITS EXPECTED CASH REQUIREMENTS AND WHEN IT WILL
HAVE TO RAISE ADDITIONAL CAPITAL/FUNDING.

The Company believes that cash generated from operations and its borrowing
availability under its revolving line of credit will be sufficient to satisfy
the Company's operating expenses and capital expenditures for the foreseeable
future. In the event that economic conditions were to severely worsen for a
protracted period of time, we believe that our borrowing capacity under our
credit facilities will provide sufficient financial flexibility. The Company
would have options available to ensure liquidity in addition to increased
borrowing. Capital expenditures, which are budgeted at $1.2 million for the
fiscal year ended June 30, 2005, could be postponed.

At September 30, 2004, the company had $1.4 million in bank debt. At that date
there was no balance outstanding against the Company's revolving credit facility
and $10.0 million available to borrow from the line based on collateral
requirements. Based on the Company's current level of debt, and performance, the
outstanding debt currently bears interest at the Bank's prime rate. The
Company's agreement with the Bank does include

<PAGE>

provisions for higher interest rates at higher debt levels and different levels
of Company performance. In future filings of the Company's Form 10-K our
disclosures will be enhanced to include these disclosures.

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CASH FLOWS

7. IN FUTURE FILINGS THE INVENTORY RESERVES AND ACCOUNTS RECEIVABLE ALLOWANCES
SHOULD BE INCLUDED AS SEPARATE ITEMS IN THE ADJUSTMENTS TO RECONCILE NET INCOME
(LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES.

In future filings on Form 10-K, on the Consolidated Statement of Cash Flows, the
inventory reserves and accounts receivable allowances will be included as
separate items in the adjustments to reconcile net income (loss) to net cash
provided by operating activities.

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION - PAGE 31

8. TELL US WHETHER YOU OFFER WARRANTIES FOR YOUR PRODUCTS. IF MATERIAL, PLEASE
INCLUDE THE DISCLOSURE REQUIREMENTS OF PARAGRAPH 14 OF FIN 45 IN FUTURE FILINGS.

Allied does offer limited warranties on its products. The standard warranty
period is one year, however, most claims occur within the first six months. The
related liability resulting from these transactions is low. The Company's cost
of providing warranty service for its products for the year ended June 30, 2004
was $82,809. Given these results, the Company has not recorded a liability for
future warranty claims.

The Company will include the disclosure requirements of paragraph 14 of FIN 45
in future filings of the Company's Form 10-K, if material.

9. PLEASE DISCLOSE IN FUTURE FILINGS WHAT TYPES OF UNCERTAINTIES WOULD AFFECT
THE TIMING OF YOUR REVENUE RECOGNITION RELATED TO CUSTOMER ACCEPTANCE, SALES
PRICE AND COLLECTIBILITY. IN ADDITION, PROVIDE MORE DETAILS OF SALES DISCOUNTS
OR OTHER INCENTIVES GIVEN TO DISTRIBUTORS OR CUSTOMERS AND HOW THESE IMPACT
REVENUE RECOGNITION. THE ACCOUNTING FOR ANY RIGHTS OF RETURN SHOULD ALSO BE
CLARIFIED.

The Company's revenue recognition policy is to recognize revenues at the time
products are shipped and title has transferred, provided that a purchase order
has been received or a contract executed, there are not uncertainties regarding
customer acceptance, the sales price is fixed and determinable and
collectibility is reasonably assured.

The sales price is fixed by Allied's acceptance of the buyer's firm purchase
order. The sales price is not contingent, or subject to additional discounts.
Allied's shipment terms are "F.O.B. shipping point" as stated in Allied's Terms
and Conditions of Sale. The customer is responsible for obtaining insurance for
and bears the risk of loss for product in-transit. Additionally, sales to
customers do not include the right to return merchandise without the prior
consent of Allied. In those cases where returns are accepted, product must be
current and restocking fees must be paid by the respective customer. A provision
has been made for estimated sales returns and allowances. These estimates are
based on historical analysis of credit memo data.

<PAGE>

Allied does not provide installation services for its products. Most products
shipped are ready for immediate use by the customer. The Company's in-wall
medical system components, central station pumps and compressors, and headwalls
do require installation by the customer. These products are typically purchased
by a third-party contractor who is ultimately responsible for installation
services. Accordingly, the customer purchase order or contract does not require
customer acceptance of the installation prior to completion of the sale
transaction and revenue recognition. Allied's standard payment terms are net 30
days from the date of shipment, and payment is specifically not subject to
customer inspection of acceptance, as stated in