SecProbe.io

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

       DIVISION OF
CORPORATION FINANCE

    Mail Stop 3030
September 29, 2009

VIA U.S. MAIL and FACSIMILE

 Mr. Uri Friedlander Chief Financial Officer Digital Power Corporation 41324 Christy Street Fremont, California 94538-3158
 RE: Digital Power Corporation
  Form 10-K for the fiscal year ended December 31, 2008
  Filed March 30, 2009
  File No. 001-12711

Dear Mr. Friedlander:
We have reviewed your filing and have the following comments.  Where
indicated, we think you should revise your document in future filings in response to these comments.  If you disagree, we will consider your explanation as to why our comment is
inapplicable or a revision is unnecessary.  Pl ease 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 re view 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.

Uri Friedlander
Digital Power Corporation
September 29, 2009 Page 2  Form 10-K for the period ending December 31, 2008

 Management’s Discussion and Analysis, page 19

 Critical Accounting Policies, page 22

 Revenue Recognition page 22

1. We note your critical accounting policy di sclosure for revenue recognition merely
repeats the policy from your signifi cant accounting polic y footnote without
elaboration.  Accordingly, your disclosure  does not conform to our expectations
for the critical accounting policies disc losure. For each identified critical
accounting policy, please expand to describe th e specific factors that in your view
makes each critical.  Discuss the nature of estimates and uncertainties about those estimates inherent to each individual  policy, including how you make those
estimates.  Discuss how different assumpti ons, methods or condi tions might effect
your financial statements.  For further gui dance, please refer to SEC interpretive
Release No. 33-8350.  Revise fu ture filings to comply.

Liquidity and Capital Resources, page 23

2. We note elsewhere, page 16, that you will require a larger facility in 2009.  Also,
capital expenditures approximated only $79 thousand in 2009.  However, we see
in your liquidity discussion that you “w ill pursue a strate gy to mitigate any
reductions in cash flow…by reducing capital  expenditures and other discretionary
spending.”  Please tell us and in future filings explain how the need to occupy a
larger facility affects your strategy and impacts your expected liquidity.

3. Also, we note from your disclosure on page 16 that the lease for the Gresham
facility  expires on September 16, 2009, with certain repairing covenants.  In this
regard, please tell us and disclose in future filings the terms associated with the certain repairing covenants referred by you on page 16.  Additionally, please provide us with and disclose in your future filings the potential adverse
consequence on your future financial pos ition, results of operations and cash
flows if you are not able to renew the lease of the Gresham facility.

Uri Friedlander
Digital Power Corporation
September 29, 2009 Page 3  Consolidated Financial Statements

 Note 6. Commitments and Contingent Liabilities, page F-18

4. Reference is made to your disclosure in Note 6 on page F-18.  Please provide us
with and disclose in the notes to your fi nancial statements in future filings your
accounting policy related to th e various operating lease agreements, which expire
on various dates and the lease agreement for the U.K. facility, which expires on
September 2009.  In this regard, if the l ease agreements are operating leases as
defined in paragraph 6 of SFAS No. 13, please tell us if you apply paragraph 15
of SFAS No. 13 in accounting for operati ng leases.  If you do apply paragraph 15
of SFAS No. 13, please explain to us why rent expense for all years presented in
Note 6 vary in amount.
 Note 7. Shareholders’ Equity, page F-18

5. We note from your disclosure on page F-20 that in 2005 and 2006 you granted
30,000 options to Telkoor’s employees and 100,000 options to a non-employee consultant.  The fair value of these op tions was estimated using a Black-Scholes
option-pricing model with assumptions for 2008.   In this regar d, please explain to
us in detail why you used assumptions as of 2008 to fair value options issued in
2005 and 2006.  Also, please provide us with a detail description of your accounting used to account for such  non-employee equity compensation,
supported with the applicab le accounting literature.

6. Additionally, please explain in detail why you recognized “compensation income”
of $12 as it relates to stock compensation related to options granted to Telkoor’s
employees and other non-employee consultants.
 Note 8. Taxes on Income, page F-21

7. We note from your consolidated statement of income on page F-4 that you report
income before income taxes for both 2008 and 2007, but report a tax benefit in
each respective fiscal year end.  In this re gard, please provide us with and disclose
in your future filings a reconciliati on in dollars or percentages between:

• The reported amount of income  tax expense(benefit), and
• The amount of income tax expense (ben efit) that would result from applying
federal statutory rates to pretax financial statement income.

Uri Friedlander
Digital Power Corporation
September 29, 2009 Page 4
Please fully explain to us in detail what  each reconciling item represents.  See
paragraph 47 of SFAS No. 109 for guidance.

Additionally, please provide us with and revise the notes to your financial
statements in future filings to include the disclosures outlined in paragraph 45 of
SFAS No. 109.
   Form 10-Q for the Periods Ended March 31, 2009 and June 30, 2009

 Exhibit 31 Certifications

8. We note that the identification of the certi fying individual at the beginning of the
certification required by Exchange Act Rule  13a-14(a) also includes the title of
the certifying individual. In future fili ngs the identification of the certifying
individual at the beginni ng of the certification should be revised so as not to
include the individual’s title. Refer to Item 601 (31) of Regulation S-K

As appropriate, please respond to these co mments within 10 business days or tell
us when you will provide us with a response.  Please furnish a cover letter with your
response that keys your responses to our  comments and provides any requested
information.  Detailed cover letters greatly facilitate our  review.  Please submit your
cover letter on EDGAR.  Pleas e understand that we may ha ve additional comments after
reviewing your responses to our comments.   We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision.  Since the company and its
management are in possession of all facts re lating 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
filings;
 ‚ 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

Uri Friedlander
Digital Power Corporation September 29, 2009 Page 5
‚ the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any person under the federal secu rities laws of the
United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.
You may contact Dennis Hult, Staff Account ant, at (202) 551-3618 or me at (202)
551-3212 if you have questions regarding comm ents on the financial statements and
related matters.  In this regard, do not hesitate to contact Ma rtin James, Senior Assistant
Chief Accountant, at (202) 551-3671.         S i n c e r e l y ,           Jeffrey Jaramillo        Accounting Branch Chief