SecProbe.io

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

June 17, 2005

Mr. Martin F. James
Senior Assistant Chief Accountant
Division of Corporation Finance
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Dear Mr. James,

Thank you for your response to our letter dated May 20, 2005. We have reviewed
your additional comments in your letter dated June 1, 2005. Below we have listed
the additional Staff comments along with our responses to each comment.

Non-GAAP Information
--------------------

1. In part (a) of your response to prior comment 1, you indicate that you will
no longer adjust for the restructuring charges in the non-GAAP measure. However,
the table for 2004 shown in part (b) of the response continues to include an
adjustment for restructuring charges. Please confirm that you will remove the
adjustment for restructuring charges in your future filings, including future
presentations of the 2004 non-GAAP measures.

                  Performance Technologies, Inc. (the "Company") confirms that
                  it will remove the 2004 adjustment for restructuring charges
                  in presentations of the 2004 non-GAAP measure in future
                  filings.

2. We note the discussion included in your response to prior comment 1 relating
to the adjustments for in-process R&D charges in the non-GAAP measures you
presented. We note that you recorded these charges in 2002 and 2004 and that
given the nature and size of your business they are reasonably likely to recur.
Please confirm that in future filings you intend to comply with Item
10(e)(1)(ii)(B) of Regulation S-K which prohibits the inclusion of non-GAAP
measures that eliminate items identified as non-recurring, infrequent or unusual
when the nature of the charge or gain is such that it is reasonably likely to
recur within two years or there was a similar charge or gain within the prior
two years.
                  The Company confirms that it will not eliminate any future
                  in-process research and development charges in the
                  determination of its non-GAAP measure in future filings.

3. We note from the last bullet point of (d) of your response to prior comment 1
that "the Company believes that this non-GAAP net income measure provides
investors with a more transparent and enhanced view of the true operations and
financial condition of the Company." In addition, in your March 31, 2005 Form
10-Q you say that the company's results excluding non-recurring items provide
"better" comparability of its operations. These statements appear to place
greater prominence on the non GAAP measures and may confuse investors into
believing that they should view the non-GAAP financial measure as being superior
to the comparable GAAP measures. Please revise your presentation to eliminate
these confusing statements. Refer to Item 10(e)(1)(i)(A).

                  The Company will revise its future filings and will eliminate
                  any words or statements that could lead an investor to believe
                  that the non-GAAP financial measure is superior to the
                  comparable GAAP measure. The Company will revise the future
                  disclosure illustrated in its letter of May 20, 2005 and will
                  remove the sentence "The Company believes that its results
                  excluding non-recurring items provide better comparability of
                  its operations."

Note B - Acquisitions
---------------------

4. We note your responses to prior comments 4 and 8. However, we also note that
the final investment balance in Mapletree represents 10.2% of your total assets
at December 31, 2003 and that the acquisition significantly impacted your 2004
operating results, as evidenced by your references to the effects of the
transaction in several sections of Management's Discussion and Analysis. As a
result, it would appear that the disclosures called for by SFAS 141 would be
meaningful to the investor's judgment.

    o    Please confirm that you will provide the disclosures required by
         paragraphs 51 through 57 of SFAS 141, including the purchase price
         allocation and the pro forma data for 2003, in your next Form 10-Q and
         in your other future filings, as appropriate. Provide us with a copy of
         your proposed disclosure.

    o    If you continue to believe the disclosures are not needed, please
         provide us with your analysis considering the guidance in SAB 99.

                  The Company continues to believe that the disclosures of a
                  material acquisition required under SFAS No. 141, including
                  the purchase price allocation and the pro forma data for 2003,
                  are not required. This position is based on several factors
                  including: the guidance provided by SAB 99, the financial
                  position of the respective companies at the acquisition date
                  and at December 31, 2003, and the results of operations of the
                  Company and of Mapletree Networks for the year ended December
                  31, 2003.

                  The Company agrees that the final investment in Mapletree
                  represented 10.2% of the Company's total assets at December
                  31, 2003. In preparing its Form 10-K for 2004 and determining
                  whether the allocation of purchase price was significant to an
                  investor and should be disclosed, the Company considered the
                  total purchase price, the acquired assets that were disclosed
                  and the materiality of those acquired assets and liabilities
                  that were not specifically disclosed. In its 2004 Form 10-K,
                  the Company disclosed that the amount of goodwill recorded
                  related to the acquisition totaled $4,143,000. This amount
                  represented approximately 78% of the purchase price; the
                  remaining amount of net assets acquired that was not
                  specifically disclosed totaled approximately $1,151,000, or
                  2.2% of the Company's total assets at December 31, 2003. No
                  single asset acquired or liability assumed exceeded the
                  aggregate total of 2.2%. At the time of the acquisition, and
                  at the time of its filing of Form 10-K for 2004, the Company
                  concluded that there were no other qualitative or quantitative
                  factors that would require these items to be disclosed. This,
                  along with the undisclosed items totaling 2.2% of total
                  assets, led the Company to believe that the disclosure of
                  these other acquired assets and liabilities was not
                  significant and would not materially influence or inform the
                  reader of the financial statements. Therefore, the Company
                  elected not to disclose these amounts. In addition, based upon
                  your previous letter and comment, the Company notes that in
                  future filings it will disclose the amount of purchase price
                  allocated to capitalized software development costs, which
                  totaled approximately $577,000. This amount represents an
                  additional 11% of the purchase price of Mapletree. As a result
                  of disclosing the amount of goodwill and the capitalized
                  software development costs, the Company will disclose the
                  allocation of $4,720,000, or 89% of the purchase price. The
                  Company will also disclose in future filings that the
                  remaining amount of net assets acquired of $574,000, or 1.1%
                  of the Company's total assets at December 31, 2003, is
                  comprised principally of accounts receivable, inventory,
                  accounts payable and accrued expenses.

                  In assessing the need for the pro forma disclosure under SFAS
                  No. 141, the Company calculated that Mapletree Network's 2003
                  pre-tax income represented less than 5% of the Company's 2003
                  pre-tax income. In addition, in consideration of SAB 99, the
                  Company did not believe that there were any other qualitative
                  or quantitative factors that would result in the pro forma
                  disclosures required under SFAS No. 141. Based upon these
                  factors, the Company continues to believe that the disclosure
                  of pro forma information is not required.

5. We note the statement in your response to comment 6 that Mapletree Networks
incurred "substantial losses" in the years preceding the acquisition. Please
tell us the amounts of any losses in the last five years and show us how you
treated these losses in your calculations of the significant subsidiary test
when determining the need for financial statements pursuant to Rule 3-05 of
Regulation S-X.

                  For each of the years in the six years ending December 31,
                  2003, Mapletree Networks did not incur expenses or realize
                  benefits from income taxes, extraordinary items or cumulative
                  effects of a change in accounting principle. As a result,
                  Mapletree's pre-tax income (loss) equaled net income (loss)
                  for each of those years. The amount of net income and net
                  losses of Mapletree Networks for each of the years in the six
                  years ending December 31, 2003 were as follows:

                      Year                     Net Income (Loss)
                  ----------------------------------------------
                  2003                             $    212,000
                  2002                             $ (4,900,000)
                  2001                             $(11,679,000)
                  2000                             $ (7,782,000)
                  1999                             $ (5,534,000)
                  1998                             $ (3,171,000)

                  As a point of clarification from the Company's May 20, 2005
                  response, Mapletree did incur significant losses in its
                  history. However, in 2003 the results of Mapletree improved
                  and Mapletree realized a slight profit for the year. Losses
                  from previous years far exceeded the income earned in 2003.

                  In accordance with Rule 3-05 of Regulation S-X, the Company
                  tested the significance of income from continuing operations
                  before income tax, extraordinary items and cumulative effect
                  of a change in accounting principle ("Income or Loss") of
                  Mapletree Networks as a percentage of the Company's Income.
                  This test was performed at the acquisition date using the most
                  recent annual financial statements of Mapletree (2003) and the
                  most recently filed annual financial statements of the Company
                  (2002) as follows:

                       Mapletree 2003 Income                 $   212,000
                       Company Five Year Average Income      -----------
                       (1998 through 2002)                   $ 7,877,000
                       Mapletree as a percentage                   2.69%

                  Mapletree's Losses for the years 1998 through 2002 were
                  not considered in the significance calculation under
                  Rule 1.02(w) of Regulation S-X.

The Company acknowledges that it is responsible for the adequacy and accuracy of
the disclosure in the filings. The Company acknowledges that Staff comments or
changes to disclosure in response to Staff comments in the filings reviewed by
the Staff do not foreclose the Commission from taking any action with respect to
the filing. The Company also acknowledges that 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.

Thank you for your time and attention in this matter. If you require additional
information please contact me.

Best Regards,

Dorrance W. Lamb
Chief Financial Officer

cc:  Donald L. Turrell, Chief Executive Officer, Performance Technologies, Inc.
     E. Mark Rajkowski, Audit Committee Chairman, Performance Technologies, Inc.
     Edward W. Kay, PricewaterhouseCoopers LLP
     Jeffrey H. Bowen, Harter, Secrest & Emery LLP

</TEXT>
</DOCUMENT>