SecProbe.io

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Via Facsimile and U.S. Mail
Mail Stop 03-09

May 9, 2005

Mr. Dennis R. Jolicoeur
Chief Financial Officer and
Executive Vice President
21411 Prairie Street
Chatsworth, CA 91311

Re:	Natrol, Inc.
	Form 10-K for the fiscal year ended December 31, 2004

	File No.  000-24567

Dear Mr. Jolicoeur:

      We have reviewed your filing and have the following
comments.
We have limited our review of the above referenced filing to only
those issues addressed. Where our comments call for disclosure, we
think you should amend your document in response to these
comments.
In some of our comments, we ask you to provide us with
supplemental
information so we may better understand your disclosure.  Please
amend your Form 10-K for the year ended December 31, 2004 and
respond
to these comments within 15 business days or tell us when you will
provide us with a response prior to the expiration of the 15-day
period.  If we have requested additional information as well as an
amendment or if you disagree with any comment that calls for
disclosure, please provide this letter prior to your amendment.
You
may wish to provide us with marked copies of the amendment to
expedite our review.  Your letter should key your responses to our
comments.  Detailed letters greatly facilitate our review.  Please
file your letter on EDGAR under the form type label CORRESP.
Please
understand that we may have additional comments after reviewing
your
amendment and responses to our 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 on 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

Item 7.  Management Discussion and Analysis of Financial Condition
and Results of Operations

Critical Accounting Policies

Revenue Recognition, page 27

1. We believe that your disclosure related to estimates that
reduce
gross revenue such as future returns, spoilage allowances,
allowances
for product deemed to be unsaleable and other allowances could be
improved as follows:

a)	Disclose the nature and amount of each accrual at the balance
sheet date and the effect that could result from using other
reasonably likely assumptions than what you used to arrive at each
accrual such as a range of reasonably likely amounts or other type
of
sensitivity analysis.
b)	Disclose the factors that you consider in estimating each
accrual such as historical return of products, levels of inventory
in
the distribution channel, estimated remaining shelf life, price
changes from competitors and introductions of generics and/or new
products.
c)	To the extent that information you consider in b) is
quantifiable, disclose both quantitative and qualitative
information
and discuss to what extent information is from external sources
(e.g., end-customer prescription demand, third-party market
research
data comparing wholesaler inventory levels to end-customer
demand).
For example, in discussing your estimate of product that may be
returned, consider disclosing and discussing, preferably by
product
and in tabular format, the total amount of product (in sales
dollars)
that could potentially be returned as of the balance sheet date
and
disaggregated by expiration period.
d)	If applicable, discuss any shipments made as a result of
incentives and/or in excess of your customer`s ordinary course of
business inventory level.  Discuss your revenue recognition policy
for such shipments.
e)	You should consider disclosing a roll forward of the accrual
for
each estimate for each period presented showing the following:
?	Beginning balance,
?	Current provision related to sales made in current period,
?	Current provision related to sales made in prior periods,
?	Actual returns or credits in current period related to sales
made in current period,
?	Actual returns or credits in current period related to sales
made in prior periods, and
?	Ending balance.

f)	In your discussion of results of operations for the period to
period revenue comparisons, discuss the amount of and reason for
fluctuations for each type of reduction of gross revenue including
the effect that changes in your estimates of these items had on
your
revenues and operations.

Contractual Obligations and Commitments, page 36

2. We note that you exclude interest payments from your
contractual
obligations table.  Please revise your contractual obligation
table
to include interest payments.

Report of Independent Auditors, page 39

3. Please revise the auditors` opinion to include the name of the
auditing firm as required by Rule 2.02(a) of Regulation S-X.

Consolidated Financial Statements

Notes to Consolidated Financial Statements

1. Business and Summary of Significant Accounting Policies

Revenue Recognition, page 46

4. We note from your disclosure that free goods shipped to
customers
are recorded as a reduction of revenue.  We refer to EITF 01-09,
paragraph 10 which states that if consideration consists of a free
product or service then the consideration should be categorized as
an
expense as opposed to a reduction in revenue.  Please revise your
filing or advice us as to why your accounting is appropriate under
US
GAAP.

Goodwill, page 46

5. Please tell us your accounting basis for reducing goodwill for
the
$2 million legal settlement with the former owners of ProLab.
Please
refer to paragraph 41 of SFAS 141.

7. Employee Benefits Plan, page 56

6. It appears from your disclosure that your employee stock
purchase
plan is a non-compensatory plan under APB 25, which would require
no
stock compensation expense, however management has elected to
expense
two-thirds of the discount.  Please disclose and explain to us
supplementally why (1) management is recording an expense for the
employee stock purchase plan and (2) why is the expense recorded
at
two-thirds of the discount.

Item 9. Changes and Disagreements with Accountants on Accounting
and
Financial Disclosure, page 61

7. Please revise your filing to include the disclosures as
required
by Items 307 and 308 of Regulation S-K.

Exhibits 31.1 and 31.2

8. Please revise your certifications to include the last paragraph
of
the certification as required by Item 601(b)(31) of Regulation S-
K.

*    *    *    *

	We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require.
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 filings;
* 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; 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.

      You may contact Joseph Roesler, Staff Accountant, at (202)
942-
1788 or Mary Mast, Senior Accountant, at (202) 551-3613 if you
have
questions regarding the comments. In this regard, do not hesitate
to
contact me, at (202) 942-1803.

								Sincerely,

								Jim B. Rosenberg
								Senior Assistant Chief
Accountant
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Mr. Dennis R. Jolicouer
Natrol, Inc.
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