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June 15, 2005

Mr. Joseph A. Foti

Sr. Assistant Chief Accountant

U. S. Securities and Exchange Commission

Washington D.C. 20549

  Re:

  Precision Auto Care, Inc.

  Form 10-KSB for the fiscal year ended June
  30, 2004

  Form 10-Q for the quarter ended September
  30, 2004 and December 31, 2004

  and March 31, 2005

  Commission file #: 000-29478

Dear Mr. Foti:

I am in receipt of your letter dated June 7, 2005.  The following is our response to each of the
comments in the order that they appeared in your letter.

Form
10-KSB for the year ended June 30, 2004

Note 7. Debt
Restructuring

1.                                       We
note from your response to comment 2 that you will revise your financial
statements to reflect the gain on the transaction as an equity transaction.
Please file your amended Form 10-KSB for our review as soon as possible.
Additionally, as requested in our prior comment, please clarify how the
$10.36/share “fair value” per share for the 500,000 shares of redeemable
preferred stock was calculated or determined as part of the negotiation to
restructure the debt. We may have further comment upon receipt of your
response.

Response:

We will file the amended 10-KSB as soon as we have satisfied all your
requests for information associated with this inquiry. It is prepared, but I prefer
not having to file twice in the event that you have additional questions.

The $10.36 per share cost of the preferred stock was not a negotiated
number. The total value of the preferred stock was negotiated. The total value
for the preferred stock was $5,180,000 and in conjunction with the 2.5 million
shares of stock and approximately 11.5 million warrants, the Company management
felt that we had negotiated an excellent

deal because we were able to dispose of $15.4 million in debt with an
annual interest rate of 12%. There was no formula or negotiation for the number
of shares (500,000) or the price of the individual shares ($10.36). Once the
total value of the preferred was negotiated and the number of preferred shares
established at 500,000, the per share price was calculated at $10.36
($5,180,000/500,000).

Form 10-Q for the period ended December 31,
2004

Note 3. Master
License Agreement

2.                                       We
note your revised disclosure language in response to comment 4, however it is
unclear how certain of the amounts were determined. Please tell us and revise
your disclosure to explain why only $130,000 of revenue was recognized through
December 31, 2004 when $150,000 was paid by August 31, 2004 and explain when
the $20,000 deferred revenue will be recognized. Additionally, please clarify
the purpose of the two additional payments of $50,000 and indicate when they
are expected to be received.

Response:

The disclosure was revised for the quarter ending March 31, 2005 to
incorporate additional language to explain why only $130,000 of revenue was
recognized through December 31, 2004.
At that point, the Company had substantially fulfilled the majority of
the required obligations but not all of them.
The remaining $20,000 was deferred because the Company had an obligation
to travel to mainland China for training. This obligation was satisfied during
the fourth quarter, thus the remaining revenue and associated expense will be
recognized in the fourth quarter.  The
two additional payments of $50,000 are due pursuant to the terms of the master
franchise agreement and represent a partial payment for the rights to develop
the Precision Tune brand in mainland China. At this date, $56,000 has been
received and an additional payment of $44,000 is expected by the end of June.

Sincerely,

  /s/ Robert R. Falconi

  Robert R. Falconi

  President and Chief Operating Officer

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