SecProbe.io

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Mail Stop 4561

				June 29, 2005

Charles W. Jepson
Extended Systems Incorporated
5777 North Meeker Avenue
Boise, ID. 83713

Re:	Form 10-K for Fiscal Year Ended June 30, 2004
      	Filed September 29, 2004
		File No. 000-23597
		Form 10-Q for Fiscal Quarter Ended September 30, 2004
		Filed November 15, 2004
		File No. 000-23597
		Form 10-Q for Fiscal Quarter Ended December 31, 2004
		Filed February 14, 2005
		File No. 000-23597
		Form 10-Q for Fiscal Quarter Ended March 31, 2005
		Filed May 16, 2005
		File No. 000-23597

Dear Mr. Jepson:

      We have reviewed the above referenced filing and have the
following comments.  Please note that we have limited our review
to
only your financial statements and related disclosures and do not
intend to expand our review to other portions of your document. We
may ask you to provide us with supplemental information so we may
better understand your disclosure.  Please be as detailed as
necessary in your explanation.  After reviewing this information,
we
may raise additional 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 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 June 30, 2004

Item 9A. Controls and Procedures, page 47

1. We note your statement that any "controls and procedures, no
matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives, and
management
necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures."
We
further note that the conclusions of your principal executive and
principal financial officer do not indicate that the disclosure
controls and procedures are effective at the "reasonable
assurance"
level.  Please explain to us how your disclosures comply with
Section
II.F.4 of SEC Release No. 33-8238, "Management`s Reports on
Internal
Control Over Financial Reporting and Certification of Disclosure
in
Exchange Act Periodic Reports," available on our website at
<http://www.sec.gov/rules/final/33-8238.htm>.  We noted similar
controls and procedures disclosures in the Form 10-Q for each of
the
three fiscal quarters in fiscal year 2005.

Form 10-Q for the Fiscal Quarter Ended March 31, 2005

Part II. Other Information, page 41

Item 1. Legal Proceedings, page 41

2. We note that you entered into a binding memorandum of
understanding that resolved the litigation with Agilent and
Samsung.
Under the terms of the Resolution Agreement, ESI entered into a
royalty-bearing license with Samsung for Samsung`s future use of
ESI`s Ir Software.  Explain why you believe that recognizing the
$1.0
million in the third quarter of 2005 and the other installments
upon
receipt as revenue is proper. Cite the accounting literature that
supports your accounting.  Indicate why the receipt of these funds
should result in immediate revenue recognition instead of being
deferred.  Explain whether the payments are for past transactions
instead of future licensing rights. Describe the relevant terms of
the settlement including licensing rights, damages, and standstill
agreements.   Further, explain what consideration was given to
allocating the settlement to each of the "terms" or deliverables
agreed to (e.g., settlement, future licensing rights, unpaid
royalties).  In addition, explain why the amounts received are
included in revenue.

Notes to Condensed Consolidated Financial Statements, page 8

Note 2. Significant Accounting Policies, page 8

Revenue Recognition, page 9

3. We note your statement that when a "royalty report is not
received
by the desired date...and there exists the basis to make a fair
and
reasonable estimate of revenue related to that royalty report,
this
estimate will be recorded as revenue."  Explain to us your basis
of
determining how a fair and reasonable estimate exists and is
determined.  Provide an analysis for fiscal year ending June 30,
2004
and for each quarterly period during fiscal year 2005 showing the
difference between actual results and estimates.  Indicate whether
any of the differences were material using SAB 99.  That is,
explain
why you believe that the revenue earned is determinable at the
time
it is recognized.

4. You state that you recognize no more than 90% of the total
contract amount until project acceptance is obtained.  Explain why
you believe that this policy is proper.  That is, explain why it
is
proper to defer the 10% until acceptance.  Is the 10% contingent
upon
acceptance by the customer?  Describe the acceptance provisions of
these contracts and indicate how your accounting for these
provisions
complies with SAB Topic 13 (A) (3) (b).

       Please respond to these comments within 10 business days or
tell us when you will provide us with a response.  Please submit
all
correspondence and supplemental materials on EDGAR as required by
Rule 101 of Regulation S-T.  You may wish to provide us with
marked
copies of any amendment to expedite our review.  Please furnish a
cover letter with any amendment that keys your responses to our
comments and provides any requested information.  Detailed cover
letters greatly facilitate our review.  Please understand that we
may
have additional comments after reviewing any amendment and 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 information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision.  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 filing;

* 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

* 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 Jason Niethamer at 202-551-3855, Stephen
Krikorian (Accounting Branch Chief) at 202-551-3488 or me at 202-
551-
3730 if you have questions regarding the above comments.

Sincerely,

Craig Wilson
Senior Assistant Chief Accountant

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Charles W. Jepson
Extended Systems Incorporated
June 29, 2005
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