SecProbe.io

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October 20, 2005

Ms. Kathleen Collins
Accounting Branch Chief
United States Securities and Exchange Commission
Division of Corporate Finance
Room 4561
Washington, D.C. 20549

RE: HPL Technologies, Inc. File No. 000-32967

Dear Ms. Collins:

We have reviewed your letter dated October 13, 2005 and set forth below is your
original inquiry and our response to such inquiry:

Form 10-K for the Fiscal Year Ended March 31, 2005
--------------------------------------------------

Note 4.  Goodwill Impairment, page 57
-------------------------------------

1.            We note your response to our Prior Comment No. 3. Explain why you
              believe that your market capitalization is not representative of
              the fair value of the Company. Provide the computation of your
              reporting unit's fair value based on quoted market prices and the
              fair value based on your discounted cash flow models and market
              approach analysis as of March 31, 2005 and June 30, 2005. Further
              provide the amount and type of consideration included in the
              non-binding term sheets which you indicated were received in June
              and July, 2005. Also tell us how the fair value of the reporting
              unit as calculated in your goodwill impairment assessment
              reconciles to your recent agreement to sell the Company for
              approximately $13 million.

              We believe that our market capitalization is not representative of
              the fair value of the Company because we had been in discussion
              with a number of potential equity investors (since February 2005)
              for a potential private placement at valuations in excess of the
              total capitalization represented by our OTC market value. Our
              investment bank informed our board in March 2005 that several
              potential investors had expressed an interest in acquiring the
              Company rather then investing in the Company. From April 6, 2005
              through May 22, 2005, we entered into confidentiality agreements
              with 8 companies interested in acquiring the Company. The price
              ranges we were discussing initially were above the market price at
              March 31, 2005 which was $0.80 per share. Furthermore, FAS 142,
              par. 23 states that the fair value of an asset (or liability) is
              the amount at which that asset (or liability) could be bought (or
              incurred) or sold (or settled) in a current transaction between
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              willing parties, that is, other than in a forced or liquidation
              sale. Thus, the fair value of a reporting unit refers to the
              amount at which the unit as a whole could be bought or sold in a
              current transaction between willing parties. Even if we believed
              the quoted market price was the most relevant indication of fair
              value, the $0.80 per share equates to an enterprise value of
              approximately $38 million which supports the book value of equity
              as of March 31, 2005.

              At March 31, 2005 and June30, 2005, consistent with every quarter
              since September 30, 2002, we tested for impairment of goodwill by
              reviewing our discounted cash flow model ("DCF Model") and our
              market approach model ("MA Model") which valued the Company based
              on comparable public company multiples, adjusted by an appropriate
              size factor. Based on this analysis, the fair value of the Company
              at March 31, 2005 was $39.1 million under the DCF Model and $38.0
              million under the MA Model or an average of $0.846 per share which
              is consistent with our closing market price of $0.80 per share on
              March 31, 2005. We also had a verbal offer in this time frame at
              $0.85 to $1.00 per share which did not materialize. At June 30,
              2005, the fair value of the Company was $37.4 million under the
              DCF Model and $30.1 million under the MA Model or an average of
              $0.745 per share. The closing quoted market price at June 30, 2005
              was $0.60 per share, which equated to an enterprise value of
              $28.34 million at June 30, 2005 compared to a book value of equity
              of $27.83 million which supported no impairment of goodwill at
              June 30, 2005. These values are consistent with a non-binding term
              sheet dated June 9, 2005, received by the Company to acquire all
              of its outstanding shares for $0.70 per share in cash. We had
              received another non-binding term sheet on July 18, 2005 for $0.60
              per share in cash or stock to be determined on entering into the
              definitive agreement. We commenced negotiations with this party
              and signed an exclusivity agreement with them on July 25, 2005
              which was terminated on August 25, 2005 when we could not come to
              terms.

              The fair value of our reporting unit at September 30, 2005 is less
              than the book value of our equity at September 30, 2005 which has
              triggered an impairment in the carrying value of our goodwill. We
              have engaged a third party valuation firm to assist in valuing the
              intangible assets of the reporting unit as of September 30, 2005
              to determine the extent of the write-down in goodwill at September
              30, 2005 which will be reflected in our quarterly report on Form
              10-Q. The decrease in fair value of the reporting unit from June
              30, 2005 to the announced sale of the Company at $13 million is
              the result of liquidity issues facing the Company and the related
              reluctance of customers to enter into long-term arrangements with
              the Company. The background section to our proxy statement filed
              with the SEC on October 14, 2005 more fully explains the process
              the Board of Directors and management undertook before entering
              into the definitive agreement with Synopsys for the sale of the
              Company.

                                     ******

Yours truly,

/s/ Michael P. Scarpelli
______________________________________
Michael P. Scarpelli
Chief Financial Officer and
Senior Vice President, Administration

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