March 17, 2005
VIA EDGAR AND FEDERAL EXPRESS
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attn: Mr. Derek B. Swanson
Re: Iteris, Inc. (formerly known as Iteris Holdings, Inc.)
Registration Statement on Form S-3 filed January 10, 2005
(File No. 333-121942)
Form 8-K filed October 12, 2004 (File No. 0-10605)
Dear Mr.Swanson:
We are in receipt of the additional comment of the Staff of the Securities and Exchange Commission (the Commission) set forth in your letter dated March 11, 2005 (the SEC Comment Letter) regarding our February 25, 2005 responses to the Commissions comment letter of February 4, 2005, regarding the Form 8-K filed by Iteris, Inc. (the Company or Iteris) on October 12, 2004. We are responding to the SEC Comment Letter on behalf of the Company as set forth below. The response set forth below contains the Staffs comment in total, set off in bold type. All factual representations in this letter are based upon information provided to us by the Company.
*****
Attached as Exhibit A is a list of the adjusting journal entries made by the Company prior to filing its Form 10-K for the year ended March 31, 2004, as referenced on page 1 of Ernst & Youngs 2004 Management Letter.
*****
In addition, please be advised that the Company acknowledges that, in the event the Company requests acceleration of the effective date of the pending Registration Statement on Form S-3 filed with the Commission on January 10, 2005 (File No. 333-121942):
should the Commission or the Staff, acting pursuant to delegated authority, declare the registration statement effective, it does not foreclose the Commission from taking any action with respect to the filing;
the action of the Commission or the Staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and
the Company may not assert this action as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
Any comments or questions regarding the foregoing should be directed to the undersigned at (949) 932-3665. Thank you very much for your assistance with this matter.
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Sincerely, |
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/S/ JOO RYUNG KANG |
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Joo Ryung Kang |
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2
EXHIBIT A
ITERIS, INC.
FYE 2004 POST CLOSING ADJUSTMENTS
3/31/2004
Description |
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DR |
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CR |
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P&L Inc / (Dec) |
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JUDGMENTAL |
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|
|
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|
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Misc Accrued Liabilities |
|
125,915 |
|
|
|
|
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G&A Expense |
|
|
|
125,915 |
|
125,915 |
|
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- To reduce year-end health insurance accrual |
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|
|
|
|
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|
|
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Warranty Reserve |
|
12,119 |
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|
|
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COGS |
|
|
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12,119 |
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12,119 |
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- To reduce year-end product warranty reserve |
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COGS |
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175,548 |
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|
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(175,548 |
) |
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Inventory Reserve |
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175,548 |
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- To increase year-end inventory reserves |
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Allowance for Doubtful Accounts |
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59,247 |
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Bad Debt Expense (Sales & Marketing) |
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59,247 |
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59,247 |
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- To reduce allowance for doubtful accounts |
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Accrued Bonuses |
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60,942 |
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Bonus Expense (G&A) |
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60,942 |
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60,942 |
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- To release overaccrual of bonuses based on final estimate of bonuses to be paid. |
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State Income Tax Accrual |
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59,564 |
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Payroll Expense (COGS) |
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59,564 |
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59,564 |
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- To fully release Michigan State Payroll Tax Liability recorded in a prior year |
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COGS |
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34,138 |
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(34,138 |
) |
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Inventory |
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34,138 |
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- To decrease inventory values based on results price testing |
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JUDGMENTAL |
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$ |
108,101 |
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CHANGE IN ANALYSIS |
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Inventory FG |
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75,453 |
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COGS |
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75,453 |
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75,453 |
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- To capitalize overhead in finished goods and work-in-process inventory |
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Unbilled |
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220,200 |
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Revenue |
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220,200 |
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220,200 |
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Cost of Sales |
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149,075 |
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(149,075 |
) |
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Accrued Payroll |
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88,000 |
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Accrued Expenses |
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61,075 |
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- To accrue consulting revenue and related COGS for 3 days at year-end |
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G&A Expense |
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140,079 |
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(140,079 |
) |
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Property, Plant, & Equipment |
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35,691 |
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Accounts Payable |
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175,770 |
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- To accrue for certain liabilities (mainly 2004 audit fees) as of 3/31/04 |
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CHANGE IN ANALYSIS |
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$ |
6,499 |
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TRANSITIONAL |
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Misc. Accrued Liabilities |
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29,818 |
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Health Trust Expense |
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29,818 |
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29,818 |
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- To true up Health Trust liability accounts at year-end based on remaining claims |
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Profit Sharing Accrual |
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32,676 |
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G&A Expense |
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13,724 |
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(13,724 |
) |
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Common Stock |
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2,372 |
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Additional Paid-In Capital |
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44,028 |
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- To record common stock issued in lieu of cash to settle 401(k) match liabilities |
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Discontinued Operations Expense |
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151,873 |
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(151,873 |
) |
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Common Stock |
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8,933 |
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Additional Paid-In Capital |
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142,940 |
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- To record common stock issued for settlement of liabilities from FYE 2002 related to a discontinued operation |
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|
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Delaware Franchise Tax |
|
45,000 |
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|
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|
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G&A Expenses |
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|
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45,000 |
|
45,000 |
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- To reduce annual Delaware Franchise Tax accrual |
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|
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G&A Expense |
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135,000 |
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(135,000 |
) |
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Accrued IRS Penalty |
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135,000 |
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- To increase accrual for taxes and related penalties and interest based on better information obtained after year-end |
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Severance Accrual |
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16,934 |
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|
|
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Payroll Expense (G&A) |
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|
|
16,934 |
|
16,934 |
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- To reduce severance accrual |
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|
|
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|
|
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TRANSITIONAL |
|
$ |
(208,845 |
) |
|||
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STOCK COMPENSATION |
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Deferred Compensation Expense |
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13,000 |
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(13,000 |
) |
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Additional Paid-In Capital |
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13,000 |
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- To expense cheap stock related to terminated 1999 IPO of Iteris subsidiary. (All options fully vested in FY 2004) |
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STOCK COMPENSATION |
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$ |
(13,000 |
) |
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TOTAL P&L ADJUSTMENTS |
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$ |
(107,245 |
) |
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ADJUSTMENTS (NO P&L IMPACT): |
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Accounts Payable |
|
70,335 |
|
|
|
|
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Cash |
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|
70,335 |
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|
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- To re-class checks on held check list and not on outstanding check list at year-end. |
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Long-Term Assets |
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147,611 |
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Demo Inventory |
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|
147,611 |
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- To re-class demo inventory to Long-Term Assets. |
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|
|
|
|
|
|
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Cash |
|
16,929 |
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|
|
|
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Misc. Accrued Liabilities |
|
|
|
16,929 |
|
|
|
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- To increase cash for Health Insurance cash account, which paid self insurance claims for company |
|
|
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Additional Paid-In Capital |
|
198,678 |
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Accounts Payable |
|
|
|
198,678 |
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- To accrue for unrecorded liabilities as of 3/31/04 (see detail below) |
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Commissions paid upon exercise of warrants |
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$ |
118,127 |
|
|
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Legal, accounting and printer fees relating to registration statement |
|
80,551 |
|
|
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||
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$ |
198,678 |
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