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November 12, 2004

VIA EDGAR AND FEDERAL EXPRESS

Securities and Exchange Commission

450 Fifth Street, N.W.

Mail Stop 4-6

Washington, D.C. 20549

Attn:       Ms. O. Nicole Holden
and

                Mr. Robert Benton

Re:                             Iteris, Inc., formerly
known as Iteris Holdings, Inc.

Form 8-K filed October 12, 2004

(File No. 010605)

Dear Ms. Holden and Mr. Benton:

                We are in receipt
of the comments of the Staff of the Securities and Exchange Commission (the “Commission”) set forth in your letter dated
October 28, 2004 (the “SEC Comment Letter”)
regarding the above-referenced Form 8-K of Iteris, Inc., a Delaware corporation
formerly known as Iteris Holdings, Inc. (the “Company”).  We are concurrently filing with the
Commission an amendment to such Form 8-K (the “Amendment”) on behalf of the Company.

                The numbered
responses set forth below contain each of the Staff’s comments set off in bold
type and correspond to the numbered comments contained in the SEC Comment
Letter.  All factual representations in
this letter are based upon information provided to us by the Company.

1.             Refer
to the third paragraph.  You state that
there were no disagreements with E&Y through September 30, 2004.  You state that you notified E&Y on
October 5, 2004 of their dismissal.  Tell
us, and revise your filing as applicable, if there were any disagreements with
E&Y in the interim periods from September 30, 2004 and through the date of
their dismissal on October 5, 2004.

Please be advised that there were no disagreements
with E&Y in the interim period from September 30, 2004 through October 5,
2004 either.  The Company is concurrently
amending  its Form 8-K to state that no
disagreement between the Company and its auditors existed during that period.

2.
Provide us with any letter or written communication to and from the
former accountants regarding any disagreements or reportable events to
management or the Audit Committee.

The Company is supplementally providing the Staff with
a copy of the Company’s 2004 management letter, which includes the Company’s
formal response to this management letter. There was an informal email draft
response to E&Y, but the foregoing final management letter contains the
Company’s formal response to this letter.

3.
To the extent that you make changes to the Form 8-K to comply with our comments,
please obtain and file an updated Exhibit 16 letter from the former accountants
stating whether the accountant agrees with the statements made in your revised
Form 8-K.

The Company is concurrently amending the Form 8-K as
requested and is filing an updated Exhibit 16 letter from Ernst & Young
LLP.  The Company has discussed this
matter with E&Y and they have advised the Company that they concur that no
disagreement existed between the Company and Ernst & Young LLP prior to
September 30, 2004, or from September 30, 2004 until the date of E&Y’s
dismissal on October 5, 2004.

Form 10-K for the year ended March
31, 2004

Item 9A, page 25

Refer to the Item 4.01 Form 8-K and
the reportable condition communicated to you by E&Y, LLP.  Tell us how you were able to provide true and
accurate Item 9A disclosures regarding Controls and Procedures in your Form
10-K.  The reportable condition disclosed
in your Form 8-K appears to indicate you may lack the necessary disclosure
controls and procedures, as well as internal controls necessary to provide true
and accurate Item 9A disclosures.  Please
advise.

The Company advises the Staff that it does not believe
that the stated reportable condition constitutes a material weakness in the
Company’s internal controls.  In addition,
the Company continues to believe that its disclosure controls and procedures
were effective in timely alerting them to the material information relating to
the Company.  The Company is a small
corporation and its management team was actively involved in the preparation of
the Company’s public reports.

As stated in the Company’s response to E&Y, the
Company believed that the delays in the reporting process giving rise to the
reportable condition were primarily the result of (i) transitional issues related
to the replacement of the controller of the Company with the controller of the
Iteris subsidiary and the subsequent promotion of that controller to the
Company’s chief financial officer; (ii) the Company’s recent divestiture of
multiple business units and reorganization of the Company’s business, and (iii)
the travel schedules of key management during the audit and review process.

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Please be advised that the Company’s independent
auditors met with the Company’s Audit Committee in connection with their audit
of the 2004 financial statements and informed the Company’s Audit Committee
that they were not aware of any material weakness in the Company’s internal
controls at that time.  When E&Y
subsequently delivered the management letter to the Company, E&Y confirmed
that they were not alleging that the reportable condition represented a
material weakness in the Company’s internal controls.  The Company believes that the delays in the
reporting process were due to unusual circumstances at the time and do not
represent either a material weakness in the Company’s internal controls or its
disclosure controls and procedures.

5. Also, we note from the Form 8-K
that management has already considered potential enhancements and taken steps
to enhance the Company’s internal controls and procedures that address the
issues raised by E&Y.  Tell us the
dates of these potential enhancements and additional steps taken, and why you
did not disclose any changes to internal controls under Item 9A or revise Item
9A as necessary.

Please see the management responses to E&Y in the
management letter, which detail the specific enhancements that the Company has
taken or plans to take with respect to the recommendations of E&Y set forth
in their management letter.  Since
receipt of the management letter in late September 2004, the Company has
implemented its Close Process Review Matrix, Close Process Task Matrix, and the
Quarterly & Year End Timelines and has established a Disclosure Committee
to supplement its current disclosure procedures and controls.  The Disclosure Committee has already met in
connection with the Company’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2004.  The Company’s
new chief financial officer has completed the transition to his new role and
has been working closely with the Company’s new auditors to ensure that no
further delays are experienced.  Please
note, the Company’s management did not have E&Y’s management letter at the
time of the 10-K filing and believed its existing internal controls were
adequate at that time.

*   *   *   *

Please be advised that the Company acknowledges that
(i) the Company is responsible for the adequacy and accuracy of the disclosures
in its filings; (ii) that the Staff comments or changes to disclosure in response
to the Staff’s comments in the filings reviewed by the Staff do not foreclose
the Commission from taking any action with respect to the filings; and (iii)
the Company may not assert the Staff’s comments 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 concerning this matter or
the Amendment should be directed to the undersigned at (949) 932-3670.

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Thank you for your
assistance in this matter.

Very truly yours,

DORSEY
& WHITNEY LLP

By:
Ellen S. Bancroft

bcc:         Mr. Gregory A. Miner
                Mr. Jack Johnson
                Mr. Jim Miele

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Iteris Management Letter

Attachment to Iteris, Inc. Letter dated November 12,
2004

Audit
Committee

Iteris Holdings, Inc.

In
planning and performing our audit of the consolidated financial statements of
Iteris Holdings, Inc. (“Iteris” or “The Company”) for the year ended March 31,
2004, we considered its internal control to determine our auditing procedures
for the purpose of expressing our opinion on the consolidated financial
statements and not to provide assurance on internal control. However, we noted
certain matters involving internal control and its operation that we consider
to be reportable conditions under standards established by the American
Institute of Certified Public Accountants. Reportable conditions involve
matters coming to our attention relating to significant deficiencies in the
design or operation of internal control that, in our judgment, could adversely
affect the organization’s ability to initiate, record, process, and report
financial data consistent with the assertions of management in the consolidated
financial statements.

Financial
Statement Close Process Deficiencies

The
length of time required by the Company to close its books and issue its
consolidated financial statements is excessive given its status as a public
company. The fiscal 2004 year-end close process, which included the preparation
by the Company of account analysis and schedules and the creation and recording
of adjusting journal entries, continued until the filing of the Annual Report
on Form 10-K on June 29, 2004, the last day before an extension would have
been required.

The
Company’s ability to close its books timely and effectively prepare for its
annual audit was also significantly impacted by an apparent lack of
communication of important transactions that occurred during the period to the
Company’s Controller. This situation led to matters being identified at or near
the filing of the Company’s Form 10-K, which left little time for the Company’s
finance department to appropriately analyze such items for accounting purposes,
without significant assistance from its professional service providers.

During
the financial statement closing process the Company did not prepare nor
maintain a detail listing of the required reconciliations and account analyses
needed to close the books that also noted the responsible persons for preparing
and reviewing each schedule and the agreed-upon due dates for preparation
and review. This task, time, and responsibility (TTR) schedule is a normal
control tool. In lieu of a TTR schedule, the Company generally used our audit
request schedule for such purpose.

Delays in
the closing of the books and completing account reconciliations and analyses in
a timely manner and the continuous recording of adjusting entries and accruals
through the date of the filing of the Form 10-K caused inefficiencies for the
Company, its professional service providers and all others involved in the
financial statement preparation and review process. Importantly, they also
increase the risk of financial statement error due to the limited time
available for the review and analysis of the financial information and related
reporting documents. The Company’s ability to compile its consolidated financial
statements and related

reports
was delayed pending closure of the accounts and finalizing the adjustments,
which resulted in the need for its professional service providers to be at the
printers on the final day to get the Company’s Form 10-K filed.

The
effect of the Company’s inability to timely and accurately close its books
during our audit was delayed and additional effort was required due to
significant inefficiencies. These increased hours resulted from staffing
changes, significant rework of account reconciliations and analyses, and the
need to audit a “moving target.”

Accordingly,
we recommend the Company:

•                  Establish a much more formal financial statement
closing schedule including dates by which general ledgers will be closed
(including (1) the recording of all quarterly and year-end accruals and (2) the
completion of all account analyses, reconciliations and recording of necessary
adjustments, consolidation completed (including elimination entries), and draft
consolidated financial statements prepared;

•               Maintain strict adherence to the closing schedule to
enhance the quality of the Company’s financial reports and ensure that the
Company achieves its earnings release and SEC filing objectives and deadlines;

•                  Create and fill the staff position of Financial
Reporting Manager, who would be responsible for all external and internal
reporting of financial information and related reports with the SEC and others.
This individual should have the requisite training and experience to have
primary responsibility over the preparation and review of the Company’s
quarterly and annual financial statements as well as other required filings
with the SEC;

•                  Ensure that senior management emphasizes the importance
of an effective internal control environment and insists upon timely, accurate
financial reporting;

•                  Develop and implement a comprehensive financial
reporting quality control checklist detailing all preparation, review and
approval activities for quarterly and annual reporting requirements.
Individuals responsible for each activity on the checklist should be required
to signify the performance of each activity for each filing;

•                Ensure that transactions entered into by the Company
are communicated to financial personnel responsible for maintaining the Company’s
books and records, including preparation of SEC filings, in a timely manner.

Shareholders
and others expect timely and accurate financial reporting and the securities
laws require registrants to provide it. Furthermore, filing deadlines for the
Company would be

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significantly
shortened in the event the Company becomes an accelerated filer, requiring
processes and procedures to be designed with consideration of meeting the
tightened deadlines. Implementation of the recommendations outlined above should
enable the Company to drastically improve the timeliness and quality of its
periodic financial reporting.

Management
Response:

Fiscal 2004 was
an important transitional year for Iteris on a number of levels:

•                  The Company completed the divestiture of its Broadcast,
Zyfer, and MAXxess Systems subsidiaries, and began unwinding most of its
foreign operations.

•                  The Company underwent a major restructuring from a
multi-divisional entity operating in several markets with multiple general
managers and related profit centers and highly diverse and complicated
accounting issues to one where the business is comprised of a non-operating
parent company and a single operating subsidiary.

•                  The Company transitioned all consolidated accounting
and reporting services from a previous team located at the Parent company, to a
team located at the operating subsidiary level of Iteris, Inc. In connection
with this transition, the previous controller who had been with the company for
approximately 20 years resigned, and Jim Miele was given full charge
Controllership responsibility for both the parent and subsidiary.

•                  The Company’s accounting staff was faced with
significant challenges related to the hand-off of accounting transactions and
files in order to effect the transition to the subsidiary. The accounting staff
and Controller responsible for interface with E&Y had been responsible for
closing the books of the consolidated entity for only the final three months
ofFiscal2004.

As a result of
the transitional challenges outlined above, fiscal 2004 was a uniquely
challenging year for the Company. The Company acknowledges that this also
created a challenging year for E&Y. The silver lining to this transitional
year was that the Company’s organizational structure and the related accounting
and reporting structures are dramatically simplified going forward. The stage
has been set for the implementation of additional accounting processes and
organizational strength, which will dramatically build upon