SecProbe.io

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<TYPE>CORRESP
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<FILENAME>filename1.txt
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                                  [RUTAN & TUCKER, LLP LETTERHEAD]

LARRY A. CERUTTI
Direct Dial: (714) 641-3450
E-mail: lcerutti@rutan.com                 June 16, 2005

VIA FEDERAL EXPRESS AND
-----------------------
EDGAR CORRESPONDENCE
--------------------

Russell Mancuso, Esq.
Branch Chief
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.  20549-0306

         Re:      Emrise Corporation
                  Amendment No. 2 to Registration Statement on Form S-1
                  Filed May 31, 2005
                  Registration No. 333-122394
                  -----------------------------------------------------

Dear Mr. Mancuso:

         On behalf of Emrise Corporation ("Company"), this letter responds to
your letter to the Company dated June 6, 2005. The comments contained in your
letter are set forth below in their entirety for your convenience.

         Enclosed are clean and marked to show changes copies of Amendment No. 3
to the Company's Registration Statement on Form S-1, Registration No. 333-122394
("Registration Statement"). Also enclosed are clean and marked to show changes
copies of the Company's Form 10-Q/A No. 1 for March 31, 2005 and the Company's
Form 8-K/A No. 2 for March 18, 2005 relating to the Pascall acquisition.

         We have indicated below where disclosure in response to your comments
has been included in the Company's filings or the reasons why the Company
believes such disclosure is inapplicable or inappropriate. The page numbers
referenced below correspond to the clean non-EDGAR versions of the enclosed
documents.

Risk Factors, page 8
--------------------

1.       WE NOTE YOUR RESPONSE TO OUR PRIOR COMMENT NUMBER 2. WE ALSO NOTE,
         HOWEVER, FROM YOUR MOST RECENT ANNUAL REPORT ON FORM 10-K FOR THE
         FISCAL YEAR ENDED DECEMBER 31, 2004 AND QUARTERLY REPORT ON FORM 10-Q
         FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005, THAT YOUR PRINCIPAL
         EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER CONCLUDED THAT THE
         DESIGN AND OPERATION OF YOUR DISCLOSURE CONTROLS AND PROCEDURES WERE
         NOT EFFECTIVE AS OF DECEMBER 31, 2004 NOR AS OF MARCH 31, 2005. PLEASE
         EXPAND YOUR RISK FACTORS TO DESCRIBE ANY MATERIAL RISKS THAT MAY RESULT
         FROM THESE CONCLUSIONS OR OTHERWISE DISCLOSE THESE CONCLUSIONS IN AN
         APPROPRIATE LOCATION IN YOUR PROSPECTUS.

<PAGE>
Russell Mancuso, Esq.
June 16, 2005
Page 2

         Disclosure of these conclusions has been included under the heading
"Controls and Procedures" at page 48 of the Registration Statement.

Pursue Strategic Acquisitions, page 56
--------------------------------------

2.       PLEASE EXPAND YOUR RESPONSE TO COMMENT 4 TO PROVIDE US DETAILS ABOUT
         THE STATUS OF THE DISCUSSION AND THE MATERIALITY OF THE TARGET.

         The Company has terminated discussions with the target. Accordingly,
the disclosure regarding the discussions, which was formerly at page 58 of the
Registration Statement, has been deleted.

January 2005 Private Placement Of Common Stock and Warrants, page 98
--------------------------------------------------------------------

3.       PLEASE UPDATE YOUR DISCLOSURE HERE AND IN THE OTHER APPLICABLE SECTIONS
         OF YOUR PROSPECTUS WHERE SIMILAR DISCLOSURE IS MADE TO QUANTIFY AND
         CLARIFY ANY PENALTIES THAT YOU HAVE INCURRED OR WILL INCUR UNDER YOUR
         REGISTRATION RIGHTS AGREEMENT AS A RESULT OF YOUR REGISTRATION
         STATEMENT NOT BEING EFFECTIVE BY THE 150TH DAY FOLLOWING THE CLOSING
         DATE OF YOUR PRIVATE PLACEMENT. PLEASE ALSO REVISE YOUR DISCLOSURE
         UNDER "SUBSEQUENT EVENTS" ON PAGE F-42 TO INCLUDE THE LIQUIDATED
         DAMAGES PAID TO DATE, OR TELL US WHY ADDITIONAL DISCLOSURE IS NOT
         NEEDED.

         The disclosures at pages 46 and 100 of the Registration Statement have
been revised to quantify and clarify penalties incurred and penalties that may
be incurred in the future. Footnote 9 of the Form 10-Q for March 31, 2005,
"January 2005 Private Placement" at page F-14 of the Form 10-Q and page F-55 of
the Registration Statement, has similarly been revised. The Company does not
believe it is necessary to revise footnote 17 of the Form 10-K, "Subsequent
Events" at page F-38 of the Registration Statement, because it believes that
adequate disclosure of the penalties has been included in the Form 10-Q and
throughout the Registration Statement.

Financial Statements for the Three Months Ended March 31, 2005 and 2004,
page F-46
--------------------------------------------------------------------------------

Condensed Consolidated Statements of Cash Flows, page F-46
----------------------------------------------------------

4.       PLEASE TELL US HOW YOU DETERMINED THE EFFECT OF EXCHANGE RATE CHANGES
         ON CASH AND CASH EQUIVALENTS. WE NOTE THAT THIS AMOUNT IS THE SAME AS
         YOUR ADJUSTMENT TO OTHER COMPREHENSIVE INCOME FOR THE THREE MONTHS
         ENDED MARCH 31, 2005. REFER TO PARAGRAPHS 25 AND 146 OF SFAS 95.

<PAGE>
Russell Mancuso, Esq.
June 16, 2005
Page 3

         The Company recomputed its cash flows worksheet for the three months
ended March 31, 2005 in accordance with the guidance provided in paragraph 25
and the example in paragraph 146 of SFAS 95. As a result, the Company has
revised the statements of cash flows at page F-5 of the March 31, 2005 Form 10-Q
and at page F-46 of the Registration Statement. We note that the cash flow
statements included in the Form 10-K for the year ended December 31, 2004 and
the interim periods included in that year did compute the effect of the exchange
rate in cash in accordance with paragraph 146 of SFAS 95.

Note 10.  Larus Corporation and Pascall Acquisitions, page F-56
---------------------------------------------------------------

5.       WE NOTE THAT $4.7 MILLION OF THE PURCHASE PRICE WAS ALLOCATED TO
         GOODWILL AND $50,000 TO TRADEMARKS. EXPLAIN IN GREATER DETAIL WHY NO
         ALLOCATION HAS BEEN MADE TO COVENANTS NOT TO COMPETE, CUSTOMERS, WORK
         FORCE, SOFTWARE AND/OR COMPLETED TECHNOLOGY. REFER TO SFAS 141,
         PARAGRAPH 51-52 FOR GUIDANCE.

         Note 10 has been revised at pages F-59 and F-60 of the Registration
Statement and the related disclosures at page 31 of the Registration Statement
and page 3 of the Form 8-K/A have been revised to contain the following further
explanation of the preliminary allocation:

         In conjunction with the acquisition of Pascall, the Company has
selected a valuation firm to determine what portion of the purchase price should
be allocated to identifiable intangible assets. The Company has considered
whether the acquisition included various types of identifiable intangible
assets, including trade names, trademarks, patents, covenants not to compete,
customers, workforce, technology and software. The Company has estimated that
the Pascall trade name and trademark are valued at $50,000. The Company has
estimated that the covenants not to compete that were obtained from Pascall's
former affiliates are valued at $100,000 in light of public statements made by
those affiliates indicating that they were strategically exiting the power
supply business, which the Company believes result in a low probability that
they would return to the power supply business absent the covenants not to
compete. The Company believes that no other identifiable intangible assets of
significant value were acquired. No patents were acquired. The Company has not
ascribed any value to Pascall's customer base because the Company's United
Kingdom subsidiary, XCEL Power Systems, Ltd., already sells to Pascall's key
customers. Pascall's workforce does not hold any special skills that are not
readily available from other sources. The Company did not identify any valuable
completed technology that was acquired, because Pascall utilizes non-proprietary
technology to produce custom power supplies pursuant to customer specifications.
Pascall does not develop or design software and does not own software of any
material value.

<PAGE>
Russell Mancuso, Esq.
June 16, 2005
Page 4

         Accordingly, the Company has estimated that the goodwill associated
with the Pascall acquisition totaled $4,571,000. The Pascall trade name and
trademark were determined to have indefinite lives and therefore are not being
amortized but rather are being periodically tested for impairment. The covenants
not to compete will be amortized over their three-year duration. The valuation
of the identified intangible assets is expected to be completed during the
quarter ending September 30, 2005 and could result in changes to the value of
these identified intangible assets and corresponding changes to the value of
goodwill. However, the Company does not believe these changes will be material
to its financial position or results of operations.

Pascall Electronic (Holdings) Limited and its Subsidiary Undertakings, page F-66
--------------------------------------------------------------------------------

Note 29. Summary of Certain Differences between Accounting Principles Generally
-------------------------------------------------------------------------------
Accepted in the United Kingdom and the United States of America, page F-88
--------------------------------------------------------------------------

6.       PLEASE PROVIDE US WITH YOUR STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
         USING BALANCES DETERMINED UNDER U.S. GAAP.

         The following represents a statement of changes in shareholders equity
using balances determined under U.S. GAAP:

<TABLE>
                                                                             RETAINED
                                                             ADDITIONAL      EARNINGS
                                 COMMON        PREFERRED       PAID IN     (ACCUMULATED
                                  STOCK          STOCK         CAPITAL        DEFICIT)        TOTAL
                               ------------   ------------   ------------   ------------   ------------
                                 (POUND)        (POUND)         (POUND)       (POUND)         (POUND)
                               ------------   ------------   ------------   ------------   ------------
<S>                                <C>            <C>            <C>             <C>           <C>
Balance at April 1, 2003           224,391        140,320        381,570         49,389        795,670

Net loss                                                                        (86,399)       (86,399)
                               ------------   ------------   ------------   ------------   ------------
Balance at March 31, 2004          224,391        140,320        381,570        (37,010)       709,271

Net loss                                                                       (115,744)      (115,744)
Amount owed to parent company
  converted to equity                                            315,686                       315,686
Distributions                                                                   (39,000)       (39,000)
                               ------------   ------------   ------------   ------------   ------------
Balance at March 18, 2005          224,391        140,320        697,256       (191,754)       870,213
                               ============   ============   ============   ============   ============
</TABLE>

<PAGE>

Russell Mancuso, Esq.
June 16, 2005
Page 5

7.       WITH REGARD TO ADJUSTMENT (C) RELATED TO YOUR PENSION ASSET, PLEASE
         TELL US WHETHER YOU ACCOUNT FOR THE PENSION PLAN AS A DEFINED BENEFIT
         PLAN OR DEFINED CONTRIBUTION PLAN UNDER U.S. GAAP. DISCUSS IN GREATER
         DETAIL THE DIFFERENCE BETWEEN U.K. AND U.S. GAAP AND CITE THE RELEVANT
         ACCOUNTING LITERATURE UPON WHICH YOU RELIED.

         The pension scheme, which is described in footnotes 1, 4, 24 and 29 at
pages F-8, F-10, F-26 and F-30, respectively, in the Form 8-K/A, provided
defined benefits for the participants. The scheme was established by Intelek
plc, the parent company, and provided the same defined benefits to the employees
of all companies within the Intelek group, including Pascall. The assets
contributed by the parent company were available to provide benefits to
employees of all companies within the Intelek group. Assets were not segregated
into separate accounts for each subsidiary nor were assets restricted in any way
to limit the benefits provided to any one company within the group.

         Employees of Pascall previously participated in the defined benefit
scheme sponsored by Intelek. However, because of the group nature of the scheme,
separate actuarial calculations were not performed for each company within the
Intelek group to determine the pension charges of the individual companies
participating in the group scheme. Historically, Pascall was allocated a charge
by the parent company based on an internal formula developed by Intelek and not
based on an actuarial calculation for each participating subsidiary.

         Under U.S. GAAP, the Company believes the characteristics of this
scheme are very similar to those of a multiemployer pension plan that provides
defined benefits. Pascall was unable to actuarially determine its periodic
pension cost nor could it have determined the amount of any pension assets or
liabilities based on actuarial data. Under a multiemployer pension plan, Pascall
would have been required to recognize as net period pension cost the required
contribution for the period. Further, any contributions due and unpaid would
have been reflected as a liability of Pascall. Because of the nature of the
scheme, disclosures typically associated with a single-employer defined benefit
plan have not been presented in the stand-alone financial statements of Pascall.
The Company believes the guidance in SFAS 87, paragraphs 67 through 70, as
amended by SFAS 132(R) is applicable to the U.S. GAAP accounting treatment of
Pascall's pension scheme for the periods presented.

         Intelek plc performed an actuarial calculation of the entire Intelek
group's pension cost in accordance with SSAP 24, "Accounting for Pension Costs."
In addition, the supplemental disclosure requirement of FRS 17, "Retirement
Benefits" was presented on a group level. Intelek plc recorded a prepaid pension
asset in accordance with the U.K. GAAP requirements that permit the recognition
of an asset if the net periodic pension cost is less than the amounts the
employer has contributed to the scheme (this rule is similar to the accounting
guidance in SFAS 87, paragraph 35, as amended by SFAS 132(R)). In addition,
Intelek plc allocated a portion of this asset to Pascall, which resulted in a
prepaid pension asset on the books of Pascall through March 31, 2004. The
allocation of this asset was not based on actuarial data since separate
actuarial computations were not performed for each subsidiary. As described in
footnote 24 to the Pascall financial statements included in the Form 8-K/A, this
asset was written off and charged to expense in fiscal 2005 pursuant to an
agreement whereby Intelek plc assumed the unfunded obligation related to the
Pascall employees. Under U.S. GAAP, an employer participating in a multiemployer
defined benefit plan would not have recorded a prepaid pension asset. The
adjustment in item (c) included in the U.S. GAAP reconciliation removes the
asset from the March 31, 2004 balance sheet. Further, the write off of the asset
recorded under U.K. GAAP in the period ended March 18, 2005 was reversed in the
U.S. GAAP reconciliation.

<PAGE>
Russell Mancuso, Esq.
June 16, 2005
Page 6

8.       WITH REGARD TO ADJUSTMENT (D) RELATED TO THE ELIMINATION OF A GAIN ON
         DISPOSAL OF A SUBSIDIARY, EXPLAIN TO US HOW YO