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Response Letter to the SEC

 HADDAN & ZEPFEL LLP

 Attorneys at Law

 500 Newport Center Drive,
Suite 580

 Newport Beach, California 92660

 (949) 706-6000

 Facsimile (949) 706-6060

 VIA EDGAR

 July 8, 2005

 Securities and Exchange Commission

 Division of Corporation Finance

 100 F Street, N.E.

 Washington, DC. 20549-2000

 Attn: Ryan Rohan

 Re:

 Modtech Holdings, Inc.

 Form 8-K Item 4.01 filed April 15, 2005

 File # 000-25161

 Ladies and Gentlemen:

 On behalf of Modtech Holdings, Inc. (the “Company”), this letter
responds to the comments of the staff of the Securities and Exchange Commission (the “Commission”) set forth in the staff letter dated April 18, 2005 regarding the above-referenced Current Report on Form 8-K (the “Form 8-K”). Our
references to “comment” below correspond to the paragraph numbers of the staff’s letter.

 Comment 1. Enclosed is a copy of the report by the Company’s former independent registered public accounting firm, KPMG LLP, concerning the
material weaknesses in the Company’s internal controls over financial reporting (the “Report”). The Report was included in Item 9A of the Company’s Annual Report on Form 10-K for the period ended December 31, 2004.

 To the extent not otherwise disclosed in the Report, the periods in which
each material weakness and accounting error or misapplication of GAAP described in the Report occurred, the amount of each accounting error and misapplication of GAAP, the reason for each accounting error or misapplication of GAAP, and the resulting
prior period adjustments, if any, are as follows:

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 July 8, 2005

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•

The journal entry coding error relating to the accounting for a legal matter disclosed in the Report was $795,000 and occurred in the fourth quarter of 2004 when the Company
received a settlement payment from a defendant in a pending lawsuit and credited the payment to “legal expense.” The credit was made to legal expense because the original debits in 2001 and 2002 were made to the same category. It was
subsequently determined that the $795,000 payment should be credited to “other income” and the debits in 2001 and 2002 for $493,000 and $242,000, respectively, were also corrected. This correction is reflected in note 19 to the
Company’s 2004 audited financial statements as a correction of an “immaterial error” in prior periods.

•

The error in the income tax provision calculation disclosed in the Report was the result of $64,000 mathematical error made by the professional tax preparation and accounting
service employed by the Company to prepare such calculation. The adjustment was made in the fourth quarter of 2004 as a year-end audit adjustment.

•

The error in assessing the recoverability of deferred tax assets identified in the Report was the result of two events. Cost overruns on a job pending at December 31, 2004 were
identified in April and May 2005 prior to the issuance of the Company’s 2004 audited financial statements (the “2005 Cost Overruns). The 2005 Cost Overruns were included in the 2004 audited statements because they related to certain
contract conditions that existed as of December 31, 2004 and the subsequent information obtained during April and May 2005 allowed for the refinement of the loss estimate on this contract prior to the issuance of the Company’s audited financial
statements. This refinement was made pursuant to paragraph 82 of the AICPA’s Statement of Position (SOP) 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts, which states that cost estimate
refinements obtained subsequent to the balance sheet date should be included as an adjustment to the unissued audited financial statements. This resulted in an operating loss for 2004 and two years of operating losses in the last three. Under GAAP,
this history of recent losses prevented the Company from determining that it could recover its $7.3 million in deferred tax assets in the future. The asset was written down to zero in the fourth quarter of 2004 as part of the Company’s year-end
audit adjustments.

•

The control failure involving various levels of review and approval over significant accrual estimates and open invoices resulted in the following year-end audit adjustments being
recorded in the fourth quarter of 2004: (i) an accrual of additional legal expenses of $42,700; (ii) the accrual of additional labor expenses for temporary field work of $201,800; and (iii) a decrease in

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 Division of Corporation Finance

 July 8, 2005

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 recognized income of $1.6 million and an increase in the cost
of sales of $4.2 million, resulting from the 2005 Cost Overruns.

•

The insufficiency of the Company’s procedures associated with accounting for its long-term contracts to ensure that revenue and costs were properly reflected in the
Company’s consolidated financial statements resulted in year-end audit adjustments in the fourth quarter of 2004 reducing recognized revenue by $1.6 million and increasing the cost of sales by $4.2 million for the year ended December 31, 2004.

•

The fact that the Company’s inventory valuation did not include appropriate controls over inventory costs resulted in an adjustment of $56,000 based on the audit of the
year-end physical inventory which was recorded in the fourth quarter of 2004

•

No other material weaknesses identified in the Report resulted in audit adjustments in 2004

•

The foregoing material weaknesses, accounting errors, or misapplication of GAAP all occurred in the fourth quarter of 2004.

•

All other material weaknesses identified in the Report were considered to have existed throughout 2004, but were not identified as such until after September 30, 2004. None of these
material weaknesses resulted in year-end audit adjustments.

•

The Company and its former auditors, KPMG LLP, determined that none of the material weaknesses identified in the Report or any accounting error or misapplication of GAAP that
resulted therefrom were of such a nature as to require the Company to restate its audited financial statements for any prior period.

 Securities and Exchange Commission

 Division of Corporation Finance

 July 8, 2005

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 The steps the Company has taken (or plans to take) and the
procedures it has implemented (or plans to implement) to correct the material weaknesses identified in the Report, including, but not limited to those weaknesses which resulted in the accounting errors and misapplication of GAAP described above, are
as follows:

•

The accounting staff that was in place in 2004 has been significantly increased. During the first quarter of 2005, the following positions were filled: Director of Accounting –
Corporate; Manager, Internal Audit – Corporate; Operations Controller – Arizona; and Regional Controller – Florida, Texas.

•

A program has been adopted to identify key account reconciliations, procedures, and reports, and to assign various levels of review and approval. Review of the general ledger will
now also include the Reporting and Consolidation Manager and the Director of Accounting. Management review of the accrual process will be formalized and a search for unrecorded liabilities will be performed each month.

•

Effective July 15, 2005, a system will be implemented requiring all project budgets, change orders, and estimates to complete a job to be reviewed and approved by the Senior Project
Manager responsible for the job before the information is incorporated into the revenue recognition calculation. Additionally, the Chief Financial Officer will review and approve the revenue recognition related calculations before a journal entry is
recorded.

•

Implementation of a computerized perpetual inventory system has begun. Management estimates that the system will be fully operational by September 30, 2005. Prior to completion of
the system, all inventory items ordered without an item key (or parts number) will require management approval.

•

In the second quarter of 2004, key payroll functions were separated, such that all recordings of new hires, terminations and changes to existing employee profiles that affect the
outcome of an employee’s compensation are now performed by the Human Resources Department, as opposed to the Payroll Department. Payroll processing, check printing, and various reconciliations of payroll data remain the responsibility of the
Payroll Department. Additional documented management review and approval controls (performed by the Director of Accounting) have been added before and after the payroll checks are generated.

•

By July 31, 2005, the accounts payable functions will be segregated so that vendor additions / maintenance, document matching and data entry will be separated from check generation.
Additional documented management review and approval controls (performed by the Operations and Regional Controllers and the Director of Accounting) will be added before and after the payroll checks are generated.

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 Division of Corporation Finance

 July 8, 2005

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•

The Information Technology Department is currently programming the spreadsheets into a data base program that will afford effective formula protection and allow changes to the
formulas only with the approval of the Chief Financial Officer. This management oversight is independent of the Operations Controllers (the preparers of the revenue recognition and cost of sales spreadsheet) and the Director of Accounting (the
preparer of the equity and earnings per share spreadsheet). Completion of the reprogramming process is targeted for July 31, 2005.

•

Certain deficiencies in the operation of the Company’s Information Technology Department which, in the aggregate, constituted a material weakness have been addressed as
follows:

 (i) An “Application Access
Rights Form” is maintained for each employee who has access to a computer and reviewed to determine if the level of access is appropriate to each employee’s job description;

 (ii) A list of all terminated employees is maintained and updated on a daily basis in order to prevent access to company
computers once an employee has been terminated;

 (iii) An
Application Outline Form is prepared for each modification or implementation of new software as a means of documenting when and how revisions were made to software applications. Requests and authorization to install updates, patches and fixes are
now formally documented;

 (iv) A nightly backup of successes
and failures is logged, dated, and signed.

 (v) A formalized
schedule of off-site storage of backups has been established.

 (vi) A weekly report is submitted to the Chief Financial Officer by the Information Technology Manager which summarizes operational statistics, virus coverage, software deployment, services provided, and repairs and maintenance; and

 (vii) A search has begun to add two Information Technology
professionals to the staff to assist in the remediation plan and help maintain controls

•

It is expected that the two additional staff members in the Information Technology Department will be in place by the end of July, 2005. Remediation of the deficiencies in the
Information Technology Department is ongoing and is expected to be complete before the end of 2005.

•

On January 4, 2005, a Manager of Internal Audit was hired to continue to develop and implement the Company’s Sarbanes-Oxley Section 404 compliance program. Training of all
staff members regarding the necessary controls is underway. A formal system of review, testing, and remediation is ongoing.

 Comment 2. The Company determined in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 that its disclosure controls and procedures were
effective based on the evaluation of such controls and procedures as of that date. The Company did not complete the

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 evaluation of its controls and procedures under Section 404 of the Sarbanes-Oxley Act until June 21, 2005. It was during this additional
evaluation period that the material weaknesses described in the Report were discovered.

 Comment 3. The requested amendment to the prior Form 8-K filing has been filed.

 In connection with this response to the Commission’s staff comment letter dated April 18, 2005, the Company acknowledges that

•

It is responsible for the adequacy and accuracy of the disclosure in the filing;

•

Staff comments or changes to disclosure in response to staff comments in the filing reviewed by the staff do not foreclose the Commission from taking 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.

 Sincerely,

 /s/ Jon Haddan

 cc: David Buckley

 Report of Independent Registered Public Accounting Firm

 The Board of Directors and Shareholders

 Modtech Holdings, Inc.:

 We have audited management’s assessment, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting (Item 9A (b)), that Modtech Holdings, Inc. (the Company) did not
maintain effective internal control over financial reporting as of December 31, 2004, because of the effect of material weaknesses identified in management’s assessment, based on criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

 We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our
audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures
as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

 A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

 Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also