Edgar Filing: ODETICS INC

PROSPECTUS

Filed pursuant to Rule 424(b)(3)
Registration No. 333-66448

78,740 Shares
ODETICS, INC.
Class A Common Stock

This prospectus relates to the public offering, which is not being
underwritten, of 78,740 shares of our Class A common stock and associated
purchase rights, which are held by some of our current stockholders. The prices
at which the selling stockholders may sell the shares will be determined by the
prevailing market price for the shares or in negotiated transactions. We will
not receive any of the proceeds from the sale of these shares.

We have two classes of common stock outstanding, the Class A common stock
and the Class B common stock. The rights, preferences and privileges of each
class of common stock are identical in all respects except for voting rights.
The holders of the Class A common stock are entitled to elect 25% of the Board
of Directors rounded up to the nearest whole number or two directors. The
holders of the Class A common stock and the Class B common stock, voting
together as a single class, are entitled to elect the balance of the Board or
six directors. On all other matters to be addressed by a stockholder vote, the
holders of Class A common stock have one-tenth of one vote per share held and
the holders of Class B common stock have one vote per share held.

Our Class A common stock and our Class B common stock are quoted on the
Nasdaq National Market under the symbol "ODETA" and "ODETB," respectively. On
July 27, 2001, the last reported sale price for the Class A common stock was
$2.3438 per share and the last reported sale price for the Class B common stock
was $2.00 per share.

_____________________

You should carefully consider the risk factors beginning on page 3 of this
prospectus before purchasing any of the Class A common stock offered by this
prospectus.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

The date of this prospectus is August 28, 2001.

ODETICS

Odetics, Inc. is engaged in the development of communication and technology
companies that may be spun-off to its shareholders. Odetics' companies develop
software and hardware-based solutions for the intelligent transportation
systems, telecommunications, video security, and television broadcast markets.
Odetics' headquarters are located in Anaheim, California with additional
operations in Europe and Asia.

We currently define our business segments as video products, telecom
products and ITS. Our video products segment includes our Broadcast, Inc.
subsidiary and our Gyyr Incorporated subsidiary. Our telecom products segment
includes our Zyfer, Inc. subsidiary and our Mariner Networks, Inc. subsidiary.
Our ITS segment consists of our Iteris, Inc. subsidiary.

Our principal executive offices are located at 1515 South Manchester
Avenue, Anaheim, California 92802, and our telephone number is (714) 774-5000.

RISK FACTORS

Our business is subject to a number of risks, some of which are discussed
below. You should consider the following risks carefully in addition to the
other information contained in this prospectus (including the information
incorporated by reference) before purchasing the shares of our common stock. If
any of the following risks actually occur, they could seriously harm our
business, financial condition or results of operations. In such case, the
trading price of our common stock could decline, and you may lose all or part of
your investment.

We Have Experienced Substantial Losses and Expect Future Losses. We
experienced significant operating losses of $49.8 million for the year ended
March 31, 2001, $38.7 million for the year ended March 31, 2000 and $18.3
million for the year ended March 31, 1999. In January 2001, we announced the
reorganization of our business in order to reduce our operating expenses and
negative cash flow, which included the downsizing of our operations in Gyyr and
Broadcast, and a 25% reduction in our total work force. We cannot assure you
that this reorganization will improve our financial performance, or that we will
be able to achieve profitability on a quarterly or annual basis in the future.
Most of our expenses are fixed in advance, and we generally are unable to reduce
our expenses significantly in the short-term to compensate for any unexpected
delay or decrease in anticipated revenues. As a result, we may continue to
experience losses, which could cause the market price of our common stock to
decline.

We Will Need to Raise Additional Capital in the Future and May Not Be Able
to Secure Adequate Funds on Terms Acceptable to Us, or at All. Our line of
credit facility expired on December 31, 2000. While we have received an
extension on this facility until November 30, 2001, we will need to obtain a new
line of credit from another lender in the near future. Substantially all of our
assets have been pledged to our existing lender to secure the outstanding
indebtedness under this facility ($13.5 million at March 31, 2001). We cannot
assure you that we will be able to obtain a new line of credit on a timely
basis, on acceptable terms, or at all. Even if we are able to secure a new line
of credit, we anticipate that we will need to raise additional capital in the
near future, either through additional bank borrowings, the monetization

of certain real property, the divestiture of business units or select assets, or
other debt or equity financings. These conditions, together with our recurring
losses, raise substantial doubt about our ability to continue as a going
concern. Our capital requirements will depend on many factors, including:

. our ability to control costs;

. increased research and development funding, and required investments in
our business units;

. our ability to generate operating income;

. market acceptance of our products;

. technological advancements and our competitors' response to our
products;

. capital improvements to new and existing facilities;

. increased sales and marketing expenses;

. potential acquisitions of businesses and product lines; and

. additional working capital needs.

If our capital requirements are materially different from those currently
planned, we may need additional capital sooner than anticipated. If additional
funds are raised through the issuance of equity securities, the percentage
ownership of our stockholders will be reduced and such securities may have
rights, preferences and privileges senior to our common stock. Additional
financing may not be available on favorable terms or at all. If adequate funds
are not available or are not available on acceptable terms, we may be unable to
develop or enhance our products, expand our sales and marketing programs, take
advantage of future opportunities or respond to competitive pressures.

Our Quarterly Operating Results Fluctuate as a Result of Many Factors. Our
quarterly revenues and operating results have fluctuated and are likely to
continue to vary from quarter to quarter due to a number of factors, many of
which are not within our control. Factors that could affect our revenues
include, among others, the following:

. our significant investment in research and development for our
subsidiaries and business units;

. our ability to control costs;

. our ability to develop, introduce, market and gain market acceptance of
new products applications and product enhancements in a timely manner;
. the size, timing, rescheduling or cancellation of significant customer
orders;

. the introduction of new products by competitors;

. the availability of components used in the manufacture of our products;

. changes in our pricing policies and the pricing policies by our
suppliers and competitors, pricing concessions on volume sales, as well
as increased price competition in general;

. the long lead times associated with government contracts or required by
vehicle manufacturers;

. our success in expanding and implementing our sales and marketing
programs;

. the effects of technological changes in our target markets;

. our relatively small level of backlog at any given time;

. the mix of sales among our business units;

. deferrals of customer orders in anticipation of new products,
applications or product enhancements;

. the risks inherent in our acquisitions of technologies and businesses;

. risks and uncertainties associated with our international business;

. currency fluctuations and our ability to get currency out of certain
foreign countries; and

. general economic and market conditions.

In addition, our sales in any quarter may consist of a relatively small
number of large customer orders. As a result, the timing of a small number of
orders may impact our quarter to quarter results. The loss of or a substantial
reduction in orders from any significant customer could seriously harm our
business, financial condition and results of operations.

Due to all of the factors listed above and other risks discussed in this
prospectus, our future operating results could be below the expectations of
securities analysts or investors. If that happens, the trading price of our
common stock could decline. As a result of these quarterly variations, you
should not rely on quarter-to-quarter comparisons of our operating results as an
indication of our future performance.

Our Operating Strategy for Developing Companies is Expensive and May Not Be
Successful. Our business strategy entails intensive business development
activities, which are expensive and highly risky. The goal of this strategy is
to develop companies that can be spun-off to our stockholders. This strategy
has in the past required us to make significant investments in our business
units, both for research and development, and also to develop a separate
infrastructure for certain of our business units, sufficient to allow the unit
to function as an

independent public company. We expect to continue to invest in the development
of certain of our business units with the goal of obtaining additional capital
to support further investment and eventually completing additional public
offerings. We may not recognize the benefits of this investment for a
significant period of time, if at all. Our ability to complete private
financings or an initial public offering of any of our business units and/or
spin-off our interest to our stockholders will depend upon many factors,
including:

. the overall performance and results of operations of the particular
business unit;

. the potential market for our business unit;

. our ability to assemble and retain a broad, qualified management team
for the business unit;

. our financial position and cash requirements;

. the business unit's customer base and product line;

. the current tax treatment of spin-off transactions and our ability to
obtain favorable determination letters from the Internal Revenue
Service; and

. general economic and market conditions, including the receptiveness of
the stock markets to initial public offerings.

We may not be able to complete a successful private or public offering or
spin-off of any of our business units in the near future, or at all. During
fiscal 2001, we attempted to complete the initial public offering of Iteris. We
withdrew the offering due to adverse market conditions. Even if we do complete
additional public offerings, we may decide not to spin-off a particular business
unit, or to delay the spin-off until a later date.

We Must Keep Pace with Rapid Technological Change to Remain Competitive.
Our target markets are in general characterized by the following factors:

. rapid technological advances;

. downward price pressure in the marketplace as technologies mature;

. changes in customer requirements;

. frequent new product introductions and enhancements; and

. evolving industry standards and changes in the regulatory environment.

Our future success will depend upon our ability to anticipate and adapt to
changes in technology and industry standards, and to effectively develop,
introduce, market and gain broad acceptance of new products and product
enhancements incorporating the latest technological advancements.

We believe that we must continue to make substantial investments to support
ongoing research and development in order to remain competitive. We need to
continue to develop and introduce new products that incorporate the latest
technological advancements in hardware, storage media, operating system software
and applications software in response to evolving customer requirements. Our
business and results of operations could be adversely affected if we do not
anticipate or respond adequately to technological developments or changing
customer requirements. We cannot assure you that any such investments in
research and development will lead to any corresponding increase in revenue.

Our Future Success Depends on the Successful Development and Market
Acceptance of New Products. We believe our revenue growth and future operating
results will depend on our ability to complete development of new products and
enhancements, introduce these products in a timely, cost-effective manner,
achieve broad market acceptance of these products and enhancements, and reduce
our product costs. We may not be able to introduce any new products or any
enhancements to our existing products on a timely basis, or at all. In
addition, the introduction of any new products could adversely affect the sales
of our certain of our existing products.

Our future success will also depend in part on the success of several
recently introduced products including DVMS, our family of digital time-lapse
recorders; AutoVue, our lane departure warning system; and Dexter, our multi-
service access device.

Market acceptance of our new products depends upon many factors, including
our ability to accurately predict market requirements and evolving industry
standards, our ability to resolve technical challenges in a timely and cost-
effective manner and achieve manufacturing efficiencies, the perceived
advantages of our new products over traditional products and the marketing
capabilities of our independent distributors and strategic partners. Our
business and results of operations could be seriously harmed by any significant
delays in our new product development. We have experienced delays in the past in
the introduction of new products, particularly with our Roswell system, which we
recently discontinued. Certain of our new products could contain undetected
design faults and software errors or "bugs" when first released by us, despite
our testing. We may not discover these faults or errors until after a product
has been installed and used by our customers. Any faults or errors in our
existing products or in any new products may cause delays in product
introduction and shipments, require design modifications or harm customer
relationships, any of which could adversely affect our business and competitive
position.

We currently outsource the manufacture of our AutoVue product line to a
single manufacturer. This manufacturer may not be able to produce sufficient
quantities of this product in a timely manner or at a reasonable cost, which
could materially and adversely affect our ability to launch or gain market
acceptance of AutoVue.

We Have Significant International Sales and Are Subject to Risks Associated
with Operating in International Markets. International product sales
represented approximately 20% of our total net sales and contract revenues for
the fiscal year ended March 31, 2001, approximately 19% for the fiscal year
ended March 31, 2000 and approximately 27% for the

fiscal year ended March 31, 1999. International business operations are subject
to inherent risks, including, among others:

. unexpected changes in regulatory requirements, tariffs and other trade
barriers or restrictions;

. longer accounts receivable payment cycles;

. difficulties in managing and staffing international operations;

. potentially adverse tax consequences;

. the burdens of compliance with a wide variety of foreign laws;

. import and export license requirements and restrictions of the United
States and each other country in which we operate;

. exposure to different legal standards and reduced protection for
intellectual property rights in some countries;

. currency fluctuations and restrictions; and

. political, social and economic instability.

We believe that international sales will continue to represent a
significant portion of our revenues, and that continued growth and profitability
may require further expansion of our international operations. Many of our
international sales are currently denominated in U.S. dollars. As a result, an
increase in the relative value of the dollar could make our products more
expensive and potentially less price competitive in international markets. We do
not engage in any transactions as a hedge against risks of loss due to foreign
currency fluctuations.

Any of these factors may adversely effect our future international sales
and, consequently, on our business and operating results. Furthermore, as we
increase our international sales, our total revenues may also be affected to a
greater extent by seasonal fluctuations resulting from lower sales that
typically occur during the summer months in Europe and other parts of the world.

We Need to Manage Growth and the Integration of Our Acquisitions. Over the
past few years, we have expanded our operations and made several substantial
acquisitions of diverse businesses, including Intelligent Controls, Inc.,
International Media Integration Services, Ltd., Meyer Mohaddes Associates, Inc.,
Viggen Corporation, certain assets of the Transportation Systems business of
Rockwell International, and the Security Products Division of Digital Systems
Processing, Inc. A key element of our business strategy involves expansion
through the acquisition of complementary businesses, products and technologies.
Acquisitions may require significant capital infusions and, in general,
acquisitions also involve a number of special risks, including:

. potential disruption of our ongoing business and the diversion of our
resources and management's attention;

. the failure to retain or integrate key acquired personnel;

. the challenge of assimilating diverse business cultures, and the
difficulties in integrating the operations, technologies and information
system of the acquired companies;

. increased costs to improve managerial, operational, financial and
administrative systems and to eliminate duplicative services;

. the incurrence of unforeseen obligations or liabilities;

. potential impairment of relationships with employees or customers as a
result of changes in management; and

. increased interest expense and amortization of acquired intangible
assets.

Acquisitions may also materially and adversely affect our operating results
due to large write-offs, contingent liabilities, substantial depreciation,
deferred compensation charges or goodwill amortization, or other adverse tax or
audit consequences.

Our competitors are also soliciting potential acquisition candidates, which
could both increase the price of any acquisition targets and decrease the number
of attractive companies available for acquisition. We cannot assure you that we
will be able to consummate any additional acquisitions, successfully integrate
any acquisitions or realize the benefits anticipated from any acquisition.

Acquisitions, combined with the expansion of our business units and recent
growth has placed and is expected to continue to place a significant strain on
our resources. To accommodate this growth, we anticipate that we will be
required to implement a variety of new and upgraded operational and financial
systems, procedures and controls, including the improvement of our accounting
and other internal management systems. All of these updates will require
substantial additional expense as well as management effort. Our failure to
manage growth and integrate our acquisitions successfully could adversely affect
our business, financial condition and results of operations.

We Depend on Government Contracts and Subcontracts and Face Additional
Risks Related to Fixed Price Contracts. A significant portion of the sales by
Iteris and a portion of our sales by Zyfer were derived from contracts with
governmental agencies, either as a general contractor, subcontractor or
supplier. Government contracts represented approximately 25% and 26% of our
total net sales and contract revenues for the years ended March 31, 2000 and
2001, respectively. We anticipate that revenue from government contracts will
continue to increase in the near future. Government business is, in general,
subject to special risks and challenges, including:

. long purchase cycles;

. competitive bidding and qualification requirements;

. performance bond requirements;

. delays in funding, budgetary constraints and cut-backs; and

. milestone requirements and liquidated damage provisions for failure to
meet contract milestones.

In addition, a large number of our government contracts are fixed price
contracts. As a result, we may not be able to recover for any cost overruns.
These fixed price contracts require us to estimate the total project cost based
on preliminary projections of the project's requirements. The financial
viability of any given project depends in large part on our ability to estimate
these costs accurately and complete the project on a timely basis. In the event
our costs on these projects exceed the fixed contractual amount, we will be
required to bear the excess costs. These additional costs adversely affect our
financial condition and results of operations. Moreover, certain of our
government contracts are subject to termination or renegotiation at the
convenience of the government, which could result in a large decline in our net
sales in any given quarter. Our inability to address any of the foregoing
concerns or the loss or renegotiation of any material government contract could
seriously harm our business, financial condition and results of operations.

The Markets in Which We Operate Are Highly Competitive and Have Many More
Established Competitors. We compete with numerous other companies in our target
markets and we expect such competition to increase due to technological
advancements, industry consolidations and reduced barriers to entry. Increased
competition is likely to result in price reductions, reduced gross margins and
loss of market share, any of which could seriously harm our business, financial
condition and results of operations. Many of our competitors have far greater
name recognition and greater financial, technological, marketing and customer
service resources than we do. This may allow them to respond more quickly to new
or emerging technologies and changes in customer requirements. It may also allow
them to devote greater resources to the development, promotion, sale and support
of their products than we can. Recent consolidations of end users, distributors
and manufacturers in our target markets have exacerbated this problem. As a
result of the foregoing factors, we may not be able to compete effectively in
our target markets and competitive pressures could adversely affect our
business, financial condition and results of operations.

We Cannot Be Certain of Our Ability to Attract and Retain Key Personnel and
We Do Not Have Employment Agreements with Any Key Personnel. Due to the
specialized nature of our business, we are highly dependent on the continued
service of our executive officers and other key management, engineering and
technical personnel, particularly Joel Slutzky, our Chief Executive Officer and
Chairman of the Board, and Gregory A. Miner, our Chief Operating Officer and
Chief Financial Officer. We do not have any employment contracts with any of
our four officers or key employees. The loss of any of these persons would
seriously harm our development and marketing efforts, and would adversely affect
our business. Our success will

also depend in large part upon our ability to continue to attract, retain and
motivate qualified engineering and other highly skilled technical personnel.
Competition for employees, particularly development engineers, is intense. We
may not be able to continue to attract and retain sufficient numbers of such
highly skilled employees. Our inability to attract and retain additional key
employees or the loss of one or more of our current key employees could
adversely affect upon our business, financial condition and results of
operations.

We May Not be Able to Adequately Protect or Enforce Our Intellectual
Property Rights. If we are not able to adequately protect or enforce the
proprietary aspects of our technology, competitors could be able to access our
proprietary technology and our business, financial condition and results of
operations will likely be seriously harmed. We currently attempt to protect our
technology through a combination of patent, copyright, trademark and trade
secret laws, employee and third party nondisclosure agreements and similar
means. Despite our efforts, other parties may attempt to disclose, obtain or use
our technologies or solutions. Our competitors may also be able to independently
develop products that are substantially equivalent or superior to our products
or design around our patents. In addition, the laws of some foreign countries do
not protect our proprietary rights as fully as do the laws of the United States.
As a result, we may not be able to protect our proprietary rights adequately in
the United States or abroad.

From time to time, we have received notices that claim we have infringed
upon the intellectual property of others. Even if these claims are not valid,
they could subject us to significant costs. We have engaged in litigation in the
past, and litigation may be necessary in the future to enforce our intellectual
property rights or to determine the validity and scope of the proprietary rights
of others. Litigation may also be necessary to defend against claims of
infringement or invalidity by others. An adverse outcome in litigation or any
similar proceedings could subject us to significant liabilities to third
parties, require us to license disputed rights from others or require us to
cease marketing or using certain products or technologies. We may not be able to
obtain any licenses on terms acceptable to us, or at all. We also may have to
indemnify certain customers or strategic partners if it is determined that we
have infringed upon or misappropriated another party's intellectual property.
Any of these results could adversely affect on our business, financial condition
and results of operations. In addition, the cost of addressing any intellectual
property litigation claim, both in legal fees and expenses, and the diversion of
management resources, regardless of whether the claim is valid, could be
significant and could seriously harm our business, financial condition and
results of operations.

The Trading Price of Our Common Stock Is Volatile. The trading price of our
common stock has been subject to wide fluctuations in the past. Since January
2000, our Class A common stock has traded at prices as low as $1.88 per share
and as high as $29.44 per share. We may not be able to increase or sustain the
current market price of our common stock in the future. As such, you may not be
able to resell your shares of common stock at or above the price you paid for
them. The market price of our common stock could continue to fluctuate in the
future in response to various factors, including, but not limited to:

. quarterly variations in operating results;

. our ability to control costs and improve cash flow;

. shortages announced by suppliers;

. announcements of technological innovations or new products by our
competitors, customers or us;

. acquisitions or businesses, products or technologies;

. changes in pending litigation or new litigation;

. changes in investor perceptions;

. our ability to spin-off any business unit;

. applications or product enhancements by us or by our competitors; and

. changes in earnings estimates or investment recommendations by
securities analysts.

The stock market in general has recently experienced volatility, which has
particularly affected the market prices of equity securities of many high
technology companies. This volatility has often been unrelated to the operating
performance of these companies. These broad market fluctuations may adversely
affect the market price of our common stock. In the past, companies that have
experienced volatilities in the market price of their securities have been the
subject of securities class action litigation. If we were to become the subject
of a class action lawsuit, it could result in substantial losses and divert
management's attention and resources from other matters.

We Are Controlled by Certain of Our Officers and Directors. As of June 21,
2001, our officers and directors beneficially owned approximately 28% of the
total combined voting power of the outstanding shares of our Class A common
stock and Class B common stock. As a result of their stock ownership, our
management will be able to significantly influence the election of our directors
and the outcome of corporate actions requiring stockholder approval, such as
mergers and acquisitions, regardless of how our other stockholders may vote.
This concentration of voting control may have a significant effect in delaying,
deferring or preventing a change in our management or change in control and may
adversely affect the voting or other rights of other holders of common stock.

Our Stock Structure and Certain Anti-Takeover Provisions May Affect the
Price of Our Common Stock. Certain provisions of our certificate of
incorporation and our stockholder rights plan could make it difficult for a
third party to acquire us, even though an acquisition might be beneficial to our
stockholders. These provisions could limit the price that investors might be
willing to pay in the future for shares of our common stock. Our Class A common
stock entitles the holder to one-tenth of one vote per share and our Class B
common stock entitles the holder to one vote per share. The disparity in the
voting rights between our common stock, as well as our insiders' significant
ownership of the Class B common stock, could

discourage a proxy contest or make it more difficult for a third party to effect
a change in our management and control. In addition, our Board of Directors is
authorized to issue, without stockholder approval, up to 2,000,000 shares of
preferred stock with voting, conversion and other rights and preferences
superior to those of our common stock, as well as additional shares of Class B
common stock. Our future issuance of preferred stock or Class B common stock
could be used to discourage an unsolicited acquisition proposal.

In March 1998, we adopted a stockholder rights plan and declared a dividend
of preferred stock purchase rights to our stockholders. In the event a third
party acquires more than 15% of the outstanding voting control of our company or
15% of our outstanding common stock, the holders of these rights will be able to
purchase the junior participating preferred stock at a substantial discount off
of the then current market price. The exercise of these rights and purchase of a
significant amount of stock at below market prices could cause substantial
dilution to a particular acquiror and discourage the acquiror from pursuing our
company. The mere existence of a stockholder rights plan often delays or makes a
merger, tender offer or proxy contest more difficult.

We Do Not Pay Cash Dividends. We have never paid cash dividends on our
common stock and do not anticipate paying any cash dividends on either class of
our common stock in the foreseeable future.

We May Be Subject to Additional Risks. The risks and uncertainties
described above are not the only ones facing our company. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial may
also adversely affect our business operations.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file with the
SEC at the SEC's public reference room at 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. Our SEC filings are also available to the public at the
SEC's web site at http://www.sec.gov.

The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended. This prospectus is part of a
registration statement we filed with the SEC (Registration No. 333-66448).
The documents we incorporate by reference are:

1. Our Annual Report on Form 10-K/A for the fiscal year ended March 31, 2001
filed with the SEC on July 30, 2001;

2. The description of our Class A common stock contained in our registration
statement on Form 8-A filed with the SEC on October 14, 1987 under Section
12 of the Exchange Act, including any amendment or report filed for the
purpose of updating such; and

3. The description of our preferred stock purchase rights contained in our
registration statement on Form 8-A filed with the SEC on May 1, 1998 under
Section 12 of the Exchange Act, including any amendment or report filed for
the purpose of updating such description.

All reports and other documents we subsequently file under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the
date of this prospectus and prior to the termination of this offering will be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such reports and documents. Any statement incorporated herein
shall be deemed to be modified or superseded for purposes of this prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this prospectus.

We will provide without charge to each person to whom this prospectus is
delivered, upon written or oral request of such person, a copy of any or all of
the foregoing documents incorporated herein by reference. We will not provide
copies of exhibits to such documents unless such exhibits are specifically
incorporated by reference into such document. Requests for documents should be
submitted in writing to the Secretary, at Odetics, Inc., 1515 South Manchester
Avenue, Anaheim, California 92802 or by telephone at (714) 774-5000.

FORWARD-LOOKING STATEMENTS

This prospectus and the documents incorporated by reference in this
prospectus contain forward-looking statements. These forward-looking statements
are based on our current expectations, estimates and projections about our
industry, management's beliefs and certain assumptions made by us. Words such as
"anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates"
and variations of these words or similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions that
are difficult to predict. Therefore, our actual results could differ materially
from those expressed or forecasted in any forward-looking statements as a result
of a variety of factors, including those set forth in "Risk Factors" below and
elsewhere in, or incorporated by reference into, this prospectus. We undertake
no obligation to update publicly any forward-looking statements for any reason,
even if new information becomes available or other events occur in the future.

USE OF PROCEEDS

The selling stockholders will receive all of the net proceeds from the sale
of the Class A common stock offered by this prospectus. Accordingly, we will not
receive any proceeds from sales of these shares.

SELLING STOCKHOLDERS

The following table sets forth the number of shares of our Class A Common
Stock owned by each of the selling stockholders. All information contained in
the table below is based upon their beneficial ownership as of July 20, 2001. We
are not able to estimate the number of shares that will be held by the selling
stockholders after completion of this offering because the selling stockholders
may offer all or some of the shares and because there currently are no
agreements, arrangements or understandings with respect to the sale of any of
the shares.

Number of Shares Beneficially
Number of Shares Shares Owned After Offering(2)
--------------------------
Selling Stockholder Beneficially Owned Being Offered Number Percentage(1)
------------------------------------------ -------------------- --------------- -------- ---------------

Abbas Mohaddes............................ 75,716 36,453 39,263 *
Michael P. Meyer.......................... 78,816 36,453 42,363 *
Gary Hamrick.............................. 5,725 3,829 1,896 *
Viggen Davidian........................... 5,593 2,005 3,588 *

-------------------- --------------- -------- ---------------
Total................................... 165,850 78,740 87,110 *

_______________

* Represents beneficial ownership of less than 1% of the outstanding shares
of Class A common stock.

(1) Based on 9,542,889 shares of Class A Common Stock outstanding on June 21,
2001.

(2) This table assumes that all shares owned by the selling stockholders which
are offered by this prospectus are being sold. The selling stockholders
reserve the right to accept or reject, in whole or in part, any proposed
sale of shares. The selling stockholders also may offer and sell less than
the number of shares indicated. The selling stockholders are not making any
representation that any shares covered by this prospectus will or will not
be offered for sale.

This prospectus also covers any additional shares of Class A common stock
which become issuable in connection with the shares being registered by reason
of any stock dividend, stock split, recapitalization or other similar
transaction effected without the receipt of consideration which results in an
increase in the number of our outstanding shares of Class A common stock. In
addition, this prospectus covers the preferred stock purchase rights which
currently trade with the Class A common stock and entitle the holder to purchase
additional shares of Class A common stock under certain circumstances.

Except as indicated, we are not aware of any material relationship between
our company and any selling stockholder within the past three years other than
as a result of the ownership of the stockholder's shares. Abbas Mohaddes and
Michael Meyer are currently the President and Vice President, respectively, of
Meyer, Mohaddes Associates, Inc., a subsidiary of Iteris, Inc., and Gary Hamrick
and Viggen Davidian are presently employees of Iteris, Inc. All of the selling
stockholders acquired the shares offered by this prospectus in connection with
the Agreement and Plan of Reorganization among us, Iteris, Inc. (formerly known
as Odetics ITS, Inc.), MMA Acquisition Corp., Meyer, Mohaddes Associates, Inc.
and the selling stockholders dated October

16, 1998. Pursuant to these agreements, we agreed to effect a shelf registration
(of which this prospectus is a part) of all of these shares in order to permit
the selling stockholders to sell these shares from time to time in the public
market or in privately-negotiated transactions. We have agreed to prepare and
file any amendments and supplements to the registration statement relating to
these shares as may be necessary to keep the registration statement effective
for at least six months following the effective date of this registration
statement.

We have also agreed to pay for all expenses of this offering other than
fees and expenses of counsel for the selling stockholders and any underwriting
discounts and commissions and brokerage commissions and fees.

PLAN OF DISTRIBUTION

We are registering all 78,740 shares on behalf of certain selling
stockholders. All of the selling stockholders acquired their shares from us in
connection with our acquisition of Meyer, Mohaddes Associates, Inc. pursuant to
the Agreement and Plan of Reorganization dated October 16, 1998, as amended,
among Odetics, Iteris, Inc., Meyer, Mohaddes Associates, Inc. and the selling
stockholders. We will not receive any of the proceeds from this offering.

The selling stockholders named in this prospectus or pledgees, donees,
transferees or other successors-in-interest selling shares received from a named
selling stockholder as a gift, partnership distribution or other non-sale
related transfer after the date of this prospectus may sell these shares from
time to time. The selling stockholders will act independently of Odetics in
making decisions with respect to the timing, manner and size of each sale. The
sales may be made on one or more exchanges or in the over-the-counter market or
otherwise, at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The selling
stockholders may effect such transactions by selling the shares to or through
broker-dealers. The shares may be sold by one or more of, or a combination of,
the following:

. a block trade in which the broker-dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;

. purchases by a broker-dealer as principal and resale by such broker-
dealer for its account under this prospectus;

. an exchange distribution in accordance with the rules of such
exchange;

. ordinary brokerage transactions and transactions in which the broker
solicits purchasers; or

. in privately negotiated transactions.

To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the selling stockholders may arrange for other broker-
dealers to participate in the resales.

The selling stockholders may enter into hedging transactions with broker-
dealers in connection with distributions of the shares or otherwise. In such
transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with selling stockholders. The
selling stockholders also may sell shares short and redeliver the shares to
close out such short positions. The selling stockholders may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares under this prospectus. The selling stockholders also may
loan or pledge the shares to a broker-dealer. The broker-dealer may sell the
shares so loaned, or upon a default the broker-dealer may sell the pledged
shares under this prospectus.

Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling stockholders. Broker-dealers
or agents may also receive compensation from the purchasers of the shares for
whom they act as agents or to whom they sell as principals, or both.
Compensation as to a particular broker-dealer might be in excess of customary
broker-dealers or the selling stockholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act of 1933, as amended,
in connection with sales of the shares. Accordingly, any such commission,
discount or concession received by them and any profit on the resale of the
shares purchased by them may be deemed to be underwriting discounts or
commissions under the Securities Act. Because selling stockholders may be deemed
to be "underwriters" within the meaning of Section 2(11) of the Securities Act,
the selling stockholders will be subject to the prospectus delivery requirements
of the Securities Act.

In addition, any securities covered by this prospectus which qualify for
sale under Rule 144 promulgated under the Securities Act may be sold under Rule
144 rather than under this prospectus. The selling stockholders have advised us
that they have not entered into any agreements, understandings or arrangements
with any underwriters or broker-dealers regarding the sale of their securities.
There is no underwriter or coordinating broker acting in connection with the
proposed sale of shares by selling stockholders.

The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.

Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days prior to the commencement of such distribution. In addition, each
selling stockholder will be subject to applicable provisions of the Exchange Act
and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchase and sales of
shares of our common stock by the selling stockholders. We will make copies of
this prospectus available to the selling stockholders and have informed them of
the need for delivery of copies of this prospectus to purchasers at or prior to
the time of any sale of the shares.

We will file a supplement to this prospectus, if required, under Rule
424(b) under the Securities Act upon being notified by a selling stockholder
that any material arrangement has

been entered into with a broker-dealer for the sale of shares through a block
trade, special offering, exchange distribution or secondary distribution or a
purchase by a broker or dealer. Such supplement will disclose:

. the name of each such selling stockholder and of the participating
broker-dealer(s),

. the number of shares involved,

. the price at which such shares were sold,

. the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable,

. that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this
prospectus, and

. other facts material to the transaction.

In addition, upon being notified by a selling stockholder that a donee or
pledgee intends to sell more than 500 shares, we will file a supplement to this
prospectus.

We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling stockholder will bear all commissions
and discounts, if any, attributable to the sales of the shares. The selling
stockholders may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act. The selling stockholders
have agreed to indemnify certain persons, including broker-dealers and agents,
against certain liabilities in connection with the offering of the shares,
including liabilities arising under the Securities Act.

INDEMNIFICATION

Under Section 145 of the Delaware General Corporation Law, we can indemnify
our directors and officers against liabilities they may incur in their
capacities as officers and directors, including for liabilities under the
Securities Act. Our bylaws provide that we will indemnify our directors and
officers to the fullest extent permitted by law. Our bylaws also require us to
advance litigation expenses upon our receipt of an undertaking by the director
or officer to repay such advances if it is ultimately determined that the
director or officer is not entitled to indemnification. The bylaws further
provide that rights conferred under such bylaws do not exclude any other right
such persons may have or acquire under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.

Our certificate of incorporation provides that, under Delaware law, our
directors will not be liable for monetary damages for breach of the directors'
fiduciary duty of care to us and our stockholders. This provision in the
certificate of incorporation does not eliminate the duty of care, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Delaware law. In addition,
each director will continue to be subject to liability for breach of the
director's duty of loyalty to us or our

stockholders, for acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval of
stock repurchases or redemptions that are unlawful under Delaware law. The
provision also does not affect a director's responsibilities under any other
law, such as the federal securities laws or state or federal environmental laws.

We have also entered into agreements to indemnify our directors, the
directors of certain of our subsidiaries and certain of our officers in addition
to the indemnification provided for in the certificate of incorporation and
bylaws. These agreements, among other things, indemnify our directors and
certain of our officers for certain expenses, attorneys' fees, judgments, fines
and settlement amounts incurred by such person in any action or proceeding,
including any action by or for us, on account of services as our director or
officer, or as a director or officer of any other company or enterprise to which
the person provides services at our request.

LEGAL MATTERS

The legality of the shares offered hereby will be passed upon for Odetics
by Brobeck, Phleger & Harrison LLP, Irvine, California.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K/A
for the year ended March 31, 2001, as set forth in their report (which contains
an explanatory paragraph describing conditions that raise substantial doubt
about our ability to continue as a going concern as described in Note 1 to our
consolidated financial statements), which is incorporated by reference in this
prospectus and elsewhere in the registration statement. Our consolidated
financial statements and schedule are incorporated by reference in reliance on
Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.

We have not authorized any person to make a statement that differs from what is
in this prospectus. If any person does make a statement that differs from what
is in this prospectus, you should not rely on it. This prospectus is not an
offer to sell, nor is it seeking an offer to buy, these securities in any state
in which the offer or sale is not permitted. The information in this prospectus
is complete and accurate as of its date, but the information may change after
that date.

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TABLE OF CONTENTS

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Page
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RISK FACTORS............................................................... 3

WHERE YOU CAN FIND MORE
INFORMATION................................................................ 13

FORWARD-LOOKING STATEMENTS................................................. 14

USE OF PROCEEDS............................................................ 14

SELLING STOCKHOLDERS....................................................... 15

PLAN OF DISTRIBUTION....................................................... 16

INDEMNIFICATION............................................................ 18

LEGAL MATTERS.............................................................. 19

EXPERTS.................................................................... 19

ODETICS, INC.

78,740 Shares
of
Class A Common Stock

-------------

PROSPECTUS

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