Image Sensing Systems Announces Record Second Quarter Financial Results

Contact: Art Bourgeois, Chief Financial Officer
Image Sensing Systems, Inc., Phone: 651.603.7700

Saint Paul, Minn., August 1, 2002 - Image Sensing Systems, Inc. (ISS) (NASDAQ Small Cap: ISNS) market leading developer and manufacturer of video-based traffic management systems, announced today financial results for its second quarter ended June 30, 2002.

Net income for the quarter was $ 562,000 or $ .18 per share compared with a net loss of $70,000 or $ .02 per share for the comparable period in 2001. The Company would have reported net income of $ 768,000 or $ .24 per share had they not had non-recurring restructuring charges.

Net income for the six-month period ended June 30, 2002 was $336,000 or $ .11 per share compared to a net loss of $294,000 or $ .09 per share for the comparable period in 2001. Without restructuring changes, net income for the first half of 2002 would have been $810,000 or $ .26 per share.

Jim Murdakes, new Chairman, and acting CEO said, “We are extremely happy with the second quarter results considering the extraordinary restructuring cost we experienced in the quarter. Restructuring has been completed during this quarter and we are now totally focused on our basic Machine Vision Technology. The strong revenue performance was due largely to the success of our newest Autoscope product, Solo Pro II, which ISS introduced last year.”

Our major partner, Econolite Control Products, Inc., continued their strong and positive sales growth resulting in ISS having a record second quarter for revenue and income. As ISS’ Autoscope Solo Pro continues to gain wide acceptance in the marketplace, we expect to continue yielding good results as we go forward.

Based in Saint Paul, Minnesota, Image Sensing Systems, Inc. is the world leader in products applying video imaging technology for implementation in advanced traffic management systems (ATMS), freeway incident detection and traffic data collection to help reduce traffic congestion and improve roadway planning. The Company’s cornerstone Autoscope® products provide traffic managers the means to reduce roadway congestion, improve roadway planning, and increase cost efficiencies. Econolite Control Products, Inc., based in Anaheim, California, has been the exclusive distributor of Autoscope products throughout North America since 1991 and recently was awarded exclusive sales distribution for Latin America. Image Sensing Systems, Inc. and Econolite Control Products, Inc. are particularly suited to provide technical solutions to the emerging intelligent transportation systems and security markets worldwide. imagesensing.com

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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This report contains “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. There are certain factors that could cause results to differ materially from those anticipated by some of the statements made, as listed in the Company’s 2001 Annual Form 10-KSB.