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Image Sensing Systems Announces First Quarter Financial Results

Contacts
Greg Smith, Chief Financial Officer
Image Sensing Systems, Inc., Phone: 651.603.7700

Saint Paul, Minn., May 1, 2013 Image Sensing Systems, Inc. (NASDAQ: ISNS), announced today the results for its first quarter ended March 31, 2013.

Revenue for the 2013 first quarter was $4.6 million compared to $5.3 million for the same period a year ago. Revenue from royalties was $2.6 million in the first quarter of 2013 compared to $2.3 million in the same period of 2012. Product sales were $2.0 million in the first quarter compared to $2.9 million in the same period of 2012. World-wide, in the first quarter of 2013, CitySync product sales were $899,000 and RTMS product sales and royalties were $566,000 and $207,000, respectively.

Net loss for the first quarter of 2013 was $(1.5) million or $(0.30) per share compared to a net loss of $(668,000) or $(0.14) per share for the same period in 2012. On a non-GAAP basis, excluding intangible asset amortization and costs of the investigation matter in our Polish subsidiary net of tax, net loss for the first quarter of 2013 was $(660,000) or $(0.13) per share compared to $(327,000) or $(0.07) in the same period a year ago.

Kris Tufto, CEO, said, Even with typical downward first quarter seasonality, results in our domestic royalty and CitySync businesses were below our expectations. Contributing to the shortfall were supplier issues that delayed planned March deliveries of approximately $550,000 in product sales. We anticipate completing these orders in the near term. Also, in addition to the costs of the investigation matter, we incurred severance costs to separate from the former director of our European operations.

We remain confident that we will show improved revenue results for the remainder of 2013. Our pipelines are increasing and we are generating new partnership activity worldwide. For example, we are excited by our recently announced partnership to integrate Exacq Vision video management with our CitySync ANPR software, creating a best-in-class product solution. Over the year, we will intensify our market-driven selling approach and follow strategies that support this approach. We believe this will lead to better execution and results. Although we intend to increase investments in certain marketing and engineering areas, we are mindful that revenue achievement is necessary to sustain the increased expenditures, continued Tufto.

Investigation Matter

Our previously disclosed investigation continues. We have voluntarily reported to the Securities and Exchange Commission and the Department of Justice, and our discussions and cooperation are ongoing. We are presently unable to determine the likely outcome or range of loss, if any, or predict with certainty the timeline for resolution of these matters, said Tufto.

Non-GAAP Information

We provide certain non-GAAP financial information as supplemental information to GAAP amounts. This non-GAAP information excludes the impact, net of tax, of amortizing the intangible assets from prior acquisitions and may exclude other non-recurring items. Management believes that this presentation facilitates the comparison of our current operating results to historical operating results. Management uses this non-GAAP information to evaluate short-term and long-term operating trends in our core operations. Non-GAAP information is not prepared in accordance with GAAP and should not be considered a substitute for or an alternative to GAAP financial measures and may not be computed the same as similarly titled measures used by other companies.

About ISS

Image Sensing Systems, Inc. is a provider of above ground detection and information management solutions for the Intelligent Transportation Systems (ITS) sector and adjacent markets including security, police and parking. We have sold more than 135,000 units of our industry leading Autoscope machine-vision, RTMS radar and CitySync automatic number plate recognition (ANPR) products in over 60 countries worldwide. This depth of our experience coupled with the breadth of our product portfolio uniquely positions us to provide powerful hybrid technology solutions and to exploit the convergence of the traffic, security and environmental management markets.

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Safe Harbor Statement: Statements made in this release concerning the Companys or managements intentions, expectations, or predictions about future results or events are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements reflect managements current expectations or beliefs, and are subject to risks and uncertainties that could cause actual results or events to vary from stated expectations, which variations could be material and adverse. Factors that could produce such a variation include, but are not limited to, the following: the inherent unreliability of earnings, revenue and cash flow predictions due to numerous factors, many of which are beyond the Companys control; developments in the demand for the Companys products and services; relationships with the Companys major customers and suppliers; the mix of and margins on the products we sell; unanticipated delays, costs and expenses inherent in the development and marketing of new products and services, including ANPR products; adverse weather conditions in our markets; the impact of governmental laws and regulations; increased international presence; our success in integrating acquisitions; and competitive factors. Our forward-looking statements speak only as of the time made, and we assume no obligation to publicly update any such statements. Additional information concerning these and other factors that could cause actual results and events to differ materially from the Companys current expectations are contained in the Companys reports and other documents filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2012 filed in March 2013.