Mohamad Talas, Deputy Director of System Engineering for NYC Department of Transportation said, "Rigorous procedures were put in place to ensure the most applicable detector technology matching our deployment criteria was selected." New York City's TOPICS IV project consists of many aspects including mid-block detection where high quality and reliable data is a major requirement.

The RTMS G4 is the only radar sensor with innovative "All-in-One" concept requiring no cabinet integration for interface, coverage of 12 lanes, minimal power requirement and is available with the widely accepted NTCIP standard communications protocol. RTMS G4 is also available with a Bluetooth option that allows technicians drive-up laptop access for setup and control. These features have made RTMS G4 a preferred solution worldwide to enhance transportation infrastructure.

About Image Sensing

Image Sensing Systems, Inc. is a technology company focused in infrastructure productivity improvement through the development of software-based detection solutions for the Intelligent Transportation Systems (ITS) sector and adjacent overlapping markets. ISS' industry leading computer-enabled detection (CED) products, including the Autoscope(R) machine-vision family and the RTMS(R) radar family, combine embedded software signal processing with sophisticated sensing technologies for use in transportation, environmental and safety/surveillance management. CED is a group of technologies in which software, rather than humans, examines the outputs of complex sensors to determine what is happening in the field of view in real-time. With more than 100,000 instances sold in over 60 countries worldwide, our depth of experience coupled with breadth of product portfolio uniquely positions us to provide powerful hybrid technology solutions and to exploit the convergence of the traffic, security and environmental management markets. We are headquartered in St. Paul, Minnesota. Visit us on the web at imagesensing.com.

SOURCE Image Sensing Systems, Inc.

http://www.imagesensing.com

Net income for the quarter ended September 30, 2009 was $1.6 million ($0.38 per diluted share) compared to $1.2 million ($0.29 per diluted share) for the same period in 2008. Net income for the first nine months of 2009 was $3.0 million ($0.74 per diluted share) compared to $3.4 million ($0.86 per diluted share) for the same period in 2008. Net income for the quarter ended September 30, 2009 was positively impacted by the recognition of tax credits in a foreign jurisdiction whose status was uncertain prior to the quarter. The earnings impact related to the credits was approximately $0.06 per diluted share.

Revenue for the third quarter was $6.8 million compared to $6.1 million for the same period a year ago, while revenue for the first nine months of 2009 was $17.9 million compared to $18.7 million for the same period a year ago. Royalties for the third quarter were $3.4 million compared to $3.7 million for the same period a year ago and were $9.1 million in the first nine months of 2009 as compared to $10.0 million in the first nine months of 2008. North American sales, which are sales of RTMS(R) in North America, were $1.7 million for the third quarter compared to $920,000 for the same period of 2008 and were $4.7 million for the first nine months of 2009 as compared to $4.5 million in the first nine months of 2008. International sales, which include both Autoscope(R) and RTMS sales outside of North America, were $1.8 million in the third quarter as compared to $1.4 million in the same period in 2008, and $4.1 million in the first nine months of 2009 as compared to $4.2 million in the same period of 2008. Sales of RTMS world-wide for the quarter were $2.4 million as compared to $1.2 million in the third quarter of 2008.

On a non-GAAP basis, excluding intangible asset amortization net of tax and the foreign tax credits, net income for the third quarter was $1.5 million ($0.36 per diluted share) and for the first nine months was $3.1 million ($0.77 per diluted share).

Ken Aubrey, CEO, said, "Our Q3 results reflect a continued difficult selling environment brought on by the economic downturn that was partially countered by tight expense control and the favorable foreign jurisdiction tax credit outcome. Our international business continues to be under pressure from what we see as lingering recessionary effects. Our domestic business, however, has shown two quarters of stabilization and we're pleased with the progress of our RTMS operations.

"We are pressing forward on our manufacturing cost reduction initiatives and hybrid product developments with the ongoing intention to be better positioned than our competitors when the world's economies improve."

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 the EIS asset purchase and may include 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 Image Sensing

Image Sensing Systems, Inc. is a technology company focused in infrastructure productivity improvement through the development of software-based detection solutions for the Intelligent Transportation Systems (ITS) sector and adjacent overlapping markets. ISS' industry leading computer-enabled detection (CED) products, including the Autoscope(R) machine-vision family and the RTMS(R) radar family, combine embedded software signal processing with sophisticated sensing technologies for use in transportation, environmental and safety/surveillance management. CED is a group of technologies in which software, rather than humans, examines the outputs of complex sensors to determine what is happening in the field of view in real-time. With more than 100,000 instances sold in over 60 countries worldwide, our depth of experience coupled with breadth of product portfolio uniquely positions us to provide powerful hybrid technology solutions and to exploit the convergence of the traffic, security and environmental management markets. We are headquartered in St. Paul, Minnesota. Visit us on the web at imagesensing.com.

Safe Harbor Statement: Statements made in this release concerning the Company's or management's 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 management's 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 Company's control; developments in the demand for the Company's products and services; relationships with the Company's major customers and suppliers; unanticipated delays, costs and expenses inherent in the development and marketing of new products and services; the impact of governmental laws and regulations; and competitive factors. Our forward-looking statements speak only as of the time made, and, except as may be required by law, 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 Company's current expectations are contained in the Company's reports and other documents filed with the Securities and Exchange Commission, including its Form 10-K for the year ended December 31, 2008 as updated by Form 10-Q filings made in 2009.

                           Image Sensing Systems, Inc.
                   Condensed Consolidated Statements of Income
                   (in thousands, except per share information)
                                     (unaudited)

                                       Three-Month          Nine-Month
                                       Period Ended         Period Ended
                                       September 30,        September 30,
                                      ---------------      --------------
                                     2009        2008        2009         2008
                                     ----        ----        ----         ----
    Revenue
      Royalties                    $3,389      $3,742      $9,068      $10,007
      North American sales          1,679         920       4,729        4,468
      International sales           1,755       1,420       4,096        4,221
                                    -----       -----       -----        -----
                                    6,823       6,082      17,893       18,696
    Cost of revenue                 1,269         860       2,947        3,468
                                    -----         ---       -----        -----
    Gross profit                    5,554       5,222      14,946       15,228

    Operating expenses
      Selling, marketing and
       product support              1,721       1,695       5,272        4,688
      General and administrative      796         980       2,574        2,883
      Research and development        868         701       2,541        2,167
      Amortization of intangible
       assets                         192         192         576          576
                                      ---         ---         ---          ---
                                    3,577       3,568      10,963       10,314
                                    -----       -----      ------       ------
    Income from operations          1,977       1,654       3,983        4,914
    Other income (expense), net         9          (6)         18           58
                                       --          --          --           --
    Income before income taxes      1,986       1,648       4,001        4,972
    Income taxes                      426         486       1,010        1,539
                                      ---         ---       -----        -----
    Net income                     $1,560      $1,162      $2,991       $3,433
                                   ======      ======      ======       ======

      Basic net income per share    $0.39       $0.29       $0.75        $0.87
      Diluted net income per
       share                        $0.38       $0.29       $0.74        $0.86

      Weighted shares - basic       3,986       3,942       3,985        3,933
      Weighted shares - diluted     4,073       4,005       4,065        4,010

    Reconciliation of GAAP to
     non-GAAP basis
    Non-GAAP operating expenses
     (1,2)                          3,385       3,155      10,387        9,517
                                    -----       -----      ------        -----
    Non-GAAP income from
     operations                     2,169       2,067       4,559        5,711
    Other income (expense), net         9          (6)         18           58
                                       --          --          --           --
    Non-GAAP income before
     income taxes                   2,178       2,061       4,577        5,769
    Non-GAAP income taxes(3)          727         626       1,442        1,810
                                      ---         ---       -----        -----
    Non-GAAP net income            $1,451      $1,435      $3,135       $3,959
                                   ======      ======      ======       ======

      Non-GAAP basic net income
       per share                    $0.36       $0.36       $0.79        $1.01
      Non-GAAP diluted net income
       per share                    $0.36       $0.36       $0.77        $0.99

    Notes to non-GAAP adjustments
    -----------------------------
    (1) Amortization of intangible asset for period as shown above is removed
    (2) Withdrawn offering expense of $221 is removed in 2008
    (3) Income taxes are increased by impact of (1,2) at ISS' marginal tax
        rate of 34% and in 2009 by $236 for foreign tax credits

                            Image Sensing Systems, Inc.
                       Condensed Consolidated Balance Sheet
                                  (in thousands)
                                   (unaudited)

                                              September 30, December 31,
                                                   2009         2008
                                                   ----         ----
    Assets
      Current assets
        Cash and cash equivalents                $7,861      $10,289
        Investments                               3,940        4,000
        Receivables, net                          6,498        6,620
        Inventories                               2,862        1,608
        Prepaid expenses and deferred taxes       1,147          752
                                                  -----          ---
                                                 22,308       23,269
      Property and equipment, net                   869          728
      Deferred income taxes                       1,575        1,575
      Goodwill and intangible assets, net         9,989       10,536
                                                  -----       ------
                                                $34,741      $36,108
                                                =======      =======
    Liabilities and Shareholders' Equity
      Current liabilities
        Accounts payable and accrued expenses    $2,278       $2,135
        Bank debt                                     -        3,750
        EIS earnout payable                           -        1,164
        Income taxes payable                        667          283
                                                    ---          ---
                                                  2,945        7,332
      Income taxes payable                          204          246
      Shareholders' equity                       31,592       28,530
                                                 ------       ------
                                                $34,741      $36,108
                                                =======      =======

                            Image Sensing Systems, Inc.
                 Condensed Consolidated Statement of Cash Flows
                                   (in thousands)
                                     (unaudited)
                                                      Nine-Month Period Ended
                                                            September 30,
                                                            -------------
                                                        2009            2008
                                                        ----            ----
    Operating activities
    Net income                                        $2,991          $3,433
    Adjustments to reconcile net income to net cash
     provided by operations
      Depreciation and amortization                      906             863
      Stock option expense                               266             246
      Changes in operating assets and liabilities     (1,217)         (1,215)
                                                      ------          ------
    Net cash provided by operating activities          2,946           3,327

    Investing activities
      Purchases of property and equipment, net of
       disposals                                        (496)           (239)
      Payment of EIS earnout                          (1,192)              -
      Sales (purchases) of investments                    60          (5,400)
                                                          --          ------
    Net cash used in investing activities             (1,628)         (5,639)

    Financing activities
      Proceeds from exercise of stock options              4             109
      Repayment of bank debt                          (3,750)         (1,000)
                                                      ------          ------
    Net cash used in financing activities             (3,746)           (891)
                                                      ------            ----

    Decrease in cash and cash equivalents             (2,428)         (3,203)
    Cash and cash equivalents, beginning of period    10,289          10,876
                                                      ------          ------
    Cash and cash equivalents, end of period          $7,861          $7,673
                                                      ======          ======

SOURCE Image Sensing Systems, Inc.

http://www.imagesensing.com

company CEO Ken Aubrey said, "This filing is intended to give us flexibility in the capital raising process and provide us the opportunity to move quickly into the capital markets now and in the intermediate term in support of our stated acquisition strategy."

Saint Paul, Minnesota-based Image Sensing Systems is a technology company focused in infrastructure productivity improvement through the development of software-based detection solutions for the "intelligent transportation systems sector and adjacent overlapping markets.

The company's computer-enabled detection products combine embedded software signal processing with sensing technologies for use in transportation, environmental and safety and surveillance management.

FinancialWire(tm) is a fully independent, proprietary news wire service. FinancialWire(tm) is not a press release service, and receives no compensation for its news, opinions or distributions. Further disclosure is at the FinancialWire(tm) web site (http://www.financialwire.net/disclosures.php). Contact FinancialWire(tm) directly via inquiries@financialwire.net.

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"We congratulate the sellers of EIS on the successful outcome," said Ken Aubrey, CEO. "The Appellate Court backed the view we held at the time of our purchase of the RTMS radar line that the automatic set-up methods were distinctly different. While we were indemnified by the sellers of EIS in this lawsuit, we are happy to see the matter resolved and that all appeals are now exhausted. The ruling also clears up any uncertainty in the market surrounding the lawsuit, which should benefit our customers and partners alike."

About Image Sensing

Image Sensing Systems, Inc. is a technology company focused in infrastructure productivity improvement through the development of software-based detection solutions for the Intelligent Transportation Systems (ITS) sector and adjacent overlapping markets. ISS' industry leading computer-enabled detection (CED) products, including the Autoscope(R) machine-vision family and the RTMS(R) radar family, combine embedded software signal processing with sophisticated sensing technologies for use in transportation, environmental and safety/surveillance management. CED is a group of technologies in which software, rather than humans, examines the outputs of complex sensors to determine what is happening in the field of view in real-time. With more than 100,000 instances sold in over 60 countries worldwide, our depth of experience coupled with breadth of product portfolio uniquely positions us to provide powerful hybrid technology solutions and to exploit the convergence of the traffic, security and environmental management markets. We are headquartered in St. Paul, Minnesota. Visit us on the web at imagesensing.com.

SOURCE Image Sensing Systems, Inc.

http://www.imagesensing.com