Mail Stop 0610
July 5, 2005
Via U.S. Mail and Facsimile to (651) 603-7795
Arthur J. Bourgeois
Chief Financial Officer
Image Sensing Systems, Inc.
500 Spruce Tree Centre
1600 University Ave. W.
St. Paul, MN 55104
Re: Image Sensing Systems, Inc.
Form 10-KSB for the Fiscal Year-Ended December 31, 2004
Filed March 29, 2005
Form 10-QSB for the Fiscal Quarter-Ended March 31,
2005
File No. 000-26056
Dear Mr. Bourgeois:
We have reviewed your response and have the following
comments.
We have limited our review of your filing to those issues we have
addressed in our comments. In some of our comments, we may ask
you
to provide us with information so we may better understand your
disclosure. After reviewing this information, we may raise
additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-QSB for the Fiscal Quarter-Ended March 31, 2005
Part I: Financial Information, page 2
Condensed Consolidated Balance Sheets, page 3
1. Please refer to prior comments 1 and 2. We note that you
continue
to have significant assets in securities. Please explain whether
you
are an investment company under Section 3(a)(1)(A) of the
Investment
Company Act. Please explain how you have made this determination.
Specifically, please analyze the company using the five factors
set
out in Tonapah Mining Company of Nevada, 26 SEC 426 (1947). As
part
of your Tonopah analysis, please consider explaining why you have
a
relatively large portion of your assets in securities. Please
also
provide the amount of cash and cash equivalents that are in
securities.
Notes to Condensed Consolidated Financial Statements, page 6
2. Please refer to prior comment 4. We note that the disclosures
required by FAS 115 are applicable to both quarterly and annual
financial information. In this regard, please tell us how you
intend
to update your disclosure in future filings to comply.
Item 3. Controls and Procedures, page 12
Evaluation of Disclosure Controls and Procedures, page 12
3. Please refer to prior comment 5. We note your disclosure that
management has concluded that your disclosure controls and
procedures
are effective "in timely alerting them to material information
relating us (or our consolidated subsidiaries) required to be
included in the reports we file or submit under the Exchange Act."
The language that is currently included after the word "effective"
in
your disclosure appears to be superfluous, since the meaning of
"disclosure controls and procedures" is established by Rule 13a-
15(e)
of the Exchange Act. However, if you do not wish to eliminate
this
language, please revise future filings so that the language that
appears after the word "effective" is substantially similar in all
material respects to the language that appears in the entire two-
sentence definition of "disclosure controls and procedures" set
forth
in Rule 13a-15(e).
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter with your response that keys your
responses to our comments and provides any requested information.
Detailed cover letters greatly facilitate our review. Please file
your cover letter on EDGAR. Please understand that we may have
additional comments after reviewing your responses to our
comments.
You may contact Kevin Kuhar, Staff Accountant, at (202) 551-
3662 or me at (202) 551-3603 if you have questions regarding these
comments on the financial statements and related matters. In this
regard, do not hesitate to contact Angela Crane, Branch Chief, at
(202) 551-3554.
Sincerely,
Jay Webb
Reviewing Accountant
Arthur J. Bourgeois
Image Sensing Systems, Inc.
July 5, 2005
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