8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 Or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)   August 10, 2012

Image Sensing Systems, Inc.

(Exact name of registrant as specified in its charter)

Minnesota	000-26056	41-1519168
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

500 Spruce Tree Centre, 1600 University Avenue West, St. Paul, Minnesota	55104
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code   (651) 603-7700

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

☐   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 5 – Corporate Governance and Management

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(a)           On August 10, 2012, Michael Doyle resigned from the Board of Directors of Image Sensing Systems, Inc. (the “Company”) because of his disagreement with the termination of the employment of Kenneth R. Aubrey as the Company’s President and Chief Executive Officer, as described below.

(b)           On August 10, 2012, Kenneth R. Aubrey’s employment as the Company’s President and Chief Executive Officer was terminated.

(c)           Effective on August 10, 2012, the Company’s Board of Directors appointed Kris B. Tufto as the Company’s interim President and Chief Executive Officer.

Mr. Tufto, age 54, has been a director of the Company since September 2011. Mr. Tufto has been a director of Sajan, Inc., a publicly-held company, since February 2010. From 2010 until 2012, he was the Chief Revenue Officer of Code 42 Software, Inc., a provider of computer backup solutions. From May 2008 to January 2010, he was President and Chief Executive Officer of MarketingBridge, LLC, a company providing internet connectivity. From April 2005 until April 2008, he served as an executive with or consultant to several early-stage technology companies. Mr. Tufto was President and Chief Executive Officer of Jasc Software, Inc., a provider of digital imaging software based in Eden Prairie, Minnesota, from March 1998 through March 2005. Jasc Software, Inc. was acquired by Corel Corporation in 2004. Mr. Tufto has a Bachelor’s of Sciences degree in Electrical Engineering from North Dakota State University.

(d)           Effective on August 10, 2012, the Company’s Board of Directors appointed Dale E. Parker to the Company’s Board. Mr. Parker, age 60, has been a director of HickoryTech Corporation, a publicly-held company, since 2006 and has served as Chair of HickoryTech Corporation’s Board of Directors since January 2011. He is currently serving as interim Chief Financial Officer (CFO) for Ener1, Inc., an energy storage technology company that develops lithium-ion-powered storage solutions for application in the electric utility, transportation and industrial electronics markets. Mr. Parker worked as CFO of Neenah Enterprises, Inc., an independent foundry, in 2010. From 2009 to 2010, Mr. Parker was the Vice President of Finance for Paper Works, a producer of coated recycled paper board. Mr. Parker was CFO at Forest Resources, LLC, a company focused on paper product production and conversion, from 2007 to October 2008. From 2006 to 2007, Mr. Parker was CFO at Vitex Packaging Group, a manufacturer of packaging for tea and coffee brands. From 2000 to 2006, Mr. Parker served as Vice President, CFO, and board member of Appleton Papers, Inc., a leading manufacturer of specialty, value-added coated paper products, including carbonless thermal and security papers. Mr. Parker is a Certified Public Accountant and holds an MBA.

Mr. Parker was appointed to serve on the Company’s Audit Committee as Chair, its Compensation and Stock Option Committee, and its Nominating and Corporate Governance Committee.

Mr. Parker will be compensated as a non-employee director in accordance with the Company’s non-employee director compensation program. Under the program, for the remainder of 2012, he will receive a pro-rated portion of the $12,000 annual retainer paid to all non-employee directors, $1,000 for each regular Board meeting attended, $750 for each Committee meeting attended and $500 for each special Board meeting attended. As Chair of the Audit Committee, Mr. Parker will receive a pro-rated portion of the $4,000 annual retainer.

In addition, in connection with Mr. Parker’s initial appointment to the Board, on August 10, 2012, he was granted a 10-year non-incentive stock option to purchase 18,000 shares of the Company’s common stock at an exercise price of $5.05 per share, which is equal to the closing price of the Company’s common stock on August 9, 2012 as quoted on The NASDAQ Capital Market. The option becomes exercisable in three equal installments on each of the first, second and third anniversary of the date of grant.

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Section 7 – Regulation FD

Item 7.01. Regulation FD Disclosure

Concurrently with Mr. Tufto’s appointment as the Company’s interim President and Chief Executive Officer, he resigned from the Company’s Compensation and Stock Option Committee, of which he was Chair, Audit Committee, and Nominating and Corporate Governance Committee. Mr. Tufto will continue to serve as a non-independent member of the Company’s Board of Directors. James W. Bracke was appointed as Chair of the Compensation and Stock Option Committee and resigned as Chair of the Audit Committee, although he continues to serve on the Audit Committee.

Section 9 – Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

(c)           Exhibits. The following document is hereby filed as an exhibit to this Current Report on Form 8-K:

Exhibit No.

99.1     Press Release dated August 13, 2012.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Image Sensing Systems, Inc.
Date:  August 13, 2012
	By	/s/ Gregory R. L. Smith
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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Exhibit Index

Exhibit No.

99.1     Press Release dated August 13, 2012.

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EX-99.1

Exhibit 99.1

500 Spruce Tree Centre 1600 University Avenue West St. Paul, Minnesota 55104-3825 USA 651.603.7700 Fax: 651.603.7795 www.imagesensing.com

NEWS RELEASE

Contacts:	INVESTORS
	Greg Smith, Chief Financial Officer
	Image Sensing Systems, Inc. Phone: 651.603.7700
	MEDIA
	Al Galgano
	Padilla Speer Beardsley Phone: 612.455.1720

FOR IMMEDIATE RELEASE

Image Sensing Systems Announces a Change In Executive Leadership

Kris Tufto named interim CEO; Dale Parker joins board of directors

Saint Paul, Minn., August 13, 2012 — Image Sensing Systems, Inc. (NASDAQ: ISNS), announced today that Kenneth R. Aubrey’s employment as president and chief executive officer (CEO) of Image Sensing Systems, Inc. has been terminated, effective immediately. The board has named Kris B. Tufto, a member of Image Sensing Systems’ board, as interim president and CEO. Tufto has served as a member of the board since September 2011. He will continue to serve on the board, but will step down from the three board committees because his role as interim president and CEO positions him as a non-independent board member. The Board expects to initiate a search for a new president and CEO in the near-term.

“Our view is that Image Sensing Systems’ assets are strong and yet the company is underperforming against the opportunity,” said Jim Bracke, chairman of the board. “The board’s decision to make a leadership change was made after ongoing consideration and a deliberative process that determined that Image Sensing Systems was not taking full advantage of the strength of its product offering given the market opportunity. The board has determined that the time is right for a leadership change and fresh perspective, and we are pleased to have Kris lead us during this interim period as we further position Image Sensing Systems to capitalize on future growth opportunities.”

Tufto brings significant leadership experience in software, technology and product marketing to his new role as interim CEO. He has served on the board of Sajan, Inc., a publicly-held company, since February 2010. From 2010 to 2012, Tufto was chief revenue officer at Code42, a software solutions and data protection company. Previously, he was chief executive officer at MarketingBridge, a global channel marketing company, and a consultant at W3i, a provider of application and mobile marketing solutions. Tufto has also served in leadership positions for various technology companies. He has a Bachelor’s of Sciences Degree in Electrical Engineering from North Dakota State University.

“I welcome the opportunity to lead Image Sensing Systems during this very exciting period and look forward to working with the team to build upon the significant assets in place to help Image Sensing Systems accelerate value creation for its shareholders. The recent passage of the MAP-21 transportation bill should unlock much of the pent-up demand for ITS spending, and Image Sensing Systems can benefit from this significant event. Additionally, our state-of-the-art and industry-leading Hybrid Duo product continues to gain traction, and we are ready to take advantage of the growth opportunities ahead of us.”

The company also announced that it continues to augment its leadership team with the addition of Dale Parker as a board director, replacing Tufto on the three board committees. Parker has a deep leadership background, and currently serves as board chairman of HickoryTech Corporation, a communications solutions provider. He retired earlier this year after serving as interim chief financial officer of Ener1, Inc., an energy storage technology company, since 2011. Previously he served in numerous chief financial officer and vice president roles for manufacturing companies.

Image Sensing Systems has also announced that Michael Doyle has stepped down as a board director.

Image Sensing Systems will hold an investment community conference call today at 10:30 a.m. CDT to discuss the leadership change. To participate, dial 877-941-8609 and reference conference ID 4559935. Please dial in at least 10 minutes prior to the call.

About Image Sensing

Image Sensing Systems, Inc. is a provider of software-based detection solutions for the Intelligent Transportation Systems (ITS) sector and adjacent markets including security, police and parking. We have sold more than 125,000 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. 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; 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 Company’s current expectations are contained in the Company’s 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, 2011 filed in March 2012.