Integrated Security Systems Inc. Receives $1 Million in Funding from Renaissance Capital Group

Business Wire, August 31, 2004

IRVING, Texas -- Integrated Security Systems, Inc. (OTCBB: IZZI), a premier supplier of anti-terrorist and perimeter security technology, today announced that it has closed on $1 million in funding in the form of a convertible promissory note from Renaissance Capital Group, Inc. The funding will provide working capital for the company to fulfill its growing backlog.

C. A. Rundell, Jr., Chairman and CEO of ISSI said, "This infusion of capital from Renaissance Capital provides us with operating capital that will enable us to aggressively pursue lucrative anti-terrorism contracts with major government entities while completing production on our current backlog of $6.2 million. Renaissance Capital's funding serves as a confirmation of their confidence in our business strategy and the growth prospects for Integrated Security Systems as we expand our offering in the homeland security arena. We're grateful to Renaissance Capital for their ongoing support in our efforts to grow the business and increase shareholder value."

One of ISSI's most significant expenses for fiscal year 2004 was a sizable R&D expense for several new anti-terrorism crash barriers. Reinforcing the company's ongoing commitment to investing in homeland security solutions, these new crash barriers address the immediate, burgeoning demand for proven perimeter security products capable of thwarting terrorist activities. As the result of augmenting and enhancing its crash barrier product line, ISSI expects to see increased sales of its crash barriers in markets around the world. ISSI expects its gross revenues to double to $20 million in fiscal year 2005 and the company anticipates it will be profitable in second, third and fourth quarters of fiscal year 2005.

"The heightened global threat of terrorism has caused the importance of physical security to soar," said Russell Cleveland, Renaissance Capital Group, Inc.'s President and CEO. "As a result, it is imperative that critical infrastructures, such as government agencies, military bases, financial institutions, pharmaceutical companies, utilities, and petrochemical plants take appropriate measures to deter vehicular terrorist threats by employing crash barriers and other robust, crash-tested perimeter security equipment, such as those provided by Integrated Security Systems, Inc. We've seen the growing demand by high-profile industry and government for ISSI's proven anti-terrorism crash barrier/gate product line and its Intelli-Site integrated security management systems and we are confident that our investment in ISSI will generate positive returns in the not too distant future."

This promissory note essentially follows the same terms as previous convertible promissory notes with Renaissance Capital Group. According to the terms of the note, the annual interest rate is 10 percent. Additionally, at its discretion, Renaissance Capital Group's BFS US Special Opportunities Trust may convert the note in whole or in part into fully paid and nonassessable shares of ISSI's stock at the conversion price of $0.38 per share. For full details on the promissory note terms and conditions, refer to ISSI's SEC Form 8-K filing on August 31, 2004.

About Integrated Security Systems, Inc. (ISSI)

Headquartered in Irving, Texas, ISSI (OTCBB Symbol: IZZI) designs, develops, manufactures, and distributes safety equipment and security software applications to the commercial, industrial, and government markets through two wholly owned subsidiaries: B&B ARMR Corporation and Intelli-Site, Inc. With a rapidly growing global customer base, ISSI is a leader in anti-terrorism and traffic control crash barrier products for the road, bridge, and perimeter security gate industries. Related products include airport and navigational lighting, perimeter security gate operators, and lane changers. Through a customizable graphical user interface, ISSI's Intelli-Site(R) software seamlessly integrates and controls existing security subsystems and devices from multiple vendors at multiple facilities, circumventing product upgrade and replacement costs. To meet the burgeoning worldwide demand for security products, ISSI actively forges strategic alliances with other security market leaders, from Europe to the Middle East, for the sales, distribution, and manufacturing of its products. For more information, please visit www.integratedsecurity.com, www.bb-armr.com or www.intelli-site.com.

This information contains certain forward-looking statements. It is important to note that ISSI's actual results could differ materially from those projected by such forward-looking statements. Important factors that could cause actual results to differ materially from those projected in the forward-looking statements include, but are not limited to, the following: operations may not improve as projected, new products may not be accepted by the marketplace as anticipated, or new products may take longer to develop than anticipated.