U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                      -------------------------------------

                                   Form 10-QSB

                      -------------------------------------


|X|      QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2002.
                                                    --------------

|_|      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________ TO ____________.



                         Commission file number 1-11900



                        Integrated Security Systems, Inc.
                        ---------------------------------
        (Exact name of small business issuer as specified in its charter)



                    Delaware                             75-2422983
         (State or other jurisdiction of              (I.R.S. Employer
         incorporation or organization)              Identification No.)


        8200 Springwood Drive, Suite 230, Irving, Texas          75063
           (Address of principal executive offices)            (Zip Code)



                                 (972) 444-8280
                           (Issuer's telephone number)



Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the  registrant  was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.      Yes [X]    No [ ]

As of April 30, 2002,  11,684,763  shares of the Registrant's  common stock were
outstanding.

Transitional Small Business  Disclosure Format:   Yes [ ]    No [X]



<PAGE>

<TABLE>
<CAPTION>
                        INTEGRATED SECURITY SYSTEMS, INC.
                                      INDEX

                                                                                   Page
                                                                                   ----
<S>                                                                                <C>
PART I.  FINANCIAL INFORMATION

      Item 1.  Financial Statements

               Consolidated Balance Sheets at March 31, 2002 (unaudited)
                    and June 30, 2001                                                3

               Consolidated Statements of Operations (unaudited)for the three
                    and nine months ended March 31, 2002 and 2001                    4

               Consolidated Statements of Cash Flows (unaudited) for the nine
                    months ended March 31, 2002 and 2001                             5

               Notes to Financial Statements                                         6

      Item 2.  Management's Discussion and Analysis or Plan of Operation             8

PART II.  OTHER INFORMATION

      Item 1.  Legal Proceedings                                                    12

      Item 2.  Changes in Securities                                                12

      Item 3.  Defaults Upon Senior Securities                                      12

      Item 4.  Submission of Matters to a Vote of Security Holders                  12

      Item 5.  Other Information                                                    13

      Item 6.  Exhibits and Reports on Form 8-K                                     13

SIGNATURES                                                                          14

</TABLE>



                                       2
<PAGE>


                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements.

<TABLE>
<CAPTION>

                        INTEGRATED SECURITY SYSTEMS, INC.
                           Consolidated Balance Sheets

                                                                        March 31,               June 30,
                                                                          2002                    2001
                                                                      -------------           -------------
                                                                       (Unaudited)
                                     ASSETS
<S>                                                                   <C>                     <C>
Current assets:
   Cash and cash equivalents                                          $      95,097           $      70,582
   Accounts receivable, net of allowance for doubtful
     accounts of $94,998 and $94,270, respectively                          959,238               1,312,464
   Inventories                                                              713,350                 632,989
   Other current assets                                                      62,665                 113,844
                                                                      -------------           -------------
     Total current assets                                                 1,830,350               2,129,879

Property and equipment, net                                                 587,739                 655,240
Other assets                                                                 14,461                  14,410
                                                                      -------------           -------------
     Total assets                                                     $   2,432,550           $   2,799,529
                                                                      =============           =============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
   Accounts payable                                                   $     637,023           $     926,076
   Accrued liabilities                                                      474,376                 425,391
   Current portion of long-term debt                                      1,171,677                 494,959
                                                                      -------------           -------------
     Total current liabilities                                        $   2,283,076           $   1,846,426
                                                                      -------------           -------------

Long-term debt                                                              644,250                 620,306

Preferred stock subject to redemption                                     7,495,052               7,345,052

Stockholders' deficit:
   Preferred stock, $.01 par value, 750,000 shares
     authorized; 161,345 shares issued and outstanding
     (liquidation value of $3,529,875)                                        1,613                   1,608
   Common stock, $.01 par value, 35,000,000 shares
     authorized; 11,571,649 and 10,782,417 shares,
     respectively, issued                                                   115,716                 107,824
   Additional paid in capital                                            17,150,346              16,123,610
   Accumulated deficit                                                  (25,138,753)            (23,126,547)
   Treasury stock, at cost - 50,000 shares                                 (118,750)               (118,750)
                                                                      -------------           -------------
     Total stockholders' deficit                                         (7,989,828)             (7,012,255)
                                                                      -------------           -------------
       Total liabilities and stockholders' deficit                    $   2,432,550           $   2,799,529
                                                                      =============           =============
</TABLE>



                 The accompanying notes are an integral part of
                     the consolidated financial statements.



                                       3
<PAGE>

<TABLE>
<CAPTION>

                        INTEGRATED SECURITY SYSTEMS, INC.
                      Consolidated Statements of Operations
                                   (Unaudited)


                                          For the Three Months Ended              For the Nine Months Ended
                                                   March 31,                               March 31,
                                        ------------------------------          ------------------------------
                                           2002               2001                 2002               2001
                                        -----------        -----------          -----------        -----------
<S>                                     <C>                <C>                  <C>                <C>
Sales                                   $ 1,185,051        $ 1,208,643          $ 3,388,848        $ 3,770,495
Cost of sales                               722,966            765,521            2,207,887          2,555,292
                                        -----------        -----------          -----------        -----------
Gross margin                                462,085            443,122            1,180,961          1,215,203
                                        -----------        -----------          -----------        -----------

Operating expenses:
   Selling, general and
   administrative                           619,238            969,095            2,118,680          3,066,997
   Research and product
   development                              105,988            106,651              323,043            395,731
                                        -----------        -----------          -----------        -----------
                                            725,226          1,075,746            2,441,723          3,462,728
                                        -----------        -----------          -----------        -----------

Loss from operations                       (263,141)          (632,624)          (1,260,762)        (2,247,525)

Other income (expense):
   Other income                             203,834                - -              203,834                - -
   Interest income                              - -                - -                  - -                139
   Interest expense                        (449,570)          (290,088)            (831,453)          (653,404)
                                        -----------        -----------          -----------        -----------

Net loss                                $  (508,877)       $  (922,712)         $(1,888,381)       $(2,900,790)

Preferred dividends                         (40,500)           (41,166)            (123,825)          (125,327)
                                        -----------        -----------          -----------        -----------

Net loss allocable to common
   stockholders                         $  (549,377)       $  (963,878)         $(2,012,206)       $(3,026,117)
                                        ===========        ===========          ===========        ===========

Weighted average common
   shares outstanding - basic
   and diluted                           11,233,291         10,732,417           11,021,544         10,630,667
                                        ===========        ===========          ===========        ===========

Net loss per share - basic and
   diluted                              $     (0.05)       $     (0.09)         $     (0.18)       $     (0.28)
                                        ===========        ===========          ===========        ===========
</TABLE>





               The accompanying notes are an integral part of the
                       consolidated financial statements.



                                       4
<PAGE>

<TABLE>
<CAPTION>

                        INTEGRATED SECURITY SYSTEMS, INC.
                      Consolidated Statements of Cash Flows
                                   (Unaudited)


                                                                     For the Nine Months Ended
                                                                              March 31,
                                                                 ---------------------------------
                                                                     2002                 2001
                                                                 ------------         ------------
<S>                                                              <C>                  <C>
Cash flows from operating activities:
   Net loss                                                      $ (1,888,381)        $ (2,900,790)
   Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation                                                      97,097              122,407
     Gain on sale of assets                                          (192,668)                 - -
     Amortization                                                         - -              113,713
     Provision for bad debt                                            34,750               18,000
     Provision for warranty reserve                                    32,000               61,500
     Provision for inventory reserve                                   13,500               15,000
     Unbilled revenue                                                     - -              221,995
     Expenses paid with stock, warrants and options                   826,786              106,351
     Changes in operating assets and liabilities:
       Accounts receivable                                            318,476              105,013
       Inventories                                                    (93,861)             (20,714)
       Other assets                                                    51,127              (11,484)
       Accounts payable                                              (321,647)             443,810
       Accrued liabilities                                             16,987               15,172
                                                                 ------------         ------------
           Net cash used in operating activities                   (1,105,834)          (1,710,027)
                                                                 ------------         ------------

Cash flows from investing activities:
   Purchase of property and equipment                                 (40,763)             (41,270)
   Proceeds from disposal of assets                                   203,834                    -
                                                                 ------------         ------------
           Net cash used in investing activities                      163,071              (41,270)


Cash flows from financing activities:
   Issuance of preferred stock                                        200,000                2,183
   Dividends on preferred stock                                       (26,604)            (125,327)
   Employee stock option exercise                                      60,625                  - -
   Payments on debt                                                  (112,789)            (117,877)
   Proceeds from notes payable and long-term debt                     846,045            1,971,860
                                                                 ------------         ------------
           Net cash provided by financing activities                  967,277            1,730,839
                                                                 ------------         ------------

Decrease in cash and cash equivalents                                  24,514              (20,458)
Cash and cash equivalents at beginning of period                       70,583               99,636
                                                                 ------------         ------------
Cash and cash equivalents at end of period                       $     95,097         $     79,178
                                                                 ============         ============
</TABLE>




               The accompanying notes are an integral part of the
                       consolidated financial statements.



                                       5
<PAGE>


                        INTEGRATED SECURITY SYSTEMS, INC.
             Notes to Consolidated Financial Statements (Unaudited)
                    Nine Months Ended March 31, 2002 and 2001


Note 1 - Basis of Presentation

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial information.  Accordingly,  they do not include all of the information
and footnotes required by generally accepted accounting  principles for complete
financial  statements.  In the opinion of management,  all  adjustments  (all of
which  are  normal  recurring   accruals)   considered   necessary  for  a  fair
presentation  have been included.  Operating  results for the interim period are
not  necessarily  indicative  of the results that may be expected for the fiscal
year ending June 30, 2002.

The  accompanying  financial  statements  include  the  accounts  of  Integrated
Security  Systems,  Inc.  and  all of its  subsidiaries,  with  all  significant
intercompany  accounts and  transactions  eliminated.  For further  information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's fiscal 2001 Annual Report on Form 10-KSB filed on October 15, 2001
with the Securities and Exchange Commission.


Note 2 - Reclassification

Certain  reclassification of prior year amounts have been made to conform to the
current period presentation.


Note 3 -Financing

In exchange for an aggregate of $100,000 cash  investment,  on January 14, 2002,
the Company  issued a promissory  note to each of  Renaissance  Capital Growth &
Income Fund III,  Inc. and  Renaissance  US Growth & Income  Trust PLC,  both of
which are investment  funds and major  stockholders of the Company.  Each of the
two promissory  notes is in the original  principal amount of $50,000 and has an
annual interest rate of 8%. The promissory notes, plus interest,  are due on May
13, 2002.  Interest is payable in monthly  installments on the first day of each
month. As a part of this transaction,  on January 14, 2002, the Company issued a
stock purchase  warrant to each of Renaissance III and Renaissance  PLC. Each of
the two stock purchase  warrants  entitles the Renaissance  entities to purchase
from the Company 250,000 fully paid and  non-assessable  shares of Common Stock,
$0.01 par value, of the Company for $0.20 per share.  These warrants were valued
at $125,000 and are being amortized over the term of these notes.

In exchange for an aggregate of $50,000 cash investment received on February 27,
2002, the Company issued a promissory note to The Rundell Family Partnership. C.
A. Rundell,  Jr., who is Chairman and Chief Executive Officer of the Company, is
also the Managing Partner of The Rundell Family Partnership. The promissory note
is in the original  principal  amount of $50,000 and has an annual interest rate
of 8% that is due on the first day of each  month.  The  promissory  note,  plus
interest,  is due on June  26,  2002 or upon  the  sale of the VT 6802  railroad
barrier  technology,  whichever  occurs  first.  This  note,  plus  all  accrued
interest,  was paid in full on March 21, 2002, the approximate  date of the sale
of the  Company's VT 6802  railroad  barrier  technology.  As a part of the cash
investment, on February 27, 2002, the Company issued a stock purchase warrant to
The Rundell Family Partnership.  The stock purchase warrant entitles The Rundell
Family  Partnership  to  purchase  from  the  Company  250,000  fully  paid  and
non-assessable shares of Common Stock, $0.01 par value, of the Company for $0.20
per  share.  This  warrant  was valued at $40,000  and was  expensed  during the
quarter ending March 31, 2002.



                                       6
<PAGE>


Note 4 - Business Segments

Information for the Company's  reportable segments for the three and nine months
ended March 31, 2002 and 2001 is as follows:

<TABLE>
<CAPTION>

                                          For the Three Months Ended            For the Nine Months Ended
                                                  March 31,                             March 31,
                                       ------------------------------         ------------------------------
                                           2002              2001                 2002              2001
                                       ------------      ------------         ------------      ------------
<S>                                    <C>               <C>                  <C>               <C>
Sales
   B&B Electromatic, Inc.              $  1,155,116      $  1,114,929         $  3,284,094      $  3,473,569
   Intelli-Site, Inc.                        29,935            93,714              104,754           296,926
                                       ------------      ------------         ------------      ------------
                                       $  1,185,051      $  1,208,643         $  3,388,848      $  3,770,495
                                       ============      ============         ============      ============

Income (loss) from operations
   B&B Electromatic, Inc.              $        944      $     28,150         $   (128,392)     $    135,048
   Intelli-Site, Inc.                      (242,491)         (342,932)            (930,778)       (1,479,201)
   Corporate                                (21,594)         (317,842)            (201,592)         (903,372)
                                       ------------      ------------         ------------      ------------
                                       $   (263,141)     $   (632,624)        $ (1,260,762)     $ (2,247,525)
                                       ============      ============         ============      ============
</TABLE>








                                       7
<PAGE>



Item 2.  Management's Discussion and Analysis or Plan of Operation.
-------------------------------------------------------------------

Forward Looking Statements

This  quarterly  report on Form  10-QSB  includes  "forward-looking  statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.  Forward-looking
statements can be identified by the use of  forward-looking  terminology such as
"may," "believe," "expect," "intend," "plan," "seek," "anticipate,"  "estimate,"
or "continue"  or the negative of those words or other  variations or comparable
terminology.

All  statements  other than  statements  of  historical  fact  included  in this
quarterly  report on Form 10-QSB,  including the statements under "Part I.--Item
2.  Management's  Discussion  and  Analysis  or Plan of  Operation"  and located
elsewhere  in this  quarterly  report on Form  10-QSB  regarding  the  financial
position and liquidity of the Company are forward-looking  statements.  Although
the Company  believes  that the  expectations  reflected in the  forward-looking
statements are reasonable,  it can give no assurance that such expectations will
prove  to  have  been  correct.   Important  factors  regarding  forward-looking
statements,  including certain risks and  uncertainties  that could cause actual
results to differ materially from the Company's  expectations,  are disclosed in
this  quarterly  report on Form  10-QSB.  The  Company  does not  undertake  any
obligation to publicly revise its  forward-looking  statements to reflect events
or  circumstances  that arise  after the date of this  quarterly  report on Form
10-QSB.

Important  factors that could cause  actual  results to differ  materially  from
those in the forward-looking  statements in this quarterly report on Form 10-QSB
include changes from anticipated  levels of operations,  customer  acceptance of
existing and new products,  anticipated  development  schedules of new products,
anticipated   levels  of  sales,   future  national  or  regional  economic  and
competitive  conditions,  changes in  relationships  with  customers,  access to
capital,  casualty to or other disruption of the Company's  production  facility
and equipment, delays and disruptions in the shipment of the Company's products,
government  regulations  and the  ability  of the  Company  to meet  its  stated
business  goals.  All  subsequent  written and oral  forward-looking  statements
attributable  to the  Company  or persons  acting on its  behalf  are  expressly
qualified in their entirety by the Company's cautionary statements.


Results of Operations

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

Sales.  The  Company's  total  sales  remained   comparable  at  $1,185,000  and
$1,209,000,  respectively,  during each of the quarters ended March 31, 2002 and
March 31, 2001. For the quarter ended March 31, 2002,  approximately  97% of the
Company's revenues were generated from the sale of products  manufactured by the
Company, compared to 92% for the quarter ended March 31, 2001.

Gross Margin.  Gross margin as a percent of sales remained comparable at 39% and
37% during the quarters ended March 31, 2002 and March 31, 2001.

Selling,  General  and  Administrative.   Selling,  general  and  administrative
expenses decreased by approximately 36% or $0.4 million during the quarter ended
March 31, 2002  compared to the quarter  ended March 31, 2001.  This decrease is
due to the significant cost reductions made company wide.

Research  and Product  Development.  Research and product  development  expenses
remained comparable during the quarters ended March 31, 2002 and March 31, 2001,
at approximately $106,000.

Other  Income.  Other  income of $203,834  consists of the gain  realized on the
Company's  B&B  subsidiary  sale of its VT 6802  railroad  barrier  and  related
technology.



                                       8
<PAGE>

Interest Expense.  Interest expense  increased by approximately  $160,000 during
the quarter  ended March 31, 2002  compared to the quarter ended March 31, 2001.
Approximately  $410,000 in non-cash  interest  charges were  incurred due to the
issuance of warrants in conjunction  with securing  additional  debt required to
meet working capital needs.  This non-cash  expense was offset by a reduction in
debt service of approximately $250,000 in interest charges due to the conversion
of  approximately  $8.4 million of the  Company's  debt to equity  during fiscal
2001.


Nine Months Ended March 31, 2002 Compared to Nine Months Ended March 31, 2001

Sales.  The Company's  total sales  decreased by $0.4  million,  or 10%, to $3.4
million during the nine months ended March 31, 2002 from $3.8 million during the
nine months  ended March 31, 2001.  Sales at the  Company's  Intelli-Site,  Inc.
subsidiary  decreased  from $0.3 million  during the nine months ended March 31,
2001 to $0.1  million  during  the nine  months  ended  March 31,  2002 due to a
reduction in software shipments and related services. In addition,  sales at the
Company's B&B Electromatic,  Inc. subsidiary  decreased from $3.5 million during
the nine  months  ended March 31,  2001 to $3.3  million  during the nine months
ended  March 31,  2002,  primarily  due to a decline  in the  volume of road and
bridge sales. For the nine months ended March 31, 2002, approximately 97% of the
Company's revenues were generated from the sale of products  manufactured by the
Company, compared to 92% for the nine months ended March 31, 2001.

Gross  Margin.  Gross  margin  as a  percent  of sales  remained  comparable  at
approximately 35% and 32% for the nine months ended March 31, 2002 and March 31,
2001, respectively.

Selling,  General  and  Administrative.   Selling,  general  and  administrative
expenses  decreased by approximately  31% or $1.0 million during the nine months
ended March 31, 2002  compared to the nine  months  ended March 31,  2001.  This
decrease is due to the significant cost reductions made company wide.

Other  Income.  Other  income of $203,834  consists of the gain  realized on the
Company's  B&B  subsidiary  sale of its VT 6802  railroad  barrier  and  related
technology.

Research  and Product  Development.  Research and product  development  expenses
decreased by approximately $70,000 or 18% during the nine months ended March 31,
2002  compared  to the  nine  months  ended  March  31,  2001  due to  decreased
expenditures at the Company's Intelli-Site subsidiary.

Interest Expense.  Interest expense  increased by approximately  $180,000 during
the nine months ended March 31, 2002 compared to the nine months ended March 31,
2001.  Approximately  $730,000 in non-cash interest charges were incurred due to
the issuance of warrants in conjunction  with securing  additional debt required
to meet working capital needs.  This non-cash  expense was offset by a reduction
in debt  service  of  approximately  $550,000  in  interest  charges  due to the
conversion of approximately  $8.4 million of the Company's debt to equity during
fiscal 2001.


Liquidity and Capital Resources

The Company's  cash position  increased by $24,514  during the nine months ended
March 31,  2002.  At March 31,  2002,  the  Company had $95,097 in cash and cash
equivalents and had $495,000 outstanding under its accounts receivable factoring
facility.  The factoring  facility,  which is secured by accounts receivable and
inventory,  permits  the  Company  to  borrow  up to $0.8  million,  subject  to
availability under its borrowing base.

For the nine months ended March 31, 2002,  the  Company's  operating  activities
used $1,105,834 of cash compared to $1,710,027 of cash used in operations during
the nine months ended March 31, 2001.


                                       9
<PAGE>

The decrease in cash used in  operations is primarily due to the decrease in net
loss and an increase in expenses paid with stock,  warrants and options,  offset
by a decrease in accounts payable.

The Company used $40,763 for the purchase of property and  equipment  during the
nine months ended March 31, 2002,  compared to $41,270 for the nine months ended
March 31, 2001.

During the nine months ended March 31, 2002, the Company financed its operations
with cash flows from  long-term  borrowings  of $846,045  compared to $1,971,860
during the nine months ended March 31, 2001.

The Company made payments of $112,789 on debt and other  liabilities  during the
nine months ended March 31,  2002,  compared to payments of $117,877 on debt and
other liabilities during the nine months ended March 31, 2001.

The cash  that the  Company  receives  from the  accounts  receivable  factoring
facility is utilized to support Company-wide  operations.  The Company's working
capital  requirements  will depend upon many factors,  including future sales of
the  Company's  products,   the  Company's  operating  results,  the  status  of
competitive  products,  and actual  profits  compared to the Company's  business
plan. The Company is currently experiencing declining liquidity,  which makes it
difficult  for the  Company  to  meet  its  current  cash  requirements  and may
jeopardize  the Company's  ability to continue as a going  concern.  The Company
intends  to  address  its  liquidity  problems  by  controlling  costs,  seeking
additional  funding and maintaining  focus on revenues and  collections.  At the
present  time and in the  foreseeable  future,  the Company  will need to obtain
additional  financing  either through equity placement or additional debt. There
can be no assurance that the Company will be able to secure such financing.

In exchange for an aggregate of $100,000 cash  investment,  on January 14, 2002,
the Company  issued a promissory  note to each of  Renaissance  Capital Growth &
Income Fund III,  Inc. and  Renaissance  US Growth & Income  Trust PLC,  both of
which are investment  funds and major  stockholders of the Company.  Each of the
two promissory  notes is in the original  principal amount of $50,000 and has an
annual interest rate of 8%. The promissory notes, plus interest,  are due on May
13, 2002.  Interest is payable in monthly  installments on the first day of each
month. As a part of this transaction,  on January 14, 2002, the Company issued a
stock purchase  warrant to each of Renaissance III and Renaissance  PLC. Each of
the two stock purchase  warrants  entitles the Renaissance  entities to purchase
from the Company 250,000 fully paid and  non-assessable  shares of Common Stock,
$0.01 par value, of the Company for $0.20 per share.  These warrants were valued
at $125,000 and are being amortized over the term of these notes.

In exchange for an aggregate of $50,000 cash investment received on February 27,
2002, the Company issued a promissory note to The Rundell Family Partnership. C.
A. Rundell,  Jr., who is Chairman and Chief Executive Officer of the Company, is
also the Managing Partner of The Rundell Family Partnership. The promissory note
is in the original  principal  amount of $50,000 and has an annual interest rate
of 8% that is due on the first day of each  month.  The  promissory  note,  plus
interest,  is due on June  26,  2002 or upon  the  sale of the VT 6802  railroad
barrier  technology,  whichever  occurs  first.  This  note,  plus  all  accrued
interest,  was paid in full on March 21, 2002, the approximate  date of the sale
of the  Company's VT 6802  railroad  barrier  technology.  As a part of the cash
investment, on February 27, 2002, the Company issued a stock purchase warrant to
The Rundell Family Partnership.  The stock purchase warrant entitles The Rundell
Family  Partnership  to  purchase  from  the  Company  250,000  fully  paid  and
non-assessable shares of Common Stock, $0.01 par value, of the Company for $0.20
per  share.  This  warrant  was valued at $40,000  and was  expensed  during the
quarter ending March 31, 2002.

If the  Company's  liquidity  does  not  improve,  it may  have to seek a merger
partner,  limit its operations or seek protection  under the federal  bankruptcy
laws. Any of the foregoing  options may be on terms that are  unfavorable to the
Company or disadvantageous to the Company's stockholders.



                                       10
<PAGE>

The Company's backlog is calculated as the aggregate sales prices of firm orders
received  from  customers  less  revenue  recognized.  At April  30,  2002,  the
Company's  backlog was approximately  $1.7 million.  The Company expects that it
will fill the majority of this backlog by March 31, 2003.






                                       11
<PAGE>



                           PART II. OTHER INFORMATION

 Item 1. Legal Proceedings.
 --------------------------

 None.


 Item 2.  Changes in Securities.
 -------------------------------

During  the  first  three  months  of  2002,  the  Company  issued  unregistered
securities in connection with the transactions described below. The issuances of
promissory  notes and  convertible  warrants  were exempt from the  registration
requirements  of the  Securities  Act,  as  amended,  by virtue of Section  4(2)
thereof,  as  transactions  not involving a public  offering and an  appropriate
restrictive legend was affixed to the warrants.

In exchange for an aggregate of $100,000 cash  investment,  on January 14, 2002,
the Company  issued a promissory  note to each of  Renaissance  Capital Growth &
Income Fund III,  Inc. and  Renaissance  US Growth & Income  Trust PLC,  both of
which are investment  funds and major  stockholders of the Company.  Each of the
two promissory  notes is in the original  principal amount of $50,000 and has an
annual  interest rate of 8%. The promissory  notes,  plus  interest,  are due on
April 13, 2002. Interest is payable in monthly  installments on the first day of
each month.  As a part of this  transaction,  on January 14,  2002,  the Company
issued a stock purchase  warrant to each of Renaissance III and Renaissance PLC.
Each of the two stock purchase  warrants  entitles the  Renaissance  entities to
purchase from the Company 250,000 fully paid and non-assessable shares of Common
Stock,  $0.01 par value,  of the Company for $0.20 per share,  at any time until
January 14, 2007. These warrants were valued at $125,000 and are being amortized
over the term of these notes.

In exchange for an aggregate of $50,000 cash investment received on February 27,
2002, the Company issued a promissory note to The Rundell Family Partnership. C.
A. Rundell,  Jr., who is Chairman and Chief Executive Officer of the Company, is
also the Managing Partner of The Rundell Family Partnership. The promissory note
is in the original  principal  amount of $50,000 and has an annual interest rate
of 8% that is due on the first day of each  month.  The  promissory  note,  plus
interest,  is due on June  26,  2002 or upon  the  sale of the VT 6802  railroad
barrier  technology,  whichever  occurs  first.  This  note,  plus  all  accrued
interest,  was paid in full on March 21, 2002, the approximate  date of the sale
of the  Company's VT 6802  railroad  barrier  technology.  As a part of the cash
investment, on February 27, 2002, the Company issued a stock purchase warrant to
The Rundell Family Partnership.  The stock purchase warrant entitles The Rundell
Family  Partnership  to  purchase  from  the  Company  250,000  fully  paid  and
non-assessable shares of Common Stock, $0.01 par value, of the Company for $0.20
per  share.  This  warrant  was valued at $40,000  and was  expensed  during the
quarter ending March 31, 2002.


 Item 3.  Defaults Upon Senior Securities.
 -----------------------------------------

The Company is in default of certain notes issued to Renaissance  Capital Growth
& Income  Fund III,  Inc.  and  Renaissance  US Growth & Income  Trust PLC.  The
Renaissance notes are secured by equity,  assets and future  contracts,  have an
interest  rate of 8% of the  principal  balance  and were due on  various  dates
during the quarter  ending March 31,  2002.  At March 31,  2002,  the  principal
amount of these notes in default was $350,000. Interest due on these outstanding
notes has been  paid in full  with  shares  of  restricted  common  stock of the
Company.  The Company has not received  notice of default and  currently  has no
other source of repayment.


 Item 4.  Submission of Matters to a Vote of Security Holders.
 -------------------------------------------------------------

 None.



                                       12
<PAGE>

 Item 5.  Other Information.
 ---------------------------

 None.


 Item 6.  Exhibits and Reports on Form 8-K.
 ------------------------------------------

 (a)  Exhibits

 (b) Reports filed on Form 8-K.

         The Company  filed a Current  Report on Form 8-K on February 7, 2002 to
         report an additional investment of $50,000 in cash on December 28, 2001
         from each of  Renaissance  Capital  Growth & Income Fund III,  Inc. and
         Renaissance  US Growth & Income  Trust PLC in exchange  for  promissory
         notes and stock  purchase  warrants,  issued to each of Frost  National
         Bank FBO  Renaissance  Capital Growth & Income Fund III, Inc. and Frost
         National Bank FBO Renaissance US Growth & Income Trust PLC.

         The Current  Report on Form 8-K filed on February 7, 2002 also reported
         an  additional  investment of $100,000 in cash on January 14, 2002 from
         each of  Renaissance  Capital  Growth  &  Income  Fund  III,  Inc.  and
         Renaissance  US Growth & Income  Trust PLC in exchange  for  promissory
         notes and stock  purchase  warrants,  issued to each of Frost  National
         Bank FBO  Renaissance  Capital Growth & Income Fund III, Inc. and Frost
         National Bank FBO Renaissance US Growth & Income Trust PLC.

         The Company filed a Current  Report on Form 8-K on February 26, 2002 to
         report the approval by the  Company's  board of directors of a one-year
         extension of the warrants  initially  issued with the  Company's  April
         1993 Initial Public Offering,  which warrants were subsequently swapped
         for the current outstanding warrants.

         The  Company  filed a Current  Report on Form 8-K on March 22,  2002 to
         report  an  investment  of  $50,000  in cash  from The  Rundell  Family
         Partnership,  of which  Mr.  C. A.  Rundell,  Jr.,  Chairman  and Chief
         Executive  Officer  of the  Company,  is  the  managing  partner.  This
         investment  was  made in  exchange  for a  promissory  note  and  stock
         purchase warrant issued to The Rundell Family Partnership.

         The  Company  filed a Current  Report on Form 8-K on March 29,  2002 to
         report the sale by the Company's subsidiary, B&B Electromatic, Inc., of
         its VT 6802 railroad barrier and related technology.




                                       13
<PAGE>



                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                    Integrated Security Systems, Inc.
                                    ---------------------------------
                                              (Registrant)



Date:        May 3, 2002            /s/ C. A. RUNDELL, JR.
                                    ----------------------
                                    C. A. Rundell, Jr.
                                    Director, Chairman of the Board, and Chief
                                    Executive Officer (Principal Executive and
                                    Financial Officer)


Date:        May 3, 2002            /s/ RICHARD B. POWELL
                                    ---------------------
                                    Richard B. Powell
                                    Vice President, Chief Accounting Officer
                                    (Principal Accounting Officer)




                                       14
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