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

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

                                  Form 10-QSB/A

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

 |X|     QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED December 31, 2001.

 |_|     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 January 31, 2002,  11,143,071 shares of the Registrant's common stock were
outstanding.

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


<PAGE>


                        INTEGRATED SECURITY SYSTEMS, INC.
                                      INDEX

                                                                       Page
PART I.  FINANCIAL INFORMATION                                         ----

Item 1.  Financial Statements

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

         Consolidated Statements of Operations (unaudited)
         for the three and six months ended December 31, 2001
         (restated) and 2000                                             4

         Consolidated Statements of Cash Flows (unaudited) for
         the six months ended December 31,  2001 and 2000                5

         Notes to Financial Statements                                   6

Item 2.  Management's Discussion and Analysis or Plan of Operation       9


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                                              12

Item 6.  Exhibits and Reports on Form 8-K                               12

SIGNATURES                                                              14




                                       2
<PAGE>



                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements.
<TABLE>
<CAPTION>

                        INTEGRATED SECURITY SYSTEMS, INC.
                           Consolidated Balance Sheets

                                                               December 31,       June 30,
                                                                   2001             2001
                                                               ------------     ------------
                                                               (Unaudited)
                                     ASSETS
<S>                                                            <C>              <C>
Current assets:
   Cash and cash equivalents                                   $     47,760     $     70,582
   Accounts receivable, net of allowance for doubtful
     accounts of $93,786 and $94,270, respectively                1,010,395        1,312,464
   Inventories                                                      709,283          632,989
   Other current assets                                              76,228          113,844
                                                               ------------     ------------
     Total current assets                                         1,843,666        2,129,879

Property and equipment, net                                         617,347          655,240
Other assets                                                         14,261           14,410
                                                               ------------     ------------
     Total assets                                              $  2,475,274     $  2,799,529
                                                               ============     ============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
   Accounts payable                                            $    951,658     $    926,076
   Accrued liabilities                                              336,322          425,391
   Current portion of long-term debt                              1,099,229          494,959
                                                               ------------     ------------
     Total current liabilities                                    2,387,209        1,846,426
                                                               ------------     ------------

Long-term debt                                                      583,292          620,306

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

Stockholders' deficit:
   Preferred stock, $.01 par value, 750,000 shares
     authorized; 102,250 shares issued and outstanding
     (liquidation value of $3,529,875)                                1,613            1,608
   Common stock, $.01 par value, 35,000,000 shares
     authorized; 11,061,686 and 10,782,417 shares,
     respectively, issued                                           110,617          107,824
   Additional paid in capital                                    16,605,618       16,123,610
   Accumulated deficit                                          (24,589,377)     (23,126,547)
   Treasury stock, at cost - 50,000 shares                         (118,750)        (118,750)
                                                               ------------     ------------
     Total stockholders' deficit                                 (7,990,279)      (7,012,255)
                                                               ------------     ------------
       Total liabilities and stockholders' deficit             $  2,475,274     $  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 Six Months Ended
                                              December 31,                         December 31,
                                      -----------------------------       -----------------------------
                                          2001             2000               2001             2000
                                      ------------     ------------       ------------     ------------
                                       (Restated)                          (Restated)
<S>                                   <C>              <C>                <C>              <C>
Sales                                 $  1,216,864     $  1,338,346       $  2,203,798     $  2,561,853
Cost of sales                              751,969          868,662          1,484,922        1,789,770
                                      ------------     ------------       ------------     ------------
Gross margin                               464,895          469,684            718,876          772,083
                                      ------------     ------------       ------------     ------------
Operating expenses:
   Selling, general and
   administrative                          679,581        1,014,513          1,499,442        2,097,898
   Research and product
   development                             106,250          143,605            217,055          289,080
                                      ------------     ------------       ------------     ------------
                                           785,831        1,158,118          1,716,497        2,386,978
                                      ------------     ------------       ------------     ------------

Loss from operations                      (320,936)        (688,434)          (997,621)      (1,614,895)

Other income (expense):
   Interest income                            --               --                 --                139
   Interest expense                       (350,727)        (191,024)          (381,883)        (363,316)
                                      ------------     ------------       ------------     ------------

Net loss                                  (671,663)        (879,548)        (1,379,504)      (1,978,072)

Preferred dividends                       (154,950)         (42,081)          (310,425)         (84,161)
                                      ------------     ------------       ------------     ------------

Net loss allocable to common
   stockholders                       $   (826,613)    $   (921,539)      $ (1,689,929)    $ (2,062,233)
                                      ============     ============       ============     ============
Weighted average common
   shares outstanding - basic
   and diluted                          10,997,184       10,643,450         10,917,973       10,580,897
                                      ============     ============       ============     ============
Net loss per share - basic and
   diluted                            $      (0.08)    $      (0.09)      $      (0.16)    $      (0.19)
                                      ============     ============       ============     ============
</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 Six Months Ended
                                                                    December 31,
                                                             ---------------------------
                                                                2001            2000
                                                             -----------     -----------
<S>                                                          <C>             <C>
Cash flows from operating activities:
   Net loss                                                  $(1,379,504)    $(1,978,072)
   Adjustments to reconcile net loss to net cash
     used by operating activities:
     Depreciation                                                 67,360          85,643
     Amortization                                                   --           113,713
     Provision for bad debt                                        8,500          12,000
     Provision for warranty reserve                               16,500          34,500
     Provision for inventory reserve                               8,000           9,000
     Unbilled revenue                                               --           186,206
     Expenses paid with stock, warrants and options              371,604          22,901
     Changes in operating assets and liabilities:
       Accounts receivable                                       293,569         (60,579)
       Inventories                                               (84,294)        (20,145)
       Other assets                                               37,765             823
       Accounts payable                                           25,583         318,388
       Accrued liabilities                                      (105,564)         74,141
                                                             -----------     -----------
           Net cash used in operating activities                (740,481)     (1,201,481)
                                                             -----------     -----------

Cash flows from investing activities:
   Purchase of property and equipment                            (29,498)        (16,637)
                                                             -----------     -----------
           Net cash used in investing activities                 (29,468)        (16,637)
                                                             -----------     -----------

Cash flows from financing activities:
   Issuance of common stock                                         --             2,183
   Issuance of preferred stock                                   200,000            --
   Dividends on preferred stock                                  (20,125)        (84,161)
   Payments on debt and other liabilities                        (51,242)        (83,222)
   Proceeds from notes payable and long-term debt                618,494       1,434,404
                                                             -----------     -----------
           Net cash provided by financing activities             747,127       1,269,204
                                                             -----------     -----------

Increase/(Decrease) in cash and cash equivalents                 (22,822)         51,086
Cash and cash equivalents at beginning of period                  70,582          99,636
                                                             -----------     -----------
Cash and cash equivalents at end of period                   $    47,760     $   150,722
                                                             ===========     ===========
</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)
                   Six Months Ended December 31, 2001 and 2000


Note 1 - Restatement

The  consolidated  statements of  operations  for the three and six months ended
December  31,  2001  have been  restated  to  correct  the  amount of  preferred
dividends.  The effect of the restatement is to increase the preferred dividends
and net loss allocable to common stockholders for the three and six months ended
December 31, 2001 by $113,550 and $227,100, respectively. Net loss per share was
increased  from $0.06 to $0.08 for the three months ended December 31, 2001, and
from $0.13 to $0.16 for the six months ended December 31, 2001.


Note 2 - 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  2001Annual Report on Form 10-KSB filed on October 15, 2001
with the Securities and Exchange Commission.


Note 3 - Reclassification

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


Note 4 -Financing

In exchange for an aggregate  of $50,000 cash  investment,  on October 12, 2001,
the  Company  issued  a  promissory  note to each of  Frost  National  Bank  FBO
Renaissance  Capital  Growth and Income Fund III, Inc.  ("Renaissance  III") and
Frost National Bank FBO  Renaissance US Growth & Income Trust PLC  ("Renaissance
PLC").  Each of the two promissory notes is in the original  principal amount of
$25,000  and has an annual  interest  rate of 8%.  The  promissory  notes,  plus
interest,  are  due  on  February  9,  2002.  Interest  is  payable  in  monthly
installments on the first day of each month. As a part of this  transaction,  on
October  12,  2001,  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  125,000 fully
paid and non-assessable  shares of Common Stock, $0.01 par value, of the Company
for $0.20 per share.

In exchange for an aggregate of $50,000 cash investment  received on October 29,
2001,  the  Company  issued a  promissory  note to each of  Renaissance  III and
Renaissance PLC on October 26, 2001. Each of the two promissory  notes is in the
original  principal amount of $25,000 and has an annual interest rate of 8%. The
promissory  notes,  plus  interest,  are due on February 23,  2002.  Interest is
payable in monthly  installments  on the first day of each  month.  As a part of
this  transaction,  on October 26,  2001,  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
125,000 fully paid and  non-assessable  shares of Common Stock, $0.01 par value,
of the Company for $0.20 per share.



                                       6
<PAGE>


In exchange for an aggregate  of $50,000 cash  investment,  on November 9, 2001,
the Company issued a promissory  note to each of Renaissance III and Renaissance
PLC. Each of the two  promissory  notes is in the original  principal  amount of
$25,000  and has an annual  interest  rate of 8%.  The  promissory  notes,  plus
interest,  are due on March 9, 2002. Interest is payable in monthly installments
on the first day of each month.  As a part of this  transaction,  on November 9,
2001, 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  125,000  fully  paid and
non-assessable shares of Common Stock, $0.01 par value, of the Company for $0.20
per share.

In exchange for an aggregate of $50,000 cash investment  received on November 8,
2001, the Company issued a promissory note to C. A. Rundell,  Jr., the Company's
Chairman and Chief Executive  Officer,  on November 9, 2001. The promissory note
is in the original  principal  amount of $50,000 and has an annual interest rate
of 8%. The promissory note, plus interest,  is due on March 9, 2002. Interest is
payable in monthly  installments  on the first day of each  month.  As a part of
this  transaction,  on November 9, 2001,  the  Company  issued a stock  purchase
warrant to Mr. Rundell.  The stock purchase  warrant entitles the Mr. Rundell to
purchase from the Company 125,000 fully paid and non-assessable shares of Common
Stock, $0.01 par value, of the Company for $0.20 per share.

In exchange for an aggregate of $50,000 cash  investment,  on November 16, 2001,
the Company issued a promissory  note to each of Renaissance III and Renaissance
PLC. Each of the two  promissory  notes is in the original  principal  amount of
$25,000  and has an annual  interest  rate of 8%.  The  promissory  notes,  plus
interest, are due on March 16, 2002. Interest is payable in monthly installments
on the first day of each month. As a part of this  transaction,  on November 16,
2001, 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  125,000  fully  paid and
non-assessable shares of Common Stock, $0.01 par value, of the Company for $0.20
per share.

In exchange for an aggregate of $50,000 cash investment received on November 14,
2001, the Company issued a promissory note to C. A. Rundell,  Jr.,  Chairman and
Chief  Executive  Officer,  on November 16, 2001. The promissory  note is in the
original  principal amount of $50,000 and has an annual interest rate of 8%. The
promissory note, plus interest, is due on March 16, 2002. Interest is payable in
monthly  installments  on the  first  day of  each  month..  As a part  of  this
transaction,  on November 16, 2001, the Company issued a stock purchase  warrant
to Mr.  Rundell.  The stock purchase  warrants  entitles Mr. Rundell 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.

In exchange for an aggregate of $50,000 cash  investment,  on December 28, 2001,
the Company issued a promissory  note to each of Renaissance III and Renaissance
PLC. Each of the two  promissory  notes is in the original  principal  amount of
$25,000  and has an annual  interest  rate of 8%.  The  promissory  notes,  plus
interest, are due on April 26, 2002. Interest is payable in monthly installments
on the first day of each month. As a part of this  transaction,  on December 28,
2001, 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  125,000  fully  paid and
non-assessable shares of Common Stock, $0.01 par value, of the Company for $0.20
per share.

The  aforementioned  warrants were valued at $617,500  which is being  amortized
over the term of the notes.


Note 5 - Subsequent Event - 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 III and Renaissance
PLC. 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.



                                       7
<PAGE>


Note 6 - Business Segments

Information for the Company's  reportable  segments for the three and six months
ended December 31, 2001 and 2000 is as follows:

<TABLE>
<CAPTION>
                                    For the Three Months Ended           For the Six Months Ended
                                           December 31,                        December 31,
                                   ----------------------------        ----------------------------
                                      2001             2000               2001             2000
                                   -----------      -----------        -----------      -----------
<S>                                <C>              <C>                <C>              <C>
Sales
   B&B Electromatic, Inc.          $ 1,163,461      $ 1,260,636        $ 2,128,979      $ 2,358,640
   Intelli-Site, Inc.                   53,403           77,710             74,819          203,213
                                   -----------      -----------        -----------      -----------
                                   $ 1,216,864      $ 1,338,346        $ 2,203,798      $ 2,561,853
                                   ===========      ===========        ===========      ===========

Income (loss) from operations
   B&B Electromatic, Inc.          $    48,650      $   147,511        $  (129,336)     $   106,901
   Intelli-Site, Inc.                 (285,584)        (542,731)          (688,287)      (1,136,267)
   Corporate                           (84,002)        (293,214)          (179,998)        (585,529)
                                   -----------      -----------        -----------      -----------
                                   $  (320,936)     $  (688,434)       $  (997,621)     $(1,614,895)
                                   ===========      ===========        ===========      ===========
</TABLE>

Note 7 - Preferred Stock Dividend Arrearage

At December  31,  2001,  the Company had  dividends  in arrears in the amount of
$353,028 related to its outstanding  Series A, D, F and G preferred stock, which
consists of the following:

                         -------------------------------
                           Shares             Dividends
                         Outstanding         In Arrears
                         -----------         -----------
Series A $20                   9,500         $      --
Series D $20                  91,250              61,749
Series F $25                  60,595              48,974
                         -----------         -----------
                             161,345         $   110,723
                         ===========         ===========
Convertible Preferred Stock Subject to Redemption
Series G $25                 299,802         $   242,305
                         ===========         ===========
Total Dividends in Arrears                   $   353,028
                                             ===========





                                       8
<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 December 31, 2001 Compared to Three Months Ended December 31,
2000

Sales.  The  Company's  total sales  decreased by $0.1  million,  or 9%, to $1.2
million  during the quarter ended December 31, 2001 from $1.3 million during the
quarter ended December 31, 2000.  This decrease is primarily due to a decline in
the volume of road and bridge  sales at the  Company's  B&B  Electromatic,  Inc.
subsidiary

For the quarter  ended  December 31, 2001,  approximately  96% of the  Company's
revenues were generated from the sale of products  manufactured  by the Company,
compared to 94% for the quarter ended December 31, 2000.

Gross Margin.  Gross margin as a percentage  of sales  increased  slightly,  but
remained comparable at 38% and 35% for the quarters ending December 31, 2001 and
December 31, 2000, respectively.

Selling,  General  and  Administrative.   Selling,  general  and  administrative
expenses  decreased by  approximately  $335,000 or 33% during the quarter  ended
December 31, 2001 compared to the quarter ended December 31, 2000 due to overall
Company reduction in staffing and operating expenses.



                                       9
<PAGE>


Research  and Product  Development.  Research and product  development  expenses
decreased by approximately  $35,000 or 26% during the quarter ended December 31,
2001  compared  to the quarter  ended  December  31,  2000 due to the  decreased
expenditures at the Company's Intelli-Site, Inc. subsidiary.

Interest Expense.  Interest expense  increased by approximately  $160,000 during
the quarter ended  December 31, 2001 compared to the quarter ended  December 31,
2000.  Approximately  $300,000 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  $140,000  in  interest  charges  due to the
conversion of approximately  $8.4 million of the Company's debt to equity during
fiscal 2001.

Six Months  Ended  December 31, 2001  Compared to Six months Ended  December 31,
2000

Sales.  The Company's  total sales  decreased by $0.4  million,  or 14%, to $2.2
million  during the six months ended  December 31, 2001 from $2.6 million during
the six months ended  December 31, 2000.  Sales at the  Company's  Intelli-Site,
Inc. subsidiary decreased from $0.2 million during the six months ended December
31,  2000 to $0.1  million  during  the six  months  ended  December  31,  2001,
primarily  due to a decrease in project  revenue  consistent  with the Company's
previously  announced  business  refocus on software  development.  In addition,
sales at the Company's B&B  Electromatic,  Inc.  subsidiary  decreased from $2.3
million during the six months ended December 31, 2000 to $2.1 million during the
six months ended  December 31, 2001,  due to a decline in the volume of road and
bridge sales.

Gross  Margin.  Gross  margin  as a percent  of sales  increased  slightly,  but
remained  comparable  at 33% and 30% for the six months ended  December 31, 2001
and December 31, 2000, respectively.

Selling,  General  and  Administrative.   Selling,  general  and  administrative
expenses decreased by approximately  $600,000 or 29% during the six months ended
December  31, 2001  compared to the six months  ended  December  31, 2000 due to
overall Company reduction in staffing and operating expenses.

Research  and Product  Development.  Research and product  development  expenses
decreased by  approximately  $70,000 or 25% during the six months ended December
31, 2001 compared to the six months ended December 31, 2000 due to the decreased
expenditures at the Company's Intelli-Site, Inc. subsidiary.

Interest  Expense.  Interest expense remained  comparable  during the six months
ended December 31, 2001 and December 31, 2000. However,  approximately  $300,000
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   $280,000  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  decreased by $22,822  during the six months ended
December  31, 2001.  At December  31, 2001,  the Company had $47,760 in cash and
cash  equivalents  and had $468,000  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 six months ended December 31, 2001, the Company's  operating  activities
used $740,481 of cash  compared to $1,201,481 of cash used in operations  during
the six months ended  December 31, 2000. The decrease in cash used in operations
is primarily due to an increase in non-cash interest expense.



                                       10
<PAGE>


The Company used $29,468 for the purchase of property and  equipment  during the
six months ended December 31, 2001, compared to $16,637 for the six months ended
December 31, 2000.

During  the six months  ended  December  31,  2001,  the  Company  financed  its
operations  with cash flows from  long-term  borrowings of $618,494  compared to
$1,434,404 during the six months ended December 31, 2000.

The Company made  payments of $51,242 on debt and other  liabilities  during the
six months ended December 31, 2001,  compared to payments of $83,222 on debt and
other liabilities during the six months ended December 31, 2000.

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.

During the six months ended  December 31, 2001, and since December 31, 2001, the
Company  received cash  investments  from each of  Renaissance  Capital Growth &
Income  Fund III,  Inc.,  Renaissance  US Growth & Income  Trust PLC,  and C. A.
Rundell,  Jr.  Please  see Note 3  (Financing)  and Note 4  (Subsequent  Event -
Financing)  to the  financial  statements  above  for  details  regarding  these
transactions.  Each of the Renaissance entities are significant  stockholders of
the Company and Mr.  Rundell is  Chairman  of the Board of  Directors  and Chief
Executive Officer of the Company. If the Company is not able to secure financing
from other  sources,  it will  continue  to be  dependent  upon  receiving  cash
investments  from the  Renaissance  entities  and Mr.  Rundell.  There can be no
assurance  that the Company  will be able to receive cash  investments  from the
Renaissance entities and Mr. Rundell in the future.

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.

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



                                       11
<PAGE>



                           PART II. OTHER INFORMATION


 Item 1.  Legal Proceedings.

 None.


 Item 2.  Changes in Securities.

 None.


 Item 3.  Defaults Upon Senior Securities.

 None.


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

 None.


 Item 5.  Other Information.

 None.


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

 (a)  Exhibits

          None.

 (b)  Reports filed on Form 8-K.

          The Company filed a Current  Report on Form 8-K on October 15, 2001 to
          report  an  additional  investment  of  $75,000  in cash  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 in  addition to a
          Registration  Rights Agreement,  a Borrower  Security  Agreement and a
          Stock Pledge  Agreement to  Renaissance  Capital  Growth & Income Fund
          III, Inc. and Renaissance US Growth & Income Trust PLC.

          The Company filed a Current  Report on Form 8-K on November 9, 2001 to
          report  an  additional  investment  of  $50,000  in cash  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 November 13, 2001 to
          report  an  additional  investment  of  $25,000  in cash  from each of
          Renaissance  Capital Growth & Income Fund III, Inc. and Renaissance US
          Growth & Income Trust PLC and $50,000 in cash from C. A. Rundell, Jr.,
          Chairman an Chief Executive Officer,  in exchange for promissory notes
          and stock purchase warrants, issued to each of Frost National Bank FBO
          Renaissance  Capital  Growth & Income Fund III,  Inc.,  Frost National
          Bank FBO  Renaissance  US Growth & Income Trust PLC and C. A. Rundell,
          Jr.


                                       12
<PAGE>


          The Company filed a Current Report on Form 8-K on November 30, 2001 to
          report  an  additional  investment  of  $25,000  in cash  from each of
          Renaissance  Capital Growth & Income Fund III, Inc. and Renaissance US
          Growth & Income Trust PLC and $50,000 in cash from C. A. Rundell, Jr.,
          Chairman an Chief Executive Officer,  in exchange for promissory notes
          and stock purchase warrants, issued to each of Frost National Bank FBO
          Renaissance  Capital  Growth & Income Fund III,  Inc.,  Frost National
          Bank FBO  Renaissance  US Growth & Income Trust PLC and C. A. Rundell,
          Jr.

          The Company filed a Current  Report on Form 8-K on February 7, 2002 to
          report  an  additional  investment  of  $50,000  in cash  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.






                                       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:   February 13, 2003              /s/ C. A. RUNDELL, JR.
                                       ----------------------
                                       C. A. Rundell, Jr.
                                       Director, Chairman of the Board, and
                                       Chief Executive Officer (Principal
                                       Executive and Financial Officer)


Date:   February 13, 2003              /s/ RICHARD B. POWELL
                                       ---------------------
                                       Richard B. Powell
                                       Vice President, Chief Accounting Officer,
                                       Secretary (Principal Accounting Officer)





                                       14
<PAGE>



                                  CERTIFICATION

I, C. A. Rundell, Jr., certify that:

1. I have reviewed this quarterly  report on Form 10-QSB of Integrated  Security
Systems, Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. I am responsible for  establishing  and maintaining  disclosure  controls and
procedures  (as  defined  in  Exchange  Act Rules  13a-14  and  15d-14)  for the
registrant and have:

         (a)    designed such disclosure  controls and procedures to ensure that
                material information  relating to the registrant,  including its
                consolidated subsidiaries,  is made known to me by others within
                those  entities,  particularly  during  the period in which this
                quarterly report is being prepared;

         (b)    evaluated  the  effectiveness  of  the  registrant's  disclosure
                controls and procedures as of a date within 90 days prior to the
                filing date of this quarterly  report (the  "Evaluation  Date");
                and

         (c)    presented  in this  quarterly  report my  conclusions  about the
                effectiveness of the disclosure controls and procedures based on
                my evaluation as of the Evaluation Date;

5. I have disclosed,  based on my most recent  evaluation,  to the  registrant's
auditors and the audit  committee  of the  registrant's  board of directors  (or
persons performing the equivalent functions):

         (a)    all  significant  deficiencies  in the  design or  operation  of
                internal  controls which could adversely affect the registrant's
                ability to record, process,  summarize and report financial data
                and have identified for the  registrant's  auditors any material
                weaknesses in internal controls; and

         (b)    any fraud, whether or not material,  that involves management or
                other employees who have a significant  role in the registrant's
                internal controls; and

6. I have  indicated  in  this  quarterly  report  whether  or  not  there  were
significant  changes  in  internal  controls  or in  other  factors  that  could
significantly  affect internal controls subsequent to the date of my most recent
evaluation,   including  any  corrective  actions  with  regard  to  significant
deficiencies and material weaknesses.

 Date:  February 13, 2003

 /s/ C. A. RUNDELL, JR.
 ----------------------------
 C. A. Rundell, Jr.,
 Chief Executive Officer and
 Principal Executive and
 Financial Officer



                                       15
<PAGE>