Image Sensing Systems Interim Leader Named CEO

The company said that Kris Tufto, who has served as interim president and CEO since August, will assume those positions on a permanent basis; meanwhile, third-quarter financial results suggest that the struggling company may be turning itself around.

St. Paul-based Image Sensing Systems, Inc.—which ousted former CEO Kenneth Aubrey in August—on Wednesday announced the appointment of a new chief executive and released financial results that suggest that things may be looking up for the struggling software company.
 
Kris Tufto, who became interim president and CEO immediately after Aubrey’s departure, will assume those positions on a permanent basis, effective immediately. Tufto has been on the St. Paul-based company’s board since September 2011 and he’ll also continue in that role.
 
Image Sensing Systems makes detection software that’s used in traffic management and for security and surveillance purposes.
 
Tufto has worked with a number of technology companies. From 2010 to 2012, he was chief revenue officer at Minneapolis-based Code42 Software, Inc., a software solutions and data protection company. Before that, he served as CEO of Marketing Bridge, a locally based global channel marketing company. His experience also includes a stint as a consultant at W3i, which provides application and mobile marketing solutions and operates a Minneapolis office.
 
“Kris’ depth of experience in software, technology, and product marketing positions him as the clear choice to lead this company and best capitalize on future growth opportunities,” Image Sensing Systems Chairman Jim Bracke said in a statement. “The board is confident that Kris can return the company to historical profitability levels and, in the long term, maximize shareholder value.”
 
Tufto’s new appointment comes during a challenging period for the company. It reported a net loss of approximately $10 million—or $2.07 per share—in 2011, compared to a profit of $3 million—or 66 cents per share—in 2010. Revenue last year totaled $30.5 million—down 3.7 percent from the prior year.
 
But third-quarter financial results that the company released Wednesday show signs of a turnaround. For the quarter that ended on September 30, Image Sensing Systems reported net income totaling $989,000—or 20 cents per share—and revenue totaling $7.2 million.
 
“Certain of our assets continued to underperform their potential, but we saw improved results in numerous areas,” Tufto said in a Wednesday statement. “In combination with reduced operating expenses, and despite a 5 cent-per-share charge to separate from our prior CEO, we had our most profitable quarter since 2010, and this is encouraging for sustaining profitable growth. Further, we again increased our cash and investments balances at quarter-end to $10.6 million, up from $9.7 million at June 30 and $7.3 million at the start of the year.”
 
Tufto added that the company is reexamining its business model and warned that “our business faces continued uncertainty.”
 
In mid-August, Image Sensing Systems announced that it had terminated the employment of Aubrey, its president and CEO since 2007—a move that prompted then-Director Michael Doyle to resign from the company’s board. In a statement, Bracke said at the time that “Image Sensing Systems’ assets are strong and yet the company is underperforming against the opportunity.” He added that “the board has determined that the time is right for a leadership change and fresh perspective. . .”
 
According to a Wednesday filing with the U.S. Securities and Exchange Commission, Tufto will receive an annual base salary of $260,000—and on April 2013, he will be eligible for a bonus of up to $50,000 based on criteria established by the company’s board. On Tuesday, Image Sensing Systems granted Tufto a 10-year incentive stock option to purchase 50,000 shares of common stock at an exercise price of $4.77 per share—equal to the stock closing price on Friday.
 
Image Sensing Systems is among Minnesota’s 85-largest public companies based on annual revenue.