COSTA MESA--- Initial Step of Irvine Sensors Debt Workout Completed

Irvine Sensors Corporation (NASDAQ:IRSN) announced today that the public UCC sale of the assets of the Company's wholly owned subsidiary, Optex Systems, Inc. ("Optex") has been completed. As agreed to in a binding Memorandum of Understanding ("MOU"), an entity controlled by Irvine Sensors' senior lenders credit bid $15 million in this public sale, and their offer was the winning bid. Effectuation of this bid will result in the senior lenders' entity acquiring title to the Optex assets and in $15 million of debt owed by Irvine Sensors being extinguished. Following the consummation of the transaction, Irvine Sensors' obligations for principal and deferred interest owed to the senior lenders are expected to be less than $4 million. Pursuant to the binding MOU, the senior lenders have agreed to exchange these residual obligations for a new class of non-voting convertible preferred stock of Irvine Sensors upon the Company's closing of anticipated debt or equity financings.

Irvine Sensors Corporation (http://www.irvine-sensors.com/), headquartered in Costa Mesa, California, is a vision systems company engaged in the development and sale of miniaturized infrared and electro-optical cameras, image processors and stacked chip assemblies and research and development related to high density electronics, miniaturized sensors, optical interconnection technology, high speed network security, image processing and low-power analog and mixed-signal integrated circuits for diverse systems applications.