U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                                   (Mark One)

     |X| Quarterly report pursuant to Sections 13 or 15(d) of the Securities
                              Exchange Act of 1934

                For the quarterly period ended September 30, 2003

    |_| Transition report pursuant to Sections 13 or 15(d) of the Securities
                              Exchange Act of 1934

        For the transition period from _______________ to _______________

                         COMMISSION FILE NUMBER: 0-24431

                            INKSURE TECHNOLOGIES INC.
        (Exact Name of Small Business Issuer as Specified in Its Charter)

                    DELAWARE                         84-1417774
                    --------                         ----------
         (State or Other Jurisdiction of            (I.R.S. Employer
          Incorporation or Organization)            Identification No.)

                   32 BROADWAY, SUITE 1314, NEW YORK, NY 10004
          (Address of Principal Executive Offices, Including Zip Code)


                                 (212) 269-0370
                (Issuer's Telephone Number, Including Area Code)

                  ____________________________________________
              (Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report)

The number of shares outstanding of our Common Stock, $0.01 par value per share,
as of November 10, 2003, was 11,982,166 shares.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):

Yes |_| No |X|

<PAGE>


                                            INKSURE TECHNOLOGIES INC.


                                               INDEX TO FORM 10-QSB
<TABLE>
<CAPTION>



                                                                                                                PAGE
<S>           <C>                                                                                                  <C>
PART I.       FINANCIAL INFORMATION................................................................................3

Item 1.       Financial Statements.................................................................................3

              Consolidated Balance Sheets as of September 30, 2003 (unaudited)
              and as of December 31, 2002 (audited)................................................................3

              Statements of Operations (unaudited) for the
              Nine and Three Months Ended September 30, 2003 and 2002..............................................5

              Consolidated Statements of Stockholders' Equity as of
              September 30, 2003 (unaudited after December 31, 2002)...............................................6

              Consolidated Statements of Cash Flows (unaudited) for the
              Nine and Three Months Ended September 30, 2003 and 2002..............................................7

              Notes to Consolidated Financial Statements...........................................................9

Item 2.       Management's Discussion and Analysis or Plan of Operation............................................11

Item 3.       Controls and Procedures..............................................................................14

Item 4.       Submission of Matters to a Vote of Security Holders..................................................15

PART II.      OTHER INFORMATION....................................................................................15

Item 6.       Exhibits and Reports on Form 8-K ....................................................................16

SIGNATURES         ................................................................................................17
</TABLE>


                                       2
<PAGE>



Part I.  Financial Information
--------------------------------------------------------------------------------

ITEM 1.           FINANCIAL STATEMENTS

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

CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS

<TABLE>
<CAPTION>

                                                        SEPTEMBER 30,          DECEMBER 31,
                                                             2003                  2002
                                                      -------------------   -------------------
                                                          UNAUDITED
                                                      -------------------
<S>                                                          <C>                      <C>
     ASSETS

 CURRENT ASSETS:
   Cash and cash equivalents                           $       942           $          213
   Short-term deposits                                       1,246                    4,063
   Trade receivables                                             -                      730
   Other accounts receivable and prepaid expenses              300                      226
   Inventories                                                  81                       88
                                                       -----------           --------------
 TOTAL current assets                                        2,569                    5,320
                                                       -----------           --------------

 SEVERANCE PAY FUND                                            115                       71
                                                       -----------           --------------
 PROPERTY AND EQUIPMENT, NET                                   325                      356
                                                       -----------           --------------
 OTHER ASSETS, NET                                             364                      418
                                                       -----------           --------------
 TOTAL assets                                          $     3,373           $        6,165
                                                       ===========           ==============


</TABLE>



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


                                       3
<PAGE>



CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS (EXCEPT SHARES DATA)

<TABLE>
<CAPTION>

                                                                                    SEPTEMBER 30,          DECEMBER 31,
                                                                                         2003                  2002
                                                                                  -------------------   -------------------
                                                                                      UNAUDITED
                                                                                  -------------------
     LIABILITIES AND STOCKHOLDERS' EQUITY
<S>                                                                                          <C>                   <C>
 CURRENT LIABILITIES:
   Trade payables                                                                   $        177          $        470
   Employees and payroll accruals                                                            194                   110
   Accrued expenses and other liabilities                                                    133                   280
                                                                                    ------------          ------------

 TOTAL current liabilities                                                                   504                   860
                                                                                    ------------          ------------

  ACCRUED SEVERANCE PAY                                                                      120                    75
                                                                                    ------------          ------------


 STOCKHOLDERS' EQUITY:
   Stock capital:
     Preferred stock of $ 0.01 par value:
       Authorized: 10,000,000 shares at September 30, 2003 and December 31,
       2002; Issued and outstanding: 0 shares at September 30, 2003 and
       December 31, 2002
     Common stock of $ 0.01 par value:
       Authorized:  35,000,000  shares at September 30, 2003 and  December 31,
       2002;  Issued and outstanding:  11,982,166 shares at September 30, 2003
       and December 31, 2002                                                                 119                   119
   Additional paid-in capital                                                              9,741                 9,741
   Accumulated other comprehensive income                                                    118                   118
   Accumulated deficit                                                                    (7,229)               (4,748)
                                                                                    ------------          ------------

 TOTAL stockholders' equity                                                                2,749                 5,230
                                                                                    ------------          ------------

 TOTAL liabilities and stockholders' equity                                         $      3,373          $      6,165
                                                                                    ============          ============



</TABLE>





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


                                       4
<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS (EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>

                                                                NINE MONTHS ENDED                  THREE MONTHS ENDED
                                                                  SEPTEMBER 30,                       SEPTEMBER 30,
                                                         --------------------------------    --------------------------------
                                                             2003              2002              2003              2002
                                                         --------------    --------------    --------------    --------------
                                                                                      UNAUDITED
                                                         --------------------------------------------------------------------
<S>                                                             <C>               <C>                 <C>               <C>

 Revenues                                                $         44      $      2,687      $         44      $        803
 Cost of revenues                                                  40               392                40               121
                                                         --------------    --------------    --------------    --------------

 Gross profit                                                       4             2,295                 4               682
                                                         --------------    --------------    --------------    --------------

 Operating expenses:
 Research and development                                         903               565               295               199
 Selling and marketing, net                                     1,078             1,321               325               533
 General and administrative                                       545               277               161                88
                                                         --------------    --------------    --------------    --------------

 TOTAL operating expenses                                       2,526             2,163               781               820
                                                         --------------    --------------    --------------    --------------

 Operating income (loss)                                       (2,522)              132              (777)             (138)
 Financial income, net                                             41                 4                 4                16
                                                         --------------    --------------    --------------    --------------

 Net income (loss)                                             (2,481)              136              (773)             (122)
 Redeemable Series A Preferred Stock deemed
   dividend                                                         -              (200)                -                 -
                                                         --------------    --------------    --------------    --------------

 Net loss available to Common stockholders               $     (2,481)     $        (64)     $       (773)     $       (122)
                                                         ==============    ==============    ==============    ==============

 Weighted average number of shares of Common Stock
   used in computing basic and diluted net loss per
   share                                                   11,982,166         6,743,836        11,982,166         9,336,880
                                                         ==============    ==============    ==============    ==============

 Basic and diluted net loss per share                    $      (0.21)     $      (0.01)     $      (0.06)     $      (0.01)
                                                         ==============    ==============    ==============    ==============

</TABLE>

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


                                       5
<PAGE>


STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS

<TABLE>
<CAPTION>


                                                                                             ACCUMULATED
                                                         RECEIPTS    ADDITIONAL   DEFERRED      OTHER                    TOTAL
                                              STOCK     ON ACCOUNT    PAID-IN      STOCK    COMPREHENSIVE ACCUMULATED STOCKHOLDERS'
                                             CAPITAL    OF SHARES     CAPITAL  COMPENSATION    INCOME       DEFICIT      EQUITY
                                              -------    ---------     -------  ------------ ------------- -----------  -----------

<S>                                              <C>        <C>        <C>             <C>         <C>       <C>          <C>
Balance as of January 1, 2002                $    57     $   250      $ 1,997      $   (61)     $   118     $(3,927)     $(1,566)

  Issuance of  Common Stock                       48        (250)       5,972            -            -           -        5,770
   and warrants, net
  Issuance of Common Stock due to
     the reverseacquisition, net                  14           -          153            -            -           -          167
  Capital surplus in respect of
    transaction betweenInkSure
    Delaware and SuperCom Ltd.                     -           -        1,480            -            -           -        1,480
  Reversal of deferred compensation
     due to forfeiture of stock
     options to employees                          -           -          (61)          61            -           -            -
  Deemed dividend upon conversion
       of Common stock to
    Series A Preferred Stock                       -           -          200            -            -        (200)           -
  Net loss                                         -           -            -            -            -        (621)        (621)
                                              ------      ------       ------       ------       ------      ------       ------

Balance as of December 31, 2002                  119           -        9,741            -          118      (4,748)       5,230

  Net loss                                         -           -            -            -            -      (2,481)      (2,481)
                                              ------      ------       ------       ------       ------      ------       ------

Balance as of September 30, 2003 (unaudited) $   119       $   -      $ 9,741       $    -      $   118     $(7,229)     $ 2,749
                                             =======       =====      =======       ======      =======     =======      =======

</TABLE>





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


                                       6
<PAGE>


CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS

<TABLE>
<CAPTION>

                                                                NINE MONTHS ENDED                  THREE MONTHS ENDED
                                                                  SEPTEMBER 30,                       SEPTEMBER 30,
                                                         --------------------------------    --------------------------------
                                                             2003               2002              2003               2002
                                                         --------------    --------------    --------------    --------------
                                                                                      UNAUDITED
                                                         --------------------------------------------------------------------
<S>                                                             <C>              <C>                <C>              <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                        $   (2,481)          $   136          $   (773)         $   (122)
  Adjustments to reconcile net income (loss) to net
    cash used in operating activities:
   Depreciation and amortization                                  116               105                39                35
   Interest on short-term deposits                                (46)              (18)               (6)              (18)
   Accrued severance pay, net                                       1               (11)               (6)               (3)
   Decrease (increase) in trade receivables                       730              (489)                -              (369)
   Decrease (increase) in other accounts receivable
     and prepaid expenses                                         (74)               93                69               137
   Increase in inventories                                          7               160                27                 8
   Decrease in trade payables                                    (293)             (137)             (161)              (18)
   Increase (decrease) in employees and payroll
     accruals                                                      84               (87)               (1)              (41)
   Increase (decrease) in accrued expenses and
     other liabilities                                           (147)             (166)               (6)               75
                                                              -------           -------           -------           -------

 Net cash used in operating activities                         (2,103)             (414)             (818)             (316)
                                                              -------           -------           -------           -------

 CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                              (31)              (10)               (1)               (3)
  Investment in short-term deposits                                 -            (4,000)                -            (4,000)
  Proceeds from short-term deposits                             2,863                 -             1,744                 -
                                                              -------           -------           -------           -------

 Net cash provided by (used in) investing activities            2,832            (4,010)            1,743            (4,003)
                                                              -------           -------           -------           -------

 CASH FLOWS FROM FINANCING ACTIVITIES:
  Short-term bank credit, net                                       -              (410)                -              (390)
  Proceeds from issuance of Common Stock and
    warrants, net                                                   -             5,781                 -             5,550
  Principal payment of long-term loans                              -              (250)                -              (200)
                                                              -------           -------           -------           -------

 Net cash provided by financing activities                          -             5,121                 -             4,960
                                                              -------           -------           -------           -------

 Increase in cash and cash equivalents                            729               697               925               641
 Cash and cash equivalents at the beginning of the
   period                                                         213                 2                17                58
                                                              -------           -------           -------           -------

 Cash and cash equivalents at the end of the period           $   942           $   699           $   942           $   699
                                                              =======           =======           =======           =======
</TABLE>


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


                                       7
<PAGE>


CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS

<TABLE>
<CAPTION>

                                                           NINE MONTHS ENDED     THREE MONTHS ENDED
                                                             SEPTEMBER 30,         SEPTEMBER 30,
                                                           -----------------     ------------------
                                                           2003      2002        2003       2002
                                                           ----      ----        ----       ----
                                                                        UNAUDITED
                                                         ------------------------------------------
<S>                                                      <C>       <C>           <C>       <C>
NON-CASH TRANSACTIONS:

 In respect of transaction between InkSure
   Delaware and SuperCom Ltd.                            $ -       $ 1,480       $ -       $ -
                                                         ===       =======       ===       ===

 Series A Preferred Stock deemed dividend
                                                         $ -       $   200       $ -       $ -
                                                         ===       =======       ===       ===

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

 Cash paid during the period for:

  Interest                                               $ 1       $    14       $ -       $ -
                                                         ===       =======       ===       ===
</TABLE>




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


                                       8
<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1:- GENERAL

     InkSure Technologies Inc. and its subsidiaries (formerly: Lil Marc., Inc.)
     ("the Company") was incorporated under the laws of the state of Nevada on
     April 22, 1997. On July 8 2003, InkSure Technologies Inc. effected a
     reincorporation from Nevada to Delaware, through a merger with and into its
     wholly-owned subsidiary, InkSure Technologies (Delaware) Inc., which
     incorporated as of June 30, 2003. The surviving corporation in the merger
     was InkSure Technologies (Delaware) Inc., which thereafter renamed itself
     InkSure Technologies.

     The Company specializes in comprehensive security solutions, designed to
     protect branded products and documents of value from counterfeiting, fraud
     and diversion.

     The Company conducts its operations and business with and through its
     direct and indirect subsidiaries, InkSure Inc., a Delaware corporation
     incorporated in March 2000; IST Operating Inc., a Delaware corporation,
     incorporated in May 2000 (formerly: InkSure Technologies Inc.); InkSure
     Ltd., which was incorporated in December 1995 under the laws of Israel, and
     InkSure RF Inc., a Delaware corporation incorporated in March 2000 (as of
     September 30, 2003, InkSure RF Inc. has been inactive).


NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES

     The significant accounting policies applied in the annual financial
     statements of the Company as of December 31, 2002, are applied consistently
     in these financial statements.

     In addition, the following accounting policies have been applied:

     Accounting for stock-based compensation:

     The Company has elected to follow Accounting Principles Board Opinion No.
     25 "Accounting for Stock Issued to Employees" ("APB No. 25") and FASB
     Interpretation No. 44 "Accounting for Certain Transactions Involving Stock
     Compensation" ("FIN No. 44") in accounting for its employee stock option
     plans. Under APB No. 25, when the exercise price of the Company's stock
     options is less than the market price of the underlying shares on the date
     of grant, compensation expense is recognized.


                                       9
<PAGE>


NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

     Under Statement of Financial Accounting Standard No. 123, "Accounting for
     Stock Based Compensation" ("SFAS No. 123"), pro forma information regarding
     net loss and loss per share is required, and has been determined as if the
     Company had accounted for its employee stock options under the fair value
     method of that statement. The fair value for these options was estimated at
     the date of grant using a Black-Scholes Option Valuation model with the
     following weighted-average assumptions for three months ended September 30,
     2003 and 2002: risk-free interest rate of 2% for each period, with dividend
     yields of 0% for each period, volatility factors of the expected market
     price of the Company's Common Stock of 0.995 and 0.5, and a
     weighted-average expected life of the options of 3 and 5 years. Stock
     compensation, for pro forma purposes, is amortized over the vesting period.


     The following table illustrates the effect on net loss and loss per share
     as if the fair value method had been applied to all outstanding and
     unvested awards in each period:
<TABLE>
<CAPTION>

                                                 NINE MONTHS ENDED                  THREE MONTHS ENDED
                                                   SEPTEMBER 30,                       SEPTEMBER 30,
                                         --------------------------------    --------------------------------
                                              2003              2002              2003               2002
                                         --------------    --------------    --------------    --------------
                                                                      UNAUDITED
                                         ---------------------------------------------------------------------
<S>                                        <C>               <C>               <C>               <C>
Net loss, as reported                      $     (2,481)      $       (64)      $      (773)      $      (122)
Deduct: Total stock-based
  compensation expense determined
  under fair value method for all
  awards                                           (114)             (302)              (25)              (61)
                                          --------------    --------------    --------------    ---------------

Pro forma net loss                         $     (2,595)      $      (366)      $      (798)      $      (183)
                                          ==============    ==============    ==============    ===============

Basic and diluted net loss per
  share, as reported                       $      (0.21)     $      (0.01)     $      (0.06)     $      (0.01)
                                          ==============    ==============    ==============    ===============

Basic and diluted net loss per
  share, pro forma                         $      (0.22)     $      (0.05)     $      (0.07)     $      (0.02)
                                          ==============    ==============    ==============    ===============
</TABLE>


NOTE 3:- UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

     The accompanying unaudited interim consolidated financial statements have
     been prepared in accordance with generally accepted accounting principles
     in the United States for interim financial information. Accordingly, they
     do not include all the information and footnotes required by generally
     accepted accounting principles in the United States for complete financial
     statements. In the opinion of management, all adjustments (consisting of
     normal recurring accruals) considered necessary for a fair presentation
     have been included. Operating results for the nine-month period ended
     September 30, 2003 are not necessarily indicative of the results that may
     be expected for the year ended December 31, 2003.





                                       10
<PAGE>





ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     In this section, "Management's Discussion and Analysis or Plan of
Operation," references to "we," "us," "our," and "ours" refer to InkSure
Technologies, Inc. and its consolidated subsidiaries.

     This Quarterly Report on Form 10-QSB contains statements that may
constitute "forward-looking statements" within the meaning, and made pursuant to
the Safe Harbor provisions, of the Private Securities Litigation Reform Act of
1995. Such statements are based on management's current expectations and are
subject to a number of risks and uncertainties, including, but not limited to,
the difficulty inherent in operating an early-stage company in a new and rapidly
evolving market, market and economic conditions, the impact of competitive
products, product demand and market acceptance risks, changes in product mix,
costs and availability of raw materials, fluctuations in operating results,
delays in development of highly complex products, risk of customer contract or
sales order cancellations and other risks detailed from time to time in our
filings with the Securities and Exchange Commission. These risks and
uncertainties could cause our actual results to differ materially from those
described in the forward-looking statements. Any forward-looking statement
represents our expectations or forecasts only as of the date it was made and
should not be relied upon as representing its expectations or forecasts as of
any subsequent date. Except as required by law, we undertake no obligation to
correct or update any forward-looking statement, whether as a result of new
information, future events or otherwise, even if our expectations or forecasts
change.

     The following discussion and analysis should be read in conjunction with
the financial statements, related notes and other information included in this
Quarterly Report on Form 10-QSB.

OVERVIEW

     On October 28, 2002, a wholly owned subsidiary of Lil Marc, Inc. merged
with and into InkSure Technologies, Inc., a Delaware corporation ("InkSure
Delaware") and InkSure Delaware became a wholly-owned subsidiary of Lil Marc in
a transaction accounted for as a reverse acquisition of Lil Marc by InkSure
Delaware. Prior to the reverse merger, Lil Marc was a non-operating public shell
corporation with nominal assets. Following the reverse merger, the management of
InkSure Delaware controlled the merged company and the principal stockholders of
InkSure Delaware became principal stockholders of the merged company. Following
the closing of the reverse merger, Lil Marc changed its name to InkSure
Technologies Inc. As a result of the reverse merger transaction, InkSure
Delaware changed its name to IST Operating Inc. and continued as an operating
entity and as our wholly owned subsidiary, and the historical financial
statements of InkSure Delaware replaced those of Lil Marc.

     On July 8, 2003, we reincorporated as a Delaware corporation by merging
with and into a newly formed wholly owned subsidiary.

A.   RESULT OF OPERATIONS

     The following discussion of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and the related notes. The financial statements have been prepared in
accordance with US Generally Accepted Accounting Principles, or GAAP.

     This discussion contains forward-looking statements that involve risks and
uncertainties.

     Our actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors.

CRITICAL ACCOUNTING POLICIES

     Our financial statements are prepared in accordance with US GAAP. The
significant accounting policies followed in the preparation of the financial
statements, applied on a consistent basis and which have been prepared in
accordance with the historical cost convention, are set forth in Note 2 to the
Consolidated Financial Statements.


                                       11
<PAGE>


     Of these significant accounting policies, certain policies may be
considered critical because they are most important to the portrayal of our
financial condition and results, and they require management's most difficult,
subjective or complex judgments, often as a result of the need to make estimates
about the effect of matters that are inherently uncertain. We believe the
following critical accounting policies affect our more significant judgments and
estimates used in the preparation of our consolidated financial statements.

     Revenue recognition. We derive revenues from the selling of security inks
and readers by utilizing a combination of our own sales personnel, strategic
alliances and licenses with intermediaries. Revenues from product sales are
recognized in accordance with Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements", ("SAB No. 101"), when delivery has
occurred, persuasive evidence of an agreement exists, the vendor's fee is fixed
or determinable, no further obligation exists and collectability is probable.
When a right of return exists, we defer revenues until the right of return
expires. We do not grant a right of return to our customers. Revenues we receive
from licenses to market and utilize our technologies are recognized over the
term of the license agreement.

     Inventories. Inventories are stated at the lower of cost or net realizable
value. Cost is determined by calculating raw materials, work in process and
finished products using the "first in, first out" method.

THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 2002

     REVENUE. Revenue consists of gross sales of products less discounts and
costs associated with technology transfer. We are currently concentrating on
entering and implementing large-scale projects. These potential contracts are
subject to a long sales cycle and fluctuated timetable for entering and
implementing such projects. This affected our results for the three months ended
September 30, 2003, where we had revenue of $44,000, compared to $803,000 in the
three months ended September 30, 2002. Revenue in the three months ended
September 30, 2002 consisted primarily of the ink shipments to the
transportation project in Turkey. Revenues from this agreement were $731,000 for
the three months ended September 30, 2002.

     Revenue from the agreement with Westvaco Brand Security was $71,000 for the
three months ended September 30, 2002. The agreement expired on December 31,
2002.

     COST OF REVENUE. Our cost of revenue consists of materials, sub-contractors
and compensation costs. Cost of revenue in the three months ended September 30,
2003 were $40,000, compared to $121,000 in the three months ended September 30,
2002. Cost of revenue in the three months ended September 30, 2002 was in
connection with our transportation project in Turkey. The lower gross margin in
the three months ended September 30, 2003 is a result of the lower revenues and
higher hardware sales.

     RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
consist primarily of compensation costs attributable to employees engaged in
ongoing research and development activities, development-related raw materials
and sub-contractors, and other related costs. Research and development expenses
increased by $96,000, or 48%, to $295,000 in the three months ended September
30, 2003 from $199,000 in the three months ended September 30, 2002. This
increase in research and development expenses is primarily related to increased
payments to subcontractors in connection with the development of several new
products and new generations of our existing products.

     SELLING AND MARKETING EXPENSES, NET. Selling and marketing expenses consist
primarily of costs relating to compensation attributable to employees engaged in
sales and marketing activities, promotion, advertising, trade shows and
exhibitions, sales support, travel, commissions and related expenses. Selling
and marketing expenses decreased by $208,000, or 39%, to $325,000 in the three
months ended September 30, 2003 from $533,000 in the three months ended
September 30, 2002. This decrease in selling and marketing expenses was
primarily due to higher marketing expenses in 2002 related to the transportation
project in Turkey. We believe that the significant investment in pre-sales and
marketing activities will contribute to our short-term and long-term sales
levels.

     GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
consist primarily of compensation costs for administration, finance and general
management personnel, insurance, legal, accounting and administrative costs.
General and administrative expenses increased by $73,000, or 83%, to $161,000 in
the three months ended September 30, 2003 from $88,000 in the three months ended
September 30, 2002. This increase was primarily a result of the merger and the
higher insurance, legal and accounting costs related to our being a public
company.


                                       12
<PAGE>


     FINANCIAL INCOME, NET. Financial income, net decreased by $12,000, or 75%
to $4,000 in the three months ended September 30, 2003 from $16,000 in the three
months ended September 30, 2002. This decrease was due to the lower interest
rate earned on our lower short-term deposits.

     NET LOSS FROM CONTINUED OPERATIONS. We had a net loss of $773,000 in the
three months ended September 30, 2003, compared with a net loss of $122,000 in
the three months ended September 30, 2002. The increase in net loss in the three
months ended September 30, 2003 in comparison with the three months ended
September 30, 2002 is attributable to the various influences described above,
which resulted in us having no significant revenue in the three months ended
September 30, 2003.

NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 2002

     REVENUE. Revenue consists of gross sales of products less discounts and
costs associated with technology transfer. We are currently concentrating on
entering and implementing large-scale projects. These potential contracts are
subject to a long sales cycle and fluctuated timetable for entering and
implementing such projects. This affected our results for the nine months ended
September 30, 2003, where we had revenue of 44,000, compared to $2,687,000 in
the nine months ended September 30, 2002. Revenue in the nine months ended
September 30, 2002 consisted primarily of the first shipments and implementation
of the transportation project in Turkey. Revenues from this agreement were
$2,003,000 for the nine months ended September 30, 2002.

     Revenue from the agreement with Westvaco Brand Security was $517,000 for
the nine months ended September 30, 2002. The agreement expired on December 31,
2002.

     COST OF REVENUE. Our cost of revenue consists of materials, sub-contractors
and compensation costs. Cost of revenue in the nine months ended September 30,
2003 was $40,000, compared to $392,000 in the nine months ended September 30,
2002. Cost of revenue in the nine months ended September 30, 2002 was in
connection with our transportation project in Turkey.

     RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
consist primarily of compensation costs attributable to employees engaged in
ongoing research and development activities, development-related raw materials
and sub-contractors, and other related costs. Research and development expenses
increased by $338,000, or 60%, to $903,000 in the nine months ended September
30, 2003 from $565,000 in the nine months ended September 30, 2002. This
increase in research and development expenses is primarily related to increased
payments to subcontractors in connection with the development of several new
products and new generations of our existing products.

     SELLING AND MARKETING EXPENSES. Selling and marketing expenses consist
primarily of costs relating to compensation attributable to employees engaged in
sales and marketing activities, promotion, advertising, trade shows and
exhibitions, sales support, travel, commissions and related expenses. Selling
and marketing expenses decreased by $243,000, or 18%, to $1,078,000 in the nine
months ended September 30, 2003 from $1,321,000 in the nine months ended
September 30, 2002. This decrease in selling and marketing expenses was
primarily due to higher marketing expenses in 2002 related to the transportation
project in Turkey. We believe that the significant investment in pre-sales and
marketing activities will contribute to our short-term and long-term sales
levels.

     GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
consist primarily of compensation costs for administration, finance and general
management personnel, insurance, legal, accounting and administrative costs.
General and administrative expenses increased by $268,000, or 97%, to $545,000
in the nine months ended September 30, 2003 from $277,000 in the nine months
ended September 30, 2002. This increase was primarily a result of the merger and
the higher insurance, legal and accounting costs related to our being a public
company.

     FINANCIAL INCOME, NET. Financial income, net increased by $37,000, to
$41,000 in the nine months ended June 30, 2003 from $4,000 in the nine months
ended September 30, 2002. This increase was due to the interest earned on our
short-term deposits.


                                       13
<PAGE>


     NET LOSS FROM CONTINUED OPERATIONS. We had a net loss of $2,481,000 in the
nine months ended September 30, 2003, compared with a net loss of $64,000 in the
nine months ended September 30, 2002. The increase in net loss in the nine
months ended September 30, 2003 in comparison with the nine months ended
September 30, 2002 is attributable to the various influences described above,
which resulted in us having no significant revenue in the nine months ended
September 30, 2003.

B.   LIQUIDITY AND CAPITAL RESOURCES

     We have incurred substantial losses since our inception in May 2000. We had
an accumulated deficit of approximately $7,229,000 at September 30, 2003, and
had a working capital (current assets less current liabilities) of approximately
$2,065,000 at September 30, 2003.

     Capital expenditures were approximately $1,000 in the three months ended
September 30, 2003 and $3,000 in the three months ended September 30, 2002.
Capital expenditures were approximately $31,000 in the nine months ended
September 30, 2003 and $10,000 in the nine months ended September 30, 2002. We
do not have any material commitments for capital expenditures for the year
ending December 31, 2003.

     At September 30, 2003, we had cash, cash equivalents and short-term
deposits of approximately $2,188,000 ($4,717,000 in September 2002). The
differences from September 30, 2003 to September 30, 2002 are due to the
negative cash flow from operating activities during the last fiscal year as a
result of lack of revenues.

     We generated negative cash flow from operating activities of approximately
$818,000 in the three months ended September 30, 2003 and $2,103,000 in the nine
months ended September 30, 2003 compared to $316,000 in the three months ended
September 30, 2002 and $414,000 in the nine months ended September 30, 2002.

C.   RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES

     We believe that our future success will depend upon our ability to enhance
our existing products and systems and introduce new commercially viable products
and systems addressing the demands of the evolving markets for brand and
document protection. As part of the product development process, we work closely
with current and potential customers, distribution channels and leaders in
certain industry segments to identify market needs and define appropriate
product specifications. Our employees also participate in industry forums in
order to stay informed about the latest industry developments.

     Our research and development expenses were approximately $295,000 in the
three months ended September 30, 2003 and $903,000 in the nine months ended
September 30, 2003, compared to $199,000 in the three months ended September 30,
2002 and $565,000 in the nine months ended September 30, 2002. To date, all
research and development expenses have been charged to operating expense as
incurred.

     We currently hold six pending patents on our technologies.

D.   CONTRACTUAL OBLIGATIONS AND COMMITMENTS

     Our contractual obligations and commitments at September 30, 2003
principally include obligations associated with our future-operating lease
obligations. Our total future obligation is approximately $214,000 until 2008.
We expect to finance these contractual commitments from cash on hand and cash
generated from operations.

ITEM 3. CONTROLS AND PROCEDURES

     (a) Evaluation of Disclosure Controls and Procedures. Our principal
executive officer and principal financial officer, after evaluating the
effectiveness of our disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this
Quarterly Report on Form 10-QSB, have concluded that, based on such evaluation,
our disclosure controls and procedures were adequate and effective to ensure
that material information relating to us, including our consolidated
subsidiaries, was made known to them by others within those entities,
particularly during the period in which this Quarterly Report on Form 10-QSB was
being prepared.


                                       14
<PAGE>


     (b) Changes in Internal Controls. There were no changes in our internal
control over financial reporting, identified in connection with the evaluation
of such internal control that occurred during our last fiscal quarter, that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The Company held its Annual Meeting of Stockholders on July 3, 2003.

The following matters were voted on at the Annual Meeting of Stockholders:

Proposal 1: To approve and adopt an Agreement and Plan of Merger providing for
the merger of the Company into its newly formed wholly-owned subsidiary, Inksure
Technologies (Delaware) Inc., a Delaware corporation, for the purpose of
changing the Company's state of incorporation from Nevada to Delaware.

                             NUMBER OF SHARES VOTED
<TABLE>
<CAPTION>

                           FOR              AGAINST           ABSTAIN
                  ---------------------------------------------------------

<S>                    <C>                     <C>             <C>
                       7,465,512               0               0
</TABLE>



Proposal 2:  Election of a Board of Directors.

                             NUMBER OF SHARES VOTED
<TABLE>
<CAPTION>

                           FOR              AGAINST           ABSTAIN
                  ---------------------------------------------------------


<S>                    <C>                     <C>             <C>
Elie Housman           7,580,711               0               0

Yaron Meerfeld         7,580,711               0               0

James Lineberger       7,580,711               0               0

Ezra Harel             7,580,711               0               0

T. Lee Provow          7,580,711               0               0

Albert Attias          7,580,711               0               0

David Sass             7,580,711               0               0
</TABLE>


Proposal 3: Ratification of the appointment of Kost Forer & Gabbay, a Member of
Ernst & Young Global, as the independent auditors and accountants for the
Company for the year ending December 31, 2003.

                                NUMBER OF SHARES
<TABLE>
<CAPTION>

                           FOR              AGAINST           ABSTAIN
                  ---------------------------------------------------------

<S>                    <C>                     <C>             <C>
                       7,580,711               0               0
</TABLE>




PART II. OTHER INFORMATION

                                       15
<PAGE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

The following exhibits are being filed with this Report:
<TABLE>
<CAPTION>

EXHIBIT NUMBER      DESCRIPTION
<C>                 <C>
2.1                 Agreement and Plan of Merger, dated July 5, 2002, among the Company, LILM Acquisition and
                    InkSure Delaware.  (Incorporated by reference to the Company's Information Statement on
                    Schedule 14C, filed with the Commission on October 8, 2002.)
2.2                 Agreement and Plan of Merger, dated July 3, 2003 among the Company and InkSure Technologies
                    (Delaware) Inc.  (Incorporated by reference to the Company's report filed on Form 8-K, filed
                    with the Commission on July 22, 2003.)
3.1                 Certificate of Incorporation of the Company. (Incorporated by reference to the Company's report
                    filed on Form 8-K, filed with the Commission on July 22, 2003.)
3.2                 By-Laws of the Company.  (Incorporated by reference to the Company's report filed on Form 8-K,
                    filed with the Commission on July 22, 2003.)
10.1                2002 Employee, Director and Consultant Stock Option Plan.  (Incorporated by reference to the
                    Company's Quarterly Report on Form 10-QSB, filed with the Commission on November 14, 2002.)
10.2                Employment Agreement, dated as of February 6, 2002, by and between the Company and Elie
                    Housman.  (Incorporated by reference to the Company's Quarterly Report on Form 10-QSB, filed
                    with the Commission on November 14, 2002.)
10.3                Exclusive Distribution Agreement by and between InkSure Inc. and
                    ISBAK A.S. (Istanbul Belediyeler Bakim Ulasim San Vetic A.S.) (Incorporated by reference to the
                    Amendment No. 1 to the Registration Statement on Form SB-2, filed with the Commission on June
                    26, 2003.)
31.1*               Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
                    of 2002, 18 U.S.C. Section 1350.
31.2*               Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
                    of 2002, 18 U.S.C. Section 1350.
32.1*               Certification of Principal Executive Officer and Principal Financial Officer Pursuant to
                    Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
</TABLE>

* Filed herewith

(b)  Reports on Form 8-K

     1.   Form 8-K filed on July 22, 2003 (Item 5. Other Events. Filed in
          connection with the Company's reincorporation from a Nevada
          corporation to a Delaware corporation).


                                       16
<PAGE>


                                   SIGNATURES

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

                                                INKSURE TECHNOLOGIES INC.

Dated: As of November 10, 2003              By: /s/ Eyal Bigon
                                                ------------------------
                                                Eyal Bigon
                                                Chief Financial Officer,
                                                Secretary, and Treasurer
                                                (Principal Financial and
                                                Accounting Officer)



Dated: As of November 10, 2003              By: /s/ Yaron Meerfeld
                                                ------------------------
                                                Yaron Meerfeld
                                                Chief Executive Officer
                                                (Principal Executive Officer)





                                       17
<PAGE>



     Exhibit 31.1


                                  CERTIFICATION





     I, Eyal Bigon, certify that:


     1. I have reviewed this quarterly report of InkSure Technologies Inc.;


     2. Based on my knowledge, this 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 report;


     3. Based on my knowledge, the financial statements, and other financial
information included in this 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 report;


     4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:


     a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;


     b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and


     c) disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and


     5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and


     b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.


Date: November 10, 2003


By: /s/ Eyal Bigon
   ------------------------
   Eyal Bigon
   Chief Financial Officer, Secretary and Treasurer



<PAGE>


     Exhibit 31.2


                                  CERTIFICATION


     I, Yaron Meerfeld, certify that:


     1. I have reviewed this quarterly report of InkSure Technologies Inc.;


     2. Based on my knowledge, this 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 report;


     3. Based on my knowledge, the financial statements, and other financial
information included in this 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 report;


     4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:


     a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;


     b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and


     c) disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and


     5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and


     b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.


Date: November 10, 2003


By: /s/ Yaron Meerfeld
   ------------------------
   Yaron Meerfeld
   Chief Executive Officer



<PAGE>



     Exhibit 32.1


                                  CERTIFICATION


            PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


             (SUBSECTIONS (A) AND (B) OF SECTION 1350, CHAPTER 63 OF


                          TITLE 18, UNITED STATES CODE)





     Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a)
and (b) of section 1350, chapter 63 of title 18, United States Code), each of
the undersigned officers of InkSure Technologies Inc., a Delaware corporation
(the "Company"), does hereby certify, to such officer's knowledge, that:


     The Form 10-QSB for the quarter ended September 30, 2003 (the "Form
10-QSB") of the Company fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, and the information contained in
the Form 10-QSB fairly presents, in all material respects, the financial
condition and results of operations of the Company.





         Dated: November 10, 2003    By: /s/ Yaron Meerfeld
                                         ------------------------
                                         Yaron Meerfeld, Chief Executive Officer








         Dated: November 10, 2003    By: /s/ Eyal Bigon
                                         ------------------------
                                         Eyal Bigon, Chief Financial Officer







     A signed original of this written statement required by Section 906 has
been provided to the Company and will be retained by the Company and furnished
to the Securities and Exchange Commission or its staff upon request.