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

                                   FORM 10-QSB

                                   (Mark One)

      [X] Quarterly report under to Sections 13 or 15(d) of the Securities
                              Exchange Act of 1934

                  For the quarterly period ended March 31, 2007

           [ ] Transition report under to Sections 13 or 15(d) of the
                                  Exchange Act

        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.)

           1770 N.W. 64th STREET, SUITE 350, FORT LAUDERDALE, FL 33309
          ------------------------------------------------------------
          (Address of Principal Executive Offices, Including Zip Code)

                                 (954) 772-8507
                                 --------------
                (Issuer's Telephone Number, Including Area Code)

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

Check whether the issuer (1) has 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 [ ]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

The number of shares outstanding of our common stock, par value $0.01 value per
share, as of April 27, 2007, was 15,915,441.

Transitional Small Business Disclosure Format (check one):

Yes [ ] No [X]

<PAGE>

                            INKSURE TECHNOLOGIES INC.

                              INDEX TO FORM 10-QSB

                                                                            PAGE

PART I.   FINANCIAL INFORMATION .........................................     3

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

          Condensed Consolidated Balance Sheet as of
          March 31, 2007 (unaudited) ....................................     4

          Condensed Consolidated Statements of Operations (unaudited)
          for the Nine and Three Months Ended March 31, 2007 and 2006 ...     6

          Statements of Stockholders' Deficiency as of
          March 31, 2007 (unaudited after December 31, 2006) ............     7

          Condensed Consolidated Statements of Cash Flows (unaudited)
          for the Nine and Three Months Ended March 31, 2007 and 2006 ...     8

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

Item 2.   Management's Discussion and Analysis or Plan of Operation .....     10

Item 3.   Controls and Procedures .......................................     15

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

Item 1.   Legal Proceedings .............................................     15

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds ...     15

Item 3.   Defaults Upon Senior Securities ...............................     15

Item 4.   Submission of Matters to a Vote of Security Holders ...........     16

Item 5.   Other Information .............................................     16

Item 6.   Exhibits ......................................................     16

SIGNATURES ..............................................................     17

                                        2

<PAGE>

ITEM 1.  FINANCIAL STATEMENTS

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

                  INKSURE TECHNOLOGIES INC. AND ITS SUBSIDIARY

                    INTERIM CONSOLIDATED FINANCIAL STATEMENTS

                              AS OF MARCH 31, 2007

                            U.S. DOLLARS IN THOUSANDS

                                    UNAUDITED

                                      INDEX

                                                                            PAGE
                                                                            ----

CONSOLIDATED BALANCE SHEET                                                   4

CONSOLIDATED STATEMENTS OF OPERATIONS                                        6

STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY                            7

CONSOLIDATED STATEMENTS OF CASH FLOWS                                        8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                   9

                                        3

<PAGE>

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

                                                                       MARCH 31,
                                                                         2007
                                                                       ---------
                                                                       UNAUDITED
                                                                       ---------
      ASSETS

CURRENT ASSETS:
   Cash and cash equivalents                                           $     527
   Short-term deposit                                                      1,631
   Trade receivables                                                         525
   Other accounts receivable and prepaid expenses                            162
   Inventories                                                               487
                                                                       ---------

TOTAL current assets                                                       3,332

PROPERTY AND EQUIPMENT, NET                                                  334

LONG TERM DEPOSIT                                                              9

DEFERRED CHARGES                                                             493

GOODWILL                                                                     271
                                                                       ---------

TOTAL assets                                                           $   4,439
                                                                       =========

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

                                        4

<PAGE>

CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS (EXCEPT SHARE DATA)

                                                                      MARCH 31,
                                                                        2007
                                                                      ---------
                                                                      UNAUDITED
                                                                      ---------
      LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES:
   Trade payables                                                     $     276
   Employees and payroll accruals                                           231
   Accrued expenses and other payables                                      180
                                                                      ---------

TOTAL current liabilities                                                   687

Convertible notes, net                                                    5,946
                                                                      ---------

STOCKHOLDERS' DEFICIENCY:
   Stock capital:
      Preferred stock of $ 0.01 par value -
         Authorized: 10,000,000 shares; Issued and outstanding:
         0 shares as of  March 31,2006
      Common stock of $ 0.01 par value -
         Authorized: 35,000,000; Issued and outstanding: 15,234,854
         as of March 31,2006                                                159
  Additional paid-in capital                                             13,721
  Accumulated other comprehensive income                                    118
  Accumulated deficit                                                   (16,192)
                                                                      ---------

TOTAL stockholders' deficiency                                           (2,194)
                                                                      ---------

TOTAL liabilities and stockholders' deficiency                        $   4,439
                                                                      =========

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

                                        5

<PAGE>

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

<TABLE>
<CAPTION>
                                                                              THREE MONTHS ENDED
                                                                                   MARCH 31,
                                                                         ---------------------------
                                                                             2007           2006
                                                                         ------------   ------------
                                                                                  UNAUDITED
                                                                         ---------------------------
<S>                                                                      <C>            <C>
Revenues                                                                 $        696   $        538
Cost of revenues                                                                  255            197
                                                                         ------------   ------------

Gross profit                                                                      441            341
                                                                         ------------   ------------
Operating expenses:
   Research and development                                                       301            231
   Selling and marketing                                                          445            516
   General and administrative                                                     284            371
                                                                         ------------   ------------

TOTAL operating expenses                                                        1,030          1,118
                                                                         ------------   ------------

Operating loss                                                                   (589)          (777)
                                                                         ------------   ------------

Financial income (expenses)                                                       (41)             6
Non cash financial income (expenses) related to convertible notes, net           (463)           166
                                                                         ------------   ------------
Financial income (expenses), net                                                 (504)           172

Net loss                                                                 $     (1,093)  $       (605)
                                                                         ============   ============

Basic and diluted net loss per share                                     $      (0.07)  $      (0.04)
                                                                         ============   ============

Weighted average number of Common Stock used in computing basic and
   diluted net loss per share                                              15,915,441     15,071,152
                                                                         ============   ============
</TABLE>

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

                                        6

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                     ACCUMULATED
                                                        ADDITIONAL     DEFERRED         OTHER                         TOTAL
                                               SHARE     PAID-IN     STOCK-BASED    COMPREHENSIVE   ACCUMULATED   STOCKHOLDERS'
                                              CAPITAL    CAPITAL     COMPENSATION      INCOME         DEFICIT       DEFICIENCY
                                              -------   ----------   ------------   -------------   -----------   -------------
<S>                                           <C>       <C>          <C>            <C>             <C>           <C>
Balance as of January 31, 2005                $   150   $   12,031         -           $  118       $    (9,774)  $       2,525

Grant of warrant                                                58       (58)                                                 -
Amortization of deferred stock-based
  compensation                                                            46                                                 46
Conversion of 368,429 warrants into 223,278
  ordinary shares                                   2           71                          -                 -              73
   Net loss                                         -            -                          -            (2,213)  $      (2,213)
                                              -------   ----------   ------------   -------------   -----------   -------------

Balance as of December 31, 2005               $   152   $   12,160       (12)          $  118       $   (11,987)            431

Stock based compensation                            -          891         -                -                 -             891
Amortization of deferred stock-based
  compensation                                      -            -        12                -                 -              12
Conversion of 380,723 warrants into 354,442
  ordinary shares                                   4          186         -                -                 -             190
Conversion of 249,283 options into 249,283
  ordinary shares                                   2          249         -                -                 -             251
   Net loss                                         -            -         -                -            (3,112)         (3,112)
                                              -------   ----------   ------------   -------------   -----------   -------------
Balance as of December 31, 2006               $   158   $   13,486         -           $  118       $   (15,099)  $      (1,337)
Stock based compensation                            -          153         -                -                 -             153
Amortization of deferred stock-based
  compensation
Conversion of 73,529 warrants into 73,529
ordinary shares                                     1           73         -                -                 -              74
Conversion of 3,333 options into 3,333
  ordinary shares                                   -            9         -                -                                 9
   Net loss                                                                                              (1,093)         (1,093)
                                              -------   ----------   ------------   -------------   -----------   -------------

Balance as of March 31, 2007                      159       13,721         -              118           (16,192)         (2,194)
                                              =======   ==========   ============   =============   ===========   =============
</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>
                                                                                    THREE MONTHS ENDED
                                                                                        MARCH 31,
                                                                                 -----------------------
                                                                                    2007         2006
                                                                                 ----------   ----------
                                                                                        UNAUDITED
                                                                                 -----------------------
<S>                                                                              <C>          <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:

   Net loss                                                                      $   (1,093)  $     (605)
   Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization                                                       22          354
     Accrued severance pay, net                                                           -            1
     Capital gain from sale of property                                                  (1)           -
     Decrease (increase) in trade receivables                                          (281)         (60)
     Non cash financial expenses related to convertible notes, net                      428         (202)
     Increase in other accounts receivable and prepaid expenses                         310          (27)
     Decrease (increase) in inventories                                                  19          (70)
     Increase (decrease) in trade payables                                               48          (99)
     Increase (decrease) in employees and payroll accruals                               87           10
     Non cash financial expenses related to implementation of SFAS No. 123              153            -
     Increase (decrease) in other payables                                              (12)         (22)
                                                                                 ----------   ----------

 Net cash used in operating activities                                                 (320)        (720)
                                                                                 ----------   ----------

 CASH FLOWS FROM INVESTING ACTIVITIES:

   Purchase of property and equipment                                                   (11)         (48)
   Proceed from sale of property                                                          3            -
   Proceeds from short-term bank deposits                                               378          452
   Proceeds from long-term bank deposits                                                 (9)           -
                                                                                 ----------   ----------

 Net cash provided by (used in) investing activities                                    361          404
                                                                                 ----------   ----------

 CASH FLOWS FROM FINANCING ACTIVITIES:

   Receipts on account of stock                                                          83            -
                                                                                 ----------   ----------
 Net cash provided by (used in) financing activities                                     83            -
                                                                                 ----------   ----------

 Increase (decrease) in cash and cash equivalents                                       124         (316)
 Cash and cash equivalents at the beginning of the period                               403          732
                                                                                 ----------   ----------

 Cash and cash equivalents at the end of the period                              $      527   $      416
                                                                                 ==========   ==========
</TABLE>

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

                                        8

<PAGE>


NOTE 1:- BASIS OF PRESENTATION

         The accompanying condensed unaudited interim consolidated financial
         statements have been prepared by INKSURE TECHNOLOGIES INC. (the
         "Company") in accordance with accounting principles generally accepted
         in the United States of America for interim financial information and
         the instructions to Form 10-QSB and Article 10 of Regulation S-X. These
         financial statements reflect all adjustments, consisting of normal
         recurring adjustments and accruals, which are, in the opinion of
         management, necessary for a fair presentation of the financial position
         of the Company as of March 31, 2007 and the results of operations and
         cash flows for the interim periods indicated in conformity with
         generally accepted accounting principles applicable to interim periods.
         Accordingly, certain information and footnote disclosures normally
         included in annual financial statements prepared in accordance with
         generally accepted accounting principles have been condensed or
         omitted. These financial statements should be read in conjunction with
         the audited financial statements and notes thereto of the Company for
         the year ended December 31, 2006 that are included in the Company's
         Form 10-KSB filed with the Securities and Exchange Commission on March
         27, 2007, as amended (the "2006 10-KSB"). The results of operations
         presented are not necessarily indicative of the results to be expected
         for future quarters or for the year ending December 31, 2007.

                                        9

<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. Generally, forward-looking statements include words or phrases such as
"anticipates," "believes," "estimates," "expects," "intends," "plans,"
"projects," "could," "may," "might," "should," "will" and words and phrases of
similar impact. 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

      We specialize in comprehensive security solutions, designed to protect
branded products and documents of value from counterfeiting, fraud, and
diversion. By creating "Smart Protection" systems from proprietary
machine-readable authentication technologies, we help companies and
organizations worldwide regain control over their most valuable assets, their
products, their reputation and their revenues. We employ a team of experts in
the fields of material science, electro-optics and software. We utilize
cross-disciplinary technological innovations to implement customized and cost
efficient security systems for data and asset integrity within the customer's
existing infrastructure and environment.

      Our SmartInk(TM) solutions enable authentication and tracking of documents
and products by adding special chemical markers to standard inks and coatings.
The combination of markers, inks and materials produce electro-optic
"signatures", unique codes that are seamlessly incorporated into the printed
media used by the customer. Proprietary computerized readers, available in
hand-held, stationary and modular kit configurations, quickly verify these codes
by manual or automatic operation. By focusing on customer driven solutions, we
are able to offer added value through enhanced reader functionality, including
high-speed automatic sorting, one-to-many code matching, first and second level
track and trace, code activation at the point of distribution and detrimental
authentication for debit applications. The inherent flexibility of our
technology also enables overlaying the machine-readable codes onto holograms and
other overt features, resulting in multi-layered security that is both effective
and economical.

                                       10

<PAGE>

   FACTORS AFFECTING FUTURE RESULTS

      INDUSTRY AND ECONOMIC FACTORS: Our operations and earnings are affected by
local, regional and global events or conditions that affect supply and demand
for products and services. These events or conditions are generally not
predictable and include, among other things, general economic growth rates and
the occurrence of economic recessions; the development of new supply sources;
supply disruptions; technological advances, including advances in security
technology and advances in technology relating to security usage; changes in
demographics, including population growth rates and consumer preferences; and
the competitiveness of alternative security sources or product substitutes. As a
result, raising capital may become difficult, and there is pressure on the
pricing of our products and services.

      COMPETITIVE FACTORS: The brand and document protection industry is
competitive. There is competition with the traditional document protection
suppliers (mainly protection for bank notes) and also with other emergent "next
generation" technology providers. We compete with other firms in the sale and
purchase of various products and services in many national and international
markets and employ all methods of competition, which are lawful and appropriate
for such purposes. We believe that a key component of our competitive position
is our technology.

      POLITICAL FACTORS: Our operations and earnings have been, and may in the
future be, affected from time to time in varying degree by political instability
and by other political developments and laws and regulations, such as forced
divestiture of assets; restrictions on production; imports and exports; war or
other international conflicts; civil unrest and local security concerns that
threaten the safe operation of our facilities, particularly those that are
located in Israel; price controls; expropriation of property; and the
cancellation of contract rights. Both the likelihood of such occurrences and
their overall effect upon us vary greatly from country to country and are not
predictable.

      PROJECT FACTORS: In addition to the factors cited above, the advancement,
cost and results of particular projects depend on the outcome of negotiations
with potential partners, governments, suppliers, customers or other third
parties; changes in operating conditions or costs; and the occurrence of
unforeseen technical difficulties.

   REVENUES

      We are currently concentrating on entering and implementing large-scale
projects. These potential contracts are subject to a long sales cycle and the
timetable is lengthy for entering and implementing such projects. These projects
involve high volume sales through multiple-year sales contracts. We have
completed several successful field trials during the last year related to these
projects. Our revenues in the first quarter of 2007 consisted of revenues from
(i) our sales agreements for brand protection with two North American customers;
and (ii) ink sales related to projects in Turkey (iii) initial sales to new
customers. In the First quarter of 2007 approximately 46% of our revenues were
earned from customers located in the United States.

   COSTS AND OPERATING EXPENSES

      Costs and operating expenses consist of cost of revenues, research and
development expenses, selling and marketing expenses, general and administrative
expense and depreciation.

      Our cost of revenues consists primarily of materials including taggants
and electronic and optical parts, payments to sub-contractors and compensation
costs for our operations staff.

      Our research and development expenses consist primarily of costs
associated with development of new generic products and the development of new
products related to customer projects. These expenses may fluctuate as a
percentage of revenue depending on the projects undertaken during the reporting
period. Since our inception, we have expensed all research and development costs
in each of the periods in which they were incurred.

                                       11

<PAGE>

      Our selling and marketing expenses consist primarily of costs associated
with our direct sales force that have been incurred to attract potential
business customers, professional advisors and commissions. We anticipate that as
we add new customers we will be able to spread these costs over a larger revenue
base and accordingly improve our operating margins.

      Our general and administrative expenses consist primarily of costs related
to compensation and employees benefits of our management (including the costs of
directors' and officers' insurance), legal and accounting fees, as well as the
expenses associated with being a publicly traded company.

      We have not recorded any income tax benefit for net losses and credits
incurred for any period from inception to March 31, 2007. The utilization of
these losses and credits depends on our ability to generate taxable income in
the future. Because of the uncertainty of our generating taxable income, we have
recorded a full valuation allowance with respect to these deferred assets.

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 as of December 31, 2006.

      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. Revenues from product sales are recognized in
accordance with Staff Accounting Bulletin No. 104, "Revenue Recognition in
Financial Statements", or SAB No. 104, 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. Delivery is considered
to have occurred upon shipment of products. We do not grant a right of return to
our customers. Had we had a right of return we would have deferred revenues
until the right of return expired.

      Revenues from certain arrangements may include multiple elements within a
single contract. Our accounting policy complies with the provisions of Emerging
Issues Task Force Issue 00-21, "Revenue Arrangements with Multiple
Deliverables", or EITF 00-21, relating to the separation of multiple
deliverables into individual accounting units with determinable fair value.

      In cases where we have partial delivery at the cut off dates and no fair
value exist for the undelivered elements revenues are being deferred and
recognized only at the point where the entire arrangement has been delivered.

      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.

      OTHER ACCRUED EXPENSES. We also maintain other accrued expenses. These
accruals are based on a variety of factors including past experience and various
actuarial assumptions and, in many cases, require estimates of events not yet
reported to us. If future experience differs from these estimates, operating
results in future periods would be impacted.

                                       12

<PAGE>

THREE MONTHS ENDED MARCH 31, 2007 COMPARED WITH THREE MONTHS ENDED MARCH 31,
2006

      REVENUES. Revenues consist of gross sales of products less discounts. We
are currently concentrating on entering and implementing large-scale projects.
In the three months ended March 31, 2007, we had revenue of $696,000, compared
to $538,000 in the three months ended March 31, 2006.

      COST OF REVENUE. Our cost of revenue consists of materials,
sub-contractors and compensation costs. Cost of revenues was $255,000 in the
three months ended March 31, 2007, compared to $197,000 in the three months
ended March 31, 2006. Cost of revenues as a percentage of sales was 36.6% in the
three months ended March 31, 2007, compared with 36.6% in the three months ended
March 31, 2006.

      Cost of revenue included non-cash expenses of $1,000 related to the
implementation of SFAS No. 123(R).

      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 $70,000, or 30.3%, to $301,000 in the three months
ended March 31, 2007 from $231,000 in the three months ended March 31, 2006.
This increase in research and development expenses is primarily related to
higher research and development expenses related to our RFID project.

      Research and Development Expenses included non-cash expenses of $5,000
related to the implementation of SFAS No. 123(R).

      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 decreased by $71,000, or 13.7%, to $445,000 in the three months
ended March 31, 2007 from $516,000 in the three months ended March 31, 2006.
This decrease in selling and marketing expenses was primarily due to a decrease
of non cash expenses (as a result of the implementation of SFAS No. 123(R)) by
$64,000, to $15,000 in the three months ended March 31, 2007 from $79,000 in the
three months ended March 31, 2006.

      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 decreased by $87,000, or 23.4%, to 284,000
in the three months ended March 31, 2007 from $371,000 in the three months ended
March 31, 2006. This decrease in General and Administrative Expenses was
primarily due to a decrease of non cash expenses (as a result of the
implementation of SFAS No. 123(R)) by $75,000, to $132,000 in the three months
ended March 31, 2007 from $207,000 in the three months ended March 31, 2006.

      FINANCIAL EXPENSES, NET. Financial expenses, net were $504,000 in the
three months ended March 31, 2007. Financial expenses, net was composed of: (i)
Interest expense, net of $41,000 and (ii) non cash financial expenses of
$463,000 related to the convertible note.

      NET LOSS. We had a net loss of $1,093,000 in the three months ended March
31, 2007, compared with a net loss of $605,000 in the three months ended March
31, 2006. The 80.6% increase in net loss in the three months ended March 31,
2007 in comparison with the three months ended March 31, 2006 is attributable
mainly to the a non cash expenses of $153,000 as a result of the implementation
of SFAS No. 123(R), a non cash income of $463,000 related to the convertible
note and various influences described above.

                                       13

<PAGE>

B.    LIQUIDITY AND CAPITAL RESOURCES

      We have incurred substantial losses since our inception in May 2000. We
had an accumulated deficit of approximately $16,192,000 at March 31, 2007, and
had a working capital (current assets less current liabilities) of approximately
$2,645,000 at March 31, 2007.

      Capital expenditures were approximately $11,000 in the three months ended
March 31, 2007 and $48,000 in the three months ended March 31, 2006. We do not
have any material commitments for capital expenditures for the three months
ended March 31, 2007.

      At March 31, 2007, we had cash, cash equivalents and short-term deposits
of approximately $2,158,000, compared to $2,412,000 at December 31, 2006. The
differences from December 31, 2006 to March 31, 2007 are due to our continuing
investments in research and development and selling and marketing expenses.

      We generated negative cash flow from operating activities of approximately
$320,000 in the three months ended March 31, 2007 compared to $720,000 in the
three months ended March 31, 2006.

      We believe that cash generated from operations will provide sufficient
cash resources to finance our operations and the projected expansion of our
marketing and research and development activities for the next twelve months.
However, if our operations do not generate cash to the extent currently
anticipated, or we grow more rapidly than currently anticipated, it is possible
that we would require more funds than presently anticipated.

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 $301,000 in the
three months ended March 31, 2007, compared to $231,000 in the three months
ended March 31, 2006. To date, all research and development expenses have been
charged to operating expense as incurred.

      With respect to the RFID technology being developed by us, we have filed
five patent families related to various aspects of the RFID technology. Two of
our patent families have been already matured into patents granted in the
following jurisdictions: United States (US6, 819,244 and US6, 997,388), France,
Germany, Switzerland and United Kingdom (EP1374156 and EP1599831). Our third
patent family has been matured into a patent granted in the United States (US6,
922,146), while it is still being examined in Europe. Regarding our forth patent
family, we have recently filed an International Patent Application (PCT). In
addition, regarding our fifth patent family, we have only recently filed a
Provisional Patent Application with the United Stated Patent and Trademark
Office, and will need to decide by September 2007 on how to proceed.

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<PAGE>

D.    CONTRACTUAL OBLIGATIONS AND COMMITMENTS

      Our contractual obligations and commitments at March 31, 2007 principally
include obligations associated with operating lease obligations and the lease of
several automobiles. Our total future obligation is approximately $84,000 until
the end of 2007. 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.

      (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.

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

      On December 12, 1999, Secu-Systems filed a lawsuit with the District Court
in Tel Aviv-Jaffa against Supercom Ltd. (InkSure Delaware's former parent
company) and InkSure Ltd. seeking a permanent injunction and damages. The
plaintiff asserted in its suit that the printing method applied to certain
products that have been developed by InkSure Ltd. constitutes, INTER ALIA: (a)
breach of a confidentiality agreement between the plaintiff and Supercom; (b)
unjust enrichment of Supercom and InkSure Ltd.; (c) a breach of fiduciary duties
owed to the plaintiff by Supercom and InkSure Ltd.; and (d) a tort of
misappropriation of trade secret and damage to plaintiff's property. As part of
its complaint, Secu-Systems sought, among other things, an injunction and a 50%
share of profits from the printing method at issue.

      On March 15, 2006, the court rendered a decision (i) denying the claim for
breach of contract; (ii) finding that there was a misappropriation of trade
secret, but not assessing any damages with respect thereto; (iii) requiring the
defendants to cease all activities involving the use of any confidential
information; and (iv) awarding the plaintiff reimbursement of the costs of the
litigation in the amount of NIS 130,000 ($30,800), plus interest and VAT, which
the defendants intend to split equally. InkSure recorded in its 2006 financial
statements a provision of NIS 65,000 ($15,400).

      Both the plaintiff and the defendants have filed an appeal to the court's
decision, and the parties are awaiting the court's decision.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

      None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

      None.

                                       15

<PAGE>

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

      None.

ITEM 5.  OTHER INFORMATION

      None.

ITEM 6.  EXHIBITS

      The following exhibits are being filed with this Report:

Exhibit
Number    Description
-------   -----------

31.1*     Certification of Principal Financial Officer Pursuant to Section 302
          of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Sections 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.

* Filed herewith.

                                       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: May 15, 2007                         By: /s/ Mickey Brandt
                                            -----------------
                                            Mickey Brandt
                                            Chief Financial Officer,
                                            Secretary and Treasurer
                                            (Principal Financial and
                                            Accounting Officer)

Dated: May 15, 2007                         By: /s/ Elie Housman
                                            ----------------
                                            Elie Housman
                                            Chief Executive Officer
                                            (Principal Executive Officer)

                                       17