UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                 FOR THE QUARTERLY PERIOD ENDED ON JUNE 30, 2008

                          (COMMISSION FILE NO. 0-24431)

                                   ----------

                            INKSURE TECHNOLOGIES INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                 DELAWARE                               84-1417774
      State or other jurisdiction of        (I.R.S. Employer Identification No.)
      incorporation or organization

1770 N.W. 64TH STREET, SUITE 350, FORT LAUDERDALE, FL              33309
    (Address of principal executive offices)                     (Zip Code)

                                 (954) 772-8507
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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.

                               [X] Yes     [_] No

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of "accelerated filer" "large accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [_]                 Accelerated filer [_]
Non-accelerated filer [_]                   Smaller reporting company [X]

Indicate by checkmark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act)

                               Yes [_]     No [X]

The number of shares of Common Stock outstanding as of [August ______, 2008]:
16,472,968


<PAGE>


                            INKSURE TECHNOLOGIES INC.

                               INDEX TO FORM 10-Q

                                                                           PAGE
PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

         CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2008
         (UNAUDITED)                                                        3

         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
         FOR THE SIX AND THREE MONTHS ENDED ON JUNE 30, 2008 AND 2007       4

         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
         FOR THE SIX AND THREE MONTHS ENDED ON JUNE 30, 2008  AND 2007      5

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         6

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION          7

ITEM 3   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK        13

ITEM 4.  CONTROLS AND PROCEDURES                                           13

PART II. OTHER INFORMATION                                                 13

ITEM 1.  LEGAL PROCEEDINGS                                                 13

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS       14

ITEM 6.  EXHIBITS                                                          15

SIGNATURES                                                                 16


                                       2
<PAGE>


ITEM 1. FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                            INKSURE TECHNOLOGIES INC.

                      CONDENSED CONSOLIDATED BALANCE SHEET

                           (U.S. DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                         JUNE 30,         DEC.31,
                                                                           2008            2007
                                                                         --------        --------
                                                                         UNAUDITED        AUDITED
                                                                         --------        --------
<S>                                                                      <C>             <C>
       ASSETS

CURRENT ASSETS:
     Cash and cash equivalents                                           $  1,393        $    820
     Trade receivables                                                        171             453
     Other accounts receivable and prepaid expenses                           738             225
     Inventories                                                              465             399
                                                                         --------        --------

TOTAL CURRENT ASSETS                                                        2,767           1,897

PROPERTY AND EQUIPMENT, NET                                                   316             352
LONG TERM DEPOSIT                                                              14              17
DEFERRED CHARGES                                                              516             385
GOODWILL                                                                      271             271
                                                                         --------        --------

TOTAL ASSETS                                                             $  3,884        $  2,922
                                                                         ========        ========

       LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES:
     Trade payables                                                      $    212        $    284
     Employees and payroll accruals                                           174             204
     Accrued expenses and other payables                                      447             362
                                                                         --------        --------

TOTAL CURRENT LIABILITIES                                                     833             850

Convertible notes, net                                                      6,875           5,691

TOTAL LIABILITIES                                                           7,708           6,541
                                                                         --------        --------

STOCKHOLDERS' DEFICIENCY:
Capital Stock:
       Preferred stock of $ 0.01 par value - Authorized:
       10,000,000 shares; Issued and outstanding:
       0 shares as of June 30, 2008 (0 shares as of June 30, 2007)
       Common stock of $ 0.01 par value - Authorized: 35,000,000;
       Issued and outstanding: 16,472,968 shares as of June 30,
       2008 (15,972,688 shares as of June 30, 2007)                           164             161
   Additional paid-in capital                                              16,719          14,279
   Accumulated other comprehensive income                                     118             118
   Accumulated deficit                                                    (20,825)        (18,177)
                                                                         --------        --------

TOTAL STOCKHOLDERS' DEFICIENCY                                             (3,824)         (3,619)
                                                                         --------        --------

TOTAL LIABILITIES AND  STOCKHOLDERS' DEFICIENCY                          $  3,884        $  2,922
                                                                         ========        ========
</TABLE>

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


                                       3
<PAGE>


                            INKSURE TECHNOLOGIES INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

          (U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED                      SIX MONTHS ENDED
                                                          JUNE 30,                               JUNE 30,
                                              --------------------------------        --------------------------------
                                                  2008                 2007                2008                2007
                                              ------------        ------------        ------------        ------------
                                                          UNAUDITED                              UNAUDITED
                                              --------------------------------        --------------------------------
<S>                                           <C>                 <C>                 <C>                 <C>
Revenues                                      $        281        $        982        $        499        $      1,678
Cost of revenues                                        53                 348                 176                 603
                                              ------------        ------------        ------------        ------------

GROSS PROFIT                                           228                 634                 323               1,075
                                              ------------        ------------        ------------        ------------

Operating expenses:
   Research and development                            468                 382               1,070                 683
   Selling and marketing                               242                 457                 612                 902
   General and administrative                          242                 252                 521                 536
                                              ------------        ------------        ------------        ------------

TOTAL OPERATING EXPENSES                               952               1,091               2,203               2,121
                                              ------------        ------------        ------------        ------------

OPERATING LOSS                                        (724)               (457)             (1,880)             (1,046)
                                              ------------        ------------        ------------        ------------

Financial expenses                                    (140)                (49)               (215)                (90)
Non cash financial expenses related to
   convertible notes, net                             (702)               (382)               (553)               (845)
                                              ------------        ------------        ------------        ------------
Financial expenses, net                               (842)               (431)               (768)               (935)

Net loss                                      $     (1,566)       $       (888)       $     (2,648)       $     (1,981)
                                              ============        ============        ============        ============

Basic and diluted net loss per share          $      (0.10)       $      (0.06)       $      (0.16)       $      (0.12)
                                              ============        ============        ============        ============

Weighted average number of Common Stock
   used in computing basic and diluted
   net loss per share                           16,336,430          15,972,688          16,292,522          15,972,688
                                              ============        ============        ============        ============
</TABLE>

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


                                       4
<PAGE>


                            INKSURE TECHNOLOGIES INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                           (U.S. DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                       SIX MONTHS ENDED
                                                                                           JUNE 30,
                                                                                     ----------------------
                                                                                      2008            2007
                                                                                     -------        -------
                                                                                            UNAUDITED
                                                                                     ----------------------
<S>                                                                                  <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                             $(2,648)       $(1,981)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization                                                            142             44
Capital gain (loss) from sales of property                                                 -             (1)
Decrease (increase) in trade receivables                                                 282           (297)
Non cash financial income expenses related to convertible notes, net                     458            773
Increase in other accounts receivable and prepaid expenses                              (513)           363
Decrease (increase) in inventories                                                       (66)            24
Increase (decrease) in trade payables                                                    (72)           216
Decrease in employees and payroll accruals                                               (30)           (21)
Non cash financial (income) expenses related to implementation of SFAS No. 123           170            266
Increase (decrease) in other payables                                                     85             41
                                                                                     -------        -------
Net cash used in operating activities                                                 (2,192)          (573)
                                                                                     -------        -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment                                                       (13)           (21)
Proceeds from sales of property                                                            -              3
Proceeds from short-term bank deposits                                                     -            637
Proceeds from long-term deposits                                                           3            (11)
                                                                                     -------        -------
Net cash provided by investing activities                                                (10)           608
                                                                                     -------        -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of new convertible notes, net of legal fees                                   2,775              -
Receipt on account of stocks                                                               -            103
                                                                                     -------        -------
Net cash provided by financing activities                                              2,775            103
                                                                                     -------        -------

Increase in cash and cash equivalents                                                    573            138
Cash and cash equivalents at the beginning of the period                                 820            403
                                                                                     -------        -------
Cash and cash equivalents at the end of the period                                   $ 1,393        $   541
                                                                                     =======        =======
</TABLE>

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


                                       5
<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-Q 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 June 30, 2008 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, 2007 that are included in the
Company's Form 10-KSB filed with the Securities and Exchange Commission on March
31, 2008, as amended (the "2007 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, 2008.

NOTE 2:- GOING CONCERN

     As reflected in the accompanying financial statements, the Company's
operations for the three months ended on June 30, 2008, resulted in a net loss
of $1,566,000 (including non-cash expenses of $54,000), and the Company's
balance sheet reflects a net stockholders' deficiency of $3,824,000. The
Company's ability to continue operating as a "going concern" is dependent on
several factors, among them is its ability to raise sufficient additional
working capital. Management's plans in this regard include, among others,
raising additional cash from current and potential stockholders and lenders, and
increasing the marketing of its current and new products.

NOTE 3:- 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 has 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 (about $38,800 based on the exchange
rate as of June, 30, 2008), plus interest and value added tax, which the
defendants intend to split equally. InkSure recorded in its 2006 financial
statements a provision of NIS 65,000 (about $19,400 at the exchange rate as of
June 30, 2008)

Both the plaintiff and the defendants appealed the court's decision.

     On November 1, 2007, the Supreme Court ruled in favor of Secu-Systems'
appeal. This ruling accepts that InkSure and Supercom have breached the
confidentiality agreement. Consequently, the appeal that had been filed by
InkSure and Supercom was dismissed. The Supreme Court instructed that the case
will be returned to the District Court for determining the remedies to which
Secu-Systems is entitled to.

     On February 18, 2008, Secu-Systems filed a petition with the district court
to amend the amount for which it has sued to NIS 25,000,000 (approx. $
7,460,000). The Company intends to file an answer to the petition.

     On March 24, 2008, SuperCom (which changed its name to Vuance Ltd) provided
the Company with an opinion, according to which, the following conclusions can
be drawn:

a)   In light of the costs analysis, SuperCom had no economical profit from the
     sale of the Company shares.

b)   The consideration received from the sale of the Company shares on 2002,
     incorporates the value of the cash flow of the Company following the sale.
     Therefore, a calculation based upon both the sale price and the future cash
     flow of the Company is not accurate and does not agree with customary
     accountant standards, since it calculates the factor of the future cash
     flow twice.

c)   The examination of the results of the Company's business activity from
     2002-2007, as reflected in its financial statements, show that the Company
     had not made any profit, and incurred losses during such periods. The
     financial statements also reflect that the Company had negative cash flow
     during these years, which was financed by bank loans and fund raising.

     In light of the above, provided that the opinion is adopted by the court,
the management of the Company and counsel handling the lawsuit believe that no
material amounts will be awarded to Secu-System in these proceedings.


                                       6
<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-Q 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-Q.

     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.

     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.


                                       7
<PAGE>


     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.

     These factors should be read in connection with the Risk Factors set forth
in the 2007 10-KSB.

     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 second quarter of 2008 include revenues from (i)
our sales agreements with four North American customers; and (ii) sales related
to projects in other two European customers. In the second quarter of 2008,
approximately 30% 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.

     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 June 30, 2008. 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, 2007 that are included in
the 2007 10-KSB.

     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" 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"
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.


                                       8
<PAGE>


     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.

THREE MONTHS ENDED JUNE 30, 2008 COMPARED WITH THREE MONTHS ENDED JUNE 30, 2007

     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 June 30, 2008, we had revenue of $281,000, compared to
$982,000 in the three months ended June 30, 2007. The decrease in the revenue is
mainly due to lack of orders from our four largest customers in 2007 as compared
to the three months ended on June 30, 2007. The company is now seeking new
projects or orders from existing and new customers.

     COST OF REVENUES. Our costs of revenues consist of materials,
sub-contractors and compensation costs. Cost of revenues was $53,000 in the
three months ended June 30, 2008, compared to $348,000 in the three months ended
June 30, 2007. Cost of revenues as a percentage of sales was 19% in the three
months ended on June 30, 2008, compared with 35% in the three months ended June
30, 2007. The decrease in costs of revenue, as a percentage of sales, in the
three months ended on June, 30 2008 was primarily related to more profitable
sales mix.

     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 $86,000, or 22%, to $468,000 in the three months ended June 30,
2008 from $382,000 in the three months ended June 30, 2008. This increase in
research and development expenses is primarily related to increased research and
development activities related to our RFID project.

     Research and Development Expenses included non-cash expenses of $4,000
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 expenses decreased by $215,000, or 47%, to $242,000 in the three
months ended on June 30, 2008 from $457,000 in the three months ended June 30,
2007. This decrease in selling and marketing expenses was primarily due to a
decrease in our sales force labor headcount and costs.

     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 $10,000, or 4%, to $242,000 in
the three months ended on June 30, 2008 from $252,000 in the three months ended
on June 30, 2007.

     FINANCIAL EXPENSES, NET. Financial expenses, net were $842,000 in the three
months ended on June 30, 2008. Financial expenses, net were composed of: (i)
Interest expense, net of $140,000 and (ii) non cash financial expenses of
$702,000 related to the convertible note. Financial expenses, net increased by
$411,000 or 95% from $431,000 in the three months ended on June 30, 2007. This
increase in financial expenses, net was primarily due to the higher interest
rate accrued on a higher amount of outstanding principle of our senior secured
convertible notes and changes in the fair market value of the outstanding
convertible notes.

     NET LOSS. We had a net loss of $1,566,000 in the three months ended on June
30, 2008, compared with a net loss of $888,000 in the three months ended on June
30, 2007. The 76% increase in net loss in the three months ended on June 30,
2008 compared to the three months ended on June 30, 2007 is attributable to the
decrease in our gross profit ($406,000) and increase in our financial expenses,
net ($411,000), which were partially offset by the decrease in the total
operating expenses of $139,000.

SIX MONTHS ENDED JUNE 30, 2008 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2007

     REVENUES. Revenues consist of gross sales of products less discounts. We
are currently concentrating on entering and implementing large-scale projects.
In the six months ended on June 30, 2008, we had revenue of $499,000, compared
to $1,678,000 in the six months ended on June 30, 2007. The decrease in the
revenue is mainly due to lack of orders from four major customers as compared to
the six months ended on June 30, 2007. The compnay is now seeking new projects
or orders from existing and new customers.


                                       9
<PAGE>


     COST OF REVENUES. Our costs of revenues consist of materials,
sub-contractors and compensation costs. Cost of revenues was $176,000 in the six
months ended on June 30, 2008, compared to $603,000 in the six months ended June
30, 2007. Cost of revenues as a percentage of sales was 35% in the six months
ended on June 30, 2008, compared with 36% in the six months ended June 30, 2007.

     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 $387,000, or 57%, to $1,070,000 in the six months ended June 30,
2008 from $683,000 in the six months ended June 30, 2008. This increase in
research and development expenses is primarily related to increased research and
development activities related to our RFID project.

     Research and Development Expenses included non-cash expenses of $16,000
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 expenses decreased by $290,000, or 32%, to $612,000 in the six
months ended on June 30, 2008 from $902,000 in the six months ended June 30,
2007. This decrease in selling and marketing expenses was primarily due to a
decrease in our sales force labor headcount and costs.

     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 $15,000, or 3%, to $521,000 in
the six months ended on June 30, 2008 from $536,000 in the six months ended on
June 30, 2007.

     FINANCIAL EXPENSES, NET. Financial expenses, net were $768,000 in the six
months ended on June 30, 2008. Financial expenses, net was composed of: (i)
Interest expense, net of $215,000 and (ii) non cash financial expenses of
$553,000 related to the convertible note. Financial expenses, net decreased by
$167,000 or 18% from $935,000 in the six months ended on June 30, 2007. This
decrease in financial expenses, net was primarily due to changes in the fair
market value of the outstanding convertible notes.

     NET LOSS. We had a net loss of $2,648,000 in the six months ended on June
30, 2008, compared with a net loss of $1,981,000 in the six months ended on June
30, 2007. The 34% increase in net loss in the six months ended on June 30, 2008
compared to the six months ended on June 30, 2007 is attributable to the
decrease in our gross profit ($752,000) and increase in our Operating expenses
($82,000), which were partially offset by the decrease in the financial
expenses, net of $167,000.


                                       10
<PAGE>


B.   LIQUIDITY AND CAPITAL RESOURCES

     We have incurred substantial losses since our inception in May 2000. We
have an accumulated a deficit of approximately $20,825,000 as of June 30, 2008,
and had negative working capital (current assets less current liabilities) of
approximately $1,934,000 as of June 30, 2008. Losses are continuing and will
continue in the foreseeable future.

     Capital expenditures were approximately $13,000 in the six months ended on
June 30, 2008 and $21,000 in the six months ended on June 30, 2007. These
expenditures were principally for computers and research and development
equipment purchases. We do not have any material commitments for capital
expenditures as of June 30, 2008.

     As of June 30, 2008, we had cash, cash equivalents and short-term deposits
of approximately $1,393,000 (excluding funds in the cash collateral account that
secures the interest payments on our convertible notes), compared to $541,000 as
of June 30, 2007. This increase is primarily the result of the receipt of
proceeds from our recent issuance of convertible notes executed on April 9th,
2008.

     We had negative cash flow from operating activities of approximately
$2,192,000 during the six months ended on June 30, 2008 compared to $573,000
during the six months ended on June 30, 2007. The negative cash flow from
operating activities during the six months ended on June 30, 2008 was attributed
to the net loss of approximately $2,648,000, partially offset by $458,000 of non
cash financial income, net related to convertible notes.

     We had negative cash flow from investing activities of approximately
$10,000 during the six months ended on June 30, 2008 compared to positive cash
flow of $608,000 during the six months ended on June 30, 2007. The negative cash
flow from investing activities during the six months ended on June 30, 2008 was
primarily due to purchase of fixed assets.

     We believe that our existing cash will be sufficient to support our
operations for the next twelve months. Continuing product development and
enhancement, expected new product launches, corporate operations and marketing
expenses will continue to require additional capital. Our current revenues from
operations are insufficient to cover our projected expansion plans.

     On September 30, 2005, we completed a private placement of convertible
notes, in the aggregate principal amount of $6,000,000. The notes were
interest-only, with interest payments due quarterly at the rate of 4% per year.
The convertible notes were unsecured and will become due on September 30, 2010;
the investors have the option to cause us to redeem the notes on September 30,
2009. These notes were exchanged for new notes with the terms as per the new
$3,000,000 notes issued on April 9, 2008.

     On April 9, 2008, we completed a private placement of senior secured
convertible notes in an aggregate principal amount of $3,000,000 pursuant to
Amendment, Exchange and Purchase Agreements. The private placement resulted in
gross proceeds of $3,000,000, of which $750,000 was placed in a cash collateral
account to secure interest payments under the notes.

     Pursuant to the agreements, the investors were issued $3,000,000 principal
amount of new notes and exchanged their $6,000,000 principal amount of existing
notes for the same principal amount of amended and restated senior secured
convertible notes (together with the $3,000,000 principal amount of new notes,
referred to as the "new notes") each of which is convertible into shares of
common stock at a conversion price is $0.60, subject to adjustment. The new
notes are secured by our assets and the assets of our subsidiaries and are
guaranteed by each of our subsidiaries. In addition, all of the shares of each
of our subsidiaries are pledged as collateral to secure our obligations under
the new notes, the security agreements and related documents. The investors may
require us to redeem all or any portion of the outstanding principal amount of
the new notes in cash plus accrued but unpaid interest on or after September 30,
2009. We may require the investors to convert all or any portion of the new
notes into shares of common stock upon the occurrence of certain conditions
relating to the trading price of our common stock. Upon any such conversion, the
investors will be entitled to receive a pro rata amount of the cash deposit in
the collateral account which we have established to secure interest payments
under the new notes based on the principal amount of the new notes that we
require to be converted. We may also redeem the new notes at any time by paying
the buyers a premium of 5%-25% of the outstanding principal amount of the notes
(based upon the time of redemption) plus interest and the amounts initially
secured in the collateral account; at the time of such redemption we will also
issue to the buyers warrants to purchase common stock, expiring on September 30,
2010, at an exercise price of $0.60. If we sell or license all or substantially
all of the assets in our ink business, we may be required to redeem the new
notes at 100% of their outstanding principal amount up to the net proceeds of
such sale or licensing transaction. If we consummate a transaction that results
in a change of control or other merger or reorganization or recapitalization, we
may be required to redeem the new notes at 125% of their outstanding principal
amount. The new notes are due on September 30, 2010, unless they are redeemed or
converted earlier. In addition, we issued to the buyers warrants to acquire
3,570,337 shares at an exercise price of $0.60. These warrants have a term of
ten years.

     During the second quarter of 2008, certain holders of out Senior Secured
Convertible Notes converted an aggregate principal amount of $118,920 of Senior
Secured Convertible Notes for an aggregate of 198,200 shares of our common stock
(at a conversion price of $0.60 per share). At the time of each such conversion,
in addition to the issuance of common stock, we paid to the converting entity
the outstanding interest on the principal amount of the Senior Secured
Convertible Note converted and a pro-rata amount of the cash collateral account
established to secure interest payments on the Senior Secured Convertible Notes.


                                       11
<PAGE>


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 $1,070,000 during
the six months ended on June 30, 2008, compared to $683,000 during the six
months ended on June 30, 2007. To date, all research and development expenses
have been charged to operating expense as incurred.

     With respect to the RFID technology we are developing, we have filed five
patent families related to various aspects of the RFID technology. Two of our
patent families have 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 fourth
patent family, we have recently filed an International Patent Application (PCT).
In addition, regarding our fifth patent family, we have filed a Provisional
Patent Application with the United Stated Patent and Trademark Office, and we
will file by May 7, 2008 International Patent Application (PCT).

     With respect to the product-authentication we are developing, we have
entered into an assignment agreement by which InkSure has acquired
AuthentiForm's entire intellectual property portfolio of enhanced
product-authentication technology. The AuthentiForm portfolio includes methods
to establish authenticity and identify products at the item level by encoding
high information-density, invisible, and essentially tamper-proof signatures
within a product's formulation, on its surface, or through incorporation into
its packaging. AuthentiForm technology enables dynamic codes without
substantially changing the chemical composition of a product or its components,
which makes the AuthentiForm technology particularly attractive for use with
pharmaceutical products.

D.   CONTRACTUAL OBLIGATIONS AND COMMITMENTS

     Our contractual obligations and commitments on June 30, 2008 principally
include obligations associated with office lease obligations and the operating
lease of several automobiles. Our total future obligation is approximately
$16,000 until the end of 2008. We expect to finance these contractual
commitments from cash on hand and cash generated from operations.

     During 2007 and up to June 30, 2008, we have received a governmental
research and development grant of approximately US$434,000 from the Office of
the Chief Scientist (OCS) at the Ministry of Trade and Industry of the
Government of Israel. This royalties-bearing research and development grant
partially covers our innovative RFID research and development project expenses.
Royalties would become due to OCS only if the RFID research and development
project funded by the grant is successfully commercialized and results in sales
revenues. The royalty rate is 3% of the sales revenues based on the RFID
research and development project funded by the grant, and is capped at the grant
amount received from the OCS. We have no assurance that the RFID project or
commercialization plan would be successful.

     On October 1, 2007, we engaged with a contractor for the receipt of
development services and design of Transmitter Receiver Module (TRM) for the
RFID project. In this service agreement, among other things, the subcontractor
is entitled to payment in an amount equal to 10% of the production and assembly
costs of the TRM paid by us for the first 10,000 units or for 4 years whichever
ends first only if such units will be produce by a person other than the
subcontractor.

     On May 28, 2006, we engaged with a contractor for consulting, development
and assistance services. In this service agreement, among other things, the
contractor is entitled to a 1% royalty on sales of antennas and front ends
through 2009 as payment for consulting, development and assistance services
during the transfer of antennas and front ends into mass production.


                                       12
<PAGE>


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. 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-Q, 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-Q 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 (about $38,800 at the exchange rate as
of June 30, 2008), plus interest and VAT, which the defendants intend to split
equally. InkSure recorded in its 2006 financial statements a provision of NIS
65,000 (about $19,400 at the exchange rate as of June 30, 2008).

Both the plaintiff and the defendants appealed the court's decision.

On November 1, 2007, the Supreme Court ruled in favor of Secu-Systems' appeal.
This ruling accepts that InkSure and Supercom have breached the confidentiality
agreement. Consequently, the appeal that had been filed by InkSure and Supercom
was dismissed. The Supreme Court instructed that the case will be returned to
the District Court for determining the remedies to which Secu-Systems is
entitled.

On February 18, 2008, Secu-Systems filed a petition with the district court to
amend the amount for which it has sued to NIS 25,000,000 (Approx. $ 7,460,000).
The company intends to file an answer to the petition.

On March 24, 2008, SuperCom (which changed its name to Vuance Ltd.) provided us
with an opinion according to which, the following conclusions can be drawn:

     a.   In light of the costs analysis, SuperCom had no economical profit from
          the sale of Inksure's shares.

     b.   The consideration received from the sale of Inksure's shares on 2002,
          incorporates the value of the cash flow of InkSure following the sale.
          Therefore, a calculation based upon both the sale price and the future
          cash flow of InkSure is not accurate and does not agree with customary
          accountant standards, since it calculates the factor of the future
          cash flow twice.

     c.   The examination of the outcome of InkSure's business activity from
          2002-2007, as reflected in its financial reports, show that InkSure
          had not made any profit, and incurred losses during such period. The
          financial statements also reflect that InkSure had negative cash flow
          during these years, which was financed by bank loans and fund raising.

In light of the above, provided that the opinion is adopted by the court, the
management of InkSure and its counsel handling the lawsuit believe that no
material amounts will be awarded to Secu-System in these proceedings.


                                       13
<PAGE>


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

During the second quarter of 2008, certain holders of out Senior Secured
Convertible Notes converted an aggregate principal amount of $118,920 of Senior
Secured Convertible Notes for an aggregate of 198,200 shares of our common stock
(at a conversion price of $0.60 per share). At the time of each such conversion,
in addition to the issuance of common stock, we paid to the converting entity
the outstanding interest on the principal amount of the Senior Secured
Convertible Note converted and a pro-rata amount of the cash collateral account
established to secure interest payments on the Senior Secured Convertible Notes.


                                       14
<PAGE>


ITEM 6. EXHIBITS

The following exhibits are being filed with this Report:

   EXHIBIT
    NUMBER          DESCRIPTION
---------------     ----------------

31.1*               Certification of Principal Executive Officer Pursuant to
                    Section 302 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
                    Sections 1350.

31.2*               Certification of Principal Financial 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 Pursuant to
                    Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
                    Section 1350.

32.2*               Certification of Principal Financial Officer Pursuant to
                    Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
                    Section 1350.

* Filed herewith.


                                       15
<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: August 13, 2008                            By: /s/ Tzlil Peker
                                                  ------------------------
                                                  Tzlil Peker
                                                  Chief Financial Officer,
                                                  Secretary and Treasurer
                                                  (Principal Financial Officer)

Dated: August 13, 2008                            By: /s/ Yaron Meerfeld
                                                  ---------------------------
                                                  Yaron Meerfeld
                                                  Acting Chief Executive Officer
                                                  (Principal Executive Officer)


                                       16