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

                                   FORM 10-QSB

                                   (Mark One)

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

                For the quarterly period ended September 30, 2007

          [_]  Transition report under Section 13 or 15(d) of the Securities
               Exchange Act of 1934

        For the transition period from _______________ to _______________

                         Commission File Number: 0-24431

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

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

           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) 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 the issuer's common stock, par value $0.01
per share, as of November 6, 2007, was [16,094,442].

Transitional Small Business Disclosure Format (check one):

                               Yes [_]     No [X]

<PAGE>


                            INKSURE TECHNOLOGIES INC.

                              INDEX TO FORM 10-QSB

                                                                        PAGE

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements                                             3

         Condensed Consolidated Balance Sheet as of
         September 30, 2007 (unaudited)                                   4

         Condensed Consolidated Statements of Operations
         (unaudited) for the Nine and Three Months Ended
         September 30, 2007 and 2006                                      5

         Statements of Stockholders' Equity (Deficiency)
         as of September 30, 2007 (unaudited after December
         31, 2006)                                                        6

         Condensed Consolidated Statements of Cash Flows
         (unaudited) for the Nine and Three Months Ended
         September 30, 2007 and 2006                                      7

         Notes to Consolidated Financial Statements                       8

Item 2.  Management's Discussion and Analysis or Plan of Operation        9

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             15

Item 5.  Other Information                                               15

Item 6.  Exhibits                                                        16

SIGNATURES                                                               17

<PAGE>


ITEM 1. FINANCIAL STATEMENTS

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

                            INKSURE TECHNOLOGIES INC.

                      CONDENSED CONSOLIDATED BALANCE SHEET

                           (U.S. DOLLARS IN THOUSANDS)

                                                    SEPTEMBER 30,
                                                       2007
                                                      ------
                                                     UNAUDITED
                                                      ------

   ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                           $  889
  Short-term deposit                                     305
  Trade receivables                                      694
  Other accounts receivable and prepaid expenses         435
  Inventories                                            489
                                                      ------
Total current assets                                   2,812
                                                      ------

LONG TERM DEPOSIT                                         15
                                                      ------

PROPERTY AND EQUIPMENT, NET                              318
                                                      ------

DEFERRED CHARGES                                         421
                                                      ------

GOODWILL                                                 271
                                                      ------

Total assets                                          $3,837
                                                      ======

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


                                       3
<PAGE>


                            INKSURE TECHNOLOGIES INC.

                      CONDENSED CONSOLIDATED BALANCE SHEET

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

                                                              SEPTEMBER 30,
                                                                  2007
                                                                --------
                                                                UNAUDITED
                                                                --------

    LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Trade payables                                                $    342
  Employees and payroll accruals                                     168
  Accrued expenses and other liabilities                             290
                                                                --------
Total current liabilities                                            800
                                                                --------

Convertible note                                                   5,531
                                                                --------

STOCKHOLDERS' DEFICIENCY:
  Share capital:
    Preferred stock of $ 0.01 par value:
      Authorized: 10,000,000 stocks at September 30, 2007;
      Issued and outstanding: 0 stocks at
      September 30, 2007
    Common Stock of $ 0.01 par value -
      Authorized: 50,000,000 stocks at September 30, 2007;
      Issued and outstanding: 16,095,072
      stocks at September 30, 2007                                   161
  Additional paid-in capital                                      14,145
  Accumulated other comprehensive income                             118
  Accumulated deficit                                            (16,918)
                                                                --------
Total stockholders' equity deficiency                             (2,494)
                                                                --------

Total liabilities and stockholders' equity deficiency           $  3,837
                                                                ========

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


                                       4
<PAGE>


                            INKSURE TECHNOLOGIES INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                             NINE MONTHS ENDED                    THREE MONTHS ENDED
                                                               SEPTEMBER 30,                         SEPTEMBER 30,
                                                     -------------------------------       -------------------------------
                                                         2007              2006               2007               2006
                                                     ------------       ------------       ------------       ------------
                                                                UNAUDITED                             UNAUDITED
                                                     -------------------------------       -------------------------------
<S>                                                  <C>                <C>                <C>                <C>
Revenues                                             $      2,432       $      1,210       $        754       $        233
Cost of revenues                                              843                562                240                141
                                                     ------------       ------------       ------------       ------------
Gross profit                                                1,589                648                514                 92
                                                     ------------       ------------       ------------       ------------

Operating expenses:
  Research and development                                    900                853                217                300
  Selling and marketing                                     1,342              1,420                440                487
  General and administrative                                  891              1,017                355                378
                                                     ------------       ------------       ------------       ------------
TOTAL operating expenses                                    3,133              3,290              1,012              1,165
                                                     ------------       ------------       ------------       ------------

Operating loss                                             (1,544)            (2,642)              (498)            (1,073)
                                                     ------------       ------------       ------------       ------------

Financial expenses                                           (155)               (83)               (65)               (44)
Non cash financial income (expenses)
related to convertible notes, net                            (120)               116                725                139
                                                     ------------       ------------       ------------       ------------
Financial income (expenses), net                             (275)                33                660                 95
                                                     ------------       ------------       ------------       ------------

Net income (loss)                                    $     (1,819)      $     (2,609)      $        162       $       (978)
                                                     ============       ============       ============       ============

Basic net income (loss) per share                    $      (0.11)      $      (0.17)      $       0.01       $      (0.06)
                                                     ============       ============       ============       ============

Weighted average number of Common Stock used in
  computing basic net loss per share                   15,852,008         15,408,302         16,033,880         15,094,337
                                                     ============       ============       ============       ============

Diluted net income (loss) per share                  $      (0.11)      $      (0.17)      $       0.01       $      (0.06)
                                                     ============       ============       ============       ============

Weighted average number of Common Stock used in
  computing diluted net loss per share                 15,852,008         15,408,302         16,367,799         15,094,337
                                                     ============       ============       ============       ============
</TABLE>

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



                                       5
<PAGE>

                            INKSURE TECHNOLOGIES INC.

                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 1, 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 warrants 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                                -           401             -              -             -            401

Amortization of deferred stock-based
compensation                                            -             -             -              -             -              -
Conversion of 253,181 warrants into 137,655
   ordinary shares                                      2           132             -              -             -            134
Conversion of 97,833 options into 97,833
   ordinary shares                                      1           126             -              -             -            127
Net loss                                                -             -             -              -        (1,819)        (1,819)
                                                 --------      --------      --------       --------      --------       --------

Balance as of September 30, 2007                 $    161      $ 14,145             -       $    118      $(16,918)      $ (2,494)
                                                 ========      ========      ========       ========      ========       ========
</TABLE>

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


                                       6
<PAGE>


                            INKSURE TECHNOLOGIES INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                           (U.S. DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                          NINE MONTHS ENDED          THREE MONTHS ENDED
                                                            SEPTEMBER 30,               SEPTEMBER 30,
                                                        ---------------------       ---------------------
                                                          2007          2006          2007          2006
                                                        -------       -------       -------       -------
                                                              UNAUDITED                   UNAUDITED
                                                        ---------------------       ---------------------
<S>                                                     <C>           <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                       $(1,819)      $(2,609)      $   162       $  (978)
Adjustments to reconcile net loss to net cash used
  in operating activities:
Depreciation and amortization                               175           104            60            34
Increase in accrued severance pay, net                       (1)          (17)            -           (18)
Decrease (increase) in trade receivables                   (450)          183          (153)          140
Non cash financial (income) expenses related to
  convertible notes, net                                     13          (223)         (759)         (174)
Decrease (Increase) in other accounts receivable
  and prepaid expenses                                        2            69          (289)           54
Decrease (increase) in inventories                           17           (86)           (7)          (47)
Increase (decrease) in trade payables                       114          (248)         (102)         (117)
Increase in employees and payroll accruals                   24            16            45            10

Non cash financial expenses related to
  implementation of SFAS No. 123                            401           726           135           270
Increase (decrease) in other payables                        98           (44)           55           (29)
                                                        -------       -------       -------       -------
Net cash used in operating activities                    (1,426)       (2,129)         (853)         (855)
                                                        -------       -------       -------       -------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment                          (41)          (66)          (20)           (3)
Proceeds from sale of property                                3             -             -             -
Proceeds from short-term bank deposits                    1,704         1,594         1,067           316
Proceeds from long-term deposit                             (15)            -            (4)            -
                                                        -------       -------       -------       -------
Net cash provided by investing activities                 1,651         1,528         1,043           313
                                                        -------       -------       -------       -------

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of options                                         261           190           157             -
                                                        -------       -------       -------       -------
Net cash provided by financing activities                   261           190           157             -
                                                        -------       -------       -------       -------
Increase (decrease) in cash and cash
  equivalents                                               486          (411)          347          (542)
Cash and cash equivalents at the beginning
  of the period                                             403           731           542           862
                                                        -------       -------       -------       -------
Cash and cash equivalents at the end
of the period                                           $   889       $   320       $   889       $   320
                                                        =======       =======       =======       =======
</TABLE>

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


                                       7
<PAGE>


                            INKSURE TECHNOLOGIES INC.

        NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                           (U.S. DOLLARS IN THOUSANDS)

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 September 30,
     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 30, 2006, 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.

NOTE 2 GOING CONCERN

     As reflected in the accompanying financial statements, the Company's
     operations for the nine month ended September 30, 2007, resulted in a net
     loss of $1,819 (including non-cash expenses of $521), and the Company's
     balance sheet reflects a net stockholders' deficiency of $2,494. 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.


                                       8
<PAGE>


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

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

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

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

OVERVIEW

     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.

     In order to continue as a going concern, pursue our operations and further
develop our products, we will need to obtain additional funds. (See Note 2 of
the Company's Condensed Consolidated interim financial statements included in
this Quarterly Report and "Liquidity and Capital Resources" below.)

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 the demand for our products
and services may decline, and/or there may be a pressure on the pricing of our
products and services.


                                       9
<PAGE>


     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 projects are subject to a long sales cycle and the
timetable is lengthy for entering and implementing such projects. These
potential projects also 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 nine months ended September
30, 2007 consisted of revenues from (i) our sales agreements for brand
protection with two North American customers; (ii) ink sales related to projects
in Turkey and another European country; and (iii) initial sales to new
customers. In the nine months ended September 30, 2007, approximately 39% 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 revenue 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.


                                       10
<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 September 30, 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 Generally Accepted
Accounting Principles in the United States (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 of our Annual Report on Form 10-KSB for the year ended 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"
("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.


                                       11
<PAGE>


NINE MONTHS ENDED SEPTEMBER 30, 2007 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 2006

REVENUES. Revenues consist of gross sales of products less discounts. We are
currently concentrating on entering and implementing large-scale projects. In
the nine months ended September 30, 2007, we had revenue of $2,432,000, compared
to $1,210,000 in the nine months ended September 30, 2006

COST OF REVENUE. Our cost of revenue consists of materials, sub-contractors and
compensation costs. Cost of revenue was $843,000 in the nine months ended
September 30, 2007, compared to $562,000 in the nine months ended September 30,
2006. Cost of revenue as a percentage of sales was 34.7% in the nine months
ended September 30, 2007, compared with 46.4% in the nine months ended September
30, 2006.

RESEARCH AND DEVELOPMENT EXPENSES. NET, 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,
net, increased by $47,000, or 5.5%, to $900,000 in the nine months ended
September 30, 2007 from $853,000 in the nine months ended September 30, 2006.
This increase in research and development expenses is primarily related to
higher research and development expenses related to our Radio Frequency
Identification ("RFID") project, and was partly compensated by a $251,000 grant
from the chief scientist also related to our RFID project.

     Research and Development Expenses included non-cash expenses of $20,000
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 $78,000, or 5.5%, to $1,342,000 in the nine months ended September
30, 2007 from $1,420,000 in the nine months ended September 30, 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
$93,000, to $55,000 in the nine months ended September 30, 2007 from $148,000 in
the nine months ended September 30, 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 $126,000, or 12.4%, to 891,000
in the nine months ended September 30, 2007 from $1,017,000 in the nine months
ended September 30, 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 $181,000, to $327,000 in the nine months
ended September 30, 2007 from $508,000 in the nine months ended September 30,
2006.

FINANCIAL EXPENSES, NET. Financial expenses, net were $275,000 in the nine
months ended September 30, 2007. Financial expenses, net were composed of: (i)
Interest expenses, net of $155,000 and (ii) non-cash financial expenses of
$120,000 related to the convertible note.

NET LOSS. We had a net loss of $1,819,000 in the nine months ended September 30,
2007, compared with a net loss of $2,609,000 in the nine months ended September
30, 2006. The 30.3% decrease in net loss in the nine months ended September 30,
2007 in comparison with the nine months ended September 30, 2006 is attributable
mainly to increase in sales, higher gross margins, decrease in non-cash expenses
of $325,000 as a result of the implementation of SFAS No. 123(R), and various
influences described above.


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<PAGE>


THREE MONTHS ENDED SEPTEMBER 30, 2007 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 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 September 30, 2007, we had revenue of $754,000, compared
to $233,000 in the three months ended September 30, 2006.

COST OF REVENUE. Our cost of revenue consists of materials, sub-contractors and
compensation costs. Cost of revenues was $240,000 in the three months ended
September 30, 2007, compared to $141,000 in the three months ended September 30,
2006. Cost of revenue as a percentage of sales was 31.8% in the three months
ended September 30, 2007, compared with 60.5% in the three months ended
September 30, 2006.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses consist
primarily of compensation costs attributable to employees' engagement in ongoing
research and development activities, development-related raw materials and
sub-contractors, and other related costs. Research and development expenses
decreased by $83,000, or 27.7%, to $217,000 in the three months ended September
30, 2007 from $300,000 in the three months ended September 30, 2006. This
decrease in research and development expenses is primarily related to a $251,000
grant from the chief scientist also related to our RFID project, compensated by
to higher research and development expenses related to our Radio Frequency
Identification ("RFID") project

     Research and development expenses included non-cash expenses of $8,000
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' engagement in sales
and marketing activities, promotion, advertising, trade shows and exhibitions,
sales support, travel, commissions and related expenses. Selling and marketing
decreased by $47,000, or 9.6%, to $440,000 in the three months ended September
30, 2007 from $487,000 in the three months ended September 30, 2006. This
decrease in selling and marketing expenses was primarily due to lower non-cash
expenses of $20,000 related to the implementation of SFAS No. 123(R), compared
to $47,000 in the same period last year.

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 $23,000, or 6%, to 355,000 in
the three months ended September 30, 2007 from $378,000 in the three months
ended September 30, 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 $91,000, to $107,000 in the three months
ended September 30, 2007 from $198,000 in the three months ended September 30,
2006. On the other hand, we had higher legal expenses in the three months ended
September 30, 2007, compared with the same period last year.

FINANCIAL EXPENSES, NET. Financial income, net was $660,000 in the three months
ended September 30, 2007. Financial income, net was composed of: (i) Interest
expense, net of $65,000 and (ii) non-cash financial income of $725,000 related
to the convertible note.

NET INCOME. We had a net income of $162,000 in the three months ended September
30, 2007, compared with a net loss of $978,000 in the three months ended
September 30, 2006. The net income in the three months ended September 30, 2007
in comparison with the net loss in the three months ended September 30, 2006 is
attributable mainly to higher sales with higher gross margins, financial income
in the three months ended September 30, 2007 versus financial expenses in the
same period last year and the various influences, as described above.


                                       13
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

     We have incurred substantial losses since our inception in May 2000. We had
an accumulated deficit of approximately $16,918,000 at September 30, 2007, and
had working capital (current assets less current liabilities) of approximately
$2,012,000 at September 30, 2007.

     Capital expenditures were approximately $41,000 in the nine months ended
September 30, 2007 and $20,000 in the three months ended September 30, 2007. We
do not have any material commitments for capital expenditures for the nine
months ended September 30, 2007.

     At September 30, 2007, we had cash, cash equivalents and short-term
deposits of approximately $1,194,000, compared to $2,412,000 at December 31,
2006. The differences from December 31, 2006 to September 30, 2007 are due to
our continuing investments in research and development and selling and marketing
expenses. We generated negative cash flows from operating activities of
approximately $1,426,000 in the nine months ended September 30, 2007 compared to
$2,129,000 in the nine months ended September 30, 2006.

     We believe that our existing cash, together with cash generated from
operations, may only be sufficient to support our operations through the end of
the first quarter of 2008. 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.

     The consolidated financial statements have been presented on the basis that
we will continue as a going concern. However, our ability to continue as a going
concern is dependent upon number of factors, including our ability to obtain
additional capital. Therefore, our management is currently interviewing
investment banking firms with a view to engaging them to raise additional
capital or to dispose of part of our operations for cash. Management's plans
also include cost cuts, raising additional cash from current stockholders and
increasing the marketing of its current and new products. However, no assurance
can be given that we will be able to obtain additional capital on terms
favorable to us, or that additional capital will be available to us at all. Our
ability to raise capital is impeded by the full ratchet anti-dilution provisions
of our convertible notes. Such provisions, unless waived or modified, would make
equity financing at less than $3.00 per share extremely dilutive to our existing
shareholders.

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 $900,000 in the
nine months ended September 30, 2007, compared to $853,000 in the nine months
ended September 30, 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 and
fifth patent families, we have recently filed an International Patent
Application (PCT).

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

     Our contractual obligations and commitments at September 30, 2007
principally include obligations associated with operating lease obligations and
the lease of several automobiles. Our total future obligation is approximately
$46,000 until the end of 2007. We expect to finance these contractual
commitments from cash on hand and cash generated from operations.


                                       14
<PAGE>



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.

     On November 1, 2007, the Supreme Court accepted Secu-Systems' appeal and
stated 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.

     In addition, certain warrantholders have taken the position that the
exercise prices of their warrants should be substantially reduced due to
penalties relating to an alleged failure to maintain the effectiveness of a
registration statement. Based on their position as to the reduced price, such
warranholders have attempted to cashlessly exercise such warrants at the reduced
price. We do not agree with their calculations and, accordingly, have not
effected such attempted exercises. There can be no assurance that such
warrantholders will not seek to pursue their claims or that we will ultimately
prevail in this dispute. If the warrantholders prevail, it could result in the
issuance of a significant number of shares of common stock which would dilute
our current stockholders, which could, in turn, lead to claims by others. In any
event, the allegations of the warrantholders could embroil us in costly legal
proceedings if they pursue their claim. Accordingly, the foregoing may have a
material adverse effect on our capital structure, our financial resources and on
other areas of our business.

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

     None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     None.

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

     None.

ITEM 5. OTHER INFORMATION

     None.


                                       15
<PAGE>


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: November 14, 2007                   By: /s/ Mickey Brandt
                                           ---------------------
                                           Mickey Brandt
                                           Chief Financial Officer,
                                           Secretary and Treasurer
                                           (Principal Financial Officer)

Dated: November 14, 2007                   By: /s/ Elie Housman
                                           --------------------
                                           Elie Housman
                                           Chief Executive Officer and Chairman
                                           (Principal Executive Officer)


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