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 June 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 our Common Stock, par value $0.01 per share,
as of July 30, 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
            June 30, 2007 (unaudited)                                        4

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

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

            Condensed Consolidated Statements of Cash Flows (unaudited)
            for the Six and Three Months Ended June 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             16

Item 5.     Other Information                                               16

Item 6.     Exhibits                                                        17

SIGNATURES                                                                  18


                                        2
<PAGE>


ITEM 1. FINANCIAL STATEMENTS

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

                            INKSURE TECHNOLOGIES INC.

                      CONDENSED CONSOLIDATED BALANCE SHEET

                           (U.S. DOLLARS IN THOUSANDS)

                                                          JUNE 30,
                                                            2007
                                                        ------------
                                                         UNAUDITED
                                                        ------------

   ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                             $        542
  Short-term deposit                                           1,372
  Trade receivables                                              541
  Other accounts receivable and prepaid expenses                 146
  Inventories                                                    482
                                                        ------------

Total current assets                                           3,083
                                                        ------------

PROPERTY AND EQUIPMENT, NET                                      322
                                                        ------------

LONG TERM DEPOSIT                                                 11
                                                        ------------

DEFERRED CHARGES                                                 457
                                                        ------------

GOODWILL                                                         271
                                                        ------------

Total assets                                            $      4,144
                                                        ============

         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)

                                                         JUNE 30,
                                                           2007
                                                       ------------
                                                        UNAUDITED
                                                       ------------

    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES:
  Trade payables                                                444
  Employees and payroll accruals                                123
  Accrued expenses                                              235
                                                       ------------

Total current liabilities                                       802
                                                       ------------

Convertible notes                                             6,290

STOCKHOLDERS' DEFICIENCY:
  Share capital:
    Preferred stock of $ 0.01 par value:
      Authorized: 10,000,000 shares;
      Issued and outstanding: 0 shares as of
      June 30, 2007
    Common Stock of $ 0.01 par value -
      Authorized: 35,000,000 shares;
      Issued and outstanding: 15,972,688 shares
      as of June 30, 2007                                       159
  Additional paid-in capital                                 13,855
  Accumulated other comprehensive income                        118
  Accumulated deficit                                       (17,080)
                                                       ------------

Total stockholders' deficiency                               (2,948)
                                                       ------------

Total liabilities and stockholders' deficiency                4,144
                                                       ============

         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>
                                                  SIX MONTHS ENDED                THREE MONTHS ENDED
                                                       JUNE 30,                          JUNE 30,
                                             ---------------------------       ---------------------------
                                                2007             2006             2007             2006
                                             ----------       ----------       ----------       ----------
                                                     UNAUDITED                         UNAUDITED
                                             ---------------------------       ---------------------------
<S>                                          <C>              <C>              <C>              <C>
Revenues                                     $    1,678       $      977       $      982       $      439
Cost of revenues                                    603              421              348              224
                                             ----------       ----------       ----------       ----------

Gross profit                                      1,075              556              634              215
                                             ----------       ----------       ----------       ----------

Operating expenses:
  Research and development                          683              553              382              322
  Selling and marketing                             902              933              457              417
  General and administrative                        536              639              252              268
                                             ----------       ----------       ----------       ----------

TOTAL operating expenses                          2,121            2,125            1,091            1,007
                                             ----------       ----------       ----------       ----------

Operating loss                                   (1,046)          (1,569)            (457)            (792)
                                             ----------       ----------       ----------       ----------

Financial expenses                                  (90)             (38)             (49)             (44)
Non cash financial expenses related to
convertible notes, net                             (845)             (23)            (382)            (189)
                                             ----------       ----------       ----------       ----------
Financial expenses, net                            (935)             (61)            (431)            (233)

Net loss                                     $   (1,981)      $   (1,630)      $     (888)      $   (1,025)
                                             ==========       ==========       ==========       ==========

Basic and diluted net loss per share         $    (0.12)      $    (0.11)      $    (0.06)      $    (0.07)
                                             ==========       ==========       ==========       ==========

Weighted average number of Common Stock
  used in computing basic and diluted
  net loss per share                         15,972,688       15,308,704       15,972,688       15,381,742
                                             ==========       ==========       ==========       ==========
</TABLE>

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


                                       5
<PAGE>


                            INKSURE TECHNOLOGIES INC.

           STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

                           (U.S. DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                        ACCUMULATED                      TOTAL
                                                            ADDITIONAL     DEFERRED        OTHER                      STOCKHOLDERS'
                                                 SHARE       PAID-IN      STOCK-BASED  COMPREHENSIVE   ACCUMULATED       EQUITY
                                                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                              -           266             -              -             -            266

Amortization of deferred stock-based
   compensation                                       -             -             -              -             -              -
Conversion of 73,529 warrants into 73,529
   ordinary shares                                    1            74             -              -             -             74
Conversion of 12,833 options into 12,833
   ordinary shares                                    -            29             -              -             -             29
Net loss                                              -             -             -              -        (1,981)        (1,981)
                                               --------      --------      --------       --------      --------       --------
Balance as of June 30, 2007                    $    159      $ 13,855             -       $    118      $(17,080)      $ (2,948)
                                               ========      ========      ========       ========      ========       ========
</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>
                                                                              SIX MONTHS ENDED            THREE MONTHS ENDED
                                                                                   JUNE 30,                     JUNE 30,
                                                                            ---------------------       ---------------------
                                                                              2007         2006          2007           2006
                                                                            -------       -------       -------       -------
                                                                                  UNAUDITED                   UNAUDITED
                                                                            ---------------------       ---------------------
<S>                                                                         <C>           <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                    $(1,981)      $(1,630)      $  (889)      $(1,025)
Adjustments to reconcile net loss to net cash used in operating
  activities:
Depreciation and amortization                                                    44            56            22            22
Capital gain (loss) from sales of property                                       (1)           (1)            -            (2)
Decrease (increase) in trade receivables                                       (297)           44           (16)          104
Non cash financial (income) expenses related to convertible notes, net          773           (49)          345           153
Increase in other accounts receivable and prepaid expenses                      363            26            53            53
Decrease (increase) in inventories                                               24           (39)            5            31
Increase (decrease) in trade payables                                           216          (131)          168           (32)
Increase (decrease) in employees and payroll accruals                           (21)            7          (108)           (3)
Non cash financial (income) expenses related to implementation of SFAS
  No. 123                                                                       266           457           113           137
Increase (decrease) in other payables                                            41           (15)           54             7
                                                                            -------       -------       -------       -------
Net cash used in operating activities                                          (573)       (1,275)         (253)         (555)
                                                                            -------       -------       -------       -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment                                              (21)          (63)          (10)          (15)
Proceeds from sales of  property                                                  3             -             -             -
Proceeds from short-term bank deposits                                          637         1,278           259           826
Proceeds from long-term bank deposits                                           (11)            -            (2)            -
                                                                            -------       -------       -------       -------
Net cash provided by investing
  activities                                                                    608         1,215           247           811
                                                                            -------       -------       -------       -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of options                                                             103           190            20           190
Net cash provided by financing
  activities                                                                    103           190            20           190
                                                                            -------       -------       -------       -------
Increase in cash and cash
  equivalents                                                                   138           130            14           446
Cash and cash equivalents at the beginning
  of the period                                                                 403           732           527           416
                                                                            -------       -------       -------       -------
Cash and cash equivalents at the end
of the period                                                               $   541       $   862       $   541       $   862
                                                                            =======       =======       =======       =======
</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

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 June 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 27, 2007. 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.


                                       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 SmartInkTM 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.


                                       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 first half of 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 First half of
2007 approximately 40% 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.


                                       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 June 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 US GAAP. The
significant accounting policies followed in the preparation of the financial
statements, applied on a consistent basis and which have been prepared in
accordance with the historical cost convention, are set forth in Note 2 to the
Consolidated Financial Statements as of December 31, 2006.

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

     REVENUE RECOGNITION. Revenues from product sales are recognized in
accordance with Staff Accounting Bulletin No. 104, "Revenue Recognition in
Financial Statements", or SAB No. 104, when delivery has occurred, persuasive
evidence of an agreement exists, the vendor's fee is fixed or determinable, no
further obligation exists and collectability is probable. Delivery is considered
to have occurred upon shipment of products. We do not grant a right of return to
our customers. Had we had a right of return, we would have deferred revenues
until the right of return expired.

     Revenues from certain arrangements may include multiple elements within a
single contract. Our accounting policy complies with the provisions of Emerging
Issues Task Force Issue 00-21, "Revenue Arrangements with Multiple Deliverables"
("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>


SIX MONTHS ENDED JUNE 30, 2007 COMPARED WITH SIX MONTHS ENDED JUNE 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 six months ended June 30, 2007, we had revenue of $1,678,000, compared to
$977,000 in the six months ended June 30, 2006

     COST OF REVENUE. Our cost of revenue consists of materials, sub-contractors
and compensation costs. Cost of revenue was $603,000 in the six months ended
June 30, 2007, compared to $421,000 in the six months ended June 30, 2006. Cost
of revenue as a percentage of sales was 35.9% in the six months ended June 30,
2007, compared with 43.1% in the six months ended June 30, 2006.

     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 $130,000, or 23.5%, to $683,000 in the six months ended June 30,
2007 from $553,000 in the six months ended June 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.

     Research and Development Expenses included non-cash expenses of $12,000
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 $31,000, or 3.3%, to $902,000 in the six months ended
June 30, 2007 from $933,000 in the six months ended June 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 $66,000, to
$35,000 in the six months ended June 30, 2007 from $101,000 in the six months
ended June 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 $103,000, or 16.1%, to 536,000
in the six months ended June 30, 2007 from $639,000 in the six months ended June
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 $90,000, to $220,000 in the six months ended June 30, 2007 from
$310,000 in the six months ended June 30, 2006.

     FINANCIAL EXPENSES, NET. Financial expenses, net were $935,000 in the six
months ended June 30, 2007. Financial expenses, net were composed of: (i)
Interest expenses, net of $90.000 and (ii) non-cash financial expenses of
$845,000 related to the convertible note.

     NET LOSS. We had a net loss of $1,981,000 in the six months ended June 30,
2007, compared with a net loss of $1,630,000 in the six months ended June 30,
2006. The 21.6% increase in net loss in the six months ended June 30, 2007 in
comparison with the six months ended June 30, 2006 is attributable mainly to the
a non-cash expenses of $266,000 as a result of the implementation of SFAS No.
123(R), a non-cash expenses of $845,000 related to the convertible note and
various influences described above.


                                       12
<PAGE>


THREE MONTHS ENDED JUNE 30, 2007 COMPARED WITH THREE MONTHS ENDED JUNE 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 June 30, 2007, we had revenue of $982,000, compared to
$439,000 in the three months ended June 30, 2006.

     COST OF REVENUE. Our cost of revenue consists of materials, sub-contractors
and compensation costs. Cost of revenues was $348,000 in the three months ended
June 30, 2007, compared to $224,000 in the three months ended June 30, 2006.
Cost of revenues as a percentage of sales was 35.4% in the three months ended
June 30, 2007, compared with 51.0% in the three months ended June 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
increased by $60,000, or 18.6%, to $382,000 in the three months ended June 30,
2007 from $322,000 in the three months ended June 30, 2006. This increase in
research and development expenses is primarily related to higher research and
development expenses related to our RFID project.

     Research and development expenses included non-cash expenses of $7,000
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 increased by $40,000, or 9.6%, to $457,000 in the three
months ended June 30, 2007 from $417,000 in the three months ended June 30,
2006. This increase in selling and marketing expenses was primarily due to a new
VP sales that joined the company in the beginning of 2007 and increase in sales
resulting in increase in sales commissions.

     Selling and Marketing Expenses included non-cash expenses of $20,000
related to the implementation of SFAS No. 123(R).

     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 $16,000, or 6.0%, to 252,000 in
the three months ended June 30, 2007 from $268,000 in the three months ended
June 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 $15,000, to $88,000 in the three months
ended June 30, 2007 from $103,000 in the three months ended June 30, 2006.

     FINANCIAL EXPENSES, NET. Financial expenses, net were $431,000 in the three
months ended June 30, 2007. Financial expenses, net were composed of: (i)
Interest expense, net of $49,000 and (ii) non-cash financial expenses of
$382,000 related to the convertible note.

     NET LOSS. We had a net loss of $888,000 in the three months ended June 30,
2007, compared with a net loss of $1,025,000 in the three months ended June 30,
2006. The 13.4% decrease in net loss in the three months ended June 30, 2007 in
comparison with the three months ended June 30, 2006 is attributable mainly to
higher sales with higher gross margins, and additional 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 $17,080,000 at June 30, 2007, and had a
working capital (current assets less current liabilities) of approximately
$2,281,000 at June 30, 2007.

     Capital expenditures were approximately $21,000 in the six months ended
June 30, 2007 and $10,000 in the three months ended June 30, 2007. We do not
have any material commitments for capital expenditures for the six months ended
June 30, 2007.

     At June 30, 2007, we had cash, cash equivalents and short-term deposits of
approximately $1,914,000, compared to $2,412,000 at December 31, 2006. The
differences from December 31, 2006 to June 30, 2007 are due to our continuing
investments in research and development and selling and marketing expenses. . We
generated negative cash flow from operating activities of approximately $573,000
in the six months ended June 30, 2007 compared to $1,275,000 in the six months
ended June 30, 2006.

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

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 $683,000 in the
six months ended June 30, 2007, compared to $553,000 in the six months ended
June 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 patent
family, we have recently filed an International Patent Application (PCT). In
addition, regarding our fifth patent family, we have only recently filed a
Provisional Patent Application with the United Stated Patent and Trademark
Office, and will need to decide by September 2007 on how to proceed.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

     Our contractual obligations and commitments at June 30, 2007 principally
include obligations associated with operating lease obligations and the lease of
several automobiles. Our total future obligation is approximately $56,000 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.

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

        None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None.


                                       15
<PAGE>


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

     At the annual meeting of stockholders held on June 26, 2007, the
stockholders elected the Board of Directors and voted upon two additional Board
proposals contained within the Proxy Statement dated April 30, 2007. The Board
nominees were elected with the following vote:

         NOMINEE                                    FOR                 WITHHELD
         -----------------------               ---------------          --------

         Elie Housman                             14,576,445             16,405

         Yaron Meerfeld                           14,578,470             14,380

         Philip M. Getter                         14,568,470             24,380

         David W. Sass                            14,580,590             12,260

         Albert Attias                            14,579,690             13,160

         Pierre L. Schoenheimer                   14,578,665             14,185

         Randy F. Rock                            14,580,690             12,160

         Samuel N. Seidman                        14,537,930              4,400

The Board proposals were approved with the following vote:

<TABLE>
<CAPTION>
                                                               ABSTENTION
                                                              (OTHER THAN
                                                                 BROKER        BROKER
          PROPOSAL                   FOR          AGAINST      NON-VOTES)     NON-VOTES
-----------------------------     ----------      --------      --------      --------
<S>                               <C>              <C>             <C>               <C>
Approval of an amendment to the
certificate of incorporation
to increase the number of
authorized shares of common
stock to 50,000,000               13,942,775       648,914         2,179             0

Ratify the selection of
Brightman Almagor &Co.,
a member firm of Deloitte
Touch Tohmatsu, as
independent auditors              14,575,589        14,760         2,500             0
</TABLE>

ITEM 5. OTHER INFORMATION

        None.


                                       16
<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.


                                       17
<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 1, 2007                      By: /s/ Mickey Brandt
                                           ---------------------
                                           Mickey Brandt
                                           Chief Financial Officer,
                                           Secretary and Treasurer
                                           (Principal Financial Officer)

Dated: August 1, 2007                      By: /s/ Elie Housman
                                           --------------------
                                           Elie Housman
                                           Chief Executive Officer and Chairman
                                           (Principal Executive Officer)


                                       18