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

                                    FORM 10-Q

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

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2009

                          (COMMISSION FILE NO. 0-24431)

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

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

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                               [X] Yes     [_] No

Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).

                               [_] Yes     [_] No

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

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

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

                               Yes [_]     No [X]

The number of shares of Common Stock outstanding as of May 1, 2009: 16,472,968


<PAGE>


                            INKSURE TECHNOLOGIES INC.

                               INDEX TO FORM 10-Q

                                                                           PAGE

PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

           CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2009
           (UN-AUDITED)                                                     3

           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
           FOR THE THREE MONTHS ENDED ON MARCH 31, 2009 AND 2008            4

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
           FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008               5

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                       6

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

ITEM 3     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      12

ITEM 4.    CONTROLS AND PROCEDURES                                         12

PART II.   OTHER INFORMATION                                               12

ITEM 1.    LEGAL PROCEEDINGS                                               12

ITEM 2.    EXHIBITS                                                        13

SIGNATURES                                                                 14


                                       2
<PAGE>


ITEM 1. FINANCIAL STATEMENTS

                            INKSURE TECHNOLOGIES INC.
                      CONDENSED CONSOLIDATED BALANCE SHEET
                           (U.S. DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                     MARCH 31,          DEC.31,
                                                                      2009               2008
                                                                  -------------      -------------
                                                                    UNAUDITED           AUDITED
                                                                  -------------      -------------
<S>                                                               <C>                <C>
       ASSETS

CURRENT ASSETS:
     Cash and cash equivalents                                    $       1,744      $       1,826
     Restricted Cash                                                        231                365
     Trade receivables                                                      203                104
     Other accounts receivable and prepaid expenses                          51                 73
     Deferred charges                                                       341                400
     Inventories                                                            278                322
                                                                  -------------      -------------

TOTAL CURRENT ASSETS                                                      2,848              3,090

PROPERTY AND EQUIPMENT, NET                                                 256                279
LONG TERM DEPOSIT                                                             9                  9
                                                                  -------------      -------------

TOTAL ASSETS                                                      $       3,113      $       3,378
                                                                  =============      =============

       LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES:
     Trade payables                                               $         155      $         225
     Employees and payroll accruals                                         145                133
     Accrued expenses and other payables                                    512                648
     Convertible notes                                                    7,318              7,087
                                                                  -------------      -------------

TOTAL CURRENT LIABILITIES                                                 8,130              8,093

     Warrants to issue shares                                             1,455                  -

TOTAL LIABILITIES                                                 $       9,585      $       8,093

STOCKHOLDERS' DEFICIENCY:
Capital Stock:
   Preferred stock of $ 0.01 par value - Authorized:
   10,000,000 shares; Issued and outstanding: 0
   shares as of March 31,2009 and as of December 31, 2008
   Common stock of $ 0.01 par value - Authorized: 50,000,000;
   Issued and outstanding: 16,472,968 as
   of March 31,2009 and as of December 31, 2008                             164                164
   Additional paid-in capital                                            13,622             16,708
   Accumulated other comprehensive income                                   118                118
   Accumulated deficit                                                  (20,376)           (21,705)
                                                                  -------------      -------------

TOTAL STOCKHOLDERS' DEFICIENCY                                           (6,472)            (4,715)
                                                                  -------------      -------------

TOTAL LIABILITIES AND  STOCKHOLDERS' DEFICIENCY                   $       3,113      $       3,378
                                                                  =============      =============
</TABLE>

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


                                       3
<PAGE>


                            INKSURE TECHNOLOGIES INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                                         THREE MONTHS ENDED
                                                                              MARCH 31,
                                                                  --------------------------------
                                                                       2009              2008
                                                                  -------------      -------------
                                                                             UNAUDITED
                                                                  --------------------------------
<S>                                                               <C>                <C>

Revenues                                                          $         781      $         219
Cost of revenues                                                             79                125
                                                                  -------------      -------------

GROSS PROFIT                                                                702                 94
                                                                  -------------      -------------
Operating expenses:
   Research and development, net                                            235                602
   Selling and marketing                                                    176                370
   General and administrative                                               196                279
                                                                  -------------      -------------

TOTAL OPERATING EXPENSES                                                    607              1,251
                                                                  -------------      -------------

OPERATING PROFIT (LOSS)                                                      95             (1,157)

OTHER INCOME (EXPENSE)
Financial expenses                                                         (130)               (75)
Non cash financial income (expenses) related to
convertible notes and warrants, net                                        (866)               149
                                                                  -------------      -------------
Financial income (expenses), net                                           (996)                74

NET LOSS                                                          $        (901)     $      (1,083)
                                                                  =============      =============

Basic and diluted net loss per share                              $       (0.05)     $       (0.07)
                                                                  =============      =============

Weighted average number of Common Stock used in
computing basic and diluted net loss per share                       16,472,968         16,248,812
                                                                  =============      =============
</TABLE>

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


                                       4
<PAGE>


                            INKSURE TECHNOLOGIES INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                           (U.S. DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                         THREE MONTHS ENDED
                                                                              MARCH 31,
                                                                  --------------------------------
                                                                      2009               2008
                                                                  -------------      -------------
                                                                             UNAUDITED
                                                                  --------------------------------
<S>                                                               <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

   Net loss                                                       $        (901)     $      (1,083)
   Adjustments to reconcile net loss to net cash
   used in operating activities:
     Depreciation and amortization                                           83                 60
     Decrease in restricted cash                                            134                  -
     Decrease (increase) in trade receivables                               (99)               346
     Non cash financial (income) expenses related to
     convertible notes, net                                                 231               (185)
     Non cash financial expenses related to warrants to
     issue shares                                                           577                  -
     Decrease in other accounts receivable and
     prepaid expenses                                                        22                 41
     Decrease (increase) in inventories                                      44                (31)
     Increase (decrease) in trade payables                                  (70)                75
     Increase in employees and payroll accruals                              12                  3
     Non cash financial expenses related to
     implementation of SFAS No. 123                                          22                116
     Increase (decrease) in other payables                                 (136)               195
                                                                  -------------      -------------

Net cash used for operating activities                                      (81)              (463)
                                                                  -------------      -------------

CASH FLOWS FROM INVESTING ACTIVITIES:

   Purchase of property and equipment                                        (1)               (12)
   Proceeds from long-term bank deposits                                      -                  -
                                                                  -------------      -------------

Net cash provided by (used for) investing activities                         (1)               (12)
                                                                  -------------      -------------

CASH FLOWS FROM FINANCING ACTIVITIES:

Net cash provided by financing activities                                     -                  -
                                                                  -------------      -------------

Decrease in cash and cash equivalents                                       (82)              (475)
Cash and cash equivalents at the beginning of the period                  1,826                820
                                                                  -------------      -------------

Cash and cash equivalents at the end of the period                $       1,744      $         345
                                                                  =============      =============
</TABLE>

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


                                       5
<PAGE>


NOTE 1:- BASIS OF PRESENTATION

     The accompanying condensed unaudited interim consolidated financial
statements have been prepared by INKSURE TECHNOLOGIES INC. (the "Company") in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and the instructions to Form 10-Q and
Article 10 of Regulation S-X. These financial statements reflect all
adjustments, consisting of normal recurring adjustments and accruals, which are,
in the opinion of management, necessary for a fair presentation of the financial
position of the Company as of March 31, 2009 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, 2008 that are included in the
Company's Form 10-K filed with the Securities and Exchange Commission on March
31, 2009, as amended (the "2008 10-K"). 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, 2009.

NOTE 2:- GOING CONCERN

     As reflected in the accompanying financial statements, the Company's
operations for the three months ended on March 31, 2009, resulted in a net loss
of $901,000, and the Company's balance sheet reflects a net stockholders'
deficiency of $6,472,000. The Company's ability to continue operating as a
"going concern" is dependent on several factors, among them is its ability to
raise sufficient additional working capital and that the notes holders will not
elect to redeem their approximately $9 million principal notes on or after
September 30, 2009. Management's plans in this regard include, among other
things, raising additional cash from current and potential stockholders or
lenders and negotiating the repayment terms of the existing Notes.

NOTE 3:- LEGAL PROCEEDINGS

     On December 12, 1999, Secu-Systems filed a lawsuit with the District Court
in Tel Aviv-Jaffa against Supercom Ltd. (the former owner of the company's
business) 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 (by virtue of the sale of our shares) and InkSure
Ltd.; (c) a breach of fiduciary duties owed to the plaintiff by Supercom and
InkSure Ltd.; and (d) a tort of misappropriation of trade secret and damage to
plaintiff's property. As part of its complaint, Secu-Systems sought, among other
things, an injunction and a 50% share of profits from the printing method at
issue.

     On March 15, 2006, the court rendered a decision (i) denying the claim for
breach of contract; (ii) finding that there was a misappropriation of trade
secret, but not assessing any damages with respect thereto; (iii) requiring the
defendants to cease all activities involving the use of any confidential
information; and (iv) awarding the plaintiff reimbursement of the costs of the
litigation in the amount of NIS 130,000 (about $31,000 at the exchange rate as
of March 31, 2009), plus interest and VAT, which the defendants intend to split
equally. InkSure recorded in its 2006 financial statements a provision of NIS
65,000 (about $15,500 at the exchange rate as of March 31, 2009).

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

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

     On February 18, 2008, Secu-Systems filed a petition with the district court
to amend the amount for which it has sued to NIS 25,000,000 (Approximately $
5,970,000 at the exchange rate as of March 31, 2009).

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

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

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

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

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


                                       6
<PAGE>


NOTE 4:- WARRANTS TO ISSUE SHARES

     The Company initially applied the provisions of EITF 07-5 DETERMINING
WHETHER AN INSTRUMENT (OR EMBEDDED FEATURE) IS INDEXED TO AN ENTITY'S OWN STOCK
in this interim financial statements. The result of the application was that
warrants series A, B1 and B2 were determined to be not solely indexed to the
Company's shares and have to be classified as liability. The reason for the
reclassification was an anti-dilution clause dependent upon future fund raising
that may adjust the exercise price of the warrants. The Company evaluated the
fair values of the reclassified warrants as of the date of initial application
(January 1, 2009). The difference between the fair value and the fair value at
issuance of the warrants (classified initially in equity) was recognized in
retained earnings. As of January 1, 2009 these warrants are carried at fair
values with changes recognized in earnings.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

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

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

     The following discussion and analysis should be read in conjunction with
the financial statements, related notes and other information included in this
Quarterly Report on Form 10-Q and with the Risk Factors included in the 2008
10-K.

     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 governments, 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.

     We are currently working on the development of next-generation RFID
technology that is being designed to enable low-cost tagging of items. This RFID
technology is being designed to permit "no line of sight" identification and to
be suitable for a variety of applications, including authentication, supply
chain management, proof of ownership, and life cycle information.

     REVENUES

     We are concentrating on developing 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. We anticipate that these
projects would involve high volume sales through multiple-year sales contracts.
In the first quarter of 2009, approximately 90% of our revenues were earned from
one customer located in Europe.


                                       7
<PAGE>


     COSTS AND OPERATING EXPENSES

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

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

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

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

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

     We have not recorded any income tax benefit for net losses and credits
incurred for any period from inception to March 31, 2009. 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 and for the year ending December 31,
2008 that are included in the 2008 10-K.

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

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

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

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

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

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



THREE MONTHS ENDED MARCH 31, 2009 COMPARED WITH THREE MONTHS ENDED MARCH 31,
2008

     REVENUES. Revenues consist of gross sales of products less discounts. We
are concentrating on developing and implementing large-scale projects. In the
three months ended March 31, 2009, we had revenue of $781,000, compared to
$219,000 in the three months ended March 31, 2008. The increase in the revenue
is mainly due to the receipt and delivery of larger orders from a customer
located in Europe.


                                       8
<PAGE>


     COST OF REVENUES. Our cost of revenues consists of materials,
sub-contractors and compensation costs. Cost of revenues was $79,000 in the
three months ended March 31, 2009, compared to $125,000 in the three months
ended March 31, 2008. Cost of revenues as a percentage of sales was 10% in the
three months ended March 31, 2009, compared with 57% in the three months ended
March 31, 2008. The decrease in costs of revenue, as a percentage of sales, in
the three months ended on March, 31 2009 was mainly due to more profitable sales
of certain SmartInkTM products in 2009.

     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
decreased by $367,000, or 61%, to $235,000 in the three months ended March 31,
2009 from $602,000 in the three months ended March 31, 2008. This decrease in
research and development expenses is primarily related to the receipt of a
governmental R&D grant (approximately $140,000) and reduction in subcontractors
(approximately $100,000) and labor expenses (approximately $140,000).

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

     SELLING AND MARKETING EXPENSES. Selling and marketing expenses consist
primarily of costs relating to compensation attributable to employees engaged in
sales and marketing activities, promotion, advertising, trade shows and
exhibitions, sales support, travel, commissions and related expenses. Selling
and marketing expenses decreased by $194,000, or 52%, to $176,000 in the three
months ended March 31, 2009 from $370,000 in the three months ended March 31,
2008. This decrease in selling and marketing expenses was primarily due to a
decrease in our sales force labor and other related expenses.

     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 $83,000, or 30%, to $196,000 in
the three months ended March 31, 2009 from $279,000 in the three months ended
March 31, 2008. This decrease in general and administrative expenses is mainly
due to the decrease in the non-cash expenses related to the implementation of
SFAS No. 123(R).

     FINANCIAL EXPENSES, NET. Financial expenses, net were $996,000 in the three
months ended March 31, 2009. Financial expenses, net were composed of: (i)
Interest expense, net of $130,000 and (ii) non cash financial expenses of
$866,000 related to the convertible notes and warrants.

     NET LOSS. We had a net loss of $901,000 in the three months ended March 31,
2009, compared with a net loss of $1,083,000 in the three months ended March 31,
2008. The 17% decrease in net loss in the three months ended March 31, 2009
compared to the three months ended March 31, 2008 is attributable to the
increase in our gross profit ($608,000) and decrease in our operating expenses
($644,000), which were offset by the increase ($1,070,000) in the non-cash
financial expenses related to the convertible notes and warrants.


                                       9
<PAGE>


     LIQUIDITY AND CAPITAL RESOURCES

     We have incurred substantial losses since our inception in April 1997. We
had an accumulated deficit of approximately $20,376,000 as of March 31, 2009,
and had a negative working capital (current assets less current liabilities) of
approximately $5,282,000 as of March 31, 2009. Losses are continuing and will
continue in the foreseeable future.

     Capital expenditures were approximately $1,000 in the three months ended
March 31, 2009 and $12,000 in the three months ended March 31, 2008. These
expenditures were principally for computers and research and development
equipment purchases. We do not have any material commitments for capital
expenditures as of March 31, 2009.

     As of March 31, 2009, we had cash, cash equivalents and short-term deposits
of approximately $1,744,000, compared to $1,826,000 as of December 31, 2008.
This decrease is primarily due to the cash used for operating activities during
the first quarter of 2009.

     We had negative cash flow from operating activities of approximately
$81,000 during the three months ended on March 31, 2009 compared to $463,000
during the three months ended on March 31, 2008. The negative cash flow from
operating activities during the three months ended on March 31, 2009 was
attributed to the net loss of approximately $901,000, offset by $231,000
non-cash financial expenses related to the convertible notes and $577,000
non-cash financial expenses related to the warrants to issue shares.

     We had negative cash flow from investing activities of approximately $1,000
during the three months ended on March 31, 2009 compared to positive cash flow
of $12,000 during the three months ended on March 31, 2008. The negative cash
flow from investing activities during the three months ended on March 31, 2009
was due to purchase of fixed assets.

     We believe that our existing cash, together with cash to be collected from
customers and governmental grants, will be sufficient to support our operations
for the next twelve months. However, we do not have the funds necessary to repay
the approximately $9 million principal amount outstanding under our senior
secured convertible notes (the "Convertible Notes") if the holders elect to
redeem them on or after September 30, 2009. 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 long term business plans.

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

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

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


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<PAGE>


     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 $235,000 during
the three months ended March 31, 2009, compared to $602,000 during the three
months ended March 31, 2008. To date, all research and development expenses have
been charged to operating expense as incurred.

     With respect to the RFID technology we are developing, we have filed five
patent families related to various aspects of the RFID technology. Two of our
patent families have already matured into patents granted in the following
jurisdictions: United States (US6,819,244), France, Germany, Switzerland and
United Kingdom (EP1374156 and EP1599831). Our third patent family has matured
into a patent granted in the United States (US6,922,146), while it is still
being examined in Europe. Regarding our fourth patent family, we have filed an
International Patent Application (PCT). In addition, during the second quarter
of 2008, we filed a PCT relating to our fifth patent family.

     With respect to the product-authentication we are developing, we entered
into an assignment agreement by which we have acquired a license for certain of
AuthentiForm Technology LLC's intellectual property portfolio regarding
authentication methods and enhanced product-authentication technology. We are
currently evaluating this intellectual property portfolio to determine whether
or not to pursue its use

     CONTRACTUAL OBLIGATIONS AND COMMITMENTS

     Our contractual obligations and commitments at March 31, 2009 principally
include obligations associated with operating lease obligations and the lease of
several automobiles. Our total future obligation is approximately $186,000 until
September, 2011. We expect to finance these contractual commitments from cash on
hand and cash generated from operations.

     During 2008 and through March 31, 2009, we received a governmental research
and development grant of approximately US$972,000 (of which US$306,000 were
received during 2007 and US$484,000 were received during 2008) from the Office
of the Chief Scientist (OCS) at the Ministry of Trade and Industry of the
Government of Israel. This royalties-bearing research and development grant
partially covers our innovative research and development project expenses.
Royalties would become due to OCS only if the RFID research and development
project funded by the grant is successfully commercialized and results in sales
revenues based on the know-how developed during the RFID project. The royalty
rate is 3%-4% of the sales revenues based on the RFID research and development
project funded by the grant, and is capped at the grant amount actually received
from the OCS plus interest. We have no assurance that the RFID project or
commercialization plan will be successful.


                                       11
<PAGE>


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are a smaller reporting company, as defined by Rule 12b-2 of the
Exchange Act of 1934, as amended, and are not required to provide information
under this item.

ITEM 4. CONTROLS AND PROCEDURES

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

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

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     On December 12, 1999, Secu-Systems filed a lawsuit with the District Court
in Tel Aviv-Jaffa against Supercom Ltd. (the former owner of the company's
business) 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 (by virtue of the sale of our shares) and InkSure
Ltd.; (c) a breach of fiduciary duties owed to the plaintiff by Supercom and
InkSure Ltd.; and (d) a tort of misappropriation of trade secret and damage to
plaintiff's property. As part of its complaint, Secu-Systems sought, among other
things, an injunction and a 50% share of profits from the printing method at
issue.

     On March 15, 2006, the court rendered a decision (i) denying the claim for
breach of contract; (ii) finding that there was a misappropriation of trade
secret, but not assessing any damages with respect thereto; (iii) requiring the
defendants to cease all activities involving the use of any confidential
information; and (iv) awarding the plaintiff reimbursement of the costs of the
litigation in the amount of NIS 130,000 (about $31,000 at the exchange rate as
of March 31, 2009), plus interest and VAT, which the defendants intend to split
equally. InkSure recorded in its 2006 financial statements a provision of NIS
65,000 (about $15,500 at the exchange rate as of March 31, 2009).

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

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

     On February 18, 2008, Secu-Systems filed a petition with the district court
to amend the amount for which it has sued to NIS 25,000,000 (Approximately $
5,970,000 at the exchange rate as of March 31, 2009).

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

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

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

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

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


                                       12
<PAGE>


ITEM 2. 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.


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<PAGE>


                                   SIGNATURES

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

                                                 INKSURE TECHNOLOGIES INC.

Dated: May 15, 2009                              By: /s/ Tzlil Peker
                                                 ----------------------
                                                 Tzlil Peker
                                                 Chief Financial Officer,
                                                 Secretary and Treasurer
                                                 (Principal Financial Officer)

Dated: May 15, 2009                              By: /s/ Yaron Meerfeld
                                                 ----------------------
                                                 Yaron Meerfeld
                                                 Acting Chief Executive Officer
                                                 (Principal Executive Officer)


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