New York Global Innovations Inc. – ‘424B4’ on 8/29/03

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Prospectus   —   Rule 424(b)(4)
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Document/Exhibit                   Description                      Pages   Size 

 1: 424B4       Prospectus                                            93    428K 

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                                                Filed Pursuant to Rule 424(b)(4)
                                                     Registration No. 333-101790

PROSPECTUS

 INKSURE TECHNOLOGIES INC.
 32 Broadway
Suite 1314
New York, New York 10004
(212) 269-0370

8,070,752 Shares of Common Stock

   We are registering up to 8,070,752 shares of our common stock for sale by
certain shareholders of our company identified in this prospectus. These        
shareholders are referred to throughout this prospectus as "selling             
securityholders."                                                               

These selling stockholders who wish to sell their shares of our common
stock may offer and sell their shares on a continuous or delayed basis in the   
future. These sales may be conducted in the open market or in privately         
negotiated transactions and at market prices, fixed prices or negotiated prices.
We will not receive any of the proceeds from the sales of shares by the selling 
securityholders but we may receive funds from the exercise of their warrants.   

   Our common stock is currently listed on the OTC Electronic Bulletin Board
under the symbol "INKS.OB." On August 27, 2003, the last reported sale price of 
our common stock on the OTC Electronic Bulletin Board was $1.45 per share.      

   Our principal executive offices are located at 32 Broadway, New York, New
York 10004, and our telephone number at such address is (212) 269-0370.         

     Our common stock being offered by this prospectus involves a high degree of
risk. You should read the "Risk Factors" section beginning on page 5 before you 
decide to purchase any common stock.                                            

     Neither the Securities and Exchange Commission nor any state commission has
approved or disapproved of these securities or passed upon the adequacy or      
accuracy of this prospectus. Nor have they made, nor will they make, any        
determination as to whether anyone should buy these securities. Any             
representation to the contrary is a criminal offense.                           

The date of this prospectus is August 28, 2003. 

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 TABLE OF CONTENTS

PROSPECTUS SUMMARY............................................................1 

  SUMMARY OF INKSURE TECHNOLOGIES INC........................................1
  SUMMARY OF THE OFFERING....................................................3

SELECTED FINANCIAL INFORMATION................................................4 

RISK FACTORS..................................................................5 

USE OF PROCEEDS..............................................................14 

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.....................15 

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION....................18 

BUSINESS.....................................................................24 

LEGAL PROCEEDINGS............................................................34 

DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS............................34 

EXECUTIVE COMPENSATION.......................................................36 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...............43 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE......................45 

SELLING SECURITYHOLDERS......................................................46 

PLAN OF DISTRIBUTION.........................................................53 

DESCRIPTION OF CAPITAL STOCK.................................................54 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...............................55 

SHARES ELIGIBLE FOR FUTURE SALE..............................................56 

HOW TO OBTAIN MORE INFORMATION ABOUT INKSURE TECHNOLOGIES INC................56 

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT         
LIABILITIES..................................................................57 

LEGAL MATTERS................................................................58 

EXPERTS......................................................................58 

FINANCIAL STATEMENTS........................................................F-1 

We have not authorized any dealer, salesperson or other person to give any      
information or represent anything not contained in this prospectus. You should  
not rely on any unauthorized information. This prospectus does not offer to sell
or buy any shares in any jurisdiction in which it is unlawful. The information  
in this prospectus is current as of the date on the cover.                      

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PROSPECTUS SUMMARY

       You should read the following summary together with the more detailed
information regarding us and the securities being offered for sale by means of  
this prospectus and our financial statements and notes to those statements      
appearing elsewhere in this prospectus. The summary highlights all material     
information contained elsewhere in this prospectus.                             

Summary of InkSure Technologies Inc.

General                                                                         

   We develop, market and sell customized authentication systems designed to
enhance the security of documents and branded products and to meet the growing  
demand for protection from counterfeiting and diversion. By "counterfeit items" 
we are referring to imitation items that are offered as genuine. By "Diversion" 
(also termed "parallel trading" or "gray market commerce") we are referring to  
the selling of goods (often genuine goods) in a geographic market where both    
wholesale and retail prices are high while falsely purchasing them for another  
market where wholesale prices are lower, thus taking advantage of the price     
difference between the two markets. Our business lies within the "authentication
industry," an industry that includes a variety of firms providing technologies  
and services designed to prevent counterfeiting and diversion.                  

    We base our products on two principal technologies - customizable security
inks that are suitable for almost every type of digital and impact printing and 
a sophisticated "full-spectrum" reader that uses proprietary software to quickly
analyze marks printed with our specialty inks. Our security solutions are covert
because our specialty inks are indistinguishable from standard non-security inks
and are easily incorporated into documents, products, product labels, packaging,
and designs.                                                                    

  Our products provide a customized solution by creating a unique chemical
code for each product line or document batch that can only be authenticated by  
our reader.                                                                     

Corporate History                                                               

 We were incorporated under the laws of the state of Nevada on April 22,
1997 under the name "Lil Marc, Inc." We were incorporated as a development stage
enterprise in the baby products industry to develop, manufacture and market the 
"Lil Marc", a plastic toilet training device for young boys. Pursuant to an     
Agreement and Plan of merger, dated as of July 5, 2002, a wholly owned          
subsidiary of Lil Marc, Inc., LILM Acquisition Corp., a Delaware corporation,   
merged with and into InkSure Technologies Inc., a Delaware corporation, or      
InkSure Delaware. InkSure Delaware was the surviving corporation in the merger  
and became a wholly owned subsidiary of Lil Marc, Inc.                          

 Pursuant to the merger agreement, each share of InkSure Delaware common
stock outstanding immediately prior to the effective time of the merger was     
converted into the right to receive one share of our common stock. The total    
number of issued and outstanding shares of our common stock was 11,982,166      
immediately after giving effect to the merger and a reverse stock split that was
consummated on October 23, 2002.                                                

As a result of the merger, the former stockholders of InkSure Delaware
held, immediately after the merger, approximately 88.0% of the issued and       
outstanding shares of our common stock; the remaining 12.0% of the issued and   
outstanding shares of our common stock were held by the stockholders who held   
our common stock immediately before the merger became effective. On a fully     
diluted basis, the former holders of securities of InkSure Delaware held,       
immediately after the merger, approximately 90.5% of the shares of Lil Marc,    
Inc. common stock.                                                              

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   Pursuant to the merger agreement, all outstanding options and warrants to
purchase shares of InkSure Delaware common stock were exchanged or converted    
into options and warrants to purchase shares of our common stock on the same    
terms and conditions as were in effect prior to the effective time of the       
merger. The options and warrants issued with respect to such exchanged options  
and warrants are exercisable for such number of shares of our common stock equal
to the number of whole shares of InkSure Delaware common stock subject to each  
such exchanged option or warrant immediately prior to the effective time of the 
Merger. The per share exercise price of options and warrants issued by us with  
respect to the exchanged options and warrants remained unchanged from the per   
share exercise price of the exchanged options and warrants. Upon consummation of
the merger, our board of directors and management resigned and were replaced by 
InkSure Delaware's board of directors and management, and we began to carry on  
InkSure Delaware's business activities.                                         

On October 28, 2002, we also filed an amendment of our Articles of    
Incorporation to, among other things, change our name from "Lil Marc, Inc." to  
"InkSure Technologies Inc." Effective on October 30, 2002, the OTC Bulletin     
Board stock symbol for our common stock was changed from "LILM" to "INKS."      

We conduct our operations with and through our direct and indirect    
subsidiaries, InkSure Inc., a Delaware corporation formed in March 2000, IST    
Operating Inc., a Delaware corporation formed in May 2000 (formerly known as    
InkSure Technologies Inc. and referred to throughout this prospectus as InkSure 
Delaware), and InkSure Ltd., which was formed in December 1995 under the laws of
Israel. We also have a subsidiary, InkSure RF Inc., a Delaware corporation      
formed in March 2000, which does not currently conduct any operations.          

 On July 8, 2003, we reincorporated as a Delaware corporation by merging
with and into a newly formed, wholly owned subsidiary.                          

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 Summary of the Offering

Shares outstanding before the      11,982,166 (1)                               
offering                                                                        

Shares outstanding offered by      6,064,215 shares of our common stock.        
selling securityholders                                                         

Shares underlying warrants         2,006,537 shares of our common stock.        
offered by selling                                                              
securityholders                                                                 

Use of proceeds                    We will not receive any of the proceeds from 
                                 the sale of the common stock offered by the
                              selling securityholders. However, we may
                                 receive an aggregate of $4,046,180 upon the
                              exercise of all the warrants held by the
                                  selling securityholders if such warrants are
                                  exercised for cash. Such funds, if any, will
                             be used for working capital and general
         corporate purposes.

Risk factors                       The shares offered hereby involve a high     
                                   degree of risk. You should carefully consider
                            the information set forth in the "Risk
                                 Factors" section of this prospectus as well
                            as other information set forth in this
                         prospectus, including our financial
                   statements and related notes.

Plan of distribution               The offering of our shares of common stock is
                                   being made by shareholders of our company who
                                 may wish to sell their shares. Sales of our
                             common stock may be made by the selling
                              securityholders in the open market or in
                              privately negotiated transactions and at
                               market prices, fixed prices or negotiated
prices.   

OTCBB Trading Symbol               "INKS.OB"                                    

(1)  As of August 22, 2003                                                      

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SELECTED FINANCIAL INFORMATION

The following selected financial information does not purport to be   
complete, and should be read in conjunction with, "Management's Discussion and  
Analysis of Financial Condition and Results of Operations" included elsewhere in
this Prospectus. The financial information set forth below is audited with      
respect to the annual periods ended December 31, 2002 and 2001, respectively,   
and unaudited with respect to the six months ended June 30, 2003 and 2002 and   
has been prepared by our management.                                            

   The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with generally accepted accounting principles in the
United States for interim financial information. Accordingly, they do not       
include all the information and footnotes required by generally accepted        
accounting principles in the United States for complete financial statements. In
the opinion of our management, all adjustments (consisting of normal recurring  
accruals) considered necessary for a fair presentation have been included. Our  
operating results for the six-month period ended June 30, 2003 are not          
necessarily indicative of the results that may be expected for the year ended   
December 31, 2003.                                                              

Consolidated Statement of Operations (U.S. Dollars in thousands, except per     
share data):                                                                    

                                                Six Months
               Years ended December 31,         ended June 30,
                  ------------------------     ---------------------
                    2002           2001          2003           2002
                    ----           ----          ----           ----
Revenues                 2,693          1,770          ---           1,884      
Gross Profit             2,291          1,727          ---           1,613      
Operating Expenses       2,938          2,198         1,745          1,343      
Net Income (Loss)          621            700        (1,708)           258      
Net Income (Loss)        (0.08)         (0.14)        (0.14)          0.01      
Per Share                                                                       

Consolidated Balance Sheet Data (U.S. Dollars in thousands):                    

                                                        [Enlarge/Download Table]


                                         As of                        As of          
                             December 31,    December 31,     June 30,     June 30,  
                                 2002            2001           2003         2002    
                            -------------    ------------  -------------   ----------
                                                                                     
Total Current Assets             5,320             735          3,478          803   
Total Current Liabilities          860           1,443            672        1,217   
Total Stockholders' Equity       5,230          (1,566)         3,552         (747)  
(Deficiency)                                                                         

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RISK FACTORS

    Investing in our stock is highly speculative and risky. You should be able
to bear a complete loss of your investment. Before making an investment         
decision, you should carefully consider the following risk factors. If any event
or circumstance described in the following risk factors actually occurs, it     
could materially adversely affect our business, operating results and financial 
condition. The risks and uncertainties described below are not the only ones    
which we face. There may be additional risks and uncertainties not presently    
known to us or those we currently believe are immaterial which could also have a
negative impact on our business, operating results and financial condition.     

We have a history of operating losses and negative cash flows; we may not be    
profitable in the future; and we have not had revenues in our last three fiscal 
quarters.                                                                       

We have incurred substantial losses and negative cash flows since our 
inception. We had an accumulated deficit of approximately $4,748,000 at December
31, 2002 and $6,456,000 at June 30, 2003, and had a working capital (current    
assets less current liabilities) of approximately $4,460,000 at December 31,    
2002 and $2,806,000 at June 30, 2003. We incurred losses of approximately       
$621,000 for the year ended December 31, 2002 and $1,708,000 for the six months 
ended June 30, 2003. We expect to have net operating losses and negative cash   
flows for the foreseeable future, and expect to spend significant amounts of    
capital to enhance our products and services, develop further sales and         
operations, and fund expansion. As a result, we will need to generate           
significant revenue to break even or achieve profitability. Even if we do       
achieve profitability, we may not be able to sustain or increase profitability  
on a quarterly or annual basis.                                                 

 Our operating expense levels are based on internal forecasts for future
demand and not on firm customer orders for products or services. Our results may
be affected by fluctuating demand for our products and services from one quarter
to the next and by increases in the costs of components acquired from suppliers.
We have not had any revenues in each of our last three fiscal quarters including
the recently completed fiscal quarter, which ended June 30, 2003.               

We have a limited operating history, which makes it difficult to evaluate our   
business.                                                                       

InkSure Delaware was formed in May 2000. We have a limited operating  
history on which to base an evaluation of our business and prospects. Our       
revenue and income potential are unproven. An investor must consider the risks, 
uncertainties, expenses and difficulties frequently encountered by companies in 
their early stages of development, particularly companies with limited capital  
in new and rapidly evolving markets. These risks and difficulties include our   
ability to develop our infrastructure; attract and maintain a base of end users;
develop and introduce desirable products and services; provide customer support,
personnel, and facilities to support our business; establish and maintain       
strategic relationships; and respond effectively to competitive and             
technological developments. Our business strategy may not be successful or may  
not successfully address any of these risks or difficulties.                    

We will face a need for additional capital and may need to curtail our          
operations if it is not available.                                              

We believe that our current cash and cash equivalents will satisfy our
operating capital needs for at least 15 months based upon our currently         
anticipated business activities. We will need additional capital even within 15 
months if we undertake large projects. Our need for additional capital to       
finance our operations and growth will be greater should, among other things,   
our revenue or expense estimates prove to be incorrect. We may not be able to   
obtain additional financing in sufficient amounts or on acceptable terms when   
needed, which would adversely affect our prospects, business, operating results 
and financial condition by forcing us to curtail our operations or not pursue   
opportunities which present themselves.                                         

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If we continue to rely on one major customer for most of our revenues, the loss 
of such customer could adversely affect our business.                           

  For the fiscal year ended December 31, 2002, our relationship with ISBAK
A.S. accounted for approximately 74% of our revenue. The loss of such customer, 
or any other customer that accounts for a significant portion of our revenues   
from time to time, could adversely affect our business, operating results and   
financial condition due to the substantial decrease in revenue such loss would  
represent.                                                                      

If our product offerings are not accepted by the market, our business may be    
adversely affected.                                                             

We generate all of our revenue from sales and licensing of products   
relating to the "authentication industry." The market for providing these       
products and services is highly competitive and is affected by the introduction 
of new products and services that compete with the products and services offered
by us. Demand for these products and services could be affected by numerous     
factors outside our control, including, among others, market acceptance by      
prospective customers, the introduction of new or superior competing            
technologies or products and services that are available on more favorable      
pricing terms than those being offered by us, and the general condition of the  
economy. Any market acceptance for our products and services may not develop in 
a timely manner or may not be sustainable. New or increased competition may     
result in market saturation, more competitive pricing, and lower margins. Our   
business, operating results and financial condition would be materially and     
adversely affected if the market for our products and services fails to grow,   
grows more slowly than anticipated, or becomes more competitive or if targeted  
customers do not accept our products and services and we experience a           
corresponding reduction in revenues, a higher loss and a failure to generate    
substantial revenues in the future.                                             

We have a long and variable sales cycle which can result in significant         
fluctuations in our revenue from quarter to quarter.                            

  The sales cycle of our products, which is the period of time between the
identification of a potential customer and completion of the sale, is typically 
long and subject to a number of significant risks over which we have little     
control. As our operating expenses are based on anticipated revenue levels, a   
small fluctuation in the timing of sales can cause our quarterly operating      
results to vary significantly from period to period. Due to such fluctuations,  
we have not had revenues in our last three fiscal quarters, including the fiscal
quarter which ended June 30, 2003. If revenue falls significantly below         
anticipated levels, our business would be seriously harmed. Investors can also  
anticipate uneven revenue results, which may be reflected in a volatile market  
price for our stock.                                                            

We face potential liability due to product defects and may incur significant    
liabilities in defending lawsuits over any such defects.                        

Authentication products as complex as those offered by us may contain 
undetected errors or defects when first introduced or as new versions are       
released. Despite testing by us and by current and potential customers, errors  
may be found in new authentication products after commencement of commercial    
shipments resulting in product recalls and market rejection of our              
authentication products and resulting in damage to our reputation, as well as   
lost revenue, diverted development resources and increased support costs. In    
addition, our product liability insurance, if any, may be insufficient to cover 
claims related errors or defects in our authentication products.                

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We may not be able to protect our proprietary technology, which would adversely 
affect our ability to compete in the authentication market.                     

Our performance and ability to compete are dependent to a significant 
degree on our proprietary technology. We regard protection of our proprietary   
rights as critical to our success, and rely on patent, trademark and copyright  
law, trade secret protection and confidentiality and/or license agreements with 
our employees, customers, partners and others to protect our proprietary rights.
We have applied for three patents covering various methods of marking documents 
for the purpose of authentication and three patents related to the radio        
frequency authentication and security technology, or RF technology, being       
developed by us, but have not received any patents. We are also seeking         
protection under the Patent Cooperation Treaty. We may file for additional      
patents as we determine appropriate. A patent may not be issued with respect to 
any patent application filed by us or the scope of any claims granted in any    
patent may not provide meaningful proprietary protection or a competitive       
advantage to us. The validity or enforceability of patents which may be issued  
or licensed to may be challenged by others and, if challenged, may not be upheld
by a court. In addition, competitors may be able to circumvent any patents that 
may be issued or licensed to us. Due to our reliance on our proprietary         
technology, our inability to protect our proprietary rights adequately would    
have a material adverse effect on us.                                           

  We generally have entered into agreements containing confidentiality and
nondisclosure provisions with our employees and consultants and limits access to
and distribution of our documentation and other proprietary information.        
However, the steps taken by us may not prevent misappropriation of our          
technology and agreements entered into for that purpose may not be enforceable. 

   Notwithstanding the precautions taken by us, a third party may be able to
copy or otherwise obtain and use our proprietary information without            
authorization or to develop similar technology independently. Policing          
unauthorized use of our technology is difficult. The laws of other countries may
afford us little or no effective protection of our intellectual property.       
Effective trademark, service mark, copyright and trade secret protection may not
be available in every country in which our products and services are made       
available. In the future, we may also need to file lawsuits to enforce our      
intellectual property rights, protect our trade secrets, and determine the      
validity and scope of the proprietary rights of others. Such litigation, whether
successful or unsuccessful, could have a material adverse effect on our         
business, operating results, and financial condition due to the substantial     
costs and diversion of resources. See "Business, Risk Factors -- We are a       
co-defendant in a litigation, and we could incur significant liabilities in     
defense of this lawsuit or in damages if our defense is unsuccessful."          

   In addition, we have entered into several agreements pursuant to which we
have granted third parties broad, exclusive rights to distribute and sell       
certain of our technology, subject to customary provisions governing            
confidentiality and nondisclosure. Failure of these third parties to effectively
market products and services based upon our technology could have a material    
adverse effect on our business, operating results, and financial condition due  
to the lack of revenues expected to be generated from such agreements.          

We will have to keep pace with new products and rapid technological change in   
order to remain competitive in the marketplace.                                 

   If we are able to sufficiently penetrate the market with our products and
services, our future success will depend upon our ability to keep pace with     
technological developments and respond to evolving customer demands. Failure to 
anticipate or respond adequately to technological developments or significant   
delays in product development could damage our potential position in the        
marketplace and could have a material adverse effect on our business, operating 
results, and financial condition. With our current limited financial and        
technical resources, we may not be able to develop or market new products,      
services or enhancements to our existing product and service offerings. It is   
possible that we could experience significant delays in these endeavors. Any    
failure to successfully develop and market products and services and product and
service enhancements could have a material adverse effect on our business,      
operating results and financial condition. See "Business Risk Factors-- If our  
product offerings are not accepted by the market, our business may be adversely 
affected."                                                                      

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We face competition and pricing pressures from larger, well financed and more   
recognized companies and we may not be able to effectively compete with such    
companies.                                                                      

     The market for our products and services is highly competitive. Many of our
competitors have far greater financial, human, and other resources. Barriers to 
entry in our business are relatively insubstantial and companies with           
substantially greater financial, technical, marketing, manufacturing and human  
resources, as well as those with far greater name recognition than us, may also 
attempt to enter the market. We believe that our ability to compete depends on  
our technology and price, as well as on our distribution channels and the       
quality of products and services. If we do not successfully compete, we will not
generate significant revenues or profits.                                       

We depend on third parties for infrastructure and supplies, the loss of which   
could adversely affect our operations.                                          

   With regard to our products, we are dependent in part on the availability
of equipment, supplies and services provided by independent third parties.      
Currently we use a limited number of suppliers in order to take advantage of    
volume discounts. If one of our suppliers were unable to meet our supply demands
and we could not quickly replace the source of supply, it could have a material 
adverse effect on our business, operating results and financial condition, for  
reasons including a delay of receipt of revenues and damage to our business     
reputation.                                                                     

We depend on our senior management and key employees, the loss of which could   
adversely affect our operations.                                                

Our success depends to a large degree upon the skills of our senior   
management team and current key employees and upon our ability to identify,     
hire, and retain additional sales, marketing, technical and financial personnel.
We may be unable to retain our existing key personnel or attract and retain     
additional key personnel. We do not maintain key person life insurance for any  
of our officers or key employees. We require our executives and key employees to
enter non-competition agreements with us. Due to our reliance on our senior     
management and key employees, the loss of any of our key executives, the use of 
proprietary or trade secret data by former employees who compete with us, or the
failure to attract, integrate, motivate, and retain additional key employees    
could have a material adverse effect on our business, operating results and     
financial condition.                                                            

We may not be able to manage our growth to successfully implement our business  
plan and such mismanagement could adversely affect our business and our ability 
to grow.                                                                        

   We anticipate a period of significant growth in connection with expansion
of our marketing efforts and business. The resulting strain on our managerial,  
operational, financial, and other resources could be significant and could      
render our increased marketing efforts useless. Our ability to manage our growth
effectively will require us to continue to improve our operations, financial and
managerial controls, reporting systems and procedures. If we are successful in  
achieving our growth plans, such growth is likely to result in increased        
responsibility for our management; and our management may not be able to        
successfully manage such growth due to their lack of experience in managing     
companies of our size.                                                          

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Our specialty inks include various chemicals and are subject to certain         
environmental regulations, for which we could incur significant liabilities for 
problems relating to their shipping and storage.                                

Our operations are subject to federal, state, local, and foreign      
environmental laws and regulations. Our specialty inks include various          
chemicals, some of which may be hazardous substances and subject to various     
government regulations relating to our transfer, handling, packaging, use, and  
disposal. We may store these chemicals or inks at our facilities in the United  
States and Israel, and a shipping company ships them at our direction. We could 
face potential liability for problems that may arise when we store or ship these
inks or chemical components. To the extent future laws and regulations are      
adopted or interpretations of existing laws and regulations change, new         
requirements may be imposed on our future activities or may create liability    
retroactively. Failure to comply with applicable rules and regulations could    
subject us to monetary damages and injunctive action, which could have a        
material adverse effect on our business, financial condition or results of      
operations.                                                                     

Some of our products in development will be subject to government regulation of 
radio frequency technology which could cause a delay or inability to introduce  
such products in the United States' and other markets.                          

The rules and regulations of the United States Federal Communications 
Commission, or the FCC, limit the radio frequency used by and level of power    
emitting from electronic equipment. Our scanning device and the next-generation 
radio frequency technology scanning equipment will be required to comply with   
these FCC rules which may require certification, verification or registration of
the equipment with the FCC. Currently we do not have FCC approval for our       
equipment. Certification and verification of new equipment requires testing to  
ensure the equipment's compliance with the FCC's rules. The equipment must be   
labeled according to the FCC's rules to show compliance with these rules.       
Testing, processing of the FCC's equipment certificate or FCC registration, and 
labeling may increase development and production costs and could delay          
introduction of our verification scanning device and next-generation radio      
frequency technology scanning equipment into the United States' market.         
Electronic equipment permitted or authorized to be used by the FCC through our  
certification or verification procedures must not cause harmful interference to 
licensed FCC users, and it is subject to radio frequency interference from      
licensed FCC users. Selling, leasing or importing non-compliant equipment is    
considered a violation of FCC rules and federal law and violators may be subject
to an enforcement action by the FCC. Any failure to comply with the applicable  
rules and regulations of the FCC could subject us to monetary action or an      
injunction and could have a material adverse effect on our business, operating  
results and financial condition. In addition, certain other countries may impose
similar or more burdensome regulations.                                         

We are a co-defendant in a litigation, and we could incur significant           
liabilities in defense of this lawsuit or in damages if our defense is          
unsuccessful.                                                                   

    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) 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.            
Secu-Systems seeks, among other things, an injunction and a 50% share of profits
from the printing method at issue. Supercom and InkSure Ltd. received a letter, 
dated February 14, 2002, from the law firm of Yossi Avraham & Co., which stated 
that, based on the facts provided to it by Supercom and InkSure Ltd., the       
probability is small that a court would grant either the permanent injunction or
a substantial amount of damages in connection with Secu-Systems' complaint. If  
Secu-Systems were to win the litigation we could be forced to make a one-time   
payment in connection with past damages and/or payments based on our future     
revenues and profits. Such payments could have a material adverse effect on our 
business, operating results and financial condition. We recently offered a      
settlement amount to Secu-Systems which was rejected.                           

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Conditions in Israel affect the operations of our subsidiary in Israel and may  
limit our ability to sell our products and services.                            

 InkSure Ltd., our principal operating subsidiary, is incorporated under
Israeli law and its principal office, manufacturing facility and research and   
development facility are located in Israel. Political, economic and military    
conditions in Israel directly affect InkSure Ltd.'s operations. Since the       
establishment of the state of Israel in 1948, a number of armed conflicts have  
taken place between Israel and its Arab neighbors and a state of hostility,     
varying in degree and intensity, has led to security and economic problems for  
Israel. Despite negotiations to effect peace between Israel and its Arab        
neighbors, the future of these peace efforts is uncertain. Since October 2000,  
there has been a significant increase in violence primarily in the West Bank and
Gaza Strip, negotiations between Israel and the Palestinian Authority have      
ceased and there has been increased military activity characterized by some as  
war. More recently, violence has spread to Jerusalem and areas near Tel Aviv.   
Furthermore, several countries still restrict trade with Israeli companies,     
which may limit our ability to make sales, or purchase components from, in those
countries. Any future armed conflict, political instability, continued violence 
in the region or restrictions could limit our ability to operate our business   
and could have a material adverse effect on our business, operating results and 
financial condition.                                                            

Our operations could be disrupted as a result of the obligation of management or
key personnel of InkSure Ltd. to perform military service.                      

    Generally, all male adult citizens and permanent residents of Israel under
the age of 45 are, unless exempt, obligated to perform up to 36 days of military
reserve duty annually. Additionally, all Israeli residents of this age are      
subject to being called to active duty at any time under emergency              
circumstances. Some of the officers and employees of InkSure Ltd. are currently 
obligated to perform annual reserve duty. Our operations could be disrupted by  
the absence for a significant period of one or more of InkSure Ltd.'s officers  
or key employees due to military service. Any such disruption could limit our   
ability to operate our business and could affect our business, results and      
financial condition.                                                            

Under current Israeli law, InkSure Ltd. may not be able to enforce covenants not
to compete which could have a negative effect on our operations in Israel.      

InkSure Ltd. has non-competition agreements with all of its employees.
These agreements prohibit its employees, if they cease working for InkSure Ltd.,
from directly competing with it or working for its competitors, generally, for  
up to twelve months. However, we have been advised by our Israeli counsel, Yossi
Avraham & Co., that Israeli courts are reluctant to enforce non-compete         
undertakings of former employees.                                               

Fluctuations in the exchange rate between the United States dollar and foreign  
currencies may adversely affect our operating results.                          

     We incur expenses for our operations in Israel in new Israeli shekels (nis)
and translate these amounts into United States dollars for purposes of reporting
consolidated results. As a result, fluctuations in foreign currency exchange    
rates may adversely affect our expenses and results of operations as well as the
value of our assets and liabilities. Fluctuations may adversely affect the      
comparability of period-to-period results. In addition, we hold foreign currency
balances, primarily Israeli shekels, that will create foreign exchange gains or 
losses, depending upon the relative values of the foreign currency at the       
beginning and end of the reporting period, affecting our net income and earnings
per share. Although we may use hedging techniques in the future (which we       
currently do not use), we may not be able to eliminate the effects of currency  
fluctuations. Thus, exchange rate fluctuations could have a material adverse    
impact on our operating results and stock price. In addition, future currency   
exchange losses may increase if we become subject to exchange control           
regulations restricting our ability to convert local currencies into United     
States dollars or other currencies.                                             

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We are exposed to special risks in foreign markets which may restrict our       
ability to convert local currency into United States dollars or Israeli shekels 
and thereby force us to curtail our business operations.                        

In conducting our business in foreign countries, we are subject to    
political, economic, legal, operational and other risks that are inherent in    
operating in other countries. These risks range from difficulties in settling   
transactions in emerging markets to possible nationalization, expropriation,    
price controls and other restrictive governmental actions. We also face the risk
that exchange controls or similar restrictions imposed by foreign governmental  
authorities may restrict our ability to convert local currency received or held 
by it in their countries into United States dollars or other currencies, or to  
take those dollars or other currencies out of those countries.                  

Under Israeli law, our stockholders may face difficulties in the enforcement of 
civil liabilities against our subsidiary InkSure Ltd., its officers, directors  
or professional advisors.                                                       

  InkSure Ltd. is incorporated under Israeli law and its principal office,
manufacturing facility and research and development facility are located in     
Israel. Certain of the directors and InkSure Ltd.'s professional advisors are   
residents of Israel or otherwise reside outside of the United States. All or a  
substantial portion of the assets of such persons are or may be located outside 
of the United States. It may be difficult to effect service of process within   
the United States upon InkSure Ltd. or upon any such directors or professional  
advisors or to realize in the United States upon judgments of United States'    
courts predicated upon civil liability of InkSure Ltd. or such persons under    
United States federal securities laws. InkSure Ltd. has been advised by our     
Israeli counsel, Yossi Avraham & Co., that Israeli courts may not (i) enforce   
judgments of United States' courts obtained against InkSure Ltd. or such        
directors or professional advisors predicated solely upon the civil liabilities 
provisions of United States' federal securities laws, or (ii) impose liabilities
in original actions against InkSure Ltd. or such directors and professional     
advisors predicated solely upon such United States' laws. However, subject to   
certain time limitations, Israeli courts will enforce foreign (including United 
States) final executory judgments for liquidated amounts in civil matters,      
obtained after due trial before a court of competent jurisdiction which         
recognizes similar Israeli judgments, provided that (1) due process has been    
observed, (2) such judgments or the execution thereof are not contrary to       
Israeli law, public policy, security or sovereignty, (3) such judgments were not
obtained by fraud and do not conflict with any other valid judgment in the same 
matter between the same parties and (4) an action between the same parties in   
the same matter is not pending in any Israeli court at the time the law suit is 
instituted in the foreign court.                                                

We have a stockholder that is able to exercise substantial influence over us and
all matters submitted to our stockholders which may make us difficult to be     
acquired and less attractive to new investors.                                  

ICTS International, N.V., beneficially owns, as of August 22, 2003,   
4,368,394 shares of our common stock, representing approximately 36.2% of our   
outstanding common stock. Ezra Harel, one of our directors, directly and        
indirectly owns a majority of the outstanding shares of ICTS International, N.V.
Such ownership interest gives ICTS substantial influence over the outcome of all
matters submitted to our stockholders, including the election of directors and  
the adoption of a merger agreement and such influence could make us a less      
attractive acquisition or investment target.                                    

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Events related to our largest stockholder and one of our directors could affect 
our reputation and harm our business.                                           

  On May 30, 2003, Ezra Harel, one of our directors and a director of ICTS
International, N.V., our largest stockholder, and Menachem Atzmon, another      
director of ICTS, were detained and then released on bail in Israel by officials
of the Israeli Securities Authority in connection with a criminal investigation.
The probe involved an unrelated company in which Mr. Harel was a former director
and Mr. Aztmon was the controlling shareholder. We do not know the substance of 
the Israeli Securities Authority's questioning of Mr. Harel and Mr. Aztmon, due 
to a gag order on the investigation is in effect. We have no indication whether 
the investigation involves ICTS, nevertheless, publicity related to this        
investigation or other events could include references to us. Publicity of this 
type could cause harm to our reputation and business, and our ability to obtain 
future financing.                                                               

We are disputing the validity of the issuance of an option to purchase shares of
InkSure Delaware common stock, which if determined to be valid would increase   
the number of our shares of common stock outstanding on a fully diluted basis.  

     We are disputing the valid issuance of an option to purchase 300,480 shares
of InkSure Delaware common stock that was issued prior to the merger of our     
wholly owned subsidiary and InkSure Delaware. If our position in this dispute   
does not prevail we would be forced to accept the validity of the issuance of   
this option and convert it into an option to purchase shares of our common      
stock. As a result, the number of shares of our common stock outstanding on a   
fully diluted basis would increase by 300,480 shares.                           

Our certificate of incorporation contains anti-takeover provisions which could  
adversely affect the voting power or other rights of the holders of our common  
stock.                                                                          

Our certificate of incorporation authorizes the issuance of up to     
10,000,000 shares of preferred stock and our board of directors is empowered,   
without stockholder approval, to issue a new series of preferred stock with     
dividend, liquidation, conversion, voting or other rights which could adversely 
affect the voting power or other rights of the holders of common stock. Such    
authority, together with certain provisions of Delaware law and of our          
certificate of incorporation and bylaws, may have the effect of delaying,       
deterring or preventing a change in control of us, may discourage bids for the  
common stock at a premium over the market price and may adversely affect the    
market price, and the voting and other rights of the holders of the common      
stock. Although we have no present intention to issue any additional shares of  
our preferred stock, we may do so in the future. The board of directors of a    
Delaware corporation may issue rights, options, warrants or other convertible   
securities, (hereinafter the "rights"), entitling the holders of the rights to  
purchase, receive or acquire shares or fractions of shares of the corporation or
assets or debts or other obligations of the corporation, upon such terms as are 
determined by the board of directors. Our board of directors is free, subject to
their fiduciary duties to stockholders, to structure the issuance or exercise of
the rights in a manner which may exclude "significant stockholders," as defined,
from being entitled to receive such rights or to exercise such rights or in a   
way which may effectively prevent a takeover of the corporation by persons      
deemed hostile to management. Nothing contained in our certificate of           
incorporation will prohibit our board of directors from using these types of    
rights in this manner.                                                          

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We have never paid common stock dividends and are unlikely to do so for the     
foreseeable future.                                                             

   We have never paid cash or other dividends on our common stock. It is our
intention to retain any earnings to finance the operation and expansion of our  
business, and therefore, we do not expect to pay any cash dividends on our      
common stock in the foreseeable future.                                         

The trading of our common stock is volatile which may prevent a stockholder from
selling its stock at the time or price they desire.                             

   Our common stock is traded on the over-the-counter market with quotations
published on the NASD OTC Bulletin Board under the symbol "INKS". The trading   
volume of our common stock historically has been limited and sporadic, and the  
stock prices have been volatile. For example, during the twelve months prior to 
May 31, 2003, our common stock traded at prices ranging from $0.296 to $2.50. As
a result of the limited and sporadic trading activity, the quoted price for our 
common stock on the over-the-counter market is not necessarily a reliable       
indicator of its fair market value. The price at which our common stock will    
trade in the future may be highly volatile and may fluctuate as a result of a   
number of factors, including, without limitation, quarterly variations in our   
operating results (which have historically been, and we expect to continue to   
be, substantial) and actual or anticipated announcements of new products or     
services by us, other business partners, or competitors as well as the number of
shares available for sale in the market.                                        

"Penny stock" rules may restrict the market for our common stock and may affect 
our stockholders' ability to sell their shares in the secondary market.         

Our common stock is subject to rules promulgated by the Securities and
Exchange Commission relating to "penny stocks," which apply to companies whose  
shares are not traded on a national stock exchange or on the Nasdaq small-cap or
national market systems, trade at less than $5.00 per share, or who do not meet 
certain other financial requirements specified by the commission. These rules   
require brokers who sell "penny stocks" to persons other than established       
customers and "accredited investors" to complete certain documentation, make    
suitability inquiries of investors, and provide investors with certain          
information concerning the risks of trading in such penny stocks. These rules   
may discourage or restrict the ability of brokers to sell our common stock and  
may affect the secondary market for our common stock. These rules could also    
hamper our ability to raise funds in the primary market for our common stock and
may affect our stockholders' ability to sell their shares in the secondary      
market.                                                                         

The number of shares eligible for future sale represents nearly all of our      
outstanding common stock and thus may adversely affect the market for our common
stock.                                                                          

    Of the 11,982,166 shares of common stock held by our present stockholders,
1,441,080 shares may be available for public sale by means of ordinary brokerage
transactions in the open market pursuant to Rule 144, promulgated under the Act,
subject to certain limitations. In general, under Rule 144, a person (or persons
whose shares are aggregated) who has satisfied a one-year holding period may,   
under certain circumstances, sell within any three-month period a number of     
securities which does not exceed the greater of 1% of the then outstanding      
shares of common stock or the average weekly trading volume of the class during 
the four calendar weeks prior to such sale. Rule 144 also permits, under certain
circumstances, the sale of securities, without any limitation, by a person who  
is not our affiliate and who has satisfied a two-year holding period. In        
addition, 6,064,215 shares of our outstanding common stock, which is a          
substantial amount of our outstanding common stock, is being registered for     
resale by certain selling stockholders. The substantial number of shares        
eligible for sale could cause our common stock price to be less than it would be
in the absence of such an offering, whether or not such shares are actually     
sold, and sales of a significant number of such shares at any one time could    
further decrease our stock price.                                               

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 USE OF PROCEEDS

   We will not receive any of the proceeds from the sale of the common stock
offered by the selling securityholders. However, we may receive an aggregate of 
$4,046,180 upon the exercise of all the warrants held by the selling            
securityholders if such warrants are exercised for cash. Such funds, if any,    
will be used for working capital and general corporate purposes. Pending use of 
the proceeds, they will be invested in short-term, interest bearing securities  
or money market funds. As of the date of this prospectus, we have received no   
firm commitments for the exercise of such warrants.                             

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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

   Our common stock commenced trading on the OTC Bulletin Board beginning in
the first quarter of 1998 under the symbol "LILM". On October 30, 2002, our     
common stock began trading on the OTC Bulletin Board under the symbol "INKS".   
The following table sets forth, for the fiscal periods indicated, the high and  
low bid prices of a share of common stock as reported by the OTC Bulletin Board 
under the symbol "LILM" for periods prior to October 30, 2002 and under the     
symbol "INKS" for periods subsequent to October 30, 2002. Such quotations       
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not necessarily represent actual transactions and the reverse stock split   
that occurred in October 2002.                                                  

                                                           High        Low
Calendar Year 2001                                                              
    1st Quarter......................................      $0.637      $0.58
    2nd Quarter......................................      $0.637     $0.278
    3rd Quarter......................................      $0.722     $0.278
    4th Quarter......................................      $0.722     $0.722

Calendar Year 2002                                                              
    1st Quarter......................................      $0.722     $0.296
    2nd Quarter......................................      $2.037     $0.296
    3rd Quarter......................................       $2.13      $1.87
    4th Quarter......................................       $2.50      $1.30

Calendar Year 2003                                                              
    1st Quarter......................................       $2.45      $1.45
    2nd Quarter......................................       $2.00      $1.30
    3rd Quarter (through August 18, 2003)............       $1.50      $1.30

As of August 18, 2003, the high and low bid prices per share of common
stock as reported by the Over the Counter Bulletin Board under the symbol "INKS"
were $1.50 and $1.50 respectively and there were approximately 100 holders of   
record of the common stock.                                                     

   We have not paid dividends on the common stock since inception and do not
intend to pay any dividends to our stockholders in the foreseeable future. We   
currently intend to retain earnings, if any, for the development of our         
business. The declaration of dividends in the future will be at the election of 
our board of directors and will depend upon our earnings, capital requirements, 
financial position, general economic conditions, and other factors the board of 
directors deem relevant.                                                        

Equity Compensation Plan Information                                            

   The following table provides information about shares of our common stock
that may be issued upon the exercise of options and warrants under all of our   
existing compensation plans as of December 31, 2002. Our stockholder approved   
equity compensation plans consist of the 2002 Employee, Director and Consultant 
Stock Option Plan. We have a number of options and warrants which were granted  
pursuant to equity compensation plans not approved by security holders and such 
securities are aggregated in the table below.                                   

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                                                        [Enlarge/Download Table]


                                                                                        Number of securities      
                                                                                      remaining available for     
                       Number of securities to be                                   future issuance under equity  
                        issued upon exercise of        Weighted-average exercise   compensation plans (excluding  
                     outstanding options, warrants       price of outstanding         securities reflected in     
                               and rights            options, warrants and rights           column (a))           

   Plan category                  (a)                             (b)                           (c)               
                                                                                                                  
                    ------------------------------   ----------------------------   ------------------------------
Equity                                                                                                            
compensation plans                                                                                                
approved by                                                                                                       
security holders                    384,789                        $1.054                        3,115,211        

Equity                                                                                                            
compensation plans                                                                                                
not approved by                                                                                                   
security holders                  1,029,402 (1)                    $1.310                                0        
                    ---------------------------------                              -------------------------------
       Total                      1,414,191                                                      3,115,211        


(1) Does not include options to purchase 300,840 shares of InkSure Delaware     
common stock which we believe was not validly issued.                           

     We have authorized the issuance of equity securities under the compensation
plans described below without the approval of stockholders. No additional       
options, warrants or rights are available for issuance under any of these plans,
except for additional shares which may become purchasable under warrants with   
anti-dilution protection as noted below. We have agreed to register for resale  
the common stock underlying the warrants issued to Commonwealth Associates      
described below.                                                                

     * Commonwealth Associates, L.P. warrants, dated July 5, 2002, July 31, 2002
and September 6, 2002: warrants to purchase shares of InkSure Delaware common   
stock in connection with Commonwealth's role as placement agent in a private    
placement of InkSure Delaware's securities. The warrants were to purchase an    
aggregate of 550,933 shares of InkSure Delaware common stock at an exercise     
price of $1.61 per share. In connection with the merger of InkSure Delaware with
our wholly owned subsidiary, these warrants to purchase shares of InkSure       
Delaware common stock were converted into warrants to purchase shares of our    
common stock.                                                                   

   * Elie Housman option, dated February 6, 2002: options to purchase shares
478,469 shares of InkSure Delaware common stock at an exercise price of $0.966  
per share, with an expiration date of February 6, 2009. In connection with the  
merger of InkSure Delaware with our wholly owned subsidiary, these options to   
purchase shares of InkSure Delaware common stock were converted into options to 
purchase shares of our common stock.                                            

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Equity Transactions                                                             

We consummated the following equity transactions, each exempt from the
registration requirements under Section 4(2) and Regulation D of the Securities 
Act of 1933, as amended, and the rules and regulations promulgated thereunder:  

   * During 2001, InkSure Delaware issued 709,066 shares of its common stock
for a purchase price of: (i) $7,000 in cash; (ii) 10% of the then-outstanding   
shares of InkSure Inc.; and (iii) 20% of the then-outstanding shares of InkSure 
RF Inc. In connection with the merger of InkSure Delaware with our wholly owned 
subsidiary, the shares of InkSure Delaware common stock were converted into     
shares of our common stock.                                                     

 * In January 2002, InkSure Delaware issued 356,630 shares of its common
stock, for a purchase price of $250,000 in cash. In connection with the merger  
of InkSure Delaware with our wholly owned subsidiary, the shares of InkSure     
Delaware common stock were converted into shares of our common stock.           

  * In February 2002, InkSure Delaware issued 142,653 shares of its common
stock for a purchase price of $100,000. In connection with the merger of InkSure
Delaware with our wholly owned subsidiary, the shares of InkSure Delaware common
stock were converted into shares of our common stock.                           

Sale of Series A Convertible Preferred Stock                                    

 On March 4, 2002, InkSure Technologies Inc., a Delaware corporation, or
InkSure Delaware, entered into a Stock Purchase Agreement with Supercom Ltd. and
El-Ad Ink LLC. Pursuant to the Stock Purchase Agreement, Supercom Ltd. sold     
1,141,553 shares of InkSure Delaware Series A Preferred Stock which it owned to 
El-Ad Ink LLC and InkSure Delaware issued 171,232 shares of Series A Preferred  
Stock to El-Ad Ink LLC. The Series A Preferred stock had a liquidation          
preference of $0.876 per share and was convertible into an aggregate of         
1,498,613 shares of InkSure Delaware common stock, subject to adjustment under  
certain circumstances. In connection with the merger of InkSure Delaware with   
our wholly owned subsidiary, all of the shares of InkSure Delaware Series A     
Preferred Stock converted into shares of our common stock and were subsequently 
exchanged for shares of our common stock.                                       

Private Placement of Units                                                      

  In 2002, InkSure Delaware received gross proceeds of $6,700,000 in three
tranches, with the third tranche closing on September 6, 2002, from the private 
sale to investors of 67 units, with each unit consisting of 62,112 shares of    
InkSure Delaware common stock and a five-year warrant to purchase 21,739 shares 
of InkSure Delaware common stock at a price of $2.17 per share. In the aggregate
this represented a sale to the investors of 4,161,505 shares of common stock and
warrants to purchase 1,456,526 shares of common stock, which at the time        
represented approximately 43% of InkSure Delaware's outstanding common stock on 
a fully diluted basis. In connection with the merger of InkSure Delaware with   
our wholly owned subsidiary, all of the shares of InkSure Delaware common stock 
issued in the private placement were exchanged for shares of our common stock   
and all warrants to purchase shares of InkSure Delaware common stock were       
converted into warrants to purchase shares of our common stock. Commonwealth    
Associates, L.P. acted as the placement agent in such private placement.        

    We agreed to prepare and file a registration statement with the Securities
Exchange Commission no later than six months following the date of the closing  
of the merger of our wholly owned subsidiary with InkSure Delaware in order to  
register the InkSure Delaware common stock and the InkSure Delaware common stock
underlying the warrants that were issued in the offering described above and    
subsequently converted into shares of our common stock and of our common stock  
underlying the warrants. The merger closed on October 28, 2002 and we filed the 
registration statement of which this prospectus is a part on April 28, 2003.    

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In connection with the private placement, InkSure Delaware paid       
Commonwealth Associates, L.P., a registered broker-dealer, a $569,500 cash fee  
and issued three five-year warrants to purchase an aggregate of 550,933 shares  
of InkSure Delaware common stock at a price of $1.61 per share. In connection   
with the merger of InkSure Delaware with our wholly owned subsidiary these      
warrants to purchase shares of InkSure Delaware common stock were converted into
warrants to purchase shares of our common stock. In December 2002, Commonwealth 
distributed these warrants to certain of its employees and affiliates.          

 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.                           

     The following discussion does not purport to be complete and should be read
in conjunction with, the Financial Statements and the Notes thereto included in 
this report. This discussion contains certain forward-looking statements that   
involve substantial risks and uncertainties. When used in this report the words 
"anticipate," "believe," "estimate," "expect" and similar expressions as they   
relate to our management or us are intended to identify such forward-looking    
statements. Our actual results, performance or achievements could differ        
materially from those expressed in, or implied by, these forward-looking        
statements. Historical operating results are not necessarily indicative of the  
trends in operating results for any future period.                              

Overview                                                                        

 On October 28, 2002, a wholly owned subsidiary of Lil Marc, Inc. merged
with and into InkSure Technologies, Inc., a Delaware corporation ("InkSure      
Delaware") and InkSure Delaware became a wholly-owned subsidiary of Lil Marc in 
a transaction accounted for as a reverse acquisition of Lil Marc by InkSure     
Delaware. Prior to the reverse merger, Lil Marc was a non-operating public shell
corporation with nominal assets. Following the reverse merger, the management of
InkSure Delaware controlled the merged company and the principal shareholders of
InkSure Delaware became principal shareholders of the merged company. Following 
the closing of the reverse merger, Lil Marc changed its name to InkSure         
Technologies Inc. As a result of the reverse merger transaction, InkSure        
Delaware changed its name to IST Operating Inc. and continued as an operating   
entity and as our wholly owned subsidiary, and the historical financial         
statements of InkSure Delaware replaced those of Lil Marc.                      

A.       RESULT OF OPERATIONS                                                   

The following discussion of our financial condition and results of    
operations should be read in conjunction with the consolidated financial        
statements and the related notes. The financial statements have been prepared in
accordance with US Generally Accepted Accounting Principles, or GAAP.           

    This discussion contains forward-looking statements that involve risks and
uncertainties.                                                                  

  Our actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors.                      

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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.                                              

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. Revenue from systems and products is recognized when
title and risk of loss have transferred to the customer and all customer        
acceptance and other conditions, if any, have been satisfied, and when          
collection is reasonably assured. Revenue from technology transfer is recognized
according to contract life. Sales to distributors do not include the right of   
return. In December 1999, the SEC issued Staff Accounting Bulletin No. 101 ("SAB
101"), as amended in June 2000, which summarizes the staff's views in applying  
generally accepted accounting principles to revenue recognition in financial    
statements. We adopted SAB 101 during the fourth quarter of 2000. The adoption  
did not have an effect on our consolidated results of operations or financial   
position.                                                                       

Revenues in respect of sales of raw materials, parts and supplies are 
recognized when the following criteria are met:                                 

1. Persuasive evidence of an arrangement exists;              
2. Delivery has occurred;                                     
3. The fee is fixed or determinable; and                      
4. Collectibility is  probable.                               

Deferred revenues include amounts received from customers for which   
revenues have not been recognized.                                              

    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.                       

Three Months Ended June 30, 2003 Compared with Three Months Ended June 30, 2002 

      Revenues. Revenues consist of gross sales of products less discounts
and costs associated with technology transfer. We are currently concentrating on
entering and implementing large-scale projects. These potential contracts are   
subject to a long sales cycle and fluctuated timetable for entering and         
implementing such projects. This affected our results for the three months ended
June 30, 2003, where we had no revenue, compared to $825,000 in the three months
ended June 30, 2002. Revenue in the three months ended June 30, 2002 consisted  
primarily of the ink shipments to the transportation project in Turkey. Revenues
from this agreement were $703,000 for the three months ended June 30, 2002.     

         Revenue from the agreement with Westvaco Brand Security was $64,000 for
the three months ended June 30, 2002. The agreement expired on December 31,     
2002.                                                                           

Cost of Revenues. Our cost of revenues consists of materials, 
sub-contractors and compensation costs. We had no cost of revenue in the three  
months ended June 30, 2003, compared to $85,000 in the three months ended June  
30, 2002. Cost of revenue in the three months ended June 30, 2002 was in        
connection with our transportation project in Turkey.                           

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      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 $112,000, or 54%, to $318,000 in the three months ended June 30,   
2003 from $206,000 in the three months ended June 30, 2002. This increase in    
research and development expenses is primarily related to increased payments to 
subcontractors in connection with the development of several new products and   
new generations of our existing products.                                       

      Selling and Marketing Expenses, Net. Selling and marketing expenses,
net 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 $43,000, or 10%, to       
$375,000 in the three months ended June 30, 2003 from $418,000 in the three     
months ended June 30, 2002. This decrease in selling and marketing expenses was 
primarily due to higher marketing expenses in 2002 related to the transportation
project in Turkey. We believe that the significant investment in pre-sales and  
marketing activities will contribute to our short-term and long-term sales      
levels.                                                                         

 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 increased by $144,000, or 215%, to   
$211,000 in the three months ended June 30, 2003 from $67,000 in the three      
months ended June 30, 2002. This increase was primarily a result of the merger  
and the higher insurance, legal and accounting costs related to our being a     
public company.                                                                 

       Financial Income, Net. Financial income, net increased by $26,000, to
$15,000 in the three months ended June 30, 2003 from $(11,000) in the three     
months ended June 30, 2002. This increase was due to the interest earned on our 
short-term deposits.                                                            

      Net Income (Loss). We had a net loss of $889,000 in the three months
ended June 30, 2003, compared with a net income of $38,000 in the three months  
ended June 30, 2002. The increase in net loss in the three months ended June 30,
2003 in comparison with the three months ended June 30, 2002 is attributable to 
the various influences described above, which resulted in us having no revenue  
in the three months ended June 30, 2003.                                        

Six Months Ended June 30, 2003 Compared with Six Months Ended June 30, 2002     

      Revenues. Revenues consist of gross sales of products less discounts
and costs associated with technology transfer. We are currently concentrating on
entering and implementing large-scale projects. These potential contracts are   
subject to a long sales cycle and fluctuated timetable for entering and         
implementing such projects. This affected our results for the six months ended  
June 30, 2003, where we had no revenue, compared to $1,884,000 in the six months
ended June 30, 2002. Revenue in the six months ended June 30, 2002 consisted    
primarily of the first shipments and implementation of the transportation       
project in Turkey. Revenues from this agreement were $1,272,000 for the six     
months ended June 30, 2002.                                                     

      Revenue from the agreement with Westvaco Brand Security was $446,000
for the six months ended June 30, 2002. The agreement expired on December 31,   
2002.                                                                           

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Cost of Revenues. Our cost of revenues consists of materials, 
sub-contractors and compensation costs. We had no cost of revenue in the six    
months ended June 30, 2003, compared to $271,000 in the six months ended June   
30, 2002. Cost of revenue in the six months ended June 30, 2002 was in          
connection with our transportation project in Turkey.                           

      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 $242,000, or 66%, to $608,000 in the six months ended June 30, 2003
from $366,000 in the six months ended June 30, 2002. This increase in research  
and development expenses is primarily related to increased payments to          
subcontractors in connection with the development of several new products and   
new generations of our existing products.                                       

      Selling and Marketing Expenses, Net. Selling and marketing expenses,
net 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 $35,000, or 4%, to        
$753,000 in the six months ended June 30, 2003 from $788,000 in the six months  
ended June 30, 2002. This decrease in selling and marketing expenses was        
primarily due to higher marketing expenses in 2002 related to the transportation
project in Turkey. We believe that the significant investment in pre-sales and  
marketing activities will contribute to our short-term and long-term sales      
levels.                                                                         

 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 increased by $195,000, or 103%, to   
$384,000 in the six months ended June 30, 2003 from $189,000 in the six months  
ended June 30, 2002. This increase was primarily a result of the merger and the 
higher insurance, legal and accounting costs related to our being a public      
company.                                                                        

       Financial Income, Net. Financial income, net increased by $49,000, to
$37,000 in the six months ended June 30, 2003 from $(12,000) in the six months  
ended June 30, 2002. This increase was due to the interest earned on our        
short-term deposits.                                                            

      Net Income (Loss). We had a net loss of $1,708,000 in the six months
ended June 30, 2003, compared with a net income of $58,000 in the six months    
ended June 30, 2002. The increase in net loss in the six months ended June 30,  
2003 in comparison with the six months ended June 30, 2002 is attributable to   
the various influences described above, which resulted in us having no revenue  
in the six months ended June 30, 2003.                                          

Year Ended December 31, 2002 Compared with Year Ended December 31, 2001         

     Sales. Sales consist of gross sales of products less discounts and refunds,
technology transfer and minimum application fees. Sales increased by $923,000,  
or 52%, to $2,693,000 in 2002 from $1,770,000 in 2001. This increase in total   
sales was primarily due to the implementation and the shipments under the       
transportation project in Turkey. Revenues from this agreement were $2,000,000  
for the fiscal year ended December 31, 2002.                                    

    Revenues from the agreement with Westvaco Brand Security were $580,000 for
the fiscal year ended December 31, 2002 compared to $1,667,000 for the fiscal   
year ended December 31, 2001. The decreased revenue under this agreement in 2002
was a result of the new agreement that was signed at the beginning of the 2002  
fiscal year. The new agreement with Westvaco expired at the end of the 2002     
fiscal year and Westvaco is currently not one of our customers.                 

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 Cost of Sales. Cost of sales consists of materials, sub-contractors and
compensation costs. Cost of sales increased by $359,000, or 735%, to $402,000 in
2002 from $43,000 in 2001. Cost of sales as a percentage of sales was 15% in    
2002, compared with 2.4% in 2001. The low cost of sales in 2001 is mainly due to
the fact that sales were based on technology transfer and minimum application   
fees rather than manufactured products.                                         

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 
decreased by $65,000, or 7%, to $809,000 in 2002 from $874,000 in 2001. This    
decrease was primarily a result of the exchange rate between the U.S. Dollar and
the Israeli Shekel during 2002. We maintain our R&D center in Israel, so most of
our expenses are based on the Israeli Shekel.                                   

Sales and Marketing Expenses. Sales 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. Sales and 
marketing expenses increased by $890,000, or 118%, to $1,641,000 in 2002 from   
$751,000 in 2001. This increase was primarily a result of the international     
expansion of our sales and marketing activities in 2002. The result of this     
activity is a 52% increase in our sales in 2002 compared to our sales in 2001.  
We believe that the significant investment in pre-sales and marketing activities
will contribute to our short-term and long-term sales levels.                   

  General and Administrative Expenses. General and administrative expenses
consist primarily of compensation costs for administration, finance and general 
management personnel, office maintenance, insurance, legal, accounting and      
administrative costs. General and administrative expenses decreased by $85,000, 
or 15%, to $488,000 in 2002 from $573,000 in 2001. General and administrative   
expenses increased in the fourth quarter of 2002 due to the merger, primarily in
connection with accounting expenses and costs associated with our acquisition of
directors' and officers' insurance. We succeeded in decreasing our general and  
administrative expenses during 2002 despite the increase in the fourth quarter  
due to the efficiency of our new management.                                    

    Financial Income, Net. Financial income, net decreased by $45,000, or 63%,
to $26,000 in 2002 from $71,000 in 2001. This decrease was due to the exchange  
rate between the U.S. Dollar and the Israeli Shekel. InkSure Ltd. received a    
loan from InkSure Delaware's former parent company, Supercom Ltd., which was    
linked to the Israeli Consumer Price Index and had an interest rate of 4%. In   
2001, we recognized translation gain from this loan due to the rise in the U.S. 
Dollar. At the beginning of 2002, the loan was converted into a contribution to 
our capital.                                                                    

    Net loss from Continued Operations. We had a net loss of $621,000 in 2002,
compared with a net loss of $400,000 in 2001, which is an increase of $221,000, 
or 55%. The increase in net loss in 2002 in comparison with 2001 is attributable
to the various influences described above, primarily to increases in sales and  
marketing expenses. We believe that the investment in sales and marketing will  
contribute to our short-term and long-term sales levels.                        

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B.   LIQUIDITY AND CAPITAL RESOURCES                                            

     We have incurred substantial losses since our inception in May 2000. We had
an accumulated deficit of approximately $6,456,000 at June 30, 2003, and had a  
working capital (current assets less current liabilities) of approximately      
$2,806,000 at June 30, 2003.                                                    

   Capital expenditures were approximately $15,000 in the three months ended
June 30, 2003 and $5,000 in the three months ended June 30, 2002. Capital       
expenditures were approximately $30,000 in the six months ended June 30, 2003   
and $7,000 in the six months ended June 30, 2002. We do not have any material   
commitments for capital expenditures for the year ending December 31, 2003.     

    At June 30, 2003, we had cash, cash equivalents and short-term deposits of
approximately $3,001,000 ($58,000 in June 2002); $0 short-term bank credit      
($390,000 in June 2002) and a $0 in principal and interest outstanding under a  
long-term loan from a former related party ($200,000 in June 2002). The         
differences from June 30, 2003 to June 30, 2002 are due to amounts raised in the
InkSure Delaware offering, the paying off of all short-term bank credit         
following the InkSure Delaware offering and the related party's cancellation of 
the loan following our payment of $200,000 to such related party, respectively. 

    We generated negative cash flow from operating activities of approximately
$764,000 in the three months ended June 30, 2003 and $1,285,000 in the six      
months ended June 30, 2003 compared to $167,000 in the three months ended June  
30, 2002 and $98,000 in the six months ended June 30, 2002.                     

  We believe that cash generated from operations and cash from the private
placement that closed in September 2002 will provide sufficient cash resources  
to finance our operations and projected expansion of our marketing and research 
development activities for the next 15 months, even if no significant revenues  
are generated over that period. However, if we enter a project which requires   
material upfront expenditures or if we grow more rapidly than currently         
anticipated, it is possible that we would require more funds than presently     
anticipated.                                                                    

C.   RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES                             

    We believe that our future success will depend upon our ability to enhance
our existing products and systems and introduce new commercially viable products
and systems addressing the demands of the evolving markets for brand and        
document protection. As part of the product development process, we work closely
with current and potential customers, distribution channels and leaders in      
certain industry segments to identify market needs and define appropriate       
product specifications. Our employees also participate in industry forums in    
order to stay informed about the latest industry developments.                  

  Our research and development expenses were approximately $318,000 in the
three months ended June 30, 2003 and $608,000 in the six months ended June 30,  
2003, compared to $206,000 in the three months ended June 30, 2002 and $366,000 
in the six months ended June 30, 2002. To date, all research and development    
expenses have been charged to operating expense as incurred.                    

We currently hold six pending patents on our technologies.            

D.   CONTRACTUAL OBLIGATIONS AND COMMITMENTS                                    

  Our contractual obligations and commitments at June 30, 2003 principally
include obligations associated with our future-operating lease obligations. Our 
total future obligation is approximately $254,000 until 2008. We expect to      
finance these contractual commitments from cash on hand and cash generated from 
operations.                                                                     

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BUSINESS

Reorganization                                                                  

 On October 28, 2002, a wholly owned subsidiary of Lil Marc, Inc. merged
with and into InkSure Technologies, Inc., a Delaware corporation ("InkSure      
Delaware") and InkSure Delaware became a wholly-owned subsidiary of Lil Marc in 
a transaction accounted for as a reverse acquisition of Lil Marc by InkSure     
Delaware. Prior to the reverse merger, Lil Marc was a non-operating public shell
corporation with nominal assets. Following the reverse merger, the management of
InkSure Delaware controlled the merged company and the principal shareholders of
InkSure Delaware became principal shareholders of the merged company. Following 
the closing of the reverse merger, Lil Marc changed its name to InkSure         
Technologies Inc. As a result of the reverse merger transaction, InkSure        
Delaware changed its name to IST Operating Inc. and continued as an operating   
entity and as our wholly owned subsidiary, and the historical financial         
statements of InkSure Delaware replaced those of Lil Marc.                      

General                                                                         

   We develop, market and sell customized authentication systems designed to
enhance the security of documents and branded products and to meet the growing  
demand for protection from counterfeiting and diversion. In this context,       
"counterfeit items" are imitation items that are offered as genuine with the    
intent to deceive or defraud. "Diversion" (also termed "parallel trading" or    
"gray market commerce") is the selling of goods (often genuine goods) in a      
geographic market where both wholesale and retail prices are high while falsely 
purchasing them for another market where wholesale prices are lower, thus taking
advantage of the price difference between the two markets. We operate within the
"authentication industry," an industry that includes a variety of firms         
providing technologies and services designed to prevent the counterfeiting and  
diversion of valuable documents and products. The United Kingdom's Counterfeit  
Intelligence Bureau estimates that losses by companies and governments from     
counterfeiting and diversion range from $300 billion to as high as $1 trillion  
annually. Security Solution Consultancy reported in 1999 that their research had
revealed a market of approximately $25 billion for document and product         
protection - a mere 5% to 6% of the total estimated losses due to               
counterfeiting.                                                                 

Our products are based on two principal technologies - customizable   
security inks that are suitable for almost every type of digital and impact     
printing on a wide variety of surfaces or substrates (e.g., paper documents,    
plastic identification cards, packaging materials and labels), and a            
sophisticated "full-spectrum" reader that uses proprietary software to quickly  
analyze marks printed with our specialty inks. Our security solutions are       
considered to be covert because our specialty inks are indistinguishable from   
standard non-security inks and are easily incorporated into variable and fully  
personalized data on documents, products, product labels, packaging, and        
designs.                                                                        

   Our ink-based products provide a customized solution by creating a unique
chemical code for each product line or document batch that can only be          
authenticated by our reader. We have applied for three patents covering various 
methods of marking documents for the purpose of authentication and three patents
related to the radio frequency ("RF") technology being developed by us. We are  
also seeking protection under the Patent Cooperation Treaty. See "Business --   
Patents and Proprietary Technology."                                            

We are currently working on the development of next-generation RF     
technology that is being designed to enable low-cost tagging of items. This RF  
technology is being designed to permit "no line of sight" identification and    
will be suitable for a variety of applications, including authentication, supply
chain management and traceability, proof of ownership, and data carrying        
transactions. If successfully developed, we believe that such technology could  
eventually replace the familiar barcode technology and other electronic article 
surveillance solutions currently available. See "Business -- Research and       
Development" and "Business -- Products."                                        

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  Our security products and business strategy have enabled us to grow from
$1,770,000 in revenues in 2001 to $2,693,000 in 2002, with a sales backlog of   
$1,000,000 as of December 31, 2002. The backlog is related to our Turkish       
transportation project with ISBAK. The timetable for receiving revenue from this
backlog is dependent on ISBAK's consumption of our inks. We expect to fill the  
majority of this backlog in the third quarter of 2003 and expect to fill the    
remainder in the fourth quarter of 2003. Revenues from the agreement with ISBAK 
were $2,000,000 for the fiscal year ended December 31, 2002, representing       
approximately 74% of our revenues for that year. Currently ISBAK is our major   
customer, and the bulk of our revenues are dependent upon the agreement with    
ISBAK. See "Business -- Sales and Marketing."                                   

Corporate History                                                               

 We were incorporated under the laws of the state of Nevada on April 22,
1997 under the name "Lil Marc, Inc." We were incorporated as a development stage
enterprise in the baby products industry to develop, manufacture and market the 
"Lil Marc", a plastic toilet training device for young boys. In May 2000 Lil    
Marc's plan of operation became to attempt to merge or effect a business        
combination with a private operating entity. Pursuant to an Agreement and Plan  
of merger, dated as of July 5, 2002, a wholly owned subsidiary of Lil Marc,     
Inc., LILM Acquisition Corp., a Delaware corporation, merged with and into      
InkSure Technologies Inc., a Delaware corporation, or InkSure Delaware. InkSure 
Delaware was the surviving corporation in the merger and became a wholly owned  
subsidiary of Lil Marc, Inc.                                                    

 Pursuant to the merger agreement, each share of InkSure Delaware common
stock outstanding immediately prior to the effective time of the merger was     
converted into the right to receive one share of our common stock. The total    
number of issued and outstanding shares of our common stock was 11,982,166      
immediately after giving effect to the merger and a reverse stock split that was
consummated on October 23, 2002.                                                

As a result of the merger, the former stockholders of InkSure Delaware
held, immediately after the merger, approximately 88.0% of the issued and       
outstanding shares of our common stock; the remaining 12.0% of the issued and   
outstanding shares of our common stock were held by the stockholders who held   
our common stock immediately before the merger became effective. On a fully     
diluted basis, the former holders of securities of InkSure Delaware held,       
immediately after the merger, approximately 90.5% of the shares of Lil Marc,    
Inc. common stock.                                                              

   Pursuant to the merger agreement, all outstanding options and warrants to
purchase shares of InkSure Delaware common stock were exchanged or converted    
into options and warrants to purchase shares of our common stock on the same    
terms and conditions as were in effect prior to the effective time of the       
merger. The options and warrants issued with respect to such exchanged options  
and warrants are exercisable for such number of shares of our common stock equal
to the number of whole shares of InkSure Delaware common stock subject to each  
such exchanged option or warrant immediately prior to the effective time of the 
Merger. The per share exercise price of options and warrants issued by us with  
respect to the exchanged options and warrants remained unchanged from the per   
share exercise price of the exchanged options and warrants. Upon consummation of
the merger, our board of directors and management resigned and were replaced by 
InkSure Delaware's board of directors and management, and we began to carry on  
InkSure Delaware's business activities.                                         

On October 28, 2002, we also filed an amendment of our Articles of    
Incorporation to, among other things, change our name from "Lil Marc, Inc." to  
"InkSure Technologies Inc."                                                     

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    Effective on October 30, 2002, the OTC Bulletin Board stock symbol for our
common stock was changed from "LILM" to "INKS."                                 

We conduct our operations with and through our direct and indirect    
subsidiaries, InkSure Inc., a Delaware corporation formed in March 2000, IST    
Operating Inc., a Delaware corporation formed in May 2000 (formerly known as    
InkSure Technologies Inc. and referred to throughout this Prospectus as InkSure 
Delaware), and InkSure Ltd., which was formed in December 1995 under the laws of
Israel. We also have a subsidiary, InkSure RF Inc., a Delaware corporation      
formed in March 2000, which does not currently conduct any operations.          

 On July 8, 2003, we reincorporated as a Delaware corporation by merging
with and into a newly formed, wholly owned subsidiary.                          

Market Opportunity                                                              

In general, brand owners that are victims of counterfeiting do not    
publicize their losses, nor do they publish their expenditures related to       
controlling the problem. In a survey conducted by the International Anti        
Counterfeiting Coalition in the year 2000, Fortune 500 companies reported that  
they spend an average of between $2 - $4 million per year to combat             
counterfeiting and some reported spending up to $10 million.                    

 There are a growing number of companies, banks, organizations and other
entities that recognize, acknowledge and are able to quantify or estimate the   
scope of their counterfeiting problem, and are willing to invest in security    
solutions to combat them, and are potential customers for our products and      
services. We believe that the number of entities willing to invest in security  
solutions will grow as the magnitude of the problem continues to grow.          

  Once the end user has decided to implement a security plan and introduce
new security features or technology, there are various criteria by which the    
selected technology will be measured. We believe that our products provide a    
high level of security and flexibility, while remaining cost-effective. See     
"Business -- Competition."                                                      

Traditional Authentication Technologies                                         

     Technologies used to authenticate and protect products and documents can be
divided into two general categories: overt and covert. Overt technologies are   
visible to the naked eye and are typically used by the consumer to identify the 
product or document as genuine. Holograms, intricate graphic design and color   
changing inks are among the most common overt security features used in both    
products and documents.                                                         

     Covert technologies are invisible and, historically, designed to be used by
investigators, customs officials and other law enforcement agents to verify     
authenticity. There are numerous covert technologies currently in use in the    
market, including specialty substrates (e.g., papers with security fibers or    
magnetic threads) and in-product marking (e.g., tracers placed in fuels).       
However, one of the most frequently used features for product and document      
security is specialty ink for the obvious reason that ink is the main consumable
for printing on documents, packaging and labels.                                

 The rapid rise in counterfeiting and diversion, however, has led to the
need for increasingly sophisticated security techniques for companies and       
organizations to mark and protect high-value products and documents.            
Accordingly, the market for countermeasures to counterfeiting and diversion is  
characterized by a constant inflow and introduction of new authentication       
techniques as a result of rapid technological progress. Complex new technologies
that are difficult for counterfeiters to circumvent are in demand.              

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Typically, currency and high value documents incorporate more than one
security feature (high denominations of United States currency have up to 20    
security features). Brand owners are increasingly adopting this same strategy   
and are using several security features simultaneously to make reproducing the  
document or packaging increasingly difficult and costly for the counterfeiter.  
In addition, layered security features provide continued protection for products
in the market even if one of the features is compromised.                       

InkSure Solutions                                                               

 We believe that our authentication technology can be distinguished from
other authentication solutions, such as visible and invisible ultra-violet      
marks, fluorescent inks, watermarks and fibers, optically variable inks, and    
holograms, currently offered by our competitors because our solutions offer a   
high level of security and flexibility while remaining cost-effective. Due to   
the nature of our technology, which is based upon multi-disciplinary            
technologies, including chemistry, printing, electro-optics and software, the   
solution is customized for each customer without significant additional costs to
the customer or us.                                                             

   High Level of Security. Each security ink manufactured by us has a unique
"signature" that is comprised of a variety of factors, including the amounts and
the unique properties of the chemicals included in the ink, the type of ink, the
ink color, the printing method and the substrate. Since the reader utilized by  
our solution reads a "full-spectrum" rather than sampling a specific point or   
points in a signature, a counterfeit item would have to replicate an entire     
unique signature - i.e., every variable upon which the signature depends -      
rather than merely replicating certain portions of the signature. In addition,  
because a coded ink's unique signature is comprised of various factors, with    
numerous possible permutations thereof, our inks are extremely difficult to     
reverse engineer. We believe that holograms, color changing inks and other more 
common overt security features are more easily replicated than our products. In 
addition, to thwart any counterfeiting attempts that successfully replicated a  
unique signature, we could alter any of the variables of which a signature is   
comprised and create an entirely new unique signature without significant       
expense.                                                                        

  Flexibility. Our solution is highly flexible, applicable to almost every
standard ink or toner used by standard printing devices. In addition, we believe
that our specialty inks are suitable for printing on any type of surface or     
substrate for which digital and impact printing is suitable. Our readers are    
available either as hand-held devices designed for quick and accurate field     
inspection, or as a technology that can be integrated in existing terminals and 
readers (e.g., ATMs, MICR readers and access control systems) to allow automated
identification and verification in mass quantities. According to the client's   
security needs, several different coded inks can be incorporated in a single    
product or document and the corresponding reader can be programmed to           
authenticate and verify each of the different codes - and indicate which code   
was verified.                                                                   

Cost Effective. Our technology provides a cost-effective solution to  
prevent counterfeiting and diversion because of our positive cost-performance   
ratio. In addition, because our readers are designed to detect even trace       
amounts of the specific chemical markers, our solutions provide a relatively    
high level of security, including through the use of chemicals, such as tagging 
agents, at reasonable incremental costs to our customers. For example, our      
technology was sufficiently cost-effective to be chosen for deployment in the   
City of Istanbul's bus system, where the average ticket price is approximately  
$0.50. After deployment of our solutions through an initial investment of       
approximately $2,000,000, the Istanbul Electric, Tunnel and Tramway Enterprise  
Administration, which operates the City of Istanbul's bus system, has seen its  
monthly revenue from the sale of bus tickets increase by approximately $750,000 
per month. We believe this increase is due largely to the ability of our        
technology to prevent counterfeiting of tickets for this bus system.            

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Marketing and Business Strategy                                                 

Our business strategy utilizes a "razor / razor blade" approach with  
respect to the sale of our readers and inks. We regard the selling of our       
proprietary readers as infrastructure similar to a hand held razor, while our   
specialty inks may be considered analogous to the blades of a razor that        
represent continuing sales. The potential anti-counterfeit market segments for  
our products can generally be divided into two major groups: documents (e.g.,   
bank notes, checks, transportation and event tickets, pre-paid telephone cards, 
identification cards, and passports) and brand products (e.g., pharmaceuticals, 
software, automotive, toys, and apparel). We have entered into strategic        
relationships with industry leaders such as Qwinstar Corporation and Sun        
Chemicals Group B.V. to leverage the development, distribution and co-marketing 
of their security products.                                                     

  We believe that the most receptive market segment for our authentication
applications - the middle and high-end of the security market - includes        
customers who have experienced significant problems with counterfeiting and have
been unable to reduce or eliminate the effects of counterfeiting through the    
authentication solutions that are more easily circumvented than our solutions.  
In addition, we have targeted customers that need a covert security feature that
is extremely difficult to reverse engineer.                                     

 More specifically, we have identified and targeted the following market
segments:                                                                       

   o     Packaging. We believe our product may facilitate brand protection
    through use in 1st level (on the product), 2nd level (on the
      packaging) and 3rd level packaging (through the use of labels,
          stickers, etc.). We believe our products are suitable for a number
          of industries, including consumer goods (e.g., apparel, cosmetics,
            fragrances, software, tobacco), pharmaceuticals, and industries that
        rely upon component parts (e.g., automotive, computer hardware).

     o     Games and Entertainment. Tickets and wrist bands for major sporting
           events and entertainment venues can be printed using our coded inks
   and authenticated at the entrance using either hand-held or
           stationary readers. Similarly, lottery tickets and gaming chips are
          subject to counterfeiting. Lottery tickets and gaming chips may be
authenticated at the time of submission for payment.    

    o     Transportation. Both national and local transportation authorities
          issue travel passes, season tickets and single-use tickets, all of
which are subject to counterfeiting.                    

o     Financial Documents. Historically, checks and other financial 
         documents have incorporated security features in the substrate or
       the pre-printed form, all in an effort to protect the fixed and
          variable data imprinted on the document. With our technology, both
fixed and variable data can now be protected directly.  

    o     Government Identity Documents. We believe that our ability to mark
     toners, inkjet ink and thermal transfer ribbons and therefore
   provide authentication capabilities to the variable data on
       government identity documents such as passports, visas, drivers
 licenses, ID cards, birth certificates, and motor vehicle
           registrations is unique. We view these market segments as requiring
   a long-term marketing and selling process given the typical
         government bid process and cycles for initiating new features, as
well as government cost constraints.                    

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o     Retail Vouchers and Gift Certificates. Retail establishments  
          currently use printed vouchers and gift certificates for increased
        sales. Certificates of Authenticity, which are printed documents
           that accompany a wide variety of retail goods ranging from software
 products to luxury goods are also an area of opportunity.

 o     Tax Stamps. Government issued tax stamps for a variety of taxed
        items such as tobacco, wine, alcohol and export tax stamps offer
opportunities for our authentication technology.        

     We have focused the bulk of our initial efforts on market segments where we
have already achieved market penetration in actual sales and where we believe   
sales potential is highest - packaging, financial documents, entertainment      
(i.e., ticketing) and transportation. As a result of this focused strategy, we  
have increased awareness of our products in these segments, established a       
presence in targeted markets throughout the world, and formed strategic         
alliances with companies that provide access to specific markets, including the 
alliance we formed in June of 2003 with Sun Chemical Group B.V., the worlds'    
largest manufacturer of printing inks. See "Business -- Sales and Marketing."   

Sales and Marketing                                                             

    Initially, we relied solely on intermediaries to market and distribute our
products and services. However, we currently sell our products and services     
through a combination of our own sales personnel, strategic alliances and       
licenses with intermediaries. To date, we have established key strategic        
alliances or valuable relationships with end-users in the following market      
segments:                                                                       

           Packaging. One key alliance was with Westvaco Brand Security, a
  subsidiary of Westvaco Corporation. Pursuant to an agreement between our
wholly owned subsidiary, InkSure Inc., and Westvaco Brand Security,   
Westvaco Brand Security had the exclusive, worldwide right to use our 
   technology in primary and secondary packaging and a nonexclusive right to
use our technology for other packaging products, subject to quarterly 
payments of $62,500 plus additional royalties based on the number of  
  products produced under the agreement. The agreement expired on December
   31, 2002, and Westvaco Corporation has subsequently ceased the operations
    of Westvaco Brand Security. Revenues from this agreement were $580,000 for
the fiscal year ended December 31, 2002.                              

           Financial Documents. We have also entered into an alliance with
 Qwinstar Corporation. Pursuant to an agreement dated December 28, 2001,
between InkSure Inc. and Qwinstar, we intend to market Qwinstar's     
   "detection devices" with our specialty inks, to be used in combination to
   determine the authenticity of checks (i.e., counterfeit check detection).
     Under this agreement, Qwinstar will have the exclusive right to market this
    combination of products in the United States and the United Kingdom and we
will have the exclusive right to market outside those areas. After    
 recoupment of costs, revenue from this venture will be shared among the
   parties equally. Revenues from this agreement were $65,000 for the fiscal
year ended December 31, 2002.                                         

            Ticketing. We have also entered into an alliance with ISBAK A.S.
(Istanbul Belediyeler Bakim Ulasim San Ve Tic. A.S.), a corporation   
    incorporated under the laws of Turkey, and MTM Guvenlik ve Holografik Kart
Sistemleri A.S., a corporation incorporated under the laws of Turkey. 
Pursuant to this agreement dated July 2001, MTM Guvenlik and we will  
     provide certain products and services to ISBAK, which is creating a secured
ticketing system for public transportation in the City of Istanbul and
   providing ticket readers for public buses in the City of Istanbul. During
    the fiscal year ended December 31, 2002, ISBAK purchased a quantity of ink
   sufficient to produce at least 200 million tickets and 2,700 readers. The
 term of the agreement is three years. Revenues from this agreement were
$2,000,000 for the fiscal year ended December 31, 2002, representing  
 approximately 74% of our revenues for that year. Currently ISBAK is our
major customer, and the bulk of our revenues are dependent upon the   
agreement with ISBAK.                                                 

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 On June 9, 2003 we entered into a strategic marketing alliance with Sun
Chemical Group B.V., the world's largest manufacturer of printing inks. Under   
such alliance, Sun Chemical will work with us to offer machine-readable         
ink-based brand and document authentication solutions under the SunSureTM brand 
name.                                                                           

    Although we intend to continue marketing our products and services through
licensees and strategic alliances, we believe that expanding our customer base  
through our direct sales personnel and maintaining a direct relationship with   
the end user are necessary elements to achieving deep market penetration.       

Products                                                                        

    We have created "Solution Packages" designed to meet various market needs.
These packages rely primarily on our core technology, best described as "line of
sight authentication" (i.e. electro-optical detection and analysis of organic   
and inorganic materials). The micro-processing unit within the readers uses a   
proprietary algorithm to authenticate genuine codes, as well as differentiate   
between various codes.                                                          

   We have designed several generic readers that provide different levels of
security for the various target applications. For specific projects, due to the 
flexibility upon which the technology is built, we customize the generic readers
to fit customer needs according to size and speed. Our current line of products,
which support our customizable solutions, include the following:                

o     The RDA2000 - a handheld detection pen used as a first level  
authentication tool.                                    

  o     The DA2000 - a handheld reader for quick and accurate field use,
offering a sophisticated authentication mechanism.      

   o     The DA1000 - a lower-cost version of the DA2000, offered at lower
        price points, currently being used in a kit format for automatic
     inspection in Access Control and transportation applications.

o     The SDA2000FD - a desktop automatic reader that is part of an 
          authentication station (including an application conform software)
designed by us and used for banking applications.       

  o     QwinSure - kit type authentication device integrated within high
speed check sorters for banking applications.           

   o     HoloSure - Multi-layered security, comprised of an overt hologram
         (supplied by a hologram manufacturer via sub-contracting) that is
            marked with our security markers that can be authenticated by either
the DA2000 or DA1000 readers.                           

 o     We anticipate that we will release several new products and new
          generations of our existing products in 2003. One new product will
be a new reader, which will be a more cost-effective and
      "user-friendly" version of our current reader. In addition, we
           anticipate the release of "TicketSure", a product that will include
       new technology designed for the ticket authentication industry;
         including authentication technology for multi-use tickets such as
         weekly, monthly or annual passes, or passes for a fixed number of
rides on mass transportation.                           

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We plan to develop products that permit high volume tagging and       
authentication without requiring a line of sight. See "Business -- Research and 
Development."                                                                   

Competition                                                                     

   We are aware of other technologies, both covert and overt surface marking
techniques, requiring decoding implements or analytical methods to reveal       
relevant information. These technologies are offered by other companies for the 
same anti-counterfeiting and anti-diversion purposes that we market our         
products. Our competitors, many of whom have greater financial resources than   
us, include:                                                                    

o     Technology providers, that typically offer a specific range of
security solutions.                                     

   o     Security printers, which are generally well-established companies
      whose core business is printing. Security printing tends to be
       segregated from the bulk of the printing industry, implementing
          fundamentally the same technologies as those generally used by the
           printing industry but with specific 'twists' that are more complex,
difficult to access or expensive to use.                

     o     Systems Integrators, which have often evolved from other sectors in
   the printing industry, mainly security print manufacturers,
        technology providers or packaging and label manufacturers. These
            companies offer a wide range of security solutions, enabling them to
         offer a complete suite tailored to the customer's specific needs.

  o     Security consultancy groups, which offer a range of technologies
           from several technology providers and tailor a specific solution to
    end-customers, based on a preliminary process involving risk
       analysis and characterization of a comprehensive organizational
security program.                                       

Competition in our markets is based upon price, service, quality,     
reliability and the ability to offer secure transaction products and services   
with the flexibility to meet a customer's particular needs. We believe our      
technology provides a unique and cost-effective solution that has certain common
competitive advantages over other technologies. However, even technologies that 
are not as secure or reliable as our products may be competitive if they are    
marketed effectively and may also compete on the basis of other criteria, such  
as price. We believe that prospective customers typically consider the following
criteria when choosing a security technology:                                   

o     Level of security (e.g., multi-layer or single layer solution,
covert, overt).                                         

o     Ability to support or be integrated with existing production, 
logistical processes and equipment.                     

o     Ease of utilization/verification.                             

  o     Ability to extend the use for various organizational uses (e.g.,
       alteration, simulation, counterfeiting, diversion, supply chain
management).                                            

 o     Safety and durability (i.e., ability to withstand environmental
factors such as temperature, humidity, sunlight).       

o     Consistency and integrity of solution.                        

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o     Need for protection of variable vs. fixed data.               

      o     Flexibility of code location (e.g., location on package, on product,
on different substrates).                               

  o     In the case of overt features, attractiveness to consumer (i.e.,
added marketing value).                                 

      o     Conclusiveness (i.e., can the technology provide conclusive evidence
of counterfeiting).                                     

  Strong competitive pricing pressures exist, particularly with respect to
products whose customers seek to obtain volume discounts and economies of scale.
In addition, alternative goods or services, such as those involving electronic  
commerce, could replace printed documents and thereby also adversely affect     
demand for our products.                                                        

Research and Development                                                        

   The technology and know-how upon which our products are based are subject
to continued development of materials and processes to meet the demands of new  
applications and increased competition. We conduct most of our research and     
development activities at our facility in Rehovot, Israel. We believe our future
success depends upon our ability to identify the requirements for future        
products and product enhancements, and to define, implement and successfully    
develop the technologies, including, without limitation, our next generation RF 
technology, needed to deploy those products and product enhancements.           

    We pursue a process-oriented strategy in which we conduct efforts aimed at
developing new or enhanced classes of products and services. As part of this    
strategy, we work closely with current and potential customers, distributors and
other members of the industry to identify market needs and define appropriate   
product specifications. Our research and development expenditures totaled       
approximately $874,000 and $809,000 for fiscal years 2001 and 2002,             
respectively.                                                                   

Manufacturing and Production                                                    

The principal raw materials used by us for the manufacturing of our   
specialty inks include trace amounts of various chemicals and inks suitable for 
various printing methods. We believe that there are many sources for both these 
chemicals and the printing inks, which we currently purchase from major         
suppliers in Europe. Some of these chemicals, however, are considered rare, with
prices in excess of $20,000 per pound for certain chemicals. We do not believe  
that we will have difficulty in continuing to procure these chemicals and       
printing inks given the number of suppliers, including, without limitation,     
suppliers located in the United States, Europe and Japan, from whom they can be 
procured. We currently subcontract the manufacturing of our specialty inks to   
various ink suppliers, who incorporate chemicals provided by us into the inks.  
To maintain the integrity and security of our specialty inks, we do not disclose
the precise chemical ingredients to these ink suppliers.                        

     The principal raw materials used by us for the manufacturing of our readers
include electronic components, plastics and other raw materials. We believe that
these materials are in good supply and are available from multiple sources. We  
currently utilize subcontractors for the manufacturing of our readers.          

Patents and Proprietary Technology                                              

   Although our policy is to file patent applications to protect technology,
inventions and improvements that are important to the development of our        
business, and although we will continue to seek the supplemental protection     
afforded by patents, we generally consider protection of our products, processes
and materials to be more dependent upon proprietary knowledge, know-how and     
rapid assimilation of innovations than patent protection. We have applied for   
three patents covering various methods of marking documents for the purpose of  
authentication and three patents related to the RF technology being developed by
us. We are also seeking protection under the Patent Cooperation Treaty.         

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We require our employees, consultants and advisors to execute         
confidentiality agreements upon the commencement of any employment or consulting
relationship with us. Each agreement provides that all confidential information 
developed or made known to the individual during the course of the relationship 
will be kept confidential and not disclosed to third parties except in specified
circumstances. In the case of employees, the agreements provide that all        
inventions conceived by an individual will be the exclusive property of us,     
other than inventions unrelated to our business and developed entirely on the   
employee's own time. There can be no assurance, however, that these agreements  
will provide adequate protection or remedies for misappropriation of our trade  
secrets in the event of unauthorized use or disclosure of such information or   
that an independent third party will not develop functionally equivalent        
technology.                                                                     

    Our patent position is uncertain and may involve complex legal and factual
issues. Consequently, we do not know whether any of our patent applications will
result in the issuance of any patents, or whether patents, if issued, will      
provide significant proprietary protection or will not be circumvented or       
invalidated. Since patent applications are maintained in secrecy until patents  
issue, and since publications of discoveries in scientific or patent literature 
tend to lag behind actual discoveries by several months, we cannot be certain   
that we were the first creator of inventions covered by pending patent          
applications or that we were the first to file patent applications for such     
inventions. Moreover, we may have to participate in interference proceedings    
declared by the United States Patent and Trademark Office or other patent       
offices to determine the priority of inventions, which could result in          
substantial cost to us.                                                         

Government Regulation                                                           

Our scanning device and the next-generation radio frequency technology
scanning equipment must comply with the regulations of the United States Federal
Communications Commission (the "FCC"), which may require certification,         
verification or registration of the equipment with the FCC. Certification and   
verification of new equipment requires testing to ensure the equipment's        
compliance with the FCC's rules. In addition, the equipment must be labeled     
according to the FCC's rules to show compliance with these rules. Electronic    
equipment permitted or authorized to be used by the FCC through our             
certification or verification procedures must not cause harmful interference to 
licensed FCC users, and it is subject to radio frequency interference from      
licensed FCC users.                                                             

Employees                                                                       

   At August 22, 2003, we had 16 employees located in Israel, including nine
engineers, two sales and marketing personnel, three management and              
administrative personnel, and two operations personnel. In addition, as of      
August 22, 2003, we had five employees located in the United States, one of whom
is a member of our management, one of whom manages our operations in the United 
States, with the remaining three being sales and marketing personnel. We        
consider our relations with our employees to be satisfactory. We believe our    
future will depend in large part on our ability to attract and retain highly    
skilled employees.                                                              

     The employees of InkSure Ltd. are entitled to "Dmey Havra'a" as provided in
a Collective Bargaining Agreement to which the General Labor Union of the       
Workers in Israel is a party. Dmey Havra'a is an employee benefit program       
whereby employees receive payments from their employer for vacation. In         
addition, InkSure Ltd. pays a monthly amount equal to 14.53% of the salary of   
each employee to an insurance policy, pension fund or combination of both,      
according to the request of such employee. Each employee pays a monthly amount  
to such insurance policy equal to 5% of such employee's salary. InkSure Ltd.    
pays a monthly amount up to 7.5% of each employee's salary to an educational    
fund in the name of such employee. Each employee pays a monthly amount to such  
fund equal to 2.5% of such employee's salary. Our wholly owned subsidiary,      
InkSure Ltd. makes cars available to some employees for their exclusive use.    
InkSure Ltd. pays all costs associated with these cars, whether fixed or        
variable, including without limitation, fuel, repairs and insurance.            

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Properties                                                                      

 We maintain our executive offices in approximately 2,000 square feet of
space in New York, NY pursuant to a lease expiring in February 2008. Monthly    
lease payments are approximately $3,600 per month. We maintain our research and 
development facilities in Rehovot, Israel. The facilities we lease in Israel are
approximately 1,476 square feet. We exercised an option to renew this lease for 
another year upon the expiration of the initial term in July 2003. Monthly lease
payments are approximately $3,700 per month at the Israeli facility.            

 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) 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.            
Secu-Systems seeks, among other things, an injunction and a 50% share of profits
from the printing method at issue. We recently offered a settlement amount to   
Secu-Systems which was rejected. We have not made any accruals in connection    
with this lawsuit.                                                              

 DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS

    Set forth below are the names of the persons nominated as directors, their
ages, their offices with us, if any, their principal occupations or employment  
for the past five years, the length of their tenure as directors and the names  
of other public companies in which such persons hold directorships.             

Name                          Age    Position                       
----                          ---    --------                       
Elie Housman.............     66     Chairman and Director          
     Yaron Meerfeld...........     43     Chief Executive Officer and Director
James Lineberger.........     66     Director                       
Ezra Harel...............     53     Director                       
T. Lee Provow............     46     Director                       
Albert Attias............     74     Director                       
David Sass...............     67     Director                       

Elie Housman joined InkSure in February 2002 as Chairman and also serves as a   
director of InkSure. Mr. Housman was a Principal at Charterhouse Group          
International, a privately held merchant bank, from 1989 until June 2001. At    
Charterhouse, Mr. Housman was involved in the acquisition of a number of        
companies with total sales of several hundred million dollars. Prior to         
Charterhouse, he was co-owner of AP Parts, a $250 million automotive parts      
manufacturer. Mr. Housman was also the Chairman of Novo Plc. in London, a       
leading company in the broadcast storage and services industry. At present, Mr. 
Housman is a director of three public companies, deltathree, Inc., ICTS         
International, N.V., a prominent aviation security company and EVCI Career      
Colleges Incorporated. In addition, Mr. Housman serves a director for Jazz      
Photo, Inc., and Bartech Systems International, Inc., which are both privately  
held companies in the United States.                                            

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Yaron Meerfeld joined InkSure in November 2001 as Chief Executive Officer and   
also serves as a director of InkSure. During the prior seven years, Mr. Meerfeld
developed expertise in authentication and multi-layered security systems for    
documents, passports, ID cards and smart cards as Managing Director of Kromotek,
Inc. and as the Vice President for Sales and Marketing at SuperCom. Prior to    
joining SuperCom, he served as Vice President for Sales and Marketing at        
APPLItec Ltd, Director of International Sales and Marketing at IIS Ltd. and in  
senior sales positions at Eichut Microcomputers, Ltd. Mr. Meerfeld holds a B.Sc.
in Economics & Business from Bar Ilan University and an M.B.A. from Tel Aviv    
University in Israel.                                                           

James Lineberger joined InkSure in September 2002 as a director. Since 1969 Mr. 
Lineberger has been the Managing Member of Lineberger & Co., LLC, a private     
investment company specializing in leveraged buyouts and venture capital. Prior 
to founding the firm and its predecessor in 1969, Mr. Lineberger was a member of
the corporate finance department of Smith Barney & Co. Inc. Mr. Lineberger was a
director of Sensormatic Electronics Corporation from 1969 until 2001, the       
leading global supplier of electronic article surveillance equipment and        
systems, and also served as Chairman of the Executive Committee from 1974 until 
1998 and Co-Chief Executive Officer from January 1998 through July 1998. He also
served as Chairman of the Board of Hilite Industries, Inc., a manufacturer of   
highly engineered parts for the automotive industry, from 1986 until 1999.      

Ezra Harel joined InkSure in September 2002 as a director. Mr. Harel founded    
ICTS International, N.V., a prominent aviation security company listed on The   
Nasdaq Stock Market. From 1989 to 1992 he served as Chairman of the Board of    
Directors of Dash200+, a company involved with the conversion of Boeing 747     
aircraft from passenger to cargo use. In 1993 he took ownership and control of  
Tuffy Associates Inc., an automotive service franchise company, which has       
approximately 450 locations. Mr. Ezra Harel is the Chairman of the Advisory     
Board of Seehafen Rostock Umschlagsgesellschaft GmbH (Port of Rostock), Germany,
a company engaged in seaport activities. Mr. Harel had been the Vice Chairman of
the Board of Directors of Rogosin Enterprises Inc., an affiliate of Leedan,     
since 1994 until 2002. He is also a real estate developer in the United States, 
Europe and Israel.                                                              

T. Lee Provow joined InkSure in September 2002 as a director. Mr. Provow is a   
limited partner at Commonwealth Associates, an investment and merchant banking  
firm, who currently focuses on managing Commonwealth Associates' relationships  
with its portfolio companies. Mr. Provow has served in this capacity since      
January 2002. Mr. Provow previously served as President and Chief Executive     
Officer of Intelispan since January 2000, until Intelispan was sold to McLeod   
USA, and served as a director since August 1998. From May 1998 to December 1999,
Mr. Provow served as the Chief Operating Officer of Slingshot Networks LLC, a   
provider of digital media storage, until Slingshot Networks was purchased by    
Qwest Communications. From June 1995 to May 1998, Mr. Provow served as the      
Executive Vice President and Chief Operating Officer of GridNet International, a
provider of enhanced data communications services, which Mr. Provow founded and 
which was purchased by MCI WorldCom in July 1997. Prior to founding GridNet, Mr.
Provow spent 15 years with NCR and its successor, AT&T Global Information       
Services, in various domestic and international technical, marketing, product   
management, and strategic planning positions, including Vice President of Retail
Product and Systems Marketing. Mr. Provow serves as a director of Slingshot     
Networks, LLC, Horizon Medical Products and Intraware.                          

Albert Attias joined InkSure in March 2002 as a director. Mr. Attias joined The 
El-Ad Group, Ltd. as President in September 1996 and currently serves as a      
director of The El-Ad Group, Ltd. The El-Ad Group is a member of El-Ad Ink LLC, 
which currently holds 1,312,785 shares of Convertible Preferred Stock. Prior to 
1996, Mr. Attias was Deputy General Manager in the Mercantile Discount Bank,    
Ltd. in Tel Aviv for twelve years. Previously, Mr. Attias worked at Barclays    
Bank.                                                                           

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David W. Sass joined InkSure in February 2003. For the past 42 years, Mr. Sass  
has been a practicing attorney in New York City and is currently a senior       
partner in the law firm of McLaughlin & Stern, LIP, a Director of ICTS          
International N.V. and an honorary trustee of Ithaca College. Mr. Sass has been 
a director of BarPoint.com, Inc., an online and wireless product information and
shopping service provider since July 1995. Mr. Sass is also the Secretary and a 
director of Pioneer Commercial Funding and a director and officer of several    
other private companies.                                                        

Executive Officers                                                              

        The names of, and certain information regarding our executive officers
who are not also directors are set forth below. Except for executive officers   
who have employment agreements with us, The executive officers serve at the     
pleasure of the Board of Directors.                                             

Name                        Age            Position           
----                        ---            --------           
     Eyal Bigon............      37             Chief Financial Officer,
                                               Secretary and Treasurer

Eyal Bigon, C.P.A., joined InkSure in January 2002 as Chief Financial Officer,  
Secretary and Treasurer. During the prior five years, he was the Chief Financial
Officer of RiT Technologies (NASDAQ: RITT), a leading provider of integrated    
network management solutions for the communications market. Prior to joining    
RiT, Mr. Bigon held financial positions at Tadiran (a formerly public company   
involved in the technology sector) and IBM. Mr. Bigon has a B.A. in Accounting  
and Economics and an M.B.A. in Marketing and International Management from      
Tel-Aviv University.                                                            

EXECUTIVE COMPENSATION

     On October 23, 2002 as a result of a "reverse merger" transaction, a wholly
owned subsidiary of Lil Marc, Inc. merged with and into InkSure Delaware        
pursuant to which InkSure Delaware became a wholly-owned subsidiary of Lil Marc 
in a transaction accounted for as a reverse acquisition of Lil Marc by InkSure  
Delaware. Prior to the reverse merger, Lil Marc was a non-operating public shell
corporation with nominal assets. Following the reverse merger, the management of
InkSure Delaware controlled the merged company and the principal shareholders of
InkSure Delaware became principal shareholders of the merged company. Following 
the closing of the reverse merger, Lil Marc changed its name to InkSure         
Technologies Inc. As a result of the reverse merger transaction, InkSure        
Delaware continued as an operating entity, changed its name to IST Operating    
Inc., and remained a wholly owned subsidiary. The historical financial          
statements of InkSure Delaware replaced those of Lil Marc. Accordingly, the     
information provided in this section is presented to include compensation       
received by our current management during the period of time prior to the       
merger.                                                                         

Summary Compensation Table                                                      

    The following Summary Compensation Table sets forth summary information as
to compensation received by our Chief Executive Officer and each of the four    
other most highly compensated executive officers who were employed by us at the 
end of December 31, 2002 (collectively, the "named executive officers") for     
services rendered to us in all capacities during the three fiscal years ended   
December 31, 2002. The table does not include summary information as to our     
executive officers prior to the reverse merger.                                 

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                                                        [Enlarge/Download Table]


                                     Annual Compensation                        Long-Term Compensation             
                            ----------------------------------  ---------------------------------------------------
                                                                        Awards            Payouts                  
                                                                -----------------------   -------                  
                                                                             Securities                            
                                                    Other       Restricted   Underlying                            
Name and Principal                                  Annual        Stock       Options/       LTIP        All Other 
    Position         Year   Salary      Bonus   Compensation(1)   Awards      SARs(#)      Payouts     Compensation
------------------   ----   ------      -----   --------------- ----------    -------      -------     ------------
                                                                                                                   
Yaron Meerfeld      2002   $121,475      $0         $13,000            $0      57,000         $0             $0    
Chief Executive     2001     20,500       0               0             0           0          0              0    
Officer                                                                                                            

Eyal Bigon          2002   $105,315      $0         $12,000            $0      55,000         $0             $0    
Chief Financial                                                                                                    
Officer,                                                                                                           
Secretary and                                                                                                      
Treasurer                                                                                                          


(1) Other Annual Compensation during the 2002 fiscal year consisted of a company
car that was provided to each of Messrs. Meerfeld and Bigon.                    

Option Grants in Last Fiscal Year                                               

The following table sets forth information regarding each stock option
granted during fiscal year 2002 to each of the named executive officers.        

                                                                [Download Table]


                    Individual Grants                                   

                   Number of         % of Total                         
                  Securities        Options/SARs   Exercise             
                  Underlying         Granted to     or Base             
                 Options/SARs       Employees in     Price    Expiration
     Name       Granted (#) (1)      Fiscal Year   ($/Share)      Date  
-------------   ---------------     -------------  ---------  --------  
                                                                        
Yaron Meerfeld    57,000 (2)             13.4%       $0.80      1/1/07  
Eyal Bigon        55,000 (3)             13.0%       $0.80      1/1/07  


-----------------                                                               
(1) The options were granted pursuant to our 2002 Employee, Director and        
Consultant Stock Option Plan (the "Plan") and were granted on January 1, 2002.  

(2) These options vest and become exercisable over a one-year period with 50%   
vesting upon issuance and 50% vesting on the first anniversary of issuance.     

(3) These options vest and become exercisable over a four-year period with 20%  
vesting upon issuance and 20% vesting on the anniversary of issuance for the    
next four years.                                                                

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Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option      
Values                                                                          

     The following table provides information regarding the exercises of options
by each of the named executive officers during the 2002 fiscal year. In         
addition, this table includes the number of shares covered by both exercisable  
and unexercisable stock options as of December 31, 2002 and the values of       
"in-the-money" options, which values represent the positive spread between the  
exercise price of any such option and the fiscal year-end value of the common   
stock.                                                                          

                                                        [Enlarge/Download Table]


                                                 Number of Securities Underlying                                
                                                       Unexercised Options           Value of the Unexercised   
                          Shares                            at Fiscal                 In-The-Money Options      
                         Acquired                           Year-End                  at Fiscal Year-End (2)    
                            on        Value       -----------------------------   ------------------------------
         Name            Exercise  Realized (1)   Exercisable     Unexercisable   Exercisable      Unexercisable
-----------------------  --------  ------------   -----------     -------------   -----------      -------------
                                                                                                                
Yaron Meerfeld               0          $0          28,500           28,500         $47,025           $47,025   
Eyal Bigon                   0          $0          11,000           44,000         $18,150           $72,600   


(1) Amounts shown in this column do not necessarily represent actual value      
realized from the sale of the shares acquired upon exercise of the option       
because in many cases the shares are not sold on exercise but continue to be    
held by the executive officer exercising the option. The amounts shown represent
the difference between the option exercise price and the market price on the    
date of exercise, which is the amount that would have been realized if the      
shares had been sold immediately upon exercise.                                 

(2) The value of unexercised in-the-money options at fiscal year end assumes a  
fair market value for our common stock of $2.45, the closing sale price per     
share of our common stock as reported on the OTC Electronic Bulletin Board on   
December 31, 2002.                                                              

Compensation of Directors                                                       

     Our policy is to pay no compensation to members of the Board for attendance
at Board meetings or committee meetings.                                        

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     Directors are entitled to receive options under our 2002 Employee, Director
and Consultant Stock Option Plan. We did not grant any options to non-employee  
Directors to purchase shares of common stock during fiscal 2002.                

    Mr. Housman received options to purchase 478,469 shares of common stock at
an exercise price of $0.966 per share pursuant to his employment agreement with 
us. All of such options were not granted pursuant to our 2002 Employee, Director
and Consultant Stock Option Plan. For a discussion of the options granted to Mr.
Meerfeld, please see "Executive Compensation -- Option Grants in Last Fiscal    
Year".                                                                          

Stock Option Plan                                                               

     We adopted the 2002 Employee, Director and Consultant Stock Option Plan, or
the Plan, in October 2003. The purpose of the Plan is to provide an additional  
incentive to attract and retain qualified competent persons who provide services
and upon whose efforts and judgment our success is largely dependent, through   
the encouragement of stock ownership in us by such persons. In furtherance of   
this purpose, the Plan authorizes, among other things: (a) the granting of      
incentive or nonqualified stock options to purchase our common stock to persons 
selected by the administrators of the Plan from the class of all of our regular 
employees, including officers who are regular employees, and directors; (b) the 
granting of nonqualified stock options to purchase our common stock to persons  
selected by the administrators of the Plan from the class of our consultants and
advisor; and (c) the use of already owned shares of our common stock as payment 
of the exercise price for options granted under the Plan.                       

    The Plan allows us to grant options. A total of 3,500,000 shares of common
stock are reserved for issuance under the Plan. Either the stockholders or the  
Board may amend the Plan, provided that any amendment approved by the Board,    
which, as determined by the Board, is of a scope that requires stockholder      
approval in order to ensure favorable federal income tax treatment for any      
incentive stock options under Section 422 of the Internal Revenue Code, as      
amended, or the Code, is subject to obtaining such stockholder approval. All of 
our employees and consultants and the members of the Board are eligible to      
participate in the Plan.                                                        

Material Features of the Plan                                                   

   The following description does not purport to be complete. For a complete
description please refer to the full text of the Plan which is included as an   
exhibit to the registration statement of which this prospectus is a part.       

1. Shares Available for Issuance. 3,500,000 shares of common stock are
reserved and available for the grant of options under the Plan. Other than the  
Plan, we have no other plan in effect under which options and stock-based awards
may be granted to employees. The number of shares available under the Plan is   
subject to adjustment in the event of stock splits, stock dividends, and other  
extraordinary events (discussed further below). Shares available for awards     
under the Plan may be either authorized and unissued shares or shares held in or
acquired for our treasury.                                                      

   In certain circumstances, shares subject to outstanding options may again
become available for issuance pursuant to other options available under the     
Plan. For example, canceled, forfeited or expired options will again become     
available for the grant of new options under the Plan.                          

In the event of a recapitalization, stock split, stock dividend,      
reorganization, business combination, or other similar corporate transaction or 
event affecting the common stock, adjustments may be made to the number and kind
of shares available for issuance subject to any outstanding options.            

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2. Eligible Participants. Current and future employees (including     
officers), non-employee directors, and consultants of us and our affiliates are 
eligible to participate in and receive a grant or grants of options under the   
Plan. Individuals to whom we or any of our subsidiaries have offered employment 
may also be granted options, but such individuals may not receive any exercise  
right relating to the option until he or she has commenced employment or the    
providing of services.                                                          

 3. Administration. Subject to the terms and conditions of the Plan, the
Board has the authority to designate which eligible individuals will receive    
options, to determine the type and number of options to be granted, to decide   
the number of shares to subject to the options, to specify the time or times at 
which options will be granted, exercisable or settled (including any performance
conditions to be satisfied in connection therewith), and to provide any other   
terms, conditions or restrictions of such options. The Board also has the       
authority to interpret and establish rules and regulations relating to the Plan 
and any individual agreements entered pursuant to the Plan, and make all other  
determinations that may be necessary or advisable for administration of the     
Plan. Under the Plan, the Board may delegate its authority to administer the    
Plan to a committee of the Board, in which case such committee shall            
administrate the Plan.                                                          

     4. Non-Qualified and Incentive Stock options. The options granted under the
Plan may be either designated as non-qualified stock options or incentive stock 
options, which are intended to meet the requirements of Section 422 of the Code 
such that a participant can receive potentially favorable tax treatment. The    
Board has discretion to determine the terms and conditions of each option       
granted under the Plan, including the grant date, option price, the term of each
option, exercise conditions and restrictions, conditions of forfeitures, and any
other terms, conditions and restrictions consistent with the terms of the Plan, 
all of which will be evidenced in an individual option agreement between the    
participant and us. Generally, the terms of an option will provide for          
post-employment exercise for specified period of time, determined by the Board. 
If not otherwise specified by the Board, the Plan provides that vested options  
will become immediately exercisable and remain exercisable for one year (or the 
remainder of their term, if shorter) upon a participant's termination due to    
death, disability or retirement.                                                

 Certain limitations apply to incentive stock options. These limitations
include a maximum term of ten years (five years for 10% owners of our common    
stock, as determined under the Code), a minimum exercise price of fair market   
value of a share as of the date of grant (110% of the fair market value of a    
share for 10% owners), and restrictions on transferability of the incentive     
stock option.                                                                   

  Payment for shares purchased pursuant to an option under the Plan may be
made in cash or (with the consent of the Board) shares through broker-assisted  
cashless exercise procedures.                                                   

    Generally, options granted under the Plan may not be transferred, pledged,
disposed, or otherwise encumbered except by will or by the laws of descent and  
distribution, or to a designated beneficiary upon the participant's death.      
However, where not prohibited by the Code or other applicable law, the Board may
permit transfers of options upon certain conditions.                            

     In addition, any shares issuable pursuant to options granted under the Plan
to a participant may be offset (or reduced) by any amount the participant may   
owe to us.                                                                      

   5. Amendment and Termination of the Plan. The Board may amend, suspend or
terminate the Plan, without stockholder approval unless stockholder approval is 
required by law, regulation, or stock exchange rule. The Board may, in its      
discretion, submit amendments to stockholders for approval, such as an amendment
to increase the number of shares authorized for issuance pursuant to options    
under the Plan. Under amendment provisions of the Plan, stockholder approval    
will not necessarily be required for amendments that might increase the cost of 
the Plan or broaden eligibility. Unless terminated earlier, the Plan will       
terminate at such time that all shares subject to options have been issued or   
purchased, or ten years from the date of adoption by the Board. Because future  
options under the Plan will be granted in the discretion of the Board, the type,
number, recipients, and other terms of such options cannot be determined at this
time.                                                                           

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6. Change of Control. Unless a participant's option Agreement provides
otherwise, under the Plan if we are to be consolidated with or acquired by      
another entity in a merger, sale of all or substantially all of our assets other
than a transaction to merely change the state of incorporation, the board of    
directors of any entity assuming the obligations of us shall, as to outstanding 
options, either (i) make appropriate provision for the continuation of such     
options by substituting on an equitable basis for the common stock then subject 
to such options either the consideration payable with respect to the outstanding
common stock in connection with the corporate transaction or securities of any  
successor or acquiring entity; or (ii) provide that all options must be         
exercised (either to the extent then exercisable or made fully exercisable      
pursuant to the underlying option agreement or the discretion of the Board),    
within a specified number of days of the date of such notice, at the end of     
which period the options shall terminate; or (iii) terminate all options in     
exchange for a cash payment equal to the excess of the fair market value of the 
common stock underlying such options (either to the extent then exercisable or  
made fully exercisable pursuant to the underlying option agreement or the       
discretion of the Board), over the exercise price thereof.                      

Federal Income Tax Implications                                                 

The following generally describes the federal income tax implications 
associated with the options granted under the Plan:                             

    There are three points in time when we and a participant could potentially
incur federal income tax consequences: date of grant, upon exercise, and upon   
disposition. First, when an option is granted to a participant, the participant 
does not recognize any income for federal income tax purposes on the date of    
grant. We similarly do not have any federal income tax consequences at the date 
of grant. Second, depending upon the type of option, the exercise of an option  
may or may not result in the recognition of income for federal income tax       
purposes. With respect to an incentive stock option, a participant will not     
recognize any ordinary income upon the option's exercise (except that the       
alternative minimum tax may apply). However, a participant will generally       
recognize ordinary income upon the exercise of a non-qualified stock option. In 
this case, the participant will recognize income equal to the difference between
the option price and the fair market value of shares purchased pursuant to the  
option on the date of exercise.                                                 

    Incentive stock options are subject to certain holding requirements before
a participant can dispose of the shares purchased pursuant to the exercise of   
the option and receive capital gains treatment on any income realized from the  
exercise of the option. Satisfaction of the holding periods determines the tax  
treatment of any income realized upon exercise. If a participant disposes of    
shares acquired upon exercise of an incentive stock option before the end of the
applicable holding periods, the participant must generally recognize ordinary   
income equal to the lesser of (i) the fair market value of the shares at the    
date of exercise of the incentive stock option minus the exercise price or (ii) 
the amount realized upon the disposition of the shares minus the exercise price.
Any excess of the fair market value on the date of such disposition over the    
fair market value on the date of exercise must be recognized as capital gains by
the participant. If a participant disposes shares acquired upon the exercise of 
an incentive stock option after the applicable holding periods have expired,    
such disposition generally will result in short-term or long-term capital gain  
or loss measured by the difference between the sale price and the participant's 
tax "basis" in such shares (generally, in such case, the tax "basis" is the     
exercise price).                                                                

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     Generally, we will be entitled to a tax deduction in an amount equal to the
amount recognized as ordinary income by the participant in connection with the  
exercise of options. However, we are generally not entitled to a tax deduction  
relating to amounts that represent capital gains to a participant. Accordingly, 
if the participant satisfies the requisite holding period prior to disposition  
to receive the favorable tax treatment accorded incentive stock options, We will
not be entitled to any tax deduction with respect to an incentive stock option. 
In the event the participant has a disqualifying disposition, we will be        
entitled to a tax deduction in an amount equal to the amount that the           
participant recognized as ordinary income.                                      

     Compensation that qualifies as "performance-based" compensation is excluded
from the $1 million deductibility cap of Section 162(m) of the Code, and        
therefore remains deductible by us. Under the Plan, options granted with an     
exercise price that is at least equal to 100% of fair market value of the       
underlying shares at the date of grant will be intended to qualify as such      
"performance-based" compensation. A number of requirements must be met, however,
in order for particular compensation to so qualify. Accordingly, there can be no
assurance that such compensation under the Plan will be fully deductible under  
all circumstances.                                                              

Employment Contracts, Termination of Employment and Change-in-Control           
Arrangements                                                                    

  On February 6, 2002, InkSure Delaware entered into a two-year employment
agreement with Elie Housman. The agreement provides for an annual base salary of
$75,000. Pursuant to the agreement, InkSure Delaware granted to Mr. Housman     
seven-year options to purchase 478,469 shares of InkSure Delaware common stock, 
which options are exercisable at a price per share of $0.966. The options       
granted to Mr. Housman were not granted pursuant to InkSure Delaware's option   
plan. All of such options have vested. Either party may terminate the employment
agreement on ten days' prior written notice or upon the occurrence of certain   
events constituting cause or good reason. In the event the agreement is         
terminated without cause or for good reason, Mr. Housman would be entitled to a 
lump sum severance payment equal to Mr. Housman's annual base salary. The       
agreement also contains customary provisions with respect to benefits,          
reimbursement of expenses, confidentiality and non-competition. In connection   
with the merger of InkSure Delaware with our wholly owned subsidiary, we assumed
the rights and obligations of this agreement and the options to purchase shares 
of InkSure Delaware common stock were converted into options to purchase shares 
of our common stock.                                                            

  On February 10, 2003, we entered into an employment agreement with Yaron
Meerfeld, our Chief Executive Officer. The agreement provides for an annual base
salary of $108,000 plus customary payments that are made to employees in Israel 
and the use of a company automobile. Mr. Meerfeld may terminate the employment  
agreement on 180 days' prior written notice and we may terminate the employment 
agreement on 270 days' prior written notice, provided that we may terminate the 
agreement without prior notice upon the occurrence of certain events            
constituting justifiable cause. The employment agreement also contains customary
provisions with respect to benefits, reimbursement of expenses and              
confidentiality.                                                                

 On February 10, 2003, we entered into an employment agreement with Eyal
Bigon, our Chief Financial Officer, Secretary and Treasurer. The agreement      
provides for an annual base salary of $90,000 plus customary payments that are  
made to employees in Israel and the use of a company automobile. Mr. Bigon may  
terminate the agreement on 180 days' prior written notice and we may terminate  
the agreement on 270 days' prior written notice, provided that the we may       
terminate the agreement without prior notice upon the occurrence of certain     
events constituting justifiable cause. The agreement also contains customary    
provisions with respect to benefits, reimbursement of expenses and              
confidentiality.                                                                

    The outstanding option agreements issued under our option plan provide for
acceleration of the vesting of the options granted upon or in connection with a 
change in control.                                                              

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

  The following table sets forth certain information as of August 22, 2003
concerning the beneficial ownership of the common stock by each stockholder     
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each current member of the Board of Directors, each of the     
named executive officers, and all directors and current executive officers as a 
group.                                                                          

                                                        [Enlarge/Download Table]


                                                       Shares Beneficially Owned (1) 
                                                       ----------------------------- 
Name and Address**                                        Number           Percent   
------------------                                     ------------      ------------
                                                                                     
Michael S. Falk (2)(3)                                     800,624           6.6%    
El-Ad Ink LLC (4)(6)                                     1,312,785          11.0%    
ICTS International, N.V. (5)(7)                          4,368,394          36.2%    
Albert Attias (6)(4)                                     1,320,118          11.0%    
Ezra Harel (7)(5)                                        4,201,185          34.8%    
Yaron Meerfeld (8)                                         483,770           4.0%    
Elie Housman (9)                                           731,122           5.9%    
Eyal Bigon (10)                                             30,333             *     
James Lineberger (11)                                      678,141           5.6%    
T. Lee Provow (12)                                          94,747             *     
David Sass (13)                                              7,333             *     
Robert Priddy (14)(2)                                      607,593           5.0%    

All directors and current executive officers (15)                                    
  as a group (8 persons)..............................   7,721,291          59.7%    


---------------                                                                 
*       Represents beneficial ownership of less than 1% of our outstanding    
shares of common stock.                                       

**      Except as otherwise indicated, the address of each beneficial owner is
      c/o InkSure Technologies Inc., 32 Broadway, Suite 1314, New York, NY
10004.                                                        

(1)      The number of shares of common stock issued and outstanding on June 23,
       2003 was 11,982,166. The calculation of percentage ownership for each
      listed beneficial owner is based upon the number of shares of common
      stock issued and outstanding at June 23, 2003, plus shares of common
   stock subject to options held by such person at June 23, 2003 and
       exercisable within 60 days thereafter. The persons and entities named
        in the table have sole voting and investment power with respect to all
    shares shown as beneficially owned by them, except as noted below.

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(2)      The address of this beneficial owner is 830 Third Avenue, New York, NY 
10022.                                                        

(3)      Includes 116,019 shares of common stock underlying warrants which are  
         currently exercisable or exercisable within 60 days of the date hereof.

(4)      This information is based solely on a Schedule 13D filed by El-Ad Ink  
       LLC with the Securities and Exchange Commission on November 13, 2002,
  which reported ownership as of October 28, 2002. El-Ad Ink LLC's
       address is c/o El-Ad Group Ltd., Parker Plaza, 400 Kelby Street, Fort
Lee, NJ 07204.                                                

(5)      Includes 86,957 shares of common stock underlying warrants which are   
         currently exercisable or exercisable within 60 days of the date hereof.
  This information is based solely on a Schedule 13D filed by ICTS
    International, N.V. with the Securities and Exchange Commission on
      August 13, 2003 which reported ownership as of August 13, 2003. ICTS
         International, N.V.'s address is One Rockefeller Plaza, Suite 2412, New
York, NY 10020.                                               

(6)      Includes 7,333 shares of common stock underlying options which are     
         currently exercisable or exercisable within 60 days of the date hereof.
         Mr. Attias is a director of The El-Ad Group, Ltd., which is a member of
        El-Ad Ink LLC, which owns 1,312,785 shares of common stock. Mr. Attias
      may be deemed to beneficially own the shares owned by El-Ad Ink LLC.

(7)      Includes 86,957 shares of common stock underlying warrants which are   
        currently exercisable or exercisable within 60 days of the date hereof
         and 7,333 shares of common stock underlying options which are currently
         exercisable or exercisable within 60 days of the date hereof. Mr. Harel
      directly and indirectly owns a majority of the outstanding shares of
 ICTS International, N.V. Mr. Harel does not disclaim beneficial
ownership of the securities owned by ICTS International, N.V. 

(8)      Includes 57,000 shares of common stock underlying options which are    
         currently exercisable or exercisable within 60 days of the date hereof.

(9)      Includes 478,469 shares of common stock underlying options which are   
         currently exercisable or exercisable within 60 days of the date hereof.

(10)     Includes 30,333 shares of common stock underlying options which are    
         currently exercisable or exercisable within 60 days of the date hereof.

(11)     Includes 173,912 shares of common stock underlying warrants which are  
        currently exercisable or exercisable within 60 days of the date hereof
         and 7,333 shares of common stock underlying options which are currently
        exercisable or exercisable within 60 days of the date hereof. L & Co.,
   LLC holds 65,217 warrants and 186,336 shares of common stock. Mr.
        Lineberger is the Managing Member of Lineberger & Co., LLC. Lineberger
         & Co., LLC is the Manager of L & Co., LLC. Mr. Lineberger has no direct
 ownership in such securities. The Irrevocable Trust of James E.
      Lineberger u/a 12/17/98 holds 108,695 warrants and 310,560 shares of
  common stock. Mr. Lineberger does not have voting or dispositive
authority over the shares held by the trust.                  

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(12)     Includes 87,414 shares of common stock underlying warrants which are   
        currently exercisable or exercisable within 60 days of the date hereof
         and 7,333 shares of common stock underlying options which are currently
exercisable or exercisable within 60 days of the date hereof. 

(13)     Includes 7,333 shares of common stock underlying warrants which are    
         currently exercisable or exercisable within 60 days of the date hereof.

(14)     Includes 123,934 shares of common stock underlying warrants which are  
         currently exercisable or exercisable within 60 days of the date hereof.

(15)     Includes 950,750 shares of common stock underlying options and warrants
      which are currently exercisable or exercisable within 60 days of the
date hereof.                                                  

 SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and officers, and persons who own more than 10% of the common stock, to file    
with the Securities and Exchange Commission, or the SEC, initial reports of     
beneficial ownership and reports of changes in beneficial ownership of the      
common stock and other of our equity securities. Officers, directors and greater
than 10% beneficial owners are required by SEC regulation to furnish us with    
copies of all Section 16(a) forms they file.                                    

To our knowledge, based solely on review of the copies of such reports
furnished to us and written representations that no other reports were required,
during the fiscal year ended December 31, 2002 all Section 16(a) filing         
requirements applicable to its officers, directors and greater than 10%         
beneficial owners were complied with, except that five reports, covering an     
aggregate of five transactions, were filed late by Yaron Meerfeld (two such     
reports), Elie Housman, ICTS International, N.V., and El-Ad Ink, LLC.           

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 SELLING SECURITYHOLDERS

The following table sets forth the shareholders who are offering their
shares for sale under this prospectus, the amount of shares owned by such       
shareholder prior to this offering, the amount to be offered by such shareholder
and the amount to be owned by such shareholders following completion of the     
offering. The prior to offering figures are as of August 22, 2003. All share    
numbers are based on information that these shareholders supplied to us. This   
table assumes that each shareholder will sell all of its shares available for   
sale during the effectiveness of the registration statement that includes this  
prospectus. Shareholders are not required to sell their shares. Beneficial      
ownership is determined in accordance with SEC rules and includes voting or     
investment power with respect to the securities.                                

The percentage interest of each selling securityholder is based on the
beneficial ownership of that selling securityholder divided by the sum of the   
current outstanding shares of common stock plus the additional shares, if any,  
which would be issued to that selling securityholder (but not any other selling 
shareholder) when exercising warrants or other rights in the future.            

                                                        [Enlarge/Download Table]


                                                   Shares           Shares         Shares       Ownership                   
                                                Beneficially     Beneficially      Hereby     Percent Prior    Ownership    
                                                Owned Before     Owned After     Offered for      to the     Percent After  
             Selling Stockholder                the Offering     the Offering       Sale         Offering    the Offering   
---------------------------------------------- ---------------- --------------- ------------  -------------  ---------------
                                                                                                                            
   Elie Housman (1)                                   731,122         722,035         9,087          5.0           5.8      
   Yaron Meerfeld (2)                                 483,770         456,873        26,897          4.0           3.8      
   Shlomo Dukler (3)                                  137,227          68,197        69,080          1.1             0      
   El-Ad Ink LLC (4)                                1,312,785       1,229,549        83,236         11.0          10.3      
   Eli Rozen (5)                                       71,326               0        71,326            *             0      
   Avi Landman                                         71,326               0        71,326            *             0      
   Yakov Hassan                                        71,326               0        71,326            *             0      
   Eli Hassan                                          71,326               0        71,326            *             0      
   ICTS Information Systems, N.V. (6)               4,368,394       3,788,734       579,660         34.7          31.4      
   Garo A. Partoyan (7)                                20,963               0        20,963            *             0      
   Daniel Och (8)                                      83,851               0        83,851            *             0      
   Stephen J. Warner (9)                               41,926               0        41,926            *             0      
   Scott Prince (10)                                   83,851               0        83,851            *             0      
   Robert and Florence Packman (11)                    20,963               0        20,963            *             0      
   Samuel R. Nussbaum (12)                             20,963               0        20,963            *             0      
   William T. McCaffrey (13)                           62,888               0        62,888            *             0      
   Societe Financiere Privee (14)                     209,628               0       209,628          1.7             0      
   Yoav Gottesman (15)                                 83,851               0        83,851            *             0      
   Shea Ventures LLC (16)(76)                         251,553               0       251,553          2.1             0      
   MicroCapital Fund LP (17)                          272,516               0       272,516          2.3             0      
   MicroCapital Fund Ltd. (18)                        146,739               0       146,739          1.2             0      
   Kerry B. Skeen Revocable Trust (19)                 41,926               0        41,926            *             0      
   MCRL, Inc. (20)                                     20,963               0        20,963            *             0      
   James Nealis (21)                                   62,888               0        62,888            *             0      
   Harry and Mary Marren JT TEN (22)                   83,851               0        83,851            *             0      
   John V. Luck (23)                                   20,963               0        20,963            *             0      
   Lay Ventures L.P.  (24)                             20,963               0        20,963            *             0      


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                                                   Shares           Shares         Shares       Ownership                   
                                                Beneficially     Beneficially      Hereby     Percent Prior    Ownership    
                                                Owned Before     Owned After     Offered for      to the     Percent After  
             Selling Stockholder                the Offering     the Offering       Sale         Offering    the Offering   
---------------------------------------------- ---------------- --------------- ------------  -------------  ---------------
                                                                                                                            
   George Krauss (25)                                  83,852               0        83,852            *             0      
   Jan Ickovic (26)                                    83,851               0        83,851            *             0      
   Harvard Investments Inc. (27)                      226,399               0       226,399          1.9             0      
   Henry Gellis (28)                                   41,926               0        41,926            *             0      
   John R. Evasius (29)                                83,851               0        83,851            *             0      
   Neil and Joan Eisner (30)                           41,926               0        41,926            *             0      
   Evan J. Rabinowitz (31)                             20,963               0        20,963            *             0      
   Garth Koniver (32)                                  20,963               0        20,963            *             0      
   Edward Jankowski (33)                               83,851               0        83,851            *             0      
   Craig L. Krumwiede (34)                             25,156               0        25,156            *             0      
   Carol R. Hill Spousal Trust (35)                   167,702               0       167,702            *             0      
   Denis Fortin (36)                                  125,777               0       125,777          1.0             0      
   AJF Family Limited Partnership (37)                146,739               0       146,739          1.2             0      
   Ciabattoni Living Trust Dated 8/17/00 (38)         209,628               0       209,628          1.7             0      
   ComVest Venture Partners LP (39)(76)               217,850               0       217,850          1.8             0      
   Robert Priddy (40)(76)                             607,953               0       607,953          5.0             0      
   Howard Rosenbloom (41)                              20,963               0        20,963            *             0      
   Irrevocable Trust of James E. Lineberger                                                                                 
     u/a 12/17/98 (42)                                419,255               0       419,255          3.5             0      
   L & Co., LLC (43)                                  251,553               0       251,553          2.1             0      
   RGA Irrevocable Trust (44)                         293,479               0       293,479          2.4             0      
   Ronald Assaf (45)                                  293,479               0       293,479          2.4             0      
   Richard Rosenblatt (46)(76)                         15,126               0        15,126            *             0      
   Glenn Emig (47)                                     83,852               0        83,852            *             0      
   Lloyd Moriber (48)                                  83,851               0        83,851            *             0      
   Paul D. Goldenheim (49)                             20,963               0        20,963            *             0      
   William A. Rice (50)                                41,926               0        41,926            *             0      
   Harold Kornblum and Edward Falcone (51)             20,963               0        20,963            *             0      
   Edward Falcone (52)                                 62,888               0        62,888            *             0      
   Noam Gottesman and Geraldine Gottesman (53)        167,702               0       167,702          1.4             0      
   Peter Zoberg and Ivan Hess, Joint Tenants                                                                         0      
     in Common (54)                                    20,963               0        20,963            *                    
   Michael S. Falk (55)(76)                           800,624               0       800,624          6.6             0      
   Brian Frank (56)(76)                               110,000               0       110,000            *             0      
   T. Lee Provow (57)(76)                              87,414           7,333        80,081            *             *      
   Scott Greiper (58)(76)                              51,583               0        51,583            *             0      
   Robert O'Sullivan (59)(76)                          93,602               0        93,602            *             0      
   Carl Kleidman (60)(76)                              52,815               0        52,815            *             0      
   Joseph P. Wynne (61)(76)                            41,016               0        41,016            *             0      


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                                                   Shares           Shares         Shares       Ownership                   
                                                Beneficially     Beneficially      Hereby     Percent Prior    Ownership    
                                                Owned Before     Owned After     Offered for      to the     Percent After  
             Selling Stockholder                the Offering     the Offering       Sale         Offering    the Offering   
---------------------------------------------- ---------------- --------------- ------------  -------------  ---------------
                                                                                                                            
   Aaron Katz (62)(76)                                  9,251               0         9,251            *             0      
   Joseph Pallotta (63)(76)                             9,997               0         9,997            *             0      
   Keith Rosenbloom (64)(76)                           90,307               0        90,307            *             0      
   Harold Blue (65)(76)                                 4,916               0         4,916            *             0      
   Beth Lipman (66)(76)                                 5,387               0         5,387            *             0      
   Edmund Shea (67)(76)                                28,204               0        28,204            *             0      
   Inder Tallur (68)(76)                               33,138               0        33,138            *             0      
   Thom Waye (69)(76)                                     983               0           983            *             0      
   Douglas Levine (70)                                 11,845               0        11,845            *             0      
   Commonwealth Associates Group Holdings,                                                                           0      
     LLC (71)(76)                                      25,875               0        25,875            *                    
   Daniel Parker Living Trust (72)(76)                  2,003               0         2,003            *             0      
   Robert Tucker (73)(76)                              18,573               0        18,573            *             0      
   Greg Manocherian (74)                                1,316               0         1,316            *             0      
   Anthony Giardina (75)(76)                            6,250               0         6,250            *             0      
   Cornelia Eldridge                                    3,126               0         3,126            *             0      


*        Represents beneficial ownership of less than 1% of our outstanding     
shares of common stock.                                       

     1.    Mr. Housman currently is our Chairman of the Board. See Note (9) to
        the table of Security Ownership of Certain Beneficial Owners and
Management.                                             
2.    Mr. Meerfeld currently is our Chief Executive Officer and also
    serves as one of our directors. See Note (8) to the table of
       Security Ownership of Certain Beneficial Owners and Management.
3.    Mr. Dukler currently is our Chief Technology Officer. Includes
            68,187 shares of common stock underlying options which are currently
     exercisable or exercisable within 60 days of the date hereof.
      4.    Mr. Attias currently serves as one of our directors. See Note (6) to
        the table of Security Ownership of Certain Beneficial Owners and
Management.                                             
5.    Mr. Rozen served as one of our directors until October 2002.  
6.    Ezra Harel, who directly and indirectly owns a majority of the
           outstanding shares of ICTS International, N.V., currently serves as
   one of our directors. See Note (7) to the table of Security
       Ownership of Certain Beneficial Owners and Management. Includes
   86,957 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
     7.    Includes 5,435 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      8.    Includes 21,739 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      9.    Includes 10,870 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      10.   Includes 21,739 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
     11.   Includes 5,435 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 

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     12.   Includes 5,435 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      13.   Includes 16,304 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      14.   Includes 54,348 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      15.   Includes 21,739 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
16.   Edmund Shea is a manager of Shea Ventures, LLC. Mr. Shea is an
      affiliate of Commonwealth Associates, L.P., which acted as the
      placement agent of our private placement that was completed in
         September 2002. Includes 65,217 shares of common stock underlying
         warrants which are currently exercisable or exercisable within 60
         days of the date hereof. Does not include 28,204 shares of common
stock beneficially owned by Mr. Shea.                   
      17.   Includes 70,652 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      18.   Includes 38,043 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      19.   Includes 10,870 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
     20.   Includes 5,435 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      21.   Includes 16,304 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      22.   Includes 21,739 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
     23.   Includes 5,435 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
     24.   Includes 5,435 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      25.   Includes 21,739 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      26.   Includes 21,739 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      27.   Includes 58,696 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      28.   Includes 10,870 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      29.   Includes 21,739 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      30.   Includes 10,870 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
     31.   Includes 5,435 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
     32.   Includes 5,435 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      33.   Includes 21,739 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
     34.   Includes 6,522 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      35.   Includes 43,478 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 

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      36.   Includes 32,609 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      37.   Includes 38,043 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      38.   Includes 54,348 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
39.   ComVest Venture Partners LP is an affiliate of Commonwealth   
           Associates, L.P., which acted as the placement agent of our private
       placement that was completed in September 2002. Includes 93,626
      shares of common stock underlying warrants which are currently
     exercisable or exercisable within 60 days of the date hereof.
    40.   Mr. Priddy is an affiliate of Commonwealth Associates, L.P., which
      acted as the placement agent of our private placement that was
           completed in September 2002. See note (14) to the table of Security
Ownership of Certain Beneficial Owners and Management.  
     41.   Includes 5,435 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
   42.   James E. Lineberger currently serves as one of our directors. See
          Note (11) to the table of Security Ownership of Certain Beneficial
      Owners and Management. Includes 108,695 shares of common stock
          underlying warrants which are currently exercisable or exercisable
within 60 days of the date hereof.                      
   43.   James E. Lineberger currently serves as one of our directors. See
          Note (11) to the table of Security Ownership of Certain Beneficial
Owners and Management.                                  
     44.   Ronald J. Asaaf, the trustee of RGA Irrevocable Trust has served as
        the CEO - U.S. Operations for InkSure Inc. since September 2002.
      InkSure Inc. is one of our wholly owned subsidiaries. Includes
   76,087 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      45.   Includes 76,087 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
  46.   Mr. Rosenblatt is an affiliate of Commonwealth Associates, L.P.,
            which acted as the placement agent of our private placement that was
           completed in September 2002. Includes 10,870 shares of common stock
          underlying warrants which are currently exercisable or exercisable
within 60 days of the date hereof.                      
      47.   Includes 21,739 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      48.   Includes 21,739 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
     49.   Includes 5,435 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      50.   Includes 10,870 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
     51.   Includes 5,435 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      52.   Includes 16,304 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
      53.   Includes 43,478 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
     54.   Includes 5,435 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
     55.   Mr. Falk is a manager of ComVest Capital Partners LLC. See Note (3)
           to the table of Security Ownership of Certain Beneficial Owners and
   Management. ComVest Capital Partners LLC is an affiliate of
            Commonwealth Associates, L.P., which acted as the placement agent of
   our private placement that was completed in September 2002.

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  56.   Mr. Frank is an employee of Commonwealth Associates, L.P., which
      acted as the placement agent of our private placement that was
            completed in September 2002. Includes 110,000 shares of common stock
          underlying warrants which are currently exercisable or exercisable
within 60 days of the date hereof.                      
    57.   Mr. Provow currently serves as one of our directors. See Note (12)
           to the table of Security Ownership of Certain Beneficial Owners and
   Management. Mr. Provow is a limited partner of Commonwealth
           Associates, L.P., which acted as the placement agent of our private
       placement that was completed in September 2002. Includes 80,081
      shares of common stock underlying warrants which are currently
     exercisable or exercisable within 60 days of the date hereof.
    58.   Mr. Grieper is an employee of Commonwealth Associates, L.P., which
      acted as the placement agent of our private placement that was
           completed in September 2002. Includes 36,614 shares of common stock
          underlying warrants which are currently exercisable or exercisable
within 60 days of the date hereof.                      
 59.   Mr. O'Sullivan is an employee of Commonwealth Associates, L.P.,
            which acted as the placement agent of our private placement that was
           completed in September 2002. Includes 37,764 shares of common stock
          underlying warrants which are currently exercisable or exercisable
within 60 days of the date hereof.                      
    60.   Mr. Kleidman was the former President of LILM Acquisition Corp., a
      wholly owned subsidiary of our predecessor, Lil Marc, Inc. Mr.
       Kleidman is an employee of Commonwealth Associates, L.P., which
      acted as the placement agent of our private placement that was
           completed in September 2002. Includes 22,859 shares of common stock
          underlying warrants which are currently exercisable or exercisable
within 60 days of the date hereof.                      
    61.   Mr. Wynn formerly served as one of our directors and as a director
          and Chief Financial Officer of our predecessor, Lil Marc, Inc. Mr.
            Wynn is an employee of Commonwealth Associates, L.P., which acted as
          the placement agent of our private placement that was completed in
         September 2002. Includes 10,704 shares of common stock underlying
         warrants which are currently exercisable or exercisable within 60
days of the date hereof.                                
 62.   Mr. Katz is an employee of Commonwealth Associates, L.P., which
      acted as the placement agent of our private placement that was
          completed in September 2002. Includes 9,251 shares of common stock
          underlying warrants which are currently exercisable or exercisable
within 60 days of the date hereof.                      
     63.   Mr. Pallotta is an employee of Commonwealth Associates, L.P., which
      acted as the placement agent of our private placement that was
          completed in September 2002. Includes 7,497 shares of common stock
          underlying warrants which are currently exercisable or exercisable
within 60 days of the date hereof.                      
   64.   Mr. Rosenbloom formerly served as one of our directors of InkSure
            and as director and President of our predecessor, Lil Marc, Inc. Mr.
        Rosenbloom is a manager of ComVest Capital Partners LLC. ComVest
        Capital Partners LLC is an affiliate of Commonwealth Associates,
         L.P., which acted as the placement agent of our private placement
      that was completed in September 2002. Includes 7,296 shares of
           common stock underlying warrants which are currently exercisable or
exercisable within 60 days of the date hereof.          
 65.   Mr. Blue is an employee of Commonwealth Associates, L.P., which
      acted as the placement agent of our private placement that was
          completed in September 2002. Includes 4,916 shares of common stock
          underlying warrants which are currently exercisable or exercisable
within 60 days of the date hereof.                      
   66.   Ms. Lipman is an employee of Commonwealth Associates, L.P., which
      acted as the placement agent of our private placement that was
          completed in September 2002. Includes 3,824 shares of common stock
          underlying warrants which are currently exercisable or exercisable
within 60 days of the date hereof.                      
  67.   Mr. Shea is an affiliate of Commonwealth Associates, L.P., which
      acted as the placement agent of our private placement that was
          completed in September 2002. Includes 3,041 shares of common stock
          underlying warrants which are currently exercisable or exercisable
          within 60 days of the date hereof. Does not include 251,553 shares
           of common stock beneficially owned by Shea Ventures, LLC, for which
Edmund Shea is the manager.                             

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   68.   Mr. Tallur is an employee of Commonwealth Associates, L.P., which
      acted as the placement agent of our private placement that was
          completed in September 2002. Includes 2,826 shares of common stock
          underlying warrants which are currently exercisable or exercisable
within 60 days of the date hereof.                      
 69.   Mr. Waye is an employee of Commonwealth Associates, L.P., which
      acted as the placement agent of our private placement that was
        completed in September 2002. Includes 983 shares of common stock
          underlying warrants which are currently exercisable or exercisable
within 60 days of the date hereof.                      
   70.   Includes 957 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
71.   Commonwealth Associates Group Holdings LLC is an affiliate of 
            Commonwealth Associates, L.P., which acted as the placement agent of
            our private placement that was completed in September 2002. Includes
   25,875 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
     72.   The Daniel Parker Living Trust is a limited partner of Commonwealth
           Associates, L.P., which acted as the placement agent of our private
      placement that was completed in September 2002. Includes 2,003
      shares of common stock underlying warrants which are currently
     exercisable or exercisable within 60 days of the date hereof.
    73.   Mr. Tucker is an affiliate of Commonwealth Associates, L.P., which
      acted as the placement agent of our private placement that was
          completed in September 2002. Includes 2,003 shares of common stock
          underlying warrants which are currently exercisable or exercisable
within 60 days of the date hereof.                      
   74.   Includes 106 shares of common stock underlying warrants which are
       currently exercisable or exercisable within 60 days of the date
hereof.                                                 
     75.   Mr. Giardina is an employee of Commonwealth Associates, L.P., which
      acted as the placement agent of our private placement that was
completed in September 2002.                            
     76.   The selling securityholder purchased his, her, or its shares in the
      ordinary course of business and at the time of purchase of the
  securities to be resold, the selling securityholder had no
      agreements or understandings, directly or indirectly, with any
person to distribute the securities.                    

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PLAN OF DISTRIBUTION

    In this section of the prospectus, the term "selling securityholder" means
and includes: (1) the persons identified in the tables above as the selling     
securityholders and (2) any of their donees, pledgees, distributees, transferees
or other successors in interest who may (a) receive any of the common stock     
offered hereby after the date of this prospectus and (b) offer or sell those    
shares hereunder.                                                               

   The common stock offered by this prospectus may be sold from time to time
directly by the selling securityholders. Alternatively, the selling             
securityholders may from time to time offer those shares through underwriters,  
brokers, dealers, agents or other intermediaries. The selling securityholders as
of the date of this prospectus have advised us that at that time there were no  
underwriting or distribution arrangements entered into with respect to the      
common stock offered hereby. The distribution of the common stock by the selling
securityholders may be effected in one or more transactions that may take place 
on the OTC Electronic Bulletin Board or Nasdaq or an exchange if the common     
stock is then traded there (including one or more block transaction) through    
customary brokerage channels, either through brokers acting as agents for the   
selling securityholders, or through market makers, dealers or underwriters      
acting as principals who may resell these shares on the OTC Electronic Bulletin 
Board or Nasdaq or an exchange if the common stock is traded then there; in     
privately-negotiated sales; by a combination of such methods; or by other means.
These transactions may be effected at market prices prevailing at the time of   
sale, at prices related to such prevailing market prices or at other negotiated 
prices. Usual and customary or specifically negotiated brokerage fees or        
commissions may be paid by the selling securityholders in connection with sales 
of the common stock.                                                            

Selling securityholders may enter into hedging transactions with      
broker-dealers in connection with distributions of the shares or otherwise. In  
such transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with such selling securityholders.  
One or more selling securityholders also may sell shares short and redeliver the
shares to close out such short positions. One or more selling securityholders   
may enter into option or other transactions with broker-dealers which require   
the delivery to the broker-dealer of the shares. The broker-dealer may then     
resell or otherwise transfer such shares pursuant to this prospectus.           

The selling securityholders also may lend or pledge the shares to a   
broker-dealer. The broker-dealer may sell the shares so lent, or upon a default 
the broker-dealer may sell the pledged shares pursuant to this prospectus. Any  
securities covered by this prospectus which qualify for sale pursuant to Rule   
144 promulgated under the Securities Act may be sold under Rule 144 rather than 
pursuant to this prospectus. The selling securityholders have advised us that   
they have not entered into any agreements, understandings or arrangements with  
any underwriters or broker-dealers regarding the sale of their securities. There
is no underwriter or coordinating broker acting in connection with the proposed 
sale of shares by the selling securityholders.                                  

Although the common stock covered by this prospectus are not currently
being underwritten, the selling securityholders or their underwriters, brokers, 
dealers or other agents or other intermediaries that may participate with the   
selling securityholders in any offering or distribution of common stock may be  
deemed "underwriters" within the meaning of the Securities Act of 1933, as      
amended (the "Securities Act"), and any profits realized or commissions received
by them may be deemed underwriting compensation thereunder.                     

     At the time a particular offer of common stock is made by or on behalf of a
selling securityholder, to the extent required under applicable rules of the    
SEC, we will prepare a prospectus supplement setting forth the number of shares 
being offered and the terms of the offering, including the name or names of any 
underwriters, dealers, brokers, agents or other intermediaries, if any, the     
purchase price paid by any underwriter for securities purchased from the selling
securityholders and any discounts, commissions or concessions allowed or        
reallowed or paid to others, and the proposed selling price to the public.      

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     Under applicable rules and regulations under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), any person engaged in a distribution of  
the common stock offered hereby may not simultaneously engage in market making  
activities with respect to the common stock for a period of up to five days     
preceding such distribution. The selling securityholders will be subject to the 
applicable provisions of the Exchange Act and the rules and regulations         
promulgated thereunder, including without limitation Regulation M, which        
provisions may limit the timing of purchases and sales by the selling           
securityholders.                                                                

   In order to comply with certain state securities laws, if applicable, the
common stock offered hereby will be sold in such jurisdictions only through     
registered or licensed brokers or dealers. In certain states, the common stock  
may not be sold unless they are registered or qualified for sale in such state, 
or unless an exemption from registration or qualification is available and is   
obtained.                                                                       

 All costs, expenses and fees in connection with the registration of the
common stock offered hereby will be borne by us. However, any brokerage or      
underwriting commissions and similar selling expenses, if any, attributable to  
the sale of the common stock will be borne by the selling securityholders.      

    We have agreed to indemnify certain of the selling securityholders against
certain liabilities, including liabilities under the Securities Act of 1933, or 
to contribute to payments to which any of those securityholders may be required 
to make in respect thereof.                                                     

DESCRIPTION OF CAPITAL STOCK

General                                                                         

The following description of our capital stock does not purport to be 
complete. For a complete description please refer to our certificate of         
incorporation and bylaws, which are included as exhibits to the registration    
statement of which this prospectus forms a part, and by applicable provisions of
Delaware law.                                                                   

   We are authorized to issue up to 35,000,000 shares of common stock, $0.01
par value per share, of which 11,982,166 shares were issued and outstanding as  
of August 22, 2003. Our certificate of incorporation authorizes 10,000,000      
shares of "blank check" preferred stock, par value $0.01 per share, none of     
which are outstanding.                                                          

Common Stock                                                                    

 Subject to the rights of holders of preferred stock, if any, holders of
shares of our common stock are entitled to share equally on a per share basis in
such dividends as may be declared by our Board of Directors out of funds legally
available therefore. There are presently no plans to pay dividends with respect 
to the shares of our common stock. Upon our liquidation, dissolution or winding 
up, after payment of creditors and the holders of any of our senior securities, 
including preferred stock, if any, our assets will be divided pro rata on a per 
share basis among the holders of the shares of our common stock. The common     
stock is not subject to any liability for further assessments. There are no     
conversion or redemption privileges nor any sinking fund provisions with respect
to the common stock and the common stock is not subject to call. The holders of 
common stock do not have any pre-emptive or other subscription rights.          

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  Holders of shares of common stock are entitled to cast one vote for each
share held at all stockholders' meetings for all purposes, including the        
election of directors. The common stock does not have cumulative voting rights. 

  All of the issued and outstanding shares of common stock are fully paid,
validly issued and non-assessable.                                              

Preferred Stock                                                                 

None of the 10,000,000 "blank check" preferred shares are currently   
outstanding. Our Board of Directors have the authority, without further action  
by the holders of the outstanding common stock, to issue shares of preferred    
stock from time to time in one or more classes or series, to fix the number of  
shares constituting any class or series and the stated value thereof, if        
different from the par value, and to fix the terms of any such series or class, 
including dividend rights, dividend rates, conversion or exchange rights, voting
rights, rights and terms of redemption (including sinking fund provisions), the 
redemption price and the liquidation preference of such class or series.        

Warrants                                                                        

As of August 22, 2003, we had warrants to purchase 2,007,459 shares of
common stock outstanding as follows: warrants for 1,456,526 shares of common    
stock exercisable at $2.17 per share; and warrants for 550,933 shares of common 
stock exercisable at $1.61 per share. All of such warrants contain provisions   
for cashless exercise.                                                          

   The exercise price of the warrants and the number of shares issuable upon
exercise of the warrants are subject to adjustment to protect against dilution  
in certain events such as stock splits, combinations, subdivisions and          
reclassifications.                                                              

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On October 23, 2002 as a result of a "reverse merger" transaction, a wholly
owned subsidiary of Lil Marc, Inc. merged with and into InkSure Delaware        
pursuant to which InkSure Delaware became a wholly owned subsidiary of Lil Marc 
in a transaction accounted for as a reverse acquisition of Lil Marc by InkSure  
Delaware. Prior to the reverse merger, Lil Marc was a non-operating public shell
corporation with nominal assets. Following the reverse merger, the management of
InkSure Delaware controlled the merged company and the principal shareholders of
InkSure Delaware became principal shareholders of the merged company. Following 
the closing of the reverse merger, Lil Marc changed its name to InkSure         
Technologies Inc. As a result of the reverse merger transaction, InkSure        
Delaware changed its name to IST Operating Inc., and continued as an operating  
entity and as one of our wholly owned subsidiaries. The historical financial    
statements of InkSure Delaware replaced those of Lil Marc.                      

     In March 2002, management of InkSure Delaware was seeking additional equity
funding in order to fully implement its business and marketing plan for the     
expansion of their business. Elie Housman, Chairman of InkSure Delaware,        
commenced discussions with Commonwealth Associates, L.P., and its affiliates,   
ComVest Capital Partners, LLC, our majority stockholder prior to the reverse    
merger, regarding a private placement and eventual reverse merger of InkSure    
Delaware with one of our wholly owned subsidiaries. In March 2002, Commonwealth 
entered into a letter of intent to act as the placement agent in connection with
a private placement for InkSure Delaware. As a condition to the closing of the  
private placement financing, InkSure Delaware agreed that it would merge with   
and into one of our newly formed wholly owned subsidiaries so that InkSure      
Delaware would be the surviving corporation and the surviving corporation would 
continue the operations and business of InkSure Delaware. The exchange ratio for
conversion of shares of InkSure Delaware common stock into shares of our common 
stock was determined by us and InkSure Delaware through such negotiations. In   
connection with the private placement, InkSure Delaware paid Commonwealth a     
$569,500 cash fee and issued a seven-year warrant to purchase 550,933 shares of 
InkSure Delaware common stock at a price of $1.61 per share. In connection with 
the merger of InkSure Delaware with our wholly owned subsidiary, this warrant to
purchase shares of InkSure Delaware common stock was converted into warrants to 
purchase shares of our common stock.                                            

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 SHARES ELIGIBLE FOR FUTURE SALE

   Shares Outstanding and Freely Tradable After Offering. Upon completion of
this offering, we will have 11,982,166 shares of common stock outstanding. The  
shares to be sold by the selling securityholders in this offering will be freely
tradable without restriction or limitation under the Securities Act, except for 
any such shares held our by "affiliates", as such term is defined under Rule 144
of the Securities Act, which shares will be subject to the resale limitations   
under Rule 144.                                                                 

    Rule 144. In general, under Rule 144, as currently in effect, a person (or
persons whose shares are aggregated) who has beneficially owned shares for at   
least one year, including an affiliate of us, would be entitled to sell, within 
any three-month period, that number of shares that does not exceed the greater  
of 1% of the then-outstanding shares of common stock (11,982,166 shares after   
this offering) or the average weekly trading volume in the common stock during  
the four calendar weeks immediately preceding the date on which the notice of   
sale is filed with the Securities and Exchange Commission, provided certain     
manner of sale and notice requirements and requirements as to the availability  
of current public information about us is satisfied. In addition, affiliates of 
ours must comply with the restrictions and requirements of Rule 144, other than 
the one-year holding period requirement, in order to sell shares of common      
stock. As defined in Rule 144, an "affiliate" of an issuer is a person who,     
directly or indirectly, through the use of one or more intermediaries controls, 
or is controlled by, or is under common control with, such issuer. Under Rule   
144(k), a holder of "restricted securities" who is not deemed an affiliate of   
the issuer and who has beneficially owned shares for at least two years would be
entitled to sell shares under Rule 144(k) without regard to the limitations     
described above.                                                                

    Effect of Substantial Sales on Market Price of Common Stock. We are unable
to estimate the number of shares that may be sold in the future by our existing 
shareholders or the effect, if any, that such sales will have on the market     
price of the common stock prevailing from time to time. Sales of substantial    
amounts of common stock, or the prospect of such sales, could adversely affect  
the market price of the common stock.                                           

HOW TO OBTAIN MORE INFORMATION ABOUT INKSURE TECHNOLOGIES INC.

     We are subject to the informational requirements of the Securities Exchange
Act of 1934, and in accordance therewith file reports, proxy or information     
statements and other information with the Securities and Exchange Commission.   
Such reports, proxy statements and other information can be inspected and copied
at the public reference facilities maintained by the Securities and Exchange    
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such    
material can be obtained from the Public Reference Section of the Securities and
Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, the Securities and Exchange Commission 
maintains a web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the       
Securities and Exchange Commission. The address of the Securities and Exchange  
Commission 's web site is http://www.sec.gov.                                   

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  We have filed with the Securities and Exchange Commission a registration
statement on Form SB-2 under the Securities Act of 1933 with respect to the     
shares of common stock being offered by the selling securityholders. As         
permitted by the rules and regulations of the Securities and Exchange           
Commission, this prospectus does not contain all the information set forth in   
the registration statement and the exhibits and schedules thereto. For further  
information with respect to our common stock offered by the selling             
securityholders, reference is made to the registration statement, and such      
exhibits and schedules. A copy of the registration statement, and the exhibits  
and schedules thereto, may be inspected without charge at the public reference  
facilities maintained by the Securities and Exchange Commission at the address  
set forth above, and copies of all or any part of the registration statement may
be obtained from such office upon payment of the fees prescribed by the         
Securities and Exchange Commission. In addition, the registration statement may 
be accessed at the Commission's web site. Statements contained in this          
prospectus as to the contents of any contract or other document are not         
purported to be complete and, where applicable, reference is made to the copy of
such contract or document filed as an exhibit to the registration statement.    

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES

    Consistent with the Delaware General Corporation Law, or the DGCL, Article
VII of our By-Laws provides that we shall indemnify any person who was or is a  
party or threatened to be made a party to any threatened, pending or completed  
action, suit or proceeding, whether civil, criminal, administrative (other than 
an action by or in the right of the corporation) by reason of the fact that he  
is or was a director or officer of the corporation, against expenses (including 
attorney's fees), judgments, fines and amounts paid in settlement actually and  
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not   
opposed to the best interests of the corporation, and with respect to any       
criminal action or proceeding, had no reasonable cause to believe his conduct   
was unlawful. The termination of any action, suit or proceeding by judgment,    
order, settlement, conviction, or upon a plea of nolo contendere or its         
equivalent shall not, without more, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not  
opposed to the best interest of the corporation, and, with respect to any       
criminal action or proceeding, had reasonable cause to believe that his conduct 
was unlawful.                                                                   

 We must indemnify a director, officer, employee or agent of ours who is
successful, on the merits or otherwise, in the defense of any action, suit or   
proceeding, or in defense of any claim, issue, or matter in the proceeding, to  
which they are a party because they are or were a director, officer employee or 
agent of us, against expenses actually and reasonably incurred by them in       
connection with the defense.                                                    

  We may provide to pay the expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding as the expenses are    
incurred and in advance of the final disposition of the action, suit or         
proceeding, upon receipt of an undertaking by or on behalf of the director or   
officer to repay the amount if it is ultimately determined by a court of        
competent jurisdiction that they are not entitled to be indemnified us.         

The DGCL also permits a corporation to purchase and maintain liability
insurance or make other financial arrangements on behalf of any person who is or
was a director, officer, employee or agent of us, or is or was serving at the   
request of the corporation as a director, officer, employee or agent, of another
corporation, partnership, joint venture, trust or other enterprise for any      
liability asserted against them and liability and expenses incurred by them in  
their capacity as a director, officer, employee or agent, or arising out of     
their status as such, whether or not we have the authority to indemnify them    
against such liability and expenses. Presently, we do carry such insurance.     

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    Insofar as indemnification for liabilities arising from the Securities Act
may be permitted to directors, officers, and controlling persons of us pursuant 
to the foregoing provisions, or otherwise, we have been advised that in the     
opinion of the Commission such indemnification is against public policy as      
expressed in the Securities Act and is, therefore, unenforceable. In the event  
that a claim for indemnification against such liabilities (other than the       
payment by us of expenses incurred or paid by a director, officer or controlling
person of us in the successful defense of any action, suit or proceeding) is    
asserted by such director, officer or controlling person in connection with the 
securities being registered, we will, unless in the opinion of its counsel the  
matter has been settled by controlling precedent, submit to a court of          
appropriate jurisdiction the question whether such indemnification by it is     
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.                                           

 LEGAL MATTERS

  The legality of the shares of common stock offered hereby will be passed
upon for us by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Chrysler    
Center, 666 Third Avenue, New York, New York 10017.                             

No person is authorized to give any information or to make any        
representations with respect to shares not contained in this Prospectus in      
connection with the offer contained herein, and, if given or made, such         
information or representation must not be relied upon as having been authorized 
by us. This Prospectus does not constitute an offer to sell or the solicitation 
of an offer to buy any security other than the shares of common stock offered by
this prospectus, nor does it constitute an offer to sell or a solicitation of an
offer to buy shares of common stock in any jurisdiction where such offer or     
solicitation would be unlawful. Neither the delivery of this Prospectus nor any 
sales made hereunder shall, under any circumstances, create any implication that
there has been no change in our affairs since the date hereof.                  

 EXPERTS

     Kost Forer & Gabbay a member of Ernst & Young Global, independent auditors,
have audited our consolidated financial statements at December 31, 2001 and     
2002, and for each of the three years in the period ended December 31, 2002, as 
set forth in their report. We've included our financial statements in the       
prospectus and elsewhere in the registration statements in reliance on Kost     
Forer & Gabbay's report, given on their authority as experts in accounting and  
auditing.                                                                       

 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

  On October 28, 2002, we decided to dismiss Berenson & Company LLP as our
independent auditor and decided to engage Kost, Forer & Gabbay, a member of     
Ernst and Young Global, to audit our financial statements for the 2002 fiscal   
year. Kost, Forer & Gabbay had been the auditors of InkSure Delaware since its  
incorporation, and following the consummation of the merger, our management     
decided to continue to use InkSure Delaware's former independent auditors.      

  The dismissal of Berenson & Company LLP was effective upon completion of
its work related to our unaudited financial statements that were filed in       
connection with our Form 10-QSB for the third fiscal quarter that we filed with 
the Securities and Exchange Commission on November 14, 2002.                    

   The reports of Berenson & Company LLP on our financial statements for the
years ended December 31, 2000 and December 31, 2001, did not contain an adverse 
opinion or a disclaimer of opinion and were not qualified or modified as to     
uncertainty, audit score or accounting principles.                              

     During our two most recent fiscal years ended December 31, 2002, we did not
consult with Kost Forer & Gabbay regarding any of the matters or events set     
forth in Item 304(a)(2)(i) and (ii) of Regulation S-B.                          

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 INKSURE TECHNOLOGIES INC. (Formerly: Lil Marc Inc.)
AND ITS SUBSIDIARIES

 CONSOLIDATED FINANCIAL STATEMENTS

 IN U.S. DOLLARS

 INDEX

                                                        [Enlarge/Download Table]


                                                                                                              Page      
                                                                                                         ---------------
                                                                                                                        
Consolidated Balance Sheets as of June 30, 2003 (Unaudited)                                                   F-2       

Consolidated Statements of Operations (Unaudited) for the Six and Three Months Ended June 30, 2003 and        F-4       
2002                                                                                                                    

Statements of Changes in Stockholders' Equity (Deficiency) as of June 30, 2003 (Unaudited after                         
December 31, 2002)                                                                                            F-5       

Consolidated Statements of Cash Flows (Unaudited) for the Six and Three Months Ended March 31, 2003 and                 
2002                                                                                                          F-6       

Notes to Consolidated Financial Statements                                                                    F-8       

Report of Independent Auditors                                                                                F-10      

Consolidated Balance Sheets as of December 31, 2002                                                           F-11      

Consolidated Statements of Operations for the Years Ended December 31, 2002, 2001 and 2000                    F-13      

Statements of Changes in Stockholders' Equity (Deficiency) for the Years Ended December 31, 2002, 2001,                 
and 2000                                                                                                      F-14      

Consolidated Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and 2000                    F-15      

Notes to Consolidated Financial Statements                                                                    F-17      


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CONSOLIDATED BALANCE SHEETS                                                     
------------------------------------------------------------------------------- 
U.S. dollars in thousands                                                       

                                                      As of      As of
                                                          June 30,  December 31,
                                                        2003        2002
                                                          --------  ------------
                                           (unaudited)
                                          ----------
ASSETS                                                                  

CURRENT ASSETS:                                                                 
Cash and cash equivalents                                $   17       $  213
Short-term deposits                                       2,984        4,063
Trade receivables                                             -          730
Other accounts receivable and prepaid expenses              369          226
Inventories                                                 108           88
                                                         ------       ------

Total current assets                                        3,478        5,320  
                                                         ------       ------

SEVERANCE PAY FUND                                             95           71  
                                                         ------       ------

PROPERTY AND EQUIPMENT, NET                                   345          356  
                                                         ------       ------

OTHER ASSETS, NET                                             382          418  
                                                         ------       ------

Total assets                                               $4,300       $6,165  
                                                         ======       ======

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

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CONSOLIDATED BALANCE SHEETS                                                     
------------------------------------------------------------------------------- 
U.S. dollars in thousands (except share data)                                   

                                                        [Enlarge/Download Table]


                                                                                    As of        As of      
                                                                                   June 30,    December 31, 
                                                                                     2003          2002     
                                                                                    -------    -------------
                                                                                   Unaudited)               
                                                                                    ---------               
                                                                                                            
     LIABILITIES AND STOCKHOLDERS' EQUITY                                                                   

 CURRENT LIABILITIES:                                                                                       
   Trade payables                                                                   $   338       $   470   
   Employees and payroll accruals                                                       195           110   
   Accrued expenses and other liabilities                                               139           280   
                                                                                    -------       -------   

 Total current liabilities                                                              672           860   
                                                                                    -------       -------   

ACCRUED SEVERANCE PAY                                                                   106            75   
                                                                                    -------       -------   

 STOCKHOLDERS' EQUITY:                                                                                      
   Stock capital:                                                                                           
     Preferred stock of $ 0.01 par value:                                                                   
       Authorized: 10,000,000 shares at June 30, 2003 and December 31, 2002;                                
       Issued and outstanding: 0 shares at June 30, 2003 and December 31, 2002                              
     Common stock of $ 0.01 par value -                                                                     
       Authorized: 35,000,000 shares at June 30, 2003 and December 31, 2002;                                
       Issued and outstanding: 11,982,166 shares at June 30, 2003 and December 31,                          
       2002                                                                             119           119   
   Additional paid-in capital                                                         9,741         9,741   
   Accumulated other comprehensive income                                               118           118   
   Accumulated deficit                                                               (6,456)       (4,748)  
                                                                                    -------       -------   

 Total stockholders' equity                                                           3,522         5,230   
                                                                                    -------       -------   

 Total liabilities and stockholders' equity                                         $ 4,300       $ 6,165   
                                                                                    =======       =======   


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

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CONSOLIDATED STATEMENTS OF OPERATIONS                                           
------------------------------------------------------------------------------- 
U.S. dollars in thousands (except share and per share data)                     

                                                        [Enlarge/Download Table]


                                                           Six months ended             Three months ended      
                                                               June 30,                       June 30,          
                                                     ----------------------------    ---------------------------
                                                          2003           2002           2003            2002    
                                                     ------------    ------------    -----------    ------------
                                                            (unaudited)                     (unaudited)         
                                                     ----------------------------    ---------------------------
                                                                                                                
Revenues                                             $          -    $      1,884    $         -    $        825
Cost of revenues                                                -             271              -              85
                                                     ------------    ------------   ------------    ------------

Gross profit                                                    -           1,613              -             740
                                                     ------------    ------------   ------------    ------------

Operating expenses:                                                                                             
Research and development                                      608             366            318             206
Selling and marketing, net                                    753             788            375             418
General and administrative                                    384             189            211              67
                                                     ------------    ------------   ------------    ------------

Total operating expenses                                    1,745           1,343            904             691
                                                     ------------    ------------   ------------    ------------

Operating income (loss)                                    (1,745)            270           (904)             49
Financial expenses (income), net                              (37)             12            (15)             11
                                                     ------------    ------------   ------------    ------------

Net income (loss)                                          (1,708)            258           (889)             38
Redeemable Preferred A shares deemed dividend                   -            (200)             -               -
                                                     ------------    ------------   ------------    ------------

Net income (loss) applicable to Common stockholders  $     (1,708)   $         58   $       (889)   $         38
                                                     ============    ============   ============    ============

Weighted average number of Common shares used in                                                                
   computing basic and diluted net income(loss)                                                                 
   per share                                           11,982,166       5,447,314     11,982,166       5,066,796
                                                     ============    ============   ============    ============

Basic and diluted net income (loss) per share        $      (0.14)   $       0.01   $      (0.07)   $       0.01
                                                     ============    ============   ============    ============


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

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STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)                      
------------------------------------------------------------------------------- 
U.S. dollars in thousands                                                       

                                                        [Enlarge/Download Table]


                                                                                      Accumulated                              
                                                   Receipts  Additional   Deferred       other                        Total    
                                           Share  on account  paid-in     stock       comprehensive  Accumulated  stockholders'
                                          capital of shares   capital   compensation      income       deficit       equity    
                                          ------- ---------- ---------- ------------- -------------- -----------  -------------
                                                                                                                               
Balance as of January 1, 2002             $  57    $  250     $ 1,997      $  (61)       $   118       $(3,927)      $(1,566)  

 Issuance of  Common stock and                                                                                                 
   warrants, net                             48      (250)      5,972           -              -             -         5,770   
 Issuance of Common stock due to the                                                                                           
   reverse acquisition, net                  14         -         153           -              -             -           167   
 Capital surplus in respect                                                                                                    
   of transaction between                                                                                                      
   InkSure Delaware and Supercom Ltd.         -         -       1,480           -              -             -         1,480   
 Reversal of deferred compensation                                                                                             
   due to forfeiture of stock options to                                                                                       
   employees                                  -         -         (61)         61              -             -             -   
 Deemed dividend upon conversion of                                                                                            
    Common stock to Redeemable Preferred                                                                                       
    A shares                                  -         -         200          -               -          (200)            -   
 Net loss                                     -         -           -           -              -          (621)         (621)  
                                          -----    ------     -------      ------        -------       -------       -------   

Balance as of December 31, 2002             119         -       9,741           -            118        (4,748)        5,230   

 Net loss                                     -         -           -           -              -        (1,708)       (1,708)  
                                          -----    ------     -------      ------        -------       -------       -------   
Balance as of June 30, 2003 (unaudited)   $ 119    $   -      $ 9,741      $    -        $   118       $(6,456)      $ 3,522   
                                          =====    ======     =======      ======        =======       =======       =======   


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

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CONSOLIDATED STATEMENTS OF CASH FLOWS                                           
------------------------------------------------------------------------------- 
U.S. dollars in thousands                                                       

                                                        [Enlarge/Download Table]


                                                           Six months ended       Three months ended   
                                                               June 30,               June 30,         
                                                       -----------------------  -----------------------
                                                         2003           2002     2003            2002  
                                                       --------       --------  -------        --------
                                                             (unaudited)             (unaudited)       
                                                       -----------------------  -----------------------
                                                                                                       
Cash flows from operating activities:                                                                  

Net income (loss)                                      $(1,708)       $   258   $  (889)       $    38 
Adjustments to reconcile net income (loss) to net                                                      
   cash used in operating activities:                                                                  
Depreciation and amortization                               77             70        38             36 
Accrued severance pay, net                                   7             (8)        2             (4)
Decrease (increase) in trade receivables                   730           (120)        -           (248)
Increase in other accounts receivable and prepaid                                                      
   expenses                                               (143)           (44)      (60)           (43)
Decrease (increase) in inventories                         (20)           152       (20)            17 
Increase (decrease) in trade payables                     (132)          (119)      139             (2)
Increase (decrease) in employees and payroll accruals       85            (46)       60             27 
Increase (decrease) in accrued expenses and other                                                      
   liabilities                                            (141)          (241)      (14)            12 
Accumulated interest on short-term deposits                (40)             -       (20)             - 
                                                       -------        -------   -------        ------- 

Net cash used in operating activities                   (1,285)           (98)     (764)          (167)
                                                       -------        -------   -------        ------- 

Cash flows from investing activities:                                                                  

Purchase of property and equipment                         (30)            (7)      (15)            (5)
Proceeds from short-term deposits                        1,119              -       310              - 
                                                       -------        -------   -------        ------- 

Net cash provided by (used in) investing activities      1,089             (7)      295             (5)
                                                       -------        -------   -------        ------- 

Cash flows from financing activities:                                                                  

Short-term bank credit, net                                  -            (20)        -            164 
Proceeds from issuance of Common stock and warrants,                                                   
   net                                                       -             81         -              - 
Principal payment of long-term loans                         -            (50)        -              - 
Proceeds from issuance of Redeemable Preferred A                                                       
   shares                                                    -            150         -              - 
                                                       -------        -------   -------        ------- 

Net cash provided by financing activities                    -            161         -            164 
                                                       -------        -------   -------        ------- 

Increase (decrease) in cash and cash equivalents          (196)            56      (469)            (8)
Cash and cash equivalents at the beginning of the                                                      
   period                                                  213              2       486             66 
                                                       -------        -------   -------        ------- 

Cash and cash equivalents at the end of the period     $    17        $    58   $    17        $    58 
                                                       =======        =======   =======        ======= 

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

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CONSOLIDATED STATEMENTS OF CASH FLOWS                                           
------------------------------------------------------------------------------- 
U.S. dollars in thousands                                                       

                                                        [Enlarge/Download Table]


                                                             Six months ended                Three months ended    
                                                                  June 30,                        June 30,         
                                                     -----------------------------  -------------------------------
                                                          2003              2002        2003               2002    
                                                     ------------       ----------  ------------       ------------
                                                           (unaudited)                        (unaudited)          
                                                     -----------------------------  -------------------------------
                                                                                                                   
Non-cash transactions:                                                                                             

  In respect of transaction between the Company and                                                                
   Supercom Ltd.                                     $          -       $    1,480  $          -       $          -
                                                     ============       ==========  ============       ============

  Conversion of Common stock into Redeemable                                                                       
   Preferred A shares                                $          -       $    1,000  $          -       $          -
                                                     ============       ==========  ============       ============

Supplemental disclosure of cash flows information:                                                                 

  Cash paid during the period for:                                                                                 

    Interest                                         $          -       $       21  $          -       $         13
                                                     ============       ==========  ============       ============

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)

NOTE 1:- GENERAL                                                                

     InkSure Technologies Inc. and its subsidiaries (formerly: Lil Marc.
       Inc.) ("the Company") was incorporated under the laws of the state of
         Nevada on April 22, 1997. Subsequent to the balance sheet date, InkSure
      Technologies Inc. effected a reincorporation from Nevada to Delaware
         through a merger with its wholly owned subsidiary, InkSure Technologies
  (Delaware) Inc., which was incorporated as of June 30, 2003. The
         surviving corporation in the merger was InkSure Technologies (Delaware)
     Inc., which thereafter renamed itself InkSure Technologies Inc. The
      Company specializes in comprehensive security solutions, designed to
      protect branded products and documents of value from counterfeiting,
fraud and diversion.                                          

       The Company conducts its operations and business with and through its
        direct and indirect subsidiaries, InkSure Inc., a Delaware corporation
         incorporated in March 2000; IST Operating Inc., a Delaware corporation,
         incorporated in May 2000 (formerly: InkSure Technologies Inc.); InkSure
        Ltd., which was incorporated in December 1995 under the laws of Israel
       and InkSure RF Inc. a Delaware corporation incorporated in March 2000
(as of June 30, 2003 InkSure RF Inc. is inactive).            

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES                                        

     The significant accounting policies applied in the annual financial
statements of the Company as of December 31, 2002, are applied
        consistently in these financial statements. In addition, the following
accounting policy is applied:                                 

Accounting for stock-based compensation:                      

       The Company has elected to follow Accounting Principles Board Opinion
      No. 25 "Accounting for Stock Issued to Employees" ("APB No. 25") and
 FASB Interpretation No. 44 "Accounting for Certain Transactions
    Involving Stock Compensation" ("FIN No. 44") in accounting for its
        employee stock option plans. Under APB No. 25, when the exercise price
     of the Company's stock options is less than the market price of the
 underlying shares on the date of grant, compensation expense is
recognized.                                                   

       Under Statement of Financial Accounting Standard No. 123, "Accounting
       for Stock Based Compensation" ("SFAS No. 123"), pro forma information
 regarding net loss and loss per share is required, and has been
   determined as if the Company had accounted for its employee stock
       options under the fair value method of that statement. The fair value
for these options was estimated at the date of grant using a  
Black-Scholes Option Valuation model with the following       
       weighted-average assumptions for three months ended June 30, 2003 and
    2002: risk-free interest rate of 2% for each period, with dividend
         yields of 0% for each period, volatility factors of the expected market
price of the Company's Common stock of 0.995 and 0.5, and a   
       weighted-average expected life of the options of 3 and 5 years. Stock
     compensation, for pro forma purposes, is amortized over the vesting
period.                                                       

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NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)                                

     The following table illustrates the effect on net income (loss) and
        earnings (loss) per share as if the fair value method had been applied
to all outstanding and unvested awards in each period:        

                                                        [Enlarge/Download Table]


                                            Six months ended       Three months ended    
                                                June 30,                June 30,         
                                       -----------------------   ----------------------- 
                                         2003           2002      2003            2002   
                                       --------        -------   -------         ------- 
                                             (unaudited)               (unaudited)       
                                       -----------------------   ------------------------
                                                                                         
Net income (loss), as reported         $(1,708)        $    58   $  (889)        $    38 
Deduct: Total stock-based                                                                
  compensation expense determined                                                        
  under fair value method for all                                                        
  awards                                   (80)           (241)      (25)            (60)
                                       -------         -------   -------         ------- 

Pro forma net loss                     $(1,788)        $  (183)  $  (914)        $   (22)
                                       =======         =======   =======         ======= 

Basic and diluted net earnings (loss)                                                    
  per share, as reported               $ (0.14)        $  0.01   $ (0.07)        $  0.01 
                                       =======         =======   =======         ======= 

Basic and diluted net loss per share,                                                    
  pro forma                            $ (0.15)        $ (0.04)  $ (0.08)        $ (0.04)
                                       =======         =======   =======         ======= 

NOTE 3:- UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS                    

The accompanying unaudited interim consolidated financial statements have been  
prepared in accordance with generally accepted accounting principles in the     
United States for interim financial information. Accordingly, they do not       
include all the information and footnotes required by generally accepted        
accounting principles in the United States for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring      
accruals) considered necessary for a fair presentation have been included.      
Operating results for the six-month period ended June 30, 2003 are not          
necessarily indicative of the results that may be expected for the year ended   
December 31, 2003.                                                              

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[ERNST & YOUNG LOGO]                                                            

REPORT OF INDEPENDENT AUDITORS

To the Shareholders of

 INKSURE TECHNOLOGIES INC. (Formerly: Lil Marc Inc.)

         We have audited the accompanying consolidated balance sheets of InkSure
Technologies Inc. (formerly: Lil Marc Inc.) and its subsidiaries ("the Company")
and its subsidiaries as of December 31, 2002 and 2001, and the related          
consolidated statements of operations, changes in shareholders' equity          
(deficiency) and cash flows for each of the three years in the period ended     
December 31, 2002. These financial statements are the responsibility of the     
Company's management. Our responsibility is to express an opinion on these      
financial statements based on our audits.                                       

         We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform 
the audit to obtain reasonable assurance about whether the financial statements 
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An 
audit also includes assessing the accounting principles used and significant    
estimates made by management, as well as evaluating the overall financial       
statement presentation. We believe that our audits provide a reasonable basis   
for our opinion.                                                                

   In our opinion, the consolidated financial statements referred to
above, present fairly, in all material respects, the consolidated financial     
position of the Company and its subsidiaries as of December 31, 2002 and 2001,  
and the consolidated results of their operations, and cash flows for each of the
three years in the period ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States.                             

Tel Aviv, Israel                          KOST, FORER & GABBAY                  
March 24, 2003                      A Member of Ernst & Young Global            

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CONSOLIDATED BALANCE SHEETS                                                     
------------------------------------------------------------------------------- 
U.S. dollars in thousands                                     

                                                                [Download Table]


                                                              December 31,   
                                                           ------------------
                                                            2002        2001 
                                                           ------      ------
                                                                             
    ASSETS                                                                   

CURRENT ASSETS:                                                              
  Cash and cash equivalents                                $  213      $    2
  Short-term deposits                                       4,063           -
  Trade receivables                                           730         312
  Other accounts receivable and prepaid expenses (Note 3)     226         208
  Inventories (Note 4)                                         88         213
                                                           ------      ------

Total current assets                                        5,320         735
                                                           ------      ------

SEVERANCE PAY FUND                                             71          68
                                                           ------      ------

PROPERTY AND EQUIPMENT, NET (Note 5)                          356         399
                                                           ------      ------

TECHNOLOGY (Note 6)                                           147         219
                                                           ------      ------

GOODWILL (Note 1c)                                            271         271
                                                           ------      ------

Total assets                                               $6,165      $1,692
                                                           ======      ======


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

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CONSOLIDATED BALANCE SHEETS                                                     
------------------------------------------------------------------------------- 
U.S. dollars in thousands (except share data)                                   

                                                        [Enlarge/Download Table]


                                                                           December 31,    
                                                                        ------------------ 
                                                                          2002       2001  
                                                                        -------    ------- 
                                                                                           
    LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)                                      

CURRENT LIABILITIES:                                                                       
  Short-term bank credit                                                    $ -    $   410 
  Trade payables                                                            470        326 
  Employees and payroll accruals                                            110        192 
  Accrued expenses and other liabilities (Note 7)                           280        515 
                                                                        -------    ------- 

Total current liabilities                                                   860      1,443 
                                                                        -------    ------- 

LONG-TERM LIABILITIES:                                                                     
  Long-term loan from related party                                           -      1,730 
  Accrued severance pay                                                      75         85 
                                                                        -------    ------- 

Total long-term liabilities                                                  75      1,815 
                                                                        -------    ------- 

COMMITMENTS AND CONTINGENT LIABILITIES (Note 8)                                            

STOCKHOLDERS' EQUITY (DEFICIENCY):                                                         
  Stock capital (Note 9):                                                                  
      Preferred stock of $ 0.01 par value -                                                
      Authorized: 10,000,000 stocks at December 31, 2002 and                               
      2001; Issued and outstanding: 0 stocks at December 31,                               
      2002 and 2001                                                                        

      Common stock of $ 0.01 par value -                                                   
       Authorized: 35,000,000 and 10,000,000 stocks as of December 31,                     
       2002 and 2001, respectively; Issued and outstanding:                                
       11,982,166 stocks as of December 31, 2002                                           
       and 5,709,066 as of December 31, 2001                                119         57 
  Receipts on account of stocks                                               -        250 
    Additional paid-in capital                                            9,741      1,997 
  Deferred stock compensation                                                 -        (61)
  Accumulated other comprehensive income                                    118        118 
  Accumulated deficit                                                    (4,748)    (3,927)
                                                                        -------    ------- 

Total stockholders' equity (deficiency)                                   5,230     (1,566)
                                                                        -------    ------- 

                                                                        $ 6,165    $ 1,692 
                                                                        =======    ======= 

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

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CONSOLIDATED STATEMENTS OF OPERATIONS                                           
------------------------------------------------------------------------------- 
U.S. dollars in thousands (except share and per share data)           

                                                        [Enlarge/Download Table]


                                                                                     Year ended                 
                                                                                    December 31,                
                                                                      ----------------------------------------- 
                                                                         2002           2001           2000     
                                                                      -----------    ----------     ----------- 
                                                                                                                
Revenues (Note 13)                                                    $     2,693    $     1,770    $       139 
Cost of revenues                                                              402             43              - 
                                                                      -----------    -----------    ----------- 

Gross profit                                                                2,291          1,727            139 
                                                                      -----------    -----------    ----------- 

Operating expenses:                                                                                             
  Research and development                                                    809            874            665 
  Selling and marketing, net                                                1,641            751            764 
  General and administrative                                                  488            573            434 
                                                                      -----------    -----------    ----------- 

Total operating expenses                                                    2,938          2,198          1,863 
                                                                      -----------    -----------    ----------- 

Operating loss                                                                647            471          1,724 
Financial expenses (income), net (Note 11)                                    (26)           (71)           141 
                                                                      -----------    -----------    ----------- 

Net loss from continuing operations                                           621            400          1,865 
Loss from discontinued operations (Note 12)                                     -            300            216 
                                                                      -----------    -----------    ----------- 

Net loss                                                                      621            700          2,081 
Redeemable Preferred A shares deemed dividend (Note 9b)                       200              -              - 
                                                                      -----------    -----------    ----------- 

Net loss applicable to Common stockholders                            $       821    $       700    $     2,081 
                                                                      ===========    ===========    =========== 

Basic and diluted loss from continuing operation                            (0.08)         (0.08)         (0.37)
                                                                      ===========    ===========    =========== 

Basic and diluted loss from discontinued operation per share                    -          (0.06)         (0.04)
                                                                      ===========    ===========    =========== 

Basic and diluted net loss per share                                  $     (0.08)   $     (0.14)   $     (0.42)
                                                                      ===========    ===========    =========== 

Weighted average number of Common shares used in computing basic and                                            
  diluted net loss per share                                            7,921,971      5,061,058      5,000,000 
                                                                      ===========    ===========    =========== 

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

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STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)                      
------------------------------------------------------------------------------- 
U.S. dollars in thousands                                     

                                                        [Enlarge/Download Table]


                                                                                           Accumulated                  
                                                     Receipts   Additional     Deferred        other                    
                                           Share    on account    paid-in        stock     comprehensive  Accumulated   
                                          capital   of shares     capital    compensation      income       deficit     
                                          -------   ----------  -----------  ------------  -------------  --------------
                                                                                                                        
Balance as of January 1, 2000               $-*)          $-          $ -            $-    $   118            $(1,146)  
  Issuance of Common stock                    50           -            -             -          -                  -   
  Net loss                                     -           -            -             -          -             (2,081)  
                                         -------     -------      -------       -------    -------            -------   

Balance as of December 31, 2000               50           -            -             -        118             (3,227)  
  Issuance of Common stock in respect                                                                                   
    of acquisition of minority                                                                                          
    interests in subsidiaries                  7           -          490             -          -                  -   
  Deferred stock compensation                  -           -           61           (61)         -                  -   
  Receipts on account of shares                -         250            -             -          -                  -   
    Capital surplus in respect of                                                                                       
    transactions between the InkSure                                                                                    
    Delaware and Supercom Ltd.                 -           -        1,446             -          -                  -   
  Net loss                                     -           -            -             -          -               (700)  
                                         -------     -------      -------       -------    -------            -------   

Balance as of December 31, 2001               57         250        1,997           (61)       118             (3,927)  
  Issuance of  Common stock and                                                                                         
  warrants, net                               48        (250)       5,972             -          -                  -   
  Issuance of Common stock due to the                                                                                   
    revenue acquisition, net                  14           -          153             -          -                  -   
  Capital surplus in respect of                                                                                         
    transaction between InkSure                                                                                         
    Delaware and Supercom Ltd.                 -           -        1,480             -          -                  -   
  Reversal of deferred compensation due                                                                                 
    to forfeiture of stock options to                                                                                   
    employees                                  -           -          (61)           61          -                  -   
  Deemed dividend upon conversion of                                                                                    
    Common stock to Redeemable                                                                                          
    Preferred A shares (Note 9b)               -           -          200             -          -               (200)  
  Net loss                                     -           -            -             -          -               (621)  
                                         -------     -------      -------       -------    -------            -------   

Balance as of December 31, 2002          $   119         $ -      $ 9,741            $-    $   118            $(4,748)  
                                         =======     =======      =======       =======    =======            =======   



                                               Total                                                                    
                                            shareholders'                                                               
                                                equity                                                                  
                                             (deficiency)                                                               
                                            -------------                                                               
                                                                                                                        
Balance as of January 1, 2000                   $(1,028)                                                                
  Issuance of Common stock                           50                                                                 
  Net loss                                       (2,081)                                                                
                                                -------                                                                 

Balance as of December 31, 2000                  (3,059)                                                                
  Issuance of Common stock in respect                                                                                   
    of acquisition of minority                                                                                          
    interests in subsidiaries                       497                                                                 
  Deferred stock compensation                         -                                                                 
  Receipts on account of shares                     250                                                                 
    Capital surplus in respect of                                                                                       
    transactions between the InkSure                                                                                    
    Delaware and Supercom Ltd.                    1,446                                                                 
  Net loss                                         (700)                                                                
                                                -------                                                                 

Balance as of December 31, 2001                  (1,566)                                                                
  Issuance of  Common stock and                                                                                         
  warrants, net                                   5,770                                                                 
  Issuance of Common stock due to the                                                                                   
    revenue acquisition, net                        167                                                                 
  Capital surplus in respect of                                                                                         
    transaction between InkSure                                                                                         
    Delaware and Supercom Ltd.                    1,480                                                                 
  Reversal of deferred compensation due                                                                                 
    to forfeiture of stock options to                                                                                   
    employees                                         -                                                                 
  Deemed dividend upon conversion of                                                                                    
    Common stock to Redeemable                                                                                          
    Preferred A shares (Note 9b)                      -                                                                 
  Net loss                                         (621)                                                                
                                                -------                                                                 

Balance as of December 31, 2002                 $ 5,230                                                                 
                                                =======                                                                 

*) Represents an amount lower than $1                                           
The accompanying notes are an integral part of the consolidated financial       
statements.                                                                     

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CONSOLIDATED STATEMENTS OF CASH FLOWS                                           
------------------------------------------------------------------------------- 
U.S. dollars in thousands                                     

                                                        [Enlarge/Download Table]


                                                                                Year ended             
                                                                                December 31,           
                                                                   ------------------------------------
                                                                     2002         2001          2000   
                                                                   --------      -------       --------
                                                                                                       
Cash flows from operating activities:                                                                  
  Net loss                                                         $  (621)      $  (700)      $(2,081)
  Adjustments to reconcile net loss to net cash used in operating                                      
    activities:                                                                                        
    Depreciation and amortization                                      147            42            17 
    Accrued severance pay, net                                         (13)           11             3 
    Increase in trade receivables                                     (418)         (312)            - 
    Increase in other accounts receivable and prepaid expenses         (18)         (164)          (34)
    Decrease (increase) in inventories                                 125          (213)            - 
    Increase in trade payables                                         144           177           102 
    Increase (decrease) in employees and payroll accruals              (82)           75            88 
    Increase (decrease) in accrued expenses and other liabilities     (235)         (133)          637 
    Accumulated interest on short-term deposits                        (63)            -             - 
    Cash contributed to discontinued operations                          -           300            (2)
                                                                   -------       -------       ------- 

Net cash used in operating activities                               (1,034)         (917)       (1,270)
                                                                   -------       -------       ------- 

Cash flows from investing activities:                                                                  
  Purchase of property and equipment                                   (32)         (129)          (81)
  Investment in short-term deposits                                 (4,000)            -             - 
                                                                   -------       -------       ------- 

Net cash used in investing activities                               (4,032)         (129)          (81)
                                                                   -------       -------       ------- 

Cash flows from financing activities:                                                                  
  Short-term bank credit, net                                         (410)          410           (36)
  Proceeds from long-term loans from related party                       -           225         1,325 
  Proceeds from issuance of  Common stock and warrants, net          5,770             7             - 
  Receipts on account of stocks                                          -           250             - 
  Principal payment of long-term loan from related party              (250)            -             - 
  Cash received in conjunction with reverse acquisition                167             -             - 
                                                                   -------       -------       ------- 

Net cash provided by financing activities                            5,277           892         1,289 
                                                                   -------       -------       ------- 

Net cash from discontinued operations                                    -             -           218 
                                                                   -------       -------       ------- 

Increase (decrease) in cash and cash equivalents                       211          (154)          156 
Cash and cash equivalents at the beginning of the year                   2           156             - 
                                                                   -------       -------       ------- 

Cash and cash equivalents at the end of the year                   $   213       $     2       $   156 
                                                                   =======       =======       ======= 

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

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CONSOLIDATED STATEMENTS OF CASH FLOWS                                           
------------------------------------------------------------------------------- 
U.S. dollars in thousands                                     

                                                        [Enlarge/Download Table]


                                                                                        Year ended            
                                                                                       December 31,           
                                                                         -------------------------------------
                                                                           2002            2001         2000  
                                                                         ----------      ----------    -------
                                                                                                              
Non-cash transactions:                                                                                        
Issuance of stocks                                                       $        -      $        -    $  50  
                                                                         ==========      ==========    =====  
Capital surplus in respect of transactions between InkSure Delaware and  $        -      $      446    $   -  
    Supercom Ltd.                                                                                             
                                                                         ==========      ==========    =====  
Waiver of Company's long-term loan to related party in respect of                                             
    transaction between InkSure Delaware and Supercom Ltd.               $    1,480      $        -    $   -  
                                                                         ==========      ==========    =====  

Redeemable Preferred A stocks deemed dividend                            $      200      $        -    $   -  
                                                                         ==========      ==========    =====  

Supplemental disclosure of cash flows information:                                                            
Cash paid during the year for:                                                                                
Interest                                                                 $       26      $       25    $   4  
                                                                         ==========      ==========    =====  

Fair value of assets acquired in step acquisition:                                                            
Goodwill                                                                 $        -      $      271    $   -  
Technology                                                                        -             219        -  
                                                                         ----------      ----------    -----  

 Acquired by issuance of shares                                          $        -      $      490    $   -  
                                                                         ==========      ==========    =====  


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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

U.S. dollars in thousands                                                       

NOTE 1:- GENERAL                                                                

      a. InkSure Technologies Inc. and its subsidiaries (formerly: Lil
    Marc. Inc.) ("the Company") was incorporated under the laws of the state
     of Nevada on April 22, 1997. The Company develops advanced authentication
  solutions for printed documents and brands. Its proprietary technology
enables the embedding of anti-counterfeiting "signature" within all 
ink-based products and labels for covert protection.                

             The Company conducts its operations and business with and
  through its direct and indirect subsidiaries, InkSure Inc., a Delaware
corporation incorporated in March 2000; InkSure RF Inc., a Delaware 
corporation incorporated in March 2000; and InkSure Ltd., which was 
   incorporated in December 1995 under the laws of Israel. (as of December
31, 2002 Inksure RF Inc. is inactive)                               

          b. According to the agreement between LILM (a subsidiary of Lil Marc
      Inc.) and InkSure Technologies Inc ("InkSure Delaware")., Lil Marc inc., a
public shell, issue 10,541,086 Common stock to the former holders of
     equity interest in InkSure Delaware. As a result of this transaction, the
  shareholders of InkSure Delaware own approximately 88% of the combined
company, while the shareholders of Lil Marc own approximately 12%.  

                The merger was accounted for as a reverse acquisition of Lil
      Marc by InkSure Delaware. Although Lil Marc is the surviving legal entity,
   for financial reporting purposes, the entity whose stockholders hold in
      excess of 50% of the combined company, InkSure Delaware, is treated as the
 continuing accounting entity. The reverse acquisition is treated as a
 capital stock transaction in which InkSure Delaware is deemed to have
 issued the Common stock held by the Lil Marc stockholders for the net
assets (comprised of cash only) of Lil Marc.                        

           Upon consummation of the merger, the Company's board of
     directors and management resigned and were replaced by InkSure Delaware's
board of directors and management, and the Company began to carry on
InkSure Delaware's business activities.                             

                  On October 28, 2002, as part of the Company's amendment of its
      Articles of Incorporation, the Company changed its name from Lil Marc Inc.
to InkSure Technologies Inc.                                        

                  As of October 30, 2002, the OTC Bulletin Board stock symbol of
the Company's Common stock was changed from LILM to INKS.           

   c. On November 2001, InkSure Delware issued 709,066 stocks in
    consideration for $ 7 in cash, 10% of the stocks of InkSure Inc. and 20%
      of the stocks of InkSure RF Inc. (resulting in the Company holding 100% of
both subsidiaries).                                                 

               Since the exchange was completed after June 30, 2001, it is
      subject to the accounting under Statement of Financial Accounting Standard
    No. 141, "Business Combination" ("SFAS No. 141"), and No. 142, "Goodwill
and Other Intangible Assets" ("SFAS No. 142"), which requires that  
resulting goodwill will not be amortized, but reviewed annually for 
     impairment. The exchange has been accounted for using the purchase method
of accounting. The total purchase price was approximately $ 497. The
purchase price was allocated to technology, with the excess of the  
   purchase price over the fair value of indentifiable assets allocated to
goodwill.                                                           

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U.S. dollars in thousands                                                       

NOTE 1:- GENERAL (Cont.)                                                        

The allocation of the purchase price was as follows:          

Intangible assets:                                            
Goodwill                  $      271                      
Technology                       219                      
    ----------

    $      490
    ==========

          d. Genodus Inc. was established in April 2000 in the United States
as a subsidiary of the Company.                                     

            Genodus Ltd. was established in 1999 by Supercom Ltd. (a
  controlling stockholder of InkSure Delaware until June 2002). In April
      2000, Supercom Ltd. sold Genodus Ltd. to Genodus Inc., in consideration of
$ 10.                                                               

           During June 2001, Inksure Delaware sold Genodus Inc. to
Supercom Ltd. in consideration of $ 10.                             

                  The spin-off transaction resulted in a change in the reporting
    entity, and the Company restated its historical financial statements, in
order to reflect financial information for all periods, for the new 
      reporting entity, as if the Company had not invested in the subsidiary, in
accordance with paragraph 34 of Accounting Principles Board ("APB") 
      Opinion No. 20 "Accounting changes" ("APB 20"). The effect of the spin-off
      transaction resulted a decrease in net loss of $ 1,198 and $ 1,227 for the
years ended December 31, 2001 and 2000, respectively.               

          e. Concentration of credit risk that may have a significant impact
on the Company:                                                     

            The Company derived 95% of its revenues in 2002 from two
customers (see Note 13).                                            

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES                                        

       The consolidated financial statements are prepared in accordance with
generally accepted accounting principles in the United States ("U.S. GAAP").    

a. Use of estimates:                                    

              The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the   
    financial statements and accompanying notes. Actual results could differ
from those estimates.                                               

b. Financial statements in U.S. dollars:                

                 A majority of the subsidiaries' sales is made in U.S. dollars
  ("the dollar" or "dollars"). In addition, a substantial portion of the
     subsidiaries' costs is incurred in dollars. Company's management believes
  that the dollar is the primary currency of the economic environment in
    which the Company and its subsidiaries operate. Thus, the functional and
 reporting currency of the Company and its subsidiaries is the dollar.

                 Accordingly, monetary accounts maintained in currencies other
than the dollar are remeasured into U.S. dollars in accordance with 
Statement No. 52 of the Financial Accounting Standards Board No. 52 
     "Foreign Currency Translation" ("SFAS No. 52"). All transaction gains and
     losses of the remeasurement of monetary balance sheet items are reflected
in the statements of operations as financial income or expenses, as 
appropriate.                                                        

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NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)                                

                 Through 1999, the financial statements of InkSure Ltd., whose
  functional currency was not the new Israeli shekels ("NIS"), have been
translated into U.S. dollars. All balance sheet accounts have been  
    translated using the exchange rates in effect at the balance sheet date.
  Statement of operations amounts have been translated using the average
  exchange rate for the year. The resulting translation adjustments were
reported as a component of shareholders' equity in accumulated other
   comprehensive income. Effective January 1, 2000, due to a change in its
business environment the subsidiary adopted the U.S. dollar as its  
functional currency.                                                

c. Principles of consolidation:                           

                 The consolidated financial statements include the accounts of
    the Company and its subsidiaries. Intercompany transactions and balances
have been eliminated upon consolidation.                            

d. Cash equivalents:                                      

              The Company considers highly liquid investments originally
     purchased with maturities of three months or less to be cash equivalents.

e. Short-term deposits:                                   

                  Short-term bank deposits are deposited with maturities of more
     than three months but less than one year. Short-term deposits are in U.S.
    dollars and bear an average annual interest of 2.4%. Short-term deposits
are presented at their cost, including accrued interest.            

f. Inventories:                                           

                Inventories are stated at the lower of cost or market value.
     Inventory write-offs are provided to cover risks arising from slow-moving
items or technological obsolescence. Cost is determined as follows: 

            Raw materials, parts and supplies - using the "first-in,
first-out" method.                                                  

                  Finished products - on the basis of direct manufacturing costs
with the addition of allocable indirect manufacturing costs.        

g. Property and equipment, net:                           

                 Property and equipment are stated at cost, net of accumulated
  depreciation. Depreciation is computed using the straight-line method,
  over the estimated useful lives of the assets, at the following annual
rates:                                                              

                                                   %
                                                  --------------------------

Computers and peripheral equipment                  20 - 33 
Office furniture and equipment                      6 - 20  
        Leasehold improvements                    over the term of the lease

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NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)                                

     The Company's property and equipment are reviewed for impairment in
accordance with Statement of Financial Accounting Standard No. 144, "Accounting 
for the Impairment or Disposal of Long- Lived Assets" ("SFAS No. 144") whenever 
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to the future undiscounted   
cash flows expected to be generated by the assets. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by    
which the carrying amount of the assets exceeds the fair value of the assets.   
Assets to be disposed of are reported at the lower of the carrying amount or    
fair value less costs to sell. As of December 31, 2002, no impairment losses    
were recognized.                                                                

h. Goodwill:                                              

                  Goodwill represents excess of the costs over the net assets of
   businesses acquired. Under SFAS No. 142 goodwill acquired in a business
combination for which date is on or after July 1, 2001, shall not be
amortized.                                                          

                "Goodwill represents excess of the costs over the net assets
    of businesses acquired. Under Statement of Financial Accounting Standard
    No.142, "Goodwill and Other Intangible Assets" ("SFAS No, 142") goodwill
    acquired in a business combination for which date is on or after July 1,
2001, shall not be amortized.                                       

                SFAS No.142 requires goodwill to be tested for impairment on
adoption and at least annually thereafter or between annual tests in
    certain circumstances, and written down when impaired, rather than being
      amortized as previous accounting standards required. Goodwill attributable
    to each of the reporting units is tested for impairment by comparing the
    fair value of each reporting unit with its carrying value. Fair value is
determined using discounted cash flows, market multiples and market 
   capitalization. Significant estimates used in the methodologies include
  estimates of future cash flows, future short-term and long-term growth
     rates, weighted average cost of capital and estimates of market multiples
for each of the reportable units. The Company expects to perform the
impairment tests during the fourth fiscal quarter."                 

i. Other intangible assets:                               

                  Intangible assets acquired in a business combination for which
   date is on or after July 1, 2001, should be amortized over their useful
      life using a method of amortization that reflects the pattern in which the
     economic benefits of the intangible assets are consumed or otherwise used
      up, in accordance with SFAS No. 142. Technology is amortized over a period
of 3 years.                                                         

j. Severance pay:                                         

                The liability of the Israeli subsidiary for severance pay is
     calculated pursuant to Israeli severance pay law based on the most recent
      salary of the employees multiplied by the number of years of employment as
of the balance sheet date. (The Company records as expenses the net 
  increase in its funded or unfunded severance liability.) Employees are
  entitled to one month salary for each year of employment, or a portion
      thereof. The subsidiaries' liability is fully provided by monthly deposits
     with severance pay funds, insurance policies and by an accrual. (Deposits
    with severance pay funds and insurance policies are under the control of
     the Company.) The value of these policies was recorded as an asset in the
Company's balance sheet.                                            

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NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)                                

                  The deposited funds may be withdrawn only upon the fulfillment
of the obligation pursuant to Israeli severance pay law or labor    
agreements. The value of the deposited funds is based on the cash   
 surrendered value of these policies, and includes immaterial profits.

                  Severance expenses for the years ended December 31, 2002, 2001
and 2000, amounted to $ 49, $ 41 and $ 26, respectively.            

k. Revenue recognition:                                                         

              InkSure Delaware derives revenues form selling of security
inks and readers through a combination of its own sales personnel,  
strategic alliances and licenses with intermediaries.               

                 Revenues from product sales are recognized in accordance with
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements", ("SAB No. 101"), 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. When a
  right of return exists, the Company defers revenues until the right of
return expires. The Company does not grant a right of return to its 
    customers. Except as described below, all of the Company's revenues were
derived from sales of products.                                     

                 The Company signed its first contract in the third quarter of
      2000. Under this agreement, the customer will have the right to market the
 Company's products worldwide in packaging until the end of 2003. This
 contract represents a potential $ 14,000 revenue for the Company over
three years. According to the agreement, the Company granted to the 
   customer the exclusive right and an exclusive license to market and use
   its technology. The customer paid $ 1,250 non-refundable, non-allocable
 fixed amount to the Company for the technology transfer. The customer
     will also pay minimum application fees on first level products of $ 1,250
  for the first full calendar year (this amount was paid during 2001 and
 2002), $ 4,500 for the second calendar year and $ 7,000 for the third
   calendar year of the agreement. For each calendar year after the third,
      the minimum application fees shall be 125% of the minimum application fees
for the immediate prior calendar year.                              

               In the event that the aggregate payments made in respect of
    the actual application fees on the first level products for any calendar
     quarter exceeds the minimum application fee for such calendar quarter and
    the customer has made a differential payment during the calendar year in
which such calendar quarter falls, the customer shall be entitled to
    offset such differential payment against application fee payment on sale
      of first level products otherwise due under this paragraph during the same
calendar year.                                                      

               The customer may terminate this agreement at any time after
 January 1, 2001 effective 90 days after giving notice to the Company,
      provided that termination under this section shall not relive the customer
     of any obligation under the above two paragraphs to make payments for the
     entire calendar year in which such termination becomes effective, but the
    customer shall have no further obligation to pay any minimum application
fees for any subsequent calendar year.                              

                  On January 1, 2002, the abovementioned contract was terminated
      and a new contract was signed between the parties. Under the new contract,
   the Company granted the customer an exclusive license to market and use
   its technology for applications in consideration of $ 250 for one year.

                  The Company recognized in respect of this contract, due to the
    technology transfer, $ 139, $ 417 and $ 580 for the years ended December
 31, 2000, 2001 and 2002, respectively. The Company also recognized in
respect of this contract, due to the minimum application fees on    
  first-level products for the first full calendar year, $ 1,250 for the
year ended December 31, 2001.                                       

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NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)                                

                 Company's revenues in 2002 were generated by 64%, 23% and 13%
sales of ink, license and readers, respectively.                    

l. Warranty:                                              

          The Company provides a warranty for its authentication
systems. The term of the warranty is the earlier of:                

    (a) one year from the day system is installed or

               (b) fifteen months from the date of delivery of the system.

                 As of the balance sheet date, the Company did not receive any
warranty claims and does not expect to receive any material warranty
      claims in the future. Therefore, the Company did not record a liability in
respect of the warranty.                                            

m. Research and development costs:                        

                  Research and development costs are charged to the statement of
operations, as incurred.                                            

n. Sales and marketing costs:                             

                The Company has received non-royalty-bearing grants from the
     Fund for Encouragement of Marketing Activity. These grants are recognized
  at the time the Company is entitled to such grants on the basis of the
costs incurred and included as a deduction of sales and marketing   
expenses.                                                           

o. Basic and diluted net loss per share:                  

              Basic net loss per share is computed based on the weighted
    average number of Common stock outstanding during each year. Diluted net
loss per share is computed based on the weighted average number of  
Ordinary shares outstanding during the year, in accordance with FASB
     Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
("SFAS No. 128").                                                   

                 All outstanding stock options and warrants have been excluded
     from the calculation of the diluted net loss per Common stock because all
such securities are anti-dilutive for the periods presented.        

p. Income taxes:                                          

                The Company and its subsidiaries account for income taxes in
    accordance with Statement of Financial Accounting Standards, "Accounting
    for Income Taxes" ("SFAS No. 109"). This statement prescribes the use of
  the liability method whereby deferred tax assets and liability account
    balances are determined based on differences between financial reporting
      and tax bases of assets and liabilities and are measured using the enacted
tax rates and laws that will be in effect when the differences are  
     expected to reverse. The Company and its subsidiaries provide a valuation
     allowance, if necessary, to reduce deferred tax assets to their estimated
realizable value.                                                   

q. Concentrations of credit risk:                         

                  Financial instruments that potentially subject the Company and
    its subsidiaries to concentrations of credit risk consist principally of
 cash and cash equivalents, short-term deposits and trade receivables.

          Cash and cash equivalents, and short-term deposits are
     invested in major banks in Israel and the United States. Such deposits in
    the United States may be in excess of insured limits and are not insured
in other                                                            

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U.S. dollars in thousands                                     

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)                                

   jurisdictions. Management believes that the financial institutions that
   hold the Company's investments are financially sound, and, accordingly,
minimal credit risk exists with respect to these investments.       

                 The trade receivables of the Company and its subsidiaries are
  mainly derived from sales to customers located primarily in Turkey and
 United States. The Company performs ongoing credit evaluations of its
      customers and to date has not experienced any material losses. The Company
did not provide an allowance for doubtful accounts. In certain      
      circumstances, the Company may require letters of credit, other collateral
or additional guarantees.                                           

                The Company has no off-balance-sheet concentration of credit
      risk such as foreign exchange contracts, option contracts or other foreign
hedging arrangements.                                               

r. Fair value of financial instruments:                   

                  The following methods and assumptions were used by the Company
and its subsidiaries in estimating their fair value disclosures for 
financial instruments:                                              

   The carrying amounts of cash and cash equivalents, short-term
     deposits, trade receivables, other accounts receivable and trade payables
and other accounts payable approximate their fair value due to the  
short-term maturity of such instruments.                            

s. Accounting for stock-based compensation:               

           The Company has elected to follow Accounting Principles Board
     Opinion No. 25 "Accounting for Stock Issued to Employees" ("APB No.
     25") and Interpretation No. 44 "Accounting for Certain Transactions
    Involving Stock Compensation" ("FIN No. 44") in accounting for its
       employee stock option plans. Under APB 25, when the exercise price of
  the Company's stock options is less than the market price of the
 underlying shares on the date of grant, compensation expense is
recognized.                                                   

       Under Statement of Financial Accounting Standard No. 123, "Accounting
for Stock Based Compensation" ("SFAS No. 123"), pro forma information regarding 
net loss and loss per share is required, and has been determined as if the      
Company had accounted for its employee stock options under the fair value method
of that Statement. The fair value for these options was estimated at the date of
grant using a Black-Scholes option pricing model with the following             
weighted-average assumptions for 2002 and 2001: risk-free interest rate of 1.5% 
and 2% for 2002 and 2001, respectively, with a dividend yields of 0% for each   
year, volatility factors of the expected market price of the Company's Common   
stock of 0.5, and a weighted-average expected life of the options of 4.2.       

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    
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U.S. dollars in thousands                                     

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)                                

Pro forma information under SFAS 123:                     

                                                                [Download Table]


                                                                   Year ended     
                                                                  December 31,    
                                                            --------------------- 
                                                               2002        2001   
                                                            ---------   --------- 
                                                                                  
Net loss as reported                                        $    (621)  $    (700)
                                                            =========   ========= 
Total stock-based compensation determined under fair value  $    (164)  $     (12)
  based method for all awards                                                     
                                                            =========   ========= 

Pro forma net loss                                          $    (785)  $    (712)
                                                            =========   ========= 

Earnings per share:                                                               

  Basic and diluted as reported                             $   (0.08)  $   (0.14)
                                                            =========   ========= 

  Basic and diluted pro-forma                               $    (0.1)  $   (0.14)
                                                            =========   ==========

                Proforma information for the year ended December 31, 2000 is
not presented since no options were outstanding in that year.       

                The Company applies SFAS No. 123 and EITF 96-18, "Accounting
for Equity Instruments that are Issued to Other than Employees for  
Acquiring, or in Conjunction with Selling, Goods or Services", with 
      respect to options issued to non-employees. SFAS No.123 requires use of an
  option valuation model to measure the fair value of the options on the
date of grant.                                                      

t. Impact of recently issued accounting standards:        

               In June 2002, the FASB issues SFAS No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities," which addresses 
      significant issue regarding the recognition, measurement, and reporting of
costs associated with exit and disposal activities, including       
      restructuring activities. SFAS No. 146 requires that costs associated with
   exit or disposal activities be recognized when they are incurred rather
      than at the date of a commitment to an exit or disposal plan. SFAS No. 146
     is effective for all exit or disposal activities initiated after December
      31, 2002. The Company does not expect the adoption of SFAS No. 146 to have
 a material impact on its results of operations or financial position.

                 In November 2002, the FASB issued FASB Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, 
      Including Indirect Guarantees of Indebtedness of Others, an interpretation
of FASB Statements No. 5, 57, and 107 and Rescission of FASB        
Interpretation No. 34" ("FIN No. 45"). FIN No. 45 elaborates on the 
     disclosures to be made by a guarantor in its interim and annual financial
 statements about its obligations under certain guarantees that it has
issued.                                                             

                It also clarifies that a guarantor is required to recognize,
  at the inception of a guarantee, a liability for the fair value of the
obligation undertaken in issuing the guarantee. FIN No. 45 does not 
    prescribe a specific approach for subsequently measuring the guarantor's
    recognized liability over the term of the related guarantee. The Company
    does not expect the adoption of FIN No. 45, to have a material impact on
its results of operations of financial position.                    

                  In November 2002, the EITF reached a consensus on Issue 00-21,
   addressing how to account for arrangements that involve the delivery or
performance of multiple products, services, and/or rights to use    

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    
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U.S. dollars in thousands                                     

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)                                

    assets. Revenue arrangements with multiple deliverables are divided into
    separate units of accounting if the deliverables in the arrangement meet
the following criteria:                                             

                       (1) the delivered item has value to the customer on a
standalone basis;             

                     (2) there is objective and reliable evidence of the
fair value of undelivered     
items; and                                                          
                   (3) delivery of any undelivered item is probable.

           Arrangement consideration should be allocated among the
      separate units of accounting based on their relative fair values, with the
      amount allocated to the delivered item being limited to the amount that is
not contingent on the delivery of additional items or meeting other 
    specified performance conditions. The final consensus will be applicable
      to agreements entered into in fiscal periods beginning after June 15, 2003
with early adoption permitted.                                      

              The Company can not estimate the impact of the adoption of
EITF 00-21 on its results of operations or financial position.      

NOTE 3: - OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES                        

                                            December 31,
                                            --------------------------------
                                          2002              2001
                                            -------------    ---------------

       Government authorities             $        34      $          38
       Prepaid expenses and other                 192                170
                                            -------------    ---------------

                                          $       226      $         208
                                            =============    ===============

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NOTE 4:- INVENTORIES                                                            

                                                                [Download Table]


                                                      December 31,          
                                            --------------------------------
                                                 2002             2001      
                                            --------------   ---------------
                                                                            
Raw materials                               $        55      $          89  
Finished products                                    33                124  
                                            --------------   ---------------

                                            $        88      $         213  
                                            ==============   ===============

NOTE 5:- PROPERTY AND EQUIPMENT                                                 

                                                                [Download Table]

                                                                           
Cost:                                                                      
  Computers and peripheral equipment        $       296      $         266 
  Office furniture and equipment                     98                 96 
  Leasehold improvements                            114                114 
                                            ------------     --------------

                                                    508                476 
                                            ------------     --------------
Accumulated depreciation:                                                  
  Computers and peripheral equipment                124                 68 
  Office furniture and equipment                     16                  8 
  Leasehold improvements                             12                  1 
                                            ------------     --------------

                                                    152                 77 
                                            ------------     --------------

Depreciated cost                            $       356      $         399 
                                            ============     ==============

           Depreciation expenses for the years ended December 31, 2002 and 2001,
amounted to $ 75 and $ 42, respectively.                            

NOTE 6:- TECHNOLOGY                                                             

                                                                [Download Table]


                                                December 31,           
                                        ------------------------------ 
                                           2002             2001       
                                        ------------   --------------- 
                                                                       
Original amounts:                                                      
  Technology                            $        219      $         219
  Less - accumulated depreciation                 72                 - 
                                        ------------      -------------

                                        $        147      $        219 
                                        ============      =============


                  Established technology related to the purchase of 10% of the
                    shares of InkSure Inc. and 20% of the shares of InkSure RF
Inc.                                  

NOTE 7:- ACCRUED EXPENSES AND OTHER LIABILITIES                                 

       Deferred revenues             $  -             $319
       Accrued expenses               280              196
                                     ----             ----

                                     $280             $515
                                     ====             ====

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NOTE 8:- COMMITMENTS AND CONTINGENT LIABILITIES                                 

a. Lease commitments:                                     

                The Company and its subsidiaries rent their facilities under
  various operating lease agreements, which expire on various dates, the
latest of which is in 2008. The minimum rental payments under       
non-cancelable operating leases are as follows:                     

                    Year ended
                    December 31,
                    ------------

2003                      $   92          
2004                          69          
2005                          43          
2006                          43          
2007 and thereafter           47          
                ------

                 $ 294
                ======

              Total rent expenses for the years ended December 31, 2002,
2001 and 2000, were approximately $ 72, $ 70 and $ 60, respectively.

b. Charges and guarantees:                                

                  The Company obtained bank guarantees in the amount of $ 34, to
secure its lease commitment.                                                    

c. Litigation:                                            

     1) On December 12, 1999, Secu-Systems filed a lawsuit with the District
   Court in Tel-Aviv-Jaffa against Supercom (InkSure Delaware, 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) breach of
  fiduciary duties owed to the plaintiff by Supercom and InkSure Ltd.; and
   (d) a tort of misappropriation of trade secrets and damage to plaintiff's
   property. Secu-Systems seeks, among other things, an injunction and a 50%
 share of profits from the printing method at issue. The Company's legal
     counsel and management are of the opinion that, based on the facts provided
  by Supercom and InkSure Ltd., the prospects are favorable that the court
   will not grant the permanent injunction or award damages of a substantial
amount in connection with the litigation.                             

     2) The Company is disputing the valid issuance of an option to purchase
  300,480 shares of InkSure Delaware Common stock that was issued prior to
     the reverse acquisition. If the Company's position in this dispute does not
   prevail it would be forced to accept the validity of the issuance of this
option and convert it into an option to purchase shares of our Common 
stock.                                                                

NOTE 9:- SHARE CAPITAL                                                          

a. Stockholders' rights:                                  

                 The Common stock confer upon the holders the right to receive
      notice to participate and vote in the general meetings of the Company, and
the right to receive dividends, if and when declared.               

b. Private placements:                                    

                During November 2001, InkSure Delaware issued 709,066 shares
      in consideration of $ 7 in cash, 10% of the shares of InkSure Inc. and 20%
of the shares of InkSure RF Inc. (see Note 1c).                     

              In January 2002, InkSure Delaware issued 356,630 shares of
     Common stock, in consideration of $ 250, which were invested by a private
investor during 2001.                                               

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    
------------------------------------------------------------------------------- 
U.S. dollars in thousands                                     

NOTE 9:- SHARE CAPITAL (Cont.)                                                  

               In February 2002, InkSure Delaware issued 142,653 shares of
      Common stock in return for an amount of $ 100 invested in InkSure Delaware
by a private investor.                                              

            In March 2002, the Company converted 1,141,553 shares of
    Common stock held by Supercom Ltd. into 1,141,553 Redeemable Preferred A
shares. Those shares were sold to EL-AD Inc. LLC (a privately held  
investment company). In addition, InkSure Delaware issued 171,232   
   Redeemable Preferred A shares to El-AD Inc. LLC, in consideration for $
     150. The Company recorded a deemed dividend in the amount of $ 200, which
     was calculated as the difference between the fair value of the Redeemable
    Preferred A shares and the fair value of the Common stock at the date of
 conversion. The deemed dividend was recognized as a charge to paid-in
     capital against net loss applicable to Ordinary shareholders, without any
    effect on total shareholders' equity (deficiency). During July 2002, all
   Redeemable Preferred A shares were converted on a one-to-one basis into
Common stock.                                                       

               On July 8, 2002, InkSure Delaware closed the first round of
    its private placement of 2,531,065 shares of Common stock and of 885,865
      five-year warrants to purchase Common stock at an exercise price of $ 2.17
per share, and raised gross proceeds of $ 4,075.                    

                 On July 31, 2002, InkSure Delaware closed the second round of
    its private placement of 1,319,880 shares of Common stock and of 461,966
      five-year warrants to purchase Common stock at an exercise price of $ 2.17
per share, and raised gross proceeds of $ 2,125.                    

                 On September 6, 2002, InkSure Delaware closed the third round
     of its private placement of 310,560 Common stock and of 108,695 five-year
warrants to purchase Common stock at an exercise price of $ 2.17 per
stock, and raised gross proceeds of $ 500.                          

             In connection with the placement, Commonwealth Associated
     L.P., the exclusive Placement Agent in the Offering received a commission
equal to 8.5% of the aggregate gross proceeds. In addition, InkSure 
  Delaware issued to Commonwealth Associates L.P., five-year warrants to
      purchase Common stock equal to 10% of the total number of Common stock and
  warrants sold in the placement. Commonwealth Associates L.P., received
550,933 warrants at an exercise price of $ 1.61 per share.          

c. Stock options:                                         

                  On August 24, 2001, the Board of Directors of InkSure Delaware
      adopted the 2001 Employee Stock Option Plan (the "Option Plan"). Under the
Option Plan 600,000 shares have been reserved for issuance upon the 
  exercise of options granted thereafter. The Option Plan will remain in
effect until August 24, 2007.                                       

          According to the Merger agreement and according to the
approval of the board of directors of InkSure Technologies Inc., all
      outstanding option agreements (as mentioned above) have been replaced with
     new options agreements in accordance with the Company's 2002 stock option
plan.                                                               

                 The terms and conditions of the 2002 plan relating to vesting
      periods and exercise prices are the same as in the 2001 stock option plan.

                  Under the 2002 plan, up to 3,500,000 options may be granted to
officers, directors, employees and consultants of the Company or its
subsidiaries.                                                       

               The options vest ratably over a period of up to four years,
    commencing with the date of grant. The options generally expire no later
    than five years from the date of grant. Any options, which are forfeited
or cancelled before expiration, become available for future grants. 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    
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U.S. dollars in thousands                                     

NOTE 9:- SHARE CAPITAL (Cont.)                                                  

 A summary of the Company's stock option activity, and related
information is as follows:                                                      

                                                        [Enlarge/Download Table]


                                                       Year ended December 31                
                                  -----------------------------------------------------------
                                              2002                          2001             
                                  ----------------------------- -----------------------------
                                                    Weighted                      Weighted   
                                                    average                       average    
                                    Number of       exercise      Number of       exercise   
                                     options         price         options         price     
                                  -------------  -------------- -------------- --------------
                                                                                             
Outstanding at beginning of year   469,830        $     0.623    -              $    -       
  Granted                          733,706        $     1.032    469,830        $   0.62     
  Forfeited                        340,280        $     0.535                   $    -       
                                  ---------                     ----------                   

Outstanding at end of year         863,256        $     1.00     469,830        $   0.62     
                                  =========       ==========    ===========     ===========  

Exercisable at end of year         555,777        $     0.95     -              $    -       
                                  =========       ==========    ===========     ===========  


              The options outstanding as of December 31, 2002, have been
separated into ranges of exercise price as follows:                 

                                                        [Enlarge/Download Table]


                                                                                   Weighted    
                  Options         Weighted                       Options           average     
                outstanding        average        Weighted     exercisable        exercise     
                    as of         remaining        average         as of           price of    
 Exercise       December 31,     contractual      exercise      December 31,       options     
  price             2002        life (years)        price           2002         exercisable   
------------  ---------------- ---------------  ------------- ---------------- ----------------
                                                                                               
$ 0.8-0.97     711,614          4.07             $     0.91     545,447         $     0.95     
$ 1-1.2         51,642          4.28             $     1.12      10,330         $     1.12     
$ 1.61         100,000          4.68             $     1.61           -         $        -     
              ----------------                                ----------------                 
               863,256                           $     1.00     555,777         $     0.95     
              ================                  ============= ================ ================


               Weighted-average fair values of options granted during 2002
  whose exercise price is higher than the fair value of the stock on the
date of grant, were $ 0.7.                                          

               No compensation expenses were recognized by the Company for
the years ended December 31, 2000, 2001 and 2002.                   

                  All options were granted with exercise price equal to the fair
value of the stock on the date of grant.                            

NOTE 10:- TAXES ON INCOME                                                       

a. Measurement of taxable income under the Income Tax Law 
(Inflationary Adjustments), 1985:                                               

              The results for tax purposes of the Israeli subsidiary are
measured in terms of earnings in NIS, after certain adjustments for 
  increases in the Israeli Consumer Price Index ("CPI"). As explained in
Note 2b, the financial statements are measured in U.S. dollars. The 
difference between the annual change in the Israeli CPI and in the  
NIS/dollar exchange rate causes a further difference between taxable
    income and the income before taxes shown in the financial statements. In
accordance with paragraph 9(f) of SFAS No. 109, the                 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    
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U.S. dollars in thousands                                     

NOTE 10:- TAXES ON CAPITAL (Cont.)                                              

    Company has not provided deferred income taxes on the difference between
the functional currency and the tax bases of assets and liabilities.

Israeli tax reform:                         

                 On January 1, 2003, a comprehensive tax reform took effect in
     Israel. Pursuant to the reform, resident companies are subject to Israeli
  tax on income accrued or derived in Israel or abroad. In addition, the
    concept of "controlled foreign corporation" was introduced, according to
   which an Israeli company may become subject to Israeli taxes on certain
    income of a non-Israeli subsidiary if the subsidiary's primary source of
    income is passive income (such as interest, dividends, royalties, rental
   income or capital gains). The tax reform also substantially changed the
system of taxation of capital gains.                                

b. Deferred income taxes:                                 

                  Deferred income taxes reflect the net tax effects of temporary
  differences between the carrying amounts of assets and liabilities for
      financial reporting purposes and the amounts used for income tax purposes.
      Significant components of the Company's and its subsidiaries' deferred tax
assets are as follows:                                              

                                                        [Enlarge/Download Table]


                                                           December 31,                  
                                         ------------------------------------------------
                                              2002              2001            2000     
                                         ---------------   --------------   -------------
                                                                                         
Operating loss carryforward                $   1,426         $     390        $     644  
Reserves and allowances                           17                24               16  
                                          ---------------   -------------    ------------

Net deferred tax asset before valuation                                                  
allowance                                      1,443               414              660  
Valuation allowance                           (1,443)             (414)            (660) 
                                          ---------------   -------------    ------------

Net deferred tax asset                     $       -         $       -        $       -  
                                          ===============   =============    ============

                  As of December 31, 2002, the Company and its subsidiaries have
provided valuation allowances of $ 1,443, in respect of deferred tax
assets resulting from tax loss carryforwards and other temporary    
     differences. Management currently believes that since the Company and its
     subsidiaries have a history of losses it is more likely than not that the
deferred tax regarding the loss carryforwards and other temporary   
    differences will not be realized in the foreseeable future. The increase
  (decrease) in the valuation allowance for the years ended December 31,
2002 and 2001 was $ 1,029, ($ 246), respectively.                   

       Income (loss) before taxes is comprised as follows:

                                    December 31,
                                      ------------------------------
                                   2002             2001
                                      ------------  ----------------

          Domestic                 $    1,341      $       757
           Foreign                      (1,962)          (1,557)
                                     ------------  ---------------

                                    $     (621)     $      (700)
                                     ============  ===============

c. Net operating losses carryforwards:                    

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    
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U.S. dollars in thousands                                     

NOTE 10:- TAXES ON CAPITAL (Cont.)                                              

                 InkSure Delware has accumulated losses for tax purposes as of
   December 31, 2002, in the amount of approximately $ 1,380, which may be
     carried forward and offset against taxable income in the future, expiring
in 2020.                                                            

               InkSure Ltd., a subsidiary of InkSure Inc. (a subsidiary of
 the Company) in Israel, has accumulated losses for tax purposes as of
   December 31, 2002, in the amount of approximately $ 2,166, which may be
   carried forward and offset against taxable income in the future, for an
indefinite period.                                                  

         d. The main reconciling items between the statutory tax rate of the
      Company and the effective tax rate are the non-recognition of tax benefits
 from accumulated net operating losses carryforward amount the various
    subsidiaries worldwide due to the uncertainty of the realization of such
tax benefits.                                                       

NOTE 11:- FINANCIAL EXPENSES (INCOME), NET                                      

                                                        [Enlarge/Download Table]


                                                              Year ended                   
                                                             December 31,                  
                                            -----------------------------------------------
                                                 2002             2001            2000     
                                            ---------------   -------------   -------------
                                                                                           
Financial expenses:                                                                        
  Interest, bank charges and fees             $      (16)       $      149      $     110  
  Foreign currency translation differences           (10)             (220)            31  
                                            ---------------   -------------   -------------

                                              $      (26)       $      (71)     $     141  
                                            ===============   =============   =============

NOTE 12:- DISCONTINUED OPERATIONS                                               

               Kromotech Inc. was established in August 2000 in the United
    States as a subsidiary of InkSure Delware. On December 31, 2001, InkSure
 Delware transferred its holdings in Kromotek Inc. to Supercom Ltd. In
 addition, Supercom Ltd. waived a loan in the amount of $ 737 that was
granted to InkSure Ltd. (a subsidiary of the Company). Property and 
      equipment of Kromotek Inc. in the carrying amount of $ 193 was retained by
InkSure Ltd.                                                        

                  In accordance with APB 30 "Reporting the Results of Operations
- Reporting the Effects of Disposal of a Segment of a Business, and 
Extraordinary, Unusual and Infrequently Occurring Events and        
  Transactions", the results of operations of Kromotek Inc. for the year
ended December 31, 2001, have been reclassified in the accompanying 
statements of operations as discontinued operations.                

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                           INKSURE TECHNOLOGIES INC. (Formerly: Lil Marc Inc.)
                                                          AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    
------------------------------------------------------------------------------- 
U.S. dollars in thousands                                     

NOTE 12:- DISCONTINUED OPERATIONS (Cont.)                                       

              Operating results from the discontinued operations for the
year ended December 31, 2002, 2001 and 2000, are as follows:        

                                                                [Download Table]


                                                  Year ended                     
                                                 December 31,                    
                               --------------------------------------------------
                                    2002               2001             2000     
                               ---------------   ----------------   -------------
                                                                                 
Operating expenses:                                                              
Research and development, net   $        -         $      144         $     101  
Marketing                                -                 25                 3  
General and administrative               -                157               111  
                               ---------------     --------------     -----------

Total operating expenses                 -                326               215  
Financial loss (income), net             -                (26)                1  
                               ---------------     --------------     -----------

Net loss                        $        -         $      300         $     216  
                               ===============     ==============     ===========


                  The transfer of the net book value of the holdings in Kromotek
  inc, the loan remission and the transfer of the property and equipment
 were recorded as additional paid-in capital in the amount of $ 1,446.

NOTE 13: - SEGMENTS, CUSTOMERS AND GEOGRAPHIC INFORMATION                       

                  The Company has one reportable geographic segments. See Note 1
    for a brief description of the Company's business. The data is presented
    in accordance with SFAS 131, "Disclosure About Segments of an Enterprise
and Related Information".                                           

                  The following data presents total revenues for the years ended
   December 31, 2002 and 2001, based on customer's location and long-lived
assets as of December 31, 2002 and 2001:                            

           2002                       2001
           --------------------------- -------------------------
                          Long-                      Long-
            Total         lived         Total        lived
          revenues        assets      revenues      assets
           -------------  ------------ ------------- -----------

United States       $   650        $   445      $ 1,664       $   515         
Export:                                                                       
Israel                  3            329            -           374       
Turkey              2,009              -            8             -       
Other                  31              -           98             -       
           -------------  ------------ ------------- -----------

           $ 2,693        $   774      $ 1,770       $   889
           =============  ============ ============= ===========

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                           INKSURE TECHNOLOGIES INC. (Formerly: Lil Marc Inc.)
                                                          AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                          
------------------------------------------------------------------------------- 
U.S. dollars in thousands                                                 

NOTE 13: - SEGMENTS, CUSTOMERS AND GEOGRAPHIC INFORMATION (Cont.)               

                Major customer data as a percentage of total revenues, is as
follows:                                                                        

                           Year ended December 31,
                            ----------------------------------
                           2002               2001
                            ---------------   ----------------

  Customer A             74%                 -

   Customer B             21%                94%

F-33

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B4’ Filing		Date		First		Last			Other Filings
		2/6/09		18
		8/24/07		88
		12/31/03		6		69			10KSB
Filed on:		8/29/03
		8/28/03		1
		8/27/03		1
		8/22/03		5		57			SB-2/A
		8/18/03		17					10QSB
		8/13/03		46					SC 13D/A
		7/8/03		4		28			8-K
		6/30/03		6		69			10QSB
		6/23/03		45
		6/15/03		85
		6/9/03		32
		5/31/03		15
		5/30/03		14
		4/28/03		19					SB-2
		3/31/03		61					10-Q,  10KSB
		3/24/03		70
		2/10/03		44
		1/1/03		90
		12/31/02		6		92			10KSB,  DEF 14C
		11/14/02		60					10QSB
		11/13/02		46					SC 13D
		10/30/02		4		77
		10/28/02		4		77
		10/23/02		3		57
		9/6/02		18		88
		7/31/02		18		88			PRE 14C
		7/8/02		88
		7/5/02		3		27			8-K
		6/30/02		6		68			10QSB
		3/31/02		61					10QSB,  10QSB/A
		3/4/02		19
		2/14/02		11
		2/6/02		18		44
		1/1/02		39		81
		12/31/01		6		92			10KSB,  10KSB/A
		12/28/01		31
		8/24/01		88
		7/1/01		80
		6/30/01		77					10QSB
		1/1/01		81
		12/31/00		60		92			10KSB,  10KSB/A
		1/1/00		74		79
		12/12/99		11		87
		4/22/97		3		77
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