InkSure Technologies Releases 2008 Results

Apr 06, 2009, 10:00 ET from InkSure Technologies, Inc.

FT. LAUDERDALE, Fla., April 6 /PRNewswire-FirstCall/ -- InkSure Technologies Inc. (OTC Bulletin Board: INKS), a leading provider of covert machine-readable security solutions for the prevention of counterfeiting, fraud and diversion, and an important developer of a unique low cost chipless RFID technology reported its operating results for the year ended December 31, 2008.

Although total revenues decreased 25% to $ 2.158 million our gross profit margins increased to 77% and our overall operating loss decreased by 13% to $2.184 million. We spent $1.7 million on research and development that primarily went to our unique next generation SARcode(TM) chipless RFID technology and we continued our penetration into international markets for our legacy security solutions and authentication technologies. Including R&D expenditures and certain accounting adjustments, the Company reported a loss of $3.5 million.

Philip M. Getter, Chairman of the Board, observed that the Company made significant progress during the year on many fronts but is disappointed with this final report. "Although we continued to grow our international business we were not immune to the economic downturn. In this very difficult climate a number of our customers indicated postponement of their plans and programs causing us to miss our expectations. "Mr. Getter noted that from an accounting point of view, InkSure took significant non-cash write-offs on both goodwill and the change in valuation of our Convertible notes. He stated that "InkSure continues its commitment to the development of its unique SARcode (TM) chipless RFID system." Mr. Getter further stated that "We believe we are well ahead of others in developing this 'tag' costing under a penny and having many uses including closed-loop high speed work flow systems and item level identification. We believe that our non-line of sight chipless RFID tag is a true competitor to barcodes - in price, accuracy and information. Management is dedicated to bringing its RFID product to market in 2010."

2008 Results

Revenues for the year decreased by $732,000, or 25%, to $2,158,000 from $ 2,890,000 in 2007. An important new project from a European customer was offset by reductions and postponements from several customers. Cost of revenues decreased 55% to $504,000 compared to $1,108,000 in 2007 as a result of improved raw material costs and the overall reduction in sales. Overall Gross Margins improved to 77% versus 62% in 2007.

Operating Loss for the year was reduced by 13% reaching $2,184,000 compared to $2,498,000 in 2007. Significant reductions to our Selling and Marketing and Administrative expenditures were offset by increased spending on Research & Development on the development and implementation of our chipless RFID technology and an impairment of goodwill expense.

Net Loss for the year totaled $3,528,000, and a loss per share of $0.21 compared to a net loss of $3,078,000, and a loss per share of $0.19. The increase in net loss in 2008 when compared to 2007 is due in part to an increase of $819,000 in non-cash financial expenses as a result of changes in the fair market value of the Convertible Notes calculated under SFAS No. 133.

The company ended 2008 with $1,826,000 in cash, cash equivalents, and short term deposits, compared with $820,000 in 2007.

Yaron Meerfeld, Acting CEO, noted that "We worked very diligently and I am pleased with our efforts in managing operations during this very difficult business climate. Although we maintain our cautious attitude, we are optimistic regarding our new RFID products and continue our efforts to realize our business plan and our long term potential."

About InkSure Technologies Inc.

InkSure Technologies Inc., with its corporate headquarters in Ft. Lauderdale, Florida and an R&D center in Science Park, Rehovot, Israel, specializes in comprehensive, covert security solutions designed to protect high profile brands and documents from counterfeiting, fraud and diversion. The Company's sales and marketing activities target a number of market opportunities, including financial, pharmaceutical, branded products, transportation, and government/institutional, on a global scale. The Company's R&D activities include the development of chipless RFID technology for affordable item-level secure logistics and track-and-trace applications. The Company's common stock is quoted on the OTC Bulletin Board under the symbol "INKS.OB". Additional information on the Company is available on its website at

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward-looking statements involve risks and uncertainty. Although InkSure (the "Company") believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. Important factors that could cause actual results to differ materially from the forward-looking statements include the Company's need to obtain substantial additional capital (through financings or otherwise) to fund its operations, the progress of development, government and regulatory approvals and licensing/commercialization of the Company's technologies, and other factors noted in the Company's periodic report filings with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.

                          CONSOLIDATED BALANCE SHEET
         U.S. dollars in thousands (except share and per share data)

                                                         DEC 31,  DEC 31,
                                                          2008     2007
                                                        AUDITED  AUDITED

         Cash and cash equivalents                       $1,826     $820
         Restricted Cash                                    365        -
         Trade receivables                                  104      453
         Other accounts receivable and prepaid expenses      73      225
         Deferred charges                                   400      385
         Inventories                                        322      399

    TOTAL CURRENT ASSETS                                  3,090    2,282

    PROPERTY AND EQUIPMENT, NET                             279      352
    GOODWILL                                                  -      271
    LONG TERM DEPOSIT                                         9       17

    TOTAL ASSETS                                         $3,378   $2,922


         Trade payables                                   $225      $284
         Employees and payroll accruals                    133       204
         Accrued expenses and other payables               648       362
         Convertible notes, net                          7,087     5,691

    TOTAL CURRENT LIABILITIES                            8,093     6,541

    Commitments and other contingent liabilities             -         -

    TOTAL LIABILITIES                                    8,093     6,541

    Capital Stock :
       Preferred stock of $0.01 par value -
        Authorized: 10,000,000 shares; Issued and
        outstanding: 0 shares as of December 31, 2008
        (0 shares as of December 31, 2007)                   -         -
       Common stock of $0.01 par value - Authorized:
        50,000,000; Issued and outstanding: 16,472,968
        shares as of December 31, 2008 (15,972,688
        shares as of December 31, 2007)                    164       161
       Additional paid-in capital                       16,708    14,279
       Accumulated other comprehensive income              118       118
       Accumulated deficit                             (21,705)  (18,177)

    TOTAL STOCKHOLDERS' DEFICIENCY                      (4,715)   (3,619)


           U.S. dollars in thousands (except share and per share data)

                                                     Year ended December 31
                                                        2008         2007

     Revenues                                         $2,158       $2,890
     Cost of revenues                                    504        1,108

     Gross profit                                      1,654        1,782

     Operating expenses:
     Research and development, net                     1,747        1,308
     Selling and marketing                               912        1,678
     General and administrative                          908        1,294
     Impairment of Goodwill                              271            -
     Total operating expenses                          3,838        4,280

     Operating loss                                   (2,184)      (2,498)

     Financial income (expense), net                    (462)        (209)
     Financial  income (expenses) related to
       convertible notes                                (882)        (316)
     Total financial income (expenses), net           (1,344)        (525)

     Net loss before taxes                            (3,528)      (3,023)
     Taxes on income                                       -          (55)

     Net loss                                        $(3,528)     $(3,078)

     Basic and diluted net loss per share             $(0.21)      $(0.19)

     Weighted average number of Common
      stocks used in computing basic and
      diluted net loss per share                  16,383,487   15,912,774

           U.S. dollars in thousands (except share and per share data)

                                                   Year ended December 31
                                                       2008         2007

    Cash flows from operating activities:
    Net loss                                         $(3,528)     $(3,078)
    Adjustments required to reconcile net loss to
     net cash used in operating activities:
    Depreciation and amortization                        305          236
    Increase in restricted cash balances                (365)           -
    Capital loss from sale of property                     -           (1)
    Decrease (increase) in trade receivables             350         (209)
    Non cash financial income related to
     convertible notes, net                              670          173
    Increase in other accounts receivable and
     prepaid expenses                                    152          212
    Decrease in inventories                               77          107
    (Decrease) increase in trade payables                (59)          56
    Increase (decrease) in employees and payroll
     accruals                                            (72)          60
    Non cash financial expenses related to
     implementation of SFAS No. 123 (R)                  159          536
    Amortization of Goodwill                             271            -
    Increase in accrued expenses and other
     payables                                            286          170
    Net cash used in operating activities             (1,755)      (1,738)

    Cash flows from investing activities:
    Purchase of property and equipment                   (22)        (102)
    Proceeds from sales of property                        -            5
    Proceeds from short-term bank deposits                 8        1,992
    Net cash provided from (used in) investing
     activities                                          (14)       1,895

    Cash flows from financing activities:
    Exercise of options to Common Stock                    -          127
    Exercise of warrants to Common Stock                   -          133
    Issuance of convertible notes, net                 2,775            -
    Net cash provided by financing activities          2,775          260

    Increase in cash and cash equivalents              1,006          417
    Cash and cash equivalents at the
     beginning of the year                               820          403
    Cash and cash equivalents at the
     end of the year                                  $1,826         $820

    Company Contact:
    Don Taylor, General Manager, InkSure Inc.

SOURCE InkSure Technologies, Inc.