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Israeli authentication company helps prevent counterfeiting

Posted By Nicky Blackburn On December 23, 2002 @ 5:00 pm In | No Comments

The InkSure technology can be used to protect any printed product ranging from documents and tickets, to share certificates, packaging, telephone cards, drugs, tags on clothes or toys, or even perfumes.An Israeli start-up has developed a new ink-based anti-counterfeiting technology for printed documents and brands that could save US companies and organizations millions of dollars in lost revenues every year.

Counterfeiting has become a major problem in the US affecting brand owners in virtually every industry. In 2001, the US Customs Service conducted 3,586 seizures in which it confiscated counterfeit merchandise worth an estimated $57.5m. Worldwide, companies lose an estimated $300 billion to $1 trillion in revenues due to counterfeiting and diversion. The estimated market for anti-counterfeiting systems is some $25 billion a year, according to Security Solution Consultancy.

InkSure, a Nevada company with R&D in Rehovot in Israel, has developed a new ink with a unique chemical code embedded within it, that can be adapted to provide a different signature for each product. The ink, which is hidden invisibly within a document or product label to offer covert protection, can be easily authenticated by a company or authority using a small, low-cost electro-optic reader developed by InkSure.

The InkSure technology, which is now being patented, is compatible with all existing inks and can be used to protect any printed product ranging from documents and tickets, to share certificates, letters of credit, packaging, telephone cards, drugs, tags on clothes or toys, or even perfumes.

One of the company’s first applications is a check authentication technology that can identify forged checks. Today in the US about four percent of all checks are forgeries. Ernst & Young recently estimated that more than 500 million checks are forged annually, with losses totaling more than $10 billion.

In January, InkSure signed a strategic agreement with US company QwinStar Corp., a specialist in audit and inventory management, to jointly develop a high speed check authentication system for check clearing sorters. The QwinSure system identifies forged checks, money orders and traveler’s checks in real-time and separates them during processing.

InkSure has tested the system at the Qwinstar facilities in St. Paul, Minnesota, and successfully completed beta-tests at four other US locations. It expects to start selling the system in the middle of next year.
InkSure also has plans to move into the packaging industry, and in 2000 signed an exclusive marketing agreement with US company WestVaco, which set up a new division called WestVaco Brand Security (WBS), to market the technology to its customers.

In February, InkSure won a $2.2m. contract to provide the world’s first automatic anti-counterfeiting system to Turkish company IETT, the Istanbul Greater Municipalities Public Transportation Co. IETT is one of the largest public transportation authorities in the world, operating 2,700 buses. For years it has lost substantial revenues to counterfeiters who have forged company bus tickets. InkSure printed tickets encoded with invisible ink and installed proprietary readers on all municipal buses. Within the first 10 months of using InkSure’s system IETT doubled its monthly sales of bus tickets from 5.5 million to 11 million, bringing in an extra $15m. in revenues, according to Eyal Bigon, InkSure’s CFO.

The system is now being extended to other Turkish cities, and Greece has also shown interest in the product. InkSure is now exploring other potential markets including telephone cards, and track and trace technologies that allow brand name producers to trace the origin of goods being sold in the shops.

InkSure was founded in 1995 as a subsidiary of Israeli smart card manufacturer Supercom, which invested $3m. in the company. In 2001 InkSure saw revenues of $1.8m. In the first nine months of this year sales rose to $2.7m. and the company became profitable. Next year sales are likely to rise by 50%, according to Bigon.
In October this year, the company raised $6.7m. at a value of $20m. in a financing round led by US merchant bank, Commonwealth Associates. One of the investors in this round was ICTS, a Nasdaq traded company involved in securing US airports for the US government. ICTS, which has a 30% share of InkSure, is an important strategic partner, offering an introduction to the US government.


A month after the offering, InkSure took part in a reverse merger with Lil Marc, a publicly-traded Nevada corporation controlled by an affiliate of Commonwealth Associates. Under the terms of the agreement Lil Marc changed its name to InkSure Technologies Inc. and contributed its cash resources to InkSure’s ongoing operations. InkSure’s stockholders acquired 90.3% of Lil Marc’s stock.

InkSure now plans to leverage its position as a public company to make acquisitions in the authentication field.

“We want to become a solutions provider, not just a technology provider,” says Bigon.


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