InCard DisplayCard Developer Reaches $1 Million in Revenue

Year-to-Date

Second Quarter Highlights

Revenue up 400% from First Quarter

Completed second stage of $8.5M financing with $5M investment from

EMC, parent company of partner RSA

9% reduction in year-to-year operating expense

66% reduction in loss per share

Global orders up substantially as pilots become deployments and strong

production backlog

Senior management strengthened by addition of top security executives

LOS ANGELES–(EMWNews)–Innovative Card Technologies, Inc. (NASDAQ: INVC), developers of the

breakthrough InCard DisplayCard^TM security

device for e-banking, e-commerce and data access, today announced second

quarter financial results. The company reported its strongest quarterly

revenue performance to date, taking in $800,209 in the second quarter of

2008, compared with $1,089 in the second quarter of 2007. This revenue

increase was driven by strong quarter-to-quarter sales performance;

second quarter sales revenues quadrupled first quarter results. The

company achieved a 9% reduction in operating expense over the comparable

2007 period, at $2.1 million. After accounting for the revaluation of

warrant liability and interest, InCard lost $800,715 in the second

quarter, or $0.03 per diluted share, as compared with $0.09 per diluted

share in the second quarter of 2007. The backlog at June 30, 2008 was

$1.2 million.

InCard also achieved the strongest six-month revenue numbers in its

history. For the six months ended June 30, 2008, InCard reported revenue

of $1 million, a dramatic increase versus the $2,509 revenue in the

first half of 2007. The company was also able to cut its operating

expenses year over year by 12% for the first half. Cash on hand at June

30, 2008 was $1.7 million, up from $339,600 at year-end 2007. Working

capital was $3.3 million at June 30, 2008, up from a deficit of $2

million at year-end 2007.

“In the past three consecutive quarters, we delivered more than 100,000

InCard DisplayCards to satisfied customers. Through our blue chip list

of credit card manufacturers and digital security providers dedicated to

marketing and distributing the InCard DisplayCard, we have many live

consumer deployments globally including some of the largest banks in the

world,” said Steven R. Delcarson, President

and CEO of InCard Technologies. “We are encouraged by our progress, but

are also mindful of challenges yet to be overcome. Our sales team is

targeting ever larger orders and our technical people are working

tirelessly to reduce scrap in an effort to improve our gross margin. In

addition, we continue to work on second-sourcing our components to

reduce manufacturing lead times. We are making progress with these

issues, and expect to beat our second quarter performance in the third

quarter of 2008, despite a month-long summer shut down by one of our key

suppliers. Overall, we are in a much stronger position than at the same

time a year ago, and I am confident that we are moving quickly and

steadily in the right direction.”

The success of the InCard DisplayCard parallels several strong global

trends; 33% of adults bank online in the United States alone, and online

transaction volume is growing 27% annually. Fraudsters are taking

advantage of the online channel; phishing attacks cost American

consumers $3.2 billion in 2007 according to Gartner. With annual

identity theft costs pegged at $45 billion, and established payment

account fraud accounting for 5.4 million victims in 2007 according to

Javelin, government regulations and consumer concern are driving

widespread adoption of dual-factor authentication to protect against

online account fraud.

The InCard DisplayCard blends an ultra-portable form factor and strong

one-time passcode security to offer a unique security opportunity that

is a win-win for both the financial institution and the consumer.

According to an Associated Press report in January of 2008, 61% of

Americans are ‘very’

or ‘extremely’

concerned with online security. Implementing stronger security will

drive adoption of online banking, the most profitable transaction

channel for banks. Each online transaction costs $0.01 versus $0.27 for

ATM transactions and $1.07 for in-person branch transactions. For

high-income professionals, the banks’ most

profitable customer segment, the need for a convenient new security

measure is especially high. VIPs are three times more likely to be

targeted by fraudsters than other customers according to a recent study

on fraud victims by Experian. Additionally, InCard DisplayCard artwork

is fully customizable, allowing financial institutions to brand valuable

in-hand real estate, unlike traditional, bulky keyfob tokens. Add this

branding capability to the unique one-time passcode function, and the

result is a product that is completely singular among the very

competitive field of VIP payment card product offerings.

About Innovative Card Technologies

Innovative Card Technologies, Inc. (NASDAQ: INVC) was founded in 1993 to

add functionalities to payment cards. The company’s

InCard DisplayCard enables dual-factor authentication in a convenient

card form. The cards can be configured to offer RFID physical access or

payment capabilities, and feature a screen powered by an integrated

battery, circuit, and switch. This screen displays a one-time password

to verify the presence of the card during online and voice transactions

or data systems login. www.incard.com.

This release may contain forward-looking statements, which are made

pursuant to the safe harbor provisions of the Private Securities

Litigation Reform Act of 1995. All forward-looking statements included

in this document are based upon information available to InCard as of

the date hereof, and InCard has not assumed any duty to update these

forward-looking statements to reflect events or circumstances after the

date of this document. A discussion of various factors that could cause

InCard’s actual results to differ materially

from those expressed in such forward-looking statements is included in

InCard’s filings with the Securities and Exchange Commission, including

its Annual Report on Form 10-KSB, dated April 1, 2008.

INNOVATIVE CARD TECHNOLOGIES, INC.
Income Statement
		Three months ended				Three months ended				Six months ended				Six months ended
		June 30,				June 30,				June 30,				June 30,
		2008				2007				2008				2007
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Revenues		$	800,209			$	1,089			$	1,017,425			$	2,509
Cost of Goods Sold			859,875				395,396				1,070,209				395,396
Gross Margin			(59,666	)			(394,307	)			(52,784	)			(392,887	)
Operating expenses
Administrative			1,656,715				1,832,454				3,046,646				3,344,329
Consulting fees			134,427				115,739				254,525				231,631
Professional fees			201,192				203,695				449,223				567,218
Research and development			118,539				173,081				298,356				469,410
Total operating expenses			2,110,873				2,324,969				4,048,750				4,612,588
Loss from operations			(2,170,539	)			(2,719,276	)			(4,101,534	)			(5,005,475	)
Other income (expense)
Change in fair value of warrant liability			1,778,099								1,903,760
Interest income			11,703				63,152				20,776				142,692
Interest expense			(419,978	)			(100	)			(585,359	)			(248	)
Total other income (expense)			1,369,824				63,052				1,339,177				142,444
Loss before provision for income taxes			(800,715	)			(2,656,224	)			(2,762,357	)			(4,863,031	)
Provision for income taxes			0				0				(800	)			0
Net loss		$	(800,715	)		$	(2,656,224	)		$	(2,763,157	)		$	(4,863,031	)
Basic and diluted loss per share		$	(0.03	)		$	(0.09	)		$	(0.10	)		$	(0.17	)
Basic and diluted weighted-average
common shares outstanding			28,486,411				28,420,616				28,459,763				28,415,133

INNOVATIVE CARD TECHNOLOGIES, INC.
Balance sheet
		June 30,			December 31,
		2008			2007
		(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	1,680,060		$	339,600
Accounts receivable			824,128		13,077
Prepaids and other current assets			341,314		54,127
Deposits on raw materials held for production			869,052		605,662
Raw materials held for production			1,365,254		1,315,960
Work in progress inventory		1,755,182			886,259
Total current assets		6,834,990			3,214,685
Property and equipment, net			164,939		193,185
Deferred debt issuance cost			500,420		0
Deposits			96,860		177,747
Intangible assets, net		1,762,555			2,075,953
Total assets		$	9,359,764		$	5,661,570
LIABILITIES & STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses		$	1,883,228		$	3,660,044
Accounts payable – related parties			595,365		657,254
Innovative Card Technologies, Inc. Stephanie Edwards, Marketing Manager 310-312-0700, [email protected] or Susan Roush, Public Relations 818-222-8330, [email protected] or Jose Castaneda, Investor Relations 720-733-0052, [email protected] Major Newsire & Press Release Distribution with Basic Starting at only $19 and Complete OTCBB / Financial Distribution only $89 Get Unlimited Organic Website Traffic to your Website  TheNFG.com now offers Organic Lead Generation & Traffic Solutions