UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549





FORM
      10-QSB





(Mark
      One)





x
            Quarterly
                report under Section 13 or 15(d) of the Securities Exchange Act of
                1934  For the quarterly period ended June
              30, 2006




o
            Transition
                report under Section 13 or 15(d) of the Exchange
                Act  For the transition period from _____________
              to _____________


Commission
      File Number 000-51259





Israel
      Technology Acquisition Corp.


(Exact
      Name of Small Business Issuer as Specified in Its Charter)




Delaware
            
            20-2374143(State
                or other Jurisdiction of
              Incorporation
                or Organization)
            
            (I.R.S.
                Employer
              Identification
                No.)




7
                Gush Etzion, 3rdFloor, Givaat Shmuel, Israel 54030(Address
                of Principal Executive Office)








972-3-5325918


(Issuer’s
      Telephone Number, Including Area Code)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes ý No  ̈





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes ý No  ̈





As
      of
      August 10, 2006, 7,818,000 shares of common stock, par value $.0001 per share,
      were issued and outstanding.





Transitional
      Small Business Disclosure Format (check one):  Yes  ̈ No ý







PagePart
                  I: Financial Information:Item
                  1 - Financial Statements (Unaudited):Condensed
                  Balance Sheet
              3Condensed
                  Statements of Operations
              4Condensed
                  Statements of Stockholders’ Equity
              5Condensed
                  Statements of Cash Flows
              6Notes
                  to Condensed Financial Statements
              7Item
                  2 - Management’s Discussion and Analysis or Plan of
                  Operation
              11Item
                  3 - Controls and Procedures
              13Part
                  II. Other InformationItem
                  2 - Unregistered Sales of Equity Securities and Use of
                  Proceeds
              14Item
                  6 - Exhibits
              14Signatures
              15






2


**ISRAEL
      TECHNOLOGY ACQUISITION CORP.**


**(A
      DEVELOPMENT STAGE ENTERPRISE)**


**CONDENSED
      BALANCE SHEET**




**June
                30,****2006****Unaudited****ASSETS**CURRENT
                ASSETSCash
                and cash equivalents
            
            $
            382,656Cash
                held in Trust Fund
            
            
            34,087,121Total
                current assets
            
            $
            34,469,777**LIABILITIES
                AND STOCKHOLDERS' EQUITY**CURRENT
                LIABILITIESAccrued
                expenses
            
            $
            29,726Total
                liabilities
            
            
            29,726Common
                stock , subject to possible conversion,1,262,968
                shares at conversion value
            
            
            6,814,015STOCKHOLDERS'
                EQUITYShare
                capital:Preferred
                Stock, $0.0001 par value -Authorized:
                1,000,000 shares; none issued
              Common
                stock, $0.0001 par value-Authorized
                30,000,000 shares, issued and outstanding: 7,818,000
                shares(less
                1,262,968 subject to possible conversion )
            
            
            656Additional
                paid-in capital
            
            
            27,405,347Accumulated
                earnings during development stage
            
            
            220,033Total
                stockholders' equity
            
            
            27,626,036Total
                liabilities and stockholders' equity
            
            $
            34,469,777




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





3




**ISRAEL
      TECHNOLOGY ACQUISITION CORP.**


**(A
      DEVELOPMENT STAGE ENERPRISE)**


**CONDENSED
      STATEMENT OF OPERATIONS**




**Three
                months ended**
              **June
                30,**
            
            **Three
                months ended**
              **June
                30,****2006**
            
            **2005****Unaudited**
            
            **Unaudited**General
                and administrative expenses
            
            $
            153,211
            
            $
            1,500Operating
                loss
            
            
            (153,211
            )
            
            (1,500
            )Financial
                income, net
            
            
            223,380
            
            
            --Net
                income ( loss )
            
            $
            70,169
            
            $
            (1,500
            )Basic
                and diluted net income ( loss ) per share
            
            $
            0.011
            
            $
            (0.00
            )Weighted
                average number of Commonshares
                used in computing basic and dilutedNet
                income per share
            
            
            6,555,032
            
            
            1,500,000





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








4


**ISRAEL
      TECHNOLOGY ACQUISITION CORP.**


**(A
      DEVELOPMENT STAGE ENTERPRISE)**


**STATEMENT
      OF STOCKHOLDERS’ EQUITY**





**Accumulated****earnings****Additional**
            
            **during
                the**
            
            **Total****Common
                Stock**
            
            **paid-in**
            
            **development**
            
            **stockholders'****Shares
                (1)**
            
            **Amount**
            
            **capital**
            
            **stage**
            
            **equity**Common
                shares issued February 22, 2005 at $0.0167
            
            
            1,500,000
            
            $
            150
            
            $
            24,850
            
            $
            -
            
            $
            25,000Sale
                of 6,000,000 units , net ofunderwriters’
                discount and offeringexpenses
                (include 1,199,400 sharessubject
                to possible conversion )
            
            
            6,000,000
            
            
            600
            
            
            32,238,542
            
            
            -
            
            
            32,239,142Proceeds
                  from issuance of optioncompensation
            
            
            -
            
            
            -
            
            
            100
            
            
            -
            
            
            100Allotment
                of 318,000 units , net ofunderwriters’
                discount and offeringexpenses
            
            
            318,000
            
            
            32
            
            
            1,719,505
            
            
            -
            
            
            1,719,537Proceeds
                subject to possible
                conversionof
1,262,968
                  shares
            
            
            (1,262,968
            )
            
            (126
            )
            
            (6,587,650
            )
            
            -
            
            
            (6,587,776
            )Net
                income
            
            
            -
            
            
            -
            
            
            -
            
            
            184,518
            
            
            184,518Balance
                as of December 31, 2005
            
            
            6,555,032
            
            
            656
            
            
            27,395,347
            
            
            184,518
            
            $
            27,580,521Reimbursement
                of issuance costs
            
            
            
            
            
            
            
            
            10,000
            
            
            
            
            
            10,000Net
                income
            
            
            
            
            
            
            
            
            
            
            
            35,515
            
            
            35,515Balance
                as of June 30, 2006 (Unaudited)
            
            
            6,555,032
            
            
            656
                $
            
            $
            27,405,347
            
            $
            220,033
            
            $
            27,626,036


(1)
              Share
                  amounts have been restated to reflect a stock dividend of one share
                  of
                  common stock for each outstanding share of common stock affected
                  on April
                  14, 2005.


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





5


**ISRAEL
      TECHNOLOGY ACQUISITION CORP.**


**(A
      DEVELOPMENT STAGE ENTERPRISE)**


**CONDENSED
      STATEMENTS OF CASH FLOWS**




**Three
                months ended**
              **June
                30,**
            
            **Three
                months ended**
              **June
                30,****2006**
            
            **2005****Unaudited**
            
            **Unaudited**Cash
                flows from operating activities:Net
                (loss) income
            
            $
            70,169
            
            
            (1,500
            )Decrease
                in other accountsreceivable
                and prepaid expenses
            
            
            15,000
            
            
            --Increase
                (decrease) in accrued expenses
            
            
            (94,764
            )
            
            25,202Accumulated
                interest on cash held in trust
            
            
            (219,429
            )
            
            --Net
                cash provided by (used in) operating activities
            
            
            (229,024
            )
            
            23,702Cash
                flows from investing activities:Decrease
                long term deposit
            
            
            --
            
            
            --Net
                cash used in investing activities
            
            
            --
            
            
            --Cash
                flows from financing activities:Proceeds
                from notes payable, stockholders
            
            
            --
            
            
            13,000Reimbursement
                of issuance costs
            
            
            10,000
            
            
            --Payment
                of deferred offering costs
            
            
            --
            
            
            (105,130
            )Net
                cash provided by (used in) financing activities
            
            
            10,000
            
            
            (92,130
            )Net
                change in cash and cash equivalents
            
            
            (219,024
            )
            
            (68,428
            )Cash
                and cash equivalents at the beginningof
                the period
            
            
            601,680
            
            
            70,000Cash
                and cash equivalents at the endof
                the period
            
            $
            382,656
            
            
            1,572





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


6





**1.**
            **BASIS
                OF PRESENTATION**





The
      accompanying condensed unaudited interim consolidated financial statements
      have
      been prepared by Israel Technology Acquisition Corp. (the "Company") in
      accordance with accounting principles generally accepted in the United States
      of
      America for interim financial information and the instructions to Form 10-QSB
      and Article 10 of Regulation S-X. These financial statements reflect all
      adjustments, consisting of normal recurring adjustments and accruals, which
      are,
      in the opinion of management, necessary for a fair presentation of the financial
      position of the Company as of June 30, 2006 and the results of operations and
      cash flows for the interim periods indicated in conformity with generally
      accepted accounting principles applicable to interim periods. Accordingly,
      certain information and footnote disclosures normally included in annual
      financial statements prepared in accordance with generally accepted accounting
      principles have been condensed or omitted. These financial statements should
      be
      read in conjunction with the audited financial statements and notes thereto
      of
      the Company for the year ended December 31, 2005 that are included in the
      Company’s Form 10-KSB filed with the Securities and Exchange Commission on March
      30, 2006 (the "2005 10-KSB"). The results of operations presented are not
      necessarily indicative of the results to be expected for future quarters or
      for
      the year ending December 31, 2006.




**2.**
            **ORGANIZATION
                AND BUSINESS OPERATIONS**





The
      Company was incorporated on February 22, 2005 as a blank check company whose
      objective is to acquire an operating business that has manufacturing operations
      or research and development facilities located in Israel.





The
      Company’s ability to commence operations was contingent upon obtaining adequate
      financial resources through a proposed public offering (“Offering”), which was
      consummated on July 19, 2005 and is discussed in Note 6. The Company’s
      management has broad discretion with respect to the specific application of
      the
      net proceeds of this Offering, although substantially all of the net proceeds
      of
      this Offering are intended to be generally applied toward consummating a
      business combination with an operating business that has manufacturing
      operations or research and development facilities located in Israel (“Business
      Combination”). An aggregate of $32,955,360, including over allotment options,
      has been deposited in an interest-bearing trust account (“Trust Fund”) until the
      earlier of (i) the consummation of a Business Combination or (ii) liquidation
      of
      the Company. Under the agreement governing the Trust Fund, funds will only
      be
      invested in only be invested in United States “government securities” within the
      meaning of Section 2(a)(16) of the Investment Company Act of 1940 with a
      maturity of 180 days or less, or in money market funds meeting certain
      conditions under Rule 2a-7 promulgated under the Investment Company Act of
      1940.
      The remaining net proceeds (not held in the Trust Fund) may be used to pay
      for
      business, legal, and accounting due diligence on prospective acquisitions and
      continuing general and administrative expenses.





7


The
      Company has signed a definitive agreement for the acquisition of a target
      business (see Note 6) and will submit such transaction for stockholder approval.
      In the event that stockholders owning 20% or more of the shares sold in the
      Offering vote against the Business Combination and exercise their conversion
      rights described below, the Business Combination will not be consummated. All
      of
      the Company’s stockholders prior to the Offering, including all of the officers
      and directors of the Company (“Initial Shareholders”), have agreed to vote their
      1,500,000 founding shares of common stock in accordance with the vote of the
      majority in interest of all other stockholders of the Company (“Public
      Stockholders”) with respect to any Business Combination. After consummation of a
      Business Combination, these voting safeguards will no longer be
      applicable.





With
      respect to a Business Combination which is approved and consummated, any Public
      Stockholder who voted against the Business Combination may demand that the
      Company convert his or her shares. The per share conversion price will equal
      the
      amount in the Trust Fund as of two days prior to the consummation of the
      proposed Business Combination divided by the number of shares of common stock
      held by Public Stockholders at the consummation of the Offering. Accordingly,
      Public Stockholders holding approximately 19.99% of the aggregate number of
      shares owned by all Public Stockholders may seek conversion of their shares
      in
      the event of Business Combination. Such Public Stockholders are entitled to
      receive their per share interest in the Trust Fund computed without regard
      to
      the shares held by the Initial Shareholders.





The
      Company’s Amended and Restated Certificate of Incorporation provides for
      mandatory liquidation of the Company in the event that the Company does not
      consummate a Business Combination within 18 months from the date of the
      consummation of the Offering, or 24 months from the consummation of the
      Offering. In the event of liquidation, it is likely that the per share value
      of
      the residual assets remaining available for distribution (including Trust Fund
      assets) will be less than the initial public offering price per share in the
      Offering (assuming no value is attributed to the Warrants contained in the
      Units
      sold in the Offering discussed in Note 6).





**2.**
            **COMMITMENTS**





The
      Company presently occupies office space provided by an affiliate of an Initial
      Stockholder. Such affiliate has agreed that, until the acquisition of a target
      business by the Company, it will make such office space, as well as certain
      office and secretarial services, available to the Company, as may be required
      by
      the Company from time to time. The Company has agreed to pay such affiliate
      $7,500 per month for such services commencing on the effective date of the
      offering.





Pursuant
      to letter agreements dated March 9, 2005 with the Company and EarlyBirdCapital,
      Inc., the representative of the underwriters in the Offering (“Representative”),
      the Initial Stockholders have waived their right to receive distributions with
      respect to their founding shares upon the Company’s liquidation.




In
      accordance with agreements between the Initial Stockholders and the
      Representative, the Initial Stockholders collectively purchased 1,300,000
      Warrants in the public marketplace at an average price of $0.568 per
      Warrant.





8


The
      Initial Stockholders will be entitled to registration rights with respect to
      their founding shares pursuant to an agreement dated July 12, 2005. The holders
      of the majority of these shares are entitled to make up to two demands that
      the
      Company register these shares at any time commencing three months prior to
      the
      third anniversary of the effective date of the Offering. In addition, the
      Initial Stockholders have certain “piggy-back” registration rights on
      registration statements filed subsequent to the third anniversary of the
      effective date of the
      Offering.





**3.**
            **NOTES
                PAYABLE, STOCKHOLDER**





The
      Company issued an aggregate of $83,000 unsecured, non-interest bearing,
      promissory notes to the Initial Stockholders. The notes were payable on the
      consummation of the Offering. Accordingly, such notes were repaid in August
      2005
      out of the proceeds of the Offering.





**4.**
            **COMMON
                STOCK**





In
      February 2005, the Company issued 750,000 shares of common stock to its
      directors for $25,000 in cash, at a purchase price of approximately $0.033
      per
      share. Effective April 14, 2005, the Company’s Board of Directors authorized a
      stock dividend of one share of common stock for each outstanding share of common
      stock, effectively lowering the purchase price to $0.0167 per share.
      Additionally, on  April
      14,
      2005, the Company’s Board of Directors authorized an amendment to the Company’s
      Amended and Restated Certificate of Incorporation to increase the number of
      authorized shares of common stock to 30,000,000. All references in the
      accompanying financial statements to the number of shares of stock have been
      retroactively restated to reflect these transactions.





At
      June
      30, 2006, 12,900,000 shares of common stock were reserved for issuance upon
      exercise of redeemable warrants and underwriters’ unit purchase
      option.





**5.**
            **INITIAL
                PUBLIC OFFERING**





On
      July
      19, 2005, the Company sold 6,000,000 units (“Units”) in the Offering. On August
      5, 2005, the Company sold an additional 318,000 Units pursuant to the
      over-allotment option. Each Unit was sold at an offering price of $6.00 per
      Unit
      generated total gross proceeds of $37,908,000. Each Unit consists of one share
      of the Company’s common stock, $.0001 par value, and two Redeemable Common Stock
      Purchase Warrants (“Warrants”). Each Warrant will entitle the holder to purchase
      from the Company one share of common stock at an exercise price of $5.00
      commencing the later of the completion of a Business Combination with a target
      business or one year from the effective date of the Offering and expiring five
      years from the date of the prospectus. The Warrants will be redeemable, upon
      prior written consent of the Representative, at a price of $.01 per Warrant
      upon
      30 days’ notice after the Warrants become exercisable, on in the event that the
      last sale price of the common stock is at least $8.50 per share for any 20
      trading days within a 30 trading day period ending on the third day prior to
      the
      date on which notice of redemption is given.





9


In
      connection with this Offering, the Company paid the underwriters an underwriting
      discount of 8% of the gross proceeds of the Offering and a non-accountable
      expense allowance of 1% of the gross proceeds of the Initial Offering. The
      Company also issued an option, for $100, to the Representative to purchase
      300,000 Units at an exercise price of $7.50 per Unit. The Warrants underlying
      such Units are exercisable at $6.25 per share. The company accounted for the
      fair value of the option, inclusive of the receipt of the $100 cash payment,
      as
      an expense of the public offering resulting in a charge directly to
      stockholders’ equity. The
      company estimated that the fair value of this option is approximately $660,000
      ($2.20 per unit) using a Black- Scholes option - pricing model. The fair value
      of this option granted to the Representative is estimated as of the data of
      grant using the following assumptions: (1) expected volatility of 44.5%, (2)
      risk- free interest rate of 3.8% and (3) expected life of 5 years **.** The
      option may be exercised for cash or on a “cashless” basis at the holder’s
      option, such that the holder may use the appreciated value of the option (the
      difference between the exercise prices of the option and the underlying warrants
      and the market price of the units and underlying securities) to exercise the
      option without the payment of any cash.





**6.**
            **PROPOSED
                BUSINESS COMBINATION**





On
      February 28, 2006, the Company entered into an Agreement and Plan of Merger
      (“Merger Agreement”) with IXI Mobile, Inc. (“IXI”). A wholly owned subsidiary of
      the Company, formed to effectuate the merger by merging with and into IXI,
      is
      also a party to the Merger Agreement. As a result of the merger, IXI will be
      the
      surviving corporation and will become a wholly owned subsidiary of the Company.
      Upon consummation of the merger, the Company will change its name to IXI Mobile,
      Inc. and IXI will change its name to IXI Mobile (USA), Inc. IXI is a privately
      owned company founded in 2000 that delivers devices and services designed to
      improve mobile communications and increase mobile data usage. Its OgoTM devices
      are designed to deliver popular messaging applications, such as instant
      messaging, email, news, and SMS on optimized devices, increasing data usage
      and
      enhancing the mobile experience. IXI markets its solutions to mobile operators
      and Internet service providers worldwide.





Pursuant
      to the Merger Agreement, immediately following the merger, the holders of equity
      interests of IXI (including holders of employee options and warrants to purchase
      IXI common stock) will own or have the right to acquire approximately 7.8
      million shares of the Company’s common stock. As further consideration, the
      holders of equity interests of IXI will receive or have the right to acquire
      up
      to an additional 10.0 million shares of the Company’s common stock based on the
      combined company attaining various targets described in the Merger
      Agreement.








10


**ITEM
      2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**





The
      following discussion should be read in conjunction with our Condensed Financial
      Statements and footnotes thereto contained in this report.





**Forward
      Looking Statements**





All
      statements other than statements of historical fact included in this Form 10-QSB
      including, without limitation, statements under “Management’s Discussion and
      Analysis or Plan of Operation” regarding our financial position, business
      strategy and the plans and objectives of management for future operations,
      are
      forward looking statements. When used in this Form 10-QSB, words such as
“anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions,
      as they relate to us or our management, identify forward looking statements.
      Such forward looking statements are based on the beliefs of management, as
      well
      as assumptions made by, and information currently available to, our management.
      Actual results could differ materially from those contemplated by the forward
      looking statements as a result of certain factors detailed in our filings with
      the SEC. All subsequent written and oral forward looking statements attributable
      to us or persons acting on our behalf are qualified in their entirety by this
      paragraph.





**Overview**





We
      were
      formed on February 22, 2005, to serve as a vehicle to effect a merger, capital
      stock exchange, asset acquisition or other similar business combination with an
      operating business that has manufacturing operations or research and development
      facilities located in Israel . We
      intend
      to utilize cash derived from the proceeds of our recently completed public
      offering, our capital stock, debt or a combination of cash, capital stock and
      debt, in effecting a business combination.





**Recent
      Development**





On
      February 28, 2006, we entered into an Agreement and Plan of Merger with IXI
      Mobile, Inc. (“IXI”). A wholly owned subsidiary of ours, formed to effectuate
      the merger by merging with and into IXI, is also a party to the Merger
      Agreement. As a result of the merger, IXI will be the surviving corporation
      and
      will become a wholly owned subsidiary of ours. Upon consummation of the merger,
      we will change our name to IXI Mobile, Inc. and IXI will change its name to
      IXI
      Mobile (USA), Inc. IXI is a privately owned company founded in 2000 that
      delivers devices and services designed to improve mobile communications and
      increase mobile data usage. Its OgoTM devices are designed to deliver popular
      messaging applications, such as instant messaging, email, news, and SMS on
      optimized devices, increasing data usage and enhancing the mobile experience.
      IXI markets its solutions to mobile operators and Internet service providers
      worldwide.




Pursuant
      to the merger agreement, immediately following the merger, the holders of equity
      interests of IXI (including holders of employee options and warrants to purchase
      IXI common stock) will own or have the right to acquire approximately 7.8
      million shares of our common stock. Of this amount, approximately 1.4 million
      shares will be available for issuance to IXI’s senior management and employees
      under IXI’s Employee Stock Option Plan. As further consideration, the holders of
      equity interests of IXI will receive or have the right to acquire up to an
      additional 10.0 million shares of our common stock based on attaining various
      targets described in the agreement.





Upon
      consummation of the merger, our board of directors will be increased to seven
      members, of whom five have been designated in the Merger Agreement and two
      will
      be designated by us prior to the closing, subject to the reasonable approval
      of
      IXI. All seven designees will be presented for election by our stockholders
      at
      the meeting called to approve the merger. In connection with the merger, we
      will
      seek approval of an amendment to our certificate of incorporation removing
      the
      board classification requirement from our certificate and the new board will
      not
      be classified into different classes, as presently required under our
      certificate of incorporation.




11


For
      a
      more complete discussion of our proposed business combination, including the
      risk that are applicable to us with respect to our acquisition of IXI, see
      our
      Current Report on Form 8-K dated February 28, 2006 and filed with the SEC on
      March 1, 2006, and our Preliminary Proxy Statement for our Special Meeting
      of
      Stockholders filed with the SEC on July 28, 2006.




**Results
      of Operations**




For
      the
      three months ended June 30, 2006, we had a net income of $70,169, attributable
      to G&A expenses of $153,211 offset by financial income of
      $223,380.




**Financial
      Condition and Liquidity**




We
      consummated our initial public offering on July 19, 2005. On August 5, 2005
      and
      August 25, 2005, we consummated the closing of an additional 300,000 units
      and
      18,000 units, respectively, that were subject to the over-allotment option.
      Gross proceeds from our initial public offering, including the over-allotment
      option, were $37,908,000. We paid a total of $3,392,640 in underwriting
      discounts and commissions, and approximately $550,000 was or will be paid for
      costs and expenses related to the offering. After deducting the underwriting
      discounts and commissions and the offering expenses, the total net proceeds
      to
      us from the offering were approximately $33,965,000, of which $32,955,360 was
      deposited into the trust account (or approximately $5.22 per share sold in
      the
      offering, including the over-allotment option ).
      The
      remaining proceeds are available to be used by us to provide for business,
      legal
      and accounting due diligence on prospective acquisitions and continuing general
      and administrative expenses. We will use substantially all of the net proceeds
      of this offering to acquire a target business, including identifying and
      evaluating prospective acquisition candidates, selecting the target business,
      and structuring, negotiating and consummating the business combination. To
      the
      extent that our capital stock is used in whole or in part as consideration
      to
      effect a business combination, the proceeds held in the trust account as well
      as
      any other net proceeds not expended will be used to finance the operations
      of
      the target business. We believe we will have sufficient available funds outside
      of the trust fund to operate through July 19, 2007, assuming that a business
      combination is not consummated during that time. From
      July
      19, 2005 through July 19, 2007, we anticipate approximately $180,000 for the
      administrative fee payable to A.F. Services Ltd.  ($7,500
      per month for two years), $150,000 of expenses for legal, accounting and other
      expenses attendant to the due diligence investigations, structuring and
      negotiating of a business combination, $50,000 for expenses for the due
      diligence and investigation of a target business, $40,000 of expenses in legal
      and accounting fees relating to our SEC reporting obligations and $590,000
      for
      general working capital that will be used for miscellaneous expenses and
      reserves, including approximately $120,000 for director and officer liability
      insurance premiums. We
      do not
      believe we will need to raise additional funds following this offering in order
      to meet the expenditures required for operating our business. However, we may
      need to raise additional funds through a private offering of debt or equity
      securities if such funds are required to consummate a business combination
      that
      is presented to us. We would only consummate such a financing simultaneously
      with the consummation of a business combination.




Commencing
      on July 12, 2005 and ending upon the acquisition of a target business, we began
      incurring a fee from A.F. Services Ltd., an affiliate of Israel Frieder, our
      chairman of the board and chief executive officer, of $7,500 per month for
      providing us with office space and certain general and administrative services. In
      addition, in February and May 2005, Israel Frieder, Glen Shear, Dael Schnider
      and Victor Halpert advanced an aggregate of $83,000 to us for payment on our
      behalf of offering expenses. These
      loans were repaid following our initial public offering from the proceeds of
      the
      offering.





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In
      connection with our initial public offering, we issued an option, for $100,
      to
      EarlyBirdCapital, Inc., the representative of the underwriters, to purchase
      300,000 units at an exercise price of $7.50 per unit, with each unit consisting
      of one share of common stock and two warrants. The warrants underlying such
      units are exercisable at $6.25 per share. We accounted for the fair value of
      the
      option, inclusive of the receipt of the $100 cash payment, as an expense of
      the
      public offering resulting in a charge directly to stockholders’ equity. We
      estimated that the fair value of this option is approximately $660,000 ($2.20
      per unit) using a Black- Scholes option - pricing model. The fair value of
      this
      option granted to EarlyBirdCapital was estimated as of the date of grant using
      the following assumptions: (1) expected volatility of 44.5%, (2) risk- free
      interest rate of 3.8% and (3) expected life of 5 years. The option may be
      exercised for cash or on a “cashless” basis at the holder’s option, such that
      the holder may use the appreciated value of the option (the difference between
      the exercise prices of the option and the underlying warrants and the market
      price of the units and underlying securities) to exercise the option without
      the
      payment of any cash.





**ITEM
      3. CONTROLS AND PROCEDURES.**





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in company reports filed or
      submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is
      recorded, processed, summarized and reported, within the time periods specified
      in the Securities and Exchange Commission’s rules and forms. Disclosure controls
      and procedures include, without limitation, controls and procedures designed
      to
      ensure that information required to be disclosed in company reports filed or
      submitted under the Exchange Act is accumulated and communicated to management,
      including our chief executive officer and treasurer, as appropriate to allow
      timely decisions regarding required disclosure.








As
      required by Rules 13a-15 and 15d-15 under the Exchange Act, our chief executive
      officer and chief financial officer carried out an evaluation of the
      effectiveness of the design and operation of our disclosure controls and
      procedures as of June 30, 2006. Based upon their evaluation, they concluded
      that
      our disclosure controls and procedures were effective.








Our
      internal control over financial reporting is a process designed by, or under
      the
      supervision of, our chief executive officer and chief financial officer and
      effected by our board of directors, management and other personnel, to provide
      reasonable assurance regarding the reliability of our financial reporting and
      the preparation of our financial statements for external purposes in accordance
      with generally accepted accounting principles. Internal control over financial
      reporting includes policies and procedures that pertain to the maintenance
      of
      records that in reasonable detail accurately and fairly reflect the transactions
      and dispositions of our assets; provide reasonable assurance that transactions
      are recorded as necessary to permit preparation of our financial statements
      in
      accordance with generally accepted accounting principles, and that our receipts
      and expenditures are being made only in accordance with the authorization of
      our
      board of directors and management; and provide reasonable assurance regarding
      prevention or timely detection of unauthorized acquisition, use or disposition
      of our assets that could have a material effect on our financial
      statements.




During
      the most recently completed fiscal quarter, there has been no change in our
      internal control over financial reporting that has materially affected, or
      is
      reasonably likely to materially affect, our internal control over financial
      reporting.





13


**PART
      II.**





**OTHER
      INFORMATION**





**ITEM
      2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**








On
      July
      19, 2005, we consummated our initial public offering of 6,000,000 Units, with
      each unit consisting of one share of our common stock and two warrants, each
      to
      purchase one share of our common stock at an exercise price of $5.00 per share.
      On August 5, 2005 and August 25, 2005, we consummated the closing of an
      additional 300,000 units and 18,000 units, respectively, that were subject
      to
      the over-allotment option. The units were sold at an offering price of $6.00
      per
      unit, generating total gross proceeds of $37,908,000. EarlyBirdCapital, Inc.
      acted as lead underwriter. The securities sold in the offering were registered
      under the Securities Act of 1933 on a registration statement on Form S-1 (No.
      333-123331). The Securities and Exchange Commission declared the registration
      statement effective on July 12, 2005.





We
      paid
      approximately $3,393,000 in underwriting discounts and commissions, and
      approximately $550,000 was or will be paid for costs and expenses related to
      the
      offering.





After
      deducting the underwriting discounts and commissions and the offering expenses,
      the total net proceeds to us from the offering were approximately $33,965,000,
      of which a total of $32,955,360 was deposited into the trust account (or
      approximately $5.22 per share sold in the offering, including the over-allotment
      option) and the remaining proceeds are available to be used to provide for
      business, legal and accounting due diligence on prospective business
      combinations and continuing general and administrative expenses.





For
      a
      description of the use of the proceeds generated in our initial public offering,
      see Part I, Item 2 of this Form 10-QSB.








**ITEM
      6: EXHIBITS**





(a)  Exhibits:





31.1
      -
      Section 302 Certification by CEO





31.2
      -
      Section 302 Certification by CFO





32.1
      -
      Section 906 Certification by CEO





32.2
      -
      Section 906 Certification by CFO


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**SIGNATURES**





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




**ISRAEL
              TECHNOLOGY ACQUISITION CORP.**Dated:
              August 10, 2006
            By:
            /s/ Israel
              FriederIsrael
              FriederChairman
              of the Board and Chief Executive Officer


By:
            /s/ Glen
              ShearGlen
              ShearChief
              Financial Officer







15