**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**


___________________





**FORM
      10-QSB/A**


(Amendment
      No. 2)


**__________________**





(Mark
      One)


x QUARTERLY
      REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR
      THE
      QUARTERLY PERIOD ENDED MARCH 31, 2006





o TRANSITION
      REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR
      THE
      TRANSITION PERIOD FROM _____________ TO _____________.





**Commission
      File Number 000-50813**





**Sand
      Hill IT Security Acquisition Corp.**


**__________________**




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








**Delaware**      **20-0996152**


(State
      or
      other Jurisdiction of incorporation)    (I.R.S.
      Employer Identification No.)





**3000
      Sand Hill Road**


**Building
      1, Suite 240**


**Menlo
      Park, California**


(Address
      of Principal Executive Office)





**(650)
      926-7022**


(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
x
      No o





As
      of
      March 31, 2006, 5,110,000 **** shares
      of
      common stock, par value $.01 per share, were issued and
      outstanding.





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





Transitional
      Small Business Disclosure Format (check one):


Yes
o
      No x









Sand
      Hill
      IT Security Acquisition Corp., a Delaware corporation (the “Company”), hereby
      amends, as set forth herein, the Company’s Quarterly Report on Form 10-QSB for
      the period ended March 31, 2006 filed with the Securities and Exchange
      Commission on May 15, 2006, as amended on Form 10-QSB/A filed with the
      Securities and Exchange Commission on June 2, 2006 (collectively, the “Form
      10-QSB”). The item numbers and responses thereto are in accordance with the
      requirements of Form 10-QSB. All capitalized terms used and not otherwise
      defined herein shall have the meaning specified in the Form 10-QSB.


**Index**
              
              **Page
                  No.****Part
                  I. Condensed Financial Information**Item
                  1 -Financial Statements
              
              
              3Unaudited
                  Condensed Balance Sheets
              
              
              3Unaudited
                  Condensed Statements of Operations
              
              
              4Unaudited
                  Condensed Statements of Cash Flows
              
              
              5Notes
                  to Unaudited Condensed Financial Statements
              
              
              6Item
                  2 - Management’s Discussion and Analysis or Plan of
                  Operation
              
              
              10Item
                  3 - Controls and Procedures
              
              
              13**Part
                  II. Other Information**Item
                  6 - Exhibits and Reports on Form 8-K
              
              
              14Signatures
              
              
              15Exhibit
                  Index
              
              
              16









**PART
      I. CONDENSED FINANCIAL INFORMATION**





**Item
      1. Condensed Financial Statements**




**SAND
      HILL IT SECURITY ACQUISITION CORP.**


**(A
      Corporation in the Development Stage)**


**CONDENSED
      BALANCE SHEET**





**ASSETS**
            
            **Restated**
              **March
                31, 2006**
              **(Unaudited**)******Current
                assets:**Cash
            
            $
            658Treasury
                securities held in trust, at market
            
            
            21,952,760Prepaid
                expenses
            
            
            10,887**Total
                Assets**
            
            $
            21,964,305**LIABILITIES
                AND STOCKHOLDERS’ EQUITY****Current
                Liabilities:**Accounts
                payable and accrued expenses
            
            $
            299,521Advances
                from stockholders
            
            
            45,000Warrant
                liability
            
            $
            7,315,800**Total
                current liabilities**
            
            $
            7,660,321**Total
                Liabilities**
            
            $
            7,660,321Common
                stock subject to possible conversion(821,589
                shares at conversion value)
            
            $
            4,368,599**Stockholders’
                Equity:**Preferred
                stock, $0.01 par value
              Authorized
                5,000,000 shares; none issuedCommon
                stock, $0.01 par valueAuthorized
                50,000,000 sharesIssued
                and outstanding 5,110,000 shares
            
            
            42,884Additional
                paid-in capital
            
            
            12,332,121Deficit
                accumulated during the development stage
            
            
            (2,439,620
            )**Total
                Stockholders’ Equity**
            
            
            9,935,385**Total
                Liabilities and Stockholders’ Equity**
            
            $
            21,964,305




See
      accompanying notes to condensed financial
      statements.




3




**SAND
      HILL IT SECURITY ACQUISITION CORP.**


**(A
      Corporation in the Development Stage)**


**CONDENSED
      STATEMENTS OF OPERATIONS**


**Restated**
              **Three
                months ended**
              **March
                31, 2006 (Unaudited)**
            
            **Restated**
              **Three
                months ended**
              **March
                31, 2005 (Unaudited)**
            
            **Restated**
              **Period
                from**
              **April
                15, 2004 (inception) to March 31, 2006
                (Unaudited)**Professional
                Fees
            
            $
            (84,782
            )
            $
            (62,166
            )
            $
            (647,439
            )Rents,
                Fees and Taxes
            
            
            (22,500
            )
            
            (22,500
            )
            
            (253,733
            )D&O
                Insurance
            
            
            (30,542
            )
            
            (30,845
            )
            
            (205,314
            )Travel,
                Lodging & Meals
            
            
            (16,019
            )
            
            (20,144
            )
            
            (163,072
            )Other
            
            
            (16,892
            )
            
            (36,493
            )
            
            (199,971
            )Operating
                loss
            
            
            (170,735
            )
            
            (172,148
            )
            
            (1,469,529
            )Interest
                income
            
            
            222,217
            
            
            123,898
            
            
            1,002,709Warranty
                liability income (expense)
            
            
            (895,980
            )
            
            411,000
            
            
            (1,972,800
            )Net
                income (loss)
            
            $
            (844,498
            )
            $
            362,750
            
            $
            (2,439,620
            )Weighted
                Average Shares Outstanding-Basic
            
            
            5,110,000
            
            
            3,468,784
            
            
            4,518,884Net
                income (loss) Per Share-Basic
            
            $
            (0.17
            )
            $
            0.10
            
            $
            (0.54
            )Weighted
                Average Shares Outstanding-Dilutive
            
            
            5,110,000
            
            
            11,688,784
            
            
            4,518,884Net
                income (loss) Per Share-Diluted
            
            $
            (0.17
            )
            $
            0.00
            
            $
            (0.54
            )







*See
      accompanying notes to condensed financial statements.*


4


**SAND
      HILL IT SECURITY ACQUISITION CORP.**


**(A
      Corporation in the Development Stage)**


**CONDENSED
      STATEMENTS OF CASH FLOWS**




**Restated**
              **Three
                months ended**
              **March
                31, 2006**
              **(Unaudited)**
            
            
            **Restated**
              **Three
                months ended**
              **March
                31, 2005**
              **(Unaudited**)****
            
            
            **Restated**
              **Period
                from**
              **April
                15, 2004 (inception) to**
              **March
                31, 2006)**
              **(Unaudited**)****CASH
                FLOW FROM OPERATING ACTIVITIESNet
                income (loss)
            
            $
            (844,498
            )
            $
            362,750
            
            $
            (2,439,620
            )Compensation
                expense related to issuance of Advisory Board options
            
            
            7,341
            
            
            7,341
            
            
            39,152Changes
                in assets & liabilities:Accretion
                of treasury bill and mark to market gain
            
            
            (222,217
            )
            
            (119,782
            )
            
            (928,535
            )Prepaid
                expenses
            
            
            902
            
            
            30,844
            
            
            (10,887
            )Accounts
                payable and accrued expenses
            
            
            44,554
            
            
            44,498
            
            
            299,521Warranty
                liability expense (income)
            
            
            895,980
            
            
            (411,000
            )
            
            1,972,800Net
                cash used in operating activities
            
            
            (117,938
            )
            
            (85,349
            )
            
            1,067,569CASH
                FLOW FROM INVESTING ACTIVITIESPurchase
                of treasury bill in trust account
            
            
            -
            
            
            -
            
            
            (21,025,000
            )Net
                cash used in investing activities
            
            
            -
            
            
            -
            
            
            (21,025,000
            )CASH
                FLOW FROM FINANCING ACTIVITIESProceeds
                from sale of common stock to initial stockholders
            
            
            -
            
            
            -
            
            
            25,000Gross
                proceeds from public offering
            
            
            -
            
            
            -
            
            
            24,660,000Costs
                of public offering
            
            
            -
            
            
            -
            
            
            (2,636,773
            )Proceeds
                from stockholder loan
            
            
            45,000
            
            
            -
            
            
            85,000Repayment
                of stockholder loan
            
            
            -
            
            
            -
            
            
            (40,000
            )Net
                cash provided by financing activities
            
            
            45,000
            
            
            -
            
            
            22,093,227NET
                INCREASE (DECREASE) IN CASH
            
            
            (72,938
            )
            
            (85,349
            )
            
            658CASH
                AT BEGINNING OF PERIOD
            
            
            73,596
            
            
            783,133
            
            
            -CASH
                AT END OF PERIOD
            
            $
            658
            
            $
            697,784
            
            $
            658





See
      accompanying notes to condensed financial
      statements.




5




**SAND
      HILL IT SECURITY ACQUISITION CORP.**


**(A
      Corporation in the Development Stage)**


**NOTES
      TO CONDENSED FINANCIAL STATEMENTS**





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





The
      financial statements included herein as of and for the three months ended March
      31, 2006 and March 31, 2005, the period from inception (April 15, 2004) to
      March
      31, 2006, have been prepared by Sand Hill IT Security Acquisition Corp. (the
      “Company”) without audit pursuant to the rules and regulations of the United
      States Securities and Exchange Commission (“SEC”) and include the accounts of
      the Company and its subsidiary, Sand Hill Merger Corp. Accordingly, these
      statements reflect all adjustments (consisting only of normal recurring
      entries), which are, in the opinion of the Company, necessary for a fair
      presentation of the financial results for the interim periods. Certain
      information and notes normally included in financial statements prepared in
      accordance with accounting principles generally accepted in the United States
      of
      America have been condensed or omitted pursuant to such rules and regulations,
      although the Company believes that the disclosures are adequate to make the
      information presented not misleading. Operating results for the interim periods
      presented are not necessarily indicative of the results that may be expected
      for
      the full fiscal year.  These
      financial statements should be read in conjunction with the financial statements
      that were included in the Company’s Annual Report on Form 10-KSB for the year
      ended December 31, 2005.





**2.**  **ORGANIZATION,
      BUSINESS OPERATIONS**





Sand
      Hill
      IT Security Acquisition Corp. was incorporated in Delaware on April 15, 2004
      as
      a blank check company whose objective is to merge with or acquire an operating
      business in the IT security industry. The Company’s initial stockholders’
purchased 1,000,000 shares of common stock, $0.01 par value, for $25,000 on
      April 20, 2004.





The
      registration statement for the Company’s initial public offering (the
“Offering”) was declared effective on July 26, 2004. The Company consummated the
      Offering on July 30, 2004 and received proceeds, net of the underwriters’
discount of $22,022,462. Subsequently, the underwriters exercised their over
      allotment option and the Company received an additional $2,861,100 in proceeds,
      net of the underwriters’ discount. The Company’s management has broad discretion
      with respect to the specific application of the net proceeds of the Offering,
      although substantially all of the net proceeds of the Offering are intended
      to
      be generally applied toward consummating a merger with or acquisition of an
      operating business in the IT security industry (“Business Combination”). There
      is no assurance that the Company will be able to successfully affect a Business
      Combination. An amount equal to $20,961,000 was placed in an interest bearing
      trust account (the “Trust Fund”) until the earlier of (i) the consummation of
      its first Business Combination or (ii) liquidation of the Company. Under the
      agreement governing the Trust Fund, funds may only be invested in United States
      government securities with a maturity of 180 days or less. The remaining
      proceeds of the Offering may be used to pay for business, legal and accounting
      due diligence on prospective mergers or acquisitions and continuing general
      and
      administrative expenses.




6




The
      Company, after signing a definitive agreement for the merger with or acquisition
      of a target business, will submit such transaction for stockholder approval.
      In
      the event that stockholders owning 20% or more of the outstanding stock
      excluding, for this purpose, those persons who were stockholders immediately
      prior to the Offering, vote against the Business Combination and exercise their
      conversion rights, 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 (the “Initial Stockholders”), have agreed to vote their
      founding shares of common stock in accordance with the vote of the majority
      in
      interest of all other stockholders of the Company (the “Public Stockholders”)
      with respect to a Business Combination. The Business Combination will not be
      completed unless more than 50% of the Public Stockholders vote in favor of
      the
      transaction. After consummation of the Company’s first Business Combination,
      these voting safeguards will no longer apply.





With
      respect to the first Business Combination which is approved and consummated,
      any
      Public Stockholder who voted against the Business Combination may demand that
      the Company redeem his or her shares. The per share redemption price will equal
      the amount in the Trust Fund as of the record date for determination of
      stockholders entitled to vote on the 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 19.99% of the aggregate
      number of shares owned by all Public Stockholders may seek redemption of their
      shares in the event of a 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 Initial Stockholders.





The
      Company’s Certificate of Incorporation provides for the mandatory liquidation of
      the Company, without stockholder approval, in the event that the Company does
      not consummate a Business Combination within 18 months from the date of the
      consummation of the Offering (January 30, 2006), or 24 months from the
      consummation of the Offering (July 30, 2006) if certain extension criteria
      have been satisfied. 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 offered in the Offering as described in Note 3). On
      October 26, 2005, the Company entered into a definitive merger agreement
      (see Note 6).





**3.**  **PUBLIC
      OFFERING**





On
      July 30, 2004, the Company sold 3,600,000 units (“Units”) in a public
      offering, which included granting the underwriters’ an over-allotment option to
      purchase up to an additional 540,000 Units. Subsequently, the underwriters
      exercised their over-allotment option and purchased an additional 510,000 units.
      Each Unit consists of one share of the Company’s common stock, $0.01 par value,
      and two Redeemable common
      stock Purchase
      Warrants (“Warrants”). Each Warrant entitles the holder to purchase from the
      Company one share of common stock at an exercise price of $5.00 commencing
      on
      the later of the completion of a Business Combination or July 25, 2005 and
      expiring July 25, 2009. The Warrants are redeemable by the Company at a price
      of
      $0.01 per Warrant upon 30 days’ notice after the Warrants become exercisable,
      only 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 the redemption is given. In
      connection with the Offering, the Company issued an option for $100 to the
      underwriters’ to purchase 270,000 Units at an exercise price of $7.50 per Unit.
      The Units issuable upon exercise of this option are identical to those included
      in the Offering except that the exercise price of the Warrants included in
      the
      Units will be $6.65 per share.




7




Under
      EITF No. 00-19, *“Accounting
      for Derivative Financial Instruments Indexed to, and Potentially Settled in,
      a
      Company’s Own Stock”* (“EITF
      No. 00-19”), the fair value of the warrants issued as part of the Units have
      been reported as a liability. The warrant agreement provides for the Company
      to
      register the shares underlying the warrants and is silent as to the penalty
      to
      be incurred in the absence of the Company’s ability to deliver registered shares
      to the warrant holders upon warrant exercise. Under EITF No. 00-19, the Company
      is required to assume that the warrants could give rise to it ultimately having
      to net-cash settle the warrants, thereby necessitating the treatment of the
      warrants as a liability. Further, EITF No. 00-19 requires the Company to record
      the warrant liability at each reporting date at its then estimated fair value,
      with any changes being recorded through the Company’s statement of operations as
      other income/expense. The warrants will continue to be reported as a liability
      until such time that they are exercised, expire, or the Company is otherwise
      able to modify the registration rights agreement to remove the provisions which
      require this treatment. As a result, the Company could experience volatility
      in
      its net income due to changes that occur in the value of the warrant liability
      at each reporting date.





The
      fair
      value of the warrant liability in the accompanying balance sheet has been
      determined using the trading value of the warrants. The value assigned to the
      fair value of the warrant liability at July 30, 2004 (date of issuance), March
      31, 2005, and March 31, 2006 was $5,343,000, $4,932,000, and $7,315,800,
      respectively.





Amounts
      reported as warrant liability income or expense in the accompanying statement
      of
      operations resulting from the change in valuation of the warrant liability
      was
      income in the amount of $411,000 and expense in the amount of $895,980 for
      the
      three months ended March 31, 2005 and 2006 respectively.





The
      Company had previously issued financial statements which accounted for the
      warrants as stockholders’ equity. The accompanying financial statements have
      been restated to correct this error. The impact of the correction of this error
      in previously reported financial statements is as follows:




8




As
                of March 31, 2005
            
            As
                of March 31, 2006As
                Previously Reported
            
            
            As
                Restated
            
            
            As
                Previously Reported
            
            
            As
                RestatedTotal
                Assets
            
            $
            22,019,364
            
            $
            22,019,364
            
            $
            21,964,305
            
            $
            21,964,305Total
                Liabilities
            
            $
            60,270
            
            $
            4,992,270
            
            $
            344,521
            
            $
            7,660,321Common
                Stock Subject to Conversion
            
            $
            4,241,936
            
            $
            4,241,936
            
            $
            4,368,599
            
            $
            4,368,599Stockholders’
                Equity
            
            $
            17,717,158
            
            $
            12,785,158
            
            $
            17,251,185
            
            $
            9,935,385






Three
                Months Ended
              March
                31, 2005
            
            Three
                Months Ended
              March
                31, 2006As
                Previously Reported
            
            
            As
                Restated
            
            
            As
                Previously Reported
            
            
            As
                RestatedWarrant
                Liability Income (Expense)
            
            $
            --
            
            $
            411,000
            
            $
            --
            
            $
            (895,980
            )Net
                Income (Loss)
            
            $
            (48,250
            )
            $
            362,750
            
            $
            51,482
            
            $
            (844,498
            )Net
                Income (Loss) Per Share-Basic
            
            $
            (0.01
            )
            $
            0.10
            
            $
            0.01
            
            $
            (0.17
            )Net Income
                (Loss) Per Share-Diluted
            
            $
            (0.01
            )
            $
            0.00
            
            $
            0.01
            
            $
            (0.17
            )





**4.**  **TREASURY
      SECURITIES**





Treasury
      securities are classified as trading securities and are carried at fair value,
      with gains or losses resulting from changes in fair value recognized currently
      in earnings.





**5.**  **PROPOSED
      BUSINESS COMBINATION**





On
      October 26, 2005, the Company and its wholly-owned subsidiary Sand Hill
      Merger Corp., a Delaware corporation (“Merger Sub”), entered into a definitive
      Agreement and Plan of Merger (the “Merger Agreement”) with St. Bernard
      Software, Inc., a Delaware corporation (“St. Bernard”), pursuant to
      which Merger Sub will merge with and into St. Bernard in an all-stock
      transaction (the “Merger”). At the effective time of the Merger,
      St. Bernard will be the surviving corporation and become a wholly-owned
      subsidiary of the Company.





**6.**  **COMMITMENT**





The
      Company presently occupies office space provided by an Initial Stockholder
      and
      affiliate of the officers and directors of the Company. 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.




9




**7.**  **NOTES
      PAYABLE**





Sand
      Hill
      Security, LLC, an Initial Stockholder and affiliate of the officers and
      directors of the Company, entered into a revolving credit agreement with the
      Company in the amount of $60,000. Advances under the credit facility amounted
      to
      $40,000 as of July 30, 2004. The loan was repaid out of the net proceeds of
      the
      Offering. During the quarterly period ended March 31, 2006 certain affiliates
      of
      the Company advanced an aggregate of $45,000 to the Company to cover expenses
      related to the merger described in Note 6 above. The Broomfield Family Trust
      advanced $25,000 to the Company and Sand Hill Security, LLC advanced $20,000
      to
      the Company. The Company entered into unsecured promissory notes in connection
      with the loans. The loans accrue interest at a rate of ten percent per annum
      and
      are payable on
      the
      earlier of the consummation of the merger described in Note 6 above and July
      26,
      2006 .





**8.**  **COMMON
      STOCK**




At
      March
      31, 2006, 50,000,000 shares of $0.01 par value common stock were authorized
      and
      5,110,000 shares were outstanding.





**9.**  **PREFERRED
      STOCK**





The
      Company is authorized to issue 5,000,000 shares of preferred stock with such
      designations, voting and other rights and preferences as may be determined
      from
      time to time by the Board of Directors.





**10.**  **EARNINGS
      PER SHARE**





For
      the
      three months ended March 31, 2005 and 2006 and the period from April 15, 2004
      (inception) to March 31, 2006, the following table sets forth the number of
      dilutive shares that may be issued pursuant to warrants currently outstanding,
      which number was used in the per share calculations.




**Three
                Months Ended April 30,****2006**
            
            **2005**Warrants
            
            -
            
            8,220,000-
            
            8,220,000




**Item
      2. Management’s Discussion and Analysis or Plan of
      Operation**




10





The
      following discussion should be read in conjunction with the financial statements
      and footnotes thereto incorporated by reference in this report.





**Forward
      Looking Statements**




Certain
      statements contained in this interim report that are not historical facts,
      including, but not limited to, statements that can be identified by the use
      of
      forward-looking terminology such as “may,” “expect,” “anticipate,” “predict,”
“believe,” “plan,” “estimate” or “continue” or the negative thereof or other
      variations thereon or comparable terminology, are forward-looking statements
      within the meaning of the Private Securities Litigation Reform Act of 1995,
      and
      involve a number of risks and uncertainties. The actual results of the future
      events described in such forward-looking statements in this interim report
      could
      differ materially from those stated in such forward-looking statements due
      to
      various factors, including but not limited to, our being a development stage
      company with no operating history, our dependence on key personnel some of
      whom
      may join us following a business combination, our personnel allocating their
      time to other businesses and potentially having conflicts of interest with
      our
      business, our potentially being unable to obtain additional financing to
      complete a business combination, the ownership of our securities being
      concentrated, risks associated with the IT security industry and those other
      risks and uncertainties detailed in the Company’s filings with the Securities
      and Exchange Commission, including our Registration Statement on Form S-1 that
      was declared effective July 26, 2004 and the definitive Prospectus thereunder,
      our annual report on Form 10-KSB filed with the Securities and Exchange
      Commission on March 17, 2006, and the uncertainties set forth from time to
      time
      in the Company’s filings and other public statements. The following discussion
      should be read in conjunction with our Financial Statements and related Notes
      thereto included elsewhere in this report.





**Plan
      of Operation**





We
      were
      formed on April 15, 2004, to serve as a vehicle to effect a merger, capital
      stock exchange, asset acquisition or other similar business combination with
      an
      operating business in the IT security industry .
      We
      intend to utilize cash derived from the proceeds of our initial public offering
      (the “Offering”), our capital stock, debt or a combination of cash, capital
      stock and debt, in effecting a business combination. We consummated the Offering
      on July 30, 2004. Our activities to date have been comprised solely of
      organizational activities, preparing for and consummating the Offering, and
      efforts associated with identifying a target for a business
      combination.





The
      net
      proceeds from the Offering and the capital contributed by our Initial
      Stockholders amounted to approximately $22.02 million. As of March 31, 2006,
      we
      had cash of $658, and treasury securities in our trust account (at cost) of
      $21,530,847; a total of approximately $21.9 million. The difference between
      the
      sum of our initial capital plus the net proceeds of the Offering reduced by
      our
      cash and amount we placed in trust is approximately $140,000. Through
      March 31, 2006, we have used $1,067,569 of the net proceeds that were not
      deposited into the trust fund to pay general and administrative expenses. The
      net proceeds deposited into the trust fund remain on deposit in the trust fund
      and have earned $991,780 in interest and $10,929 on money market accounts
      through March 31, 2006.




11




For
      the
      three months ended March 31, 2006, we recorded interest income from the
      accretion in value of our trust account of $222,217. We incurred an operating
      loss of $170,735 for that same period. Our expenses consist primarily of
      professional fees, rents, fees and taxes, insurance, travel and other certain
      other expenses associated with being a public company.





Over
      the
      24-month period subsequent to the consummation of the Offering, the Company
      had
      anticipated approximately $250,000 of expenses for legal, accounting and other
      expenses related to the due diligence investigations, and structuring and
      negotiating of a business combination, $180,000 for the administrative fee
      payable to Sand Hill Security, LLC ($7,500 per month for two years), $100,000
      of
      expenses for the due diligence and investigation of a target business, $75,000
      of expenses in legal and accounting fees relating to our SEC reporting
      obligations and $475,000 for general working capital to be used for
      miscellaneous expenses and reserves, including approximately $180,000 for
      director and officer liability insurance premiums, inclusive of the amounts
      set
      out in the preceding paragraph. We do not believe that the Company has
      sufficient available cash resources outside of the trust fund to operate until
      the merger is consummated, without accruing for certain professional expenses,
      such as legal and accounting costs and, therefore, we may need to raise
      additional funds through a private offering of debt or equity securities if
      such
      funds are required to consummate the business combination with St. Bernard. **** Anticipating
      closure of the merger by the end of the second quarter of 2006, Sand Hill
      estimates total costs to consummation of approximately $15,000 for the
      administrative fee payable to Sand Hill Security LLC, $10,000 for accounting
      fees relating to quarterly SEC reporting obligations, $40,000 for legal costs
      related to the joint proxy statement/prospectus and registration statement
      on
      Form S-4, $25,000 in printing costs for the joint proxy
      statement/prospectus and registration statement on Form S-4, plus an
      additional $30,000 in travel costs, investor relations costs and general
      corporate working capital requirements. This is a total estimate of $120,000
      to
      operate until the consummation of a business combination. **** To the
      extent that these costs exceed amounts available outside the trust fund, trust
      fund assets will be used to fund the excess costs of the merger if the merger
      is
      completed and the trust fund assets are released to the Company.





We
      are
      obligated, commencing July 26, 2004, to pay to Sand Hill Security, LLC, an
      affiliate of our directors and executive officers, a monthly fee of $7,500
      for
      general and administrative services. In
      addition, in April 2004, Sand Hill Security, LLC advanced an aggregate of
      $40,000 to us, on a non-interest bearing basis, for payment of offering expenses
      on our behalf. This amount was repaid in August 2004 out of the proceeds of
      the
      Offering.  During
      the quarterly period ended March 31, 2006 certain affiliates of the Company
      advanced an aggregate of $45,000 to the Company to cover expenses related to
      the
      merger described below. The Broomfield Family Trust advanced $25,000 to the
      Company and Sand Hill Security, LLC advanced $20,000 to the Company. The Company
      entered into unsecured promissory notes in connection with the loans. The loans
      accrue interest at a rate of ten percent per annum and are payable on
      the
      earlier of the consummation of the merger of St. Bernard Software, Inc. and
      Sand
      Hill Merger Corp. and July 26, 2006 .





On
      October 26, 2005, the Company and its
      wholly-owned subsidiary Sand Hill Merger Corp., a Delaware corporation (“Merger
      Sub”) entered into a definitive Agreement and Plan of Merger (the “Merger
      Agreement”) with St. Bernard Software, Inc., a Delaware corporation
      (“St. Bernard”), pursuant to which Merger Sub will merge with and into
      St. Bernard in an all-stock transaction (the “Merger”). At the effective
      time of the Merger, St. Bernard will be the surviving corporation and
      become a wholly-owned subsidiary of the Company. On December 16, 2005, the
      Company filed a joint proxy statement/prospectus with the Securities and
      Exchange Commission relating to the Merger as part of a registration statement
      on Form S-4. The joint proxy statement/prospectus on Form S-4 was amended and
      refiled with the Securities and Exchange Commission on March 17, 2006 and April
      26, 2006.




12




**Item
      3. Controls and Procedures**





Under
      the
      supervision and with the participation of our management, including our chief
      executive officer and chief financial officer, we have evaluated the
      effectiveness of the design and operation of our disclosure controls and
      procedures as of March 31, 2006 (the “Evaluation Date”), and, based on their
      evaluation, our chief executive officer and chief financial officer have
      concluded that these controls and procedures were effective as of the Evaluation
      Date. However, in connection with the preparation of Amendment No. 4 to the
      Registration Statement on Form S-4 related to the Agreement and Plan of Merger,
      dated as of October 26, 2005, by and among our company, St. Bernard Software,
      Inc. and Sand Hill Merger Corp., we were advised by our independent registered
      accounting firm, Hein & Associates LLP (“Hein”) on June 19, 2006, that we
      may need to reclassify certain amounts in our financial statements to report
      the
      warrants issued as part of the units in our initial public offering as a
      liability. Hein based its conclusions upon on a comment received from the
      Securities and Exchange Commission in connection with the preparation of the
      Amendment No. 4 to the Registration Statement on Form S-4 and after further
      discussion with the Staff of the Securities and Exchange Commission. We
      addressed this concern by determining to restate our Form 10-KSB for the fiscal
      year ended December 31, 2005 and our Form 10-QSB/A for the period ended March
      31, 2006 to reflect this reclassification. There were no significant changes
      in
      our internal controls or in other factors that could significantly affect these
      controls subsequent to the Evaluation Date.





**PART
      II. OTHER INFORMATION**





**Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds**





(a)  Unregistered
      Sales of Equity Securities by Small Business Issuer.





None.





(b)  Use
      of
      Proceeds.





On
      July
      30, 2004, we closed the Offering of 3,600,000 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. The Units were sold at an offering price
      of
      $6.00 per Unit, generating gross proceeds of $21,600,000. Additionally, the
      underwriters’ purchased 510,000 units, pursuant to the exercise of the
      over-allotment option granted in connection with the Offering, generating gross
      proceeds of $3,060,000. The representatives of the underwriters in the Offering
      were I-Bankers Securities Incorporated and Newbridge Securities Corporation.
      The
      securities sold in the Offering were registered under the Securities Act
      pursuant to a registration statement on Form S-1 (No. 333-114861). The
      Securities and Exchange Commission declared the registration statement effective
      on July 26, 2004.




13




We
      paid a
      total of $2,250,900 in underwriting discounts and commissions, including
      $648,000 for the underwriters’ non-accountable expense allowance, and
      approximately $386,000 for other 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 $22,022,462,
      of which $20,961,000 was deposited into a trust fund 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.





**PART
      II. OTHER INFORMATION**





**Item
      6. Exhibits and Reports on Form 8-K**





(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








(b)  Reports
      on Form 8-K:





**Date**
            
            **Items**
            
            **Financial
                Statements**March
                17, 2006
            
            8.01
                and 9.01
            
            None





14




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.




Dated: June 21, 2006SAND
              HILL IT
              SECURITY ACQUISITION CORP./s/ Humphrey P. PolanenHumphrey P. Polanen
              Chief
                Executive Officer/s/ Keith WalzKeith Walz
              Chief Financial Officer and Secretary


15




**EXHIBIT
      INDEX**




Number
            Description31.1
            Section
              302 Certification by CEO31.2
            Section 302 Certification by CFO32.1
            Section
                906 Certification by CEO32.2
            Section
                906 Certification by CFO





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