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 MARCH 31, 2005

[ ] 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 [ ]

As of March 31,  2005,  5,110,000  shares of common  stock,  par value  $.01 per
share, were issued and outstanding.

Transitional Small Business Disclosure Format (check one):
Yes [  ] No [X]

<PAGE>

                                    Index                              Page No.
                                    -----                              --------

Part I:  Condensed Financial Information

      Item 1 - Financial Statements                                           3

               Condensed Balance Sheets                                       3
               Condensed Statements of Operations                             4
               Condensed Statements of Cash Flows                             5
               Notes to Condensed Financial Statements                        6

      Item 2 - Management's Discussion and Analysis or Plan of Operation      9

      Item 3 - Controls and Procedures                                       10

Part II.  Other Information

      Item 6 - Exhibits and Reports on Form 8-K                              11

Signatures                                                                   14
Exhibit Index                                                                15



<PAGE>

PART I.  CONDENSED FINANCIAL INFORMATION

Item 1.  Condensed Financial Statements

<TABLE>
<CAPTION>

                                         SAND HILL IT SECURITY ACQUISITION CORP.
                                        (A Corporation in the Development Stage)
                                                CONDENSED BALANCE SHEETS

                                                                                    March 31, 2005
                                                                                      (Unaudited)            December 31, 2004
                                                                                 ----------------------     ---------------------
<S>                                                                              <C>                        <C>
ASSETS

Current assets:
Cash............................................................................ $           697,785        $          783,133
Treasury securities held in trust, at market ...................................          21,220,292                21,100,510
Prepaid expenses................................................................             101,287                   132,131
                                                                                 ----------------------     ---------------------

     Total current assets.......................................................          22,019,364                22,015,774
                                                                                 ----------------------     ---------------------
Total Assets.................................................................... $        22,019,364        $       22,015,774
                                                                                 ======================     =====================


LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
     Accounts payable and accrued expenses...................................... $            60,270        $           15,772
                                                                                 ----------------------     ---------------------
Total Liabilities...............................................................              60,270                    15,772
                                                                                 ----------------------     ---------------------


Stockholders' Equity:
Preferred stock, $0.01 par value
     Authorized 5,000,000 shares; none issued................................... $                 -        $                -
Common stock, $0.01 par value
     Authorized 50,000,000 shares
     Issued and outstanding, 5,110,000 and 5,110,000 shares, respectively.......              51,100                    51,100
Additional paid-in capital......................................................          22,006,151                21,998,809
Deficit accumulated during the development stage................................            (98,157)                  (49,907)
                                                                                 ----------------------     ---------------------

Total Stockholders' Equity......................................................          21,959,094                22,000,002
                                                                                 ----------------------     ---------------------

Total Liabilities and Stockholders' Equity...................................... $        22,019,364        $       22,015,774
                                                                                 ======================     =====================


                               See accompanying notes to condensed financial statements.
</TABLE>

                                                           3
<PAGE>

<TABLE>
<CAPTION>

                                         SAND HILL IT SECURITY ACQUISITION CORP.
                                        (A Corporation in the Development Stage)
                                           CONDENSED STATEMENTS OF OPERATIONS

                                                                                  Three months          Period from April 15
                                                                                 ended March 31,           (inception) to
                                                                                     2005                  March 31, 2005
                                                                                  (Unaudited)                (Unaudited)
                                                                                ----------------------   ---------------------
<S>                                                                             <C>                      <C>
Formation and operating costs.................................................  $              172,148   $           364,094
                                                                                ----------------------   ---------------------
Operating loss................................................................                (172,148)             (364,094)

Interest income and mark to market gain.......................................                 123,898               265,937
                                                                                ----------------------   ---------------------
Net loss......................................................................  $              (48,250)  $           (98,157)
                                                                                ======================   =====================

Weighted Average Shares Outstanding...........................................               5,110,000             3,896,928

Net loss Per Share (Basic and Diluted)........................................  $                (0.01)  $             (0.02)























                                See accompanying notes to condensed financial statements.

</TABLE>
                                                           4
<PAGE>

<TABLE>
<CAPTION>

                                         SAND HILL IT SECURITY ACQUISITION CORP.
                                        (A Corporation in the Development Stage)
                                           CONDENSED STATEMENTS OF CASH FLOWS


                                                                                  Three months          Period from April 15
                                                                                 ended March 31,           (inception) to
                                                                                     2005                  March 31, 2005
                                                                                  (Unaudited)                (Unaudited)
                                                                                ----------------------   ---------------------
<S>                                                                             <C>                      <C>
CASH FLOW FROM OPERATING ACTIVITIES
  Net loss....................................................................  $              (48,250)  $             (98,157)
  Accretion of treasury bill and mark to market gain..........................                (119,782)               (195,292)
  Increase in prepaid expenses................................................                  30,844                (101,287)
  Increase in accounts payable and accrued expenses...........................                  44,498                  60,270
  Compensation  expense related to issuance of
      Advisory Board Options..................................................                   7,341                   9,788
                                                                                ----------------------   ---------------------
Net cash provided by (used in) operating activities...........................                 (85,348)               (324,677)
                                                                                ----------------------   ---------------------

CASH FLOW FROM INVESTING ACTIVITIES
  Purchase of treasury bill in trust account..................................                      --             (21,025,000)
                                                                                ----------------------   ---------------------
Net cash used in investing activities.........................................                      --             (21,025,000)
                                                                                ----------------------   ---------------------

CASH FLOW FROM FINANCING ACTIVITIES
  Proceeds   from  sale  of  common  stock  to  initial stockholders..........                      --                  25,000
  Gross proceeds from public offering.........................................                      --              24,660,000
  Costs of public offering....................................................                      --              (2,637,538)
  Proceeds from stockholder loan..............................................                      --                  40,000
  Repayment of  stockholder loan..............................................                      --                 (40,000)
                                                                                ----------------------   ---------------------
Net cash provided by financing activities.....................................                      --              22,047,462
                                                                                ----------------------   ---------------------

NET INCREASE (DECREASE) IN CASH...............................................                 (85,348)                697,785
CASH AT BEGINNING OF PERIOD...................................................                 783,133                       -
                                                                                ----------------------   ---------------------
CASH AT END OF PERIOD.........................................................  $              697,785   $             697,785
                                                                                ======================   =====================








                               See accompanying notes to condensed financial statements.
</TABLE>


                                                           5


<PAGE>

                     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 for the quarterly  period ended
March 31, 2005 and the period from  inception  (April 15,  2004) to December 31,
2004 and March 31, 2005, 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").  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 period ended December 31, 2004.

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 $21,025,000 is being held in an interest bearing
trust account  ("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
<PAGE>

     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 ("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  ("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 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 to be offered in the Offering as described in Note 3).

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
shares. 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 will entitle the holder to purchase from the Company one share of common

                                       7
<PAGE>

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
will be  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.

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.   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 commencing on July 31, 2004.

6.   NOTE 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.

7.   COMMON STOCK

     At March 31, 2005,  50,000,000  shares of $0.01 par value common stock were
authorized and 5,110,000 shares were outstanding.

8.   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 Director.

                                       8
<PAGE>

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

     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 31, 2005, and the uncertainties set forth from time
to time in the Company's filings and other public statements.

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 this 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,
2005, we had cash of $697,785,  and treasury securities in our trust account (at
cost) of $21,025,000;  a total of approximately  $21.80 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  $300,000.
Through  March 31, 2005, we have used $300,442 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 $259,292 in interest and $6,645 on money market accounts through
March 31, 2005.

                                       9
<PAGE>

     For the three  months ended March 31, 2005,  we earned  interest  income of
approximately  $4,100 and  recorded  income from the  accretion  in value of our
trust  account of  approximately  $119,800.  We incurred  operating  expenses of
approximately  $172,000 for that same period.  Our expenses consist primarily of
professional  fees,  overhead  fees,  insurance,  financial  advisory  fees, and
certain other expenses associated with being a public company.

     Over the 24-month period subsequent to the consummation of the Offering, we
anticipate  approximately  $250,000 of expenses for legal,  accounting and other
expenses   related  to  the  due  diligence   investigations,   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  that will 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  we  will  need  to  raise
additional  funds 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.   We  would  only   consummate   such  a  fund   raising
simultaneously with the consummation of a business combination.

     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.

Item 3. Controls and Procedures

     An  evaluation  of  the  effectiveness  of  our  disclosure   controls  and
procedures  as of March 31,  2005 was made  under the  supervision  and with the
participation of our management,  including our chief executive  officer and our
chief  financial  officer.  Based on that  evaluation,  they  concluded that our
disclosure  controls and  procedures  are  effective as of the end of the period
covered by this report to ensure that information required to be disclosed by us
in reports that we file or submit under the  Securities  Exchange Act of 1934 is
recorded,  processed,  summarized and reported within the time periods specified
in Securities and Exchange  Commission rules and forms. During the most recently
completed fiscal quarter,  there has been no significant  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.





                                       10
<PAGE>

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.

     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:

                  10.1       Form of Advisor Stock Option Agreement

                  10.2       M&A Advisory Agreement, dated March 30, 2005, by
                             and between the Company and Software Equity Group,
                             L.L.C.

                  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




                                       11
<PAGE>

          (b)  Reports on Form 8-K:


           Date                 Items                  Financial Statements
           ----                 -----                  --------------------
           January 12, 2005     5.02, 9.01             None.
           January 27, 2005     1.01, 8.01, and 9.01   None.
           April 4, 2005        1.01                   None.

























                                       12
<PAGE>


                                   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:  May 16, 2005

                                         SAND HILL IT SECURITY ACQUISITION CORP.

                                         /s/ Humphrey P. Polanen
                                         -----------------------
                                         Humphrey P. Polanen
                                         Chief Executive Officer

                                         /s/ Keith Walz
                                         --------------
                                         Keith Walz
                                         Chief Financial Officer and Secretary














                                       13
<PAGE>


                                  EXHIBIT INDEX


                 Number                    Description
                 ------      --------------------------------------------------
                  10.1       Form of Advisor Stock Option Agreement

                  10.2       M&A Advisory Agreement, dated March 30, 2005, by
                             and between the Company and Software Equity Group,
                             L.L.C.

                  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















                                       14