SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               -------------------

                                   FORM 10-QSB
                               ------------------

(MarkOne)

[X]  Quarterly  report under Section 13 or 15(d) of the Securities  Exchange Act
     of 1934 For the quarterly period ended September 30, 2004

[ ]  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               (I.R.S. Employer Identification No.)
     of incorporation)

    3000 Sand Hill Road, Building 1, Suite 240, Menlo Park, California 94025
                     (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 September 30, 2004,  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.

                                                                      Page No.

Part I:  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 2 - Changes in Securiteis and Small Business Issuer
                  Purchases of Equity Securiteis                             11

         Item 5 - Other Information                                          11

         Item 6 - Exhibits and Reports on Form 8-K                           12

Signatures                                                                   13
Exhibit Index                                                                14

<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements
<TABLE>
<CAPTION>

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

                                                               September 30, 2004
                                                                  (Unaudited)           April 20, 2004
                                                               ------------------      ----------------
<S>                                                                     <C>                     <C>
ASSETS
Current assets:
Cash........................................................   $      867,686          $       25,000
Treasury bill held in trust.................................       21,007,464                      --
Prepaid expenses............................................          170,476                      --
                                                                   ----------                  ------
     Total current assets...................................       22,045,626                  25,000
                                                                   ----------                  ------
Deferred offering costs.....................................               --                   9,203
                                                                   ----------                  ------
Total Assets................................................   $   22,045,626          $       34,203
                                                                   ==========                  ======

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
     Accounts payable and accrued expenses.... .............   $       13,772          $       13,953
                                                                   ----------                  ------
Total Liabilities...........................................           13,772                  13,953
                                                                   ----------                  ------

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 1,000,000 shares,
       respectively.........................................           51,110                  10,000
Additional paid-in capital..................................       21,997,127                  15,000
Deficit accumulated during the development stage............          (16,373)                 (4,750)
                                                                   ----------                  ------
Total Stockholders' Equity..................................       22,031,854                  20,250
                                                                   ----------                  ------
Total Liabilities and Stockholders' Equity..................   $   22,045,626          $       34,203
                                                                   ==========                  ======
</TABLE>

                    See accompanying notes to condensed financial statements.

                                                3

<PAGE>

<TABLE>
<CAPTION>

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


                                                          Period from
                                                         April 15, 2004     Three Months
                                                         (inception) to        Ended            Period from
                                                         September 30,      September 30,     April 15, 2004
                                                              2004              2004          (inception) to
                                                           (Unaudited)       (Unaudited)      April 20, 2004
                                                         --------------     ------------      --------------

<S>                                                             <C>             <C>                     <C>

Formation and operating costs........................     $ 63,125            $50,432             $4,750
                                                          --------            -------             ------

Operating loss.......................................      (63,125)           (50,432)            (4,750)
                                                          --------            --------            -------

Interest income......................................       46,752             46,752                 --
                                                          --------            --------            -------

Net loss.............................................     $(16,373)           $(3,680)            $(4,750)
                                                          ========            ========            ========

Weighted Average Shares Outstanding..................     2,542,454           3,762,857           1,000,000
                                                          =========           =========           =========

Net Loss Per Share (Basic and Diluted)...............     $(0.01)             $(0.00)              $(0.00)
                                                          =======             =======             =======

</TABLE>


                       See accompanying notes to condensed financial statements.

                                                    4
<PAGE>
<TABLE>
<CAPTION>

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


                                                                                  Period from
                                                                                  April 15, 2004           Period from
                                                                                  (inception) to           April 15, 2004
                                                                                  September 30, 2004       (inception) to
                                                                                  (Unaudited)              April 20, 2004
                                                                                  ------------------       --------------

<S>                                                                                     <C>                     <C>

CASH FLOW FROM OPERATING ACTIVITIES
  Net loss................................................................        $     (16,373)           $    (4,750)
  Accretion of treasury bill..............................................              (46,464)
  Increase in prepaid expenses............................................             (170,476)                    --
  Increase in accounts payable and accrued expenses.......................               13,772                 13,953
                                                                                    ------------                ------
Net cash provided by (used in) operating activities.......................             (219,541)                 9,203
                                                                                    ------------                ------

CASH FLOW FROM INVESTING ACTIVITIES
  Purchase of treasury bill in trust account..............................          (20,961,000)                    --
                                                                                    -----------
Net cash used in investing activities.....................................          (20,961,000)                    --
                                                                                    ------------                ------

CASH FLOW FROM FINANCING ACTIVITIES
  Proceeds from sale of common stock to initial stockholders..............               25,000                 25,000
  Gross proceeds from public offering.....................................           24,660,000                     --
  Costs of public offering................................................           (2,636,773)                (9,203)
  Proceeds from stockholder loan..........................................               40,000                     --
  Repayment of  stockholder loan..........................................              (40,000)                    --
                                                                                     ----------                 ------
Net cash provided by financing activities.................................           22,048,227                 15,797
                                                                                     ----------                 ------

NET INCREASE IN CASH......................................................              867,686                 25,000
CASH AT BEGINNING OF PERIOD...............................................                  ---                    ---
                                                                                     -----------                ------

CASH AT END OF PERIOD.....................................................        $     867,686            $    25,000
                                                                                   ============             ==========
</TABLE>



                     See accompanying notes to condensed financial statements.

                                                    5

<PAGE>
                     SAND HILL IT SECURITY ACQUISITION CORP.
                    (A Corporation in the Development Stage)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
     As of April 20 and September 30, 2004, for the Periods From Inception
            (April 15, 2004) Ended September 30 and April 20, 2004,
               and for the Three Months Ended September 30, 2004

1.       BASIS OF PRESENTATION

     The condensed financial statements included herein for the quarterly period
ended  September  30, 2004 and periods  from  inception  (April 15,  2004) ended
September  30 and April 20,  2004 have been  prepared  by Sand Hill IT  Security
Acquisition  Corp.  (the  "Company")  without  audit  pursuant  to the rules and
regulations  of the  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 year ended December 31, 2004.

     The  preparation  of financial  statements  in conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.


2.       ORGANIZATION, BUSINESS OPERATIONS

     The Company 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
("Offering")  was effective July 26, 2004. The Company  consummated the Offering
on July 30, 2004 and received  proceeds,  net of the  underwriters'  discount of
$20,196,000.  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 this  Offering,
although  substantially all of the net proceeds of this 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  effect a Business
Combination. An amount equal to $20,961,000 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  trust  fund

                                       6
<PAGE>

balance has been invested in a United States  Treasury Bill,  which is accounted
for as a trading  security and is recorded at its market value of  approximately
$21,007,000  at  September  30,  2004.  The excess of market  value over cost is
included in interest  income in the  accompanying  Statement of Operations.  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.

     The Company,  after  signing a definitive  agreement for the merger with or
acquisition of a target  business,  will submit such transaction for shareholder
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,  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.  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,  or 24 months from the consummation of
the Offering 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).

                                       7
<PAGE>

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
stock at an exercise price of $5.00 commencing on the later of the completion of
a Business  Combination  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  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  exercise
price of the Warrants included in the units will be $6.65 per share.


4.       COMMITMENT

     The  Company  presently  occupies  office  space  provided  by  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.


5.       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.


6.       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.

                                       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

     The statements  discussed in this report include forward looking statements
that involve risks and  uncertainties  detailed from time to time in our reports
filed with the Securities and Exchange Commission.

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 recently  completed public  offering,  our
capital  stock,  debt or a  combination  of cash,  capital  stock and  debt,  in
effecting a business combination.

     On July 30, 2004,  we completed  our initial  public  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  representatives  of the underwriters in the offering were
I-Bankers  Securities  Incorporated and Newbridge  Securities  Corporation.  The
Securities and Exchange Commission declared the registration statement effective
on July 26,  2004.  The Units were sold at an offering  price of $6.00 per Unit,
generating  gross  proceeds of  $21,600,000.  Subsequent  to July 30, 2004,  the
underwriters'   purchased  510,000  units,  pursuant  to  the  exercise  of  the
over-allotment  option granted in connection  with the initial public  offering,
generating gross proceeds of $3,060,000.

     We paid a total of $2,250,900 in  underwriting  discounts and  commissions,
including $648,000 for the underwriters' non-accountable expense allowance of 3%
of the gross proceeds from the shares sold in the initial public  offering,  and
$385,873  has been paid or accrued for other costs and  expenses  related to the
offering.

     After deducting the  underwriting  discounts and commissions and payment of
all of the  offering  expenses  referred to above,  the total net proceeds to us
from the offering will be $22,023,227,  of which  $20,961,000 has been 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.

     The net loss of  $16,373  reported  for the  period  from  April  15,  2004
(inception)  through  September  30,  2004  consists  primarily  of $20,663  for
director  and  officer  liability  and other  insurance,  $15,000  for a monthly
administrative  services  fee,  $8,500 for  professional  fees,  and $18,674 for
travel and other expenses.  Interest accreted on the trust fund was $46,176, and
other interest income was $288.

                                       9
<PAGE>

     We will  use  substantially  all of the net  proceeds  of our  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  fund as well as any  other  net
proceeds  not  expended  will be used to finance  the  operations  of the target
business.  We believe that we have  sufficient  available  funds  outside of the
trust  fund  to  operate  through  July  30,  2006,  assuming  that  a  business
combination is not consummated during that time.

     Over this time period, 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 $475,100 for general working capital that will
be  used  for  miscellaneous  expenses  and  reserves,  including  approximately
$180,000  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.  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 our initial public offering.


Item 3.  Controls and Procedures

     An  evaluation  of  the  effectiveness  of  our  disclosure   controls  and
procedures as of September 30, 2004 was made under the  supervision and with the
participation of our management, including our chief executive officer and 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.  Changes in Securities and Small Business Issuer Purchases of
         Equity Securities

     On July 30, 2004, we closed our initial public 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  initial  public  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 of 1933
on 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 of 3%
of the gross proceeds from the shares sold in the initial public  offering,  and
approximately  $385,873  has been paid or accrued for other  costs and  expenses
related to the offering.

     After deducting the  underwriting  discounts and commissions and payment of
all of the  offering  expenses  referred to above,  the total net proceeds to us
from the offering will be $22,023,227,  of which  $20,961,000 has been 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.

                                       11
<PAGE>


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

             99.1     Audited Financial Statements for the periods from
                      April 15, 2004 (inception) to September 30, 2004 and
                      April 15, 2004 (Inception) to April 20, 2004

         (b) Reports on Form 8-K:

             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:  November 15, 2004

                                   SAND HILL IT SECURITY ACQUISITION CORP.

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

                                   /s/ Cary M. Grossman
                                   Cary M. Grossman
                                   Chief Financial Office and Secretary


                                       13
<PAGE>



                                  EXHIBIT INDEX

         Number            Description

         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

         99.1              Audited Financial Statements for the periods from
                           April 15, 2004 (inception) to September 30, 2004
                           and April 15, 2004 (Inception) to April 20, 2004


                                       14