UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-Q

x  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2008 or

o  Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ____to ___

Commission file number: 0-30105

FUTUREIT, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware	98-0517683
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

4 Hamelacha Street
North Industrial Area,
Lod, Israel
(Address of Principal Executive Offices)

(011) (972)(8)920-8070
(Registrant’s Telephone Number, Including Area Code)

N/A
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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

Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, or a non-accelerated filer. See of “accelerated filer and large accelerated filer”in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x
(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of November 14, 2008 the issuer had 24,340,000 shares of Common Stock, par value $0.0001, outstanding.

FUTUREIT, INC. AND SUBSIDIARIES

INDEX

Page

PART I - FINANCIAL INFORMATION:

	Item 1.	Condensed Consolidated Balance Sheets as of September 30, 2008 (Unaudited) and December 31, 2007	3
		Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the
		Three and Nine Months Ended September 30, 2008 and September 30, 2007 (Unaudited)	4
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2008
		and September 30, 2007 (Unaudited)	5
		Notes to Condensed Consolidated Financial Statements (Unaudited)	6
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	8
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
	Item 4T.	Controls and Procedures	15
PART II - OTHER INFORMATION:
	Item 6.	Exhibits and Reports on Form 8-K	16
SIGNATURES			17

2

Item 1. Financial Statements

FUTUREIT, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

	September 30,			December 31,
	2 0 0 8			2 0 0 7
	(U.S. dollars)
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	77,612		$	1,020,767
Trade account receivable		39,225			58,442
Other receivables and prepaid expenses		33,722			4,506
Total current assets		150,559			1,083,715
Property and equipment
Cost		51,790			49,255
Less - Accumulated depreciation and amortization		(28,158	)		(18,086	)
Property and equipment, net		23,632			31,169
Other long lived assets		5,212			6,304
Total assets		179,403			1,121,188
Current liabilities
Current maturities of long-term debt		465,667			191,678
Trade accounts payable		84,321			32,821
Other payables and accrued expenses		582,441			342,550
Deferred revenue		201,598			319,912
Total current liabilities		1,334,027			886,961
Long term loans
Loan from bank		292,667			416,656
Loan from related party		275,000			541,666
Total long term loans		567,667			958,322
Accrued severance pay, net		6,024			5,151
Stockholders' deficiency
Share Capital - Common Stock of $ 0.0001 par value:
Authorized - 35,000,000 as of December 31, 2007 and as of
March 31,2008; Issued and Outstanding - 23,840,000 as of
December 31, 2007 and as of 24,340,000 - as of
September 30, 2008		2,434			2,384
Additional paid in capital		2,037,401			2,099,307
Accumulated deficiency		(3,768,150	)		(2,830,937	)
Total Stockholders' deficiency		(1,728,315	)		(729,246	)
Total liabilities and Stockholders' deficiency	$	179,403		$	1,121,188

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

3

FUTUREIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

	For the three months ended September 30,						For the nine months ended September 30,
	2008			2007			2008			2007
	(Unaudited)						(Unaudited)
Revenues	$	140,483		$	44,950		$	493,554		$	110,155
Cost of revenues		45,171			19,008			112,673			69,024
Gross profit		95,312			25,942			380,881			41,131
Research and development expenses		65,866			4,094			178,494			57,927
Selling & marketing Expenses		104,760			84,305			347,136			259,731
General and administrative expenses		266,129			87,482			738,518			877,917
Operating loss before financial
expenses, net		341,443			149,940			883,267			1,154,444
Financial expenses ( income ) , net		(48,845	)		150,848			52,685			146,286
Loss before Taxes		292,598			300,788			935,952			1,300,730
Taxes		-			-			1,261			-
Loss for the period		(292,598	)		(378,000	)		(937,213	)		(1,300,730	)
Basic and diluted net loss per share	$	(0.01	)	$	(0.02	)	$	(0.04	)	$	(0.08	)
Number of shares used in computing
basic and diluted net loss per share		24,340,000			16,460,000			24,340,000			16,460,000

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

4

FUTUREIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)

	Period of nine months ended September 30,
	2008			2007
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net loss	$	(937,213	)	$	(1,300,730	)
Adjustments required to reconcile net loss to net cash used in
operating activities:
Depreciation		10,072			8,599
Amortization of deferred compensation		38,094			501,305
Amortization of bridge loan discount		-			124,263
Accrued severance pay, net		873			(2,182	)
Decrease in trade receivables		19,217			29,380
Increase in other accounts receivable and prepaid expenses		(29,215	)		(56,518	)
Decrease in Long Term Deposits		1,092			-
Increase (Decrease) in trade payables		51,500			99,439
Increase (Decrease) in other payables		239,891			219,422
Change in deferred revenues		(118,314	)		97,739
Net cash used in operating activities		(724,003	)		(279,283	)
Cash flows from investing activities:
Purchase of property and equipment		(2,535	)		(17,061	)
Investment in subsidiary		(100,000	)		-
Long term Deposits		-			-
Net cash used in investing activities		(102,535	)		(17,061	)
Cash flows from financing activities:
Increase (Decrease) in bank credit		(41,667	)		(1,208	)
Repayments of Bank Loan		-			-
Issuance of Share Capital		50			186,395
Repayment of Loan from stockholders'		(75,000	)		-
Issuance of Share Capital in Private Placement		-			-
Bridge loan received		-			213,605
Bridge loan repayment		-			-
Net cash provided by financing activities		(116,617	)		398,792
Increase (decrease ) in cash and cash equivalents		(943,155	)		102,448
Cash and cash equivalents at the beginning of the period	$	1,020,767		$	26
Cash and cash equivalents at the end of the period	$	77,612		$	102,474

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

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FUTUREIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:- BASIS OF PRESENTATION

The accompanying condensed unaudited interim consolidated financial statements have been prepared by FUTUREIT INC. (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. These financial statements reflect all adjustments, consisting of normal recurring adjustments and accruals, which are, in the opinion of management, necessary for a fair presentation of the financial position of the Company as of September 30, 2008 and the results of operations and cash flows for the interim periods indicated in conformity with generally accepted accounting principles applicable to interim periods. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These financial statements should be read in conjunction with the audited financial statements and notes thereto of the Company for the year ended December 31, 2007 that are included in the Company’s Form 10-KSB filed with the Securities and Exchange Commission on March 31, 2008, as amended (the “2007 10-KSB”). The results of operations presented are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2008. The interim financial statements of the Company as of September 30, 2008, and for the three and nine months ended September 30, 2008 and 2007 are unaudited. These results are not necessarily indicative of the results expected for the calendar year ending December 31, 2008. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States of America. Refer to the audited financial statements of the Company as of December 31, 2007, in its 2007 10-KSB filed with the SEC for additional information, including significant accounting policies.

NOTE 2:- GENERAL

a. Future IT, Inc. (“the Company”) was incorporated in the State of Delaware on October 27, 2006.

The Company is a subsidiary of the DataSafe Group Ltd. (65.01%), an Israeli IT services group of companies.

On January 8, 2007 the Company entered into an option agreement with Future I.T. Ltd., an Israeli company then held by Omer Nir-Hod (98%), a director and president of the Company who is a controlling shareholder of DataSafe Group Ltd., and by Shamad Orlan Ltd. (2%), an Israeli company controlled by Shmuel Bachar, Chairman of the Board of Directors of the Company. Pursuant to the agreement, Future I.T. Ltd. issued shares to the Company constituting 90% of its issued and outstanding share capital. In consideration, the Company provided Future I.T. Ltd. with guarantees for all of the debt incurred by the latter in the ordinary course of its business. The agreement also provided an option to purchase the remaining 10% of the shares of Future I.T. Ltd. for additional consideration of $100,000. On January 15, 2008 The Company exercised the option.

In accordance with Statement of Financial Accounting Standards (SFAS) 141 “Business Combinations” this transaction was accounted for as a reorganization of entities under common control. Accordingly, the consolidated financial statements of the Company for all periods are presented as if the reorganization occurred at the beginning of the earliest period presented and include the accounts of Future I.T. Ltd. on a historical cost basis, in a manner similar to a pooling of interests.

6

FUTUREIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company markets and sells its products primarily through distributors and resellers in Israel and European countries but revenues to date have been generated mainly from Israel. The Company has two wholly owned subsidiaries – Future I.T. Ltd., an Israeli company, engaged mainly in research & development, sales & marketing and support, and Future I.T. Software Limited, a UK company.

The Company does not hold any patents and relies upon a combination of security devices, copyrights, trade secret laws and contractual restrictions to protect its rights in the products.

b. Private Placement of Shares of common stock and Warrants

In December 2007, in reliance upon exemptions from registration provided by Rule 505 and Regulation S under Securities Act, the Company sold 5,400,000 shares of its common stock to U.S accredited investors and foreign investors, as such terms are defined under the Securities Act. The purchase price per share of common stock was $0.30 per share. The Company also granted the investors a right to purchase up to an aggregate of 2,494,800 additional shares of common stock at $0.50 per share issuable upon the exercise of warrants.

In connection with the Private Placement, the Company issued to the placement agents, advisors and consultants an aggregate of 1,500,000 shares of common stock and warrants to purchase up to 597,220 shares of common stock exercisable at $0.30 per share. The warrants issued to the placement agents, advisors and consultants have the same exercise period as the warrants issued to the investors in the Private Placement.

The proceeds received from the December 2007 private placement amounted to $1,620,000 and the net proceeds amounted to $1,410,457 after deduction of issuance expenses of $209,543.

c. Going Concern

The Company’s net loss and negative cash flows from operating activities for the period of nine months ended September 30, 2008 were $937,213 and $724,003, respectively. The Company’s ability to continue operating as a “going concern” is dependent on its ability to raise sufficient additional working capital.

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

          This information should be read in conjunction with the condensed consolidated financial statements and notes included in Item 1 of Part I of this Quarterly Report and the audited consolidated financial statements and notes thereto, and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2007 contained in our 2007 Annual Report on Form 10-KSB. The discussion and analysis which follows may contain trend analysis and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 which reflect our current views with respect to future events and financial results. These include statements regarding our earnings, projected growth and forecasts, and similar matters that are not historical facts.

          We remind shareholders that forward-looking statements are merely predictions and therefore are inherently subject to uncertainties and other factors that could cause the future results to differ materially from those described in the forward-looking statements.

        The following is management’s discussion and analysis of certain significant factors which have affected our financial position and operating results during the periods included in the accompanying consolidated financial statements, as well as information relating to the plans of our current management.

Background

        We were incorporated in the State of Delaware on October 26, 2006 under the name FutureIT, Inc. On January 8, 2007 we entered into an agreement with Future I.T. Ltd. Pursuant to the agreement, Future I.T. Ltd. issued to us shares constituting 90% of its issued and outstanding share capital. In consideration we provided Future I.T. Ltd. with guarantees for all of the debt incurred by it in the ordinary course of its business. Pursuant to an option provided in the agreement, on January 15, 2008 we purchased the remaining 10% interest in Future I.T. Ltd. for additional consideration of $100,000. Our consolidated financial statements are prepared in U.S. dollars, and in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.

Overview

        We are engaged in the development, marketing, sale and support of software products that provide affordable easy-to-use comprehensive database management and monitoring solutions for both SMEs and larger enterprises running different Microsoft SQL servers, versions 2000 and 2005, as well as Microsoft SQL Server Desktop Engine, or MSDE and SQL Express.

        As a software provider we generate revenues from sales of our products to both small and medium sized enterprises and larger corporations and enterprises. Accordingly, our business is affected by economic conditions and the financial health of the corporations and enterprises. The volatile economic conditions throughout 2008 have slowed-down our sales process and complicated our ability to conduct transactions. The current economic climate and the uncertainty in the global economic conditions could impact the ability of our customers to make capital expenditures, thereby affecting their ability to purchase our products. In addition, the turmoil in the financial markets may limit our ability to obtain financing in 2009.

        Most of our sales are currently denominated in dollars, while the majority of our operating expenses are incurred in foreign currencies, principally the NIS. As a result, the increase in the value of the U.S. dollar against the NIS in the third quarter of 2008 has resulted in decreased expenses for our company. In the period ended September 30, 2008 the U.S dollar appreciated against the NIS by approximately 11%. However, because exchange rates between the NIS and the U.S. dollar fluctuate continuously, exchange rate fluctuations and especially larger periodic devaluations will have an impact on our profitability and period-to-period comparisons of our results. We cannot assure you that in the future our results of operations may not be materially adversely affected by currency fluctuations.

8

Critical Accounting Policies and Estimates

        Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of the financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. Though we evaluate our estimates and assumptions on an ongoing basis, our actual results may differ from these estimates.

        Certain of our accounting policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s subjective judgments are described below to facilitate better understanding of our business activities. We base our judgments on our experience and assumptions that we believe are reasonable and applicable under the circumstances.

Revenue Recognition

        We recognize revenues pursuant to the provisions of American Institute of Certified Public Accountants Statement of Position, or SOP, 97-2, “Software Revenue Recognition,” or SOP 97-2, as amended by SOP 98-9, “Modification of SOP 97-2, Software Revenue Recognition With Respect to Certain Transactions.” Accordingly, Revenues from software licensing are recognized when all the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) our fee is fixed or determinable, and (iv) collectibility is probable.

        We are unable to establish vendor-specific objective evidence, or VSOE on our post-contact customer support, or PCS, services for all arrangements. Accordingly, when PCS is an element of these sale arrangements (which is the case with most of our sales), revenue on the entire arrangement is deferred and recognized over the initial customer support period of twelve months.

Functional Currency and Financial Statements in U.S. dollars

        Our functional currency is the U.S. dollar, as the U.S dollar is the primary currency of the economic environment in which we have operated and expect to continue to operate in the foreseeable future. The vast majority of our revenues is determined, and denominated in U.S. dollars. The majority of our operations is currently conducted in Israel and most of the expenses in Israel are currently paid in NIS. However, most of our total expenses are denominated and determined in U.S dollars. Financing activities including loans, equity transactions cash investments, are made in U.S dollars.

        Our transactions and balances denominated in U.S dollars are presented at their original amounts. Non-dollar transactions and balances have been remeasured to U.S dollars in accordance with statement No. 52 of the Financial Accounting Standard Board (“FASB”). All transaction gains and losses from remeasurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statements of operations as financial income or expenses, as appropriate.

Concentrations of Credit Risk

        Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents and trade receivables. We maintain cash and cash equivalents and investments with major financial institutions and limit the amount of credit exposure with any institution.

Stock-Based Compensation

        We adopted SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS No. 123R) requiring that compensation cost relating to share-based payment awards made to employees and directors be recognized in the financial statements. The cost for such awards is measured at the grant date based on the calculated fair value of the award. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods (generally the vesting period of the equity award) in our consolidated statement of operations.

9

        Stock-based compensation cost relating to stock options recognized in 2007 and 2008 is based on the value of the portion of the award that is ultimately expected to vest. SFAS No. 123R requires forfeitures to be estimated at the time of grant in order to estimate the portion of the award that will ultimately vest.

        The exercise price of the options granted under the plan is the nominal value of the shares into which such options are exercised, which is deemed insignificant. As such, the values of the options are similar to the values of restricted shares. Accordingly, the value of the award is based on the fair value of the shares of our common stock at the date of grant. Such values were determined based on the proceeds of our Private Placement.

Research and Development

        SFAS No. 86, “Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise Marketed” requires capitalization of certain software development costs subsequent to the establishment of technological feasibility.

        Based on our product development process, technological feasibility is established upon completion of a working model, as a result, research and development costs incurred by us to date have been charged to operating expenses.

Sources of Revenues

        We generate revenues from the sale of software licenses as well as from maintenance and support services. Our customers generally enter into a standard license agreement with us under which they are granted license to use our software and are offered the right to purchase phone support and software maintenance that provides updates and upgrades to our software if and when made available.

Cost of Revenues and Operating Expenses

        Cost of Revenues. Cost of revenues consists primarily of salaries of employees engaged in phone support and maintenance services and royalty payments to Microsoft.

        Research and Development Expenses. Research and development expenses consist primarily of salaries of employees in on going research and development activities, as well as participation in Microsoft and SAP partnerships, purchase of third parties research and development tools, consulting services and software development by sub contractors, mainly subsidiaries of DataSafe Group.

        Selling and Marketing Expenses. Selling and marketing expenses consist primarily of salaries and related expenses for sales and marketing personnel, sales commissions, participation in trade shows, web site related expenses, public relations, promotional materials, travel expenses and trade show exhibit expenses.

        General and Administrative Expenses. General and administrative expenses consist primarily of salaries and related expenses for executive, accounting, and administrative personnel, professional fees and other general corporate expenses. We expect that general and administrative expenses will increase

        Financial Expenses, Net. Financial expenses, consists primarily of interest on our loans and gains and losses from remeasurement of monetary balance sheet items denominated in non US$ currencies.

        Income Tax Expense. Our taxable income in Israel is subject to corporate tax at the statutory rates of 31% in 2006, 29% in 2007, 27% in 2008, 26% in 2009 and 25% in 2010 and thereafter.

Results of Operations

        The following discussion of our results of operations for each of the nine months ended September 30, 2007 and 2008, as well as the data presented as a percentage of total revenues in the following table, are based upon our statements of income contained in our financial statements for those periods.

10

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Total revenues		100	%		100	%		100	%		100	%
Cost of revenues		32	%		43	%		23	%		63	%
Gross profit		68	%		58	%		77	%		37	%
Operating expenses:
Research and development		47	%		9	%		36	%		53	%
Selling and marketing		75	%		188	%		70	%		236	%
General and administrative		189	%		195	%		150	%		796	%
Total operating expenses		311	%		392	%		256	%		1085	%
Operating loss		(243	)%		(334	)%		(179	)%		(1,048	)%
Financial expenses & tax, net		(35	)%		335	%		11	%		133	%
Net loss		(208	)%		(669	)%		(190	)%		(1,181	)%

Three Months Ended September 30, 2008 Compared with Three Months Ended September 30, 2007

        Revenues. Revenues from software sales increased to $140,483 for the three months ended September 30, 2008 from $44,950 for the three months ended September 30, 2007. We are unable to establish vendor-specific objective evidence, or VSOE, on our post-contact customer support, or PCS, services for all arrangements. Accordingly, when PCS is an element of these sale arrangements (which is the case with most of our sales), revenue on the entire arrangement is deferred and recognized over the initial customer support period of twelve months. Our deferred revenues at September 30, 2008 were approximately $201,598, as compared to $319,912 in December 31, 2007. We recorded deferred revenues in both periods due to the fact that we were unable to implement VSOE relating to software revenue recognition. The high level of deferred revenues in the period ended December 31, 2007 resulted from record number of sales made during this period.

        Cost of Revenues. Cost of revenues increased to $45,171 for the three months ended September 30, 2008 from $19,008 for the three months ended September 30, 2007, an increase of 138%, reflecting the increase in staff and sales activities.

        Gross Profit. Our gross profit increased to $95,312 for the three months ended September 30, 2008 from $25,942 for the three months ended September 30, 2007, an increase of 267%, reflecting the increase in our revenues for the period.

        Research and Development Expenses. Research and development expenses increased to $65,866 for the three months ended September 30, 2008 from $4,094 for the three months ended September 30, 2007, an increase of 1,509%, as a result of the increase of in research and development staff during the 2008 period. The increase in research and development expenses was due to work performed in connection with improving and upgrading our products.

        Selling and Marketing Expenses. Selling and marketing expenses increased to $104,760 for the three months ended September 30, 2008 from $84,305 for the three months ended September 30, 2007, an increase of 24%, as a result of the increase in the number of our employees and expenses related to the establishment of our global network of distributors and resellers.

        General and Administrative Expenses. General and administrative expenses increased to $266,129 for the three months ended September 30, 2008 from $87,482 for the three months ended September 30, 2007, an increase of 204%. The increase in general and administrative expenses is attributable to the increased costs associated with becoming a public company.

11

        Financial Expenses, Net. Our financial income amounted to $48,845 for the three months ended September 30, 2008 compared to financial expenses of $150,848 for the three months ended September 30, 2007, as a result of an increase of approximately 2% in the exchange rate of the US dollar against the New Israeli Shekel (NIS) during the third quarter of 2008. During the third quarter of 2007 we recorded financial expenses of approximately $124,000 resulting from amortization of the discount recorded on our 2007 Bridge Loan discount.

        As a result of the foregoing, we incurred a net loss of $292,598 for the three months ended September 30, 2008, as compared to a net loss of $300,788 for the three months ended September 30, 2007.

Nine Months Ended September 30, 2008 Compared with Nine Months Ended September 30, 2007

        Revenues. Revenues from software sales increased to $493,554 for the nine months ended September 30, 2008 from $110,155 for the nine months ended September 30, 2007. We are unable to establish vendor-specific objective evidence, or VSOE, on our post-contact customer support, or PCS, services for all arrangements. Accordingly, when PCS is an element of these sale arrangements (which is the case with most of our sales), revenue on the entire arrangement is deferred and recognized over the initial customer support period of twelve months. Our deferred revenues at September 30, 2008 were approximately $201,598, as compared to $319,912 in December 31, 2007. We recorded deferred revenues in both periods due to the fact that we were unable to implement VSOE relating to software revenue recognition. The high level of deferred revenues in the period ended December 31, 2007 resulted from record number of sales made during this period.

        Cost of Revenues. Cost of revenues increased to $112,673 for the nine months ended September 30, 2008 from $ 69,024 for the nine months ended September 30, 2007, an increase of 63%, reflecting the increase in staff and sales activities.

        Gross Profit. Our gross profit increased to $380,881 for the nine months ended September 30, 2008 from $41,131 for the nine months ended September 30, 2007, an increase of 826%, reflecting the increase in our revenues for the period.

        Research and Development Expenses. Research and development expenses increased to $178,494 for the nine months ended September 30, 2008 from $57,927 for the nine months ended September 30, 2007, an increase of 208%, as a result of the increase in our research and development staff during the 2008 period. The increase in research and development expenses was due to work performed in connection with improving and upgrading our products.

        Selling and Marketing Expenses. Selling and marketing expenses increased to $347,136 for the nine months ended September 30, 2008 from $259,731 for the nine months ended September 30, 2007, an increase of 34%, as a result of the increase in the number of our employees and expenses related to the establishment of our global network of distributors and resellers.

        General and Administrative Expenses. General and administrative expenses decreased to $738,518 for the nine months ended September 30, 2008 from $877,917 for the nine months ended September 30, 2007, a decrease of 16%. This decrease mainly resulted from stock options compensation expenses of approximately $501,000, recorded in the 2007 period.

        Financial Expenses, Net. Our financial expenses amounted to $52,685 for the nine months ended September 30, 2008 compared to financial income of $146,286 for the nine months ended September 30, 2007. During the third quarter of 2007 we recorded financial expenses of approximately $124,000 resulting from amortization of the discount recorded on our 2007 Bridge Loan discount.

         As a result of the foregoing, we incurred a net loss of $937,213 for the nine months ended September 30, 2008, as compared to a net loss of $1,300,730 for the nine months ended September 30, 2007.

Off-Balance Sheet Arrangements

        As of September 30, 2008, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

12

Quantitative and Qualitative Disclosure about Market Risk

Interest Rate Risk

        We do not believe that we have any material exposure to interest rate risk other than sensitivity to prevailing interest rates that may affect income from our cash deposits and marketable securities.

Foreign Exchange Risk

          Most of our sales are currently denominated in dollars, while the majority of our operating expenses are incurred in foreign currencies, principally the NIS. As a result, the decrease in the value of the U.S. dollar against these currencies has resulted in increased expenses for our company. In 2007 and during the first nine months of 2008, the U.S dollar depreciated against the NIS by approximately 9% and 11% , respectively.

Liquidity and Capital Resources

        As of September 30, 2008 we had approximately $77,612 in cash and cash equivalents and had working capital deficit of approximately $1,183,468, after a deduction of deferred revenue in the amount of approximately $201,598.

        We believe that we have sufficient funds for our working capital, capital expenditure and other cash requirement needs for the remainder of 2008. We believe that we will require additional funds for 2009. On September 15, 2008 our Board of Directors determined to seek additional working capital financing. DataSafe Group, our controlling shareholders and Nicolas, the Viscount Bearsted, a shareholder and a director of the Registrant (together the “Lenders”) , agreed to provide us with an interim $300,000 credit line bearing annual interest of 10%. In addition, for each $1.00 that is advanced to us, we will issue to the Lenders a warrant to purchase a share of common stock of our company at an exercise price per share equal to $0.50. In addition, the Lenders will be entitled to participate in a future financing (if completed by us) by way of converting each $1.00 lent within the credit line to $1.00 of such financing.

        The current economic climate and the uncertainty in the global financial markets resulting from the recent disruption in credit markets may affect our ability to raise additional funds. There can be no assurance that such additional financing will be available for us, or if available, will be on terms favorable to our company.

        Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our selling and marketing activities, the timing and extent of research and development spending to support product development and enhancement efforts, costs associated with expansion into new territories or markets, the timing of the introduction of new products and services and the enhancement of existing products and the continuing market acceptance of our products and services.

Cash Flows

        Our cash and cash equivalents, total current assets, total assets, total current liabilities, and total liabilities as at September 30, 2007 and September 30, 2008 are as follows:

	Nine Months Ended September 30,
	2008			2007
Net cash used in operating activities	$	(724,003	)	$	(279,283	)
Net cash used in investing activities		(102,535	)		(17,061	)
Net cash provided by (used in) financing activities		(116,617	)		398,792
Increase (decrease) in cash and cash equivalents		(943,155	)		102,448
Cash and cash equivalents at the beginning of the period		1,020,767			26
Cash and cash equivalents at end of period	$	77,612		$	102,474

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        Operating Activities. Net cash used by operating activities for the nine months ended September 30, 2008 was approximately $724,003. This amount was primarily attributable to our net loss of approximately $937,000. Net cash used in operating activities was approximately $279,383 for the nine months ended September 30, 2007. This amount was primarily attributable to our net loss of approximately $1,300,000, reduced by the amortization of deferred compensation in amount of $501,305 and by an increase in other payables in amount of $219,422.

        Investing Activities. Net cash used in investing activities was approximately $102,535 for the nine months ended September 30, 2008, primarily due to the investment of $100,000 for the purchase of the remaining 10% minority interest in our Israeli subsidiary. Net cash used in investing activities was approximately $17,061 for the nine months ended September 30, 2007. This was primarily attributable to capital expenditures primarily for leasehold improvements.

        Financing Activities. During the nine months ended September 30, 2008, the company repaid loans in amount of approximately $117,000. Net cash provided by financing activities was approximately $ 399,000 for the nine months ended September 30, 2007. Of the cash provided by financing activities in the period ended September 30, 2007, approximately $400,000 was provided by a bridge loan which we repaid late in 2007.

Contractual Obligations

        The following table summarizes our minimum contractual obligations and commercial commitments, as of September 30, 2008 and the effect we expect them to have on our liquidity and cash flow in future periods

	Payments Due by Period
Contractual Obligations	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Long-term debt obligations	$	1,033,334	$	465,667	$	567,667		-		-
Operating lease obligations		178,000		88,000		90,000		-		-
Estimated long-term interest		119,000		56,000		63,000		-		-
Total	$	1,330,334	$	609,667	$	720,667		-		-

        As of September 30, 2008, our principal commitments consisted of obligations outstanding under our long term debt, promissory notes and operating leases. Our capital requirements are dependent on many factors, including market acceptance of our software product offerings and the allocation of resources to our research and development efforts, as well as our marketing and sales activities. In the last year, we have experienced a substantial increase in our expenditures as a result of the growth in our operations and personnel. We intend to increase our expenditures in the future consistent with our anticipated growth. We anticipate that our cash resources will be used primarily to fund our operating activities, as well as for capital expenditures.

Recent Accounting Pronouncements

        In September 2006, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements” (SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and enhances fair value measurement disclosure. The measurement and disclosure requirements are effective for us beginning in the first quarter of fiscal 2008. Currently, we do not believe that the adoption of SFAS No. 157 will have a significant impact on our consolidated financial statements.

        In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS No. 159). SFAS No. 159 permits companies to choose to measure certain financial instruments and other items at fair value. The standard requires that unrealized gains and losses are reported in earnings for items measured using the fair value option. SFAS No. 159 is effective for us beginning in the first quarter of fiscal year 2008. We do not believe that the adoption of SFAS No. 159 will have a significant impact on its consolidated financial statements.

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        In September 2007, the FASB ratified Emerging Issues Task Force (EITF) Issue No. 07-3, “Accounting for Nonrefundable Advance Payments for Goods or Services to Be Used in Future Research and Development Activities” (EITF 07-3). EITF 07-3 requires non-refundable advance payments for goods and services to be used in future research and development activities to be recorded as an asset and the payments to be expensed when the research and development activities are performed. EITF 07-3 applies prospectively for new contractual arrangements entered into beginning in the first quarter of fiscal year 2008. The adoption of EITF 07-3 is not expected to have a significant impact on our consolidated financial statements.

        In December 2007, the FASB issued SFAS No. 141(R) “Business Combinations” (“SFAS 141(R)”) and SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statement” (“SFAS 160”). SFAS 141(R) requires the acquiring entity in a business combination to record all assets acquired and liabilities assumed at their respective acquisition-date fair values and changes other practices under FAS 141, some of which could have a material impact on how we account for business combinations. SFAS 141(R) also requires additional disclosure of information surrounding a business combination, such that users of the entity’s financial statements can fully understand the nature and financial impact of the business combination. SFAS 160 requires entities to report non-controlling (minority) interests in subsidiaries as equity in the consolidated financial statements. The Company are required to adopt SFAS 141(R) and SFAS 160 simultaneously in The Company’s fiscal year beginning January 1, 2009. The provisions of SFAS 141(R) will only impact the Company if it is a party to a business combination after the pronouncement has been adopted. Currently, we do not believe that the adoption of SFAS No. 160 has a significant impact on our consolidated financial statements.

        In March 2008, FASB issued FASB Statement No. 161 (“SFAS 161”), “Disclosures about Derivative Instruments and Hedging Activities”. SFAS 161 requires companies with derivative instruments to disclose information that should enable financial-statement users to understand how and why a company uses derivative instruments, how derivative instruments and related hedged items are accounted for under FASB Statement No. 133 “Accounting for Derivative Instruments and Hedging Activities” and how derivative instruments and related hedged items affect a company’s financial position, financial performance and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Currently, we do not believe that the adoption of SFAS No. 161 has any impact on our consolidated financial statements.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

        None.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

        Not applicable.

Item 4T. Controls and Procedures

        We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934, or the Exchange Act, reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our chief executive officer and chief financial officer to allow timely decisions regarding required disclosure. Our management, including our chief executive officer and chief financial officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our chief executive officer and chief financial officer have concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

        There was no change in our internal control over financial reporting that occurred during the period covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II – OTHER INFORMATION:

Item 1A. Risk Factors

        The Risk Factors listed below are in addition to those set forth in Item 1 of our Annual Report on Form 10-KSB for the year ended December 31, 2007.

Our business may be negatively affected by the current global economic and credit crisis.

        The current economic climate and the uncertainty in the global economic conditions resulting from the recent disruption in credit markets pose a risk to the overall economy that could impact customer demand for our products, as well as our ability to manage normal commercial relationships with our customers, suppliers and creditors. If the current situation deteriorates significantly, our business could be negatively impacted, including such areas as reduced demand for our products from a slow-down in the general economy, or supplier or customer disruptions resulting from tighter credit markets. In addition, the current credit crisis, and the increased difficulty in securing credit may affect our ability to raise additional funds in 2009.

Item 6. Exhibits

(a)  Exhibits  

31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.

31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under   the Securities Exchange Act of 1934, as amended.

32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to   Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

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

Dated: November 14, 2008 FUTREIT, INC.


By: /s/ Shmuel Bachar
——————————————
Shmuel Bachar
Chairman and Chief Executive Officer

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