QUARTERLY REPORT FOR SMALL BUSINESS ISSUERS SUBJECT TO THE 1934 ACT REPORTING REQUIREMENTS

FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

o QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES   EXCHANGE ACT OF 1934

For the Quarterly Period ended September 30, 2008

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES   EXCHANGE ACT OF 1934

Commission file number: 000-49950

InRob Tech Ltd.

(Exact name of Registrant as specified in its charter)

Nevada	88-0219239
(State or other Jurisdiction of	(IRS Employer
Incorporation or Organization)	Identification Number)

1515 Tropicana Ave, Suite 140

Las Vegas NV 89119

702-795-3601

(Address of Principal Executive Offices, Zip code)

702-795-3601

(Issuer’s Telephone Number)

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 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 ¨ .

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

Large accelerated filer   o Accelerated filer   o Non-accelerated filer   o Smaller reporting company  x

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

There were 380,000,000 shares of the Registrant's common stock outstanding as of November 14, 2008.

INROB TECH LTD. AND SUBSIDIARY

INDEX TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008, AND 2007

(Unaudited)

Financial Statements-
Consolidated Balance Sheets as of September 30, 2008, and December 31, 2007	F-2
Consolidated Statements of Operations and Comprehensive (Loss) for the Three Months and Nine Months Ended September 30, 2008, and 2007	F-3
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2008, and 2007	F-4
Notes to Consolidated Financial Statements September 30, 2008, and 2007	F-6

INROB TECH LTD. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS (NOTE 2)

AS OF SEPTEMBER 30, 2008, AND DECEMBER 31, 2007

(Unaudited)

	2008			2007
ASSETS
Current Assets:
Cash and cash equivalents	$	83,819		$	2,486,975
Accounts Receivable - Trade		315,992			360,650
Inventories		437,083			507,744
Cost of uncompleted contracts in excess of billings		163,064			56,407
Prepaid expenses		68,205			19,574
Total current assets		1,068,163			3,431,350
Property and Equipment:
Office and computer equipment		112,858			99,885
Furniture and fixtures		74,586			65,335
Vehicles		579,828			587,522
Leasehold improvements		53,015			43,760
		820,287			796,502
Less - Accumulated depreciation and amortization		(325,848	)		(352,700	)
Net property and equipment		494,439			443,802
Other Assets:
Deposits and other		1,085			586
Debt issuance costs, net		107,658			368,572
Loans to related party companies		289,654			274,061
Interest receivable on loan to Director and stockholder		60,748			46,537
Manufacturing deposit		2,978,000			982,000
Total other assets		3,437,145			1,671,756
Total Assets	$	4,999,747		$	5,546,908
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Bank overdrafts	$	360,154		$	191,870
Bank loans and other debt, current portion		77,811			46,931
Current portion of convertible notes		3,044,841			3,715,389
Accounts payable - Trade		275,461			228,272
Due to related party - Director and stockholder		-			2,849
Due to related party - Affiliate company		54,063			2,880
Billings on uncompleted contracts in excess of costs		117,993			195,341
Due to related party - Investor group		171,438			178,438
Accrued liabilities		342,267			252,260
Income tax payable		-			19,643
Deferred revenue		379,731			532,573
Total current liabilities		4,823,759			5,366,446
Long-term Debt, less current portion:
Bank loans and other debt		250,102			183,792
Convertible notes		-			750,000
Total long-term debt		250,102			933,792
Total liabilities		5,073,861			6,300,238
Commitments and Contingencies
Stockholders' (Deficit):
Preferred stock, par value $.0001 per share; 20,000,000 shares authorized; 1,000 Series A shares issued and outstanding		-			-
Additional paid-in capital		150,000			150,000
Common stock, par value $.0001 per share; 380,000,000 shares authorized; 380,000,000 and 79,134,307 shares issued and outstanding in 2008 and 2007, respectively		38,000			7,913
Additional paid-in capital		4,699,056			3,010,977
Less - Loan receivable - Director and stockholder		(475,000	)		(475,000	)
Accumulated other comprehensive income		53,774			54,525
Accumulated (deficit)		(4,539,944	)		(3,501,745	)
Total stockholders' (deficit)		(74,114	)		(753,330	)
Total Liabilities and Stockholders' (Deficit)	$	4,999,747		$	5,546,908

The accompanying notes to consolidated financial statements

are an integral part of these consolidated balance sheets.

F-2

INROB TECH LTD. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE (LOSS) (NOTE 2) FOR THE

THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2008, AND 2007

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
Revenues:
Services	$	475,323		$	379,938		$	1,437,547		$	1,137,018
Product sales		182			60,701			51,321			284,768
Total revenues		475,505			440,639			1,488,868			1,421,786
Cost of Goods Sold:
Services		304,067			363,560			926,717			1,216,144
Product sales		61			23,231			17,107			94,923
Total cost of goods sold		304,128			386,791			943,824			1,311,067
Gross Profit		171,377			53,848			545,044			110,719
Expenses:
General and administrative		184,599			623,113			981,979			1,291,554
Total general and administrative expenses		184,599			623,113			981,979			1,291,554
(Loss) from Operations		(13,222	)		(569,265	)		(436,935	)		(1,180,835	)
Other Income (Expense):
Interest and other income		58,730			49,082			74,384			138,257
Gain on disposal of asset		102			-			28,698			-
Loss on disposal of asset		(790	)		-			(9,585	)		-
Interest (expense)		(253,242	)		(371,251	)		(694,761	)		(687,331	)
Total other income (expense)		(195,200	)		(322,169	)		(601,264	)		(549,074	)
(Loss) before Income Taxes		(208,422	)		(891,434	)		(1,038,199	)		(1,729,909	)
(Provision) Benefit for income taxes		-			-			-			-
Net (Loss)		(208,422	)		(891,434	)		(1,038,199	)		(1,729,909	)
Comprehensive (Loss):
Israeli currency translation		6,389			(6,383	)		(751	)		(3,025	)
Total Comprehensive (Loss)	$	(202,033	)	$	(897,817	)	$	(1,038,950	)	$	(1,732,934	)
(Loss) Per Common Share:
(Loss) per common share - Basic and Diluted	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.03	)
Weighted Average Number of Common Shares Outstanding During the Periods- Basic and Diluted		289,789,824			67,289,465			197,875,475			65,221,781

The accompanying notes to consolidated financial statements are

an integral part of these consolidated statements.

F-3

INROB TECH LTD. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (NOTE 2)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008, AND 2007

(Unaudited)

	Nine Months Ended
	September 30,
	2008			2007
Operating Activities:
Net (loss)	$	(1,038,199	)	$	(1,729,909	)
Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Depreciation and amortization		113,244			67,390
Amortization of debt issuance costs		260,914			218,937
(Recovery of) loss on contract		-			(39,141	)
(Gain) Loss on sale of vehicles		9,585			1,177
Changes in net assets and liabilities-
Accounts receivable		44,658			(228,052	)
Inventories		70,661			286,031
Cost of uncompleted contracts in excess of billings		(106,657	)		143,605
Prepaid expenses and deposits		(49,130	)		(17,723	)
Manufacturing contract deposit		(1,996,000	)		-
Accounts payable - trade and accrued liabilities		434,814			339,589
Billings on uncompleted contracts in excess of related costs		(77,348	)		83,685
Deferred revenue		(152,842	)		(92,169	)
Income taxes payable and other		(19,643	)		-
Net Cash (Used in) Operating Activities		(2,505,943	)		(966,580	)
Investing Activities:
Proceeds from sale of vehicles		62,035			19,623
Purchases of and adjustments to property and equipment		(235,501	)		(140,500	)
Net Cash (Used in) Investing Activities		(173,466	)		(120,877	)
Financing Activities:
Proceeds from long-term debt		144,145			109,476
Payments on long-term debt		(46,955	)		(49,407	)
Proceeds from (offset to) bank overdrafts		168,284			93,962
Proceeds from issuance of convertible notes		-			3,000,000
Debt issuance costs - Convertible notes		-			(355,262	)
Proceeds from (payments to) loan from related party - Investor group		(7,000	)		17,236
Payments on (advances to) Loan - Director and stockholder		(19,940	)		(73,664	)
Received from (loans to) related party companies		38,470			(72,797	)
Net Cash Provided by Financing Activities		277,004			2,669,544
Effect of Exchange Rate Changes on Cash		(751	)		(3,025	)
Net Increase (Decrease) in Cash		(2,403,156	)		1,579,062
Cash and Cash Equivalents - Beginning of Period		2,486,975			2,278,371
Cash and Cash Equivalents - End of Period	$	83,819		$	3,857,433

The accompanying notes to consolidated financial statements are

an integral part of these consolidated statements.

F-4

INROB TECH LTD. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (NOTE 2)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008, AND 2007

(Unaudited)

Supplemental Disclosures of Cash Flow Information:

	Nine Months Ended
	September 30,
	2008		2007
Cash paid during the period for:
Interest	$	32,499	$	35,173
Income taxes	$	-	$	-

Supplemental Information of Noncash Investing and Financing Activities:

During the nine-month periods ended September 30, 2008, and 2007, the Company issued 300,965,693 shares and 8,546,776 shares of its common stock as payment of $1,420,548 and $1,382,292 of principal, and $297,620 and $139,784 of accrued interest on certain convertible notes, respectively.

The accompanying notes to consolidated financial statements are

an integral part of these consolidated statements.

F-5

INROB TECH LTD. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008, AND 2007

(Unaudited)

(1)Summary of Significant Accounting Policies

Organization and Basis of Presentation

Inrob Tech Ltd. (“Inrob Tech” or the “Company”) is a Nevada corporation which provides engineering products and services for the maintenance of critical and sophisticated equipment, and the integration and production of advanced wireless control solutions for unmanned ground vehicle (“UVR”) robots. The remote control systems of the Company are the “brains” for many UVR solutions. The current nature of Israel’s security situation coupled with the Company’s close work with the Israeli Defense Forces (“IDF”) and the Israeli police, has helped the Company gain extensive experience in a wide range of military and law enforcement UVR applications and control solutions. The Company has also targeted the civilian applications market, which includes solar powered equipment, and dangerous tasks such as nuclear plant maintenance, inspection and decommissioning, the demolition industry, and firefighting and rescue services. The accompanying consolidated financial statements of Inrob Tech were prepared from the accounts of the Company and its wholly owned subsidiary under the accrual basis of accounting in United States dollars. In addition, the accompanying consolidated financial statements reflect the completion of a reverse merger between Inrob Tech and Inrob Ltd. (“Inrob Israel”), which was effected on July 21, 2005.

Prior to the completion of the reverse merger, Inrob Tech was a near dormant corporation with virtually no assets or operations (essentially since April 1, 2001, when the Company sold its paging business, known as The Sports Page and Score Page to BeepMe, to a third-party vendor and creditor). The Company was originally incorporated in the State of Nevada under the name of Beeper Plus, Inc. On July 15, 2003, the Company then changed its name to Western Gaming Corporation. On August 17, 2005, the Company again changed its name to Inrob Tech Ltd. to reflect the reverse merger effected on July 21, 2005, and its new business plan.

Inrob Israel was organized as an Israeli corporation in 1988, under the name of Eligal Laboratories Ltd., and its UVR solutions include: (i) remote control systems (the “brains” of any robot); (ii) complete robot systems; and (iii) customized solutions. Inrob Israel is certified to design, manufacture and maintain electronic, optical, and electro-mechanical equipment, and is a certified supplier to the Israeli Defense Forces and the Israeli Air Force. It has also been issued a certificate from the Israeli Air Force stating that its quality system is approved to perform inspections of products and services supplied to the Israeli Air Force. Inrob Israel changed its name to Inrob Ltd. in September 2003.

The consolidated financial statements as of September 30, 2008, include the accounts of Inrob Tech Ltd., Inrob Israel through a reverse merger transaction, and a wholly owned subsidiary, Inrob Philippines, Incorporated. Intercompany transactions and balances have been eliminated in consolidation.

F-6

INROB TECH LTD. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008, AND 2007

(Unaudited)

Unaudited Interim Financial Statements

The interim consolidated financial statements as of September 30, 2008, and for the three-month and nine-month periods ended September 30, 2008, and 2007, are unaudited. However, in the opinion of management, the interim consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s consolidated financial position as of September 30, 2008, and the consolidated results of its operations and its cash flows for the three-month and nine-month periods ended September 30, 2008, and 2007. These results are not necessarily indicative of the results expected for the calendar year ending December 31, 2008. The accompanying consolidated financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States of America. Refer to Inrob Tech Ltd.’s audited financial statements contained in its Annual Report on Form 10-KSB as of December 31, 2007, for additional information, including significant accounting policies.

Cash and Cash Equivalents

For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

Accounts Receivable

Accounts receivable consist of amounts due from customers, employees and related parties. The Company establishes an allowance for doubtful accounts in amounts sufficient to absorb potential losses on accounts receivable. As of September 30, 2008, no allowance for doubtful accounts was deemed necessary. While management uses the best information available upon which to base estimates, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used for the purpose of analysis.

Revenue Recognition

The Company generates revenues from product sales and maintenance service contracts.

Revenues from product sales are recognized on a completed-contract basis, in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements” (“SAB No. 104”) and Statement of Position 81-1, “Accounting for Performance of Construction-Type and Certain Production-Type Contracts.” Revenue is recognized when delivery has occurred provided there is persuasive evidence of an agreement, acceptance tests results have been approved by the customer, the fee is fixed or determinable and collection of the related receivable is probable. Customers are billed, according to individual agreements, upon completion of the contract. All product costs are deferred and recognized on completion of the contract and customer acceptance. A provision is made for the amount of any expected loss on a contract at the time it is known.

F-7

INROB TECH LTD. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008, AND 2007

(Unaudited)

On-going maintenance service contracts are negotiated separately at an additional fee. The maintenance service is separate from the functionality of the products, which can function without on-going maintenance. Revenues relating to maintenance service contracts are recognized as the services are rendered ratably over the period of the related contract.

The Company is not required to perform significant post-delivery obligations, does not provide warranties and does not allow product returns. As such, no provision is made for costs of this nature.

The Company does not sell products with multiple deliverables. It is management’s opinion that EITF 00-21, “Revenue Arrangements With Multiple Deliverables,” is not applicable.

Property and Equipment

The components of property and equipment are stated at cost. Property and equipment costs are depreciated or amortized for financial reporting purposes over the useful lives of the related assets by the straight-line method. Useful lives utilized by the Company for calculating depreciation or amortization are as follows:

Computer and office equipment	5 to 10 years
Furniture and fixtures	3 to 15 years
Vehicles	5 to 6 years
Leasehold improvements	10 years

Upon disposition of an asset, its cost and related accumulated depreciation or amortization are removed from the accounts, and any resulting gain or loss is recognized.

Lease Obligations

All noncancellable leases with an initial term greater than one year are categorized as either capital or operating leases. Assets recorded under capital leases are amortized according to the same methods employed for property and equipment or over the term of the related lease, if shorter.

Impairment of Long-Lived Assets

The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives when events or circumstances lead management to believe that the carrying value of an asset may not be recoverable. For the periods ended September 30, 2008, and 2007, no events or circumstances occurred for which an evaluation of the recoverability of long-lived assets was required.

F-8

INROB TECH LTD. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008, AND 2007

(Unaudited)

Earnings (Loss) Per Common Share

Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

Common Stock Registration Expenses

The Company considers incremental costs and expenses related to the registration of equity securities with the SEC, whether by contractual arrangement as of a certain date or by demand, to be unrelated to original issuance transactions. As such, subsequent registration costs and expenses are reflected in the accompanying financial statements as general and administrative expenses, and are expensed as incurred.

Research and Development Costs

The Company conducts research and development activities for others under contractual arrangements. Research and development costs incurred under contractual arrangements are accounted for in accordance with Statement of Financial Accounting Standards No. 68, “Research and Development Agreements” (“SFAS No. 68”). All costs incurred under the contractual arrangements are deferred and recognized as cost of sales (product sales) upon completion of the contract work.

Deferred Offering Costs

The Company defers as other assets the direct incremental costs of raising capital until such time as the offering is completed. At the time of the completion of the offering, the costs are charged against the capital raised. Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated.

Debt Issuance Costs

The Company defers as other assets the costs associated with the issuance of debt instruments. Such costs are amortized as additional interest expense over the life of the related debt. During the period ended September 30, 2008, the Company amortized $260,914 of debt issuance costs related to convertible notes as additional interest expense.

Advertising and Promotion Costs

Advertising and promotion costs are charged to operations when incurred. For the periods ended September 30, 2008, and 2007, advertising and promotion costs amounted to $16,745 and $22,225, respectively.

F-9

INROB TECH LTD. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008, AND 2007

(Unaudited)

Comprehensive Income (Loss)

The Company presents comprehensive income (loss) in accordance with Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive Income” (“SFAS No. 130”). SFAS No. 130 states that all items that are required to be recognized under accounting standards as components of comprehensive income (loss) be reported in the financial statements. For the periods ended September 30, 2008, and 2007, the only components of comprehensive income (loss) were the net income (loss) for the periods, and the foreign currency translation adjustments.

Income Taxes

The Company accounts for income taxes pursuant to SFAS No. 109, “Accounting for Income Taxes” (“SFAS No. 109”). Under SFAS No.109, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.

Foreign Currency Translation

The Company accounts for foreign currency translation pursuant to SFAS No. 52, “Foreign Currency Translation” (“SFAS No. 52”). The Company’s functional currency is the Israeli New Shekel. Under SFAS No. 52, all assets and liabilities are translated into United States dollars using the current exchange rate at the end of each fiscal period. Revenues and expenses are translated using the average exchange rates prevailing throughout the respective periods. Translation adjustments are included in other comprehensive income (loss) for the period. Certain transactions of the Company are denominated in United States dollars. Translation gains or losses related to such transactions are recognized for each reporting period in the related statement of operations and comprehensive income (loss).

F-10

INROB TECH LTD. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008, AND 2007

(Unaudited)

Fair Value of Financial Instruments

The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of September 30, 2008, the Company’s financial instruments approximated fair value to do the nature and maturity of such instruments.

Estimates

The consolidated financial statements are prepared on the basis of accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of consolidated assets and liabilities as of September 30, 2008, and consolidated revenues and expenses for the periods ended September 30, 2008, and 2007. Actual results could differ from those estimates made by management.

(2)Going Concern

During the period ended September 30, 2008, and subsequent thereto, Inrob Tech continued its operations, business expansion, and capital formation activities through the issuance of convertible debt. On November 15, 2006, the Company completed a subscription agreement with a group of accredited investors for the issuance of Convertible Notes in the amount of $3,000,000. The maturity date of the Convertible Notes is two years from the date of issuance – November 15, 2008. Net proceeds to the Company amounted to $2,659,500, after deducting debt issuance costs. On March 27, 2007, the Company effected a second subscription agreement with a group of accredited investors for the issuance of Convertibles Notes also in the amount of $3,000,000. The maturity date of the second issuance of Convertible Notes is two years from the date of issuance – March 27, 2009. The second transaction was completed under essentially the same terms and conditions as the first issuance. In additional, under the terms of the transactional documents, all rights and benefits to be granted to the investor (including the security interest) are identical to and are intended to be shared equally with the holders of the Convertible Notes and warrants issued by the Company as of November 15, 2006. Proceeds from the second subscription agreement amounted to approximately $2,594,738 after debt issuance costs.

While management of the Company believes that the Company will be successful in increasing its working capital from operations and the generation of additional business revenues from new and existing clients, there can be no assurance that the Company will be able to generate the funds needed to meet its debt and working capital obligations under its business plan, or be successful in the sale of its products and services to generate sufficient revenues to allow the Company to achieve profitability, and to sustain its operations.

F-11

INROB TECH LTD. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008, AND 2007

(Unaudited)

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has incurred significant operating losses through September 30, 2008, and has insufficient cash resources and revenues to cover its on-going operating costs. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

(3)Inventories

As of September 30, 2008, inventories consisted of the following:

	2008
Work in progress	$	386,161
Materials		50,922
Total	$	437,083

(4)Loan Receivable – Director and Stockholder

As discussed in Note 9, in July 2005, Inrob Israel purchased, on behalf of Ben-Tsur Joseph, President, sole Director and stockholder, 2,057,415 shares of common stock of Inrob Tech in connection with the reverse merger. The amount of consideration provided by Inrob Israel for the shares was $475,000. Thereafter, Mr. Joseph entered into a Share Transfer and Loan Agreement with Inrob Israel whereby the company transferred to Mr. Joseph 2,057,415 shares of the common stock of Inrob Tech in exchange for a promissory note issued by Mr. Joseph in the amount of $475,000. The promissory note carries an interest rate of four percent per annum, and is payable to Inrob Israel on demand. As of September 30, 2008, the balance owed on the loan plus accrued interest amounted to $535,748. The Company has classified the amount of the promissory note due from Mr. Joseph, or $475,000, as an offset to common stock equity, due to the nature of the transaction as a common stock subscription arrangement.

(5)Loans to and Interest Receivable from Related Parties

Loans to related party entities bear interest at a variable rate equivalent to the minimum rate allowed by the Israel Income Tax Ordinance (4%), are unsecured, and are due, including principal and interest, on December 31, 2008. Interest receivable from Mr. Joseph associated with the loan transaction described in Note 4 above amounted to $60,748 as of September 30, 2008. The following summarizes the amounts receivable as of September 30, 2008:

F-12

INROB TECH LTD. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008, AND 2007

(Unaudited)

	2008
Ben-Tsur Joseph Holdings Ltd.	$	289,654
Totals	$	289,654

(6)Bank Indebtedness

The Company has certain loans and bank arrangements to fund its operations in Israel which begin to mature in early 2009.

(7)Manufacturing Deposit

On December 24, 2007, the Company through its wholly owned subsidiary, Inrob Philippines, Incorporated, entered into a Manufacturing Agreement with CP Communications Services, Inc. (“CPCOM”), a Philippines corporation located in Makati City, Philippines. The Agreement provides for the lease of the use of CPCOM's premises on a full turnkey basis. Under the terms of the Agreement, CPCOM is committing to manufacture, and the Company has the right to order products with a total value of up to $28,500,000. In order to secure this right, the Company was required to pay to CPCOM the amount of $2,950,000, of which $1,000,000 was due by December 31, 2007, with the balance due and payable by March 31, 2008. The Agreement will remain in effect for an unlimited period of time. However, the Agreement may be terminated by the Company at any time for any reason upon ten days prior notice without refund of any amounts paid to CPCOM. As of December 31, 2007, the Company had paid $980,000 to CPCOM, which was considered as satisfaction of the $1,000,000 obligation. As of March 31, 2008, the remaining amount due of $1,970,000 was paid by the Company to CPCOM. As of September 30, 2008, the total non-refundable deposit paid to CPCOM amounted to $2,978,000, and was classified as a manufacturing deposit in the accompanying consolidated balance sheets.

(8)Issuance of Convertible Notes and Warrants

On November 15, 2006, the Company effected a subscription agreement with a group of accredited investors under Regulation D of the Securities Act of 1933, as amended, which provided for the issuance to the investors, exempt from registration, of certain eight percent convertible notes (the “Convertible Notes”) in the principal amount of $3,000,000. The maturity date of the Convertible Notes is two years from the date of issuance – November 15, 2008.

Payments amortizing the outstanding principal amount and related interest under the Convertible Notes will commence on the third month anniversary date of the date of issuance (February 15, 2007) and on the same day of each month thereafter until the principal amount and interest have been repaid in full. On each repayment date, the Company is required to make payments to the investors in the amount of 4.76 percent of the initial principal amount and all interest accrued on the Convertible Notes as of the repayment date. Upon an event of default, the interest rate will automatically be increased to 15 percent. At the Company’s election, monthly repayments may be made (i) in cash in an amount equal to 115 percent of the principal amount component of the monthly payment, and 100 percent of all other components, or (ii) in shares of registered common stock of the Company at a conversion price equal to the lesser of (a) $0.25, or (b) 75 percent of the average of the closing bid price of the common stock of the Company as reported by Bloomberg L.P. for the common stock’s principal market for the five trading days preceding the date a notice of conversion given to the Company after the Company notifies the holder of the Convertible Notes of its election to make a monthly repayment in shares of registered common stock.

F-13

INROB TECH LTD. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008, AND 2007

(Unaudited)

Provided there is no default under the Convertible Notes, the Company may prepay the outstanding principal amount of the Convertible Notes at a 20 percent premium, together with accrued but unpaid interest thereon and any and all other sums due.

The investors have a right to convert the Convertible Notes into registered shares of common stock of the Company at $0.25 per share. Upon an event of default, the conversion price shall be the lesser of $0.25 or 75 percent of the average of the closing bid prices of the common stock of the Company for the five trading days prior to a conversion date. No conversions may take place if it would cause an investor to become the beneficial owner of more than 4.99 percent of the outstanding shares of common stock of the Company, which limitation is subject to waiver by an investor upon 61 days prior written notice to the Company.

The Company has granted a security interest in all of its assets, and the assets of Inrob Israel to secure its obligations under the Convertible Notes. Further, in connection with the Convertible Note transaction, the Company has determined that there was no beneficial conversion feature recorded.

The Company also issued Class A warrants to purchase 6,000,000 shares of the Company’s common stock at $0.40 per share and Class B warrants to purchase 6,000,000 shares of the Company’s common stock at $0.50 per share. All warrants are exercisable for a period of five years following the effective date of a registration statement filed with the SEC, which the Company agreed to complete.

The Company filed a Registration Statement on Form SB-2 with the SEC on December 20, 2006, to register 18,405,000 shares of common stock related to the Convertible Notes. The Registration Statement was declared effective by the SEC on January 11, 2007.

In connection with the issuance of the Convertible Notes, the Company incurred $340,500 in debt issuance costs, which included $300,000 paid in cash as a finder’s fee. The Company is obligated to pay additional finder’s fees in the amount of ten percent of the proceeds generated from the exercise of Class A and Class B warrants. In addition, the Company also issued 1,200,000 warrants to the finder (similar to and carrying the same rights as the Class A warrants issued to the investors in the Convertible Notes) to purchase a like number of shares of common stock of the Company for $0.25 per share. Such warrants are exercisable for a period of five years following the effective date of the Registration Statement filed by the Company with the SEC.

F-14

INROB TECH LTD. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008, AND 2007

(Unaudited)

On March 27, 2007, the Company effected a second subscription agreement with a group of accredited investors under Regulation D of the Securities Act of 1933, as amended, which provided for the issuance to the investors, exempt from registration, of certain 8 percent convertible notes (the “Convertible Notes”) in the principal amount of $3,000,000. The maturity date of the Convertible Notes is two years from the date of issuance – March 27, 2009. The transaction was completed under essentially the same terms and conditions as the first issuance described above. In additional, under the terms of the transactional documents, all rights and benefits to be granted to the investors (including the security interest) were identical to and intended to be shared equally with the holders of the Convertible Notes and warrants issued by the Company as of November 15, 2006. Proceeds from the second subscription agreement amounted to approximately $2,594,738 after debt issuance costs.

The Company filed a Registration Statement on Form SB-2 with the SEC on May 7, 2007, to register 18,405,000 shares of common stock related to the second issuance of Convertible Notes. Under the terms of the Subscription Agreement pertaining to the second issuance of Convertible Notes, the Company had 160 days from the date of filing a Registration Statement on Form SB-2 with the SEC to obtain an approval from the SEC on such Registration Statement. However, after filing two amendments to this Registration Statement with the SEC, on October 18, 2007, the Company withdrew the Registration Statement. Subsequently, on October 23, 2007, the Company entered into an amendment agreement (the “Amendment Agreement”) with the accredited investors to the second issuance of Convertible Notes of March 27, 2007. Under the terms of the Amendment Agreement, the Company was no longer required to register the shares issuable upon conversion of the Convertible Notes and exercise of the warrants issued in connection with the March 27, 2007, agreement. The interest rate under the second issuance of Convertible Notes was increased to 18 percent and was deemed to have accrued from the date of issuance (March 27, 2007) of the Convertible Notes. The Company is also required to make principal and interest payments under the Convertible Notes in common stock only at 75 percent of the average of the closing bid price of the common stock for the five trading days preceding the date an interest or principal payment, as the case may be, is due. In addition, the exercise price of the warrants was reduced to $0.25 and their expiration date was fixed at the sixth anniversary of the closing date of the March 2007 second issuance of Convertible Notes.

For the nine-month periods ended September 30, 2008, and 2007, the Company issued 300,965,693 shares and 8,546,776 shares of its common stock as payment of $1,420,548, and $1,382,292 of principal and $297,620, and $139,784 of accrued interest related to Convertible Notes, respectively.

(9)Capital Stock Transactions

On October 4, 2006, pursuant to authorization by the shareholders of the Company, Inrob Tech filed Amended Articles of Incorporation with the Nevada Secretary of State to increase the number of authorized shares of its common stock from 80,000,000 shares authorized to 380,000,000 shares, and to change the par value of its preferred and common stock from $0.001 per share to $0.0001 per share. Subsequent to the filing, the Company was authorized to issue a total of 400,000,000 shares, consisting of 380,000,000 shares of common stock and 20,000,000 shares of preferred stock, all with a par value of $0.0001 per share. In connection with the change in par value of preferred and common stock described above, all prior transactions involving common stock with a par value of $0.001 have restated to reflect the new par value of $0.0001 in the accompanying financial statements.

F-15

INROB TECH LTD. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008, AND 2007

(Unaudited)

On November 9, 2006, pursuant to written consent provided by the board of directors, the Company established 1,000 shares of Series A Preferred Stock, par value $0.0001 with the Nevada Secretary of State. Each share of Series A Preferred Stock carries voting rights equal to 400,000 shares of common stock of the Company. In addition, the board of directors authorized the issuance of 1,000 shares of Series A Preferred Stock to Mr. Ben-Tsur Joseph, President and Director of the Company for services rendered. The issuance of the Series A Preferred Stock was valued at $150,000.

As described in Note 8, in November 2006, the Company issued Class A warrants to purchase 6,000,000 shares of the Company’s common stock at $0.40 per share, and Class B warrants to purchase 6,000,000 shares of the Company’s common stock at $0.50 per share. In addition, 1,200,000 finder’s warrants were also issued to purchase 1,200,000 shares of the Company’s common stock at $0.25 per share. All warrants are exercisable for a period of five years following the effective date of a registration statement filed with the SEC, which the Company received on January 11, 2007.

In connection with the second issuance of Convertible Notes completed in March 2007, the Company also issued Class A warrants to purchase 6,000,000 shares of the Company’s common stock at $0.40 per share, and Class B warrants to purchase 6,000,000 shares of the Company’s common stock at $0.50 per share. In addition, 1,200,000 finder’s warrants were also issued to purchase 1,200,000 shares of the Company’s common stock at $0.25 per share. All warrants were exercisable for a period of five years following the effective date of a registration statement filed with the SEC. As described in Note 8, effective October 23, 2007, the exercise price of the warrants pertaining to the second issuance of Convertible Notes was reduced to $0.25 and their expiration date was fixed at the sixth anniversary of the closing date of the March 2007 second issuance of Convertible Notes.

On July 25, 2008, the Company filed a Preliminary Information Statement on Schedule 14C with the SEC. The shareholders of the Company were requested to approve the following actions: (1) to amend the Company's Articles of Incorporation in order to increase the number of authorized shares of common stock, par value $.0001 per share, of the Company from 380,000,000 shares to 1,000,000,000 shares; and (2) to amend the Company’s Articles of Incorporation to effect a reverse stock split of all of the outstanding shares of common stock of the Company at a ratio of 1 for 500. The Company will mail to the shareholders of record as of August 1, 2008, the information presented in the Schedule 14C, and the above mentioned actions will be taken 20 days after the mailing.

As of July 15, 2008, the Company had 380,000,000 shares of common stock issued and outstanding, par value $.0001 per share, of an authorized 380,000,000 shares of common stock. Until the increase in authorized shares and reverse stock split are effected as described above, the Company is unable to issue shares of its common stock. Due to this inability to issue additional shares of common stock, the Company may become delinquent on various obligations.

F-16

INROB TECH LTD. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008, AND 2007

(Unaudited)

(10)Related Party Transactions

Inrob Israel entered into a management agreement with a director and officer on October 1, 2003, which was subsequently extended as to its commencement date to May 1, 2005. Other terms and conditions related to equipment usage commenced with the original date of the agreement. Under the terms of the agreement, the Company is obligated to pay $15,000 per month during the first year and $20,000 per month thereafter for management fees. The management agreement does not have a specific completion date, but may be terminated by either party on written notice of three months.

As described in Note 9 above, in July 2005, Inrob Israel purchased, on behalf of Ben-Tsur Joseph, its President, Director, and sole stockholder, 2,057,415 shares of common stock of Inrob Tech in connection with the reverse merger. The amount of consideration provided by Inrob Israel for the shares was $475,000. Thereafter, Mr. Joseph entered into a Share Transfer and Loan Agreement with Inrob Israel whereby the company transferred to Mr. Joseph 2,057,415 shares of the common stock of Inrob Tech in exchange for a promissory note issued by Mr. Joseph in the amount of $475,000. The promissory note carries an interest rate of four percent per annum, and is payable to Inrob Israel on demand. The Company has classified the amount of the promissory note due from Mr. Joseph, or $475,000, as an offset to common stock equity, due to the nature of the transaction as a common stock subscription arrangement.

(11)Commitments and Contingencies

The Company is a party to various operating lease agreements for office space, warehouse space, and automobiles.

(12)Recent Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115" (SFAS No. 159), which permits entities to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. An entity would report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The decision about whether to elect the fair value option is applied instrument by instrument, with a few exceptions; the decision is irrevocable; and it is applied only to entire instruments and not to portions of instruments. SFAS No. 159 requires disclosures that facilitate comparisons (a) between entities that choose different measurement attributes for similar assets and liabilities and (b) between assets and liabilities in the financial statements of an entity that selects different measurement attributes for similar assets and liabilities. SFAS No. 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year provided the entity also elects to apply the provisions of SFAS No. 157. Upon implementation, an entity shall report the effect of the first re-measurement to fair value as a cumulative-effect adjustment to the opening balance of retained earnings. Since the provisions of SFAS No. 159 are applied prospectively, any potential impact will depend on the instruments selected for fair value measurement at the time of implementation. The management of the Company is currently evaluating the impact, if any, that the adoption of SFAS No. 159 will have on its financial statements.

F-17

INROB TECH LTD. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008, AND 2007

(Unaudited)

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51” (“SFAS No. 160”),which establishes accounting and reporting standards to improve the relevance, comparability, and transparency of financial information in its consolidated financial statements. This is accomplished by requiring all entities, except not-for-profit organizations, that prepare consolidated financial statements to (a) clearly identify, label, and present ownership interests in subsidiaries held by parties other than the parent in the consolidated statement of financial position within equity, but separate from the parent’s equity; (b) clearly identify and present both the parent’s and the noncontrolling’s interest attributable consolidated net income on the face of the consolidated statement of income; (c) consistently account for changes in parent’s ownership interest while the parent retains it controlling financial interest in subsidiary and for all transactions that are economically similar to be accounted for similarly; (d) measure of any gain, loss, or retained noncontrolling equity at fair value after a subsidiary is deconsolidated; and (e) provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. This Statement also clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No. 160 is effective for fiscal years and interim periods on or after December 15, 2008. The management of the Company does not expect the adoption of this pronouncement to have a material impact on its financial statements.

In March 2008, the FASB issued FASB Statement No. 161, “Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement 133” (“SFAS No. 161”). SFAS No. 161 enhances required disclosures regarding derivatives and hedging activities, including enhanced disclosures regarding how: (a) an entity uses derivative instruments; (b) derivative instruments and related hedged items are accounted for under FASB No. 133, “Accounting for Derivative Instruments and Hedging Activities”; and (c) derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Specifically, FASB No. 161 requires:

● Disclosure of the objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation;

● Disclosure of the fair values of derivative instruments and their gains and losses in a tabular format;

● Disclosure of information about credit-risk-related contingent features; and

● Cross-reference from the derivative footnote to other footnotes in which derivative-related information is disclosed.

F-18

INROB TECH LTD. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008, AND 2007

(Unaudited)

FASB No. 161 is effective for fiscal years and interim periods beginning after November 15, 2008. Earlier application is encouraged. The management of the Company does not expect the adoption of this pronouncement to have a material impact on its financial statements.

In May 2008, the FASB issued FASB Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States of America. The sources of accounting principles that are generally accepted are categorized in descending order as follows:

a) FASB Statements of Financial Accounting Standards and Interpretations, FASB Statement 133 Implementation Issues, FASB Staff Positions, and American Institute of Certified Public Accountants (AICPA) Accounting Research Bulletins and Accounting Principles Board Opinions that are not superseded by actions of the FASB.

b) FASB Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and Accounting Guides and Statements of Position.

c) AICPA Accounting Standards Executive Committee Practice Bulletins that have been cleared by the FASB, consensus positions of the FASB Emerging Issues Task Force (EITF), and the Topics discussed in Appendix D of EITF Abstracts (EITF D-Topics).

d) Implementation guides (Q&As) published by the FASB staff, AICPA Accounting Interpretations, AICPA Industry Audit and Accounting Guides and Statements of Position not cleared by the FASB, and practices that are widely recognized and prevalent either generally or in the industry.

On May 26, 2008, the FASB issued FASB Statement No. 163, “Accounting for Financial Guarantee Insurance Contracts” (“SFAS No. 163”). SFAS No. 163 clarifies how FASB Statement No. 60, “Accounting and Reporting by Insurance Enterprises” (“SFAS No. 60”), applies to financial guarantee insurance contracts issued by insurance enterprises, including the recognition and measurement of premium revenue and claim liabilities. It also requires expanded disclosures about financial guarantee insurance contracts.

The accounting and disclosure requirements of SFAS No. 163 are intended to improve the comparability and quality of information provided to users of financial statements by creating consistency. Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under SFAS No. 60, “Accounting and Reporting by Insurance Enterprises.” That diversity results in inconsistencies in the recognition and measurement of claim liabilities because of differing views about when a loss has been incurred under FASB Statement No. 5, “Accounting for Contingencies” (“SFAS No. 5”). SFAS No. 163 requires that an insurance enterprise recognize a claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation. It also requires disclosure about (a) the risk-management activities used by an insurance enterprise to evaluate credit deterioration in its insured financial obligations and (b) the insurance enterprise’s surveillance or watch list.

F-19

INROB TECH LTD. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008, AND 2007

(Unaudited)

SFAS No. 163 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years, except for disclosures about the insurance enterprise’s risk-management activities. Disclosures about the insurance enterprise’s risk-management activities are effective the first period beginning after issuance of SFAS No. 163. Except for those disclosures, earlier application is not permitted. Management of Inrob Tech does not expect the adoption of this pronouncement to have material impact on its financial statements.

F-20

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.

FORWARD-LOOKING STATEMENTS

The following discussion should be read in conjunction with our unaudited interim financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward-looking statements in the following discussion and elsewhere in this Report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control, and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on our behalf. We disclaim any obligation to update forward-looking statements.

PLAN OF OPERATIONS

Our operating subsidiary is Inrob Israel. Inrob Israel was established in 1988 as an engineering firm providing cost-efficient solutions for organizations to outsource maintenance of critical and sophisticated equipment. We now provide maintenance support of industrial electronic, electro-mechanical, optical, and other scientific equipment, mainly to customers in the defense industry.

Inrob Israel and its management team built on this engineering experience and customer base, and in 1992 expanded into a second area of operations. Today, on top of our maintenance and support services, we develop, integrate, and produce advanced wireless control solutions for unmanned ground vehicle robots. Our remote control systems are the "brains" for many UGV solutions.

The current nature of Israel's security situation coupled with our close work with the Israel Defense Forces and the Israeli police, has helped us gain extensive experience in a wide range of military and law enforcement UGV applications and control solutions. We have the ability to provide fast and reliable solutions to meet the immediate operational needs of front-line IDF units as they arise. We are also targeting the civilian applications market, which includes dangerous tasks such as nuclear plant maintenance, inspection and decommissioning, the demolition industry, and firefighting, and rescue services.

Our UGV solutions include:

· Remote control systems (the "brains" of any robot)

· Complete robot systems

· Customized solutions

We are certified to design, manufacture, and maintain electronic, optical, and electro-mechanical equipment and are a certified supplier to the Israel Defense Forces and the Israeli Air Force. We have also been issued a certificate from the Israeli Air Force stating that our quality system is approved to perform inspection of products and services supplied to the Israeli Air Force.

RESULTS OF OPERATIONS:

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

Revenues-

For the three months ended September 30, 2008, the Company recognized $475,505 in revenues compared to $440,639 for the same period in 2007, which resulted in an overall increase of $34,866, or 7.9%. The overall increase in revenues resulted primarily from an increase in services from $379,938 in 2007 to $475,323 in 2008, an increase of $93,385 or 25.1%. Product sales decreased from $60,701 in 2007 to $182 in 2008, a decrease of 99.7%. The increase in service revenues resulted from the completion of additional projects under contract during the quarter.

Cost of Goods Sold-

Cost of goods sold amounted to $304,128 compared to $386,791 for the same period in 2007, resulting in a decrease of $82,663, or 21.4%. The decrease was primarily attributed to reductions in salaries and wages, repairs and maintenance, insurance expenses offset by an increase in purchases and occupancy costs.

General and Administrative Expenses-

General and administrative expenses decreased from $623,113 in 2007, to $184,599 for the same period in 2008, resulting in an overall decrease of $438,514, or 70.4%. The decrease was primarily attributed to decreases in office expenses, telephone and communications expenses, professional fees, and repairs and maintenance costs, offset by increases in salaries and wages, auto expenses, depreciation, and insurance expenses.

Other Income (Expense)-

Other income (expense) for the three months ended September 30, 2008 amounted to an expense of $195,200, from an expense of $322,169 for the same period in 2007. The decrease of $126,969 was primarily attributable to a decrease in interest expense of $118,009, an increase in interest income of $9,648, offset by an increase in loss on disposal of fixed assets of $688.

Net (Loss)-

Net (Loss) for the three months ended September 30, 2007 went from a net loss of $(891,434) in 2007 to a net loss of $(208,422) for the same period in 2008. The decrease in the loss of $683,012, or 76.6%, was due to the net impact of the items described previously in 2008.

Comprehensive (Loss)-

Comprehensive (loss) for the three months ended September 30, 2008, decreased from a comprehensive loss of $(897,817) in 2007 to a comprehensive loss of $(202,033) in 2008, for an overall loss decrease of $695,784, or 77.5%. The decrease in the loss was due primarily to the business activities described above and fluctuations in Israeli currency.

Weighted Average Number of Shares Outstanding-

The weighted average number of common shares outstanding increased from 67,289,465 in 2007 to 289,789,824 in 2008. The increase was primarily due to various transactions that were completed involving our Common Stock, including conversions by holders of the Company’s convertible notes and the payments of principal and interest under those notes that were made in shares.

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

Revenues-

For the nine months ended September 30, 2008, the Company recognized $1,488,868 in revenues compared to $1,421,786 for the same period in 2007, which resulted in an overall increase of $67,082, or 4.7%. The overall increase in revenues resulted primarily from an increase in services from $1,137,018 in 2007 to $1,437,547 in 2008, and increase of $300,529 or 26.4%. Product sales decreased from $284,768 in 2007 to $51,321 in 2008, a decrease of $233,447, or 82.0%. The increase in service revenues resulted from the completion of additional projects under contract during the quarter.

Cost of Goods Sold-

Cost of goods sold amounted to $943,824 in 2008, compared to $1,311,067 for the same period in 2007, resulting in a decrease of $367,243, or 28.0%. The decrease was primarily attributed to decreases in management fees, telephone and communications expenses, professional fees, depreciation expense, and auto expenses offset by increases in travel and insurance expenses.

General and Administrative Expenses-

General and administrative expenses decreased from $1,291,554 in 2007, to $981,979 for the same period in 2008, resulting in an overall decrease of $309,575, or 24.0%. The decrease was primarily attributed to decreases in management salaries, office and supply expenses, professional fees, promotion and business expansion expenses, realized losses on foreign exchange transactions, auto transportation expenses, and depreciation expenses, offset by increases in advertising, repairs and maintenance, and travel.

Other Income (Expense)-

Other income (expense) for the nine months ended September 30, 2008 amounted to an expense of $601,264, from an expense of $549,074 for the same period in 2007. The increase in other expense of $52,190 was primarily attributable to an increase in interest expense of $7,430 related to the Company’s convertible notes and a decrease in interest and other income of $44,760.

Net (Loss)-

Net (Loss) for the nine months ended September 30, 2008 went from a loss of $(1,729,909) in 2007 to a net loss of $(1,038,199). The decrease in the loss of $691,710, or 40.0%, was due to the net impact of the items described previously in 2008.

Comprehensive (Loss)-

Comprehensive (loss) for the nine months ended September 30, 2008, decreased from a comprehensive loss of $(1,732,934) in 2007 to a comprehensive loss of $(1,038,199) in 2008, for an overall loss increase of $693,984, or 40.0%. The decrease in the loss was due primarily to the business activities described above and fluctuations in Israeli currency.

Weighted Average Number of Shares Outstanding-

The weighted average number of common shares outstanding increased from 65,221,781 in 2007 to 197,875,475 in 2008. The increase was primarily due to various transactions that were completed involving our Common Stock, including conversions by holders of the Company’s convertible notes and the payments of principal and interest under those notes that were made in shares.

Liquidity and Financial Resources

During the nine months ended September 30, 2008, net cash (used in) operating activities amounted to $2,505,943 when compared to net cash (used in) operating activities of $966,580 for the same period in 2007. The increase in net cash used in operations was primarily due to the net loss for the period, increases in cost of uncompleted contracts in excess of billings, prepaid expenses, and a manufacturing contract deposit, offset by the impact of debt issuance costs and depreciation, and decreases in accounts receivable, inventories and accounts payable – trade and accrued liabilities

Net cash (used in) investing activities in 2008 was primarily for the purchase of property and equipment and amounted to $173,466. In 2008, net cash provided by financing activities amounted to $277,004 when compared to net cash provided by financing activities of $2,669,544 for the same period in 2007. The decrease was primarily due to the fact that during 2007 the company received $3,000,000 in proceeds obtained from the issuance of convertible notes offset by $355,262 in debt issuance costs.

As of September 30, 2008, current liabilities exceeded current assets by $3,755,596, and the accumulated deficit amounted to $(4,539,944). We believe that our current cash on hand as of September 30, 2008, is not sufficient to sustain our operations for at least the next twelve months, and we will be required to obtain additional sources of debt and equity in the near future.

We cannot ensure that we will achieve sufficient growth or obtain sufficient financing to develop profitable operations prior to utilizing all of our current capital resources. We are currently investigating various ways to raise additional financing to sustain our operations. These financings may involve the issuance of additional debt or equity securities or a combination thereof. Any such issuances may have a dilutive effect on our current shareholders’ interests. There can be no assurance that we will be successful in our attempts to raise additional financing or that such additional financing will actually improve our operating results. If these financing programs are not successful in raising the capital we need, it may be necessary to curtail, or cease entirely our operations.

Recent Financing Activities

November 2006 Financing

On November 15, 2006, we issued to a group of accredited investors our 8% two-year convertible notes in the principal amount of $3,000,000. Amortizing payments of the outstanding principal amount and interest under the notes will commence on the third month anniversary date of the date of issuance of the Notes and on the same day of each month thereafter until the principal amount and interest have been repaid in full. On each payment date, we are required to make payments to the note holders in the amount of 4.76% of the initial principal amount and all interest accrued on the notes as of the payment date. At our election, monthly payments may be made (i) in cash in an amount equal to 115% of the principal amount component of the monthly payment and 100% of all other components, or (ii) in shares of our registered common stock at a conversion price equal to the lesser of (A) $0.25, or (B) 75% of the average of the closing bid price of our common stock for our common stock’s principal market for the five trading days preceding the date a notice of conversion is given to us after we notify the holder of the notes of its election to make a monthly payment in shares of our common stock. We may prepay the outstanding principal amount of the Notes at a 20% premium, together with accrued but unpaid interest thereon and any and all other sums due. The note holders have a right to convert the notes into shares of common stock at $0.25 per share. No conversions may take place if it would cause a holder to become the beneficial owner of more than 4.99% of the outstanding shares of our common stock, which limitation is subject to waiver by the holder upon 61 days prior written notice to us.

In connection with the notes, we also issued Class A Warrants to purchase 6,000,000 shares of our common stock at $0.40 per share and Class B Warrants to purchase 6,000,000 shares of our common stock at $0.50 per share. All warrants are exercisable for a period of five years following the effective date of the Registration Statement that was filed in connection with this financing transaction.  

March 2007 Financing

On March 27, 2007, we entered into and consummated a subscription agreement with a group of accredited investors providing for the issuance to the investors of our eight percent convertible notes in the principal amount of $3,000,000. The notes mature two years from the date of issuance.

Under the terms of the agreement, all rights and benefits to be granted to the investors (including the security interest) were identical to and are intended to be shared equally with holders of convertible notes and warrants issued by the Company as of November 15, 2006. In addition, all repayment and conversion terms of and registration rights relating to these notes were identical to those contained the notes issued in November 2006.

Most of the proceeds from this financing will be used to fund ongoing research and development. These activities will focus on new product development, upgrades to existing products, and engagement in joint ventures to develop new opportunities and markets for new and existing products.

On October 23, 2007, we entered into an amendment to the subscription agreement dated March 27, 2007. Under the terms of the amendment, we are no longer required to register the shares issuable upon conversion of the Notes and exercise of the warrants issued in connection with the Agreement. The interest under the Notes was increased to 18% and is deemed to have accrued from the date of issuance of the Notes. We will be required to make principal and interest payments under the Notes in common stock only. The exercise price of the warrants was reduced to $0.25 and their expiration date was fixed at the sixth anniversary of the closing date of the March financing.

Currently available cash will not be sufficient to sustain our operations. Unless we raise significant additional funds, we may be required to curtail our operations or cease to be a going concern. There can be no assurance that we will be able to raise additional funds on acceptable terms, if at all. If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of our shareholders will be reduced, shareholders may experience additional dilution and such securities may have rights, preferences, and privileges senior to those of our common stock.

Item 3. CONTROLS AND PROCEDURES.

Evaluation and Disclosure Controls and Procedures

The Company, under the supervision and with the participation of our management, under our Sole Executive Officer, filling the position of Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s “Disclosure Controls and Procedures,” as such term is defined in Rules 13a-15e promulgated under the Exchange Act as of this Report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer has concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Report to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms. The Company’s Chief Executive Officer and Chief Financial Officer has also concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act are accumulated and communicated to our management to allow timely decisions on required disclosure.

Management is aware that there is a lack of segregation of duties due to the small number of employees managing administrative and financial matters. This constitutes a significant deficiency in the financial reporting. Management has, as is required by Israeli Law and also to mitigate these factors, hired an independent accountant/bookkeeper to review and compile our financial statements on a quarterly and annual basis.

At this time, management has decided that considering the employees involved and the control procedures in place and the potential benefits of adding additional employees to clearly segregate duties does not justify the additional expense.

We will periodically reevaluate this situation. If the situation changes and sufficient capital is secured, it is our intention to increase staffing to mitigate the current lack of segregation of duties within the general administrative and financial functions.

Changes in Internal Controls

Management has evaluated the effectiveness of the disclosure controls and procedures as of September 30, 2008. Based on such evaluation, management has concluded that the disclosure controls and procedures were effective September 30, 2008, for their intended purpose described above. There were no changes to the internal controls during the three-month period ended September 30, 2008, that have materially affected or that are reasonably likely to affect the internal controls.

Limitations on the Effectiveness of Controls

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving its objectives. Our principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective at that reasonable assurance level.

PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS.

On January 20, 2008, the Israeli Antitrust authorities searched the Company's offices and questioned members of the Company's management in connection with an investigation involving allegations of price fixing.  The Antitrust authority has recently notified the Company that it had obtained the materials that it was looking for and will notify the Company whether or not it will take further action against the Company or its officers.  The Company is not aware of any wrongdoing on its part or on the part of any individuals involved with the Company.

From time to time the Company may be subject to litigation incidental to its business. The Company is not currently a party to any material legal proceedings.

Item 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

Item 5. OTHER INFORMATION.

None.

Item 6. EXHIBITS.

Exhibits.

The following exhibits are filed with this Report:

Exhibit 31.1 - Certification of CEO and CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32.1 - Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350

SIGNATURE

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

	INROB TECH LTD.
	/s/ BEN-TSUR JOSEPH
	Ben-Tsur Joseph,    Chief Executive Officer/  Chief Financial Officer
Date: November 14, 2008