UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549   FORM 10-KSB   X__ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the fiscal year ended June 30, 2006  ___TRANSITION REPORT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______.   TABATHA II, INC. (Exact name of registrant as specified in its charter  Colorado0-3175184-1536518(State or other jurisdiction of incorporation or organization)(Commission file number)(I.R.S. Employer Identification No.)1926 S. Oswego Way Aurora, Colorado
80014(Address of principal executive offices)   Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  X    No  Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes X  No  State issuer's revenue for its most recent fiscal year: $ -0-  State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked priced of such common equity, as of a specified date within the past 60 days (See definition of affiliate in Rule 12b-2 of the Exchange Act): -0-   - 1 -   Note: If determining whether a person is an affiliate will involve an unreasonable effort and expense, the issuer may calculate the aggregate market value of the common equity held by non-affiliates on the basis of reasonable assumptions, if the assumptions are stated.  (Issuers involved in bankruptcy proceedings during the past five years): Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes __ No __  (Applicable only to corporate registrants): State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 8,292,400 as of June 30, 2006.  Documents incorporated by reference.  If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-KSB (e.g. Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").  The listed documents should be clearly described for identification purposes.  Transitional Small Business Disclosure Format (Check one):  Yes __ NoX  - 2 -   PART I  ITEM 1. DESCRIPTION OF BUSINESS.  General  The Company was incorporated under the laws of the State of Colorado on March 17, 2000, and is in the early developmental and promotional stages.  To date, the Company's only activities have been organizational ones, directed at developing its business plan and raising its initial capital. The Company has not commenced any commercial operations. The Company has no full-time employees and owns no real estate. As of the end of its fiscal year June 30, 2006, the Company had not identified any business opportunity that it planned to pursue, nor had the Company reached any agreement or definitive understanding with any person concerning an acquisition. No assurance can be given that the Company will be successful in finding or acquiring a desirable business opportunity, given the limited funds that are expected to be available for acquisitions, or that any acquisition that occurs will be on terms that are favorable to the Company or its stockholders. The Company's search has been directed toward enterprises which have a desire to become a public corporation and which have a business plan designed to allow them to take advantage of opportunities available to public entities. This includes entities which have been recently organized, with no operating history, or a history of losses attributable to under-capitalization or other factors, entities in need of funds to develop a new product or service or to expand into a new market, entities which desire to use their securities to make acquisitions, and entities which have a combination of these characteristics. In searching for investment opportunities, the Company is not restricted to any particular geographical area or industry. Therefore, subject to economic conditions, limitations on its ability to locate available business opportunities, and other factors, the Company has substantial discretion in selecting an appropriate business opportunity. In connection with any acquisition, it is highly likely that an amount of stock constituting control of the Company would be issued by the Company or purchased from the Company's current principal shareholders by the target entity or its controlling shareholders.  Investigation and Selection of Business Opportunities  To a large extent, a decision to participate in a specific business opportunity may be made upon management's analysis of the quality of the other company's management and personnel, the anticipated acceptability of new products or marketing concepts, the merit of technological changes, and numerous other factors which are difficult, if not impossible, to analyze through the application of any objective criteria. In many instances, it is anticipated that the historical operations of a specific firm may not necessarily be indicative of the potential for the future because of the possible need to shift marketing approaches substantially, expand significantly, change product emphasis, change or substantially augment management, or make other changes. Because the Company may participate in a business opportunity with a newly organized firm or with a firm which is entering a new phase of growth, it should be emphasized that the Company will incur further risks, because management in many instances will not have proved its abilities or effectiveness, the eventual market for such company's products or services will likely not be established, and such company may not be profitable when acquired. It is anticipated that the Company will not be able to diversify, but will essentially be limited to one such venture because of the Company's limited financing. This lack of diversification will not permit the Company to offset potential losses from one business opportunity against profits from another, and should be considered an adverse factor affecting any decision to purchase the Company's securities. It is  - 3 -   emphasized that management of the Company may effect transactions having a potentially adverse impact upon the Company's shareholders pursuant to the authority and discretion of the Company's management to complete acquisitions without submitting any proposal to the stockholders for their consideration. Company management does not generally anticipate that it will provide holders of the Company's securities with financial statements, or any other documentation, concerning a target company or its business prior to any merger or acquisition.  In some instances, however, the proposed participation in a business opportunity may be submitted to the stockholders for their consideration, either voluntarily by Company management which elects to seek the stockholders' advice and consent, or because state law so requires.  The analysis of business opportunities will be undertaken by or under the supervision of the Company's executive officers and directors.  Although there are no current plans to do so, Company management might hire an outside consultant to assist in the investigation and selection of business opportunities, and in that event, might pay a finder's fee.  Since Company management has no current plans to use any outside consultants or advisors to assist in the investigation and selection of business opportunities, no policies have been adopted regarding use of such consultants or advisors, the criteria to be used in selecting such consultants or advisors, the services to be provided, the term of service, or regarding the total amount of fees that may be paid. However, because of the limited resources of the Company, it is likely that any such fee the Company agrees to pay would be paid in stock and not in cash. Otherwise, the Company anticipates that it will consider, among other things, the following factors:  (1) Potential for growth and profitability, indicated by new technology, anticipated market expansion, or new products;  (2) Strength and diversity of existing management, or management prospects that are scheduled for recruitment;  (3) Capital requirements and anticipated availability of required funds, to be provided from operations, through the sale of additional securities, through joint ventures or similar arrangements, or from other sources;  (4) The Company's perception of how any particular business opportunity will be received by the investment community and by the Company's stockholders;  (5) The availability of audited financial statements for the business opportunity; and  (6) Whether, following the business combination, the financial condition of the business opportunity would be, or would have a significant prospect in the foreseeable future of becoming sufficient to enable the securities of the Company to qualify for listing on an exchange or on a national automated securities quotation system, such as NASDAQ.  No one of the factors described above will be controlling in the selection of a business opportunity, and management will attempt to analyze all factors appropriate to the opportunity and make a determination based upon reasonable investigative measures and available data. Potential investors must recognize that, because of the Company's limited capital available for investigation and management's limited experience in business analysis, the Company may not discover or adequately evaluate adverse facts about the opportunity to be acquired. The Company is unable to predict when it may participate in a business opportunity and it has not established any deadline for completion of a transaction. It expects, however, that the process of seeking candidates, analysis of specific proposals and the selection of a business opportunity  - 4 -   may require several additional months or more. Company management believes that various types of potential merger or acquisition candidates might find a business combination with the Company to be attractive. These include acquisition candidates desiring to create a public market for their shares in order to enhance liquidity for current shareholders, acquisition candidates which have long-term plans for raising equity capital through the public sale of securities and believe that the possible prior existence of a public market for their securities would be beneficial, and acquisition candidates which plan to acquire additional assets through issuance of securities rather than for cash, and believe that the possibility of development of a public market for their securities will be of assistance in that process. Acquisition candidates which have a need for an immediate cash infusion are not likely to find a potential business combination with the Company to be an attractive alternative.  Form of Acquisition  It is impossible to predict the manner in which the Company may participate in a business opportunity. Specific business opportunities will be reviewed as well as the respective needs and desires of the Company and the promoters of the opportunity and, upon the basis of that review and the relative negotiating strength of the Company and such promoters, the legal structure or method deemed by management to be suitable will be selected. Such structure may include, but is not limited to leases, purchase and sale agreements, licenses, joint ventures and other contractual arrangements. The Company may act directly or indirectly through an interest in a partnership, corporation or other form of organization. Implementing such structure may require the merger, consolidation or reorganization of the Company with other corporations or forms of business organization. In addition, the present management and stockholders of the Company most likely will not have control of a majority of the voting shares of the Company following a reorganization transaction. As part of such a transaction, the Company's directors may resign and new directors may be appointed without any vote by stockholders. It is likely that the Company will acquire its participation in a business opportunity through the issuance of Common Stock or other securities of the Company. Although the terms of any such transaction cannot be predicted, it should be noted that in certain circumstances the criteria for determining whether or not an acquisition is a so-called "tax free" reorganization under the Internal Revenue Code of 1986, depends upon the issuance to the stockholders of the acquired company of at least 80% of the common stock of the combined entities immediately following the reorganization. If a transaction were structured to take advantage of these provisions rather than other "tax free" provisions provided under the Internal Revenue Code, the Company's stockholders in such circumstances would retain in the aggregate 20% or less of the total issued and outstanding shares. This could result in substantial additional dilution in the equity of those who were stockholders of the Company prior to such reorganization. Any such issuance of additional shares might also be done simultaneously with a sale or transfer of shares representing a controlling interest in the Company by the current officers, directors and principal shareholders. (See "Description of Business - General").  It is anticipated that any securities issued in any reorganization would be issued in reliance upon exemptions, if any are available, from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of the transaction, the Company may agree to register such securities either at the time the transaction is consummated, or under certain conditions at specified times thereafter. The issuance of substantial additional securities and their potential sale into any trading market that might develop in the Company's securities may have a depressive effect upon such market. The Company will participate in a business opportunity only after the negotiation and execution of a written agreement. Although the terms of such agreement cannot be predicted, generally such an agreement would require specific representations and warranties by all of the  - 5 -   parties thereto, specify certain events of default, detail the terms of closing and the conditions which must be satisfied by each of the parties thereto prior to such closing, outline the manner of bearing costs if the transaction is not closed, set forth remedies upon default, and include miscellaneous other terms.  Competition  The Company expects to encounter substantial competition in its efforts to locate attractive opportunities, primarily from business development companies, venture capital partnerships and corporations, venture capital affiliates of large industrial and financial companies, small investment companies, and wealthy individuals. Many of these entities will have significantly greater experience, resources and managerial capabilities than the Company and will therefore be in a better position than the Company to obtain access to attractive business opportunities. The Company also will experience competition from other public "blind pool" companies, many of which may have more funds available than does the Company.  Administrative Offices  The Company currently maintains a mailing address at 1926 S. Oswego Way, Aurora, Colorado 80014, which is the office address of its Secretary. The Company's telephone number there is (303) 752-4637. Other than this mailing address, the Company does not currently maintain any other office facilities, and does not anticipate the need for maintaining office facilities at any time in the foreseeable future. The Company pays no rent or other fees for the use of this mailing address.  Employees  The Company is a development stage company and currently has no employees. Management of the Company expects to use consultants, attorneys and accountants as necessary, and does not anticipate a need to engage any full-time employees so long as it is seeking and evaluating business opportunities. The need for employees and their availability will be addressed in connection with the decision whether or not to acquire or participate in specific business opportunities. No remuneration will be paid to the Company's officers except as set forth under "Executive Compensation" and under "Certain Relationships and Related Transactions."  CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.  Except for historical matters, the matters discussed in this Form 10-KSB are forward-looking statements based on current expectations, and involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements under the following headings:  (i)  "Description of Business - General" - the general description of the Company's plan to seek a merger or acquisition candidate, and the types of business opportunities that may be pursued.  (ii)  "Description of Business - Investigation and Selection of Business Opportunities" - the steps which may be taken to investigate prospective business opportunities, and the factors which may be used in selecting a business opportunity.   - 6 -   (iii) "Description of Business - Form of Acquisition" - the manner in which the Company may participate in a business acquisition. The Company wishes to caution the reader that there are many uncertainties and unknown factors which could affect its ability to carry out its business plan in the manner described herein.   ITEM 2. DESCRIPTION OF PROPERTY.  The Company currently maintains a mailing address at 1926 S. Oswego Way, Aurora, Colorado 80014, which is the address of its Secretary. The Company pays no rent for the use of this mailing address, however, for financial statement purposes, the Company has been expensing $50 per month as common stock for this use. The Company does not believe that it will need to maintain an office at any time in the foreseeable future in order to carry out its plan of operations described herein. The Company's telephone number is (303) 752-4637. The Company currently has no investments in real estate, real estate mortgages, or real estate securities, and does not anticipate making any such investments in the future. However, the policy of the Company with respect to investment in real estate assets could be changed in the future without a vote of security holders.  ITEM 3. LEGAL PROCEEDINGS.  The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated. No director, officer or affiliate of the Company and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.  No matters were submitted to a vote of the security holders of the Company during the fourth quarter of the fiscal year which ended June 30, 2006.   PART II  ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.  There is not currently a public trading market for the Company's securities. Such securities are currently held of record by a total of approximately 44 persons. No dividends have been declared or paid on the Company's securities, and it is not anticipated that any dividends will be declared or paid in the foreseeable future.  ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.  DISCLAIMER REGARDING FORWARD LOOKING STATEMENTS  Certain statements in this Form 10-KSB which are not statements of historical fact are what are known as "forward-looking statements," which are basically statements about the future. For that  - 7 -   reason, these statements involve risk and uncertainty since no one can accurately predict the future. Words such as "plans," "intends," "hopes," "seeks," "anticipates," "expects," and the like, often identify such forward looking statements, but are not the only indication that a statement is a forward-looking statement. Such forward-looking statements include statements concerning our plans and objectives with respect to our present and future operations, and statements which express or imply that such present and future operations will or may produce revenues, income or profits. These and other factors may cause our actual results to differ materially from any forward-looking statement.  We caution you not to place undue reliance on these forward-looking statements.  Although we base these forward-looking statements on our expectations, assumptions, and projections about future events, actual events and results may differ materially, and our expectations, assumptions, and projections may prove to be inaccurate. The forward-looking statements speak only as of the date hereof, and we expressly disclaim any obligation to publicly release the results of any revisions to these forward-looking statements to reflect events or circumstances after the date of this filing.  Overview  Tabatha II, Inc. (a development stage company) (the "Company") was incorporated under the laws of the State of Colorado on March 17, 2000. The principal office of the corporation is 1926 South Oswego Way, Aurora, Colorado 80014.  The Company is an enterprise in the development stage as defined by Statement No.7 of the Financial Accounting Standards Board and has not engaged in any business other than organizational efforts. It has no full-­time employees and owns no real property. The Company intends to operate as a capital market access corporation and has registered with the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934. The Company intends to seek to acquire one or more existing businesses that have existing management, through merger or acquisition. Management of the Company will have virtually unlimited discretion in determining the business activities in which the Company might engage.  Liquidity and Capital Resources  As of June 30, 2006, the Company remains in the development stage. For the fiscal year ended June 30, 2006, the Company's balance sheet reflects current and total assets of $1,937, in the form of cash, and current liabilities of $541. For the fiscal year ended June 30, 2006, operating expenses and losses narrowed to $3,214 as compared to operating losses of $12,444 at June 30, 2005.  The Company will carry out its plan of business as discussed above. The Company cannot predict to what extent its liquidity and capital resources will be diminished prior to the consummation of a business combination or whether its capital will be further depleted by the operating losses (if any) of the business entity which the Company may eventually acquire.  The Company issued 150,000 shares of its common stock for $3,000 to non-affiliated shareholders during the year ended June 30, 2006.  Results of Operations  During the period from March 17, 2000 (inception) through June 30, 2006, the Company has engaged in no significant operations other than organizational activities, acquisition of capital and preparation and filing of its registration statement on Form 10-SB under the Securities Exchange Act of 1934, as amended, compliance with its periodical reporting requirements and  - 8 -   initial efforts to locate a suitable merger or acquisition candidate. No revenues were received by the Company during this period.  Plan of Operations  For the fiscal year ending June 30, 2007, the Company expects to continue its efforts to locate a suitable business acquisition candidate and thereafter to complete a business acquisition transaction. The Company anticipates incurring a loss for the fiscal year as a result of expenses associated with compliance with the reporting requirements of the Securities Exchange Act of 1934, and expenses associated with locating and evaluating acquisition candidates.  The Company does not expect to generate revenues until it completes a business acquisition, and, depending upon the performance of the acquired business, it may also continue to operate at a loss after completion of a business combination.  Need for Additional Financing  During the fiscal year ending June 30, 2007, the Company plans to continue with efforts to seek, investigate, and, if warranted, acquire one or more properties or businesses. The Company also plans to file all required periodical reports and to maintain its status as a fully-reporting Company under the Securities Exchange Act of 1934. In order to proceed with its plans for the next year, it is anticipated that the Company will require additional capital in order to meet its cash needs. These include the costs of compliance with the continuing reporting requirements of the Securities Exchange Act of 1934, as amended, as well as any costs the Company may incur in seeking business opportunities. No specific commitments to provide additional funds have been made by management or other stockholders, and the Company has no current plans, proposals, arrangements or understandings with respect to the sale or issuance of additional securities prior to the location of a merger or acquisition candidate. Accordingly, there can be no assurance that any additional funds will be available to the Company to allow it to cover its expenses. Notwithstanding the foregoing, to the extent that additional funds are required, the Company anticipates receiving such funds in the form of advancements from current shareholders without issuance of additional shares or other securities, or through the private placement of restricted securities rather than through a public offering. The Company may also seek to compensate providers of services by issuances of stock in lieu of cash. For information as to the Company's policy in regard to payment for consulting services, see "Certain Relationships and Transactions."  ITEM 7. FINANCIAL STATEMENTS.  See following pages.   - 9 -           TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY)   INDEX TO FINANCIAL STATEMENTS   PAGEINDEX TO FINANCIAL STATEMENTS10REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM11BALANCE SHEET12STATEMENTS OF OPERATIONS13STATEMENTS OF STOCKHOLDERS EQUITY14-15STATEMENTS OF CASH FLOWS16NOTES TO FINANCIAL STATEMENTS17-23            - 10 -        REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    To The Board of Directors and Stockholders of TABATHA II, INC. Aurora, Colorado  We have audited the accompanying balance sheet of TABATHA II, INC. (a development stage company) as of June 30, 2006 and 2005, and the related statements of operations, stockholders equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.  We did not audit the financial statements of TABATHA II, INC. for the year ended June 30, 2004 or for the period from March 17, 2000 {inception} to June 30, 2004.  Those statements were audited by other auditors whose reported thereon dated July 18, 2004 expressed an unqualified opinion with a going concern explanatory paragraph.  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.  In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of TABATHA II, INC. as of June 30, 2006 and 2005, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.     Child, Van Wagoner & Bradshaw, PLLC Kaysville, Utah August 24, 2006  - 11 -     TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY)  BALANCE SHEET  June 30,ASSETS2006Current assetsCash$             1,937Total current assets1,937Total assets$             1,937LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilitiesAccounts payable and accrued liabilities$                541Total current liabilities541Stockholders' equityPreferred stock: no par value; 10,000,000 shares authorized; no shares issued and outstanding-Common stock: no par value; 100,000,000 shares authorized; 8,292,400 shares issued and outstanding94,275Deficit accumulated during the development stage(92,879)Total stockholders' equity1,396Total liabilities and stockholders' equity$             1,937        See notes to financial statements.  - 12 -      TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY)  STATEMENTS OF OPERATIONS  Year endedPeriod from
March 17, 2000
[inception] toJune 30,June 30,200620052006Revenues$                      -$                      -$                      -Operating expensesSelling, general and administrative expense7248,79366,563Accounting1,9003,05112,365Consulting--5,000Legal--4,174Rent6006003,750Office supplies--1,279Total operating expenses3,22412,44493,131Operating loss(3,224)(12,444)(93,131)Other incomeInterest income103252Total other income103252Net loss before income taxes(3,214)(12,441)(92,879)Provision for income taxes---Net loss$             (3,214)$           (12,441)$           (92,879)Basic and diluted net loss per share$               (0.00)$               (0.00)Weighted average number of shares outstanding8,288,6008,189,067       See notes to financial statements.  - 13 -      TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY)  STATEMENTS OF STOCKHOLDERS EQUITY FOR THE PERIOD FROM MARCH 17, 2000 [INCEPTION] TO JUNE 30, 2006   DevelopmentCommon StockStagePreferred StockCommon Stockissued  forAccumulatedSharesAmountSharesAmountPrepaid ServicesDeficitTotalBalance at March 17, 2000 (date of inception)-$                  --$                  -$                       -$                  -$                  -Common stock issued for cash - 03/01/00--900,0004,500--4,500Common stock issued for services - 03/01/00--8,100,00040,500--40,500Common stock issued for services - 04/01/00--300,0003,000--3,000Common stock issued for cash - 04/03-05/30/00--660,0006,600--6,600Common stock issued for services - 05/18/00--2,50025--25Rent at no charge---150--150Net loss for the period-----(44,766)(44,766)Balance June 30, 2000--9,962,50054,775-(44,766)10,009Common stock warrants issued for services - 12/04/00---13,300--13,300Rent at no charge---600--600Net loss for the year-----(17,266)(17,266)Balance June 30, 2001--9,962,50068,675-(62,032)6,643Rent at no charge---600--600Net loss for the year-----(3,170)(3,170)Balance June 30, 2002--9,962,50069,275-(65,202)4,073Common stock issued for cash - 03/01/00--99,9001,000--1,000Rent at no charge---600--600Net loss for the year-----(3,737)(3,737)Balance June 30, 2003--10,062,40070,875(68,939)1,936Common stock surrendered - 03/01/04--(2,850,000)----Common stock issued for cash - 05/21/04--75,0001,500--1,500Common stock issued for cash - 05/26/04--125,0002,500--2,500Common stock issued for services - 05/27/04--600,00012,000(12,000)--Common stock issued for services - 05/31/04--50,0001,000(1,000)--Common stock issued for cash - 05/31/0475,0001,500--1,500Common stock issued for cash - 06/09/04--50,0001,000--1,000Rent at no charge---600--600Net loss for the year----4,300(8,285)(3,985)Balance June 30, 2004--8,187,40090,975(8,700)(77,224)5,051Common stock cancelled--(50,000)(1,000)1,000--Common stock issued for cash - 03/01/05--5,000100--100Rent at no charge---600--600Net loss for the year----7,700(12,441)(4,741)Balance June 30, 2005--8,142,40090,675-(89,665)1,010Common stock issued for cash - 11/05/05--150,0003,000--3,000  - 14 -       Rent at no charge---600--600Net loss for the year-----(3,214)(3,214)Balance June 30, 2006-$                  -8,292,400$        94,275$                       -$    (92,879)$          1,396     See notes to financial statements            - 15 -      TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY)  STATEMENTS OF CASH FLOWS  Year endedPeriod from
March 17, 2000 [inception] toJune 30,June 30,200620052006Cash flows from operating activities:Net loss$          (3,214)$        (12,441)$          (92,879)Adjustments to reconcile net loss tonet cash used in operations:Rent paid with shares6006003,750Stock issued for services--68,825Changes in operating liabilities and assets:Stock issued for prepaid services-7,700-Increase in accounts payable-107541Net cash used in operating activities(2,614)(4,034)(19,763)Cash flows from financing activities:Issuance of common stock3,00010021,700Net cash provided by financing activities3,00010021,700Increase (decrease) in cash and cash equivalents386(3,934)1,937Cash and cash equivalents, beginning of period1,5515,485-Cash and cash equivalents, end of period$           1,937$           1,551$             1,937Supplemental disclosures of cash flow information:Cash paid for interest$                   -$                   -Cash paid for income taxes$                   -$                   -Non-cash financing activity:Rent paid with shares$               600$               600    See notes to financial statements.    - 16 -       TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY)  NOTES TO FINANCIAL STATEMENTS  1. BUSINESS DESCRIPTION - ORGANIZATION  Tabatha II, Inc. (a development stage company) (the "Company") was incorporated under the laws of the State of Colorado on March 17, 2000. The principal office of the corporation is 1926 South Oswego Way, Aurora, Colorado 80014.  The Company is an enterprise in the development stage as defined by Statement No.7 of the Financial Accounting Standards Board and has not engaged in any business other than organizational efforts. It has no full­time employees and owns no real property. The Company intends to operate as a capital market access corporation and has registered with the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934. The Company intends to seek to acquire one or more existing businesses that have existing management, through merger or acquisition. Management of the Company will have virtually unlimited discretion in determining the business activities in which the Company might engage.  2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  BASIS OF PRESENTATION  The financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).  FISCAL YEAR  The fiscal year of the Company is June 30.  LOSS PER SHARE  Basic loss per common share is calculated using the weighted average number of shares outstanding during the period. Diluted loss per common share is calculated by adjusting the weighted outstanding shares, assuming conversion of all potentially dilutive stock options. At June 30, 2006 there were no potentially dilutive stock options outstanding.  FINANCIAL INSTRUMENTS  Unless otherwise indicated, the fair value of all reported assets and liabilities that represent financial instruments, none of which are held for trading purposes, approximate the carrying values of such assets and liabilities.  - 17 -      TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY)  NOTES TO FINANCIAL STATEMENTS   2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)  ORGANIZATION COSTS  The Company, in accordance with the provisions of the American Institute of Certified Public Accountants' Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-up Activities, expenses all start-up and organizational costs as they are incurred.  STATEMENT OF CASH FLOWS  For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.  USE OF ESTIMATES  The preparation of the Company's financial statements in conformity with generally accepted accounting principles requires the Company's management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates.  STOCK BASIS  Shares of common stock issued for other than cash have been assigned amounts equivalent to the fair value of the service or assets received in exchange.  IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS  In August 2001, the FASB issued Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS 144"). FAS 144 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. The Company has implemented FAS 144 for this fiscal year. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates.  No impairment was recorded in the fiscal year ending June 30, 2006.  - 18 -      TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY)  NOTES TO FINANCIAL STATEMENTS  3. STOCKHOLDERS EQUITY  As of June 30, 2006, 100,000,000 shares of the Company's no par value common stock had been authorized, of which 8,242,400 were issued and outstanding.  The Company is authorized to issue up to 10,000,000 shares of preferred stock, in series, as determined by the Board of Directors. As of June 30, 2006, no preferred shares have been designated or issued.  150,000 shares of common stock were issued on November 02, 2005 for cash of $3,000.  Warrants to purchase 2,660,000 shares of common stock at $0.05 per share were issued on December 4, 2000. The warrants were issued for services valued at $13,300. The warrants were to expire on December 3, 2004. The warrants were surrendered and cancelled by the Company in the year ended June 30, 2004.  On March 1, 2004, 2,850,000 shares of common stock were surrendered by the president of the Company concurrent with his resignation as president and director. The Company immediately cancelled these shares.  75,000 shares of common stock were issued on May 21, 2004 for cash of $1,500.  125,000 shares of common stock were issued on May 26, 2004 for cash of $2,500.  600,000 shares of common stock were issued on May 27, 2004. The shares were issued for services valued at $12,000. The services were provided from March 2004 to March 2005 and resulted in expenses of $7,700 and $4,300 for the years ended June 30, 2005 and 2004.  50,000 shares of common stock were issued on May 31, 2004. The shares were issued for prepaid services valued at $1,000. The services were to be provided from March 2004 to March 2005. The services were never provided, so the shares were subsequently cancelled.  75,000 shares of common stock were issued on May 31, 2004 for cash of $1,500.  50,000 shares of common stock were issued on June 9, 2004 for cash of $1,000.  On March 1, 2005, 5,000 shares of common stock were issued for cash of $100.  - 19 -      TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY)  NOTES TO FINANCIAL STATEMENTS   4. RELATED PARTY TRANSACTIONS  As of the date hereof, officers and directors of the Company are the owners of 5,741,600 shares of its issued and outstanding common stock, constituting approximately 69% of the Company's issued and outstanding common stock. The shares were issued for cash and services from $0.005 to $0.02 per share.  Officers and directors are reimbursed for all out-of-pocket expenses.  Rent is being provided to the Company at no charge. For purposes of the financial statements, the Company is accruing $50 per month as common stock for this use.  5. INCOME TAXES  The Company has Federal net operating loss carry forwards of approximately $92,879 expiring between the years 2020 through 2026. The tax deferred benefit of these net operating losses is approximately $37,152 and has been offset by a full valuation allowance due to uncertainty regarding their realization. For the year ended June 30, 2006, the allowance increased by $1,286. These carryforwards may be limited upon consummation of a business combination under IRC Section 381.  6. RECENT ACCOUNTING PRONOUNCEMENTS  In November 2004, the FASB issued SFAS No. 151, Inventory Costs-an amendment of ARB No. 43, Chapter 4.  This statement requires that abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal."  SFAS No. 150 was effective for financial statements entered into or modified after May 31, 2003 and otherwise was effective and adopted by the Company in 2003.  Management does not believe the adoption of this statement will have a material impact on the Company as the Company maintains no inventory.  In December 2004, the FASB issued SFAS No. 152, Accounting for Real Estate Time-Sharing Transactions-an amendment of FASB Statement No. 66 and 67.  This statement amends FASB Statement No. 66 and 67 to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. This statement is effective for financial statements for fiscal years beginning after June 15, 2005.  Management does not believe the adoption of this statement will have a material impact on the Company as the Company does not record nor have any real estate time-sharing transactions.    - 20 -      TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY)  NOTES TO FINANCIAL STATEMENTS   6. RECENT ACCOUNTING PRONOUNCEMENTS (Continued)  In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment. SFAS 123(R) is a revision of SFAS No., 123, Accounting for Stock Based Compensation, and supersedes APB No. 25, Accounting for Stock Issued to Employees. Among other items SFAS 123(R) eliminates the use of APB 25 and the intrinsic value method of accounting, and requires companies to recognize the cost of employee services received in exchange for awards of equity instruments, based on the grant date fair value of those awards, in the financial statements. The Company began recognizing compensation expense for the fair value of stock-based compensation in its financial statements in accordance with SFAS 123 in 2003. The effective date of SFAS 123(R) is the first annual reporting period beginning after June 15, 2005. The adoption of SFAS 123(R) did not have a material impact on the Companys financial position, results of operations or cash flows.  In March 2005, the SEC staff issued additional guidance on SFAS 123(R) in the form of SAB. 107. SAB 107 was issued to assist preparers by simplifying some of the implementation challenges of SFAS 123(R) while enhancing the information that investors receive. SAB 107 creates a framework that is premised on two themes: (a) considerable judgment will be required by preparers to successfully implement SFAS 123(R), specifically when valuing employee stock options; and (b) reasonable individuals, acting in good faith, may conclude differently on the fair value of employee share options. Key topics covered by SAB 107 include: (a) valuation models - SAB 107 reinforces the flexibility allowed by SFAS 123(R) to choose an option-pricing model that meets the standards fair value measurement objective; (b) expected volatility - the SAB provides guidance on when it would be appropriate to rely exclusively on either historical or implied volatility in estimating expected volatility; and (c) expected term - the new guidance includes examples and some simplified approaches to determining the expected term under certain circumstances. The Companys adoption of the principles of SAB 107 in conjunction with its adoption of SFAS 123(R) did not have material impact on the Companys financial statements or results of operations.  In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29. SFAS No. 153 addresses the measurement of exchanges of nonmonetary assets and redefines the scope of transactions that should be measured based on the fair value of the assets exchanged. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005.  The adoption of SFAS No. 153 did not have a material impact on the Companys financial statements or results of operations.  In January 2003, the FASB issued FASB Interpretation (FIN) No. 46, (FIN 46), Consolidation of Variable Interest Entities (VIE). Until this interpretation, the Company generally included entities in its consolidated financial statements only if it controlled the entity  - 21 -      TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY)  NOTES TO FINANCIAL STATEMENTS   6. RECENT ACCOUNTING PRONOUNCEMENTS (Continued)  through voting interests. FIN No. 46 requires a variable interest entity, as defined, to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entitys activities or entitled to receive a majority of the entitys residual returns. FIN No. 46 is effective for reporting periods ending after December 15, 2003. The adoption of FIN No. 46 did not have a material impact on the Companys Financial Statements as of December 31, 2005.  In March 2005, FASB issued FASB Interpretation No. 47 (FIN 47), Accounting for Conditional Asset Retirement Obligations. FIN 47 clarifies that the term Conditional Asset Retirement Obligation as used in FASB Statement No. 143, Accounting for Asset Retirement Obligations, refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. Accordingly, an entity is required to recognize a liability for the fair value of a Conditional Asset Retirement Obligation if the fair value of the liability can be reasonably estimated. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005. The adoption of FIN 47 did not have a material affect on the Companys financial position, results of operations or cash flows.  In May 2005, the Financial Accounting Standards Board (FASB) issued SFAS No. 154, Accounting Changes and Error Corrections (SFAS No. 154), which replaced Accounting Principles Board Opinion No. 20, Accounting Changes and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS No. 154 changes the requirements for the accounting for and reporting of a change in accounting principles. It requires retrospective application to prior periods financial statements of changes in accounting principles, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.  The impact on the Companys operations will depend on future accounting pronouncements or changes in accounting principles.  In February 2006, the FASB issued SFAS No. 155 Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140.  This statement improves financial reporting by eliminating the exemption from applying Statement 133 to interests in securitized financial assets so that similar instruments are accounted for similarly regardless of the form of the instruments.  This statement is effective for all financial instruments acquired or issued after the beginning of an entitys first fiscal year that begins after September 15, 2006.  Management believes the adoption of this statement will have no impact on the financial statements of the Company.   - 22 -      TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY)  NOTES TO FINANCIAL STATEMENTS   6. RECENT ACCOUNTING PRONOUNCEMENTS (Continued)  In March 2006, the FASB issued SFAS No. 156 Accounting for Servicing of Financial Assets-an amendment of FASB Statement No. 140.  This statement requires that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. SFAS No. 156 states that an entity should adopt this statement as of the beginning of its first fiscal year that begins after September 15, 2006.  Management believes the adoption of this statement will have no impact on the financial statements of the Company.             - 23 -      ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  On or about January 1, 2006, Child, Sullivan & Company, the principal accountant for Tabatha II, Inc. (the "Company") changed its accounting practice from a corporation to a professional limited liability company named Child, Van Wagoner & Bradshaw, PLLC.  As this is viewed as a separate legal entity, the Company terminated its accounting arrangement with Child, Sullivan & Company as principal accountant and engaged Child, Van Wagoner & Bradshaw, PLLC, as the Company's principal accountants for the Company's fiscal year ending June 30, 2006 and the interim periods for 2005 and 2006.  The decision to change principal accountants was approved by the Audit Committee of the Company's Board of Directors and subsequently approved by the Board of Directors.  None of the reports of Child, Sullivan & Company, on the Company's financial statements for either of the past two years or subsequent interim period contained an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles.  There were no disagreements between the Company and Child, Sullivan & Company, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Child, Sullivan & Company, would have caused them to make reference to the subject matter of the disagreement in connection with its report. Further, Child, Sullivan & Company has not advised the Registrant that:  1) internal controls necessary to develop reliable financial statements did not exist; or  2) information has come to the attention of Child, Sullivan & Company which made it unwilling to rely upon management's representations, or made it unwilling to be associated with the financial statements prepared by management; or  3) the scope of the audit should be expanded significantly, or information has come to the attention of Child, Sullivan & Company that they have concluded will, or if further investigated might, materially impact the fairness or reliability of a previously issued audit report or the underlying financial statements, or the financial statements issued or to be issued covering the fiscal year ending June 30, 2006.  (b) On or about January 2, 2006, the Company engaged Child, Van Wagoner & Bradshaw, PLLC as its principal accountant as successor to Child, Sullivan & Company to audit its financial statements.  During the Registrant's two most recent fiscal years or subsequent interim period, the Registrant has not consulted with the entity of Child, Van Wagoner & Bradshaw, PLLC regarding the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Registrant's financial statements, nor did the entity of Child, Van Wagoner & Bradshaw, PLLC provide advice to the Registrant, either written or oral, that was an important factor considered by the Registrant in reaching a decision as to the accounting, auditing or financial reporting.     - 24 -       ITEM 8A. CONTROLS AND PROCEDURES  The Securities and Exchange Commission defines the term disclosure controls and procedures to mean a company=s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms.   The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms.  Based on an evaluation performed, the Company's certifying officers have concluded that the disclosure controls and procedures were effective as of June 30, 2006, to provide reasonable assurance of the achievement of these objectives.  ITEM 8B. OTHER INFORMATION None.       - 25 -      PART III  ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.  The directors and executive officers currently serving the Company are as follows:  NameAgePositions Held and TenureJohn Ballard48President, Chief Financial Officer and a Director since April 2004Diane Thelen60Secretary, Treasurer, and a Director since March 2000  The directors named above will serve until the next annual meeting of the Company's stockholders.  Thereafter, directors will be elected for one-year terms at the annual stockholders' meeting.  Officers will hold their positions at the pleasure of the board of directors, absent any employment agreement, of which none currently exists or is contemplated.  There is no arrangement or understanding between any of the directors or officers of the Company and any other person pursuant to which any director or officer was or is to be selected as a director or officer.  The directors and officers will devote their time to the Company's affairs on an "as needed" basis, which, depending on the circumstances, could amount to as little as two hours per month, or more than forty hours per month, but more than likely will fall within the range of five to ten hours per month.  Biographical Information  John Ballard, Chief Financial Officer  On September 30, 2003, John Ballard became Chief Financial Officer of TABATHA II, INC., a publicly traded company headquartered in California. John Ballard has more than sixteen years of business management, project management, and accounting experience. From January 2002 to the present, Mr. Ballard has been a financial consultant and director of Reveal Systems, Inc., a software development company and Internet provider based in Longmont, Colorado. Mr. Ballard was the Chief Financial Officer of Call Solutions Inc., a publicly traded company, from October 1999 to November 2002. Call Solutions was in the business of opening call centers. From 1997-1999 Mr. Ballard owned and operated the food operations Cookies N Kreme and Lincoln Street Cafe in the Denver Metropolitan Area.  In 1993, Mr. Ballard retired and he traveled until 1997.  From 1988 to 1993, Mr. Ballard was Chief Financial Officer for Apple Sundries, Inc., a Denver retail chain. Mr. Ballard holds a Bachelor of Science Degree in Management and Marketing from the University of Colorado where he graduated Magna Cum Laude. Mr. Ballard also holds a Masters of Business in Administration from Regis University.     - 26 -      Diane Thelen, Secretary/Treasurer and a director  Diane Thelen, the Company's Secretary/Treasurer and a director, has managed and developed luxury high-rise residential, retail, industrial and large office building complexes for over twenty-two years. She has written numerous articles on safety issues regarding large office complexes, as well as articles advocating the needs of real estate managers to state legislators. Ms. Thelen is a Certified Property Manager (CPM) (Institute of Real Estate Management) and a Real Property Administrator (RPA) (Building Owners and Managers Association.)  Compliance With Section 16(a) of the Exchange Act.  For the fiscal year ending June 30, 2006, all of the Company=s officers, directors and principal shareholders have filed reports required under Section 16(a).  Code of Ethics  Tabatha II, Inc. has not yet adopted a code of ethics which applies to the chief executive officer, or principal financial and accounting officer or controller, or persons performing similar functions due to several factors. Tabatha II, Inc. is a reporting blind pool company whose shares have not yet traded.  ITEM 10. EXECUTIVE COMPENSATION.  No officer or director received any remuneration from the Company during the fiscal year.  Until the Company acquires additional capital, it is not intended that any officer or director will receive compensation from the Company other than reimbursement for out-of-pocket expenses incurred on behalf of the Company.  The Company has no stock option, retirement, pension, or profit-sharing programs for the benefit of directors, officers or other employees, but the Board of Directors may recommend adoption of one or more such programs in the future.  ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.  The following table sets forth, as of the end of the Company's most recent fiscal year, the number of shares of Common Stock owned by persons who hold 5.0% or more of the outstanding Common Stock of the Company.  Also included are the shares held by all executive officers and directors as a group.  Name and AddressNumber of Shares Owned BeneficiallyPercent of Class OwnedDiane Thelen   (1)
1926 S. Oswego Way
Aurora, CO 800142,883,30034.77%  - 27 -       John Ballard  (1)
6754 W. Hinsdale Place
Littleton, CO 801282,858,30034.47%Jimmy Wang
1142 Cherry Ave.
San Bruno, CA 94066675,0008.14%All directors and executive officers
(2  persons)5,741,60069.24%   (1) The person listed is an officer, a director, or both, of the Company.   ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS  There were no transactions or proposed transactions in the last two fiscal years to which the Company was or is to be a party.  Indemnification of Officers and Directors  As permitted by Colorado law, the Company's Articles of Incorporation provide that the Company will indemnify its directors and officers against expenses and liabilities they incur to defend, settle, or satisfy any civil or criminal action brought against them on account of their being or having been Company directors or officers unless, in any such action, they are adjudged to have acted with gross negligence or willful misconduct. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in that Act and is, therefore, unenforceable.  Exclusion of Liability  Pursuant to the Colorado Corporation Code, the Company's Articles of Incorporation exclude personal liability for its directors for monetary damages based upon any violation of their fiduciary duties as directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, acts in violation of Section 7-5-114 of the Colorado Corporation Code, or any transaction from which a director receives an improper personal benefit. This exclusion of liability does not limit any right which a director may have to be indemnified and does not affect any director's liability under federal or applicable state securities laws.  Conflicts of Interest  None of the officers of the Company will devote more than a portion of his time to the affairs of the Company. There will be occasions when the time requirements of the Company's business  - 28 -      conflict with the demands of the officers' other business and investment activities. Such conflicts may require that the Company attempt to employ additional personnel. There is no assurance that the services of such persons will be available or that they can be obtained upon terms favorable to the Company. Company management, and the other principal shareholders of the Company, intend to actively negotiate or otherwise consent to the purchase of a portion of their common stock as a condition to, or in connection with, a proposed merger or acquisition transaction. It is anticipated that a substantial premium may be paid by the purchaser in conjunction with any sale of shares by officers, directors or affiliates of the Company which is made as a condition to, or in connection with, a proposed merger or acquisition transaction. The fact that a substantial premium may be paid to Company officers, directors and affiliates to acquire their shares creates a conflict of interest for them and may compromise their state law fiduciary duties to the Company's other shareholders. In making any such sale, Company officers, directors and affiliates may consider their own personal pecuniary benefit rather than the best interests of the Company and the Company's other shareholders, and the other shareholders are not expected to be afforded the opportunity to approve or consent to any particular buy-out transaction involving shares held by members of Company management.   ITEM 13. EXHIBITS  (a) The Exhibits listed below are filed as part of this Annual Report.  3(i) Articles of Incorporation (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on October 11, 2000).  3(ii) Bylaws (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on October 11, 2000).  31.1 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.  32.1      Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.   - 29 -     ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES  Audit-Related Fees
(1) The aggregate fees billed by Child, Van Wagoner & Bradshaw, PLLC (formerly Child, Sullivan & Company) (the Principal Accountant) for audit of the Company's annual financial statements were $1,000 for the fiscal year ended June 30, 2006 and $1,000 for the fiscal year ended June 30, 2005.  The aggregate fees billed by Child, Van Wagoner & Bradshaw, PLLC (formerly Child, Sullivan & Company) for review of the Company's financial statements included in its quarterly reports on Form 10-QSB were $900 during the period ended June 30, 2006 and $900 during the period ended June 30, 2005.
(2) The Principal Accountant did not bill the Company any amounts for assurance and related services that were related to its audit or review of the Company's financial statements during the fiscal year ending June 30, 2006 or June 30, 2005.
Tax Fees
(3) The aggregate fees billed by the Principal Accountant for tax compliance, tax advice and tax planning were $0 for the fiscal year ended June 30, 2006 and $0 for the fiscal year ended June 30, 2005.
All Other Fees
(4) The Principal Accountant didnot bill the Company for any products and services other than the foregoing during the fiscal year ended June 30, 2006 and June 30, 2005. Audit Committee=s Pre-approval policies and procedures  (5) Tabatha II, Inc., a blind pool reporting company which is not yet publicly traded, does not have an audit committee per se. The current board of directors functions as the audit committee.  - 30 -      SIGNATURES  In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.  TABATHA II, INC.   By: /S/ JOHN BALLARD John Ballard, President, Chief Financial Officer and a Director  Date:  September 26, 2006  In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.  By: /S/ JOHN BALLARD John Ballard, President, Chief Financial Officer and a Director  Date: September 26, 2006   By: /S/ DIANE THELEN Diane Thelen, Secretary and a Director  Date: September 26, 2006    - 31 -