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

                                   FORM 10-QSB

(Mark One)

|X|      Quarterly report under Section 13 or 15(d) of the Securities Exchange
         Act of 1934

         For the quarterly period ended March 31, 2006
                                        --------------

| |      Transition report under Section 13 or 15(d) of the Exchange Act

         For the transition period from _____________ to _____________

                        Commission File Number 000-51362
                                               ---------

                            Ithaka Acquisition Corp.
                            ------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

           Delaware                                              20-2620798
           --------                                              ----------
(State or other Jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)


            100 South Pointe Drive, 23rd Floor, Miami, Florida 33139
            --------------------------------------------------------
                     (Address of Principal Executive Office)

                                 (858) 847-9000
                                 --------------
                (Issuer's Telephone Number, Including Area Code)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes |X| No | |

         Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes |X| No |_|

         As of May 15, 2006, 10,974,100 shares of common stock, par value $.0001
per share, were issued and outstanding.

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

                                       1


<PAGE>


                                                                           Page

Part I:  Financial Information:

       Item 1 -Financial Statements (Unaudited):

         Report of Independent Registered Public Accounting Firm             3

         Balance Sheet                                                       5

         Statements of Operations                                            6

         Statement of Stockholders' Equity                                   7

         Statement of Cash Flows                                             8

          Notes to Financial Statements                                      9

       Item 2 - Management's Discussion and Analysis or Plan of Operation   14

       Item 3 - Controls and Procedures                                     15

Part II.  Other Information

       Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds 16

       Item 6 - Exhibits                                                    16

Signatures                                                                  17

                                       2


<PAGE>


Report of Independent Registered Public Accounting Firm

To the Board of Directors
Ithaka Acquisition Corp.

We have reviewed the accompanying condensed balance sheet of Ithaka Acquisition
Corp. (a corporation in the development stage) as of March 31, 2006, the related
condensed statements of operations and cash flows for the three-month period
ended March 31, 2006, and the related condensed statements of operations,
stockholders' equity and cash flows for the cumulative period from April 4, 2005
(inception) to March 31, 2006. These financial statements are the responsibility
of the company's management.

We conducted our reviews in accordance with standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, the objective of
which is the expression of an opinion regarding the condensed financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to the condensed financial statements referred to above for them to be
in conformity with United States generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public
Company Accounting Oversight Board, the balance sheet of Ithaka Acquisition
Corp. as of December 31, 2005 and the related statements of operations,
stockholders' equity and cash flows for the period then ended (not presented
herein); and in our report dated March 28, 2006 we expressed an unqualified
opinion on those financial statements. In our opinion, the information set forth
in the accompanying balance sheet as of December 31, 2005 is fairly stated, in
all material respects, in relation to the balance sheet from which it has been
derived.

/s/ Goldstein Golub Kessler LLP

Goldstein Golub Kessler LLP
New York, New York

May 9, 2006

                                       3


<PAGE>


                                                        ITHAKA ACQUISITION CORP.
                                        (A CORPORATION IN THE DEVELOPMENT STAGE)

                                                        CONDENSED BALANCE SHEETS
================================================================================
                                                       March 31,   December 31,
                                                         2006         2005
                                                      (Unaudited)
--------------------------------------------------------------------------------
ASSETS
Current assets:
     Cash                                             $   764,298   $ 1,087,359
     Investments held in Trust Fund (Note 1)           48,097,855    47,608,849
     Prepaid expenses                                      88,896       117,908
                                                      -----------   -----------
Total current assets                                   48,951,049    48,814,116
Deferred tax asset                                        196,458       118,244
                                                      -----------   -----------
Total assets                                          $49,147,507   $48,932,360
                                                      ===========   ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable and accrued expenses            $    53,993   $    48,892
     Income and Franchise taxes payable                   186,834       247,963
     Deferred interest                                    219,868       122,116
                                                      -----------   -----------
Total current liabilities                                 460,695       418,971
                                                      -----------   -----------
Common stock, subject to possible conversion,
     1,768,935 shares at conversion value (Note 1)      9,394,896     9,394,896
                                                      -----------   -----------

Commitment (Note 5)

Stockholders' equity (Notes 1, 2, 6 and 7)
     Preferred stock, $.0001 par value, Authorized

          1,000,000 shares; none issued
     Common stock, $.0001 par value
          Authorized 35,000,000 shares
          Issued and outstanding 10,974,100 shares
               (which includes 1,768,935 subject to
               possible conversion)                         1,098         1,098
     Additional paid-in capital                        38,951,616    38,951,616
     Earnings accumulated during the development stage    339,202       165,779
                                                      -----------   -----------
          Total stockholders' equity                   39,291,916    39,118,493
                                                      -----------   -----------
Total liabilities and stockholders' equity            $49,147,507   $48,932,360
                                                      ===========   ===========

            SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS.

                                       4


<PAGE>


                                                        ITHAKA ACQUISITION CORP.
                                        (A CORPORATION IN THE DEVELOPMENT STAGE)

                                    UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
================================================================================
                                                                    Period from
                                                For  the Three    April 4, 2005
                                                  Months Ended   (inception) to
                                                March 31, 2006   March 31, 2006
--------------------------------------------------------------------------------
Expenses:

Formation and operating costs                     $    116,864    $    340,483
                                                  ------------    ------------
Operating loss for the period                         (116,864)       (340,483)
                                                  ------------    ------------
Interest income                                        401,518         890,936
                                                  ------------    ------------
Income before provision for income tax                 284,654         550,453
                                                  ------------    ------------
Provision for income taxes                             111,231         211,251
                                                  ------------    ------------
Net income                                        $    173,423    $    339,202
                                                  ------------    ------------
Net income per share basic and diluted                    $.02
                                                  ------------
Weighted average shares outstanding                 10,974,100
                                                  ------------


            SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS

                                       5


<PAGE>


                                                        ITHAKA ACQUISITION CORP.
                                        (A CORPORATION IN THE DEVELOPMENT STAGE)

                                               STATEMENT OF STOCKHOLDERS' EQUITY
================================================================================
<TABLE>
<CAPTION>

                                                                                                 Earnings
                                                                                                accumulated
                                                             Common Stock          Additional    during the
                                                      ---------------------------   Paid-In    developmental
                                                         Shares        Amount       Capital        stage           Total
----------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>             <C>        <C>            <C>         <C>
Sale of 2,125,000 shares of common stock
     to initial stockholders
     on April 4, 2005 at $0.01176 per share               2,125,000       $  213     $  24,787      $   ---     $     25,000

Sale of 8,849,100 units, net of underwriters'
     discount and offering expenses (includes
     1,768,935 shares subject to possible conversion)     8,849,100          885    48,321,625          ---       48,322,510

Proceeds subject to possible conversion
     of 1,768,935 shares                                        ---          ---    (9,394,896)         ---       (9,394,896)

Proceeds from issuance of option                                ---          ---           100          ---              100

Net income for the period                                       ---          ---           ---      165,779          165,779
----------------------------------------------------- -------------- ------------ ------------- ------------ ----------------
Balance, December 31, 2005                               10,974,100       $1,098   $38,951,616     $165,779      $39,118,493
Unaudited:

Net income for the period                                       ---          ---           ---      173,423          173,423
----------------------------------------------------- -------------- ------------ ------------- ------------ ----------------
Balance, March 31, 2006                                  10,974,100       $1,098   $38,951,616     $339,202      $39,291,916
===================================================== ============== ============ ============= ============ ================
</TABLE>


            SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS

                                       6


<PAGE>


                                                        ITHAKA ACQUISITION CORP.
                                        (A CORPORATION IN THE DEVELOPMENT STAGE)

                                              CONDENSED STATEMENTS OF CASH FLOWS
================================================================================
<TABLE>
<CAPTION>

                                                       For the Three   April 4, 2005
                                                        Months Ended  (inception) to
                                                      March 31, 2006  March 31, 2006
------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES

<S>                                                    <C>             <C>
     Net income                                        $    173,423    $    339,202


     Adjustments to reconcile net income to net
     income used in operating activities:

     Income earned on investments held in trust            (489,006)     (1,099,877)
     Increase in prepaid expenses                            29,012         (88,896)
     Increase in deferred taxes asset                       (78,214)       (196,458)
     Increase in income and franchise taxes payable         (61,129)        186,834
     Increase in deferred interest                           97,752         219,868
     Increase in accounts payable and accrued expenses        5,101          53,993
                                                       ------------    ------------
          Net cash used in operating activities            (323,061)       (585,334)
                                                       ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES

     Investments placed in Trust Fund                          --       (46,997,978)
                                                       ------------    ------------
          Net cash used in investing activities                --       (46,997,978)
                                                       ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES

     Gross proceeds of public offering                                   53,094,600
     Proceeds from notes payable, stockholders                              100,000
     Proceeds from sale of shares of common stock                            25,000
     Proceeds from issuance of option                                           100
     Principal payments on notes payable                                   (100,000)
     Payment of costs of public offering                                 (4,772,090)
                                                       ------------    ------------
          Net cash provided by financing activities            --        48,347,610
                                                       ------------    ------------

Net increase (decrease) in cash                            (323,061)        764,298
Cash at beginning of the period                           1,087,359            --
                                                       ------------    ------------
Cash at end of the period                              $    764,298    $    764,298
                                                       ============    ============
</TABLE>


            SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS

                                       7


<PAGE>


                                                        ITHAKA ACQUISITION CORP.
                                        (A CORPORATION IN THE DEVELOPMENT STAGE)
                               NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1.     ORGANIZATION     Ithaka Acquisition Corp. (the "Company") was
       AND              incorporated in Delaware on  April 4, 2005 as a blank
       BUSINESS         check company whose objective is to acquire an
       OPERATIONS       operating business in the healthcare industry.

                        The financial statements at March 31, 2006 and for the
                        periods ended March 31, 2006 are unaudited. In the
                        opinion of management, all adjustments (consisting of
                        normal adjustments) have been made that are necessary to
                        present fairly the financial position of the Company as
                        of March 31, 2006, the results of its operations for the
                        three month period ended March 31, 2006 and for the
                        period from April 4, 2005 (inception) through March 31,
                        2006, and its cash flows for the period from April 4,
                        2005 (inception) through March 31, 2006. Operating
                        results for the interim period presented are not
                        necessarily indicative of the results to be expected for
                        a full year.

                        The statements and related notes have been prepared
                        pursuant to the rules and regulations of the U.S.
                        Securities and Exchange Commission. Accordingly, certain
                        information and footnote disclosures normally included
                        in financial statements prepared in accordance with
                        generally accepted accounting principles have been
                        omitted pursuant to such rules and regulations. It is
                        suggested that these financial statements be read in
                        conjunction with the financial statements and related
                        disclosures for the year ended December 31, 2005
                        included in the Company's Annual Report on Form 10-KSB
                        filed with the Securities and Exchange Commission (the
                        "SEC"). The December 31, 2005 balance sheet has been
                        derived from the audited financial statements.

                        All activity from April 4, 2005 (inception) through
                        August 23, 2005 relates to the Company's formation and
                        initial public offering described below. Subsequent to
                        August 23, 2005, the Company has been seeking a business
                        combination with an operating business in the healthcare
                        industry ("Business Combination"). The Company has
                        selected December 31 as its fiscal year-end.

                        The registration statement for the Company's initial
                        public offering ("Offering") was declared effective
                        August 17, 2005. The Company consummated the offering on
                        August 23, 2005 (Note 2). The Company's management has
                        broad discretion with respect to the specific
                        application of the net proceeds of this Offering,
                        although substantially all of the net proceeds of this
                        Offering are intended to be generally applied toward
                        consummating a Business Combination. Furthermore, there
                        is no assurance that the Company will be able to
                        successfully effect a Business Combination. Upon the
                        closing of the Offering, including the over-allotment
                        option, an

                                       8


<PAGE>


                                                        ITHAKA ACQUISITION CORP.
                                        (A CORPORATION IN THE DEVELOPMENT STAGE)
                               NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

                        amount of $46,997,978 of the net proceeds was deposited
                        in an interest-bearing trust account ("Trust Account")
                        until the earlier of (i) the consummation of a Business
                        Combination or (ii) liquidation of the Company. Under
                        the agreement governing the Trust Account, funds will
                        only be invested in United States "government
                        securities" within the meaning of Section 2(a)(16) of
                        the Investment Company Act of 1940 with a maturity of
                        180 days or less or in money market funds meeting
                        certain conditions under Rule 2a-7 promulgated under the
                        Investment Company Act of 1940. The remaining net
                        proceeds (not held in the Trust Account) may be used to
                        pay for business, legal and accounting due diligence on
                        prospective acquisitions and continuing general and
                        administrative expenses.

                        The Company, after signing a definitive agreement for
                        the acquisition of a target business, will submit such
                        transaction for stockholder approval. In the event that
                        stockholders owning 20% or more of the shares sold in
                        the Offering vote against the Business Combination and
                        exercise their conversion rights described below, the
                        Business Combination will not be consummated.

                        All of the Company's stockholders prior to the Offering,
                        including all of the officers and directors of the
                        Company ("Initial Stockholders"), have agreed to vote
                        their 2,125,000 founding shares of common stock in
                        accordance with the vote of the majority in interest of
                        all other stockholders of the Company ("Public
                        Stockholders") with respect to any Business Combination.
                        After consummation of a Business Combination, these
                        voting safeguards will no longer be applicable.

                        With respect to a Business Combination which is approved
                        and consummated, any Public Stockholder who voted
                        against the Business Combination may demand that the
                        Company convert his shares. The per share conversion
                        price will equal the amount in the Trust Account,
                        calculated as of two business days prior to the
                        consummation of the proposed Business Combination,
                        divided by the number of shares of common stock held by
                        Public Stockholders at the consummation of the Offering.
                        Accordingly, Public Stockholders holding 19.99% of the
                        aggregate number of shares owned by all Public
                        Stockholders may seek conversion of their shares in the
                        event of a Business Combination. Such Public
                        Stockholders are entitled to receive their per share
                        interest in the Trust Account computed without regard to
                        the shares held by Initial Stockholders. Accordingly, a
                        portion of the net proceeds from the offering (19.99% of
                        the amount held in the Trust Account) has been
                        classified as common stock subject to possible
                        conversion in the accompanying March 31, 2006 balance
                        sheet.

                        The Company's Certificate of Incorporation, as amended,
                        provides

                                       9


<PAGE>


                                                        ITHAKA ACQUISITION CORP.
                                        (A CORPORATION IN THE DEVELOPMENT STAGE)
                               NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

                        for mandatory liquidation of the Company in the event
                        that the Company does not consummate a Business
                        Combination within 18 months from the date of the
                        consummation of the Offering, or 24 months from the
                        consummation of the Offering if certain extension
                        criteria have been satisfied. In the event of
                        liquidation, it is likely that the per share value of
                        the residual assets remaining available for distribution
                        (including Trust Account assets) will be less than the
                        initial public offering price per share in the Offering
                        due to costs related to the Offering and since no value
                        would be attributed to the Warrants contained in the
                        Units sold (Note 2).

                        Basic earnings per share is computed by dividing net
                        income by the weighted-average number of shares of
                        common stock outstanding during the period. Diluted
                        earnings per share reflects the additional dilution for
                        all potentially dilutive securities such as stock
                        warrants and options. The effect of the 17,698,200
                        outstanding warrants, issued in connection with the
                        initial public offering described in Note 2, has not
                        been considered in the diluted earnings per share since
                        the warrants are contingently exercisable and the effect
                        of the 425,000 outstanding underwriter option units have
                        not been considered since the market value of the units
                        was less than the exercise price during the period ended
                        March 31, 2006.

                        In December 2004, the Financial Accounting Standards
                        Board issued Statement of Financial Accounting Standards
                        No. 123 (revised 2004) ("SFAS 123(R)"), "Share Based
                        Payment". SFAS 123(R) requires all share-based payments
                        to employees, including grants of employee stock
                        options, to be recognized in the financial statements
                        based on their fair values. The Company is required to
                        adopt SFAS 123(R) effective January 1, 2006. The
                        adoption of SFAS No. 123(R) did not have a significant
                        impact on the Company's financial condition or results
                        of operations.

                        Management does not believe that any other recently
                        issued, but not yet effective, accounting standards if
                        currently adopted would have a material effect on the
                        accompanying financial statements.

2.  INITIAL PUBLIC      On August 23, 2005, the Company sold 8,500,000 units
    OFFERING            ("Units") in the Offering. On September 20, 2005, the
                        Company consummated the closing of an additional 349,100
                        Units which were subject to the over-allotment option.
                        Each Unit consists of one share of the Company's common
                        stock, $.0001 par value, and two Redeemable Common Stock
                        Purchase Warrants ("Warrants"). Each Warrant entitles
                        the holder to purchase from the Company one share of
                        common stock at an exercise price of $5.00 commencing
                        the later of the completion of a Business Combination or
                        one year from the effective date of the Offering and
                        expiring four years from the effective date of the
                        Offering. The Warrants will be redeemable, at the
                        Company's option, with the prior consent of
                        EarlyBirdCapital, Inc., the representative of the
                        underwriters in the Offering

                                       10


<PAGE>


                                                        ITHAKA ACQUISITION CORP.
                                        (A CORPORATION IN THE DEVELOPMENT STAGE)
                               NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

                        ("Representative"), at a price of $.01 per Warrant upon
                        30 days' notice after the Warrants become exercisable,
                        only in the event that the last sale price of the common
                        stock is at least $8.50 per share for any 20 trading
                        days within a 30 trading day period ending on the third
                        day prior to the date on which notice of redemption is
                        given. The Company paid the underwriters in the Offering
                        an underwriting discount of 7% of the gross proceeds of
                        the Offering and a non-accountable expense allowance of
                        1% of the gross proceeds of the Offering. In connection
                        with this Offering, the Company also issued an option
                        ("Option"), for $100, to the Representative to purchase
                        425,000 Units at an exercise price of $7.50 per Unit.
                        The Company accounted for the fair value of the Option,
                        inclusive of the receipt of the $100 cash payment, as an
                        expense of the Offering resulting in a charge directly
                        to stockholders' equity. The Company estimates that the
                        fair value of the Option is approximately $935,000
                        ($2.20 per Unit) using a Black-Scholes option-pricing
                        model. The fair value of the Option granted to the
                        Representative is estimated as of the date of grant
                        using the following assumptions: (1) expected volatility
                        of 44.5%, (2) risk-free interest rate of 3.8% and (3)
                        expected life of 5 years. The Option may be exercised
                        for cash or on a "cashless" basis, at the holder's
                        option, such that the holder may use the appreciated
                        value of the Option (the difference between the exercise
                        prices of the Option and the underlying Warrants and the
                        market price of the Units and underlying securities) to
                        exercise the option without the payment of any cash. In
                        addition, the Warrants underlying such Units are
                        exercisable at $7.25 per share.

3. COMMITMENT           Pursuant to letter agreements with the Company and the
                        Representative, the Initial Stockholders have waived
                        their right to receive distributions with respect to
                        their founding shares upon the Company's liquidation.

                        Pursuant to agreements with the Representative, the
                        Initial Stockholders collectively purchased 1,250,000
                        Warrants at $0.51 per Warrant (for an aggregate purchase
                        price of $637,500) in the public marketplace during the
                        first 90 day period after separate trading of the
                        Warrants commenced.

                        The Initial Stockholders are entitled to registration
                        rights with respect to their founding shares pursuant to
                        an agreement dated August 17, 2005. The holders of the
                        majority of these shares are entitled to make up to two
                        demands that the Company register these shares at any
                        time commencing three months prior to the third
                        anniversary of the effective date of the Offering. In
                        addition, the Initial Stockholders have certain
                        "piggy-back" registration rights on registration
                        statements filed subsequent to the third anniversary of
                        the effective date of the Offering.

                                       11


<PAGE>


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The following discussion should be read in conjunction with the
Company's Consolidated Financial Statements and footnotes thereto contained in
this report.

FORWARD LOOKING STATEMENTS

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

         We were formed on April 4, 2005, to serve as a vehicle to effect a
merger, capital stock exchange, asset acquisition or other similar business
combination with an operating business in the healthcare industry. We intend to
utilize cash derived from the proceeds of our recently completed public
offering, our capital stock, debt or a combination of cash, capital stock and
debt, in effecting a business combination.

         For the three months ended March 31, 2006, we had a net income of
$173,423 derived from interest income of $401,518 offset by $89,576 for federal
income taxes, $21,655 for Florida income taxes, $26,012 for officer liability
insurance, $50,183 for professional fees, $10,975 for travel and other expenses,
$8,159 in Delaware franchise taxes, $6,520 for transfer agent fees and $15,015
for other operating expenses.

         For the period from April 4, 2005 (inception) to March 31, 2006, we had
a net income of $339,202 derived from interest income of $890,936 offset by
$37,858 in Delaware franchise taxes, $65,607 for officer liability insurance,
$11,188 for marketing and advertising expenses, $114,176 for professional fees,
$174,977 for federal income taxes, $36,274 for Florida income taxes, $57,675 for
travel and other expenses, $13,517 for transfer agent fees and $40,462 for other
operating expenses.

         We paid a total of $3,716,622 in underwriting discounts and commissions
and approximately $1,055,468 for other costs and expenses related to the
offering, including $510,000 for the underwriters' non-accountable expense
allowance of 1% of the gross proceeds. After deducting the underwriting
discounts and commissions and the other offering expenses, the total net
proceeds to us from the offering were approximately $48,323,000, of which
$46,997,978 was deposited into the trust account and the remaining proceeds of
approximately $1,325,000 became available to be used to provide for business,
legal and accounting due diligence on prospective business combinations and
continuing general and administrative expenses. The net proceeds deposited into
the trust fund remain on deposit in the trust fund and have earned $1,099,874 in
interest through March 31, 2006.

         We consummated our initial public offering on August 23, 2005. On
September 20, 2005, we consummated the closing of an additional 394,100 units
that were subject to the over-allotment option. Gross proceeds from our initial
public offering were $53,094,600. We paid a total of $4,672,417 in underwriting
discounts and commissions, and approximately $98,897 was or will be paid for
costs and expenses related to the offering. After deducting the underwriting
discounts and commissions and the offering expenses, the total net proceeds to
us from the offering were approximately $48,323,000, of which $46,997,978 was
deposited into the trust account (or $5.31 per share sold in the offering). The
remaining proceeds are available to be used by us to provide for business, legal
and accounting due diligence on prospective acquisitions, tax payments and
continuing general and administrative expenses. We intend to use substantially
all of the net proceeds of this offering to acquire a target business, including
identifying and evaluating prospective acquisition candidates, selecting the
target business, and structuring, negotiating and consummating the business
combination. To the extent that our capital stock is used in whole or in part

                                       12


<PAGE>


as consideration to effect a business combination, the proceeds held in the
trust fund as well as any other net proceeds not expended will be used to
finance the operations of the target business. We believe we will have
sufficient available funds outside of the trust fund to operate through August
23, 2007, assuming that a business combination is not consummated during that
time. From August 23, 2005 through August 23, 2007, we anticipate approximately
$300,000 of expenses for legal, accounting and other expenses attendant to the
due diligence investigations, structuring and negotiating of a business
combination, $300,000 of expenses for the due diligence and investigation of a
target business, $40,000 of expenses in legal and accounting fees relating to
our SEC reporting obligations and $730,000 for general working capital that will
be used for miscellaneous expenses and reserves, including approximately $80,000
for director and officer liability insurance premiums. We do not believe we will
need to raise additional funds following this offering in order to meet the
expenditures required for operating our business. However, we may need to raise
additional funds through a private offering of debt or equity securities if such
funds are required to consummate a business combination that is presented to us.
We would only consummate such a financing simultaneously with the consummation
of a business combination.

         In April 2005, our directors advanced an aggregate of $100,000 to us,
on a non-interest bearing basis, for payment of offering expenses on our behalf.
These loans were repaid following our initial public offering from the proceeds
of the offering.

                                       13


<PAGE>


ITEM 3.  CONTROLS AND PROCEDURES.

         Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in company
reports filed or submitted under the Securities Exchange Act of 1934 (the
"Exchange Act") is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in
company reports filed or submitted under the Exchange Act is accumulated and
communicated to management, including our chief executive officer and treasurer,
as appropriate to allow timely decisions regarding required disclosure.

         As required by Rules 13a-15 and 15d-15 under the Exchange Act, our
chief executive officer and chief financial officer carried out an evaluation of
the effectiveness of the design and operation of our disclosure controls and
procedures as of March 31, 2006. Based upon their evaluation, they concluded
that our disclosure controls and procedures were effective.

         Our internal control over financial reporting is a process designed by,
or under the supervision of, our chief executive officer and chief financial
officer and effected by our board of directors, management and other personnel,
to provide reasonable assurance regarding the reliability of our financial
reporting and the preparation of our financial statements for external purposes
in accordance with generally accepted accounting principles. Internal control
over financial reporting includes policies and procedures that pertain to the
maintenance of records that in reasonable detail accurately and fairly reflect
the transactions and dispositions of our assets; provide reasonable assurance
that transactions are recorded as necessary to permit preparation of our
financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in
accordance with the authorization of our board of directors and management; and
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a
material effect on our financial statements.

         During the most recently completed fiscal quarter, there has been no
change in our internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.

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<PAGE>


                                    PART II.

                                OTHER INFORMATION

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

         On August 23, 2005, we consummated our initial public offering of
8,500,000 Units, with each unit consisting of one share of our common stock and
two warrants, each to purchase one share of our common stock at an exercise
price of $5.00 per share. On September 20, 2005, we closed on an additional
394,100 units that were subject to the underwriters' over-allotment option. The
units were sold at an offering price of $6.00 per unit, generating total gross
proceeds of $53,094,600. EarlyBirdCapital, Inc. acted as lead underwriter. The
securities sold in the offering were registered under the Securities Act of 1933
on a registration statement on Form S-1 (No. 333-124521). The Securities and
Exchange Commission declared the registration statement effective on August 17,
2005.

         We paid a total of $4,672,417 in underwriting discounts and
commissions, and approximately $98,897 has been or will be paid for costs and
expenses related to the offering.

         After deducting the underwriting discounts and commissions and the
offering expenses, the total net proceeds to us from the offering were
approximately $48,323,286, of which $46,972,032 was deposited into the trust
account (or $5.31 per share sold in the offering) and the remaining proceeds are
available to be used to provide for business, legal and accounting due diligence
on prospective business combinations and continuing general and administrative
expenses.

         For a description of the use of the proceeds generated in our initial
public offering, see Part I, Item 2 of this Form 10-QSB.

ITEM 6:  EXHIBITS

         (a) Exhibits:

                  31.1 - Section 302 Certification by CEO

                  31.2 - Section 302 Certification by CFO

                  32.1 - Section 906 Certification by CEO

                  32.2 - Section 906 Certification by CFO

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<PAGE>


                                   SIGNATURES

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

                              ITHAKA ACQUISITION CORP.

Dated:  May 15, 2006

                              /s/ Paul A. Brooke
                              ---------------------------
                              Paul A. Brooke
                              Chairman of the Board and Chief Executive Officer

                              /s/ Eric Hecht
                              ---------------------------
                              Eric Hecht
                              President and Chief Financial Officer

                                       16