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 June 30, 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 August 14, 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|

<PAGE>

                                                                            PAGE
Part I: Financial Information:

       Item 1 -Financial Statements (Unaudited):

         Report of Independent Registered Public Accounting Firm              3

         Balance Sheet                                                        4

         Statements of Operations                                             5

         Statement of Stockholders' Equity                                    6

         Statement of Cash Flows                                              7

         Notes to Financial Statements                                        8

       Item 2 - Management's Discussion and Analysis or Plan of Operation    13

       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 June 30, 2006, the related
condensed  statements of operations  for the  three-month  period ended June 30,
2006,  the related  condensed  statements of  operations  and cash flows for the
period  from  April 4,  2005  (inception)  to June  30,  2005,  and the  related
condensed statements of operations,  stockholders' equity and cash flows for the
six months  ended June 30,  2006 and the  cumulative  period  from April 4, 2005
(inception) to June 30, 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 interim  financial  statements referred to above for them  to  be
in conformity with United States generally accepted accounting principles.

The accompanying  financial  statements have been prepared  assuming that Ithaka
Acquisition  Corp.  will continue as a going concern.  As discussed in Note 1 to
the  financial   statements,   Ithaka   Acquisition  Corp.  may  face  mandatory
liquidation by February 23, 2007 if a business  combination is not  consummated,
unless certain extension  criteria are met, which raises substantial doubt about
its ability to continue as a going  concern.  The  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.

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, the related statement of stockholders' equity
for  the  period  then  ended   and  the  related   statements  of   operations,
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  and  statement  of
stockholders' equity for the period then ended is fairly stated, in all material
respects, in relation to the balance sheet and statement of stockholders' equity
from which it has been derived.


/s/ Goldstein Golub Kessler LLP

Goldstein Golub Kessler LLP
New York, New York

August 11, 2006

                                       3
<PAGE>

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

                                                        CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                       June 30, 2006    December 31, 2005
                                                        (Unaudited)

-----------------------------------------------------------------------------------------
<S>                                                     <C>                <C>
ASSETS
Current assets:
     Cash                                               $   581,014        $ 1,087,359
     Investments held in Trust Fund (Note 1)             48,547,723         47,608,849
     Prepaid expenses                                        58,347            117,908
                                                        -----------        -----------
Total current assets                                     49,187,084         48,814,116
Deferred tax asset                                          255,969            118,244
                                                        -----------        -----------
Total assets                                            $49,443,053        $48,932,360
                                                        ===========        ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable and accrued expenses              $    67,031        $    48,892
     Income and Franchise taxes payable                     175,015            247,963
     Deferred interest                                      309,795            122,116
                                                        -----------        -----------
Total current liabilities                                   551,841            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      543,602            165,779
                                                        -----------        -----------
          Total stockholders' equity                     39,496,316         39,118,493
                                                        -----------        -----------
Total liabilities and stockholders' equity              $49,443,053        $48,932,360
                                                        ===========        ===========
</TABLE>

            SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS.

                                       4
<PAGE>


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

                                    UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                      Period from       Period from
                                                              For the Three      For the Six        April 4, 2005     April 4, 2005
                                                               Months Ended      Months Ended      (inception) to    (inception) to
                                                              June 30, 2006      June 30, 2006      June 30, 2005     June 30, 2006
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                <C>                <C>                <C>
Expenses:

Formation and operating costs                                 $    114,577       $    231,441       $      1,797       $    455,060
                                                              ---------------------------------------------------------------------

Operating loss for the period                                     (114,577)          (231,441)            (1,797)          (455,060)
                                                              ---------------------------------------------------------------------

Interest and dividend income                                       368,480            769,998                 --          1,259,416
                                                              ---------------------------------------------------------------------

Income (loss) before provision for income tax                      253,903            538,557             (1,797)           804,356
                                                              ---------------------------------------------------------------------

Provision for income taxes                                          49,503            160,734                 --            260,754
                                                              ---------------------------------------------------------------------

Net income (loss)                                             $    204,400       $    377,823       $     (1,797)      $    543,602
                                                              ---------------------------------------------------------------------

Net income per share basic and diluted                                $.02               $.03              $(.00)
                                                              ------------       ------------       ------------

Weighted average shares outstanding                             10,974,100         10,974,100           2,125,000
                                                              ------------       ------------       ------------
</TABLE>

            SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS

                                       5
<PAGE>

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

                                               STATEMENT OF STOCKHOLDERS' EQUITY

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                                     Common Stock           Additional
                                                                             ---------------------------      Paid-In
                                                                                 Shares        Amount         Capital
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <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

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

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

Proceeds from issuance of option                                                       --             --            100

Net income for the period                                                              --             --             --

--------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2005                                                     10,974,100   $      1,098   $ 38,951,616
Unaudited:

Net income for the period                                                              --             --             --

--------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 2006                                                         10,974,100   $      1,098   $ 38,951,616
==========================================================================================================================
</TABLE>


<TABLE>
<CAPTION>
                                                                            Earnings accumulated
                                                                                 during the
                                                                             developmental stage        Total
-----------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                    <C>
Sale of 2,125,000 shares of common stock to initial stockholders
     on April 4, 2005 at $0.01176 per share                                   $         --           $     25,000

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

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

Proceeds from issuance of option                                                        --                    100

Net income for the period                                                          165,779                165,779

-----------------------------------------------------------------------------------------------------------------
Balance, December 31, 2005                                                    $    165,779           $ 39,118,493
Unaudited:

Net income for the period                                                          377,823                377,823

-----------------------------------------------------------------------------------------------------------------
Balance, June 30, 2006                                                        $    543,602           $ 39,496,316
=================================================================================================================
</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 Six       April 4, 2005     April 4, 2005
                                                                                 Months Ended      (inception) to    (inception) to
                                                                                 June 30, 2006      June 30, 2005     June 30, 2006

------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                                                           $    377,823       $     (1,797)      $    543,602
     Adjustments to reconcile net income (loss) to net cash
       used in operating activities:
     Income earned on investments held in trust                                      (938,874)                           (1,549,745)
     (Increase) decrease in prepaid expenses                                           59,561                               (58,347)
     Increase in deferred taxes asset                                                (137,725)                             (255,969)
     Increase (decrease) in income and franchise taxes payable                        (72,948)                              175,015
     Increase in deferred interest                                                    187,679                               309,795
     Increase in accounts payable and accrued expenses                                 18,139              1,009             67,031
                                                                                 ------------       ------------       ------------
          Net cash used in operating activities                                      (506,345)              (788)          (768,618)
                                                                                 ------------       ------------       ------------

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            100,000
     Proceeds from sale of shares of common stock                                          --             25,000             25,000
     Proceeds from issuance of option                                                      --                 --                100
     Principal payments on notes payable                                                   --                 --           (100,000)
     Payment of costs of public offering                                                   --           (111,478)        (4,772,090)
                                                                                 ------------       ------------       ------------
          Net cash provided by financing activities                                        --            (13,522)        48,347,610
                                                                                 ------------       ------------       ------------

Net increase (decrease) in cash                                                      (506,345)            12,734            581,014
Cash at beginning of the period                                                     1,087,359                 --                 --
                                                                                 ------------       ------------       ------------
Cash at end of the period                                                        $    581,014       $     12,734       $    581,014
                                                                                 ============       ============       ============
     Non cash financing activity:
           Accrual of costs of public offering                                             --       $     26,160                 --
                                                                                 ============       ============       ============
</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
       BUSINESS                 blank check company whose objective is to
       OPERATIONS               acquire an operating business in the healthcare
                                industry.

                                The financial statements at June 30, 2006 and
                                for the periods ended June 30, 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 June 30, 2006, and the results of its
                                operations and its cash flows for the periods
                                ended June 30, 2006 and 2005. 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 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

                                       8
<PAGE>

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

                                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 June 30, 2006 balance sheet.

                                The Company's  Certificate of Incorporation,  as
                                amended,  provides 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.  There is no assurance that the
                                Company  will be able to  successfully  effect a
                                Business  Combination  during this period.  This
                                factor  raises   substantial   doubt  about  the
                                Company's   ability  to   continue  as  a  going
                                concern.  The accompanying  financial statements
                                are prepared  assuming the Company will continue
                                as a going concern.  The financial statements do
                                not include any  adjustments  that might  result
                                from the  outcome  of this  uncertainty.  In the
                                event of liquidation, it is likely

                                       9
<PAGE>

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

                                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 June 30, 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.

                                In July 2006, the Financial Accounting Standards
                                Board ("FASB") issued FASB Interpretation No.
                                48, "Accounting for Uncertainty in Income
                                Taxes", an interpretation of FASB Statement No.
                                109 ("FIN 48"), which provides criteria for the
                                recognition, measurement, presentation and
                                disclosure of uncertain tax positions. A tax
                                benefit from an uncertain position may be
                                recognized only if it is "more likely than not"
                                that the position is sustainable based on its
                                technical merits. The provisions of FIN 48 are
                                effective for fiscal years beginning after
                                December 15, 2006. We do not expect FIN 48 will
                                have a material effect on our 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
       OFFERING                 units ("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

                                       10
<PAGE>

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

                                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
                                ("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

                                       11
<PAGE>

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

                                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.

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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. We incurred $1,797 of operating
expenses during the period from April 4, 2005 (inception) to June 30, 2005.

         For the three months ended June 30, 2006, we had a net income of
$204,400 derived from interest and dividend income of $368,480 offset by $43,458
for federal income taxes, $6,045 for Florida income taxes, $26,301 for officer
liability insurance, $45,136 for professional fees, $16,599 for travel and other
expenses, $10,250 in Delaware franchise taxes, $3,252 for transfer agent fees
and $13,039 for other operating expenses.

         For the six months ended June 30, 2006, we had a net income of $377,823
derived from interest and dividend income of $769,998 offset by $133,034 for
federal income taxes, $27,700 for Florida income taxes, $52,312 for officer
liability insurance, $95,319 for professional fees, $27,574 for travel and other
expenses, $18,409 in Delaware franchise taxes, $9,773 for transfer agent fees
and $28,054 for other operating expenses.

         For the period from April 4, 2005 (inception) to June 30, 2006, we had
a net income of $543,602 derived from interest and dividend income of $1,259,416
offset by $218,435 for federal income taxes, $42,319 for Florida income taxes,
$91,908 for officer liability insurance, $11,188 for marketing and advertising
expenses, $159,312 for professional fees, $74,274 for travel and other expenses,
$48,108 in Delaware franchise taxes, $16,769 for transfer agent fees and
$53,501for 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 $1,549,745 in
interest and dividends through June 30, 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

                                       13
<PAGE>

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 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.

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<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 June 30, 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 $46,997,978 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: August 14, 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

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