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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-QSB



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(Mark One)

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

For the quarterly period ended September 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



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Ithaka Acquisition Corp.

(Exact Name of Small Business Issuer as Specified in Its Charter)



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

100 South Pointe Drive, 23rdFloor, Miami, Florida 33139

(Address of Principal Executive Office)

(305) 532-3800

(Issuers Telephone Number, Including Area Code)



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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 November 13, 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



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|                               |  |                                                                      |  |     
|------------------------------ |  | -------------------------------------------------------------------- |  | ----
|                               |  |                                                                      |  | 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



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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 September 30, 2006, the related condensed statements of operations for the three-month periods ended September 30,
2006 and 2005, the related condensed statements of operations and cash flows for the period from April 4, 2005 (inception) to September 30, 2005, and the related condensed statements of operations, stockholders equity and cash flows
for the nine months ended September 30, 2006 and the cumulative period from April 4, 2005 (inception) to September 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.

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.

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 August 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.

/s/ Goldstein Golub Kessler LLP

GOLDSTEIN GOLUB KESSLER LLP

New York, New York

November 8, 2006



3



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Ithaka Acquisition Corp.

(a corporation in the development stage)

Condensed Balance Sheets



|                                                                                                   |  |                   |            |                  |   |           
|-------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | ---------------- | - | ----------
|                                                                                                   |  | September 30,2006 |            | December 31,2005
|                                                                                                   |  | (Unaudited)       |            |                 
|Assets                                                                                             |  |                   |            |                  |   |           
|Current assets:                                                                                    |  |                   |            |                  |   |           
|Cash                                                                                               |  | $                 | 387,468    |                  | $ | 1,087,359 
|Investments held in Trust Fund (Note 1)                                                            |  |                   | 48,937,877 |                  |   | 47,608,849
|Prepaid expenses                                                                                   |  |                   | 31,503     |                  |   | 117,908   
|                                                                                                   |  |                   |            |                  |   |           
|Total current assets                                                                               |  |                   | 49,356,848 |                  |   | 48,814,116
|Deferred tax assets, net                                                                           |  |                   | 287,525    |                  |   | 118,244   
|                                                                                                   |  |                   |            |                  |   |           
|Total assets                                                                                       |  | $                 | 49,644,373 |                  | $ | 48,932,360
|                                                                                                   |  |                   |            |                  |   |           
|Liabilities and Stockholders Equity                                                               |  |                   |            |                  |   |           
|Current liabilities:                                                                               |  |                   |            |                  |   |           
|Accounts payable and accrued expenses                                                              |  | $                 | 96,982     |                  | $ | 48,892    
|Income and franchise taxes payable                                                                 |  |                   | 149,880    |                  |   | 247,963   
|Deferred interest and dividends                                                                    |  |                   | 387,835    |                  |   | 122,116   
|                                                                                                   |  |                   |            |                  |   |           
|Total current liabilities                                                                          |  |                   | 634,697    |                  |   | 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 3)                                                                                |  |                   |            |                  |   |           
|                                                                                                   |  |                  
|Stockholders equity (Notes 1 and 2)                                                               |  |                   |            |                  |   |           
|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                                                  |  |                   | 662,066    |                  |   | 165,779   
|                                                                                                   |  |                   |            |                  |   |           
|Total stockholders equity                                                                         |  |                   | 39,614,780 |                  |   | 39,118,493
|                                                                                                   |  |                   |            |                  |   |           
|Total liabilities and stockholders equity                                                         |  | $                 | 49,644,373 |                  | $ | 48,932,360
|                                                                                                   |  |                   |            |                  |   |           

See accompanying notes to condensed financial statements.



4



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Ithaka Acquisition Corp.

(a corporation in the development stage)

Unaudited Condensed Statements of Operations



|                                       |  |                                             |            |   |                                             |   |           |                                            |  |   |                                                          |   |  |                                                          |           |   |  |   |           |  
|-------------------------------------- |  | ------------------------------------------- | ---------- | - | ------------------------------------------- | - | --------- | ------------------------------------------ |  | - | -------------------------------------------------------- | - |  | -------------------------------------------------------- | --------- | - |  | - | --------- | -
|                                       |  | For the ThreeMonths EndedSeptember 30, 2006 |            |   | For the ThreeMonths EndedSeptember 30, 2005 |   |           | For the NineMonths EndedSeptember 30, 2006 |  |   | Period fromApril 4, 2005(inception) toSeptember 30, 2005 |   |  | Period fromApril 4, 2005(inception) toSeptember 30, 2006 |          
|Expenses:                              |  |                                             |            |   |                                             |   |           |                                            |  |   |                                                          |   |  |                                                          |           |   |  |   |           |  
|Formation and operating costs          |  | $                                           | 201,827    |   |                                             | $ | 64,173    |                                            |  | $ | 433,268                                                  |   |  | $                                                        | 75,770    |   |  | $ | 656,887   |  
|Operating loss for the period          |  |                                             | (201,827   | ) |                                             |   | (64,173   | )                                          |  |   | (433,268                                                 | ) |  |                                                          | (75,770   | ) |  |   | (656,887  | )
|                                       |  |                                             |            |   |                                             |   |           |                                            |  |   |                                                          |   |  |                                                          |           |   |  |   |           |  
|Interest and dividend income           |  |                                             | 318,912    |   |                                             |   | 138,584   |                                            |  |   | 1,088,910                                                |   |  |                                                          | 138,584   |   |  |   | 1,578,328 |  
|                                       |  |                                             |            |   |                                             |   |           |                                            |  |   |                                                          |   |  |                                                          |           |   |  |   |           |  
|Income before provision for income tax |  |                                             | 117,085    |   |                                             |   | 74,411    |                                            |  |   | 655,642                                                  |   |  |                                                          | 62,814    |   |  |   | 921,441   |  
|Benefit (provision) for income taxes   |  |                                             | 1,379      |   |                                             |   | (13,603   | )                                          |  |   | (159,355                                                 | ) |  |                                                          | (10,704   | ) |  |   | (259,375  | )
|                                       |  |                                             |            |   |                                             |   |           |                                            |  |   |                                                          |   |  |                                                          |           |   |  |   |           |  
|Net income                             |  | $                                           | 118,464    |   |                                             | $ | 60,808    |                                            |  | $ | 496,287                                                  |   |  | $                                                        | 52,110    |   |  | $ | 662,066   |  
|                                       |  |                                             |            |   |                                             |   |           |                                            |  |   |                                                          |   |  |                                                          |           |   |  |   |           |  
|Net income per share basic and diluted |  | $                                           | .01        |   |                                             | $ | .01       |                                            |  | $ | .05                                                      |   |  | $                                                        | .01       |   |  |   |           |  
|                                       |  |                                             |            |   |                                             |   |           |                                            |  |   |                                                          |   |  |                                                          |           |   |  |   |           |  
|Weighted average shares outstanding    |  |                                             | 10,974,100 |   |                                             |   | 5,766,207 |                                            |  |   | 10,974,100                                               |   |  |                                                          | 3,986,061 |   |  |   |           |  
|                                       |  |                                             |            |   |                                             |   |           |                                            |  |   |                                                          |   |  |                                                          |           |   |  |   |           |  

See accompanying notes to condensed financial statements



5



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Ithaka Acquisition Corp.

(a corporation in the development stage)

Statement of Stockholders Equity



|                                                                                                                                        |  |              |  |                            |       |  |                                                     |            |       |  |   |         |  |   |            |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ |  | -------------------------- | ----- |  | --------------------------------------------------- | ---------- | ----- |  | - | ------- |  | - | ---------- | -
|                                                                                                                                        |  | Common Stock |  | Additional Paid-In Capital |       |  | Earnings accumulated
during the developmental stage |            | Total | 
|                                                                                                                                        |  | Shares       |  | Amount                     |       |  |                                                    
|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 Unaudited:                                                                                                   |  | 10,974,100   |  | $                          | 1,098 |  | $                                                   | 38,951,616 |       |  | $ | 165,779 |  | $ | 39,118,493 |  
|                                                                                                                                        |  |              |  |                            |      
|Net income for the period                                                                                                               |  |             |  |                            |      |  |                                                     |           |       |  |   | 496,287 |  |   | 496,287    |  
|                                                                                                                                        |  |              |  |                            |       |  |                                                     |            |       |  |   |         |  |   |            |  
|Balance, September 30, 2006                                                                                                             |  | 10,974,100   |  | $                          | 1,098 |  | $                                                   | 38,951,616 |       |  | $ | 662,066 |  | $ | 39,614,780 |  
|                                                                                                                                        |  |              |  |                            |       |  |                                                     |            |       |  |   |         |  |   |            |  

See accompanying notes to condensed financial statements



6



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Ithaka Acquisition Corp.

(a corporation in the development stage)

Unaudited Condensed Statements of Cash Flows



|                                                                                            |  |                                            |            |   |                                               |   |             |                                               |  |   |             |  
|------------------------------------------------------------------------------------------- |  | ------------------------------------------ | ---------- | - | --------------------------------------------- | - | ----------- | --------------------------------------------- |  | - | ----------- | -
|                                                                                            |  | For the NineMonths EndedSeptember 30, 2006 |            |   | April 4, 2005(inception) toSeptember 30, 2005 |   |             | April 4, 2005(inception) toSeptember 30, 2006 | 
|Cash Flows from Operating Activities                                                        |  |                                            |            |   |                                               |   |             |                                               |  |   |             |  
|Net income                                                                                  |  | $                                          | 496,287    |   |                                               | $ | 52,110      |                                               |  | $ | 662,066     |  
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |                                            |            |   |                                               |   |             |                                               |  |   |             |  
|Income earned on investments held in trust                                                  |  |                                            | (1,329,028 | ) |                                               |   |            |                                               |  |   | (1,939,899  | )
|(Increase) decrease in prepaid expenses                                                     |  |                                            | 86,405     |   |                                               |   | (141,754    | )                                             |  |   | (31,503     | )
|Increase in other receivable                                                                |  |                                            |           |   |                                               |   | (8,362      | )                                             |  |   |            |  
|Increase in deferred taxes asset                                                            |  |                                            | (169,281   | ) |                                               |   |             |                                               |  |   | (287,525    | )
|Increase (decrease) in income and franchise taxes payable                                   |  |                                            | (98,083    | ) |                                               |   | 10,704      |                                               |  |   | 149,880     |  
|Increase in deferred interest                                                               |  |                                            | 265,719    |   |                                               |   | 34,624      |                                               |  |   | 387,835     |  
|Increase in accounts payable and accrued expenses                                           |  |                                            | 48,090     |   |                                               |   | 52,864      |                                               |  |   | 96,982      |  
|                                                                                            |  |                                            |            |   |                                               |   |             |                                               |  |   |             |  
|Net cash provided by (used in) operating activities                                         |  |                                            | (699,891   | ) |                                               |   | 186         |                                               |  |   | (962,164    | )
|                                                                                            |  |                                            |            |   |                                               |   |             |                                               |  |   |             |  
|Cash Flows from Investing Activities                                                        |  |                                            |            |   |                                               |   |             |                                               |  |   |             |  
|Investments placed in Trust Fund                                                            |  |                                            |           |   |                                               |   | (47,171,186 | )                                             |  |   | (46,997,978 | )
|                                                                                            |  |                                            |            |   |                                               |   |             |                                               |  |   |             |  
|Net cash used in investing activities                                                       |  |                                            |           |   |                                               |   | (47,171,186 | )                                             |  |   | (46,997,978 | )
|                                                                                            |  |                                            |            |   |                                               |   |             |                                               |  |   |             |  
|Cash Flows from Financing Activities                                                        |  |                                            |            |   |                                               |   |             |                                               |  |   |             |  
|Gross proceeds of public offering                                                           |  |                                            |           |   |                                               |   | 53,094,600  |                                               |  |   | 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         |                                               |  |   | 100         |  
|Principal payments on notes payable                                                         |  |                                            |           |   |                                               |   | (100,000    | )                                             |  |   | (100,000    | )
|Payment of costs of public offering                                                         |  |                                            |           |   |                                               |   | (4,672,417  | )                                             |  |   | (4,772,090  | )
|                                                                                            |  |                                            |            |   |                                               |   |             |                                               |  |   |             |  
|Net cash provided by financing activities                                                   |  |                                            |           |   |                                               |   | 48,447,283  |                                               |  |   | 48,347,610  |  
|                                                                                            |  |                                            |           
|Net increase (decrease) in cash                                                             |  |                                            | (699,891   | ) |                                               |   | 1,276,283   |                                               |  |   | 387,468     |  
|Cash at beginning of the period                                                             |  |                                            | 1,087,359  |   |                                               |   |            |                                               |  |   |            |  
|                                                                                            |  |                                            |            |   |                                               |   |             |                                               |  |   |             |  
|Cash at end of the period                                                                   |  | $                                          | 387,468    |   |                                               | $ | 1,276,283   |                                               |  | $ | 387,468     |  
|                                                                                            |  |                                            |            |   |                                               |   |             |                                               |  |   |             |  
|Non cash financing activity:                                                                |  |                                            |            |   |                                               |   |             |                                               |  |   |             |  
|Accrual of costs of public offering                                                         |  |                                            |           |   |                                               | $ | 98,897      |                                               |  |   |            |  
|                                                                                            |  |                                            |            |   |                                               |   |             |                                               |  |   |             |  

See accompanying notes to condensed financial statements



7



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Ithaka Acquisition Corp.

(a corporation in the development stage)

Notes to Unaudited Condensed Financial Statements



|   |  |                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- |  | ------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. |  | Organization and Business Operations |  | Ithaka Acquisition Corp. (the Company) was incorporated in Delaware on April 4, 2005 as a blank check company whose objective is to
acquire an operating business in the healthcare industry.  The financial statements at
September 30, 2006 and for the periods ended September 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 September 30, 2006, and the results of its operations and its cash flows for the periods ended September 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



8



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Ithaka Acquisition Corp.

(a corporation in the development stage)

Notes to Unaudited Condensed Financial Statements



| |  |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  |  | 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 has signed a definitive agreement for the acquisition of a target business (see Note 4)
and 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 September 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



9



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Ithaka Acquisition Corp.

(a corporation in the development stage)

Notes to Unaudited Condensed Financial Statements



| |  |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  |  | months from the consummation of the Offering if certain extension criteria have been satisfied. The Company has satisfied the extension criteria (see
Note 4). 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 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 September 30, 2006.  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 Offering |  | On August 23, 2005, the Company sold 8,500,000 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



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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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



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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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|-- |  | ---------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4. |  | Subsequent Event |  | On October 3, 2006, the Company entered into an Agreement and Plan of Merger (Merger Agreement) with Alsius Corporation (Alsius) and certain of Alsiuss
shareholders (Signing Shareholders). A wholly owned subsidiary of the Company, formed to effectuate the merger by merging with and into Alsius, is also a party to the Merger Agreement. As a result of the merger, Alsius will be the
surviving corporation and will be a wholly owned subsidiary of the Company. Pursuant to the Merger Agreement, all shares of capital stock and convertible promissory notes of Alsius issued and outstanding immediately prior to the effective time of
the merger will be automatically converted on the closing date of the merger, into the right to receive (i) 8,000,000 shares of the Companys common stock and (ii) up to 6,000,000 shares of the Companys common stock if certain revenue
targets are met during the years 2007, 2008 and 2009.



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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.

Overview

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.

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.

Recent Developments

On
October 3, 2006, we entered into an Agreement and Plan of Merger (Merger Agreement) with Alsius Corporation (Alsius) and certain of Alsiuss shareholders (Signing Shareholders). Our wholly owned
subsidiary, formed to effectuate the merger by merging with and into Alsius, is also a party to the Merger Agreement. As a result of the merger, Alsius will be the surviving corporation and will be a wholly owned subsidiary of ours. Pursuant to the
Merger Agreement, all shares of capital stock and convertible promissory notes of Alsius issued and outstanding immediately prior to the effective time of the merger will be automatically converted on the closing date of the merger, into the right
to receive (i) 8,000,000 shares of our common stock and (ii) up to 6,000,000 shares of our common stock if certain revenue targets are met during the years 2007, 2008 and 2009.

For a more complete discussion of our proposed business combination, including the risk that are applicable to us with respect to our acquisition of
Alsius, see our Current Report on Form 8-K dated October 3, 2006 and filed with the SEC on October 4, 2006 and our preliminary proxy statement/prospectus filed on November 1, 2006.

Results of Operations

For the three months ended
September 30, 2006, we had a net income of $118,464 derived from interest and dividend income of $318,912, $(27,934) for federal income taxes, $26,555 for Florida income taxes offset by $26,590 for officer liability insurance, $125,412 for
professional fees, $16,682 for travel and other expenses, $10,187 in Delaware franchise taxes, $5,825 for transfer agent fees and $17,131 for other operating expenses.

For the nine months ended September 30, 2006, we had a net income of $496,287 derived from interest and dividend income of $1,088,910 offset by $105,100 for federal income taxes, $54,255 for Florida income taxes,
$78,902 for officer liability insurance, $220,730 for professional fees, $44,257 for travel and other expenses, $28,596 in Delaware franchise taxes, $15,598 for transfer agent fees and $45,185 for other operating expenses.



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For the period from April 4, 2005 (inception) to September 30, 2006, we had a net income of
$662,066 derived from interest and dividend income of $1,578,328 offset by $190,501 for federal income taxes, $68,874 for Florida income taxes, $118,497 for officer liability insurance, $11,188 for marketing and advertising expenses, $284,724 for
professional fees, $90,957 for travel and other expenses, $58,295 in Delaware franchise taxes, $22,594 for transfer agent fees and $70,632 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 $1,939,899 in interest and dividends through September 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 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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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 September 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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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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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: November 13, 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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