**FORM 10-Q**
**[ X ] QUARTERLY REPORT PURSUANT TO SECTION13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934** For the quarterly period ended June 30, 2012
**[] TRANSITION REPORT PURSUANT TO SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
For the transition period from April 1, 2012to June 30, 2012
Commission File Number: 000-51413
**COTTON BAY HOLDINGS, INC.**F/K/A TRANQUILITY, INC.(Exact name of registrant as specified in its charter)

Delaware(State of Incorporation)

000-51413(Commission File No.)
52-2175900(IRS Employer ID No.)
1314 East Las Olas Boulevard; Suite 1036;Fort Lauderdale, FL, 33301Address of Principal Executive OfficesZip Code
954-915-4616Registrant's Telephone Number, Including Area Code

Indicate by check mark whether the registrant (1) has filedall reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months(or for shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filingrequirements for the past 90 days. [ X ] Yes [ ] No

Indicate by check mark whether the registrant has submittedelectronically and posted on its corporate Web site, if any,every Interactive Data File required to be submitted and postedpursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter)during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files).[ X ] Yes [ ] No

Indicate by check mark whether the registrant is a largeaccelerated filer, an accelerated filer, a non-accelerated filer,or a smaller reporting company. See the definitions of"large accelerated filer," "acceleratedfiler" and smaller reporting company" in Rule 12b-2 ofthe Exchange Act.

Large accelerated filer [ ]Accelerated filer [ ]Non-accelerated filer [ ]Smaller reporting company [ X ]Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).[X]Yes [ ] No

As of June 30, 2012 the Issuer had 5,105,740 shares of commonstock issued and outstanding.
**PART I-FINANCIAL INFORMATION**

**ITEM 1. FINANCIAL STATEMENTS.**

The financial statements of Tranquility, Inc. (the"Company"), a Delaware corporation, included hereinwere prepared, without audit, pursuant to rules and regulationsof the Securities and Exchange Commission. Because certaininformation and notes normally included in financial statementsprepared in accordance with accounting principles generallyaccepted in the United States of America were condensed oromitted pursuant to such rules and regulations, these financialstatements should be read in conjunction with the financialstatements and notes thereto included in the audited financialstatements of the Company in the Company's Form 10-K for thefiscal year ended December 31, 2011.

**COTTON BAY HOLDINGS, INC.f/k/a TRANQUILITY, INC.(A DEVELOPMENT STAGE COMPANY)NOTES TO FINANCIAL STATEMENTSFrom Inception (August 20, 1997) through June 30, 2012**

**NOTE 1.      ORGANIZATION**

Cotton Bay Holdings, Inc., formerly known as Tranquility, Inc.(the "Company") is currently a development stagecompany under the provisions of Accounting Standards Codification("ASC") 915 "Development Stage Entities," andwas incorporated under the laws of the State of Delaware onAugust 20, 1997. The Company has a December 31 year-end. TheCompany's current management, i.e. .as of this filing, tookall necessary and reasonable measures in ensuring the accuracy ofthe financial information disclosed herein, even though thereigning Chief Executive Officer and Chief Financial Officer werenot in these executive positions during the time period providedherein.

**NOTE 2.      SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES**

**Basis of Presentation - Development StageCompany**

The Company has not earned any revenue from operations.Accordingly, the Company's activities have been accounted foras those of a "Development Stage Enterprise" as setforth in FASB ASC 915 "Development Stage Entities".Among the disclosures required by FASB ASC 915 are that theCompany's financial statements be identified as those of adevelopment stage company, and that the statements of operations,stockholders' equity/(deficit) and cash flows discloseactivity since the date of the Company's inception.

The accompanying unaudited interim financial statements havebeen prepared in accordance with Form 10-Q instructions and, inthe opinion of management, include all normal adjustmentsconsidered necessary to present fairly the financial position asof June 30, 2012 and the results of operations for the threemonths ended June 30, 2012 and the period from inception (August20, 1997) through June 30, 2012. The results have been determinedon the basis of generally accepted accounting principles andpractices and applied consistently with those used in thepreparation of the Company's financial statements and notesfor the year ended December 31, 2011, as filed on Form 10-K.

Certain information and footnote disclosures normally includedin the financial statements presented in accordance withgenerally accepted accounting principles have been condensed oromitted. It is suggested that the accompanying unaudited interimfinancial statements be read in conjunction with the financialstatements and notes thereto contained in the Company's 2011Annual Report on Form 10-K. Our results for the three monthsended June 30, 2012 may not be indicative of our results for thetwelve months ended December 31, 2012.

**Recently Issued Accounting Pronouncements**

The company has adopted all recently issued accountingpronouncements. The adoption of the accounting pronouncements,including those not yet effective, is not anticipated to have amaterial effect on the financial position or results ofoperations of the Company.

**NOTE 3.      GOING CONCERN**

The Company's financial statements are prepared usingaccounting principles generally accepted in the United States ofAmerica applicable to a going concern that contemplates therealization of assets and liquidation of liabilities in thenormal course of business. The Company has not established anysource of revenue to cover its operating costs. The Company willengage in very limited activities without incurring anyliabilities that must be satisfied in cash until a source offunding is secured. The Company will offer noncash considerationand seek equity lines as a means of financing its operations. Ifthe Company is unable to obtain revenue producing contracts orfinancing or if the revenue or financing it does obtain isinsufficient to cover any operating losses it may incur, it maysubstantially curtail or terminate its operations or seek otherbusiness opportunities through strategic alliances, acquisitionsor other arrangements that may dilute the interests of existingstockholders.

**NOTE 4.      RELATED PARTYTRANSACTIONS**

As of June 30, 2012, a shareholder of the Company had paidexpenses on behalf of the Company in exchange for a payablebearing no interest and due on demand. Total amount of expensespaid during the three months ended March 31, 2012 was $0. Thebalance payable to the shareholder at June 30, 2012, 2012 andDecember 31, 2011 were $64,480 and $64,480, respectively.

The Company does not lease or rent any property. Office spaceand services are provided without charge by anofficer/shareholder. Such costs are immaterial to the financialstatements and, accordingly, have not been reflected therein. Theofficers and directors of the Company are involved in otherbusiness activities and may, in the future, become involved inother business opportunities. If a specific business opportunitybecomes available, such persons may face a conflict in selectingbetween the Company and their other business interests. TheCompany has not formulated a policy for the resolution of suchconflicts.

**NOTE 5.      SUBSEQUENTEVENTS**
We evaluated subsequent events through the date and time ourfinancial statements were available to the public.
**ITEM 2.      MANAGEMENT'SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS.**

**SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKINGSTATEMENTS**

CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THEFOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD LOOKINGSTATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THEFUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK ANDUNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDSSUCH AS "PLANS," "INTENDS," "WILL,""HOPES," "SEEKS," "ANTICIPATES,""EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARDLOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT ASTATEMENT IS A FORWARD LOOKING STATEMENT. SUCH FORWARD LOOKINGSTATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVESWITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY,AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT ANDFUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME ORPROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THECOMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TOSUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, ORCAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCEREVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISEDTHAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OFTHE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THISREPORT ON FORM 10-Q AND IN THE COMPANY'S OTHER FILINGS WITHTHE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINEDIN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE ORASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.

**Overview and Recent Developments**

Cotton Bay Holdings, Inc. f/k/a Tranquility, Inc. wasincorporated under the laws of the State of Delaware on August20, 1997. As of June 30, 2012, the Company's only activitieshad been organizational ones, directed at developing its businessplan and raising its initial capital. The Company has notcommenced any commercial operations. The Company has no full-timeemployees and owns no real estate. The Company is currently a"shell" company with no or nominal operations and no ornominal assets. The Company's current business plan is toidentify, evaluate and investigate various companies with theintent that, if such investigation warrants, a reverse mergertransaction be negotiated and completed pursuant to which theCompany would acquire a target company with an operatingbusiness, with the intent of continuing the acquiredcompany's business as a publicly held entity. The Company haslimited capital with which to provide the owners of the targetcompany with any significant cash or other assets and, as such,the Company will only be able to offer owners of a target companythe opportunity to acquire a controlling ownership interest inthe Company.

For the fiscal year ending December 31, 2012, and thesubsequent twelve (12) months, the Company expects to continuewith its efforts to locate a suitable business acquisitioncandidate and thereafter to complete a business acquisitiontransaction. The Company does not expect to generate revenuesuntil it completes a business acquisition, and, depending uponthe performance of the acquired business, it may also continue tooperate at a loss after completion of a business combination.During the next twelve (12) months, the Company will requireadditional capital in order to pay the costs associated withcarrying out its plan of operations and the costs of compliancewith its continuing reporting obligations under the SecuritiesExchange Act of 1934 as amended. This additional capital will berequired whether or not the Company is able to complete abusiness combination transaction during the current fiscal year.Furthermore, once a business combination is completed, theCompany's needs for additional financing are likely toincrease substantially.

No specific commitments to provide additional funds have beenmade by management or other stockholders, and the Company has nocurrent plans, proposals, arrangements or understandings to raiseadditional capital through the sale or issuance of additionalsecurities prior to the location of a merger or acquisitioncandidate. Accordingly, there can be no assurance that anyadditional funds will be available to the Company to allow it tocover its expenses. Notwithstanding the foregoing, however, tothe extent that additional funds are required, the Companyanticipates that it will either continue to rely on its majorityshareholder to pay expenses on its behalf, or it will seek toraise capital through the private placement of restrictedsecurities. The majority shareholders are under no obligation topay such expenses. If the Company is unable to raise additionalfunds, it will not be able to pursue its business plan. Inaddition, in order to minimize the amount of additional cashwhich is required in order to carry out its business plan, theCompany might seek to compensate certain service providers byissuances of stock in lieu of cash.

**Liquidity and Capital Resources**

As of June 30, 2012, the Company's balance sheet reflectstotal current assets of $nil and total current liabilities of$71,497. The Company has cash on hand of $nil and a deficitaccumulated in the development stage of $87,981. The Company doesnot have sufficient assets or capital resources to pay itson-going expenses while it is seeking out business opportunities,and it has no current plans to raise additional capital throughthe sale of securities. As a result, although the Company has noagreement in place with its shareholders or other persons to payexpenses on its behalf, it is anticipated that the Company willcontinue to rely on its majority shareholder to pay expenses onits behalf at least until it is able to consummate a businesstransaction. The majority shareholder is under no obligation topay such expenses.

**Off Balance Sheet Arrangements**

The Company does not have any off-balance sheetarrangements.

**ITEM 3.      QUANTITATIVE ANDQUALITATIVE DISCLOSURES ABOUT MARKET RISK.**

Not Applicable.

**ITEM 4.      CONTROLS ANDPROCEDURES.**

**Disclosure Controls and Procedures**

The Securities and Exchange Commission defines the term"disclosure controls and procedures" to mean thecompany's controls and other procedures of an issuer that aredesigned to ensure that information required to be disclosed inthe reports that it files or submits under the SecuritiesExchange Act of 1934 is recorded, processed, summarized andreported, within the time periods specified in the Securities andExchange Commission's rules and forms. Disclosure controlsand procedures include, without limitation, controls andprocedures designed to ensure that information required to bedisclosed by an issuer in the reports that it files or submitsunder the Securities Exchange Act of 1934 is accumulated andcommunicated to the issuer's management, including itsprincipal executive and principal financial officers, or personsperforming similar functions, as appropriate to allow timelydecisions regarding required disclosure. The Company maintainssuch a system of controls and procedures in an effort to ensurethat all information which it is required to disclose in thereports it files under the Securities Exchange Act of 1934 isrecorded, processed, summarized and reported within the timeperiods specified under the SEC's rules and forms and thatinformation required to be disclosed is accumulated andcommunicated to principal executive and principal financialofficers to allow timely decisions regarding disclosure.

As of the end of the period covered by this report, we carriedout an evaluation, under the supervision and with theparticipation of our chief executive officer and chief financialofficer, of the effectiveness of the design and operation of ourdisclosure controls and procedures. Based on this evaluation, ourchief executive officer and chief financial officer concludedthat our disclosure controls and procedures are designed toprovide reasonable assurance of achieving the objectives oftimely alerting them to material information required to beincluded in our periodic SEC reports and of ensuring that suchinformation is recorded, processed, summarized and reportedwithin the time periods specified. Our chief executive officerand chief financial officer also concluded that our disclosurecontrols and procedures were effective as of the end of theperiod covered by this report to provide reasonable assurance ofthe achievement of these objectives.

**Changes in Internal Control over FinancialReporting**

There was no change in the Company's internal control overfinancial reporting during the period ended June 30, 2012, thathas materially affected, or is reasonably likely to materiallyaffect, the Company's internal control over financialreporting.
**PART II-OTHER INFORMATION**

**ITEM 1.      LEGALPROCEEDINGS.**
The Company is not a party to any pending legal proceedings, andno such proceedings are known to be contemplated. No director,officer or affiliate of the Company, and no owner of record orbeneficial owner of more than 5.0% of the securities of theCompany, or any associate of any such director, officer orsecurity holder is a party adverse to the Company or has amaterial interest adverse to the Company in reference to pendinglitigation.
**ITEM 1A.      RISKFACTORS.**

Not Applicable.

**ITEM 2.      UNREGISTERED SALES OFEQUITY SECURITIES AND USE OF PROCEEDS.**

None.

**ITEM 3.      DEFAULTS UPON SENIORSECURITIES.**

None.

**ITEM 4.      MINE SAFETYDISCLOSURES.**

Not Applicable.

**ITEM 5.      OTHERINFORMATION.**

None.

**ITEM 6.      EXHIBITS.**

The following exhibits are filed herewith:

31.1      Certifications pursuant toRule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of1934, as amended, as adopted pursuant to Section 302 of theSarbanes-Oxley Act of 2002.

31.2      Certifications pursuant toRule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of1934, as amended, as adopted pursuant to Section 302 of theSarbanes-Oxley Act of 2002.

31.3      Certifications pursuant to18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002.
**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of1934, the registrant has duly caused this report to be signed onits behalf by the undersigned thereunto duly authorized.

**COTTON BAY HOLDINGS, INC. f/k/a TRANQUILITY, INC.**

By: /S/ Alfred E. Abiouness, Jr.Chief Executive Officer

Date: December 6, 2012

By: /S/ Kevin BerthChief Financial Officer

Date: December 6, 2012