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**SHELBY      ACQUISITION II, INC.**

**-      INDEX -**

|                                                                               |                                                                                                                                                                                                                                                           | Page  |
|------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| **PART              I- FINANCIAL INFORMATION:**                                    |                                                                                                                                                                                                                                                           |
|                                                                               |                                                                                                                                                                                                                                                           |       |
| Item              1.                                                               | Financial                Statements                                                                                                                                                                                                                            |       |
|                                                                               |                                                                                                                                                                                                                                                           |       |
|                                                                               | Balance                Sheet as of October 31, 2007 (unaudited)                                                                                                                                                                                                | F-1        |
|                                                                               |                                                                                                                                                                                                                                                           |       |
|                                                                               | Statements                of Operations for the Three Months Ending October 31, 2007 (unaudited)                and                for the Period from February 1, 2007 (Date of Inception) through                October                31, 2007 (unaudited) | F-2        |
|                                                                               |                                                                                                                                                                                                                                                           |       |
|                                                                               | Statement                of Stockholder’s Equity for the Period from February 1, 2007 (Date of                Inception) through                October 31, 2007 (unaudited)                                                                        | F-3        |
|                                                                               |                                                                                                                                                                                                                                                           |       |
|                                                                               | Statements                of Cash Flows for the Three Months Ending October 31, 2007 (unaudited)                and                for the Period from February 1, 2007 (Date of Inception) through                October                31, 2007 (unaudited) | F-4        |
|                                                                               |                                                                                                                                                                                                                                                           |       |
|                                                                               | Notes                to Financial Statements (unaudited)                                                                                                                                                                                                       | F-5        |
|                                                                               |                                                                                                                                                                                                                                                           |       |
| Item              2.                                                               | Management's                Discussion and Analysis of Financial Condition and Results of                Operations                                                                                                                                            | 1          |
|                                                                               |                                                                                                                                                                                                                                                           |       |
| Item              3.                                                               | Controls                and Procedures                                                                                                                                                                                                                         | 2          |
|                                                                               |                                                                                                                                                                                                                                                           |       |
| **PART              II –              OTHER              INFORMATION:** |                                                                                                                                                                                                                                                           |
|                                                                               |                                                                                                                                                                                                                                                           |       |
| Item              1.                                                               | Legal                Proceedings                                                                                                                                                                                                                               | 3          |
|                                                                               |                                                                                                                                                                                                                                                           |       |
| Item              2.                                                               | Unregistered                Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                     | 3          |
|                                                                               |                                                                                                                                                                                                                                                           |       |
| Item              3.                                                               | Defaults                Upon Senior Securities                                                                                                                                                                                                                 | 3          |
|                                                                               |                                                                                                                                                                                                                                                           |       |
| Item              4.                                                               | Submission                of Matters to a Vote of Security Holders                                                                                                                                                                                             | 3          |
|                                                                               |                                                                                                                                                                                                                                                           |       |
| Item              5.                                                               | Other                Information                                                                                                                                                                                                                               | 3          |
|                                                                               |                                                                                                                                                                                                                                                           |       |
| Item              6.                                                               | Exhibits                                                                                                                                                                                                                                                       | 3          |
|                                                                               |                                                                                                                                                                                                                                                           |       |
| Signatures                                                                         | 4                                                                                                                                                                                                                                                              |

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**PART      I –**
**      FINANCIAL INFORMATION**

**Item      1. Financial Statements.**

**SHELBY      ACQUISITION II, INC.**

**(A      Development Stage Company)**

**BALANCE      SHEET**

**(Unaudited)**

| **ASSETS**                                                                                                                                      |   |   |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|
| **CURRENT                ASSETS**                                                                                                               |   |   |       |   |
| **Cash                and cash equivalents**                                                                                                    |   | $      | 11,833     |   |
|                                                                                                                                            |   |   |       |   |
| **TOTAL                ASSETS**                                                                                                                 |   | **$**  | **11,833** |   |
|                                                                                                                                            |   |   |       |   |
| **LIABILITIES                & STOCKHOLDER'S EQUITY**                                                                                       |   |   |       |   |
| **CURRENT                LIABILITIES**                                                                                                          |   |   |       |   |
| **Accrued                Professional Fees**                                                                                                    |   | $      | 3,675      |   |
|                                                                                                                                            |   |   |       |   |
| **TOTAL                LIABILITIES**                                                                                                            |   |   | 3,675      |   |
|                                                                                                                                            |   |   |       |   |
| **STOCKHOLDER'S                EQUITY**                                                                                                         |   |   |       |   |
| **Preferred                Stock, .0001 par value; 10,000 shares authorized; none issued and                outstanding**                       |   |   | —    |   |
| **Common                Stock, .0001 par value; 100,000,000 shares authorized; 5,000,000                issued                and outstanding** |   |   | 500        |   |
| **Additional                Paid in Capital**                                                                                                   |   |   | 24,500     |   |
| **Deficiency                accumulated during development stage**                                                                              |   |   | (16,842    | ) |
| **TOTAL                STOCKHOLDER'S EQUITY**                                                                                                   |   |   | 8,158      |   |
|                                                                                                                                            |   |   |       |   |
| **TOTAL                LIABILITIES & STOCKHOLDER'S EQUITY**                                                                                 |   | **$**  | **11,833** |   |

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**SHELBY      ACQUISITION II, INC.**

**(A      Development Stage Company)**

**STATEMENTS      OF OPERATIONS**

**(Unaudited)**

|                                                                                                      |   |                           |          | **For                the**                 |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------------|--------------------------------------------|--------|
|                                                                                                      |   | **For                the**     |          | **Cumulative**                             |   |
|                                                                                                      |   | **Three**                      |          | **Period                from**             |   |
|                                                                                                      |   | **Months**                     |          | **Inception**                              |   |
|                                                                                                      |   | **Ended**                      |          | **(February                1, 2007)** |   |
|                                                                                                      |   | **October 31, 2007** |          | **to October 31, 2007**     |   |
|                                                                                                      |   |                           |          |                                       |   |
| **Revenue**                                                                                               |   | **$**                          | **-**         |                                       | **$**  | **-** |   |
|                                                                                                      |   |                           |          |                                       |   |   |   |
| **General                and Administrative Expenses**                                                    |   |                           | 3,675         |                                       |   | 16,842 |   |
|                                                                                                      |   |                           |          |                                       |   |   |   |
| **Net                Loss**                                                                               |   | **$**                          | **(3,675**    | **)**                                      | **$**  | **(16,842** | **)** |
|                                                                                                      |   |                           |          |                                       |   |   |   |
|                                                                                                      |   |                           |          |                                       |   |   |   |
| **Basic                and Diluted Net Loss Per Share**                                                   |   |                           | **0.00**      |                                       |   | **0.00** |   |
|                                                                                                      |   |                           |          |                                       |   |   |   |
| **Number                of Shares Used in Computing Basic and Diluted Net Loss Per                Share** |   |                           | **5,000,000** |                                       |   | **5,000,000** |   |

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**SHELBY      ACQUISITION II, INC.**

**(A      Development Stage Company)**

**STATEMENT      OF STOCKHOLDER’S EQUITY**

**(Unaudited)**

|                                                       |   |                     |    |                              |   |                       |   |                  |          |              |   | **Deficit** |   |       |       |
|------------------------------------------------------------|--------|--------------------------|---------|-----------------------------------|--------|----------------------------|--------|-----------------------|---------------|-------------------|--------|-------------|--------|------------|------------|
|                                                       |   |                     |    |                              |   |                       |   |  **Accumulated** |          |              |   |
|                                                       |   |                          |    |                              |   | **Additional**             |   | **During**            |          |              |   |
|                                                       |   | **Preferred Stock** |    | **Common                  Stock** |   | **Paid                In** |   | **Development**       |          | **Stockholder's** |   |
|                                                       |   | **Shares**               |    | **Amount**                        |   | **Shares**                 |   | **Amount**            |          | **Capital**       |   | **Stage**   |   | **Equity** |       |
|                                                       |   |                     |    |                              |   |                       |   |                  |          |              |   |        |   |       |       |
| **BALANCE                AT FEBRUARY 1, 2007 INCEPTION**   |   |                     | — |                              | $      | -                          |   |                  | —       |              | $      | -           |   | $          | -          |   | $ | - |   | $ | - |   |
|                                                       |   |                     |    |                              |   |                       |   |                  |          |              |   |        |   |       |       |   |   |   |   |   |   |   |
| Issuance                of Common Stock                    |   |                     | — |                              |   | -                          |   |                  | 5,000,000     |              |   | 500         |   |       | 24,500     |   |   | — |   |   | 25,000 |   |
|                                                       |   |                     |    |                              |   |                       |   |                  |          |              |   |        |   |       |       |   |   |   |   |   |   |   |
| Net                loss                                    |   |                     | — |                              |   | -                          |   |                  | —       |              |   | —     |   |       | —    |   |   | (13,167 | ) |   | (13,167 | ) |
|                                                       |   |                     |    |                              |   |                       |   |                  |          |              |   |        |   |       |       |   |   |   |   |   |   |   |
| **Balance                as of July 31, 2007**             |   |                     | — |                              |   | **-**                      |   |                  | **5,000,000** |              |   | **500**     |   |       | **24,500** |   |   | **(13,167** | **)** |   | **11,833** |   |
|                                                       |   |                     |    |                              |   |                       |   |                  |          |              |   |        |   |       |       |   |   |   |   |   |   |   |
| Net                loss for period 8/1/07 through 10/31/07 |   |                     | — |                              |   | -                          |   |                  | —       |              |   | —     |   |       | —    |   |   | (3,675 | ) |   | (3,675 | ) |
|                                                       |   |                     |    |                              |   |                       |   |                  |          |              |   |        |   |       |       |   |   |   |   |   |   |   |
| **Balance                as of October 31, 2007**          |   |                     | — |                              | **$**  | **-**                      |   |                  | **5,000,000** |              | **$**  | **500**     |   | **$**      | **24,500** |   |   | **($16,842** | **)** | **$** | **8,158** |   |

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**SHELBY      ACQUISITION II, INC.**

**(A      Development Stage Company)**

**STATEMENTS      OF CASH FLOWS**

**(Unaudited)**

|                                                                                                |   |                           |       | **For the**                       |   |
|-----------------------------------------------------------------------------------------------------|--------|--------------------------------|------------|----------------------------------------|--------|
|                                                                                                |   |                           |       | **Cumulative**                         |   |
|                                                                                                |   | **For the**               |       | **Period from**                   |   |
|                                                                                                |   | **Three Months**          |       | **Inception**                          |   |
|                                                                                                |   | **Ended**                      |       | **(February 1, 2007)**       |   |
|                                                                                                |   | **October 31, 2007** |       | **to October 31, 2007** |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES**                                             |   |                           |       |                                   |   |   |   |
| **Net                Loss**                                                                         |   | $                              | (3,675     | )                                      | $      | (16,842 | ) |
| **Adjustments                to reconcile Net Loss to net cash used in                operations:** |   |                           |       |                                   |   |   |   |
| **Due                to Affiliate**                                                                 |   |                           | (592       | )                                      |   | 0 |   |
| **Accrued                professional fees**                                                        |   |                           | 3,675      |                                   |   | 3,675 |   |
| **Net                cash used in Operating Activities**                                            |   |                           | (592       | )                                      |   | (13,167 | ) |
|                                                                                                |   |                           |       |                                   |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES**                                             |   |                           |       |                                   |   |   |   |
| **Proceeds                from Issuance of Common Stock**                                           |   |                           | 0          |                                   |   | 25,000 |   |
| **Net                cash provided by Financing Activities**                                        |   |                           | 0          |                                   |   | 25,000 |   |
|                                                                                                |   |                           |       |                                   |   |   |   |
| **Net                (decrease) increase in cash and cash equivalents for                period**   |   |                           | (592       | )                                      |   | 11,833 |   |
|                                                                                                |   |                           |       |                                   |   |   |   |
| **Cash                and cash equivalents at beginning of period**                                 |   |                           | 11,833     |                                   |   | — |   |
|                                                                                                |   |                           |       |                                   |   |   |   |
| **Cash                and cash equivalents at end of period**                                       |   | **$**                          | **11,833** |                                   | **$**  | **11,833** |   |

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**SHELBY      ACQUISITION II, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**NOTES      TO FINANCIAL STATEMENTS**

**October      31, 2007**

| (a)   | Organization                and Business: |
|-----------------|-------------------------------------------|

| (b)   | Basis                of Presentation/Going concern: |
|-----------------|-----------------------------------------------------|

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**SHELBY      ACQUISITION II, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**NOTES      TO FINANCIAL STATEMENTS**

**October      31, 2007**

|  | (c) | Cash                and Cash Equivalents |
|--|-----|------------------------------------------|

|  | (d) | Use                of Estimates: |
|--|-----|----------------------------------|

|  | (e) | Income                Taxes |
|--|-----|-----------------------------|

|  | (f) | Loss                per Common Share |
|--|-----|--------------------------------------|

|  | (g) | Fair                Value of Financial Instruments |
|--|-----|----------------------------------------------------|

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**SHELBY      ACQUISITION II, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**NOTES      TO FINANCIAL STATEMENTS**

**October      31, 2007**

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**SHELBY      ACQUISITION II, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**NOTES      TO FINANCIAL STATEMENTS**

**October      31, 2007**

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**Item      2. Management’s Discussion and Analysis of Financial Condition and Results of      Operations. **

***Results      of Operations***

***Liquidity      and Capital Resources***

| Operating                activities |   | $      | (13,167 | )      |
|-------------------------------------|--------|--------|---------|--------|
| Investing                activities |   |   | -       |   |
| Financing                activities |   | $      | 25,000  |   |
|                                |   |   |    |   |
| Net                effect on cash   |   | $      | 11,833  |   |

***Plan      of Operations***

|  | (i) | filing                of reports under the Securities Exchange Act of 1934, as amended                (the                “Exchange Act”), and |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (ii) | consummating                an acquisition. |
|--|------|---------------------------------------------|

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***Off-Balance      Sheet Arrangements***

** **

**Item      3. Controls and Procedures.**

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**PART      II — OTHER INFORMATION**

**Item      1. Legal Proceedings.**

**Item      2. Unregistered Sales of Equity Securities and Use of Proceeds.**

**Item      3. Defaults Upon Senior Securities.**

**Item      4. Submission of Matters to a Vote of Security Holders.**

**Item      5. Other Information.**

**Item      6. Exhibits.**

| Exhibit                  No. |   | Description |
|------------------------------|--------|-------------|
|                         |   |        |
| *3.1                         |   |        | Certificate                  of Incorporation, as filed with the Delaware Secretary of State                  on                  February 1, 2007. |
|                         |   |        |   |
| *3.2                         |   |        | By-Laws. |
|                         |   |        |   |
| 31.1                         |   |        | Certification                  of the Company’s Principal Executive Officer and Principal Financial                  Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,                  with                  respect to the registrant’s Quarterly Report on Form 10-QSB for the                  quarter ended October 31, 2007. |
|                         |   |        |   |
| 32.1                         |   |        | Certification                  of the Company’s Principal Executive Officer and Principal Financial                  Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant                  to Section                  906 of the Sarbanes Oxley Act of                  2002. |

| * | Filed                as an exhibit to the Company's Registration Statement on Form 10-SB,                as                filed with the Securities and Exchange Commission on November 20,                2007,                and incorporated herein by this                reference. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**SIGNATURES**

| Dated:                March 11, 2008 | **SHELBY                ACQUISITION II, INC.** |
|--------------------------------------|------------------------------------------------|
|                                 |                                           |
|                                 |                                           |   |
|                                 | By:                                            | /s/                James R. Kerr |
|                                 | Name:                James R. Kerr             |
|                                 | Title:                President and Secretary  |

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