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**SHELBY      ACQUISITION II, INC.**

**-      INDEX -**

|                                                       |                                                                                                                                                                                                                                     |   | Page   |
|------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| **PART                I- FINANCIAL INFORMATION:**          |                                                                                                                                                                                                                                     |   |
|                                                       |                                                                                                                                                                                                                                     |   |   |
| Item                1.                                     | Financial                Statements                                                                                                                                                                                                      |   |   |
|                                                       |                                                                                                                                                                                                                                     |   |   |
|                                                       | Balance                Sheet as of January 31, 2008 (unaudited)                                                                                                                                                                          |   | F-1    |
|                                                       |                                                                                                                                                                                                                                     |   |   |
|                                                       | Statements                of Operations for the Three and Six Months Ending January 31, 2008                (unaudited) and for the Period from February 1, 2007 (Date of Inception)                through January 31, 2008 (unaudited) |   | F-2    |
|                                                       |                                                                                                                                                                                                                                     |   |   |
|                                                       | Statement                of Stockholder’s Equity for the Period from February 1, 2007 (Date of                Inception) through January 31, 2008 (unaudited)                                                                      |   | F-3    |
|                                                       |                                                                                                                                                                                                                                     |   |   |
|                                                       | Statements                of Cash Flows for the Three and Six Months Ending January 31, 2008                (unaudited) and for the Period from February 1, 2007 (Date of Inception)                through January 31, 2008 (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**                                                                                                    |   | $      | 3,163     |   |
|                                                                                                                                            |   |   |      |   |
| **TOTAL                ASSETS**                                                                                                                 |   | **$**  | **3,163** |   |
|                                                                                                                                            |   |   |      |   |
| **LIABILITIES                & STOCKHOLDER'S DEFICIT**                                                                                      |   |   |      |   |
| **CURRENT                LIABILITIES**                                                                                                          |   |   |      |   |
| **Accrued                Professional Fees**                                                                                                    |   | $      | 7,350     |   |
| **Due                to Stockholder**                                                                                                           |   |   | 18,750    |   |
|                                                                                                                                            |   |   |      |   |
| **TOTAL                LIABILITIES**                                                                                                            |   |   | 26,100    |   |
|                                                                                                                                            |   |   |      |   |
| **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**                                                                              |   |   | (47,937   | )      |
| **TOTAL                STOCKHOLDER'S DEFICIT**                                                                                                  |   |   | (22,937   | )      |
|                                                                                                                                            |   |   |      |   |
| **TOTAL                LIABILITIES & STOCKHOLDER'S DEFICIT**                                                                                |   | **$**  | **3,163** |   |

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**SHELBY      ACQUISITION II, INC.**

**(A      Development Stage Company)**

**STATEMENTS      OF OPERATIONS**

**(Unaudited)**

|                                                                                                      |   | **For the****Three****Months****Ended****January 31,****2008** |          | **For the****Six Months****Ended****January 31,****2008** |   | **For the****Cumulative****Period from****Inception****(February 1,****2007)****to October 31,****2007** |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|---------------|--------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                      |   |                                                                     |          |                                                                     |   |                                                                                                                              |   |
| **Revenue**                                                                                               |   | **$**                                                                    | **-**         |                                                                     |   |                                                                                                                              |   | **$** | **-** |   |
|                                                                                                      |   |                                                                     |          |                                                                     |   |                                                                                                                              |   |   |   |   |
| **General                and Administrative Expenses**                                                    |   |                                                                     | 31,095        |                                                                     |   | 34,770                                                                                                                            |   |   | 47,937 |   |
|                                                                                                      |   |                                                                     |          |                                                                     |   |                                                                                                                              |   |   |   |   |
| **Net                Loss**                                                                               |   | **$**                                                                    | **(31,095**   | **)**                                                                    | **$**  | **(34,770**                                                                                                                       | **)**  | **$** | **(47,937** | **)** |
|                                                                                                      |   |                                                                     |          |                                                                     |   |                                                                                                                              |   |   |   |   |
| **Basic                and Diluted Net Loss Per Share**                                                   |   | **$**                                                                    | **(0.01**     | **)**                                                                    | **$**  | **(0.01**                                                                                                                         | **)**  | **$** | **(0.01** | **)** |
|                                                                                                      |   |                                                                     |          |                                                                     |   |                                                                                                                              |   |   |   |   |
| **Number                of Shares Used in Computing Basic and Diluted Net Loss Per                Share** |   |                                                                     | **5,000,000** |                                                                     |   | **5,000,000**                                                                                                                     |   |   | **5,000,000** |   |

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**SHELBY      ACQUISITION II, INC.**

**(A      Development Stage Company)**

**STATEMENT      OF STOCKHOLDER’S EQUITY**

**(Unaudited)**

|                                                       |   | **Preferred Stock** |        | **Common Stock** |   | **Additional****Paid In** | ** ** | **Deficit****Accumulated****During****Development** | ** **    | **Stockholder's****Equity** |   |
|------------------------------------------------------------|--------|--------------------------|-------------|-----------------------|--------|--------------------------------|------------|-----------------------------------------------------|---------------|-----------------------------|--------|
|                                                       |   | **Shares**               |        | **Amount**            |   | **Shares**                     |       | **Amount**                                          |          | **Capital**                 |   | **Stage** |   | **(Deficit)** |   |
|                                                       |   |                     |        |                  |   |                           |       |                                                |          |                        |   |   |   |   |   |
| **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** |   |
|                                                       |   |                     |        |                  |   |                           |       |                                                |          |                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss for period 11/1/07 through 1/31/08 |   |                     | —     |                  |   | —                        |       |                                                | —       |                        |   | — |   |   | — |   |   | (31,095 | ) |   | (31,095 | ) |
|                                                       |   |                     |        |                  |   |                           |       |                                                |          |                        |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance                as of January 31, 2008**          |   |                     | **—** |                  | **$**  | **-**                          |       |                                                | **5,000,000** |                        | **$**  | **500** |   | **$** | **24,500** |   | **$** | **(47,937** | **)** | **$** | **(22,937** | **)** |

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**SHELBY      ACQUISITION II, INC.**

**(A      Development Stage Company)**

**STATEMENTS      OF CASH FLOWS**

**(Unaudited)**

|                                                                                                |   |  **For the****Six Months****Ended****January 31,****2008** |      | **For the****Cumulative****Period from****Inception****(February 1,****2007)****to January 31,****2008** |   |
|-----------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------|-----------|-----------------------------------------------------------------------------------------------------------------------------------|--------|
| **CASH                FLOWS FROM OPERATING ACTIVITIES**                                             |   |                                                                           |      |                                                                                                                              |   |   |   |
| **Net                Loss    **                                                 |   | $                                                                              | (34,770   | )                                                                                                                                 | $      | (47,937 | ) |
| **Adjustments                to reconcile Net Loss to net cash used in                operations:** |   |                                                                           |      |                                                                                                                              |   |   |   |
| **Accrued                Professional Fees**                                                        |   |                                                                           | 7,350     |                                                                                                                              |   | 7,350 |   |
| **Net                cash used in Operating Activities**                                            |   |                                                                           | (27,420   | )                                                                                                                                 |   | (40,587 | ) |
|                                                                                                |   |                                                                           |      |                                                                                                                              |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES**                                             |   |                                                                           |      |                                                                                                                              |   |   |   |
| **Loans                from Stockholder**                                                           |   |                                                                           | 18,750    |                                                                                                                              |   | 18,750 |   |
| **Loans                from Affiliate**                                                             |   |                                                                           | (592      | )                                                                                                                                 |   | 0 |   |
| **Proceeds                from Issuance of Common Stock**                                           |   |                                                                           | 0         |                                                                                                                              |   | 25,000 |   |
| **Net                cash provided by Financing Activities**                                        |   |                                                                           | 18,158    |                                                                                                                              |   | 43,750 |   |
|                                                                                                |   |                                                                           |      |                                                                                                                              |   |   |   |
| **Net                (decrease) increase in cash and cash equivalents for                period**   |   |                                                                           | (9,262    | )                                                                                                                                 |   | 3,163 |   |
|                                                                                                |   |                                                                           |      |                                                                                                                              |   |   |   |
| **Cash                and cash equivalents at beginning of period**                                 |   |                                                                           | 12,425    |                                                                                                                              |   | — |   |
|                                                                                                |   |                                                                           |      |                                                                                                                              |   |   |   |
| **Cash                and cash equivalents at end of period**                                       |   | **$**                                                                          | **3,163** |                                                                                                                              | **$**  | **3,163** |   |

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**SHELBY      ACQUISITION II, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**NOTES      TO FINANCIAL STATEMENTS**

**January      31, 2008**

**NOTE      1- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING      POLICIES**

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

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**SHELBY      ACQUISITION II, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**NOTES      TO FINANCIAL STATEMENTS**

**January      31, 2008**

**NOTE      1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES      (Continued):**

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

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

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

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**SHELBY      ACQUISITION II, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**NOTES      TO FINANCIAL STATEMENTS**

**January      31, 2008**

**NOTE      1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES      (Continued):**

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

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

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

**NOTE      2 – CAPITAL STOCK**

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**SHELBY      ACQUISITION II, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**NOTES      TO FINANCIAL STATEMENTS**

**January      31, 2008**

**NOTE      2 – CAPITAL STOCK (continued)**

**NOTE      3 – DUE TO STOCKHOLDER**

**NOTE      4 – RECENT ACCOUNTING PRONOUNCEMENTS**

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**SHELBY      ACQUISITION II, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**NOTES      TO FINANCIAL STATEMENTS**

**January      31, 2008**

**NOTE      4 – RECENT ACCOUNTING PRONOUNCEMENTS (continued)**

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**SHELBY      ACQUISITION II, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**NOTES      TO FINANCIAL STATEMENTS**

**January      31, 2008**

**NOTE      4 – RECENT ACCOUNTING PRONOUNCEMENTS (continued)**

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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 |   | $      | (40,587 | )      |
|-------------------------------------|--------|--------|---------|--------|
| Investing                activities |   |   | -       |   |
| Financing                activities |   | $      | 43,750  |   |
|                                |   |   |    |   |
| Net                effect on cash   |   | $      | 3,163   |   |

***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 January 31, 2008. |
|             |   |                                                                                                                                                                                                                                                                                                                                                  |
| 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 17, 2008 | **SHELBY                ACQUISITION II, INC.** |
|--------------------------------------|------------------------------------------------|
|                                 |                                           |   |
|                                 |                                           |   |
|                                 | By:                                            | /s/                James R. Kerr |
|                                 |                                           | James                R. Kerr |
|                                 |                                           | President                and Secretary |

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