UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  Form 10-QSB   X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 2006  _ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to _____   TABATHA II, INC. (Name of small business issuer in its charter)  Colorado0-3175184-1536518(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification Number)1926 S. Oswego Way 
Aurora, Colorado80014(Address of principal executive offices)(Zip Code)  Registrants telephone number, including area code:  (303) 752-4637  Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X   No ____  Applicable only to issuers involved in bankruptcy proceedings during the past five years:  Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes _ No  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes X   No  Applicable only to corporate issuers:  State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 8,342,400 as of September 2006.  Transitional Small Business Disclosure Format (Check one): Yes __ No X  - 1 -     PART I - FINANCIAL INFORMATION  ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS           TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY)  UNAUDITED FINANCIAL STATEMENTS  INDEX TO UNAUDITED FINANCIAL STATEMENTS  September 30, 2006   PAGEBALANCE SHEET (UNAUDITED)3STATEMENTS OF OPERATIONS (UNAUDITED)4STATEMENTS OF CASH FLOWS (UNAUDITED)5NOTES TO UNAUDITED FINANCIAL STATEMENTS6             - 2 -       TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY) September 30, 2006 BALANCE SHEET (UNAUDITED) September 30,2006ASSETSCurrent assetsCash$             1,939Total current assets1,939Total assets$             1,939LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilitiesAccounts payable and accrued liabilities$                541Total current liabilities541Stockholders' equityPreferred stock: no par value; 10,000,000 shares authorized; no shares issued and outstanding-Common stock: no par value; 100,000,000 shares authorized; 8,342,400 shares issued and outstanding94,425Deficit accumulated during the development stage(93,027)Total stockholders' equity1,398Total liabilities and stockholders' equity$             1,939       See notes to unaudited financial statements.        - 3 -     TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY) September 30, 2006 STATEMENTS OF OPERATIONS (UNAUDITED)  Three months endedPeriod from March 17, 2000 [inception] toSeptember 30,September 30,200620052006Revenues$                      -$                      -$                      -Operating expensesSelling, general and administrative expense-27466,563Accounting-1,00012,365Consulting--5,000Legal--4,174Rent1501503,900Office supplies--1,279Non-cash compensation---Total operating expenses1501,42493,281Operating loss(150)(1,424)(93,281)Other incomeInterest income2-254Total other income2-254Net loss before income taxes(148)(1,424)(93,027)Provision for income taxes---Net loss$                (148)$             (1,424)$           (93,027)Basic and diluted net loss per share$               (0.00)$               (0.00)Weighted average number of shares outstanding8,342,4008,189,067        See notes to unaudited financial statements.  - 4 -      TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY) September 30, 2006 STATEMENTS OF CASH FLOWS (UNAUDITED)    Three months endedPeriod from March 17, 2000 [inception] toSeptember 30,September 30,200620052006Cash flows from operating activities:Net loss$(148)$(1,424)$(93,027)Adjustments to reconcile net loss tonet cash used in operations:Non-Cash Rent to Capital1501503,900Stock issued for services--68,825Changes in operating assets and liabilities:Accounts payable--541Net cash used in operating activities2(1,274)(19,761)Cash flows from financing activities:Issuance of common stock--21,700Net cash provided by financing activities--21,700Increase (decrease) in cash and cash equivalents2(1,274)1,939Cash and cash equivalents, beginning of period1,9375,485-Cash and cash equivalents, end of period$1,939$4,211$1,939Supplemental disclosures of cash flow information:Cash paid for interest$-$-Cash paid for income taxes$-$-     See notes to unaudited financial statements.  - 5 -     TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY) September 30, 2006 NOTES TO UNAUDITED FINANCIAL STATEMENTS   1. MANAGEMENTS REPRESENTATION OF INTERIM FINANCIAL INFORMATION  The accompanying financial statements have been prepared by Tabatha II, Inc. without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These financial statements include all of the adjustments which, in the opinion of management, are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. These financial statements should be read in conjunction with the audited financial statements as of June 30, 2005 as filed with Form 10-KSB.   BUSINESS DESCRIPTION - ORGANIZATION  Tabatha II, Inc. (a development stage company) (the "Company") was incorporated under the laws of the State of Colorado on March 17, 2000. The principal office of the corporation is 1926 South Oswego Way, Aurora, Colorado 80014.  The Company is an enterprise in the development stage as defined by Statement No.7 of the Financial Accounting Standards Board and has not engaged in any business other than organizational efforts. It has no full­time employees and owns no real property. The Company intends to operate as a capital market access corporation and has registered with the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934. The Company intends to seek to acquire one or more existing businesses that have existing management, through merger or acquisition. Management of the Company will have virtually unlimited discretion in determining the business activities in which the Company might engage.  2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  BASIS OF PRESENTATION  The financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).  FISCAL YEAR The fiscal year of the Company is June 30.  - 6 -     TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY) September 30, 2006 NOTES TO UNAUDITED FINANCIAL STATEMENTS   2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued  LOSS PER SHARE  Basic loss per common share is calculated using the weighted average number of shares outstanding during the period. Diluted loss per common share is calculated by adjusting the weighted outstanding shares, assuming conversion of all potentially dilutive stock options. At June 30, 2005 there were no potentially dilutive stock options outstanding.  FINANCIAL INSTRUMENTS  Unless otherwise indicated, the fair value of all reported assets and liabilities that represent financial instruments, none of which are held for trading purposes, approximate the carrying values of such assets and liabilities.  ORGANIZATION COSTS  The Company, in accordance with the provisions of the American Institute of Certified Public Accountants' Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-up Activities, expenses all start-up and organizational costs as they are incurred.  STATEMENT OF CASH FLOWS  For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.  USE OF ESTIMATES  The preparation of the Company's financial statements in conformity with generally accepted accounting principles requires the Company's management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates.  STOCK BASIS  Shares of common stock issued for other than cash have been assigned amounts equivalent to the fair value of the service or assets received in exchange.   - 7 -     TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY) September 30, 2006 NOTES TO UNAUDITED FINANCIAL STATEMENTS  2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued  IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS  In August 2001, the FASB issued Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS 144"). FAS 144 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. The Company has implemented FAS 144 for this fiscal year. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates.  No impairment was recorded in the fiscal year ending June 30, 2006 or first quarter ending September 30, 2006.  3. STOCKHOLDERS EQUITY  As of June 30, 2006, 100,000,000 shares of the Company's no par value common stock had been authorized, of which 8,342,400 were issued and outstanding.  The Company is authorized to issue up to 10,000,000 shares of preferred stock, in series, as determined by the Board of Directors. As of June 30, 2006, no preferred shares have been designated or issued.  150,000 shares of common stock were issued on November 2, 2005 for cash of $3,000.  Warrants to purchase 2,660,000 shares of common stock at $0.05 per share were issued on December 4, 2000. The warrants were issued for services valued at $13,300. The warrants were to expire on December 3, 2004. The warrants were surrendered and cancelled by the Company in the year ended June 30, 2004.  On March 1, 2004, 2,850,000 shares of common stock were surrendered by the president of the Company concurrent with his resignation as president and director. The Company immediately cancelled these shares.   - 8 -     TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY) September 30, 2006 NOTES TO UNAUDITED FINANCIAL STATEMENTS  3. STOCKHOLDERS EQUITY - continued  75,000 shares of common stock were issued on May 21, 2004 for cash of $1,500.  125,000 shares of common stock were issued on May 26, 2004 for cash of $2,500.  600,000 shares of common stock were issued on May 27, 2004. The shares were issued for services valued at $12,000. The services were provided from March 2004 to March 2005 and resulted in expenses of $7,700 and $4,300 for the years ended June 30, 2005 and 2004.  50,000 shares of common stock were issued on May 31, 2004. The shares were issued for prepaid services valued at $1,000. The services were to be provided from March 2004 to March 2005. The services were never provided, so the shares were subsequently cancelled.  75,000 shares of common stock were issued on May 31, 2004 for cash of $1,500.  50,000 shares of common stock were issued on June 9, 2004 for cash of $1,000.  On March 1, 2005, 5,000 shares of common stock were issued for cash of $100.  4. RELATED PARTY TRANSACTIONS  As of the date hereof, officers and directors of the Company are the owners of 5,741,600 shares of its issued and outstanding common stock, constituting approximately 71% of the Company's issued and outstanding common stock. The shares were issued for cash and services from $0.005 to $0.02 per share.  Officers and directors are reimbursed for all out-of-pocket expenses.  Rent is being provided by a shareholder of the Company. For purposes of the financial statements, the Company is accruing $50 per month as common stock for this use.  5. INCOME TAXES  The Company has Federal net operating loss carry forwards of approximately $92,878 expiring between the years 2020 through 2026. The tax benefit of these net operating losses is approximately $26,005 or 28% of the  carry loss forward of $92,878 and has been offset by a full allowance for realization. For the quarter ended September 30, 2006, the allowance increased by $59. These carry forwards may be limited upon consummation of a business combination under IRC Section 381.  - 9 -      TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY) September 30, 2006 NOTES TO UNAUDITED FINANCIAL STATEMENTS  6. RECENT ACCOUNTING PRONOUNCEMENTS.  In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment. SFAS 123(R) is a revision of SFAS No., 123, Accounting for Stock Based Compensation, and supersedes Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to Employees. Among other items SFAS 123(R) eliminates the use of APB 25 and the intrinsic value method of accounting, and requires companies to recognize the cost of employee services received in exchange for awards of equity instruments, based on the grant date fair value of those awards, in the financial statements. The Company began recognizing compensation expense for the fair value of stock-based compensation in its financial statements in accordance with SFAS 123 in 2003. The effective date of SFAS 123(R) is the first annual reporting period beginning after June 15, 2005. The adoption of SFAS 123(R) did not have a material impact on the Companys financial position, results of operations or cash flows.  In March 2005, the SEC staff issued additional guidance on SFAS 123(R) in the form of Staff Accounting Bulletin (SAB) No. 107. SAB 107 was issued to assist preparers by simplifying some of the implementation challenges of SFAS 123(R) while enhancing the information that investors receive. SAB 107 creates a framework that is premised on two themes: (a) considerable judgment will be required by preparers to successfully implement SFAS 123(R), specifically when valuing employee stock options; and (b) reasonable individuals, acting in good faith, may conclude differently on the fair value of employee share options. Key topics covered by SAB 107 include: (a) valuation models - SAB 107 reinforces the flexibility allowed by SFAS 123(R) to choose an option-pricing model that meets the standards fair value measurement objective; (b) expected volatility - the SAB provides guidance on when it would be appropriate to rely exclusively on either historical or implied volatility in estimating expected volatility; and (c) expected term - the new guidance includes examples and some simplified approaches to determining the expected term under certain circumstances. The Companys adoption of the principles of SAB 107 in conjunction with its adoption of SFAS 123(R) did not have material impact on the Companys financial statements or results of operations.  In December 2004, the FASB issued SFAS No. 153, Exchanges of Non monetary Assets, an amendment of APB Opinion No. 29. SFAS No. 153 addresses the measurement of exchanges of non monetary assets and redefines the scope of transactions that should be measured based on the fair value of the assets exchanged. SFAS No. 153 is effective for non monetary asset exchanges occurring in fiscal periods beginning after June 15, 2005.  The adoption of SFAS No. 153 did not have a material impact on the Companys financial statements or results of operations.  - 10 -     TABATHA II, INC. (A DEVELOPMENT STAGE COMPANY) September 30, 2006 NOTES TO UNAUDITED FINANCIAL STATEMENTS  6. RECENT ACCOUNTING PRONOUNCEMENTS-continued.  In January 2003, the FASB issued FASB Interpretation (FIN) No. 46, (FIN 46), Consolidation of Variable Interest Entities (VIE). Until this interpretation, the Company generally included entities in its consolidated financial statements only if it controlled the entity through voting interests. FIN No. 46 requires a variable interest entity, as defined, to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entitys activities or entitled to receive a majority of the entitys residual returns. FIN No. 46 is effective for reporting periods ending after December 15, 2003. The adoption of FIN No. 46 did not have a material impact on the Companys Consolidated Financial Statements as of June 30, 2005.  In March 2005, FASB issued FASB Interpretation No. 47 (FIN 47), Accounting for Conditional Asset Retirement Obligations. FIN 47 clarifies that the term Conditional Asset Retirement Obligation as used in FASB Statement No. 143, Accounting for Asset Retirement Obligation, refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. Accordingly, an entity is required to recognize a liability for the fair value of a Conditional Asset Retirement Obligation if the fair value of the liability can be reasonably estimated. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005. The adoption of FIN 47 did not have a material affect on the Companys financial position, results of operations or cash flows.  In May 2005, the Financial Accounting Standards Board (FASB) issued SFAS No. 154, Accounting Changes and Error Corrections (SFAS No. 154), which replaced Accounting Principles Board Opinion No. 20, Accounting Changes and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS No. 154 changes the requirements for the accounting for and reporting of a change in accounting principles. It requires retrospective application to prior periods financial statements of changes in accounting principles, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.  The impact on the Companys operations will depend on future accounting pronouncements or changes in accounting principles.   - 11 -     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS  DISCLAIMER REGARDING FORWARD LOOKING STATEMENTS  Certain statements in this Form 10-QSB which are not statements of historical fact are what are known as "forward-looking statements," which are basically statements about the future. For that reason, these statements involve risk and uncertainty since no one can accurately predict the future. Words such as "plans," "intends," "hopes," "seeks," "anticipates," "expects," and the like, often identify such forward looking statements, but are not the only indication that a statement is a forward-looking statement. Such forward-looking statements include statements concerning our plans and objectives with respect to our present and future operations, and statements which express or imply that such present and future operations will or may produce revenues, income or profits. These and other factors may cause our actual results to differ materially from any forward-looking statement.  We caution you not to place undue reliance on these forward-looking statements.  Although we base these forward-looking statements on our expectations, assumptions, and projections about future events, actual events and results may differ materially, and our expectations, assumptions, and projections may prove to be inaccurate. The forward-looking statements speak only as of the date hereof, and we expressly disclaim any obligation to publicly release the results of any revisions to these forward-looking statements to reflect events or circumstances after the date of this filing.  Executive Overview  Tabatha II, Inc. (a development stage company) (the "Company") was incorporated under the laws of the State of Colorado on March 17, 2000. The principal office of the corporation is 1926 South Oswego Way, Aurora, Colorado 80014.  The Company is an enterprise in the development stage as defined by Statement No.7 of the Financial Accounting Standards Board and has not engaged in any business other than organizational efforts. It has no full­time employees and owns no real property. The Company intends to operate as a capital market access corporation and has registered with the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934. The Company intends to seek to acquire one or more existing businesses that have existing management, through merger or acquisition. Management of the Company will have virtually unlimited discretion in determining the business activities in which the Company might engage.  Liquidity and Capital Resources  As of September 30, 2006, the Company remains in the development stage. Since inception, it has experienced no significant change in liquidity or capital resources or stockholders' equity other than the receipt of proceeds in the amount of $21,700 from its inside capitalization funds. Consequently, for the period ended September 30, 2006, the Company's balance sheet reflects current and total assets of $1,939, which is all in the form of cash, and current liabilities of $541.  The Company does not believe its existing cash resources will be sufficient to pay costs associated with carrying out its plan of operations for the remainder of the fiscal year. Therefore it expects to require additional capital (see "Need for Additional Financing" below) during the fiscal year.  - 12 -     Plan of Operations  The Company expects to continue its efforts to locate a suitable business acquisition candidate and thereafter to complete a business acquisition transaction. The Company anticipates incurring a loss for each quarter and for the full fiscal year as a result of expenses associated with compliance with the reporting requirements of the Securities Exchange Act of 1934, and expenses associated with locating and evaluating acquisition candidates. The Company does not expect to generate revenues until it completes a business acquisition, and, depending upon the performance of the acquired business, it may also continue to operate at a loss after completion of a business combination.  Need for Additional Financing  The Company believes it will require additional capital in order to pay the costs associated with carrying out its plan of operations and the costs of compliance with its continuing reporting obligations under the Securities Exchange Act of 1934, as amended. This additional capital will be required whether or not the Company is able to complete a business combination transaction during the current year. Furthermore, once a business combination is completed, the Company's needs for additional financing are likely to increase substantially.  No specific commitments to provide additional funds have been made by Management or other stockholders, and the Company has no current plans, proposals, arrangements or understandings to raise additional capital through the sale or issuance of additional securities prior to the location of a merger or acquisition candidate. Accordingly, there can be no assurance that any additional funds will be available to the Company to allow it to cover its expenses. Notwithstanding the foregoing, however, to the extent that additional funds are required, the Company anticipates receiving such funds in the form of advancements from current shareholders without the issuance of additional shares or other securities, or through the private placement of restricted securities. In addition, in order to minimize the amount of additional cash which is required in order to carry out its business plan, the Company might seek to compensate certain service providers by issuances of stock in lieu of cash.     - 13 -     ITEM 3. CONTROLS AND PROCEDURES  The Securities and Exchange Commission defines the term disclosure controls and procedures to mean a company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuers management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and principal accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on this evaluation, our chief executive officer and principal accounting officer concluded that our disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported with the time periods specified.  Our chief executive officer and principal accounting officer also concluded that our disclosure controls and procedures were effective as of September 30, 2006 to provide reasonable assurance of the achievement of these objectives.  There was no change in the Company's internal control over financial reporting during the quarter ended September 30, 2006, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.    - 14 -     PART II - OTHER INFORMATION  ITEM 1. LEGAL PROCEEDINGS.  None.  ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.  None.   ITEM 3. DEFAULTS UPON SENIOR SECURITIES.  None.  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.  None.  ITEM 5. OTHER INFORMATION.  None.  ITEM 6. EXHIBITS.  The following exhibits are filed herewith:  3(i) Articles of Incorporation (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on October 11, 2000).  3(ii) Bylaws (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on October 11, 2000).  31.1 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.  32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.    - 15 -     SIGNATURE In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.   TABATHA II, INC.  By: /S/ JOHN BALLARD
John Ballard, President, Chief Financial Officer and a Director  Date:  November 14, 2006             - 16 -