United
        States
 Securities
        and Exchange Commission
 Washington,
        D. C. 20549
 
 FORM
        10-Q
 
 x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE
        ACT OF 1934
 
 For
        the
        quarterly period ended March 31, 2008
 
 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE
        ACT OF 1934
 
 **For
        the quarterly period ended March 31, 2008**
 
 Commission
        File No. 000-53014
 
 **Z-II,
        INC.**
 
 (Exact
        Name of Registrant as specified in its charter)
 
 Delaware
              
              26-0612552(State
                  or other jurisdiction of
              
              (IRS
                  Employerincorporation
                  or organization)
              
              Identification
                  No.)
 
 244
        East
        32nd St. Suite B, New York, NY 10016
 
 (Address
        of principal executive offices)
 
 (212)
        576-1515
 
 (Registrant's
        telephone number, including area code)
 
 Indicate
        by check mark whether the registrant: (1) has filed all reports required
        to be
        filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding
        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 o
 
 Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, or a non-accelerated filer. See definition of “accelerated
        filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (check
        one):
 Large
                    Accelerated Filero
                Accelerated FileroNon-Accelerated Filero(Do not check if a smaller reporting company)
                Smaller Reporting Companyx
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act). Yes x No o
 
 Indicate
        the number of shares outstanding of each of the issuer's classes of common
        stock, as of the latest practicable date:
 Outstanding at May 12, 2008CLASS
                  A
                Common
                  stock $.01 Par Value
              
              
              0CLASS
                  B
                Common
                  stock $.01 Par Value
              
              
              40,000
  
  Part
        I
        -  FINANCIAL
        INFORMATION
 Item
        1
        -  Financial
        Statements
 
 Z-II,
        Inc.
 A
        Development Stage Company
 Balance
        Sheets
 
 March
                  31,2008
              
              June
                  30,(Unaudited)
              
              2007ASSETSCurrent
                  AssetsCash
                  and Cash Equivalents
              
              $
              560,041
              
              
              -TOTAL
                  CURRENT ASSETS, representing total assets
              
              $
              560,041
              
              $
              -LIABILITIES
                  & EQUITYLiabilitiesCurrent
                  LiabilitiesAmounts
                  Due for Expenses Paid on Behalf of the Company by
                  Officer/Stockholder
              
              $
              8,988
              
              $
              13,534Interest
                  Payable on Notes Payable to Officers/Stockholders
              
              
              15,611
              
              
              -Total
                  Current Liabilities
              
              
              24,599
              
              
              13,534Long
                  Term LiabilitiesNotes
                  payable to officers/stockholders
              
              
              580,000
              
              
              -Total
                  Liabilities
              
              
              604,599
              
              
              13,534Stockholders'
                  DeficitPreferred
                  Stock $.01 par value10,000,000
                  shares authorized, noneissued
                  and outstanding
              
              
              -
              
              
              -Class
                  A Common Stock $.01 par value45,000,000
                  shares authorized, noneissued
                  and outstanding
              
              
              -
              
              
              -Class
                  B Common Stock par value $.015,000,000
                  shares authorized,40,000
                  shares issued and outstanding
              
              
              400
              
              
              400Additional
                  Paid-In Capital
              
              
              19,600
              
              
              19,600Stock
                  Subcriptions Receivable
              
              
              -
              
              
              (20,000
              )Deficit
                  accumulated in the development stage
              
              
              (64,558
              )
              
              (13,534
              )Total
                  Stockholders' Deficit
              
              
              (44,558
              )
              
              (13,534
              )TOTAL
                  LIABILITIES & STOCKHOLDERS' DEFICIT
              
              $
              560,041
              
              $
              -
 
 The
        accompanying notes are an integral part of
 these
        financial statements.
  2
  Z-II,
        Inc.
 A
        Development Stage Company
 Statements
        of Operations
 (Unaudited)
 
 CumulativeThree Months
              
              Nine Months
              
              March 20, 2007
              
              March 20, 2007Ended
              
              Ended
              
              (Inception) to
              
              (Inception) toMarch 31, 2008
              
              March 31, 2008
              
              June 30, 2007
              
              March 31, 2008General
                  and Administrative ExpensesProfessional
                  Fees
              
              $
              20,271
              
              $
              38,919
              
              $
              13,534
              
              $
              52,453General
                  and Administrative Expense
              
              
              92
              
              
              92
              
              
              -
              
              
              92Loss
                  from Operations
              
              
              (20,363
              )
              
              (39,011
              )
              
              (13,534
              )
              
              (52,545
              )Other
                  Income (Expense)Interest
                  Income
              
              
              8,616
              
              
              46,141
              
              
              
              
              
              46,141Interest
                  Expense
              
              
              (15,611
              )
              
              (57,136
              )
              
              -
              
              
              (57,136
              )Total
                  Other Income (Expense)
              
              
              (6,995
              )
              
              (10,995
              )
              
              -
              
              
              (10,995
              )Loss
                  before provision for income taxes
              
              
              (27,358
              )
              
              (50,006
              )
              
              (13,534
              )
              
              (63,540
              )Provision
                  for income taxes
              
              
              (1,018
              )
              
              (1,018
              )
              
              -
              
              
              (1,018
              )Net
                  Loss
              
              $
              (28,376
              )
              $
              (51,024
              )
              $
              (13,534
              )
              $
              (64,558
              )Primary
                  and fully diluted earnings per shareWeighted
                  average shares outstanding
              
              
              40,000
              
              
              35,200
              
              
              -
              
              
              25,608Loss
                  per share
              
              $
              (0.71
              )
              $
              (1.45
              )
              $
              -
              
              $
              (2.52
              )
 
 The
        accompanying notes are an integral part of these financial
        statements.
  3
  Z-II,
        Inc.
 A
        Development Stage Company
 Statements
        of Cash Flows (Unaudited)
 
 CumulativeNine Months
              
              March 20, 2007
              
              March 20, 2007Ended
              
              (Inception) to
              
              (Inception) toMarch 31, 2008
              
              June 30, 2007
              
              March 31, 2008OPERATING
                  ACTIVITIESNet
                  Loss
              
              $
              (51,024
              )
              $
              (13,534
              )
              $
              (64,558
              )Adjustments
                  to reconcile Net Loss to net cash provided by operations:Increases
                  in (Reimbursement for) Expenses Paid on Behalf of the Company by
                  Officer/Stockholder
              
              
              (4,546
              )
              
              13,534
              
              
              8,988Net
                  cash used by Operating Activities
              
              
              (55,570
              )
              
              -
              
              
              (55,570
              )FINANCING
                  ACTIVITIESProceeds
                  received from Issuance of NotesPayable
                  to Officers/Stockholders
              
              
              1,980,000
              
              
              -
              
              
              1,980,000Repayments
                  of Notes Payable to Officers/Stockholders
              
              
              (1,400,000
              )
              
              -
              
              
              (1,400,000
              )Increase
                  in interest payable on NotesPayable
                  to Officers/Stockholders
              
              
              15,611
              
              
              -
              
              
              15,611Proceeds
                  received on Issuance of Class B Common Stock to Founders
              
              
              20,000
              
              
              -
              
              
              20,000Net
                  cash provided by Financing Activities
              
              
              615,611
              
              
              -
              
              
              615,611Net
                  increase in cash & cash equivalents
              
              
              560,041
              
              
              -
              
              
              560,041Cash
                  and cash equivalents at beginning of period
              
              
              -
              
              
              -
              
              
              -Cash
                  and cash equivalents at end of period
              
              $
              560,041
              
              $
              -
              
              $
              560,041
 
 The
        accompanying notes are an integral part of these financial
        statements.
  4
 
 ZII,
        INC.
 (A
        Development Stage Company)
 NOTES
        TO
        FINANCIAL STATEMENTS
 Nine
        Months Ended March 31, 2008
 
 Note
        1.   Organization
        and Basis of Presentation:
 
 Z-II,
        Inc. (the “Company”) was incorporated in the State of Delaware on March 20,
        2007. The Company's fiscal year ends in June. Since inception it has been
        engaged in organizational efforts and securing initial financing. The Company
        was formed as a vehicle to pursue one or more business combination transactions,
        such as mergers or acquisitions (of assets or stock) of operating businesses
        and
        to date, has made no efforts to identify any possible business combination.
        As a
        result, it has not conducted negotiations or entered into a letter of intent
        concerning any business combination transaction. The Company's business purpose
        is to seek business combination transactions with one or more existing
        companies.
 
 Based
        on
        its proposed business activities, Z-II is a “blank check” company. The
        Securities and Exchange Commission (the “SEC”) defines those companies as “any
        development stage company that is issuing a penny stock, within the meaning
        of
        Section 3 (a)(51) of the Securities Exchange Act of 1934, as amended (the
        “Exchange Act”), and that has no specific business plan or purpose, or has
        indicated that its business plan is to merge with an unidentified company
        or
        companies.” Under SEC Rule 12b-2 under the Securities Act of 1933, as amended
        (the “Securities Act”), the Company also qualifies as a “shell company,” because
        it has no or nominal assets (other than cash) and no or nominal operations.
        Many
        states have enacted statutes, rules and regulations limiting the sale of
        securities of “blank check” companies in their respective jurisdictions.
        Management does not intend to undertake any efforts to cause a market to
        develop
        in the Company's securities, either debt or equity, until it has successfully
        concluded a business combination. The Company intends to comply with the
        periodic reporting requirements of the Exchange Act for so long as it is
        subject
        to those requirements.
 
 The
        Company was organized as a vehicle to investigate and, if such investigation
        warrants, acquire one or more operating companies or businesses whose owners
        are
        seeking liquidity and the potential for capital appreciation. Its principal
        business objective for the next 12 months and beyond such time will be to
        achieve long-term growth potential through one or more combinations with
        operating businesses rather than immediate, short-term earnings. The Company
        will not restrict its search for potential candidates to companies engaged
        in
        any specific business, industry or geographical location and, thus, may acquire
        any type of business.
 
 The
        accompanying interim financial statements have been prepared by the Company
        without audit, in accordance with the instructions for Form 10-Q pursuant
        to the
        rules and regulations of the Securities and Exchange Commission (“SEC”) and
        therefore do not include all information and notes normally provided in the
        annual financial statements and should be read in conjunction with the audited
        financial statements and the notes thereto included in Form 10 Registration
        of
        Securities as amended filed with the SEC on March 14, 2008.
 
 In
        the
        opinion of management, the accompanying unaudited financial statements contain
        all adjustments (which consist of normal and recurring adjustments) necessary
        for a fair presentation of the financial statements. The results of operations
        for the three months ended March 31, 2008 and from inception through March
        31,
        2008 are not necessarily indicative of the results to be expected for the
        full
        year.
 
 Liquidity
 
 At
        March
        31, 2008 the Company had $560,041 in cash and cash equivalents and total
        liabilities of $604,599, of which $24,599 was current and the balance, $580,000
        consisted of long term notes payable. It had a working capital surplus of
        $535,442.
 
 Until
        such time as it acquires an operating company, management believes its liquidity
        will provide sufficient working capital for its needs. If and when an operating
        company is acquired, the Company's liquidity needs will be re-evaluated and
        it
        may seek to supplement its primary capital, as necessary, with one or more
        lines
        of credit or other debt accommodations with one or more financial institutions
        or lenders. At March 31, 2008, other than loans from its founders (see Note
        5)
        the Company had no such lines of credit or other outstanding debt obligations.
  5
  Note
        2.   Summary
        of Significant Accounting Policies
 
 Development
        Stage Entity Status
 
 Currently,
        the Company earns revenue only from the investment of its cash and cash
        equivalent assets. It has no operating revenues.
 
 Use
        of
        Estimates
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America generally requires management
        to make estimates and assumptions that affect the reported amounts of assets
        and
        liabilities and disclosures of contingent assets and liabilities at the date
        of
        the financial statements and the reported amounts of revenue and expenses
        during
        the reporting period. Actual results could differ from those estimates.
 
 If
        and
        when one or more operating companies is acquired, management will be required
        to
        make estimates and such estimates may include, but are not limited to, revenue
        recognition on fixed fee contracts, allowance for doubtful accounts, impairment
        of goodwill and intangibles, depreciation and amortization, the fair value
        of
        equity securities underlying stock-based compensation, the fair value of
        acquired assets, purchase price allocations and the realize-ability of deferred
        tax assets and liabilities.
 
 Fair
        Value of Financial Instruments
 
 The
        Company's short-term financial instruments as of March 31, 2008 consisted
        of
        cash and cash equivalents, interest payable on notes payable to
        officers/stockholders and amounts due to officer/stockholder for expenses
        paid
        on behalf of the Company. The carrying amounts of all short-term financial
        instruments at March 31, 2008 were their actual values.
 
 The
        Company's long-term financial instruments as of March 31, 2008 consisted
        of long
        term notes payable (see Note 5). The carrying amounts of all long-term financial
        instruments at March 31, 2008 were equivalent to the face amount of such
        instruments.
 
 Revenue
        Recognition
 
 Currently,
        the Company earns revenue only from the investment of its cash and cash
        equivalent assets. It has no operating revenues. For the period March 20,
        2007
        (inception) through March 31, 2008, the Company had no other revenues.
 
 Cash
        Equivalents
 
 The
        Company considers all highly liquid investments with maturities of three
        months
        or less when purchased to be cash equivalents.
 
 Income
        Taxes
 
 The
        Company used the asset and liability method to calculate deferred tax assets
        and
        liabilities. Deferred taxes are recognized based on the differences between
        financial reporting and income tax bases of assets and liabilities using
        enacted
        income tax rates. Deferred tax assets and liabilities are measured using
        enacted
        tax rates in effect for the years in which those temporary differences are
        expected to be recovered or settled. The effect on deferred tax assets and
        liabilities of a change in tax rates is recognized in income in the period
        that
        includes the enactment date.
 
 Loss
        Per
        Share
 
 Basic
        (loss) per share excludes dilution and is computed by dividing net (loss)
        available to common shareholders by the weighted average number of shares
        of
        Common Stock outstanding for the period.
 
 Diluted
        earnings per share is computed by dividing income available to common
        shareholders by the weighted average number of common shares outstanding
        for the
        period, adjusted to reflect potentially dilutive securities. During the period
        from March 20, 2007 (Inception) to March 31, 2008, there were no potentially
        dilutive securities.
  6
  Note
        3.  Recently
        Issued Accounting Pronouncements:
  In
        December 2007, the Financial Accounting Standards Board (“FASB”) simultaneously
        issued SFAS No. 141R, “Business Combinations (2007 Amendment),” and SFAS 160,
        Noncontrolling Interests in Consolidated Financial Statements, an Amendment
        of
        ARB 51.” Both standards update United States guidance on accounting for
“noncontrolling interests,” sometimes referred to as minority interests, which
        interests represent a portion of a subsidiary not attributable, directly
        or
        indirectly, to a parent. FASB and the International Accounting Standards
        Board
        (“IASB”) have been working together to promote international convergence of
        accounting standards. Prior to promulgation of these new standards there
        were
        specific areas in accounting for business acquisitions in which conversion
        was
        not achieved. The objective of both standards is to improve the relevance,
        comparability, and transparency of the financial information that a reporting
        entity provides in “business combinations” and consolidated financial statements
        by establishing accounting and reporting standards. In business combinations
        it
        is accomplished by establishing principles and requirements concerning how
        an
“acquirer” recognizes and measures identifiable assets acquired, liabilities
        assumed, and noncontrolling interest in the acquiree, as well as goodwill
        acquired in the combination or gain from a bargain purchase; and determines
        information to be disclosed to enable users to evaluate the nature and effects
        of business combinations. In consolidated financial statements the standards
        require: identification of ownership interests held in subsidiaries by parties
        other than the parent be clearly identified, labeled and presented in
        consolidated financial position within equity (rather than “mezzanine” between
        liabilities and equity) separately from amounts attributed to the parent,
        with
        net income attributable to the parent and to the minority interest clearly
        identified and presented on the face of consolidated statements of income.
        The
        standards also provide guidance in situations where the parent’s ownership
        interest in a subsidiary changes while the parent retains its controlling
        financial interest. The standard also provides guidance on recording a gain
        or
        loss based on fair value in situations involving deconsolidation of a
        subsidiary. Entities must provide sufficient disclosures that distinguish
        between interests of the parent and that of the noncontrolling interest.
        Both
        standards are effective for fiscal years and interims beginning on or after
        December 15, 2008 (that is January 1, 2009) for entities with calendar years.
        Earlier adoption is prohibited. The standards shall be applied prospectively
        as
        of the beginning of the fiscal year in which initially applied, except for
        the
        presentation and disclosure requirements, which shall be applied retrospectively
        for all periods presented. The Company does not anticipate that the adoption
        of
        SFAS No. 141R and No. 160 will have an impact on the Company's overall results
        of operations or financial position, unless the Company makes a business
        acquisition in which there is a noncontrolling interest.
 
 In
        September 2006, the FASB issued Statement of Financial Accounting Standards
        (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 clarifies the
        definition of fair value, establishes a framework for measuring fair value,
        and
        expands on required disclosures about fair value measurement. SFAS 157 will
        be
        effective for the Company on January 1, 2008 and will be applied prospectively.
        The Company is currently assessing whether adoption of SFAS 157 will have
        an
        impact on our financial statements but does not believe the adoption of SFAS
        157
        will have a material impact on the Company’s financial position, cash flows, or
        results of operations.
  In
        June,
        2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in
        Income Taxes, an Interpretation of FASB Statement No. 109, Accounting for
        Income
        Taxes (FIN48), to create a single model to address accounting for uncertainty
        in
        tax positions. FIN 48 clarifies the accounting for income taxes by prescribing
        a
        minimum recognition threshold a tax position is required to meet before being
        recognized in the financial statements. FIN 48 also provides guidance on
        derecognition, measurement, classification, interest, and penalties, accounting
        in interim periods, disclosure and transition. The Company adopted FIN 48
        as of
        January 1, 2007 and the adoption did not have a material impact to the Company's
        consolidated financial statements or effective tax rate and did not result
        in
        any unrecognized tax benefits.
 
 Interest
        costs and penalties related to income taxes are classified as interest expense
        and general and administrative costs, respectively, in the Company's
        consolidated financial statements. For the period from March 20, 2007
        (inception) to March 31, 2008, the Company did not recognize any interest
        or
        penalty expense related to income taxes. The Company is currently subject
        to a
        three year statue of limitations by major tax jurisdictions. The Company
        expects
        to file income tax returns in the U.S. federal jurisdiction, New York State
        and
        New York City.
 
 Note
        4.   Property
        and Equipment
 
 As
        of
        March 31, 2008, the Company had no depreciable property and
        equipment.
 
 Note
        5.   Notes
        Payable to Officers/Stockholders
 
 On
        August
        2, 2007 the Company borrowed $1,980,000 from two stockholders in the amounts
        of
        $1,485,000 and $495,000, respectively. In connection with this borrowing,
        the
        Company issued notes representing unsecured obligations of the Company. The
        notes bear interest at 5 per cent per annum, payable quarterly beginning
        September 30, 2007, with principal due at maturity on December 31, 2012.
        On
        February 12, 2008, $1,050,000 was repaid to Further Lane Trust, LLC and $350,000
        was repaid to Jack M. Rapport for an aggregate $1,400,000. The repayment
        of the
        loans was effectuated by a direct transfer of funds to The Birkhill Group,
        LLC,
        an entity substantially controlled directly or indirectly by David M. McCarthy,
        Further Lane Trust, LLC and Jack M. Rapport. As of March 31, 2008 $15,611
        was
        due an payable on the two notes. This interest was subsequently paid to the
        note
        holders on April 8, 2008. Interest expense incurred on the notes amounted
        to
        $15,611 and $57,136 for the three months and nine months ended March 31,
        2008,
        respectively, and $57,136 for the period from inception (March 20, 2007)
        to
        March 31, 2008.
  7
  Note
        6.   Common
        Stock
 
 The
        total
        number of shares of stock which the Corporation has authority to issue is
        60,000,000 shares, divided into 45,000,000 shares of Class A Common Stock,
        par
        value $0.01 per share, 5,000,000 shares of Class B Common Stock, par value
        $0.01
        per share, and 10,000,000 shares of Preferred Stock, par value $0.01 per
        share.
        The powers, designations, preferences and relative, participating, optional
        or
        other special rights of each class of stock or series thereof and the
        qualifications, limitations or restrictions of such preferences and/or rights
        are as described in the Company's Charter. In particular, Holders of Class
        B
        Common Stock have the right to convert their shares into Class A Common Stock.
        The Company’s Certificate of Incorporation also contains provision for the
        maintenance of the relative relationship between Class A and Class B holdings
        in
        the event of issuance of options or warrants, mergers or other such
        transactions. Holders of Class A Common Stock shall be entitled to one (1)
        vote
        per share, while holders of Class B Common Stock shall be entitled to ten
        (10)
        votes per share. Transfers of Class B Common Stock are restricted to certain
        specified transferees.
 
 On
        August
        2, 2007 the Company issued 40,000 shares of Class B Common Stock to the two
        shareholders described in the preceding paragraph. The aggregate sum paid
        for
        these shares was $20,000 as shown in the following table.
 
 Further Lane
                Trust, LLC
              
              Jack M. Rapport
              
              TotalClass B Common Stock, $.01 par value
              
              $
              300
              
              $
              100
              
              $
              400Additional
                  Paid-in Capital
              
              $
              14,700
              
              $
              4,900
              
              $
              19,600Total
              
              $
              15,000
              
              $
              5,000
              
              $
              20,000
 
 At
        March
        31, 2008, the 40,000 shares continue to be the only shares outstanding.
 
 Note
        7.   Employee
        Benefit Plans
 
 As
        of
        March 31, 2008 the Company had no employee benefit plans.
 
 Note
        8.   Commitments
        and Contingencies
 
 The
        Company may, from time to time, enter into agreements that contain
        indemnification provisions in the normal course of business for which the
        risks
        are considered nominal and impracticable to estimate. Historically, the Company
        has not incurred any significant costs related to performance under these
        indemnities.
 
 Note
        9.   Credit
        Risk
 
 The
        only
        financial instruments that potentially subject the Company to credit risk
        are
        cash and cash equivalents. The Company places its excess cash in money-market
        instruments with institutions of high credit quality and therefore we believe
        we
        have minimal credit risk. However, these balances may, from time to time,
        exceed
        the Federal depository insurance coverage. Cash and cash equivalents held
        in one
        bank, JPMorgan Chase Bank, exceed federally insured limits by approximately
        $404,091 at March 31, 2008.
 
 Note
        10.   Income
        Taxes
 
 The
        Company incurred New York State and New York City income taxes of $1,018
        for the
        three month and nine month ended periods ended March 31, 2008, as well as
        the
        period from inception (March 20, 2007) to March 31, 2008. As of March 31,
        2008
        no amounts have been accrued for taxes that will be payable on June 30, 2008
        with the state and local returns due by the Company for the year ended June
        30,
        2008..
  8
  Note
        11.   Other
        Comments
 
 The
        Company presently occupies office space provided by a relative of the Chief
        Executive Officer of the Company on a rent free basis.
 
 9
  Item
        2 -
        Management's Discussion and Analysis and Plan of Operation
 
 This
        report contains certain forward-looking statements and information relating
        to
        Z-II, Inc. ("Z-II" or the "Company") that are based on assumptions made by
        management and on information currently available. When used in this report,
        the
        words "anticipate", "believe", "estimate", "expect", "intend", "plan" and
        similar expressions, as they relate to the Company or its management, are
        intended to identify forward-looking statements. These statements reflect
        management's current view of the Company concerning future events and are
        subject to certain risks, uncertainties and assumptions, including among
        many
        others: a general economic downturn; a downturn in the securities markets;
        federal or state laws or regulations having an adverse effect on the Company;
        and other risks and uncertainties including those identified in the “Risk
        Factors” section of the Company’s, Registration Statement on Form 10/A dated
        March 14, 2008. Should any of these risks or uncertainties materialize, or
        should underlying assumptions prove incorrect, actual results may vary
        materially from those described in this report as anticipated, estimated
        or
        expected.
 
 The
        following discussion should be read in conjunction with Z-II's audited Financial
        Statements and related Notes thereto included in its Registration on Form
        10/A
        dated March 14, 2008, as filed with the Securities and Exchange
        Commission.
 
 On
        February 4, 2008 the Securities and Exchange Commission adopted Release No.
        33-8876 "Smaller Reporting Company Regulatory Relief and Simplification,” (Dec.
        19, 2007), a new system of disclosure rules for smaller companies filing
        periodic reports and registration statements with the SEC. They replace the
        disclosure requirements formerly in the SEC’s Regulation S-B, which applied to
“small business issuers,” under which definition the Company falls. Under the
        new system, smaller reporting companies will prepare and file their SEC reports
        and registration statements using the same forms as other SEC reporting
        companies, though the information required to be disclosed may differ.
        Eventually, there will be no special “small business” forms. Instead, smaller
        reporting companies will use standard forms like Forms 10-K and S-1 used
        by
        other companies. Under the new rules, the Company has the option to file
        its
        next annual report on Form 10-KSB or the standard Form 10-K and quarterly
        reports due before this annual report on Form 10-QSB or Form 10-Q. After
        the
        next annual report, all future annual and quarterly reports must be on the
        standard forms instead of the “SB” forms. The Company has elected to begin using
        Forms 10Q and 10-K from this report forward.
 
 Plan
        of
        Operation
 
 Z-II,
        Inc, (“Z-II”, or the “Company”) was incorporated as a vehicle to investigate
        and, if such investigation warrants, acquire one or more operating companies
        or
        businesses whose owners are seeking liquidity and the potential for capital
        appreciation. The Company's principal business objective for the next 12
        months
        and beyond will be to achieve long-term growth potential through one or more
        combinations with one or more operating companies (individually, a "Target
        Company" and collectively, "Target Companies"). The Company does not intend
        to
        restrict its search for potential candidates to companies engaged in any
        specific business, industry or geographical location and, thus, may acquire
        any
        type of business. Investors in this offering will have an economic interest
        in
        the Company, however, they will not have any decision-making rights, including
        whether or not the Company should acquire a Target Company, as control of
        the
        Company will be in the hands of Z-II's founders.
 
 Z-II
        will
        seek to add value to a Target Company by providing leadership and management,
        contribute and help raise additional capital and establish such controls,
        procedures and practices as will allow the combined entity to realize its
        potential and maximize shareholder value.
 
 The
        analysis of new business opportunities has and will be undertaken by or under
        the supervision of the Company's officers and directors. They have unrestricted
        flexibility in seeking, analyzing and participating in potential business
        opportunities. In their efforts to analyze potential Target Companies or
        businesses, they will consider, among others, the following factors:
 
 (i)  potential
        for growth, indicated by new technology, anticipated market expansion or
        new
        products;
 
 (ii)  competitive
        position as compared to other firms of similar size and experience within
        the
        relevant industry segment as well as within the industry as a whole;
 
 (iii)  strength
        and diversity of management, either in place or scheduled for recruitment;
 
 (iv)  capital
        requirements and anticipated availability of required funds, to be provided
        by
        us or from operations, through the sale of additional securities, through
        joint
        ventures or similar arrangements or from other sources;
  10
  (v)  the
        cost
        of participation by Z-II as compared to the perceived tangible and intangible
        values;
 
 (vi)  the
        extent to which the business opportunities can be advanced;
 
 (vii)  the
        accessibility of required management expertise, personnel, raw materials,
        services, professional assistance and other required items; and
 
 (viii)  other
        relevant factors that the Company may identify.
 
 In
        applying the foregoing criteria, no one of which will be controlling, Z-II's
        management will attempt to analyze all factors and circumstances and make
        a
        determination based upon reasonable investigative measures and available
        data.
        Potentially available business opportunities may occur in many different
        industries, and at various stages of development, all of which will make
        the
        task of comparative investigation and analysis of such business opportunities
        extremely difficult and complex. Due to the Company's limited capital it
        may not
        discover or adequately evaluate adverse facts about any opportunity evaluated
        or, ultimately, any transaction consummated.
 
 During
        the three month period ended March 31, 2008 the Company's officers participated
        in discussions with potential Target Companies but did not enter into any
        contract or memorandum of understanding with respect to a transaction.
 
 The
        manner in which the Company participates in an opportunity will depend upon
        the
        nature of the opportunity, the Company's respective needs and desires and
        the
        promoters of the opportunity, and the Company's relative negotiating strength
        and that of such promoters.
 
 It
        is
        anticipated that the investigation of specific business opportunities and
        the
        negotiation, drafting and execution of relevant agreements, disclosure documents
        and other instruments will require substantial management time and attention
        and
        substantial costs for third party professionals, accountants, attorneys and
        others. If a decision is made not to participate in a specific business
        opportunity, these costs theretofore incurred in the related investigation
        would
        not be recoverable. Furthermore, even if an agreement is reached for the
        participation in a specific business opportunity, the failure to consummate
        that
        transaction may result in the loss of the related costs incurred.
 
 Based
        on
        our proposed business activities, Z-II is a “blank check” company. The
        Securities and Exchange Commission defines those companies as “any development
        stage company that is issuing a penny stock, within the meaning of Section
        3(a)(51) of the Exchange Act, as amended, and that has no specific business
        plan
        or purpose, or has indicated that its business plan is to merge with an
        unidentified company or companies.” Under Rule 12b-2 under the Securities Act,
        the Company also qualifies as a “shell company,” because it has no or nominal
        assets (other than cash) and no or nominal operations. Many states have enacted
        statutes, rules and regulations limiting the sale of securities of “blank check”
companies in their respective jurisdictions. Management does not intend to
        undertake any efforts to cause a market to develop in the Company's securities,
        either debt or equity, until it has successfully concluded a business
        combination transaction. Z-II intends to comply with the periodic reporting
        requirements of the Exchange Act for so long as it is subject to those
        requirements.
 
 Results
        of Operations
 
 The
        Company was founded on March 20, 2007 and at March 31, 2007 had no operations,
        assets, liabilities or capital. A comparison of the results of the three
        months
        ended March 31, 2008 with the period from inception through March 31, 2007
        would
        therefore not be meaningful and has thus been omitted from this
        report.
 
 For
        the
        three months ended March 31, 2008 the Company had no operating revenues and
        incurred $20,363 in professional fees and administrative expenses, resulting
        in
        a loss from operations of $20,363. The Company incurred interest expense
        of
        $15,611 which was offset partially by interest income of $8,616 resulting
        in net
        interest expense of $6,995. The Company paid $1,018 in Federal and State
        Income
        taxes in the quarter. Thus, the Company had a net loss for the three months
        ended March 31, 2008 of $28,376.
 
 For
        the
        nine months ended March 31, 2008, the Company had no operating revenues and
        incurred $39,011 in professional fees and administrative expenses resulting
        in a
        loss from operations of $39,011. The Company incurred interest expense of
        $46,141 which was offset partially by interest income of $57,136 resulting
        in
        net interest expense of $10,995. The Company paid $1,018 in Federal and State
        Income taxes during the period. Thus, the Company had a net loss for the
        nine
        months ended March 31, 2008 of $51,024.
  11
  Summary
        of Critical Accounting Policies; Significant Judgments and
        Estimates
 
 There
        were no other changes to our critical accounting policies, which are described
        in Registration Statement on Form 10 submitted to the SEC on January 15,
        2008,
        as amended, during the three months ended March 31, 2008. There were no items
        presented in the Company's financial statements that required the significant
        use of management estimates.
 
 Liquidity
        and Capital Resources
 
 As
        of
        March 31, 2007 and for the period from March 20, 2007 (inception) through
        March
        31, 2007, the Company had no assets or liabilities and no cash flows from
        any
        source.
 
 As
        of
        March 31, 2008, the Company had cash and cash equivalents of $560,041 and
        a
        working capital surplus of $535,442. For the nine months ended March 31,
        2008,
        the Company used $55,570 of cash for operations.
 
 At
        March
        31, 2008, the Company had no long-term debt other than the notes payable
        to
        Officers/Stockholders. The Company has no off-balance sheet arrangements
        and has
        not entered into any transactions involving unconsolidated, limited purpose
        entities or commodity contracts. The sources of liquidity and capital resources
        are loans from stockholders and cash in banks.
 
 On
        February 12, 2008 we repaid $1,050,000 to Further Lane Trust, LLC and $350,000
        to Jack M. Rapport for an aggregate $1,400,000. The repayments on these loans
        were effectuated by a direct transfer of funds to The Birkhill Group, LLC,
        an
        entity controlled directly or indirectly by David M. McCarthy, Further Lane
        Trust, LLC and Jack M. Rapport. These repayments notwithstanding, during
        the
        next 12 months, despite anticipated costs related to the filing of Exchange
        Act
        reports, and consummating one or more business combination transactions,
        we
        believe we will be able to meet our funding requirements through use of funds
        in
        our treasury and additional amounts, as necessary, to be loaned by or invested
        in us by our stockholders, management or other investors.
 
 Item
        4T – Controls and Procedures
 
 Evaluation
        of Disclosure Controls and Procedures
  We
        maintain a set of disclosure controls and procedures, as defined in Section
        13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange
        Act”), that are designed to ensure that information required to be disclosed
        by
        us in the reports filed by us under the Securities Exchange Act of 1934,
        as
        amended (the “Exchange Act”) is recorded, processed, summarized and reported
        within the time periods specified in the SEC’s rules and forms. We carried out
        an evaluation, under the supervision and with the participation of our Chief
        Executive Officer and our Chief Financial Officer, of the effectiveness of
        the
        design and operation of our disclosure controls and procedures pursuant to
        Rule
        13a-15(b) of the Exchange Act. Based on that evaluation, our Chief Executive
        Officer and our Chief Financial Officer concluded that our disclosure controls
        and procedures were effective as of the end of the period covered by this
        report.
 
 Notwithstanding
        the foregoing, there can be no assurance that the Company’s disclosure controls
        and procedures will detect or uncover all failures of persons within the
        Company
        to disclose material information otherwise required to be set forth in the
        Company’s periodic reports. There are inherent limitations to the effectiveness
        of any system of disclosure controls and procedures, including the possibility
        of human error and the circumvention or overriding of the controls and
        procedures. Accordingly, even effective disclosure controls and procedures
        can
        only provide reasonable, not absolute, assurance of achieving their control
        objectives.
 
 Changes
        in Internal Controls Over Financial Reporting
 
 An
        evaluation was performed under the supervision of the Company’s management,
        including the CEO and CFO, as required under Exchange Act Rule 13a-15(d)
        and
        15d-15(d) of whether any change in the Company’s internal control over financial
        reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) occurred
        during the fiscal quarter ended March 31, 2008. Based on that evaluation,
        the
        Company’s management, including the CEO and CFO, concluded that no change in the
        Company’s internal controls over financial reporting occurred during the fiscal
        quarter ended March 31, 2008 that has materially affected or is reasonably
        likely to materially affect, the Company’s internal control over financial
        reporting.
  12
  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
 
 Not
        applicable.
 
 Item
        4.
        Submission of Matters to a Vote of Security Holders
 
 None
 
 Item
        5.
        Other Information
 
 None
 
 Item
        6.
        Exhibits
 
 Exhibit
        31.1 Certification of Chief Executive Officer as required by Rule 13a-14
        or
        15d-14 of the Securities Exchange Act of 1934, as adopted Pursuant to Section
        302 of the Sarbanes-Oxley Act of 2002.
 
 Exhibit
        31.2 Certification of Chief Financial Officer as required by Rule 13a-14
        or
        15d-14 of the Securities Exchange Act of 1934, as adopted Pursuant to Section
        302 of the Sarbanes-Oxley Act of 2002.
 
 Exhibit
        32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350,
        as
        adopted pursuant to Section 906 of the Sarbanes-Oxley Act 0f of
        2002.
 
 Exhibit
        32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350,
        as
        adopted pursuant to Section 906 of the Sarbanes-Oxley Act 0f of
        2002.
  13
  SIGNATURES
  Pursuant
        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this report to be signed on its behalf by the undersigned thereunto
        duly authorized.
  Z-II,
                  INC.Dated:
                  May 13, 2008
              /s/
                  David M. McCarthyDavid
                  M. McCarthy, Chief Executive Officer(Principal
                  Executive Officer)Dated:
                  May 13, 2008
              /s/
                  Jack M. RapportJack
                  M. Rapport, Chief Financial Officer(Principal
                  Accounting and Financial
                  Officer)
  14