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 September 30, 2008 or





o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
      ACT OF 1934





For
      the
      transition period from __________ to ___________





000-53014







(Commission
      File No.)





**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 Filer ̈
            Accelerated
                Filer ̈Non-Accelerated
                Filer ̈(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 November 18, 2008CLASS
                A
              Common
                stock $.01 Par Value
            
            0CLASS
                B
              Common
                stock $.01 Par Value
            
            40,000





TABLE
      OF
      CONTENTS


PagePART
                  I FINANCIAL INFORMATION
              3Item
                  1 - Financial Statements.
              3Balance
                  Sheets as of September 30, 2008 (unaudited) and June 30,
                  2008
              3Statements
                  of Operations for the three months ended September 30, 2008 (unaudited)
                  and 2007 (unaudited) and from March 20, 2007 (inception) to September
                  30,
                  2008 (unaudited)
              4Statements
                  of Cash Flows for the three months ended September 30, 2008 (unaudited)
                  and September 30, 2007 (unaudited) and from March 20, 2007 (inception)
                  to
                  September 30, 2008 (unaudited)
              5Notes
                  to Financial Statements (unaudited)
              6Item
                  2 - Management's Discussion and Analysis, Plan of Operation and
                  Results of
                  Operations
              11Item
                  4(T) - Controls and Procedures.
              13PART
                  II OTHER INFORMATION
              14Item
                  6 – Exhibits.
              14Signatures
              15


2


Part
      I
      -  FINANCIAL
      INFORMATION


Item
      1
      -  Financial
      Statements





Z-II,
      Inc.


A
      Development Stage Company


Balance
      Sheets





September 30,
            
            June 30,2008
            
            2008(Unaudited)ASSETSCurrent
                AssetsCash
                and Cash Equivalents
            
            $
            14,643
            
            $
            21,223Prepaid
                Expenses
            
            
            466
            
            
            465TOTAL
                CURRENT ASSETS, representing total assets
            
            $
            15,108
            
            $
            21,688LIABILITIES
                & EQUITYLiabilitiesCurrent
                LiabilitiesAccounts
                Payable -Professional Fees
            
            $
            30,700
            
            $
            16,000Interest
                Payable on Notes Payable to Officers/Stockholders
            
            
            4,969
            
            
            4,969Total
                Current Liabilities
            
            
            35,669
            
            
            20,969Long
                Term LiabilitiesNotes
                payable to officers/stockholders
            
            
            80,000
            
            
            80,000Total
                Liabilities
            
            
            115,669
            
            
            100,969Stockholders'
                DeficitPreferred
                  Stock $.01 par value 10,000,000
                  shares authorized, none issued
                  and outstanding
            
            
            -
            
            
            -Class
                    A Common Stock $.01 par value 45,000,000
                    shares authorized, none issued
                    and outstanding
            
            
            -
            
            
            -Class
                  B Common Stock par value $.01 5,000,000
                  shares authorized, 40,000
                  shares issued and outstanding at September 30, 2008 and and
                  at June 30, 2008
            
            
            400
            
            
            400Additional
                Paid-In Capital
            
            
            19,600
            
            
            19,600Deficit
                accumulated in the development stage
            
            
            (120,561
            )
            
            (99,281
            )Total
                Stockholders' Deficit
            
            
            (100,561
            )
            
            (79,281
            )TOTAL
                LIABILITIES & STOCKHOLDERS' DEFICIT
            
            $
            15,108
            
            $
            21,688





The
      accompanying notes are an integral part of


these
      financial statements.


3





Statements
      of Operations


(Unaudited)





CumulativeFor the three months
            
            March 20, 2007ended
            
            (Inception) toSeptember 30, 2008
            
            September 30, 2007
            
            September 30, 2008General
                and Administrative ExpensesProfessional
                Fees
            
            $
            20,700
            
            $
            966
            
            $
            103,555General
                and Administrative Expense
            
            
            -
            
            
            -
            
            
            265Loss
                from Operations
            
            
            (20,700
            )
            
            (966
            )
            
            (103,820
            )Other
                Income (Expense)Interest
                Income
            
            
            20
            
            
            12,403
            
            
            47,056Interest
                Expense
            
            
            -
            
            
            (16,225
            )
            
            (62,106
            )Total
                Other Income (Expense)
            
            
            20
            
            
            (3,822
            )
            
            (15,050
            )Loss
                before provision for income taxes
            
            
            (20,680
            )
            
            (4,788
            )
            
            (118,870
            )Provision
                for income taxes
            
            
            600
            
            
            -
            
            
            1,691Net
                Loss
            
            $
            (21,280
            )
            $
            (4,788
            )
            $
            (120,561
            )Primary
                and fully diluted earnings per share Weighted
                average shares outstanding
            
            
            40,000
            
            
            25,652
            
            
            30,303Loss
                per share
            
            $
            (0.53
            )
            $
            (0.19
            )
            $
            (3.98
            )





The
      accompanying notes are an integral part of


these
      financial statements.


4


Z-II,
      Inc.


A
      Development Stage Company


Statements
      of Cash Flows


(Unaudited)





CumulativeFor the three months
            
            March 20, 2007ended
            
            (Inception) toSeptember 30, 2008
            
            September 30, 2007
            
            September 30, 2008OPERATING
                ACTIVITIESNet
                Loss
            
            $
            (21,280
            )
            $
            (4,788
            )
            $
            (120,561
            )Adjustments
                to reconcile Net Lossto
                net cash provided by (used by) operations:Increase
                in prepaid expenses
            
            
            -
            
            
            -
            
            
            (465
            )Increase
                in accounts payable
            
            
            14,700
            
            
            -
            
            
            30,700Increase
                in interest payable on NotesPayable
                to Officers/Stockholders
            
            
            -
            
            
            16,225
            
            
            4,969Increases
                in (Reimbursement for) Expenses Paidon
                Behalf of the Company by Officer/Stockholder
            
            
            -
            
            
            966
            
            
            -Net
                cash provided by (used by) Operating Activities
            
            
            (6,580
            )
            
            12,403
            
            
            (85,357
            )FINANCING
                ACTIVITIESProceeds
                received from Issuance of NotesPayable
                to Officers/Stockholders
            
            
            -
            
            
            1,980,000
            
            
            1,980,000Repayment
                of Notes Payable to Officers/Stockholders
            
            
            
            
            
            
            
            
            (1,900,000
            )Proceeds
                received on Issuance of
                Class B Common Stock to Founders
            
            
            -
            
            
            20,000
            
            
            20,000Net
                cash provided by Financing Activities
            
            
            -
            
            
            2,000,000
            
            
            100,000Net
                increase in cash & cash equivalents
            
            
            (6,580
            )
            
            2,012,403
            
            
            14,643Cash
                and cash equivalents at beginning of period
            
            
            21,223
            
            
            -
            
            
            -Cash
                and cash equivalents at end of period
            
            $
            14,643
            
            $
            2,012,403
            
            $
            14,643SUPPLEMENTAL
                CASH FLOW INFORMATIONCash
                paid for interest
            
            $
            -
            
            $
            -
            
            $
            57,136Cash
                paid for income taxes
            
            $
            600
            
            $
            -
            
            $
            1,691





**The
      accompanying notes are an integral part of these financial
      statements.**


5





ZII,
      INC.


(A
      Development Stage Company)


NOTES
      TO
      FINANCIAL STATEMENTS


Three
      Months Ended September 30, 2008





Note
      1. Organization
      and Basis of Presentation:





Z-II,
      Inc. (the “Company”) was incorporated in the State of Delaware on March 20,
      2007. Since inception it has been engaged in organizational efforts, securing
      initial financing and because 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, in attempting to identify a possible
      business combination. While during the course of the year the Company has been
      in discussions with various operating companies with which to combine, it did
      not enter into any contract or memorandum of understanding with respect to
      a
      transaction





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 is 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 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 the Company’s Annual Report on Form 10-K for the fiscal year ended
      June 30, 2008, as filed with the SEC on September 29, 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 September 30, 2008 and from inception through
      September 30, 2008 are not necessarily indicative of the results to be expected
      for the full year.





Liquidity





At
      September 30, 2008 the Company had $14,643 in cash and cash equivalents and
      total liabilities of $115,669, of which $35,669 was current and the balance,
      $80,000 consisted of long term notes payable. It had a working capital deficit
      of ($20,561).





Until
      such time as the Company completes a business combination transaction,
      management intends to fund its operations as needed through additional
      borrowings from its shareholders. If and when a business combination transaction
      is completed, 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 September 30, 2008, other than loans from its founders (see Note
      5),
      the Company had no such lines of credit or other outstanding debt obligations.


6





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 business combination transactions are completed, 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 September 30, 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 September 30, 2008 were their actual values.





The
      Company's long-term financial instruments as of September 30, 2008 consisted
      of
      long term notes payable (see Note 5). The carrying amounts of all long-term
      financial instruments at September 30, 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 from March
      20,
      2007 (inception) through September 30, 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 holders of common stock 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 holders of common
      stock by the weighted average number of shares of common stock outstanding
      for
      the period, adjusted to reflect potentially dilutive securities. During the
      period from March 20, 2007 (inception) to September 30, 2008, there were no
      potentially dilutive securities.


7





Note
      3.  Recently
      Issued Accounting Pronouncements:




In
      October 2008, the FASB issued FSP SFAS No. 157-3, “Determining the Fair Value of
      a Financial Asset When the Market for That Asset Is Not Active”, (“FSP 157-3”),
      to clarify the application of the provisions of SFAS 157 in an inactive market
      and how an entity would determine fair value in an inactive market. FSP 157-3
      was effective upon issuance and applies to the Company’s current financial
      statements. The application of the provisions of FSP 157-3 did not materially
      affect the Company’s results of operations or financial condition as of and for
      the three and nine months ended September 30, 2008.





In
      June
      2008, the FASB issued EITF No. 07-5, “ *Determining
      Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own
      Stock”* effective for financial statements issued for fiscal years and interim periods
      beginning after December 15, 2008. EITF No.07-5 provides guidance for
      determining whether an equity-linked financial instrument (or embedded feature)
      is indexed to an entity’s own stock. The adoption of EITF No. 07-5 is not
      expected to have a material effect on the Company’s consolidated financial
      statements.





In
      June
      2008, the FASB issued FSP Emerging Issues Task Force (EITF) No. 03-6-1,
“Determining Whether Instruments Granted in Share-Based Payment Transactions
      Are
      Participating Securities.” Under the FSP, unvested share-based payment awards
      that contain rights to receive nonforfeitable dividends (whether paid or unpaid)
      are participating securities, and should be included in the two-class method
      of
      computing EPS. The FSP is effective for fiscal years beginning after December
      15, 2008, and interim periods within those years, and is not expected to have
      a
      significant impact on the Company’s results of operations, financial condition
      or cash flows.





In
      May
      2008, the FASB issued SFAS No. 162 (“SFAS No. 162”), “The Hierarchy of Generally
      Accepted Accounting Principles.” This statement identifies the sources of
      accounting principles and the framework for selecting the principles to be
      used
      in the preparation of financial statements of nongovernmental entities that
      are
      presented in conformity with GAAP. While this statement formalizes the sources
      and hierarchy of GAAP within the authoritative accounting literature, it does
      not change the accounting principles that are already in place. This statement
      will be effective 60 days following the SEC’s approval of the Public Company
      Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present
      Fairly in Conformity With Generally Accepted Accounting Principles.” SFAS No.
      162 is not expected to have a material impact on the Company’s consolidated
      financial statements.





In
      May
      2008, FASB Staff Position (“FSP”) No. APB 14-1, “Accounting for Convertible Debt
      Instruments That May be Settled in Cash upon Conversion (Including Partial
      Cash
      Settlement)” (“FSP No. APB 14-1”) was issued which specifies that issuers of
      such instruments should separately account for the liability and equity
      components in a manner that will reflect the issuer’s nonconvertible debt
      borrowing rate when interest cost is recognized in subsequent periods. FSP
      No.
      APB 14-1 is effective for financial statements issued for fiscal years beginning
      after December 15, 2008. Early adoption is not permitted. Adoption of this
      standard is not expected to have a material impact on the Company’s consolidated
      financial statements.





In
      April
      2008, FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets”
(“FSP No. FAS 142-3”) was issued which provides for additional considerations to
      be used in determining useful lives and requires additional disclosure regarding
      renewals. FSP No. FAS 142-3 is effective for fiscal years beginning after
      December 15, 2008. Early adoption is not permitted. The Company is currently
      evaluating the impact of this standard.




In
      December 2007, the FASB issued SFAS No. 141 (revised 2007), " *Business
      Combinations.* "
      SFAS
      141(R) broadens the guidance of SFAS 141, extending its applicability to all
      transactions and other events in which one entity obtains control over one
      or
      more other businesses. It broadens the fair value measurement and recognition
      of
      assets acquired, liabilities assumed, and interests transferred as a result
      of
      business combinations. SFAS 141(R) expands on required disclosures to improve
      the statement users' abilities to evaluate the nature and financial effects
      of
      business combinations. SFAS 141(R) is effective for our fiscal year beginning
      January 1, 2009. The adoption of SFAS 141(R) is not expected to have a material
      impact on the Company's financial position, results of operations or cash
      flows.





In
      December 2007, the FASB issued SFAS No. 160, " *Noncontrolling
      Interests in Consolidated Financial Statements—an amendment of ARB No.
      51.* " SFAS
      160 requires that a noncontrolling interest in a subsidiary be reported as
      equity and the amount of consolidated net income specifically attributable
      to
      the noncontrolling interest be identified in the consolidated financial
      statements. It also calls for consistency in the manner of reporting changes
      in
      the parent's ownership interest and requires fair value measurement of any
      noncontrolling equity investment retained in a deconsolidation. SFAS 160 is
      effective for our fiscal year beginning January 1, 2009. We have not yet
      determined the impact of adopting SFAS 160 on the Company's financial position,
      results of operations or cash flows.


8





Note
      4. Property
      and Equipment





As
      of
      September 30, 2008, the Company had no depreciable property and
      equipment.





Note
      5. Notes
      Payable to Officers/Stockholders





On
      August
      2, 2007 the Company borrowed and aggregate $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 repayment of $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.





On
      May
      27, 2008 the Company repaid an additional $375,000 to Further Lane Trust, LLC
      and $125,000 to Jack M. Rapport for an aggregate repayment of $500,000. The
      repayments of 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.





Effective
      July 1, 2008, new notes were executed for the remaining balances aggregating
      $80,000. The new notes are substantially identical in terms to the original
      notes, except that they no longer bear interest.





As
      of
      September 30 and June 30, 2008 $4,969 of interest was accrued and upaid on
      the
      two notes.





During
      the three months ended September 30, 2008 the Company incurred no interest
      expense on these notes. For the three months ended September 30, 2007, the
      Company incurred and aggregate of $16, 225 of interest expense on these notes.
      For the period from inception (March 20, 2007) to September 30, 2008 the Company
      incurred interest expense of $46,579 to Further Lane Trust, LLC and $15,526
      to
      Jack M. Rapport for a total of $62,105.





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 certificate of incorporation. 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 Note 5 above. 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
            
            $
            300
            
            $
            100
            
            $
            400Additional
                Paid-in Capital
            
            $
            14,700
            
            $
            4,900
            
            $
            19,600Total
            
            $
            15,000
            
            $
            5,000
            
            $
            20,000






At
      November 18, 2008, the 40,000 shares of Class B Common Stock continue to be
      the
      only shares of the Company’s equity securities outstanding.




9





Note
      7.   Employee
      Benefit Plans





As
      of
      September 30, 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 with respect to such instruments. 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,
      did
      not exceed federally insured limits at September 30, 2008.





Note
      10.   Income
      Taxes





The
      Company incurred New York State and New York City income taxes of $600 for
      the
      three month period ended September 30, 2008 and $1,691 for the period from
      inception (March 20, 2007) to September 30, 2008. As of September 30, 2008
      no
      amounts have been accrued for taxes that will be payable on June 30, 2009 with
      the state and local returns due by the Company for the year ending June 30,
      2009.





In
      accordance with FASB issued Interpretation No. 48, Accounting for Uncertainty
      in
      Income Taxes, 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 June 30, 2008, the Company did not recognize
      any interest or penalty expense related to income taxes. The Company is
      currently subject to a three year statute 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.





The
      Company has net operating loss carry forwards of approximately $121,000 which
      expire through 2029. The deferred tax asset arising from the loss carry forwards
      is approximately $48,000 and, because of the uncertainty of its realization,
      has
      been fully reserved against.





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.


10


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", “we”, “our” 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 in the Company’s Annual Report on Form 10-K
      for the year ended June 30, 2008, as filed with the Securities and Exchange
      Commission (“SEC”) dated September 29, 2008.





Plan
      of
      Operation





Z-II
      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 is 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"). We do not intend to restrict our 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 we should acquire a Target
      Company, as control of the Company will be in the hands of our
      founders.





We
      will
      seek to add value to a Target Company by providing leadership and management,
      contributing and helping to 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 our officers and directors. We have wide flexibility in
      seeking, analyzing and participating in potential business opportunities. In
      our
      efforts to analyze potential Target Companies or businesses, we 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;





(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, we 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.


11





During
      the three months ended September 30, 2008 we 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 we participate 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 our relative negotiating strength and that of such
      promoters.





We
      anticipate 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 we decide 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 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 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. We may undertake efforts to cause a market to develop in the
      Company's securities and if so, we intend to comply with the periodic reporting
      requirements of the Exchange Act for so long as it is subject to those
      requirements.





Results
      of Operations





Three
      months ended September 30, 2008 versus three months ended September 30,
      2007





For
      the
      three months ended September 30, 2008 we had no operating revenues and incurred
      $20,700 in professional fees, resulting in a loss from operations of $20,700.
      For the three months ended September 30, 2007 we, similarly, had no revenues
      but
      incurred professional fees of $966 and had a loss from operations of $966.
      The
      higher professional fees for the current period were primarily as a result
      of
      higher accounting fees associated with the Company’s public status, whereas
      professional fees incurred in the three months ended September 30, 2007 were
      primarily for continuing legal support. For the three months ended September
      30,
      2007, we earned interest income of $20 and since the amendment to the notes
      payable to officers/stockholders eliminating interest took effect on July 1,
      2008, we had no interest expense. During the three months ended September 30,
      2007 we had interest income of $12,403 offset by interest expense of $16,225
      resulting in net interest expense of $3,822. We paid $600 in state and local
      income taxes in the quarter ended September 30, 2008 versus no taxes paid for
      the comparable period in 2007. We had a net loss for the three months ended
      September 30, 2008 of $21,280. For the three months ended September 30, 2007,
      our net loss was $4,788. Loss per share was $.53 for the three months ended
      September 30, 2008 as compared to $.19 for the three months ended September
      30,
      2007.





Inception
      (March 20, 2007) to September 30, 2008





We
      are
      still in development stage and have earned no revenues since inception but
      we
      incurred $103,820 in professional fees and administrative expense, resulting
      in
      a cumulative loss from operations of $103,820. Cumulative interest income was
      $47,056 offset by interest expense of $62,106, resulting in net interest expense
      of $15,050. The cumulative loss before provision for taxes was $118,870. Total
      taxes paid since inception were $1,691 resulting in a cumulative after tax
      loss
      of $120,561.





Summary
      of Critical Accounting Policies; Significant Judgments and
      Estimates





There
      were no other changes to our critical accounting policies, which are described
      in our Annual Report on Form 10-K for the year ended June 30, 2008 during the
      three months ended September 30, 2008. There were no items presented in the
      Company's financial statements that required the significant use of management
      estimates.


12





Liquidity
      and Capital Resources





As
      of
      September 20, 2008 we had $14,643 in cash and cash equivalents. Current
      liabilities, represented by $30,700 in professional fees payable and $4,969
      in
      interest payable to Officers/Stockholders for a total $35,669, resulted in
      a
      working capital deficit of $20,561. Until such time as we acquire an operating
      company, we intend to fund operations as needed through additional borrowings
      from our shareholders. If and when an operating company is acquired, our
      liquidity needs will be re-evaluated and we may seek to supplement our primary
      capital, as necessary, with one or more lines of credit or other debt
      accommodations with one or more financial institutions or lenders. At September
      30, 2008, other than loans from our founders (see Note 5 to the unaudited
      financial statements included elsewhere in this report) we had no such lines
      of
      credit or other outstanding debt obligations.




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




The
      Company maintains a set of disclosure controls and procedures, as defined in
      Section 13a-15(e) of the the Exchange Act, that are designed to ensure that
      information required to be disclosed under the reporting requirements of the
      Exchange Act is recorded, processed, summarized and reported within the time
      periods specified in the SEC’s rules and forms. The Company has conducted an
      evaluation, under the supervision and with the participation of the Chief
      Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), of the
      effectiveness of the design and operation of the disclosure controls and
      procedures of the Company pursuant to Rule 13a-15(b) of the Exchange Act. Based
      on that evaluation, the CEO and CFO 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 controls over
      financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
      occurred during the fiscal quarter ended September 30, 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 September 30, 2008 that has materially affected,
      or is reasonably likely to materially affect, the Company’s internal controls
      over financial reporting.




13


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 No.
            Description.3.1
                (1)
            Certificate
                of Incorporation.3.2
                (1)
            By-Laws.31.1
                (2)
            Certification
                of Chief Executive Officer as required by Rule 13a-14 or 15d-14 of
                the
                Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley
                Act
                of 2002.31.2
                (2)
            Certification
                of Chief Financial Officer as required by Rule 13a-14 or 15d-14 of
                the
                Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley
                Act
                of 2002.32.1(2)
            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 2002.32.2
                (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.





(1)
      Incorporated by reference to the Company’s Registration Statement on Form 10/A,
      as filed on March 14, 2008.


(2)
      Furnished herewith.


14





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:
                November 18, 2008
            
            /s/
                David M. McCarthyDavid
                M. McCarthy, Chief Executive Officer(Principal
                Executive Officer)Dated:
                November 18, 2008
            
            /s/
                Jack M. RapportJack
                M. Rapport, Chief Financial Officer(Principal
                Accounting and Financial
                Officer)


15