<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-Q SB


                  QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005
                                -----------------







                       Commission file number: 33-49261-D


                        TRANSITION AUTO FINANCE II, INC.
        (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)



                 TEXAS                                75-2753067
       (State of incorporation)         (I.R.S. employer identification number)


   8144 Walnut Hill Lane, SUITE 680,
             DALLAS, TEXAS                               75231
(Address of principal executive offices)               (Zip code)



                  Issuer's telephone number, including area code:  (214)360-9966

Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]



State the number of shares outstanding of each of the issuer's classes of Common
equity, as of the latest practicable date: As of June 30, 2005, the issuer' had
1,000 shares of common stock



    TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMS (CHECK ONE): YES [ ] NO [X]




================================================================================

<PAGE>


                        TRANSITION AUTO FINANCE II, INC.

                                   FORM 10-QSB

                       FOR THE QUARTER ENDED JUNE 30, 2005


<TABLE>
<CAPTION>
                                                                                                   Page No.
                                                                                                   --------
<S>     <C>                                                                                           <C>
PART I.  FINANCIAL INFORMATION

    ITEM 1.  Financial Statements

        Balance Sheets..................................................................................3
          June 30, 2005 (Unaudited) and December 31, 2004

        Statements of Income (Unaudited)................................................................4
          Quarter and six months ended June 30, 2005 and June 30, 2004

        Statements of Cash Flows (Unaudited)............................................................5
          Six Months ended June 30, 2005 and June 30, 2004

        Notes to Financial Statements (Unaudited).......................................................6

    ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.....11


    ITEM 3.  Controls and Procedures...................................................................12


PART II. OTHER INFORMATION

    ITEM 1.  Legal Proceedings.........................................................................12

    ITEM 2.  Changes in Securities and Use of Proceeds.................................................12

    ITEM 3.  Defaults Upon Senior Securities...........................................................12

    ITEM 4.  Submission of Matters to a Vote of Security Holders.......................................12

    ITEM 5.  Other Information.........................................................................12

    ITEM 6.  Exhibits and Reports on Form 8-K..........................................................13


    Signatures  ...................................................................................... 14
</TABLE>


         In the opinion of management, all adjustments necessary to fair
statement of the results for interim periods presented have been reflected in
these financial statements.


<PAGE>


                          PART I. FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                        TRANSITION AUTO FINANCE II, INC.

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                      ASSETS
                                                      ------
                                                                                     6 months ended         FYE
                                                                                        6/30/2005        12/31/2004
                                                                                       (unaudited)      (See Note 1)
                                                                                       -----------      ------------
<S>                                                                                     <C>             <C>
CURRENT ASSETS
  Cash and cash equivalents - restricted                                                   $105,055        $111,388
  Other Assets                                                                                9,319           9,319
                                                                                         ----------      ----------
      Total Current Assets                                                                  114,374         120,707
                                                                                         ----------      ----------

      Total Assets                                                                         $114,374        $120,707
                                                                                         ==========      ==========
</TABLE>

<TABLE>
<CAPTION>
                                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                                  ----------------------------------------------

                                                                                     6 Months Ended         FYE
                                                                                        6/30/2005        12/31/2004
CURRENT LIABILITIES                                                                    (Unaudited)      (See Note 1)
                                                                                       -----------      ------------
<S>                                                                                    <C>               <C>
  Accrued liabilities                                                                       $ 1,300           $ 675
  Investor notes payable                                                                  4,867,000       4,867,000
                                                                                        -----------     -----------
        Total Current Liabilities                                                         4,868,300       4,867,675
                                                                                        -----------     -----------

OTHER LIABILITIES
  Due to affiliate                                                                           64,192          64,192
                                                                                        -----------     -----------
      Total Other Liabilities                                                                64,192          64,192
                                                                                        -----------     -----------

TOTAL LIABILITIES                                                                         4,932,492       4,931,867
                                                                                        -----------     -----------

SUBORDINATED DEBT TO AFFILIATE                                                              371,330         371,330
                                                                                        -----------     -----------

STOCKHOLDERS' EQUITY (DEFICIT)
   Common stock, $.10 par value, 1,000 shares authorized,                                       100             100
      issued and outstanding
   Additional paid-in capital                                                                   900             900
   Retained earnings (deficit)                                                          (5,190,448)     (5,183,490)
                                                                                        -----------     -----------
       Total Stockholders' Equity (Deficit)                                             (5,189,448)     (5,182,490)
                                                                                        -----------     -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
   (DEFICIT)                                                                               $114,374        $120,707
                                                                                        ===========     ===========
</TABLE>


Note 1: The balance sheet at December 31, 2004, as presented, is derived from
the audited financial statements at that date.

See accompanying notes to financial statements.


<PAGE>


                        TRANSITION AUTO FINANCE II, INC.


                              STATEMENTS OF INCOME

                                   (Unaudited)



<TABLE>
<CAPTION>
                                                     Quarter Ended       Six Months Ended       Quarter Ended       Six Months Ended
                                                     June 30, 2005          June 30, 2005       June 30, 2004          June 30, 2004
                                                     -------------          -------------       -------------          -------------
<S>                                                  <C>                 <C>                    <C>                 <C>
REVENUES

  Vehicle monthly lease payments                             $ -0-                  $ -0-            $ 12,682               $ 36,726
  Amortization of down payments                                -0-                    -0-                 187                    939
                                                       -----------            -----------         -----------            -----------
      Total Revenues                                           -0-                    -0-              12,869                 37,665
                                                       -----------            -----------         -----------            -----------

OPERATING EXPENSES

  Operating costs                                             -0-                     -0-                686                   1,746
  General and administrative                                2,631                   7,631              4,765                  24,657
  Depreciation and amortization                               -0-                     -0-              8,089                  20,466
                                                       -----------            -----------         -----------            -----------
        Total Operating Expenses                            2,631                   7,631             13,540                  46,869
                                                       -----------            -----------         -----------            -----------

Operating Income (Loss)                                    (2,631)                (7,631)               (671)                (9,204)
                                                       -----------            -----------         -----------            -----------

OTHER INCOME (EXPENSE)

Investment income                                              546                    673                  39                    140
Other income (expense)                                         -0-                    -0-                   3                      3
Interest expense                                               -0-                    -0-                 -0-                    -0-
Gain (Loss) on sale of inventory                               -0-                    -0-               6,613                  2,918
                                                       -----------            -----------         -----------            -----------
        Total Other Income (Expense)                           546                    673               6,655                  3,061
                                                       -----------            -----------         -----------            -----------

Provision for Federal Income Taxes                             -0-                    -0-                 -0-                    -0-
                                                       -----------            -----------         -----------            -----------

Net Income (Loss)                                         $(2,085)               $(6,958)              $5,984               $(6,143)
                                                       ===========            ===========         ===========            ===========

Profit (Loss) per share (basic and diluted)               $ (2.09)               $ (6.96)              $ 5.98               $ (6.14)
</TABLE>


See accompanying notes to financial statements.


<PAGE>


                        TRANSITION AUTO FINANCE II, INC.

                            STATEMENTS OF CASH FLOWS

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                  6 Months Ended             6 Months Ended
                                                                                   June 30, 2005              June 30, 2004
                                                                                   -------------              -------------
<S>                                                                                <C>                        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                                                 ($6,958)                  ($6,143)
Adjustments to reconcile net income to net cash provided by
  operating activities:
     Depreciation and amortization                                                            -0-                    20,466
     Amortization of down payments                                                            -0-                     (939)
     Provision for allowance for doubtful accounts                                            -0-                       -0-
     (Gain) loss on sale of property                                                          -0-                   (2,918)
Net changes in operating assets and liabilities:
     Accounts receivable                                                                      -0-                     2,758
     Other Assets                                                                             -0-                       370
     Accrued liabilities                                                                      625                  (17,860)
     Deferred revenue                                                                         -0-                     (228)
                                                                                      -----------               -----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                                          (6,333)                   (4,494)
                                                                                      -----------               -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of fixed assets                                                                   -0-                       -0-
   Cash proceeds from sale of property                                                        -0-                    76,489
                                                                                      -----------               -----------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES                                              -0-                    76,489
                                                                                      -----------               -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Net advances (payments) to affiliates                                                      -0-                     1,989
   Payments of notes payable                                                                  -0-                 (125,600)
                                                                                      -----------               -----------
NET CASH (USED) BY FINANCING ACTIVITIES                                                       -0-                 (123,611)
                                                                                      -----------               -----------

NET INCREASE (DECREASE) IN CASH                                                           (6,333)                  (51,616)

CASH AND CASH EQUIVALENTS, beginning of period                                            111,388                   225,140
                                                                                      -----------               -----------

CASH AND CASH EQUIVALENTS, end of period                                                 $105,055                  $173,524
                                                                                      ===========               ===========

CASH PAID DURING THE YEAR FOR
   Interest                                                                              $    -0-                  $    -0-
   Income taxes                                                                          $    -0-                  $    -0-
</TABLE>



See accompanying notes to financial statements.


<PAGE>


                        TRANSITION AUTO FINANCE II, INC.

                          NOTES TO FINANCIAL STATEMENTS


NOTE 1:  BUSINESS ACTIVITY

         The Company was established to purchase motor vehicles and automobile
         lease contracts, collect and service automobile lease contracts and
         remarket motor vehicles upon termination of their leases. A summary of
         the significant accounting policies consistently applied in the
         preparation of the accompanying financial statements follows.
         Transition Leasing Management, Inc. (TLMI) owns 100% of the Company's
         common stock.

         Trust Management, Inc. serves as the trustee for the Company under the
         Indenture Agreement. The Company defaulted on the investor notes
         payable administered by Trust Management, Inc. in June 2002. Upon the
         default of the investor notes payable, Trust Management, Inc. receives
         all receipts collected by the Company and approves all of the Company's
         disbursements. Trust Management, Inc. will pay note holders any unpaid
         principal, ratably, without preference as well as any other unpaid
         allowable costs incurred by the Company.

NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         CASH AND CASH EQUIVALENTS

         For purposes of the statement of cash flows, the Company considers all
         highly liquid investments with maturity of three months or less when
         purchased to be cash equivalents.

         The Company maintains cash balances at financial institutions in
         Dallas, Texas. Accounts at the institutions are insured by the Federal
         Deposit Insurance Corporation up to $100,000. The Company has not
         experienced any losses in such accounts and believes it is not exposed
         to any significant credit risk to cash and cash equivalents.

         All cash balances are restricted in nature and managed by Trust
         Management due to Company in default of their Indenture Agreement. All
         cash distributions from these accounts must be authorized by Trust
         Management, Inc. and are for the sole purpose of repaying investor
         notes payable after any authorized expenses have been paid.

         REVENUE

         The vehicles are leased to individuals under leases with terms ranging
         from thirty-six to forty-two months. The leases are considered to be
         operating leases. At the end of the lease period, the lessee may
         purchase the equipment at the contractual residual value plus any other
         outstanding items due. Monthly lease payments are recognized as revenue
         in the month that the payments are due.


<PAGE>


                        TRANSITION AUTO FINANCE II, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         REVENUE (CONTINUED)

         The vehicle leases require a down payment from the lessee at the
         inception of the lease. The down payments are initially recorded as
         deferred revenue and then recognized as income over the term of the
         leases on a straight-line basis.

         ACCOUNTS RECEIVABLE

         The Company provides for uncollectible accounts receivable using the
         allowance method of accounting for bad debts. Under this method of
         accounting, a provision for uncollectible accounts is charged to
         earnings. The allowance account is increased or decreased based on past
         collection history and management's evaluation of accounts receivable.
         All amounts considered uncollectible are charged against the allowance
         account and recoveries of previously charged-off accounts are added to
         the allowance.

         VEHICLES HELD FOR SALE

         Vehicles held for sale are leased vehicles in which the lease term has
         expired or that have been repossessed. Vehicles held for sale are
         valued at the lower of cost or fair value. Cost of these vehicles is
         the net book value of the vehicle after it has been returned to the
         Company either through repossession or early termination of the lease.
         Generally the Company will sell these vehicles at auction.

         PROPERTY

         Property consists of leased vehicles, which are stated at cost less
         accumulated depreciation. Depreciation is provided in amounts
         sufficient to relate the cost of depreciable assets to operations over
         their estimated service lives using the straight-line-method. Leased
         vehicle depreciation is calculated over the term of the vehicle lease,
         using the cost of the vehicle less the estimated residual value of the
         vehicle at the end of the lease. Present leases have terms ranging from
         thirty-six to forty-two months.

         DEFERRED REVENUE

         Deferred revenue consists of down payments made by lessees at the
         inception of the lease. The down payments are amortized over the lease
         term. Lease terms range from thirty-six to forty-two months.


<PAGE>


                        TRANSITION AUTO FINANCE II, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         FAIR VALUE OF FINANCIAL INSTRUMENTS

         Fair values of financial instruments are estimated to approximate the
         related book value, unless otherwise indicated, based on market
         information available to the Company.

         USE OF ESTIMATES

         In preparing the Company's financial statements, management is required
         to make estimates and assumptions that affect the reported amounts of
         assets and liabilities, the disclosure of contingent assets and
         liabilities at the date of the financial statements, and the reported
         amounts of revenues and expenses during the reporting period. Actual
         results could differ from these estimates.


NOTE 3:  INVESTOR NOTES PAYABLE

         The Company has issued fixed rate redeemable asset-backed notes
         (Investor Notes). The remaining balance as of June 30, 2005 was
         $4,867,000.

         These Investor Notes were issued pursuant to a public offering on Form
         SB-2 under the Securities Act of 1933. The Investor Notes bear interest
         at the rate of 11%. Interest payments ceased after the 2002 default.

         The Investor Notes were issued at various times during 1999 and 1998,
         however the maturity date for all of the Investor Notes is June 30,
         2002. The Investor Notes are collateralized by the following:

                  1.       Automobile contracts for the leasing of new or late
                           model automobiles.
                  2.       The leased vehicles.

         The Investors Notes matured on June 30, 2002 and the Company was unable
         to pay the remaining debt. The Company is in default on the investor
         notes payable as of June 30, 2002. As of that date all income from
         leasing activities is used to repay Investor Notes. All Company
         disbursements require approval of Trust Management.


<PAGE>


                        TRANSITION AUTO FINANCE II, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 4:  INCOME TAX

         The Company is a corporation subject to federal and state income taxes.
         The Company and its parent intend to file a consolidated tax return.
         Each company in the consolidated group determines its taxable income or
         loss, on a separate company basis, and the consolidated tax liability
         is allocated to each company with taxable income in proportion to the
         total of the taxable income amounts.

         The Company has a deferred tax asset of approximately $1,760,000 and
         $1,670,000 as of December 31, 2004 and 2003 (primarily from net
         operating loss carry-forward), which has been completely offset by
         recognition of a valuation allowance.

         The Company has a net operating loss (NOL) carry-forward of
         approximately $1,720,000 and $1,680,000 for the year ended December 31,
         2004 and the year ended December 31, 2003, respectively. The Company's
         NOL carry-forward expires between December 31, 2012 and December 31,
         2023.

NOTE 5:  RELATED PARTIES

         The Company has entered into a Servicing Agreement with TLMI. TLMI will
         be entitled to a servicing fee of $20 per month per contract and a
         payment of $150 per contract purchased. TLMI will receive, as a
         marketing fee, 57.5% of the down payment made by the customers with
         respect to contracts it originates. TLMI will receive from the Company
         a Releasing Fee of 57.5% of the down payment with respect to a new
         contract following repossession of a leased vehicle. The Company paid
         $2,140 to TLMI in 2004 and zero will be paid in 2005 for servicing,
         documentation and marketing fees. The Company also has a payable to
         TLMI for $64,192 as of June 30, 2005 and December 31, 2004.

NOTE 6:  SUBORDINATED DEBT TO AFFILIATE

         The Company assumed a liability of $371,330 due to TLMI. This debt is
         subordinated to all other Company liabilities and cannot be repaid
         before any other creditors or investors.


<PAGE>


                        TRANSITION AUTO FINANCE II, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 7:  GOING CONCERN

         The accompanying financial statements have been prepared in conformity
         with U.S. generally accepted accounting principles, which contemplates
         continuation of the Company as a going concern. The Company has
         sustained recurring losses from operations, negative working capital, a
         negative equity position and has defaulted on investor notes payable
         that were due in 2002. Management intends to service existing leases
         and attempt to raise additional capital and or secure additional
         financing in order to continue repayment of the investor notes payable.
         As of December 31, 2004, the Company no longer had any leases to
         service or vehicles to lease. Management recognizes that full payment
         may take several years to complete and that full repayment may not
         occur. This situation raises substantial doubt about the Company's
         ability to continue as a going concern.


<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         The following discussions and analysis relates to factors that have
affected the operating results of the Company for the quarter ended June 30,
2005. The balance sheet at December 31, 2004, as presented, is derived from the
audited financial statements at that date.

General.

         As of December 31, 1999, the Company had sold $10,000,000 of its 11%
Redeemable Secured Notes. In February of 1999 the Company also purchased 116
lease contracts from Transition Auto Finance, Inc. for $2,883,000.

         On June 30, 2002 Transition Auto Finance II, Inc. defaulted on its
$10,000,000 11% Redeemable Secured Notes.

Results of Operations: Six months ended June 30, 2005, compared to six months
ended June 30, 2004.

         As of June 30, 2005, the company had no remaining leases on its books.
Its only remaining asset is cash and its only revenue is interest on the cash
that is held. Its only expense for the 6 months ended June 30, 2005 was $7,589
for the 2004 audit and SEC filings. As a result, no comparisons with the same
period for 2004 would be meaningful.

         On June 30, 2002, TAF II, Inc. defaulted on its $10,000,000 11%
Redeemable Secured Notes. At the time of the default the company had paid to
investors a total of $7,058,413. This figure is comprised of $3,338,413 in
interest and $3,720,000 of principal. As of June 30, 2005, the principal amount
paid to Noteholders was $5,133,000.

         The adverse economic effects of the current recession and events of
September 11, resulted in an unusually high number of early lease payoffs and
automobile repossessions. The major reasons for the excessive early payoffs and
repossessions appear to have been (1) the weak economy, and (2) low-cost
incentive financing (such as "zero financing") offered by new car manufacturers.
The weak economy hurt the personal finances of many customers causing an
increased number of repossessions, while low-cost incentive financing enticed
many other customers to purchase new cars, which resulted in these customers
paying off their leases early. Additionally, low-cost financing negatively
impacted used car prices by flooding the market with late model cars.

         The early payoffs and repossessions were not, by themselves,
extraordinary. What was extraordinary - and unprecedented - was the pace and
rate at which these early payoffs and repossessions occurred. Most damaging,
however, was the timing of the excessive early payoffs and repossessions, which
began to accelerate in September 2000. Under the terms of the indenture that
governs the notes, all payments after August 2000, from early payoffs and
repossessions had to be returned to the note-holders rather than retained by the
company for further investment. This "sinking fund" provision in the indenture
had a devastating effect on the company's capital, and stripped the company of
its ability to generate sufficient cash flow to repay the notes.

         The company worked on a plan that would have extended the maturity of
the notes and the reinvestment period, and lower the interest rate. The effect
of these changes should have increased the ultimate amount of funds available
for note repayment but since these modifications would require 100% approval of
the Noteholders, the plan was never submitted to the Noteholders.

Early Payoffs and Repossessions

         The Company's portfolio, which consisted of 430 leases, included 391
leases which resulted in early terminations. The information on the Company's
experience with respect to early terminations is set forth below:


<TABLE>
<CAPTION>
                                                                       Vehicle                                    Total
                # of    Gross Cost    Misc.      Total      Down        Sale    Sales Tax Warranty  Marketing    Amount     Profit
             Contracts  Of Vehicle  Expenses   Payments    Payment     Amount     Credit   Rebate    Fee Paid   Received    (Loss)

<S>             <C>     <C>         <C>       <C>         <C>         <C>         <C>      <C>     <C>        <C>         <C>
Repossession    236     $5,698,567  $150,480  $2,858,964  $1,136,054  $2,501,636  $111,712 $59,687   $630,483  $6,037,570   $188,523
Early Payoff    155     $3,444,188    $6,747  $1,970,830    $724,355  $2,118,544  $102,183 $15,805   $399,274  $4,532,443 $1,081,508
                ---     ----------    ------  ----------    --------  ----------  -------- -------   --------  ---------- ----------
Total           391     $9,142,755  $157,227  $4,829,794  $1,860,409  $4,620,180  $213,895 $75,492 $1,029,757 $10,570,013 $1,270,031
</TABLE>

Note: The above results on early termination does not include any allowance for
      interest expense


<PAGE>


ITEM 3.  CONTROLS AND PROCEDURES

                  Under the supervision and with the participation of our
         management, including our principal executive officer and principal
         financial officer, we conducted an evaluation of the effectiveness of
         the design and operation of our disclosure controls and procedures, as
         defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange
         Act of 1934, within 90 days of the filing date of this report (the
         "Evaluation Date"). Based upon this evaluation, our principal executive
         officer and principal financial officer concluded as of the Evaluation
         Date that our disclosure controls and procedures were effective such
         that the material information required to the included in our
         Securities and Exchange Commission ("SEC") reports is recorded,
         processed, summarized, and reported within the time periods specified
         in SEC rules and forms relating to the Company, including, our
         consolidated subsidiaries, and was made known to them by others within
         those entities, particularly during the period when this report was
         being prepared.

                  In addition, there were no significant changes in our internal
         controls or in other factors that could significantly affect these
         controls subsequent to the Evaluation Date. We have not identified any
         significant deficiencies or material weaknesses in our internal
         controls, and therefore, there were no corrective actions taken.


PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         Although the Company is not a party to any material legal
proceedings, it is possible that one or more note-holders may institute legal
action against the company in light of the default of the company's notes.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

         (a) Not Applicable

         (b) Not Applicable

         (c) Not Applicable
         (d) The company applied 90% of the gross proceeds from the sale of the
         Notes to the purchase or acquisition of the Leased Vehicles and the
         contracts. The Company paid to the Underwriter sales commissions of 6%
         of the principal amount of the Notes sold by the Underwriter.
         Additionally, the Company reimbursed the Underwriter for certain
         expenses incurred in connection with its due diligence activities with
         regard to the Offering of 2.5% of the aggregate principal amount of the
         Notes sold. The Company also used 1.5% of the gross proceeds from the
         sale of the Notes to pay offering and organizational expenses,
         including filing and registration fees, legal fees of the Company's
         counsel, accounting fees, trustee's fees, escrow agent's fees, "blue
         sky" expenses and printing expenses.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         On June 30, 2002, the Company defaulted on its $10,000,000 11%
Redeemable Secured Notes.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of the Company's sole stockholder
during the Second quarter of 2005.

ITEM 5. OTHER INFORMATION

None


<PAGE>


PART II.  OTHER INFORMATION (CONTINUED)


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)    Financial Statements

       The following financial statements are filed as a part of this Form
10-QSB:

             The Index to Financial Statements is set out in Item 7 herein.

       Exhibits

       The following exhibits are filed as exhibits to this report on Form
10-QSB:

             The information required is set forth in the Index to Exhibits
accompanying this Form 10-QSB.

(b)    Reports on Form 8-K

       No reports on Form 8-K were filed during the six months ended June 30,
2005.


<PAGE>


                                   SIGNATURES

         In accordance with section 13 or 15(d) of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



                                             TRANSITION AUTO FINANCE II, INC.
                                        ----------------------------------------
                                                      (Registrant)


Date: August 18, 2005                        /s/ Kenneth C. Lowe
                                        ----------------------------------------
                                                   Kenneth C. Lowe, President/
                                                   Chief Executive Officer


Date: August 18, 2005                        /s/ Kenneth C. Lowe
                                        ----------------------------------------
                                                   Kenneth C. Lowe, President/
                                                   Chief Operating Officer


Date: August 18, 2005                        /s/ Kenneth C. Lowe
                                        ----------------------------------------
                                                   Kenneth C. Lowe, President/
                                                   Chief Financial Officer


<PAGE>



                                INDEX TO EXHIBITS

EXHIBIT
NUMBER                                   DESCRIPTION

3.1         Articles of Incorporation of Transition Auto Finance II, Inc. *

3.2         Bylaws of Transition Auto Finance II, Inc. *

4.1         Form of Indenture between Transition Auto Finance II, Inc. and Trust
            Management, Inc., as Trustee ***

4.2         Form of Secured Note Due June 30, 2002 (included in Article Two of
            Indenture filed as Exhibit 4.1)

10.1        Form of Master Contract Purchase Agreement between Transition Auto
            Finance II, Inc. and Transition Leasing Management, Inc.**

10.2        Form of Servicing Agreement between Transition Leasing Management,
            Inc. and Transition Auto Finance II, Inc. **

31          Certification of Reporting Officer Pursuant to Section 302 of the
            Sarbanes-Oxley Act of 2002

32          Certification of Reporting Officer pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002


*      Incorporated by reference from Registration Statement on Form SB-2 of
       Transition Auto Finance II, Inc. Registration No. 33-49261-D, filed April
       2, 1998.

**     Incorporated by reference from Amendment No. 1 to Registration Statement
       on Form SB-2 of Transition Auto Finance II, Inc., Registration No.
       33-49261-D, filed June 19, 1998.

***    Incorporated by reference from Amendment No. 2 to Registration Statement
       on Form SB-2 of Transition Auto Finance II, Inc., Registration No.
       33-49261-D, filed July 9, 1998.