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UNITEDSTATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C.20549

FORM 10-QSB

(MarkOne)

|        |                                                                                 |
|--------|---------------------------------------------------------------------------------|
|   | Quarterly report underSection 13 or 15(d) of the Securities Exchange Act of1934 |

For the quarterly period ended March31,  2006

|        |                                                                |
|--------|----------------------------------------------------------------|
|   | Transitionreport under Section 13 or 15(d) of the Exchange Act |

Forthe transition period from                             to                            

Commission File Number000-51228

KBL Healthcare Acquisition Corp.II(Exact Name of Small Business Issuer as Specified in ItsCharter)

|                                                              |  |                                     |  |  |  |  |
|--------------------------------------------------------------|--|-------------------------------------|--|--|--|--|
| Delaware                                                     |  | 20-1994619                          |
| (Stateor other Jurisdiction of Incorporation orOrganization) |  | (I.R.S. Employer IdentificationNo.) |
|                                                              |

757 Third Avenue, 21stFloor, New York, New York 10017(Address of PrincipalExecutive Office)

(212) 319-5555(Issuer’s Telephone Number, Including Area Code)

Checkwhether the issuer (1) filed all reports required to be filed bySection 13 or 15(d) of the Exchange Act during the past 12 months (orfor such shorter period that the registrant was required to file suchreports), and (2) has been subject to such filing requirements for thepast 90 days.  Yes    No 

Indicate bycheck mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes     No 

Asof May  15,  2006, 11,200,000 shares of common stock, parvalue $.0001 per share, were issued and outstanding.

TransitionalSmall Business Disclosure Format (check one): Yes     No

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|                                                                              |  |        |  |  |  |  |
|------------------------------------------------------------------------------|--|--------|--|--|--|--|
|                                                                         |  | Page   |
| PartI: Financial Information:                                                |  |   |
| Item 1— Financial Statements(Unaudited):                               |  |   |
| Balance Sheet                                                                |  | 3      |
| Statements of Operations                                                     |  | 4      |
| Statements of Stockholders’Equity                                      |  | 5      |
| Statements of CashFlows                                                      |  | 6      |
| Notes to FinancialStatements                                                 |  | 7      |
| Item 2 —Management’s Discussion and Analysis or Plan ofOperation |  | 10     |
| Item 3 — Controlsand Procedures                                        |  | 11     |
| Part II. OtherInformation                                                    |  |   |
| Item 2 — UnregisteredSales of Equity Securities and Use ofProceeds     |  | 12     |
| Item 6 —Exhibits                                                       |  | 12     |
| Signatures                                                                   |  | 13     |
|                                                                              |

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KBL Healthcare AcquisitionCorp. II(a corporation in the development stage)CondensedBalanceSheet

|                                                                                                                                                                                      |  |                                |            |                     |  |        |            |        |  |  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--------------------------------|------------|---------------------|--|--------|------------|--------|--|--|
|                                                                                                                                                                                 |  | Asof March 31, 2006(unaudited) |            | AsofDecember31,2005 |
| ASSETS                                                                                                                                                                               |  |                           |       |                |  |   |       |   |
| CurrentAssets                                                                                                                                                                        |  |                           |       |                |  |   |       |   |
| Cash                                                                                                                                                                                 |  | $                              | 551,736    |                |  | $      | 649,223    |   |
| Amountsheld in trust                                                                                                                                                                 |  |                           |       |                |  |   |       |   |
| Cash held intrust                                                                                                                                                                    |  |                           | 288        |                |  |   | 286        |   |
| US GovernmentSecurities- TreasuryBill                                                                                                                                                |  |                           | 49,877,308 |                |  |   | 49,877,308 |   |
| AccruedInterest — trustfund                                                                                                                                                    |  |                           | 904,785    |                |  |   | 403,509    |   |
| Totalheld intrust                                                                                                                                                                    |  |                           | 50,782,381 |                |  |   | 50,281,103 |   |
| Prepaidexpenses                                                                                                                                                                      |  |                           | 10,583     |                |  |   | 42,332     |   |
| TotalCurrentAssets                                                                                                                                                                   |  |                           | 51,344,700 |                |  |   | 50,972,658 |   |
| ComputerEquipment, (net of accumulated depreciation of $547 and $217respectively)                                                                                                    |  |                           | 6,063      |                |  |   | 4,118      |   |
| Deferredtaxasset                                                                                                                                                                     |  |                           | 338,800    |                |  |   | 229,000    |   |
| Totalassets                                                                                                                                                                          |  | $                              | 51,689,563 |                |  | $      | 51,205,776 |   |
| LIABILITIESAND STOCKHOLDERS'EQUITY                                                                                                                                                   |  |                           |       |                |  |   |       |   |
| Currentliabilities:                                                                                                                                                                  |  |                           |       |                |  |   |       |   |
| Accountspayable and accruedexpenses                                                                                                                                                  |  | $                              | 90,171     |                |  | $      | 41,199     |   |
| DeferredTrustIncome                                                                                                                                                                  |  |                           | 322,714    |                |  |   | 222,509    |   |
| Capitaland Income TaxPayable                                                                                                                                                         |  |                           | 370,458    |                |  |   | 172,193    |   |
| TotalLiabilities                                                                                                                                                                     |  |                           | 783,343    |                |  |   | 435,901    |   |
| CommonStock, subject to possible conversion, 1,839,080 shares atconversionvalue                                                                                                      |  |                           | 9,828,683  |                |  |   | 9,828,683  |   |
| CommitmentandContingency                                                                                                                                                             |  |                           |       |                |  |   |       |   |
| Stockholders'equity                                                                                                                                                                  |  |                           |       |                |  |   |       |   |
| Preferredstock, $.0001 par value, Authorized 1,000,000 shares; noneissued                                                                                                            |  |                           |       |                |  |   |       |   |
| Common stock, $.0001par value Authorized 35,000,000 shares Issued and outstanding11,200,000 shares (which include 1,839,080 subject to possibleconversion) and 2,000,000respectively |  |                           | 1,120      |                |  |   | 1,120      |   |
| Additionalpaid-incapital                                                                                                                                                             |  |                           | 40,632,501 |                |  |   | 40,632,501 |   |
| Income/(Deficit)accumulated during the developmentstage                                                                                                                              |  |                           | 443,916    |                |  |   | 307,571    |   |
| Totalstockholders'equity                                                                                                                                                             |  |                           | 41,077,537 |                |  |   | 40,941,192 |   |
| Totalliabilities and stockholders'equity                                                                                                                                             |  | $                              | 51,689,563 |                |  | $      | 51,205,776 |   |
|                                                                                                                                                                                      |

SeeNotes to Unaudited Condensed FinancialStatements

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KBL Healthcare Acquisition Corp. II(acorporation in the development stage)

Condensed Statement ofOperations(unaudited)

|                                        |  |                                        |            |                                        |  |                                                            |           |         |  |        |           |        |  |  |
|----------------------------------------|--|----------------------------------------|------------|----------------------------------------|--|------------------------------------------------------------|-----------|---------|--|--------|-----------|--------|--|--|
|                                   |  | Forthe threemonths endedMarch  31,2006 |            | For the threemonths endedMarch31, 2005 |  | For the periodDecember09,2004 (inception)to March  31,2006 |
| Income:                                |  |                                   |       |                                   |  |                                                       |      |    |  |   |      |   |
| Interest                               |  | $                                      | 404,747    |                                   |  | $                                                          | —   |    |  | $      | 1,301,095 |   |
| TotalIncome:                           |  |                                   | 404,747    |                                   |  |                                                       | —   |    |  |   | 1,301,095 |   |
| Expenses:                              |  |                                   |       |                                   |  |                                                       |      |    |  |   |      |   |
| ProfessionalFees                       |  |                                   | 22,190     |                                   |  |                                                       | 3,750     |    |  |   | 84,922    |   |
| Franchiseand CapitalTaxes              |  |                                   | 10,375     |                                   |  |                                                       | —   |    |  |   | 46,536    |   |
| Administrativefees                     |  |                                   | 22,500     |                                   |  |                                                       | —   |    |  |   | 85,000    |   |
| DuesandSubscriptions                   |  |                                   | 6,848      |                                   |  |                                                       | —   |    |  |   | 38,683    |   |
| Insurance                              |  |                                   | 27,500     |                                   |  |                                                       | —   |    |  |   | 100,833   |   |
| Otheroperatingexpenses                 |  |                                   | 64,877     |                                   |  |                                                       | —   |    |  |   | 121,647   |   |
| Totalexpenses                          |  |                                   | 154,290    |                                   |  |                                                       | 3,750     |    |  |   | 477,621   |   |
| Incomebefore provision for incometaxes |  |                                   | 250,457    |                                   |  |                                                       | (3,750    | )  |  |   | 823,474   |   |
| Provisionfor incometaxes               |  |                                   | 114,112    |                                   |  |                                                       | 150       |    |  |   | 379,558   |   |
| Netincome                              |  | $                                      | 136,345    |                                   |  | $                                                          | (3,900    | )  |  | $      | 443,916   |   |
| Netincome per share basic anddiluted   |  | $                                      | 0.01       |                                   |  | $                                                          | (0.00     | )  |  | $      | 0.05      |   |
| Weightedaverage sharesoutstanding      |  |                                   | 11,200,000 |                                   |  |                                                       | 2,000,000 |    |  |   | 8,536,402 |   |
|                                        |

SeeNotes to Unaudited Condensed FinancialStatements

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KBL Healthcare Acquisition Corp. II(acorporation in the development stage)

Condensed Statement ofStockholders’ Equity

For the period fromDecember  9,  2004 (inception) to March  31,2006

|                                                                                                                                            |  |             |            |                           |  |                                                         |         |        |  |        |            |         |  |        |         |         |  |        |            |         |  |  |
|--------------------------------------------------------------------------------------------------------------------------------------------|--|-------------|------------|---------------------------|--|---------------------------------------------------------|---------|--------|--|--------|------------|---------|--|--------|---------|---------|--|--------|------------|---------|--|--|
|                                                                                                                                       |  | CommonStock |            | Additional paid-inCapital |  | (Deficit)/Income accumulated duringthe developmentstage |         |   |
|                                                                                                                                       |  | Shares      |            | Amount                    |  | Total                                                   |
| Saleof 2,000,000 shares of common stock to initial stockholders as ofDecember  9, 2004 at $.02857 per share                                |  |        | 2,000,000  |                      |  | $                                                       | 200     |   |  | $      | 24,800     |    |  | $      | — |    |  | $      | 25,000     |    |
| Net loss for theperiod                                                                                                                     |  |        | —    |                      |  |                                                    | — |   |  |   | —    |    |  |   | (939    | )  |  |   | (939       | )  |
| Balance,December  31,2004                                                                                                                  |  |        | 2,000,000  |                      |  |                                                    | 200     |   |  |   | 24,800     |    |  |   | (939    | )  |  |   | 24,061     |    |
| Saleof 9,200,000 units, net of underwriters’ discount and offeringexpenses (includes 1,839,080 shares subject to possibleconversion) |  |        | 9,200,000  |                      |  |                                                    | 920     |   |  |   | 50,436,284 |    |  |   | — |    |  |   | 50,437,204 |    |
| Proceedssubject to possible conversion of 1,839,080shares                                                                                  |  |        | —    |                      |  |                                                    | — |   |  |   | (9,828,683 | )  |  |   | — |    |  |   | (9,828,683 | )  |
| Proceedsfrom issuance ofoptions                                                                                                            |  |        | —    |                      |  |                                                    | — |   |  |   | 100        |    |  |   | — |    |  |   | 100        |    |
| Netincome for theperiod                                                                                                                    |  |        | —    |                      |  |                                                    | — |   |  |   | —    |    |  |   | 308,510 |    |  |   | 308,510    |    |
| Balanceat December  31,2005                                                                                                                |  |        | 11,200,00  |                      |  | $                                                       | 1,120   |   |  | $      | 40,632,501 |    |  | $      | 307,571 |    |  |   | 40,941,192 |    |
| Unaudited:                                                                                                                                 |  |        |       |                      |  |                                                    |    |   |  |   |       |    |  |   |    |    |  |   |       |    |
| Netincome for theperiod                                                                                                                    |  |        | —    |                      |  |                                                    | — |   |  |   | —    |    |  |   | 136,345 |    |  |   | 136,345    |    |
| Balanceat March  31,2006                                                                                                                   |  |        | 11,200,000 |                      |  | $                                                       | 1,120   |   |  | $      | 40,632,501 |    |  | $      | 443,916 |    |  | $      | 41,077,537 |    |
|                                                                                                                                            |

SeeNotes to Unaudited Condensed FinancialStatements.

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KBL Healthcare Acquisition Corp. II (acorporation in the development stage) Condensed Statement of CashFlows (unaudited)

|                                                                                    |  |                                          |          |                                          |  |                                                              |         |         |  |        |             |         |  |  |
|------------------------------------------------------------------------------------|--|------------------------------------------|----------|------------------------------------------|--|--------------------------------------------------------------|---------|---------|--|--------|-------------|---------|--|--|
|                                                                               |  | Forthe three months ended March 31, 2006 |          | For thethree months ended March 31, 2005 |  | For the periodDecember 09, 2004 (inception) to March 31,2006 |
| Cash flow from operatingactivities                                                 |  |                                     |     |                                     |  |                                                         |    |    |  |   |        |    |
| Net income(loss)                                                                   |  | $                                        | 136,345  |                                     |  | $                                                            | (3,900  | )  |  | $      | 443,916     |    |
| Adjustmentsto reconcile net income (loss) to net cash used in operatingactivities: |  |                                     |     |                                     |  |                                                         |    |    |  |   |        |    |
| Depreciation                                                                       |  |                                     | 330      |                                     |  |                                                         | — |    |  |   | 547         |    |
| Deferredtaxbenefit                                                                 |  |                                     | (109,800 | )                                   |  |                                                         | — |    |  |   | (338,800    | )  |
| Changesin operating assets and liabilities                                         |  |                                     |     |                                     |  |                                                         |    |    |  |   |        |    |
| Accruedinterest income on trustaccount                                             |  |                                     | (501,276 | )                                   |  |                                                         | — |    |  |   | (1,614,379  | )  |
| Decrease/(increase)in prepaidexpenses                                              |  |                                     | 31,749   |                                     |  |                                                         | — |    |  |   | (10,583     | )  |
| Increasein accruedexpenses                                                         |  |                                     | 48,972   |                                     |  |                                                         | 2,950   |    |  |   | 90,171      |    |
| Increasein deferred trustincome                                                    |  |                                     | 100,205  |                                     |  |                                                         | — |    |  |   | 322,714     |    |
| Increase/(decrease)in capital and income taxpayable                                |  |                                     | 198,265  |                                     |  |                                                         | (139    | )  |  |   | 370,458     |    |
| Netcash used in operatingactivities                                                |  |                                     | (95,210  | )                                   |  |                                                         | (1,089  | )  |  |   | (735,956    | )  |
| Cashflows from Investing Activities                                                |  |                                     |     |                                     |  |                                                         |    |    |  |   |        |    |
| Purchasesofequipment                                                               |  |                                     | (2,275   | )                                   |  |                                                         | — |    |  |   | (6,610      | )  |
| Increasein cash held intrust                                                       |  |                                     | (2       | )                                   |  |                                                         | — |    |  |   | (288        | )  |
| Purchaseof treasurybills                                                           |  |                                     | —  |                                     |  |                                                         | — |    |  |   | (99,044,714 | )  |
| Maturityof treasurybills                                                           |  |                                     | —  |                                     |  |                                                         | — |    |  |   | 49,877,000  |    |
| Netcash used in investingactivities                                                |  |                                     | (2,277   | )                                   |  |                                                         | — |    |  |   | (49,174,612 | )  |
| Cashflows from financing activities                                                |  |                                     |     |                                     |  |                                                         |    |    |  |   |        |    |
| Grossproceeds from publicoffering                                                  |  |                                     | —  |                                     |  |                                                         | — |    |  |   | 55,200,000  |    |
| Proceedsfrom issuance ofoption                                                     |  |                                     | —  |                                     |  |                                                         | — |    |  |   | 100         |    |
| Proceedsfrom notes payable,stockholders                                            |  |                                     | —  |                                     |  |                                                         | 100,000 |    |  |   | 100,000     |    |
| Paymentof notes payable,stockholders                                               |  |                                     | —  |                                     |  |                                                         | — |    |  |   | (100,000    | )  |
| Proceedsfrom sale of shares of commonstock                                         |  |                                     | —  |                                     |  |                                                         | — |    |  |   | 25,000      |    |
| Paymentof offeringcosts                                                            |  |                                     | —  |                                     |  |                                                         | (92,659 | )  |  |   | (4,762,796  | )  |
| Netcash provided by financingactivities                                            |  |                                     | —  |                                     |  |                                                         | 7,341   |    |  |   | 50,462,304  |    |
| Netincrease incash                                                                 |  |                                     | (97,487  | )                                   |  |                                                         | 6,252   |    |  |   | 551,736     |    |
| Cashat beginning of theperiod                                                      |  |                                     | 649,223  |                                     |  |                                                         | — |    |  |   | —     |    |
| Cashat the end of theperiod                                                        |  | $                                        | 551,736  |                                     |  | $                                                            | 6,252   |    |  |   | 551,736     |    |
|                                                                                    |

SeeNotes to Unaudited Condensed FinancialStatements.

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KBLHealthcare Acquisition Corporation(a corporation in thedevelopment stage)Notes to Unaudited FinancialStatements

1.    Basis ofPresentation

The financial statements at March  31,2006 and for the periods ended March  31,  2006 areunaudited. In the opinion of management, all adjustments (consisting ofnormal accruals) have been made that are necessary to present fairlythe financial position of KBL Healthcare Acquisition Corp. II (the‘‘Company’’) as of March  31,2006 and the results of its operations and cash flows for the threemonths ended March  31,  2006 and 2005 and the period fromDecember  9,  2004 (inception) to March  31,2006 and its stockholders equity for the three months March31,  2006 and the period from December  9,  2004(inception) to March  31,  2006. Operating results for theinterim period presented are not necessarily indicative of the resultsto be expected for a full year.

The statements and related noteshave been prepared pursuant to the rules and regulations of the U.S.Securities and Exchange Commission. Accordingly, certain informationand footnote disclosures normally included in financial statementsprepared in accordance with generally accepted accounting principleshave been omitted pursuant to such rules and regulations. Thesefinancial statements should be read in conjunction with the financialstatements that were included in the Company’s Annual Report onForm 10-KSB for the period ended December  31,  2005. TheDecember  31,  2005 balance sheet has been derived from theaudited financial statements.

2.    Organization and BusinessOperations

The Company was incorporated on December9,  2004 as a blank check company whose objective is to acquirean operating business in the healthcare industry.

Theregistration statement for the Company’s initial public offering(‘‘Offering’’) was declared effectiveApril  21,  2005. The Company consummated the Offering onApril  27,  2005 (see Note 7). The Company’smanagement has broad discretion with respect to the specificapplication of the net proceeds of this Offering, althoughsubstantially all of the net proceeds of this Offering are intended tobe generally applied toward consummating a business combination with anoperating business in the healthcare industry (‘‘BusinessCombination’’). Upon the closing of the Offering, and theunderwriters’ over-allotment option, an aggregate of$49,168,000, was deposited in an interest-bearing trust account(‘‘Trust Fund’’) until the earlier of (i)the consummation of a Business Combination or (ii) liquidation of theCompany. Under the agreement governing the Trust Account, funds willonly be invested in United States ‘‘governmentsecurities’’ within the meaning of Section 2(a)(16) ofthe Investment Company Act of 1940 with a maturity of 180 days or less,or in money market funds meeting certain conditions under Rule 2a-7promulgated under the Investment Company Act of 1940. At March31,  2006, the value of the Trust Account amounted toapproximately $50,782,381. The remaining net proceeds (not held in theTrust Fund) may be used to pay for business, legal and accounting duediligence on prospective acquisitions and continuing general andadministrative expenses.

The Company, after signing a definitiveagreement for the acquisition of a target business, will submit suchtransaction for stockholder approval. In the event that stockholdersowning 20% or more of the shares sold in the Offering voteagainst the Business Combination and exercise their conversion rightsdescribed below, the Business Combination will not be consummated. Allof the Company’s stockholders prior to the Offering, includingall of the officers and directors of the Company(‘‘Initial Stockholders’’), have agreed tovote their 2,000,000 founding shares of common stock in accordance withthe vote of the majority in interest of all other stockholders of theCompany (‘‘Public Stockholders’’) withrespect to any Business Combination. After consummation of a BusinessCombination, these voting safeguards will no longer beapplicable.

With respect to a Business Combination which isapproved and consummated, any Public Stockholder who voted against theBusiness Combination may demand that the Company convert his

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KBLHealthcare Acquisition Corporation(a corporation in thedevelopment stage)Notes to Unaudited FinancialStatements

or her shares. The per share conversion pricewill equal the amount in the Trust Fund as of two days prior to theconsummation of the proposed Business Combination divided by the numberof shares of common stock held by Public Stockholders at theconsummation of the Offering. Accordingly, Public Stockholders holding19.99% of the aggregate number of shares owned by all PublicStockholders may seek conversion of their shares in the event of aBusiness Combination. Such Public Stockholders are entitled to receivetheir per-share interest in the Trust Fund computed without regard tothe shares held by Initial Stockholders. Accordingly, a portion of thenet proceeds from the Offering (19.99% of the amount originallyheld in the Trust Fund) has been classified as common stock subject topossible conversion in the accompanying March  31,  2006balance sheet and 19.99% of the related interest earned on theTreasury Bill has been recorded as deferred interest.

TheCompany’s Amended and Restated Certificate of Incorporationprovides for mandatory liquidation of the Company in the event that theCompany does not consummate a Business Combination within 18 monthsfrom the date of the consummation of the Offering, or 24 months fromthe consummation of the Offering if certain extension criteria havebeen satisfied. In the event of liquidation, it is likely that the pershare value of the residual assets remaining available for distribution(including Trust Fund assets) will be less than the initial publicoffering price per share in the Offering (assuming no value isattributed to the Warrants contained in the Units sold in the Offeringdiscussed in Note 7).

3.    Initial PublicOffering

On April  27,  2005, the Company sold8,000,000 units (‘‘Units’’) in theOffering. On April  29,  2005, the Company sold anadditional 1,200,000 Units pursuant to the underwriters’over-allotment option. Each Unit consists of one share of theCompany’s common stock, $.0001 par value, and two RedeemableCommon Stock Purchase Warrants(‘‘Warrants’’). Each Warrant will entitlethe holder to purchase from the Company one share of common stock at anexercise price of $5.00 commencing the later of the completion of aBusiness Combination with a target business or one year from theeffective date of the Offering and expiring five years from the date ofthe prospectus. The Warrants will be redeemable, upon prior writtenconsent of EarlyBirdCapital, Inc., at a price of $.01 per Warrant upon30 days' notice after the Warrants become exercisable, only inthe event that the last sale price of the common stock is at least$8.50 per share for any 20 trading days within a 30 trading day periodending on the third day prior to the date on which notice of redemptionis given.

In connection with this Offering, the Company issued anoption, for $100, to the representative of the underwriters to purchase400,000 Units at an exercise price of $7.50 per Unit. The Companyestimates that the fair value of the Option is approximately $876,000($2.19 per Unit) using a Black-Scholes option-pricing model. The fairvalue of the option granted to EarlyBirdCapital was estimated as of thedate of grant using the following assumptions: (1) expected volatilityof 43.45%, (2) risk-free interest rate of 3.97% and (3)expected life of 5 years. The Option may be exercised for cash or on a‘‘cashless’’ basis, at the holder'soption, such that the holder may use the appreciated value of theOption (the difference between the exercise prices of the Option andthe underlying Warrants and the market price of the Units andunderlying securities) to exercise the option without the payment ofany cash. In addition, the Warrants underlying such Units areexercisable at $6.25 per share.

4.    Deferred OfferingCosts

Deferred offering costs consisted principally of legal andunderwriting fees incurred through the balance sheet date that arerelated to the Offering and were charged to capital upon the receipt ofthe capital raised.

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KBLHealthcare Acquisition Corporation(a corporation in thedevelopment stage)Notes to Unaudited FinancialStatements

5.    Notes Payable,Stockholder

The Company issued an aggregate of $100,000unsecured promissory notes to an Initial Stockholder, who is also anofficer, in January and March  2005. The notes were non-interestbearing and were payable on the earlier of January  14,2006 or the consummation of the Offering. These amounts were repaid inMay  2005 out of the proceeds of theOffering.

6.    Commitment

The Company presentlyoccupies office space provided by an affiliate of an InitialStockholder. Such affiliate has agreed that, until the acquisition of atarget business by the Company, it will make such office space, as wellas certain office and secretarial services, available to the Company,as may be required by the Company from time to time. The Company hasagreed to pay such affiliate $7,500 per month for such servicescommencing on the effective date of the Proposed Offering. ThroughMarch  31,  2006, the Company has expensed $85,000 relatingto this agreement.

7.    Common Stock

EffectiveJanuary  26,  2005 and March  24,  2005, theCompany's Board of Directors authorized a stock dividend of0.428571 shares of common stock and 0.6 shares of common stock,respectively, for each outstanding share of common stock. OnFebruary  8,  2005, the Company's Certificate ofIncorporation was amended to increase the authorized shares of commonstock from 15,000,000 to 30,000,000 shares of common stock.Additionally, on March  24,  2005, the Company'sCertificate of Incorporation was amended to increase the authorizedshares of common stock to 35,000,000 shares of common stock. Allreferences in the accompanying financial statements to the number ofshares of stock have been retroactively restated to reflect thesetransactions.

As of March  31,  2006, 19,600,000shares of common stock were reserved for issuance upon exercise ofredeemable warrants and underwriter’s unit purchaseoption.

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ITEM 2 –MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion should be read in conjunction with theCompany's Consolidated Financial Statements and footnotes theretocontained in this report.

Forward Looking Statements

The statements discussed in this Report include forward lookingstatements that involve risks and uncertainties detailed from time totime in the Company's reports filed with the Securities andExchange Commission.

We were formed on December 9, 2004, toserve as a vehicle to effect a merger, capital stock exchange, assetacquisition or other similar business combination with an operatingbusiness in the healthcare industry. We intend to utilize cash derivedfrom the proceeds of our recently completed public offering, ourcapital stock, debt or a combination of cash, capital stock and debt,in effecting a business combination.

For the three months endedMarch 31, 2006, we had a net income of $136,345, attributable tointerest income on the trust fund net of organization and formationexpenses.

For the three months ended March 31, 2005, we had anet loss of $3,900 attributable to organization and formationexpenses.

For the period from December 9, 2004 (inception)through March 31, 2006, we had a net income of $443,916, attributableto interest income on the trust fund net of organization and formationexpenses.

We consummated our initial public offering on April27, 2005. On April 29, we consummated the closing of an additional1,200,000 units that were subject to the underwriters'over-allotment option. Gross proceeds from our initial public offeringwere $55,200,000. We paid a total of $4,272,000 in underwritingdiscounts and commissions, and approximately $491,000 was or will bepaid for costs and expenses related to the offering. After deductingthe underwriting discounts and commissions and the offering expenses,the total net proceeds to us from the offering were approximately$50,437,000, of which $49,168,000 was deposited into the trust account(or $5.344 per share sold in the offering). The remaining proceeds areavailable to be used by us to provide for business, legal andaccounting due diligence on prospective acquisitions and continuinggeneral and administrative expenses. We will use substantially all ofthe net proceeds of this offering to acquire a target business,including identifying and evaluating prospective acquisitioncandidates, selecting the target business, and structuring, negotiatingand consummating the business combination. To the extent that ourcapital stock is used in whole or in part as consideration to effect abusiness combination, the proceeds held in the trust fund as well asany other net proceeds not expended will be used to finance theoperations of the target business. We believe we will have sufficientavailable funds outside of the trust fund to operate through April 27,2007, assuming that a business combination is not consummated duringthat time. From April 27, 2005 through April 27, 2007, we anticipateapproximately $280,000 of expenses for legal, accounting and otherexpenses attendant to the due diligence investigations, structuring andnegotiating of a business combination, $180,000 for the administrativefee payable to KBL Healthcare Management Inc. ($7,500 per month for twoyears), $150,000 for expenses for the due diligence and investigationof a target business, $40,000 of expenses in legal and accounting feesrelating to our SEC reporting obligations and $619,000 for generalworking capital that will be used for miscellaneous expenses andreserves, including approximately $80,000 for director and officerliability insurance premiums. We do not believe we will need to raiseadditional funds following this offering in order to meet theexpenditures required for operating our business. However, we may needto raise additional funds through a private offering of debt or equitysecurities if such funds are required to consummate a businesscombination that is presented to us. We would only consummate such afinancing simultaneously with the consummation of a businesscombination.

Commencing on April 21, 2005 and ending upon theacquisition of a target business, we began incurring a fee from KBLHealthcare Management, Inc., an affiliate of Zachary Berk, O.D., ourchairman of the board and president, Marlene Krauss, M.D., our chiefexecutive officer and secretary, 

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and Michael Kaswan, our chief operatingofficer, of $7,500 per month for providing us with office space andcertain general and administrative services. In addition, in Januaryand March 2005, Marlene Krauss advanced an aggregate of $100,000 to usfor payment on our behalf of offering expenses. These loans were repaidfollowing our initial public offering from the proceeds of theoffering.

ITEM 3.    CONTROLS AND PROCEDURES.

Disclosure controls and procedures are controls and other proceduresthat are designed to ensure that information required to be disclosedin company reports filed or submitted under the Securities Exchange Actof 1934 (the "Exchange Act") is recorded,processed, summarized and reported, within the time periods specifiedin the Securities and Exchange Commission's rules and forms.Disclosure controls and procedures include, without limitation,controls and procedures designed to ensure that information required tobe disclosed in company reports filed or submitted under the ExchangeAct is accumulated and communicated to management, including our chiefexecutive officer and treasurer, as appropriate to allow timelydecisions regarding required disclosure.

As required byRules  13a-15 and 15d-15 under the Exchange Act, our chiefexecutive officer and chief operating officer carried out an evaluationof the effectiveness of the design and operation of our disclosurecontrols and procedures as of March 31, 2006. Based upon theirevaluation, they concluded that our disclosure controls and procedureswere effective.

Our internal control over financial reporting isa process designed by, or under the supervision of, our chief executiveofficer and chief operating officer and effected by our board ofdirectors, management and other personnel, to provide reasonableassurance regarding the reliability of our financial reporting and thepreparation of our financial statements for external purposes inaccordance with generally accepted accounting principles. Internalcontrol over financial reporting includes policies and procedures thatpertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of ourassets; provide reasonable assurance that transactions are recorded asnecessary to permit preparation of our financial statements inaccordance with generally accepted accounting principles, and that ourreceipts and expenditures are being made only in accordance with theauthorization of our board of directors and management; and providereasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use or disposition of our assets that couldhave a material effect on our financial statements.

During themost recently completed fiscal quarter, there has been no significantchange in our internal control over financial reporting that hasmaterially affected, or is reasonably likely to materially affect, ourinternal control over financial reporting.

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PART II.

OTHER INFORMATION

ITEM 2:    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OFPROCEEDS

On April 27, 2005, we consummated our initial publicoffering of 8,000,000 Units, with each unit consisting of one share ofour common stock and two warrants, each to purchase one share of ourcommon stock at an exercise price of $5.00 per share. On April 29,2005, we closed on an additional 1,200,000 units that were subject tothe underwriters' over-allotment option. The units were sold atan offering price of $6.00 per unit, generating total gross proceeds of$55,200,000. EarlyBirdCapital, Inc. acted as lead underwriter. Thesecurities sold in the offering were registered under the SecuritiesAct of 1933 on a registration statement on Form S-1 (No. 333-121610).The Securities and Exchange Commission declared the registrationstatement effective on April 21, 2005.

We paid a total of$4,272,000 in underwriting discounts and commissions, and approximately$491,000 has been paid for costs and expenses related to theoffering.

After deducting the underwriting discounts andcommissions and the offering expenses, the total net proceeds to usfrom the offering were approximately $50,437,000, of which $49,168,000was deposited into a trust fund (or $5.344 per share sold in theoffering) and the remaining proceeds are available to be used toprovide for business, legal and accounting due diligence on prospectivebusiness combinations and continuing general and administrativeexpenses.

For a description of the use of the proceeds generatedin our initial public offering, see Part I, Item 2 of this Form10-QSB.

ITEM 6:    EXHIBITS

(a)    Exhibits:

31.1 – Section 302 Certification by CEO

31.2 –Section 302 Certification by COO

32.1 – Section 906Certification by CEO

32.2 – Section 906 Certification byCOO

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SIGNATURES

In accordance with therequirements of the Exchange Act, the registrant caused this report tobe signed on its behalf by the undersigned, thereunto dulyauthorized.

|  | KBL HEALTHCAREACQUISITION CORP. II |
|--|------------------------------------|

Dated: May 15, 2006

|  | /s/ Marlene Krauss, M.D. Marlene Krauss,M.D. Chief Executive Officer |
|--|----------------------------------------------------------------------|

|  | /s/Michael Kaswan Michael Kaswan Chief OperatingOfficer |
|--|---------------------------------------------------------|

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