U. S. Securities and Exchange Commission
                           Washington, D. C. 20549

                                 FORM 10-QSB

[X]       QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the quarterly period ended September 30, 2006


[  ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the transition period from _____ to _____

                          Commission File No. 0-33145

                      HEADLINERS ENTERTAINMENT GROUP, INC.
                 ---------------------------------------------
                 (Name of Small Business Issuer in its Charter)

          Delaware                                      84-1195628
 --------------------------------------------------------------------------
 (State or Other Jurisdiction of                 (I.R.S. Employer I.D. No.)
  incorporation or organization)

                  501 Bloomfield Avenue, Montclair, NJ 07042
                  ------------------------------------------
                   (Address of Principal Executive Offices)

                   Issuer's Telephone Number: (973) 223-1233


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

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).    Yes [ ]   No  [X]

APPLICABLE ONLY TO CORPORATE ISSUERS:  Indicate the number of shares
outstanding of each of the Registrant's classes of common stock, as of the
latest practicable date:
                             November 11, 2006
                      Common Voting Stock: 158,564,854

Transitional Small Business Disclosure Format (check one):  Yes [ ]  No [X]
<PAGE>

PART 1.     FINANCIAL INFORMATION

            Headliners Entertainment Group, Inc. and Subsidiaries
                     Condensed Consolidated Balance Sheet
                              September 30, 2006

Assets
 Current Assets
  Cash                                        $    81,419
  Assets to be disposed of                        130,218
  Inventory                                        53,359
  Other current assets                             91,090
                                               ----------
 Total Current Assets                             356,086
                                               ----------
Property and equipment, net                     2,416,748
Goodwill                                          384,063
Intangible assets                                 279,566
                                               ----------
Total Assets                                    3,436,463
                                               ==========
Liabilities and Stockholders' Deficit
 Current Liabilities
  Accounts payable and accrued expenses         3,865,803
  Notes payable                                 1,341,725
                                               ----------
 Total Current Liabilities                      5,207,528

Convertible debenture, net of unamortized
 premium of $153,418                            8,140,918
Fair value of embedded derivative               2,218,750
                                              -----------

 Total Liabilities                             15,567,196
                                              -----------
Stockholders' Deficit
 Common stock, authorized 500,000,000
  shares, $.001 par value, 60,389,317
  shares issued and outstanding                    60,390
 Additional paid-in capital                    59,244,732
 Accumulated deficit                          (71,435,855)
                                               ----------
 Total Stockholders' Deficit                  (12,130,733)
                                               ----------
Total Liabilities and Stockholders' Deficit   $ 3,436,463
                                               ==========


See notes to the condensed consolidated financial statements.

<PAGE>                                                          -1-

          Headliners Entertainment Group, Inc. and Subsidiaries
             Condensed Consolidated Statements of Operations
                               (Unaudited)


                               Three Months Ended       Nine Months Ended
                                  September 30,              September 30,
                             -----------------------  -------------------------
                                 2006        2005        2006           2005
                             ----------  -----------  -----------     ---------
Net Sales                   $ 1,711,794  $ 1,851,940  $ 5,422,514   $ 4,312,873

Cost of sales                   538,004      718,440    1,802,872     1,657,517
                             ----------  -----------   ----------     ---------
Gross Profit                  1,173,790    1,133,500    3,619,642     2,655,356
                             ----------  -----------   ----------     ---------

General and Administrative
 expenses
 General and administrative
  expenses                    1,377,844    2,232,183    4,969,673     4,532,526
 Stock based compensation             -            -            -    24,420,000
 Stock issued for consulting
  services                            -    2,735,199            -    15,381,900
                             ----------  -----------   ----------    ----------
Total General and
 Administrative Expenses      1,377,844    4,967,382    4,969,673    44,334,426
                             ----------  -----------   ----------    ----------

Loss From Operations           (204,054)  (3,833,882)  (1,350,031)  (41,679,070)
                             ----------  -----------   ----------    ----------
Other Income (Expenses)
 Derivative adjustment to
  market                       (221,704)           -      116,979             -
 Interest expense              (227,821)  (1,371,565)    (837,115)   (2,155,878)
 Interest income                      -           44            -        13,377
 Other income (expense)         (64,387)       9,675      (64,387)        9,675
                             ----------  -----------   ----------    ----------
Total Other Expense            (513,912)  (1,361,846)    (784,523)   (2,132,826)
                             ----------  -----------   ----------    ----------

Loss From Continuing
 Operations                    (717,966)  (5,195,728)  (2,134,554)  (43,811,896)
                             ----------  -----------   ----------    ----------
Discontinued Operations
 (Loss) Income from discon-
  tinued operations (net of
  tax effect of $0)            (119,071)      16,864     (188,256)      142,913
 Loss on disposal of
  operations (net of tax
  effect of $0)                (807,094)           -   (1,759,179)           -
                             ----------  -----------   ----------    ----------
(Loss) Income From
 Discontinued Operations       (926,165)      16,864   (1,947,435)      142,913
                             ----------  -----------   ----------    ----------

Net Loss                    $(1,644,131) $(5,178,864) $(4,081,989) $(43,668,983)
                             ==========   ==========   ==========   ===========

Earnings (Loss) per share   $     (0.03) $     (0.35) $     (0.11) $      (4.38)
Earnings (Loss) Per Share
 From Continuing Operations $     (0.01) $     (0.35) $     (0.06) $      (4.38)
Earnings (Loss) Per Share
 From Discontinued
 Operations                 $     (0.02) $         -  $     (0.05) $       0.01


Weighted Average Number of
 Common Shares Outstanding   51,788,254   14,793,478   39,146,582     9,965,921


      See notes to the condensed consolidated financial statements.

<PAGE>                                                          -2-

            Headliners Entertainment Group, Inc. and Subsidiaries
               Condensed Consolidated Statements of Cash Flows
                                 (Unaudited)

                                                    Nine Months Ended
                                                      September 30,
                                              ----------------------------
                                                  2006             2005
                                              -----------     ------------
Net Cash Provided by (Used in) Operating
 Activities                                  $     11,736     $ (1,130,258)

Cash Flows from Investing Activities
 Purchase of fixed assets                        (273,011)        (217,160)
 Issuance of note receivable                            -         (400,000)
 Repayments of note receivable                          -          400,000
 Purchase of LLC's, net of $44,200 cash
  acquired                                              -       (1,325,800)
                                              -----------      -----------
 Net Cash Used in Investing Activities           (273,011)      (1,542,960)
                                              -----------      -----------
Cash Flows From Financing Activities
 Proceeds from promissory notes                         -        2,927,500
 Repayment of notes payable                      (400,977)        (324,468)
 Proceeds from notes payable                      500,000          232,923
                                              -----------      -----------
 Net Cash Provided by Financing Activities         99,023        2,835,955

Net (Decease) Increase in Cash                   (162,252)         162,737

Cash at Beginning of Period                       243,671           29,058
                                              -----------      -----------
Cash and Equivalents at End of Period        $     81,419     $    191,795
                                              ===========      ===========


        See notes to the condensed consolidated financial statements.

<PAGE>                                                          -3-
               Headliners Entertainment Group, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)


     SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES

     During the nine months ended September 30, 2006, the Company issued
     26,284,728 common shares upon the conversion of $219,809 of convertible
     debentures.

     During the nine months ended September 30, 2006, the Company issued
     2,000,000 common shares in consideration of a financing.  The shares
     are recorded as a debt discount of $160,000.

     During the nine months ended September 30, 2005, the Company issued
     a $4,500,000 promissory note in exchange for $427,500 in cash and
     the extinguishment of an outstanding obligation of $3,025,000.
     Additionally, a discount on the note of $1,047,500 was recorded.

     During the nine months ended September 30, 2005, the Company issued
     a $3,000,000 promissory note in exchange for $2,500,000 in cash and
     a discount of $500,000.

     During the nine months ended September 30, 2005, the Company
     acquired all of the rights, title and interest in six limited
     liability companies.  In connection with the acquisition, the
     Company, assumed $337,549 of accounts payable and accrued expenses,
     issued notes payable aggregating $793,435 and issued common stock
     valued at $301,565.

     During the nine months ended September 30, 2005, the Company issued
     1,700,000 shares of common stock for $2,877,000 of prepaid
     consulting services.

     On June 28, 2005, the Company issued a convertible debenture in the
     amount of $3,000,000 in exchange for $2,500,000.  The debenture was
     discounted by $500,000.  The net proceeds of $2,500,000 were
     disbursed directly to a movie production company, pursuant to a
     subscription agreement dated June 28, 2005, in exchange for movie
     participation rights.

     On August 17, 2005, the Company issued a convertible debenture in
     the amount of $7,953,698 in exchange for the extinguishment of
     $7,500,000 of promissory notes and accrued interest of $453,698.




See notes to the condensed consolidated financial statements.

<PAGE>                                                          -4-

             Headliners Entertainment Group, Inc. and Subsidiaries
           Notes to the Condensed Consolidated Financial Statements
                    Nine Months Ended September 30, 2006
                                (Unaudited)

1.   BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial
     statements have been prepared in accordance with generally accepted
     accounting principles for interim financial information and with the
     instructions to Item 310 of Regulation S-B.  Accordingly, they do
     not include all of the information and footnotes required by
     generally accepted accounting principles for complete financial
     statements, In the opinion of management, all adjustments
     (consisting of normal recurring accruals) considered necessary for
     a fair presentation have been included.  Operating results for the
     nine months ended September 30, 2006 are not necessarily indicative
     of the results that may be expected for the year ended December 31,
     2006.  The unaudited condensed financial statements should be read
     in conjunction with the consolidated financial statements and
     footnotes thereto included in the Company's annual report on Form
     10-KSB for the year ended December 31, 2005.

2.   GOING CONCERN

     The accompanying condensed consolidated financial statements have
     been prepared on a going concern basis, which contemplates the
     realization of assets and the satisfaction of liabilities and
     commitments in the normal course of business.  As reflected in the
     condensed consolidated financial statements, the Company has
     incurred recurring net losses from operations.  Further, at
     September 30, 2006, current liabilities exceed current assets by
     $4,851,442 and total liabilities exceed total assets by $12,130,733.
     These factors all raise substantial doubt about the ability of the
     Company to continue as a going concern.

     Management's plan in regard to the going concern issues is to raise
     capital through the sale of the Company's stock and convert existing
     debt into shares of the Company's common stock.  In addition, the
     Company is focusing on developing a significant number of clubs to
     achieve an efficient level of operations.

3.   NOTES PAYABLE

     On February 2, 2006, the Company issued a promissory note in the
     amount of $360,000 in exchange for $300,000 in cash.  The note has
     been discounted by$60,000, bears interest at 18% per annum and is
     due in 18 monthly payments of $20,000 beginning April 1, 2006.  The
     Company issued 2,000,000 common shares to the note holder as an
     inducement to make the loan.  The shares were valued at $0.08 per
     share, the value on the date they were issued and were recorded as
     deferred financing fees.  The deferred financing fees and the
     discount are being amortized over the life of the loan.  As
     collateral for the note, the Company has placed 7,500,000 common
     shares in an escrow account.

4.   DISCONTINUED OPERATIONS

     During the quarter ended June 30, 2006, the Company decided to cease
     operations at its Jackson, Mississippi location due to declining
     sales and costly rents.  The Company began operations in Jackson,
     Mississippi on April 1, 2005.

     Subsequent to the nine months ended September 30, 2006, the Company
     has ceased operations at its Cincinnati, Ohio and Baltimore,
     Maryland locations.  For the nine months ended September 30, 2006,
     activities of these two locations have been included in discontinued
     operations.  Additionally, the statement of operations for the three
     and nine months ended September 30, 2005 have been reclassified to
     conform to the three and nine months ended September 30, 2006.  The
     decision to close these locations was based on declining sales and
     profits.

     Discontinued operations have generated sales of $1,172,766 and
     $2,641,101 for the nine months ended September 30, 2006 and 2005,
     respectively and (loss)/income of ($188,256) and $142,913 for the
     nine months ended September 30, 2006 and 2005, respectively.

<PAGE>                                                          -5-

             Headliners Entertainment Group, Inc. and Subsidiaries
             Notes to the Condensed Consolidated Financial Statements
                      Nine Months Ended September 30, 2006
                                   (Unaudited)

5.   BUSINESS COMBINATIONS

     On March 29, 2005, the Company entered into a Consolidated Acquisition
     Agreement with Paul Butler and JHF Property Holdings, LLC ("JHF").
     Pursuant to the Consolidated Acquisition Agreement, effective March 31,
     2005,  the Company acquired all of the rights, title and interest in five
     limited liability companies and the right to receive the net income of a
     sixth limited liability company.  The Consolidated Acquisition Agreement,
     provided for the Company to acquire ownership of the sixth limited
     liability company at a future date.  Each of the limited liability
     companies operates an entertainment complex consisting of a dance club
     and other facilities, one each in Cincinnati, Kansas City, Tucson,
     Jackson, Louisville and Omaha.

     In accordance with the Consolidated Acquisition Agreement, the
     Company and JHF commenced development of comedy club utilizing the
     Rascals trademark in Hampton, VA.  JHF was responsible for
     supervising the development and construction of the club for a fee
     and the Company retained all of the rights, title and interest in
     the club.

     The consideration paid to JHF for the acquisition of the five
     limited liability companies, the right to receive the net income of
     the sixth limited liability company and the development and
     construction of the Hampton, VA comedy club consisted of $3,675,000
     in cash payments, a 0% convertible debenture due on March 31, 2008
     in the principal amount of $5,000,000 and 7,000 shares of the
     Company's common stock.

     Additionally, the Consolidated Acquisition Agreement contained
     provisions under which, JHF would manage the seven properties.  In
     consideration for the management services, the Company issued common
     stock with a market value of $2,300,000 to JHF.  The Company has
     committed that if the proceeds realized by JHF from selling the
     shares are less than $2,300,000, the Company will issue additional
     shares until JHF realizes $2,300,000.  Additionally, the Company
     agreed to make weekly cash payments to JHF for their management
     services.

     On July 22, 2005, the Company entered into a Settlement Agreement
     with JHF Property Holdings, LLC, Paul Butler, Jon B. Field and Jon
     H. Field (collectively, "JHF").  The Settlement Agreement settled
     a lawsuit that the Company had brought against JHF alleging fraud
     and breach of contract.  The Settlement Agreement contained the
     following provisions, which amended the terms under which the
     Company acquired the six limited liability companies.  The
     acquisition has been recorded in the accompanying financial
     statements effective, April 1, 2005, in accordance with these
     amended terms:

     1. The Company's ownership of the limited liability companies
        that own the six dance clubs has been acknowledged.

     2. The Company assigned to JHF all of its interest in the
        comedy club built in Hampton, VA.

     3. JHF surrendered the $5,000,000 convertible debenture issued
        to them pursuant to the Consolidated Acquisition Agreement.

     4. The Company's agreement with JHF to manage the clubs has
        been terminated.

     5. All of the Company's payment obligations under the
        Consolidated Acquisition Agreement have been terminated.
        In lieu thereof, the Company agreed to pay to JHF: (a) five
        weekly payments of $74,687 (totaling $373,435), commencing
        on August 3, 2005; and (b) twenty-eight weekly payments of
        $15,000 (totaling $420,000) commencing on September 7, 2005.

     The aggregate acquisition price for the six clubs was $4,770,000,
     which included cash in the amount of $3,675,000, 777,000 shares of
     the Company's commons stock valued at $301,565 (which represents the
     proceeds realized by JHF from the sale of stock issued to them) and
     issuance of notes payable to JHF aggregating $793,435.

<PAGE>                                                          -6-

            Headliners Entertainment Group, Inc. and Subsidiaries
          Notes to the Condensed Consolidated Financial Statements
                     Nine Months Ended September 30, 2006
                                 (Unaudited)

5.   BUSINESS COMBINATIONS, Continued

     The Results of Operations for the six acquired limited liability
     companies for the period after April 1, 2005 are included in the
     Company's consolidated financial statements.  Following are pro
     forma amounts assuming that the acquisition was made on January 1,
     2005:

                                             For the Nine Months Ended
                                                September 30, 2005
                                             -------------------------
     Net Sales                                   $   9,558,293

     Net Loss                                    $ (43,762,071)

     Loss Per Share From Continuing Operations   $      (4.38)


     The transaction was accounted for as an acquisition of the six
     limited liability companies under the purchase method of accounting
     in accordance with Statement of Financial Accounting Standards.  No.
     141, Business Combinations.  Under the purchase method of
     accounting, the total purchase price is allocated to the net
     tangible and intangible assets acquired by the Company in connection
     with the transaction, based on their fair values as of the
     completion of the transaction.  The excess cost over the net
     tangible and identifiable intangible assets is allocated to
     goodwill.  The preliminary purchase price allocation is subject to
     finalization of the intangible asset.


6 SUBSEQUENT EVENT - TERMINATION OF MANAGEMENT AGREEMENT

     On November 15, 2006 the Company agreed to terminate the Management
     Agreement under which the Company has managed the restaurant, comedy
     club and dance club facility owned by Rascals Montclair, Inc. in
     Montclair, New Jersey.  The majority owners of Rascals Montclair are
     trusts owned by the families of Eduardo Rodriguez and Michael
     Margolies, the members of the Company's Board of Directors.

<PAGE>                                                          -7-

Item 2.  Management Discussion and Analysis

     Forward-looking Statements

     This Report contains certain forward-looking statements
regarding Headliners Entertainment Group, its business and financial
prospects.  These statements represent Management's present intentions
and its present belief regarding the Company's future.  Nevertheless,
there are numerous risks and uncertainties that could cause our actual
results to differ from the results suggested in this Report.  A
detailed discussion of some of the risks that may cause such a
difference has been set forth in the Company's Annual Report on
Form10-KSB for the year ended December 31, 2005 in the section
numbered "Item 6" under the heading "Risk Factors that May Affect
Future Results."  Among the more significant factors are:

     1.   We have obligations to Cornell Capital Partners in excess of
          $8,000,000.  The greater portion of that debt is likely to
          be satisfied by our issuance of a large quantity of our
          common stock.

     2.   We lack the capital necessary to expand our operations, and
          must rely on the sale of equity to obtain the necessary
          funds.

     3.   We have never operated profitably for any significant period
          of time, and may continue to report net losses.

     Because these and other risks may cause Headliners' actual
results to differ from those anticipated by Management, the reader
should not place undue reliance on any forward-looking statements that
appear in this Report.  Readers should also take note that Headliners
will not necessarily make any public announcement of changes affecting
these forward-looking statements, which should be considered accurate
on this date only.

     Results of Operations

     From its founding in 1984 through 2001, Headliners' business
consisted entirely of the operation of  stand-alone restaurant/comedy
club facilities: two in New Jersey from the 1980s until 2003/2004  and
one that we operated in Miami, Florida for only a year.  From 2002
into 2006 we substantially changed the nature of our operations.  We
began to develop alternative locations for Rascals' comedy by
organizing hotel-based clubs and by granting licenses to utilize the
name "Rascals."  We also began to develop multiple channels of
distribution for the comedic entertainment produced in our clubs, such
as online distribution, home video sales and pay-per-view sales.
During 2006, however, a number of those ventures have proven to be
unprofitable, and we have significantly reduced our level of
operations.

     The most dramatic example of our expanding operations was our
acquisition at the end of March 2005 of six dance clubs that operated
under one of the followings trade names: "Banana Joe's,""Margarita
Mama's," "Red Cheetah," "Parrot Beach" or "Cactus Cafe."   Commencing
on April 1, 2005 we have consolidated the financial results of the
clubs with our other operations on our financial statements.  This
resulted in an increase in our revenues, from $4,312,873 in the first
nine months of 2005 to $5,422,514 in the first nine months of 2006.

<PAGE>                                                          -8-

     During the past twelve months, however, we have closed four of
the six dance clubs that we purchased in 2005.  As a result, our gross
revenue for the quarter ended September 2006 was 8% lower than the
same quarter of 2005.  The results from those four operations have
been reported as "discontinued operations" on our Statements of
Operations.  A net loss of $1,947,435 from the operations of those
clubs and the disposal of their facilities contributed to our overall
net loss for the nine months ended September 30, 2006

     Over the past several years we also altered our use of the
Rascals trademark by expanding into new venues.  We replaced the two
restaurant-club locations that we have operated since the 1980s with
a restaurant and Rascals Comedy Club that opened in Montclair NJ in
June 2004.  In November, 2006, however, we terminated the agreement
under which we managed that property.  So the Montclair facility will
no longer contribute to our financial results.  In 2005 we opened a
comedy club in the Palisades Center in New Jersey, then closed it
early in 2006.  We also opened a comedy club in Baltimore, Maryland in
July 2006, then closed it in September due to lack of patronage.  At
the present time, therefore, we are operating no restaurants and only
one comedy club.  That club is located in the Hilton Hotel in Cherry
Hill, New Jersey, where we commenced operations in December 2002.
Although the sales level of this club is far lower than the levels we
maintained in West Orange or Ocean, we generate it with only one full-
time and three part-time employees (compared to dozens at our
restaurant-club combinations).  So the Cherry Hill club has been
profitable.

     The transitions in our business plan have resulted in a marked
disparity between revenues and expenses.  During the first nine months
of 2006 we incurred general and administrative expenses totaling
$4,969,673, which exceeded our gross profit by $1,350,031.  This
represented an improvement over the first nine months of 2005,
however.  The improvement is primarily due to the fact that during
2005 we issued stock to pay expenses with a market value of
$39,801,900.  In order to achieve profitability, however, we will have
to increase our revenue to a level that will sustain our overhead.

     In November 2005 we agreed with Cornell Capital Partners to
exchange the convertible debenture then held by Cornell for a new
five-year debenture whose principal amount equals the principal of the
surrendered debenture plus accrued interest.  In connection with the
exchange, we issued to Cornell Capital Partners five year warrants to
purchase 10,000,000 shares of our common stock at $.20 per share.
Because the warrants had a fair value of $1,460,000 and because the
terms of the new debenture included an embedded derivative, we
recognized in 2005 an expense of $3,811,193 as "loss on extinguishment
of debt" arising from this transaction.  During the life of the
warrants, until they are exercised, we will adjust the value of the
warrants to market value at the end of each accounting period.  As a
result of that adjustment, we recognized income of $116,979 in the
nine month period ended September 30, 2006.  At the same time, we
incurred an "interest expense" of $837,115 during the nine months
ended September 30, 2006, most of which was attributable to the
Cornell debenture.  The debenture carries a stated interest of 12% per
annum.

     Our expenses remain disproportionate to our revenue.  As a
result, we realized a net loss of $4,081,989 for the first nine months
of 2006, compared to a net loss of $43,668,983 in the first nine
months of 2005.  We expect to continue to incur losses until we are
able to reduce our general and administrative costs to a level that is
proportionate to our revenue level.  Our recent termination of the
Montclair management agreement is intended to be a step in that
direction.

<PAGE>                                                          -9-

Liquidity and Capital Resources

     In order to obtain the funds necessary to acquire our six new
dance clubs and construct our facilities in Montclair and the
Palisades Center, we borrowed nearly $10 million from Cornell Capital
Partners.  Today our debt to Cornell Capital Partners totals
$8,192,309 plus accrued interest.  The debt is represented by a
Secured Convertible Debenture in that amount issued on November 17,
2005. Headliners is not required to make any payment by the Debenture
until November 17, 2010, when it will have the option of satisfying
any principal and interest remaining outstanding in cash or with
common stock.  In the meantime, Cornell Capital Partners will have the
right to convert the principal and accrued interest on the Debenture
into Headliners common stock at a conversion price equal to 80% of the
market price at the time of conversion.

     With the proceeds of our sale of debt instruments to Cornell
Capital Partners, we substantially alleviated our capital commitments.
Nevertheless, in addition to the ongoing expenses of operating its
business, Headliners had accounts payable and accrued expenses of
$3,865,803 at September 30, 2006, as well as being obligated on
$1,341,725 in notes payable.

     During the first nine months of 2006 our operations produced
only $11,736 in cash.  However, in the second half of 2005 our
operations produced $458,525 in cash.  The improved cash flow in the
second half of 2005 resulted from the fact that we obtained full
managerial control over the six new dance clubs during the summer of
2005.  We believe that the modest cash flow in the first nine months
of 2006 is not indicative of the direction of our operations, but
primarily reflects (a) troubles at our Jackson MS club that were
resolved when we closed the club in April and (b) remaining
obligations of the other clubs that we have closed over the past
twelve months.   We expect that the cash flow from the remaining clubs
will be sufficient to sustain their  operations and meet their cash
obligations.  In order to meet the financial obligations of our
holding company, however, we will require additional capital.  We are
currently engaged in seeking sources of additional capital, but we
have not obtained any financing commitment.

     Off-Balance Sheet Arrangements

     We do not have any off-balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our
financial condition or results of operations.

Item 3.  Controls and Procedures

     Evaluation of Disclosure Controls and Procedures.  Eduardo
Rodriguez, our Chief Executive Officer and Chief Financial Officer,
carried out an evaluation of the effectiveness of Headliners'
disclosure controls and procedures as of September 30, 2006.  Pursuant
to Rule13a-15(e) promulgated by the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, "disclosure controls
and procedures" means controls and other procedures that are designed
to insure that information required to be disclosed by Headliners in
the reports that it files with the Securities and Exchange Commission
is recorded, processed, summarized and reported within the time limits
specified in the Commission's rules.  "Disclosure controls and
procedures" include, without limitation, controls and procedures
designed to insure that information Headliners is required to disclose
in the reports it files with the Commission is accumulated and
communicated to our Chief Executive Officer and Chief Financial
Officer as appropriate to allow timely decisions regarding required
disclosure.  Based on his evaluation, Mr. Rodriguez concluded that
Headliners' system of disclosure controls and procedures was effective
as of September 30, 2006 for the purposes described in this paragraph.

     Changes in Internal Controls.  There was no change in internal
controls over financial reporting (as defined in Rule 13a-15(f)
promulgated under the Securities Exchange Act or 1934) identified in
connection with the evaluation described in the preceding paragraph
that occurred during Headliners's third fiscal quarter that has
materially affected or is reasonably likely to materially affect
Headliners's internal control over financial reporting.

<PAGE>                                                          -10-


PART II   -   OTHER INFORMATION

Item 2.  Changes in Securities and Small Business Issuer Purchase of
Equity Securities

     (c) Unregistered sales of equity securities

     Between July 1, 2006 and September 30, 2006 Headliners issued a
total of 15,843,737 shares of common stock to Cornell Capital Partners
LP.  The shares were issued upon conversion of a debenture in the
amount of $142,800.  The sale was exempt pursuant to Section 4(2) of
the Act since the sale was not made in a public offering and was made
to an entity whose principal had access to detailed information about
Headliners and was acquiring the shares for its own account.  There
were no underwriters.

     (e) Purchases of equity securities

     The Company did not repurchase any of its equity securities that
were registered under Section 12 of the Securities Exchange Act during
the 3rd quarter of 2006.

Item 5.  Other Information

     Termination of Material Agreement

     On November 15, 2006, Headliners terminated the management
agreement pursuant to which it managed the restaurant, comedy club and
dance club in Montclair, New Jersey.

     Unregistered Issuance of Equity Securities

     In October 2006, Headliners issued a total of 85,000,000 shares
of common stock to five creditors in partial settlement of their
debts.  The amount of debt settled will equal the proceeds of the sale
of the shares by the creditors.  The sales were exempt pursuant to
Section 4(2) of the Act since the sales were not made in a public
offering and were made to individuals who had access to detailed
information about Headliners and were acquiring the shares for their
own accounts.  There were no underwriters.

     In October 2006, Headliners issued a total of 25,000,000 shares
of common stock to two companies in payment for consulting services.
The shares were valued at $.003 per share, being the market value on
the date of issuance.  The sales were exempt pursuant to Section 4(2)
of the Act since the sales were not made in a public offering and were
made to entities whose principals had access to detailed information
about Headliners and were acquiring the shares for their own accounts.
There were no underwriters.

Item 6.

     Exhibits.

     31   Rule 13a-14(a) Certification
     32   Rule 13a-14(b) Certification

<PAGE>                                                          -11-


                                 SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned thereunto duly authorized.

                                 HEADLINERS ENTERTAINMENT GROUP, INC.


Date: November 17, 2006          By:  /s/ Eduardo Rodriguez
                                      ----------------------------------
                                      Eduardo Rodriguez, Chief Executive
                                      Officer & Chief Financial Officer