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 March 31, 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:
                           May 11, 2006
                           Common Voting Stock: 35,000,052

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
                                March 31, 2006
                                 (Unaudited)

Assets
 Current Assets
  Cash                                         $     65,105
  Inventory                                          62,612
  Prepaid expenses                                  169,207
  Assets to be disposed of                          184,218
                                                 ----------
 Total Current Assets                               481,142

Property and equipment, net                       3,500,126
Goodwill                                            384,063
Intangible assets                                   301,966
Security deposits                                     6,500
                                                 ----------
 Total Assets                                     4,673,797
                                                 ==========

Liabilities and Stockholders' Deficit
 Current Liabilities
  Accounts payable and accrued expenses           2,807,869
  Notes payable                                   1,456,658
                                                 ----------
 Total Current Liabilities                        4,264,527

Convertible debenture, net of premium             8,334,010
Fair value of embedded derivative                 2,243,260
                                                 ----------
 Total Liabilities                               14,841,797
                                                 ----------
Stockholders' Deficit
 Common stock, authorized 500,000,000 shares,
  $.001 par value, 32,000,053 shares issued
  and outstanding                                    32,000
 Additional paid-in capital                      59,024,619
 Prepaid consulting                                 (21,000)
 Accumulated deficit                            (69,203,619)
                                                 ----------
 Total Stockholders' Deficit                    (10,168,000)
                                                 ----------
Total Liabilities and Stockholders' Deficit    $  4,673,797
                                                 ==========


See notes to the unaudited condensed consolidated financial statements.

                                                                -2-
<PAGE>

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


                                                      Three Months Ended
                                                           March 31,
                                                    -----------------------
                                                       2006          2005
                                                    ----------    ---------

Net Sales                                          $ 1,874,768  $    446,703
Cost of sales                                          636,125       152,690
                                                    ----------    ----------
Gross Profit                                         1,238,643       294,013
                                                    ----------    ----------
General and Administrative expenses
 General and administrative expenses                 1,936,752       801,571
 Stock based compensation                                    -    24,420,000
 Stock issued for consulting services                        -    12,362,400
                                                    ----------    ----------
Total General and Administrative Expenses            1,936,752    37,583,971
                                                    ----------    ----------
Other Expenses (Income)
 Interest expense                                      375,136       270,190
 Derivative adjustment to market                      (146,163)            -
                                                    ----------    ----------
Total Other Expense                                    228,973       270,190
                                                    ----------    ----------
Loss From Continuing Operations                       (927,082)  (37,560,148)
                                                    ----------    ----------
Discontinued Operations
 Income from discontinued operations (net of
  tax effect of $0)                                     29,414             -
 Loss on disposal of operations (net of tax
  effect of $0)                                       (952,085)            -
                                                    ----------    ----------
(Loss) Income From Discontinued Operations            (922,671)            -
                                                    ----------    ----------
Net Loss                                           $(1,849,753) $(37,560,148)
                                                    ==========    ==========
Earnings per share
 Earnings (Loss) Per Share From Continuing
  Operations                                       $     (0.03) $     (25.97)
 Earnings (Loss) Per Share From Discontinued
  Operations                                       $     (0.03) $          -

Weighted Average Number of Common Shares
 Outstanding                                        29,963,177     1,446,166



See notes to the unaudited condensed consolidated financial statements.

                                                                -3-
<PAGE>

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

                                                      Three Months Ended
                                                           March 31,
                                                    ------------------------
                                                       2006           2005
                                                    ----------     ---------
Net Cash Used in Operating Activities              $  (235,605)  $  (674,477)

Cash Flows from Investing Activities
 Purchase of property and equipment                   (267,961)      (25,024)
 Cash paid for acquisition                                   -    (1,400,000)
 Cash paid for construction in progress                      -      (133,791)
 Issuance of note receivable                                 -      (400,000)
                                                     ---------     ---------
 Net Cash Used in Investing Activities                (267,961)   (1,958,815)
                                                     ---------     ---------
Cash Flows From Financing Activities
 Proceeds from long-term debt                                -     2,927,500
 Repayment of notes payable                           (175,000)            -
 Proceeds from notes payable                           500,000        50,000
                                                     ---------     ---------
 Net Cash Provided by Financing Activities             325,000     2,977,500
                                                     ---------     ---------

Net Increase (Decrease) in Cash                       (178,566)      344,208
Cash at Beginning of Period                            243,671        29,058
                                                     ---------     ---------
Cash at End of Period                               $   65,105    $  373,266
                                                     =========     =========

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

 During the quarter ended March 31, 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 quarter ended March 31, 2006, the Company issued 895,464 shares
 for the conversion of $50,000 of convertible debentures.


See notes to the condensed consolidated financial statements.
                                                                -4-

<PAGE>


<PAGE>
          Headliners Entertainment Group, Inc. and Subsidiaries
         Notes to the Condensed Consolidated Financial Statements
              For the Three Month Period Ended March 31, 2006
                               (Unaudited)
1.   BASIS OF PRESENTATION

 The accompanying unaudited condensed 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 disclosures
 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 three months ended March 31, 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
 disclosures 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,
 an accumulated deficit, and recurring negative cash flows from operations.
 Further, at March 31, 2006, current liabilities exceed current assets by
 $3,783,385 and total liabilities exceed total assets by $10,168,000.  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 it to raise capital
 through the sale of the Company's 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

 Subsequent to the quarter ended March 31, 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, consequently, there are no discontinued operations reported for the
 three months ended March 31, 2005.  For the three months ended March 31,
 2006, the discontinued operations generated sales of $518,269 and operating
 income of $29,414.
                                                                -5-
<PAGE>

<PAGE>
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 Form 10-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.  In the years since 2002 we
have substantially changed the nature of our operations.  We have 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.

     The most dramatic example of our expanding operations is our
acquisition at the end of March 2005 of six dance clubs that operate 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 has resulted in a significant
increase in our revenues, from $446,703 in the first quarter of 2005 to
$1,874,768 in the first quarter of 2006.
                                                                -6-
<PAGE>

     We have also altered our use of the Rascals trademark over the past
several years, 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 addition, we have been actively pursuing opportunities to
situate Rascals Comedy Clubs in hotels and entertainment venues, where a
large, pre-existing clientele can be converted into customers of our club.
Currently we own and operate two Rascals Comedy Clubs:

     -       Rascals Montclair.  To replace our West Orange and Ocean
             restaurant-clubs, in June 2004 we opened a 13,000 square foot
             restaurant and comedy club in Montclair, New Jersey.  The
             restaurant and bar in our Montclair facility seats 150, and the
             showroom seats 400.  The property is owned by a separate
             corporation organized by members of Headliners' management.
             However, that corporation has a contract with Headliners under
             which we manage the facility and pay all of its expenses, and in
             return the corporation has assigned all of the revenues from the
             Montclair operation to Headliners. In March 2006 we opened a Red
             Cheetah dance club at the same location.

     -       Rascals Cherry Hill.  We are now realizing approximately $22,000
             per month in revenue from our Cherry Hill hotel-based operation,
             which commenced operations in December 2002.  Although this
             sales level 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 we are realizing an average monthly
             profit in Cherry Hill of approximately $13,000.

     Recently we have renewed our efforts to utilize the Rascals Library
of Comedy Classics as a revenue source.  The Library contains over 200
hours of live recordings of well-known comedians when they appeared at a
Rascals Comedy Club.  At times during our history we have broadcast
portions of the Library on pay-per-view television, sold home video
recordings of shows in the Library, and made shows available for download
on the Internet.  During the first quarter of 2006 we obtained only
nominal revenue from broadcasts of our comedy on XM radio and Audible.com,
each of which offers the Rascals Comedy Classics in its menu of on-demand
media, as well as from our position as the exclusive stand-up comedy
channel on Microsoft MSN Video.  We anticipate that these media
distribution channels will provide increased revenue as the audience on
these channels increases.

     The revenue and gross profit figures reported for the first quarter
of 2006 exclude the results for three of the dance clubs we purchased in
March as well as the results of the Rascals Comedy Club that we opened at
the Palisades Center in May 2005.  Three of these clubs were closed near
the end of 2005.  The fourth, our dance club in Jackson Mississippi, was
closed in April 2006.  The results from those four operations, therefore,
have been reported as "discontinued operations" on our Statements of
Operations.  A net loss of $922,671 from the operations of those clubs and
the disposal of their facilities contributed to our overall net loss for
the quarter ended March 31, 2006.
                                                                -7-
<PAGE>

     The transitions in our business plan have resulted in a marked
disparity between revenues and expenses.  During the first quarter of 2006
we incurred general and administrative expenses totaling $1,936,752, which
exceeded our gross profit by $698,109.  This represented an improvement
over the first quarter of 2005, however.  The improvement is primarily due
to the fact that during the earlier quarter we issued stock to pay
expenses with a market value of $36,782,400.  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 $146,163 in the period ended March 31, 2006.  At the
same time, we incurred an "interest expense" of $375,136 during the
quarter, 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 $1,849,753 for the first quarter of 2006,
compared to a net loss of $37,560,148 in the first quarter of 2005.
However, the new directions in our operations bode well for the future.
We believe that the acquisition of the dance clubs, the opening of the new
Red Cheetah in Montclair, and our new ventures in media distribution of
the Rascals Library will combine to serve as a platform for profitable
operations.  We believe that is an achievable goal.

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 six months of
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 have substantially alleviated our capital commitments.
Nevertheless, in addition to the ongoing expenses of operating its
business, Headliners had accounts payable and accrued expenses of
$2,807,869 at March 31, 2006, as well as being obligated on $1,456,658 in
notes payable.
                                                                -8-
<PAGE>

     During the first quarter of 2006 our operations consumed $235,605 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 the year
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 loss
of cash in the first quarter 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) the
seasonality of our business - i.e. the fact that the first quarter of the
year is the slowest period for club operations.

     Now that we have undisputed control over the new dance clubs, we
expect that the cash flow from those clubs will be sufficient to enable us
to sustain our operations and meet the cash obligations noted above.  We
do not expect that we will require additional capital during the next
twelve months, except in connection with new development projects that we
may undertake.  At this time we have not committed to any specific new
development project nor obtained any financing commitment.

     Once we have passed the current period of rapid expansion, our
capital requirements will be much easier to control.  Once clubs are
established, they either operate profitably or they are closed.  So the
capital requirements of ongoing operations should not be significant.  Our
plan is to continue to expand, but at a pace commensurate with available
capital and capital commitments, either from equity sources or secured
lending sources that should become available once we have a portfolio of
assets to offer as collateral.

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 March 31, 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 March 31, 2006 for the purposes described in this
paragraph.
                                                                -9-
<PAGE>

     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 first fiscal quarter that has materially
affected or is reasonably likely to materially affect Headliners's
internal control over financial reporting.


PART II   -   OTHER INFORMATION

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

     (c) Unregistered sales of equity securities

     In January 2006 Headliners issued 222,387 shares of common stock to
Eric Meyer.  The shares were issued upon Mr. Meyer's conversion of
principal and accrued interest totaling $15,000 on a debenture issued to
him by Headliners.  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
individual who had access to detailed information about Headliners and was
acquiring the shares for his own accounts.  There were no underwriters.

     In February 2006 Headliners issued 2,000,000 shares of common stock
to Anomaly Capital, LLC.  The shares were issued in consideration for a
loan of $300,000 by Anomaly Capital to Rascals Montclair, Inc.  The shares
were valued at $.08 per share, the market value of the shares on the date
they were issued.  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.

     In February 2006 Headliners issued 2,000,000 shares of common stock
to Stanley Chason.  The shares were issued in consideration for Mr.
Chason's loan of $200,000 to Headliners.  The shares were valued at $.08
per share, the market value of the shares on the date they were issued.
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 individual who had access
to detailed information about Headliners and was acquiring the shares for
his own account.  There were no underwriters.

     In February 2006 Headliners issued 1,000,000 shares of common stock
to N.K. Gray Development LLC.  The shares were issued in satisfaction of
prior rent obligations.  The shares were valued at $.08 per share, the
market value of the shares on the date they were issued. 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 principals had access to
detailed information about Headliners and were acquiring the shares for
its own accounts.  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
1st quarter of 2006.
                                                                -10-
<PAGE>

Item 5.   Other Information

     On May 11, 2006 the Company filed with the Secretary of State of
Delaware a Certificate of Designation.  The Certificate designated 1,000
shares of preferred stock as Series B Preferred Stock.  Each share of
Series B Preferred Stock is entitled to a preference of $1.00 in the event
of a liquidation of the Company.  No dividends accrue with respect to the
Series B Preferred Stock.  Each share of Series B Preferred Stock entitles
the Holder to cast at any meeting of shareholders or by written consent
votes equal to 0.05% of the votes that may be cast by the holders of the
outstanding common stock.  On May 11, 2006 the Board of Directors issued
all 1,000 shares of Series B Preferred Stock to Eduardo Rodriguez, the
President of the Company, giving him the right to cast 50% of the votes at
any meeting of shareholders.

Item 6.    Exhibits.

     3-a   Certificate of Designation of Series B Preferred Stock

     31    Rule 13a-14(a) Certification

     32    Rule 13a-14(b) Certification


                                 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: May 12, 2006          By:  /s/ Eduardo Rodriguez
                            ----------------------------------
                            Eduardo Rodriguez, Chief Executive
                            Officer & Chief Financial Officer