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 June 30, 2005


[ ]       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   [ ]

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:
                              August 11, 2005
                      Common Voting Stock: 14,793,477

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

<PAGE>


<PAGE>
PART 1.   FINANCIAL INFORMATION

           Headliners Entertainment Group, Inc. and Subsidiaries
                   Condensed Consolidated Balance Sheet
                              June 30, 2005

        Assets

Current Assets
 Cash                                            $     86,974
 Assets to be disposed of                             125,000
 Inventory                                            210,458
 Employee advances                                     18,586
 Deposit                                               31,923
 Prepaid insurance                                    228,239
 Interest receivable                                   13,333
 Note receivable                                       36,364
 Other current assets                                  58,124
                                                   ----------
   Total Current Assets                               809,001
                                                   ----------
Property and equipment, net                         4,781,999
                                                   ----------
Other Assets
 Intangible assets                                  4,510,500
 Note receivable, net of current portion              363,636
 Security deposits                                     25,492
                                                   ----------
   Total Other Assets                               4,899,628
                                                   ----------

   Total Assets                                    10,490,628
                                                   ==========

        Liabilities and Stockholders' Deficit

Current Liabilities
 Accounts payable and accrued expenses              2,190,829
 Deferred rent                                         82,203
 Promissory note, net of unamortized
  discount of $644,615                              3,855,385
 Notes payable                                      1,671,050
 Deferred income                                       35,939
 Current portion of long-term debt, net
  of unamortized discount of $193,548               1,006,452
                                                   ----------
   Total Current Liabilities                        8,841,858

Convertible debenture, net of unamortized
 discount of $500,000                               2,500,000
Long-term debt, net of current portion,
 net of unamortized discount of $258,065            1,541,935
                                                   ----------
   Total Liabilities                               12,883,793
                                                   ----------
Stockholders' Deficit
 Common stock, authorized 500,000,000
  shares, $.001 par value, 14,793,478
  shares issued and outstanding                        14,794
 Additional paid-in capital                        56,321,753
 Accumulated deficit                              (55,994,513)
 Prepaid consulting                                (2,735,199)
                                                   ----------
   Total Stockholders' Deficit                     (2,393,165)
                                                   ----------
   Total Liabilities and Stockholders' Deficit   $ 10,490,628
                                                   ==========

See notes to the condensed consolidated financial statements.

                                    -1-
<PAGE>

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

<TABLE>

                                  Three Months Ended             Six Months Ended
                                       June 30,                     June 30,
                             ---------------------------  --------------------------
                                2005           2004          2005            2004
                             -----------    ----------    -----------    -----------
                             (Unaudited)    (Unaudited)   (Unaudited)    (Unaudited)
                             -----------    ----------    -----------    -----------
<S>                          <C>            <C>           <C>            <C>

Net Sales                     $ 3,337,168   $  191,185  $  3,783,871   $    225,736
Cost of Sales                   1,342,023       83,831     1,494,713        102,015
                               ----------   ----------    ----------     ----------
Gross Profit                    1,995,145      107,354     2,289,158        123,721
                               ----------   ----------    ----------     ----------
General and Administrative
 expenses
 General and administrative
  expenses                      2,140,025    1,750,239     2,941,596      2,094,544
 Stock based compensation               -       70,000    24,420,000        140,000
 Stock issued for consulting
  services                        284,301      490,619    12,646,701        811,727
                               ----------   ----------    ----------     ----------
    Total General and
     Administrative Expenses    2,424,326    2,310,858    40,008,297      3,046,271
                               ----------   ----------    ----------     ----------
Other Income (Expenses)
 Interest expense                (514,123)      (9,000)     (784,313)       (18,000)
 Interest income                   13,333            -        13,333              -
                               ----------   ----------     ---------     ----------
    Total Other Expense          (500,790)      (9,000)     (770,980)       (18,000)
                               ----------   ----------    ----------     ----------

Loss From Continuing Operations  (929,971)  (2,212,504)  (38,490,119)    (2,940,550)
                               ----------   ----------    ----------     ----------
Discontinued Operations
 Loss from discontinued
  operations (net of tax effect
  of $0)                                -     (415,125)            -       (439,588)
 Gain on disposal of operations
  (net of tax effect of $0)             -            -             -         16,926
                               ----------   ----------    ----------     ----------
 Loss From Discontinued
  Operations                            -     (415,125)            -       (422,662)
                               ----------   ----------    ----------     ----------

    Net Loss                  $  (929,971) $(2,627,629) $(38,490,119)  $ (3,363,212)
                               ==========   ==========    ==========     ==========

Earnings (Loss) per share     $      (.07) $   (68.38)  $      (5.12)  $   (130.04)
Earnings (Loss) Per Share
 From Continuing Operations   $      (.07) $   (57.58)  $      (5.12)  $   (113.70)
Earnings (Loss) Per Share
 From Discontinued Operations $         -  $   (10.80)  $          -   $    (16.34)

Weighted Average Number of
 Common Shares Outstanding     13,528,730      38,423      7,512,136        25,863


</TABLE>

See notes to the condensed consolidated financial statements.

                                    -2-

<PAGE>
           Headliners Entertainment Group, Inc. and Subsidiaries
             Condensed Consolidated Statements of Cash Flows



                                                Six Months Ended
                                                    June 30,
                                          ---------------------------
                                               2005          2004
                                            ---------     ---------
Cash Used in Operating Activities
 Continued Operations                      $  (951,624)   $(2,819,316)
 Discontinued Operations                             -         44,947
                                            ----------     ----------
   Net Cash Used in Operating Activities      (951,624)    (2,774,369)
                                            ----------     ----------
Cash Flows from Investing Activities
 Purchase of investment                              -     (2,125,000)
 Issuance of note receivable                  (400,000)             -
 Purchase of fixed assets                     (217,160)      (550,083)
 Proceeds from sale of liquor license                -         60,000
 Purchase of LLC's, net of $74,200
  cash acquired                             (1,325,800)             -
                                            ----------     ----------
   Net Cash Used in Investing Activities    (1,942,960)    (2,615,083)

Cash Flows From Financing Activities
 Borrowings on line of credit                        -      3,575,000
 Proceeds from promissory notes              2,927,500              -
 Issuance of common stock                            -      2,122,500
 Proceeds from notes payable                    50,000         75,000
 Repayment of note payable                     (25,000)             -
                                            ----------     ----------
   Net Cash Provided by Financing
    Activities                               2,952,500      5,772,500
                                            ----------     ----------

Net Increase in Cash and Equivalents            57,916        383,048

Cash and Equivalents at Beginning of Period     29,058             70
                                            ----------     ----------
Cash and Equivalents at End of Period      $    86,974    $   383,118
                                            ==========     ==========


See notes to the condensed consolidated financial statements.

                                    -3-

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

SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES

During the six months ended June 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 six months ended June 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 six months ended June 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 six months ended June 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.


See notes to the condensed consolidated financial statements.

                                    -4-
<PAGE>


<PAGE>
          Headliners Entertainment Group, Inc. and Subsidiaries
         Notes to the Condensed Consolidated Financial Statements
                      Six Months Ended June 30, 2005
                                (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 six months ended June 30, 2005 are not
       necessarily indicative of the results that may be expected for the
       year ended December 31, 2005.  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, 2004.

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 June 30, 2005, current liabilities
       exceed current assets by $8,032,857 and total liabilities exceed total
       assets by $2,393,165.  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 via the equity line
       of credit that has been established.  In addition, the Company is
       focusing on developing a significant number of clubs to achieve an
       efficient level of operations.

3.     INTANGIBLE ASSETS

       Intangible assets at June 30, 2005 consist of the following:

       Excess purchase price of the net assets assumed
        of six limited liability companies acquired
        (See note 4)                                      $ 2,010,000
       Movie participation rights                           2,500,000
                                                           ----------
                                                          $ 4,510,000
                                                           ==========

       On June 28, 2005, the Company entered into a subscription agreement
       with a movie production company.  The Company paid $2,500,000 in
       exchange for participation rights in two movies.  The participation
       rights entitle the Company to receive from the adjusted gross revenues
       of the movies the full amount of its investment plus 20%.  After that
       payment is achieved, the Company will be entitled to receive 6.8% of
       the adjusted gross revenues generated by each movie in perpetuity.
       As the participation rights do not have a finite life, they will not
       be amortized; however, in accordance with FASB Statement No. 144,
       "Accounting for Impairment or Disposal of Long-Lived Assets", the
       Company will test the participation rights annually for impairment.

                                    -5-

             Headliners Entertainment Group, Inc. and Subsidiaries
           Notes to the Condensed Consolidated Financial Statements
                        Six Months Ended June 30, 2005
                                (Unaudited)

4.     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 a 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 was
       to retain 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 committed
       that if the proceeds realized by JHF from selling the shares were less
       than $2,300,000, the Company would issue additional shares until JHF
       realized $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.

                                    -6-
<PAGE>

            Headliners Entertainment Group, Inc. and Subsidiaries
           Notes to the Condensed Consolidated Financial Statements
                        Six Months Ended June 30, 2005
                               (Unaudited)

4. BUSINESS COMBINATIONS, Continued

   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 common 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.

   The Results of Operations of 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 Six Months Ended
                                                      June 30, 2005
                                                ------------------------
    Net Sales                                        $   6,388,190
    Net Loss                                         $ (38,397,145)
    Loss Per Share From Continuing Operations                (5.11)


   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.

5. CONVERTIBLE DEBENTURE

   On June 28, 2005, the Company issued a convertible debenture in the
   principal amount of $3,000,000, bearing interest at 12% per annum.
   In exchange for the debenture, the Company received $2,500,000.  The
   debenture was discounted by $500,000.  The discount on the debenture
   is being amortized on a straight line basis, with the amortization
   being recognized as interest expense.  The unamortized discount on the
   debenture at June 30, 2005 was $500,000.  The Company used the
   proceeds from the debenture to invest in the production and
   distribution of two movies pursuant to a subscription agreement dated
   June 28, 2005.  The subscription agreement entitles the Company to
   receive participation rights in each movie. ( See Note 3.)

   The debenture provides that the first $3,000,000 in receipts from the
   Company's participation rights pursuant to the subscription agreement
   will be paid to satisfy the debenture.  Any portion of the debenture
   that remains unpaid on December 31, 2006 will be payable by the
   Company on that date.  The debenture is secured by (a) the Company's
   rights under the subscription agreement, (b) all of the Company's
   assets, and (c) 100,000,000 shares of the Company's common stock.

   The debenture is convertible into shares of the Company's common stock
   at the option of the debenture holder at a conversion price of $0.55
   per share.

6. NOTE RECEIVABLE

   In March of  2005, the Company loaned $400,000 to another publicly
   traded entity whose Chief Executive Officer is also the Chief
   Executive Officer of Headliners Entertainment Group, Inc.  The loan
   bears interest at the rate of 10% per annum.  The interest is to be
   paid on the first day of each month, commencing April 2005.  The note
   is to be repaid in eleven monthly installments of $33,333 commencing
   on June 1, 2006.  A final payment in the amount of $33,337 is due on
   May 1, 2007.
                                    -7-

<PAGE>
           Headliners Entertainment Group, Inc. and Subsidiaries
          Notes to the Condensed Consolidated Financial Statements
                       Six Months Ended June 30, 2005
                               (Unaudited)

7. PROMISSORY NOTE

   On January 25, 2005, the Company issued a promissory note in the
   amount of $4,500,000, bearing interest at 12% per annum.  In exchange
   for the promissory note, the note holder paid the Company $427,500 and
   surrendered other notes due from the Company in the principal amount
   of $3,025,000.  Additionally, the Company discounted the note by
   $1,047,500.  The discount on the note is being amortized on the
   straight line basis, with the amortization being recognized as
   interest expense.  The unamortized discount on the note at June 30,
   2005 was $644,615.  The note is to be repaid in monthly principal
   payments of $750,000 plus accrued interest commencing on August 25,
   2005.  The note is secured by substantially all of the Company's
   assets.

   In the event of a default, the note holder will have the option to
   convert the principal and accrued interest into common stock of the
   Company.  The conversion rate will be the lesser of $12 or 80% of the
   average of the lowest three closing bid prices during the thirty days
   preceding conversion.

8. LONG-TERM DEBT

   On March 21, 2005, the Company issued a promissory note in the amount
   of $3,000,000, bearing interest at 12% per annum.  In exchange for the
   promissory note, the note holder paid the Company $2,500,000.  The
   note was discounted by $500,000.  The discount on the note is being
   amortized on the straight line basis, with the amortization being
   recognized as interest expense.  The unamortized discount on the note
   at June 30, 2005 was $451,613.  The note is to be repaid in thirty
   monthly installments of $100,000 plus accrued interest, commencing
   May 23, 2005.  As collateral for the note, the Company has pledged
   100,000,000 shares of its common stock.  As of June 30, 2005, the
   current portion due under the note is $1,006,452, net of $193,548
   unamortized discount and the long-term portion due under the note is
   $1,541,935, net of $258,065 unamortized discount. The Company is
   currently in default under this note, as no payments have been made.

9. JOINT MANAGEMENT AGREEMENT

   On March 7, 2005 the Company entered into a joint management agreement
   with Global Concepts, Ltd., Eduardo Rodriguez, Michael Margolies, The
   Rodriguez Family Trust and the Margolies Family Trust.  Global
   Concepts, Ltd is a publicly traded company of which Michael Margolies
   is the President.  The joint management agreement has replaced the
   employment contracts previously entered into with the Company's
   President and Vice Chairman and Secretary.

   Per the joint management agreement, the Rodriguez Family Trust and the
   Margolies Family Trust organized a limited liability company.  The
   Trusts, as well as Rodriguez and Margolies, will contribute their
   shares of the Company to the trust on August 15, 2005.  The Company
   will pay a fee of $5,000 per month to the limited liability company
   in compensation for the services of Rodriguez and Margolies.  Also,
   the Company entered into a five year employment agreement with
   Rodriguez and a five year advisory agreement with Margolies, Margolies
   resigned from his position as Vice Chairman, and Margolies and
   Rodriguez agreed to serve as members of the Company's board of
   directors.

   The Company's employment agreement with Rodriguez provides that he
   will serve as President for an annual compensation of $200,000 and an
   automobile allowance of $1,000 per month.  The employment agreement
   terminates on January 31, 2010.

   The Company's advisory agreement with Margolies provides that he will
   consult with the board of directors and the President on matters of
   business development, investor relations, public relations and
   finance.  The Company will pay Margolies an annual fee of $25,000 for
   his services.  The advisory agreement terminates on January 31, 2010.

                                    -8-
<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, 2004 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
        $10,500,000.  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, as the six clubs reported
$11,353,827 in revenue for 2004, although three of the clubs only
commenced operations in Spring of that year.

                                    -9-
<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. The Rascals Comedy Clubs that now operate in such venues are:

        -       Rascals at the Palisades Center.  We opened this club on May
                12, 2005 in the Palisades Center, the second largest retail
                mall in the United States.

        -       Rascals Cherry Hill.  We opened this club in 2002 in the Hilton
                Hotel in Cherry Hill, New Jersey.

     While we have been undertaking these capital intensive efforts to
increase the number of our clubs, we have also been offering licensing
arrangements that will increase the numbers of Rascals Comedy Clubs with
minimal capital commitment by Headliners.  Our first such licensing
arrangement permitted our licensee to open a 300-seat "Rascals Comedy
Club" in Jersey City, New Jersey during the first quarter of 2004.
Headliners provides the group with its plans and designs for the club,
consulted with the group during the development stage, and is providing
bookings for a fee.  In return, the licensee pays a monthly royalty to
Headliners equal to five percent of its gross receipts throughout the
ten-year term of the license.  During 2004 the Jersey City club had paid
us only $12,500, and we anticipate that our revenue from this arrangement
will remain modest.  However, almost all of the revenue flows through to
our bottom line, since we have no operational responsibility for the
club, and it has been achieved with no capital commitment.

     Recently we have renewed our efforts to utilize the Rascals Library
of Comedy Classics as a revenue source.  The Library contains over 300
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 second quarter of 2005 we obtained modest
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.  In our financial reports for the third quarter we will also
realize revenue from our position as the exclusive stand-up comedy
channel on Microsoft MSN Video, Windows Media Entertainment, and TVNet.
Similar to our club licensing arrangements, these media distribution
channels currently provide only limited revenue, but it is revenue
obtained with almost no marginal expense, thus flowing directly into
earnings.

     In June 2005 we further expanded our entertainment assets by
investing in the production and distribution of two general distribution
movies:  "Beer League" and "TV The Movie."  Headliners will own
"participation rights" in these movies, which are being produced by a
well-established team of movie industry figures.  The participation

                                    -10-
<PAGE>

rights entitle Headliners to receive from the gross revenues produced by
the movies (net of certain "top line deductions") the full amount of its
investment plus 20% - i.e the principal amount of the Debenture sold to
Cornell Capital Partners to fund our investment.  After that payment is
achieved, then Headliners will be entitled to receive approximately 6.8%
of the adjusted gross revenues generated by each movie.

     The effect of our expansion is evident in the results reported in
our Statement of Operations.  During the first quarter of 2005, when our
operations including the Montclair restaurant and club, we reported net
sales of $446,703, compared to $34,551 in the first quarter of 2004, when
our only club operation was at the Hilton in Cherry Hill.  In the second
quarter of 2005, when we added the six dance clubs and the Rascals at the
Palisades Center, our net sales exploded to $3,337,168, compared to
$191,185 in the second quarter of 2004.  Similarly our expanded
operations produced gross profit in the quarter ended June 30, 2005 of
$1,995,145, compared to gross profit of only $107,354 in the second
quarter of 2004.  We also incurred a net loss of $415,125 in the quarter
ended June 30, 2004 from the final months of operations of our club and
restaurant in Ocean Township NJ.  The loss realized in Ocean Township has
been reported as a "Loss from Discontinued Operations" on our Statement
of Operations for 2004.

     The transitions in our business plan have resulted in a marked
disparity between revenues and expenses.  In the first quarter of 2005 we
incurred general and administrative expenses totaling $37,583,971.
However, this included only $801,571 in expenses that were or will be
settled in cash.  The remaining $36,782,400 in first quarter expenses
were settled by issuance of stock.  In the second quarter of 2005 we
incurred an additional $284,301 in expenses from the issuance of stock to
consultants.  This large expense for stock-based compensation arises from
our efforts to implement growth strategies for the future.  Our lack of
cash requires us to pay with stock both our executives and the network of
individuals who are assisting us in developing and implementing our
business plan, which results in a large expense for "stock issued for
consulting services."

     A portion of the common stock issued to consultants during the
first six months of 2005 was compensation under two year contracts.  The
market value of those shares has been recorded as a reduction to equity
identified as "prepaid consulting."  The aggregate of $2,735,199 in
prepaid consulting on Headliners' balance sheet at June 30, 2005 will be
expensed in future periods when Headliners expects to realize the benefit
of the consulting services.

     Headliners incurred an "interest expense" of $784,313 during the
first half of 2005, most of which was attributable to the three notes
payable to Cornell Capital Partners in the aggregate principal amount of
$10,500,000.  In addition to the stated interest at 12% per annum that
accrued under the notes, $451,272 of the interest expense was
attributable to amortization of the discounts given to Cornell Capital
Partners when it purchased the notes from Headliners.  The remaining
$1,596,228 of the discount will be similarly expensed over the lives of
the notes.  The $4,500,000 note, on which a discount of $644,615 remains
unamortized, is scheduled to terminate on January 26, 2006.  The
$3,000,000 note issued in March, on which a discount of $451,613 remains
unamortized, is scheduled to terminate on October 26, 2007.  The
$3,000,000 note issued in June, on which the unamortized discount is
$500,000, is scheduled to terminate on December 31, 2006.

                                    -11-
<PAGE>

     Our expenses remain disproportionate to our revenue, primarily due
to interest expense and consulting fees.  As a result, we realized a net
loss of $929,971 in the quarter ended June 30, 2005 and $38,490,119 for
the six months ended June 30, 2005.  However, the new directions in our
operations bode well for the future.  The acquisition of the six dance
clubs, the opening of the Rascals at the Palisades Center, and our new
ventures in media distribution of the Rascals Library will combine to
result in a many-fold increase in our revenue.  Our focus in 2005 will
be on achieving financial stability, which can serve as a platform for
profitable operations in 2006.  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 have borrowed nearly $10 million from Cornell Capital Partners.  In
addition, in June 2005 we incurred an additional $3,000,000 debt to
Cornell Capital Partners in order to invest in the production and
distribution of two movies.  That arrangement provides that after we
fully repay Cornell Capital Partners from our share of the net revenues
of the movies, we will retain a 6.8% interest in the net revenues.

     At December 31, 2004, we owed Cornell Capital Partners $3,025,000.
Today the debt totals $10,500,000, consisting of three notes:

        -       One note, for $4,500,000, requires Headliners to make monthly
                payments of $750,000 plus interest, commencing on August 25,
                2005.  If Headliners defaults in making any payment, Cornell
                Capital Partners will be entitled to convert the note into
                common stock at a conversion price equal to the lesser of
                $12.00 or 80% of the then-current bid price.  The note is
                secured by a pledge of all of Headliners' assets.

        -       The second note, for $3,000,000, provides that Headliners will
                make monthly principal payments of $100,000 plus accrued
                interest commencing on May 23, 2005.  Headliners' obligation is
                secured by a pledge of all of its assets.  Headliners also
                pledged 100,000,000 shares of its common stock to secure its
                obligations under the second note.  Headliners is currently in
                default under that note, as we have made no payments.  We are
                currently in negotiation with Cornell Capital Partners
                regarding a restructuring of both this and the earlier note.

        -       The third note, which we incurred in order to fund our
                investment in the two movies, provides that we will pay to
                Cornell Capital Partners all of the distributions we receive
                from the movies until it is satisfied.  Any amount that remains
                unpaid on December 31, 2006 will be payable from our general
                assets.  Cornell Capital Partners is entitled to convert the
                note into Headliners common stock at a conversion price of $.55
                per share. Headliners obligation under the note is guaranteed
                by Ckrush Entertainment, Inc., the promoter of the movies.

                                    -12-
<PAGE>

     In order to satisfy our debt to Cornell Capital Partners we have
entered into a "Standby Equity Distribution Agreement" with Cornell
Capital Partners.  The Standby Equity Distribution  Agreement becomes
effective when we provide Cornell Capital Partners with a prospectus that
will permit it to resell to the public any shares it acquires from
Headliners.  During the two years after the Securities and Exchange
Commission declares that prospectus effective, Headliners may demand that
Cornell Capital Partners purchase shares of common stock from Headliners.
Headliners may make a demand no more than once every seven trading days.
The maximum purchase price on each demand is $500,000.  The Standby
Equity Distribution Agreement recites that Headliners may demand from
Cornell Capital Partners up to $30,000,000 during its term.  The number
of shares that Cornell Capital Partners will purchase after a demand will
be determined by dividing the dollar amount demanded by a per share
price.  The per share price used will be 98% of the lowest daily volume-
weighted average price during the five trading days that follow the date
a demand is made by Headliners.  Cornell Capital Partners is required by
the Agreement to pay each amount demanded by Headliners, unless (a) there
is no prospectus available for Cornell Capital Partners to use in
reselling the shares, (b) the purchase would result in Cornell Capital
Partners owning over 9.9% of Headliners outstanding shares, or (c) the
representations made by Headliners in the Agreement prove to be untrue.

     We plan to meet most of our debt service obligations to Cornell
Capital Partners by selling it common stock under the terms of the
Standby Equity Distribution Agreement.  This will result in a significant
increase in our outstanding common stock.  At the market price of $.15
per share on August 11, 2005, satisfaction of our entire debt to Cornell
Capital Partners would require that we issue approximately 72,000,000
shares.  However, the influx of shares in that quantity into the market
is likely to result in a reduction in the market price for our common
stock.  Therefore it is likely that considerably more shares will have to
be sold in order to satisfy our obligations to Cornell Capital Partners.

     With the proceeds of our sale of notes to Cornell Capital Partners,
we have substantially alleviated our capital commitments.  Nevertheless,
in addition to the ongoing expenses of operating its business, Headliners
faces the following cash commitments:

       1.       We are committed to pay $793,435 over the next 33 weeks to
                settle our obligations to the prior owners of our six new dance
                clubs.

       2.       We had almost $2.2 million in accounts payable on June 30,
                2005, not including the notes payable to Cornell Capital
                Partners that totaled $10,500,000.  We do not expect that cash
                flow from operations will, in the near term, effect any
                significant reduction in our accounts payable.  Therefore we
                will either need to obtain extended payment terms from our
                creditors or we will have to obtain additional capital to pay
                those creditors whose debts are most pressing.

     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.

                                    -13-
<PAGE>

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 June 30, 2005.  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 June 30, 2005 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 second 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 June 2005 Headliners issued a total of 62,500 shares of common
stock to two prior investors.  The shares were issued in consideration
for the investors' agreements to release Headliners from its obligation
to include the shares in a registration statement filed with the
Securities and Exchange Commission.  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.

     (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 2nd quarter of 2005.

Item 6.
Exhibits.

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

                                    -14-
<PAGE>

                               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: August 12, 2005       By:  /s/ Eduardo Rodriguez
                                 ----------------------------------
                                 Eduardo Rodriguez, Chief Executive
                                 Officer & Chief Financial Officer