UNITEDSTATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.20549

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Form10-QSB

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|   | QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |

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| •  | For the quarterly period ended June 30,2005 |

or

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|   | TRANSITION REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |

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| •  | For the transition period from                  to                            . |

CommissionFile No.  333-96257

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TAG EntertainmentCorp.

(Exact name of Small Business Issuer asspecified in itscharter)

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| Delaware                                                    |  | 13-3851304                         |
| (Stateor other jurisdiction ofincorporation ororganization) |  | (I.R.S. EmployerIdentificationNo.) |
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9916South Santa Monica Boulevard, 1st Floor Beverly Hills,California 90212(Address of principal executiveoffices)

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Registrant's telephonenumber, including area code:(310)  277-3700

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Check whether the issuer(1)  filed all reports required to be filed by Section  13or 15(d) of the Exchange Act during the preceding 12  months (orfor such shorter period that the registrant was required to file suchreports), and (2)  has been subject to such filing requirementsfor the past 90  days.    Yes       No   

APPLICABLE ONLYTO CORPORATE ISSUERS

State the number of shares outstanding ofeach of the issuer's classes of common equity, as of the latestpracticable date: The registrant had 21,180,448 shares of common stock,$0.001 par value, issued and outstanding as of August 1, 2005.

Transitional Small Business Disclosure Format (Checkone):    Yes       No   

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TABLE OFCONTENTS

PART I – FINANCIALINFORMATION

| Item1.    Consolidated Condensed FinancialStatements | 3 |
|--------------------------------------------------------------------------|---|

| Item2.    Management's Discussion andAnalysis or Plan of Operation | 13 |
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| Item3.    Controls andProcedures | 19 |
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PART II – OTHERINFORMATION

| Item 1.    LegalProceedings | 22 |
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| Item2.    Unregistered Sales of Equity Securitiesand Use of Proceeds | 22 |
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| Item3.    Defaults Upon SeniorSecurities | 23 |
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| Item4.    Submission of Matters to a Vote ofSecurity Holders | 23 |
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| Item5.    OtherInformation | 23 |
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| Item6.    Exhibits | 24 |
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FORWARD LOOKINGSTATEMENTS

This report Form 10-QSB for TAG Entertainment Corp.(the "Company" or"TAG") contains "forward-lookingstatements" within the meaning of the Private SecuritiesLitigation Reform Act of 1995. In some cases, forward-lookingstatements may be identified by terms such as"may," "intend,""will," "should,""could," "would,""expect,""believe,""estimate,""expect" or the negative of these terms, andsimilar expressions intended to identify forward-lookingstatements.

These forward-looking statements reflect theCompany's current views with respect to future events and arebased on assumptions and are subject to risks and uncertainties. Also,these forward-looking statements present estimates and assumptions onlyas of the date of this report. Except for the ongoing obligation todisclose material information as required by federal securities laws,the Company does not intend to update readers concerning any futurerevisions to forward-looking statements to reflect events orcircumstances occurring after the date of this report. Some of thefactors that could cause actual results to vary from theforward-looking statements include:

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|  | •  | the Company's inability togenerate revenues sufficient to sustain operations or to raise capitalas and when required; |

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|  | •  | unanticipated increases indevelopment, production or marketing expenses related to theCompany's business activities; |

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|  | •  | The Company's inability toeffectively compete with other entertainment providers; |

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|  | •  | The Company's inability toprotect its intellectual property from infringement by others; |

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|  | •  | The Company's inability tofully implement its business plan for any reason; or |

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|  | •  | The loss of the services of theCompany's Chief Executive Officer or other key employees. |

In evaluating forward-looking statements, readers should considerthe factors identified above as well as those risks outlined in thesection of this report titled "Management'sDiscussion and Analysis or Plan of Operation". Although webelieve that expectations reflected in the forward-looking statementsare reasonable, future results, levels of activity, or achievements arenot assured.

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Part I Item1.    Financial Statements

TAG ENTERTAINMENT CORP.

CONSOLIDATED CONDENSED BALANCE SHEETS(unaudited)

|                                                                                                                                                                                                |  |              |            |                  |  |        |            |         |  |  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--------------|------------|------------------|--|--------|------------|---------|--|--|
|                                                                                                                                                                                           |  | June30, 2005 |            | December 31,2004 |
| **ASSETS**                                                                                                                                                                                     |  |
| **Currentassets**                                                                                                                                                                              |  |
| Cash                                                                                                                                                                                           |  | $            | 2,188,000  |             |  | $      | 23,000     |    |
| Accountsreceivable                                                                                                                                                                             |  |         | 350,000    |             |  |   | 531,000    |    |
| Notereceivable                                                                                                                                                                                 |  |         | 255,000    |             |  |   | 5,000      |    |
| Othercurrentassets                                                                                                                                                                             |  |         | 248,000    |             |  |   | 25,000     |    |
| Totalcurrentassets                                                                                                                                                                             |  |         | 3,041,000  |             |  |   | 584,000    |    |
| **Capitalizedfilm costs,net**                                                                                                                                                                  |  |         | 1,894,000  |             |  |   | 2,053,000  |    |
| **Investmentsin limitedpartnerships**                                                                                                                                                          |  |         | 696,000    |             |  |   | 688,000    |    |
| **Equipment,net**                                                                                                                                                                              |  |         | 98,000     |             |  |   | 162,000    |    |
| **Otherassets**                                                                                                                                                                                |  |         | 237,000    |             |  |   | 16,000     |    |
|                                                                                                                                                                                           |  | $            | 5,966,000  |             |  | $      | 3,503,000  |    |
| **LIABILITIESAND STOCKHOLDERS' EQUITY(DEFICIT)**                                                                                                                                               |  |
| **Currentliabilities**                                                                                                                                                                         |  |
| Accounts payableand accruedexpenses                                                                                                                                                            |  | $            | 577,000    |             |  | $      | 828,000    |    |
| Bankoverdrafts                                                                                                                                                                                 |  |         | —    |             |  |   | 124,000    |    |
| Amountspayable to affiliatedpartnerships                                                                                                                                                       |  |         | 1,052,000  |             |  |   | 1,871,000  |    |
| Deferredrevenue                                                                                                                                                                                |  |         | —    |             |  |   | 81,000     |    |
| Due torelated party                                                                                                                                                                            |  |         | 77,000     |             |  |   | —    |    |
| Notespayable                                                                                                                                                                                   |  |         | 247,000    |             |  |   | 495,000    |    |
| Deferredproductionfunding                                                                                                                                                                      |  |         | 297,000    |             |  |   | 191,000    |    |
| Accruedresiduals                                                                                                                                                                               |  |         | 57,000     |             |  |   | 51,000     |    |
| Accruedsalaries                                                                                                                                                                                |  |         | 365,000    |             |  |   | 370,000    |    |
| Accruedpayrolltaxes                                                                                                                                                                            |  |         | 169,000    |             |  |   | 168,000    |    |
| Totalcurrentliabilities                                                                                                                                                                        |  |         | 2,841,000  |             |  |   | 4,179,000  |    |
| **6%Series A convertible preferred stock** $.001 par value: 500,000shares authorized; 5,000 shares outstanding; mandatorilyredeemable, $5,000,000 redemption value; net of unamortizeddiscount |  |         | 279,000    |             |  |   | —    |    |
| **Commitmentsandcontingencies**                                                                                                                                                                |  |
| **Minorityinterest**                                                                                                                                                                           |  |         | 2,302,000  |             |  |   | 2,338,000  |    |
| **Stockholders'equity (deficit)**                                                                                                                                                              |  |
| Common stock, $.001 parvalue: 50,000,000 shares authorized; 21,180,000 and 21,062,000sharesoutstanding                                                                                         |  |         | 21,000     |             |  |   | 21,000     |    |
| Additionalpaid-incapital                                                                                                                                                                       |  |         | 9,060,000  |             |  |   | 3,167,000  |    |
| Accumulateddeficit                                                                                                                                                                             |  |         | (8,537,000 | )           |  |   | (6,202,000 | )  |
| Totalstockholders' equity(deficit)                                                                                                                                                             |  |         | 544,000    |             |  |   | (3,014,000 | )  |
|                                                                                                                                                                                           |  | $            | 5,966,000  |             |  | $      | 3,503,000  |    |
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Seeaccompanying notes to consolidated financial statements.

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TAG ENTERTAINMENT CORP.

CONSOLIDATED CONDENSED STATEMENTS OFOPERATIONS(unaudited)

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|-------------------------------------------------------|--|---------------------------|------------|-------------------------|--|--------|------------|---------|--|--------|------------|---------|--|--------|------------|---------|--|--|
|                                                  |  | Threemonths ended June 30 |            | Six months ended June30 |
|                                                  |  | 2005                      |            | 2004                    |  | 2005   |            | 2004    |
| **Revenue**                                           |  |
| Filmrevenue                                           |  | $                         | 128,000    |                    |  | $      | 81,000     |    |  | $      | 359,000    |    |  | $      | 321,000    |    |
| Managementfees                                        |  |                      | 90,000     |                    |  |   | 112,000    |    |  |   | 180,000    |    |  |   | 225,000    |    |
| Overheadfees                                          |  |                      | 60,000     |                    |  |   | 90,000     |    |  |   | 120,000    |    |  |   | 150,000    |    |
| Studiorentalincome                                    |  |                      | —    |                    |  |   | 125,000    |    |  |   | —    |    |  |   | 225,000    |    |
| Totalrevenue                                          |  |                      | 278,000    |                    |  |   | 408,000    |    |  |   | 659,000    |    |  |   | 921,000    |    |
| **Operatingexpenses**                                 |  |
| Amortization of filmcosts                             |  |                      | 52,000     |                    |  |   | 30,000     |    |  |   | 196,000    |    |  |   | 206,000    |    |
| Studiorent and otherexpenses                          |  |                      | 10,000     |                    |  |   | 217,000    |    |  |   | 43,000     |    |  |   | 349,000    |    |
| Selling,general andadministrative                     |  |                      | 996,000    |                    |  |   | 729,000    |    |  |   | 1,666,000  |    |  |   | 1,457,000  |    |
| Totaloperatingexpenses                                |  |                      | 1,058,000  |                    |  |   | 976,000    |    |  |   | 1,905,000  |    |  |   | 2,012,000  |    |
| **Lossfromoperations**                                |  |                      | (780,000   | )                  |  |   | (568,000   | )  |  |   | (1,246,000 | )  |  |   | (1,091,000 | )  |
| Interestexpense                                       |  |                      | (984,000   | )                  |  |   | —    |    |  |   | (984,000   | )  |  |   | —    |    |
| Interestand otherincome                               |  |                      | 7,000      |                    |  |   | 2,000      |    |  |   | 11,000     |    |  |   | 5,000      |    |
| **Netloss before minorityinterest**                   |  |                      | (1,757,000 | )                  |  |   | (566,000   | )  |  |   | (2,219,000 | )  |  |   | (1,086,000 | )  |
| Minorityinterest                                      |  |                      | 20,000     |                    |  |   | 6,000      |    |  |   | 19,000     |    |  |   | 7,000      |    |
| **Netloss**                                           |  | $                         | (1,737,000 | )                  |  | $      | (560,000   | )  |  | $      | (2,200,000 | )  |  | $      | (1,079,000 | )  |
| **Netloss per common share – basic anddiluted** |  | $                         | (0.08      | )                  |  | $      | (0.03      | )  |  | $      | (0.10      | )  |  | $      | (0.06      | )  |
| **Weightedaverage shares – basic anddiluted**   |  |                      | 21,069,000 |                    |  |   | 17,299,000 |    |  |   | 21,065,000 |    |  |   | 17,241,000 |    |
|                                                       |

Seeaccompanying notes to consolidated financial statements

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TAG ENTERTAINMENT CORP.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWSFOR THE SIXMONTHS ENDED JUNE 30 (unaudited)

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|-----------------------------------------------------------------------------------------|--|--------|------------|---------|--|--------|------------|---------|--|--|
|                                                                                    |  | 2005   |            | 2004    |
| **Cashflows from operatingactivities**                                                  |  |
| Net loss beforeminorityinterest                                                         |  | $      | (2,219,000 | )  |  | $      | (1,086,000 | )  |
| Adjustmentsto reconcile net loss to net cash used in operatingactivities:               |  |
| Amortization of filmcosts                                                               |  |   | 196,000    |    |  |   | 206,000    |    |
| Depreciation                                                                            |  |   | 27,000     |    |  |   | 20,000     |    |
| Stockissued forservices                                                                 |  |   | 167,000    |    |  |   | —    |    |
| Amortizationof discount on debtfinancings                                               |  |   | 782,000    |    |  |   | —    |    |
| Amortizationof deferred financingcosts                                                  |  |   | 21,000     |    |  |   | —    |    |
| Changesin operating assets and liabilities:                                             |  |
| Accountsreceivable                                                                      |  |   | 181,000    |    |  |   | (77,000    | )  |
| Investmentsin films                                                                     |  |   | (37,000    | )  |  |   | (906,000   | )  |
| Bankoverdrafts                                                                          |  |   | (124,000   | )  |  |   | 217,000    |    |
| Accountspayable                                                                         |  |   | (251,000   | )  |  |   | (206,000   | )  |
| Amountspayable to affiliatedpartnerships                                                |  |   | (819,000   | )  |  |   | 205,000    |    |
| Deferredrevenue                                                                         |  |   | (81,000    | )  |  |   | 275,000    |    |
| Accruedsalaries                                                                         |  |   | (5,000     | )  |  |   | 300,000    |    |
| Other                                                                                   |  |   | (88,000    | )  |  |   | (7,000     | )  |
| Netcash used in operatingactivities                                                     |  |   | (2,250,000 | )  |  |   | (1,059,000 | )  |
| **Cashflows from investingactivities**                                                  |  |
| Issuance of notesreceivable                                                             |  |   | (250,000   | )  |  |   | (5,000     | )  |
| Investmentin filmpartnerships                                                           |  |   | (8,000     | )  |  |   | (180,000   | )  |
| Proceedsfrom disposition ofequipment                                                    |  |   | 49,000     |    |  |   | —    |    |
| Purchasesofequipment                                                                    |  |   | (12,000    | )  |  |   | (24,000    | )  |
| Netcash used in investmentactivities                                                    |  |   | (221,000   | )  |  |   | (209,000   | )  |
| **Cashflows from financing activities**                                                 |  |
| Proceeds fromissuance of notespayable                                                   |  |   | 1,025,000  |    |  |   | 19,000     |    |
| Payments onnotespayable                                                                 |  |   | (1,273,000 | )  |  |   | —    |    |
| Proceedsfrom issuance of convertible preferredstock                                     |  |   | 5,000,000  |    |  |   | —    |    |
| Proceedsfrom relatedparty                                                               |  |   | 85,000     |    |  |   | —    |    |
| Payments torelatedparty                                                                 |  |   | (8,000     | )  |  |   | (55,000    | )  |
| Proceeds fromprivate placement offerings due to relatedparty                            |  |   | —    |    |  |   | 322,000    |    |
| Proceeds fromprivate placement offerings of commonstock                                 |  |   | 88,000     |    |  |   | 336,000    |    |
| Payment offinancingcosts                                                                |  |   | (370,000   | )  |  |   | (31,000    | )  |
| Minorityinterest capital contributed(returned)                                          |  |   | (17,000    | )  |  |   | 4,000      |    |
| Proceedsfor filmproduction                                                              |  |   | 106,000    |    |  |   | 65,000     |    |
| Netcash provided by financingactivities                                                 |  |   | 4,636,000  |    |  |   | 660,000    |    |
| Netincrease (decrease) incash                                                           |  |   | 2,165,000  |    |  |   | (608,000   | )  |
| Cashat beginning ofperiod                                                               |  |   | 23,000     |    |  |   | 685,000    |    |
| Cashat end ofperiod                                                                     |  | $      | 2,188,000  |    |  | $      | 77,000     |    |
| Supplementaldisclosure of cash flow information:Interest and original issuediscountpaid |  | $      | 197,000    |    |  | $      | 4,000      |    |
|                                                                                         |

Seeaccompanying notes to consolidated financialstatements

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TAGENTERTAINMENT CORP.

NOTES TO CONSOLIDATED CONDENSED FINANCIALSTATEMENTS (unaudited)

NOTE 1- SUMMARY OF SIGNIFICANTACCOUNTING POLICIES

Accounting Principles and Use ofEstimates

The accompanying consolidated condensed financialstatements for the six month periods ended June 30, 2005 and 2004 havebeen prepared in accordance with accounting principles generallyaccepted in the United States ("GAAP") andwith the instructions to Form 10-QSB and Item 310 of Regulation S-B.These financial statements have not been audited by independent publicaccountants, but include all adjustments (consisting of normalrecurring adjustments) which are, in the opinion of management,necessary for a fair presentation of the financial condition, resultsof operations, and cash flows for such periods. However, these resultsare not necessarily indicative of results for any other interim periodor for the full year. The accompanying consolidated condensed balancesheet as of December 31, 2004 has been derived from the auditedfinancial statements, but does not include all disclosures required byGAAP.

Certain information and footnote disclosures normallyincluded in financial statements prepared in accordance with GAAP havebeen omitted pursuant to guidelines of the Securities and ExchangeCommission (the "SEC"). Management believesthat the disclosures included in the accompanying interim financialstatements and footnotes are adequate to make the information notmisleading, but the disclosures contained herein should be read inconjunction with the consolidated financial statements and notesthereto included in the Company's Annual Report on Form 10-KSBfor the year ended December 31, 2004.

The preparation of thefinancial statements in accordance with GAAP requires management tomake estimates and assumptions that affect reported amounts of assetsand liabilities and disclosure of contingent assets and liabilities atthe date of the financial statements and the reported amounts ofrevenues and expenses during the reporting period. Actual results coulddiffer from those and other estimates.

Nature ofOperations

TAG Entertainment Corp. (the"Company" or "TAG")is a Delaware corporation headquartered in Beverly Hills, California.The Company is engaged in the development, production and distributionof motion pictures and the management of studio facilities. The Companyalso acquires the copyrights and/or distribution rights to alreadycompleted films for media exhibition. In order to finance filmproduction, the Company raises funds through the establishment ofsingle purpose limited partnerships and through the sale of equity ordebt securities. TAG Entertainment USA, Inc. ("TAGUSA"), the Company's wholly-owned subsidiary, servesas the sole general partner of the following four limited partnerships:Majestic Film Partners, LP, Majestic Film Partners II, LP, MajesticFilm Partners III, LP and Majestic Film Partners IV, LP (the"Limited Partnerships"). TAG USA is also thedistributor of films produced by numerous other limited partnerships aswell as assists in facilitating the production and distribution offilms produced by limited partnerships for which it receives anoverhead and/or production fee. Five of these other limitedpartnerships have as their general partner an entity owned andcontrolled by Steve Austin, the Company's Chief ExecutiveOfficer.

The Company's revenues are derived from motionpicture distribution, which includes theatrical, home entertainment,television and international distribution. Theatrical revenues arederived from the domestic theatrical release of motion pictures inNorth America. Home entertainment revenues are derived from the sale ofvideo and DVD releases of the Company's own productions andacquired 

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films, including theatrical releases anddirect-to-video releases. Television revenues are primarily derivedfrom the licensing of the Company's productions and acquiredfilms to the domestic cable, free and pay television markets.International revenues are derived from the licensing of theCompany's productions and acquired films to international marketson a territory-by-territory basis.

The Company's primaryoperating expenses include the following: direct operating expenses,which include amortization of production or acquisition costs,participation and residual expenses; distribution and marketingexpenses; which primarily include the costs of theatrical"prints and advertising" and of video and DVDduplication and marketing; and general and administration expenses,which include salaries and other overhead.

Merger

OnNovember 22, 2004, TAG USA was acquired by Power Marketing, Inc., aDelaware corporation. In the transaction, TAG USA merged with asubsidiary of Power Marketing, Inc. and became a wholly-ownedsubsidiary of Power Marketing, Inc., now operating as a separateentity. As a result of this transaction, the stockholders and othersecurity holders of TAG USA became the owner of approximately90% of the Company's outstanding shares of common stock.In connection with the merger, Power Marketing changed its corporatename to TAG Entertainment Corp., obtained the new trading symbolTAGE.OB and all of the officers and directors of Power Marketingresigned and Mr. Austin, who was the majority shareholder, ChiefExecutive Officer and sole director of TAG USA became theCompany's Chief Executive Officer, Chief Financial Officer andsole director. As discussed below, the Company recently appointed fiveadditional individuals to its board of directors. The transaction wastreated as a reverse merger and a recapitalization of the Company forreporting purposes. The holders of approximately 1,122,000 shares ofcommon stock of TAG USA that did not consent in writing to theCompany's acquisition of TAG USA are entitled to exerciseappraisal rights under the California Corporations Code. In the eventsuch holders elect to exercise these rights, the Company would berequired to purchase the shares of common stock of TAG USA held by themin lieu of issuing shares of the Company's common stock at theexchange ratio applicable to the transaction.

Going Concern andManagement Plans

The Company's financial statements havebeen presented on the basis that it is a going concern, whichcontemplates the realization of assets and the satisfaction ofliabilities in the normal course of business. The Company hasexperienced recurring losses and negative cash flows from operationsand has a working capital deficit, which raises substantial doubt aboutits ability to continue as a going concern and the Company'sindependent auditors have included a "goingconcern" explanatory paragraph in their report on theCompany's financial statements for the year ended December 31,2004. The Company is currently devoting its efforts to raisingadditional capital and ultimately achieving profitable operations. TheCompany's ability to continue as a going concern is dependentupon its ability to develop additional sources of capital. Theaccompanying financial statements do not include any adjustments thatmight result from the outcome of these uncertainties. The Companyclosed on a bridge financing in the amount of $1,000,000 on March 30,2005. On May 4, 2005, the Company completed a $5,000,000 preferredstock financing and retired the bridge loan.

On March 30, 2005,the Company entered into a letter of intent to acquire 100% ofthe outstanding common stock of Myriad Pictures, Inc., which is engagedin the film production and distribution business. The letter of intentprovides for a purchase price of approximately $4,000,000, including anearnout payment of up to $2,000,000 to be negotiated prior to closingof the transaction. The earnout may be paid in cash or in shares of theCompany's common stock, at its option. In addition, the Companyintends to invest an additional $750,000 to provide Myriad with workingcapital and debt repayment after the closing. Included in the purchaseprice, a $1,000,000 promissory note will be issued, payable over 12months following the closing.

In connection with the executionof the letter of intent, the Company provided Myriad with a short termloan of $250,000, bearing interest at the rate of 3% per annum,which Myriad will use for 

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working capital and transition costs pendingthe closing. After closing of the transaction, the loan will convertinto additional investment in Myriad. The loan is secured by a lien onthe assets of Myriad.

In order to satisfy future cashrequirements, management is actively pursuing and has entered intodiscussions regarding additional financing to support the proposedacquisition, related expansion plans, and ongoing operations. TheCompany currently has no firm agreements with any third parties for anyfuture transactions and future financings.

Principles ofConsolidation

The accompanying consolidated financialstatements of the Company include the accounts of TAG and of theLimited Partnerships which the Company is the sole general partner. TheGeneral Partner has the full and exclusive control of the managementand operation of the business of each partnership. The Company in itscapacity as General Partner participates in 1% of the losses ofthe limited partnerships but shares in 60% of any profits. Allsignificant inter-company balances and transactions have beeneliminated in consolidation.

Minority Interests

TAGconsolidates the Limited Partnerships for which it is the sole generalpartner. The amount of minority interest represents the aggregate netlimited partnership capital of each partnership offset by 99% ofaccumulated Limited Partnership losses.

RevenueRecognition

Revenue from the sale or licensing of films andtelevision programs is recognized upon meeting all recognitionrequirements of SOP 00-2. Revenue from the theatrical release offeature films is recognized at the time of exhibition based on theCompany's participation in box office receipts. Revenue from thesale of videocassettes and digital video disks("DVDs") in the retail market is recognizedon the "street date" when it is available forsale by the customer. Revenues from televisions licensing arerecognized when the feature film or television program is available tothe licensee for telecast. Revenues from sales to internationalterritories are recognized when the feature film or television programis available to the distributor for exploitation and no conditions fordelivery exist.

As facilitator or producer of various filmsthrough limited partnerships established for the sole purpose offinancing the production of motion pictures, the Chief ExecutiveOfficer of the Company has assigned to TAG his management fee rightsduring the production period.

Rental revenue from short-termoperating leases studio facilities is recognized over the term of thelease.

Cash payments received which may include minimumguarantees are recorded as deferred revenue until all conditions ofrevenue recognition have been met.

Cash Equivalents

Forpurposes of reporting cash flows, the Company considers all short-term,interest bearing deposits with original maturities of three months orless to be cash equivalents.

Capitalized Film Costs

Capitalized film costs consist of investments in films which includethe unamortized costs of completed films which have been produced bythe Company or for which the Company has acquired distribution rightsor film libraries.

For films produced by the Company,capitalized costs include all direct production and financing costs,and production overhead. For acquired films, these capitalized costsconsist of minimum guarantee payments to acquire the distributionrights.

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Costs of acquiring and producing films andof acquired libraries are amortized using the individual-film-forecastmethod, whereby these costs are amortized and participation andresidual costs are accrued in the proportion that current year'srevenue bears to management's estimate of ultimate revenue at thebeginning of the current year expected to be recognized from theexploitation, exhibition or sale of the films.

Ultimate revenueincludes estimates over a period not to exceed ten years following thedate of initial release. For titles included in acquired libraries,ultimate revenue includes estimates over a period not to exceed tenyears following the date of acquisition.

Capitalized film costsare stated at the lower of amortized cost or estimated fair value on anindividual film basis. The valuation of investment in films is reviewedon a title-by-title basis, when an event or changes in circumstancesindicated that the fair value of a film is less than its unamortizedcost. The fair value of the film is determined using management'sfuture revenue and cost estimates. Additional amortization is recordedin the amount by which the unamortized costs exceed the estimated fairvalue of the film. Estimates of future revenue involve measurementuncertainty and it is therefore possible that reductions in thecarrying value of investment in films may be required as a consequenceof changes in management's future revenue estimates.

Filmsin progress include the accumulated costs of production, which have notyet been completed by the Company.

Films in development includecosts of acquiring film rights to original screenplays and costs toadapt such projects. Such costs are capitalized and, upon commencementof production, are transferred to production costs. Projects indevelopment are written off at the earlier of the date determined notto be recoverable or when abandoned, or three years from the date ofthe initial investment.

Equipment

Equipment is carriedat cost and is depreciated on the straight-line basis over theirestimated useful lives of three to eight years. Repairs and maintenanceare expensed as incurred. When assets are retired or otherwise disposedof, the property accounts are relieved of costs and accumulateddepreciation and any existing gain or loss is credited or charged tooperations.

Stock-Based Compensation

The Companyaccounts for stock-based compensation in accordance with Statement ofFinancial Accounting Standards No. 123, "Accounting forStock-Based Compensation" ("SFAS123"). This standard requires the Company to adopt the"fair value" method with respect tostock-based compensation of consultants and other non-employees. TheCompany did not change its method of accounting with respect toemployee stock options; the Company continues to account for theseunder the "intrinsic value" method and tofurnish the pro-forma disclosures required by SFAS 123.

Valuation of the Company's Common Stock

Unlessotherwise disclosed, all stock-based transactions entered into by theCompany have been valued at the market value of the Company'scommon stock on the date the transaction was entered into or have beenvalued using the Black-Scholes to estimate the fair market value.

Concentrations of Risk

The Company's financialinstruments that are exposed to concentrations of credit risk consistof cash and receivables. The Company invests its cash in banks withhigh credit ratings; however, certain account balances have beenmaintained at levels in excess of federally insured limits. The Companyhas not experienced a loss in such accounts.

The Company extendscredit based on an evaluation of the customer's financialcondition, generally without collateral. Exposure to losses onreceivables is principally dependent on each customer's

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financial condition. The Company monitors itsexposure for credit losses and maintains allowances for anticipatedlosses, as required. The Company sub-distributes titles in both thedomestic and international markets. The Company is typically paid anadvance or minimum guarantee for these rights. Any overages (revenue inexcess of the minimum guarantee) are reported to the Company 45 to 90days after the reporting period. Because of the minimum guarantees andshort reporting periods accounts receivables are minimized andoutstanding balances are generally collected within 45 to 90 days.

Income Taxes

Deferred income taxes are recorded to reflectthe tax consequences in future years of temporary differences betweenthe tax basis of the assets and liabilities and their financialstatement amounts at the end of each reporting period. Valuationallowances are established when necessary to reduce deferred tax assetsto the amount expected to be realized. Income tax expense is the taxpayable for the current period and the change during the period indeferred tax assets and liabilities. The deferred tax assets andliabilities have been netted to reflect the tax impact of temporarydifferences. A full valuation allowance has been established for netdeferred tax assets as management believes that it is more likely thannot that a tax benefit will not be realized.

Earnings perCommon Share

The Company computes earnings per common share inaccordance with Statement of Financial Accounting Standards No. 128,"Earnings per Share" (SFAS No. 128). TheStatement requires dual presentation of basic and diluted EPS on theface of the income statement for all entities with complex capitalstructures and requires a reconciliation of the numerator anddenominator of the basic EPS computation to the numerator anddenominator of the diluted EPS computation. Basic loss per share iscomputed by dividing loss available to common shareholders by theweighted average number of common shares outstanding. The computationof diluted loss per share is similar to the basic loss per sharecomputation except the denominator is increased to include the numberof additional shares that would have been outstanding if the dilutivepotential common shares had been issued. In addition, the numerator isadjusted for any changes in income or loss that would result from theassumed conversions of those potential shares. However, suchpresentation is not required if the effect is anti-dilutive.Accordingly, the diluted per share amounts do not reflect the impact ofwarrants and options totaling 7,595,000 and 67,000 at June 30, 2005 and2004, respectively as the effects would be anti-dilutive.

NOTE2 - AMOUNTS PAYABLE TO AFFILIATED PARTNERSHIPS

Net amountspayable to affiliated partnerships resulted from the advancement offunds by certain partnerships to TAG which were required during thecourse of managing the Company's operations and facilitating theactivities of the partnerships. In addition, to meet the cash flowneeds of other affiliated partnerships, funding transfers have alsooccurred between and among TAG and the affiliated partnerships. Theamounts payable to affiliated partnerships include various receivableand payable balances between TAG and these affiliated entities.

The Company in its capacity as general partner and distributor ofvarious films produced by the limited partnerships is allowed to chargemonthly overhead and production fees which get recorded to accountswith the affiliated partnerships. The Company plans on making a formalpurchase offer to the various partnerships in return for TAG stock thussettling outstanding balances owed to the partnerships.

TheCompany has recorded interest on amounts borrowed from related entitiesat the prime leading rate and has included accrued interest in theamounts due to and from the related entities.

NOTE 3 - DEFERREDPRODUCTION FUNDING

TAG deposited funds obtained from thirdparty producers for the purpose of producing specific films. Inexchange for an ownership or participation percentage in the film, thethird party producer has 

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agreed to finance a portion of theproduction. Since no funds directly related to the production had beenexpended at June 30, 2005, the amounts received have been included as aliability until such time as the production costs are incurred.

NOTE 4 – FINANCING ACTIVITIES

On March 30, 2005, theCompany entered into a Securities Purchase Agreement with SatelliteStrategic Finance Associates, LLC and an affiliated investor underwhich the Company issued $1,000,000 in aggregate principal amount ofSenior Secured Notes and Warrants to purchase 500,000 shares of itscommon stock in a private placement to accredited investors underRegulation D of the Securities Act of 1933, as amended. The Companyreceived gross proceeds of $1,000,000 which were intended for the filmproduction and general working capital requirements. The aggregateprincipal amount of the Notes was $1,150,000 with a 15% yieldfunded as original issuance discount. The Company also entered into aRegistration Rights Agreement and a Security Agreement with theinvestors and its subsidiary, TAG Entertainment USA, Inc. co-signed theSecurity Agreement and agreed to guaranty its obligations pursuant tothe financing agreements. Pursuant to the Security Agreement, theCompany granted the investors a first priority lien on all of itsassets, other than certain previously issued liens, in order to secureits obligations. The Notes mature on March 30, 2006 and are soonerpayable in full in the event the Company consummates a subsequentfinancing event, with certain exceptions, or upon the occurrence of anevent of default. The warrants are exercisable at $1.00 per share,subject to adjustment upon certain events, including as a result of itssale of equity securities at a price below the exercise price. Thewarrants are exercisable at any time on or before March 30, 2010. Inconnection with the issuance of the Notes and the related warrants, theCompany allocated the net proceeds between the instruments based on therelative fair value of the warrants and the Notes. The fair value ofthe warrants was determined using the Black-Scholes pricing model andthe following assumptions: contractual terms of five years, an averagerisk free interest rate of 2.5%, a dividend yield of 0%,and a volatility of 95.3%. Accordingly, the Company recorded anincrease in additional paid-in capital and note payable discount of$638,000 in connection with the issuance of the Notes and warrants.

On May 4, 2005 the Company consummated a subsequent financingtransaction with the holders of these notes, pursuant to which thesesecured notes were repaid in full and the Company fulfilled itsobligations under the Security Agreement and Guaranty. In thisfinancing transaction, the Company completed a private placement ofshares of its Series A Convertible Preferred Stock, par value $.001 pershare, and warrants to purchase shares of TAG's common stock. Theplacement was made pursuant to a Securities Purchase Agreement, datedMay 3, 2005 and the gross proceeds of this transaction were $5,000,000.The Company repaid out of the gross proceeds the secured notes theCompany issued to the investors in the bridge financing completed March30, 2005. After payment of the notes and financing expenses in theamount of approximately $370,000, the Company received net proceeds ofapproximately $3,480,000 from this financing. The Company plans to usethe net proceeds for the production, acquisition and distribution offeature films and general working capital. Financing expenses will beamortized over the three year maturity period of the Preferred Stock.Deferred financing expenses totaled $349,000 at June 30, 2005 and areincluded with other current assets ($123,000) and other assets($226,000).

In this financing, the Company issued 5,000 sharesof Preferred Stock, convertible at the option of the holder into aninitial aggregate amount of 2,000,000 shares of common stock, par value$.001 per share, at an initial conversion price of $2.50 per share, andwarrants to purchase an initial aggregate amount of 2,000,000 shares ofcommon stock at an initial exercise price of $2.50 per share, which areimmediately exercisable and expire in seven years.

In connectionwith the issuance of the Preferred Stock and the related warrants, theCompany allocated the net proceeds between the instruments based on therelative fair value of the warrants and the Preferred Stock beforevaluation of the beneficial conversion feature. The fair value of thewarrants was determined using the Black-Scholes pricing model and thefollowing assumptions: contractual terms of seven years, an averagerisk free interest rate of 2.5%, a dividend yield of 0%,and a volatility of 115%. Accordingly, the Company recorded anincrease in additional paid-in capital 

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and a discount against the Preferred Stock of$2,586,000 in connection with the issuance of the Preferred Stock andwarrants. The discount related to the warrants is being amortized andcharged to interest expense over the three year maturity period.Amortization of $144,000 was recorded as interest expense during thethree and six months ended June 30, 2005.

The Company evaluatedthe beneficial conversion feature of the Preferred Stock by measuringthe effective conversion price after the discount for the warrantsagainst the current market price of TAG's common stock of $3 pershare at closing. In recognition of the intrinsic value of theconversion feature, the company recorded an additional discount of$2,414,000 against the Preferred Stock with a corresponding increase inadditional paid-in-capital. The discount is being amortized over threeyears and charged against retained earnings.

Each share ofPreferred Stock, which has a stated value of $1,000 per share, earnscumulative dividends at a rate of 6% per annum and matures threeyears from the date of issuance. The dividend and liquidation rights ofthe Preferred Stock are senior to those of its common stock. ThePreferred Stock does not carry voting rights.

As previouslyreported, in January 2005 the Company commenced a private placementoffering under Rule 506, promulgated under the Securities Act of 1933.During the six months ended June 30, 2005, $88,000 had been raised inconnection with the issuance of 29,000 shares.

NOTE 5 -LITIGATION

The Company is involved in various claims and otherlegal proceedings that arise from time to time in the ordinary courseof business. The Company does not believe any of them will have amaterial adverse affect on the Company's financial position orresults of operations. Litigation is inherently unpredictable andexcessive verdicts do occur. Although the Company believes is has validdefenses in these matters, the Company could in the future incurjudgments or enter into settlements of claims that could have amaterial adverse affect on the Company's financial position orresults of operations in any particular period.

An arbitrationwas filed on July 20, 2004; Philipson vs. Animal Partners, LP, et al,with the American Arbitration Association("AAA") which named TAG as a respondent. Anamended petition initiating the Arbitration (the"Petition") allegedly arose out of thepetitioners' purchase of several units of the Animal PartnersLimited Partnership (the "LP"). The petitionalleged that respondents did not fully report financial information ofthe LP to the petitioners. TAG sent the matter to its legal counsel;however, TAG is neither a Limited Partner nor General Partner of the"LP". TAG's association with the"LP" is as distributor of the motion pictureMiracle Dogs produced by the LP. The case was settled in March 2005 andTAG was released from any claims. TAG acquired the outstanding LPshares owned by the petitioners for $200,000.

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Item2.    Management's Discussion and Analysis or Plan ofOperation

Thismanagement's discussion and analysis of financial condition andresults of operations discusses our consolidated financial statements,which have been prepared in accordance with accounting principlesgenerally accepted in the United States. The preparation of thesefinancial statements requires management to make estimates andassumptions that affect the reported amounts of assets and liabilitiesand the disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues andexpenses during the reporting period. On an on-going basis, managementevaluates its estimates and judgments. Management bases its estimatesand judgments on historical experience and on various other factorsthat are believed to be reasonable under the circumstances. Thisdiscussion also contains forward-looking statements that involve risksand uncertainties. The following discussion should be read inconjunction with our consolidated financial statements and the notesthereto included elsewhere in this report. Actual results may differfrom these estimates under different assumptions or conditions.

Nature of Operations

TAG Entertainment Corp. is a Delawarecorporation headquartered in Beverly Hills, California. We are engagedin the development, production and distribution of motion pictures andthe management of studio facilities. We also acquire the copyrightsand/or distribution rights to already completed films for mediaexhibition. In order to finance film production, we raise funds throughthe establishment of single purpose limited partnerships and throughthe sale of equity or debt securities. TAG Entertainment USA, Inc.("TAG USA"), the Company's wholly-ownedsubsidiary, serves as the sole general partner of the following fourlimited partnerships: Majestic Film Partners, LP, Majestic FilmPartners II, LP, Majestic Film Partners III, LP and Majestic FilmPartners IV, LP (the "Limited Partnerships").TAG USA is also the distributor of films produced by numerous otherlimited partnerships as well as assists in facilitating the productionand distribution of films produced by limited partnerships for which itreceives an overhead and/or production fee. Certain of these otherlimited partnerships have as their general partner an entity owned andcontrolled by Steve Austin, our Chief Executive Officer.

Ourrevenues are derived from motion picture distribution, which includestheatrical, home entertainment, television and internationaldistribution. Theatrical revenues are derived from the domestictheatrical release of motion pictures in North America. Homeentertainment revenues are derived from the sale of video and DVDreleases of our productions and acquired films, including theatricalreleases and direct-to-video releases. Television revenues areprimarily derived from the licensing of the Company's productionsand acquired films to the domestic cable, free and pay televisionmarkets. International revenues are derived from the licensing of ourproductions and acquired films to international markets on aterritory-by-territory basis. Our primary operating expenses includethe following: direct operating expenses, which include amortization ofproduction or acquisition costs, participation and residual expenses;distribution and marketing expenses; which primarily include the costsof theatrical "prints and advertising" and ofvideo and DVD duplication and marketing; and general and administrationexpenses, which include salaries and other overhead.

Merger

On November 22, 2004, TAG USA was acquired by PowerMarketing, Inc., a Delaware corporation. In the transaction, TAG USAmerged with a subsidiary of Power Marketing, Inc. and became awholly-owned subsidiary of Power Marketing, Inc., now operating as aseparate entity. As a result of this transaction, the stockholders andother security holders of TAG USA became the owner of approximately90% of the Company's outstanding shares of common stock.In connection with the merger, Power Marketing changed its corporatename to TAG Entertainment Corp., obtained the new trading symbolTAGE.OB and all of the officers and directors of Power Marketingresigned and Mr.  Austin, who was the majority shareholder, ChiefExecutive Officer and sole director of TAG USA became theCompany's Chief Executive Officer, Chief Financial Officer andsole director. As discussed below, we recently appointed fiveadditional individuals to our board of directors. The transaction was

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treated as a reverse merger and arecapitalization of the Company for reporting purposes. The holders ofapproximately 1,122,000 shares of common stock of TAG USA that did notconsent in writing to the Company's acquisition of TAG USA areentitled to exercise appraisal rights under the California CorporationsCode. In the event such holders elect to exercise these rights, wewould be required to purchase the shares of common stock of TAG USAheld by them in lieu of issuing shares of the Company's commonstock at the exchange ratio applicable to the transaction.

Going Concern and Management Plans

Our financial statementshave been presented on the basis that the Company is a going concern,which contemplates the realization of assets and the satisfaction ofliabilities in the normal course of business. The Company hasexperienced recurring losses and negative cash flows from operationsand has a working capital deficit and a stockholder deficit, whichraises substantial doubt about its ability to continue as a goingconcern and the Company's independent auditors have included anexplanatory paragraph in their report on the Company's financialstatements in the year ended December  31, 2004. We are currentlydevoting efforts to raising additional capital and ultimately achievingprofitable operations. The Company's ability to continue as agoing concern is dependent upon our ability to develop additionalsources of capital. The accompanying financial statements do notinclude any adjustments that might result from the outcome of theseuncertainties. We closed on a bridge financing in the amount of$1,000,000 on March 30, 2005. On May 4, 2005, we completed a $5,000,000preferred stock financing and retired the bridge loan.

On March30, 2005, we entered into a letter of intent to acquire 100% ofthe outstanding common stock of Myriad Pictures, Inc., which is engagedin the film production and distribution business. The letter of intentprovides for a purchase price of approximately $4,000,000, including anearnout payment of up to $2,000,000 to be negotiated prior to closingof the transaction. The earnout may be paid in cash or in shares of theCompany's common stock, at our option. In addition, we intend toinvest an additional $750,000 to provide Myriad with working capitaland debt repayment after the closing. Included in the purchase price, a$1,000,000 promissory note will be issued, payable over 12 monthsfollowing the closing.

In connection with the execution of theletter of intent, we provided Myriad with a short term loan of$250,000, bearing interest at the rate of 3% per annum, whichMyriad will use for working capital and transition costs pending theclosing. After closing of the transaction, the loan will convert intoadditional investment in Myriad. The loan is secured by a lien on theassets of Myriad.

Management is actively pursuing and hasentered discussions regarding additional financing to support theproposed acquisition, related expansion plans, and ongoingoperations.

Critical Accounting Policies

Theapplication of the following accounting policies, which are importantto the Company's financial position and results of operations,requires significant judgments and estimates on the part of management.For a summary of all of the Company's accounting policies,including the accounting policies discussed below, see Note 1 to theCompany's audited consolidated financial statements.

Useof Estimates

The preparation of the financial statements inaccordance with accounting principles generally accepted in the UnitedStates requires management to make estimates and assumptions thataffect reported amounts of assets and liabilities and disclosure ofcontingent assts and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting period. Actual results could differ from those and otherestimates.

Principles of Consolidation

The accompanyingconsolidated financial statements of the Company include the accountsof TAG and of the Limited Partnerships which TAG USA is the solegeneral partner. The General Partner has 

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the full and exclusive control of themanagement and operation of the business of each partnership. TAG USAin its capacity as General Partner participates in 1% of thelosses of the limited partnerships but shares in 60% of anyprofits. All significant inter-company balances and transactions havebeen eliminated in consolidation.

Minority Interests

TAG consolidates four limited partnerships for which TAG USA is thesole general partner. The amount of minority interest represents theaggregate net limited partnership capital of each limited partnershipalong with a reduction of 99% of the losses incurred directly bythe Limited Partnerships.

Revenue Recognition

Revenuefrom the sale or licensing of films and television programs isrecognized upon meeting all recognition requirements of SOP 00-2.Revenue from the theatrical release of feature films is recognized atthe time of exhibition based on the Company's participation inbox office receipts. Revenue from the sale of videocassettes anddigital video disks ("DVDs") in the retailmarket is recognized on the "street date"when it is available for sale by the customer. Revenues fromtelevisions licensing are recognized when the feature film ortelevision program is available to the licensee for telecast. Revenuesfrom sales to international territories are recognized when the featurefilm or television program is available to the distributor forexploitation and no conditions for delivery exist.

Asfacilitator or producer of various films through limited partnershipsestablished for the sole purpose of financing the production of motionpictures, our Chief Executive Officer has assigned to TAG hismanagement fee rights during the production period.

Rentalrevenue from short-term operating leases studio facilities isrecognized over the term of the lease.

Cash payments receivedwhich may include minimum guarantees are recorded as deferred revenueuntil all conditions of revenue recognition have been met.

CashEquivalents

For purposes of reporting cash flows, we considerall short-term, interest bearing deposits with original maturities ofthree months or less to be cash equivalents.

Capitalized FilmCosts

Capitalized film costs consist of investments in filmswhich include the unamortized costs of completed films which have beenproduced by the Company or for which the Company has acquireddistribution rights or film libraries.

For films produced by theCompany, capitalized costs include all direct production and financingcosts, and production overhead. For acquired films, these capitalizedcosts consist of minimum guarantee payments to acquire the distributionrights.

Costs of acquiring and producing films and of acquiredlibraries are amortized using the individual-film-forecast method,whereby these costs are amortized and participation and residual costsare accrued in the proportion that current year's revenue bearsto management's estimate of ultimate revenue at the beginning ofthe current year expected to be recognized from the exploitation,exhibition or sale of the films.

Ultimate revenue includesestimates over a period not to exceed ten years following the date ofinitial release. For titles included in acquired libraries, ultimaterevenue includes estimates over a period not to exceed ten yearsfollowing the date of acquisition.

Capitalized film costs arestated at the lower of amortized cost or estimated fair value on anindividual film basis. The valuation of investment in films is reviewedon a title-by-title basis, when an event or 

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changes in circumstances indicated that thefair value of a film is less than its unamortized cost. The fair valueof the film is determined using management's future revenue andcost estimates. Additional amortization is recorded in the amount bywhich the unamortized costs exceed the estimated fair value of thefilm. Estimates of future revenue involve measurement uncertainty andit is therefore possible that reductions in the carrying value ofinvestment in films may be required as a consequence of changes inmanagement's future revenue estimates.

Films in progressinclude the accumulated costs of production for film projects whichhave not yet been completed.

Films in development include costsof acquiring film rights to original screenplays and costs to adaptsuch projects. Such costs are capitalized and, upon commencement ofproduction, are transferred to production costs. Projects indevelopment are written off at the earlier of the date determined notto be recoverable or when abandoned, or three years from the date ofthe initial investment.

Equipment

Equipment is carriedat cost and is depreciated on the straight-line basis over theirestimated useful lives of three to eight years. Repairs and maintenanceare expensed as incurred. When assets are retired or otherwise disposedof, the property accounts are relieved of costs and accumulateddepreciation and any existing gain or loss is credited or charged tooperations.

Stock-Based Compensation

The Companyaccounts for stock-based compensation in accordance with Statement ofFinancial Accounting Standards No. 123, "Accounting forStock-Based Compensation" ("SFAS123"). This standard requires the Company to adopt the"fair value" method with respect tostock-based compensation of consultants and other non-employees. TheCompany did not change its method of accounting with respect toemployee stock options; the Company continues to account for theseunder the "intrinsic value" method and tofurnish the pro-forma disclosures required by SFAS 123.

Valuation of the Company's Common Stock

Unlessotherwise disclosed, all stock-based transactions entered into by theCompany have been valued at the market value of the Company'scommon stock on the date the transaction was entered into or have beenvalued using the Black-Scholes to estimate the fair market value.

Concentrations of Risk

The Company's financialinstruments that are exposed to concentrations of credit risk consistof cash and receivables. The Company invests its cash in banks withhigh credit ratings; however, certain account balances have beenmaintained at levels in excess of federally insured limits. The Companyhas not experienced a loss in such accounts.

The Company extendscredit based on an evaluation of the customer's financialcondition, generally without collateral. Exposure to losses onreceivables is principally dependent on each customer's financialcondition. The Company monitors its exposure for credit losses andmaintains allowances for anticipated losses, as required. The Companysub-distributes titles in both the domestic and international markets.The Company is typically paid an advance or minimum guarantee for theserights. Any overages (revenue in excess of the minimum guarantee) arereported to the Company 45 to 90 days after the reporting period.Because of the minimum guarantees and short reporting periods accountsreceivables are minimized and outstanding balances are generallycollected within 45 to 90 days.

Income Taxes

Deferredincome taxes are recorded to reflect the tax consequences in futureyears of temporary differences between the tax basis of the assets andliabilities and their financial statement amounts at the end of eachreporting period. Valuation allowances are established when necessaryto reduce 

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deferred tax assets to the amount expected tobe realized. Income tax expense is the tax payable for the currentperiod and the change during the period in deferred tax assets andliabilities. The deferred tax assets and liabilities have been nettedto reflect the tax impact of temporary differences. At December 31,2004, a full valuation allowance has been established for the deferredtax asset as management believes that it is more likely than not that atax benefit will not be realized.

Earnings per CommonShare

We computed earnings per common share in accordance withStatement of Financial Accounting Standards No. 128,"Earnings per Share" (SFAS No. 128). TheStatement requires dual presentation of basic and diluted EPS on theface of the income statement for all entities with complex capitalstructures and requires a reconciliation of the numerator anddenominator of the basic EPS computation to the numerator anddenominator of the diluted EPS computation. Basic loss per share iscomputed by dividing loss available to common shareholders by theweighted average number of common shares outstanding. The computationof diluted loss per share is similar to the basic loss per sharecomputation except the denominator is increased to include the numberof additional shares that would have been outstanding if the dilutivepotential common shares had been issued. In addition, the numerator isadjusted for any changes in income or loss that would result from theassumed conversions of those potential shares. However, suchpresentation is not required if the effect is anti-dilutive.Accordingly, the diluted per share amounts do not reflect the impact ofwarrants and options totaling 7,595,000 and 67,000 at June 30, 2005 and2004 as the effects would be anti-dilutive.

Results ofOperations

Three and Six Months Ended June 30, 2005 ascompared to June 30,  2004

Revenue

Grossrevenues for the three months ended June 30, 2005 and 2004 were$278,000 and $408,000, respectively; a decrease of $130,000. For thesix months ended June 30, 2005 and 2004, revenues were $659,000 and$921,000, a decrease of $262,000. The decrease in revenues wasprincipally attributable to the decrease in studio rental income. Inthe current year, there was no rent income arising from film productionactivity as compared to rental income of $125,000 and $225,000 duringthe three and six months ended June 30, 2004. In addition, managementand overhead fees also decreased slightly. Film revenues increasedslightly as a result of stronger video sales of certain libraryproductions.

Expenses

Expenses for the threemonths ended June 30, 2005 were $1,058,000 compared to $976,000 in theprior year period, an increase of $82,000. For the six months endedJune 30, 2005, expenses were $1,905,000 compared to $2,012,000 in theprior year period, a decrease of $107,000. For the three month period,the increase resulted primarily from increased general andadministrative expenses in strengthening corporate reporting andcontrol processes in connection with our recent transition as apublicly reported company. For the six month period, the decrease wasprimarily attributed to lower studio expenses, offset by increasedadministrative expenses associated with our transition as a publiccompany.

Interest expense was $984,000 for the three and sixmonths ended June 30, 2005 and included discount amortizationassociated with bridge financing retired in May 2005 ($788,000),amortization of convertible preferred stock discount associated withrelated warrants ($144,000), and accrued interest on theCompany's convertible preferred stock. There was no interestexpense in the prior year periods.

MinorityInterest

The consolidated income effect attributable to theminority interest for the three and six months ended June 30, 2005 was$20,000 and $19,000, respectively, compared to $6,000 and $7,000 in thecorresponding prior year periods. The increase was attributed toslightly higher losses experienced by limited partnerships that areconsolidated for financial reporting purposes.

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Liquidity and Capital Resources

Since inception, we have financed our operations primarily throughthe sale of equity securities and issuance of debt instruments. ThroughJune 30, 2005, we had received in excess of $12 million from suchofferings including approximately $7  million raised by TAG USAprior to its merger with Power Marketing.

As of December 31,2004, the Company had minimal cash and cash equivalents as we were inthe process of completing various financing arrangements. In March2005, we completed a secured debt financing transaction which providedcash of $1,000,000. The secured notes were to mature March 30, 2006 andthe principal amount of the notes was $1,150,000 with a 15%yield funded as original issuance discount. We also granted theinvestors warrants to purchase a total of 500,000 shares of TAG commonstock, exercisable at $1.00 per share, subject to adjustment uponcertain events, including as a result of its sale of equity securitiesat a price below the exercise price. The warrants are exercisable atany time on or before March 30, 2010.

On May 4, 2005, weconsummated a subsequent financing transaction with the holders of thesecured notes, pursuant to which the secured notes were repaid in fulland we fulfilled our obligations under the Security Agreement andGuaranty we entered in connection with our secured note financing. Inthis financing transaction, we completed a private placement of sharesof TAG's Series A Convertible Preferred Stock, par value $.001per share, and warrants to purchase shares of TAG's common stock.The placement was made pursuant to a Securities Purchase Agreement,dated May 3, 2005 and the gross proceeds of this transaction were$5,000,000. We repaid out of the gross proceeds the secured note theCompany issued to the investor in the bridge financing completed March30, 2005. After payment of the note and offering expenses in the amountof approximately $350,000, the Company received net proceeds ofapproximately $3,500,000 from this financing. The Company plans to usethe net proceeds for the production, acquisition and distribution offeature films and general working capital.

In this financing, weissued 5,000 shares of Preferred Stock, convertible at the option ofthe holder into an initial aggregate amount of 2,000,000 shares ofcommon stock, par value $.001 per share, at an initial conversion priceof $2.50 per share, and warrants to purchase an initial aggregateamount of 2,000,000 shares of common stock at an initial exercise priceof $2.50 per share, which are immediately exercisable and expire inseven years. Each share of Preferred Stock, which has a stated value of$1,000 per share, earns cumulative dividends at a rate of 6% perannum and matures three years from the date of issuance. The dividendand liquidation rights of the Preferred Stock are senior to those ofits common stock. The Preferred Stock does not carry voting rights.

Net cash used for operating activities for the six months ended June30, 2005 was $2,250,000 which primarily resulted from theCompany's operating losses, as well as amounts advanced tocertain partnerships to fund completion of films where the Company isengaged as producer and distributor. In addition, cash was utilized forreductions of payables and bank overdrafts.

Net cash used foroperating activities for the six months ended June 30, 2004 was$1,059,000 which primarily consisted of a net loss of $1,086,000 alongwith film investments of $906,000, offset by increases in accruedsalaries of $300,000, amounts payable to affiliated partnerships of$205,000, and deferred revenue of $275,000.

Net cash used ininvesting activities for the first six months of 2005 was $221,000,compared to $209,000 in the prior year. In 2005, the Company loaned$250,000 in connection with a proposed acquisition; in 2004, amountswere invested in certain film partnerships totaling $180,000.

Net cash provided by financing activities for the six months of 2005was $4,636,000 which primarily consisted of proceeds from debtfinancings offset by financing costs. Net cash provided by financingactivities in 2004 was $660,000 which primarily included proceeds fromthe issuance of common stock and private placement proceeds payable tothe chief executive officer of the Company.

Cash Requirementsand Need for Additional Funds

With the completion of the recent$5 million preferred stock financing, we received net proceeds ofapproximately $3.5 million after retirement of the $1 million bridgeloan and payment of closing costs. 

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The proceeds will be used to fund its nearterm working capital requirements and business model objectives. Inconnection with the execution of its business strategy and relatedexpansion plans, including the recently announced proposed acquisitionof Myriad Pictures, we intend to either undertake private placements ofits securities, either as a self-offering or with the assistance ofregistered broker-dealers, or negotiate a private sale of itssecurities to one or more institutional investors. However, wecurrently have no firm agreements with any third-parties for suchtransactions and no assurances can be given that we will be successfulin raising sufficient capital from any of these proposed financings.Further, we cannot assure you that any additional financing will beavailable or, even if it is available that it will be on termsacceptable to us. Any inability to obtain required financing onsufficiently favorable terms could have a material adverse effect onthe Company's business, results of operations and financialcondition. If we are unsuccessful in raising additional capital andincreasing revenues from operations, we will need to reduce costs andoperations substantially. Further, if expenditures required to achieveour plans are greater than projected or if revenues are less than, orare generated more slowly than projected, we will need to raise agreater amount of funds than currently expected.

Off-BalanceSheet Arrangements

We have not created, and are not party to,any special-purpose or off-balance sheet entities for the purpose ofraising capital, incurring debt or operating parts of its business thatare not consolidated into its financial statements, except as describedherein. Except as described herein, we do not have any arrangements orrelationships with entities that are not consolidated into itsfinancial statements that are reasonably likely to materially affectits liquidity or the availability of its capital resources.

TheCompany has incurred debt to unconsolidated partnerships in theaggregate amount of $1.1 million as of June 30, 2005, which we requiredduring the course of managing operations and facilitating theactivities of the partnerships. In addition, cash transfers wererequired between affiliated partnerships to meet cash flow needs andother obligations. 

TAG USA in its capacity as generalpartner and distributor of various films produced by the limitedpartnerships is allowed to charge monthly overhead and production feeswhich get recorded to and against related party transactions. We alsoplan on making a formal purchase offer to the various partnerships inreturn for shares of its stock, which if consummated, would eliminateany current and future outstanding balances owed to the partnerships.TAG has recorded interest on amounts borrowed from related entities atthe prime lending rate.

We have entered into various agreementsby which the Company may be obligated to indemnify the other party withrespect to certain matters. Generally, these indemnification provisionsare included in contracts arising in the normal course of businessunder which the Company customarily agrees to hold the indemnifiedparty harmless against losses arising from a breach of representationsrelated to such matters as intellectual property rights. Payments bythe Company under such indemnification clauses are generallyconditioned on the other party making a claim. Such claims aregenerally subject to challenge by the Company and to dispute resolutionprocedures specified in the particular contract. Further, theCompany's obligations under these arrangements may be limited interms of time and/or amount and, in some instances, the Company mayhave recourse against third parties for certain payments made by us. Itis not possible to predict the maximum potential amount of futurepayments under these indemnification agreements due to the conditionalnature of the Company's obligations and the unique facts of eachparticular agreement. Historically, we have not made any payments underthese agreements that have been material individually or in theaggregate. As of June 30, 2005, we were not aware of any obligationsunder such indemnification agreements that would require materialpayments.

Item 3.    Controls and Procedures

Disclosure Controls

As of the end of the periodcovered by this report, we carried out an evaluation, under thesupervision and with the participation of our management, including theChief Executive Officer and 

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Chief Financial Officer, of the effectivenessof the Company's disclosure controls and procedures as defined inExchange Act Rule 13a-15(e). Based upon that evaluation, our ChiefExecutive Officer and Chief Financial Officer has concluded thatcurrent disclosure controls and procedures are effective as of theperiod covered by the quarterly report on Form 10-QSB.

Internal Controls

In connection with the merger ofPower Marketing and TAG USA in November 2004, we adopted andimplemented numerous measures in connection with its ongoing efforts toimprove control processes and corporate governance. These changes arerequired to effect our transition from a privately-held corporation toa public company that files periodic reports under the SecuritiesExchange Act of 1934, as amended. As a private company, the Company wasnot required to adopt the types of internal control procedures that apublic company must adopt and maintain. Accordingly, since the merger,we have has taken numerous steps to enhance existing policies, orimplement new ones, so as to have an effective system of internalcontrols over financial reporting. These measures included thefollowing:

|              |                                                                                                                                                                                                                                                                      |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | We increased themembership of the board of directors to consist of six persons, four ofwhom are independent, as such term is defined in the Marketplace Rulesof the Nasdaq Stock Market. We designated one independent director as"Audit Committee FinancialExpert." |

|              |                                                                                             |
|--------------|---------------------------------------------------------------------------------------------|
| •  | Wedetermined to hire an individual to serve as Chief Financial Officer ona full-time basis. |

|              |                                                                                                                                                                                                                                                                               |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Weformalized a Code of Ethics and Business Conduct. The Code of Ethics isdesigned to promote ethical conduct and full, fair and accuratedisclosure in its periodic reports. We have re-emphasized to ourfinance and accounting personnel the importance of theserequirements. |

|              |                                                                                                                                                                                                                                                                                  |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | We have recruitednew personnel to the finance organization who have expertise infinancial controls and reporting, including a corporate controller, andmade other changes in finance personnel to improve the overall qualityand level of experience of the financeorganization. |

|              |                                                                                                        |
|--------------|--------------------------------------------------------------------------------------------------------|
| •  | We havereorganized the finance and general and administrative functions toimprove financial oversight. |

|              |                                                                                                                                                                                                                                                                                                   |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Wehave made changes in the organizational structure to provide a clearersegregation of responsibilities in connection with accountreconciliations, manual journal entries, and the preparation and reviewof documentation to support the preparation of quarterly and annualfinancial statements. |

|              |                                                                                                                                                                                                                                                                 |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | We haveadopted and implemented standard financial policies and procedures on acomprehensive basis. These policies provide finance and accountingguidance and include process documentation designed to ensureconsistent application of policies and procedures. |

We continueto implement additional measures in response to specific accounting andreporting weaknesses, including personnel and organizational changes toimprove supervision and increased training for finance and accountingpersonnel. We will continue to develop new policies and procedures andeducate and train employees on existing policies and procedures in aneffort to continuously improve internal controls and the controlenvironment.

Except for the improvements described above, therehave been no other changes in the internal control over financialreporting during the quarter ended June 30, 2005 that have materiallyaffected, or are reasonably likely to materially affect, internalcontrols over financial reporting.

We do not expect thatdisclosure controls or internal controls over financial reporting willprevent all errors or all instances of fraud. A control system, nomatter how well designed and operated, can provide only reasonable, notabsolute, assurance that the control system's objectives will bemet. Further, the design of a control system must reflect the fact thatthere are resource constraints, and the benefits of controls must beconsidered relative to their costs. Because of the inherent limitationsin all control systems, no evaluation of controls can provide absoluteassurance that all control issues and instances of fraud, if any,within its company have been detected. These inherent limitations

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include the realities that judgments indecision-making can be faulty, and that breakdowns can occur because ofsimple error or mistake. Controls can also be circumvented by theindividual acts of some persons, by collusion of two or more people, orby management override of the controls. The design of any system ofcontrols is based in part upon certain assumptions about the likelihoodof future events, and any design may not succeed in achieving itsstated goals under all potential future conditions. Over time, controlsmay become inadequate because of changes in conditions or deteriorationin the degree of compliance with policies or procedures. Because of theinherent limitation of a cost-effective control system, misstatementsdue to error or fraud may occur and not be detected.

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PartII

Item 1.    Legal Proceedings

We are not currentlya party to any lawsuit or proceeding which, in the opinion ofmanagement, is likely to have a material adverse effect on TAG, exceptas set forth below.

The Company was named in an administrativeproceedings with the securities regulatory agency in the state of Texasregarding a private placement of limited partnership interests ofSupercross the Movie, L.P. made to investors in that state bySupercross the Movie, L.P. On or about February 16, 2005, the TexasSecurities Bureau and counsel for TAG and Supercross agreed thatSupercross the Movie, L.P. would undertake a rescission offer for thelimited partnership interests of Supercross sold in Texas and to makeall the required filings in that state. Counsel for Supercross is inthe process of drafting the rescission offer to the investors in Texaswho subscribed for Supercross, the Movie L.P. interests.

Anarbitration was filed on July 20, 2004, Philipson vs. AnimalPartners, LP, et al, with the American Arbitration Associationwhich named TAG USA as a respondent. The arbitration allegedly arisesout of the petitioners' purchase of several units of the AnimalPartners Limited Partnership. The petition alleges that respondentshave never fully reported any financial information pertaining to thelimited partnership to the petitioners. TAG USA was named as arespondent despite the fact that it is neither a limited partner northe general partner of the limited partnership. TAG USA has adistribution arrangement with the limited partnership whereby it servesas the distributor of the motion picture Miracle Dogs, which wasproduced by the limited partnership. This matter was settled in March2005 and TAG USA was released from any claims. As part of thissettlement, TAG acquired the outstanding limited partnership interestsowned by the petitioners for $200,000.

The Company is involvedin various claims and other legal proceedings that arise from time totime in the ordinary course of business. We do not believe any of thesematters will have a material adverse affect on TAG's financialposition or results of operations. Litigation is inherentlyunpredictable and excessive verdicts do occur. Although we believe wehave valid defenses in these matters, in the future we may incurjudgments or enter into settlements of claims that could have amaterial adverse affect on TAG's financial position or results ofoperations in any particular period.

Item 2.    UnregisteredSales of Equity Securities and Use of Proceeds

On May 4, 2005,we completed a private placement with Satellite Strategic FinanceAssociates, LLC and Satellite Strategic Finance Partners, Ltd. ofshares of TAG's Series A Convertible Preferred Stock, par value$.001 per share, and warrants to purchase shares of TAG's commonstock. The placement was made pursuant to a Securities PurchaseAgreement, dated May 3, 2005 and the gross proceeds of this transactionwere $5,000,000. We repaid out of the gross proceeds the secured noteswe issued to the investors in the bridge financing completed March 30,2005. After payment of the notes and offering expenses in the amount ofapproximately $370,000, we received net proceeds of approximately$3,480,000 from this financing. We plan to use the net proceeds for theproduction, acquisition and distribution of feature films and generalworking capital.

In this financing, we issued 5,000 shares ofPreferred Stock, convertible at the option of the holder into aninitial aggregate amount of 2,000,000 shares of common stock, par value$.001 per share, at an initial conversion price of $2.50 per share, andwarrants to purchase an initial aggregate amount of 2,000,000 shares ofcommon stock at an initial exercise price of $2.50 per share, which areimmediately exercisable and expire in seven years. Each share ofPreferred Stock, which has a stated value of $1,000 per share, earnscumulative dividends at a rate of 6% per annum and matures threeyears from the date of issuance. The dividend and liquidation rights ofthe Preferred Stock are senior to those of its common stock. ThePreferred Stock does not carry voting rights.

We have the rightto require the investors to convert their shares of Preferred Stockinto shares of common stock under certain conditions, as described inthe Certificate of Designations, Rights and Preferences of Series APreferred Stock. In addition, we will be required to redeem thePreferred Stock on its maturity date, which is three years from theclosing date, at its stated value plus any 

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accrued and unpaid dividends. The Companywill also be required to redeem the Preferred Stock upon a default ofthe financing agreements or a change of control at redemption pricesthat vary, depending on the circumstances and timing of the redemption,between 101% and 120% of the sated value of the PreferredStock, plus unpaid dividends.

Both the Preferred Stock and thewarrants contain anti-dilution protection in the event that we issueshares of common stock or securities convertible into shares of commonstock at a price less than (a) the conversion price of the PreferredStock, (b) the exercise price of the warrants or (c) the then-currentmarket price of its common stock. In addition, if at any time theconversion price for the Preferred Stock is less than an amount equalto 80% of the then-current market price of the common stock, theconversion price will be reset to be equal to such amount. ThePreferred Stock will provide, however, that the conversion price cannotbe adjusted to an amount that is less than $1.00, except for an eventsuch as a stock split, stock dividend or similar events. We have alsogranted to the investors a participation right in future financings andagreed that for a period of at least 90 days from closing that we willnot effect subsequent placements of its securities, subject to certainexemptions from these restrictions.

The sale of the PreferredStock and warrants to the Investors was exempt from the registrationprovisions of the Securities Act of 1933 pursuant to Section 4(2) ofthe Securities Act and/or Regulation D. Accordingly, these securitiesmay not be offered or sold in the United States absent registration oran applicable exemption from such registration requirement.  Wefiled a registration statement covering the resale of the shares ofcommon stock issuable pursuant to the shares of Preferred Stock andwarrants pursuant to the registration rights agreement we entered intowith the investors. This registration statement has been declaredeffective by the Securities and Exchange Commission.

Aspreviously reported, in January 2005, we commenced a private placementoffering of shares of common stock under Section 4(2) of the SecuritiesAct of 1933, as amended, and Rule 506, promulgated thereunder. Thisoffering expired during the fiscal quarter ended June  30, 2005.An aggregate amount of 29,480 shares of common stock were issued at aper share price of $3.00. We received a total of $88,440 from thesesales which will be used for working capital and general corporatepurposes. We relied on Section 4(2) of the Securities Act of 1933 andRule 506 promulgated thereunder to issue the securities, inasmuch asthe shares were offered and sold only to accredited investors.

Stock Repurchases

During the six months ended June30, 2005, we did not repurchase any shares of its common stock.

Item 3.     Defaults Upon Senior Securities

None.

Item 4.    Submission of Matters to a Vote of SecurityHolders

In connection with the consummation of the sale of5,000 shares of Series A Preferred Stock and warrants on May 4, 2005,as described above, the holder of a majority of the Company'soutstanding shares of common stock executed a written consent approvingthe terms of the transaction, including the anti-dilution provisions ofthe Certificate of Designations, Rights and Preferences of Series APreferred Stock.

Item 5.    Other Information

On May2, 2005, we appointed the following five persons to serve as members ofthe Company's board of directors: Mr. John Botti, Mr. CarlMcCall, Mr. Marvin Rosen, Mr. James Schneider and Mr. RaymondSkiptunis. Messrs. Schneider, McCall and Rosen were also appointed tothe compensation committee of the board on such date and Mr. Schneiderwas named Chairman of this committee.

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On June 6, 2005, TAG's board ofdirectors constituted an Audit Committee and a Nominating and CorporateGovernance Committee. The board appointed Messrs. Botti, McCall andSchneider to serve on the Audit Committee and appointed Mr. Botti asChairman of the Audit Committee. The board also appointed Messrs.Botti, McCall and Rosen to serve on the Nominating and CorporateGovernance Committee and named Mr. McCall as Chairman of suchcommittee. Each of Messrs. Botti, McCall, Rosen and Schneider areindependent members of the board of directors as determined under thecriteria established by the NASDAQ stock market. Mr. Skiptunispresently provides services to TAG pursuant to a consultingagreement.

As previously disclosed, on March 30, 2005, weentered into a Letter of Intent to acquire a privately held company,Myriad Pictures, Inc., which is engaged in the film distributionbusiness. The Letter of Intent provides for a purchase price ofapproximately $4,000,000, including an earn out payment of up to$2,000,000 which will be negotiated by the parties prior to closing ofthe transaction. The earnout may be paid in cash or in shares of itscommon stock, at its option. In addition, we have committed to use anadditional $750,000 to provide Myriad with working capital and debtrepayment after the closing. Of the purchase price, $1,000,000 will beevidenced by a promissory note, payable over 12 months following theclosing. In connection with the execution of the Letter of Intent, weprovided Myriad with a short term loan of $250,000 which Myriad willuse for working capital and to pay for its acquisition costs pendingthe closing. In the event the transaction is completed, the loan willbe an intercompany debt and thereafter be converted into additionalequity in Myriad. The loan is secured by a lien on the assets ofMyriad. The parties have agreed to use their best efforts to completethe transaction during the quarter ending September 30, 2005. Closingof the transaction is subject to numerous conditions, including: (i)negotiation and execution of a definitive acquisition agreement, aswell as ancillary agreements such as employment agreements for certainprinciples of Myriad and the terms of the earn out payment; (ii)completion of due diligence by the parties; and (iii) completion offinancial statements for Myriad in accordance with SEC requirements.Accordingly, there can be no assurance that the transaction will becompleted, or completed upon the terms as described above.

TheCompany leased an industrial condominium of approximately 10,000 squarefeet for use as a production studio in Chatsworth, California under athree year lease which commenced in December 2004. Our rent obligationunder this lease was $8,000 per month. In May 2005, an entityaffiliated with our Chief Executive Officer purchased the premises fromthe landlord and in August 2005, the lease with TAG was terminatedeffective in May 2005 with no further obligation to the Company inconnection with the lease.

Item 6.    Exhibits

Theexhibits designated with an asterisk (*) are filed herewith. All otherexhibits have been previously filed with the Commission and, pursuantto 17 C.F.R. Section 230.411, are incorporated by reference to thedocument referenced in brackets following the descriptions of suchexhibits.

|               |  |                                                                                                                                                                 |  |  |  |  |
|---------------|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Descriptionof Document                                                                                                                                          |
| 3.1           |  | Certificate of Designations,Rights and Preferences of Series A Preferred Stock (Previously filed asexhibit 3.1 to Current Report on Form 8-K filed May 5,2005). |
| 4.1           |  | Form of Secured Note Issued byTAG Entertainment Corp., dated March 30, 2005 (Previously filed asexhibit 4.1 to Current Report on Form 8-K filed April 4,2005).  |
| 4.2           |  | Form of Warrant Issued by TAGEntertainment Corp., dated March 30, 2005 (Previously filed as exhibit4.2 to Current Report on Form 8-K filed April 4,2005).       |
| 4.3           |  | Form of Warrant Issued by TAGEntertainment Corp., dated May 4, 2005 (Previously filed as exhibit 4.1to Current Report on Form 8-K filed May 5,2005).            |
|               |

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|               |  |                                                                                                                                                                                                               |  |  |  |  |
|---------------|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Descriptionof Document                                                                                                                                                                                        |
| 10.1          |  | Form of SecuritiesPurchase Agreement between TAG Entertainment Corp., and Investors,dated March 30, 2005 (Previously filed as exhibit 10.1 to CurrentReport on Form 8-K filed April 4,2005)                   |
| 10.2          |  | Form of Security Agreementbetween TAG Entertainment Corp., TAG Entertainment USA, Inc. andInvestors, dated March 30, 2005 (Previously filed as exhibit 10.2 toCurrent Report on Form 8-K filed April 4,2005). |
| 10.3          |  | Subsidiary Guarantee by TAGEntertainment USA, Inc., dated March 30, 2005 (Previously filed asexhibit 10.3 to Current Report on Form 8-K filed April 4,2005).                                                  |
| 10.4          |  | Form of Registration RightsAgreement between TAG Entertainment Corp. and Investors, dated March30, 2005 (Previously filed as exhibit 10.4 to Current Report on Form8-K filed April 4, 2005).                  |
| 10.5          |  | Form ofSecurities Purchase Agreement between TAG Entertainment Corp. andInvestors, dated May 3, 2005 (Previously filed as exhibit 10.1 toCurrent Report on Form 8-K filed May 5,2005).                        |
| 10.6          |  | Form of Registration RightsAgreement between TAG Entertainment Corp. and Investors, dated May 3,2005 (Previously filed as exhibit 10.2 to Current Report on Form 8-Kfiled May 5, 2005).                       |
| 31.1*         |  | Certification ofChief Executive Officer and Chief Financial Officer pursuant toExchange Act Rules 13a-14(a) and 15(d) -14(a), adopted pursuant toSection 302 of the Sarbanes-Oxley Act of2002.                |
| 32.1*         |  | Certification of Chief ExecutiveOfficer and Chief Financial Officer pursuant to 18  U.S.C.Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Actof  2002.                                    |
|               |

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SIGNATURES

In accordancewith Section 13 or 15(d) of the Exchange Act, TAG caused this Report tobe signed on its behalf by the undersigned, thereunto dulyauthorized.

|                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |
|---------------------|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| Date:August 12,2005 |  | TAGENTERTAINMENT CORP.    By:   /s/ SteveAustin                                                    SteveAustin        President and Chief Executive Officer,        Chief FinancialOfficer |
|                     |

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