UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                   FORM 10-QSB

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

                  For the Quarterly Period Ended June 30, 2006

                                       OR

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

       For the transition Period from ________________ to ________________

                        Commission file number 000-24057

                        Rush Financial Technologies, Inc.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Texas                                       75-2375969
   ------------------------              --------------------------------------
   (State of Incorporation)              (I. R. S. Employer Identification No.)

                 13355 Noel Road, Suite 300, Dallas, Texas 75240
               ---------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                  972-450-6000
                           ---------------------------
                           (Issuer's telephone number)


         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

                                 Yes XXX No ____

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

         State the number of shares outstanding of each of the issuer's classes
of common equity as of August 15, 2006: 37,748,510 shares of common stock, $0.01
par value.

         Transitional Small Business Disclosure Format;

                                 Yes ___ No XXX


<PAGE>

                         PART I -- FINANCIAL INFORMATION

Item 1.  Financial Statements










                                       2
<PAGE>
<TABLE>
<CAPTION>

               RUSH FINANCIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
                      UNAUDITED CONSOLIDATED BALANCE SHEETS

                                                                        June 30,       December 31,
                                ASSETS                                    2006             2005
                                                                     -------------    -------------
<S>                                                                  <C>              <C>
Current assets
   Cash and cash equivalents                                         $   4,658,312    $      23,399
   Cash segregated in compliance with federal regulations              144,306,602             --
   Restricted cash                                                            --             31,000
   Receivables from brokers, dealers and clearing organizations         16,083,319             --
   Receivables from customers                                           31,636,131             --
   Receivables from non customers                                          125,002             --
   Accounts receivable                                                     945,499           78,190
   Prepaid expenses and other current assets                               427,949          134,119
                                                                     -------------    -------------
         Total current assets                                          198,182,814          266,708
                                                                     -------------    -------------

Capitalized software development costs, net                              1,431,985          595,966
Property and equipment, net                                                771,534          108,731
Intangibles, net                                                         4,809,393          135,681
Goodwill                                                                11,661,480             --
Other assets                                                                 2,000           32,800
Deferred acquisition costs                                                    --            553,475
                                                                     -------------    -------------
         Total assets                                                $ 216,859,206    $   1,693,361
                                                                     =============    =============

              LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current liabilities
   Line of credit                                                    $   4,140,387    $        --
   Payables to brokers, dealers and clearing organizations                 917,137             --
   Payables to customers                                               174,617,145             --
   Payables to non-customers                                               294,335             --
   Accounts payable and accrued expenses (including $112,605 and
    $88,376 of accrued interest expense due to related parties at
    June 30, 2006 and December 31, 2005, respectively)                   6,639,058        2,412,843
   Accrued preferred stock dividends                                       235,751          209,902
   Liabilities acquired in 2001 acquisition                                332,098          332,098
   Convertible notes payable, including $318,333 due to related
    parties at June 30, 2006 and December 31, 2005)                        485,000          485,000
                                                                     -------------    -------------
         Total current liabilities                                     187,660,911        3,439,843
                                                                     -------------    -------------

   Convertible bonds payable, net of unamortized debt discount of
    $10,636 and $14,201 at June 30, 2006 and December 31, 2005,
    respectively                                                           334,364          330,799
                                                                     -------------    -------------
         Total liabilities                                             187,995,275        3,770,642
                                                                     -------------    -------------

Commitment and contingencies

Shareholders' equity (deficit)
   Preferred stock - cumulative; $10 par value; 38,792 shares
    authorized; 14,063 shares issued and outstanding; liquidation
    preference of $10 per share                                            140,630          140,630
   Preferred stock - convertible cumulative; $10 par value;
    835,000 shares authorized; 50,980 and 51,980 shares issued and
    outstanding at June 30, 2006 and December 31, 2005,
    respectively; liquidation preference of $10 per share                  509,800          519,800
   Preferred stock - convertible non-cumulative voting; $10 par
    value; 35,000 shares authorized, issued and outstanding at
    June 30, 2006; liquidation preference of $1,000 per share              350,000             --
   Common stock - $0.01 par value, 50,000,000 shares authorized;
    37,748,510 and 37,478,127 shares issued and outstanding at
    June 30, 2006 and December 31, 2005, respectively                      377,485          374,781
   Additional paid in capital                                           50,989,386       18,419,535
   Accumulated deficit                                                 (23,503,370)     (21,532,027)
                                                                     -------------    -------------
         Total shareholders' equity (deficit)                           28,863,931       (2,077,281)
                                                                     -------------    -------------
         Total liabilities and shareholders' equity (deficit)        $ 216,859,206    $   1,693,361
                                                                     =============    =============
</TABLE>

      See accompanying notes to unaudited consolidated financial statements

                                       3
<PAGE>
<TABLE>
<CAPTION>

               RUSH FINANCIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                Three Months Ended June 30,     Six Months Ended June 30,
                                               ----------------------------    ----------------------------
                                                   2006            2005            2006            2005
                                               ------------    ------------    ------------    ------------
<S>                                            <C>             <C>             <C>             <C>
Revenues
   Commissions and fees                        $  7,550,548    $    514,281    $  8,217,124    $    994,323
   Interest                                       2,024,365           2,884       2,029,109           6,007
   Other income                                     101,131          23,466         117,950          32,325
                                               ------------    ------------    ------------    ------------
                                                  9,676,044         540,631      10,364,183       1,032,655
Expenses
   Commissions, execution and exchange fees       4,050,894         233,039       4,377,857         434,032
   Employee compensation                          2,936,056         462,682       3,333,366         852,265
   Quotations and market data                     1,116,457          56,136       1,244,784          87,349
   Interest expense on accounts                     915,645            --           915,645            --
   Advertising and promotional                      180,456          90,861         187,230         167,682
   Professional fees                                279,437          90,017         376,464         143,732
   Communications and information technology        180,682          39,338         228,296          73,795
   Occupancy and equipment rental                   160,723          78,710         223,920         144,665
   Depreciation and amortization                    518,781         219,242         624,495         455,164
   Travel and entertainment                          43,996            --            43,996            --
   Other operating expenses                         548,361          41,270         572,847          94,639
                                               ------------    ------------    ------------    ------------
Total expenses                                   10,931,488       1,311,295      12,128,900       2,453,323

Operating income (loss)                          (1,255,444)       (770,664)     (1,764,717)     (1,420,668)

Interest expense                                    159,293          38,880         206,626          74,459
                                               ------------    ------------    ------------    ------------
Net loss                                       $ (1,414,737)   $   (809,544)   $ (1,971,343)   $ (1,495,127)
                                               ============    ============    ============    ============

Beneficial conversion feature on preferred
 stock                                           (46,236,641)           --      (46,236,641)           --

Dividends on preferred stock                        (14,672)        (14,072)        (29,531)        (29,719)
                                               ------------    ------------    ------------    ------------

Net loss attributable to common shareholders   $(47,666,050)   $   (823,616)   $(48,237,515)   $ (1,524,846)
                                               ============    ============    ============    ============

Basic and diluted net loss per share
 attributable to common shareholders           $      (1.26)   $      (0.03)   $      (1.28)   $      (0.06)
                                               ============    ============    ============    ============


Weighted average common shares outstanding,
 basic and diluted                               37,699,953      29,393,556      37,671,104      27,541,667
                                               ============    ============    ============    ============
</TABLE>

      See accompanying notes to unaudited consolidated financial statements

                                       4
<PAGE>
<TABLE>
<CAPTION>

               RUSH FINANCIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the Six Months ended June 30, 2006 and 2005

                                                                                2006            2005
                                                                            ------------    ------------
<S>                                                                         <C>             <C>
Cash flows from operating activities:
   Net loss                                                                 $ (1,971,343)   $ (1,495,127)
    Adjustments to reconcile net loss to net cash used in
     operating activities:
       Common stock issued for compensation, services and expenses               271,897          93,339
       Depreciation and amortization                                             624,495         449,390
       Amortization of debt discount                                             145,279          13,555
       Amortization of deferred financing fees                                      --             5,774
       Loss on settlement of liabilities                                            --            26,458
       Change in assets and liabilities, net of effects of acquisition:
          (Increase) decrease in assets:
             Cash segregated in compliance with federal regulations          (29,711,922)           --
             Receivables from brokers, dealers and clearing organizations      3,240,538            --
             Receivables from customers                                       28,322,900            --
             Receivables from non customers                                      309,360            --
             Accounts receivable                                                 990,358         (12,102)
             Prepaid expenses and other assets                                  (261,030)        (25,117)
          Increase (decrease) in liabilities:
             Payables to brokers, dealers and clearing organizations             (46,806)           --
             Payables to customers                                            (3,762,408)           --
             Payables to non customers                                            33,340            --
             Accounts payable and accrued expenses                               344,489          86,722
             Accrued payroll tax obligation                                     (679,615)        109,964
                                                                            ------------    ------------
Net cash used in operating activities                                         (2,150,468)       (747,144)
                                                                            ------------    ------------

Cash flows from investing activities:
   Cash acquired in acquisition                                               10,035,187            --
   Cash paid in acquisition                                                  (25,000,000)           --
   Purchase of property and equipment                                            (90,175)        (69,240)
   Capitalization of software development costs                                     --          (132,851)
                                                                            ------------    ------------
Net cash used in investing activities                                        (15,054,988)       (202,091)
                                                                            ------------    ------------

Cash flows from financing activities:
   Proceeds from issuance of preferred stock, net                             32,494,407            --
   Proceeds from sale of common stock                                               --           615,000
   Proceeds from exercise of stock options                                        30,000           3,200
   Proceeds from issuance of convertible notes payable to related party          300,000            --
   Payment of convertible notes payable to related party                        (300,000)           --
   Net payments on line of credit                                            (10,684,038)           --
   Proceeds from issuance of note payable to related party                       100,000            --
   Payment of note payable to related party                                     (100,000)           --
                                                                            ------------    ------------
Net cash provided by financing activities                                     21,840,369         618,200
                                                                            ------------    ------------

Net decrease in cash and cash equivalents                                      4,634,913        (331,035)
Cash and cash equivalents at beginning of period                                  23,399         343,510
                                                                            ------------    ------------
Cash and cash equivalents at end of period                                  $  4,658,312    $     12,475
                                                                            ============    ============

      See accompanying notes to unaudited consolidated financial statements

                                       5
<PAGE>


               RUSH FINANCIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the Six Months ended June 30, 2006 and 2005
                                   (continued)

Supplemental Disclosure of Cash Flow Information:
   Cash paid for interest                                                   $       --      $       --
   Cash paid for income taxes                                               $       --      $       --

Supplemental Disclosure of Non-Cash Information:
   Preferred stock dividend accrued                                         $     29,531    $     29,719
   Fair value of warrants issued in connection  with debt
        financing recorded as debt discount                                 $    141,714    $       --
   Common stock issued as payment for accrued interest
        and accrued dividends                                               $      3,682    $    102,145
   Common stock issued in the LostView acquisition                          $       --      $    195,000
   Intangibles acquired with common stock                                   $     22,500    $       --
   Conversion of bonds to common stock                                      $       --      $    140,000
   Common stock issued for conversion of preferred stock                    $     10,000    $       --
   Common stock issued to acquire intangible assets                         $       --      $     82,835
</TABLE>





      See accompanying notes to unaudited consolidated financial statements

                                       6
<PAGE>



1.       Basis of Presentation and Company Information

         The financial statements included herein have been prepared by Rush
Financial Technologies, Inc., without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such rules and regulations,
although we believe that the disclosures contained herein are adequate to make
the information presented not misleading. In the opinion of management, the
information furnished in the unaudited consolidated financial statements
reflects all adjustments which are ordinary in nature and necessary to present
fairly our financial position, results of operations and changes in financial
position for such interim period. These interim financial statements should be
read in conjunction with our financial statements and the notes thereto as of
and for the year ended December 31, 2005, included in our annual report on Form
10-KSB for the year ended December 31, 2005 and 8Ka related to the acquisition
of Terra Nova Trading, LLC as filed with the Securities and Exchange Commission
on July 26, 2006.

         Rush Financial  Technologies,  Inc. (the  "Company," "we" or "us") is a
holding company that operates  through three primary  subsidiaries:  a real-time
financial  technology   development  company,   RushGroup   Technologies,   Inc.
("RushGroup"), a direct-access online brokerage firm, RushTrade Securities, Inc.
("RushTrade"), and a full service self-clearing agency broker/dealer, Terra Nova
Trading L.L.C. ("Terra Nova").

         RushGroup is a wholly owned subsidiary of the Company. RushGroup is a
registered Service Bureau and member of the Certified Partners program with the
Nasdaq Stock Market. RushGroup serves as our financial technology development
subsidiary, which develops and operates proprietary real-time portfolio
management software products, advanced order management systems, direct-access
trading software applications and a data service center. Utilizing a number of
proprietary technologies and its exclusive Direct Access Routing Technology
(DART(TM)), an intelligent order routing system, RushGroup offers real-time
market data platforms and direct access trading systems to the National
Association of Securities Dealers ("NASD") member broker/dealers, institutional
portfolio managers and traders.

         RushTrade is a wholly owned subsidiary of the Company. RushTrade, a
fully-disclosed introducing broker/dealer and member of the NASD, Pacific
Exchange (PCX), Boson Stock Exchange ("BSX"), Securities Investor Protection
Corporation ("SIPC") and National Futures Association ("NFA"), offers securities
and direct access online brokerage, trading and advanced order routing services
to its retail customers utilizing RushGroup's software products. RushTrade
customer accounts are insured up to $25 million and are held at a third-party
clearing firm. RushTrade is registered in all 50 states and accepts customers
from most foreign countries. Customer accounts are self-directed, and RushTrade
does not provide advice or make trade recommendations.

         Terra Nova , founded in 1994, is a full-service self-clearing agency
broker/dealer and futures commission merchant. Terra Nova is a member of the
NASD, NFA, and SIPC, as well as the following exchanges: PCX, International
Securities Exchange ("ISE"), Boston Options Exchange ("BOX") and Chicago Stock
Exchange ("CHX"). Terra Nova maintains a diversified customer base servicing
institutional, wholesale (defined as business-to-business and correspondent
clearing for other introducing broker/dealers) and direct market access clients,
while offering a diversified product offering including equities, options,
futures, fixed income and foreign exchange. Headquartered in Chicago, Terra Nova
has approximately 70 employees, with a sales presence in New York, San
Francisco, Denver and San Antonio. Terra Nova was acquired by the Company on May
17, 2006. See note 3 "Acquisition" for further details.

2.       Significant Accounting Policies

Revenue Recognition

         Investment services revenues consist of commission revenue, other
brokerage related revenue, user fees and interest income. Commission revenue and
related expenses on securities transactions are recorded on a trade date basis.
Other brokerage related revenue consists of fees and rebates when orders are
routed through exchanges and ECNs and are recorded on a trade date basis as
security transactions occur. User fees are charges for the use of the Company's
software execution platform. Revenues from user fees are recognized on a monthly
basis as services are provided to account holders. Interest income consists
primarily of the Company's portion of the income generated by charges to
customers on margin balances and customer cash held and invested by the
Company's clearing firm, offset by interest paid to customers on their credit
balances. Interest is recorded at calendar month end on settled balances.

                                       7
<PAGE>

Goodwill

         Goodwill is recorded when the price paid for an acquisition exceeds the
estimated fair value of the net identified tangible and intangible assets
acquired. Annually in the fourth quarter of each year, or more frequently if
indicators of potential impairment exist, the Company performs a review to
determine if the carrying value of the recorded goodwill is impaired. The first
step of this process is to identify potential goodwill impairment by comparing
the fair value of the reporting unit to its carrying value. The Company
estimates fair value using a combination of the market price of the Company's
common equity and discounted cash flows. If the carrying value is less than fair
value, the Company would complete step two in the impairment review process
which measures the amount of goodwill impairment. Management tests the
reasonableness of the inputs and outcomes of the discounted cash flow analysis
and the evaluation of the market price of its common equity against other
available comparable market data. All of the goodwill is related to the
Company's May 2006 acquisition. The goodwill resulting from the May 2006
acquisition has been assigned to the Terra Nova reporting unit within the
investment services segment.

Share Based Payments

         On January 1, 2006, we adopted Financial Accounting Standards No. 123
(revised 2004), "Share-Based Payment" ("FAS 123(R)"), that addresses the
accounting for share-based payment transactions in which an enterprise receives
employee services in exchange for either equity instruments of the enterprise or
liabilities that are based on the fair value of the enterprise's equity
instruments or that may be settled by the issuance of such equity instruments.
The statement eliminates the ability to account for share-based compensation
transactions, as we formerly did, using the intrinsic value method as prescribed
by Accounting Principles Board, or APB, Opinion No. 25, "Accounting for Stock
Issued to Employees," and generally requires that such transactions be accounted
for using a fair-value-based method and recognized as expenses in our
consolidated statement of operations.

         We adopted FAS 123(R) using the modified prospective method which
requires the application of the accounting standard as of January 1, 2006. Our
consolidated financial statements as of and for the two quarters ended June 30,
2006 reflect the impact of adopting FAS 123(R). In accordance with the modified
prospective method, the consolidated financial statements for prior periods have
not been restated to reflect, and do not include, the impact of FAS 123(R). See
Note 10 "Share-based Payments" for further details.

         Share-based compensation expense recognized during the period is based
on the value of the portion of share-based payment awards that are ultimately
expected to vest. Share-based compensation expense recognized in the
consolidated statements of operations during the three and six months ended June
30, 2006 included compensation expense for share-based payment awards granted
prior to, but not yet vested, as of December 31, 2005 based on the grant date
fair and compensation expense for the share-based payment awards granted
subsequent to December 31, 2005, based on the grant date fair value. FAS 123(R)
requires forfeitures to be estimated at the time of grant and revised, if
necessary, in subsequent periods if actual forfeitures differ from those
estimates. As share-based compensation expense recognized in the statement of
operations for the three and six months ended June 30, 2006 is based on awards
ultimately expected to vest, it has been reduced for estimated forfeitures. In
the pro forma information required under FAS 148 for the periods prior to 2006,
we accounted for forfeitures as they occurred.

3.       Acquisition

         On March 30, 2006, the Company and TAL Financial Services, LLC ("TFS")
entered into a Membership Interest Purchase Agreement (the "Purchase") providing
for Rush to purchase from TFS 100% of the outstanding membership interests of
Terra Nova Trading, LLC, Market Wise Securities, LLC ("MW Securities") and
Market Wise Stock Trading School, LLC ("MW School"). We raised $35 million from
the sale of 35,000 shares of Series E Convertible Preferred Stock ("Series E
Preferred") and 116,655,000 warrants to purchase common stock which was used to
finance the acquisition. The purchase price of the acquisition was $25,000,000
plus acquisition costs of $493,122. The remainder of the funds, net of offering
and acquisition related expenses, will provide for additional working capital
and broker/dealer net capital. We received final approval for the Purchase from
the National Association of Securities Dealers, Inc. ("NASD") and various other
regulatory authorities on May 15, 2006. We funded the purchase on May 17, 2006
and completed the sale of the Series E Preferred on May 19, 2006 with a total of
$35,000,000 raised. The Purchase was accounted for as a business combination.

                                       8
<PAGE>

         The Series E Preferred will be automatically converted into 6,667
shares of common stock per $1,000 face value of each Series E Preferred stock
following the amendment of Rush's articles of incorporation to increase the
number of authorized shares of our common stock. The warrants provide for the
purchase of 3,333 shares of the Company's common stock at $0.30 per share for
each share of Series E Preferred. The warrants have a term of five years.

         Terra Nova, founded in 1994, is a full-service self-clearing agency
broker/dealer and futures commission merchant. Terra Nova is a member of the
NASD, NFA and SIPC, as well as the following exchanges: PCX, ISE, BOX and CHX.
Terra Nova maintains a diversified customer base servicing Institutional,
Business-to-Business (including Correspondent Clearing for other introducing
broker/dealers) and Direct Market Access clients, while offering diversified
product offering including equities, options, futures, fixed income and foreign
exchange-traded securities. Headquartered in Chicago, Terra Nova has
approximately 70 employees, with a sales presence in New York, San Francisco,
Denver and San Antonio.

         MW School is an education provider to traders and investors. Its
mission is to support traders and investors in their quest to achieve financial
freedom and success, while sharing the passion and trading skills of its
instructors. MW School's education curriculum is provided to assist traders and
investors develop sound methods of analysis and risk management. Headquartered
in Boulder, Colorado, MW School trains students worldwide. Operations are
minimal.

         MW Securities is a registered broker/dealer authorized to do business
in a limited number of states. Currently MarketWise Securities introduced
clients to Terra Nova Trading, LLC. Plans are being reviewed to determine the
ultimate use for this entity. Operations are minimal.

         The acquisition was accounted for using the purchase method of
accounting. As such, the assets and liabilities of the acquired companies have
been recorded at their estimated fair values based upon an independent third
party valuation and the results of operations of the acquired companies have
been included in the consolidated results of operations from May 1, 2006, the
effective date of the acquisition for accounting purposes. The excess purchase
price over the fair value of the tangible and intangible assets acquired and
liabilities assumed in the acquisition totaled $11,661,480 and was allocated to
goodwill.


         We believe that the Acquisition was in the best interests of our
shareholders because, among other things:

     o   it enhances the Company's  sophisticated  front-end trading platform by
         providing  "back-end"  execution  and clearing  services  acquired from
         Terra Nova;

     o   the combined  technologies of the trading  platform and clearing system
         provide the Company with a complete front-to-back solution;

     o   the combined companies have approximately  20,000 customer accounts and
         over $600 million in customer account assets;

     o   the  RushGroup  platform  will  be  promoted  to  approximately  20,000
         additional customers;

     o   Terra Nova was  repeatedly  ranked  among the leaders in direct  access
         online trading by Barron's Magazine and other financial publications;

     o   the RushGroup  trading  platform  complements the needs of Terra Nova's
         diverse client base of institutions,  correspondent  broker-dealers and
         direct active traders and investors;

     o   when  combined,  the  broker-dealers,  RushTrade and Terra Nova,  might
         realize synergies and reduced overhead;

     o   the RushGroup trading platform includes a low-cost  web-based  platform
         that Terra Nova may add to its product offering, which may assist Terra
         Nova is expanding its market reach;

     o   Terra Nova's ability to support trading in equities,  options,  futures
         and FOREX; and

                                       9
<PAGE>
<TABLE>
<CAPTION>

     o   MW School's  education  offering  complements the Company's  technology
         initiatives and broker dealer trading  activities by providing training
         in trading,  analysis  and risk  management  to traders  and  investors
         worldwide.

Preliminary Purchase Price Allocation

     Following is a summary of the amounts assigned to the assets and
liabilities of the acquired companies:


           Current assets                             $ 206,175,784
           Current liabilities                         (199,028,109)
           Fixed assets                                     683,967
           Capitilized software (3 year life)             1,000,000
           Intagibles (3 year life)                       5,000,000
           Goodwill                                      11,661,480
                                                      -------------
       Total purchase price                           $  25,493,122
                                                      =============



     None of the goodwill recorded as a result of the acquisition is expected to
be deductible for tax purposes.

     During the three and six months ended June 30, 2006, the Company recognized
approximately $278,000 of amortization expense related to the intangible
acquired.

Unaudited Pro Forma Results

     The following unaudited pro forma consolidated results of operations have
been prepared as if the acquisition discussed above had occurred as of January
1, 2005:



                                    Three Months Ended June 30,      Six Months Ended June 30,
                                   ----------------------------    ----------------------------
                                       2006            2005            2006            2005
                                   ------------    ------------    ------------    ------------
<S>                                <C>             <C>             <C>             <C>
Revenues                           $ 13,793,030    $ 15,950,210    $ 27,796,359    $ 25,780,725

Net (loss) attributable to
 common shareholders               $ (1,614,471)   $  3,155,445    $ (2,249,573)   $    952,086
                                   ============    ============    ============    ============

Net income (loss) per share
 attributed to common
 shareholders, basic and diluted   $      (0.04)   $       0.11    $      (0.06)   $      (0.03)
                                   ============    ============    ============    ============

Weighted average common shares
 outstanding, basic and diluted     37,699,953      29,393,556      37,671,104      27,541,667
                                   ============    ============    ============    ============
</TABLE>

4.       Use of Accounting Estimates

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported financial
statement amounts and disclosures. Accordingly, the actual amounts could differ
from those estimates.

                                       10
<PAGE>
<TABLE>
<CAPTION>

5.       Industry Segment Information

         Our segments have been identified based on products and services
offered as well as risks assumed in a manner consistent with the data utilized
by management in evaluating operations. RushTrade and Terra Nova offer
broker/dealer services, and their operations have been included in the
Investment Services segment. The Software Services segment is comprised of
RushGroup which plans to offer licensing of the RushTrade direct access software
and other arrangements. There is ongoing development activity on the software to
enhance its use to outside entities.

         The assets of the parent company, Rush Financial Technologies, Inc.,
are used to support the operations of the primary operating divisions. The
expenses of the parent company are included in general and administrative
expenses.

         The following summarizes our identifiable assets, capital expenditures
and depreciation and amortization by industry segment as of the dates indicated:

                                                     June 30,
                                          ----------------------------
             Identifiable Assets              2006            2005
         ----------------------------     ------------    ------------
         Investment Services              $211,045,182    $    201,923
         Software Services                     612,016       1,141,633
         Corporate                           5,202,008         202,895
                                          ------------    ------------
                    Total                 $216,859,206    $  1,546,451
                                          ============    ============


                                  Three Months Ended June 30,      Six Months Ended June 30,
                                 ----------------------------    ----------------------------
    Capital Expenditures             2006            2005            2006            2005
----------------------------     ------------    ------------    ------------    ------------
<S>                              <C>             <C>             <C>             <C>
Investment Services              $      4,640    $      7,044    $      2,120    $      7,772
Software Services                      52,428          79,985          52,423         167,280
Corporate                              32,876           1,701          35,632          27,039
                                 ------------    ------------    ------------    ------------
           Total                 $     89,944    $     88,730    $     90,175    $    202,091
                                 ============    ============    ============    ============

                                  Three Months Ended June 30,      Six Months Ended June 30,
   Depreciation and              ----------------------------    ----------------------------
     Amortization                    2006            2005            2006            2005
----------------------------     ------------    ------------    ------------    ------------
Investment Services              $     84,324    $     37,197    $    126,223    $     70,271
Software Services                      64,397         177,826         127,334         373,094
Corporate                             370,060           1,909         370,938           6,025
                                 ------------    ------------    ------------    ------------
           Total                 $    518,781    $    216,932    $    624,495    $    449,390
                                 ============    ============    ============    ============



         The following summarizes our industry segment operating data for the
periods indicated:

                                       11
<PAGE>


                                  Three Months Ended June 30,      Six Months Ended June 30,
                                 ----------------------------    ----------------------------
          Revenue                    2006            2005            2006            2005
----------------------------     ------------    ------------    ------------    ------------
Investment Services              $  9,656,262    $    514,027    $ 10,330,313    $    997,048
Software Services                       1,650           1,075           3,370           3,670
Corporate                              18,132          25,529          30,499          31,937
                                 ------------    ------------    ------------    ------------
           Total                 $  9,676,044    $    540,631    $ 10,364,182    $  1,032,655
                                 ============    ============    ============    ============

                                  Three Months Ended June 30,      Six Months Ended June 30,
         Non-operatin            ----------------------------    ----------------------------
       Interest Expense              2006            2005            2006            2005
----------------------------     ------------    ------------    ------------    ------------
Investment Services              $      2,213    $        310    $      3,260    $        310
Software Services                         786            --             2,275              33
Corporate                             156,294          38,570         201,091          74,116
                                 ------------    ------------    ------------    ------------
           Total                 $    159,293    $     38,880    $    206,626    $     74,459
                                 ============    ============    ============    ============

                                  Three Months Ended June 30,      Six Months Ended June 30,
                                 ----------------------------    ----------------------------
       Net Income (Loss)             2006            2005            2006            2005
----------------------------     ------------    ------------    ------------    ------------
Investment Services              $    213,575    $     16,736    $    291,585    $     23,880
Software Services                    (391,220)       (485,787)       (765,081)       (846,295)
Corporate                          (1,237,092)       (340,493)     (1,497,846)       (672,712)
                                 ------------    ------------    ------------    ------------
           Total                 $ (1,414,737)   $   (809,544)   $ (1,971,342)   $ (1,495,127)
                                 ============    ============    ============    ============

                                  Three Months Ended June 30,      Six Months Ended June 30,
                                 ----------------------------    ----------------------------
          Expense                    2006            2005            2006            2005
----------------------------     ------------    ------------    ------------    ------------
Investment Services              $  9,442,687    $    497,291    $ 10,038,728    $    973,168
Software Services                     392,870         486,862         768,451         849,965
Corporate                           1,255,224         366,022       1,528,345         704,649
                                 ------------    ------------    ------------    ------------
           Total                 $ 11,090,781    $  1,350,175    $ 12,335,524    $  2,527,782
                                 ============    ============    ============    ============
</TABLE>

6.   Reclassification

         Certain prior period balances have been reclassified to conform to the
current period presentation.


7.   Net Loss per Share

         Basic and diluted net loss per share is computed by dividing net loss
applicable to common shareholders by the weighted average number of common
stocks outstanding for the period. Common stock equivalents representing stock
options and warrants, convertible bonds, notes, and preferred stock were not
included in the computation of diluted net loss per share because they were
antidilutive.

8.   Convertible Notes

         As of June 30, 2006 we have convertible notes due to a related party
totaling $185,000 plus accrued interest that are past due and four additional
notes totaling $300,000 plus accrued interest that are past due. We are in
discussion with the holders, and we expect to be able to repay or restructure
these notes.

         On March 8, 2006 we borrowed funds from and issued a convertible note
for $200,000 to a related party. This note accrued interest at the rate of 10%
per annum payable quarterly commencing July 1, 2006 and was secured by a general
security interest in all assets. The note was due on the earlier of September 8,
2007 or at the option of the payee, the date we consummate an equity or debt
financing of at least $200,000. The note plus accrued interest was convertible,
in whole or in part, at the option of the payee into our equity securities as
part of an equity or debt public or private offering. The note was to convert to
equity at the then current private or public offering rate. We calculated the
value of the beneficial conversion feature embedded in these notes in accordance
with EITF 98-5 "Accounting for Convertible Securities with Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios" ("EITF 98-5") and EITF
00-27 "Application of Issue No. 98-5 to Certain Convertible Instruments" ("EITF
00-27"). Since the note was contingently convertible, the intrinsic value of the

                                       12
<PAGE>

beneficial conversion feature would not be recorded until the note became
convertible. We borrowed an additional $100,000 from the related party on April
28, 2006. The $200,000 principal amount above was amended to read $300,000. All
other terms of the note remained unchanged.

         In connection with the note, we issued 1,000,000 warrants for the
purchase of our common stock at a price of $0.22 per share. These warrants
expire on March 7, 2011. We recorded a debt discount of $83,061 relating to the
issuance of the warrants. This amount represents the relative fair value of the
warrants, which was determined by using the Black-Scholes pricing model with the
following assumptions: 88% volatility, no dividend yield, 5 year term and 4.37%
risk free interest rate. In accordance with EITF 98-5 and EITF 00-27, we were
amortizing the debt discount to interest expense over the eighteen-month term of
the note.

         On May 15, 2006 we repaid the note. In relation to this repayment we
expensed the remainder of the debt discount in the second quarter of 2006. For
the three and six months ending June 30, 2006 interest expense related to
amortization of the debt discount was $77,827 and $83,061, respectively.

9.   Note Payable

         We borrowed funds from and issued a note for $100,000 on January 3,
2006 to a related party. This note accrued interest at the rate of 12% per annum
payable in full with accrued interest on January 3, 2007. The note was secured
by "the software and all related intellectual property known as RushTrade Direct
and RushTrade Direct Pro, the direct access trading products of RushTrade.com
and the internet domain names RushTrade.com and daytrade.com". In connection
with the note, we issued 869,566 warrants for the purchase of our common stock
at $0.23 per share. The warrants expire January 7, 2011. We recorded a debt
discount of $58,653 relating to the issuance of the warrants. This amount
represents the relative fair value of the warrants, which was determined by
using the Black-Scholes pricing model with the following assumptions: 91%
volatility, no dividend yield, 5 year term and 4.73% risk free interest rate. In
accordance with EITF 98-5 and EITF 00-27, we were amortizing the debt discount
to interest expense over the twelve-month term of the note. We repaid this note
in May 2006 and accordingly expensed the remainder of the debt discount. For the
three and six months ending June 30, 2006 interest expense related to the
amortization of this debt discount was $44,673 and $58,653, respectively.

10.  Share-based Payments

         We have a 1997 Stock Option Plan (the "1997 Option Plan"), which
provides for the grant to eligible employees and directors of options for the
purchase of common stock. The 1997 Option Plan covers, in the aggregate, a
maximum of 500,000 shares of common stock, and provides for the granting of both
incentive stock options (as defined in Section 422 of the Internal Revenue Code
of 1986) and nonqualified stock options (options which do not meet the
requirements of Section 422). Under the 1997 Option Plan, the exercise price may
not be less than the fair market value of the common stock on the date of the
grant of the option. At June 30, 2006, there were a total of 243,182 options
outstanding under the 1997 Stock Option Plan. Of the original 500,000 shares
available under the plan, 223,903 options remain available for issue.

         We also have a 2000 Stock Option Plan (the "2000 Option Plan"), which
provides for the grant to eligible employees and directors of options for the
purchase of common stock. The 2000 Option Plan covers, in the aggregate, a
maximum of 500,000 shares of common stock, and provides for the granting of both
incentive stock options (as defined in Section 422 of the Internal Revenue Code
of 1986) and nonqualified stock options (options which do not meet the
requirements of Section 422). Under the 2000 Option Plan, the exercise price may
not be less than the fair market value of the common stock on the date of the
grant of the option. At June 30, 2006, there were a total of 438,040 options
outstanding under the 2000 Stock Option Plan and 51,960 remain available for
issue.

         We also have a 2002 Stock Option Plan (the "2002 Option Plan"), which
provides for the grant to eligible employees and directors of options for the
purchase of common stock. The 2002 Option Plan covers, in the aggregate, a
maximum of 1,000,000 shares of common stock, and provides for the granting of
both incentive stock options (as defined in Section 422 of the Internal Revenue
Code of 1986) and nonqualified stock options (options which do not meet the
requirements of Section 422). Under the 2002 Option Plan, the exercise price may
not be less than the fair market value of the common stock on the date of the
grant of the option. At June 30, 2006, there were a total of 985,000 options
outstanding under the 2002 Stock Option Plan, and 15,000 remain available for
issue.

                                       13
<PAGE>

         On December 15, 2004 a Long-Term Incentive Plan ("LTIP") was approved
by the Board of Directors and ratified by the shareholders at our Annual
Shareholders' Meeting in 2005 to provide certain incentives to certain
employees, directors, consultants, and advisors of the Company and its
subsidiaries. The LTIP provides for the issuance of a maximum number of shares
of common stock equal to 10 percent of the total number of shares of common
stock equivalents outstanding less the total number of shares of common stock
subject to outstanding awards under any share-based plan for the directors,
officers or employees of the Company. At June 30, 2006, there were a total of
1,076,381 options outstanding under the LTIP and 1,004,545 remaining available
for issue.

         In conjunction with the Purchase and issuance of the Series E
Preferred, the board authorized the issuance of warrants for up to 35,000,000
shares of common stock to the employees of Rush and Terra Nova. On May 19, 2006,
32,150,000 warrants were issued to employees. These warrants have an exercise
price of $0.28 per share, a term of five years and vest 25% after 12 months;
another 25% after 24 months; and the remaining 50% after 36 months. These
warrants have a fair value of $4,887,687, which was determined by using the
Black-Scholes pricing model with the following assumptions: 88% volatility, no
dividend yield, 5 year expected life and 5.16% risk free interest rate. We
recorded share-based compensation expense of $140,518 during the quarter
relating to these warrants. At June 30, 2006, 2,850,000 warrants remain
available for issuance.

Impact of the Adoption of FAS 123(R)

         We adopted FAS 123(R) using the modified prospective transition method
beginning January 1, 2006. Accordingly, during the three and six month periods
ended June 30, 2006, we recorded share-based compensation expense for awards
granted prior to, but not yet vested, as of January 1, 2006, as if the fair
value method required for pro forma disclosure under FAS 123 were in effect for
expense recognition purposes, adjusted for estimated forfeitures. For
share-based awards granted after January 1, 2006, we have recognized
compensation expense based on the estimated grant date fair value method using
the Black-Scholes valuation model. For these awards, we have recognized
compensation expense using a straight-line amortization method. As FAS 123(R)
requires that share-based compensation expense be based on awards that are
ultimately expected to vest, share-based compensation for the three and six
month periods ended June 30, 2006 has been reduced for estimated forfeitures.
When estimating forfeitures, we consider voluntary termination behaviors as well
as trends of actual option forfeitures. The impact on our results of operations
of recording share-based compensation for the three and six month periods ended
June 30, 2006 was as follows:

                                Three months Ended    Six Months Ended
                                    June 30, 2006       June 30, 2006
                                ------------------   ------------------
          Investment Services     $      127,823       $      150,097
          Software Services               15,978               19,953
          Corporate                       15,978               18,176
                                ------------------   ------------------
                                  $      159,779       $      188,227
                                ==================   ==================

         The adoption of FAS 123(R) did not change our basic and diluted loss
per share for the three months ended June 30, 2006 and increased our basic and
diluted loss per share by $0.01 for the six months ended June 30, 2006.


Valuation Assumptions


         The fair value of each share based award is estimated on the date of
grant using the Black Scholes option pricing model. Our expected volatility is
based on historical volatility of the Company's share. Expected life is
determined based on historical experience of similar awards, giving
consideration to the contractual terms of the share-based awards, vesting
schedules and expectations of future employee behavior. Separate groups of
employees that have similar historical exercise behavior are considered
separately for valuation purposes. The interest rate for periods within the
contractual life of the award is based on the U.S. Treasury yield curve in
effect at the time of grant.


Share-based Payment Award Activity

A summary of employee stock option activity under the 1997 Option Plan, 2000
Option Plan and LTIP as of June 30, 2006 and for the six months then ended is
presented below:

                                       14
<PAGE>
<TABLE>
<CAPTION>

                                                                     Weighted
                                                      Weighted       Average
                                                      Average        Remaining       Aggregate
                                                      Exercise      Contractual      Intrinsic
                                          Options      Price      Term (in years)      Value
------------------------------------   -----------   ----------   ---------------   -----------
<S>                                    <C>           <C>          <C>               <C>
Balance at December 31, 2005             2,867,603     $ 0.26
Granted                                          -          -                            43,000
Exercised                                 (200,000)      0.15
Forfeited                                 (125,000)      0.21
                                       -----------   ----------
Balance at June 30, 2006                 2,542,613     $ 0.28           2.82        $   156,408
                                       ===========   ==========   ===============   ===========

Options exercisable at June 30, 2006     2,009,742     $ 0.28           2.44        $   139,317
                                       ===========   ==========   ===============   ===========

         The aggregate intrinsic value is calculated as the difference between
the exercise price of the underlying awards and the quoted price of our common
stock for awards that were in-the-money at June 30, 2006. As of June 30, 2006,
there was approximately $74,000 of total unrecognized compensation cost related
to unvested share-based compensation arrangements granted under our stock option
plans. That cost is expected to be recognized over a weighted-average period of
approximately 1.5 years. During the three and six months ended June 30, 2006, we
recognized compensation expense of $19,261 and $47,709, respectively, related to
options vesting under our option plans. Cash received for the exercise of stock
options during the six months ended June 30, 2006 totaled $30,000.

A summary of employee warrant activity as of June 30, 2006 and for the six
months then ended is presented below:

                                                                     Weighted
                                                      Weighted       Average
                                         Employee     Average        Remaining       Aggregate
                                         Warrants     Exercise      Contractual      Intrinsic
                                       Outstanding     Price      Term (in years)      Value
------------------------------------   -----------   ----------   ---------------   -----------
Balance at December 31, 2005                     -     $    -
Granted                                 32,150,000       0.28
Exercised                                        -          -
Forfeited                                        -          -
                                       -----------   ----------
Balance at June 30, 2006                32,150,000     $ 0.28           4.89        $       -
                                       ===========   ==========   ===============   ===========

Options exercisable at June 30, 2006             -     $    -              -        $       -
                                       ===========   ==========   ===============   ===========
</TABLE>

         The weighted average grant date fair value of warrants granted to
employees during the three and six months ended June 30, 2006 was $0.25.

Restricted Stock

         A summary of the status and changes of our nonvested shares related to
our equity incentive plans as of and during the six months ended June 30, 2006
is presented below:


                                       15
<PAGE>

                                                          Weighted
                                                          Average
                                                         Grant Day
                                             Shares      Fair Value
                                           ----------    ----------
           Non vested at January 1, 2006      307,500    $     0.21
               Granted                           --            --
               Forfeited                      (42,500)         0.30
               Vested                        (265,000)         0.20
                                           ----------    ----------
           Non vested at June 30, 2006           --      $     --
                                           ==========    ==========

         The total fair value of shares vested during the three and six months
ended June 30, 2006 was $42,750 and $50,650, respectively.

Pro forma Information for Periods Prior to the Adoption of FAS 123(R)

         Prior to the adoption of FAS No. 123(R), we provided the disclosures
required under FAS 123, as amended by FAS 148. No share-based compensation
expense for share options was recognized in our results of operations for the
three and six month periods ended June 30, 2005 as all options were granted with
an exercise price equal to the market value of the underlying common stock on
the date of grant. Had we determined compensation expense based on the grant
date fair value for share options under FAS 123 and FAS 148, our pro form net
loss and net loss per share would have been as follows:


                                              Three Months       Six Months
                                             Ended June 30,    Ended June 30,
                                             --------------    --------------
                                                   2005              2005
                                             --------------    --------------
Net loss attributable to common
 shareholders, as reported                   $     (823,616)   $   (1,524,846)
Add: Stock-based employee compensation
 expense included in reported net loss                 --                --
Deduct: Stock-based employee compensation
 expense determined under fair value
 based method                                        (4,738)           (4,738)
                                             --------------    --------------
Pro forma net loss                           $     (828,354)   $   (1,529,484)
                                             ==============    ==============

Net loss per common share, basic and
 diluted
   As reported                               $        (0.03)   $        (0.06)
                                             ==============    ==============
   Pro forma                                 $        (0.03)   $        (0.06)
                                             ==============    ==============

         The Company has 50,000,000 shares of common stock authorized and
37,478,510 shares of common stock outstanding at June 30, 2005. The total
convertible securities, options and warrants outstanding at June 30, 2006 total
19,147,073 shares on an "as if converted" basis resulting in an authorized share
deficit of 6,880,103 shares. The Company has proposed in the 2006 proxy an
amendment to the articles of incorporation to increase the number of authorized
shares to 800,000,000.


11.   Common Stock

         During the first quarter of 2006, we issued 18,353 shares of common
stock as director's fees (valued at $4,250 based on the fair market value of our
share on the date of issuance) and 25,000 shares of common stock with a fair
market value of $7,500 were retired due to non-vesting. The 25,000 shares were
originally issued as deferred employee compensation.

         During the second quarter of 2006 we issued 32,300 shares of common
stock as director's fees (valued at $9,750 based on the fair market value of our
share on the date of issuance), 40,000 shares of common stock were issued for
the conversion of $10,000 of convertible preferred stock , 14,730 shares of

                                       16
<PAGE>

common stock with a fair value of $3,535 on the date of issuance were issued as
payment of preferred dividends and 7,500 shares of common stock with a fair
value of $2,020 on the date of issuance were issued as employee compensation.
200,000 stock options were exercised for proceeds of $30,000. Additionally,
17,500 shares of common stock with a fair market value of $5,425 were retired
due to non-vesting. The 17,500 shares were originally issued as deferred
employee compensation.


12.       Payroll Tax Obligation

         We had an estimated federal and state payroll tax obligation of
$745,324 at March 31, 2006. We estimated this obligation to be the amounts of
tax withheld from employees and the employer portion of Social Security Federal
Tax Obligation for the first and fourth quarters of 2003, all four quarters of
2004 and the fourth quarter of 2005 in addition to an estimated accrual for
interest and penalties. In the second quarter of 2006 we brought our past due
payroll tax obligation current.

13.      Leases

         We entered into a lease with Navisite, Inc. on January 31, 2006 for 120
square feet of space within the Navisite Hosting Services Center. The Navisite
center is a Tier 2 hosting services facility, situated on top of one of the
major internet backbones in the U.S. and provides for co-location of our servers
and networking platforms and redundancy for our data services and
telecommunications. Navisite is a Microsoft Gold Partner. The lease payments are
$4,445 per month for 36 months commencing on March 17, 2006. Navisite agreed to
provide floor space, AC power, internet connectivity, environmental control,
24/7 support and a security cage. The lease will be accounted for as an
operating lease.

         We have long term office leases in Dallas, Texas and Chicago, Illinois.

14.      Related Party Transactions

         During the period ending June 30, 2006 we borrowed funds from and
issued two notes to two related parties (see notes 8 and 9 for a more complete
discussion). We believe that the transactions were on terms similar to those
that could be obtained from unaffiliated third parties. We borrowed an
additional $100,000 from a related party on April 28, 2006. The $200,000
principal amount referenced in Note 8 "Convertible Notes" above was amended to
read $300,000. All other terms of the note remain unchanged. Both of these notes
were repaid in May 2006.


15.      Cash Segregated in Compliance with Federal Regulations

         Terra Nova maintained cash segregated in compliance with federal
regulations of $144.3 million as of June 30, 2006. Such funds have been
segregated in special reserve accounts with Harris Trust and Savings Bank and
BMO Capital Markets primarily in interest bearing cash deposits, for the
exclusive benefit of customers under Rule 15c3-3 of the Securities Exchange Act
of 1934 and other regulations.

16.  Receivables from Customers

         Terra Nova receivables from brokerage customers as of June 30, 2006 was
$31.6 million, primarily consisting of margin loans to brokerage customers.
Margin loans are secured by securities owned by brokerage customers. Such
collateral is not reflected in the consolidated financial statements. Terra Nova
charges interest on debit balances in brokerage customer accounts.

         Margin requirements determine the amount of equity required to be held
in an account relative to the purchase and sale of equity transactions. Margin
lending is subject to the rules and regulations of the Federal Reserve System,
the NASD, various clearing firms, and the internal policies of Terra Nova. Terra
Nova assumes risk that the collateral securing margin debits may reduce in value
to an amount that renders the margin loan unsecured. Margin requirements are
amended by Terra Nova as deemed necessary for certain accounts and securities.
Terra Nova also reserves the right to close-out any and all positions in an
account should it feel necessary to protect itself from loss. There is no
assurance that a customer will satisfy a margin call or pay unsecured
indebtedness owed to Terra Nova.

                                       17
<PAGE>

17.  Receivable from Brokers

         Terra Nova's receivable from brokers as of June 30, 2006 was $16
million. Such receivable consists primarily of securities borrowed and
commissions receivable. Securities borrowed transactions require Terra Nova to
provide the counterparty with collateral in the form of cash. Terra Nova adjusts
this amount on a daily basis as the value of the securities borrowed may change.
Terra Nova utilizes Merrill Lynch, Pierce, Fenner & Smith Limited as a clearing
broker for institutional equities, option omnibus and various correspondents'
clearing business, R.J. O'Brien for clearance of fully-disclosed futures
business, and HotSpot for fully-disclosed forex business.

18.  Regulatory Requirements

         Terra Nova, MW Securities and RushTrade are subject to the Securities
and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1) under the
Securities Exchange Act of 1934. Terra Nova and RushTrade are subject to the
Commodity Futures Trading Commission's financial requirement (Regulation 1.17).
Terra Nova calculates its net capital using the "alternative method", which
requires the maintenance of minimum net capital, as defined by the rules, equal
to the greater of (i) $250,000 and (ii) 2.0% of aggregate debit items. Further
since Terra Nova is registered to accommodate prime brokerage business, it is
further subjected to a minimum net capital requirement of $1.5 million.

Net Capital Requirements at June 30, 2006 were as follows:

                                            Capital          Excess
                          Net Capital     Requirement     Net Capital
                         -------------   -------------   -------------

         Terra Nova      $   7,544,789   $   1,500,000   $   6,044,789
         MarketWise BD          24,527           5,000          19,527
         RushTrade             200,081           5,000         195,081

19.  Legal Proceedings

         From time to time we are involved in certain legal actions arising in
the ordinary course of business. It is the opinion of management that such
litigation will be resolved without a material adverse effect on our liquidity,
financial position or results of operations.

         On December 27, 2004, in Waymark Internet Services, Inc. v. Rush
Financial Technologies, Inc.; Cause No. 04-12776-K; 192nd Judicial District
Court, Dallas County, Texas, a vendor filed a claim in Dallas District Court
claiming a total of $52,870 in damages. We dispute the amount of the claims and
plan to vigorously defend the Company in this matter. At June 30, 2006 we
estimate our liability for this claim to be approximately $11,000, and
accordingly have recorded a liability for this amount. We are in the early
stages of discovery and a trial setting has been postponed until February 5,
2007.

         On April 17, 2003, in E.F. (Mickey) Long, II, et al. v. Rushmore
Financial Group, Inc., Rushmore Securities Corporation and D.M. "Rusty" Moore;
NASD Dispute Resolution Arbitration No. 03-01451, a group of former securities
representatives of RSC filed for NASD Dispute Resolution, naming the Company and
Mr. Moore as defendants. The former representatives are claiming $178,288 in
commissions. At December 31, 2003 we estimated our liability to be $43,000 and
recorded an accrual for this amount. In 2004 we negotiated a settlement with the
representatives in the amount of $98,750 but RSC has been unable to pay this
claim. Since no payments have been made RSC became subject to an agreed
arbitration award in the total sum of $129,425. The entire liability of $129,425
has been accrued at June 30, 2006.

         RSC was subject to a joint NASD and SEC examination in the second
quarter of 2002. As a result of this examination the Company has accrued a
liability of $25,000 at June 30, 2006 to account for a possible NASD fine. This
is management's best estimate of the ultimate liability to RSC.

         Office of Foreign Assets Control ("OFAC") has indicated to Terra Nova
that it believes that Terra Nova violated U.S. economic sanctions against Iran
by opening, through it's branch office MB Trading, an account for an individual
resident of Tehran, Iran. The account in question, which funded with less than
$5,000 and was open for approximately one month, engaged in securities trading
for approximately fifteen days. OFAC has indicated that it believes that the
foregoing gives rise to an assessable penalty of $458,998 against Terra Nova,

                                       18
<PAGE>

prior to taking into account any mitigating factors, under published guidelines,
which could result in a reduction of the penalty by as much as 75% to $114,750.
Terra Nova is engaged in settlement discussions with OFAC concerning such
mitigating factors and the amount of the penalty imposed. At June 30, 2006 we
have accrued a liability of $120,000 related to this issue which is management's
best estimate of the ultimate penalty that will be assessed.

         A claim by plaintiffs Fane Lozman and Blue Water Partners, Inc.
indicated that Terra Nova allegedly usurped corporate opportunities owed to Blue
Water Partners in 1994 and continuing to the present, allegedly owed brokerage
and software commission payments to plaintiffs since 1995, and for specific
performance or the monetary equivalent based on a claim that Lozman was promised
half ownership in Terra Nova. Terra Nova denies the allegations and vigorously
defended itself at the trial for the legal claim, which resulted in a jury
verdict in Terra Nova's favor on December 16, 2004. State Farm Insurance Company
filed an action against Terra Nova seeking a declaration that State Farm does
not owe a defense or indemnity obligation to Terra Nova arising out of State
Farm's policies of insurance sold to Terra Nova during the relevant time
periods. Terra Nova intends to vigorously defend the claim and believes it has
meritorious defenses against State Farm for bad faith and seeks to recover its
legal fees and costs arising from its defense in the Lozman litigation described
above. Furthermore Terra Nova has filed a counter claim.

         We establish liabilities when a particular contingency is probable and
estimable. For contingencies noted above, we have accrued amounts considered
probable and estimable. We are not aware of pending claims or assessments, other
than as described above, which may have a material adverse impact on our
liquidity, financial position or results of operation.


Item 2.  Management's Discussion and Analysis or Plan of Operation.

1.   Recent Developments

         The Company issued $35,000,000 in Series E Preferred Stock and detached
warrants. Fees associated with the issuance, including commissions, were
$2,488,206. The Company also issued approximately 14,462,000 underwriter
warrants with a fair value of $2,980,422 recorded as additional paid in capital.
The issuance of the Series E Preferred Stock resulted in a beneficial conversion
feature with a pro forma value of $13,569,974.

         We received final approval for the Purchase from the National
Association of Securities Dealers, Inc. ("NASD") and various other regulatory
authorities on May 15, 2006. We funded the purchase on May 17, 2006 and closed
the sale of the Series E Preferred on May 19, 2006 with a total of $35,000,000
raised. The Purchase has been accounted for as a business combination.

         The Company paid $25,000,000 in cash for the acquisition of Terra Nova,
MW School and MW Securities. Additionally, the Company paid $275,068 in
acquisition related legal and accounting fees, severance expenses of $325,000
and $218,054 of other acquisition costs.

          Terra Nova Trading, LLC., founded in 1994, is a full-service
self-clearing agency broker/dealer and futures commission merchant. Terra Nova
is a member of the NASD, NFA and SIPC, as well as the following exchanges: PCX,
ISE, BOX and CHX. Terra Nova maintains a diversified customer base servicing
Institutional, B-to-B (including Correspondent Clearing for other introducing
broker/dealers) and Direct Market Access clients, while offering a diversified
product offering including equities, options, futures, fixed income and foreign
exchange. Headquartered in Chicago, Terra Nova has over 90 employees, with a
sales presence in New York, San Francisco, Denver and San Antonio.

         Terra Nova is a pioneer in electronic trading, earning a national
reputation for exceptional customer service, and has been highly ranked by
Barron's Magazine in its annual survey of Best Online Trading Brokers, ranking
#1 in the areas of Customer Service, Trade Technology, Portfolio Reports and
Overall Usability. For more information about Terra Nova Trading, please visit
www.terranovatrading.com. TNT had revenue in excess of $40,000,000 in 2005.

         MW School is an education provider to traders and investors. Its
mission is to support traders and investors in their quest to achieve financial
freedom and success, while sharing the passion and trading skills of its
instructors. Market Wise's education curriculum is provided to assist traders

                                       19
<PAGE>

and investors develop sound methods of analysis and risk management.
Headquartered in Boulder, Colorado, MW School trains students worldwide. For
more information about MW School, visit www.marketwise.com. Market Wise had
revenue of less than $1,000,000 in 2005.

         MW Securities is a registered broker dealer in Illinois and Colorado.
It is currently introduces accounts to Terra Nova and receives compensation for
those services.

2.   RushTrade and RushGroup Business Summary

         Rush Financial  Technologies,  Inc. (the  "Company," "we" or "us") is a
holding company that operates  through three primary  subsidiaries:  a real-time
financial  technology   development  company,   RushGroup   Technologies,   Inc.
("RushGroup"), a direct-access online brokerage firm, RushTrade Securities, Inc.
("RushTrade"), and a full service self-clearing agency broker/dealer, Terra Nova
Trading L.L.C. ("Terra Nova").

         RushGroup is a wholly owned subsidiary of the Company. RushGroup is a
registered Service Bureau and member of the Certified Partners program with the
Nasdaq Share Market. RushGroup serves as our financial technology development
subsidiary, which develops and operates proprietary real-time portfolio
management software products, advanced order management systems, direct-access
trading software applications and a data service center. Utilizing a number of
proprietary technologies and its exclusive Direct Access Routing Technology
(DART(TM)), an intelligent order routing system, RushGroup offers real-time
market data platforms and direct access trading systems to the National
Association of Securities Dealers ("NASD") member broker/dealers, institutional
portfolio managers and traders.

         RushTrade is a wholly owned subsidiary of the Company. RushTrade, a
fully-disclosed introducing broker/dealer and member of the NASD, Pacific
Exchange (PCX), Boson Share Exchange ("BSX"), Securities Investor Protection
Corporation ("SIPC") and National Futures Association ("NFA"), offers securities
and direct access online brokerage, trading and advanced order routing services
to its retail customers utilizing RushGroup's software products. RushTrade
customer accounts are insured up to $25 million and are held at a third-party
clearing firm. RushTrade is registered in all 50 states and accepts customers
from most foreign countries. Customer accounts are self-directed, and RushTrade
does not provide advice or make trade recommendations.

         For more information about RushTrade, RushGroup and their products,
please visit www.rushtrade.com and www.rushgroup.com.

         Terra Nova , founded in 1994, is a full-service self-clearing agency
broker/dealer and futures commission merchant. Terra Nova is a member of the
NASD, NFA, and SIPC, as well as the following exchanges: PCX, International
Securities Exchange ("ISE"), Boston Options Exchange ("BOX") and Chicago Stock
Exchange ("CHX"). Terra Nova maintains a diversified customer base servicing
institutional, wholesale (defined as business-to-business and correspondent
clearing for other introducing broker/dealers) and direct market access clients,
while offering a diversified product offering including equities, options,
futures, fixed income and foreign exchange. Headquartered in Chicago, Terra Nova
has over 70 employees, with a sales presence in New York, San Francisco, Denver
and San Antonio.

Overview

         Rush Financial Technologies, Inc. was originally founded in 1990 as a
traditional financial services company that grew rapidly from a start-up into a
retail brokerage organization with a nationwide account base and network of
agents and registered representatives for the sale of investment products.
Rush's common stock began trading on the Nasdaq SmallCap Market under the symbol
"RFGI" following its initial public offering in April 1998. On August 23, 2002
the stock moved to the Nasdaq OTC Bulletin Board Market after its delisting from
the Nasdaq SmallCap Market.

         In 2000, we launched a multi-million dollar proprietary technology
development initiative in response to the burgeoning market for direct access
online trading. After more than three years of development and successful beta
testing, we introduced our direct access technology platform in August 2002
under our RushTrade(R) brand. This technology will be the primary trading
platform for the organization's broker/dealer efforts.

         As part of our repositioning as a real-time financial technology
development and direct access online financial services company, the board of
directors approved a name change to Rush Financial Technologies, Inc., which

                                       20
<PAGE>

became effective upon shareholder approval and the filing of amended articles of
incorporation with the Secretary of the State of Texas in January 2004. With the
name change, our ticker symbol on the OTC Bulletin Board Market was changed to
"RSHF."

         On March 30, 2006, we entered into a Membership Interest Purchase
Agreement with TAL Financial Services, LLC providing for Rush to purchase from
TFS 100% of the outstanding membership interests of Terra Nova Trading, LLC,
Market Wise Securities, LLC and Market Wise Stock Trading School, LLC. Terra
Nova Trading, the most significant part of this acquisition has annual revenue
in excess of $40,000,000.

         Rush is a holding company that operates through three principal
operating subsidiaries:

         Terra Nova is a leading direct access self-clearing broker/dealer
committed to providing the trading tools and services necessary for the client
to succeed. The diverse product offering and diverse client base combined with a
network of partnerships and alliances, and superior service, Terra Nova gives
its customers the best opportunities in a changing marketplace. Terra Nova is
recognized as a pioneer and leader in the world of electronic trading, and is a
trusted online direct access broker/dealer for Institutional, Wholesale and
Direct clients. From a self-clearing standpoint, Terra Nova processes
transactions of a diverse product offering on its own proprietary system.

         RushGroup is a wholly owned subsidiary of the Company. RushGroup is a
registered Service Bureau and member of the Certified Partners program with the
Nasdaq Stock Market. RushGroup serves as our financial technology development
subsidiary, which develops and operates proprietary real-time portfolio
management software products, advanced order management systems, direct-access
trading software applications and a data service center. Utilizing a number of
proprietary technologies and its exclusive Direct Access Routing Technology
(DART(TM)), an intelligent order routing system, RushGroup offers real-time
market data platforms and direct access trading systems to National Association
of Securities Dealers ("NASD") member broker/dealers, institutional portfolio
managers and traders.

         RushTrade is a wholly owned subsidiary of the Company. RushTrade, a
fully-disclosed introducing broker/dealer and member of the NASD, PCX and SIPC,
offers securities and direct access online brokerage, trading and advanced order
routing services to its retail customers utilizing RushGroup's software
products. RushTrade customer accounts are insured up to $25 million and are held
at a third-party clearing firm. RushTrade is registered in all 50 states and
accepts customers from most foreign countries. Customer accounts are
self-directed, and RushTrade does not provide advice or make trade
recommendations. For more information about RushTrade and our products, please
visit www.rushtrade.com and www.rushgroup.com.

Products

         RushGroup has exclusively developed and supports several proprietary
products: RushTrade Direct, a Level I browser-based product, RushTrade Direct
Plus, a streaming Level I software-based product, and RushTrade Direct Pro, a
Level II software-based product. RushGroup offers real-time financial services
technologies, direct access trading applications, and Advanced Order Management
Systems (OMS), to the online brokerage and institutional trading industry.
RushGroup's products have been fully validated in the market, having executed a
total stock market value of over $2.3 billion in its first year of operations.

         RushTrade, along with other providers, was featured in Bear Stearns'
Financial Technology report dated August 2004 and has also been featured in
Barron's and in Active Trader magazine. In the Barron's March 8, 2004 Online
Brokers Survey, RushTrade was rated "...among the Best Direct-Access Brokers for
Active Traders." In the March 7, 2005 and March 6, 2006 issues of Barron's,
awarded RushTrade its Four Star Rating. RushTrade provides customers
direct-access to the markets, electronically bypassing third party Market Makers
in most cases.

         With portfolio management tools that include real-time
"straight-through" posting of trade positions and account balances, the
technological advancements made in RushTrade Direct Pro software constitute the
third generation (3G) trading software that is much more efficient than that of
the traditional online firms. RushGroup's software is thin and efficient
compared to older "legacy" software trading platforms.

                                       21
<PAGE>

Broker/Dealer Products

The Terra Nova Trading, L.L.C. broker/dealer offers a diverse product offering
including

Equities
Options
Futures
Commodity Options
Fixed Income
Mutual Funds
Forex

         The broker/dealer's primary trading technology will be the RushGroup
technology product offering. In addition, Terra Nova will continue to offer
other front end trading platforms including the Townsend Analytic, Ltd.,
RealTick product.

         Terra Nova is a full service agency broker/dealer. The clients primary
trade on a self-directed basis through the front end trading platforms, but may
also transact trades through the Terra Nova trade desk.

Broker/Dealer Technology

         Terra Nova currently owns its proprietary software used to enable it to
self-clear the broker/dealer transactions. This software acquired in 2004 and
has been continually enhanced. It allows Terra Nova to control the clearing
process while allowing for scale in transactions. This business model has
provided Terra Nova with a lower cost model with substantially increased control

Technology

         RushGroup's technology unit and software development team align well
with its strategic direction to expand rapidly in the financial technology and
direct access online trading space. RushGroup continues to strengthen its
product offerings and bolster its market presence.

         RushGroup's data service center processes and delivers real-time market
data, quotes, charts, advanced studies, etc., and its "Execution Server,"
utilizing DART, a proprietary intelligent or "smart" order routing technology
which has connections to the major Exchanges and Electronic Communications
Networks ("ECN's"), empowers customers, in most cases, to bypass the "middlemen"
or Market Makers that seek to profit from customer order flow. Within
milliseconds, DART automatically scans the available market for the best price
and routes the order to that particular market participant. RushTrade's
marketable limit orders are usually routed, executed and filled in less than 1-2
seconds.

         Developed by RushGroup's software engineers in collaboration with
experienced traders, DART's "smart" order routing is accomplished by an
innovative proprietary trading algorithm along with other proprietary features.
RushGroup currently has under development additional Advanced Order Types and
systems with OTO and OCO functionality, as well as other trade management and
portfolio risk management tools.

Market Opportunity

         Demographic shifts and new technologies always drive change; electronic
brokerage, electronic clearing and electronic order matching is changing the
retail brokerage and institutional trading industry. In addition, recent
regulatory actions are opening up new opportunities for RushGroup's products and
services. RushTrade Group is positioning itself to benefit from the convergence
of these industry trends and regulatory changes. We believe that new
technologies have begun to erode the dominance previously enjoyed by a few large
players. New market opportunities have emerged for new providers like RushGroup,
who can efficiently and cost effectively deliver financial tools and
information.

         We believe that RushTrade will be able to capitalize on these market
opportunities with its easy-to-use, multi-product offering, and low cost
operational infrastructure, and therefore can position itself as a low cost
leader in the direct access market.

                                       22
<PAGE>

Marketing

         Today, electronic and algorithmic trading is becoming a dynamic force
representing over one-third of total trading volume on the New York Stock
Exchange and NASDAQ. According to Bear Stearns & Co. Inc., at the end of 2005
there were over 22.6 million online accounts, up 5% from 2004. In the past year,
the number of online retail accounts increased slightly, while the demand for
DMA technology by institutional accounts continued to skyrocket, due to greater
focus on execution quality and increased algorithmic trading.

         As DMA technology becomes more commonplace among institutions, we
expect semi-professionals to account for a smaller portion of overall NYSE and
NASDAQ stock volume. On the other hand, many industry experts argue that with
the implementation of Regulation NMS in mid 2006 - and the resulting
"electronification" of the NYSE and other regional exchanges - semi-professional
volumes could actually increase.

         It is apparent that semi-professional traders are transforming
themselves into semi-professional portfolio managers or small emerging hedge
funds referred to by Bear Stearns and others as "Instividuals." Increasingly,
these "Instividuals" are demanding the types of tools and services that were
once used only by portfolio managers/institutions. RushTrade continues to
position itself to penetrate receptive markets in both retail direct access
online space as well as the institutional market.

Growth Strategy

         We have two core businesses with two primary channels of distribution
for our products and services. Currently driving our revenue growth is our
direct-access self-clearing broker/dealer subsidiary, Terra Nova (as well as
RushTrade Securities, Inc.), both are NASD and SIPC members registered in all 50
U.S. states and accepts new customers from most foreign countries

         We are executing a low cost "guerrilla" sales and Internet marketing
strategy in addition to our strategic alliances that are producing sustained
rates of sales growth. Visits to our web domains, www.terranovatrading.com,
www.daytrade.comand www.rushtrade.com, have created a growing web traffic that
generates most of our current sales leads. We believe that we can position
ourselves as a low cost leader in the retail direct access market as we prepare
to launch our products and services in the institutional marketplace. Referrals
are a significant part of our growth strategy.

         Another significant means of growth currently comes from various
marketing partners and strategic alliances. This is a significant part of the
growth strategy going forward.

         Terra Nova and RushGroup continue to perform well and are nationally
recognized by various experts including Barrons and others who review and
comment on this industry.

Competition

         The retail and online brokerage industries are highly competitive with
many large, diversified, well-capitalized brokerage firms, financial
institutions and other organizations. The Company, in many instances, competes
directly with organizations that are well capitalized and that have substantial
name brand recognition for market share of commission dollars.

         Most of the Company's competitors are larger, well capitalized
organizations that offer a full range of investment products. Several of these
competitors in recent months have lowered the commissions they charge their
customers, and have reduced or eliminated charges for software subscriptions. We
have lowered our commissions and software license fees to be more competitive
and believe that we are able to compete in this market, although dominated by
larger companies, due to our new-generation product offerings, low cost
operational infrastructure and responsive customer service.

Employees

         We have a total of 15 full time employees located in our offices in
Dallas, Texas. There are two independent contractors.

         We have over 70 employees located in our offices in Chicago, Illinois.
There are two independent contractors.

                                       23
<PAGE>

Properties

         We lease 3,800 square feet at the Dallas Galleria One Office Tower,
Dallas, Texas. We lease approximately 15,000 square feet at the 100 South Wacker
Drive, Chicago, Illinois. We believe these facilities are adequate to meet our
requirements at the current level of business activity.

Regulation

         Our business is subject to a high degree of regulation. The securities
business is one of the most highly regulated industries in the United States,
and regulatory pressures can have a direct effect on our operations.

         RushTrade, MW Securities and Terra Nova are subject to regulation by
the Securities and Exchange Commission, the NASD, the SIPC, the Texas State
Securities Board, and the securities exchanges. The NASD and State Securities
Board regularly inspect their books and records to determine compliance with
laws applicable to securities dealers. Under the rules of the SEC and NASD,
broker/dealers are required to maintain varying levels of net capital. Any
deficiencies in net capital due to losses or otherwise can result in regulatory
action including fines, suspensions and sanctions. Terra Nova, MW Securities and
RushTrade are currently not the subject of any regulatory deficiencies or legal
proceedings with any regulatory authority.

         Our management is subject to regulation by the Securities and Exchange
Commission and state securities regulators. Such regulation covers testing and
background checks on our officers and employees, review and approval of business
methods, compensation structures, advisory agreements and advertising.

3.   Results of Operations

Three months ended June 30, 2006 and 2005:

The following table sets forth the components of our revenues for the periods
indicated:

                                            Three Months Ended June 30,
                                           ----------------------------
                    Revenue                    2006            2005
          ----------------------------     ------------    ------------
          Investment Services              $  9,656,262    $    514,027
          Software Services                       1,650           1,075
          Corporate                              18,132          25,529
                                           ------------    ------------
                     Total                 $  9,676,044    $    540,631
                                           ============    ============

         Total revenue for the second quarter increased $9,135,413, or 1690%,
from 2005 to 2006. This increase reflects substantially the increased revenue
from the acquisition of Terra Nova.

         Investment services revenue increased $9,142,235, or 1,778%, from 2005
to 2006. This increase is due primarily to the addition of Terra Nova. Our
broker/dealer is dependent on the overall activity in the United States equity
markets. We will continue to devote resources toward marketing our online
trading platforms and increasing the overall customer base, which should drive
increases in trade volumes and revenues.

         Software Services had revenue of $1,650, an increase of $575 from 2005
to 2006. RushGroup has yet to realize any revenues from the licensing of our
proprietary software-trading platform to unrelated third party entities. We have
had contact with several institutions and brokerages about the licensing
potential of various software components or applications of the RushTrade
platforms and we continue to aggressively pursue these opportunities. While we
continue to enhance and strengthen our various software applications, management
expects RushGroup software services and licensing potential to be a new source
of revenue. During the next period our focus will be on providing our trading
platforms to Terra Nova customers.

         Corporate revenues decreased $7,397 to $18,132 from 2005 to 2006. This
decrease represents trailing commissions from Rushmore Insurance Services. As
this line of business was discontinued, all related revenues and expenses are
classified as corporate.

                                       24
<PAGE>

Expenses

         The following table sets forth the components of our expenses for the
periods indicated:

                                            Three Months Ended June 30,
                                           ----------------------------
                    Expense                    2006            2005
          ----------------------------     ------------    ------------
          Investment Services              $  9,442,687    $    497,291
          Software Services                     392,870         486,862
          Corporate                           1,255,224         366,022
                                           ------------    ------------
                     Total                 $ 11,090,781    $  1,350,175
                                           ============    ============

         Total expenses, including interest expense, increased $9,740,606 or
721%, from 2005 to 2006. Investment Services expenses increased 1799%, or
$8,945,396, Software Services expenses decreased $93,992, or 19%, and Corporate
expenses increased 243%, or $889,202.

         Investment Services expenses increased $8,945,396, or 1,799%, from 2005
to 2006. This reflects the additional expenses from acquiring Terra Nova, May 1,
2006. Employee compensation and benefits increased $2,197,530, commissions,
exchange and clearing fees increased 3,817,852, communications and data
processing increased $1,229,810, office expense increased $52,775, advertising
and marketing increased $178,121, and other expenses increased approximately
$1,500,000. We also had an increase of $368,000 in depreciation and amortization
expenses from the amortization of intangibles related to the acquisition of
Terra Nova. We believe that once the broker/dealers realize many of the
synergies that have been identified our costs as a percentage of revenue will
decline.

         Software Services expenses decreased 19% or $93,992 from 2005 to 2006.
In the second three months of 2005 we capitalized certain software development
costs reducing our 2005 expenses by $45,000. In the second three months of 2006
we did not capitalize any software development costs. In comparing 2005 to 2006,
this effectively reduced our first quarter 2005 expenses when compared to the
first quarter of 2006. Employee compensation expenses increased approximately
$14,000, office expenses increased approximately $16,500 and other expenses
increased 4,600 in 2006. These increases were offset by net depreciation expense
on capitalized software decreased $119,000 and a decrease in communication and
data processing expense of $53,500. As overall market activity and acceptance of
the products increases and when RushGroup begins to market to outside entities,
costs to support the platforms will increase.

         Corporate expenses increased $889,504, or 243%, from 2005 to 2006.
Employee compensation and benefits expense increased $328,000 from the payment
of deferred salaries. We also had an increase of $124,000 in interest expense
related to the write off of debt discounts on short term notes payable and an
increase in other expenses of $122,000. These increases were partially offset by
decreases in office expenses of $27,000, advertising and marketing expenses of
$17,000 and accounting and legal expenses of $17,000.

Six months ended June 30, 2006 and 2005:

Revenues

         The following table sets forth the components of our revenues for the
periods indicated:

                                             Six Months Ended June 30,
                                           ----------------------------
                   Revenue                     2006            2005
         ----------------------------      ------------    ------------
         Investment Services               $  9,776,019    $    997,048
         Software Services                     392,870            3,670
         Corporate                             921,892           31,937
                                           ------------    ------------
                    Total                  $ 10,364,182    $  1,032,655
                                           ============    ============

         Total revenue for the first six months increased $9,331,528, or 904%,
from 2005 to 2006. This increase generally reflects increased revenue from in
the acquisition of Terra Nova.

         Investment services revenue increased $9,333,265, or 936%, from 2005 to
2006. This increase is due primarily to the addition of sales from the addition
of the Terra Nova business unit. We expect these trends to continue; however,

                                       25
<PAGE>

our broker/dealers, like most broker/dealers, are dependent on the overall
activity in the United States equity markets. We will continue to devote
resources toward marketing our online trading platforms and increasing the
overall customer base, which should drive increases in trade volumes and
revenues.

         Software Services had revenue of $3,370, a decrease of $300 from 2005
to 2006. RushGroup has yet to realize any revenues from the licensing of our
proprietary software-trading platform to unrelated third party entities. We have
had contact with several institutions and brokerages about the licensing
potential of various software components or applications of the RushTrade
platforms and we continue to aggressively pursue these opportunities. While we
continue to enhance and strengthen our various software applications, management
expects RushGroup software services and licensing potential to be a new source
of revenue.

         Corporate revenues decreased $1,438 to $30,499 from 2005 to 2006. This
decrease represents trailing commissions from Rushmore Insurance Services. As
this line of business was discontinued, all related revenues and expenses are
classified as administrative.

Expenses

         The following table sets forth the components of our expenses for the
periods indicated:

                                             Six Months Ended June 30,
                                           ----------------------------
                   Expense                     2006            2005
         ----------------------------      ------------    ------------
         Investment Services               $ 10,372,060    $    973,168
         Software Services                      768,453         849,965
         Corporate                            1,195,013         704,649
                                           ------------    ------------
                    Total                  $ 12,335,524    $  2,527,782
                                           ============    ============

         Total expenses, including interest expense, increased $9,807,744 or
388%, from 2005 to 2006. Investment Services expenses increased 932%, or
$9,065,560, Software Services expenses decreased $81,514, or 10%, and Corporate
expenses increased 117%, or $823,696.

         Investment Services expenses increased $9,065,560, or 932%, from 2005
to 2006. Employee compensation and benefits expense increased $2,126,558,
commission, exchange and clearing fees increased approximately $3,971,000,
communication and data processing fees increased approximately $1,298,806,
office expense increased $180,000, other expenses increased $551,000,
depreciation and amortization expense increased $919,000. This was partially
offset by a decrease in advertising and marketing expenses of $36,000. We also
had an increase of $368,000 in depreciation and amortization expenses from the
amortization of intangibles related to the acquisition of Terra Nova. The
increases in these expenses are attributable to the increased cost associated
with the Terra Nova business unit.

         Software Services expenses decreased 10% or $81,514 from 2005 to 2006.
In the first six months of 2005 we capitalized certain software development
costs reducing our 2005 expenses by $133,000. In the first six months of 2006 we
did not capitalize any software development costs. In comparing 2005 to 2006,
this effectively reduced our first quarter 2005 expenses when compared to the
first quarter of 2006. Employee compensation expenses increased approximately
$45,000, office expenses increased approximately $29,000, other expenses
increased approximately $7,000 and interest expense increased approximately
$2,000 in 2006. Net depreciation expense on capitalized software decreased
$251,534 from approximately $379,000 in 2005 to $127,000 in 2006, a 67%
decrease. Communications and data processing fees also decreased by
approximately $45,000 in 2006. These increases are primarily due to the
increased cost from Terra Nova. As overall market activity and acceptance of the
products increases and when RushGroup begins to market to outside entities,
costs to support the platforms will increase.

         Corporate expenses increased $823,696, or 117%, from 2005 to 2006. We
had increases in employee compensation and benefits of approximately $331,000,
communications and data processing expense of $2,000, other expenses of $4,000,
penalties for late payment of our payroll taxes of $122,000 and interest expense
of $133,000. These increases were partially offset by decreases in office
expense of $57,000, advertising and marketing expense of $16,000 and accounting
and legal expense of $41,000. Also in 2005 our expenses were decreased by a gain
on the settlement of a liability of $19,000.

                                       26
<PAGE>

Liquidity

         Cash Flows from Operating Activities - We incurred a net loss of
$1,971,343 for the six months ended June 30, 2006. This amount was adjusted for
non-cash expenses totaling $1,041,671, reduced by an increase in segregated cash
of $29,711,922, as well an increase in prepaid expenses, deposits and other
assets of $293,830, a decrease in payables to brokers, dealers and clearing
organizations of $46,806, a decrease in payables to customers of $3,762,408, and
a decrease in accrued payroll tax obligation of $679,615, and offset by a
decrease in receivables from brokers, dealers and clearing organizations of
$3,240,538, a decrease in receivable from customers of $28,322,900, a decrease
in receivables from non customers of $309,360, a decrease in accounts receivable
of $990,358, a decrease in other assets of $32,800, an increase in payables to
non customers of $33,340, an increase in accounts payable and accrued expenses
of $344,489; thus yielding net cash flows used in operating activities of
$2,150,468.

         We incurred a net loss of $1,495,127 for the six months ended June 30,
2005. This amount included non-cash expenses totaling $588,516. Cash flows from
operating activities decreased from an increase in receivables of $12,102 and by
a increase in prepaids and deposits of $25,117 offset by an increase in accounts
payable of $30,560, an increase in accrued payroll tax obligation of $109,964
and an increase in accrued expenses of $56,162 due to our lack of available
cash; thus yielding a net cash flow used by operating activities of $747,144.

         Cash Flows From Investing Activities - Cash flow used in investing
activities during the six months ended June 30, 2006 was $15,054,988, due to
applying $25,000,000 to the purchase of Terra Nova and related entities and the
purchase of property and equipment of $90,175 offset by $10,035,187 cash
acquired in the acquisition of the subsidiaries.

         Cash flow used by investing activities during the six months ended June
30, 2005 was $202,091, from purchase of equipment and capitalized software
development costs related to the RushTrade direct access software RushTrade Back
Office Tool.

         Cash Flows from Financing Activities - During the six months ended June
30, 2006 we raised $300,000 from the issuance of a convertible note to a related
party, $100,000 from the issuance of a related party note payable, approximately
$32,494,407 net proceeds from the sale of Series E preferred stock and $30,000
from the exercise of stock options. This was offset by the repayment of the
$300,000 convertible note and the $100,000 note payable and the net payments on
our line of credit of $10,684,038.

         During the six months ended June 30, 2005 we raised $615,000 from the
sale of common stock and warrants and $3,200 from the exercise of stock options.

         The accompanying financial statements have been prepared assuming that
we will continue as a going concern. At June 30, 2006, we had $187,660,911 in
current liabilities, and current assets of $198,182,814. Also, we incurred a net
loss of $1,971,343 during the six months ended June 30, 2006 and $1,495,127 in
2005. We believe the funds raised in connection with the purchase of Terra Nova
and the cash flows generated by Terra Nova will enable us to reach a sustainable
level of profitability; however, these matters raise substantial doubt about our
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

         We have received minimal revenue from licensing our software products
and services to outside entities and do not expect any additional revenues,
other than intercompany revenues, above current levels until the last quarter of
2006. Due to our lack of resources, we have been limited to only preliminary
marketing efforts. If we are unable to successfully market our products to
outside entities it will severely restrict our revenue growth, profitability and
liquidity, and could impact our ability to continue as a going concern. We
expect the relationship with Terra Nova will provide additional revenue above
current levels once the products are integrated into Terra Nova's clearing
operations.

         We are presently engaged in several legal proceedings, more fully
described in Legal Proceedings on page 30. We believe that our current level of
funding the payment of the claims would not have an adverse effect on our
ability to continue as a going concern if the outcomes are unfavorable. We
believe we would be able to pay the claims in total in the short term.

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<PAGE>

         Until the completion of the funding related to the acquisition we had
been unable to meet many of our obligations as they have become due. At June 30,
2006, we have convertible notes due to a related party totaling $485,000 plus
accrued interest that are past due. We are in discussion with the holders, and
we expect to be able to repay or restructure these notes.

         Since the completion of the funding related to the acquisition we have
brought our most critical vendors current especially those most critical to our
day-to-day operations. If we are unable to maintain this payment schedule, we
risk losing valuable services that could limit our ability to service new and
existing customers. This could severely restrict our continued revenue growth
and prevent us from reaching profitability.

         There is a large group of vendors, not affecting our day-to-day
operations, which have not been paid and are severely past due. If these vendors
were to initiate legal proceedings, it would divert our attention from day to
day operations and require an allocation of resources to defend the action or
attempt to settle these obligations.

         We have made it a priority to pay for goods and services necessary to
operate our business in a timely manner. When we have been able to negotiate
settlements on past due obligations on terms that we have determined to be
favorable to us, we have made it a priority to pay those. We have not made it a
priority to make payments to related parties.

Forward-looking statements

          Certain statements contained in this 10-QSB Report and other written
material and oral statements made from time to time by us do not relate strictly
to historical or current facts. As such, they are considered "forward-looking
statements" that provide current expectations or forecasts of future events.
Such statements are typically characterized by terminology such as "believe,"
"anticipate," "should," "intend," "plan," "will," "expect," "estimate,"
"project," "strategy" and similar expressions. Our forward-looking statements
generally relate to the prospects for future sales of our products, and the
success of our strategic corporate relationships. These statements are based
upon assumptions and assessments made by our management in light of its
experience and its perception of historical trends, current conditions, expected
future developments and other factors our management believes to be appropriate.
These forward-looking statements are subject to a number of risks and
uncertainties, including the following: our ability to achieve profitable
operations and to maintain sufficient cash to operate our business and meet our
liquidity requirements; our ability to obtain financing, if required, on terms
acceptable to us, if at all; the success of our research and development;
competitive developments affecting our current products; our ability to
successfully attract strategic partners and to market both new and existing
products; exposure to lawsuits and regulatory proceedings; our ability to
protect our intellectual property; governmental laws and regulations affecting
operations; our ability to identify and complete diversification opportunities;
and the impact of acquisitions, divestitures, restructurings, product
withdrawals and other unusual items. Except as required by applicable law, the
Company undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.


Item 3.  Controls and Procedures.

    (a)  Within the 90-day  period prior to the date of this report,  we carried
         out an evaluation,  under the supervision and with the participation of
         our  management,  including  the  Chief  Executive  Officer  and  Chief
         Financial Officer,  of the effectiveness of the design and operation of
         our disclosure  controls and procedures  pursuant to Rule 13a-14 of the
         Securities  Exchange Act of 1934 (the "Exchange Act").  Based upon that
         evaluation,  the Chief Executive  officer and Chief  Financial  Officer
         concluded that our disclosure  controls and procedures are effective in
         timely  alerting them to material  information  relating to the Company
         (including it consolidated subsidiaries) required to be included in our
         Exchange Act filings.

    (b)  There have been no significant  changes in our internal  controls or in
         other  factors,  which could  significantly  affect  internal  controls
         subsequent to the date we carried out our evaluation.

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<PAGE>

                          PART II. -- OTHER INFORMATION

Item 1.  Legal Proceedings.

         From time to time we are involved in certain legal actions arising in
the ordinary course of business. It is the opinion of management that such
litigation will be resolved without a material adverse effect on our liquidity,
financial position or results of operations.

         On December 27, 2004, in Waymark Internet Services, Inc. v. Rush
Financial Technologies, Inc.; Cause No. 04-12776-K; 192nd Judicial District
Court, Dallas County, Texas, a vendor filed a claim in Dallas District Court
claiming a total of $52,870 in damages. We dispute the amount of the claims and
plan to vigorously defend the Company in this matter. At June 30, 2006 we
estimate our liability for this claim to be approximately $11,000, and
accordingly have recorded a liability for this amount. We are in the early
stages of discovery and a trial setting has been postponed until February 5,
2007.

          On April 17, 2003, in E.F. (Mickey) Long, II, et al. v. Rushmore
Financial Group, Inc., Rushmore Securities Corporation and D.M. "Rusty" Moore;
NASD Dispute Resolution Arbitration No. 03-01451, a group of former securities
representatives of RSC filed for NASD Dispute Resolution, naming the Company and
Mr. Moore as defendants. The former representatives are claiming $178,288 in
commissions. At December 31, 2003 we estimated our liability to be $43,000 and
recorded an accrual for this amount. In 2004 we negotiated a settlement with the
representatives in the amount of $98,750 but RSC has been unable to pay this
claim. Since no payments have been made RSC became subject to an agreed
arbitration award in the total sum of $129,425. The entire liability of $129,425
has been accrued at June 30, 2006.

         RSC was subject to a joint NASD and SEC examination in the second
quarter of 2002. As a result of this examination the Company has accrued a
liability of $25,000 at June 30, 2006 to account for a possible NASD fine. This
is management's best estimate of the ultimate liability to RSC.

         Office of Foreign Assets Control ("OFAC") has indicated to Terra Nova
that it believes that Terra Nova violated U.S. economic sanctions against Iran
by opening, through it branch office MB Trading, an account for an individual
resident of Tehran, Iran. The account in question, which funded with less than
$5,000 and was open for approximately one month, engaged in securities trading
for approximately fifteen days. OFAC has indicated that it believes that the
foregoing gives rise to an assessable penalty of $458,998 against Terra Nova,
prior to taking into account any mitigating factors, under published guidelines,
which could result in a reduction of the penalty by as much as 75% to
$114,749.50. Terra Nova is engaged in settlement discussions with OFAC
concerning such mitigating factors and the amount of the penalty imposed. At
June 30, 2006 we have accrued a liability of $120,000 for this liability.

         Lozman Litigation against Terra Nova arises out of a claim by
plaintiffs Fane Lozman and Blue Water Partners, Inc. that Terra Nova allegedly
usurped corporate opportunities owed to Blue Water Partners in 1994 and
continuing to the present, allegedly owed brokerage and software commission
payments to plaintiffs since 1995, and for specific performance or the monetary
equivalent based on a claim that Lozman was promised half ownership in Terra
Nova. Terra Nova denies the allegations and vigorously defended itself at the
trial for the legal claim, which resulted in a jury verdict in Terra Nova's
favor on December 16, 2004.

         State Farm litigation against Terra Nova is an action filed by State
Farm Insurance Company seeking a declaration that State Farm does not owe a
defense or indemnity obligation to Terra Nova arising out of State Farm's
policies of insurance sold to Terra Nova during the relevant time periods. Terra
Nova intends to vigorously defend the claim and believes it has meritorious
defenses against State Farm for bad faith and seeks to recover its legal fees
and costs arising from its defense in the Lozman litigation described above.
Furthermore Terra Nova has filed a counter claim.

         We establish liabilities when a particular contingency is probable and
estimable. For contingencies noted above, we have accrued amounts considered
probable and estimable. We are not aware of pending claims or assessments, other
than as described above, which may have a material adverse impact on our
liquidity, financial position or results of operation.

                                       29
<PAGE>

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.


         During the six months ended June 30, 2006 we issued 32,300 shares of
common stock as director's fees (valued at $9,750 based on the fair market value
of our stock on the date of issuance), 40,000 shares of common stock with a fair
value of $10,000 were issued in exchange for convertible preferred stock, 14,730
shares of common stock with a fair value of $3,535 on the date of issuance were
issued as payment of preferred dividends and 7,500 shares of common stock with a
fair value of $2,020 on the date of issuance were issued as employee
compensation. Stock options valued at $30,000 were exercised resulting in the
issuance of 200,000 shares of common stock. Additionally, 17,500 shares of
common stock with a fair market value of $5,425 were retired due to non-vesting.
The 17,500 shares were originally issued as deferred employee compensation.



Item 3.  Defaults Upon Senior Securities.

         None.

Item 4.  Submission of Matters to a Vote of Security Holders.

         None.

Item 5.  Other Information.

         None.

Item 6.  Exhibits.

         Exhibit 31.1 Certification of Chief Executive Officer Pursuant to Rule
         13a-14(a) or Rule 15d-14(a).

         Exhibit 31.2 Certification of Chief Financial Officer Pursuant to Rule
         13a-14(a) or Rule 15d-14(a).

         Exhibit 32.1 Certification of Chief Executive Officer Pursuant to Rule
         13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350, as Adopted
         Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

         Exhibit 32.2 Certification of Chief Financial Officer Pursuant to Rule
         13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350, as Adopted
         Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


                                       30
<PAGE>


                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized

                                            Rush Financial Technologies, Inc.

Dated: August 21, 2006              By       /s/ Mike Nolan
                                            ------------------------------------
                                            Mike Nolan
                                            Chief Executive Officer

Dated: August 21, 2006              By       /s/ M. Patricia Kane
                                            ------------------------------------
                                            M. Patricia Kane
                                            Chief Financial Officer








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