SECURITIES AND EXCHANGE COMMISSION
                      Washington, D. C.  20549
                            FORM 10-Q

(Mark One)

X Quarterly  report  pursuant to Section 13 or 15(d) of the Securities  Exchange
Act of 1934 for the quarterly period ended September 30, 1997; 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 000-19577

                        HARMONY HOLDINGS, INC.
      (Exact Name of Registrant as Specified in its Charter)


     Delaware                                            95-4333330
(State or Other 
Jurisdiction of                                        (I.R.S. Employer
 Incorporation                                          Identification No.)
or Organization)                                        


                  1990 Westwood Boulevard, Suite 310
                  Los Angeles, California 90025-4676
               (Address of Principal Executive Offices)
                             (Zip Code)

                          (310) 446-7700
           (Registrant's Telephone Number, Including Area Code)

         Indicate by check mark whether the Registrant (1) has filed all Reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such Reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                 YES     X                  NO

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the last practicable date.

          Class                                 Outstanding at November 14, 1997
 Common Stock, par value                                 6,487,429  shares
     $.01 per share






                                       1
<PAGE>


                             
                                                  

PART I--FINANCIAL INFORMATION


ITEM 1.

<TABLE>
<CAPTION>

Financial Statements                                                       Page
<S>                                                                        <C>    

Consolidated Balance Sheets:
      September 30, 1997 (unaudited) and June 30, 1997                     3

Consolidated Statements of Operations (unaudited):
      Three Months Ended September 30, 1997 and 1996                       4

Consolidated Statements of Cash Flows (unaudited):
      Three Months Ended September 30, 1997 and 1996                       5

Notes to Consolidated Financial Statements                                 6



ITEM 2.

Management's Discussion And Analysis Of Financial
Condition And Results Of Operations                                        8





PART II-- OTHER INFORMATION

ITEM 5.


Other Information                                                          11

ITEM 6.

                                                                           11
Exhibits and Reports on Form 8-K

</TABLE>


                                       2
<PAGE>




<TABLE>
<CAPTION>

      Harmony Holdings, Inc.
      Consolidated Balance Sheets
       ----------------------------------------------------------------------------- ---------------------- -----------------
                                                                                      September 30, 1997     June 30, 1997
                                                                                          (unaudited)
       ----------------------------------------------------------------------------- ---------------------- -----------------
       Assets

       <S>                                                                                     <C>             <C>    
       Current Assets:
          Cash                                                                                 $   586,256     $   2,354,625
          Accounts receivable - net of allowance for doubtful accounts of $43,717                4,946,112         5,280,665
          and $97,646
          Unbilled accounts receivable                                                             465,844           865,560
          Other current assets                                                                   1,063,515           794,883
                                                                                                   213,678           208,889
          Note receivable from officer                                               ---------------------- -----------------       
       
           Total current assets                                                                  7,275,405         9,504,622
           
                                                                                                
       Property and equipment, at cost, net of accumulated depreciation and                      1,968,981         1,953,064
       amortization
                                                                                                
       Goodwill, net of accumulated amortization of $1,507,588 and $1,454,643                    2,704,720         2,757,665
                                                                                                  
       Other assets                                                                                183,659           289,695
                                                                                     ---------------------- -----------------
              Total assets                                                                    $ 12,132,765      $ 14,505,046
                                                                                     ====================== =================
                                                                                              
         
                                                                                     

       Liabilities and Stockholders' Equity

       Current Liabilities:
          Accounts payable                                                                   $   1,340,751     $   1,694,219
          Accrued liabilities                                                                    2,401,125         4,230,668
          Bank line of credit                                                                      600,000                 -
          Deferred income                                                                        1,193,728           823,371
                                                                                     ---------------------- -----------------
             Total current liabilities                                                           5,535,604         6,748,258
           


       Stockholders' Equity:

       Preferred Stock, $.01 par value, authorized 10,000,000 shares; none issued

       Common Stock, $.01 par value, authorized 20,000,000 shares, issued and                       64,625            66,933
       outstanding 6,462,429 and 6,693,198
       Additional paid-in capital                                                               14,284,937        14,845,129
       Accumulated deficit                                                                     (7,752,401)       (7,155,274)
                                                                                     ---------------------- -----------------
                                                                                                 6,597,161         7,756,788
       Stockholders' equity
                                                                                     ---------------------- -----------------
                                                                                     
       Total Liabilities and Stockholders' Equity                                             $ 12,132,765      $ 14,505,046
                                                                                     ====================== =================
                                                                                  


       ----------------------------------------------------------------------------- ---------------------- -----------------
</TABLE>

               See Accompanying Notes to Consolidated Financial Statements



                                       3
<PAGE>




Harmony Holdings, Inc.
Consolidated Statement of Operations
(unaudited)
<TABLE>
<CAPTION>

--------------------------------------------------- ------------------------------------------
                                                               Three Months Ended
                                                                  September 30,
--------------------------------------------------- ------------------------------------------
                                                           1997                  1996
                                                    -------------------- ---------------------
                                                    -------------------- ---------------------
<S>                                                          <C>                   <C>   

Contract revenues                                          $ 11,379,476          $ 13,816,519
Cost of production                                            9,123,498            11,145,918
                                                    -------------------- ---------------------
    Gross profit                                              2,255,978             2,670,601

Selling expenses                                                732,730               658,696
Operating expenses                                            1,917,581             1,480,863
Depreciation and amortization                                   175,734               143,971
                                                    -------------------- ---------------------
    (Loss) income from operations                             (570,067)               387,071

Interest income                                                  19,883                 2,378
Interest expense                                                (3,695)              (21,076)
                                                    -------------------- ---------------------
Net (loss) income before income taxes                         (553,879)               368,373

Income taxes                                                     43,248                     0
                                                    -------------------- ---------------------
Net (loss) income                                           $ (597,127)               368,373
                                                    ==================== =====================
Net (loss) income per share                                    $ (0.09)                  0.06
Weighted average shares outstanding                           6,515,683             6,182,328
--------------------------------------------------- -------------------- ---------------------
</TABLE>
             See Accompanying Notes to Consolidated Financial Statements




                                       4
<PAGE>



<TABLE>
<CAPTION>

Harmony Holdings, Inc.
Consolidated Statements of Cash Flows
(unaudited)

--------------------------------------------------------------------------------------------------------------------

                                                                                        Three Months Ended
Increase (decrease) in cash                                                                September 30,
--------------------------------------------------------------------------------------------------------------------

                                                                                       1997               1996
                                                                               --------------------------------------
                                                                               

Cash flows from operating activities:
<S>                                                                                         <C>              <C>   

Net income (loss)                                                                       $  (597,127)       $ 368,373
Adjustments to reconcile net loss to cash used by operating activities:
Depreciation and amortization                                                                175,102         143,168
 Amortization of prepaid interest                                                                  0           3,823
 Issuance of non-cash compensation expense                                                    37,500               0

Changes in assets and liabilities:
   Accounts receivable                                                                       334,553       (442,222)
   Unbilled accounts receivable                                                              399,716       (129,101)
   Other current assets                                                                    (268,632)       (463,126)
   Note receivable former officer - interest                                                 (4,789)               0
   Other assets                                                                              106,036           2,801
   Accounts payable                                                                        (353,468)           (128)
   Accrued liabilities                                                                   (1,829,543)       1,462,215
   Deferred income                                                                           370,357       (287,990)
                                                                               --------------------------------------
                                                        
     Net cash provided by (used in) operating activities                                 (1,630,295)         657,813
  
                                                                               --------------------------------------
                                                                              
Cash flows from investing activities:
Capital expenditures                                                                       (138,074)       (110,610)
                                                                               --------------------------------------
                                                                               
                                                                                           (138,074)       (110,610)
   Net cash used by investing activities
                                                                               --------------------------------------
                                                                            
Cash flows from financing activities:

Proceeds from issuance of (repurchase of) stock                                            (600,000)       2,000,000
 Repayments subordinated notes payable                                                             0       (385,000)
 Net borrowings under bank line of credit                                                    600,000       (300,000)
                                                                               --------------------------------------
                                                                               
                                                                                                   0       1,315,000
   Net cash provided by financing activities
                                                                               --------------------------------------
                                                                              
                                                                                         (1,768,369)       1,862,203
Net increase (decrease) in cash
                                                                                           2,354,625         446,740
Cash, beginning of period
Cash, end of period
                                                                               --------------------------------------
                                                                               
                                                                                           $ 586,256     $ 2,308,943
-------------------------------------------------------------------------------======================================
</TABLE>
              See Accompanying Notes to Consolidated Financial Statements


                                       5
<PAGE>






                                                        

                             HARMONY HOLDINGS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)
                               September 30, 1997

(1)         Basis of Presentation

           The financial information included herein is unaudited, however, such
information  reflects all adjustments  (consisting of normal recurring accruals)
which are, in the opinion of management, necessary to present fairly the results
of operations for the periods  presented.  The results of operations for the six
months ended September 30, 1997 are not necessarily indicative of a full year.

           The  information  contained  in this  Quarterly  Report  on Form 10-Q
should be read in conjunction with the audited  financial  statements as of June
30, 1997 filed as part of the Company's Annual Report on Form 10-K.

(2)       Organization, Business, and Principles of Consolidation

          Harmony Holdings, Inc. (the "Company") was incorporated under the laws
of the State of  Delaware  on August 5,  1991 as a wholly  owned  subsidiary  of
Ventura Entertainment Group Ltd.  ("Ventura").  In connection with its formation
and initial  capitalization,  Ventura  contributed  all of the capital  stock of
Harmony  Pictures,  Inc.  ("Harmony") and Melody Films,  Inc.  ("Melody") to the
Company.  Harmony and Melody  have been  operating  since  1979.  In March 1990,
Ventura  acquired  Harmony and Melody  from its  co-founders,  Stuart  Gross and
Robert Lieberman.  The Company conducts its operations  through its wholly owned
subsidiaries, Harmony Pictures, Inc., Melody Films, Inc., Lexington Films, Inc.,
The End Inc.,  The  Beginning  Inc.,  The Moment Inc.,  The End  (London)  Ltd.,
Curious Pictures  Corporation,  Hollywood Business  Solutions,  Inc. and Harmony
Entertainment,  Inc. Unless the context indicates otherwise,  the term "Company"
includes all of these subsidiaries.  All significant  intercompany  accounts and
transactions have been eliminated in consolidation. As of June 30, 1994, Ventura
owned  approximately  27 percent of the Company's  common stock.  As of June 30,
1995,  Ventura had sold its entire  interest in the  Company.  Curious  Pictures
Corporation is 99% owned, the 1% minority  interest is not presented  separately
as the amounts are not significant.

         The Company operates in one reportable  segment,  producing  television
commercials,  music videos and related media. The Company's services are usually
directed towards advertising  agencies located in the major markets of New York,
Los Angeles, Chicago, Detroit, Dallas, San Francisco and in regional markets.

(3)      Equity

     On July 25,  1997,  the Company  re-purchased  230,769  shares  (originally
issued in July 1996) of its common stock at $2.60 per share for a total purchase
price of $600,000.

(4)      Commitments and Contingencies

         A lawsuit  was filed on March 22,  1996,  (served  August 12,  1996) in
Superior  Court of the State of  California,  County of Los Angeles.  A wrongful
death claim has been made by the estate of Henry Gillermo Urgoiti,  his wife and
three children for an accident that occurred during the filming of a music video
in August 1995.  The complaint  contains six causes of action,  three causes for
negligence,  one cause for  negligent  product  liability,  one cause for strict
liability and one cause for breach of warranty. Harmony Holdings, Inc., has been
named in all six causes of action, Harmony Pictures Inc., The End Inc. and three
of it's  employees  have  been  named  in one of the  negligence  claims.  Other
defendants include Southern California Edison, Virgin Records America, Inc. Bell
Helicopters  and  Helinet  Aviation  Services.  While  it is  too  early  in the
discovery  process to assess  economic risk,  management has been advised by the
Company's insurance broker that there is adequate insurance to cover any damages
assessed  against the Company.  The  probability of an  unfavorable  outcome and
range of possible loss is unknown.  Accordingly, no amounts have been accrued at
September 30, 1997.

                                       6
<PAGE>

         A  cross-complaint  related  to the  preceding  matter,  was  filed  on
December 23, 1996 in Superior  Court of the State of  California,  County of Los
Angeles. The complaint has been filed by Virgin Records Limited against The End,
Inc.  and  Southern  California  Edison  for  contractual  indemnity,  equitable
indemnity,  comparative  contribution  and declaratory  relief.  While it is too
early in the discovery  process to assess  economic risk or insurance  coverage,
the Company's  insurance  broker has advised  management  that there is adequate
insurance to cover any damages assessed against the Company.  The probability of
an  unfavorable  outcome and range of possible loss is unknown.  Accordingly, no
amounts have been accrued at September 30, 1997.




                                       7
<PAGE>







ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Three  Months  ended  September  30, 1997 as compared  with Three  Months  ended
September 30, 1996

           For the three months ended September 30, 1997,  revenues decreased by
18%, or $2,437,043,  to $11,379,476  from $13,816,519 for the three months ended
September  30,  1996.  The  subsidiaries  that  ceased  operations  during  1996
accounted for $547,050 or 4% of the Company's revenue for the three months ended
September 30, 1996. Revenues excluding those from ceased operations decreased by
$1,889,993.

           Cost of production  is directly  related to revenues and includes all
direct  costs   incurred  in  connection   with  the  production  of  television
commercials including film, crews, location fees and commercial directors' fees.
Cost of production for the Three months ended  September 30, 1997,  decreased by
18%, or $2,022,420,  to $9,123,498  from  $11,145,918 for the Three months ended
September 30, 1996.  Expressed as a percentage  of revenues,  cost of production
for the Three months ended September 30, 1997, was 80% compared with 81% for the
Three months ended  September 30, 1996 and resulted in gross profit  percentages
of 20% and 19%, respectively.  The increase in gross profit for the three months
ended September 30, 1997, was primarily due to management's  continuing  efforts
to  reduce  costs  and  maximize  purchasing  power,  offset  by  the  increased
competitive factors within the commercial production industry.  The subsidiaries
that ceased operations during 1996 accounted for $448,229 or 4% of the Company's
cost of  production  for the three months  ended  September  30,  1996.  Cost of
production  excluding those from ceased operations decreased by $2,470,649 which
was directly attributable to the decrease in revenues.

           Selling  expenses  consist  of  sales  commissions,  advertising  and
promotional  expenses,  travel and other  expenses  incurred in the  securing of
commercial contracts.  Selling expenses for the three months ended September 30,
1997,  increased to $732,730 from $658,696 for the three months ended  September
30,  1996,  representing  an  increase  of $74,034 or 11%.  Selling  commissions
decreased by $53,829,  while other selling expenses  increased by $127,863.  The
increase  was  primarily  attributable  to $107,844  increase in  promotion  and
advertising  expense and $19,745  increase in sales  salaries  expense.  Selling
expenses for the operations  ceased during 1996,  accounted for $22,318 or 3% of
the total  selling  expenses  for the three  months  ended  September  30, 1996.
Selling expenses excluding those from ceased operations increased by $96,352.

           Operating  expenses consist of overhead costs such as office rent and
expenses,  executive,  general and  administrative  payroll,  and related items.
Operating  expenses for the three months ended September 30, 1997,  increased to
$1,917,581  from  $1,480,863  for the three  months  ended  September  30, 1996,
representing  a  increase  of  $436,718  or  29%.  Operating  expenses  for  the
operations  ceased  during  1996,  accounted  for  $71,726  or 5% of  the  total
operating  expenses  for the three months ended  September  30, 1996.  Operating
expenses  excluding  those from ceased  operations  increased by  $508,444.  The
increase in operating  expense is primarily  attributable  to $568,512  combined
increase in insurance,  office  expense,  outside  service,  rent,  salaries and
telephone offset by a combined  decrease of $119,374 in advertising,  bad debts,
entertainment,  investor relations,  leased equipment and legal. The increase of
$508,444  includes  $91,954 for a new subsidiary in London,  England and $65,938
for a new San Francisco office for Curious Pictures Corporation.

           Depreciation and amortization  expense increased for the three months
ended  September  30, 1997, to $175,734 from $143,971 for the three months ended
September 30, 1996,  representing  an increase of $31,763.  The change is due to
the increase in depreciable assets of $138,074.

           Interest  income  increased for the three months ended  September 30,
1997,  to $19,883  from $2,378 for the three months  ended  September  30, 1996,
representing  an  increase  of  $17,505,  due to more  cash  held in short  term
investments compared to the prior year.

                                       8
<PAGE>

           Interest  expense  decreased for the three months ended September 30,
1997,  to $3,695 from  $21,076 for the three months  ended  September  30, 1996,
representing  a decrease of $17,381,  due to a decrease in borrowings  under the
line of credit.

           Income tax expense was $43,248 for the three months  ended  September
30,  1997.  The tax expense is  primarily  attributable  to federal  alternative
minimum tax and state  taxes  imposed by various  states in which the  companies
conduct business. A full valuation allowance has been established as the Company
cannot  determine  that it is more likely than not that the  deferred tax assets
will be  realized.  During  the three  months  ended  September  30,  1997,  the
Company's  effective income tax rate varied from the statutory  federal tax rate
as a result of the utilization of operating  losses for which no tax benefit had
been recognized due to the valuation allowance on the net deferred tax asset.

Liquidity and Capital Resources

Three  months  ended  September  30, 1997 as compared  with Three  months  ended
September 30, 1996

         As of September 30, 1997, the Company had working capital of $1,739,801
including cash of $586,256  compared to working capital of $2,011,259  including
cash of $2,308,943 at September 30, 1996. Cash used by operating  activities for
the three months ended  September 30, 1997,  increased  $2,288,108 to $1,630,295
from  cash  provided  by  operations  of  $657,813  for the three  months  ended
September 30, 1996. The material items relating to the net increase in cash used
by operations  were:  $965,500  decrease in income from  operations;  $1,305,592
decrease in billed and  unbilled  accounts  receivable;  $3,645,098  decrease in
accounts payable and accrued expenses, $292,940 decrease in other current assets
and other assets and an increase in deferred income of $658,347.

         Cash used in investing  activities (ie: capital  expenditures)  for the
three  months  ended  September  30, 1997,  increased  $27,464 to $138,074  from
$110,610 for the three months ended September 30, 1996.

         Cash  provided  by  financing  activities  for the three  months  ended
September 30, 1997,  decreased by $1,315,000 to $0 from $1,315,000 for the three
months ended  September  30, 1996.  The material  decrease in the amount of cash
provided  by  financing  activities  were:  $2,000,000  less  proceeds  from the
issuance  of  stock,   $600,000   repurchase  of  stock,   $385,000  paydown  on
subordinated  debt in 1996 and a $900,000 increase in net borrowings on the line
of credit agreement.

         On May 10, 1995, the Company originally entered into a $3,000,000 asset
based  revolving  line of credit with a bank,  with interest at the bank=s prime
rate plus 1.0% per  annum,  collateralized  by the  assets of the  Company.  The
bank=s  prime rate at  September  30, 1997 was 8.50%.  The  maximum  outstanding
balance  during the three months ended  September  30, 1997 was $800,000 and the
weighted  average  interest rate was 8.50%.  The agreement  expires November 30,
1997. Borrowing is based upon certain percentages of acceptable receivables. The
loan  agreement  has  certain  financial  covenants  one of which is to maintain
profitability  on a quarterly basis. The Company was not in compliance with this
at September 30, 1997 and the non-compliance was waived by the Bank.

           To the extent that future  revenues  and related  gross  profits from
these operations do not provide  sufficient funds to offset operating costs, the
Company's  present  resources  will decrease.  The Company,  as of September 30,
1997,  had entered  into  various  employment  agreements  with its officers and
others which obligate it to make minimum  payments of  approximately  $7,210,858
over the next five years. The payments due are $3,760,929, $2,379,929, $871,250,
$159,000 and $39,750 for the years ended  September 30, 1998,  1999,  2000, 2001
and 2002.  Of such  amounts,  $4,264,183  is for  administrative  personnel  and
$2,946,675  is for  commercial  television  directors and  salespeople.  Certain
director and salespeople agreements provide for additional compensation based on
revenues  and other  items of the  subsidiaries.  Other  agreements  provide for
additional  compensation  based on  certain  defined  operating  profits  of the
subsidiaries. This additional compensation is payable whether or not the Company
has a profit.  Some of the  television  directors  who are  associated  with the
Company receive monthly draws against the directors' compensation for production
of  commercials.  The monthly  draws equal the minimum  guaranteed  compensation
payable to such directors.  Although the draws are recoupable by the Company out
of  compensation  otherwise  payable to such  directors,  such directors are not
obligated  to repay such draws,  if their fees for  commercials  produced do not
exceed  the  monthly  draws that have been paid.  Consequently,  the  Company is
obligated to provide  compensation  to these  directors  whether or not they are
directing  commercials.  Most of the Company's sales  personnel  receive monthly
draws  offset  by their  earned  commissions.  During  the  three  months  ended
September 30, 1997,  the Company paid $556,448 in such draws to these  directors
and  salespeople;  they earned  $757,439 in fees,  which sum  exceeded the draws
advanced by a net $200,991.  On an individual  basis,  some of the directors and
sales  personnel's  fees  earned were less than their  draws and  decreased  the
Company's profits by $66,667.

                                       9
<PAGE>

           The Company has no material  commitments for capital expenditures and
has not made any  arrangements for external sources of financing other than what
has been  disclosed.  Management  believes that the  Company's  present cash and
other  resources  are  sufficient  for its needs  for at least  the next  twelve
months.

Inflation

           Inflation has not had a significant effect on the Company.





                                       10
<PAGE>




PART II-- OTHER INFORMATION


ITEM 5.    Other Information - None


ITEM 6.    Exhibits and Reports on Form 8-K

          (a) 27 Financial Data Schedule


          (b) Reports on Form 8-K

     Harmony  Holdings,  Inc. filed two Current  Reports on Form 8-K dated as of
July 22, 1997. The first was an item 5. Other Event,  filed on July 30, 1997 and
the second was an item 1.  Change in Control of  Registrant,  filed on August 5,
1997.

No other Items of Part II of the Quarterly Report on Form 10-Q are applicable to
the period covered by this Quarterly Report on Form 10-Q.




                                       11
<PAGE>




                                   SIGNATURES

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

                             HARMONY HOLDINGS, INC.

Date: November 14, 1997

           By/s/Christopher T. Dahl
           Christopher T. Dahl
           Chairman of the Board, Chief Executive Officer

Date: November 14, 1997


           By/s/Brian Rackohn
           Brian Rackohn
           Chief Financial Officer
           (Principal Financial and Chief Accounting Officer)



                                       12
<PAGE>