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UNITED STATES SECURITIES AND EXCHANGE
COMMISSIONWashington, D.C. 20549

FORM 10-Q



|[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
      THE SECURITIES EXCHANGE ACT OF 1934
|---------------------------------------------------------------------------------------------------
|                                                                                                   
|For the quarterly period ended September 30,
  2010                                                

|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|[     ]
    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: 333-168346

**AVENUE SOUTH LTD.**(Exact name of registrant
as specified in its charter)

|Nevada                                   | 26-0478989                          
|---------------------------------------- | ------------------------------------
|(State or other jurisdiction of          | (I.R.S. Employer Identification No.)
|incorporation or organization)           |                                     
|                                         |                                     
|5 Victory Road                           |                                     
|Suffern, NY                              | 10901                               
|(Address of principal executive offices) | (Zip Code)                          

Registrants telephone number (including area code): (845)
548-0888

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 by check mark whether the
registrant is a large accelerated filer, an accelerated filer, or a
non-accelerated filer or a smaller reporting company. See definition of large
accelerated filer, accelerated filer and smaller reporting company in Rule
12b-2 of the Exchange Act. (Check one):

|Large accelerated filer [   ]                       | Accelerated filer [   ]      
|--------------------------------------------------- | -----------------------------
|Non-accelerated filer [   ]                         | Smaller reporting company [X]
|(Do not check if a smaller reporting
      company) |                              

Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [   ]    No
[X]

Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Website, if
any, every Interactive Date File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files). [   ]

As of November 17, 2010, there were
4,200,000 shares of company common stock issued and outstanding.

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|AVENUE SOUTH LTD.                                         
|----------------------------------------------------------
|                                                          
|Quarterly Report on Form
      10-Q                       
|                                                          
|TABLE OF CONTENTS                                         
|PART I  FINANCIAL INFORMATION                            
|                                                          
|Cautionary Note Regarding Forward-Looking
      Statements
|                                                          
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|PART II  OTHER INFORMATION                               
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|SIGNATURES                                                

1

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-Q contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. We cannot give any guarantee that the plans, intentions or expectations described in the forward looking statements will
be achieved. All forward-looking statements involve significant risks and uncertainties, and actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those factors
described in the Risk Factors section of our registration statement on Form S-1 that was filed with the Securities & Exchange Commission on October 26, 2010.  Readers should carefully review such risk factors as well as factors
described in other documents that we file from time to time with the Securities and Exchange Commission.

In some cases, you can identify forward-looking statements by terminology such as guidance, may, will, should, expects, plans, anticipates, believes,
estimates, predicts, projects, potential, proposed, intended, or continue or the negative of these terms or other comparable terminology. You should read statements
that contain these words carefully, because they discuss our expectations about our future operating results or our future financial condition or state other forward-looking information.  There may be events in the future that we are not
able to accurately predict or control. You should be aware that the occurrence of any of the events described in our risk factors and other disclosures could substantially harm our business, results of operations and financial condition, and that
upon the occurrence of any of these events, the trading price of our securities could decline. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, growth rates,
and levels of activity, performance or achievements. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include, without
limitation:

- our ability to obtain sufficient working capital to support our business plans;
- our ability to expand our product offerings;
- our ability to continue to receive orders from our major client;
- our ability to survive through the current difficult retail environment and changing economic conditions that may further adversely affect consumer demand and spending, and as a result, adversely affect our financial condition

Readers are cautioned not to place undue reliance on our forward-looking statements, which reflect managements opinions only as of the date thereof. We undertake no obligation to revise or publicly release the results of any revision of our
forward-looking statements, except as required by law.

2

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Item 1. Financial Statements

AVENUE SOUTH LTD.( A Development Stage Company)

CONDENSED CONSOLIDATED BALANCE SHEETS UNAUDITED

|                                                                      |   | September 30, |   |   | March 31, |  
|--------------------------------------------------------------------- | - | ------------- | - | - | --------- | -
|                                                                      |   | 2010          |   |   | 2010      |  
|                                                                      |   | (unaudited)   |   |   |           |  
|ASSETS                                                                |   |               |   |   |           |  
|Current Assets:                                                       |   |               |   |   |           |  
|Cash and cash
      equivalents                                       | $ | 124,730       |   | $ | 123,420   |  
|Total Assets                                                          |   | 124,730       |   |   | 123,420   |  
|                                                                      |   |               |   |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                  |   |               |   |   |           |  
|                                                                      |   |               |   |   |           |  
|Current Liabilities                                                   |   |               |   |   |           |  
|Accrued expenses                                                      | $ | 3,000         |   | $ |          |  
|Due to related parties                                                |   | 77,210        |   |   | 112,210   |  
|Total
      Liabilities                                               |   | 80,210        |   |   | 112,210   |  
|                                                                      |   |               |   |   |           |  
|Commitments and contingencies                                         |   |               |   |   |           |  
|                                                                      |   |               |   |   |           |  
|Stockholders Equity:                                                 |   |               |   |   |           |  
|Common stock , $0.001 par value;
      100,000,000 shares authorized; |   |               |   |   |           |  
|4,200,000 shares
      and 2,450,000 shares issued and outstanding at |   |               |   |   |           |  
|September 30, 2010 and March 31,
      2010, respectively.            |   | 4,200         |   |   | 2,450     |  
|Common stock
      subscribed, 1,750,000 shares                       |   |              |   |   | 35,000    |  
|Additional paid-in capital                                            |   | 49,800        |   |   | 16,550    |  
|Deficit accumulated
      during the development stage                |   | (9,480        | ) |   | (7,790    | )
|Stock subscription receivable                                         |   |              |   |   | (35,000   | )
|                                                                      |   |               |   |   |           |  
|Total Stockholders Equity                                            |   | 44,520        |   |   | 11,210    |  
|                                                                      |   |               |   |   |           |  
|Total Liabilities and Stockholders Equity                            | $ | 124,730       |   | $ | 123,420   |  

See accompanying notes to unaudited consolidated financial
statements

3

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|AVENUE SOUTH
      LTD. ( A Development Stage Company) CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED
|----------------------------------------------------------------------------------------------------------------------
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Revenue                                                                                                               
|Sales                                                                                                                 
|Cost of sales                                                                                                         
|Gross Margin                                                                                                          
|Operating Expenses                                                                                                    
|Other selling, general and administrative
      expenses                                                              
|                                                                                                                      
|Total operating expenses                                                                                              
|                                                                                                                      
|Net operating loss                                                                                                    
|Other Income (expenses)                                                                                               
|Net loss                                                                                                              
|                                                                                                                      
|Loss per common share:                                                                                                
|- Basic and fully
      diluted                                                                                       
|                                                                                                                      
|Weighted average number
      of shares                                                                               
|- Basic and fully diluted                                                                                             
|                                                                                                                      

*See accompanying notes to unaudited consolidated financial
statements*

4

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|AVENUE SOUTH LTD. ( A
      Development Stage Company) CONDENSED CONSOLIDATED STATEMENTS OF
      CHANGES IN STOCKHOLDERS EQUITY UNAUDITED
|-------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           
|Predecessor Entity                                                                                                                         
|Balance, February 15, 2005                                                                                                                 
|(Inception of Predecessor Entity)                                                                                                          
|Share issued in inception                                                                                                                  
|                                                                                                                                           
|Net loss for the period                                                                                                                    
|Balance, March 31, 2005                                                                                                                    
|                                                                                                                                           
|Net loss for the year                                                                                                                      
|Balance, March 31, 2006                                                                                                                    
|                                                                                                                                           
|Net loss for the year                                                                                                                      
|Balance, March 31, 2007                                                                                                                    
|                                                                                                                                           
|Net loss for the year                                                                                                                      
|Balance, July 5, 2007                                                                                                                      
|                                                                                                                                           
|                                                                                                                                           
|Successor Entity                                                                                                                           
|Balance, July 6, 2007                                                                                                                      
|(Inception of Successor Entity)                                                                                                            
|Issuance of Common Stock                                                                                                                   
|Net loss for the period                                                                                                                    
|Balance, March 31, 2008                                                                                                                    
|                                                                                                                                           
|Share issued in private placement at
      $0.02 per share                                                                                 
|Net loss for the year                                                                                                                      
|Balance, at March 31, 2009                                                                                                                 
|                                                                                                                                           
|Common stock subscribed in private
      placement at $0.02 per share                                                                      
|Shares subscription receivable                                                                                                             
|Net income for the year                                                                                                                    
|Balance, March 31, 2010                                                                                                                    
|(Cash collected  stock
    subscriptions issued)                                                                                          
|Common stock subscribed in private placement at $0.02 per
    share                                                                        
|Net loss for the period                                                                                                                    
|Balance, September 30, 2010 - unaudited                                                                                                    

See accompanying notes to unaudited consolidated financial
statements

5

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|AVENUE SOUTH LTD. ( A
      Development Stage Company) CONDENSED CONSOLIDATED STATEMENTS OF
      CASH FLOWS UNAUDITED
|----------------------------------------------------------------------------------------------------------------------
|                                                                                                                      
|                                                                                                                      
|Cash flows from operating activities                                                                                  
|Net loss for the year/period                                                                                          
|Amortization                                                                                                          
|                                                                                                                      
|Changes in operating assets and
      liabilities:                                                                    
|Other current
      assets                                                                                            
|Inventories                                                                                                           
|Accrued expenses                                                                                                      
|                                                                                                                      
|Net cash provided by (used in) operating activities                                                                   
|                                                                                                                      
|Cash flows from investing activities Acquisition of web
      site                                                    
|                                                                                                                      
|Net cash flows used in investing activities:                                                                          
|                                                                                                                      
|Cash flows from financing activities                                                                                  
|Advance from (to) related parties                                                                                     
|Proceeds from
      issuance of common stock                                                                          
|                                                                                                                      
|Net cash flows provided by financing activities                                                                       
|Net increase (decrease) in cash                                                                                       
|                                                                                                                      
|Cash- beginning of year/period                                                                                        
|Cash- end of year/period                                                                                              
|                                                                                                                      
|Supplemental disclosure of non cash                                                                                   
|financing activities:                                                                                                 
|Issuance of common stock subscribed                                                                                   
|                                                                                                                      
|Supplemental cash flow Information:                                                                                   
|Cash paid for interest                                                                                                
|Cash paid for income taxes                                                                                            

*See accompanying notes to unaudited consolidated financial
statements*

6

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AVENUE SOUTH LTD.( A Development Stage Company)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of the Avenue South Ltd. and its subsidiary have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or the SEC, including the
instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed
or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive consolidated financial statements and should be read in conjunction with our
audited consolidated financial statements for the year ended March 31, 2010.

In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three-month period have been made. Results for the interim periods presented are not
necessarily indicative of the results that might be expected for the entire fiscal year. When used in these notes, the terms "Company", "we", "us" or "our" mean Avenue South Ltd. and its subsidiary included in these consolidated financial
statements.

2. ORGANIZATION AND NATURE OF BUSINESS

On July 6, 2007, our principal stockholder acquired 100% of the equity of Avenue South, Inc., a North Carolina corporation. On July 6, 2007, Avenue South Ltd., a Nevada corporation was formed by our principal stockholder and our principal
stockholder entered into a share exchange agreement, pursuant to which all the common stock held by our principal stockholder in Avenue South, Inc. was acquired by Avenue South Ltd. by issuing 2 million common shares to our principal stockholder.
Avenue South Ltd. then became the parent corporation owning 100% of Avenue South, Inc.

Avenue South, Inc. was incorporated in the State of North Carolina on February 15, 2005 (date of predecessor inception) with the principal business objective of a one-stop web based supplier of imported and domestic art reproductions,
collectibles and home décor items that are difficult to find in traditional home furnishing retail outlets. All items are sold through the Companys website, www.avenuesouth.com.

The Companys success will depend in part on its ability to market and sell its products over the internet and through other marketing channels. There can be no assurance that these marketing efforts will be successful. The Company believes
that it currently has sufficient cash and financing commitments to meet its funding requirements over the next year. In addition, the Company may wish to selectively pursue additional products complementary to those of the Company in the future in
order to expand its presence in the marketplace and achieve operating efficiencies. The Company may expect to seek to obtain additional funding through debt or equity transactions. There can be no assurance as to the availability or terms upon which
such financing and capital might be available.

Principles of consolidation

The accompanying consolidated financial statements include the accounts of the Avenue South Ltd. and its wholly-owned subsidiary Avenue South, Inc., after elimination of all material intercompany accounts, transactions, and profits.

A summary of significant accounting policies of Avenue South Ltd. (A Development Stage Company) (the Company or Successor) is presented to assist in understanding the Companys financial statements. The accounting
policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. The Company has not realized
any significant revenues from its planned principal business purpose and is considered to be in a development stage in accordance with ASC 915, Development Stage Entities.

7

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AVENUE SOUTH LTD.( A Development Stage Company)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Inventory

Inventories consist of finished goods of home furnishing products. Cost is stated at the lower of cost or market on a first-in, first-out (FIFO) basis.  The Company has not recorded an allowance for slow-moving or obsolete inventory. There was no
inventory on hand at September 30, 2010.

Income Taxes

The Company uses the liability approach to financial accounting and reporting for income taxes. The differences between the financial statement and tax bases of assets and liabilities are determined annually. Deferred income tax assets and
liabilities are computed for those differences that have future tax consequences using the currently enacted tax laws and rates that apply to the period in which they are expected to affect taxable income. Valuation allowances are established, if
necessary, to reduce deferred tax asset accounts to the amounts that will more likely than not be realized. Income tax expense is the current tax payable or refundable for the period, plus or minus the net change in the deferred tax asset and
liability accounts.

Revenue Recognition

The Company recognizes revenue in accordance with accounting standards issued by the FASB, which specifies that revenue is realized or realizable and earned when four criteria are met:

- Persuasive evidence of an arrangement exists;
- Delivery has occurred or services have been rendered;
- The sellers price to the buyer is fixed or determinable; and
- Collectability of payment is reasonably assured.

The Company recognizes revenue when the goods are accepted by the customer and title has passed. The Company sells its goods via shipment from its suppliers directly to its customers. Shipping and handling costs were not significant. The Company has
a 30 day return policy and customers have a general right of 30 days return on products delivered.

The Company did not provide for an allowance for return products since the Company has not experienced any sales returns.

Certain customer arrangements require evaluation of the criteria outlined in the accounting standards of reporting revenue Gross as a Principal Versus Net as an Agent in determining whether it is appropriate to record the
gross amount of revenue and related costs or the net amount earned as agent fees. Generally, when we are primarily obligated in a transaction, revenue is recorded on a gross basis. Other factors that we consider in determining whether to recognize
revenue on a gross versus net basis include our assumption of credit risk, our latitude in establishing prices, our determination of service specifications and our involvement in the provision of services. When we conclude that we are not primarily
obligated as a principal, we record the net amount earned as agent fees within net sales.

Basic Income/Loss Per Common Share 
The computation of income / loss per share is based on the weighted average number of shares outstanding during the period presented in accordance with ASC 260, Earnings Per Share. At September 30, 2010 and March 31, 2010, the Company
did not have any stock equivalents.

Use of Estimates 
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Foreign Currency Transactions 
For the six months ended September 30, 2010 and 2009, there are no gain and loss on foreign currency transaction as all transactions are denominated in US dollars.

8

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AVENUE SOUTH LTD.( A Development Stage Company)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED

Cash and cash equivalentsThe Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with original maturities of three months or less, when purchased, to be cash and cash equivalents.

4. RECENT CHANGES IN ACCOUNTING STANDARDS

Recent Accounting PronouncementsIn August 2009, the FASB issued an Accounting Standards Update (ASU) No.2009.05 regarding measuring liabilities at fair value. This ASU provides additional guidance clarifying the measurement of liabilities at fair value in circumstances
in which a quoted price in an active market for the identical liability is not available; under those circumstances, a reporting entity is required to measure fair value using one or more of valuation techniques, as defined. This ASU is effective
for the first reporting period, including interim periods, beginning after the issuance of this ASU. The adoption of this guidance did not have a material impact on the Companys consolidated financial statements.

The Company does not expect that adoption of recently issued accounting pronouncements will have a material impact on its financial position, results of operations or cash flows.

5. DUE TO RELATED PARTIES

As of September 30, 2010, the amount due to related parties of $77,210 represented the amount due to President, Principal Accounting Officer, Secretary and director. As of March 31, 2010, the amount due to related parties of $112,210
included $77,235 due to President, Principal Accounting Officer, Secretary and director and $34,975 due to Vice President Sales and Director. The amounts due are unsecured, non-interest bearing, and due on demand.

6. INCOME TAXES

The Company accounts for income taxes using the liability method; under which deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and the tax basis of assets and liabilities
using enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the
deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.

At September 30, 2010, the Company had accumulated deficit during the development stage of $9,480 to offset future taxable income. The Company has established a valuation allowance equal to the full amount of this deferred tax asset due to the
uncertainty of the utilization of the operating losses in future periods.

The Company adopted the provisions of ASC 740, Accounting for Uncertainty in Income Taxes, at inception. As a result of the implementation of ASC 740, the Company recognized no increase in the liability for unrecognized tax benefits.

The Company has no uncertain tax positions at September 30, 2010 and 2009 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

9

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AVENUE SOUTH LTD.( A Development Stage Company)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7. STOCKHOLDERS EQUITY

The Companys Articles of Incorporation authorize 100,000,000 shares of $0.001 par value common stock. On December 17, 2008, the Company issued 450,000 shares of its Common Stock to the Companys sole stockholder, at $0.02 per
share, for total proceeds of $9,000.

On March 28, 2010 the Company had received stock subscriptions to issue 1,750,000 shares of its common stock to 28 non-US investors at $0.02 per share. The Company completed the private placement offering for gross proceeds of $35,000 to
non-US persons in reliance of Regulation S promulgated under the Securities Act of 1933 in June 2010. The total amount of common stock subscribed at March 31, 2010 was $35,000. The Company also entered into a Registration Rights Agreement on
March 28, 2010 with each investor whereby as soon as possible but in any event not later than the 120th day after March 28, 2010, the Company agreed to file a registration statement on Form S-1. Upon the failure by the Company to have the
Registration Statement declared effective within 180 days from the date of the closing of our offering (September 27, 2010), the Company may be required to issue additional shares of its common stock (valued at $0.02 per share) to each
Subscriber as liquidated damages. The penalty amount is equal to five percent of the subscription price paid by each subscriber for the first month starting September 27, 2010, if the Registration Statement is not declared effective by that date.
The penalty amount equals an additional 87,500 total common shares that may be issued to all the investors for a one month delay and one percent of the subscription price paid in shares (valued at $0.02 per share) to each subscriber for every
month thereafter. The maximum amount of liquidated damages due shall not exceed twenty five percent of the Subscription Price paid by the Subscribers (valued at $0.02 per share), which equals a potential maximum of 437,500 additional total
common shares that may be issued to all subscribers.

The Company has been able to obtain a verbal commitment from all investors to waive all penalties as the Registration Statement went effective on November 2, 2010. There was no penalty accrued for the quarter ended September 30, 2010.

On June 16, 2010 the Company collected all stock subscriptions receivable totaling $35,000 and issued the 1,750,000 shares that were subscribed in the offering.

10

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Item 2. Managements Discussion and Analysis of Financial Conditions of Operations.

The following discussion and analysis of financial condition and results of operations relates to the operations and financial condition reported in our unaudited condensed consolidated financial statements for the three months ended September
30, 2010 and 2009, and should be read in conjunction with such financial statements and related notes included in this report. Those statements in the following discussion that are not historical in nature should be considered to be forward looking
statements that are inherently uncertain. Actual results and the timing of the events may differ materially from those contained in these forward looking statements due to a number of factors, including those discussed in the Cautionary Note
on Forward Looking Statements set forth elsewhere in this Report.

Overview

We are a web-based retailer of imported and domestic distinctive art reproductions, collectibles and home décor items. We sell our products through our website www.avenuesouth.com and through an informal relationship with our major customer,
a home furnishing distributor in Hong Kong. We do not occupy any physical stores or outlets. We believe that the products we sell are relatively unique and will sell successfully through our website because they are not readily available at many
retail outlets.

Principal Factors Affecting our Financial Performance

Our operating results are primarily affected by the following factors:

| | Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next 12 months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Our ability to achieve and maintain profitability and positive cash flow is dependent upon:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
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| | Based upon current plans, we expect to incur operating losses in future periods because we will continue to be in the development stage and will be incurring expenses and not generating significant revenues.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | We are dependent upon our relationships with, Crown Trend Trading Ltd., our major customer and principal distributor at this time, to sell our product inventory. We do not have any formal relationship with them and they may in
their sole discretion and without any penalty cease being our distributor at any time. If they cease the distribution of our products then our sole source of distribution will be through our website, which has not generated any significant revenue
to date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | In addition to sales of our products through our major customer and any other distributor that may sell our products in the future, our sales are dependent on our ability to attract retail customers to our website on
cost-effective terms. Our strategy to attract customers to our website, which has not been formalized or implemented, includes viral marketing, the practice of generating "buzz" among Internet users in our products through the developing and
maintaining weblogs or "blogs", online journals that are updated frequently and available to the public, postings on online communities such as Facebook, MySpace, Yahoo!(R) Groups and amateur websites such as YouTube.com, and other methods of
getting Internet users to refer others to our website by e-mail or word of mouth; search engine optimization, marketing our
website via search engines by purchasing sponsored placement in search results; and entering into affiliate marketing relationships with website providers to increase our access to Internet consumers. We expect to rely on word of mouth marketing as
the primary source of traffic to our website, with search engine optimization and affiliate marketing as secondary sources.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | We acquire our product inventory from several wholesale
vendors all located in the United States who will also drop-ship the inventory
we purchase from them to our Hong Kong customer or to other export customers. We
do not manufacture any of our own products. We have not entered into any formal
supply agreements with these vendors. We are required to pay in full for product
inventory purchased from these vendors upon delivery. If the prices charged by
these vendors increase and we are not able to pass on the increased price to our
customers, then our margins will be reduced and this will affect our potential
for future profitability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

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Results of Operations for the three months ended September 30, 2010 and September 30, 2009 (successor).

Revenues

We generated revenues of $42,455 during the three months ended September 30, 2010 and $0 during the same period in 2009. This increase in revenue for the three months ended September 30, 2010 is due to our sales to our major customer, a Hong
Kong based wholesale distributor of home furnishings of $42,455. We anticipate future increases in revenue from our major customer and perhaps obtain other new distributors and consumer sales through our website but at this time, our ability to
generate significant revenues continues to be uncertain and we continue to be a development stage company.

Cost of Sales

Our cost of sales was $36,801 for the three months ended September 30, 2010 compared to $0 for the three months ended September 30, 2009. The increase in the cost of sales for the three months ended September 30, 2010 was due to our increase
in revenue for the three months ended September 30, 2010 as we were able to continue to sell our merchandise to our major customer this quarter, which generated $42,455 of revenue for the three months ended September 30, 2010.

Gross Profit

Our gross profit was $5,654 for the three months ended September 30, 2010 compared to $0 for the three months ended September 30, 2009. The increase in the gross profit for the three months ended September 30, 2010 was due to our increase in
revenue for the three months ended September 30, 2010. We expect our future gross profit margins to continue to be in the range of 13% to 17% with our major customer and 13% to 25% from other customers as we continue to seek new business from
wholesale distributors of home furnishing products and other retail consumers.

Expenses

For expenses were $10,291 for the three months ended September 30, 2010 compared to $1,677 for the three months ended September 30, 2009. The increase in the expenses for the three months ended September 30, 2010 was due to our increase
costs incurred for travel expenses, credit card fees and other general and administrative expenses for the three months ended September 30, 2010. We expect our general and administrative costs to increase sometime later in 2010 or 2011 if we can
expand our sales in Hong Kong and other locations and increase our profits. We may also increase our general and administrative expenses if we are able to raise money through a combination of debt financing and equity financing by way of doing
another private placement.

Net Income (Loss)

We had net loss of $4,637 during the three months ended September 30, 2010 and a net loss of $1,677 during the same period in 2009. This increase in net loss for the three months ended September 30, 2010 is due to our sale to our distributor
in Hong Kong and increase costs incurred for travel expenses, credit card fees and other general and administrative expenses for the three months ended September 30, 2010.

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Results of Operations for the six months ended September 30, 2010 and September 30, 2009 and from July 6, 2007 (successor inception) to September 30, 2010.

Revenues

We generated revenues of $76,675 during the period from our inception on July 6, 2007 to September 30, 2010.

We generated revenues of $62,465 during the six months ended September 30, 2010 and $0 during the same period in 2009. This increase in revenue for the six months ended September 30, 2010 is due to our sales to our major customer, a Hong
Kong based wholesale distributor of home furnishings of $62,465. We anticipate future increases in revenue from our major customer and perhaps obtain other new distributors and consumer sales through our website but at this time, our ability to
generate significant revenues continues to be uncertain and we continue to be a development stage company.

Cost of Sales

Our cost of sales from our inception on July 6, 2007 to September 30, 2010 was $64,024.

Our cost of sales was $53,749 for the six months ended September 30, 2010 compared to $0 for the six months ended September 30, 2009. The increase in the cost of sales for the six months ended September 30, 2010 was due to our increase in
revenue for the six months ended September 30, 2010 as we were able to continue to sell our merchandise to our major customer this quarter, which generated $62,465 of revenue for the six months ended September 30, 2010.

Gross Profit

Our gross profit from our inception on July 6, 2007 to September 30, 2010 was $12,651.

Our gross profit was $8,716 for the six months ended September 30, 2010 compared to $0 for the six months ended September 30, 2009. The increase in the gross profit for the six months ended September 30, 2010 was due to our increase in
revenue for the six months ended September 30, 2010. Our gross profit margin decreased from approximately 26% for the year ended March 31, 2010 to 14% for the six months ended September 30, 2010. This decrease in gross margin is due to the
renegotiation of our selling prices to our major customer in order for us to derive more sales volume from our major customer for future fiscal quarters and for the year ended March 31, 2011. We expect our future gross profit margins to continue to
be in the range of 14% to 17% with our major customer and 14% to 25% from other customers as we continue to seek new business from wholesale distributors of home furnishing products and other retail consumers.

Expenses

From July 6, 2007 (inception) to September 30, 2010, our total expenses were $22,131. These total expenses since inception to September 30, 2010 were for general and administrative expenses which consisted of charges for website maintenance and
credit card fees, bank charges, office maintenance, communication expenses, courier, postage, office supplies, and travel.

Our expenses were $10,406 for the six months ended September 30, 2010 compared to $2,375 for the six months ended September 30, 2009. The increase in the expenses for the six months ended September 30, 2010 was due to our increase costs
incurred for travel expenses, credit card fees and other general and administrative expenses for the six months ended September 30, 2010 for the expansion of our business. We expect our general and administrative costs to increase sometime later in
2010 or 2011 if we can expand our sales in Hong Kong and other locations and increase our profits. We may also increase our general and administrative expenses if we are able to raise money through a combination of debt financing and equity
financing by way of doing another private placement.

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Net Income (Loss)

We have a net loss of $9,480 during the period from our
inception on July 6, 2007 to September 30, 2010.

We had net loss of $1,690 during the six months ended September
30, 2010 and a net loss of $2,375 during the same period in 2009. This decrease
in net loss for the six months ended September 30, 2010 is due to our sale to
our distributor in Hong Kong.

Liquidity and Capital Resources as of September 30, 2010 and
2009

As of September 30, 2010, we had cash of $124,730, total assets
of $124,730 and working capital of $44,520 compared to $123,420 in cash,
$123,420 in assets and working capital of $11,210 as of March 31, 2010. As of
September 30, 2010 we have an accumulated deficit of $9,480.

During the six months ended September 30, 2010 we had an
increase in the net cash provided by operating of $1,310. We collected $35,000
of the financing from our March 28, 2010 private placement in June 2010. In
addition, we repaid loan from related parties of $35,000. From our inception on
July 6, 2007 to September 30, 2010, we have raised a total net amount of
$124,730 in cash through financing activities.

During the six months ended September 30, 2010 we had net loss
of $1,690 provided by our operating activities compared to $2,375 of cash used
by our operating activities during the same period in 2009, a decrease of $685.
This is due to increase in our net income for the six months ended September 30,
2010. From our inception on July 6, 2007 to September 30, 2010, we used net cash
of $16,480 from our operating activities. During the year ended March 31, 2011,
our total cash requirements may exceed our cash balances. Currently, we do not
have sufficient cash in our bank accounts to cover our estimated expenses for
the next 12 months if we expand our future operations and our related parties do
not demand repayment of their loans. These loans are non-interest bearing and
due on demand. We anticipate meeting our future cash requirements through a
combination of equity and debt financing.

It may take several years for us to fully realize our business
plan.

We estimate that our expenses over the next 12 months
(beginning October 2010) will be approximately $160,000 as described in the
table below. These estimates may change significantly depending on the nature of
our future business activities and our ability to raise capital from
shareholders or other sources.

|                                                   |  | Target completion |  |  | Estimated | 
|-------------------------------------------------- |  | ----------------- |  |  | --------- | 
|Description                                        |  | date or period    |  |  | expenses  | 
|Legal and accounting fees                          |  | 12 months         |  |  | 20,000    | 
|Further development of the website avenuesouth.com |  | 12 months         |  |  | 10,000    | 
|Marketing and advertising                          |  | 12 months         |  |  | 65,000    | 
|Salaries and consulting fees                       |  | 12 months         |  |  | 55,000    | 
|General and administrative                         |  | 12 months         |  |  | 10,000    | 
|Total                                              |  |                   |  |  | 160,000   | 

We intend to meet our cash requirements for the next 12 months
through a combination of debt financing and equity financing by way of private
placements. We currently do not have any arrangements in place for the
completion of any further private placement financings and there is no assurance
that we will be successful in completing any further private placement
financings. There is no assurance that any financing will be available or if
available, on terms that will be acceptable to us. We may not raise sufficient
funds to fully carry out any business plan.

We will also incur certain legal and accounting costs
associated with the public reporting obligations in conjunction with becoming a
public reporting company.

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Off-Balance Sheet Arrangements

As of the date of this Report, we have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that are material to our stockholders.

Inflation

The effect of inflation on our revenues and operating results has not been significant.

Critical Accounting Policies

Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete listing of these policies is included in Note 2 of the notes to our financial statements
for the years ended March 31, 2010 and 2009 and from date of inception (July 6, 2007) to March 31, 2010 and for the three months ended September 30, 2010 and 2009. We have identified below the accounting policies that are of particular importance in
the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.

Recent Accounting Pronouncements 
In May 2009, the FASB issued new guidance of ASC 855 Subsequent Events on the treatment of subsequent events which is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet
date but before financial statements are issued or are available to be issued. Specifically, management of a reporting entity is required to evaluate subsequent events through the date that financial statements are issued and disclose the date
through which subsequent events have been evaluated, as well as the date the financial statements were issued. This new guidance was effective for fiscal years and interim periods ended after June 15, 2009, and must be applied prospectively. The
adoption of this guidance did not have a material impact on the Companys consolidated financial statements.

In August 2009, the FASB issued an Accounting Standards Update (ASU) No.2009.05 regarding measuring liabilities at fair value. This ASU provides additional guidance clarifying the measurement of liabilities at fair value in circumstances
in which a quoted price in an active market for the identical liability is not available; under those circumstances, a reporting entity is required to measure fair value using one or more of valuation techniques, as defined. This ASU is effective
for the first reporting period, including interim periods, beginning after the issuance of this ASU. The adoption of this guidance did not have a material impact on the Companys consolidated financial statements.

The Company does not expect that adoption of recently issued accounting pronouncements will have a material impact on its financial position, results of operations or cash flows.

15

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Item 3. Quantitative And Qualitative Disclosures About Market Risk.

Pursuant to Item 305(e) of Regulation S-K, we are not required to provide the information required by this Item as we are a smaller reporting company.

Item 4. Controls And Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the
reports we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(e), our management has carried out an evaluation, with the participation and under the supervision of Irina Goldman, our President and Principal Accounting Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures, as of September 30, 2010. Based upon, and as of the date of this evaluation, Ms. Goldman, determined that our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

During the fiscal quarter ended September 30, 2010, there were no changes in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

|Item 1. | Legal Proceedings
|------- | -----------------

From time to time, we may become involved in various lawsuits
and legal proceedings, which arise in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in these
or other matters may arise from time to time that may harm business. We are
currently not aware of any such legal proceedings or claims that will have,
individually or in the aggregate, a material adverse affect on our business,
financial condition or operating results.

|Item 1A. | Risk Factors
|-------- | ------------

As a smaller reporting company, we are not required to make
disclosures under this Item 1A.

|Item 2. | Unregistered Sales of Equity
      Securities and Use of Proceeds
|------- | -----------------------------------------------------------------
|        |                                                                  
|None.   |                                                                  
|        |                                                                  
|Item 3. | Defaults Upon Senior Securities                                  
|        |                                                                  
|None.   |                                                                  
|        |                                                                  
|Item 4. | Removed and Reserved                                             
|        |                                                                  
|        |                                                                  
|Item 5. | Other Information                                                
|        |                                                                  
|None.   |                                                                  

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Item 6. Exhibits

|             |                                                                                                                                                                                                                   
|------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) Exhibits |                                                                                                                                                                                                                   
|             |                                                                                                                                                                                                                   
|Exhibit      |                                                                                                                                                                                                                   
|Number       | Description of Exhibit                                                                                                                                                                                            
|             |                                                                                                                                                                                                                   
|31*          | Certification of Principal Executive Officer
      and Principal Accounting Officer pursuant to Rule 13a-14 and Rule
      15d-14(a), promulgated under the Securities and Exchange Act of 1934, as
      amended.
|             |                                                                                                                                                                                                                   
|32 *         | Certification pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of
      2002.                                                                              

* Filed herewith

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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.

Avenue South Ltd.

November 17, 2010

By:/s/ Irina Goldman
Irina Goldman 
President and Principal Financial Officer 
(Principal Executive Officer and Principal
Financial Officer)

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