**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**




**FORM
      10-QSB**


x
            
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30,
                2007**





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




**Commission
      File Number 001-12885**





**AVENUE
      ENTERTAINMENT GROUP INC.**


(Exact
      Name of Registrant as Specified in Its Charter)


Delaware
            
            95-4622429(State
                or Other Jurisdiction
            
            (I.R.S.
                Employerof
                Incorporation or Organization)
            
            Identification
                No.)





120
      White Plains Road, Tarrytown, New York 10591


(Address
      of principal executive offices)





(914)
      631-5265


(Issuer’s
      telephone number)





Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
      for
      such shorter period that the registrant was required to file such reports),
      and
      (2) has been subject to such filing requirements for the past 90 days.





Yes x No o





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




Yes x No o





As
      of April 9 , 2008,
      the issuer had outstanding 11,582,000 shares of common stock.





Transitional
      Small Business Disclosure Format (check one): Yes o No x









**TABLE
      OF CONTENTS**


PagePART
                I FINANCIAL INFORMATIONITEM
                1. Financial Statements
            1ITEM
                2. Management’s Discussion and Analysis or Plan of Operation
            7ITEM
                3. Controls and Procedures
            10PART
                II OTHER INFORMATIONITEM
                1. Legal Proceedings
            11ITEM
                2. Unregistered Sales of Equity Securities and Use of Proceeds
            11ITEM
                3. Defaults upon Senior Securities
            11ITEM
                4. Submission of Matters to a Vote of Security Holders
            11ITEM
                5. Other Information
            11ITEM
                6. Exhibits
            11SIGNATURES
            12Exhibit
                31.1 - Section 302
                Certification of Chief Executive OfficerExhibit
                31.2 - Section302
                Certification of Chief Financial OfficerExhibit
                32.1 - Section 906
                Certification of Chief Executive Officer and Chief Financial
                Officer







**PART
      I FINANCIAL INFORMATION**





**ITEM
      1. Financial Statements**





**AVENUE
      ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES**





**CONSOLIDATED
      BALANCE SHEET**


**June
      30, 2007**


**(Unaudited)**





ASSETSCurrent
                assetsCash
            
            $
            902Prepaid
                expenses
            
            
            30,878Stock
                subscriptions receivable
            
            
            5,593TOTAL
                ASSETS
            
            $
            37,373LIABILITIES
                AND STOCKHOLDERS’ DEFICITCurrent
                liabilitiesAccounts
                payable and accrued liabilities
            
            $
            1,955Due
                to related party
            
            
            21,340Loan
                payable - stockholder/officer
            
            
            20,000TOTAL
                LIABILITIES
            
            
            43,295STOCKHOLDERS’
                DEFICITCommon
                stock, $.01 par value, 15,000,000 shares authorized; 10,321,030
                shares issued and outstanding
            
            
            103,210Additional
                paid-in capital
            
            
            7,233,323Accumulated
                deficit
            
            
            (7,273,072
            )Treasury
                    stock, at cost (798,918 shares of common
                    stock)
            
            
            (69,383
            )TOTAL
                STOCKHOLDERS’ DEFICIT
            
            
            (5,922
            )TOTAL
                LIABILITIES AND STOCKHOLDERS’ DEFICIT
            
            $
            37,373





See
      notes
      to consolidated financial statements




1




**AVENUE
      ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES**





**CONSOLIDATED
      STATEMENT OF OPERATIONS**


**(Unaudited)**


Three Months Ended
                
                Six Months EndedJune 30,
                
                June 30,2007
                
                2006
                
                2007
                
                2006Revenues
                
                $
                6,311
                
                $
                1,261
                
                $
                8,487
                
                $
                1,261General
                    and administrative expenses
                
                
                10,428
                
                
                43,892
                
                
                21,017
                
                
                50,876Loss
                    from continuing operations
                
                $
                (4,117
                )
                $
                (42,631
                )
                $
                (12,530
                )
                $
                (49,615
                )Discontinued
                    operationsIncome
                    from discontinued operations
                
                
                
                
                
                125,130
                
                
                
                
                
                94,410Gain
                    on sale of assets
                
                
                
                
                
                722,334
                
                
                
                
                
                722,334Income
                    from discontinued operations
                
                
                
                
                
                847,464
                
                
                
                
                
                816,744Net
                    (loss) income
                
                $
                (4,117
                )
                $
                804,833
                
                $
                (12,530
                )
                $
                767,129Per
                    share data:Loss
                    from continuing operations -basic
                    and diluted
                
                
                *
                
                $
                (0.01
                )
                
                *
                
                $
                (0.01
                )Income
                    from discontinued operations -basic
                    and diluted
                
                
                
                
                $
                0.11
                
                
                
                
                $
                0.13Net
                    (loss) per share -basic
                    and diluted
                
                
                *
                
                $
                0.10
                
                
                *
                
                $
                0.12Weighted
                    average common shares outstanding -basic
                    and diluted
                
                
                10,321,030
                
                
                7,792,543
                
                
                10,321,030
                
                
                6,258,213


*  Less
      than
      $.01 per share




See
      notes
      to consolidated financial statements


2


**AVENUE
      ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES**





**CONSOLIDATED
      STATEMENT OF CASH FLOWS**


**(Unaudited)**





Six Months EndedJune 30,2007
            
            2006Cash
                Flows From Continuing OperationsNet
                (loss) income
            
            $
            (12,530
            )
            $
            767,129LessIncome
                from discontinued operations
            
            
            
            
            
            (94,410
            )Gain
                on sale of assets
            
            
            
            
            
            (722,334
            )Loss
                from continuing operating activities
            
            
            (12,530
            )
            
            (49,615
            )Adjustments
                to reconcile net loss to net cash(used
                in) continuing operating activities:Changes
                in continuing operating assets and liabilities:Prepaid
                expenses
            
            
            (30,878
            )Accounts
                payable and accrued expenses
            
            
            1,955
            
            
            (6,773
            )Net
                cash used in continuing operating activities
            
            
            (41,453
            )
            
            (56,388
            )Cash
                Flows From Financing ActivitiesIncrease
                (decrease) in due to related party
            
            
            (8,486
            )
            
            30,541Proceeds
                from loan payable - Stockholder/officer
            
            
            20,000Proceeds
                from sales of common stock (net of subscriptionsreceivable
                of $5,593 in 2007 and $60,000 in 2006)
            
            
            29,393
            
            
            40,000Net
                cash provided by financing activities
            
            
            40,907
            
            
            70,541(Decrease)
                increase in cash from continuing operations
            
            
            (546
            )
            
            14,153Cash
                flows from discontinued operationsNet
                cash used in discontinued operating activities
            
            
            
            
            
            16,237Net
                cash used in discontinued investing activities
            
            
            
            
            
            (6,258
            )Increase
                in cash from discontinued operations
            
            
            
            
            
            9,979(Decrease)
                increase in cash
            
            
            (546
            )
            
            24,132Cash –
                Beginning of period
            
            
            1,448Cash –
                End of period
            
            $
            902
            
            $
            24,132Supplemental
                cash flow information:Capitalization
                of loan to stockholder
            
            
            
            
            $
            163,558


See
      notes
      to consolidated financial statements


3




**AVENUE
      ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**




1. Organization
      and Operations





Avenue
      Entertainment Enterprises, Inc. (the “Company”) was incorporated in Delaware on
      March 7, 1997 and had operated through its wholly-owned subsidiaries, Avenue
      Pictures, Inc. and its subsidiaries (“Avenue Pictures”) and Wombat Productions,
      Inc. (“Wombat”).





Avenue
      Pictures operated as an independent entertainment company that produced feature
      films, television films and series for television and made-for-television/cable
      movies through September 2, 2005, when it ceased operations upon the sale of
      its
      assets. Wombat operated as a licensor of its library of one-hour-profiles films
      of over 25 Hollywood stars, (the Hollywood Collection), both domestically and
      internationally, through May 2, 2006, when it ceased operations upon the sale
      of
      its assets.





From
      May
      2, 2006, the Company has been inactive.





2. Summary
      of Significant Accounting Policies





Basis
      of
      presentation





The
      accompanying unaudited financial statements and related notes have been prepared
      in accordance with accounting principles generally accepted in the United States
      for interim financial statements and with the rules and regulations under
      Regulation SB of the Securities and Exchange Commission for Form 10-QSB.
      Accordingly, they do not include all of the information and footnotes required
      by accounting principles generally accepted in the United States for complete
      financial statements presentation. In the opinion of management, all adjustments
      (consisting of normal recurring accruals) considered necessary to present fairly
      the financial position as of June 30, 2007 and results of operations and cash
      flows for the three and six months ended June 30, 2007 and 2006 have been
      included. These financial statements should be read in conjunction with the
      financial statements of the Company together with the Company’s management
      discussion and analysis in the Company’s Form 10-KSB for the year ended December
      31, 2006. Interim results are not necessarily indicative of the results for
      a
      full year.





Consolidated
      Financial Statements





The
      Company’s consolidated financial statements include the accounts of the Company
      and its wholly-owned subsidiaries. All material intercompany accounts and
      transactions have been eliminated.





Reclassifications





Certain
      amounts for the prior period have been reclassified to conform to 2007 financial
      statement presentations.





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 disclosures of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of revenues and expenses during the reporting period.
      Actual results could differ from those estimates.


4





New
      Accounting Pronouncements





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair
      value, establishes a framework for measuring fair value, and enhances
      disclosures about fair value measurements. SFAS 157 applies to other accounting
      pronouncements that require the use of fair value measurements. SFAS 157 is
      effective for interim and annual financial statements issued for fiscal years
      beginning after November 15, 2007. The Company is currently assessing the impact
      of adopting SFAS 157 on its financial condition, results of operations and
      cash
      flows.





In
      February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities—Including an amendment of FASB Statement 115”
(“SFAS 159”). SFAS 159 permits an entity to elect to measure various financial
      instruments and certain other items at fair value. It provides entities with
      the
      opportunity to mitigate volatility in reported earnings caused by measuring
      related assets and liabilities differently without having to apply complex
      hedge
      accounting provisions. SFAS 159 requires that a business entity report
      unrealized gains and losses, on items for which the fair value option has been
      elected, in earnings at each subsequent reporting date. SFAS 159 is effective
      as
      of the beginning of the first annual period beginning after November 15, 2007.
      The Company is currently assessing the impact of adopting SFAS 159 on its
      financial condition, results of operations and cash flows.





In
      December 2007, the FASB issued Statement of Financial Accounting Standards
      No.
      141(R), “Business Combinations” (“SFAS 141R”), which replaces SFAS No. 141,
“Business Combinations.” SFAS 141R establishes principles and requirements for
      determining how an enterprise recognizes and measures the fair value of certain
      assets and liabilities acquired in a business combination, including
      noncontrolling interests, contingent consideration, and certain acquired
      contingencies. SFAS 141R also requires acquisition-related transaction expenses
      and restructuring costs be expensed as incurred rather than capitalized as
      a
      component of the business combination. SFAS 141R will be applicable
      prospectively to business combinations for which the acquisition date is on
      or
      after the beginning of the first annual reporting period beginning on or after
      December 15, 2008. SFAS 141R would have an impact on accounting for any
      businesses acquired after the effective date of this pronouncement.





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements – An Amendment of ARB No. 51” (“SFAS
      160”). SFAS 160 establishes accounting and reporting standards for the
      noncontrolling interest in a subsidiary (previously referred to as minority
      interests). SFAS 160 also requires that a retained noncontrolling interest
      upon
      the deconsolidation of a subsidiary be initially measured at its fair value.
      Upon adoption of SFAS 160, the Company would be required to report any
      noncontrolling interests as a separate component of stockholders’ equity. The
      Company would also be required to present any net income allocable to
      noncontrolling interests and net income attributable to stockholders of the
      Company separately in its consolidated statements of income. SFAS 160 is
      effective for fiscal years, and interim periods within those fiscal years,
      beginning on or after December 15, 2008. SFAS 160 requires retroactive adoption
      of the presentation and disclosure requirements for existing minority interests.
      All other requirements of SFAS 160 shall be applied prospectively. SFAS 160
      would have an impact on the presentation and disclosure of the noncontrolling
      interests of any non wholly-owned businesses acquired in the
      future.





Management
      does not believe that any other recently issued, but not yet effective
      accounting pronouncements, if adopted, would have a material effect on the
      accompanying financial statements.





3. Sale
      of
      Assets/Discontinued Operations





On
      May 2,
      2006, Wombat sold substantially all the assets, including rights under certain
      distribution agreements, to a company owned by a former officer of the Company
      in exchange for: (1) the assignment of certain of its liabilities, (2) the
      return of 84,168 shares of common stock of the Company, with a fair value $1,683
      and (3) for the cancellation of options to purchase 175,000 shares of common
      stock of the Company, with a fair value of $3,500. The Company also issued
      a
      fully vested, non-qualified option to purchase 56,500 shares of common stock
      of
      the Company, exercisable at $0.50, per share, through February 13, 2012, with
      a
      fair value of $1,500.


5





The
      Company had been committed to its former president and chairman for salaries,
      bonuses and benefits under employment agreements. Certain of these amounts
      had
      been deferred by these officers. As a result of the sale of assets, these
      agreements were cancelled and all deferred compensation amounts were assumed
      by
      the purchasers of the assets.





The
      Company was also granted the right to receive participation rights on certain
      revenues from certain film properties sold.





For
      the
      three and six months ended June 30, 2006, discontinued operations included
      the
      following:





Revenues
            
            $
            166,022Income
                from discontinued operations
            
            $
            94,410





4. Income
      Taxes





Effective
      January 1, 2007, the Company adopted the provisions of Financial Accounting
      Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes, an interpretation of FASB Statement No. 109” (FIN 48). FIN 48
      clarifies the accounting for uncertainty in income taxes recognized in the
      Company’s financial statements in accordance with FASB Statement 109,
“Accounting for Income Taxes”, and prescribes a recognition threshold and
      measurement process for financial statement recognition and measurement of
      a tax
      position taken or expected to be taken in a tax return. FIN 48 also provides
      guidance on derecognition, classification, interest and penalties, accounting
      in
      interim periods, disclosure and transition.





Management
      has evaluated and concluded that there are no significant uncertain tax
      positions requiring recognition in the Company’s consolidated financial
      statements as of January 1, 2007 and June 30, 2007.





The
      Company’s policy is to classify assessments, if any, for tax related interest as
      interest expenses and tax related penalties as general and administrative
      expenses.





5. Related
      Party Transactions





In
      May
      2007, a stockholder/officer prepaid $20,000 in legal expenses on behalf of
      the
      Company, payable on demand, with interest at 5%, per annum.





6. Subsequent
      Events





In
      July
      2007, the Company collected the stock subscription receivable of
      $5,593.





On
      September 27, 2007, the Company sold an aggregate of 5,000,000 shares of the
      Company’s common stock under stock subscription agreements to two
      stockholders/officers of the Company, at $.02, per share, for aggregate proceeds
      of $100,000. As the Company did not have adequate common shares available to
      issue under the stock subscriptions, only an aggregate of 1,260,970 shares
      were
      issued under the subscriptions. Through December 31, 2007, the Company collected
      $25,000 of the proceeds of the stock subscriptions.





Subsequent
      to June 30, 2007, the Company borrowed an additional $26,407 from the
      stockholder/ officer payable on demand, with interest at 5%, per
      annum.


6


**ITEM
      2. Management’s Discussion and Analysis or Plan of
      Operation**





*The
      following discussion of our financial condition and results of operations should
      be read in conjunction with our financial statements and related notes included
      in this report. This discussion includes forward-looking statements that involve
      risks and uncertainties. As a result of many factors, our actual results may
      differ materially from those anticipated in these forward-looking statements.*




**Overview**




Our
      company cut back daily operations in late 2005 and essentially ceased daily
      operations in May 2006. In September 2005, we sold certain assets to Cary Brokaw
      Productions, and subsequently ceased the business of producing feature films,
      television films and made-for-television/cable movies. Cary Brokaw also resigned
      as a director and as our Chief Executive Officer, President and Chief Financial
      Officer. Gene Feldman assumed certain duties previously held by Mr. Brokaw,
      including becoming our Chairman of the Board.





In
      May
      2006, Gene Feldman was diagnosed with lymphoma and resigned from his position
      with us. On August 25, 2006, Gene Feldman passed away. On September 1, 2006,
      Mr.
      Feldman’s nephew, Michael D. Feldman, stepped in to become our Chief Executive
      Officer and Chairman of the Board, and Jerome I. Feldman, Gene Feldman’s brother
      and Michael D. Feldman’s father, became our Chief Financial Officer, Treasurer
      and Vice Chairman of the Board. Since Gene Feldman’s resignation, we have been
      substantially inactive. All monies disbursed by us from May 2006 to date were
      used to pay for directors and officers’ insurance premiums and the cost of
      maintaining our public company status. During that period, we have had no
      employees, other than our officers and our board of directors has not
      met.




Effective
      May 2006, we sold our remaining assets to the estate of Gene Feldman, pursuant
      to an agreement between Gene Feldman and us in early 2006; however, the actual
      closing of the transaction did not occur until January 2007. We have no current
      operations and do not expect to have revenue from operations in the near future.
      Our present focus is to acquire a target company or business seeking the
      perceived advantages of being a publicly-held corporation.




**Results
      of Operations**




***Three
      Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006***




Operations
      for the three months ended June 30, 2007 and 2006 are not comparable because
      we
      sold most of our assets in the years ended December 31, 2006 and 2005, resulting
      in discontinued operations.





***Six
      Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006***




Operations
      for the six months ended June 30, 2007 and 2006 are not comparable because
      we
      sold most of our assets in the years ended December 31, 2006 and 2005, resulting
      in discontinued operations.





**Liquidity
      and Capital Resources**




As
      of
      June 30, 2007, we had negative working capital of $5,922 compared to working
      capital of $48,417 at June 30, 2006.





We
      do not
      have sufficient funds to continue our operating activities. Future operating
      activities are expected to be funded by sales of common stock to and loans
      from
      officers, directors and major shareholders.




7





**Off-balance
      Sheet Arrangements**




As
      of the
      date of this report, we have not entered into any transactions with
      unconsolidated entities in which we have financial guarantees, subordinated
      retained interests, derivative instruments or other contingent arrangements
      that
      expose us to material continuing risks, contingent liabilities or any other
      obligations under a variable interest in an unconsolidated entity that provides
      us with financing, liquidity, market risk or credit risk support.




**Impact
      of Inflation**




We
      believe that inflation has not had a material impact on our results of
      operations for the three months ended June 30, 2007 and 2006. We cannot assure
      you that future inflation will not have an adverse impact on our operating
      results and financial condition.




**Application
      of Critical Accounting Policies and Estimates**




The
      significant accounting policies that we believe are the most critical to aid
      in
      fully understanding and evaluating our reported financial results are as
      follows:




*Consolidated
      Financial Statements*




Our
      consolidated financial statements include the accounts our company and our
      wholly-owned subsidiaries. All material intercompany accounts and transactions
      have been eliminated.




*Fair
      Value of Financial Instruments*




Our
      carrying values of cash and due to related party approximate their fair values
      because of the short-term maturity of these instruments.




*Use
      of Estimates*




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




Significant
      estimates had included those had related to valuation of accounts receivable,
      film costs and accrued expenses.




*Income
      (Loss) per Common Share*




Basic
      net
      income (loss) per share was computed by dividing the net income (loss) for
      the
      period by the basic weighted average number of shares outstanding during the
      period. Diluted net income (loss) per share was computed by dividing the net
      income (loss) for the period by the weighted average number and any potentially
      diluted shares outstanding during the period.




*Share-Based
      Compensation*




We
      recognize compensation expense for all share-based payment awards made to
      employees, directors and others based on the estimated fair values on the date
      of the grant. Options are valued using the Black-Scholes Option-Pricing Model
      using the market price of our common stock on the date of valuation, an expected
      dividend yield of zero, the remaining period or maturity date of the warrants
      and the expected volatility of our common stock.




8




On
      January 1, 2006, we adopted Statement of Financial Accounting Standards No.
      123
      (revised), “Share-Based Compensation-Revised,” without a material effect.




*Deferred
      Income Taxes*




Deferred
      income taxes are provided for temporary differences between financial statement
      and income tax reporting under the liability method, using expected tax rates
      and laws that are expected to be in effect when the differences are expected
      to
      reverse. A valuation allowance is provided when it is more likely than not,
      that
      the deferred tax asses will not be realized.




**Recently-issued
      Accounting Pronouncements**




In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value
      Measurements” (“SFAS No. 157”), that defines fair value, establishes a framework
      for measuring fair value in generally accepted accounting principles (“GAAP”),
      and expands disclosures about fair value measurements. SFAS No. 157 applies
      under other accounting pronouncements that require or permit fair value
      measurements. Prior to SFAS No. 157, there were different definitions of fair
      value and limited guidance for applying those definitions in GAAP. Moreover,
      that guidance was dispersed among many accounting pronouncements that require
      fair value measurements. Differences in that guidance created inconsistencies
      that added to the complexity in applying GAAP. The changes to current practice
      resulting from the application of this statement relate to the definition of
      fair value, the methods used to measure fair value, and the expanded disclosures
      about fair value measurements. SFAS No. 157 is effective for financial
      statements issued for fiscal years beginning after November 15, 2007, and
      interim periods within those fiscal years. We have not determined the effect,
      if
      any, that may result from the adoption of SFAS No. 157 on our financial
      statements.




In
      February 2007, the FASB issued SFAS
      No.
      159 “The Fair Value Option for Financial Assets and Financial Liabilities”
(“SFAS No. 159”). SFAS No. 159 permits entities to choose, at specified election
      dates, to measure eligible items at fair value (the “fair value option”). A
      business entity shall report unrealized gains and losses on items for which
      the
      fair value option has been elected in earnings at each subsequent reporting
      date. The objective is to improve financial reporting by providing entities
      with
      the opportunity to mitigate volatility in reported earnings caused by measuring
      related assets and liabilities differently without having to apply complex
      hedge
      accounting provisions. SFAS No. 159 is effective as of the beginning of an
      entity’s first fiscal year that begins after November 15, 2007. Early adoption
      is permitted as of the beginning of a fiscal year that begins on or before
      November 15, 2007, provided the entity also elects to apply the provisions
      of
      SFAS No. 157, “Fair Value Measurements.”We
      have
      not determined the effect, if any, that may result from the adoption of SFAS
      No.
      159 on our financial statements.





In
      December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS
      141R”), which replaces SFAS No. 141, “Business Combinations.” SFAS 141R
      establishes principles and requirements for determining how an enterprise
      recognizes and measures the fair value of certain assets and liabilities
      acquired in a business combination, including noncontrolling interests,
      contingent consideration, and certain acquired contingencies. SFAS 141R also
      requires acquisition-related transaction expenses and restructuring costs be
      expensed as incurred rather than capitalized as a component of the business
      combination. SFAS 141R will be applicable prospectively to business combinations
      for which the acquisition date is on or after the beginning of the first annual
      reporting period beginning on or after December 15, 2008. SFAS 141R would have
      an impact on accounting for any businesses acquired after the effective date
      of
      this pronouncement.





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements – An Amendment of ARB No. 51” (“SFAS
      160”). SFAS 160 establishes accounting and reporting standards for the
      noncontrolling interest in a subsidiary (previously referred to as minority
      interests). SFAS 160 also requires that a retained noncontrolling interest
      upon
      the deconsolidation of a subsidiary be initially measured at its fair value.
      Upon adoption of SFAS 160, we would be required to report any noncontrolling
      interests as a separate component of stockholders’ equity. We would also be
      required to present any net income allocable to noncontrolling interests and
      net
      income attributable to stockholders of ours separately in our consolidated
      statements of income. SFAS 160 is effective for fiscal years, and interim
      periods within those fiscal years, beginning on or after December 15, 2008.
      SFAS
      160 requires retroactive adoption of the presentation and disclosure
      requirements for existing minority interests. All other requirements of SFAS
      160
      shall be applied prospectively. SFAS 160 would have an impact on the
      presentation and disclosure of the noncontrolling interests of any
      non-wholly-owned businesses acquired in the future.


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**ITEM
      3.** **Controls
      and Procedures**





**Evaluation
      of Disclosure Controls and Procedures**





We
      carried out an evaluation, under the supervision and with the participation
      of
      our management, including our Chief Executive Officer and our Chief Financial
      Officer, of the effectiveness of the design and operation of our disclosure
      controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under
      the Exchange Act. Based
      upon that evaluation, our Chief Executive Officer and the Chief Financial
      Officer have concluded that our disclosure controls and procedures were not
      effective as of June 30, 2007, based on their evaluation of these controls
      and
      procedures .
      Disclosure controls and procedures include, without limitation, controls and
      procedures designed to ensure that information required to be disclosed by
      an
      issuer in reports it files or submits under the Exchange Act is accumulated
      and
      communicated to management, including its principal executive officer or
      officers and principal financial officer or officers, or persons performing
      similar functions, as appropriate to allow timely decisions regarding required
      disclosure.





**Changes
      in Internal Control over Financial Reporting**





We
      have
      identified certain matters that constitute material weakness (as defined under
      the Public Company Accounting Oversight Board Auditing Standard No. 2) in
      our internal controls over financial reporting. The material weaknesses that
      we
      have identified relate to the fact that that our overall financial reporting
      structure, internal accounting information systems and current staffing levels
      are not sufficient to support our financial reporting requirements. We are
      working to remedy our deficiency.


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**PART
      II. OTHER INFORMATION**


**ITEM
      1. Legal Proceedings**





We
      are
      not the subject of any material pending legal proceedings and, to the knowledge
      of our management, no material proceedings are presently contemplated against
      us
      by any federal, state or local governmental agency. Further, to the knowledge
      of
      our management, no director or executive officer is party to any action which
      any has an interest adverse to us.





**ITEM
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds**





**Unregistered
      Sales of Equity Securities during the Three Months ended June 30,
      2007**





There
      were no sales of unregistered securities during the three months ended June
      30,
      2007.





**ITEM
      3. Defaults upon Senior Securities**





None.





**ITEM
      4. Submission of Matters to a Vote of Security Holders**





No
      matters were submitted to a vote of security holders during the three months
      ended June 30, 2007.





**ITEM
      5. Other Information**





None.





**ITEM
      6. Exhibits**





Exhibit
                31.1
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act.Exhibit
                31.2
            Certification
                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act.Exhibit
                32.1
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                Section
                906 of the Sarbanes-Oxley Act.




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**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Securities Exchange
      Act of 1934, the registrant caused this report to be signed on its behalf by
      the
      undersigned, thereunto duly authorized.




Dated:
       April 9, 2008




**AVENUE
                ENTERTAINMENT GROUP, INC.**By:
            /s/Michael
                D. FeldmanMichael
                D. FeldmanChairman,
                Chief Executive Officer(principal
                executive officer)By:
            /s/Jerome
                I. FeldmanJerome
                I. FeldmanVice
                Chairman, Chief Financial Officer, Treasurer(principal
                financial and accounting officer)




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