**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**







**FORM
      10-Q**







**(Mark
      One)**


**x**
            **QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**




**For
      the quarterly period ended March 31, 2008**




** ̈**
            **TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT**




**For
      the transition period from** **** **to** ****





**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


(Registrant’s
      Telephone Number, Including Area Code)







(Former
      Name, Former Address and Former Fiscal Year, if Changed Since Last Report)




Indicate
      by check mark whether the registrant (1) filed all reports required to be filed
      by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
      such shorter period that the registrant was required to file such reports),
      and
      (2) has been subject to such filing requirements for the past 90
      days.    Yes x No  ̈





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




Large
      Accelerated Filer o     Accelerated
      Filer o




Non-accelerated
      Filer o     Smaller
      Reporting Company x




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





As
      of May 14 , 2008,
      the registrant had outstanding 11,582,000 shares of common stock.









**TABLE
      OF CONTENTS**


PagePART
                I. FINANCIAL INFORMATIONITEM
                1. Financial Statements
            1ITEM
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations
            6ITEM
                3.Quantitative
                and Qualitative Disclosures About Market Risk
            7ITEM
                4T. Controls and Procedures
            8PART
                II. OTHER INFORMATIONITEM
                1. Legal Proceedings
            9ITEM
                1A. RiskFactors
            9ITEM
                2. Unregistered Sales of Equity Securities and Use of Proceeds
            9ITEM
                3. Defaults upon Senior Securities
            9ITEM
                4. Submission of Matters to a Vote of Security Holders
            9ITEM
                5. Other Information
            9ITEM
                6. Exhibits
            9SIGNATURES
            10Exhibit
                31.1 - Section 302 Certification of Chief Executive
                OfficerExhibit
                31.2 - Section 302 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**







March
                31, 2008
            
            December
                31, 2007(Unaudited)
            
            (Audited)ASSETSCurrent
                assetsCash
            
            $
            6,501
            
            $
            23,562Prepaid
                Expenses
            
            
            -
            
            
            12,351TOTAL
                ASSETS
            
            $
            6,501
            
            $
            35,913LIABILITIES
                AND STOCKHOLDERS' DEFICITCurrent
                liabilitiesAccounts
                payable and accrued liabilities
            
            $
            103,827
            
            $
            36,481Loan
                payable - officer
            
            
            48,163
            
            
            47,568Due
                to related party
            
            
            16,922
            
            
            18,422TOTAL
                LIABILITIES
            
            
            168,912
            
            
            102,471STOCKHOLDERS'
                DEFICIT:Preferred
                stock, $.01 par value, 2,000,000 sharesauthorized;
                none issued
            
            
            -
            
            
            -Common
                stock, $.01 par value, 15,000,000 sharesauthorized;
                11,582,000 shares issued andoutstanding
            
            
            115,820
            
            
            115,820Class
                B common stock, no par value, 1,000,000 sharesauthorized;
                none used
            
            
            -
            
            
            -Additional
                paid-in capital
            
            
            7,245,713
            
            
            7,245,713Accumulated
                deficit
            
            
            (7,454,561
            )
            
            (7,358,708
            )Treasury
                stock, at cost (798,918 shares ofcommon
                stock)
            
            
            (69,383
            )
            
            (69,383
            )TOTAL
                STOCKHOLDERS' DEFICIT
            
            
            (162,411
            )
            
            (66,558
            )TOTAL
                LIABILITIES AND STOCKHOLDERS' DEFICIT
            
            $
            6,501
            
            $
            35,913




See
      notes
      to consolidated financial statements


1


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





**CONSOLIDATED
      STATEMENT OF OPERATIONS**


**(Unaudited)**




Three
                Months Ended
              March
                31,2008
            
            2007Revenues
            
            $
            1,500
            
            $
            2,176General
                and administrative expenses
            
            
            97,353
            
            
            10,589Net
                loss
            
            $
            (95,853
            )
            $
            (8,413
            )Net
                loss per share - basic and diluted
            
            $
            (0.01
            )
            
            *Weighted
                average common shares outstanding -basic
                and diluted
            
            
            11,582,000
            
            
            10,321,030




*Less than $.01 per share




See
      notes
      to consolidated financial statements


2


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





**CONSOLIDATED
      STATEMENT OF CASH FLOWS**


**(Unaudited)**






Three
                Months Ended
              March
                31,2008
            
            
            2007Cash
                Flows From OperationsCash
                Flows From Operating ActivitiesNet
                loss
            
            $
            (95,853
            )
            $
            (8,413
            )Adjustments
                to reconcile net loss to net cash(used
                in) operating activitiesChanges
                in operating assets and liabilitiesPrepaid
                expenses
            
            
            12,351
            
            
            (19,601
            )Accounts
                payable and accrued expenses
            
            
            67,346
            
            
            1,956Loan
                payable - officer
            
            
            595
            
            
            -Due
                to related party
            
            
            (1,500
            )
            
            (2,176
            )Net
                cash used in operating activities
            
            
            (17,061
            )
            
            (28,234
            )Cash
                Flows From Financing ActivitiesProceeds
                from collection of stock subscription receivable
            
            
            -
            
            
            29,393(Decrease)
                increase in cash from operations
            
            
            (17,061
            )
            
            1,159Cash
                - Beginning of period
            
            
            23,562
            
            
            1,448Cash
                - End of period
            
            $
            6,501
            
            $
            2,607


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 Group, 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”).




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 S-X of the Securities and Exchange Commission for Form 10-Q.
      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, results of operations and cash flows for interim
      financial statements 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, 2007. Interim results are not necessarily
      indicative of the results for a full year.




Consolidated
      Financial Statements




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




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.




3.
      Going
      Concern and Management’s Plans




The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern, which contemplates the realization
      of assets and the satisfaction of liabilities in the normal course of business.
      The Company had incurred operating losses, has negative working capital and
      no
      operating cash flow and future losses are anticipated. The Company’s plan of
      operations, to raise equity financing, even if successful, may not result in
      cash flow sufficient to finance and expand its business. These factors raise
      substantial doubt about the Company’s ability to continue as a going concern.
      Realization of assets is dependent upon future operations of the Company, which
      in turn is dependent upon management’s plans to meet its financing requirements
      and the success of its future operations. These financial statements do not
      include any adjustments related to the recoverability and classification of
      asset amounts or the amounts and classification of liabilities that might be
      necessary should the Company be unable to continue existence.


4


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.




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.
      Fair
      Value Measurements




Effective
      January 1, 2008, the Company adopted both SFAS 157 and SFAS 159 without any
      effect.




Statement
      of Financial Accounting Standards (“SFAS”) No. 157, "Fair Value Measurements"
      (“SFAS 157”), defines fair value, establishes a framework for measuring fair
      value, and expands disclosures about fair value measurements. SFAS 157 applies
      to other accounting pronouncements that require the use of fair value
      measurements. A fair value measurement assumes that the transaction to sell
      an
      asset or transfer a liability occurs in the principal market for the asset
      or
      liability, or, in the absence of a principal market, the most advantageous
      market for the asset or liability.




SFAS
      No.
      159, "The Fair Value Option for Financial Assets and Financial Liabilities
      -
      Including an amendment of FASB Statement 115" (“SFAS 159”) permits an entity to
      elect to measure various financial instruments and certain other items at fair
      value that are not currently required to be measured at fair value. Unrealized
      gains and losses on items for which the fair value option has been elected
      should be reported in earnings at each subsequent reporting date.




6.
      Related Party Transactions




As
      of
      March 31, 2008, loan payable - officer was $48,163, payable on demand, with
      interest at 5%, per annum.




7.
      Stock
      Subscription Receivable




In
      January and February 2007, the Company collected the stock subscription
      receivable of $29,393.





5


**ITEM
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations**





*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 of ours 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 March 31, 2008 Compared to Three Months Ended March 31, 2007***




Operations
      for the three months ended March 31, 2008 and 2007 are not comparable because,
      commencing in mid 2007, we started the process of bringing our SEC filings
      current whereas in early 2007, the company was dormant.





**Liquidity
      and Capital Resources**




As
      of
      March 31, 2008, we had negative working capital of $162,411 compared to negative
      working capital of $1,805 at March 31, 2007.





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 stockholders.




**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.


6


**Impact
      of Inflation**




We
      believe that inflation has not had a material impact on our results of
      operations for the three months ended March 31, 2008 and 2007. 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.




*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.




*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.




**ITEM
      3. Quantitative and Qualitative Disclosures About Market
      Risk**





Not
      required.





7


**ITEM
      4T.** **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 March 31, 2008, 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.


8


**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 1A.
      Risk Factors**





There
      are
      no material changes in the risk factors previously disclosed in our annual
      report on Form 10-KSB for the year ended December 31, 2007.





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





**Unregistered
      Sales of Equity Securities during the Three Months ended March 31,
      2008**





There
      were no sales of unregistered securities during the three months ended March
      31,
      2008.





**ITEM
      3. Defaults upon Senior Securities**





None.





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





None.





**ITEM
      5. Other Information**





None.





**ITEM
      6. Exhibits**





Exhibit
      31.1 Certification of Chief Executive Officer pursuant to 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.




9


**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: May
      14,
      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)




10