UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   Form 10-QSB

[X]  Quarterly  Report  Pursuant  to Section 13 or 15(d) of the  Securities  and
Exchange Act of 1934 For the quarter ended September 30, 1999

                                       or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from to

Commission File Number:                              001-12885

                        AVENUE ENTERTAINMENT GROUP, INC.
             (Exact Name of Registrant as Specified in its Charter)

         Delaware                                               95-4622429
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization                               Identification No.)

11111 Santa Monica Blvd., Suite 525
Los Angeles, California                                         90025
(Address of principal executive offices)                      (Zip Code)

                                 (310) 996-6815
              (Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the  Securities  and  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 ______

Number of shares  outstanding of each of issuer's  classes of common stock as of
November 18, 1999.



         Common Stock                                          4,589,030



<PAGE>


                        AVENUE ENTERTAINMENT GROUP, INC.

                                Table of Contents


PART I.  FINANCIAL INFORMATION                                         Page No.

         Consolidated Condensed Balance Sheets -
         September 30, 1999 (unaudited) and
          December 31, 1998                                                1

         Unaudited Consolidated Condensed Statement of Operations -
         Three Months and Nine Months Ended
         September 30, 1999 and 1998                                       2

         Unaudited Consolidated Condensed Statement of Cash Flows -
         Nine Months Ended September 30, 1999 and 1998                     3

         Unaudited Notes to Consolidated Condensed Financial Statements    5

         Management's Discussion and Analysis of Results of Operations     7

PART II. OTHER INFORMATION

                  Signatures                                              11



<PAGE>




                          PART I. FINANCIAL INFORMATION

                        AVENUE ENTERTAINMENT GROUP, INC.

                      Consolidated Condensed Balance Sheets


                                               September 30,      December 31,
                                                     1999             1998
Assets                                           (unaudited)

Cash                                          $   645,083          $  427,240
Marketable securities                              79,110             339,716
Accounts receivable                               594,969             108,515
Income tax receivable                              29,703              55,000
Films costs, net                                2,145,630           1,091,646
Property and equipment, net                        70,154              87,272
Other assets                                       18,472              29,766
Goodwill                                        1,963,639           2,174,029
                                              -----------         -----------
Total assets                                   $5,546,760          $4,313,184
                                               ==========          ==========


Liabilities and Stockholders' Equity
Accounts payable and accrued expenses       $   1,113,108          $1,024,862
Deferred income                                   700,000                   0
Loan payable                                      842,500             127,500
Deferred compensation                             325,250             145,006
Due to related party                              101,172              94,481
                                             ------------           ---------
Total liabilities                               3,082,030           1,391,849
                                              -----------           ---------


Stockholders' equity
Common stock, par value $.01 per share             45,890              41,088
Additional paid-in capital                      6,938,519           6,415,196
Deficit                                        (4,369,679)         (3,384,949)
Note receivable for common stock                 (150,000)           (150,000)
                                              -----------          ----------
Total stockholders' equity                      2,464,730           2,921,335
                                              -----------         -----------
Total liabilities and stockholders' equity     $5,546,760          $4,313,184
                                               ==========          ==========

   See accompanying notes to the consolidated condensed financial statements.


<PAGE>


                        AVENUE ENTERTAINMENT GROUP, INC.


                 Consolidated Condensed Statements of Operations

                                   (Unaudited)


<TABLE>

<CAPTION>

                                                          Three months                   Nine months
                                                           ended September 30,              ended September 30,
                                                          1999          1998         1999                  1998
<S>                                                   <C>                <C>           <C>                <C>
Operating revenues                                    $ 2,876,475        $ 144,136     $3,252,880         $553,894
                                                      -----------        ---------     ----------         --------

Cost and expenses:

Film production costs                                   2,685,878           18,911      2,807,450          192,163

Selling, general & administrative
 expenses                                                 422,186          563,652      1,398,575        1,783,920
                                                               -------------------     ----------       ----------

    Total costs and expenses                            3,108,064          582,563      4,206,025        1,976,083
                                                     ------------       ----------     ----------      -----------

Unrealized gains (losses) on
    trading securities                                     17,580         (177,775)       (45,708)          27,853
Gain (loss) on sale of investments                              0                          15,003
                                                -----------------       ------------- ----------- ----------------

Loss before income tax                                   (214,009)        (616,202)      (983,850)      (1,394,336)

Income tax (benefit) expense                               (1,837)             174            880            7,630
                                                  ---------------      ---------------   ----------   --------------

Net gain (loss)                                     $    (212,172)      $ (616,376)   $  (984,730)     $(1,401,966)
                                                    ==============      ==========    ===========       ===========

Basic and diluted loss per common stock             $       (0.05)      $    (0.15)   $     (0.23)     $     (0.34)
                                                    ==============      ===========   ============     ============



Weighted average shares outstanding                     4,428,966        4,108,838      4,215,547        4,090,838
                                                     -------------      ------------    -----------     ----------

</TABLE>




   See accompanying notes to the consolidated condensed financial statements.


<PAGE>


                        AVENUE ENTERTAINMENT GROUP, INC.


                 Consolidated Condensed Statements of Cash Flows

                                   (Unaudited)

<TABLE>

<CAPTION>

                                                                          Nine months
                                                                      ended September 30,

                                                                   1999           1998
                                                                   ----           -------

Cash flows from operating activities:

<S>                                                          <C>             <C>
   Net loss                                                  $ (984,730)     $ (1,401,966)
Adjustments to reconcile net income (loss)
to net cash provided by (used for)
operating activities:
   Depreciation                                                  18,349            18,094
   Amortization-film production costs                         2,770,391           254,463
   Amortization-goodwill                                        210,390           210,390
   Loss on sale of Fixed Assets                                     465
   Proceeds from disposal of Fixed Assets                         1,360
   Gain on sale of investments                                  (15,003)
   Unrealized (gain) loss on trading securities                  45,708           (27,853)
   Proceeds from sale of marketable securities                  229,901            63,000
   Deferred compensation                                        325,250
   Stock compensation                                            28,125            28,125

Changes in assets and liabilities which affect net income:
   Accounts receivable                                         (486,454)           45,021
   Film costs                                                (3,824,375)         (388,623)
   Other assets                                                  11,294           (15,584)
   Accounts payable and accrued expenses                         (8,754)          250,350
   Deferred income                                              700,000
   Income taxes payable                                          25,297            27,000
   Due to related party                                           6,691         _________
                                                           -------------

Net cash used in operating activities                          (946,095)         (937,583)


Cash flows from investing activities:

  Purchase of equipment                                          (3,056)           (2,364)
                                                           -------------        -----------

  Net cash used in investing activities                          (3,056)           (2,364)
                                                           -------------        -----------

</TABLE>


<PAGE>



                        AVENUE ENTERTAINMENT GROUP, INC.

           Consolidated Condensed Statements of Cash Flows (Continued)



                                   (Unaudited)



<TABLE>

<CAPTION>

                                                                   Nine months
                                                                ended September 30,

                                                               1999            1998
                                                              -----            ------

Cash flows from financing activities:

<S>                                                       <C>          <C>
Sale of common stock                                      $ 500,000    $      145,800
Proceeds from issuance of short term debt                   715,000
Repayment of loan to officers                               (48,006)
Principal payments of capital lease obligations                   0            (8,459)
                                                          ----------        -----------

      Net cash provided by financing activities           1,166,994           137,341

      Net increase (decrease) in cash                       217,843          (802,606)

Cash at the beginning of year                               427,240         1,158,347
                                                         -----------       -----------

Cash at end of period                                    $  645,083         $ 355,741
                                                         ==========         =========

Supplemental cash flow information:
  Cash paid during the year for:

  Interest                                               $    7,661       $     8,916
                                                         ----------        ----------
  Income taxes                                           $    2,717       $     7,493
                                                         ==========       ===========


</TABLE>


   See accompanying notes to the consolidated condensed financial statements.







<PAGE>



                        AVENUE ENTERTAINMENT GROUP, INC.

              Notes to Consolidated CONDENSED Financial Statements
                                   (Unaudited)




1.       Summary of Significant Accounting Policies


The Company

Avenue  Entertainment  Group, Inc. (the "Company") is principally engaged in the
development,  production and distribution of feature films,  television  series,
movies-for-television, mini-series and film star biographies.



Generally,  theatrical  films are first  distributed  in the theatrical and home
video markets. Subsequently,  theatrical films are made available for world-wide
television  network  exhibition or pay  television,  television  syndication and
cable  television.  Generally,  television  films are first licensed for network
exhibition and foreign  syndication or home video, and subsequently for domestic
syndication on cable  television.  The revenue cycle  generally  extends 7 to 10
years on film and television product.


Basis of Presentation

The accompanying  interim  consolidated  financial statements of the Company are
unaudited  and have  been  prepared  by the  Company  pursuant  to the rules and
regulations  of  the  Securities  and  Exchange  Commission   regarding  interim
financial reporting. Accordingly, they do not include all of the information and
footnotes  required by generally  accepted  accounting  principles  for complete
financial  statements  and should be read in conjunction  with the  consolidated
financial statements and notes thereto included in the Company's Form 10K-SB for
the year ended December 31, 1998. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
financial  position  of the  Company  at  September  30,  1999,  the  results of
operations  and its cash flows for the three months and nine month periods ended
September 30, 1999 and 1998 have been  included.  The results of operations  for
the  interim  period are not  necessarily  indicative  of  results  which may be
realized for the full year.





<PAGE>


                        AVENUE ENTERTAINMENT GROUP, INC.

        Notes to Consolidated CONDENSED Financial Statements (Continued)


2.       Film costs

         Film costs consist of the following:

                                                   September 30,   December 31,
                                                            1999          1998
                                                   -------------   ------------
     In process or development                     $    315,927    $      2,076
     Released, net of accumulated amortization
      of $15,225,637 and $12,455,246                  1,829,703       1,089,570
                                                      ---------       ---------
                                                   $  2,145,630    $  1,091,646
                                                      =========       =========

3.       Loan payable

         On May 27, 1997,  the Company  entered  into an  unsecured  demand note
which provided the Company with borrowings (the "Note") in the principal  amount
of $250,000, at prime plus 1%, with Fleet Bank, National Association  ("Fleet"),
which was payable on demand, but in any event not later then May 27, 1998. As of
September 30, 1999, $127,500 was outstanding.

         On June 3,  1999,  the  Company  entered  into an  unsecured  loan  for
$1,000,000 at 8.75% with City National Bank which matures on October 1, 1999. As
of September  30,  1999,  $715,000  was  outstanding.  As of October 1, 1999 the
Company extended the note for an additional three months.

4.       Sale of stock

         In August 1999,  the Company sold 480,192  shares of Common Stock and a
Warrant to purchase  500,000  shares of Common Stock which  expires  August 2002
(the  "Warrant")  to  certain   investors   pursuant  to  a  private   placement
transaction. The Warrant is exercisable at an exercise price of $2.00 per share.
The shares of Common Stock and the shares of Common Stock issuable upon exercise
of the Warrant cannot be sold,  transferred,  pledged or assigned for a one-year
period. The Company claimed exemption from the registration  requirements of the
Securities Act of 1933 (the "Act")  pursuant to Rule 506 of Regulation D. of the
Act.

5.       Recent Development

         The Company receive a letter from the American Stock Exchange  ("AMEX")
notifying  the  Company  that it has fallen  below  certain of AMEX's  continued
listing  guidelines  because of the  Company's  recurring  losses.  The  Company
attended  a meeting  with AMEX on  November  16,  1999 to  discuss  its  listing
eligibility.  At this meeting AMEX  informed the Company that within three weeks

<PAGE>

it would make a determination on the Company's eligibility for continued listing
and whether an  extension  would be granted to enable the Company to satisfy the
listing criteria. However, there can be no assurance that the Common Stock will
not be delisted in the future.



Item 2.  Management's Discussion and Analysis OF FINANCIAL CONDITION AND
         RESULTS  OF OPERATIONS

The following  discussion and analysis  should be read in  conjunction  with the
Company's consolidated condensed financial statements and related notes thereto.

General

The  Company is an  independent  entertainment  company  which,  through its two
operating  subsidiaries (Avenue Pictures and Wombat Productions) produces motion
pictures for theatrical exhibition, television and other ancillary markets, both
domestically and internationally.

Liquidity and capital resources

At  September  30,  1999,  the  Company had  approximately  $645,000 of cash and
approximately  $79,000 of short term  investments.  Of the  $645,000  of cash at
September  30,  1999,  approximately  $300,000  has been  earmarked  for  future
residual  payments  which have been  accrued in the  financial  statements.  The
residual  payments  would be  payable  on the  earlier of the second air date of
certain television productions or September 2000.

The Company has a working capital  deficiency and has an accumulated  deficit of
$4,369,679  through  September 30, 1999. The Company's  continuation  as a going
concern is dependent on its ability to ultimately attain  profitable  operations
and positive cash flows from operations.  The Company's management believes that
it can satisfy its working  capital needs based on its estimates of revenues and
expenses,  together with improved  operating  cash flows,  as well as additional
funding  whether from financial  markets,  other sources or other  collaborative
arrangements,  such as the private placement  transaction described in Note 4 to
the  Notes to the  Consolidated  Condensed  Financial  Statements.  The  Company
believes it will have  sufficient  funds  available to continue to exist through
the next year,  although no assurance can be given in this regard.  Insufficient
funds will  require the Company to scale back its  operations.  The  Independent
Auditor's  Report dated April 14, 1999 on the Company's  consolidated  financial
statements  states that the Company has suffered losses from  operations,  has a
working  capital   deficiency  and  has  an  accumulated   deficit  that  raises
substantial  doubt  about  its  ability  to  continue  as a going  concern.  The
accompanying financial statements do not include any adjustments that may result
from the Company's  inability to continue as a going concern.  See Note 5 to the
Notes  to  Consolidated  Financial  Statements  with  respect  to the  Company's
discussions with the American Stock Exchange with respect to the continued
listing of its Common Stock.

<PAGE>

Results of operations

For the quarter and nine months ended  September 30, 1999 the Company had a loss
before income taxes of $214,000 and $984,000, respectively compared to losses of
$616,000  and  $1,394,000  for the quarter and nine months ended  September  30,
1998.  The decreased  loss for the periods was the result of increased  revenues
earned by Avenue Pictures.

Revenues

Revenues for the three months ended September 30, 1999 were $2,876,000  compared
to $144,000  for the three  months ended  September  30,  1998.  Of the revenues
earned by Avenue during the three months ended September 30, 1999, approximately
$2,696,000  was  derived  from the  delivery  of the  "Timeshifters"  to  Turner
Broadcast  Systems.  The revenues earned by Wombat during the three months ended
September 30, 1999, were derived from the licensing of "Harry  Connick,  Jr." to
Bravo and from the  licensing  of rights for  Wombat  programming  in  secondary
markets primarily through Janson Associates.

Revenues for the nine months ended September 30, 1999 were  $3,253,000  compared
to $554,000 for the nine months ended  September  30,  1998.  Revenues  from the
operations of Avenue  Pictures for the nine months ended September 30, 1999 were
approximately $2,956,000 which was primarily derived from delivery to TBS of the
"Timeshifters."  Revenues  from  Wombat's  operations  for the nine months ended
September 30, 1999 were approximately $297,000. Wombat's revenue of $297,000 was
derived from the availability of two one-hour  profiles for Bravo. The remaining
revenue of $126,000 was derived from licensing of rights for Wombat  programming
in secondary markets primarily through Janson Associates.

Film Production Costs

Cost of revenues for the nine months  ended  September  30, 1999 was  $2,807,000
compared to $192,000 for the nine months ended  September 30, 1998. The increase
is the result of increased revenue recognized for the period.

Selling, General and Administrative

Selling,  general and administrative (S,G&A) expenses for the three months ended
September 30, 1999 were $422,000 compared to $564,000 for the three months ended
September  30,  1998.  The reduced  S,G&A cost for the period was the results of
efforts to reduce expenses and personnel costs.

Selling, general and administrative expenses for the nine months ended September
30, 1999 were  $1,399,000  compared  to  $1,784,000  for the nine  months  ended
September  30,  1998.  The reduced  S,G&A cost for the period was the results of
efforts to reduce expenses and personnel costs.


<PAGE>


Recent accounting developments

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standard  (SFAS)  No.  133,  "Accounting  for  Derivative
Instruments and Hedging Activities." This Statement  establishes  accounting and
reporting standards for derivative  instruments and for hedging  activities.  It
requires  that  an  entity   recognize  all  derivatives  as  either  assets  or
liabilities in the statement of financial position and measure those instruments
at fair value.  This  Statement is effective  for all fiscal  quarters of fiscal
years  beginning  after June 15,  1999.  The Company  will adopt SFAS No. 133 by
January 1, 2000. The Company is currently  evaluating the impact the adoption of
SFAS No. 133 will have on the consolidated financial statements.

Year 2000

The  Company  is aware of the issues  associated  with the  programming  code in
existing  computer systems as the millennium (year 2000)  approaches.  The "year
2000" problem is pervasive  and complex as virtually  every  computer  operation
will be affected in some way by the  rollover of the two digit year value to 00.
The issue is whether  computer  systems will properly  recognize  date sensitive
information  when  the  year  changes  to  2000.  Systems  that do not  properly
recognize such  information  could generate  erroneous data or cause a system to
fail.

The Company is  utilizing  both  internal  and  external  resources to identify,
correct or  reprogram  and test  systems for year 2000  compliance.  The Company
operates its  financial  reporting  systems  through a personal  computer  based
accounting  and  general  ledger  package.  The  Company  is in the  process  of
installing  the  required  updates to the  system to make the  system  year 2000
compliant.  The Company  believes  that these  updates  will cost  approximately
$5,000 and be complete by the end of the second  month of the fourth  quarter of
1999.

The Company  has also  identified  various  ancillary  programs  that need to be
updated and has  contracted  with third  parties  for this work to be  completed
within the next six months. It is expected that the cost of these  modifications
will be approximately $5,000.

In addition,  the Company is examining  their exposure to the year 2000 in other
areas of technology. These areas include telephone and E-mail systems, operating
systems  and  applications  in free  standing  personal  computers,  local  area
networks and other areas of communication. A failure of these systems, which may
impact the ability of the Company to service their  customers which could have a
material  effect on their results of operations.  These issues are being handled
by the finance team at the Company by  identifying  the  problems and  obtaining
from service  providers  either the necessary  modifications  to the software or
assurances that the systems will not be disrupted. The Company believes that the
cost of the programming and equipment  upgraded will not be in excess of $7,500.
In addition,  certain  personnel  computers and other equipment that is not year
2000  compliant  will be  upgraded  through  the  Company's  normal  process  of
equipment upgrades.  The Company believes that the evaluation and implementation
process will be complete no later than the fourth quarter of 1999. Over the next
year, the Company plans to continue to develop and implement  other  information
technology projects needed in the ordinary course of business.

<PAGE>

The  Company  expects  to  finance  these  expenditures  from  working  capital.
Therefore,  the  Company  does not expect the year 2000 issue to have a material
adverse impact on its financial position or results of operations.

Like other  companies,  the Company  relies on its customers for revenues and on
its vendors for products and services of all kinds; these third parties all face
the year 2000 issue.  An  interruption  in the ability of any of them to provide
goods or  services,  or to pay for goods or  services  provided  to them,  or an
interruption  in the business  operations of our customers  causing a decline in
demand for  services,  could have a material  adverse  effect on the  Company in
turn.

In addition,  there is a risk, the  probability of which the Company is not in a
position to estimate, that the transition to the year 2000 will cause wholesale,
perhaps    prolonged,    failures    of    electrical    generation,    banking,
telecommunications  or  transportation  systems in the United  States or abroad,
disrupting the general  infrastructure of business and the economy at large. The
effect of such disruptions on the Company could be material.

The  Company's  various   departments  will  communicate  with  their  principal
customers and vendors about their year 2000  readiness,  and expect this process
to be completed no later than the fourth quarter of 1999.  None of the responses
received to date suggests that any  significant  customer or vendor  expects the
year 2000 issue to cause an  interruption  in its operations  which would have a
material  adverse  impact on the  Company.  However,  because  so many firms are
exposed to the risk of failure not only of their own systems, but of the systems
of other firms,  the ultimate effect of the year 2000 issue is subject to a very
high degree of uncertainty.

The Company believes that its  preparations  currently under way are adequate to
assess and manage the risks presented by the year 2000 issue,  and does not have
a formal contingency plan at this time.

The  statements  in this section  regarding  the effect of the year 2000 and the
Company's  responses  to it are  forward-looking  statements.  They are based on
assumptions  that the Company  believes to be reasonable in light of its current
knowledge and experience.  A number of contingencies  could cause actual results
to differ materially from those described in forward-looking  statements made by
or on behalf of the Company.

Forward-Looking Statements

This report contains certain forward-looking  statements reflecting management's
current  views with respect to future events and  financial  performance.  These
forward-looking  statements are subject to certain risks and uncertainties  that
could   cause   actual   results  to  differ   materially   from  those  in  the
forward-looking  statements,  including,  but not limited to, the ability of the
Company to reverse its history of operating losses; production risks; dependence
on contracts with certain customers;  future foreign distribution  arrangements;
the risk that the Company's  preparations with respect to the risks presented by
the year  2000  issue  will not be  adequate;  and  dependence  on  certain  key
management  personnel.  All of these above factors are difficult to predict, and
many are beyond the control of the Company.

<PAGE>




                           PART II. OTHER INFORMATION

                        AVENUE ENTERTAINMENT GROUP, INC.



                               September 30, 1999


                                   SIGNATURES

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


                        AVENUE ENTERTAINMENT GROUP, INC.

DATE:         November 22, 1999             BY:   Gene Feldman
                                                  Chairman of the Board

DATE:         November 22, 1999             BY:   Cary Brokaw
                                                  President and Chief Executive
                                                  Officer, Director

DATE:         November 22, 1999             BY:   Sheri L. Halfon
                                                  Chief Financial Officer