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 March 31, 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 Small Business Issuer as Specified in its Charter)

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


11755 Wilshire Blvd., Suite 2200
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
May 12, 1999:



     Common                                  4,108,838


<PAGE>

                        AVENUE ENTERTAINMENT GROUP, INC.

                                Table of Contents


PART I.  FINANCIAL INFORMATION                                         Page No.

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

         Unaudited Consolidated Condensed Statements of Operations -
         Three Months Ended March 31, 1999 and 1998                       2

         Unaudited Consolidated Condensed Statements of Cash Flows -
         Three Months Ended March 31, 1999 and 1998                       3

         Unaudited Notes to Consolidated Condensed Financial Statements   5

         Management's Discussion and Analysis or Plan of Operation        7

PART II. OTHER INFORMATION

         Signatures                                                      11



<PAGE>



                              


                          PART I. FINANCIAL INFORMATION

                        AVENUE ENTERTAINMENT GROUP, INC.


                      Consolidated Condensed Balance Sheets


                                              March 31,       December 31,
                                                1999               1998      
Assets                                      (unaudited)

Cash                                       $   390,064        $    427,240
Marketable securities                          251,890             339,716
Accounts receivable                             78,619             108,515
Income tax receivable                           55,000              55,000
Films costs, net                             1,049,623           1,091,646
Property and equipment, net                     82,379              87,272
Other assets                                    36,254              29,766
Goodwill                                     2,103,899           2,174,029
                                           -----------         -----------
Total assets                                $4,047,728          $4,313,184
                                            ==========          ==========


Liabilities and Stockholders' Equity
Accounts payable and accrued expenses      $ 1,014,014        $ 1,024,862
Loan payable                                   127,500            127,500
Deferred compensation                          183,506            145,006
Due to related party                            99,477             94,481
                                           -----------         ----------
Total liabilities                            1,424,497          1,391,849
                                           -----------         ----------


Stockholders' equity
Common stock, par value $.01 per share          41,088             41,088
Additional paid-in capital                   6,424,571          6,415,196
Deficit                                     (3,692,428)        (3,384,949)
Note receivable for common stock              (150,000)          (150,000)
                                            ----------          ----------
Total stockholders' equity                   2,623,231          2,921,335
                                            ----------        ----------
Total liabilities and stockholders' equity  $4,047,728         $4,313,184
                                            ==========         ==========



   See accompanying notes to the consolidated condensed financial statements.


<PAGE>


                        AVENUE ENTERTAINMENT GROUP, INC.

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                                   (unaudited)


                                                Three months     Three months
                                               ended March 31,  ended March 31,
                                                   1999               1998  
                                               -----------         ----------

Operating revenues                             $   177,669          $  239,701
                                               -----------          ----------

Costs and expenses:
Film production costs                               66,826              32,699
Selling, general and administrative expenses       471,069             664,762
                                               -----------          ----------
Total costs and expenses                           537,895             697,461
                                               -----------          ----------

Unrealized gain on trading securities               30,268
Gain on sale of investments                         24,480                  

Loss before income tax                            (305,478)           (457,760)

Income tax expense                                   2,001               5,301
                                               -----------           ---------

Net loss                                       $  (307,479)          $(463,061)
                                               ===========           ==========

Basic and diluted loss per common stock        $     (.07)           $    (.11)
                                              ===========            ==========






   See accompanying notes to the consolidated condensed financial statements.



<PAGE>







                        AVENUE ENTERTAINMENT GROUP, INC.

           CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued)

                                   (unaudited)

<TABLE>

<CAPTION>

                                                                   Three months        Three months
                                                                      Ended               Ended
                                                                     March 31,           March 31,
                                                                       1999                1998

Cash flows from operating activities:
<S>                                                                <C>                 <C>         
   Net loss                                                        $ (307,479)         $  (463,061)
Adjustments to reconcile net income (loss) to net cash 
   provided by (used in) operating activities:
   Depreciation                                                         6,124                5,913
   Amortization - film production costs                                60,396               25,200
   Amortization - goodwill                                             70,130               70,130
   Gain on sale of investments                                        (24,480)
   Unrealized gain on trading securities                              (30,268)
   Proceeds from sale of marketable securities                        142,574
   Deferred compensation                                               38,500
   Stock compensation                                                   9,375                9,375
   Changes in assets and liabilities which affect net income:
       Accounts receivable                                             29,896              (74,784)
       Film costs                                                     (18,373)            (104,007)
       Other assets                                                    (6,488)             (13,396)
       Accounts payable and accrued expenses                          (10,848)              41,571
       Due to related party                                             4,996         
                                                                  -----------
                                                                                               -

           Net cash used in operating activities                      (35,945)            (503,059)
                                                                   -----------          -----------

Cash flows from investing activities:
       Purchase of equipment                                           (1,231)              (2,364)
                                                                  -----------          ------------

           Net cash used in investing activities                       (1,231)              (2,364)
                                                                  ------------        -------------

   See accompanying notes to the consolidated condensed financial statements.

</TABLE>




<PAGE>


                        AVENUE ENTERTAINMENT GROUP, INC.

           CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued)

                                   (unaudited)

                                                    Three months  Three months
                                                        ended        Ended
                                                      March 31,     March 31,
                                                        1999         1998

Cash flows from financing activities:
 Principal payments of capital lease obligations        -             (4,230)
                                                     ---------    ----------
           Net decrease in cash                      (37,176)       (509,653)

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

Cash at end of period                                $390,064     $  648,694
                                                     =======      ==========

Supplemental cash flow information: 
  Cash paid during the year for:
     Interest                                        $  2,707     $    3,305
                                                     -------      ----------
     Income taxes                                    $  2,001     $    5,301
                                                     ========     ==========






     See accompanying notes to 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
worldwide   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 10-KSB 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 March 31, 1999,  the
results of  operations  and its cash flows for the three months ended March 31,
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)


                                   (Unaudited)



2.       Film costs

         Film costs consist of the following:

                                                    March 31,      December 31,
                                                     1999              1998    

In process or development                         $   13,684       $    2,076
Released, net of accumulated amortization
 of $12,515,642 and $12,455,246, respectively      1,035,939        1,089,570
                                                 -----------       ----------
                                                  $1,049,623       $1,091,646


3.       Loan payable

         On May 27, 1997,  the Company  entered  into an unsecured  demand note
which provides the Company with borrowings (the "Note") in the principal amount
of $250,000, at prime plus 1%, with Fleet Bank, National  Association, which is
payable on demand,  but in any event not later than May 27,  1999.  The Company
believes  that it will be able to extend  the note for an  additional period on
similar terms and conditions. At March 31, 1999, $127,500 was outstanding.




<PAGE>


Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION.

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

Liquidity and Capital Resources

         At March 31, 1999, the Company had approximately  $390,000 of cash and
approximately $252,000 of marketable securities.Revenues have been insufficient
to cover costs of operations  for the quarter ended March 31, 1999. The Company
has a working  capital  deficiency and has an accumulated deficit of $3,692,428
through  March 31,  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. 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, l999 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.

Results of Operations

         For the  quarter  ended March 31,  1999, the Company had a loss before
income taxes of  approximately $305,000  compared to a loss of $458,000 for the
quarter ended March 31, 1998.  The loss for the period was primarily the result
of reduced revenues earned, partially mitigated by reduced selling, general and
administrative expenses as well as unrealized  gains on trading  securities and
gains  on  sales  of  investments,  both  relating  to the common  stock  of GP
Strategies Corporation.

Revenues

         Revenues for the three  months ended March 31, 1999 were approximately
$178,000  compared to $240,000 for the three  months  ended March 31, 1998.  The
revenues earned  in 1998  were  derived  from the  licensing  of  rights of the
"Hollywood Collection"  in secondary  markets  through Janson  Associates.  The
revenues earned in 1999 were derived  from the sale of the  domestic  rights to
"Betty Buckley,  In  Performance  and In Person" to the Bravo Cable network for
$50,000, as well as  licensing  of  rights  of the  "Hollywood  Collection"  in
secondary markets. In addition, the Company received a $44,000 production fee 
in 1999, relating to the motion picture "Wayward Son".

<PAGE>

Film production costs

         Film  production  costs for the three months ended March 31, 1999 were
$67,000  compared  to $33,000  for the three months  ended  March 31, 1998 as a
result of costs  associated with the feature sold to Bravo,  "Betty Buckley, In
Performance and In Person".

Selling, General and Administrative

         Selling,  general and  administrative (S,G&A)  expenses  for the three
months  ended March 31, 1999 were  $471,000 compared to $665,000  for the three
months ended March 31, 1998. The reduced S,G&A in 1999 is the result of efforts
to reduce expenses and personnel costs due to the reduced level of revenue.

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 instru-
ments 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 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.


<PAGE>

         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 second  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.

        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 third  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.


<PAGE>

         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;  the ability to obtain
additional financing and improved cash flow in order to meet its obligations and
continue to exist as a going concern; 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.

Market Risk Exposure

The financial position of the Company is subject to market risk associated with
interest rate movements on outstanding  debt. The Company has debt  obligations
with variable terms.  The carrying  value of the  Company's  variable rate debt
obligation approximates fair value as the market rate is based on prime.




<PAGE>


                           PART II. OTHER INFORMATION

                        AVENUE ENTERTAINMENT GROUP, INC.

                                 March 31, 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:             May 18, 1999                Gene Feldman
                                              Chairman of the Board

DATE:             May 18, 1999                Cary Brokaw
                                              President and Chief Executive
                                              Officer, Director

DATE:             May 18, 1999                Ira J. Sobotko
                                              Principal Accounting Officer