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 June 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.)

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
August 6, 1999.

                  Common Stock                4,108,838



<PAGE>



                        AVENUE ENTERTAINMENT GROUP, INC.

                                Table of Contents



PART I.  FINANCIAL INFORMATION                                        Page No.

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

         Unaudited Consolidated Condensed Statements of Operations -
         Three Months and Six Months Ended
         June 30, 1999 and 1998                                           2

         Unaudited Consolidated Condensed Statements of Cash Flows -
         Six Months Ended June 30, 1999 and 1998                          3

         Unaudited Notes to Consolidated Condensed Financial
          Statements                                                      5

         Management's Discussion and Analysis of Financial
         Condition or Plan of Operations                                  7

PART II. OTHER INFORMATION                                               11

         Signatures                                                      12



<PAGE>



                          PART I. FINANCIAL INFORMATION

                        AVENUE ENTERTAINMENT GROUP, INC.

                      Consolidated Condensed Balance Sheets



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

Cash                                           $   316,565         $  427,240
Marketable securities                               61,530            339,716
Accounts receivable                                 80,424            108,515
Income tax receivable                               54,695             55,000
Films costs, net                                 1,092,921          1,091,646
Property and equipment, net                         76,246             87,272
Other assets                                        34,054             29,766
Goodwill                                         2,033,769          2,174,029
                                               -----------        -----------
Total assets                                    $3,750,204         $4,313,184
                                                ==========         ==========

Liabilities and Stockholders' Equity

Accounts payable and accrued expenses           $1,138,194         $1,024,862
Loan payable                                       127,500            127,500
Deferred compensation                              207,506            145,006
Due to related party                               109,477             94,481
                                                ----------        -----------
Total liabilities                                1,582,677          1,391,849
                                                ----------         ----------

Stockholders' equity

Common stock, par value $.01 per share              41,088             41,088
Additional paid-in capital                       6,433,946          6,415,196
Accumulated deficit                             (4,157,507)        (3,384,949)
Note receivable for common stock                  (150,000)          (150,000)
                                               ------------       -----------
Total stockholders' equity                       2,167,527          2,921,335
                                               -----------        -----------
Total liabilities and stockholders' equity      $3,750,204         $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              Six months
                                                                ended June 30,               ended June 30,
                                                              ----------------             ----------------
<S>                                                       <C>              <C>           <C>                <C>
                                                          1999             1998          1999               1998
                                                        -------           ------       -------          ----------
Operating revenues                                    $   198,736       $  170,057     $  376,405       $  409,758
                                                      -----------       ----------     ----------       ----------

Cost and expenses:
Film production costs                                      54,746          140,553        121,572          173,252
Selling, general & administrative
 expenses                                                 505,320          555,506        976,389        1,220,268
                                                      -----------        ---------     ----------      -----------

    Total costs and expenses                              560,066          696,059      1,097,961        1,393,520
                                                      -----------       ----------     ----------      -----------

Unrealized gain (loss) on trading
 securities                                               (93,556)         205,628        (63,288)         205,628
Gain (loss) on sale of investments                         (9,477)                         15,003
                                                   -------------- -----------------   ----------- ----------------

Loss before income tax                                   (464,363)        (320,374)      (769,841)        (778,134)

Income tax expense                                            716            2,155          2,717            7,456
                                                  ---------------     ------------   ------------     ------------

Net loss                                               $ (465,079)      $ (322,529)    $ (772,558)      $ (785,590)
                                                       ==========       ==========     ==========       ==========


Basic and diluted loss per share                   $         (.11)   $        (.08)$         (.19)   $       (.19)
                                                   ==============    ============= ==============    ============



</TABLE>


   See accompanying notes to the consolidated condensed financial statements.


<PAGE>


                        AVENUE ENTERTAINMENT GROUP, INC.

                 Consolidated Condensed Statements of Cash Flows

                                   (Unaudited)


                                                             Six months
                                                           ended June 30,
                                                         1999          1998
Cash flows from operating activities:

Net loss                                              $(772,558)   $(785,590)
Adjustments to reconcile net income (loss)
  to net cash provided by (used in)
  operating activities:
   Depreciation                                          12,257       11,893
   Amortization-film production costs                   118,080      163,039
   Amortization-goodwill                                140,260      140,260
   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          63,288     (205,628)
   Proceeds from sale of marketable securities          229,901       36,000
   Deferred compensation                                 62,500
   Stock compensation                                    18,750       18,750
  Changes in assets and liabilities which
    affect net income:
       Accounts receivable                               28,091      (30,287)
       Film costs                                      (199,355)    (203,110)
       Other assets                                      (4,288)     (19,601)
       Accounts payable and accrued expenses           (113,332)      11,627
       Income taxes                                         305       27,000
       Due to related party                              14,996
                                                      ---------    ---------

           Net cash used in operating activities       (107,619)    (835,647)
                                                      ---------    ---------

Cash flows from investing activities:
  Purchase of equipment                                  (3,056)      (2,364)
                                                       --------    ----------

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




<PAGE>


                        AVENUE ENTERTAINMENT GROUP, INC.

           Consolidated Condensed Statements of Cash Flows (Continued)

                                   (Unaudited)



                                                            Six months
                                                           ended June 30,
                                                       1999             1998


Cash flows from financing activities:
Sale of common stock                             $                  $  145,800
Principal payments of capital lease obligations                         (8,459)
                                                 -----------       -----------

      Net decrease in cash                          (110,675)         (700,670)

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

Cash at end of period                            $   316,565       $   457,677
                                                 ===========       ===========

Supplemental cash flow information:
Cash paid during the periods for:
  Interest                                             4,432       $     6,638
                                                 -----------       -----------
  Income taxes                                         2,717       $     7,456
                                                 ===========       ===========


   See accompanying notes to the consolidated condensed financial statements.







<PAGE>



                        AVENUE ENTERTAINMENT GROUP, INC.

              Notes to Consolidated CONDENSED Financial Statements

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
syndications  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 June 30,  1999,  the
results of operations  and its cash flows for the six months ended June 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)


                                   (Unaudited)



2.       Film costs

         Film costs consist of the following:

                                                      June 30,      December 31,
                                                        1999             1998
In process or development                           $   84,524       $    2,076
Released, net of accumulated amortization
 of $12,573,326 and $12,455,246, respectively        1,008,397        1,089,570
                                                   -----------       ----------
                                                    $1,092,921       $1,091,646


3.       Loan payable

         On May 27, 1999,  the Company  entered  into an  unsecured  demand note
which provides the Company with borrowings (the "Note") in the principal  amount
of $150,000, at prime plus 1%, with Fleet Bank, National  Association,  which is
payable on demand,  but in any event not later  than May 27,  2000.  At June 30,
1999 $127,500 was outstanding.


4.       Subsequent event

         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 Company realized net proceeds of approximately  $500,000.  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 an  exemption  from the  registration  requirements  of the
Securities  Act of 1933 (the "Act")  pursuant to Rule 506 of Regulation D of the
Act.





<PAGE>


Item 2.  Management's Discussion and Analysis or 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 June 30, 1999,  the Company had  approximately  $317,000 of cash and
approximately $62,000 of marketable securities.  Revenues have been insufficient
to cover costs of operations  for the quarter  ended June 30, 1999.  The Company
has a working  capital  deficiency and has an accumulated  deficit of $4,206,249
through  June  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, 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 and six months ended June 30,  1999,  the Company had a
loss before income taxes of  approximately  $464,000 and $770,000  compared to a
loss of $320,000  and  $778,000  for the  quarter and six months  ended June 30,
1998.  The loss for the period  was  primarily  the  result of reduced  revenues
earned  and  unrealized  losses on  trading  securities  and  losses on sales of
investments, both relating to the common stock of GP Strategies Corporation.

Revenues

         Revenues for the three  months  ended June 30, 1999 were  approximately
$199,000  compared to $170,000 for the three  months  ended June 30,  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>

         Revenues  for the six months ended June 30,  1999,  were  approximately
$376,000 compared to $410,000 for the six months ended June 30, 1998.

Film production costs

         Film  production  costs for the three  months  ended June 30, 1999 were
$55,000 compared to $141,000 for the three months ended June 30, 1998.

Selling, General and Administrative

         Selling,  general and  administrative  (S,G&A)  expenses  for the three
months  ended June 30, 1999 were  $505,000  compared  to $556,000  for the three
months ended June 30, 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.
Selling,  general and  administrative  (S,G&A) expenses for the six months ended
June 30, 1999,  were $976,000  compared to  $1,220,000  for the six months ended
June 30, 1998.

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 third quarter of 1999.


<PAGE>

         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 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.

<PAGE>

         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;  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>



                        AVENUE ENTERTAINMENT GROUP, INC.

                           PART II. OTHER INFORMATION


Item 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a)      Exhibits

                    4.1     Form of Warrant dated August 1999.  Filed herewith.








<PAGE>



                           PART II. OTHER INFORMATION

                        AVENUE ENTERTAINMENT GROUP, INC.



                                  June 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:         August 16, 1999           BY:      Gene Feldman
                                                 Chairman of the Board

DATE:         August 16, 1999           BY:      Cary Brokaw
                                                 President and Chief Executive
                                                 Officer, Director

DATE:         August 16, 1999           BY:      Sheri L. Halfon
                                                 Principal Accounting Officer