**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**




**FORM
      10-QSB**





x
            
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31,
                2007**





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





**Commission
      File Number 001-12885**





**AVENUE
      ENTERTAINMENT GROUP INC.**


(Exact
      Name of Registrant as Specified in Its Charter)





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





120
      White Plains Road, Tarrytown, New York 10591


(Address
      of principal executive offices)





(914)
      631-5265


(Issuer’s
      telephone number)





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





Yes x No o





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


Yes x No o





As
      of March 28 , 2008,
      the issuer had outstanding 11,582,000 shares of common stock.





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







**TABLE
      OF CONTENTS**


PagePART
                  I FINANCIAL INFORMATIONITEM
                  1. Financial Statements
              1ITEM
                  2. Management’s Discussion and Analysis or Plan of Operation
              7ITEM
                  3. Controls and Procedures
              10PART
                  II OTHER INFORMATIONITEM
                  1. Legal Proceedings
              11ITEM
                  2. Unregistered Sales of Equity Securities and Use of Proceeds
              11ITEM
                  3. Defaults upon Senior Securities
              11ITEM
                  4. Submission of Matters to a Vote of Security Holders
              11ITEM
                  5. Other Information
              11ITEM
                  6. Exhibits
              11SIGNATURES
              12Exhibit
                  31.1 - Section 302 Certification of Chief Executive
                  OfficerExhibit
                  31.2 - 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, 2007**


**(Unaudited)**





ASSETSASSETSCurrent
                AssetsCash
            
            $
            2,607Prepaid
                expenses
            
            
            19,601Stock
                subscription receivable
            
            
            5,593TOTAL
                ASSETS
            
            $
            27,801LIABILITIES
                AND STOCKHOLDERS' DEFICITLIABILITIESCurrent
                LiabilitiesAccounts
                payable and accrued expenses
            
            $
            1,956Due
                to related party
            
            
            27,650TOTAL
                LIABILITIES
            
            
            29,606STOCKHOLDERS'
                DEFICITCommon
                stock, $.01 par value, 15,000,000 shares authorized; 10,321,030 shares
                issued and outstanding
            
            
            103,210Additional
                paid-in capital
            
            
            7,233,323Accumulated
                deficit
            
            
            (7,268,955
            )Treasury
                    stock, at cost (798,918 shares of common
                    stock)
            
            
            (69,383
            )TOTAL
                STOCKHOLDERS' DEFICIT
            
            
            (1,805
            )TOTAL
                LIABILITIES AND STOCKHOLDERS' DEFICIT
            
            $
            27,801





See
      notes
      to consolidated financial statements


1


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





**CONSOLIDATED
      STATEMENT OF OPERATIONS**


**(Unaudited)**





Three
                Months Ended
              March
                31,2007
            
            2006Revenues
            
            $
            2,176General
                and administrative expenses
            
            
            10,589
            
            $
            6,984Loss
                from continuing operations
            
            
            (8,413
            )
            
            (6,984
            )Loss
                from discontinued operations
            
            
            
            
            
            (30,720
            )Net
                (loss)
            
            $
            (8,413
            )
            $
            (37,704
            )Per
                share data:Loss
                from continuing operations - basic and diluted
            
            
            *
            
            
            *Loss
                from discontinued operations - basic and diluted
            
            
            *
            
            $
            (0.01
            )Net
                loss per share - basic and diluted
            
            
            *
            
            $
            (0.01
            )Weighted
                average common shares outstanding - basic and diluted
            
            
            10,321,030
            
            
            4,627,802*
                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
                31,2007
            
            2006Cash
                Flows From Continuing Operating ActivitiesNet
                loss
            
            $
            (8,413
            )
            $
            (37,704
            )Add:
                loss from discontinued operations
            
            
            
            
            
            30,720Loss
                from continuing operations
            
            
            (8,413
            )
            
            (6,984
            )Adjustments
                to reconcile loss from continuing operations to net cash (used in)
                provided by continuing operating activities:Changes
                in operating assets and liabilities:Prepaid
                expenses
            
            
            (19,601
            )Assets
                to be disposed of
            
            
            
            
            
            528Accounts
                payable and accrued expenses
            
            
            1,956
            
            
            (5,279
            )Deferred
                income
            
            
            
            
            
            (12
            )Due
                to related party
            
            
            (2,176
            )
            
            (367
            )Liabilities
                to be disposed of
            
            
            
            
            
            42,834Net
                cash (used in) provided by continuing operating activities
            
            
            (28,234
            )
            
            30,720Cash
                Flows From Financing ActivitiesCollection
                of stock subscriptions receivable
            
            
            29,393Cash
                flows from continuing operations
            
            
            1,159
            
            
            30,720Cash
                flows (used in) discontinued operations
            
            
            
            
            
            (30,720
            )Increase
                in cash
            
            
            1,159Cash
                - Beginning of period
            
            
            1,448Cash
                - End of period
            
            $
            2,607
            
            
            None





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”).




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




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




2.  Summary
      of Significant Accounting Policies




Basis
      of
      presentation




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




Consolidated
      Financial Statements




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




Reclassifications




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




Use
      of
      Estimates




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


4


New
      Accounting Pronouncements




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




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




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




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




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




3.  Sale
      of
      Assets/Discontinued Operations




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


5


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




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




For
      the
      three months ended March 31, 2006, discontinued operation included the
      following:




Revenues
            
            $
            23,146Loss
                from discontinued operations
            
            
            ($30,720
            )




4.
      Income
      Taxes




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




Management
      has evaluated and concluded that there are no significant uncertain tax
      positions requiring recognition in the Company’s consolidated financial
      statements as of January 1, 2007 and March 31, 2007.




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




5.
      Subsequent Events




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




On
      September 27, 2007, the Company sold an aggregate of 5,000,000 shares of the
      Company’s common stock under a subscription agreement to two
      stockholders/officers of the Company, at $.02, per share, for aggregate proceeds
      of $100,000. Through December 31, 2007, the Company collected $25,086 of the
      proceeds.




Subsequent
      to March 31, 2007, the Company borrowed $46,407 from an officer payable on
      demand, with interest at 5%, per annum.


6


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





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




**Overview**




Our
      company cut back daily operations in late 2005 and essentially ceased daily
      operations in May 2006. In September 2005, we sold certain assets to Cary Brokaw
      Productions, and subsequently ceased the business of producing feature films,
      television films and made-for-television/cable movies. Cary Brokaw also resigned
      as a director 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, 2007 Compared to Three Months Ended March 31, 2006***




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





**Liquidity
      and Capital Resources**




As
      of
      March 31, 2007, we had negative working capital of $1,805 compared to negative
      working capital of $1,016,291 at March 31, 2006.





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




**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.


7


**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, 2007 and 2006. We cannot assure
      you that future inflation will not have an adverse impact on our operating
      results and financial condition.




**Application
      of Critical Accounting Policies and Estimates**




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




*Consolidated
      Financial Statements*




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




*Fair
      Value of Financial Instruments*




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




*Use
      of Estimates*




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




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




*Income
      (Loss) per Common Share*




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




Potentially
      diluted shares consisted of outstanding options to purchase to 132,000 shares
      of
      common stock which have been included in diluted weighted average number of
      shares outstanding. For the three months ended March 31, 2007 and 2006, diluted
      income (loss) per share was antidilutive as we had losses from continuing
      operations.




*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.




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


8


*Deferred
      Income Taxes*




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




**Recently-issued
      Accounting Pronouncements**




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




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





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





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


9


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





**Evaluation
      of Disclosure Controls and Procedures**





We
      carried out an evaluation, under the supervision and with the participation
      of
      our management, including our Chief Executive Officer and our Chief Financial
      Officer, of the effectiveness of the design and operation of our disclosure
      controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under
      the Exchange Act. Based
      upon that evaluation, our Chief Executive Officer and the Chief Financial
      Officer have concluded that our disclosure controls and procedures were not
      effective as of March 31, 2007, based on their evaluation of these controls
      and
      procedures .
      Disclosure controls and procedures include, without limitation, controls and
      procedures designed to ensure that information required to be disclosed by
      an
      issuer in reports it files or submits under the Exchange Act is accumulated
      and
      communicated to management, including its principal executive officer or
      officers and principal financial officer or officers, or persons performing
      similar functions, as appropriate to allow timely decisions regarding required
      disclosure.





**Changes
      in Internal Control over Financial Reporting**





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


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**PART
      II. OTHER INFORMATION**


**ITEM
      1. Legal Proceedings**





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





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





**Unregistered
      Sales of Equity Securities during the Three Months ended March 31,
      2007**





There
      were no sales of unregistered securities during the three months ended March
      31,
      2007.





**ITEM
      3. Defaults upon Senior Securities**





None.





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





On
      February 2007, our stockholders, acting upon written consent of the holders
      of a
      majority of our issued and outstanding shares of common stock, approved the
      May
      2006 sale of our remaining assets to the estate of Gene Feldman. Proxies were
      not solicited for this approval.





No
      other
      matters were submitted to a vote of security holders during the three months
      ended March 31, 2007.





**ITEM
      5. Other Information**





None.





**ITEM
      6. Exhibits**





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


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**SIGNATURES**




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




Dated:
       March 28, 2008




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





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