SecProbe.io

May 24, 2005

Via US Mail and Facsimile

Mr. Cary Brokaw
Chief Executive and Financial Officer
Avenue Entertainment Group, Inc.
10202 West Washington Blvd., Lean 119
Culver City, CA 90232

Re: Avenue Entertainment Group, Inc.
 Form 10-K for the year ended December 31, 2004
 Commission File Number:   001-12885

Dear Mr. Brokaw:

We have reviewed the above referenced filing and have the following comments.  We have
limited our review to the financial statements and related disclosures included within these
documents.  Understand that the purpose of our  review process is to assist you in your
compliance with the applicable disclosure requirem ents and to enhance the overall disclosure in
your filings.

Where expanded or revised disc losure is requested, you may co mply with these comments in
future filings.  If you disagree, we will consid er your explanation as to why our comments are
inapplicable or a revision is unnecessary.  In so me of our comments, we may ask you to provide
us with supplemental information so we may better understand your disclosure.  Please be as
detailed as necessary in your explanation.

We look forward to working with you in these respects and welcome any questions you may
have about any aspects of our review.

* * * * * * * * * * * * * * * * * * * * * * *
Item 6. Management’s discussion and Analysis of  Financial Condition and Results of Operations

Results of Operations, page 20

1. We have noted several instances within MD&A where changes in revenues and expenses are
discussed but the reasons for them are not expl ained.  For example, year over year revenues
differ by approximately $300,000 while the revenue-p roducing projects year to year appear
to be quite similar, but the discrepancy is not  explained.  Also, a difference of approximately

Avenue Entertainm ent Group, Inc.
May 24, 2005
Page 2

$160,000 exists in Film Costs that is similarly no t explained. Please revi se your explanations
of changes in year over year expenses to fully and completely explain the facts and
circumstances surrounding these changes.  Refer to the guidance in FR 72.  Please note that
the examples provided are not meant to be all-in clusive; as such, please review your entire
MD & A for similar instances.

2. In this regard, our comment applies to the MD &A in your Form 10-QSB for the three months
ended March 31, 2005 as well.  We particularly note the very significant decrease in revenues in the first fiscal  quarter of 2005.  Please expa nd your disclosures to more
completely address the reasons for this decreas e, including whether you consider the various
sources of the fiscal 2004 revenues to be unusual or nonrecurring.   We note that you
extended a two-year contract with HBO.  Do  you expect to derive significant additional
revenues on this or other long-term contacts in subsequent fiscal quar ters?  Please revise
future filings to clarify.

Liquidity and Capital Resources, page 21

3. We note your disclosure that you have a working capital deficit at December 31, 2004.
Please expand this disclosure to discuss how your current pos ition compares with other
businesses in your industry.

Financial Statements

Consolidated Statements of Operations, page 27

4. Please revise your presentation to  separate Other Income from operating expenses as it does
not appear to represent income from operations.  If true, it shoul d be presented as a
component of non-operating income below income from operations.  Please revise or advise.

Note 7 – Commitments and Contingencies

Leases, page 51
5. Please explain to us the facts and circumstan ces surrounding the procurement of your current
rental situation with the office space in Culver City.  Include in your response the identity of
the lessor, the monthly rent payment, the mark et rate for similar space in the area, and how
you have accounted for any diffe rence in market value.  We  may have further comment on
your response.

Employment Agreements, page 51
6. We note that Deferred Compensation comprises nearly 55% of total liabilities, and that it
appears the majority of this balance is derive d from the voluntary deferment of salary by both
the President and the Chairman.  Supplementall y explain to us how and when these amounts
are expected to be repa id.  We may have furthe r comment on your response.

Avenue Entertainm ent Group, Inc.
May 24, 2005
Page 3

7. As a related matter, supplementally explain to us what the balance in deferred compensation not related to salary deferments by the Chairm an and President represents.  We may have
further comment on your response.

Note 9 – Income Taxes, page 41

8. It appears from your disclosure that you have  evaluated your need fo r a deferred tax asset
valuation allowance based on the net deferred ta x asset.  Please note that paragraph 21 of
SFAS 109 requires consideration of  each source of deferred tax assets, on a gross basis, in
determining the need for a valuation allowance.   As such, given your history of losses and
disclosure that you believe your deferred tax assets will not be realized, please revise your financial statements to increase your valuat ion allowance by $199,145 or supplementally tell
us your basis in GAAP for not doing so.

Note 10 – Related Party Transactions

Transactions with GP Strategies, page 56
9. Supplementally explain to us the facts and ci rcumstances surrounding the note payable to GP
Strategies.  Include in your re sponse how and when the note orig inated, the original balance,
when you plan to pay this note completely, and your basis in GAAP for not imputing interest.
We assume that the note is payable on demand.  If true, please disclo se this fact in your
footnote.  If our assumption is incorrect, please explain.

Note 12 – Subsequent Events, page 43

10. Supplementally tell us what progress has been made with regard to the potential sale
transaction detailed here a nd on page 2.  Include in you r response whether you are in
discussions with any entities and, if so, wh at progress has been made to date in the
negotiation process.

11. As a related matter, we note that you have labeled this note as “Unaudited.”  Please supplementally explain why this treatment is in accordance with  GAAP or revise the filing to
remove the “Unaudited” label from this note and file an amended Form 10-KSB with a dual-
dated report related to this note.  Please re fer to Section AU 508.28 of the Codification of
Statements on Auditing Standards in any supplemental response.

* * * * * * * * * * * * * * * * * * * * * * *

We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the
filings reviewed by the staff to be certain that they have provided a ll information investors
require.  Since the company and its management are in possession of all facts relating to a

Avenue Entertainm ent Group, Inc.
May 24, 2005
Page 4

company’s disclosure, they are responsible for th e accuracy and adequacy of the disclosures they
have made.

In connection with responding to our comments, please provide, in writing, a statement from the
company acknowledging that

‚ the company is responsible for the adequacy and accuracy of the disclo sure in the filings;
‚ staff comments or changes to disclosure in  response to staff comments in the filings
reviewed by the staff do not foreclose th e Commission from taking any action with
respect to the filing; and
‚ the company may not assert staff comments as  a defense in any proceeding initiated by
the Commission or any person under the federa l securities laws of  the United States.

In addition, please be advised that the Division of Enforcement ha s access to all information you
provide to the staff of the Divi sion of Corporation Finance in our review of your filing or in
response to our comments on your filing.

Please file your response to our comments via E DGAR within ten business days from the date of
this letter.  Please understand th at we may have additional comments after reviewing your
response.  You may contact Amy Geddes at 202-551-3304 or Margery Re ich at 202-551-3347 if
you have questions or me at 202- 551-3816 with any concerns as I supervised the review of your
filing.

        S i n c e r e l y ,

        J o s e p h  F o t i
        Senior Assistant Chief Accountant