SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 F O R M  10-KSB

              [X] ANNUAL REPORT PURSUANT TO SECTION L3 OR L5(D) OF
                       THE SECURITIES EXCHANGE ACT OF L934
                                       OR
                  [ ] TRANSITION REPORT PURSUANT TO SECTION 13
                 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

                      FOR THE YEAR ENDED DECEMBER 31, 2002

                         COMMISSION FILE NUMBER 1-12635

                             ----------------------

                      PARADISE MUSIC & ENTERTAINMENT, INC.
           (Name of Small Business Issuer as specified in its charter)

            DELAWARE                                     13-3906452
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)


122 EAST 42ND STREET, NEW YORK, NEW YORK                   10168
(Address of principal executive offices)                 (Zip Code)

         ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (888) 565-3259


SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:

Title of each class                    Name of Each Exchange on Which Registered
----------------------                 -----------------------------------------
Common Stock, par value
  $0.01 per share                      Nasdaq Small Cap Market
                                       Boston Stock Exchange

Redeemable Common Stock
  Purchase Warrants                    Boston Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE ACT:  None

         Check whether the issuer (1) has filed all reports required to be filed
by  Section  13 or 15(d)  of the  Securities  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 |_|    No |X|

         Check if  disclosure  of  delinquent  filers in response to Item 405 of
Regulation S-B is not contained herein and will not be contained, to the best of
issuer's knowledge,  in definitive proxy or information statements  incorporated
by  reference  in Part III of this  Form  10-KSB or any  amendment  to this Form
10-KSB.   |X|

         The  issuers'  revenues  for the year  ended  December  31,  2002  were
$163,000.

         The aggregate market value of voting and non-voting  common equity held
by non-affiliates of the issuer on December 31, 2003 was approximately $498,000.
On such date,  the last sale price of issuer's  common stock was $0.017.  Solely
for the purposes of this calculation,  shares  beneficially  owned by directors,
officers and beneficial  owners of in excess of 10% of the  registrant's  common
stock have been  excluded,  except  shares  with  respect to which such  persons
disclaim   beneficial   ownership.   Such  exclusion  should  not  be  deemed  a
determination  or  admission  by  registrant  that such  persons  are,  in fact,
affiliates of registrant.  As of December 31, 2003 there were 36,246,358  shares
of common stock outstanding.


                    DOCUMENTS INCORPORATED BY REFERENCE: None

Transitional Small Business Disclosure Format (check one)
         Yes |_|    No |X|

<PAGE>

                                     PART I

         The statements  contained in this Annual Report that are not historical
facts are forward-looking  statements.  Such  forward-looking  statements may be
identified by, among other things, the use of  forward-looking  terminology such
as  "believes,"  "expects,"  "may,"  "will,"  "should" or  "anticipates"  or the
negative thereof or other variations  thereon or comparable  terminology,  or by
discussions   of  strategy   that  involve   risks  and   uncertainties.   These
forward-looking statements involve predictions.  Our actual results, performance
or  achievements  could  differ  materially  from the results  expressed  in, or
implied by, these forward-looking statements.  Potential risks and uncertainties
that could affect our future operating results include,  but are not limited to,
our need to raise  additional  capital,  our  history of losses,  the  high-risk
nature of the music and entertainment  business and our dependence on some large
customers, as well as economic conditions.

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL


         Paradise   Music  &   Entertainment,   Inc.   (PDSE)  is  a  music  and
entertainment  company focused on partnering with other companies to build their
brands  by  utilizing  music  and  events  to marry  marketing,  technology  and
entertainment  to connect  customers with  consumers.  Our strategy is to market
sponsor-targeted   entertainment   projects,   including  the   development  and
production of proprietary festivals, events and branding campaigns for corporate
clients.

         Prior to 2002 we discontinued all our other operating areas to focus on
our core  business,  as described  above.  Consequently,  we have a very limited
history with respect to our current business  operations.  We now focus on music
events, an area that incorporates our core  competencies.  We currently have one
remaining operating subsidiary, All Access Entertainment Management Group, Inc.,
through which we conduct some of our events.

         We were  incorporated  in the State of Delaware on July 18,  1996.  Our
principal  executive  offices are located at 122 East 42nd Street,  New York, NY
10168, and our telephone number is 888-565-3259.

RECENT DEVELOPMENTS SINCE DECEMBER 31, 2001

In January 2002, we entered into a Letter of Intent with Showtime Networks, Inc.
providing for a relationship  whereby we would  coordinate with Showtime certain
events and artists with corresponding sponsors on Pay-per-View and eventually in
ancillary markets. To date, we have not produced any events under this Letter of
Intent nor entered into a definitive agreement with Showtime.

In January  2002,  we entered  into a Letter of Intent with Avenue B  Marketing,
Inc.  This Letter of Intent was  similar to that with  Showtime,  providing  for
coordinating  events  and  artists,  but in this case  targeting  the  corporate
sponsor and client demographics.  To date, we have not produced any events under
this  Letter of Intent nor entered  into a  definitive  agreement  with Avenue B
Marketing.

In connection with the Avenue B Marketing Agreement, we entered into a Strategic
Partner Contractor's Agreement with Barry Bookhard.  Pursuant to this agreement,
Mr.  Bookhard  received  250,000  shares of our  common  stock in  exchange  for
consulting services. We are no longer operating under this agreement.

In January 2002, we entered into a Consulting  Services  Agreement with Mark van
Deusen  pursuant  to which we  issued  to Mr.  van  Deusen  1,000,000  shares of
Paradise  common stock in exchange for  consulting  services in connection  with
obtaining  a credit  facility  and/or  introducing  us to  industry  contacts to
further our business  development.  Mr. van Deusen continues to provide services
to Paradise, and we are currently negotiating his compensation.


                                       1
<PAGE>

In February 2002, we entered into a Consulting  Services  Agreement with Jeffrey
A. Rinde,  Esq. who is a partner  with Bondy & Schloss  LLP, our SEC  attorneys.
Pursuant to this agreement, Bondy & Schloss LLP received 1,000,000 shares of our
common stock in exchange for legal services.

In February  2002, we entered into a Strategic  Partner  Contractor's  Agreement
with Winston  Willis,  one of our  directors.  Although Mr. Willis  continues to
provide  services to Paradise both as a director and a consultant,  we no longer
operate under the terms of this agreement.

In April  2002,  we  entered  into a  Letter  of  Intent  with  Nantucket  Beach
Foundation,  Inc.,  similar to that with  Showtime,  providing for  coordinating
events and artists.  To date,  we have not produced any events under this Letter
of Intent nor entered into a definitive agreement with Nantucket.

In May  2002,  we signed  an  agreement  with The  Garland  Appeal to  produce a
fund-raiser  music  event.  To date,  no  event  has been  produced  under  this
agreement.

In August 2002, we entered into a Master Purchase Agreement with The Music Force
Media  Group,  LLC  pursuant to which we sold certain  recorded  album  masters,
including sound copyrights and original artwork for a purchase price of $20,000.


COMPETITION

         We  face  intense   competition  both  for  business  and  for  talent,
executives and operating personnel.

         Our music events operations compete with businesses ranging from single
proprietors in local areas to the SFX division of Clear Channel.  There are over
1,000  music  festival  events in the United  States  each year and  hundreds of
organizers and producers.  Our sponsorship and media  operations  compete with a
similarly  crowded  field,  from local media and sponsor  marketers to the large
advertising firms.

EMPLOYEES/INDEPENDENT CONTRACTORS

During 2002, we had three executive  officers and no other full-time  employees.
Mr. Hickel  continues as Chairman of the Board.  Mr. Richard  Rifenburgh is Vice
Chairman and a member of the Board of Directors.  Mr. Winston Willis serves as a
member of the Board of Directors and heads our music event initiative.  Ms. J.M.
Belden is the Chief Financial  Officer and Secretary of the  corporation.  These
individuals  serve under  informal  consulting  agreements.  Other  services are
provided on a consulting basis as needed. As is customary in the music business,
we also  utilize  the  services of artists,  performers,  composers,  producers,
engineers,  roadies,  booking agents and others who are independent contractors.
These independent  contractors hire out their services on an as needed basis and
receive a set fee for the services.  The services performed by these independent
contractors  are not  needed on a full time  basis.  As a  result,  services  of
independent  contractors  are less  expensive  than having  full time  employees
perform these services.


ITEM 2. DESCRIPTION OF PROPERTY

We utilize space occupied by Total  Communications  Group, Inc. in New York City
at 122 E. 42nd Street. Pursuant to our arrangement entered into on May 22, 2002,
we were to pay Total  Communications  Group a monthly rent of $1,750 plus shares
of our common  stock the number of which are  negotiated  from time to time.  On
October  17,  2002,  we  entered  into a  joint  venture  agreement  with  Total
Communications  Group  pursuant to which we received  marketing and  promotional
expertise in exchange for shares of our common stock and the use of a portion of
their space at this location.  We continue to use the space on a periodic basis,
but we no longer pay rent or operate under either of the aforesaid agreements.


                                       2
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

In 2002, we were a party to several legal proceedings:

     o    The dispute with Craig Rodgers, former president of a subsidiary,  was
          settled on April 15, 2003.  The terms of the  settlement  are that the
          Company would make two payments of $12,500 to Mr.  Rodgers,  the first
          such  payment to be made on or before  June 10,  2003,  and the second
          payment to be made on or before August 10, 2003.  While these payments
          have not yet been made,  they were provided for in the liabilities for
          discontinued  operations  section on the balance sheet for fiscal year
          2001.

     o    Cast & Crew Entertainment Services, Inc. brought a claim against us in
          Superior  Court,  County of Los  Angeles,  for unpaid  invoices in the
          amount of  approximately  $805,000.  Though  neither side admitted any
          wrongdoing,  this dispute was settled on November 13, 2003.  The terms
          of the  settlement  are for the  Company to pay the sum of $250,000 by
          December 31, 2003. In addition,  the Company  agreed to issue warrants
          to the  Plaintiff to purchase  three  million  shares of the Company's
          common stock at $0.15 per share.  These liabilities have been provided
          for on the balance sheet for fiscal year ending 2002.

     o    Two vendors obtained judgments against us from New York Superior Court
          in the aggregate amount of approximately  $10,000 for unpaid fees. The
          Company has no information regarding the results of these proceedings.

     o    On August 13,  2001,  8330 West Third  Street,  LLC filed a  complaint
          against Straw dogs, Inc, a subsidiary of the Company,  in the Superior
          Court of California,  County of Los Angeles,  alleging that Straw Dogs
          breached various obligations under its lease dated August 1, 1998. The
          suit seeks damages, including but not limited to past due rent, in the
          amount of  approximately  $59,000,  attorneys  fees, and certain other
          fees  and  taxes.   These  charges  have  been  provided  for  in  the
          liabilities for discontinued  operations  section on the balance sheet
          for fiscal year 2001.

Settlement of any  outstanding  claim may be predicated on our ability to secure
capital  funding.  Unfavorable  resolution  of these  claims is likely to have a
material  adverse  impact on our financial  condition.  If a judgment is entered
against us with respect to one or more of these claims,  we may be unable to pay
such judgment.


                                       3
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information:

      Our common stock traded on the Nasdaq SmallCap Market and the Boston Stock
Exchange from January 22, 1997 through  March 29, 2002 under the symbols  "PDSE"
and "PMU,"  respectively.  Beginning  May 2002,  our shares began trading on the
"pink  sheets"  inter-dealer  market.  The high and low bid prices of our common
stock (as  reported by NASDAQ  (and,  after May 2002,  the pink  sheets) and the
Boston  Stock  Exchange)  for each quarter  during  fiscal 2001 and 2002 were as
follows:

                             NASDAQ SmallCap Market


               Period                       High               Low
               ------                       ----               ---

2002     01/01/02 - 03/31/02               $0.090            $0.010
         04/01/02 - 06/30/02               $0.080            $0.001
         07/01/02 - 09/30/02               $0.030            $0.001
         10/01/02 - 12/31/02               $0.015            $0.001


2001      01/01/01 - 03/31/01              $0.750            $0.219
          03/31/01 - 06/30/01              $0.400            $0.160
          07/01/01 - 09/30/01              $0.450            $0.080
          10/01/01 - 12/31/01              $0.140            $0.015


                              Boston Stock Exchange

               Period                       High               Low
               ------                       ----               ---

2000      01/01/00 - 03/31/00              $3-3/32           $1-3/4
          04/01/00 - 06/30/00              $1-7/8            $ 1
          07/01/00 - 09/30/00              $1-3/4            $ 1-1/2
          10/01/00 - 12/31/00              $1-5/32           $1/32

         At this  time we are  unable  to  obtain  the range of high and low bid
prices per share of our common  stock on the Boston  Stock  Exchange for periods
after 2000.

         The approximate  number of holders of record of our common stock was 94
as of December  31,  2003.  We believe that there are in excess of 500 round lot
beneficial owners of common stock whose shares are held in street name.

         We have never paid a dividend on our common stock.  We anticipate  that
future  earnings,  if any, will be retained for use in our business or for other
corporate purposes and we do not anticipate paying cash dividends.


                                       4
<PAGE>

Recent Sales of Unregistered Securities:

Except as described  below,  we did not issue any equity  securities  during the
fiscal  period from  January 1, 2002  through  December  31, 2002 which were not
registered  under the  Securities  Act of 1933, as amended.  We did issue equity
securities  during  the  fiscal  period  which  were not  registered  under  the
Securities Act of 1933, as amended, as follows:  (i) 9,043,807 shares granted to
consultants  for  services  rendered  during 2002 were  valued at  $180,940  and
recorded  in  operations;   (ii)  1,600,000  shares  issued  to  Porter  Capital
Corporation  in  consideration  for debt to  equity  conversion  were  valued at
$80,000 and recorded in operations; (iii) 4,000,000 shares were issued to Porter
Capital  Corporation  in 2004 for  conversion of debt to equity in the amount of
$200,000,  and is recorded as a reduction in liabilities in 2002; (iv) 3,850,000
shares issued in 2003, and 14,400,000  shares issued in 2004, to consultants for
services rendered in 2003 were valued at $72,650 and recorded in operations; and
(v) warrants  authorized  subsequent to December 31, 2002 through April 30, 2004
as outlined in the following table:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
SECURITIES            DATE SOLD    PURCHASER        CONSIDERATION         EXEMPTION          TERMS OF           USE OF
SOLD                                                                      CLAIMED            CONVERSION         PROCEEDS
                                                                                             OR EXERCISE
-------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>          <C>              <C>                   <C>                <C>                <C>
Warrants to           April 18,    Two Private      Purchase of           Section 4 (2)      Exercisable at     Working
Purchase              2002         Investors        $25,000 Aggregate     And Rule 506       a price of         Capital
500,250 shares                                      Principal amount      Of                 $0.05 per
Of common                                           Of Promissory         Regulation D.      share
Stock                                               Notes due 4/18/03.
-------------------------------------------------------------------------------------------------------------------------------
Warrants to           May 17,      One Private      Purchase of           Section 4 (2)      Exercisable at     Working
Purchase              2002         Investor         $33,000 Aggregate     And Rule 506       a price of         Capital
750,000 shares                                      Principal amount      Of                 $0.04 per
Of common                                           Of Promissory         Regulation D.      share
Stock                                               Notes due 10/17/02.
-------------------------------------------------------------------------------------------------------------------------------
Warrants to           December     One Private      Purchase of           Section 4 (2)      Exercisable at     Working
Purchase              1, 2003,     Investor         $27,000               And Rule 506       a price of         Capital
500,000 shares        and April                     Aggregate  principal  Of                 $0.002 per
of common             18, 2002                      Amount of             Regulation D.      share
stock                                               Promissory notes
-------------------------------------------------------------------------------------------------------------------------------
Warrants to           April 12,    One Lender       Secured loan in the   Section 4 (2)      Exercisable at     Working
Purchase              2004                          Amount of $40,000     And Rule 506       a price of         Capital
500,000 shares                                      For 24 months at      Of                 $0.002 per
of common                                           10% per annum         Regulation D.      share
stock
-------------------------------------------------------------------------------------------------------------------------------
Warrants to           April 12,    One Lender       Secured loan in the   Section 4 (2)      Exercisable at     Working
Purchase              2004                          Amount of $80,000     And Rule 506       a price of         Capital
1,000,000                                           For 24 months at      Of                 $0.002 per
shares of                                           10% per annum         Regulation D.      share
common stock
-------------------------------------------------------------------------------------------------------------------------------
Warrants to           April 12,    One Lender       Secured loan in the   Section 4 (2)      Exercisable at     Working
Purchase              2004                          Amount of $880,000    And Rule 506       a price of         Capital and
9,614,009                                           For 24 months at      Of                 $0.002 per         Funding for
shares of                                           10% per annum         Regulation D.      share              acquisitions
common stock
-------------------------------------------------------------------------------------------------------------------------------
Warrants to           January  9,  One Lender       Purchase of $20,000   Section 4 (2)      Exercisable at     Working
Purchase 400,000      2004                          Aggregate Principal   And Rule 506       a price of         Capital
shares of common                                    Amount of             Of                 $0.02 per
stock                                               Promissory notes      Regulation D.      share
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       5
<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Introduction

We market sponsor-targeted entertainment projects, including the development and
production of proprietary festivals, events and branding campaigns for corporate
clients.  In 2002,  we  executed a branding  program for Coors  Brewing  Company
including promoting their brand at  "after-the-concert"  parties for portions of
the "Nelly" tour.


Results of Operations:

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

In the  aggregate,  revenues  from  continuing  operations  for the  year  ended
December  31,  2002,  were  $163,000,  as compared to $90,000 for the year ended
December 31, 2001.  This  increase of $73,000,  or 81%, was due primarily to the
Coors Brewing  Company  project.  The loss before  discontinued  operations  and
extraordinary   items  in  2002  was  $1,861,000   compared  to  a  loss  before
discontinued  operations  and  extraordinary  items of $6,  039,000 in 2001. The
discontinued  operations  generated a loss of $13,158,000 in 2001, and a gain of
$16,956 in 2002.  The net loss that includes both  continuing  and  discontinued
operations was $1,844,000 for the year ended December 31, 2002, as compared to a
net loss of $19,309,000 for the year ended December 31, 2001.

PDSE Film & TV Group revenues were zero for the year ended December 31, 2002, as
compared to $4,620,000 for the twelve months ended December 31, 2001, a decrease
of  $4,620,000,  or 100%. The decrease in revenues is due to the sale of Picture
Vision and both Rave's operations and royalties.

PDSE  Commercial  Group revenues were zero for the year ended December 31, 2002,
as compared to  $13,569,000  for the twelve  months  ended  December 31, 2001, a
decrease  of  $13,569,000,  or 100%.  The  decrease  in  revenues  is due to the
cessation of operations of Shelter Films and Straw Dogs.

PDSE Music  revenues  were  $40,000 for the year ended  December  31,  2002,  as
compared to  $1,605,000  for the year ended  December  31,  2001,  a decrease of
$1,565,000,  or 98%. The decrease in revenues is due to the  termination  of the
music joint ventures and the cessation of new releases by Label M.

PDSE  Festival & Events  revenue was  $163,000  for the year ended  December 31,
2002,  compared to $35,000 for the year ended December 31, 2001. The increase of
$128,000, or 366%, was due to concentrating all our business efforts in the area
of entertainment projects.

Paradise's marketing,  selling, general and administrative expenses decreased to
$1,795,000  for the year ended December 31, 2002,  from  $4,006,000 for the year
ended December 31, 2001, a decrease of $2,211,000,  or 56%. The decrease was due
primarily to the termination of employees.

Net interest expense was $225,000 for the year ended December 31, 2002, compared
to $27,000 for the year ended  December  31, 2001,  an increase of $198,000,  or
737%. The increase is the result of the loan with Porter Capital Corporation.


Liquidity and Capital Resources:

Net cash used in operating  activities for the year ended December 31, 2002, was
$241,000.

Net cash used in investing  activities for the year ended December 31, 2002, was
zero.

Net cash provided by financing  activities for the year ended December 31, 2002,
was $251,000, which is substantially  represented by proceeds from notes payable
and net proceeds from a financing arrangement.


                                       6
<PAGE>

We had working capital of $10,000 and a  stockholders'  deficit of $7,416,000 at
December 31, 2002. We are currently negotiating with various lenders,  strategic
partners  and equity  investors  to assist in meeting our  short-term  cash flow
needs.

We believe we do not have available  funds  sufficient to sustain our operations
through the fourth quarter of 2004.  Our available  funds  generally  consist of
cash  and the  funding  derived  from  our  revenue  sources:  music  event  and
sponsorship revenues and record label revenues.  As of December 31, 2002, we had
$17,000 in available cash. Reducing operating expenses and capital  expenditures
alone will not be sufficient to solve our liquidity problems. Unless we are able
to obtain  sufficient  funding  through  equity or debt offerings we will not be
able to continue as a going  concern.  We need to raise funds through  equity or
debt offerings in order to survive. Such financing may not be available on terms
favorable to us, or at all. Even if we are able obtain  additional  financing it
may not be sufficient to maintain our current operations.

The Company has a commercial financing agreement with Porter Capital Corporation
(PCC.) The  agreement  provides that the Company  sell,  transfer,  set over and
assign certain  invoices and accounts  receivable to the lender,  with recourse.
The credit facility provides for maximum  revolving  borrowings up to $1,500,000
and is  collateralized  by a UCC-1 filing on certain of the Company's assets. As
of December 31, 2002, the outstanding advance balance,  including interest,  was
approximately $277,000.  Advances from the lender bear interest at the higher of
10.5% per annum or the prime rate plus 2.50%.

In January 2002 through May 2002, the lender  advanced  $110,000 on a short term
basis and in May 2002  converted  $200,000  of the debt to equity by agreeing to
purchase  4,000,000  shares at a price of $0.05 per share.  The  Company  issued
1,600,000  shares to the  lender on March 13,  2002 as  consideration  for these
borrowings and conversions. The lender signed an extension agreement on December
31, 2002.

As of October 10, 2003,  PCC's Senior Loan  balance due was  $607,351.45  due to
accrued  interest,  finance  charges and minimum monthly fees. On April 12, 2004
PCC  agreed to reduce  the  Principal  Amount  due  under the  Senior  Line from
$607,351.45  to  $300,000.  Further,  the Senior Loan balance will now be due on
April 15, 2005 and will not bear  interest  until after its  maturity  date,  at
which time the  interest  will be payable  monthly at the rate of 18% per annum.
The loan  balance will be paid down out of the proceeds of the sale of the stock
held by PCC.

On April 12, 2004,  PCC agreed to extend to Paradise a new line of credit in the
amount of five  million  dollars  upon its normal  business  terms for  accounts
receivable financing for the purposes of acquisitions by Paradise.

Private Investor Loans:

In March 2002, one private  investor  loaned the Company  $50,000  pursuant to a
promissory note that bears interest at a rate of 10% per annum due on August 27,
2002. This loan is currently in default.

In March 2002,  Kelly Hickel and David Sunshine each loaned the company  $15,000
pursuant  to a  promissory  note that bears  interest at the higher of 10.5% per
annum or the prime rate plus 2.50%. Mr.  Sunshine's note has  subsequently  been
repaid, and Mr. Hickel's note was transferred to Porter Capital Corporation.

In April 2002, we sold $37,500, in the aggregate principal amount, of promissory
notes to three private  investors.  The notes bear interest at a rate of 10% per
annum and were due on April 18, 2003.  We also issued to the  purchasers  of the
notes warrants to purchase an aggregate of 500,250 shares of our common stock at
a price of $0.05 per share. On December 1, 2003, one of the April 2002 investors
loaned an  additional  $14,500,  and the warrants on his loan were  increased to
500,000 shares and the exercise price reduced to $0.002 per share.

In May 2002, we sold $33,000,  in the aggregate  principal amount, of promissory
notes to one  private  investor.  The notes bear  interest  at a rate of 10% per
annum and were due on October 17, 2002.  We issued to the purchaser of the notes
warrants to purchase an  aggregate  of 750,000  shares of our common  stock at a
price of $0.04 per share.


                                       7
<PAGE>

New Mezzanine Loans:

On April 12, 2004, PCC agreed to provide forty thousand  dollars  ($40,000) as a
secured loan for two years at an interest rate of 10% per annum. The interest is
payable quarterly in arrears,  in cash or stock, at the lenders option. PCC will
receive  warrants  to  purchase  500,000  shares  of the  company's  stock at an
exercise price of $0.002 per share. The warrants expire four years from the date
of issuance. This loan was provided for the company's working capital needs. All
of these funds have already been advanced to the company.

On April 12, 2004, MME, Inc. agreed to provide eighty thousand dollars ($80,000)
as a  secured  loan for two  years at an  interest  rate of 10% per  annum.  The
interest  is payable  quarterly  in  arrears,  in cash or stock,  at the lenders
option.  MME, Inc.  will receive  warrants to purchase  1,000,000  shares of the
company's  stock at an exercise price of $0.002 per share.  The warrants  expire
four years from the date of issuance.  This loan was provided for the  company's
working capital needs.  Sixty-five thousand dollars has already been advanced to
the company.

On April 12, 2004, MME, Inc. agreed to provide up to an additional eight hundred
and eighty  thousand  ($880,000)  as a secured loan for two years at an interest
rate of 10% per annum. The interest is payable quarterly in arrears,  in cash or
stock, at the lenders option.  F&C will receive  warrants to purchase  9,614,009
shares of the  company's  stock at an  exercise  price of $0.002 per share.  The
warrants  expire  four  years  from the  date of  issuance.  This  loan is being
provided for the company's  working capital needs and to fund  acquisitions  for
Paradise.

Risk Factors

We have a history of  losses,  we expect  more  losses in the future and we have
substantial  doubt  regarding our ability to continue as a going concern.  Since
our inception,  we have never been profitable.  We cannot predict when, if ever,
we will  achieve  profitability.  For the years ended  December  31,  2002,  and
December  31,  2001,   we  had  net  losses  of  $1,838,000   and   $19,309,000,
respectively.  In September  2001,  we ceased all  operations  of our  principal
subsidiaries,  Shelter Films,  Inc. and Straw Dogs,  Inc.,  because we could not
operate  them  profitably.  As a result,  we have  substantially  decreased  our
business  operations  and we have minimal  income from our  remaining  operating
divisions and  subsidiaries.  We presently have limited credit facilities and we
are in default on several loan  instruments.  These  factors  raise  substantial
doubt about our ability to continue as a going concern,  and it is unlikely that
we will report net income in any future year or period.  In addition,  the notes
to our financial  statements  for the year ended  December 31, 2001,  contain an
explanatory paragraph regarding our ability to continue as a going concern.

We believe we do not have available  funds  sufficient to sustain our operations
through the third quarter of 2004. Our available funds generally consist of cash
and the funding  derived from our revenue  sources:  income related  relating to
music  festivals.  As of December  31, 2002,  we had $17,000 in available  cash.
Reducing  operating  expenses  and  capital   expenditures  alone  will  not  be
sufficient  to solve  our  liquidity  problems.  Unless  we are  able to  obtain
sufficient  funding  through  equity  or debt  offerings  we will not be able to
continue  as a going  concern.  We need to raise  funds  through  equity or debt
offerings  in order to survive.  Such  financing  may not be  available on terms
favorable to us, or at all. Even if we are able obtain  additional  financing it
may not be sufficient to maintain our current operations.

Recently Issued Accounting Pronouncements

In  June  2001,  the  Financial   Accounting  Standards  Board  ("FASB")  issued
Statements of Financial  Accounting  Standards  No. 141 "Business  Combinations"
("SFAS 141") and No. 142 "Goodwill and Other  Intangible  Assets"  ("SFAS 142").
SFAS 141 requires all business combinations  initiated after June 30, 2001 to be
accounted for under the purchase method. For all business combinations for which
the date of  acquisition  is  after  June 30,  2001,  SFAS 141 also  establishes
specific  criteria for the  recognition  of intangible  assets  separately  from
goodwill  and  requires   unallocated   negative  goodwill  to  be  written  off
immediately as an extraordinary  gain, rather than deferred and amortized.  SFAS
142 changes the  accounting  for goodwill and other  intangible  assets after an
acquisition.


                                       8
<PAGE>

The most  significant  changes made by SFAS 142 are: 1) goodwill and  intangible
assets  with  indefinite  lives will no longer be  amortized;  2)  goodwill  and
intangible  assets with indefinite  lives must be tested for impairment at least
annually; and 3) the amortization period for intangible assets with finite lives
will no longer be limited to forty years. We do not believe that the adoption of
these statements will have a material effect on our financial position,  results
of operations, or cash flows.

In June 2001,  the FASB also  approved for issuance  SFAS 143 "Asset  Retirement
Obligations."  SFAS  143  establishes  accounting  requirements  for  retirement
obligations associated with tangible long-lived assets, including (1) the timing
of the liability  recognition,  (2) initial  measurement of the  liability,  (3)
allocation of asset  retirement cost to expense,  (4) subsequent  measurement of
the liability and (5) financial statement disclosures. SFAS 143 requires that an
asset  retirement  cost should be capitalized as part of the cost of the related
long-lived  asset and  subsequently  allocated to expense using a systematic and
rational method. We will adopt the statement  effective no later than January 1,
2003, as required. The transition adjustment resulting from the adoption of SFAS
143 will be reported as a cumulative effect of a change in accounting principle.
We do not  believe  that the  adoption  of this  statement  will have a material
effect on our financial position, results of operations, or cash flows.

In August 2001,  the FASB also approved SFAS 144,  Accounting for the Impairment
or Disposal of Long-Lived Assets. SFAS 144 replaces SFAS 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The
new accounting model for long-lived  assets to be disposed of by sale applies to
all  long-lived  assets,  including  discontinued  operations,  and replaces the
provisions of APB Opinion No. 30, Reporting Results of Operations-Reporting  the
Effects of Disposal of a Segment of a Business,  for the disposal of segments of
a business.  Statement 144 requires that those long-lived  assets be measured at
the lower of carrying amount or fair value less cost to sell,  whether  reported
in continuing operations or in discontinued operations.  Therefore, discontinued
operations will no longer be measured at net realizable value or include amounts
for operating losses that have not yet occurred. Statement 144 also broadens the
reporting of discontinued operations to include all components of an entity with
operations that can be  distinguished  from the rest of the entity and that will
be  eliminated  from  the  ongoing  operations  of  the  entity  in  a  disposal
transaction.  The  provisions  of  Statement  144 are  effective  for  financial
statements  issued for fiscal  years  beginning  after  December  15,  2001 and,
generally, are to be applied prospectively.  We do not believe that the adoption
of this statement will have a material effect on our financial position, results
of operations, or cash flows.

In April 2002, the FASB approved SFAS 145,  Rescission of FASB statements No. 4,
44 and 64, Amendment of SFAS 13, and technical  corrections.  While the adoption
of this SFAS will not have any effect on the  statements of financial  position,
stockholder  deficit,  or on the net income (loss),  the adoption may change the
classification of any future gains from debt  extinguishments  on the statements
of operations.


ITEM 7. FINANCIAL STATEMENTS

See the index to our financial statements attached hereto.


                                       9
<PAGE>

                        CONSOLIDATED FINANCIAL STATEMENTS




                                    CONTENTS

INDEPENDENT AUDITOR'S REPORT                                          F-2

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET                                            F-3

CONSOLIDATED STATEMENTS OF OPERATIONS                                 F-4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                       F-5 - F-6

CONSOLIDATED STATEMENTS OF CASH FLOWS                                 F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                            F-8 - F-17



<PAGE>


                     REPORT OF INDEPENDENT PUBLIC ACCOUNTANT

Board of Directors and Stockholders
Paradise Music and Entertainment, Inc.

We have audited the balance sheet of Paradise Music and  Entertainment,  Inc. as
of December 31,  2002,  and the related  statements  of  operations,  changes in
stockholders'  equity,  and cash  flows  for each of the  years in the  two-year
period then ended.  These  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material  misstatement.  An audit includes examining on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements referred to above, present fairly, in
all  material   respects,   the  financial   position  of  Paradise   Music  and
Entertainment,  Inc. as of December 31, 2002,  and the results of its operations
and cash  flows  for each of the years in the two year  period  then  ended,  in
conformity with generally accepted accounting principles.

                                       /s/ James E. Scheifley & Associates, P.C.
                                       James E. Scheifley & Associates, P.C.
                                       Certified Public Accountants

Dillon, Colorado
May 26, 2004


                                       F-2
<PAGE>


                      Paradise Music & Entertainment, Inc.
                           Consolidated Balance Sheet
                             As of December 31, 2002

                                     ASSETS

Current assets:

  Cash                                                            $      16,981
                                                                  -------------

      Total current assets                                        $      16,981
                                                                  =============



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

  Notes payable - bank                                            $     276,308
  Accounts payable                                                    1,219,154
  Notes payable - iball                                                 305,250
  Bridge Loans                                                          140,000
  Accrued Interest                                                       80,394
  Accrued wages                                                         199,747
  Accrued taxes                                                          90,269
  Accrued Job Costs                                                      22,390
  Accrued Expenses - Restructure                                        474,000
 Net liabilities of discontinued operations                           4,625,114
                                                                  -------------
      Total current liabilities                                       7,432,626


Stockholders' equity:
 Preferred stock, $.01 par value,
  5,000,000 shares authorized                                                --
 Common stock, $.01 par value,
  75,000,000 shares authorized,
  36,246,358 shares issued and outstanding                              362,464
  Common Stock to be issued                                             200,000
 Additional paid-in capital                                          26,937,835
Accumulated (deficit)                                               (34,915,944)
                                                                  -------------
                                                                     (7,415,645)
                                                                  -------------
                                                                  $      16,981
                                                                  =============


                                      F-3
<PAGE>

                      Paradise Music & Entertainment, Inc.
                            Statements of Operations
                     Years Ended December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                                           December 31,

                                                                      2002               2001
                                                                      ----               ----

<S>                                                               <C>                <C>
Revenue                                                           $    162,650       $     90,000

Operating expenses
  Cost of sales                                                             --                 --
  Marketing, selling, general and administrative                     1,794,879          4,006,389
  Impairment of fixed assets, goodwill and other intangibles             3,455          2,086,164
                                                                  ------------       ------------

Total operating expenses                                             1,798,334          6,092,553
                                                                  ------------       ------------

(Loss) from continuing operations                                   (1,635,684)        (6,002,553)

Other (income) and expense
  Interest expense                                                     225,485             46,298
  Interest (income)                                                         --            (18,965)
  Other expenses                                                            --              9,127
                                                                  ------------       ------------
                                                                       225,485             36,460

(Loss) before income taxes, discontinued operations and
 extraordinary item                                                 (1,861,169)        (6,039,012)
Provision for income taxes                                                 160            111,504
                                                                  ------------       ------------
(Loss) before discontinued operations and
 extraordinary item                                                 (1,861,329)        (6,150,516)
                                                                  ------------       ------------

Income (loss) from discontinued operations                              16,956        (13,158,149)
                                                                  ------------       ------------

(Loss) before extraordinary item                                    (1,844,373)       (19,308,665)
                                                                  ------------       ------------

Net (loss)                                                        $ (1,844,373)      $(19,308,665)
                                                                  ============       ============

 Basic and diluted (loss) per share
  Before discontinued operations and extraordinary item           $      (0.06)      $      (0.37)
  Discontinued operations                                                 0.00              (0.79)
  Extraordinary item                                                        --                 --
                                                                  ------------       ------------
                                                                  $      (0.06)      $      (1.16)
                                                                  ============       ============

 Weighted average shares outstanding                                30,110,161         16,625,354
                                                                  ============       ============
</TABLE>


                                      F-4
<PAGE>

                      Paradise Music & Entertainment, Inc.
            Consolidated Statement of Changes in Stockholders' Equity
                     Years Ended December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                                                                        Additional
                                                                    Common             Stock             Paid -in
                         ACTIVITY                                   Shares             Amount            Capital

<S>                                                              <C>                <C>                <C>
 Balance, January 1, 2001                                          10,738,837       $    107,388       $ 24,820,382

Repayment of stockholder note:
  In cash
  In connection with sale of subsidiary

Issuance of stock and warrants for acquisition                      8,565,691             85,657          1,798,795

Issuance of stock for consideration for restructure of debt           250,000              2,500             32,500

Issuance of stock for debt cancellation                                50,000                500              7,500

Issuance of stock to Employees                                      3,307,046             33,070            305,733

Issuance of stock for services                                      3,486,261             34,863            135,811

Issuance of previously authorized common stock grants

Stock reacquired and cancelled                                       (933,496)            (9,335)           (75,955)

Compensation value of warrants issued for services
 and long-term financing                                                                                     26,150

Compensation value of warrants issued for services                                                           16,155

Reduction of PIC due to Sale of Subsidiaries                                                               (350,824)

Net (loss) for the year                                                    --                 --                 --
                                                                 ------------       ------------       ------------
 Balance, December 31, 2001                                        25,464,339            254,643         26,716,247


Issuance of stock and warrants for acquisition                        138,212              1,382              2,073

Common stock to be issued                                                                     --                 --

Issuance of stock for debt cancellation                             1,600,000             16,000             64,000

Issuance of stock for services                                      9,043,807             90,438             90,502

Compensation value of warrants issued for services                     65,013
 and long-term financing

Net (loss) for the year                                                    --                 --                 --
                                                                 ------------       ------------       ------------
 Balance, December 31, 2002                                        36,246,358       $    362,463       $ 26,937,834
                                                                 ============       ============       ============
</TABLE>


                                      F-5
<PAGE>

                      Paradise Music & Entertainment, Inc.
            Consolidated Statement of Changes in Stockholders' Equity
                                   (Continued)
                     Years Ended December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                                    Common        Stockholder
                                                                    Stock             Note           Accumulated
                      ACTIVITY                                  Subscriptions      Receivable          Deficit           Total

<S>                                                             <C>               <C>               <C>               <C>
 Balance, January 1, 2001                                       $     93,750      $    (64,082)     $(13,762,905)     $ 11,194,533

Repayment of stockholder note:
  In cash                                                                         $     20,000                              20,000
  In connection with sale of subsidiary                                           $     44,082                              44,082

Issuance of stock and warrants for acquisition                                                                           1,884,452

Issuance of stock for consideration for restructure of debt                                                                 35,000

Issuance of stock for debt cancellation                                                                                      8,000

Issuance of stock to Employees                                                                                             338,803

Issuance of stock for services                                                                                             170,674

Issuance of previously authorized common stock grants                (93,750)                                              (93,750)

Stock reacquired and cancelled                                                                                             (85,290)

Compensation value of warrants issued for services
 and long-term financing                                                                                                    26,150

Compensation value of warrants issued for services                                                                          16,155

Reduction of PIC due to Sale of Subsidiaries                                                                              (350,824)

Net (loss) for the year                                                   --                --       (19,308,665)      (19,308,665)
                                                                ------------      ------------      ------------      ------------

 Balance, December 31, 2001                                               --                --       (33,071,570)       (6,100,680)


Issuance of stock and warrants for acquisition                                                                               3,455

Common stock to be issued                                            200,000                                               200,000

Issuance of stock for debt cancellation                                                                                     80,000

Issuance of stock for services                                                                                             180,940

Compensation value of warrants issued for services                                                                          65,013
 and long-term financing                                                                                                        --


Net (loss) for the year                                                   --                --        (1,844,373)       (1,844,373)
                                                                ------------      ------------      ------------      ------------

 Balance, December 31, 2002                                     $    200,000      $         --      $(34,915,943)     $ (7,415,645)
                                                                ============      ============      ============      ============
</TABLE>


                                      F-6
<PAGE>

                      Paradise Music & Entertainment, Inc.
                            Statements of Cash Flows
                     Years Ended December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                                             December 31,
                                                                        2002              2001
                                                                        ----              ----

<S>                                                                 <C>                <C>
Net (loss)                                                          $ (1,844,373)      $(19,308,665)
  Adjustments to reconcile net income (loss) to net
   cash provided by operating activities:
   Depreciation and amortization                                              --            255,768
   Non-cash consulting expense in connection with warrants
   Provision for returns                                                      --
   Common stock issued for services                                      329,408          2,043,121
   Stock Subscriptions                                                   200,000
   Rent Deposit Expensed                                                  10,285
   Impairments and losses arising from discontinued operations             6,829         14,793,539
Changes in assets and liabilities:
    (Increase) decrease in accounts receivable 89,582
    Increase (decrease) in accounts payable                              507,940            269,478
    Increase (decrease) in accrued expenses                              549,138            317,662
                                                                    ------------       ------------
       Total adjustments                                               1,603,600         17,769,150
                                                                    ------------       ------------
  Net cash (used in)
   operating activities                                                 (240,773)        (1,539,515)
                                                                    ------------       ------------
Cash flows from investing activities:
   Acquisition of plant and equipment                                         --
   Acquisition costs net of cash acquired
Net cash (used in) investing activities                                       --                 --
                                                                    ------------       ------------
Cash flows from financing activities:
   Proceeds from bank borrowings                                         110,744            375,000
   Proceeds from loans                                                   140,000
   Repayment of notes and line of credit                                      --               (436)
   Repayment of shareholder loans                                             --             20,000
                                                                    ------------       ------------
  Net cash provided by
   financing activities                                                  250,744            394,564
                                                                    ------------       ------------

Increase (decrease) in cash                                                9,971         (1,144,951)
Cash and cash equivalents,
 beginning of period                                                       7,010          1,151,961
                                                                    ------------       ------------
Cash and cash equivalents,
 end of period                                                      $     16,981       $      7,010
                                                                    ============       ============


Supplemental cash flow information:
   Cash paid for interest                                           $                  $
   Cash paid for income taxes                                       $                  $

Non-cash financing activities
   Conversion of Liabilities into common stock subscriptions        $    200,000       $
   Options, warrants and stock granted for services                 $    329,408       $
   Net assets acquired for stock and warrants                       $                  $
</TABLE>


                 See accompanying notes to financial statements.


                                      F-7
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND NATURE OF OPERATIONS:
   -------------------------------------

Paradise  Music &  Entertainment,  Inc.  ("Paradise")  was  formed in July 1996.
Effective July 3, 2001,  Paradise and iball Media Inc. ("iball") completed their
plan of merger and effectively combined their business interests (See Note 5 for
further details).

Paradise Music &  Entertainment,  Inc.  ("Paradise" or the "Company") is a music
and  entertainment  company  focused on partnering with other companies to build
their brands by utilizing  music and events to marry  marketing,  technology and
entertainment to connect customers with consumers.

The Company  markets  sponsor-targeted  entertainment  projects,  including  the
development  and  production  of  proprietary  festivals,  events  and  branding
campaigns  for corporate  clients.  The Company has agreed to produce two events
for not-for-profit organizations. The Company is currently in negotiations for a
number of festivals and music events for the 2004/2005  season,  with  contracts
with a number of global brand companies currently being negotiated.

At the end of 2001, the Company ceased  operations of other  operating  areas to
focus on the core business, as described above. Consequently,  the Company has a
limited history with respect to our current business operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
   ------------------------------------------

Principles of Consolidation - The consolidated  financial statements include the
accounts of Paradise and its wholly-owned subsidiaries, iball Media, Events, All
Access, PDSE Records,  Push Records,  PDSE Digital,  Rave, Picture Vision, Straw
Dogs  and  Shelter  Films   (collectively   the   "Company").   All  significant
intercompany accounts and transactions have been eliminated in consolidation.

Revenue  Recognition  - The  Company's  current  revenue  comes  from short term
festival and event  marketing.  These are typically  short term projects and the
revenues are recognized when the project is completed.

Cash and Cash Equivalents -The Company  considers all highly liquid  investments
with  maturities of three months or less when purchased to be cash  equivalents.
The Company  maintains its cash in bank deposit  accounts  that,  at times,  may
exceed federally insured limits. The Company has not incurred any losses in such
accounts and believes it is not exposed to any significant credit risk on cash.

Inventory  -  Inventory  is stated at the lower of cost or market  and  consists
primarily of finished compact discs and tape cassettes. The cost of inventory is
determined by the first-in,  first-out  (FIFO) method.  Due to the change in the
business  strategy to focus on festivals and events,  and the Company's  limited
personnel  to pursue the sale of the  Company's  inventory,  the  inventory  was
impaired to zero at December 31, 2001. Any future sale of compact discs or tapes
will be recorded as revenue if and when it occurs.

Impairment  of Long  Lived  Assets -  Impairment  losses  on  long-lived  assets
(including  goodwill) is recognized when events and circumstances  indicate that
the  undiscounted  cash flows estimated to be generated by these assets are less
than the carrying amounts of those assets.  As discussed in Note 4, in 2001, the
Company significantly impaired the majority of its assets.

Stock Warrants - Stock warrants  issued for goods and services are accounted for
in accordance  with  Emerging  Issues Task Force (EITF)  96-18,  Accounting  for
Warrants  that are  Issued  to  other  than  Employees  for  Acquisition,  or in
Conjunction  with Selling Goods and Services.  Accordingly  warrants  subject to
vesting based on performance, will be valued each reporting period until vested.
The portion of the value related to the completed term of the related  agreement
is expensed, and the remaining non-cash deferred consulting expense is amortized
over the


                                      F-8
<PAGE>

remaining term of the agreement.  The value of such related warrants was subject
to adjustment until such time that the warrant was nonforfeitable,  fully vested
and  exercisable.  All warrants issued as  consideration  for goods or services,
either were fully vested or cancelled as of December 31, 2001.

Income  Taxes  -  Deferred  income  tax  assets  and  liabilities  are  computed
fordifferences  between  the  financial  statement  and tax bases of assets  and
liabilities  that will  result in taxable or  deductible  amounts in the future,
based on  enacted  tax laws and rates  applicable  to the  periods  in which the
differences  are expected to affect  taxable  income.  Valuation  allowances are
established,  when  necessary,  to reduce the deferred  income tax assets to the
amount expected to be realized.

Loss Per  Common  Share - Basic  earnings  per share  excludes  dilution  and is
computed by dividing  loss  applicable  to common  stockholders  by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share  reflects the  potential  dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity. Diluted loss per common share is the same as basic loss per common share
for all periods  presented.  Unexercised  stock options and warrants to purchase
6,033,890  shares at December 31, 2001 and 4,354,012 shares at December 31, 2002
of the Company's  common stock were not included in the  computations of diluted
earnings per common share because their effect would have been antidilutive as a
result of the Company's losses.

Fair Value of Financial Instruments - The fair value of the Company's assets and
liabilities   which  qualify  as  financial   instruments  under  SFAS  No.  107
"Disclosures  about  fair  value  of  financial  instruments,"  approximate  the
carrying amounts presented in the consolidated balance sheet.

Use of Estimates - The  preparation  of  consolidated  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 disclosure of contingent  assets and liabilities at the date of
the consolidated  financial  statements and the reported amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

The Company's calculation of impairments,  discontinued operations,  litigation,
lease liabilities and  contingencies,  and other liabilities and obligations are
significant  estimates.  It is at least reasonably possible that these estimates
could be revised in the near term and that such a revision could be material.

New Accounting Pronouncements - In June 2001, the Financial Accounting Standards
Board  ("FASB")  issued  Statements  of Financial  Accounting  Standards No. 141
"Business  Combinations" ("SFAS 141") and No. 142 "Goodwill and Other Intangible
Assets"  ("SFAS  142").  SFAS 141 requires all business  combinations  initiated
after June 30,  2001 to be  accounted  for under the  purchase  method.  For all
business  combinations for which the date of acquisition is after June 30, 2001,
SFAS 141 also  establishes  specific  criteria for the recognition of intangible
assets separately from goodwill and requires unallocated negative goodwill to be
written off  immediately  as an  extraordinary  gain,  rather than  deferred and
amortized.  SFAS 142 changes the  accounting  for goodwill and other  intangible
assets after an acquisition.  The most significant changes made by SFAS 142 are:
1)  goodwill  and  intangible  assets  with  indefinite  lives will no longer be
amortized;  2) goodwill  and  intangible  assets with  indefinite  lives must be
tested for  impairment at least  annually;  and 3) the  amortization  period for
intangible  assets with finite  lives will no longer be limited to forty  years.
The Company does not believe that the adoption of these  statements  will have a
material effect on its financial position, results of operations, or cash flows.
In June 2001,  the FASB also  approved for issuance  SFAS 143 "Asset  Retirement
Obligations."  SFAS  143  establishes  accounting  requirements  for  retirement
obligations associated with tangible long-lived assets, including (1) the timing
of the liability  recognition,  (2) initial  measurement of the  liability,  (3)
allocation of asset  retirement cost to expense,  (4) subsequent  measurement of
the liability and (5) financial statement disclosures. SFAS 143 requires that an
asset  retirement  cost should be capitalized as part of the cost of the related
long-lived  asset and  subsequently  allocated to expense using a systematic and
rational  method.  The Company will adopt the statement  effective no later than
January 1, 2003,  as required.  The  transition  adjustment  resulting  from the
adoption  of SFAS 143 will be  reported  as a  cumulative  effect of a change in
accounting  principle.  The Company  does not believe  that the adoption of this
statements  will have a material  effect on its financial  position,  results of
operations, or cash flows.


                                      F-9
<PAGE>

In August 2001,  the FASB also approved SFAS 144,  Accounting for the Impairment
or Disposal of Long-Lived Assets. SFAS 144 replaces SFAS 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The
new accounting model for long-lived  assets to be disposed of by sale applies to
all  long-lived  assets,  including  discontinued  operations,  and replaces the
provisions of APB Opinion No. 30, Reporting Results of Operations-Reporting  the
Effects of Disposal of a Segment of a Business,  for the disposal of segments of
a business.  Statement 144 requires that those long-lived  assets be measured at
the lower of carrying amount or fair value less cost to sell,  whether  reported
in continuing operations or in discontinued operations.  Therefore, discontinued
operations will no longer be measured at net realizable value or include amounts
for operating losses that have not yet occurred. Statement 144 also broadens the
reporting of discontinued operations to include all components of an entity with
operations that can be  distinguished  from the rest of the entity and that will
be  eliminated  from  the  ongoing  operations  of  the  entity  in  a  disposal
transaction.  The  provisions  of  Statement  144 are  effective  for  financial
statements  issued for fiscal  years  beginning  after  December  15,  2001 and,
generally,  are to be applied  prospectively.  The Company does not believe that
the  adoption of this  statement  will have a material  effect on its  financial
position, results of operations, or cash flows.

In April 2002, the FASB approved SFAS 145,  Rescission of FASB statements No. 4,
44 and 64, Amendment of SFAS 13, and technical  corrections,  while the adoption
of this SFAS will not have any effect on the  statements of financial  position,
stockholder  deficit,  or on the net income (loss),  the adoption may change the
classification of any future gains from debt  extinguishments  on the statements
of operations.

3. CONTINUED OPERATIONS:
   --------------------

For the years ended  December 31, 2002,  and December 31, 2001,  the Company had
net losses of $1,844,000  and  $19,309,000,  respectively.  Since  discontinuing
substantially  all of its  business  operations,  the  Company  is  experiencing
substantially  decreased business  operations and it has minimal income from the
remaining operating divisions and subsidiaries. The Company's new strategy is to
focus on festivals and events in a global branding strategy, and while there has
been some progress made on the implementation of this new strategy, the strategy
is still in its infancy and the Company has generated  limited revenues from it.
The Company presently has limited credit facilities and is in default on several
loan instruments, however as discussed in Note 16, some additional financing has
been  obtained  subsequent  to year-end  2002.  All of the above  factors  raise
substantial doubt about our ability to continue as a going concern.

4. IMPAIRMENTS AND DISCONTINUED OPERATIONS:
   ---------------------------------------

As noted elsewhere,  substantially all of the Company's business operations were
sold or closed down prior to January 1, 2002. The net liabilities and results of
operations for the  discontinued  operations are presented as a single line item
on the  balance  sheet and in the  statement  of  operations.  In  general,  the
discontinued  operations and disposals  resulted in substantial  impairments and
losses.


                                      F-10
<PAGE>

5. DEBT:
   ----

Financing  Agreement - On April 25, 2001, the Company  entered into a commercial
financing agreement with a lender. The agreement provides that the Company sell,
transfer,  set over and assign certain  invoices and accounts  receivable to the
lender,  with  recourse.  The credit  facility  provides  for maximum  revolving
borrowings  up to  $1,500,000.  Borrowings  under this  facility  are based on a
funding  formula  and, in addition to the accounts  receivable  and invoices are
collateralized by all of the Company's remaining assets. As of December 31, 2002
approximately  $277,000 was the outstanding  advance balance.  Advances from the
lender  bear  interest  at the  higher of 10.5% per annum or the prime rate plus
2.50%.

Porter Capital Corporation (PCC)

In January  2002 through May 2002 the lender  advanced  $110,000 on a short term
basis and in May 2002  converted  $200,000  of the debt to equity by agreeing to
purchase  4,000,000  shares at a price of $0.05 per share.  The  Company  issued
1,600,000  shares to the  lender on March 13,  2002 as  consideration  for these
borrowings and conversions. The lender signed an extension agreement on December
31, 2002.

Private Investor Loans

In March 2002, one private  investor  loaned the Company  $50,000  pursuant to a
promissory note that bears interest of 10% per annum due on August 27, 2002.

In March 2002,  Kelly Hickel and David Sunshine each loaned the company  $15,000
pursuant  to  promissory  notes that bears  interest  at the higher of 10.5% per
annum or the prime rate plus 2.50%. Mr.  Sunshine's note has  subsequently  been
repaid, and Mr. Hickel's note was transferred to Porter Capital Corporation.

In April 2002 we sold a $37,500  aggregate  principal amount of promissory notes
to three private  investors.  The notes bear interest at a rate of 10% per annum
and were due on April 18, 2003.  We also issued to the  purchasers  of the notes
warrants to purchase an  aggregate  of 500,250  shares of our common  stock at a
price of $0.05 per share. These investors have the right to invest an additional
$75,000 on the same terms.

In May 2002 we sold $33,000  aggregate  principal  amount of promissory notes to
one  private  investor.  The notes bear  interest at a rate of 10% per annum and
were due on October 17, 2002. We issued to the  purchaser of the notes  warrants
to purchase an  aggregate  of 750,000  shares of our common  stock at a price of
$0.04 per share.

See Note 16 for terms of  additional  borrowings  from the lender  subsequent to
December 31, 2002.

Notes Payable - Notes payable totaling $305,000 are past due and in default. The
notes currently bear a default interest rate of 15%.

Other  loans  were made to the  Company  in 2003 and  2004.  See Note 16 for the
details of these additional borrowings


                                      F-11
<PAGE>

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
   -------------------------------------

At December  31, 2002,  accounts  payable and accrued  expenses  for  continuing
operations consist of the following:

          Accounts Payable                                $  1,219,154
          Accrued Interest (other than PCC)                     80,394
          Accrued Wages and Taxes                              290,016
          Accrued Expenses - restructure                       474,000
          Accrued Job Costs                                     22,390
                                                          ------------
                                                          $  2,085,954

Regarding the Accrued  Expenses for  Restructure,  the Company  anticipated  the
total costs  through  Fiscal Year 2003  required to complete the  financial  and
operational  restructuring  necessary  to  move  from  its  past  focus  on  the
Consolidated Entertainment Company to its future focus as a provider of narrowly
focused  marketing and entertainment  musical events.  The Company believes that
these accruals  represent the total costs necessary to accomplish that objective
in a manner consistent with Generally Accepted Accounting Principles (GAAP).


7. INCOME TAXES:
   ------------

The Company  accounts for income taxes under SFAS 109, which requires the use of
the liability method. SFAS 109 provides that deferred tax assets and liabilities
are  recorded  based on the  differences  between  the tax bases of  assets  and
liabilities  and  their  carrying  amounts  for  financial  reporting  purposes,
referred to as temporary differences. Deferred tax assets and liabilities at the
end of each period are determined using the currently  enacted tax rates applied
to  taxable  income  in the  periods  in  which  the  deferred  tax  assets  and
liabilities are expected to be settled or realized.

The provision for income taxes differs from the amount  computed by applying the
statutory  federal income tax rate to income before  provision for income taxes.
The sources and tax effects of the differences are as follows:

Income tax provision at
  the federal statutory rate             34%
Effect of operating losses              (34)%
                                       ----
                                          -
                                       ====

As of December 31, 2002,  the Company has a net operating loss  carryforward  of
approximately $21,000,000.  This loss will be available to offset future taxable
income.  If not used, this  carryforward  will expire through 2022. The deferred
tax  asset  of   approximately   $7,000,000   relating  to  the  operating  loss
carryforward has been fully reserved at December 31, 2002. The reserve increased
by $627,000 during fiscal year ending December 31, 2002.



                                      F-12
<PAGE>

8.  COMMITMENTS AND CONTINGENCIES:
    -----------------------------

Litigation

We have been a party to several legal proceedings:

     o    The dispute with Craig Rodgers, former president of a subsidiary,  was
          settled on April 15, 2003.  The terms of the  settlement  are that the
          Company would make two payments of $12,500 to Mr.  Rodgers,  the first
          such  payment to be made on or before  June 10,  2003,  and the second
          payment to be made on or before August 10, 2003.  While these payments
          have not yet been made,  they were provided for in the liabilities for
          discontinued  operations  section on the balance sheet for fiscal year
          2001.

     o    Cast & Crew Entertainment Services, Inc. brought a claim against us in
          Superior  Court,  County of Los  Angeles,  for unpaid  invoices in the
          amount of  approximately  $805,000.  Though  neither side admitted any
          wrongdoing,  this dispute was settled on November 13, 2002.  The terms
          of the  settlement  are for the  Company to pay the sum of $250,000 by
          December 31, 2003. In addition,  the Company  agreed to issue warrants
          to the  Plaintiff to purchase  three  million  shares of the Company's
          common stock at $0.15 per share.  These liabilities have been provided
          for on the balance  sheet for fiscal year 2002.  This  Agreement is in
          default.

     o    Two vendors obtained judgments against us from New York Superior Court
          in the aggregate amount of approximately  $10,000 for unpaid fees. The
          Company has no information regarding the results of these proceedings.

     o    On August 13,  2001,  8330 West Third  Street,  LLC filed a  complaint
          against Straw dogs, Inc, a subsidiary of the Company,  in the Superior
          Court of California,  County of Los Angeles,  alleging that Straw Dogs
          breached various obligations under its lease dated August 1, 1998. The
          suit seeks damages, including but not limited to past due rent, in the
          amount of  approximately  $59,000,  attorneys  fees, and certain other
          fees  and  taxes.   These  charges  have  been  provided  for  in  the
          liabilities for discontinued  operations  section on the balance sheet
          for fiscal year 2001.

Settlement of any  outstanding  claim may be predicated on our ability to secure
capital  funding.  Unfavorable  resolution  of these  claims is likely to have a
material  adverse  impact on our financial  condition.  If a judgment is entered
against us with respect to one or more of these claims,  it may be unlikely that
we will be able to pay such judgment.

The Company has agreed to pay each of its  outside  directors  $18,000 per year,
payable  quarterly in the  Company's  common stock valued on the last day of the
applicable  quarter.  The  Company  has also  agreed  to pay the  Vice  Chairman
$166,500  per year.  The Company has agreed to pay the  Chairman  $250,000.  The
Company has not been able to make these payments.

9.  CONCENTRATIONS:
    --------------

Although a significant  portion of the Company's 2002 revenues were derived from
one customer,  Coors Brewing Company, future concentrations of risk are expected
to be related to the Company's new strategy focusing on festivals and events.

10. STOCKHOLDERS' EQUITY:
    --------------------

The Company entered into consulting  agreements with various consultants in 2002
for  professional and financial  services.  The consultants were compensated for
their  services  (either  partially  or in  full)  through  the  issuance  of an
aggregate of 10,643,807  shares of the Company's  common stock.  The shares were
valued at  approximately  $261,000 and were expensed  under these  agreements in
fiscal 2002.

For the year ended  December  31, 2001,  the Company  issued  500,000  shares to
employees  valued  at  approximately   $44,000.   This  amount  is  recorded  in
operations.

                                      F-13
<PAGE>

11. STOCK OPTIONS:
    -------------

On October 8, 1996, the Board of Directors adopted and the stockholders approved
the Option Plan.  The Option Plan  provides for the granting of incentive  stock
options  ("ISOs") within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"),  non-qualified  stock options ("NQSOs") and/or
Stock Appreciation Rights (SARs) to certain directors,  agents and employees of,
and consultants to the Company. The purpose of the Option Plan is to attract and
retain exemplary employees,  agents, consultants and directors. Options and SARs
granted under the Option Plan may not be  exercisable  for terms in excess of 10
years  from the date of grant.  In  addition,  no options or SARs may be granted
under the  Option  Plan later than 10 years  after the Option  Plan's  effective
date.  The total number of shares of Common Stock with respect to which  options
and SARs will be granted under the Option Plan is 3,000,000.  The shares subject
to and  available  under the Option Plan may  consist,  in whole or in part,  of
authorized  but  unissued  stock or treasury  stock not  reserved  for any other
purpose.  Any  shares  subject to an option or SAR that  terminates,  expires or
lapses  for any  reason,  and any  shares  purchased  pursuant  to an option and
subsequently  repurchased  by the  Company  pursuant to the terms of the option,
shall again be available for grant under the Option Plan.

As part of the  Option  Plan,  the Board of  Directors  set  aside  for  Outside
Directors  an aggregate of 100,000  stock  options to eligible  directors of the
Company.  Each eligible director receives 5,000 stock options per annum, subject
to  adjustment,  for his  services  on the Board on each July 1. The options are
exercisable  at the fair  market  value  of the  common  stock on the last  date
preceding  the date of grant.  The maximum term of the stock  options is 5 years
and the stock options may be exercised at any time for a period of 5 years after
the date of grant.

The activity in the Option Plan is as follows:

                                                 Exercise Price
                                     Number of Options      Per Share Range
                                     -----------------      ---------------
Balance outstanding January 1, 2000       2,657,500           2.06 - 6.00
    Granted                               1,151,500           1.00 - 5.00
    Cancelled                            (1,061,500)          1.50 - 5.00
                                         ----------           -----------

Balance outstanding Dec. 31, 2000         2,747,500           1.00 - 6.00
    Granted                                 242,222           0.25 - 1.00
    Cancelled                              (207,030)          1.00 - 5.00
                                         ----------           -----------

Balances outstanding Dec. 31, 2001        2,782,692           0.25 - 6.00
    Granted                                   - 0 -                n/a
    Cancelled                               828,500           4.03 - 5.25
                                         ----------           -----------

Balances outstanding Dec. 31, 2002        1,954,192           0.25 - 6.00



                                      F-14
<PAGE>


The Company has adopted the disclosure requirements of SFAS No. 123, "Accounting
for Stock-Based  Compensation".  The Company applies Accounting Principles Board
Opinion No. 25 and related interpretations in accounting for its Option Plan and
Program.  Had compensation for the Company's stock options been determined based
on the fair value at the grant dates, consistent with the provisions of SFAS No.
123, the  Company's  consolidated  net loss and loss per common share would have
been adjusted to the pro forma amounts indicated below:

                                              For the Years
                                            Ended December 31,
                                 ---------------------------------------
                                      2002                     2001
                                 --------------          ---------------
<    Net Loss:
        As reported              $  (1,837,737)          $  (19,308,665)
        Pro forma                   (1,837,737)             (19,488,000)



 Basic and diluted loss per common share:

                                              For the Years
                                            Ended December 31,
                                 ---------------------------------------
                                      2002                     2001
                                 --------------          ---------------

        As reported              $       (0.06)          $        (1.17)
        Pro forma                        (0.06)                   (1.17)



The fair value of each  option  grant is  estimated  on the grant date using the
Black-Scholes option pricing model with the following assumptions for grants:

                                              For the Years
                                            Ended December 31,
                                 ---------------------------------------
                                      2002                     2001
                                 --------------          ---------------
        Volatility                     n/a                     111%
        Interest rate                  n/a                     5.0%
        Dividends                      n/a                      --
        Expected term                  n/a                       5


                                      F-15
<PAGE>


12. STOCK WARRANTS:
    --------------

    The following table summarizes common stock warrant activity:

                                                            Exercise
                                                     Shares            Prices
                                                   ----------       ------------
Warrants outstanding as of January 1, 2000          2,869,000       4.00 - 7.20
    Granted                                         2,221,339       1.06 - 8.28
    Cancelled                                      (2,797,000)      4.00 - 10.00
                                                   ----------       ------------

Warrants outstanding as of December 31, 2000        2,293,339       1.06 - 8.28
    Granted                                         1,421,000       0.25 - 2.50
    Cancelled                                        (463,141)      1.06 - 10.00
                                                   ----------       ------------

Warrants outstanding as of December 31, 2001        3,251,198
    Granted                                         1,750,250       0.02 - 0.05
    Cancelled                                         629,672       1.25 - 4.00
                                                   ----------       ------------

 Warrants outstanding as of December 31, 2002       4,389,635       0.02 - 3.00


                                      F-16
<PAGE>

13. SUBSEQUENT EVENTS:
    -----------------

Porter Capital Corporation (PCC)

As of October 10, 2003,  PCC's Senior Loan  balance due was  $607,351.45  due to
accrued  interest,  finance charges and minimum monthly fees. On April 12, 2004,
PCC  agreed to reduce  the  Principal  Amount  due  under the  Senior  Line from
$607,351.45  to  $300,000.  Further,  the Senior Loan balance will now be due on
April 15. 2005 and will not bear  interest  until after its  maturity  date,  at
which time the  interest  will be payable  monthly at the rate of 18% per annum.
The loan  balance will be paid down out of the proceeds of the sale of the stock
held by PCC.

New Porter Capital Loans

On April 12,  2004,  PCC  agreed to extend to  Paradise  a line of credit in the
amount of five  million  dollars  upon its normal  business  terms for  accounts
receivable financing for the purposes of acquisitions by Paradise.

Private Investor Loans

On  December  1, 2003,  one of the April  2002  investors  loaned an  additional
$14,500 and the warrants on the loan were  increased  to 500,000  shares and the
exercise price reduced to $0.002 per share.

New Mezzanine Loans

On April 12, 2004,  Porter Capital  Corporation  agreed to provide  $40,000 as a
secured loan for two years at an interest rate of 10% per annum. The interest is
payable quarterly in arrears,  in cash or stock, at the lenders option. PCC will
receive  warrants  to  purchase  500,000  shares  of the  company's  stock at an
exercise price of $0.002 per share. The warrants expire four years from the date
of issuance. This loan was provided for the company's working capital needs. All
of these funds have already been advanced to the Company.

On April 12, 2004, MME, Inc. agreed to provide $80,000 as a secured loan for two
years at an interest rate of 10% per annum. The interest is payable quarterly in
arrears,  in cash or stock, at the lenders option.  PCC will receive warrants to
purchase  1,000,000 shares of the company's stock at an exercise price of $0.002
per share.  The warrants expire four years from the date of issuance.  This loan
was provided for the company's working capital needs.

On April 12, 2004, MME, Inc. agreed to provide up to an additional $880,000 as a
secured loan for two years at an interest rate of 10% per annum. The interest is
payable quarterly in arrears, in cash or stock, at the lenders option. MME, Inc.
will receive warrants to purchase  1,000,000 shares of the company's stock at an
exercise price of $0.002 per share. The warrants expire four years from the date
of issuance. This loan is being provided for the company's working capital needs
and to fund acquisitions for Paradise.

Subsequent  to  December  31,  2002,  and  through  April 30,  2004,  18,250,000
additional  shares of common  stock were issued to  consultants  for services in
2003 and were valued at approximately  $72,550. This amount has been recorded in
operations for fiscal year 2003.

                                      F-17


<PAGE>

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

On May 10, 2002, the Company terminated  Rothstein,  Kass & Company, P.C. as its
principal  accountant.  The Company appointed Hein + Associates as its principal
accountant.  This change in the principal  accountants was approved by the Board
of Directors of Paradise on May 13, 2002.

We are not, nor have we ever been involved in any dispute or disagreement  about
any  matter  of  accounting   principles  or  practices,   financial   statement
disclosure,  audit scope or procedures, or any reportable events with Rothstein,
Kass & Company, P.C.

On October 3, 2003, we retained James E.  Scheifley & Associates,  P.C. to audit
the Company financial records for fiscal years ending 2001 and 2002.

James E. Scheifley & Associates,  P.C.'s report on the financial  statements for
December 31, 2002,  contained no adverse  opinion or disclaimer of opinion,  nor
was modified as to  uncertainty,  audit scope, or accounting  principles,  other
than it's "going concern" disclaimer.

ITEM 8A.  CONTROLS AND PROCEDURES.

(a) Disclosure controls and procedures. Based upon an evaluation,  supervised by
Kelly T. Hickel, our Chairman and Principal Executive and Accounting Officer, of
the  effectiveness  of the design and operation of our  disclosure  controls and
procedures  concluded that our disclosure controls and procedures were effective
as of December 31, 2002.

(b) Internal  controls.  During the year ended December 31, 2002,  there were no
significant changes in our internal accounting controls or in other factors that
materially affected our internal controls over financial reporting.


                                       10
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT

         Our directors,  executive  officers and key executives of our operating
groups at the time of filing are as follows:

<TABLE>
<CAPTION>
---------------------------- ------ ------------------------ -------------------------------
           NAME               AGE    POSITION WITH COMPANY             HELD SINCE
---------------------------- ------ ------------------------ -------------------------------
<S>                          <C>    <C>                      <C>
Kelly Hickel                 61     Chairman                 February  2001
---------------------------- ------ ------------------------ -------------------------------
---------------------------- ------ ------------------------ -------------------------------
Richard P. Rifenburgh        71     Vice-Chairman            July  2000
---------------------------- ------ ------------------------ -------------------------------
---------------------------- ------ ------------------------ -------------------------------
Winston "Buzz" Willis        57     Director                 November  2002
---------------------------- ------ ------------------------ -------------------------------
</TABLE>


         KELLY HICKEL was appointed as our Chairman in February  2001.  From May
1999 until we merged with iball Media,  Inc. in July 2001,  he has served as the
Chairman and Chief  Executive  Officer of iball Media,  Inc. Mr. Hickel was also
the turn-around President to Miniscribe Corp., a troubled Fortune 500 disk drive
manufacturer,  from 1989 to 1990.  Mr.  Hickel has been  building  products  and
services  based on the Internet  since 1981. He was the President of the Maxwell
Technology  Information  Systems Group from 1993 until 1997.  Mr. Hickel was the
Chairman  of ELS, a  telecommunications  company,  from May 1997 until May 1999,
when he was the Chairman of Interstate Services, a real estate services company.
Mr. Hickel is a graduate of Indiana University, with a Bachelors of Science.

         RICHARD P.  RIFENBURGH has served as our Vice Chairman since July 2001.
He has served as Chairman  of the Board of Moval  Management  Corporation  since
1968.  Moval  Management  Corporation  is  a  management  consulting  firm  that
specializes  in restoring  companies in financial  distress.  From February 1989
until  May 1991 Mr.  Rifenburgh  served  as  Chairman  of the  Board  and  Chief
Executive Officer of Miniscribe Corporation, a publicly-held holding company and
manufacturer of computer disc drives. From 1987 to 1990 he was a General Partner
at Hambrecht and Quist Venture Partners,  a venture capital  organization.  From
1988 to 1990 he was  Chairman  of the  Board  and  Chief  Executive  Officer  of
Ironstone Group, Inc., and a publicly-held company. Since 1996, he has served on
the Board of Directors of Tristar Corporation,  a publicly-held  manufacturer of
cosmetics and fragrances  that filed for  bankruptcy in 2001.  From 1992 to 2001
Mr. Rifenburgh served as a director of Concurrent Computer Corporation, which is
a publicly  reporting  company.  Mr. Rifenburgh is also Chairman of the Board of
Directors  of St.  George  Crystal  Ltd., a major  manufacturer  of fine quality
crystal products.

         WINSTON  "BUZZ" WILLIS,  who serves as CEO of All Access  Entertainment
Management Group,  Inc., a division of Paradise Music & Entertainment,  Inc., is
acknowledged  as a true pioneer and marketing  innovator in the music  industry.
After  graduating  from Case Weston  University in  Cleveland,  OH, Buzz's music
industry career enjoyed  significant growth from its humble beginning as a local
promoter  for MGM  Records.  From there,  he joined the staff of RCA Records and
signed several artists who went on to record gold and platinum records. He holds
the  distinction of being the youngest Vice President at RCA and was the founder
of the Black Music  Division  of RCA  Records  where,  under his  guidance,  the
careers of Jose Feliciano and the Main Ingredient  were nurtured.  From the late
1970s to the early  1980s,  he served as Senior V.P. of American  operations  of
Phillips  Electronics Corp. (parent of Polydor/Polygram  Records).  At Phillips,
Buzz was instrumental in the acquisition of the Mercury and Verve labels. A true
trailblazer,  Buzz  accepted  the  position  of  CEO of CTI  Records.  Here,  he
propelled the career of jazz greats such as George  Benson and Esther  Phillips,
and was personally  responsible  for the  industry's  first platinum jazz album,
"Mr.  Magic" by Grover  Washington,  Jr. He introduced  the concept of marketing
Black artists,  such as Kool & The Gang,  Sister Sledge and Alexander O'Neal, to
mainstream audiences and treating them similarly to White artists. In 1996, Buzz
launched One World  Entertainment in partnership with The Sanctuary Group, which
provided services such as artist management,  tour direction,  record production
and concert tour promotion. Buzz is a member of the R&B Hall of Fame.


                                       11
<PAGE>

Compliance with Section 16(a) of the Exchange Act:

         Section 16(a) of the  Securities  Exchange Act of 1934, as amended (the
"Exchange Act") requires our officers and directors and holders of more than 10%
of our common stock (collectively "Reporting Person") to file reports of initial
ownership,  ownership  and  changes in  ownership  of the common  stock with the
Securities and Exchange Commission within certain time periods and to furnish us
with copies of all such  reports.  Based solely on our review of copies and such
reports   furnished  to  us  by  such  Reporting   Persons  or  on  the  written
representations  of such  Reporting  Persons that no reports on Form 4 or 5 were
required,  we believe that, during the fiscal period ended December 31, 2002 all
of the Reporting Persons complied with their Section 16(a) filing requirements.

ITEM 10. EXECUTIVE COMPENSATION

Summary Compensation Table

         The following table sets forth all  compensation  awarded to, earned by
or paid by Paradise  or its  subsidiaries  during each of the last three  fiscal
years to Kelly Hickel, our current Chairman.

<TABLE>
<CAPTION>
                               ANNUAL COMPENSATION              LONG TERM COMPENSATION AWARDS
------------------------ --------- ------------- -------------- -------------- --------------- -------------------
NAME/PRINCIPAL POSITION  YEAR      SALARY ($)    BONUS ($)      RESTRICTED     SECURITIES      ALL OTHER
                                                                STOCK AWARDS   UNDERLYING      COMPENSATION
                                                                               OPTIONS
------------------------ --------- ------------- -------------- -------------- --------------- -------------------
<S>                      <C>       <C>           <C>            <C>            <C>             <C>
Kelly Hickel  (1)        2001      $90,579       ---            ---            ---             ---
Chairman since           2002      ---           ---            ---            ---             $53,915
February 2001            2003                                                                  $45,095
------------------------ --------- ------------- -------------- -------------- --------------- -------------------
</TABLE>

(1) In April,  2002,  the Board of Directors  approved the issuance of up to ten
million  shares  of  the  Company's  common  stock  to  Kelly  Hickel,   or  his
designee(s),  as payment of compensation  due at a price equal to the average of
the market  value for the  thirty  days prior to the time the stock is issued as
payment.

Option Grants in Fiscal Period January 1, 2002 through December 31, 2002:

None

Aggregate Option/SAR Exercises; Fiscal 2002 Year End Option/SAR Values:

No options were exercised during the fiscal year ended December 31, 2002.

Directors' Compensation:

         Pursuant  to our  Outside  Directors  Program,  directors  who  are not
employees ("Outside Directors") are entitled to receive non-qualified options to
purchase 5,000 shares for each year of service,  payable in advance on July 1 of
each year,  at an  exercise  price  equal to the closing bid price of the common
stock on the first  trading  day of each fiscal  year.  No grants have been made
under the Outside Directors Program since July 1, 2000.

         Outside Directors are entitled to receive compensation in the amount of
$18,000 per annum,  100% payable in stock. Such amounts are payable quarterly in
arrears. For the fiscal period ended December 31, 2002, persons who were Outside
Directors during such fiscal year did not receive any shares of common stock.

         All directors are  reimbursed for certain  expenses in connection  with
attendance at Board of Directors and Committee meetings. Other than with respect
to reimbursement of expenses, directors who are employees or officers or who are
associated with us do not receive  compensation for service as directors.  We do
not have any employment agreements with any of the Named Executive Officers.


                                       12
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following  OWNERSHIP table sets forth (2) certain information as of
December  31,  2003  regarding  the share  ownership  of the company by (i) each
person who is known to us to be the record or beneficial owner of more than five
percent (5%) of our common stock;  (ii) each  director and each Named  Executive
Officer; and (iii) all directors and executive officers as a group.

<TABLE>
<CAPTION>
------------------------------------------------------------ ----------------------------------- ---------------------------
          NAME AND ADDRESS OF BENEFICIAL OWNER (1)             AMOUNT AND NATURE OF BENEFICIAL     % OF OUTSTANDING SHARES
                                                                        OWNERSHIP (2)                      OWNED (3)
------------------------------------------------------------ ----------------------------------- ---------------------------
NAMED EXECUTIVE OFFICER AND DIRECTORS:
------------------------------------------------------------ ----------------------------------- ---------------------------
------------------------------------------------------------ ----------------------------------- ---------------------------
<S>                                                                     <C>                                 <C>
Kelly Hickel                                                            13,264,571(4)                       28.7%
------------------------------------------------------------ ----------------------------------- ---------------------------
Richard Rifenburgh                                                         439,169                           1.0%
------------------------------------------------------------ ----------------------------------- ---------------------------
Winston Willis                                                            3,250,000                          8.1%
------------------------------------------------------------ ----------------------------------- ---------------------------
ALL NAMED EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP                    16,983,740                         37.8%
(3 PERSONS)
------------------------------------------------------------ ----------------------------------- ---------------------------
------------------------------------------------------------ ----------------------------------- ---------------------------
BENEFICIAL OWNERS IN EXCESS OF 5% (OTHER THAN NAMED
EXECUTIVE OFFICERS AND DIRECTORS):
----------------------------------------------------------- ------------------------------------ ---------------------------
Porter Capital Corporation                                              7,125,000 (5)                       17.7%
------------------------------------------------------------ ----------------------------------- ---------------------------
Michael J. Renna                                                          3,500,000                          8.7%
------------------------------------------------------------ ----------------------------------- ---------------------------
</TABLE>

* less than 1%

(1) The address of each  beneficial  owner  identified  is c/o Paradise  Music &
Entertainment,  Inc., 122 East 42nd Street,  New York, NY 10017,  except for (i)
Michael  Renna,  whose address is PO Box 442, New York, NY 10004 and (ii) Porter
Capital Corporation, which is 2112 First Avenue North, Birmingham, AL 10168.

(2) Unless otherwise  indicated,  we believe that all persons named in the table
have sole voting and investment power with respect to all shares of common stock
beneficially  owned by them.  A person is deemed to be the  beneficial  owner of
securities  that can be acquired by such person  within 60 days of December  31,
2003 upon the exercise of options, warrants or convertible securities.

(3) Each beneficial owner's  percentage  ownership is determined by assuming (i)
that options,  warrants or convertible  securities  that are held by such person
(but not those held by any other person) and that are exercisable within 60 days
of December 31, 2003 have been  exercised  and  converted,  and (ii)  40,096,358
shares of common stock were  outstanding,  before any  consideration is given to
such options, warrants or convertible securities.

(4) Includes  850,000 shares issued in 2003 and 9,150,000 shares issued in 2004.
These shares were approved for issuance on April 9, 2002.

(5) Includes securities held by Porter Capital Corporation (PCC) as follows: (i)
common  stock,  (ii)  warrants to purchase  275,000  shares of common stock at a
price of $.05 per share,  (iii)  warrants to purchase  500,000  shares of common
stock at a price of $.02 per share, and (iv) warrants to purchase 500,000 shares
of common  stock at a price of $0.002  per  share.  This  amount  also  includes
4,000,000  shares  which PCC had the right to acquire in 2002 but which were not
issued until 2004.

Information  contained  herein with regard to stock  ownership was obtained from
our stockholders' list, filings with governmental authorities, or from the named
individual  nominees,  directors  and  officers.  The persons  identified in the
foregoing table disclaim  beneficial  ownership of shares owned or held in trust
for the benefit of members of their  families or entities with which they may be
associated.


                                       13
<PAGE>

PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

   (a)   Exhibits

Exhibit
Number                            Description
------------------------------------------------------------------

3.1     Certificate of Incorporation of the Registrant (1)
3.2     Amended and Restated By-Laws of the Registrant (1)
4.1     Specimen of Registrant's Common Stock Certificate (1)
4.2     Specimen of Registrant's Warrant Certificate (1)
4.3     Form of Representative's Warrant Agreement including form of Warrant (1)
4.4     Form of Warrant  Agreement  between  Registrant  and  Continental  Stock
        Transfer and Trust Company (1)
10.7    Form of The Registrant's 1996 Stock Option Plan (corrected version) (1)
21.1    Subsidiaries  of Registrant (2)
31      Certification  of Kelly Hickel under Rule 13a-14(a) (3)
32      Certification of Kelly Hickel (3)

         (1) Incorporated by reference to the Company's  Registration  Statement
on Form SB-2 (Reg. No. 333-13941) which was declared effective by the Securities
and Exchange Commission on January 22, 1997.

         (2)  Incorporated by reference to the Company's  Current Report on Form
8-K filed on February 15, 2001.

         (3) Filed herewith.

                  (b) Reports on Form 8-K


                  o   Report  on Form  8-K  filed  with the SEC on May 17, 2001,
                      announcing a change in accountants.


                  o   Report  on Form  8-K  filed  with the SEC on May 11, 2004,
                      announcing new financing agreements.


                                       14
<PAGE>

                                   SIGNATURES

In accordance with the  requirements of the Securities  Exchange Act of 1934, as
amended,  the  registrant  caused  this report to be signed on its behalf by the
undersigned  thereunto duly  authorized,  in the City of New York,  State of New
York on June 8, 2004.


                                        PARADISE MUSIC & ENTERTAINMENT,  INC.


                                        By /s/ Kelly Hickel
                                        -------------------
                                        Kelly Hickel, Chairman

     In accordance  with the Exchange Act of 1934,  as amended,  this report has
been signed below by the following  persons on behalf of the  registrant  and in
the capacities and on the dates below.

     Signature                      Title                         Date


/s/ KELLY HICKEL                    Chairman of the Board         June 8, 2004
----------------
Kelly Hickel


/s/ RICHARD P. RIFENBURGH           Vice Chairman                 June 8, 2004
-------------------------
Richard P. Rifenburgh


/s/ WINSTON WILLIS                  Director                      June 8, 2004
------------------
Winston Willis