**SECURITIES
      AND EXCHANGE
      COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-KSB**


**x**  **ANNUAL
        REPORT PURSUANT TO SECTION l3 OR l5 (d) OF**
 **THE
        SECURITIES EXCHANGE ACT OF l934**
 
 **For
        the fiscal year ended December 31, 2004**
 
 **OR**
 **o**  **TRANSITION
        REPORT PURSUANT TO SECTION 13**
 **OR
        15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**


**For
      the transition period from ____________________ to
      ____________________**





**Commission
      file number 1-12635**


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





**PARADISE
      MUSIC & ENTERTAINMENT, INC.**


(Name
      of
      Small Business Issuer in its charter)





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





**122
                East 42****nd****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 RegisteredCommon
                Stock, par value $0.01 per share
            
            Over-the-counter





**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 past 12 months (or
      for such shorter period that the registrant was required to file such reports),
      and (2) has been subject to such filing requirements for the past 90 days.   Yes o No x





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant'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. o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o **** No x





The
      issuer had no revenues for the year ended December 31, 2004.





The
      aggregate market value of voting and non-voting common equity held by
      non-affiliates of the issuer on December 31, 2005 was approximately $288,000.
      On
      such date, the last sale price of issuer's common stock was $0.008. 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, 2005 there were 58,496,358 shares
      of common stock outstanding.





**DOCUMENTS
      INCORPORATED BY REFERENCE:** None





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










**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, our change in focus with our business
      strategy, our ability to find, acquire, and integrate other businesses, and
      the
      high-risk nature of the music and entertainment business.




ITEM
      1.
      DESCRIPTION OF BUSINESS


GENERAL





Paradise
      Music & Entertainment, Inc. ("Paradise" or the "Company") is a diversified
      company which currently operates in the environmental testing and music and
      entertainment industries. In the past, we attempted to operate Paradise as
      a
      music and entertainment company focused on partnering with other companies
      to
      build their brands. Our strategy was to utilize music and events to marry
      marketing, technology and entertainment to connect our customers with their
      consumers. We intended to accomplish this by marketing sponsor-targeted
      entertainment projects, including the development and production of proprietary
      festivals, events and branding campaigns for corporate clients. The Company
      markets sponsor-targeted entertainment projects, including the development
      and
      production of proprietary festivals, events and branding campaigns for corporate
      clients. The Company is currently in negotiations for a music event for the
      2006
      season. In 2005, the Company was the producer of the American Legacy Magazine
      10 th Anniversary Gala. As discussed below, the company shifted its focus during
      2004
      to include a new acquisition strategy (beginning with an acquisition in the
      environmental testing industry) as well as pursuing the existing entertainment
      strategy. The
      Company has established a plan of operation for 2005 and 2006 based on the
      continued effort in the entertainment sector and the successful acquisition
      of
      Environmental Testing Laboratories, Inc.





2005
      ACQUISITION OF ENVIRONMENTAL TESTING LABORATORIES, INC.





On
      February 14, 2005, ETL Acquisition Corp. (“ETL”), a Delaware corporation and a
      wholly owned subsidiary of Paradise, completed the acquisition of all or
      substantially all of the assets and business of Environmental Testing
      Laboratories, Inc.  Environmental Testing Laboratories, Inc. is a privately
      held company based in Farmingdale, New York, and engaged in the business of
      environmental testing (as further described in the Current Report on form 8-K
      filed with the United States Securities and Exchange Commission (the "SEC")
      on
      February 18, 2005 and the Asset Purchase Agreement filed as Exhibit 2.1 to
      that
      Current Report and incorporated herein by this reference). ETL acquired assets
      consisting primarily of accounts receivable, machinery and laboratory equipment
      of Environmental Testing Laboratories, Inc. valued at $1,915,463 at the time
      of
      the closing. At closing ETL paid for these assets by assuming liabilities of
      $761,820 from Environmental Testing Laboratories, Inc. and agreeing to assume
      additional liabilities of $1,153,643 from affiliate companies of Environmental
      Testing Laboratories, Inc.. The $761,820 assumed directly from Environmental
      Testing Laboratories, Inc. consisted of approximately $530,000 of accounts
      payable, approximately $170,000 of tax obligations due to various taxing
      authorities, and approximately $63,000 in judgments entered against
      Environmental Testing Laboratories, Inc.. The additional liabilities of
      $1,153,643 from affiliate companies of Environmental Testing Laboratories,
      Inc.
      which ETL agreed to assume would be determined by ETL in the future at its
      sole
      discretion; however, ETL agreed to pay a minimum of $250,000 of this $1,153,643
      within thirty days of the closing. On February 24, 2005 ETL made a payment
      of
      $250,000 in cash against the additional liabilities.





On
      December 19, 2005 the parties agreed to amend the terms of the purchase as
      follows: In consideration for the purchased assets, the purchase price was
      reduced to $1,274,079, which ETL agreed to pay at closing by the assumption
      of
      accounts payable and accrued expenses in the amount of $546,441, the assumption
      of additional liabilities from affiliate companies of Environmental Testing
      Laboratories, Inc. in the amount of $671,638, and the issuance of preferred
      shares as noted below.


As
      part
      of the consideration for the acquisition, Paradise agreed to issue 280,000
      shares of its Series B Preferred Stock to Environmental Testing Laboratories,
      Inc. The parties agreed to amend the terms of the purchase, with effect from
      the
      date of the original agreement, to provide for the issuance by Paradise of
      280,000 shares of its Series A Preferred Stock, rather than its Series B
      Preferred Stock. Each share of Series A Preferred Stock is convertible, at
      the
      option of the holder or of the Company, into ten (10) shares of Paradise common
      stock. The holders of shares of Series A Preferred Stock are entitled to receive
      an annual dividend of five cents per share, but do not receive a liquidation
      preference with respect to the Series A Preferred shares. The Series A Preferred
      Shares issued to Environmental Testing Laboratories, Inc. were valued at
      $56,000, based on the value of the Company's underlying common stock on the
      purchase date.





In
      conjunction with the transaction described above, ETL borrowed $500,000 from
      Capstone Business Credit LLC (“Capstone”) and executed a promissory note in that
      principal amount. The promissory note was secured by substantially all of the
      assets of ETL. The note bears interest at the rate of 24% per annum and is
      payable by ETL in 24 installments of $15,000 commencing on February 28, 2005
      until February 28, 2007, at which time the remaining unpaid principal and
      interest are due and payable (as further set forth in the Promissory Note filed
      as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February
      18, 2005 and incorporated herein by this reference). In addition, in connection
      with the asset acquisition, ETL entered into a Discount Factoring Agreement
      with
      Capstone whereby Capstone agreed to advance ETL an amount equal to seventy-five
      (75%) percent of certain of its accounts receivable. Capstone will remit payment
      to ETL upon its acceptance of the assignment of each account receivable (as
      further set forth in the Discount Factoring Agreement filed as Exhibit 10.2
      to
      the Company’s Current Report on Form 8-K filed on February 18, 2005 and
      incorporated herein by this reference). Paradise Music & Entertainment, Inc.
      and Kelly Hickel, personally, and as the President and CEO of Paradise Music
      & Entertainment, Inc., have jointly and severally guaranteed the faithful
      and timely performance and satisfaction by ETL of its obligations under both
      the
      promissory note and the Discount Factoring Agreement, including without
      limitation the payment of all amounts when due under such agreements (as further
      set forth in the Guarantee filed as Exhibit 10.3 to the Company’s Current Report
      on Form 8-K filed on February 18, 2005 and incorporated herein by this
      reference).





ETL
      is
      committed to providing high quality data to its clients by adhering to approved
      methodologies and all mandated QA/QC protocols. Company analysts are seasoned
      professional with years of environmental experience. Using state-of-the-art
      instrumentation with powerful computer hardware and software, ETL provides
      the
      most current and competitive pricing and services to match the customers’ data
      quality objectives.





ETL
      provides the following services:





·
            RCRA
                (Resource Conservation Recovery Act) and Hazardous Waste
                Characterization





·
            TCLP
                (Toxic Characteristic Leaching Procedure)
                Analyses





·
            Underground
                Storage Tank Analytical Assessment





·
            Landfill/Ground
                Water Monitoring





·
            Pesticide
                and Herbicide Testing in Soil and
                Groundwater





·
            NPDES
                (National Pollution Discharge Elimination System) Effluent Characteristics
                Analysis





2


·
              PCB
                  (Polychlorinated biphenyls) and PCB Congener
                  Analysis
 
 ·
              HUD
                  Lead Abatement Testing
 
 ·
              Fingerprint
                  Categorization


·
            Petroleum
                Analyses





·
            Client
                Specific Deliverables





·
            Electronic
                Data Deliverables





As
      indicated by the acquisition of Environmental Testing Laboratories, Inc.,
      Paradise has launched a new strategy in order to maximize the opportunity for
      growing the Company into a profitable operating company. That strategy is to
      acquire companies that are, or can be, operated profitably in three vertical
      business areas: Distribution, Services and Manufacturing. The Company’s
      management has operated manufacturing and service companies in a variety of
      fields for over 35 years.





Based
      on
      our acquisition of Environmental Testing Laboratories, Inc. the Company is
      going
      to focus in the near term on acquiring additional businesses in the
      environmental testing industry. In these scenarios, the Company expects to
      improve the operational performance and the asset utilization of the acquired
      entities, if any are acquired, via both horizontal and vertical expansion.
      In
      each scenario, the Company plans to increase its revenues while holding overhead
      and capitalization costs to a minimum by integrating back office, front office
      and field systems, routes and personnel. We cannot guarantee, however, that
      we
      will be able to find entities or businesses in this field that fit within our
      strategy, or that, if we do find such businesses, we will be able to acquire
      them.





We
      were
      incorporated in the State of Delaware on July 18, 1996. Our principal executive
      offices are located at 122 East 42 nd Street,
      Suite 2900, New York, NY 10168, and our telephone number is 888-565-3259.





COMPETITION





Music
      Industry





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.





Environmental
      testing industry





Regarding
      our recently acquired business and its competitive position in the industry,
      it
      should be noted that ETL operates one of approximately 7,639 testing
      laboratories in the United States, according to the listings from the
      Environmental Yellow Pages. These laboratories range from small dedicated local
      laboratories to large national labs that receive and deliver testing for
      materials on a national basis. The services provided include all those listed
      above as well as others not provided by ETL from mold detection and testing
      to a
      variety of water testing and other analytical services. ETL competes, primarily,
      in the regional northeastern US market sector. There many labs in this regional
      marketplace. ETL succeeds because of its long relationships with customers.
      ETL
      was founded in 1988 and has been servicing many of its customers since that
      time. ETL’s customers include petroleum companies, contractors, environmental
      consulting firms and a variety of utilities and municipalities.





ETL
      maintains the necessary permits and licenses with the local municipalities,
      a
      number of states where it does business and the regional and national
      environmental authorities as is necessary. The ETL business is relatively stable
      with only small fluctuations based on seasonality. ETL competes primarily on
      service, not price. Its reputation allows it to provide high quality, responsive
      service to a select group of customers, rather than the low-cost price-based
      commodity services provided by many of the national labs. While there is some
      overlap, ETL’s customers prefer to deal with someone they know and trust in this
      critically important piece of their own business activities.


EMPLOYEES/INDEPENDENT
      CONTRACTORS





During
      2004, we had two executive officers and no other employees. Mr. Hickel continues
      as Chairman of the Board and fills several executive positions. Mr. Richard
      Rifenburgh is the non-executive Vice Chairman, a member of the Board of
      Directors and the Chairman of the audit committee. Mr. Winston Willis serves
      as
      a member of the Board of Directors, Vice President of Paradise and President
      of
      All Access Entertainment Group, Inc., a subsidiary of the Company. These
      individuals serve under informal consulting agreements; however none of them
      are
      employed full time by the Company. 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.





Environmental
      Testing Laboratories, Inc., our recent acquisition and newest subsidiary,
      provides traditional benefits to its 35 employees. Many of the employees have
      been with the Company since its founding in 1988.





One
      of
      ETL’s main customers is The Tyree Company, a provider of services in the retail
      petroleum sector. Subsequent to the Company’s acquisition of ETL, The Turnaround
      Group, LLC acquired a 25% ownership of The Tyree Company. Mr. Hickel is a member
      of The Turnaround Group, LLC, and is also on the Board of Directors and an
      employee of The Tyree Company.





ITEM
      2.
      DESCRIPTION OF PROPERTY





We
      utilize space occupied by Total Communications Group, Inc. in New York City
      at
      122 E. 42 nd Street.
      We use the space on a periodic basis, but we do not pay rent, having reached
      an
      agreement with Total Communications Group in 2002 to utilize space in exchange
      for 1.2 million shares of our common stock.





Environmental
      Testing Laboratories, Inc., our recent acquisition, utilizes rented facilities
      at 208 Route 109 in Farmingdale, New York. The landlord is Tyree Realty, Inc.
      and is not an affiliate of the Company.


3


PART
      II





ITEM
      5.
      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS





Market
      Information:





Our
      common stock traded on the Nasdaq Small Cap Market from January 22, 1997 through
      March 29, 2002 under the symbol "PDSE". Beginning May 2002, the only bid and
      ask
      quotations for our common stock were those provided by market
      makers and other dealers who listed such quotations with the National Daily
      Quotation Service, commonly referred to as the interdealer "Pink
      Sheets." The high
      and low bid prices of our common stock (as reported by Nasdaq (and, after May
      2002, the pink sheets, as reported by the National Quotation Bureau)) were
      as
      follows. These quotations reflect inter-dealer prices, without retail mark-up,
      mark-down or commission and may not represent actual transactions.




Period
              
              High
              
              Low2005
              01/01/05
                  - 03/31/05
              $
              0.037
              
              $
              0.01404/01/05
                  - 06/30/05
              $
              0.025
              
              $
              0.01507/01/05
                  - 09/30/05
              $
              0.023
              
              $
              0.00610/01/05
                  - 12/31/05
              $
              0.023
              
              $
              0.0082004
              01/01/04
                  - 03/31/04
              $
              0.070
              
              $
              0.01904/01/04
                  - 06/30/04
              $
              0.080
              
              $
              0.03207/01/04
                  - 09/30/04
              $
              0.060
              
              $
              0.01010/01/04
                  - 12/31/04
              $
              0.052
              
              $
              0.0202003
              01/01/03
                  - 03/31/03
              $
              0.005
              
              $
              0.00103/31/03
                  - 06/30/03
              $
              0.020
              
              $
              0.00107/01/03
                  - 09/30/03
              $
              0.009
              
              $
              0.00210/01/03
                  - 12/31/03
              $
              0.017
              
              $
              0.002




The
      approximate number of holders of record of our common stock was 97 as of
      December 31, 2004. 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, except those
      dividends required to be paid on our Series A Preferred Stock, 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 on our common stock. The 280,000
      shares of Series A Preferred Stock issued in connection with the acquisition
      of
      Environmental Testing Laboratories, Inc. have a five cent per share per year
      cumulative dividend rate, payable from their date of authorization for issuance;
      however, as of December 31, 2005, the Company has paid no dividends on the
      shares of Series A Preferred Stock.




Equity
      Compensation Plan Information




Plan
                Category
            
            Number
                of Securities to be Issued upon Exercise of Outstanding options Warrants
                and rights
            
            Weighted-average
                Exercise price of Outstanding options Warrants and rights
            
            Number
                of securities Remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column
                (a))(a)
            
            (b)
            
            (c)Equity
                Compensation Plans Approved by security holdersEquity
                Compensation Plans Not approved by security holders
            
            -
                0
                -
            
            -
                0
                -
            
            2,009,083Total
            
            -
                0
                -
            
            -
                0
                -
            
            2,009,083





The
      Company filed a Form S-8 Registration Statement under the Securities Act of 1933 with
      respect to the
      Company’s 2001 Consultant Stock Option Plan on September 10, 2001. Five million
      shares were registered and awards were authorized to be made as Common Stock
      or
      options or warrants to purchase Common Stock under this Plan. The terms of
      the
      options and warrants are to be determined by the Board of Directors at its
      discretion. Such awards were authorized to be made only to Consultants who
      have
      provided bona fide services to the Company. The Board of Directors may suspend
      or terminate the
      plan at any
      time or from time to time, but no such action shall adversely affect the rights
      of a person granted an Award under this Plan prior to that date.





The
      Company filed a Form S-8 Registration Statement under the Securities Act of 1933 with
      respect to the
      Company’s 2002 Employee Stock Compensation Plan on February 25, 2002. Five
      million shares were registered and awards were authorized as grants of Common
      Stock to Employees, Consultants and/or Directors. The effective date of this
      Plan is February 21, 2002. This plan shall expire on February 21, 2012, unless
      earlier terminated by the Board of Directors in accordance with provisions of the plan.





The
      plans
      are combined for the purpose of the Equity Compensation Plan table
      above.


4


**Recent
      Sales of Unregistered Securities**





During
      the fiscal year ended December 31, 2004, we issued the following securities
      which were not registered under the Securities Act of 1933, as amended: (i)
      10,650,000 shares issued in 2004 to consultants for services rendered in 2002
      were valued at $48,750 and were accrued in operations for fiscal year 2002;
      (ii)
      2,750,000 shares issued in 2004 to consultants for services rendered in 2004
      and
      expensed as part of operations in 2004 at a value of $6,500; (iii) 1,000,000
      shares issued in 2004 to outside directors and expensed as part of operations
      in
      2004 at a value of $2,000; (iv) 4,000,000 shares issued in 2004 for debt to
      equity conversion that was expensed in operations for fiscal year 2002; and
      (v)
      warrants authorized subsequent to December 31, 2003 through December 31, 2004
      as
      outlined in the following table:





SECURITIES
                SOLD
            
            DATE
                SOLD
            
            PURCHASER
            
            CONSIDERATION
            
            EXEMPTION
                CLAIMED
            
            TERMS
                OF CONVERSION OR EXERCISE
            
            USE
                OF PROCEEDSWarrants
                to Purchase 510,000 shares of common stock
            
            February
                3, 2004
            
            One
                Private Investor
            
            Purchase
                of $25,500 Aggregate principal Amount of Promissory notes
            
            Section
                4 (2) And Rule 506 Of Regulation D.
            
            Exercisable
                at a price of $0.010 per share
            
            Working
                CapitalWarrants
                to Purchase 500,000 shares of common stock
            
            April
                12, 2004
            
            Senior
                Lender
            
            Purchase
                of $40,000 Aggregate principal Amount of Promissory notes
            
            Section
                4 (2) And Rule 506 Of Regulation D.
            
            Exercisable
                at a price of $0.002 per share
            
            Working
                CapitalWarrants
                to Purchase 860,853 shares of common stock
            
            December
                16, 2004
            
            One
                Private Investor
            
            Purchase
                of $46,500 Aggregate principal Amount of Promissory notes
            
            Section
                4 (2) And Rule 506 Of Regulation D.
            
            Exercisable
                at a price of $0.002 per share
            
            Working
                Capital





We
      made
      all of the offers and sales referred to above in reliance on the exemption
      from
      registration afforded by Section 4(2) of the Securities Act. In most cases,
      the purchaser of the securities was either Mr. Kelly Hickel, a director and
      officer of the Company, or was a friend or business associate of Mr. Hickel.
      No
      general solicitation or advertising was conducted in connection with any of
      the
      sales, and all of the purchasers had access to the same kind of information
      that
      would be made available to them in a registration statement under the Securities
      Act, in that the purchasers were given copies of the Company's reports and
      statements filed under the Securities Exchange Act; and were given a
      disclosure document describing the Company and its business; and conducted
      their own "due diligence" investigation of the Company.  Each purchaser
      signed a subscription agreement in which such person represented that he or
      she
      was acquiring the debentures for investment and without a view to distribution,
      that he or she had knowledge and experience in financial matters, and that
      he or
      she had been given an opportunity to have access to information about, and
      to
      ask questions of, officers of the Company.




5


ITEM
      6.
      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION





Paradise
      Music & Entertainment, Inc. ("Paradise" or the "Company") is a diversified
      company which currently operates in the environmental testing and music and
      entertainment industries. The
      Company has established a PLAN OF OPERATION for 2005 and 2006 based on the
      continued effort in the entertainment sector and the successful acquisition
      of
      Environmental Testing Laboratories, Inc.





In
      the
      entertainment space, Mr. Willis will continue to pursue specific projects that
      can, it is believed, generate profits and positive cash flow. It is very
      challenging since the Company is unwilling and/or unable to provide the
      financing for these projects. Projects that require investment will be based
      on
      the participation of outside investors. These investments may be designed as
      partnership on a participation basis, or other arrangements that are mutually
      satisfactory to both the Company, Mr. Willis and the investors. A number of
      these projects are currently under discussion and/or negotiations. It is not
      clear when or if these projects will come to completion.





Regarding
      the environmental testing space, the PLAN OF OPERATION for 2005 is to a)
      stabilize the financial management and reporting of ETL b) to complete the
      required audits of ETL’s financial performance and to consolidate those with the
      Company’s financial reporting c) manage the cash flow d) increase the marketing
      activities of ETL e) identify additional acquisition targets and f) prepare
      to
      replace the high cost bridge financing used to make the acquisition. It is
      believed that the combined cash flow of the Company’s businesses will be
      adequate to support its operations for 2005. The only change in the number
      of
      employees is expected to be those needed by ETL to grow its business.





In
      2006
      the PLAN OF OPERATION is to a) expand the ETL business by 10% or more through
      increased marketing b) secure much more reasonable financing to replace the
      expensive bridge financing; c) begin servicing and/or reducing/settling the
      Company’s previously acquired debt that was unrelated directly to the ETL
      acquisition; d) make one additional acquisition in the environmental testing
      laboratory sector; and e) identify at least one additional acquisition in other
      related market sectors. It is expected that acquisitions, if any, can be
      accomplished by a combination of asset-based borrowing, the issuance of notes
      and/or Preferred or Common Stock to the seller. There is no assurance any of
      the
      above contemplated plans can be accomplished.





If
      management is successful in the above PLAN OF OPERATION, the Company’s cash flow
      in 2005 and 2006 will be adequate to support its existing business and loan
      repayment obligations, as restructured and agreed with its lenders. Any
      additional funds that may be needed should be for the purpose of acquisitions.
      Any expected purchase of plant and equipment will be one of two categories.
      ETL
      expects to make modest upgrades of equipment and vehicles necessary to support
      its business and its possible expansion. Any other purchases of plant and
      equipment are expected to be the result of acquisitions, if any.





**Results
      of Operations**





Year
      Ended December 31, 2004 Compared to Year Ended December 31, 2003





There
      were no revenues from continuing operations for the year ended December 31,
      2004, just as there were no revenues for the year ended December 31, 2003.
      There
      was Other Revenue in the amount of $55,000 reported due to a payment of an
      accounts receivable item that had been written off as uncollectible in an
      earlier period. The loss in 2004 was $127,000 compared to a loss $97,000 in
      2003. The increase in loss was due to the expense incurred from warrants
      provided in exchange for financing agreements during 2004.





Paradise's
      marketing, selling, general and administrative expenses increased to $48,000
      for
      the year ended December 31, 2004, from $7,000 for the year ended December 31,
      2003, an increase of $41,000. The increase was due primarily to the consulting
      and due diligence fees prior to the acquisition of Environmental Testing
      Labs.





Net
      interest expense was $134,000 for the year ended December 31, 2004, compared
      to
      $90,000 for the year ended December 31, 2003. The increase of $44,000 was due
      to
      the expense incurred from warrants provided in exchange for financing agreements
      during 2004.


**Liquidity
      and Capital Resources**





Net
      cash
      used in operating activities for the year ended December 31, 2004, was $122,000.





Net
      cash
      provided by financing activities for the year ended December 31, 2004, was
      $117,000, which is substantially represented by proceeds from mezzanine
      financing arrangements. We had negative working capital of $5,000 and a
      stockholders' deficit of $7,528,632 at December 31, 2004.





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 security interest in all of the Company’s assets. As
      of December 31, 2004, the outstanding advance balance, including interest,
      was
      approximately $300,000. Advances from the lender bear interest at the higher
      of
      10.5% per annum or the prime rate plus 2.50%.





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 was due on April
      15, 2005 and would not bear interest until after its maturity date, at which
      time the interest was to 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 Company common
      stock held by PCC at such time or times as those shares may be sold. The Company
      agreed to deposit into escrow 15,000,000 shares of its common stock, which
      shares are to be delivered to PCC in the event that PCC is not able to realize
      $300,000 from the sale of such shares by April 15, 2005. On December 19, 2005,
      an agreement was reached waiving all current defaults and the Due Date of the
      Senior Loan Balance was revised to April 15, 2006. All obligations with respect
      to the Escrow Stock have been deleted in their entirety. Management has every
      reason to expect that a satisfactory renegotiation will take place at that
      time.




6




**New
      Mezzanine Loans**





On
      April
      12, 2004, PCC 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 received warrants to purchase 500,000
      shares of the company’s stock at a price of $0.002 per share. This loan was
      provided for the company’s working capital needs. All of these funds have
      already been advanced to the company. **** On
      November 30, 2005, an agreement was reached waiving all current defaults. ****





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. MME, Inc. received 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 lender's option. MME, Inc. 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 and will be issued as funds are advanced. The loan is to provide
      for
      the company’s working capital needs and to fund acquisitions.




**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. The report of our
      independent auditor contains a qualification that points out factors "raising
      substantial doubt about [our] ability to continue as a going concern." Since
      our
      inception, we have never been profitable before extraordinary items. We expect
      profitability in 2005, although there is no assurance that will happen. For
      the
      year ended December 31, 2004, we had a net loss of $127,000, compared to a
      net
      loss of $97,000 for the year ended December 31, 2003. We have substantially
      decreased our prior business operations and we had no income from our operating
      divisions and subsidiaries in 2004. 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, though
      we
      expect to report positive net income in 2005.




We
      believe we do have available funds sufficient to sustain our operations through
      the fourth quarter of 2005 as a result of our acquisition of Environmental
      Testing Laboratories, Inc. Our available funds generally consist of cash and
      the
      funding derived from our revenue sources: income related relating to music
      festivals, and in 2005, environmental testing. As of December 31, 2004, we
      had
      $100 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 expand our business. Even if we are able obtain additional financing
      it
      may not be sufficient to expand our current operations.





ITEM
      7.
      FINANCIAL STATEMENTS





See
      the
      index to our financial statements attached hereto.





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





Effective
      as of October 3, 2003, the Board of Directors approved the engagement of James
      E. Scheifley & Associates, P.C. to act as its certifying accountant.





James
      E.
      Scheifley & Associates, P.C.’s report on the financial statements for
      December 31, 2004, contained no adverse opinion or disclaimer of opinion, nor
      was modified as to uncertainty, audit scope, or accounting principles, other
      than its “going concern” paragraph.





On
      May
      18, 2004, Hein & Associates LLP formally notified the Company that it had
      resigned as the Company’s certifying accountant. The Company had engaged Hein
& Associates LLP to audit its financial statements for the fiscal year ended
      December 31, 2001. However, this audit was never completed due to the lack
      of
      capital required to complete the process. During the two most recent fiscal
      years, and subsequent interim periods, there were no disagreements with Hein
      & associates on any matter of accounting principles or practices, financial
      statement disclosure, or auditing scope or procedure, which disagreements,
      if
      not resolved to the satisfaction of Hein & Associates would have caused it
      to make reference to such disagreement in its reports.





On
      May
      24, 2005 the Company signed an engagement letter with Tinter Scheifley Tang,
      LLP
      to act as its certifying accountants





ITEM
      8A.
      CONTROLS AND PROCEDURES.





(a)
      Disclosure controls and procedures. Based upon an evaluation, supervised by
      Kelly Hickel, our Chief Executive Officer and Principal 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, 2004.





(b)
      Internal controls. During the year ended December 31, 2004, there were no
      significant changes in our internal accounting controls or in other factors
      that
      materially affected our internal controls over financial
      reporting.


7


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:








**Name**
            **Age**
            **Position
                with Company**
            **Held
                Since**Kelly
                T Hickel
            63
            Chairman
            February
                2001Richard
                P. Rifenburgh
            73
            Vice-Chairman
            July
                2001Winston
                ‘Buzz’ Willis
            59
            Director
            November
                2002





KELLY
      T.
      HICKEL was appointed as our Chairman in February 2001. From May 2000, 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. During his tenure, Maxwell
      was
      the 9th. best performing stock on NASDAQ in 1996. Mr. Hickel was the Chairman
      of
      Interstate Sweeping from 1997 until March, 1999. Mr. Hickel was the Chairman
      of
      EIS, a telecommunications company, from May 1999 until May 2000. 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. From 1996 to 2002 he 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 subsidiary 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.




Mr.
      Hickel fills the executive roles of President, Chief Executive Officer,
      Treasurer and Secretary. Mr. Willis serves as Vice President of the Company.
      Mr.
      Willis is also President of one of the Company’s subsidiary, All Access
      Management Group, LLC.





**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 SEC within
      certain time periods and to furnish us with copies of all such reports. **** These
      forms include (i) Form 3, which is the Initial Statement of Beneficial Ownership
      of Securities, (ii) Form 4, which is a Statement of Changes in Beneficial
      Ownership, and (iii) Form 5, which is an Annual Statement of Changes in
      Beneficial Ownership. Our Reporting Persons include Mr. Kelly T. Hickel, Mr.
      Richard P. Rifenburgh, and Mr. Winston "Buzz" Willis, all of whom are directors
      and/or executive officers of the Company, and the Hickel Living Trust, which
      holds more than 10% of our common stock, and its trustees.  Based on our
      review of our files and of filings made with the SEC, we believe that none
      of
      the Reporting Persons has filed any of the reports required under Section 16(a).
      Mr. Hickel became a director and executive officer of the Company in February
      2001; Mr. Rifenburgh became a director in July 2001; and Mr. Willis became
      a
      director in November 2002. Based on our review of our files, in addition to
      the Initial Statement of Beneficial Ownership (Form 3) that Mr. Hickel did
      not
      file upon becoming a director, he did not file Statements of Changes in
      Beneficial Ownership (Forms 4) to report his acquisition of an aggregate of
      1,170,299 shares in connection with our acquisition of iBall Media, Inc. in
      July
      2001; his acquisition of 500,000 shares of common stock in March 2002 in lieu
      of
      consulting compensation; his acquisition of 850,000 shares of common stock
      in
      January 2003 in lieu of consulting compensation; and 9,150,000 shares of common
      stock in 2004 in lieu of consulting compensation. Of these shares, 7,700,000
      were issued to the Hickel Living Trust. Based on our review of our files, in
      addition to the Initial Statement of Beneficial Ownership (Form 3) that Mr.
      Rifenburgh did not file upon becoming a director, he did not file Statements
      of
      Changes in Beneficial Ownership (Forms 4) to report his acquisition of 128,718
      shares of common stock in September 2001 and 310,451 shares of common stock
      in
      October 2001 in connection with our acquisition of iBall Media, Inc. in July
      2001; and the acquisition of 1,000,000 shares of common stock in April 2004
      for outside director fees.   Based on our review of our files, in
      addition to the Initial Statement of Beneficial Ownership (Form 3) that Mr.
      Willis did not file upon becoming a director, he did not file Statements of
      Changes in Beneficial Ownership (Forms 4) to report his acquisition of 250,000
      shares of common stock in March 2002 in lieu of compensation; and his
      acquisition of 3,000,000 shares of common stock in January 2003 in lieu of
      compensation. The Hickel Living Trust failed to file a Statement of Beneficial
      Ownership (Form 3) upon becoming the beneficial owner of more than 10% of the
      shares of our common stock in April 2004, and failed to file Statements of
      Changes in Beneficial Ownership (Form 4) in 2004. The Reporting Persons have
      indicated to the Company that they are in the process of filing Forms 3, 4
      and
      5.





**Audit
      Committee Financial Expert**





The
      Securities Exchange Commission has adopted rules to implement certain
      requirements of the Sarbanes-Oxley Act of 2002 pertaining to public company
      audit committees. One of the rules adopted by the SEC requires a company to
      disclose whether it has an “audit committee financial expert” serving on its
      audit committee. As of July, 2005, our board of directors has established an
      audit committee consisting of Richard P. Rifenburgh. We have determined
      that Mr. Rifenburgh is an "audit committee financial expert," based on his
      experience described above in this Item 9. SEC rules also require us to
      determine whether Mr. Rifenburgh, as the sole member of our Audit Committee,
      is
      "independent," as defined by SEC rules adopted pursuant to the requirements
      of
      the Sarbanes-Oxley Act of 2002.  Although our stock is not listed for
      trading on the Nasdaq Stock Market at this time, we are required to determine
      the independence of Mr. Rifenburgh by reference to the rules of a national
      securities exchange or of a national securities association (such as the Nasdaq
      Stock Market). In accordance with these requirements, we have determined that
      Mr. Rifenburgh is an "independent director," as determined in accordance with
      Rule 4200(a) (15) of the Marketplace Rules of the Nasdaq Stock Market,
      Inc.


8


**Code
      of Ethics**





We
      have
      adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-K
      of
      the Exchange Act. This Code of Ethics applies to directors and senior officers,
      such as the principal executive officer, principal financial officer,
      controller, and persons performing similar functions, of ours. Our Code of
      Ethics is available as Exhibit 14. Any amendments or waivers to our Code of
      Ethics will be disclosed following the date of any such amendment or waiver.





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.


Annual
                  Compensation
              
              Long
                  Term Compensation AwardsName/Principal
                  Position
              
              Year
              
              Salary
                  ($)
              
              Bonus
                  ($)
              
              Restricted
                  Stock Awards(1)
              
              Securities
                  Underlying Options/SAR's
              
              All
                  Other Compensation(2)Kelly
                  Hickel
              
              
              2002
              
              
              ---
              
              
              ---
              
              $
              7,500
              
              
              ---
              
              $
              46,415Chairman
                  since
              
              
              2003
              
              
              ---
              
              
              ---
              
              $
              3,400
              
              
              ---
              
              $
              41,695February
                  2001
              
              
              2004
              
              
              ---
              
              
              ---
              
              $
              45,750
              
              
              ---
              
              $
              77,390




(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. These
      shares were issued in 2003 and 2004 and are reflected here and in Item 11 below.
      In 2002, Mr. Hickel received 500,000 shares of stock in lieu of
      compensation.





(2)
      These
      payments made as consulting fees paid and reported on a Form 1099.





**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. Mr. Richard Rifenburgh is currently
      our
      sole Outside Director. No grants have been made under the Outside Directors
      Program since July 1, 2000. Mr.
      Rifenburgh agreed to suspend, effective January 2, 2002, the accrual of additional
      options until the Company reaches profitability.





Outside
      Directors are entitled to receive compensation in the amount of $18,000 per
      annum, 100% payable in stock, as a fee for their services as directors. Such
      amounts are payable quarterly in arrears. On April 7, 2004 Mr. Rifenburgh,
      our
      sole Outside Director, received 1,000,000 shares of common
      stock pursuant to this plan. The value of the 1,000,000 shares was
      $2,000 and was recorded as an expense for fiscal period ended December 31,
      2004.
      With the exception of the 1,000,000 shares issued to Mr. Rifenburgh in 2004,
      the
      Company and Mr. Rifenburgh agreed to forego his right to receive all
      director shares, including all shares owed to him since he began his
      service as a director, and to reestablish his rights to receive Outside
      Director shares only if and when the Company reaches profitability.





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.


9


ITEM
      11.
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





The
      following table sets forth certain information as of December 31 **,** 2005
      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.




Name
                and Address of Beneficial Owner(1)
            Amount
                and Nature of Beneficial Ownership(2)
            %
                of Outstanding Shares Owned(3)*Named
                Executive Officer and Directors:*Kelly
                Hickel
            3,039,702(4)
            5.2%Richard
                Rifenburgh
            1,370,062
                (5)
            2.3%Winston
                Willis
            3,250,000
            5.5%*All
                Named Executive Officers and Directors as a group (3 persons)*
            7,659,764
            13%*Beneficial
                Owners in Excess of 5% (other than Named Executive Officers and
                Directors):*Porter
                Capital Corporation
            7,125,000
                (7)
            12.2%Julia
                M. Belden
            4,500,000
                (6)
            7.7%Hickel
                Living Trust
            7,700,000
                (8)(9)
            13.1%





(1)
      The
      address of each beneficial owner identified is c/o Paradise Music &
Entertainment, Inc., 122 East 42 nd Street,
      New York, NY 10168, except for (i) Porter Capital Corporation, which is 2112
      First Avenue North, Birmingham, AL 10168 and (ii) Julia M. Belden, which is
      P.O.
      Box 13590, Denver, CO 80201.





(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,
      2005 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, 2005 have been exercised and converted, and (ii) 58,496,358 shares
      of common stock were outstanding, before any consideration is given to such
      options, warrants or convertible securities.





(4)
      Includes 1,450,000 shares issued in 2004. These shares were approved for
      issuance on April 9, 2002 and are part of the ten million shares issued to
      Kelly
      Hickel, or his designee(s), as payment of compensation due.





(5)
      Includes 1,000,000 shares issued in 2004. These shares were approved for
      issuance on October 4, 2003.





(6)
      Includes 1,000,000 shares issued in 2004. These shares were approved for
      issuance on October 4, 2003.





(7)
      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.





(8)
      These
      shares were approved for issuance on April 9, 2002 and are part of the ten
      million shares issued to Kelly Hickel, or his designee(s), as payment of
      compensation due.





(9)
      The
      Hickel Living Trust pledged 1,674,869 shares of common stock in November 2004
      as
      collateral for a loan to the Company from an outside lender.




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.


10





ITEM
      13.
      EXHIBITS





(a)
      Exhibits





Exhibit
                Number
            
            Description3.1
            
            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)14
            
            Code
                of Ethics21.1
            
            Subsidiaries
                of Registrant (2)31
            
            Certification
                of Kelly Hickel under Rule 13a-14(a)32
            
            Certification
                of Kelly Hickel





(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. nge Commission on March 29, 2000.





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


11


**ITEM
      14. Principal Accountant Fees and Services**





On
      May
      18, 2004, Hein & Associates LLP formally notified the Company that it had
      resigned as the Company’s certifying accountant, and effective as of October 3,
      2003, the Board of Directors approved the engagement of James E. Scheifley
&
Associates, P.C. to act as its certifying accountant.





(a)Audit
      Fees





During
      our fiscal year ended December 31, 2004, our principal accountant, James E.
      Scheifley & Associates, billed us approximately $11,500 for professional
      services that it provided for the audit of our annual financial statements,
      review of the financial statements included in our reports on 10-QSB, and other
      services typically provided by an accountant in connection with statutory and
      regulatory filings or engagements for that fiscal year, as set forth in the
      table below.





During
      our fiscal year ended December 31, 2003, our principal accountant, Hein +
      Associates, billed us aggregate fees in the amount of approximately $9,794,
      and
      our principal accountant, James E. Scheifley & Associates, billed us
      aggregate fees of approximately $10,000, as set forth in the table below. In
      both cases, these amounts were billed for professional services that the
      accountants provided for the audit of our annual financial statements, review
      of
      the financial statements included in our reports on 10-QSB, and other services
      typically provided by an accountant in connection with statutory and regulatory
      filings or engagements for that fiscal year.





Type
                of Fee
            Paid
                to
            Fiscal
                Year ending 2004
            Fiscal
                Year Ending 2003Audit
            Hein
                + Associates
            
            $9,794Audit
            James
                E. Scheifley & Associates
            $11,500
            $10,000




(b) Audit-Related
      Fees




Neither
      Hein + Associates nor James E. Scheifley & Associates billed us for any
      audit-related services for the fiscal year ended December 31, 2004 or the fiscal
      year ended December 31, 2003.




(c) Tax
      Fees




Neither
      Hein + Associates nor James E. Scheifley & Associates billed us for any tax
      services for the fiscal year ended December 31, 2004 or the fiscal year ended
      December 31, 2003.




(d) All
      Other
      Fees




Neither
      Hein + Associates nor James E. Scheifley & Associates billed us for any
      services other than those disclosed above under the caption "Audit Services"
      for
      the fiscal year ended December 31, 2004 or the fiscal year ended December 31,
      2003.




(e) Audit
      Committee's Pre-Approval Practice




Section 10A(i) of
      the Securities Exchange Act of 1934 prohibits our auditors from performing
      audit
      services for us as well as any services not considered to be "audit services"
      unless such services are pre-approved by the audit committee of the Board of
      Directors, or unless the services meet certain *de
      minimis* standards. As our principal certifying accountants have not provided services
      other than audit services for the fiscal year ended December 31, 2004 and the
      fiscal year ended December 31, 2003, it has not been necessary for our Audit
      Committee to approve the performance of any such services for such fiscal
      years.




According
      to information provided by our principal certifying accountants, all services
      were performed by persons who were their full time employees.


12


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 February 14, 2006.





PARADISE
                MUSIC & ENTERTAINMENT, INC.By:
            /s/
                Kelly HickelKelly
                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
            
            February
                14, 2006Kelly
                Hickel/s/
                RICHARD P. RIFENBURGH
            
            Vice
                Chairman
            
            February
                14, 2006Richard
                P. Rifenburgh/S/
                WINSTON WILLIS
            
            Director
            
            February
                14, 2006Winston
                Willis




13


PARADISE
      MUSIC & ENTERTAINMENT, INC.


CONSOLIDATED
      FINANCIAL STATEMENTS





CONTENTS





INDEPENDENT
                AUDITOR’S REPORT
            
            15CONSOLIDATED
                FINANCIAL STATEMENTSCONSOLIDATED
                BALANCE SHEET
            
            16CONSOLIDATED
                STATEMENTS OF OPERATIONS
            
            17CONSOLIDATED
                STATEMENTS OF STOCKHOLDERS’ EQUITY
            
            18CONSOLIDATED
                STATEMENTS OF CASH FLOWS
            
            19
                - 20NOTES
                TO CONSOLIDATED FINANCIAL STATEMENTS
            
            21
                - 25




ENVIRONMENTAL
      TESTING LABORATORIES, INC.


FINANCIAL
      STATEMENTS





CONTENTS





INDEPENDENT
                AUDITOR’S REPORT
            
            26FINANCIAL
                STATEMENTSBALANCE
                SHEET
            
            27STATEMENTS
                OF OPERATIONS
            
            28STATEMENTS
                OF CASH FLOWS
            
            29NOTES
                TO FINANCIAL STATEMENTS
            
            30
                - 32




PRO
      FORMA
      CONDENSED FINANCIAL STATEMENTS


PARADISE
      MUSIC & ENTERTAINMENT, INC.


ENVIRONMENTAL
      TESTING LABORATORIES, INC.




CONTENTS





INTRODUCTION
                TO PRO FORMA STATEMENTS
            
            33PRO
                FORMA CONDENSED STATEMENT OF OPERATIONS
            
            34PRO
                FORMA CONDENSED BALANCE SHEET
            
            35




14


REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





The
      Board
      of Directors and Stockholders


Paradise
      Music and Entertainment, Inc. and its subsidiaries





We
      have
      audited the accompanying consolidated balance sheet of Paradise Music and
      Entertainment, Inc. and its subsidiaries as of December 31, 2004, and the
      related consolidated statements of operations, stockholders’ (deficit) and cash
      flows for the years ended December 31, 2004 and 2003. These consolidated
      financial statements are the responsibility of the company’s management. Our
      responsibility is to express an opinion on these consolidated financial
      statements based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. The company is not required to
      have, nor were we engaged to perform, an audit of its internal control over
      financial reporting. Our audit includes consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the company’s internal control over financial
      reporting. Accordingly, we express no such opinion. An audit also includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements, 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 consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Paradise Music and
      Entertainment, Inc. and its subsidiaries as of December 31, 2004, and the
      results of their operations and their cash flows for each of the years in the
      two-year period ended December 31, 2004 and 2003 in conformity with accounting
      principles generally accepted in the United States of America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 2 to the financial
      statements, the Company has suffered recurring losses from operations and has
      substantial deficits of stockholders’ equity and working capital, which raise
      substantial doubts about its ability to continue as a going concern.
      Management's plans in regard to these matters are also described in Note 2.
      The
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.





Tinter
      Scheifley Tang, LLC


Certified
      Public Accountants





Denver,
      Colorado


January
      11, 2006




15





Paradise
      Music & Entertainment, Inc.


Consolidated
      Balance Sheet


As
      of
      December 31, 2004




ASSETSCurrent
                    assets:Cash
                
                $
                114Total
                    current assets
                
                $
                114LIABILITIES
                    AND STOCKHOLDERS' EQUITYCurrent
                    liabilities:Notes
                    payable - financial institution
                
                $
                340,000Accounts
                    payable
                
                
                5,043,892Notes
                    payable - other
                
                
                662,250Accrued
                    Interest
                
                
                261,089Accrued
                    wages
                
                
                483,136Accrued
                    expenses - other
                
                
                738,379Total
                    current liabilities
                
                
                7,528,746Stockholders'
                    equity: Preferred stock, $.01 par value, 5,000,000 shares
                    authorized
                
                
                -Common
                    stock, $.01 par value, 75,000,000 shares authorized, 58,496,358
                    shares
                    issued and outstanding
                
                
                584,964Additional
                    paid-in capital
                
                
                27,026,355Accumulated
                    (deficit)
                
                
                (35,139,951
                )(7,528,632
                )Total
                    Current Liabilities and Stockholders’ Equity
                
                $
                114
 
 See
        accompanying notes to financial statements.




16




Paradise
        Music & Entertainment, Inc.


Statements
        of Operations
 Years
        Ended December 31, 2004 and 2003


December
                31,
            
            December
                31,2004
            
            2003Marketing,
                selling, general and administrative
            
            $
            48,467
            
            $
            7,218Total
                operating expenses
            
            
            48,467
            
            
            7,218Profit
                (Loss) from continuing operations
            
            
            (48,467
            )
            
            (7,218
            )Other
                (income) and expenseInterest
                expense
            
            
            133,541
            
            
            89,985Other
                (Income)
            
            
            (55,205
            )
            
            -Total
                Other (Income) and Expenses
            
            
            78,336
            
            
            89,985Net
                Profit (Loss)
            
            $
            (126,803
            )
            $
            (97,203
            )Basic
                and diluted (loss) per share
            
            $
            0.00
            
            $
            0.00Weighted
                average shares outstanding
            
            
            53,656,906
            
            
            39,811,563





See
      accompanying notes to financial statements.




17




Paradise
        Music & Entertainment, Inc.


Consolidated
        Statement of Changes in Stockholders' Equity
 Years
        Ended December 31, 2004 and 2003


Common
                Shares
            
            Stock
                Amount
            
            Additional
                Paid -in Capital
            
            Common
                Stock Subscriptions
            
            Accumulated
                Deficit
            
            TotalACTIVITYBalance,
                January 1, 2003
            
            
            36,246,358
            
            $
            362,463
            
            $
            26,937,834
            
            $
            200,000
            
            $
            (34,915,945
            )
            $
            (7,415,645
            )Issuance
                of stock for services Previously accrued
            
            
            3,850,000
            
            
            38,500
            
            
            (23,100
            )
            
            
            
            
            
            
            
            15,400Compensation
                value of warrants Issued for financing
            
            
            
            
            
            
            
            
            667
            
            
            
            
            
            
            
            
            667Net
                (loss) for the year
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (97,203
            )
            
            (97,203
            )Balance,
                December 31, 2003
            
            
            40,096,358
            
            
            400,963
            
            
            26,915,402
            
            
            200,000
            
            
            (35,013,148
            )
            
            (7,496,782
            )Issuance
                of stock for services
            
            
            3,750,000
            
            
            37,500
            
            
            (29,000
            )
            
            
            
            
            
            
            
            8,500Issuance
                of stock for services Previously expensed
            
            
            10,650,000
            
            
            106,500
            
            
            (57,750
            )
            
            
            
            
            
            
            
            48,750Issuance
                of previously authorized Common stock subscriptions
            
            
            4,000,000
            
            
            40,000
            
            
            160,000
            
            
            (200,000
            )
            
            
            
            
            -Compensation
                value of warrants Issued for financing
            
            
            
            
            
            
            
            
            37,703
            
            
            
            
            
            
            
            
            37,703Net
                Profit (Loss) for year
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (126,803
            )
            
            (126,803
            )Balance,
                December 31, 2004
            
            
            58,496,358
            
            $
            584,964
            
            $
            27,026,355
            
            $
            -
            
            $
            (35,139,951
            )
            $
            (7,528,632
            )




See
      accompanying notes to financial
      statements.




18





Paradise
      Music & Entertainment, Inc.


Statements
      of Cash Flows


Years
      Ended December 31, 2004 and 2003





December
                31, 2004
            
            December
                31, 2003Net
                (loss)
            
            $
            (126,803
            )
            $
            (97,205
            )Adjustments
                to reconcile net income (loss) to net cash provided by operating
                activities:Non-cash
                consulting expense in connection with warrants
            
            
            
            
            
            667Common
                stock issued for services
            
            
            8,500Compensation
                value of warrants issued for financing
            
            
            37,703Changes
                in assets and liabilities:Increase
                (decrease) in accounts payable
            
            
            (113,353
            )
            
            (87,133
            )Increase
                (decrease) in accrued expenses
            
            
            71,968
            
            
            38,097Total
                adjustments
            
            
            4,818
            
            
            (48,369
            )Net
                cash (used in) operating activities
            
            
            (121,985
            )
            
            (145,574
            )Cash
                flows from financing activities:Proceeds
                from bank borrowings
            
            
            -
            
            
            23,692Proceeds
                from loans
            
            
            117,000
            
            
            110,000Net
                cash provided by financing activities
            
            
            117,000
            
            
            133,692Increase
                (decrease) in cash
            
            
            (4,985
            )
            
            (11,882
            )Cash
                and cash equivalents, beginning of period
            
            
            5,099
            
            
            16,981Cash
                and cash equivalents, end of period
            
            $
            114
            
            $
            5,099





See
      accompanying notes to financial statements.


19


Paradise
      Music & Entertainment, Inc.


Statements
      of Cash Flows


Years
      Ended December 31, 2004 and 2003





December
                31, 2004
            
            December
                31, 2003Supplemental
                cash flow information:Cash
                paid for interest
            
            $
            -
            
            $
            -Cash
                paid for income taxes
            
            $
            -
            
            $
            -Non-cash
                financing activities:Options,
                warrants and stock granted for services
            
            $
            8,500
            
            $
            667





See
      accompanying notes to financial statements.




20


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS








1. ORGANIZATION
      AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES :




Paradise
      Music & Entertainment, Inc. ("Paradise") was incorporated in the State of
      Delaware in July 1996. Paradise is a diversified company which currently
      operates in the environmental testing and music and entertainment industries.
      The Company had no significant revenue producing operations during the years
      ended December 31, 2004 and 2003. The Company plans to market sponsor-targeted
      entertainment projects, including the development and production of proprietary
      festivals, events and branding campaigns for corporate clients. The Company
      is
      currently in negotiations for a music event for the 2006 season. The Company
      entered the environmental testing industry on February 14, 2005 through an
      asset
      acquisition agreement completed with Environmental Testing Laboratories, Inc.,
      a
      New York corporation (See Note 3.)





The
      Company is pursuing other acquisitions in the following vertical industry
      segments:





**DISTRIBUTION**


Parts
      for
      servicing retail petroleum outlets





**SERVICES**


Environmental
      Testing





**MANUFACTURING**


Product
      lines and companies that have a quantifiable market upside
      opportunity





The
      Company, to date, has not identified any additional merger
      candidates.





Principles
      of Consolidation - The consolidated financial statements include the accounts
      of
      Paradise and its wholly-owned subsidiaries, iball Media, PDSE 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.
      In
      2001, the Company discontinued operations in all the subsidiaries except for
      All
      Access Entertainment Management Group, Inc.





Reclassifications
      - Certain items presented in the previous year’s financial statements have been
      reclassified to conform to current year presentation.





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. Revenue from the provision of
      environmental testing services is recorded when the service has been
      performed.





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.





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.





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
      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, 2004.




Income
      Taxes - Deferred income tax assets and liabilities are computed for differences
      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
      6,598,879  shares
      at
      December 31, 2004 and 4,728,026 shares at December 31, 2003 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. In February, 2005, as part of the Asset Purchase of
      Environmental Testing Laboratories, Inc., the Company agreed to issue 280,000
      shares of Series A Preferred Stock to the sellers. This transaction will
      significantly affect earnings per share in future periods.





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 in Financial Statements - The preparation of financial statements
      in
      conformity with accounting principles generally accepted in the United States
      of
      America requires management to make estimates and assumptions that affect the
      amounts reported in the financial statements and accompanying notes. Actual
      results could differ from those estimates.





Segment
      Information - The Company follows SFAS 131, “Disclosures about Segments of an
      Enterprise and Related Information”. Certain information is disclosed, per SFAS
      131, based on the way management organizes financial information for making
      operating decisions and assessing performance. The Company currently operates
      in
      a single segment and will evaluate additional segment disclosure requirements
      as
      it expands its operations.





Stock-Based
      Compensation - The Company accounts for equity instruments issued to employees
      for services based on the fair value of the equity instruments issued and
      accounts for equity instruments issued to other than employees based on the
      fair
      value of the consideration received or the fair value of the equity instruments,
      whichever is more reliably measurable.





The
      Company accounts for stock based compensation in accordance with SFAS 123,
      "Accounting for Stock-Based Compensation." The provisions of SFAS 123 allow
      companies to either expense the estimated fair value of stock options or to
      continue to follow the intrinsic value method set forth in APB Opinion 25,
      "Accounting for Stock Issued to Employees" (“APB 25”) but disclose the pro forma
      effects on net income (loss) had the fair value of the options been expensed.
      The Company has elected to continue to apply APB 25 in accounting for its stock
      option incentive plans. New accounting pronouncements - In December 2003, the
      Financial Accounting Standards Board issued FASB Interpretation Number 46-R
      “Consolidation of Variable Interest Entities.” FIN 46-R, which modifies certain
      provisions and effective dates of FIN 46, sets for the criteria to be used
      in
      determining whether an investment is a variable interest entity should be
      consolidated. These provisions are based on the general premise that if a
      company controls another entity through interests other than voting interests,
      that company should consolidate the controlled entity. The Company currently
      does not consolidate any entities under the provisions of FIN 46-R.


21


New
      Accounting Pronouncements





In
      November 2004, the FASB issued SFAS 151, “Inventory Costs.” SFAS 151 amends the
      accounting for abnormal amounts of idle facility expense, freight, handling
      costs, and wasted material (spoilage) under the guidance in ARB 43, Chapter
      4,
“Inventory Pricing.” Paragraph 5 of ARB 43, Chapter 4, previously stated that
“...under some circumstances, items such as idle facility expense, excessive
      spoilage, double freight, and rehandling costs may be so abnormal as to require
      treatment as current period charges....” This Statement requires that those items
      be recognized as current-period charges regardless of whether they meet the
      criterion of “so abnormal.” In addition, this Statement requires that allocation
      of fixed production overheads to the costs of conversion be based on the normal
      capacity of the production facilities. This statement is effective for inventory
      costs incurred during fiscal years beginning after June 15, 2005. Management
      does not expect adoption of SFAS 151 to have a material impact on the Company’s
      financial statements.





In
      December 2004, the FASB issued SFAS 153, “Exchanges of Nonmonetary Assets,” an
      amendment to Opinion No. 29, “Accounting for Nonmonetary Transactions.”
Statement 153 eliminates certain differences in the guidance in Opinion No.
      29
      as compared to the guidance contained in standards issued by the International
      Accounting Standards Board. The amendment to Opinion No. 29 eliminates the
      fair
      value exception for nonmonetary exchanges of similar productive assets and
      replaces it with a general exception for exchanges of nonmonetary assets that
      do
      not have commercial substance. Such an exchange has commercial substance if
      the
      future cash flows of the entity are expected to change significantly as a result
      of the exchange. SFAS 153 is effective for nonmonetary asset exchanges occurring
      in periods beginning after June 15, 2005. Earlier application is permitted
      for
      nonmonetary asset exchanges occurring in periods beginning after December 16,
      2004. Management does not expect adoption of SFAS 153 to have a material impact
      on the Company’s financial statements.





In
      December 2004, the FASB issued SFAS 123(R), “Share-Based Payment.” SFAS 123(R)
      amends SFAS 123, “Accounting for Stock-Based Compensation,” and APB Opinion 25,
“Accounting for Stock Issued to Employees.” SFAS 123(R) requires that the cost
      of share-based payment transactions (including those with employees and
      non-employees) be recognized in the financial statements. SFAS 123(R) applies
      to
      all share-based payment transactions in which an entity acquires goods or
      services by issuing (or offering to issue) its shares, share options, or other
      equity instruments (except for those held by an ESOP) or by incurring
      liabilities (1) in amounts based (even in part) on the price of the entity’s
      shares or other equity instruments, or (2) that require (or may require)
      settlement by the issuance of an entity’s shares or other equity instruments.
      This statement is effective (1) for public companies qualifying as SEC small
      business issuers, as of the first fiscal year beginning after December 15,
      2005,
      or (2) for all other public companies, as of the first fiscal year or interim
      period beginning after June 15, 2005, or (3) for all nonpublic entities, as
      of
      the first fiscal year beginning after December 15, 2005. Management is currently
      assessing the effect of SFAS No. 123(R) on the Company’s financial
      statements.





2. CONTINUED
      OPERATIONS:





For
      the
      year ended December 31, 2004 the Company had a net loss of $127,000 compared
      to
      a net loss of $97,000 for the year ended December 31, 2003 and has working
      capital and stockholders’ deficits of $7,528,632 at December 31, 2004. The
      Company's strategy is to maximize the opportunity for growing the Company into
      a
      profitable operating company. That strategy is to acquire companies that are,
      or
      can be, operated profitability in three vertical business areas: Distribution,
      Services and Manufacturing. The Company’s management has operated manufacturing
      and service companies in a variety of fields for over 35 years. While there
      has
      been some progress made on the implementation of this relatively 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. All of the above factors raise substantial
      doubt about our ability to continue as a going concern.





The
      Company's status as a going concern is dependent on its ability to successfully
      implement a marketing plan and generate sufficient revenues to operate on a
      profitable basis, continued financial support by officers and major shareholders
      and raising of additional funds for working capital. The financial statements
      do
      not include any adjustments to reflect the possible future effects on the
      recoverability and classification of assets or the amounts and classification
      of
      liabilities that may result from the possible inability of the Company to
      continue as a going concern.




3. ASSET
      ACQUISITION AGREEMENT





On
      February 14, 2005, ETL Acquisition Corp. (“ETL”), a Delaware corporation and a
      wholly owned subsidiary of Paradise Music & Entertainment, Inc., completed
      the acquisition of all or substantially all of the assets and business of
      Environmental Testing Laboratories, Inc.  Environmental Testing
      Laboratories, Inc. is a privately held company based in Farmingdale, New York,
      and engaged in the business of environmental testing (as further set forth
      in
      the Asset Purchase Agreement filed as Exhibit 2.1 to this Current Report and
      incorporated herein by reference). ETL acquired assets consisting primarily
      of
      accounts receivables, machinery and laboratory equipment of Environmental
      Testing Laboratories, Inc. valued at $1,915,463 at the time of the closing.
      At
      closing ETL paid for these assets by assuming liabilities of $761,820 from
      Environmental Testing Laboratories, Inc. and agreeing to assume additional
      liabilities of $1,153,643 from affiliate companies of Environmental Testing
      Laboratories, Inc.. The $761,820 assumed directly from Environmental Testing
      Laboratories, Inc. consisted of approximately $530,000 of accounts payable,
      approximately $170,000 of tax obligations due to various taxing authorities,
      and
      approximately $63,000 in judgments entered against Environmental Testing
      Laboratories, Inc.. The additional liabilities of $1,153,643 from affiliate
      companies of Environmental Testing Laboratories, Inc. which ETL agreed to assume
      would be determined by ETL in the future at its sole discretion; however, ETL
      agreed to pay a minimum of $250,000 of this $1,153,643 within thirty days of
      the
      closing. On February 24, 2005 ETL made a payment of $250,000 in cash against
      the
      additional liabilities.





On
      December 19, 2005 the parties agreed to amend the terms of the purchase as
      follows: In consideration for the purchased assets, the purchase price was
      reduced to $1,274,079, which ETL agreed to pay at closing by the assumption
      of
      accounts payable and accrued expenses in the amount of $546,441, the assumption
      of additional liabilities of $671,638 from affiliate companies of Environmental
      Testing Laboratories, Inc., and the issuance of preferred shares as noted below.





As
      part
      of the consideration for the acquisition, Paradise agreed to issue 280,000
      shares of its Series B Preferred Stock to Environmental Testing Laboratories,
      Inc. The parties agreed to amend the terms of the purchase, with effect from
      the
      date of the original agreement, to provide for the issuance by Paradise of
      280,000 shares of its Series A Preferred Stock, rather than its Series B
      Preferred Stock. The Series A Preferred Stock is convertible, at the option
      of
      the holder or of the Company, into ten (10) shares of Paradise common stock.
      The
      holders of shares of Series A Preferred Stock are entitled to receive an annual
      dividend of five cents per share, but do not receive a liquidation preference
      with respect to the Series A Preferred shares. The fair value of the Series
      A
      Preferred Stock at the purchase date was $56,000, based of the trading price
      of
      the underlying common stock.





The
      asset
      purchase was consummated in connection with the Company’s efforts to expand its
      intended business focus. The Company launched a new strategy in order to
      maximize the opportunity for growing the Company into a profitable operating
      company. That strategy is to acquire companies that are, or can be, operated
      profitability in three vertical business areas: Distribution, Services and
      Manufacturing.





Had
      the
      purchase transaction been completed as of the beginning of the 2004 fiscal
      year,
      the Company’s net loss would have increased to $444,365 ($.01 per share).





At
      the
      purchase date, the net assets of Environmental Testing Laboratories, Inc.
      consisted of:





Accounts
                Receivable
            
            $
            353,814Property
                & Equipment
            
            
            920,265Accounts
                Payable and Accrued Expenses
            
            
            (546,441
            )Additional
                Liabilities
            
            
            (671,638
            )$
            56,000




22


4. DEBT:





Financing
      Agreement - On April 25, 2001, the Company entered into 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 provided 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. 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. As of December 31,
      2004
      approximately $300,000 was outstanding under the line. Advances from the lender
      bear interest at 18% per annum and were originally due on April 15, 2005.
      Paradise agreed to deposit 15,000,000 fully paid and non-assessable shares
      of
      its Common Stock in escrow (“Escrow Stock”) pursuant to an Escrow Agreement. On
      December 19, 2005, an agreement was reached with PCC waiving all current
      defaults and the Due Date of the Senior Loan Balance was revised to April 15,
      2006. All obligations with respect to the Escrow Stock have been deleted in
      their entirety.





On
      April
      12, 2004, PCC agreed to provide $40,000 as a secured loan for three 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 received warrants to purchase 500,000
      shares of the company’s stock at a price of $0.002 per share. This loan was
      provided for the company’s working capital needs. All of these funds have
      already been advanced to the company, and $7,250 of the compensation value
      of
      the stock ($29,000) has been accreted as additional interest expense for fiscal
      year ending December 31, 2004.





On
      February 3, 2004, a private investor loaned the Company $25,500 for working
      capital needs. The loan plus interest at 12% per annum is due after one year.
      In
      connection with the loan, the Company granted the investor 510,000 common stock
      purchase warrants with an exercise price of $0.01 per share. Such warrants
      are
      exercisable for a period of three years from the closing date. The fair value
      of
      the warrants, determined using the Black-Scholes method to be $8,821, has been
      included as additional interest expense for the year ended December 31, 2004.





On
      December 16, 2004, a private investor with an existing loan balance to the
      Company of $27,000 agreed to loan an additional $46,500 to the Company for
      working capital purposes. The new loan balance of $73,500 plus interest at
      15%
      per annum is due after one year. In connection with the loan, the Company
      granted the investor 860,853 common stock purchase warrants with an exercise
      price of $0.002 per share. Such warrants are exercisable for a period of three
      years from the closing date. The fair value of the warrants, determined using
      the Black-Scholes method to be $21,632, has been included as additional interest
      expense for the year ended December 31, 2004.





Notes
      payable totaling $662,250 are past due and in default. The notes currently
      bear
      a default interest rate of 15%.





5. ACCOUNTS
      PAYABLE AND ACCRUED EXPENSES :





At
      December 31, 2004, accounts payable and accrued expenses include an aggregate
      of
      $4,595,115 of past due liabilities of certain of the Company’s inactive
      subsidiaries.





6. 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, 2004, the Company has a net operating loss carry forward of
        approximately $21,227,000. This loss will be available to offset future taxable
        income. If not used, this carry forward will expire through 2023. The deferred
        tax asset of approximately $7,217,000 relating to the operating loss carry
        forward has been fully reserved at December 31, 2004. The reserve increased
        by
        approximately $42,000 during fiscal year ending December 31, 2004.


23




7. COMMITMENTS
      AND CONTINGENCIES:





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. As the only outside director, Mr. Rifenburgh signed an
      agreement on January 2, 2002 to suspend the accrual of compensation until the
      Company begins significant operations. The Company has agreed to pay the
      Chairman $240,000 per year. The Company was not able to make these payments,
      nor
      have they accrued the expense for fiscal year ended December 31, 2004. The
      Chairman, Mr. Hickel, agreed on January 2, 2004 to suspend the accrual of
      compensation until the Company begins significant operations.





8. STOCKHOLDERS'
      EQUITY:





During
      2004, the Company issued 10,650,000 shares of common stock to consultants for
      services that had been accrued in 2002 as part of the Company’s restructuring
      plan. An additional 2,750,000 shares of common stock were issued to consultants
      for services performed in 2004. These additional shares were valued at
      approximately $6,500, based on the trading value of the Company’s common stock
      on the dates the share issuances were approved by the Company’s Board of
      Directors, and this amount has been recorded in operations for fiscal year
      2004.
      An additional one million shares were issued to outside directors at a value
      of
      $2,000, which has been recorded in operations for fiscal year 2004. Also during
      2004, four million shares of common stock were issued to Porter Capital
      Corporation. These shares were authorized and the related expense was accounted
      for in fiscal year 2002.





9. 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. As the
      only outside director, Mr. Rifenburgh signed an agreement on January 2, 2002
      to
      suspend the accrual of compensation until the Company begins significant
      operations.




The
                  activity in the Option Plan is as follows:
              
              Exercise
                  Price
                Number
                  of Options
              
              Per
                  share rangeBalances
                  outstanding January 1, 2003
              
              
              1,954,192
              
              
              0.25
                  - 5.00Granted
              
              
              -
                  0 -
              
              
              n/aCancelled
              
              
              610,192
              
              
              0.25
                  - 3.00Balances
                  outstanding Dec 31, 2003
              
              
              1,344,000
              
              
              1.00
                  - 5.00Granted
              
              
              -
                  0 -
              
              
              n/aCancelled
              
              
              -
                  0 -
              
              
              n/aBalances
                  outstanding December 31, 2004
              
              
              1,344,000
              
              
              1.00
                  - 5.00
 
 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
        not
        have been adjusted as no options were granted for the periods
        presented.




24




10. STOCK
      WARRANTS:





The
      following table summarizes common stock warrant activity:


Shares
            
            Exercise
                PricesWarrants
                outstanding as of January 1, 2003
            
            
            4,389,635
            
            
            0.02
                - 3.00Granted
            
            
            333,250
            
            
            0.002Cancelled
            
            
            1,338,859
            
            
            1.06
                - 3.00Warrants
                outstanding as of December 31, 2003
            
            
            3,384,026
            
            
            0.002
                - 2.61Granted
            
            
            2,870,853
            
            
            0.002
                - 0.01Cancelled
            
            
            n/a
            
            
            n/aWarrants
                outstanding as of December 31, 2004
            
            
            6,254,879
            
            
            0.002
                - 2.61





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 31,2004
            
            2003Volatility
            
            
            49.03
            
            
            40.0Interest
                rate
            
            
            12
            %
            
            15
            %Dividends
            
            
            n/a
            
            
            n/aExpected
                term
            
            
            24
            
            
            12





The
      expense for warrants granted in 2004 and 2003 was $37,703 and $667 respectively
      and is discussed further in Note 4 and is related primarily to additional cost
      of debt issuance.




11. SUBSEQUENT
      EVENTS:





In
      conjunction with the transaction described in Note 3, ETL entered into a
      promissory note whereby it borrowed $500,000 from Capstone Business Credit
      LLC
      (“Capstone”). The promissory note was secured by substantially all of the assets
      of ETL. The note shall bear interest at the rate of 24% per annum and is payable
      by ETL in 24 installments of $15,000 commencing on February 28, 2005 until
      February 28, 2007, at which time the remaining unpaid principal and interest
      shall be due and payable. In addition, in connection with the asset acquisition,
      ETL entered into a Discount Factoring Agreement with Capstone whereby Capstone
      agreed to advance ETL an amount equal to seventy-five (75%) percent of certain
      of its accounts receivable. Capstone will remit payment to ETL upon its
      acceptance of the assignment of each account receivable. Paradise Music and
      Kelly Hickel, the President and CEO of Paradise Music, have jointly and
      severally guaranteed the faithful and timely performance and satisfaction by
      ETL
      of its obligations under both the promissory note and the Discount Factoring
      Agreement, including without limitation the payment of all amounts when due
      under such agreements.


25


REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





Stockholders
      and Board of Directors


Environmental
      Testing Laboratories, Inc.





We
      have
      audited the accompanying balance sheet of Environmental Testing Laboratories,
      Inc. as of December 31, 2004, and the related statements of operations,
      stockholders’ (deficit) and cash flows for the years ended December 31, 2004 and
      2003. 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 the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. The company is not required to
      have, nor were we engaged to perform, an audit of its internal control over
      financial reporting. Our audit includes consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the company’s internal control over financial
      reporting. Accordingly, we express no such opinion. An audit also includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements, 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 Environmental Testing Laboratories,
      Inc. as of December 31, 2004, and results of its operations and its cash flows
      for the years ended December 31, 2004 and 2003, in conformity with accounting
      principles generally accepted in the United States of America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 2 to the financial
      statements, the Company has suffered a loss from operations and has working
      capital and stockholders’ deficits. These factors raise substantial doubt about
      the Company’s ability to continue as a going concern. Management’s plans in
      regard to this matter are also discussed in Note 2. The financial statements
      do
      not include any adjustments that might result from the outcome of this
      uncertainty.




Tinter
      Scheifley Tang, LLP


Certified
      Public Accountants





Denver,
      Colorado


December
      10, 2005


26





Environmental
      Testing Laboratories, Inc.


Balance
      Sheet


December
      31, 2004





AssetsCurrent
                assets:Accounts
                    receivable, net of allowance for doubtful accounts of
                    $45,944
            
            $
            452,457452,457Property
                and equipment, net of accumulated depreciation of
                $1,658,485
            
            
            452,184$
            904,641Liabilities
                and stockholders' (deficit)Current
                liabilities:Cash
                overdraft
            
            $
            1,840Accounts
                payable and accrued expenses
            
            
            640,264Loans
                from affiliated companies
            
            
            1,168,446Capital
                leases payable
            
            
            -Total
                current liabilities
            
            
            1,810,550Stockholders'
                (deficit):Common
                stock, $.001 par value,25,000,000
                shares authorized,18,476,186
                shares issued and outstanding
            
            
            10,000Accumulated
                deficit
            
            
            (915,909
            )(905,909
            )$
            904,641





See
      accompanying notes to financial statements.




27


Environmental
      Testing Laboratories, Inc.


Statements
      of Operations


Years
      Ended December 31, 2004 and 2003





2004
            
            2003Sales
            
            $
            2,308,498
            
            $
            3,303,658Sales
                to affiliates
            
            
            613,155
            
            
            549,2792,921,653
            
            
            3,852,937Cost
                of sales
            
            
            (1,934,558
            )
            
            (2,914,397
            )Gross
                margin
            
            
            987,095
            
            
            938,540Other
                costs and expenses:Selling,
                general and administrative
            
            
            1,211,396
            
            
            1,630,452(Loss)
                from operations
            
            
            (224,301
            )
            
            (691,912
            )Interest
                expense - affiliates
            
            
            93,262
            
            
            73,788Net
                (loss)
            
            
            (317,563
            )
            
            (765,700
            )Retained
                earnings (deficit) - beginning of year
            
            
            (598,346
            )
            
            167,354(Deficit)
                - end of year
            
            $
            (915,909
            )
            $
            (598,346
            )





See
      accompanying notes to financial statements.




28





Environmental
      Testing Laboratories, Inc.


Statements
      of Cash Flows


Years
      Ended December 31, 2004 and 2003





2004
            
            2003Net
                income (loss)
            
            $
            (317,563
            )
            $
            (765,699
            )Adjustments
                to reconcile net income (loss) to net cash provided (used in) by
                operating
                activities:Depreciation
                expense
            
            
            150,372
            
            
            187,811Changes
                in assets and liabilities:(Increase)
                decrease in:Accounts
                receivable
            
            
            112,078
            
            
            409,866Prepaid
                expenses and other assets
            
            
            802
            
            
            33,193Increase
                (decrease) in:Cash
                overdraft
            
            
            1,840
            
            
            -Accounts
                payable
            
            
            (305,352
            )
            
            125,976Advances
                from affiliates
            
            
            637,384
            
            
            (328,505
            )Total
                adjustments
            
            
            597,125
            
            
            428,341Net
                cash (used in)operating
                activities
            
            
            279,561
            
            
            (337,358
            )Cash
                flows from investing activities:Acquisition
                of property and equipment
            
            
            -
            
            
            (15,603
            )Net
                cash provided byinvesting
                activities
            
            
            -
            
            
            (15,603
            )Cash
                flows from financing activities:Loans
                from related parties
            
            
            -
            
            
            300,000Repayment
                of related party loans
            
            
            (300,000
            )
            
            -Net
                cash provided byfinancing
                activities
            
            
            (300,000
            )
            
            300,000Decrease
                in cash
            
            
            (20,439
            )
            
            (52,961
            )Cash
                and cash equivalents, beginning of period
            
            
            20,439
            
            
            73,400Cash
                and cash equivalents, end of period
            
            $
            (0
            )
            $
            20,439





See
      accompanying notes to financial statements.




29


Environmental
      Testing Laboratories, Inc.


Notes
      to
      Financial Statements


December
      31, 2004




NOTE
      1.
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Organization
      and Operations





Environmental
      Testing Laboratories Inc.
      (the “Company”) was incorporated in New York on August 2, 1988.





The
      Company provides laboratory testing services to various businesses and
      governmental units principally in the Northeastern United States. The Company’s
      services are designed to detect the presence and levels of environmental
      pollutants in liquid and solid samples provided by its customers.





Through
      February 14, 2005, the Company was owned by fewer than ten related shareholders
      who also control a number of businesses which provide construction and
      maintenance services to petroleum retail outlets. A significant amount of the
      Company’s revenues are derived from services provided to these related
      companies.





On
      February 14, 2005, the Company was party to an asset purchase agreement with
      Paradise Music & Entertainment, Inc., a Delaware corporation with executive
      offices in Denver, CO. (See Note 8.)





Revenue
      Recognition





The
      Company recognizes testing revenue when services are provided. The Company
      currently operates in one business activity.





Cash
      and
      Cash Equivalents





The
      Company considers all highly liquid investments with an original maturity of
      three months or less to be cash equivalents.





Accounts
      Receivable





Accounts
      receivable are stated at estimated net realizable value. Accounts receivable
      are
      comprised of balances due from customers net of estimated allowances for
      uncollectible accounts. In determining collectibility, historical trends are
      evaluated and specific customer issues are reviewed to arrive at appropriate
      allowances.





Property
      and Equipment





Property
      and equipment is recorded at cost. Depreciation of assets is computed using
      the
      straight-line method over the following estimated useful lives.





Laboratory
                equipment
            3
                -
                10 yearsFurniture
                and fixtures
            3
                -
                7 years





Financial
      Instruments





Fair
      value estimates discussed herein are based upon certain market assumptions
      and
      pertinent information available to management as of December 31, 2004. The
      respective carrying value of certain on-balance-sheet financial instruments
      approximated their fair values. These financial instruments include cash,
      accounts receivable, accounts payable and notes payable. Fair values were
      assumed to approximate carrying values for these financial instruments because
      they are short term in nature and their carrying amounts approximate fair
      values.




Long
      Lived Assets





The
      carrying value of long-lived assets is reviewed on a regular basis for the
      existence of facts and circumstances that suggest impairment. The Company will
      measure the amount of any impairment based on the amount that the carrying
      value
      of the impaired assets exceed the undiscounted cash flows expected to result
      from the use and eventual disposal of the impaired assets. At December 31,
      2004,
      no impairment of long-lived assets was deemed appropriate.





Use
      of
      Estimates





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the amounts reported in the financial
      statements and accompanying notes. Actual results could differ from those
      estimates.





Advertising
      Costs





Advertising
      costs are charged to expense as incurred. Advertising costs are included in
      selling, general and administrative expenses were $4,578 and $14,185 during
      2004
      and 2003, respectively.





Segment
      Information





The
      Company follows SFAS 131, “Disclosures about Segments of an Enterprise and
      Related Information”. Certain information is disclosed, per SFAS 131, based on
      the way management organizes financial information for making operating
      decisions and assessing performance. The Company currently operates in a single
      segment and will evaluate additional segment disclosure requirements as it
      expands its operations.





Income
      Taxes





The
      Company follows SFAS 109 "Accounting for Income Taxes" for recording the
      provision for income taxes. Deferred tax assets and liabilities are computed
      based upon the difference between the financial statement and income tax basis
      of assets and liabilities using the enacted marginal tax rate applicable when
      the related asset or liability is expected to be realized or settled. Deferred
      income tax expenses or benefits are based on the changes in the asset or
      liability each period. If available evidence suggests that it is more likely
      than not that some portion or all of the deferred tax assets will not be
      realized, a valuation allowance is required to reduce the deferred tax assets
      to
      the amount that is more likely than not to be realized. Future changes in such
      valuation allowance are included in the provision for deferred income taxes
      in
      the period of change.





30




Recent
      Pronouncements





In
      December 2003, the Financial Accounting Standards Board issued FASB
      Interpretation Number 46-R “Consolidation of Variable Interest Entities.” FIN
      46-R, which modifies certain provisions and effective dates of FIN 46, sets
      for
      the criteria to be used in determining whether an investment is a variable
      interest entity should be consolidated. These provisions are based on the
      general premise that if a company controls another entity through interests
      other than voting interests, that company should consolidate the controlled
      entity. The Company does not currently consolidate any entities under the
      provisions of FIN 46-R.





In
      November 2004, the FASB issued SFAS 151, “Inventory Costs.” SFAS 151 amends the
      accounting for abnormal amounts of idle facility expense, freight, handling
      costs, and wasted material (spoilage) under the guidance in ARB 43, Chapter
      4,
“Inventory Pricing.” Paragraph 5 of ARB 43, Chapter 4, previously stated that
“...under some circumstances, items such as idle facility expense, excessive
      spoilage, double freight, and rehandling costs may be so abnormal as to require
      treatment as current period charges....” This Statement requires that those items
      be recognized as current-period charges regardless of whether they meet the
      criterion of “so abnormal.” In addition, this Statement requires that allocation
      of fixed production overheads to the costs of conversion be based on the normal
      capacity of the production facilities. This statement is effective for inventory
      costs incurred during fiscal years beginning after June 15, 2005. Management
      does not expect adoption of SFAS 151 to have a material impact on the Company’s
      financial statements.




In
      December 2004, the FASB issued SFAS 153, “Exchanges of Nonmonetary Assets,” an
      amendment to Opinion No. 29, “Accounting for Nonmonetary Transactions.”
Statement 153 eliminates certain differences in the guidance in Opinion No.
      29
      as compared to the guidance contained in standards issued by the International
      Accounting Standards Board. The amendment to Opinion No. 29 eliminates the
      fair
      value exception for nonmonetary exchanges of similar productive assets and
      replaces it with a general exception for exchanges of nonmonetary assets that
      do
      not have commercial substance. Such an exchange has commercial substance if
      the
      future cash flows of the entity are expected to change significantly as a result
      of the exchange. SFAS 153 is effective for nonmonetary asset exchanges occurring
      in periods beginning after June 15, 2005. Earlier application is permitted
      for
      nonmonetary asset exchanges occurring in periods beginning after December 16,
      2004. Management does not expect adoption of SFAS 153 to have a material impact
      on the Company’s financial statements.





In
      December 2004, the FASB issued SFAS 123(R), “Share-Based Payment.” SFAS 123(R)
      amends SFAS 123, “Accounting for Stock-Based Compensation,” and APB Opinion 25,
“Accounting for Stock Issued to Employees.” SFAS 123(R) requires that the cost
      of share-based payment transactions (including those with employees and
      non-employees) be recognized in the financial statements. SFAS 123(R) applies
      to
      all share-based payment transactions in which an entity acquires goods or
      services by issuing (or offering to issue) its shares, share options, or other
      equity instruments (except for those held by an ESOP) or by incurring
      liabilities (1) in amounts based (even in part) on the price of the entity’s
      shares or other equity instruments, or (2) that require (or may require)
      settlement by the issuance of an entity’s shares or other equity instruments.
      This statement is effective (1) for public companies qualifying as SEC small
      business issuers, as of the first fiscal year beginning after December 15,
      2005,
      or (2) for all other public companies, as of the first fiscal year or interim
      period beginning after June 15, 2005, or (3) for all nonpublic entities, as
      of
      the first fiscal year beginning after December 15, 2005. Management does not
      expect adoption of SFAS 123(R) to have a material impact on the Company’s
      financial statements.





NOTE
      2.
      BASIS OF REPORTING





The
      Company’s financial statements are presented on a going concern basis, which
      contemplates the realization of assets and satisfaction of liabilities in the
      normal course of business.





The
      Company has experienced significant losses from operations as a result of
      decreased revenues coupled with certain fixed operating costs included in cost
      of sales and higher than anticipated general and administrative costs. For
      the
      year ended December 31, 2004, the Company incurred a net loss of $317,563 and
      has a working capital deficit of $1,358,093 and a stockholders’ deficit of
      $915,909 at December 31, 2004.





The
      Company’s ability to continue as a going concern is contingent upon its ability
      to attain profitable operations and secure financing. In addition, the Company’s
      ability to continue as a going concern must be considered in light of the
      problems, expenses and complications frequently encountered by entrance into
      established markets and the competitive environment in which the Company
      operates.





The
      Company is pursuing equity and debt financing for its operations and is seeking
      to expand its operations. Failure to secure such financing may result in the
      Company depleting its available funds and not being able pay its
      obligations.





The
      financial statements do not include any adjustments to reflect the possible
      future effects on the recoverability and classification of assets or the amounts
      and classification of liabilities that may result from the possible inability
      of
      the Company to continue as a going concern.




NOTE
      3.
      PROPERTY AND EQUIPMENT





Property
      and equipment at December 31, 2004 consisted of the following:





Furniture
                and office equipment
            
            $
            299,459Laboratory
                equipment
            
            
            1,835,2872,134,746Accumulated
                depreciation
            
            
            (1,682,562
            )$
            452,184





Depreciation
      expense for the years ended December 31, 2004 and 2003 was $150,372 and
      $187,811, respectively.





NOTE
      4.
      LOANS FROM AFFILIATED COMPANIES





Loans
      from affiliated companies reflect the net balance due to The Tyree Company
      and
      its affiliates at December 31, 2004, which amounted to $1,168,446. At December
      31, 2004 the Company was related to these entities as a result of common
      ownership of the Company and the affiliates. The balance due consists of the
      net
      balance of cash advances and repayments, inter-company charges for expenses
      such
      as rent, utilities, insurance, interest and other operating costs, offset by
      sales made by the Company to the affiliates.





During
      the years ended December 31, 2004 and 2003 such transactions consisted of the
      following:


2004
                
                2003Sales
                    to affiliates
                
                $
                613,155
                
                $
                549,279Allocation
                    of expenses
                
                
                958,005
                
                
                1,133,546Cash
                    advanced to affiliates
                
                
                341,149
                
                
                7,000Cash
                    advanced to the Company
                
                
                158,284
                
                
                -




31




NOTE
      5.
      INCOME TAXES





The
      Company accounts for income taxes under SFAS 109, which requires 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
              )%-




The
      Company joins in the consolidated federal and state income tax returns of The
      Tyree Organization and its affiliates. No benefit from the Company’s operating
      losses has been allocated to the Company from the consolidated group. No
      recognition of the future benefit of the accumulated operating losses has made
      in connection with the change in ownership of the Company’s assets as described
      in Note 8.




NOTE
      6.
      COMMITMENTS AND CONTINGENCIES





Operating
      Leases





The
      Company leases its office and laboratory facility from an affiliated company
      at
      a rate of $19,500 per month, including utility costs, on a month to month
      basis.





Rent
      and
      utility expense for the years ended December 31, 2004 and 2003 including the
      above lease was $189,504 and $165,753, respectively.





Litigation





During
      the periods covered by these financial statements the Company has been involved
      in litigation resulting from its normal business operations. The Company does
      not believe that any of the litigation will have a material impact on its
      financial condition or results of operation.





NOTE
      7.
      SUBSEQUENT EVENTS





On
      February 14, 2005, the Company completed an “Asset Acquisition Agreement” with
      ETL Acquisition Corp. (“ETL”), a Delaware corporation and a wholly owned
      subsidiary of Paradise Music & Entertainment, Inc., whereby ETL acquired
      substantially all of the assets and business of Environmental Testing
      Laboratories, Inc. At closing ETL paid for these assets by assuming liabilities
      of $761,820 from Environmental Testing Laboratories, Inc. and agreeing to assume
      additional liabilities of $1,153,643 from affiliate companies of Environmental
      Testing Laboratories, Inc. The $761,820 assumed directly from ETL consisted
      of
      approximately $530,000 of accounts payable, approximately $170,000 of tax obligations
      due to various taxing authorities, and approximately $63,000 in judgments
      entered against Environmental Testing Laboratories, Inc.. ETL is obligated
      to
      make payment on the accounts payable in the ordinary course of business. The
      additional liabilities of $1,153,643 from affiliate companies of Environmental
      Testing Laboratories, Inc. which ETL has agreed to assume will be determined
      by
      ETL in the future at its sole discretion; however, ETL agreed to pay a minimum
      of $250,000 of this $1,153,643 within thirty days of the closing. On
      February 24, 2005 ETL made a payment of $250,000 in cash against the additional
      liabilities.





On
      December 19, 2005 the parties agreed to amend the terms of the purchase as
      follows: In consideration for the purchased assets, the purchase price was
      reduced to $1,274,079, which ETL agreed to pay at closing by the assumption
      of
      accounts payable and accrued expenses in the amount of $546,441, additional
      liabilities in the amount of $671,638, and the issuance of preferred shares
      as
      noted below.





As
      additional consideration for the acquisition, Paradise Music agreed to issue
      280,000 shares of its Series B Preferred Stock to Environmental Testing
      Laboratories, Inc.. The
      parties agreed to amend the terms of the purchase, with effect from the date
      of
      the original agreement, to provide for the issuance by Paradise of 280,000
      shares of its Series A Preferred Stock, rather than its Series B Preferred
      Stock. The Series A Preferred Stock is convertible, at the option of the holder
      or of the Company, into ten (10) shares of Paradise common stock. The holders
      of
      shares of Series A Preferred Stock are entitled to receive an annual dividend
      of
      five cents per share, but do not receive a liquidation preference with respect
      to the Series A Preferred shares. Additional
      consideration paid by Paradise Music as a result of the issuance of the
      Preferred Stock amounted to $56,000, based of the trading price of the
      underlying common stock . Paradise
      expects to account for the asset purchase using the purchase method of
      accounting.





In
      conjunction with the transaction described above, ETL entered into a promissory
      note whereby it borrowed $500,000 from Capstone Business Credit LLC
      (“Capstone”). The promissory note was secured by substantially all of the assets
      of ETL. The note shall bear interest at the rate of 24% per annum and is payable
      by ETL in 24 installments of $15,000 commencing on February 28, 2005 until
      February 28, 2007, at which time the remaining unpaid principal and interest
      shall be due and payable. In addition, in connection with the asset acquisition,
      ETL entered into a Discount Factoring Agreement with Capstone whereby Capstone
      agreed to advance ETL an amount equal to seventy-five (75%) percent of certain
      of its accounts receivable. Capstone will remit payment to ETL upon its
      acceptance of the assignment of each account receivable. Paradise Music and
      Kelly Hickel, the President and CEO of Paradise Music, have jointly and
      severally guaranteed the faithful and timely performance and satisfaction by
      ETL
      of its obligations under both the promissory note and the Discount Factoring
      Agreement, including without limitation the payment of all amounts when due
      under such.


32


Pro
      Forma
      Condensed Financial Statements





Introduction





The
      transaction consists of the “Asset Acquisition Agreement” with ETL Acquisition
      Corp. (“ETL”), a Delaware corporation and a wholly owned subsidiary of Paradise
      Music & Entertainment, Inc., whereby ETL acquired substantially all of the
      assets and business of Environmental Testing Laboratories, Inc. At closing
      ETL
      paid for these assets by assuming liabilities of $761,820 from Environmental
      Testing Laboratories, Inc. and agreeing to assume additional liabilities of
      $1,153,643 from affiliate companies of Environmental Testing Laboratories,
      Inc.
      The $761,820 assumed directly from ETL consisted of approximately $530,000
      of
      accounts payable, approximately $170,000 of tax obligations
      due to various taxing authorities, and approximately $63,000 in judgments
      entered against Environmental Testing Laboratories, Inc.. ETL is obligated
      to
      make payment on the accounts payable in the ordinary course of business. The
      additional liabilities of $1,153,643 from affiliate companies of Environmental
      Testing Laboratories, Inc. which ETL has agreed to assume will be determined
      by
      ETL in the future at its sole discretion; however, ETL agreed to pay a minimum
      of $250,000 of this $1,153,643 within thirty days of the closing. On
      February 24, 2005 ETL made a payment of $250,000 in cash against the contingent
      liabilities.





On
      December 19, 2005 the parties agreed to amend the terms of the purchase as
      follows: In consideration for the purchased assets, the purchase price was
      reduced to $1,274,079, which ETL agreed to pay at closing by the assumption
      of
      accounts payable and accrued expenses in the amount of $546,441, additional
      liabilities in the amount of $671,638, and the issuance of preferred shares
      as
      noted below.





The
      entities involved in the Pro Forma Financial Statements are Paradise Music
&
Entertainment, Inc. (Paradise), a Delaware corporation, and Environmental
      Testing Laboratories, Inc., a New York corporation affiliated with The Tyree
      Company Group, Inc.





The
      period covered by the Pro forma Financial Statements is fiscal year ending
      December 31, 2004.





The
      Pro
      Forma Condensed Statement of Operations indicates that had the purchase been
      transacted January 1, 2004, the result would have been a profit of $232,691
      for
      the condensed entities. The pro forma only considers the income (loss) from
      continuing operations before any Other Income or extraordinary items, and as
      such, does not recognize the $55,205 in Other Income from the Paradise
      historical statement of operations. Adjustments to depreciation, interest and
      corporate allocations were all adjusted in the preparation of the pro forma
      results.


33


Pro
      Forma
      Statements of Operations


Paradise
      Music & Entertainment, Inc. (PDSE)


Environmental
      Testing Laboratories, Inc. (ETL)





**Historical****PDSE****Profit
                  & Loss****Jan - Dec 04**
            ****
            **Historical****ETL****Profit
                  & Loss****Jan - Dec 04**
            ****
            **Pro
                  Forma****Adjustments**
            ****
            
            ****
            **Pro
                      Forma****Results****Profit &
                  Loss****Jan - Dec 04****Sales**
            
            
            0
            
            
            2,921,653
            
            
            
            
            
            
            
            
            2,921,653**Cost
                of Goods**
            
            
            0
            
            
            1,934,558
            
            
            (565,000
            )
            
            (1)
            
            
            1,369,558**Gross
                Profit**
            
            
            0
            
            
            987,095
            
            
            
            
            
            
            
            
            1,552,095**S,
                G & A**
            
            
            48,467
            
            
            1,211,396
            
            
            (266,000
            )
            
            (2)
            
            
            993,863**Net
                Operating Income**
            
            
            (48,467
            )
            
            (224,301
            )
            
            
            
            
            
            
            
            558,232**Other
                (Income) Expenses****Depreciation
                Expense**
            
            
            
            
            
            
            
            
            92,000
            
            
            (3)
            
            
            92,000**Interest
                Expense**
            
            
            133,541
            
            
            
            
            
            100,000
            
            
            (4)
            
            
            233,541**Interest
                Expense - affiliates**
            
            
            
            
            
            93,262
            
            
            (93,262
            )
            
            (5)
            
            
            0**Other
                Income**
            
            
            (
                55,205
            )
            
            
            
            
            55,205
            
            
            (6)
            
            
            0**Total
                Other (Income) Expense**
            
            
            78,
                366
            
            
            93,262
            
            
            
            
            
            
            
            
            325,541**Net
                Income (Loss)**
            
            
            **(126,803**
            **)**
            
            **(317,563**
            **)**
            
            
            
            
            
            
            
            **232,691**





Notes
      to
      Pro Forma Statements of Operations:


(1)
      COGS
      was reduced by $473K due to elimination of expenses previously charged by
      affiliated companies; Depreciation expense of $92K was reclassified from COGS
      to
      Other Expenses


(2)
      SG&A was reduced by the Corp Allocation of $616K which the Company is no
      longer subject to; SG&A was increased by $350K due to costs no longer
      covered by Corporate


(3)
      Depreciation of $92K was reclassified from COGS to Other Expense


(4)
      Additional interest expense of $100K due to the Capstone Equipment
      Loan


(5)
      “Interest expense due to affiliates” eliminated as it was not part of the
      acquired assets and liabilities


(6)
      “Other Income” due to payment of receivable previously written off and therefore
      eliminated from pro forma


34


Pro
      Forma
      Balance Sheets


Paradise
      Music & Entertainment, Inc. (PDSE)


Environmental
      Testing Laboratories, Inc. (ETL)





**Historical
                    PDSE Balance
                    Sheet****as of 12/31/04**
              
              **Historical
                    ETL Balance Sheet****as
                  of 12/31/04**
              
              **Pro
                    Forma****Adjustments**
              
              
              
              **Pro
                    Forma Results Balance
                    Sheet****as of 12/31/04****Cash**
              
              
              114
              
              
              0
              
              
              500,000
              
              
              (1)
              
              
              500,114**Accounts
                  Receivable**
              
              
              0
              
              
              452,457
              
              
              
              
              
              
              
              
              452,457**Total
                  Current Assets**
              
              
              114
              
              
              452,457
              
              
              
              
              
              
              
              
              952,571**Fixed
                  Assets****Property
                  & Equipment**
              
              
              0
              
              
              452,184
              
              
              468,081
              
              
              (2)
              
              
              920,265**Total
                  Fixed Assets**
              
              
              0
              
              
              452,184
              
              
              
              
              
              
              
              
              920,265**TOTAL
                  ASSETS**
              
              
              **114**
              
              
              **904,641**
              
              
              
              
              
              
              
              
              **1,872,836****LIABILITIES
                  & EQUITY****Accounts
                  Payable****A/P
                  - Paradise**
              
              
              5,043,893
              
              
              
              
              
              
              
              
              
              
              
              5,043,893**A/P
                  - ETL**
              
              
              
              
              
              640,264
              
              
              
              
              
              
              
              
              640,264**A/P
                  - Additional Liabilities**
              
              
              
              
              
              
              
              
              671,638
              
              
              (3)
              
              
              671,638**Total
                  Accounts Payable**
              
              
              5,043,893
              
              
              640,264
              
              
              
              
              
              
              
              
              6,355,795**Other
                  Current Liabilities****Capstone
                  Equipment Loan**
              
              
              
              
              
              
              
              
              500,000
              
              
              (4)
              
              
              500,000**NP
                  - Financial Institutions**
              
              
              340,000
              
              
              
              
              
              
              
              
              
              
              
              340,000**Notes
                  Payable - Other**
              
              
              662,250
              
              
              
              
              
              
              
              
              
              
              
              662,250**Loans
                  from affiliated companies**
              
              
              
              
              
              1,168,446
              
              
              (1,168,446
              )
              
              (5)
              
              
              0**Cash
                  overdraft**
              
              
              
              
              
              1,840
              
              
              (1,840
              )
              
              (5)
              
              
              0**Accrued
                  Interest**
              
              
              261,089
              
              
              
              
              
              100,000
              
              
              (6)
              
              
              361,089**Accrued
                  Wages**
              
              
              483,136
              
              
              
              
              
              
              
              
              
              
              
              483,136**Accrued
                  Expenses - Other**
              
              
              738,379
              
              
              
              
              
              
              
              
              
              
              
              738,379**Total
                  Other Current Liabilities**
              
              
              2,484,854
              
              
              1,170,286
              
              
              
              
              
              
              
              
              3,084,854**Total
                  Liabilities**
              
              
              7,528,747
              
              
              1,810,550
              
              
              
              
              
              
              
              
              9,440,649**Equity****Common
                  Stock - Par Value**
              
              
              584,964
              
              
              10,000
              
              
              (10,000
              )
              
              (7)
              
              
              584,964**PIC
                  - Common Stock**
              
              
              27,026,355
              
              
              
              
              
              
              
              
              
              
              
              27,026,355**Preferred
                  Stock Series A**
              
              
              
              
              
              
              
              
              56,000
              
              
              (8)
              
              
              56,000**Retained
                  Earnings**
              
              
              (35,139,149
              )
              
              (598,346
              )
              
              269,672
              
              
              (9)
              
              
              (35,467,823
              )**Net
                  Income (Loss)**
              
              
              (126,803
              )
              
              (317,563
              )
              
              (55,205
              )
              
              (10)
              
              
              232,691**Total
                  Equity**
              
              
              (7,528,633
              )
              
              (905,909
              )
              
              
              
              
              
              
              
              (7,567,813
              )**TOTAL
                  LIABILITIES & EQUITY**
              
              
              **114**
              
              
              **904,641**
              
              
              
              
              
              
              
              
              **1,872,836**


Notes
      to
      Pro Forma Balance Sheet:


(1)  Record
      cash from Capstone Equipment Loan at time of acquisition


(2)  Write
      up
      Property & Equipment to FMV at time of acquisition


(3)  Record
      additional liabilities as part of the acquisition


(4)  Record
      Capstone Equipment Loan


(5)  Eliminate
      Loans from affiliate companies and Cash overdraft as not part of the acquired
      assets and liabilities


(6)  Increase
      Accrued Interest to record increased interest expense due to Capstone Equipment
      Loan


(7)  Eliminate
      Common Stock of ETL as not part of the acquired assets and
      liabilities


(8)  Record
      valuation of 280,000 shares of Preferred Stock Series A as part of the
      acquisition


(9)  Adjustment
      due to elimination of retained earnings of ETL and offsetting items (4) and
      (6)


(10)  Elimination
      of extraordinary items per rules for Pro Forma presentations






35