UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)

|X|   Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
      of 1934

      For the quarterly period ended March 31, 2005

|_|   Transition report under Section 13 or 15(d) of the Exchange Act

      For the transition period from _____________ to _____________

                         Commission File Number 0-51168

                        Devine Entertainment Corporation
        (Exact Name of Small Business Issuer as Specified in Its Charter)

              Ontario, Canada                           Not Applicable
      (State or other Jurisdiction of                  (I.R.S. Employer
       Incorporation or Organization)                 Identification No.)

         Suite 504, 2 Berkeley Street, Toronto, Ontario, Canada M5A 2W3
                     (Address of Principal Executive Office)

                                 (416) 364-2282
                           (Issuer's Telephone Number)

                                 Not Applicable
              ----------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

      Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes |X|
No |_|

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

      State the number of shares outstanding of each of the issuer's classes of
commom equity, as of the latest practicable date: As of November 11, 2005, the
issuer had 35,353,508 Common Shares outstanding.

      Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
<PAGE>

                          PART I--FINANCIAL INFORMATION

Item 1. Financial Statements.

                        DEVINE ENTERTAINMENT CORPORATION

                    INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                      (Unaudited - Prepared by Management)

                                 March 31, 2005

                         (Expressed in Canadian Dollars)


<PAGE>


                                                                         PAGE II

                        DEVINE ENTERTAINMENT CORPORATION

                       INTERIM CONSOLIDATED BALANCE SHEET
                      (Unaudited - Prepared by Management)

                                 MARCH 31, 2005
                        (Expressed in Canadian Dollars)

                                     ASSETS

                                                   Mar 31              Dec 31
                                                    2005                2004
                                                ------------        ------------
Current

Cash                                            $    254,044        $    104,727
Accounts receivable                                  347,291             655,482
Inventory                                             13,521              26,013
Tax credits receivable                               299,097             299,097
Prepaid and sundry assets                             66,569              42,066
                                                ------------        ------------

                                                     980,522           1,127,385

Advances receivable                                  494,550             494,550
Investment in film, television
  programs and recordings
  (Note 4)                                         9,315,425           9,407,576
Deferred financing charges                            12,750              36,123
Property and equipment
  (Note 5)                                            29,540              31,727
                                                ------------        ------------
                                                $ 10,832,787        $ 11,097,361
                                                ============        ============

                                  LIABILITIES

Current

Bank film production loan
  (Note 6)                                      $    361,839        $    919,664
Accounts payable and accrued
  liabilities                                      1,076,646           1,041,147
Convertible debentures
  (Note 7)                                         1,519,290           1,519,290
Deferred revenue                                   2,658,971           2,658,971
                                                ------------        ------------
                                                   5,616,746           6,139,072
                                                ------------        ------------
Contingency and commitments
  (Notes 9 and 18)

                              SHAREHOLDERS' EQUITY

Capital stock (Note 10)                         $ 11,969,712        $ 11,703,437
Contributed surplus (Note 12)                      1,020,886           1,051,886
Deficit                                           (7,774,557)
                                                ------------        ------------
                                                   5,216,041           4,958,289
                                                ------------        ------------
                                                $ 10,832,787        $ 11,097,361
                                                ============        ============

See accompanying notes to interim consolidated financial statements.


<PAGE>


                                                                        PAGE III

                        DEVINE ENTERTAINMENT CORPORATION

             INTERIM CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                      (Unaudited - Prepared by Management)

            FOR THE PERIOD ENDED MARCH 31, 2005 AND DECEMBER 31, 2004
                        (Expressed in Canadian Dollars)


<TABLE>
<CAPTION>
                                                                      Stock                               Contributed
                               Common Shares           Warrants      Options         Preferred Shares       Surplus        Deficit
                          -----------------------     ----------    ---------       ------------------    -----------   ------------
                              #            $              #             #              #          $            $              $
                                                                                                           (Note 12)
<S>                       <C>           <C>             <C>                <C>           <C>        <C>      <C>        <C>
BALANCE,
January 1, 2004           14,261,838    9,393,316       550,000            --            --         --       466,313    (12,095,951)

ISSUED
- on settlement
  of bank loans              100,000       10,000            --            --            --         --            --             --
- on settlement
  of long-term debt        2,042,054      204,205     1,830,000            --            --         --        18,300             --
- pursuant to
  private placement        1,100,000      121,000       866,616            --            --         --        99,000             --
- pursuant to
  private placement        5,160,000      464,400     2,580,000            --            --         --        51,600             --
- for cash
  consideration              100,000       10,000            --            --            --         --            --             --
- on settlement of
  advances from
  related parties          4,717,082      471,708            --            --            --         --            --             --
- on settlements of
  accounts payable
  and accruals             4,022,918      461,569            --            --            --         --       371,823             --
Less: share issuance
  costs                           --      (28,111)           --            --            --         --            --             --
- on conversion
  of warrants                366,666       55,000      (366,666)           --            --         --       (55,000)            --
- issued to Devine
  Limited Partnership        380,450      351,800            --            --       494,550    494,550            --             --
- tax benefits utilized
  by limited partnership          --     (306,000)           --            --            --         --            --             --
- on issuance of stock
  options                         --           --            --     3,435,000            --         --        99,850             --
NET INCOME                        --           --            --            --            --         --            --      4,298,917
                          ----------------------------------------------------------------------------------------------------------
BALANCE,
December 31, 2004         32,251,008   11,208,887     5,459,950     3,435,000       494,550    494,550     1,051,886     (7,797,034)
                          ==========================================================================================================
- on conversion
  of warrants              1,362,500      231,625    (1,362,500)           --            --         --       (27,250)            --
- on exercise of
  stock options              125,000       16,250            --      (125,000)           --         --        (3,750)            --
- issued for services
  rendered                    80,000       18,400            --            --            --         --            --             --
NET INCOME                        --           --            --            --            --         --            --         22,477
                          ----------------------------------------------------------------------------------------------------------
BALANCE,
March 31, 2005            38,818,508   11,475,162     4,097,450     3,310,000       494,550    494,550     1,020,886     (7,774,557)
                          ==========================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>


                                                                         PAGE IV

                        DEVINE ENTERTAINMENT CORPORATION

                  INTERIM CONSOLIDATED STATEMENT OF OPERATIONS
                      (Unaudited - Prepared by Management)

                     FOR THE 3 MONTH PERIOD ENDED MARCH 31,
                        (Expressed in Canadian Dollars)

                                                    2005               2004
                                                ------------       ------------
REVENUE                                         $    478,236       $     77,467
                                                ------------       ------------
EXPENSES
  Operating                                          175,044             76,928
  Amortization - film, television
                 programs and recordings             257,036             60,096
               - equipment                             2,188              1,776
  Interest (Note 8)                                   21,491             40,319
                                                ------------       ------------
                                                     455,759            179,119
                                                ------------       ------------
NET INCOME (LOSS) FOR THE PERIOD                      22,477           (101,652)

Deficit, beginning of period                      (7,797,034)       (12,095,951)
                                                ------------       ------------
Deficit, end of period                          $ (7,774,557)      $(12,197,603)
                                                ============       ============

EARNINGS (LOSS) PER COMMON SHARE
  (Note 11)

BASIC                                                 $ 0.00            $ (0.01)
                                                      ======            =======

FULLY DILUTED                                         $ 0.00            $ (0.01)
                                                      ======            =======

See accompanying notes to interim consolidated financial statements.


<PAGE>


                                                                          PAGE V

                        DEVINE ENTERTAINMENT CORPORATION

                  INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
                      (Unaudited - Prepared by Management)

                     FOR THE 3 MONTH PERIOD ENDED MARCH 31,
                        (Expressed in Canadian Dollars)

                                                         2005           2004
                                                       ---------      ---------
OPERATING ACTIVITIES
  Net income (loss) for the period                     $  22,477      $(101,652)
  Amortization - film, television programs
                 and recordings                          257,036         60,096
               - property and equipment                    2,188          1,776
               - financing charges                        23,373          7,990
  Shares issued for services rendered                     18,400             --
  Investment in film, television programs
    and recordings                                      (164,885)      (863,480)
  Change in non-cash components of
    working capital (Note 14)                            331,678       (101,577)
                                                       ---------      ---------
                                                         490,267       (996,847)
                                                       ---------      ---------
FINANCING ACTIVITIES
  Increase (decrease) in bank loans                     (557,825)       550,292
  Private placement                                           --        173,000
  Issuance of shares on conversion
    of warrants                                          204,375             --
  Issuance of shares on stock
    options exercised                                     12,500             --
                                                       ---------      ---------
                                                        (340,950)       723,292
                                                       ---------      ---------
INVESTING ACTIVITY
  Purchase of property and equipment                          --         (3,750)
                                                       ---------      ---------
CHANGE IN CASH                                           149,317       (277,305)

CASH, BEGINNING OF PERIOD                                104,727        742,431
                                                       ---------      ---------
CASH, END OF PERIOD                                    $ 254,044      $ 465,126
                                                       =========      =========
SUPPLEMENTAL DISCLOSURE (Note 14)

Interest paid                                          $   8,721      $  42,476

See accompanying notes to interim consolidated financial statements.


<PAGE>


                                                                         PAGE VI

                        DEVINE ENTERTAINMENT CORPORATION

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                      (Unaudited - Prepared by Management)

                                 MARCH 31, 2005
                        (Expressed in Canadian Dollars)

1.    NATURE OF BUSINESS

      Devine   Entertainment   Corporation  ("the  Company")  is  an  integrated
      developer  and producer of  children's  and family  programs for worldwide
      television and film broadcast and home video markets.

      Television and film production and distribution is highly  speculative and
      inherently  risky.  There can be no assurance  of the economic  success of
      such television and film  programming  since the revenues derived from the
      production  and  distribution  (which  do not  necessarily  bear a  direct
      correlation  to the  production or  distribution  costs  incurred)  depend
      primarily upon their acceptance by the public.

      The success of the Company's  television and film  programming also may be
      impacted by, among other factors,  prevailing advertising rates, which are
      subject to fluctuation.  Therefore,  there is a substantial risk that some
      of all of the  Company's  television  projects  will  not be  commercially
      successful,  resulting in costs not being recouped or anticipated  profits
      not being realized.

      These  financial  statements have been prepared on the basis of accounting
      principles  applicable to a going concern,  which presumes the realization
      of assets and settlement of liabilities in the normal course of operations
      in the foreseeable future.

      The Company has a significant working capital deficiency and its continued
      existence is dependent upon its ability to restore and maintain profitable
      operations and to successfully convert convertible debentures.

      If the going concern  assumption  were not appropriate for these financial
      statements,  then adjustments would be necessary in the carrying values of
      assets and liabilities and the reported net income.

2.    BASIS OF PRESENTATION

      The accompanying  unaudited interim consolidated financial statements have
      been  prepared  in  accordance  with  the  requirements  of  the  Canadian
      Institute  of  Chartered   Accountants  ("CICA")  Handbook  Section  1751,
      "Interim  Financial  Statements."  Accordingly,  certain  information  and
      footnote  disclosure  normally  included  in annual  financial  statements
      prepared  in  accordance  with  Canadian  generally  accepted   accounting
      principles  ("GAAP")  have  been  omitted  or  condensed.   These  interim
      consolidated financial statements include the accounts of the Company, its
      subsidiaries and variable  interest  entities.  All material  intercompany
      balances and transactions  have been eliminated.  These unaudited  interim
      consolidated  financial statements and supplemental  information should be
      read in  conjunction  with the Company's  audited  consolidated  financial
      statements  as at and for the year ended  December 31, 2004, as set out in
      the December 2004 Annual Report.

      In the opinion of management,  these  statements  include all  adjustments
      (consisting  of  normal  recurring  accruals)   considered   necessary  by
      management  to present a fair  statement  of the  results  of  operations,
      financial  position and cash flows.  The  unaudited  interim  consolidated
      financial  statements were prepared using the same accounting policies and
      methods as those used in the Company's  consolidated  financial statements
      for the year ended December 31, 2004.

      These  interim  consolidated  financial  statements  have been prepared in
      accordance with accounting  principles  generally  accepted in Canada that
      conforms, in all material respects, with U.S. GAAP, except as described in
      Note 16 to the financial statements.


<PAGE>


                                                                        PAGE VII

                        DEVINE ENTERTAINMENT CORPORATION

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                      (Unaudited - Prepared by Management)

                                 MARCH 31, 2005

3.    ADVANCES FROM LIMITED PARTNERSHIP

      During the first  quarter of 2005,  the  Company  entered  into a services
      agreement with the QCF 2005 Limited Partnership ("Partnership"). Under the
      terms of the agreement, the Partnership will incur certain expenses, until
      December  31,  2005,  relating  to  the  following  services  required  in
      connection with the conduct of business of the Company.

            o     Labour, employment and all other "direct" services;

            o     Marketing services,  including production and placement of all
                  required advertising;

            o     The incurring of other operating expenses,  excluding payments
                  for the purchase of real property,

            o     Administrative services;

            o     Certain  development  services required in connection with new
                  projects of the business

      In return,  the  Partnership  would be  entitled  to a royalty  equal to a
      percentage  of gross  revenue of the Company for the  calendar  years from
      2005 to 2015,  payable 60 days after the  completion of each calendar year
      in connection with the expenses incurred during such year.

      The accounts of this  variable  interest  entity have been included in the
      consolidated financial statements of the Company.

4.    INVESTMENT IN FILM, TELEVISION PROGRAMS AND RECORDINGS

<TABLE>
<CAPTION>
                                              March 31, 2005             December 31, 2004
                                              --------------             -----------------
                                               Accumulated
                                    Cost       Amortization      Net            Net
                                 -----------   ------------  -----------    -----------
<S>                              <C>           <C>           <C>            <C>
Completed television
  programs and recordings        $16,038,987   $13,021,907   $ 3,017,080    $ 3,096,399
Completed Motion picture
  - Bailey's Billions              7,146,016     1,930,481     5,215,535      5,407,622
Projects in progress               1,082,810            --     1,082,810        903,555
                                 -----------   -----------   -----------    -----------
                                 $24,267,813   $14,952,388   $ 9,315,425    $ 9,407,576
                                 ===========   ===========   ===========    ===========
</TABLE>

      The Company  expects to amortize  approximately  $1,100,000  for completed
      television programs and recordings costs and $700,000 for completed motion
      picture costs during the current fiscal year.

      The Company  expects 98% of completed  television  programs and recordings
      and 51% of completed  motion  picture  costs will be amortized by December
      31, 2007.

      As at December 2011 over 80% of the completed motion picture costs will be
      amortized.

      The remaining  period of  amortization  for the completed  projects ranges
      from two to nine years at December 31, 2004.


<PAGE>

                                                                       PAGE VIII

                        DEVINE ENTERTAINMENT CORPORATION

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                      (Unaudited - Prepared by Management)

                                 MARCH 31, 2005

5.    PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                              March 31, 2005             December 31, 2004
                                              --------------             -----------------
                                               Accumulated
                                    Cost       Amortization      Net            Net
                                 -----------   ------------  -----------    -----------
<S>                              <C>           <C>           <C>            <C>
Computer and editing equipment     $177,922      $155,450      $22,472        $24,284
Furniture and fixtures               58,193        51,125        7,068          7,443
                                   --------      --------      -------        -------
                                   $236,115      $206,575      $29,540        $31,727
                                   ========      ========      =======        =======
</TABLE>

6.    BANK FILM PRODUCTION LOAN                           March 31   December 31
                                                            2005        2004
                                                          --------   -----------
      Term loan bearing interest at a fluctuating
      per annum rate equal to 1.25% plus the Base
      Rate of the Comerica Bank, repayable on
      November 30, 2004, secured by a general
      security agreement against all the assets of
      one of the 100% owned subsidiaries of Devine
      Entertainment Corporation. On December 10,
      2004, the loan was extended to April 4, 2005.
      This loan was used for the financing of the
      motion picture "Bailey's Billions". The loan
      was repaid on May 24, 2005.                         $361,839    $919,664
                                                          ========    ========

      Interest on the above bank film production loan for the three month period
      ended March 31, 2005 totalled $8,721 (March 31, 2004 - $42,392).


<PAGE>

                                                                         PAGE IX

                        DEVINE ENTERTAINMENT CORPORATION

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                      (Unaudited - Prepared by Management)

                                 MARCH 31, 2005

7.    CONVERTIBLE DEBENTURES

      Convertible Debentures
                                                        March 31,   December 31
                                                          2005          2004
                                                       ----------    ----------
      Principal Issued
      - February 1996 (i)                              $   75,000    $   75,000
      - December 2000 (ii)                                550,000       550,000
      - December 2000 (iii)                               835,800       835,800
      - Capitalized interest (iv)                         240,000       240,000
                                                       ----------    ----------
                                                        1,700,800     1,700,800
      Less - equity component                            (181,510)     (181,510)
                                                       ----------    ----------
                                                       $1,519,290    $1,519,290
                                                       ==========    ==========

      (i)   The  Company   issued  a  7.5%   $100,000   redeemable   convertible
            subordinated  debenture  in February  1996.  This  debenture  was to
            mature on December 31, 2000.  The debenture was  convertible  at the
            holder's  option into common shares at any time prior to maturity at
            a conversion rate of $1.50 per share.

            Management  renegotiated  repayment  terms of this  debenture  at an
            increased interest rate of 10%. The principal was re-payable in four
            quarterly  payments during 2001 of $25,000 plus interest.  The first
            instalment  was made in April 2001.  The Company is still in default
            on the second,  third and fourth instalments.  As at March 31, 2005,
            there  remains  an  outstanding  balance  of  $75,000  plus  $31,875
            (December 31, 2004 - $30,000) in accrued interest on this debenture.
            As a result of the default,  the  debenture is classified as current
            liability on the balance sheet.

      (ii)  The Company  issued  550,000  units of  debentures  and  warrants in
            December 2000 for $550,000 less costs of $85,000 for net proceeds to
            the Company of $465,000. Each unit consists of a $1.00 debenture and
            1  immediately   separable  warrant.   The  redeemable   convertible
            subordinated  debentures  mature on December 31, 2005, bear interest
            at 10.5% per annum,  and are payable  semi-annually.  The debentures
            are  convertible  at the holders'  option into common  shares at any
            time prior to  maturity  on the basis of one common  share per $0.50
            principal  amount of debenture.  The debentures are  subordinated to
            certain senior indebtedness of the Company. As at March 31, 2005 the
            Company  is  in  default  of  an  outstanding  balance  of  $122,150
            (December  31,  2004  -  $107,713)  in  accrued  interest  on  these
            debentures.  As a result of the default, the debenture is classified
            as current liability on the balance sheet.


<PAGE>

                                                                          PAGE X

                        DEVINE ENTERTAINMENT CORPORATION

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                      (Unaudited - Prepared by Management)

                                 MARCH 31, 2005

7.    CONVERTIBLE DEBENTURES(Continued)

      (iii) On December  19,  2000,  the Company  obtained  the  approval of the
            holders of the 7.5% debentures issued December,  1995 to: (i) extend
            the maturity date to December 31, 2002;  (ii) reduce the  conversion
            rate to $0.50 per common share;  (iii) increase the rate of interest
            applicable  to 10.5% per  annum;  (iv)  issue to the  holders of the
            debentures one warrant for each $1.00 principal  amount held by such
            holder;  and (v) to secure the 7.5%  debentures by way of a floating
            charge over all of the Company's assets,  such floating charge to be
            subordinated  to all existing and future "Senior  Indebtedness"  and
            "Permitted  Encumbrances"  and to rank  pari  passu  with  identical
            security  to be granted to  holders  of up to  $1,000,000  principal
            amount of convertible  debentures  issued by the Company on December
            21,  2000.  The  Company  is in  default  on  the  repayment  of the
            debentures.  As at March 31,  2005,  there  remains  an  outstanding
            balance  of  $183,509  (December  31,  2004 -  $161,569)  in accrued
            interest  on these  debentures.  As a  result  of the  default,  the
            debenture is classified as current liability on the balance sheet.

            Management is in constant  communication  with the debenture holders
            and expects that the Company  will be able to settle the  debentures
            in the normal course of operations.

      (iv)  As part of the  settlement  of the long-term  debt,  the Company has
            granted the same  conversion  privileges to $240,000  portion of the
            interest  accrued on the  debentures  described  in notes  7(ii) and
            7(iii) as on the related  debentures.  As at March 31, 2005 there is
            an  outstanding  amount of $18,900  (December 31, 2004 - $12,600) in
            accrued  interest.  As a result of the  default,  the  debenture  is
            classified as current liability on the balance sheet.

8.    INTEREST EXPENSE

                                                          March 31,   March 31,
                                                            2005        2004
                                                          --------    --------
      Interest on convertible debenture                   $ 67,925    $ 64,448
      Interest on bank loans                                 8,721      64,861
                                                          --------    --------
                                                            76,646     129,309
      Interest income                                      (13,375)         --
                                                          --------    --------
                                                            63,271     129,309
      Interest capitalized to film and
        television programs                                (41,780)    (88,990)
                                                          --------    --------
                                                          $ 21,491    $ 40,319
                                                          ========    ========


<PAGE>

                                                                         PAGE XI

                        DEVINE ENTERTAINMENT CORPORATION

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                      (Unaudited - Prepared by Management)

                                 MARCH 31, 2005

9.    COMMITMENTS

      (a)   The Company has a rental  lease  commitment  for its  premises.  The
            agreement  expires May 31,  2009.  Minimum  annual rent  commitments
            excluding occupancy costs are as follows:

                        2005                           $19,500
                        2006                            27,000
                        2007                            28,000
                        2008                            29,000
                        2009                            13,000

      (b)   The  Company  has  employment   agreements  with  various  principal
            officers and employees.  The  agreements  provide for minimum salary
            levels.

      (c)   The Company has entered  into  contractual  agreements  for creative
            talent related to future film production.

      (d)   The purchasers of the copyright  interest are entitled to a priority
            distribution  of the future  revenue  earned from the motion picture
            "Bailey's  Billions" up to the original amount of the purchase price
            of  $2,477,500.  Subsequent  to the priority  distribution,  all the
            amounts  would be  distributed  pari  passu in  accordance  with the
            percentage ownership acquired.

      (e)   The distributors of the film are entitled to a priority distribution
            of the  future  revenue  earned  from the motion  picture  "Bailey's
            Billions"  up to the original  amount of the  purchase  price in the
            amount of $2,908,971.  Subsequent to the priority distribution,  all
            the amounts would be distributed in accordance  with the contractual
            agreements.

10.   CAPITAL STOCK

      (a)   Authorized

            An unlimited number of common shares and Class "A" shares 494,550 of
            Series 1 preferred shares.

      (b)   Issued - common shares                          Number     $ Amount
                                                          ----------  ----------
            Balance, December 31, 2004                    32,251,008  11,208,887

            Common shares issued for services
              rendered                                        80,000      18,400

            Common shares issued on conversion
              of warrants                                  1,362,500     231,625

            Stock options exercised into common
              shares                                         125,000      16,250
                                                          ----------  ----------
            Balance, March 31, 2005                       33,818,508  11,475,162
                                                          ==========  ==========


<PAGE>

                                                                        PAGE XII

                        DEVINE ENTERTAINMENT CORPORATION

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                      (Unaudited - Prepared by Management)

                                 MARCH 31, 2005

10.   CAPITAL STOCK (Continued)

      (c)   Issued - Series 1 preferred shares               Number     $ Amount
                                                             -------    --------
            Balance, December 31, 2004
              and March 31, 2005                             494,550    494,550
                                                             =======    =======

            The Series 1 preferred shares are non-voting,  non-participating, $1
            redeemable and  retractable  The shares pay dividends at the rate of
            9.1% per  annum  payable  in annual  instalments  on the 15th day of
            December in each year and shall  accrue and be  cumulative  from the
            date of issue. As at March 31, 2005 dividends in arrears amounted to
            $11,220.

      (d)   Stock Option Plan

            Under the terms of a stock option plan approved by the shareholders,
            the Company is authorized to grant  directors,  officers,  employees
            and others options to purchase  common shares at prices based on the
            market price of shares as determined on the date of grant.

            The outstanding and exercisable stock options are as follows:

                                                           Weighted      Average
                                               Number     Allocated     Exercise
Outstanding and Exercisable                of Options         Value        Price
--------------------------------------------------------------------------------
Balance, December 31, 2004                  3,435,000        99,850        $0.10
  Exercised                                  (125,000)       (3,750)        0.10
                                            ---------        ------         ----
Balance, March 31, 2005                     3,310,000        96,100         0.10
                                            =========        ======         ====

                                                       Number           Exercise
Expiry Date               Grant Date               of Options              Price
--------------------------------------------------------------------------------
June 25, 2005             June 25, 2004                10,000               0.10
June 25, 2006             June 25, 2004               300,000               0.10
June 25, 2009             June 25, 2004             3,000,000               0.10
                                                    ---------
                                                    3,310,000
                                                    =========


<PAGE>

                                                                       PAGE XIII

                        DEVINE ENTERTAINMENT CORPORATION

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                      (Unaudited - Prepared by Management)

                                 MARCH 31, 2005

10.   CAPITAL STOCK (Continued)

      (e)   Warrants

            Common  shares have been  reserved  for  warrants  on the  following
            basis:

                                                                         Average
                                               Number     Allocated     Exercise
Outstanding and Exercisable               of Warrants         Value        Price
--------------------------------------------------------------------------------
Balance, December 31, 2004                  5,459,950       113,900        $0.37
  Converted to common shares               (1,362,500)      (27,250)        0.15
                                           ----------       -------        -----
Balance, March 31, 2005                     4,097,450        86,650        $0.36
                                           ==========       =======        =====

                                                       Number           Exercise
Expiry Date               Grant Date              of Warrants              Price
--------------------------------------------------------------------------------
April 7, 2005             April 7, 2004             1,217,500               0.15
December 31, 2005         December 31, 2000           550,000               0.50
September 26, 2006        June 30, 2004               499,950        0.15 - 0.20
February 26, 2007         June 30, 2004             1,830,000               0.50
                                                    ---------
                                                    4,097,450
                                                    =========

11.   EARNINGS PER COMMON SHARE

      (a)   Basic: For the three month period ended March 31, 2005, the weighted
            average  number of common  shares was  32,785,008  (March 31, 2004 -
            14,261,838).

      (b)   Fully Diluted:  For the three month period ended March 31, 2005, the
            diluted  weighted  average  number of common  shares was  33,350,004
            (March 31,  2004 -  14,261,838).  For the three month  period  ended
            March 31, 2005,  2,380,000  (March 31, 2004 - 550,000)  warrants and
            Nil (March 31, 2004 - 1,927,000) options to purchase common were not
            included in the  calculation  of fully  diluted  earnings  per share
            because of their anti-dilutive effect.


<PAGE>

                                                                        PAGE XIV

                        DEVINE ENTERTAINMENT CORPORATION

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                      (Unaudited - Prepared by Management)

                                 MARCH 31, 2005

12.   CONTRIBUTED SURPLUS

            Balance, December 31, 2004              $1,051,886
            Less: Stock Options exercised
              (Note 10(d))                              (3,750)
            Less: Warrants converted into
              common shares (Note 10(e))               (27,250)
                                                    ----------
                                                    $1,020,886

                                                  March 31, 2005   Dec. 31, 2004
                                                  --------------   -------------

            Settlement of debt instruments          $  656,626       $  656,626
            Equity portion of long-term debt
              (Note 7(a))                              181,510          181,510
            Stock Options (Note 10 (d))                 96,100           99,850
            Warrants (Note 10(e))                       86,650          113,900
                                                    ----------       ----------
                                                    $1,020,886       $1,051,886
                                                    ==========       ==========

13.   RELATED PARTY TRANSACTIONS

      During the 3 month period  ended March 31, 2005 $53,247  (March 31, 2004 -
      $2,720) of fees were paid or accrued to corporations  controlled by two of
      the  directors  for  writing,  directing  and  producing  services.  These
      transactions have been measured at exchange amount, which is the amount of
      consideration  established  and agreed to by the related parties and which
      the  management  believes  reflect  prevailing  market rates.  Included in
      accounts  payable  and accrued  liabilities  at March 31, 2005 was $26,304
      (December 31, 2004 - $Nil).

14.   SUPPLEMENTAL CASH FLOW INFORMATION

                                                           2005         2004
                                                         --------     ---------
      Change in non-cash working capital
        Accounts receivable                              $308,191     $  79,228
        Inventory                                          12,492            --
        Prepaid and sundry assets                         (24,503)      (14,577)
        Accounts payable and accrued liabilities           35,498      (165,888)
        Deferred revenue                                       --          (340)
                                                         --------     ---------
                                                         $331,678     $(101,577)
                                                         ========     =========
      Non-cash transactions
        Shares issued for services rendered              $ 18,400     $      --


<PAGE>

                                                                         PAGE XV

                        DEVINE ENTERTAINMENT CORPORATION

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                      (Unaudited - Prepared by Management)

                                 MARCH 31, 2005

15.   SEGMENTED INFORMATION

      The  Company  conducts  its  operations  in two  business  segments:  film
      productions  and  film  library  revenue.  Selected  information  for  the
      Company's operating segments, net of inter-company amounts is as follows:

                                                 Film      Film Library
            2005                              Productions     Revenue     Total
            ----                              -----------  ------------  -------
                                                   $             $          $
            Revenue                             293,000       185,000    478,000

            2004
            ----

            Revenue                                  --        77,000     77,000

      Revenue by geographic location,  based on the location of customers, is as
      follows:

                                                               2005        2004
                                                              -------     ------
                                                                 $           $
      Revenue
        Canada                                                116,000      8,000
        United States                                          69,000     69,000
        France                                                 99,000         --
        Europe - Other                                        188,000         --
        Other foreign                                           6,000         --
                                                              -------     ------
                                                              478,000     77,000
                                                              =======     ======

16.   RECONCILIATION TO UNITED STATES GAAP

      The consolidated financial statements of the Company have been prepared in
      accordance  with  Canadian  GAAP.  The  material  differences  between the
      accounting  policies used by the Company under Canadian GAAP and U.S. GAAP
      are disclosed  below in accordance  with the  provisions of the Securities
      and Exchange Commission.

      (a)   Under  Canadian  GAAP,  the  conversion  feature on the  convertible
            debentures   (Note  9(a)),  is  valued  at  $181,510  and  had  been
            classified as  contributed  surplus.  Under U.S. GAAP the conversion
            feature is not accounted  separately and thus would not flow through
            contributed surplus. This transaction occurred in 2000.

      (b)   Under Canadian GAAP, the exchange of convertible  debentures for new
            convertible  debentures and subsequent gain on settlement of the new
            convertible   debentures  were  valued  at  $284,803  and  had  been
            classified as  contributed  surplus.  Under U.S. GAAP the conversion
            and subsequent  settlement is not accounted for through  contributed
            surplus and would be recorded  through the  statement of  operations
            thus reducing the deficit. This transaction occurred in 2000.


<PAGE>

                                                                        PAGE XVI

                        DEVINE ENTERTAINMENT CORPORATION

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                      (Unaudited - Prepared by Management)

                                 MARCH 31, 2005

16.   RECONCILIATION TO UNITED STATES GAAP (continued)

      (c)   Under  Canadian  GAAP,  the  Company's  preferred  shares  have been
            included  in  shareholders'  equity as the  Company  considered  the
            likelihood  of  redemption  by the holders to be remote.  Under U.S.
            GAAP,   the   preferred   shares  would  be  presented   outside  of
            shareholders' equity.

            March 31, 2005                                  CDN GAAP   U.S. GAAP
            --------------                                  --------   ---------

            Convertible Debentures                         1,519,290   1,700,800

            Contributed Surplus                            1,020,886     554,573

            Deficit                                        7,756,157   7,489,754

            December 31, 2004
            -----------------

            Convertible Debentures                         1,519,290   1,700,800

            Contributed Surplus                            1,051,886     585,573

            Deficit                                        7,797,034   7,512,231

17.   COMPARATIVE FIGURES

      Certain of the comparative  figures have been reclassified to conform with
      the current year's presentation.

18.   CONTINGENCY

      In  the  normal   course  of   operations   the  Company  is  involved  in
      negotiations,  grievances and arbitrations  with guilds and unions related
      to the film production  industry.  In June 2005 the Company will go before
      an arbitrator  relating to a particular  grievance brought against them by
      the  Writer's  Guild of Canada for unpaid  royalties.  The  outcome is not
      determinable at this time, but the management estimates that the grievance
      will not result in any future material financial obligation. No amount has
      been recorded in the consolidated financial statements with regard to this
      matter.

19.   SUBSEQUENT EVENTS

      On April 7, 2005,  1,185,000  warrants were  converted into common shares.
      Each warrant was converted into a common share for $0.15 per warrant.

      On May 19,  2005,  the  Company  issued  350,000  common  shares to settle
      previously unpaid professional fees of $78,500.


<PAGE>

Item 2. Management's Discussion and Analysis or Plan of Operation.

General

      The discussion and analysis of the Company's results of operations for the
calendar  quarter  ended  March  31,  2005 set  forth  below  should  be read in
conjunction  with  the  Company's  unaudited  interim   consolidated   financial
statements  and the notes  thereto  appearing  elsewhere  in this  report.  Such
discussion and analysis  contains  forward-looking  statements.  Forward-looking
statements are statements that are not historical  facts.  The Company's  actual
results may differ  significantly  from those  projected in the  forward-looking
statements. The Company does not intend to update the forward-looking statements
to reflect actual results or changes in factors  affecting such  forward-looking
statements.

      The  Company's  consolidated  financial  statements  have been prepared in
accordance with Canadian generally  accepted  accounting  principles  ("Canadian
GAAP") and  include  the  accounts  of Devine  Entertainment  and the  following
wholly-owned  subsidiaries of Devine  Entertainment:  Devine  Productions  Ltd.,
Devine New Media Corporation,  Devine Productions  (Artists) Ltd., Devine (Fairy
Tale)  Productions  Ltd.  and  Devine  Bailey  Productions  Ltd.  The  Company's
consolidated financial statements conform, in all material respects, with United
States  generally  accepted  accounting  principles  ("U.S.  GAAP"),  except  as
described below under "-- Reconciliation to U.S. GAAP."

Revenue Recognition

      The  Company's  revenue is derived from  broadcast  licensing  agreements,
royalties,  distribution  fees, the sale of distribution  rights and the sale of
home videos. All revenue is recognized upon meeting all recognition requirements
of the American Institute of Certified Public Accountants' Statement of Position
00-2 ("SOP 00-2").  Revenue from broadcast licensing  agreements,  together with
related costs,  and revenue from the sale of copyright  interests are recognized
once the  licensing  periods have  commenced,  the programs  are  delivered  and
collection is reasonably  assured.  Revenue from royalties and distribution fees
is recognized  when received.  Revenue from the sale of  distribution  rights is
recognized when the film or television programs are substantially  complete, the
investors have irrevocably committed to acquire distribution rights and there is
reasonable assurance of collectibility of proceeds. Revenue


<PAGE>

from the sale of home  videos and DVDs is  recognized  at the time of  shipment.
Amounts received and not recognized as revenue are recorded as deferred revenue.

      The Company does not  anticipate any trends that will impact its revenues.
As the Company further executes its business strategy,  the Company expects that
its revenue will increase  primarily  from its expanded  operations  and product
line additions.

Investment in Film, Television Programs and Recordings

      Investment in film,  television programs and recordings represent projects
in  progress  and  the  unamortized  costs  of  film,  television  programs  and
recordings,  net of  anticipated  federal and  provincial  film  production  tax
credits,  which have been  produced  by the Company or for which the Company has
acquired  a  copyright  interest  or the  rights to future  revenue.  Such costs
include  development  and  production  expenditures,  capitalized  overhead  and
financing  costs and other costs,  which are expected to benefit future periods.
Under SOP 00-2,  exploitation costs,  including advertising and marketing costs,
are being  expensed as  incurred.  The Company  also has an interest in programs
which have been fully amortized in prior years and have no carrying value in the
Company's consolidated financial statements.

      Projects  in  progress  include  the  costs of  acquiring  film  rights to
original  screenplays  and  costs  to  adapt  such  projects.   Such  costs  are
capitalized  and, upon  commencement  of production,  are added to investment in
film, television programs,  and recordings.  Advances or contributions  received
from third  parties to assist in  development  are  deducted  from these  costs.
Projects in progress are written off at the earlier of the date  determined  not
to be  recoverable  or when  projects in progress are  abandoned,  and three (3)
years from the date of the initial investment.

      Amortization  is  determined  based on the ratio that  current  gross film
revenues bear to management's  estimate of total  remaining  ultimate gross film
revenue as of the  beginning of the current  fiscal year on a program by program
basis  (the  "individual  film  forecast  method").  Revenue  and film costs are
continually  reviewed by  management  and  revised  when  warranted  by changing
conditions.  When  estimates of total revenues and costs indicate that a feature
film or television  program will result in an ultimate  loss, a reduction in the
carrying  value of the  investment is recognized to the extent that  capitalized
film costs exceed estimated fair value.  Such adjustments  could have a material
effect on the results of  operations  in future  periods.  Production  financing
provided by third  parties  that acquire  substantive  equity  participation  is
recorded as a reduction of costs of the production.

      Capitalized  film  costs are  stated at the lower of  unamortized  cost or
estimated fair value on an individual film basis.  Fair market value is based on
the discounted  projected net cash flows. The determination of the projected net
cash flows and discount rates are subjective in nature and involve uncertainties
and matters of significant judgement by management.

Government and Other Assistance

      The Company has access to various government programs that are designed to
assist film, television programs and recordings production and distribution in


<PAGE>

Canada.  Effective January 1, 2004,  amounts receivable in respect of production
assistance  are recorded as a reduction  of  investment  in film and  television
programs.   Government  assistance  towards  current  expenses  is  included  in
earnings.  Investment  tax credits are recorded as a reduction to  investment in
film,  television  programs and recordings,  when the ultimate collection of the
credits are assured.

Stock-Based Compensation

      The Company  accounts for all  stock-based  payments  using the fair value
based method.  The Company  grants stock options for a fixed number of shares to
employees and consultants  with an exercise price equal to the fair value of the
shares at the date of grant. The Company recognizes compensation expense for the
stock-based  compensation  plan  when  stock  or stock  options  are  issued  to
employees.  Any consideration  paid by employees on exercise of stock options or
purchase of stock is credited to share capital.

      If stock or stock options are  repurchased  from employees or consultants,
the excess of the  consideration  paid over the carrying  amount of the stock or
stock option cancelled is charged to retained earnings.

Future Income Taxes

      The  Company  provides  for  income  taxes  using the asset and  liability
method.  The asset and liability  method  requires that income taxes reflect the
expected future tax consequences of temporary  differences  between the carrying
amounts of assets or liabilities  and their tax bases.  Future income tax assets
and  liabilities are determined for each temporary  difference  based on the tax
rates,  which are expected to be in effect when the  underlying  items of income
and expenses are expected to be realized.

Reconciliation to U.S. GAAP

      The consolidated financial statements of the Company have been prepared in
accordance with Canadian GAAP. The material  differences  between the accounting
policies  used by the Company  under  Canadian  GAAP and U.S. GAAP are set forth
below.

      o Under Canadian GAAP, the conversion feature on the Company's convertible
debentures is valued at $181,510 and had been classified as contributed surplus.
Under U.S.  GAAP, the  conversion  feature is not accounted  separately and thus
would not flow through contributed surplus. This transaction occurred in 2000.

      o  Under  Canadian  GAAP,  the  exchange  of  the  Company's   convertible
debentures for new  convertible  debentures and subsequent gain on settlement of
the new  convertible  debentures  were  valued at  $284,803  and  classified  as
contributed surplus.  Under U.S. GAAP, the conversion and subsequent  settlement
were not accounted for through contributed surplus and would be recorded through
the statement of operations thus reducing the deficit. This transaction occurred
in 2000.

      o Under Canadian GAAP, the Company's  preferred  shares have been included
in shareholders' equity as the Company considered the likelihood of redemption


<PAGE>

by the holders to be remote.  Under U.S.  GAAP,  the  preferred  shares would be
presented outside the shareholders' equity.

March 31, 2005                                      Canadian GAAP      U.S. GAAP
--------------                                      -------------      ---------
Convertible Debentures                              1,519,290          1,700,800
Contributed Surplus                                 1,020,886            554,573
Deficit                                             7,756,157          7,489,754

December 31, 2004
-----------------
Convertible Debentures                              1,519,290          1,700,800
Contributed Surplus                                 1,051,886            585,573
Deficit                                             7,797,034          7,512,231

Recent Accounting Pronouncements

      In 2003,  the Canadian  Institute of  Chartered  Accountants  (the "CICA")
issued new Handbook Section 1100,  "Generally Accepted  Accounting  Principles."
This  section   clarifies   that  an  enterprise  is  required  to  account  for
transactions  in accordance with the specific  recommendations  in the handbook,
basic financial statement concepts and, if appropriate, other relevant
authoritative literature. Consequently, the Company may no longer use historical
industry practice as a source of authority, and accordingly,  the recognition of
government  financing and assistance will prospectively change from revenue to a
reduction of the related  production  costs. The Company has adopted this policy
as of January 1, 2004. The adoption of these standards had no material impact on
the Company's results of operations or financial position.

      In December 2003, the Emerging Issues Committee of the CICA released EIC -
141,  "Revenue  Recognition"  and EIC-142  "Revenue  Arrangements  with Multiple
Deliverable."  EIC-141 provides interpretive guidance on the application of CICA
Handbook Section 3400, "Revenue."  Specifically,  this EIC presents the criteria
to be met for revenue recognition to be considered  achieved.  EIC-142 addresses
certain  aspects of the accounting by a vendor for  arrangements  under which it
will perform multiple  revenue-generating  activities for a given customer.  The
adoption of these standards had no material  impact on the Company's  results of
operations or financial position.

      In June  2003,  the  CICA  released  AcG-15,  "Consolidation  of  Variable
Interest  Entities," to be applied by companies for the periods  beginning on or
after November 1, 2004.  Under this release,  the CICA  established  criteria to
identify variable interest entities ("VIE") and the primary  beneficiary of such
entities.  An entity that qualifies as a VIE must be consolidated by its primary
beneficiary.  In January 2003, the Financial  Accounting  Standards Board issued
Interpretation No. 46,  "Consolidation of Variable Interest  Entities," which is
effective for financial statements of public companies that have special purpose
entities  for periods  ending after  December 15, 2003 and for public  companies
without  special  purpose  entities  for periods  ending  after March 15,  2004.
Accordingly,  the  Company  has  included  the  results  of  operations  of  the
Partnership  (as  hereinafter  defined)  and  QCF  Partnership  (as  hereinafter
defined) in its consolidated  operations.  See "-- Devine Entertainment  Limited
Partnership" and "-- QCF Partnership."

      In  January  2005,  the CICA  issued  Handbook  Section  3855,  "Financial
Instruments -  Recognition  and  Measurement."  This section  prescribes  when a
financial  instrument  is to be  recognized  on the  balance  sheet  and at what
amount.  It also specifies how financial  instrument  gains and losses are to be
presented.  This new standard will be effective for interim and annual financial
statements  relating to fiscal years commencing on or after October 1, 2006. The
Company  is  assessing  the  impact  of this new  standard  on its  consolidated
financial statements.

      In January 2005,  the CICA issued  Handbook  Section 3865,  "Hedges." This
section  provides  alternative  treatments  to Section 3855 for  entities  which
choose to designate  qualifying  transactions as hedges for accounting purposes.
It replaces and expands on Accounting Guideline AcG-13 "Hedging Relationships,"


<PAGE>

and the hedging  guidance in Section  1650  "Foreign  Currency  Translation"  by
specifying how hedge  accounting is applied and what  disclosures  are necessary
when it is applied.  This new standard  will be effective for interim and annual
financial  statements relating to fiscal years commencing on or after October 1,
2006.  The  Company  is  assessing  the  impact  of  this  new  standard  on its
consolidated financial statements.

      In January 2005,  the CICA issued  Handbook  Section 1530,  "Comprehensive
Income."  This  section  introduces a new  requirement  to  temporarily  present
certain gains and losses from changes in fair value outside net income, but in a
transparent  manner.  This new standard will be effective for interim and annual
financial  statements relating to fiscal years commencing on or after October 1,
2006.  The  Company  is  assessing  the  impact  of  this  new  standard  on its
consolidated financial statements.

Potential Capital Reorganization

      The Company has sought and received  approval  from its board of directors
to effect a capital  reorganization of the Company at such time in the future as
may be  required  in order to  maintain  the  Company's  eligibility  to receive
certain  financial  incentives  and  assistance  or  any  required  licenses  or
approvals  from Canadian  federal or provincial  governments  and agencies.  The
Company will lose its  eligibility if the ownership of the equity  securities of
the Company by Canadian residents fails to meet certain specified  requirements.
If such  reorganization  is effected,  each Common  Share will be exchanged  for
one-half of a newly-created  voting common share and one-half of a newly-created
non-voting  common share.  This exchange will treat  stockholders of the Company
uniformly.

      The Company believes that the benefit of remaining eligible to receive the
aforesaid  financial  incentives  and  assistance,  licenses and  approvals,  by
effecting  the  reorganization,  will greatly  outweigh  any  possible  negative
effects which may temporarily result in the then-existing trading market for the
Company's  securities as a result of the Company's  new capital  structure.  The
Company's  belief in this  regard is  buttressed  by the fact that  transactions
similar to the Company's  proposed  reorganization  are familiar to investors in
other  Canadian  public  entertainment   companies  such  as  Alliance  Atlantis
Communications  Inc. and Corus Entertainment Inc. A review of the public filings
made by each of these  companies does not indicate that such  company's  capital
structure  has  impaired  its ability to access  capital  markets for funding or
otherwise attract investors.

      The  stockholders of the Company  initially  approved the proposed capital
reorganization on June 25, 2004. The stockholders of the Company  reapproved the
capital  reorganization  on June 16, 2005. The Company will, on an annual basis,
continue to seek  reapproval  of the  capital  reorganization  at the  Company's
annual meeting of  stockholders.  The failure of the Company's  stockholders  to
continue  approving  the capital  reorganization  could have a material  adverse
effect  upon the  Company's  business  in the  future if the  Company  no longer
remains eligible to receive the aforesaid  financial  incentives and assistance,
licenses and approvals by reason of not being able to effect the reorganization.

      The   Company   does  not  expect  to  have  to   implement   the  capital
reorganization for the foreseeable future.

Additional Information

      Additional  information  regarding  the Company is  available  on SEDAR at
www.sedar.com and EDGAR at www.sec.gov.

Results of Operations

      Calendar  Quarter Ended March 31, 2005 Compared to Calendar  Quarter Ended
March 31, 2004

      Overview

      The positive changes experienced by the Company in 2004 continued into the
first quarter of 2005. These changes included the following:

o     The Company's  revenues in the first quarter of 2005  increased by 517% to
      $478,236 as compared to $77,467 for the same period in 2004.

o     The Company's first feature film, Bailey's Billion$, generated revenues of
      $293,000 in the first quarter of 2005 from sales of distribution rights in
      France, Italy and Israel.

o     The Company's  proprietary  film library  continued to perform well with a
      broadcast  license sale to TVOntario in Canada for $108,000 and $77,000 in
      DVD and  video  revenues  in  North  America.  Sales  from  the  Company's
      proprietary film library contributed $185,000 to the Company's revenues in
      the first  quarter 2005, a 139% increase as compared to the same period in
      2004.

o     The Company completed a partial financing of $204,375 from the exercise of
      1,362,500  previously  issued  warrants  from its  April 7,  2004  private
      placement at a price of $0.15 per unit before  March 31, 2005.  Subsequent
      to the end of the  first  quarter  of 2005 and  before  the  expiry of the
      warrants on April 7, 2005, an additional 1,185,000 warrants were exercised
      and in total 2,547,500 of 2,580,000  warrants  outstanding  were exercised
      for total proceeds to the Company of $382,125.

o     The first  quarter of 2005 is the fourth  consecutive  quarter the Company
      has posted  positive net income and an increase in  stockholders'  equity.
      Net income in the first  quarter of 2005,  which was  derived  solely from
      operating  activities,  was $22,477 or $0.00 per share as compared  with a
      loss of $101,652  or ($0.01)  for the same  period in 2004.  Stockholders'
      equity  increased by $257,752 to  $5,216,041  in the first quarter of 2005
      from $4,958,289 as at December 31, 2004.

      The Company will  continue to focus on new  production,  and the marketing
and  distribution of its proprietary  film library in an effort to drive revenue
growth.  Since 2004, the Company made significant progress in turning around its
business.  Although there can be no assurance, the Company expects this trend to
continue for the foreseeable future.

      Revenues

      The Company's  revenues during the first quarter of 2005 increased by 517%
to $478,236, as compared to $77,467 for the same period in 2004.

      Of the Company's total revenues during the first quarter of 2005, $293,000
was derived from sales of distribution rights in France, Italy and Israel of the
Company's feature film Bailey's  Billion$.  Revenues from sales of the Company's
proprietary film library  increased by 139% to $185,000 during the first quarter
of 2005,  as compared to $77,467 for the same period in 2004.  Revenues from the
film  library  included a new sale of broadcast  rights to Canadian  educational
broadcaster  TVOntario for $108,000.  TVOntario  also committed to buy broadcast
rights for a new series of  complementary  films  based on the lives and work of
landmark authors,  entitled, The Writers' Specials. North American DVD and video
sales  provided  the  balance of revenue  from the  Company's  proprietary  film
library.  90% of the  Company's  $77,000 of revenues from DVD and video sales in
the first  quarter of 2005 were  derived  from sales in the United  States.  The
balance of such revenues was derived from sales in Canada.

      Reflecting  the fact that the Company's film library  revenues  during the
first  quarter 2005 were derived  primarily  from sales in the United States and
Canada  and the  revenues  attributable  to the sale of  distribution  rights to
Bailey's Billion$ came from France,  Italy and Israel, the Company's revenues by
geographic location, based on the location of its customers was as follows:

                                             Mar. 31 2005          Mar. 31 2004
                                             ------------          ------------
                                                   $                     $
Revenue
         Canada                                 116,000                8,000
         United States                           69,000               69,000
         France                                  99,000                 --
         Italy                                  188,000                 --
         Israel                                   6,000                 --
                                                -------               ------

                                                478,000               77,000
                                                =======               ======

      Earnings per Share

      In the first quarter of 2005, the Company reported its fourth  consecutive
profitable quarter with net income of $22,477 or $0.00 per share, as compared to
a loss of $101,652 or ($0.01) per share for the same period in 2004.

      Stockholders' Equity

      Stockholders'  equity increased by $297,800 to $5,256,089 during the first
quarter of 2005, as compared to equity of $4,958,289 as at December 31, 2004.

      Operating expenses

      The Company's  operating  expenses for the first quarter of 2005 increased
by $98,116 or  approximately  128% to  $175,044,  as compared to $76,928 for the
same period in 2004.  This  increase  reflects the change made by the  Company's
from  focusing on delivering  Bailey's  Billion$ in the first quarter of 2004 to
developing  and financing new production and the marketing of the Company's film
library during the same period in 2005.

      Production and Development Activity

      The  Company  continues  to develop  new  projects  in order to secure new
production activity. Projects which include initial participation and support of
funds from Telefilm Canada,  Astral  Communications and Corus  Entertainment are
feature films and TV movies  entitled Red,  Miracle Journey and October 7, 1944.
The Company has also acquired the rights and is actively  developing  additional
films and series projects  targeted to the worldwide  family audience  including
Revolving Door, Quarterback,  Fat Camp and Humchucker.  In addition, the Company
has  entered  into an  initial  agreement  to  co-develop,  with the  intent  of
co-producing in the future, a new series of Writers' Specials with a co-producer
in France.

      Investment in Film and Television Programs and Recordings

      The Company  reviews and revises the  estimated  fair market  value of its
investment in film,  television programs and recordings as required on a regular
basis.  Capitalized  film costs are stated at the lower of  unamortized  cost or
estimated fair value on an individual  film basis.  For the  proprietary  films,
television  programs and recordings produced by the Company, a maximum period of
ten years after the delivery of the  production is used in  accordance  with SOP
00-2 to estimate  fair value.  Development  costs which are  expected to benefit
future periods are also  capitalized.  If the property under development has not
been set for  production  within three  years,  the costs  associated  with such
property are written off to income.

      As at March 31, 2005,  the Company's  investment in its  proprietary  film
library  was  estimated  as  $3,096,399  after  accumulated  amortization.   The
Company's  investment in Bailey's  Billion$ was  estimated as  $5,215,535  after
accumulated amortization and the Company's investment in projects in development
was estimated as $1,082,810 as per the table set out below:

<TABLE>
<CAPTION>
                                                                 March 31, 2005                     Dec 31, 2004
                                                                 --------------                     ------------
                                                                          Accumulated
                                                              Cost        Amortization           Net             Net
                                                              ----        ------------           ---             ---
<S>                                                       <C>              <C>               <C>              <C>
Completed television programs and recordings              $16,038,987      $13,021,907       $3,017,080       $3,096,399
Completed Motion picture - Bailey's Billion$                7,146,016        1,930,481        5,215,535        5,407,622
Projects in progress                                        1,082,810            --           1,082,810          903,555
                                                          -----------      -----------       ----------       ----------
                                                          $24,267,813      $14,952,388       $9,315,425       $9,407,576
</TABLE>

      The Company  expects to amortize  approximately  $1,100,000  for completed
television  programs and  recordings  costs and $700,000  for  completed  motion
picture costs during 2005.

      The Company  expects 98% of completed  television  programs and recordings
and 51% of  completed  motion  picture  costs will be  amortized by December 31,
2007. As at December 2011,  over 80% of the completed  motion picture costs will
be amortized.  The remaining period of amortization  for the completed  projects
ranges from two to nine years at March 31, 2005.

      Capital Stock

      The Company  issued  1,567,500  Common  Shares during the first quarter of
2005 valued at $266,275 as follows:

(i) In January  2005,  80,000  Common  Shares  valued at $18,400 were issued for
services rendered.

(ii) In February 2005,  125,000 Common Shares valued at $16,250 were issued upon
the exercise of options held by an employee of the Company.

(iii) In March 2005,  1,362,500 Common Shares were issued for cash consideration
of  $204,375.  These  Common  Shares were  issued upon the  exercise of warrants
issued in connection with a unit offering effected by the Company in April 2004.

      Related Party Transactions

      During the first quarter of 2005,  $53,247 of fees were paid or accrued to
corporations  controlled  by two of the  directors  for writing,  directing  and
producing  services.  These  transactions have been measured at exchange amount,
which is the amount of  consideration  established  and agreed to by the related
parties and which the  management  believes  reflect  prevailing  market  rates.
Included in accounts  payable and accrued  liabilities  as at March 31, 2005 was
$26,304  (December  31, 2004 0 $Nil).  See "Item 6.  Executive  Compensation  --
Executive Services Agreement."

      Liquidity and Capital Resources

      The Company's cash on hand as at March 31, 2005 was $254,044,  as compared
to $104,727 as at December 31, 2004, a change in cash position of $149,317. This
increase  reflects the  financing  activities  from the  exercise of  previously
issued warrants from the Company's unit offering  effected in April 2004 and the
cash flow related to ongoing sales from the Company's operations.

      The Company expects to maintain renewed  profitability from operations and
expects that proceeds from sales of Bailey's  Billion$ and its film library will
generate additional revenues and positive cash flow through the balance of 2005.
The Company's  bank film  production  loan for Bailey's  Billion$ was reduced by
$557,825 to $361,839 as at March 31, 2005 from $919,664 as at December 31, 2004.
The Company's working capital deficiency remains  significant,  but is mitigated
by the fact that the  Company's  deferred  revenue of  $2,658,971  from Bailey's
Billion$  is a  non-repayable  liability.  In  addition,  the Company is working
towards  converting its $1,519,290 of outstanding  convertible  debentures  into
Common Shares in 2005. There can be no assurance, however, that such convertible
debentures  will be  converted,  in  whole  or in  part,  during  2005.  If such
conversion  does not  occur  and the  Company  remains  unable  to  service  its
convertible debt, the Company will require  additional  working capital from its
production  activities or corporate  financing in 2005.  The Company  intends to
actively seek additional funding in calendar 2005.

      Subsequent Events

      In April 2005,  1,185,000 Common Shares were issued for cash consideration
of  $177,750.  These  Common  Shares were  issued upon the  exercise of warrants
issued in connection with a unit offering effected by the Company in April 2004.

      In May 2005,  350,000  Common Shares were issued to the Company's  outside
Canadian legal counsel to settle accounts payable for  professional  fees in the
amount of $78,552.13.

      In May 2005,  Knowledge  Network,  a company  based in  British  Columbia,
licensed the regional broadcast rights to (i) the Company's Artists', Inventors'
and Composers'  Specials films for $36,000 and (ii) pre-buy the Company's series
of six new films on landmark Writers for $24,000.

      In May 2005, the Company's bank film production loan for Bailey's Billion$
was repaid in full.


<PAGE>

Devine Entertainment Limited Partnership

      During 2004,  the Company  entered into a services  agreement  with Devine
Entertainment  Limited Partnership (the "Partnership").  None of the partners of
the   Partnership  is  a  director,   officer  or  other   affiliate  of  Devine
Entertainment.  Under  the  terms of the  services  agreement,  the  Partnership
assumed certain expenses of the Company up through December 31, 2004 relating to
the  following:  (i) labor,  employment and all other  "direct"  services;  (ii)
marketing  services,   including   production  and  placement  of  all  required
advertising; (iii) other operating expenses, excluding payments for the purchase
of  real   property,   equipment  and  expenses  of  a  capital   nature;   (iv)
administrative  services;  and (v)  certain  development  services  required  in
connection with new Devine  Entertainment  projects.  In return, the Partnership
was paid a royalty based on the gross  revenue of the Company.  The Company paid
such royalty by issuing  380,450  Common  Shares and 494,550  Series 1 Preferred
Shares (as  hereinafter  defined).

QCF Partnership

      During the first  quarter of 2005,  the  Company  entered  into a services
agreement with QCF 2005 Limited  Partnership  ("QCF  Partnership").  None of the
partners of QCF Partnership is a director,  officer or other affiliate of Devine
Entertainment.  Under the terms of the services agreement,  QCF Partnership will
assume certain expenses, until December 31, 2005, relating to the following: (i)
labor,  employment and all other  "direct"  services;  (ii) marketing  services,
including  production  and  placement of all required  advertising;  (iii) other
operating expenses,  excluding payments for the purchase of real property;  (iv)
administrative  services;  and (v)  certain  development  services  required  in
connection with new Devine Entertainment projects. In return, QCF Partnership is
entitled to receive  royalty  payments equal to a percentage of gross revenue of
the Company for the calendar years 2005 through 2015.

Off-Balance Sheet Arrangements

      The Company,  as part of its ongoing  business,  does not  participate  in
transactions  that  generate  relationships  with  unconsolidated   entities  or
financial partnerships, such as entities often referred to as structured finance
or special purpose entities ("SPEs"),  which would have been established for the
purpose of facilitating  off-balance sheet  arrangements or other  contractually
narrow or limited purposes. As of November 1, 2005, the Company was not involved
in any material unconsolidated SPE transaction.


<PAGE>

Item 3. Controls and Procedures.

      The  Company's  Chief  Executive   Officer  and  Chief  Financial  Officer
(collectively,  the "Certifying  Officers") are responsible for establishing and
maintaining  disclosure controls and procedures for establishing and maintaining
disclosure controls and procedures for the Company. Such officers have concluded
(based upon their  evaluation  of these  controls  and  procedures  as of a date
within 90 days of filing of this report) that the Company's  disclosure controls
and procedures are effective to ensure that information required to be disclosed
by the Company in this report is accumulated  and  communicated to the Company's
management,  including its Certifying  Officers as appropriate,  to allow timely
decisions  regarding  required  disclosure.  The  Certifying  Officers also have
indicated  that there were no  significant  changes  in the  Company's  internal
controls  or  other  factors  that  could  significantly  affect  such  controls
subsequent to the date of their evaluation, and there were no corrective actions
with regard to significant deficiencies and material weaknesses.

                           PART II--OTHER INFORMATION

Item 1. Legal Proceedings.

      Neither the Company nor any of its property is the subject of any material
pending legal proceeding.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a)   In January  2005,  the Company  issued  185,000  Common  Shares to certain
      employees of Mid South Capital Inc. in consideration for services provided
      in connection with the commencement of the trading of the Common Shares in
      the United States in the Pink Sheets(R).  The aforesaid Common Shares were
      offered and sold in reliance on the exemption from  registration  afforded
      by  Section  4(2)  of  the  Securities  Act  of  19933,  as  amended  (the
      "Securities Act").

      In January 2005, the Company issued 40,000 Common Shares to David Karas in
      consideration for financial advisory services provided to the Company. The
      aforesaid Common Shares were offered and sold in reliance on the exemption
      from registration afforded by Section 4(2) of the Securities Act.

      In January 2005, the Company issued 40,000 Common Shares to Anthony Golden
      in consideration  for investor  relation services provided to the Company.
      The  aforesaid  Common  Shares  were  offered  and sold in reliance on the
      exemption  from  registration  afforded by Section 4(2) of the  Securities
      Act.

      Each  exemption  claimed  above  from  compliance  with  the  registration
      provisions  of the  Securities  Act  by  reason  of  Section  4(2)  of the
      Securities  Act is based on the  grounds  that each offer and sale did not
      involve any public offering,  each purchaser was sophisticated with access
      to the kind of  information  registration  would  provide  and  that  such
      purchaser  acquired  the  securities  at  issue  without  a  view  towards
      distribution thereof.

(b)   In December 2004,  the Company  issued  494,500 shares of preferred  stock
      designated as Series 1 Preferred  Shares.  The holders of these shares, in
      priority to the holders of the Common  Shares,  are  entitled to receive a
      cumulative  annual dividend of 9.1 cents per share.  Absent the consent of
      all of the holders of the Series 1 Preferred Shares,  dividends may not be
      paid on the  Common  Shares  if  dividends  are then due and  owing on the
      Series 1 Preferred Shares.

(c)   Not applicable.

(d)   Not applicable.

Item 3. Defaults Upon Senior Securities.

(a)   Note 7 to the interim  consolidated  financial  statements  of the Company
      dated March 31, 2005 filed herewith is incorporated herein by reference.

(b)   Not applicable.


<PAGE>

Item 4. Submission of Matters to a Vote of Security Holders.

(a)   Not applicable.

(b)   Not applicable.

(c)   Not applicable.

(d)   Not applicable.

Item 5. Other Information.

(a)   Not applicable.

(b)   Not applicable.

Item 6. Exhibits and Reports on Form 8-K.

(a)   Exhibits

      (i)   99.1  Certification  of Chief  Executive  Officer  pursuant  to Rule
            13a-14 (a)

      (ii)  99.2  Certification  of Chief  Financial  Officer  pursuant  to Rule
            13a-14 (a)

      (iii) A-1  Certification of Chief Executive  Officer pursuant to 18 U.S.C.
            Section   1350  as  adopted   pursuant   to   Section   906  of  the
            Sarbanes-Oxley Act of 2002 (furnished  pursuant to Item 601 (b) (32)
            (ii) of Regulation S-K).

      (iv)  A-2  Certification of Chief Financial  Officer pursuant to 18 U.S.C.
            Section   1350  as  adopted   pursuant   to   Section   906  of  the
            Sarbanes-Oxley Act of 2002 (furnished  pursuant to Item 601 (b) (32)
            (ii) of Regulation S-K).

      (b)   Reports on Form 8-K

            None.

                                   SIGNATURES

      In accordance  with the  requirements of the Exchange Act, ther registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                                Devine Entertainment Corporation
                                                --------------------------------
                                                          (Registrant)

Date December 16, 2005                           /s/ David Devine
                                                --------------------------------
                                                    President and Chief
                                                    Executive Officer
                                                    (Signature)*

Date December 16, 2005                           /s/ Richard Mozer
                                                --------------------------------
                                                    Chief Financial Officer and
                                                    Chief Accounting Officer
                                                    (Signature)*

*Print the name and title of each signing officer under his signature.