*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 AND EXCHANGE*

*      ACT OF 1934*

* *

*For the quarterly period ended                   September 30, 2004   *

* *

*OR*

* *

**o*   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT*

* *

*For the transition period from _______________ to _____________________*

* *

* *

*Commission file number                           1-12635*

* *

*PARADISE MUSIC & ENTERTAINMENT, INC.*

* *

*(Exact name of registrant as specified in its charter)*

* *

| *Delaware*                                 | * * | *13-3906452*          |
|--------------------------------------------|----------|-----------------------|
| *(State or other jurisdiction of*          | * * | *(I.R.S. Employer*    |
| *incorporation or organization)*           | * * | *Identification No.)* |
| * *                                   | * * | * *              |
| *122 East 42nd Street, New York, New York* | * * | *10168*               |
| *(Address of principal executive offices)* | * * | *(Zip Code)*          |
| * *                                   | * * | * *              |
| *(Issuer's telephone number)*              | * * | *888-565-3259*        |
|                                            |          |                       |

* *

*Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was*

*required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.*

* *

*  Yes *o*   No *x**

* *

*At September 30, 2004, the Issuer had 58,496,358 shares of Common Stock, $.01 par value, issued and outstanding.*

* *

*Transitional Small Business Disclosure Format   Yes *o*  No *x**

*** *

*** *

| ** ** |
|------------|

*** *

*** *

*PARADISE MUSIC & ENTERTAINMENT, INC.*

*AND SUBSIDIARIES*

* *

* *

| ***PART I   FINANCIAL INFORMATION*                                             | *** *                                                               | ***PAGE*                                                          |
|-----------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|-------------------------------------------------------------------|
| *** *                                                                                    | *** *                                                               | *** *                                                        | *** * | *** * |
| ***Item 1    Financial Statements*                                        | *** *                                                               | *** *                                                        |
| *** *                                                                                    | *** *                                                               | *** *                                                        | *** * | *** * |
| *** *                                                                                    | ***Condensed Consolidated Balance Sheet as of*                           | *** *                                                        | ****3** |
| *** *                                                                                    | ***September 30, 2004 (Unaudited)*                                       | *** *                                                        | *** * |
| *** *                                                                                    | *** *                                                               | *** *                                                        | *** * | *** * |
| *** *                                                                                    | ***Condensed Consolidated Statements of Operations for the Three*        | *** *                                                        | ****4** |
| *** *                                                                                    | ***Months and Nine Months Ended September 30, 2004 and 2003 (unaudited)* | *** *                                                        | *** * |
| *** *                                                                                    | *** *                                                               | *** *                                                        | *** * | *** * |
| *** *                                                                                    | ***Condensed Consolidated Statements of Cash Flows for the Nine*         | *** *                                                        | ****5** |
| *** *                                                                                    | ***Months Ended September 30, 2004 and 2003 (unaudited)*                 | *** *                                                        | *** * |
| *** *                                                                                    | *** *                                                               | *** *                                                        | *** * | *** * |
| *** *                                                                                    | ***Notes to Condensed Consolidated Financial Statements*                 | *** *                                                        | ****6 – 7** |
| *** *                                                                                    | ***(unaudited)*                                                          | *** *                                                        | *** * |
| *** *                                                                                    | *** *                                                               | *** *                                                        | *** * | *** * |
| ***Item 2    Management's Discussion and Analysis of Financial Condition* | *** *                                                               | ****8 - 10**                                                      |
| *** *                                                                                    | *** *                                                               | ***And Results of Operations*                                     | *** * | *** * |
| *** *                                                                                    | *** *                                                               | *** *                                                        | *** * | *** * |
| ***Item 3    Controls and Procedures*                                     | *** *                                                               | ****10**                                                          |
| *** *                                                                                    | *** *                                                               | *** *                                                        | *** * | *** * |
| *** *                                                                                    | *** *                                                               | ***(a)    Disclosure Controls and Procedures* | *** * | *** * |
| *** *                                                                                    | *** *                                                               | *** *                                                        | *** * | *** * |
| *** *                                                                                    | *** *                                                               | ***(b)    Internal Controls*                  | *** * | *** * |
| *** *                                                                                    | *** *                                                               | *** *                                                        | *** * | *** * |
| ***PART II - OTHER INFORMATION*                                                               | *** *                                                               | *** *                                                        |
| *** *                                                                                    | *** *                                                               | *** *                                                        | *** * | *** * |
| *** *                                                                                    | ***Signatures*                                                           | *** *                                                        | ****11** |
| *** *                                                                                    | *** *                                                               | *** *                                                        | *** * | *** * |
| ***Item 6   Exhibits*                                                          | *** *                                                               | ****12 – 13**                                               |
| *** *                                                                                    | *** *                                                               | *** *                                                        | *** * | *** * |
|                                                                                               |                                                                          |                                                                   |  |  |  |

*** *

*** *

| ** ** |
|------------|

*** *

*** *

*PART I – FINANCIAL INFORMATION*

* *

*PARADISE MUSIC & ENTERTAINMENT, INC.*

*AND SUBSIDIARIES*

* *

*CONDENSED CONSOLIDATED BALANCE SHEET*

*September 30, 2004*

*(unaudited)*

**** **

| ****ASSETS**                                                                 | *** *                                             | *** * | *** *                                       |
|------------------------------------------------------------------------------|--------------------------------------------------------|------------|--------------------------------------------------|
| *** *                                                                   | *** *                                             | *** * | *** *                                       |
| ****CURRENT ASSETS:**                                                        | *** *                                             | *** * | *** *                                       |
| ****Cash**                                                                   | ****$      4,503 ** | *** * | *** *                                       |
| *** *                                                                   | *** *                                             | *** * | *** *                                       |
| ****Total current assets**                                                   | *** *                                             | *** * | ****$    4,503 **       |
| *** *                                                                   | *** *                                             | *** * | *** *                                       |
| *** *                                                                   | *** *                                             | *** * | *** *                                       |
| ****LIABILITIES AND STOCKHOLDERS' EQUITY**                                   | *** *                                             | *** * | *** *                                       |
| *** *                                                                   | *** *                                             | *** * | *** *                                       |
| ****CURRENT LIABILITIES:**                                                   | *** *                                             | *** * | *** *                                       |
| ****Accounts payable and accrued expenses**                                  | *** *                                             | *** * | ****$ 7,386,183 **                          |
| *** *                                                                   | *** *                                             | *** * | *** *                                       |
| ****STOCKHOLDERS' EQUITY:**                                                  | *** *                                             | *** * | *** *                                       |
| ****Preferred stock, $.01 par value,**                                       | *** *                                             | *** * | *** *                                       |
| ****authorized 5,000,000 shares, none issued**                               | ****-- **                                         | *** * | *** *                                       |
| ****Common stock, $.01 par value,**                                          | *** *                                             | *** * | *** *                                       |
| ****authorized 75,000,000 shares,**                                          | *** *                                             | *** * | *** *                                       |
| ****issued and outstanding 58,496,358 shares**                               | ****584,964 **                                    | *** * | *** *                                       |
| ****Capital in excess of par value**                                         | ****26,988,652 **                                 | *** * | *** *                                       |
| ****Accumulated deficit**                                                    | ****(34,955,296)**                                     | *** * | *** *                                       |
| *** *                                                                   | *** *                                             | *** * | *** *                                       |
| ****Total stockholders' equity**                                             | *** *                                             | *** * | ****(7,381,680)**                                |
| *** *                                                                   | *** *                                             | *** * | *** *                                       |
| *** *                                                                   | *** *                                             | *** * | ****$     4,503 ** |
| *** *                                                                   | *** *                                             | *** * | *** *                                       |
| ****See accompanying notes to condensed consolidated financial statements.** |
|                                                                              |                                                        |            |                                                  |

*** *

*** *

| **3** |
|-------|

****Table of Contents**

*** *

*** *

*PARADISE MUSIC & ENTERTAINMENT, INC.*

*AND SUBSIDIARIES*

* *

*CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS*

*(unaudited)*

*** *

*** *

| *** *                                                                                                          | ****Three Months ended Sept 30**               | ****Nine Months ended Sept 30**                    |
|---------------------------------------------------------------------------------------------------------------------|------------------------------------------------|----------------------------------------------------|
| *** *                                                                                                          | ****2004**                                     | ****2003**                                         | ****2004** | ****2003** |
| *** *                                                                                                          | *** *                                     | *** *                                         | *** * | *** * |
| ****REVENUES**                                                                                                      | ****$     0 **   | ****$      0 ** | ****$    55,205 ** | ****$     0 ** |
| *** *                                                                                                          | *** *                                     | *** *                                         | *** * | *** * |
| ****OPERATING EXPENSES**                                                                                            | *** *                                     | *** *                                         | *** * | *** * |
| ****      General and administrative**                                                | ****11,623 **                             | ****669 **                                    | ****13,423 ** | ****5,211 ** |
| *** *                                                                                                          | *** *                                     | *** *                                         | *** * | *** * |
| ****             Total operating expenses**        | ****11,623 **                             | ****669 **                                    | ****13,423 ** | ****5,211 ** |
| *** *                                                                                                          | *** *                                     | *** *                                         | *** * | *** * |
| ****PROFIT(LOSS)FROM OPERATIONS**                                                                                   | ****(11,623)**                                 | ****(669)**                                        | ****41,782 ** | ****(5,211)** |
| *** *                                                                                                          | *** *                                     | *** *                                         | *** * | *** * |
| ****OTHER (INCOME) AND EXPENSES**                                                                                   | *** *                                     | *** *                                         | *** * | *** * |
| ****  Interest Expense (Income)**                                                                         | ****18,688 **                             | ****20,490 **                                 | ****64,977 ** | ****68,775 ** |
| ****  Other (Income) Expenses**                                                                           | *** *                                     | *** *                                         | ****497 ** | *** * |
| ****  Prior Period Adjustment (Income)**                                                                  | ****(1,545)**                                  | *** *                                         | ****(1,545)** | *** * |
| *** *                                                                                                          | *** *                                     | *** *                                         | *** * | *** * |
| ****    Total Other (Income) and Expenses**                                                     | ****17,143 **                             | ****20,490 **                                 | ****63,929 ** | ****68,775 ** |
| *** *                                                                                                          | *** *                                     | *** *                                         | *** * | *** * |
| ****NET(LOSS)PROFIT**                                                                                               | *** *                                     | *** *                                         | *** * | *** * |
| ****BEFORE EXTRAORDINARY ITEMS**                                                                                    | ****(28,766)**                                 | ****(21,159)**                                     | ****(22,147)** | ****(73,986)** |
| *** *                                                                                                          | *** *                                     | *** *                                         | *** * | *** * |
| ****EXTRAORDINARY ITEMS**

****Forgiveness of Debt (Income)**                                                       | *** *

****(80,000)**                     | *** *

****0.00 **                       | *** *

****(80,000)** | *** *

****0.00 ** |
| *** *                                                                                                          | *** *                                     | *** *                                         | *** * | *** * |
| ****NET (LOSS) PROFIT**                                                                                             | ****51,234 **                             | ****(21,159)**                                     | ****57,853 ** | ****(73,986)** |
| *** *                                                                                                          | *** *                                     | *** *                                         | *** * | *** * |
| ****BASIC AND DILUTED PROFIT/LOSS**

****PER COMMON SHARE**                                                         | *** *                                     | *** *                                         | *** * | *** * |
| ****    Net Profit (Loss) Per Share**

****    Before Extraordinary Items** | *** *

****0.00 **                   | *** *

****0.00 **                       | *** *

****0.00 ** | *** *

****0.00 ** |
| *** *

****    Extraordinary Items  **                                           | *** *

****0.00 **                   | *** *

****0.00 **                       | *** *

****0.00 ** | *** *

****0.00 ** |
| *** *                                                                                                          | *** *                                     | *** *                                         | *** * | *** * |
| ****Weighted average Number of Common Shares Used in Computing Basic and Diluted Loss per Common Share**            | *** *

*** *

****53,656,906 ** | *** *

*** *

****39,811,563 **     | *** *

*** *

****53,656,906 ** | *** *

*** *

****39,811,563 ** |
| *** *                                                                                                          | *** *                                     | *** *                                         | *** * | *** * |
| ****See accompanying notes to condensed consolidated financial statements.**                                        |
|                                                                                                                     |                                                |                                                    |  |  |

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| **4** |
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****Table of Contents**

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*** *

*PARADISE MUSIC & ENTERTAINMENT, INC.*

*AND SUBSIDIARIES*

* *

*CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS*

*(unaudited)*

**** **

*** *

| *** *                                                                   | ****Nine Months Ended September 30,**       |
|------------------------------------------------------------------------------|---------------------------------------------|
| *** *                                                                   | ****2004**                                  | *** * | ****2003** |
| *** *                                                                   | *** *                                  | *** * | *** * |
| ****CASH FLOWS FROM OPERATING ACTIVITIES:**                                  | *** *                                  | *** * | *** * |
| *** *                                                                   | *** *                                  | *** * | *** * |
| ****Net Profit (Loss)**                                                      | ****$    57,853 ** | *** * | ****$    (73,986)** |
| *** *                                                                   | *** *                                  | *** * | *** * |
| ****Adjustments to reconcile to net loss to net cash**                       | *** *                                  | *** * | *** * |
| ****used in operating activities:**                                          | *** *                                  | *** * | *** * |
| *** *                                                                   | *** *                                  | *** * | *** * |
| ****Common Stock issued for services**                                       | *** *                                  | *** * | ****15,400 ** |
| *** *                                                                   | *** *                                  | *** * | *** * |
| ****Changes in operating Assets and Liabilities:**                           | *** *                                  | *** * | *** * |
| ****Accounts Payable**                                                       | ****(95,511)**                              | *** * | ****212,845 ** |
| ****Accrued Expenses**                                                       | ****48,062 **                          | *** * | ****(247,924)** |
| ****NET CASH USED IN OPERATING ACTIVITIES**                                  | ****10,404 **                          | *** * | ****(93,665)** |
| *** *                                                                   | *** *                                  | *** * | *** * |
| ****CASH FLOWS FROM FINANCING ACTIVITIES:**                                  | *** *                                  | *** * | *** * |
| ****Proceeds from bank borrowings**                                          | ****(11,000)**                              | *** * | ****78,692 ** |
| *** *                                                                   | *** *                                  | *** * | *** * |
| ****NET CASH PROVIDED BY FINANCING ACTIVITIES**                              | ****(11,000)**                              | *** * | ****78,692 ** |
| *** *                                                                   | *** *                                  | *** * | *** * |
| ****NET INCREASE (DECREASE) IN CASH**                                        | ****(596)**                                 | *** * | ****(14,973)** |
| *** *                                                                   | *** *                                  | *** * | *** * |
| ****CASH, beginning of period**                                              | ****5,099 **                           | *** * | ****16,981 ** |
| *** *                                                                   | *** *                                  | *** * | *** * |
| ****CASH, end of period**                                                    | ****$    4,503 **  | *** * | ****$    2,008 ** |
| *** *                                                                   | *** *                                  | *** * | *** * |
| ****See accompanying notes to condensed consolidated financial statements.** |
|                                                                              |                                             |  |  |

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| **5** |
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**Table of Contents**

* *

* *

*NOTES TO CONSOLIDATED FINANCIAL STATEMENTS*

* *

* *

*1.  BASIS OF PRESENTATION:*

*    ---------------------------------------*

*The condensed consolidated financial statements included herein have been prepared by Paradise Music & Entertainment, Inc. and subsidiaries (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of results of operations for interim periods.  Certain information and footnote disclosures have been omitted pursuant to such rules and regulations.  It is suggested that these financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report for the period ended December 31, 2003 on Form 10-KSB.*

* *

*2.  ORGANIZATION AND NATURE OF OPERATIONS:*

*    ---------------------------------------*

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

* *

***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.  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 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 2005 season. * **

*** *

*PDSE is launching 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.  PDSE management has operated manufacturing and service companies in a variety of fields for over 35 years.*

* *

*PDSE is pursuing 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*

* *

*In these scenarios, PDSE expects to improve the operational performance and the asset utilization of the acquired entities via both horizontal and vertical expansion.  In each scenario, PDSE 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 believe this strategy maximizes the acquired core assets because of its simplicity.  We are not delivering perishable goods or fashion that changes quarterly - we are delivering services and/or products.  It is simple for the customer, employee and management to execute.*

*** *

| **6** |
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****Table of Contents**

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*3.  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.  The Company has also agreed to pay the Vice Chairman $166,500 per year.  The Company has agreed to pay the Chairman $250,000 per year.  The Company has not been able to make these payments and has made no accruals for these expenses*.**

* *

*On September 7, 2004, MME and its affiliates entered into a blanket Release Agreement dissolving the relationships of the two partners comprising the entity and its affiliates.  PDSE was asked to be a party to the Release Agreement and, as a result, to waive its right to receive the funds agreed to be advanced from MME, Inc and its affiliates who were also parties to the mutual Release Agreement and all further obligations by MME due to the Company, in exchange for MME waiving all notes, warrants and obligations by the Company due to MME.  The Company’s third quarter financials record debt forgiveness income as a result of the forgiving by MME, and affiliates, of the $80,000 secured loan as part and parcel of the Release Agreement.*

* *

*4.  GOING CONCERN STATUS - FUTURE OPERATIONS*

*    ---------------------------------------*

*As of September 30, 2004 the Company has an accumulated deficit of $35,000,000. The Company's strategy has been to focus on festivals and events in a global branding strategy, and while there has been some progress made on the implementation of this strategy, it is still in its infancy and the Company has generated limited revenues from it.  See Organization and Nature of the Business for an update on the Company’s strategy. 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 discontinued substantially all of its operations during 2002 and is attempting to reorganize its ongoing operations to attain profitability. Since its inception, the Company has not operated profitably.  The Company had a stockholders’ deficit of $7,386,000 at September 30, 2004. There can be no assurance that commercial viability can be demonstrated for the Company’s products and services, and there can be no assurance that the Company will ever achieve profitability on a sustained basis, if at all.*

* *

*The Company's status as a going concern is dependent on its ability to implement a successful marketing plan and to generate sufficient revenues to operate on a profitable basis, along with continued financial support by officers and major shareholders, and the raising of additional funds for working capital. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.*

* *

*5.  SUBSEQUENT EVENTS:*

*    ---------------------------------------*

****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 substantially all of the assets and business of Environmental Testing Laboratories, Inc.  Environmental Testing Laboratories 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 the Company’s  Current Report on Form 8-K filed February 18, 2005 and incorporated therein by reference).**

*** *

| **7** |
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****Table of Contents**

*** *

*** *

****ITEM 2.** MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**

****AND RESULTS OF OPERATIONS**

*** *

****Forward-Looking Statements**

* *

*Except for the historical information contained herein, this quarterly report on Form 10-QSB may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.  These statements relate to future events and to our future financial performance.  These statements are only predictions and may differ from actual future events or results.  We disclaim any intention or obligation to revise any forward-looking statements whether as a result of new information, future developments or otherwise.  Please refer to our other filings with the Securities and Exchange Commission, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including but not limited to risks associated with changes in general economic and business conditions, actions of our competitors, the extent to which we are able to develop new services and markets for our services, the time and expense involved in such development activities, the level of demand and market acceptance of our services and changes in business strategies.*

* *

****Overview**

*** *

****Paradise Music & Entertainment, Inc. (PDSE) is a diversified company which currently operates in the environmental testing and music and entertainment industries.  In the past , we have 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.  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.  **Prior to 2002, we discontinued all our other operating areas to focus on our core business, as described above.  Consequently, we have a very limited history with respect to our current business operations.  During 2003 and 2004, our main focus has been on reestablishing compliance with SEC reporting obligations, implementing new accounting controls and procedures, and settling litigation.  **We now focus on music events, an area that incorporates our core competencies.**   In the remainder of 2004 and in 2005, our focus will be, in addition to developing our existing entertainment strategy, to acquiring one or more profitable companies in the three vertical markets of distribution, manufacturing and services. While there can be no assurance of our success, a number of discussions are under way that management hopes to result in future acquisition. We currently have one remaining operating subsidiary, All Access Entertainment Management Group, Inc., through which we conduct our music events, and managed by Mr. Winston (Buzz) Willis.  In order to grow,*Paradise* will need to raise additional financing and maintain or develop cash flow to support its business.  There can be no assurance that such financing can be obtained on terms acceptable to the Company.**

*** *

****Developments Subsequent to Quarter End**

*** *

*Subsequent to the period covered by this Quarterly Report on Form 10-QSB, we have expanded our intended business focus.  PDSE* *is launching 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.  PDSE management has operated manufacturing and service companies in a variety of fields for over 35 years.*

* *

****First acquisition**:**

* *

****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 substantially all of the assets and business of Environmental Testing Laboratories, Inc.  Environmental Testing Laboratories 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 the Company’s  Current Report on Form 8-K filed February 18, 2005  and incorporated therein by reference).  ETL acquired assets consisting primarily of accounts receivables, machinery and laboratory equipment of Environmental Testing Laboratories valued at $1,915,463.  At closing ETL paid for these assets by assuming liabilities of $761,820 from Environmental Testing Laboratories and agreeing to assume additional liabilities of $1,153,643 from affiliate companies of Environmental Testing Laboratories.  The $761,820 assumed directly from Environmental Testing Laboratories 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.  ETL is obligated to make payment on the accounts payable in the ordinary course of business and expects to negotiate a settlement agreement with the taxing authorities that will provide for a reasonable repayment plan.  The additional liabilities of $1,153,643 from affiliate companies of Environmental Testing Laboratories 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.  This payment was made February 24, 2005.**

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****Table of Contents**

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*As additional consideration for the acquisition, Paradise Music agreed to issue 280,000 shares of its Series B Preferred Stock to Environmental Testing Laboratories.  The Series B Preferred Stock is convertible, at the option of the holder, into ten (10) shares of Paradise Music common stock at a price per share equal to the average price of the common stock in the public market during the 31 days of trading immediately prior to the date of conversion provided, however, in no event shall the conversion price for the Series B Preferred Stock be less than $.20 per share.  However, no Series B Preferred Stock shall be convertible until the average price of the common stock in the public market during the 31 trading days immediately prior to the date of conversion equals or exceeds $1.00.  The holders of shares of Series B Preferred Stock shall not be entitled to receive any dividends and shall not receive a liquidation preference.   *

* *

****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 (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 therein by 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 Report on Form 8-K filed on February 18, 2005 and incorporated therein by reference).  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 (as further set forth in the Guarantee filed as Exhibit 10.3 to the Company’s  Current Report Report on Form 8-K filed on February 18, 2005  and incorporated therein by reference).**

*** *

*Other transactions are contemplated in the future and at least one additional acquisition is in the discussion stage.*

* *

*PDSE plans to continue to pursue the current and additional entertainment industry projects and acquisitions.  This effort is managed by Winston (Buzz) Willis and is expected to produce results in 2005.  We cannot be certain, however, that our projects in this or any other area will occur or that they will be profitable.*

* *

****Results of Operations**

* *

****Three Months Ended September 30, 2004 Compared to Three Months Ended September 30, 2003.**

**** **

*The net profit was $51,000 for the three months ended September 30, 2004 compared to a net loss of $21,000 for the three months ended September 30, 2003.  The increase in profit was due to forgiveness of $80,000 in debt by MME, Inc. as described in Note 3 above.*

* *

*Paradise's marketing, selling, general and administrative expenses increased to $12,000 for the three months ended September 30, 2004 from $700 for the three months ended September 30, 2003, an increase of $11,000.  There was no Revenue for either the three month period ended September 30, 2004 or the three month period ended September 30, 2003.*

* *

*Net interest expense was $19,000 for the three months ended September 30, 2004, compared to $20,000 for the three months ended September 30, 2003.  *

*** *

****Nine Months Ended September 30, 2004 compared to Nine Months Ended September 30, 2004.**

* *

*The net profit was $58,000 for the nine months ended September 30, 2004 compared to a net loss of $74,000 for the nine months ended September 30, 2003.  The increase in profit was due to forgiveness of $80,000 in debt by MME, Inc. as described in Note 3 above, as well as revenue of $55,000 received during the second quarter.  Revenue of $55,000 was received during the second quarter as payment of an accounts receivable that had been written off as uncollectible in an earlier period.  There was no revenue in the nine month period ending September 30, 2003.  *

* *

*Paradise's marketing, selling, general and administrative expenses increased to $13,000 for the nine months ended September 30, 2004 from $5,000 for the nine months ended September 30, 2003, an increase of $8,000.  *

*** *

** *Net interest expense was $65,000 for the nine months ended September 30, 2004, compared to $69,000 for the nine months ended September 30, 2003.  *

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****Liquidity and Capital Resources**

* *

*Net cash used in operating activities for the nine months ended September 30, 2004 was $10,000.*

* *

*Net cash provided by financing activities for the nine months ended September 30, 2004 was a negative $11,000, the result of funds provided by private investor loans and the forgiveness of debt described in Note 3 above.  *

* *

*The Company is reviewing the profit and/or loss projections and cash needs of its businesses. Discussions are under way  with various prospective investors to provide additional capital, but there can be no assurance that such discussions will result in the arrangement of such capital on terms acceptable to the Company if at all. As more fully discussed in  Note 4 to the financial statements included in Item 1, continuation of the Company as a going concern is dependent upon its ability to resolve its liquidity problem and attain future profitable operations.*

*** *

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****ITEM 3.** CONTROLS AND PROCEDURES**

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*(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, Mr. Hickel has concluded that our disclosure controls and procedures were effective as of September 30, 2004.*

* *

***(b) Internal controls. During the quarter ended September 30, 2004, there were no significant changes in our internal accounting controls or in other factors that materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.*

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****PART II – OTHER INFORMATION**

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****ITEM 6.**  EXHIBITS**

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****(a)**           Exhibits**

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**                *31                            *Rule 13a-14(a) Certification of Kelly T. Hickel**

* *

*32                            *Section 1350 Certification of Kelly T. Hickel**

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****SIGNATURES**

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*** *

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****Pursuant to the requirements of the Securities Exchange Act of 1934, the**

****registrant has duly caused this report to be signed on its behalf by the**

****undersigned, thereunto duly authorized**

**** **

**** **

****                                PARADISE MUSIC & ENTERTAINMENT, INC.**

**** **

**** **

****                                By:    /s/ Kelly T. Hickel**

****                                    --------------------------------------------**

****                                    **

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*** *

****Date:  May 19, 2005**

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*Exhibit 31*

****CERTIFICATION**

* *

*I, Kelly T. Hickel, certify that:*

* *

*1. I have reviewed this Quarterly Report on Form 10-QSB of Paradise Music and Entertainment, Inc.;*

* *

*2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;*

* *

****3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;**

* *

*4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) of the registrant and have:*

* *

*a. designed such disclosure controls and procedures, or caused such disclosure controls  and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;*

* *

*b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;*

* *

*c. evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and*

* *

*d. disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and*

* *

*5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent functions):*

* *

*a. all significant deficiencies  and material weaknesses in the design or operation of internal control over financial reporting which could are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and information; and*

* *

****b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.**

* *

* *

***Date: May 19, 2005                                                                                              */s/ Kelly T. Hickel**

****                                **                **                **                                    **            **                Kelly T. Hickel**

****                                **                **                **                **                **                **                Chairman of the Board**

****     **           (Principal Executive Officer,**

****                Principal Financial Officer,**

****                Principal Accounting Officer)**

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****Exhibit 32**

* *

****PARADISE MUSIC & ENTERTAINMENT, INC.**

****CERTIFICATION PURSUANT TO**

****18 U.S.C. SECTION 1350,**

****AS ADOPTED PURSUANT TO SECTION 906**

****OF THE SARBANES-OXLEY ACT OF 2002**

* *

*In connection with the Quarterly Report of Paradise Music & Entertainment, Inc. (the "Company") on Form 10-QSB for the period ended September 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kelly T. Hickel, the Chairman of the Board (Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer), hereby certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.*

* *

****/s/ Kelly T. Hickel**

*** *

*Kelly T. Hickel*

****Chairman of the Board**

****     **           (Principal Executive Officer,**

****                Principal Financial Officer,**

**Principal Accounting Officer)**

* *

* *

****Date: May 19, 2005**

* *

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