SECURITIES
AND EXCHANGE COMMISSION





WASHINGTON,
D.C. 20549





FORM
1O-QSB





(MARK
ONE)





/X/
    QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.





FOR THE
QUARTER ENDED MARCH 31, 2005


COMMISSION
FILE NO. 133-16736





EARTHWORKS
ENTERTAINMENT, INC. AND SUBSIDIARIES-


(Formerly
ECONTENT, INC.)


(Exact
name of registrant as specified in its charter)





DELAWARE
    23-2442288State
      or other jurisdiction of corporation or organization)
    (I.R.S.
      Employer Identification Number)4
      Dutura St., West Palm Beach, FL
    33314(Address
      of principal executive offices)
    (Zip
      Code)(561)
      719-9841(Issuer's
      Telephone Number)





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 shorter period that the registrant was required to
file such report), and (2) has been subject to such filing requirements for the
past 90 days.    Yes 
 /X/       No /  /





Transitional
Small Business Disclosure Format:     Yes /
 /       No /X/





The
number of shares outstanding of each of the registrant's classes of common stock
as of April 28, 2005, is 64,978,269 shares all of one class of which is $.0015
par value common stock and no shares of convertible preferred stock with a
$10.00 par value.






















EARTHWORKS
ENTERTAINMENT, INC. AND SUBSIDIARIES-





(Formerly
ECONTENT, INC.)





A
DEVELOPMENT STAGE COMPANY





INDEX





PAGEPART
      I FINANCIAL INFORMATIONConsolidated
      Balance Sheet-March 31,2005
    1Consolidated
      Statements of Operations-Three and Six Months Ended March 31,
      2005
    2-3Consolidated
      Statement of Cash Flows-Three Months Ended March 31,2005
    4Notes
      to the Consolidated Financial Statements
    5Management's
      Discussion and Analysis of Financial Conditions and Results of
      Operations
    13PART
      II OTHER INFORMATIONItem
      1.
    Legal
      Proceedings
    14Item
      2.
    Changes
      in Securities
    14Item
      3.
    Defaults
      Upon Senior Securities
    14Item
      4.
    Submission
      of Matters to a Vote of Security Holders
    14Item
      5.
    Other
      Information
    14Item
      6.
    Exhibits
      on Reports on Form 8-K
    14Signature
      Page
    15








i




EARTHWORKS
ENTERTAINMENT, INC. AND SUBSIDIARIES


(Formerly
ECONTENT, INC.)


A
DEVELOPMENT STAGE COMPANY


CONSOLIDATED
BALANCE SHEET


MARCH 31,
2005


(UNAUDITED)





ASSETSCurrent
      AssetsCash
      and equivalents
    
    $
    1,441,238Other
      current assets
    
    
    4,422Deferred
      production costs
    
    
    655,753Total
      Current Assets
    
    
    2,101,413Property
      and equipment, net of accumulated depreciation
      of $287
    
    
    863Other
      Assets:Organizational
      property rights
    
    
    2,000,000Total
      Other Assets
    
    
    2,000,000Total
      Assets
    
    
    4,102,276LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      Liabilities:Accounts
      payable and accrued expense
    
    $
    369,006Convertible
      promissory notes
    
    
    850,000Convertible
      promissory notes - officers
    
    
    200,000Other
      current liabilities
    
    
    167,500Total
      Current Liabilities
    
    
    1,586,506Other
      Liabilities
    
    
    72,624Minority
      Interests in consolidated entity
    
    
    1,012,854Stockholders'
      Equity:Common
      stock, par value $.0015 per share; authorized100,000,000
      shares, 64,978,269 issued and outstanding
    
    
    97,468Convertible
      preferred stock, authorized 1,000,000 shares,par
      value $10.00; no shares issued and outstanding
    
    
    -Additional
      paid in capital
    
    
    18,160,501Deficit
      accumulated during development stage
    
    
    (16,827,677
    )Total
      Stockholders' Equity
    
    
    1,430,292Total
      Liabilities and Stockholders' Equity
    
    $
    4,102,276





See notes
to the consolidated financial statements.





1




EARTHWORKS
ENTERTAINMENT, INC. AND SUBSIDIARY


(Formerly
ECONTENT, INC.)


A
DEVELOPMENT STAGE COMPANY


STATEMENT
OF OPERATIONS


(UNAUDITED)





FOR
      THE THREE MONTHS ENDED MARCH 31,
    
    FROM
      APRIL 1, 1998 (DATE OF INCEPTION) TO MARCH 31,2004
    
    2005
    
    2005Gross
      Earnings
    
    $
    -
    
    $
    49,637
    
    $
    49,637Costs
      and Expenses:Development,
      production and distribution including non-stock related charges of $0, $0
      and $916,056, respectively
    
    
    -
    
    
    228,113
    
    
    2,780,875General
      and administrative including non-cash charges of $102,000, $0 and
      $2,907,572
    
    
    311,482
    
    
    243,106
    
    
    11,491,133Depreciation
      and amortization
    
    
    2,025
    
    
    96
    
    
    139,285Total
      Costs and Expenses
    
    
    313,507
    
    
    471,315
    
    
    14,411,293Loss
      from operations before other expenses and provisions for income
      taxes
    
    
    (313,507
    )
    
    (421,678
    )
    
    (14,361,656
    )Other
      Operating Income (Expense):Interest
      income
    
    
    -
    
    
    4,474
    
    
    7,733Settlement
      and debt extinguishment income (expense)
    
    
    -
    
    
    (2,000
    )
    
    847,059Interest
      expense (net)
    
    
    (2,500
    )
    
    (66,591
    )
    
    (1,332,640
    )Minority
      interest in consolidated loss
    
    
    -
    
    
    62,643
    
    
    62,643Equity
      in earnings of unconsolidated subsidiary
    
    
    -
    
    
    -
    
    
    96,774Loss
      from termination of interest in unconsolidated subsidiary
    
    
    -
    
    
    -
    
    
    (1,985,901
    )Impairment
      loss
    
    
    -
    
    
    -
    
    
    (161,589
    )Total
      Other Operating Income (Expense)
    
    
    (2,500
    )
    
    (1,474
    )
    
    (2,465,921
    )Operating
      loss before income taxes
    
    
    (316,007
    )
    
    (423,152
    )
    
    (16,827,577)
    )Provision
      for income taxes
    
    
    -
    
    
    -
    
    
    -Net
      loss
    
    $
    (316,007
    )
    $
    (423,152
    )
    $
    (16,827,577
    )Loss
      per common share, basic and diluted
    
    $
    (.006
    )
    $
    (.007
    )Weighted
      average common shares outstanding, basic and diluted
    
    
    51,780,046
    
    
    64,387,543





See notes
to the consolidated financial statements.




2




EARTHWORKS
ENTERTAINMENT, INC. AND SUBSIDIARY


(Formerly
ECONTENT, INC.)


A
DEVELOPMENT STAGE COMPANY


STATEMENT
OF OPERATIONS


(UNAUDITED)





FOR
      THE SIX MONTHS ENDED MARCH 31,
    
    FROM
      APRIL 1, 1998 (DATE OF INCEPTION) TO MARCH 31,2004
    
    2005
    
    2005Gross
      Earnings
    
    $
    -
    
    $
    49,637
    
    $
    49,637Costs
      and Expenses:Development,
      production and distribution including non-stock related charges of $0, $0
      and $916,056, respectively
    
    
    -
    
    
    253,130
    
    
    2,780,875General
      and administrative including non-cash charges of $307,000, $52,500 and
      $2,907,572
    
    
    505,833
    
    
    444,025
    
    
    11,491,133Depreciation
      and amortization
    
    
    8,574
    
    
    192
    
    
    139,285Total
      Costs and Expenses
    
    
    514,407
    
    
    697,347
    
    
    14,411,293Loss
      from operations before other expenses and provisions for income
      taxes
    
    
    (514,407
    )
    
    (647,710
    )
    
    (14,361,656
    )Other
      Operating Income (Expense):Interest
      income
    
    
    -
    
    
    4,992
    
    
    7,733Settlement
      and debt extinguishment income (expense)
    
    
    (49,865
    )
    
    (49,200
    )
    
    847,059Interest
      expense (net)
    
    
    (5,000
    )
    
    (131,580
    )
    
    (1,332,640
    )Minority
      interest in consolidated loss
    
    
    -
    
    
    62,643
    
    
    62,643Equity
      in earnings of unconsolidated subsidiary
    
    
    -
    
    
    -
    
    
    96,774Loss
      from termination of interest in unconsolidated subsidiary
    
    
    -
    
    
    -
    
    
    (1,985,901
    )Impairment
      loss
    
    
    -
    
    
    -
    
    
    (161,589
    )Total
      Other Operating Income (Expense)
    
    
    (54,865
    )
    
    (113,145
    )
    
    (2,465,921
    )Operating
      loss before income taxes
    
    
    (569,272
    )
    
    (760,855
    )
    
    (16,827,577
    )Provision
      for income taxes
    
    
    -
    
    
    -
    
    
    -Net
      loss
    
    $
    (569,272
    )
    $
    (760,855
    )
    $
    (16,827,577
    )Loss
      per common share, basic and diluted
    
    $
    (.01
    )
    $
    (.01
    )Weighted
      average common shares outstanding, basic and diluted
    
    
    50,205,989
    
    
    64,125,417





See notes
to the consolidated financial statements.





3




EARTHWORKS
ENTERTAINMENT, INC. AND SUBSIDIARIES-


(Formerly
ECONTENT, INC.)


A
DEVELOPMENT STAGE COMPANY


CONSOLIDATED
STATEMENTS OF CASH FLOWS





FOR
      THE SIX MONTHS ENDED MARCH 31,
    
    FROM
      APRIL 1, 1998 (DATE OF INCEPTION) TO MARCH 31,2004
    
    2005
    
    2005Cash
      flows from operating activities:Net
      Loss
    
    $
    (569,272
    )
    $
    (760,855
    )
    $
    (15,780,510
    )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
    
    
    8,574
    
    
    192
    
    
    139,285Interest
      expense paid with equity
    
    
    -
    
    
    80,681
    
    
    98,181Loan
      fees
    
    
    -
    
    
    -
    
    
    25,000Loss
      on abandonment of equipment
    
    
    -
    
    
    -
    
    
    39,547Stock
      based compensation and expenses paid by stock
    
    
    342,002
    
    
    52,500
    
    
    8,693,737Minority
      interest in consolidated loss
    
    
    -
    
    
    (62,643
    )
    
    (62,643
    )Equity
      in earnings of unconsolidated subsidiary
    
    
    -
    
    
    -
    
    
    (96,774
    )Settlement
      (income) expense relating to stock
    
    
    -
    
    
    49,200
    
    
    (1,317,169
    )Loss
      on termination of interest in unconsolidated subsidiary
    
    
    -
    
    
    -
    
    
    1,985,909Changes
      in assets and liabilities:Deferred
      charges and other current assets
    
    
    (11,730
    )
    
    (660,175
    )
    
    (57,431
    )Other
      liabilities
    
    
    (90,398
    )
    
    409
    
    
    448,135Accounts
      payable and accrued expenses
    
    
    61,100
    
    
    113,320
    
    
    832,740Net
      cash used in operating activities
    
    
    (259,724
    )
    
    (1,187,371
    )
    
    (5,051,993
    )Cash
      flows from investing activities:Investment
      in intangible assets
    
    
    -
    
    
    -
    
    
    (90,481
    )Investment
      in property and equipment
    
    
    -
    
    
    -
    
    
    (68,528
    )Advance
      on production rights
    
    
    -
    
    
    -
    
    
    (337,500
    )Investment
      in MPI
    
    
    -
    
    
    -
    
    
    (1,850,000
    )Net
      cash used in investing activities
    
    
    -
    
    
    -
    
    
    (2,346,509
    )Cash
      flows from financing activities:Net
      proceeds from issuance of common stock
    
    
    179,730
    
    
    -
    
    
    4,803,911Cash
      investment in LLC Membership
    
    
    -
    
    
    2,435,875
    
    
    2,435,875Proceeds
      from loans
    
    
    -
    
    
    50,000
    
    
    1,500,213Advances
      from officers and stockholders
    
    
    -
    
    
    -
    
    
    400,954Repayment
      of loans
    
    
    (2,500
    )
    
    -
    
    
    (301,213
    )Net
      cash provided by financing activities
    
    
    177,230
    
    
    2,485,875
    
    
    8,839,740Net
      increase (decrease)in cash and cash equivalents
    
    
    (82,494
    )
    
    1,298,504
    
    
    1,441,238Cash
      and cash equivalents, Beginning of Period
    
    
    86,316
    
    
    142,734
    
    
    -Cash
      and cash equivalents, End of Period
    
    $
    3,822
    
    $
    1,441,238
    
    $
    1,441,238








See notes
to the consolidated financial statements.





4





EARTHWORKS
ENTERTAINMENT, INC. AND SUBSIDIARIES
 (FORMERLY
ECONTENT, INC.)
 A
DEVELOPMENT STAGE COMPANY
 NOTES TO
FINANCIAL STATEMENTS
 MARCH 31,
2005
 (Unaudited)







NOTE 1 -
BASIS OF PRESENTATION:





The
accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form l0-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. For further information,
refer to the financial statements and footnotes thereto included in the
Company’s annual report for Form 10-KSB for the year ended September 30, 2004.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six month period ended March 31, 2005 are not
necessarily indicative of the results that may be expected for the year ended
September 30, 2005.





NOTE 2 -
GOING CONCERN





Since the
Reorganization, the Company has funded its operations from the issuance of
common stock and loans from officers and certain shareholders. The Company has
incurred operating losses totaling $16,661,539 from inception April 1, 1998
through March 31, 2005. The Company's ability to continue as a going concern and
its future success is dependent upon its ability to raise capital in the near
term to:





(1)
    satisfy
      its current obligations,


(2)
    continue
      its development of properties and projects, and


(3)
    successfully
      implement its plans to market the properties and projects.





The
Company believes that it will be able to complete the necessary steps in order
to meet its cash flow requirements throughout fiscal 2005 and continue its
development and commercialization efforts. Management's plans in this regard
include, but are not limited to, the following:





(1)
    The
      Company presently has ongoing negotiations regarding financing
      alternatives. The Company also plans to/and has been able to settle many
      prior obligations with equity and extended payment terms, and partial
      payments. During the Fiscal year ended September 30, 2004, the Company
      received $800,000 and during the quarter ended December 2004, $50,000 in
      bridge financing, from private investors. The Company will now focus on
      the next phase of its financing initiative, which is to further fund the
      production of its existing entertainment properties.





(2)
    In
      addition to the above financing activities, the following business
      initiatives are also ongoing and are expected to provide additional
      working capital to the Company:





(A)
    On
      December 31, 2003, the Company's Board of Directors approved an agreement
      with Peter Keefe, the Company's president, pursuant to a deal memorandum
      dated December 1, 2003, which was intended to be binding and subject to
      definitive agreements whereby in exchange for the issuance of 10,000,000
      restricted shares of the Company's common stock; based upon the Company's
      share price as of December 1, 2003; which was $.20, or $2,000,000, to
      acquire the rights to certain entertainment properties. On January 20,
      2004, the Company executed a definitive agreement and acquired the rights
      to certain properties, including direct profit participation, sales and
      marketing rights, merchandise licensing rights, home video distribution
      and television distribution rights in connection with the Nine Dog and
      Z-Force animated show properties.





5




EARTHWORKS
ENTERTAINMENT, INC. AND SUBSIDIARIES
 (FORMERLY
ECONTENT, INC.)
 A
DEVELOPMENT STAGE COMPANY
 NOTES TO
FINANCIAL STATEMENTS
 MARCH 31,
2005
 (Unaudited)


(B)
    The
      Company has established a platform to launch its properties and products
      in the global television, home video/DVD and merchandise licensing
      marketplace. The Company is currently marketing the Nine Dog
      Christmas, Corneil & Bernie, Little Reindeer,
      The Plonsters, Little Suzy's Zoo and Z-Force childrens
      entertainment properties and is in negotiations to secure further, future
      properties that it calculates have a high potential for success. The
      Company also has valuable and unique business relationships with leading
      production, distribution and licensing groups in the global entertainment
      market. The Company has built working alliances with several outside
      production studios and talent pools and the Company has identified several
      projects it plans to implement on a property by property basis during
      fiscal 2005 and beyond.





(3.)
    The
      Company received approximately $2.25 million, of net of outside
      transaction costs from investors which hold a minority interest in a newly
      formed subsidiary entity of the Company in January 2005, to provide
      additional funding for the production of the first thirteen episodes of
      its Z-Force animated children's television series. The funding was
      provided, net of fees and start-up expenditures, to Z-Force Enterprises,
      LLC, a subsidiary entity of the Company, which holds the Company's
      interest in the Z-Force project; in exchange for profit participation in
      the Z-Force entertainment property. As a result the Company’s profit
      participation in the project went from 45% to 42.6% while its interest in
      the licensing rights remained at 100%.





Management
believes that actions presently being taken to complete the Company's
development stage through the successful production and distribution of
children's and family entertainment properties will ultimately generate
sufficient revenue to support its operations. However, there can be no assurance
that Earthworks Entertainment will generate sufficient revenues to provide
positive cash flows from operations or that sufficient capital will be
available, when required, to permit the Company to realize its plans.





NOTE 3 -
PRINCIPLES OF CONSOLIDATION:





The
consolidated financial statements include the accounts of the Company and its
majority-owned subsidiary entity. All material inter-company accounts and
transactions have been eliminated in consolidation.





During
the quarter ended March 31, 2005, the Company formed a new subsidiary called
Earthworks Brand Management.





NOTE 4 -
LOSS PER COMMON SHARE, BASIC AND DILUTED:





The
Company accounts for net loss per common share in accordance with the provisions
of Statements of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share" ("EPS"). SFAS No. 128 reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. Common equivalent shares have been excluded from
the computation of diluted EPS since their effect is antidilutive. The 1998
earnings per share were restated to reflect the 1 for 25 split pursuant to the
plan of re-organization, and the 4,000,000 shares issued in the merger accounted
for as a reorganization were treated as outstanding effective from the date of
inception.








6




EARTHWORKS
ENTERTAINMENT, INC. AND SUBSIDIARIES
 (FORMERLY
ECONTENT, INC.)
 A
DEVELOPMENT STAGE COMPANY
 NOTES TO
FINANCIAL STATEMENTS
 MARCH 31,
2005
 (Unaudited)


NOTE 5 -
SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES:





FOR THE
SIX MONTHS ENDED





MARCH
31,


2004
    
    2005Issuance
      of 200,000 and 590,000 shares of common stock for repayment of a defaulted
      notes payable and accrued interest
    
    $
    40,334
    
    $
    123,900Issuance
      of 500,000 shares of common stock to two officers to settle unpaid
      expenses and compensation due from a prior settlement
    
    $
    103,196
    
    $
    -Issuance
      of 10,000,000 shares of common stock to Company president for acquisition
      of rights to certain entertainment properties
    
    $
    2,000,000
    
    $
    -Issuance
      of 793,531 shares for exercise of warrants previously outstanding in
      exchange for a corresponding offset to additional paid in capital has been
      recorded
    
    $
    -
    
    $
    197,633











NOTE 6 -
COMMITMENTS AND CONTINGENCIES





On
October 5, 1999, the Company entered into a licensing agreement with an
individual and Spartan Sporting Goods and Fashions, Inc. ("Spartan") a privately
held New York Corporation for the exclusive master license of certain logos,
trademarks and copyrights. The agreement provided that the Company pay 30% of
all royalty income received under this agreement to the Licensor, or "Spartan".
Additionally, the agreement provided for minimum annual non-refundable license
fees for each optional renewal, potentially through 2008. Effective December 31,
2002, the Company decided not to renew the agreement with Spartan. As of
September 30, 2003, net of the settlement of $100,000 for 1,200,000 shares,
$102,400 remained due to Spartan for unpaid license rights fees. During the
period ended December 31, 2004, the Company settled the remaining balance with
Spartan.





On June
15, 2003, the Company entered into an employment agreement with its president
and chief executive officer. The general terms of the agreement provides for a
grant of 3,000,000 shares of common stock upon execution of the agreement; a
base salary of $185,000 per year with annual increases of 10% through 2006 and a
grant of 400,000 options at $.25 per share, vesting 100,000 options per year
through 2006.





On July
1, 2003, the Company entered into an employment agreement with its executive
vice president and chief operating/financial officer. The general terms of the
agreement provides for a base salary of $165,000 per year with annual increases
of 10% through 2006 and a grant of 400,000 options at $.25 per share, vesting
100,000 options per year through 2006.




7






EARTHWORKS
ENTERTAINMENT, INC. AND SUBSIDIARIES
 (FORMERLY
ECONTENT, INC.)
 A
DEVELOPMENT STAGE COMPANY
 NOTES TO
FINANCIAL STATEMENTS
 MARCH 31,
2005
 (Unaudited)


NOTE 7 -
NOTES PAYABLE





In
September, 2001, the Company issued $45,000 of bridge notes to investors, due to
mature the earlier of one year from the date of note or the closing of an equity
funding if at least $2,000,000. The notes bear an interest rate of 10% and the
note holders received 22,500 warrants to purchase one share each of the
Company's common stock at $.20. In the event of a default the investors would
receive an additional 22,500 warrants with an exercisable price of $.10.In
September 2002, the Company issued $146,500 of bridge notes to investors, due to
mature the earlier of one year from the date of note or the closing of an equity
funding of at least $2,000,000. These notes bear interest of 10% and the note
holders received 116,000 warrants to purchase one share of the Company’s common
stock at $.20. During the quarter ended December 31, 2004 these notes were
settled by the issuance of 590,000 shares of the Company’s stock.





During
the fiscal year September 30, 2004, the Company issued $800,000 of bridge notes
to investors, due to mature in one year from the date of note. The notes are
convertible into shares of the Company's common stock at $.08 per share. The
Company plans to re-pay theses notes from revenues anticipated to commence
during the fourth quarter from projects currently under development. These notes
bear interest at 10% and the note holders received 1,666,667 warrants to
purchase one share of the Company's common stock at $.15 per share. During the
three months ended December 31, 2004 the Company issued $50,000 of bridge notes
to investors on similar terms. During the six months ended March 31, 2005 the
Company accrued $50,898 interest on these notes in addition to recording $80,681
interest expense in connection with the amortization of loan discount recorded
on these notes.





The
Company also issued $200,000 in notes to the Company’s president and
vice-president, are also convertible into the Company’s common stock at $.08 per
share in addition to 416,667 warrants at $.08 per share in exchange for unpaid
compensation.





NOTE 8 -
MINORITY INTEREST AND INVESTMENT IN Z-FORCE ENTERPRISES, LLC.





The
Company received approximately $2.25 million, net of outside transaction costs,
which was available to the Company in January 2005, to provide additional
funding for the production of the first thirteen episodes of its Z-Force
animated children's television series. The funding was provided to Z-Force
Enterprises, LLC, a subsidiary entity of the Company, which holds the Company's
interest in the Z-Force project; in exchange for profit participation in the
Z-Force entertainment property.





As a
result the Company's profit participation in the project went from 45% to 42.5%,
when taking into account both profit participation with LLC limited members of
approximately 21.2% and other co-participants while the Company’s interest
overall net in the licensing rights remained 100%.





In
connection with the investments made by the minority members to Z-Force
Enterprises, LLC; the Company issued warrants to the investors , and a finder
that facilitated this transaction which give the holder the right to purchase
2,455,993 shares of the Company's common stock at an exercise price of $.15 per
share through December of 2007.





At March
31, 2005 the Company recorded $1,012,854 of minority interests representing the
investors interest in the Company’s majority owned subsidiary entity,
Z-Force.





8





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





The
following is management's discussion and analysis of certain significant factors
which have affected the Company's financial position and operating results
during the periods included in the accompanying financial statements, as well as
information relating to the plans of the Company's current management.





FORWARD-LOOKING
STATEMENTS





This
report contains "forward-looking statements". In some cases, you can identify
forward-looking statements by terms such as "may," "intend," "might," "will,"
"should," "could," "would," "expect," "believe," "estimate," "predict,"
"potential," or the negative of these terms and similar expressions intended to
identify forward-looking statements. These statements reflect the Company's
current views with respect to future events and are based on assumptions and
subject to risks and uncertainties. These risks and uncertainties may cause the
Company's actual results, performance, or achievements to be materially
different from any future results, performance, or achievements expressed or
implied by the forward-looking statements. You should not place undue reliance
on these forward-looking statements. Also, these forward-looking statements
represent the Company's estimates and assumptions as of the date of this report.
The Company is under no duty to update any of the forward-looking statements
after the date of this report to conform such statements to actual results or to
changes in our expectations.





RESULTS
OF OPERATIONS





THREE
MONTHS ENDED MARCH 31, 2005 VS. THREE MONTHS ENDED MARCH 31, 2004





The
Company recorded its initial production revenue since inception during the
current period totaling $49,637, as restated for the termination of its
investment in MPI; as a result of the production fees it receives as producer of
the Z-Force project, net of the amount allocable as a member of the Z-force
Enterprises, LLC . The Company recorded a net loss of $423,152 for the three
months ended March 31, 2005 as compared to a loss of $316,007 for the period
March 31, 2004. This represents a loss per common share of $(.004) for the three
months ended March 31, 2005 on basic and diluted shares outstanding of
64,387,543 as compared to a loss per common share of $(.006) on basic and
diluted shares outstanding of 51,780,046 for the period March 31, 2004. The
Company anticipates some revenue will be generated from its current production
activities, in early 2005, and revenues will be generated from the exploitation
activities from these projects during fiscal 2006 as the projects currently in
production are introduced into the marketplace.





Development,
production and distribution expenses were $228,113 for the three months ended
March 31, 2005 compared to $0 for the three months ended March 31, 2004. These
cost primarily relate to formation expenses of the Company’s majority owned
subsidiary entity, Z-Force Enterprises, Inc. All direct production costs
incurred during the
quarter related to the Company’s Z-Force project and were deferred as they are
expected to be recoverable from the revenue anticipated from this
project.





General
and administrative expenses decreased to $243,106 in the three months ended
March 31, 2005 from $311,482 for the three months ended March 31, 2004, or
$68,736. The decrease in these costs relates to an decrease in other general
corporate overhead, such as legal expenses and professional fees. These costs
are anticipated to grow as the Company's planned production of properties with
recent funding commitments is implemented.





Other net
operating expenses totaled $60,157 in the three months ended March 31, 2005 as
compared to $2,500 for the three months ended March 31, 2004. The Company
recorded a settlement loss of $2,000 during the three months ended March 31,
2005. Interest expense increased to $66,591, which includes $40,341 of
amortization of debt costs, for the three months ended March 31, 2005 from
$2,500 for the three months ended March 31, 2004. This increase in interest
expense can be attributed to the $800,000 in bridge notes obtained from
investors and $200,000 obtained from officer’s for unpaid compensation during
the latter portion of our prior fiscal year which ended September 30, 2004, as
well as an additional $50,000 borrowed during the quarter ended December 31,
2004; none of which were outstanding during the prior period.





9







SIX
MONTHS ENDED MARCH 31, 2005 VS. SIX MONTHS ENDED MARCH 31, 2004





The
Company recorded its initial production revenue since inception during the
current period totaling $49,637, as restated for the termination of its
investment in MPI; as a result of the production fees it receives as producer of
the Z-Force project, net of the amount allocable as a member of the Z-force
Enterprises, LLC . The Company recorded a net loss of $760,865 for the six
months ended March 31, 2005 as compared to a loss of $569,272 for the period
March 31, 2004. This represents a loss per common share of $(.01) for the six
months ended March 31, 2005 on basic and diluted shares outstanding of
64,125,417 as compared to a loss per common share of $(.01) on basic and diluted
shares outstanding of 50,205,989 for the period March 31, 2004. The Company
anticipates some revenue will be generated from its current production
activities, in early 2005, and revenues will be generated from the exploitation
activities from these projects during fiscal 2006 as the projects currently in
production are introduced into the marketplace.





Development
and production expenses were $253,130 for the six months ended March 31, 2005
compared to $0 for the six months ended March 31, 2004. The current development
expenses relate to pre-production costs of the Z-Force project. All direct
production costs totaling $655,753 incurred during the current period related to
the Company’s Z-FORCE project and were deferred as they are expected to be
recoverable from the revenue anticipated from this project.





General
and administrative expenses decreased to $444,025 in the six months ended March
31, 2005 from $505,833 for the six months ended March 31, 2004, or $61,808. The
decrease in these costs relates to an decrease in other general corporate
overhead, such as legal expenses and professional fees. These costs are
anticipated to grow as the Company's planned production of properties with
recent funding commitments is implemented.





Other net
operating expenses totaled $171,822 in the six months ended March 31, 2005 as
compared to $54,865 for the six months ended March 31, 2004. The Company
recorded a settlement loss of $49,200 during the six months ended March 31, 2005
compared to $49,865 in the prior year. Interest expense increased to $131,580,
which includes $80,681 of amortization of debt costs, for the six months ended
March 31, 2005 from $5,000 for the six months ended March 31, 2004. This
increase in interest expense can be attributed to the $800,000 in bridge notes
obtained from investors and $200,000 obtained from officer’s for unpaid
compensation during the latter portion of our prior fiscal year which ended
September 30, 2004, as well as an additional $50,000 borrowed during the quarter
ended December 31, 2004; none of which were outstanding during the prior period.





10







CURRENT
EVENTS





Z-Force
Commences production





The
Company received approximately $2.25 million, net of outside transaction costs,
which was available to the company in January 2005, to provide additional
funding for the production of the first thirteen episodes of its Z-Force
animated children's television series. At March 31, 205 the Company recorded
$1,071,531 of minority interests representing the investors interest in the
Company’s equity.





The
funding was provided to Z-Force Enterprises, LLC, a subsidiary entity of the
Company, which holds the Company's interest in the Z-Force project; in exchange
for profit participation in the Z-Force entertainment property.





As a
result the Company's net profit participation in the project went from 45% to
42.6% while its interest in the licensing rights remained at 100%.





In
connection with these investments by members of the LLC, the Company issued
warrants to the investors which give these investors the right to purchase
2,455,993 shares of the Company's common stock at an exercise price of $.15 per
share through December of 2007.





During
the three month period ending March 31, 2005, the Company was granted certain
sales, marketing and merchandise licensing rights for three new children’s and
family oriented entertainment properties as listed as follows:




The
Plonsters, the Company will receive 30% in commissions from the merchandise
licensing royalties and 20% of the home video royalties from the transactions
the Company generates.





Corneil
& Bernie, the Company will receive 35% in commissions from the merchandise
licensing royalties from the transactions the Company generates.





Little
Reindeer, the Company will receive 35% in commissions from the merchandise
licensing royalties, 25% of home video royalties, and 25% from all gross TV
transactions the Company generates.





In May of
2005, the Company was granted global licensing and merchandising rights for the
Little Suzy’s Zoo property. The Company will receive 35% in commissions from the
merchandise licensing royalties from the transactions that the Company
generates.





PLAN OF
OPERATIONS AND BUSINESS STRATEGY





The
global market demand for high quality, character driven children and family
entertainment has never been greater. The proliferation of new digital,
satellite and cable broadcast networks throughout the world has prompted
industry analysts to predict that the demand for world class children's and
family entertainment properties is expected to increase exponentially over the
next decade. Merchandising, licensing, publishing and other areas of marketing
for character driven hit entertainment properties can generate hundreds of
millions of dollars for the rights holders and tens of millions of dollars for
the companies who actually market the properties.





Earthworks
Entertainment, Inc., is a vertically integrated marketing company engaged in the
creation, co-production, marketing and distribution of high quality, world class
children's and family oriented entertainment properties. The properties are
marketed in all multi-platform areas of commercial exposition ranging from
Television to Home Video to Merchandise Licensing to Electronic & Video
Games to Book and Music Publishing.





The
Company also forms Teaming Agreements with outside companies for the
co-operative marketing of hit potential entertainment properties. The Company is
establishing an artistic & commercial `bridge' between producers, TV
broadcasters, publishing companies and merchandise groups in North America,
Europe and Asia. The establishment of such `bridge' relationships among
entertainment entities, who otherwise would not be able to globally expand their
world market share in such a near horizon time frame, will ensure that the
Company is privy to substantial `first look/first option' opportunities on a
wide array of world class entertainment properties.





11







On June
15, 2003 the Company appointed Peter Keefe as the Company's President.
Management considered that Mr. Keefe's network of global contacts, associations
and affiliations in the children's and family entertainment and licensing
industries would connect the Company with a uniquely broad, and extremely
valuable, base of exciting revenue generating marketing opportunities. At that
time, the Company began to establish its current platform to launch properties
and products in the global television, home video/DVD and merchandise licensing
marketplace. The Company began marketing of the Nine Dog Christmas, Nine Dog
Night of Fright and Z-Force animated entertainment properties. On December 31,
2003, the Company's Board of Directors approved an agreement with Peter Keefe,
the Company's president, pursuant to a deal memorandum dated December 1, 2003,
which was intended to be binding and subject to definitive agreements. Effective
April 26, 2004, in exchange for the issuance of 10,000,000 restricted shares of
the Company's common stock valued at $2,000,000, Mr. Keefe executed an agreement
whereby the Company has acquired rights to certain properties which are
currently allocated as follows:




Rights
      Acquired
    Property
      Name
    $
      AllocationProfit
      Participation Ownership (originally 45%)
    Z-Force
    42.6%Global
      Management & Control of TV & Home Video/DVD Sales, Toys and
      Merchandise Licensing, Distribution, Production and all Related
      Activities
    Z-Force
    100%TOTAL
      Z-FORCE $ ALLOCATION
    $1,700,000Royalty
      Revenue from all World Wide Merchandise Licensing
    Activities
    Nine
      Dog Property
    10%Royalty
      Revenue from any Toy & Licensing Deals negotiated by
      Earthworks
    Nine
      Dog Property
    25%Royalty
      Revenue World Wide Home Video/DVD Sales
    Nine
      Dog Property
    10%TOTAL
      NINE DOG $ ALLOCATION
    300,000Total
    $2,000,000


The
properties that the Company develops and targets for distribution and licensing
are chosen to provide the greatest probability for success across multi-platform
market categories. These market sector catagories include the following:






Television
      (pay, free, cable & satellite)
    School
      SuppliesHome
      Video/DVD
    Educational
      LicensingMerchandise
      Licensing
    Music
      & Book PublishingToys
      & Video Games
    Direct
      Marketing (to retail chains & through catalogues)Apparel
    Internet
      ApplicationsTheme
      Park Licensing
    Gifts
      & NoveltiesFast
      Food Promotions





The
Company plans to generate its revenues from its existing and future retainer and
management fees, performance incentives, production activities, sales and
marketing commissions and equity-based annuities/property ownership positions in
successful kid's and family entertainment properties. As the Company reaches
critical mass in its property and project ownership and management base,
revenues can multiply as equity positions increase significantly at
substantially lower risk levels. This is a key component of the business model
and an important valuation driver for the Company as it grows. By building a
diverse library of properties and projects the Company minimizes the risk
associated with any one particular property or project while maximizing the
commercial exploitation of its entertainment property portfolio.





12





LIQUIDITY
AND CAPITAL RESOURCES





Since the
reorganization, the Company has funded its operations from the issuance of
common stock and loans from officers and certain shareholders. The Company has
incurred operating losses totaling $16,661,539 from inception April 1, 1998
through March 31, 2005. The Company's ability to continue as a going concern and
its future success is dependent upon its ability to raise capital in the near
term to:





(1)
    satisfy
      its current obligations,


(2)
    continue
      its development of properties and projects, and


(3)
    successfully
      implement its plans to market the properties and projects.





The
Company believes that it will be able to complete the necessary steps in order
to meet its cash flow requirements throughout fiscal 2005 and continue its
development and commercialization efforts. Management's plans in this regard
include, but are not limited to, the following:





(1)
    The
      Company presently has ongoing negotiations regarding financing
      alternatives. The Company also plans to/and has been able to settle many
      prior obligations with equity and extended payment terms, and partial
      payments. During the Fiscal year ended September 30, 2004, the Company
      received $800,000 and during the quarter ended December 2004, $50,000 in
      bridge financing, from private investors. The Company will now focus on
      the next phase of its financing initiative, which is to further fund the
      production of its existing entertainment properties.





(2)
    In
      addition to the above financing activities, the following business
      initiatives are also ongoing and are expected to provide additional
      working capital to the Company:





(A)
    On
      December 31, 2003, the Company's Board of Directors approved an agreement
      with Peter Keefe, the Company's president, pursuant to a deal memorandum
      dated December 1, 2003, which was intended to be binding and subject to
      definitive agreements whereby in exchange for the issuance of 10,000,000
      restricted shares of the Company's common stock; based upon the Company's
      share price as of December 1, 2003; which was $.20, or $2,000,000, to
      acquire the rights to certain entertainment properties. On January 20,
      2004, the Company executed a definitive agreement and acquired the rights
      to certain properties, including direct profit participation, sales and
      marketing rights, merchandise licensing rights, home video distribution
      and television distribution rights in connection with the Nine Dog and
      Z-Force animated show properties.





(B)
    The
      Company has established a platform to launch its properties and products
      in the global television, home video/DVD and merchandise licensing
      marketplace. The Company is currently marketing the Nine Dog Christmas,
      Corneil & Bernie, Little Reindeer, The Plonsters, Little
      Suzy's Zoo and Z-Force childrens entertainment properties
      and is in negotiations to secure further, future properties that it
      calculates have a high potential for success. The Company also has
      valuable and unique business relationships with leading production,
      distribution and licensing groups in the global entertainment market. The
      Company has built working alliances with several outside production
      studios and talent pools and the Company has identified several projects
      it plans to implement on a property by property basis during fiscal 2005
      and beyond.





(3.)
    The
      Company received approximately $2.25 million, net outside transaction
      costs, which was available to the company in January 2005, to provide
      addition funding for the production of the first thirteen episodes of
      its Z-Force animated children's television series. The funding was
      provided to Z-Force Enterprises, LLC, a subsidiary entity of the Company,
      which holds the Company's interest in the Z-Force project; in exchange for
      profit participation in the Z-Force entertainment property. As a result
      the Company's profit participation in the project went from 45% to 42.6%
      while its interest in the licensing rights remained at
    100%.





13





Management
believes that actions presently being taken to complete the Company's
development stage through the successful production and distribution of
children's and family entertainment properties will ultimately generate
sufficient revenue to support its operations. However, there can be no assurance
that Earthworks Entertainment will generate sufficient revenues to provide
positive cash flows from operations or that sufficient capital will be
available, when required, to permit the Company to realize its
plans.





INFLATION





The rate
of inflation has had little impact on the Company's results of operations and is
not expected to have a significant impact on continuing operations.





ITEM 3.
CONTROLS AND PROCEDURES





Under the
supervision and with the participation of management including the Chief
Executive Officer and Chief Financial Officer, we have evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-14c and of the end of the period
covered by this report. Based on that evaluation, the Chief Executive Officer
and Chief Financial Officer have concluded that these disclosure controls and
procedures are effective. There were no changes in our internal control over
financial reporting during the quarter ended December 31, 2004 that have
materially affected, or are reasonably likely to materially affect, our internal
controls over financial reporting.





PART II


OTHER
INFORMATION





ITEM
      1.
    LEGAL
      PROCEEDINGS.





In May
2001, the prior president instituted a suit in federal court against the
Company's president at that time and an investment banker, in connection with
his termination. This suit was dropped. His termination resulted in the return
of certain shares to the Company and a consulting contract for $2,500 per week
for 103 weeks commencing on May 29, 2001.





In
December 2002, a former vendor filed a complaint against the Company and its
former president in the Circuit Court of the Fifteenth Judicial Circuit in Palm
Beach County seeking reimbursement of unpaid storage fees due on office
furniture and equipment held on behalf of the Company. The Company filed a
counter complaint seeking damages for the unauthorized release of the office
furniture and equipment to a former employee and to a vendor.





ITEM
      2
    CHANGES
      IN SECURITIES.





NONE





ITEM
      3.
    DEFAULTS
      UPON SENIOR SECURITIES.





NONE





ITEM
      4.
    SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS.





NONE





ITEM
      5.
    OTHER
      INFORMATION.





NONE





ITEM
      6.
    EXHIBITS
      AND REPORTS ON FORM 8-K.





A. Exhibit
31.1a 31.2 32.1 32.2 - Officer Certifications





B. Form 8-K
Regarding Event Dated December 29, 2004.





14







SIGNATURES





In
accordance with the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant, caused this report to be signed on its
behalf by the undersigned, hereunto duly authorized.








Earthworks
Entertainment, Inc.





Dated:
      May 18, 2005
    By:
    /s/
      PETER
      KEEFEPeter
      Keefe





Pursuant
to the requirement of the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.


NAME
    TITLE
    DATEBy:
    /s/
      PETER KEEFE
    CEO,
      President
    May
      18, 2005Peter
      KeefeBy:
    /s/
      WILLIAM H. CAMPBELL
    Acting
      Chief Financial Officer, Corporate Secretary, Director
    May
      18, 2005William
      H. CampbellBy:
    /s/
      CATHERINE MALATESTA
    Director
    May
      18, 2005Catherine
      Malatesta
















15