Paradise Music & Entertainment Inc – ‘10KSB40’ for 12/31/00

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Annual Report — Small Business — [x] Reg. S-B Item 405   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB40     Form 10-Ksb                                           52    277K 
 2: EX-21.1     Subsidiaries of Registrant                             1      4K 
 3: EX-99.1     Risk Factors                                           2±     8K 

10KSB40   —   Form 10-Ksb
Document Table of Contents

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

F O R M 10-KSB

  |X|   ANNUAL REPORT PURSUANT TO SECTION l3 OR l5(d) OF THE
SECURITIES EXCHANGE ACT OF l934             

OR

      |_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934             

 For the period from January 1, 2000 to December 31, 2000.

Commission file number 1-12635

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

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

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

53 West 23rd Street, New York, New York             10010               
(Address of principal executive offices)         (Zip Code)             

Issuer's telephone number, including area code: (212) 590-2100

Securities registered under Section 12(b) of the Exchange Act:                  

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

Redeemable Common Stock Purchase Warrants      Boston Stock Exchange            

Securities registered pursuant to Section 12(g) of the Exchange Act:  None      

      Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 
12 months (or for such shorter period that the registrant was required to file  
such reports), and (2) has been subject to such filing requirements for the past
90 days.        Yes |X| No |_|                                                  

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

      The issuers' revenues for the period from January 1, 2000 through December
31, 2000 were $36,434,589.                                                      

     The aggregate market value of voting and non-voting common equity held by
non-affiliates of the issuer on March 16, 2001 was approximately $3,328,513. On 
such date, the last sale price of issuer's common stock was $.50. Solely for the
purposes of this calculation, shares beneficially owned by directors, officers  
and beneficial owners of in excess of 10% of the registrant's common stock have 
been excluded, except shares with respect to which such persons disclaim        
beneficial ownership. Such exclusion should not be deemed a determination or    
admission by registrant that such persons are, in fact, affiliates of           
registrant.                                                                     

As of March 16, 2001 there were 11,100,957 shares of common stock   
outstanding.                                                                    

 DOCUMENTS INCORPORATED BY REFERENCE: None

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

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PART I

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

ITEM 1. DESCRIPTION OF BUSINESS                                                 

GENERAL                                                                         

    Paradise Music & Entertainment, Inc. ("Paradise" or the "Company") is an
entertainment company focused on supplying state-of-the art film, video, digital
and music-related products, services and content to traditional and web-centric 
entertainment businesses. Our products, content and services are offered through
three operating groups, namely:                                                 

o     PDSE Film & TV - Involved in the production of television     
         commercial, music videos and televised music concerts through its
      Straw Dogs, Picture Vision and Shelter Films subsidiaries. The
          Company plans to expand its production services to the creation of
film and television properties.                         

      o     PDSE Music - Involved in the production of original music scores and
          advertising themes for television, radio and film through its Rave
         subsidiary; the production of music videos and music specials for
            television through its Picture Vision subsidiary; the production and
         commercial release of recorded music through its PDSE Records and
          Push Records subsidiaries; and music artist management through its
All Access subsidiary.                                  

 o     PDSE Digital - Involved in the design, creation, production and
           delivery of new digital formats of programming for Internet-related
         content and digital entertainment consulting services through its
Paradise Digital Productions division.                  

Our Company is led by industry veterans and each of our operating   
companies is managed by well-known professionals in their areas of operations   
with experience in all relevant facets of the entertainment industry.           

Below are the highlights of each of our business groups:            

PDSE Film & TV Group                                                            

      Straw Dogs employs a roster of well-known directors who produce television
commercials. The directors each have expertise in one or more commercial        
categories. Straw Dogs has created and produced television commercials for      
numerous national advertisers including Nike, Coca-Cola, Pepsi, Reebok,         
Budweiser, Hallmark, 7-Up, General Motors, AT&T, Sprint, Chevrolet, Pizza Hut,  
Disney, American                                                                

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Express, Mountain Dew and Doritos. Many of the directors working for Straw Dogs 
perform their services as independent contractors.                              

  Picture Vision produces music videos and music television specials for
numerous well-known musical artists. These artists include Whitney Houston,     
Madonna, Anita Baker, Ray Charles, Van Morrison, Rod Stewart, Reba McEntire,    
Billy Joel, Garth Brooks and Sting. Picture Vision also produces and directs    
music television specials and long-form musical video programs, featuring       
artists including Billy Joel, Faith Hill, Janet Jackson, Anita Baker, Hall &    
Oates and Van Morrison. Picture Vision has received numerous awards for its     
productions.                                                                    

     Shelter Films is a commercial production company that employs a roster of
well known and up and coming directors. Shelter Films has created and produced  
television commercials for numerous national advertisers including Hershey's,   
ESPN, McDonald's and KIA.                                                       

   Straw Dogs, Picture Vision and Shelter Films are paid on a contract fee
basis with profitability based upon accurate budgeting and efficient operations.
PDSE Film & TV has assisted both our PDSE Music and PDSE Digital groups in      
providing services required for those operations.                               

PDSE Music Group                                                                

This group operates in several niche areas of the music business. It
produces and delivers:                                                          

o     records (PDSE Records, Label M, IndigeDisc, Push Records)     
      o     original musical content for television programs and motion pictures
(Rave)                                                  
o     music for advertising (Rave)                                  
o     musical artist management (All Access)                        

   The PDSE Music group operating divisions receive revenues from contract
services, percentage shares and/or royalties from original musical scores and   
records and percentage fees for artist management. The PDSE Music group has also
provided services and business opportunities for PDSE Film & TV and PDSE        
Digital.                                                                        

    The PDSE Music group, through PDSE Records, Inc. and Push Records, Inc.,
produces records for sale to the public. Push Records has a distribution        
agreement with V2 Records for the U.S. distribution of records currently through
BMG.                                                                            

      PDSE Records produces and releases jazz music through its Label M division
and African music through its newly formed IndigeDisc division. Label M was     
formed in May 2000. It produces and releases jazz compilations, re-issues, and  
new product. IndigeDisc was formed in October 2000 to release indigenous African
music. The division will release recordings made during the 1960's, 1970's and  
1980's and will also release select contemporary music from African artists. The
majority of PDSE Records' releases are distributed in the U.S. through its      
agreement with Ryko Distribution. PDSE Music group also distributes its releases
worldwide through distributors on a territory by territory basis.               

PDSE Records and Push records also maintain licensing, marketing and
distribution and joint venture agreements with independent record labels in a   
selected number of musical genres including:                                    

  o     Trippin' 'N Rhythm/Hardcastle Records - Smooth Jazz, Urban/Adult
Contemporary and Smooth Jazz/NAC                        
o     Mesa Records - Jazz, Pop/Rock, and Contemporary Jazz          
o     Kinetic Records - dance/trance DJ compilations                

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   Rave produces music for commercials as well as original musical content
for programs and movies. Rave's composers created the theme music, as well as   
the underscore, for the kids television series Pokemon, the 2BA Master          
television series soundtrack album on Koch Records, the score for the Warner    
Bros. feature film "Mewtwo Strikes Back" and the score for the direct-to-video  
animated feature, "Pikachu's Winter Vacation". During the 2000 fiscal period    
Rave also composed and directed the music for the live Pokemon musical,         
completed a second album for Koch Records, scored the film "Pokemon 2000 - The  
Power of One", and scored the latest Pokemon film "The Spell of the Unknown".   
Rave has also produced original compositions of advertising themes for clients  
such as Bounty Fabric Softener, Pringles and Jif Peanut Butter.                 

All Access provides comprehensive career management services for    
established, as well as up and coming, music industry talent. Its current       
clients include Daryl Hall & John Oates, Mosh Entertainment Group LLC,          
Sheppard, Kenny Goia, and Poe. In October 2000, All Access entered into a       
consulting agreement with Uproar, Inc., an interactive entertainment company, to
produce the interactive online version of the game show "Name That Tune" for the
Uproar Network.                                                                 

PDSE Digital                                                                    

     PDSE Digital Group was established in January 2000 to apply our expertise
in various aspects of traditional music and entertainment production towards the
creation, production and delivery of Internet-related content for the digital   
and web-based entertainment markets. PDSE Digital, Inc., through its division   
Paradise Digital Productions, has formed an alliance with Computer Associates   
International Inc., a leading provider of Internet software solutions, to       
combine their expertise in back-end software support with our content designed  
for the digital entertainment market. Due to the rapid shift in the digital     
entertainment markets, however, PDSE Digital operations have been cut back      
significantly. In order to contain costs and to refocus its strategy, PDSE      
Digital has adopted a more risk adverse and opportunistic approach. Although it 
is likely that the market for digitally delivered entertainment products will   
eventually mature, we believe that the Company is best served with this low risk
approach.                                                                       

CROSS SELLING AND SERVICING                                                     

 Paradise is able to offer a broader range of services than most other
small independent companies in our industry by the availability of              
cross-services within the PDSE Film & TV, PDSE Music and PDSE Digital groups.   
These services have been structured to foster more efficient business           
operations, lower costs and greater convenience to customers. We have also been 
developing new business opportunities through the interaction of our existing   
groups.                                                                         

DEVELOPMENT STRATEGY                                                            

 We have adopted a strategic plan to enter into and sustain growth and
profitability within our organization. The strategy focuses on three            
initiatives:                                                                    

         o     Fostering internal growth. We intend to internally grow our
          groups and their operating units by expansion of their
          existing operations through the addition of key talent
               including directors, recording artists, composers and other
                individuals and the addition of other products and services.
                  In connection with this growth, we are also continuing to seek
             attractive joint venture and partnership opportunities to
combine our strengths with those of others. 

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     o     Merger and acquisition of complementary businesses. The
                  industries in which we are active are fragmented and populated
            by many smaller organizations which can benefit from the
                 infrastructure and breadth of our operations. Consequently we
        believe that we can structure attractive acquisition
               opportunities. We are currently engaged in identifying such
         opportunities and are in discussions with a number of
                 companies to execute this strategy primarily in the music and
                commercial production areas. Our most recent acquisition was
Shelter Films, Inc.                         

          o     Expanding our core competencies into new markets. We plan to
          leverage the experience, talent and accomplishments of
           existing groups into related business areas such as the
               creation of film and television properties. Our traditional
               competencies in the production of commercials, music videos
                  and televised music concerts, as well as in the music industry
                 provide the foundation for our introduction into the film and
television industry.                        

RECENT DEVELOPMENTS SINCE DECEMBER 31, 1999                                     

   There have been a number of developments in our business since December
31, 1999. These developments include:                                           

o     Acquisitions, Transactions and Investments                    
o     Financing Transactions                                        
o     Securities Listings                                           
o     Management Developments                                       
o     Changes in Consultants and Board                              

Acquisitions, Transactions and Investments:                                     

Acquisition of Shelter Films                                                    

      On June 15, 2000, we acquired substantially all of the business and assets
of Offshore Pictures, Inc. and assumed certain disclosed liabilities for 150,000
shares of Paradise common stock. Offshore Pictures was a commercial production  
company owned and operated by Steve Shore. The shares were issued at the closing
and will be held in escrow by Paradise until the first anniversary of the       
closing in order to secure Offshore's obligations under the Bill of Sale. The   
shares issued were not registered under the Securities Act of 1933, as amended. 
After the closing, we changed the name of the company to Shelter Films, Inc.    

Joint Venture and Licensing Arrangements                                        

    The Company has also been active in establishing numerous joint ventures
and licensing relationships in its PDSE Music operating group. These ventures   
have been described in the previous section in which we have discussed the      
business of PDSE Music.                                                         

Proposed Merger                                                                 

On February 10, 2001, the Paradise Board of Directors approved the  
execution of a Memorandum of Understanding (the "MOU") with iball Media, Inc.   
("iball") stipulating the intent of Paradise and iball to combine their         
respective businesses into a merged entity. Pursuant to the proposed merger     
structure, iball shareholders would receive 11,390,000 shares of Paradise common
stock. No additional options, warrants or conversion rights are to be granted by
Paradise prior to the closing without iball's consent. The proposed transaction 
may be subject to changes upon completion of due diligence and further          
discussions between the parties.                                                

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The completion of the merger is contingent upon customary closing   
conditions, as well as execution of a definitive transaction agreement setting  
forth the terms of the merger, approval by the Paradise Board and its           
shareholders, and receipt of a favorable fairness opinion letter from an        
investment banker selected by an independent committee of Paradise directors.   
Furthermore, the merger is contingent upon arrangement by iball, effective on   
the closing, for financing of at least $3,000,000, which funds shall be obtained
in exchange for equity or convertible subordinated debt of the merged entity and
arrangement by iball of a revolving line of credit for the merged entity in an  
amount sufficient to support the merged entity's accounts receivable.           

Iball will have the right to designate for election to the Board of 
Directors of the merged entity, a majority of one with Paradise to designate the
balance. Certain of the directors, although selected by one party or another,   
may be designated as independent.                                               

    Either party has the right to withdraw from the transaction in the event
that a definitive agreement has not been executed by April 9, 2001, or if the   
merger is not submitted for approval by the Paradise shareholders on or before  
June 1, 2001. There is no assurance that the transaction will be completed or   
that it will be completed in the manner described above.                        

Financing Transactions:                                                         

Baystar Notes and Cancellation                                                  

On March 7, 2000, Paradise and BayStar Capital, L.P. and BayStar    
International Ltd. (collectively "BayStar") entered into a $3,000,000 private   
convertible subordinated note financing made in the form of Paradise Senior     
Subordinated Convertible Notes (the "Notes"), convertible at $2.375 per share,  
plus five year warrants to purchase an additional 631,579 shares ("Warrants 1   
and 2"). Warrants 1 and 2 have an initial exercise price of $2.61 per share,    
vested on March 7, 2001 (the first anniversary of the date of grant) and expire 
on March 7, 2005.                                                               

      On December 15, 2000, we completed a transaction with BayStar the terms of
which were set forth in a Purchase and Sale Agreement. BayStar converted and    
exchanged the Notes and accrued interest for an aggregate of 1,000,000 shares of
Paradise common stock, warrants to purchase an aggregate of 500,000 shares of   
Paradise common stock ("Warrants 3 and 4"), and Paradise's 1,000,000 shares of  
Series A Preferred Stock of Eruptor Entertainment, Inc. Warrants 3 and 4 vested 
immediately, expire on December 15, 2005 and have an initial exercise price of  
$2.00 per share. The exchange enabled Paradise to eliminate all outstanding     
long-term debt and related annual interest expense. Paradise recorded a one-time
non-cash gain related to this exchange during the fourth quarter 2000 of        
$336,815.                                                                       

Pursuant to the terms of Warrants 1 and 2 and Warrants 3 and 4      
(collectively the "BayStar Warrants") BayStar exercised their option to have the
per share exercise price redetermined on March 7, 2001, to a price equal to the 
lesser of $2.61 and $2.00, respectively, or the average daily closing bid price 
for the common stock for the twenty trading days immediately preceding March 7, 
2001. The reset price of the BayStar Warrants is $.48 per share.                

Also, the exercise price of the Warrants and the number of shares of
common stock issuable upon exercise of the Warrants are subject to adjustment in
certain circumstances, including a stock dividend, subdivision or combination of
stock and the issuance of common stock or rights, options or warrants to        

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acquire common stock at a price per share less than the exercise price of the   
warrants in effect immediately before such issuance.                            

Renessence Ventures bv io                                                       

 On June 28, 2000, Paradise entered into a Subscription Agreement with
Renessence Ventures bv io ("Renessence") whereby Renessence invested            
approximately $1.6 million through the purchase of 1,605,422 restricted shares  
of Paradise common stock (the "Shares") and warrants to purchase an additional  
240,813 Shares (the "Warrants"). The securities granted under the agreement are 
subject to a lock-up period for one year commencing on June 22, 2000, the       
binding date of the agreement. Also, if at any time after the first anniversary 
of the binding date Paradise is authorized to file a registration statement the 
Renessence securities are subject to piggy-back registration rights. The        
Warrants vested on January 1, 2001 and expire June 28, 2002. The Warrants have  
an exercise price of $1.75 per share.                                           

Securities Listings:                                                            

Common Stock                                                                    

On March 30, 2001, Paradise was notified by Nasdaq's listing        
qualifications department that it fails to comply with the minimum bid price    
requirement for continued listing set forth in Marketplace Rule 4310(c), and    
that its securities are subject to delisting from the Nasdaq SmallCap Market.   
Paradise has requested an oral hearing to review the staff determination. Any   
delisting action will be suspensed by Nasdaq pending the outcome of the appeal. 

Warrants                                                                        

     Paradise extended and modified the terms of the 1,146,000 public warrants
sold under the Initial Public Offering. At the commencement of the current      
expiration period, January 21, 2001, (i) the exchange ratio would be such that  
the warrant holders can buy an aggregate of 229,200 shares of common stock (five
warrants exercisable for one share), (ii) the expiration period would extend to 
December 31, 2002, and (iii) the exercise price would be $2.50 per share.       

On January 11, 2000, Paradise was notified by Nasdaq's listing      
qualifications department that its public warrants failed to maintain a minimum 
of two active market makers over the previous 10 consecutive trading days as    
required for continued listing on the Nasdaq SmallCap Market. Paradise was      
unable to regain compliance with this rule by February 12, 2001, and its        
warrants were delisted from the Nasdaq Small Cap Market on March 6, 2001.       

Management Developments:                                                        

      On February 12, 2001, Paradise announced the resignation of Jesse Dylan as
Chairman and Chief Executive Officer, the appointment of David Pritchard as     
Chief Executive Officer and the appointment of Kelly Hickel as Chairman.        

      Paradise and Jesse Dylan entered into a Termination Agreement effective as
of January 1, 2001 whereby he resigned his positions as Chairman and CEO of the 
Company. In connection with the termination all 750,000 options to purchase     
Paradise common stock held by Mr. Dylan were cancelled. Mr. Dylan agreed that   
1,000,000 shares of Paradise common stock received by him in connection with the
Stock Purchase Agreement and Asset Purchase Agreement, both dated September 23, 
1999, will remain locked up for the lesser of two years following the Effective 
Date of the Termination Agreement or a period equal to the lock up period of the
new chairman. Mr. Dylan will continue as a member of the Paradise Board of      
Directors and as a director for the Company's Straw Dogs subsidiary. The terms  
of Mr. Dylan's director agreement are more fully discussed at Part II, Item 10. 

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Paradise entered into an employment agreement with David Pritchard  
effective as of February 12, 2001, whereby Mr. Pritchard will serve as Chief    
Executive officer for a two year term. Mr. Pritchard will receive an annual     
salary of $300,000 per year and options to purchase an aggregate of 400,000     
shares of Paradise's common stock at an exercise price of $1 per share. The     
options vest in equal one-third installments on the first, second and third     
anniversary, respectively, of the date of grant.                                

    From time to time the Company issues warrants or options to purchase our
shares to attract key individuals or entities to enter into consulting or joint 
venture agreements. During the period January 1, 2000 through December 31, 2000,
281,500 warrants to purchase shares of Paradise common stock were issued for    
such purposes. The exercise price of the warrants range from $1.06 per share to 
$3 per share. These warrants have exercise periods ranging from 2 years to 3    
years.                                                                          

Changes in Consultants and Board:                                               

On February 10, 2001, the Paradise Board of Directors approved the  
execution of a Management Services Engagement Letter with iball whereby iball   
provides the management services of Kelly Hickel and David Sunshine for the     
interim period prior to the closing of the proposed merger between Paradise and 
iball. Iball will provide management services in the areas of financial and     
business operational matters, capital structure, and advise pertaining to       
obtaining capital to satisfy Paradise's long and short-term goals. The Services 
Agreement provides for a non-refundable retainer in the amount of $25,000 to be 
paid by Paradise to iball, and a minimum of $25,000 per month. Paradise will    
also reimburse iball for all actual, reasonable and accountable expenses        
incurred in the performance of its services either as budgeted or approved in   
advance by Paradise.                                                            

On February 10, 2001, the Paradise Board of Directors accepted Jesse
Dylan's resignation as Chairman and approved his continued appointment as a     
Director of the Company. The Board also elected Kelly Hickel as Chairman and    
Robert Sparacino as a Director.                                                 

On March 9, 2001, Paradise retained Venture Partners Ltd. as its    
non-exclusive financial advisor in connection with a review of the Company's    
operations, and a determination of strategic direction and financing            
alternatives available with the goal of developing initiatives intended to      
enhance operating results and maximize shareholder value. The Agreement may be  
terminated by either party upon thirty days prior written notice.               

On November 14, 2000, Robert Buziak resigned from the Board and on  
December 20, 2000, Thomas Edelman resigned from the Board. Both Mr. Buziak and  
Mr. Edelman resigned their positions due to increased obligations of other      
business commitments.                                                           

COMPETITION                                                                     

   Each of our business groups faces intense competition both for business
and for talent, executives and operating personnel. The PDSE Film & TV group    
competes to secure deals to produce television commercials as part of major     
national advertising campaigns for products and services with household name    
recognition. It also competes with others in all aspects of the offering of     
services for music videos, music television specials and television programs.   
Many of our competitors are substantially larger and better financed. Those     
competitors include, among others, MJZ, Propaganda, and Radke Films. We also    
compete with the other companies for the services of top commercial directors   
needed to deliver commercials of the highest quality.                           

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In our PDSE Music group we currently compete with numerous other    
businesses and individuals who produce original music scores and advertising    
themes for television, radio and film, music videos and specials for television 
and provide management for music artists. Currently, the production of original 
scores and advertising themes for television, radio and film, the production of 
music videos and video specials for television, and music artist management are 
carried out by individuals or small privately held niche companies. Generally,  
each such individual or small company engages in only one of these businesses.  
Many of these businesses and individuals have greater financial resources, and  
in many instances longer operating histories, than we do. In our record         
businesses we face intense competition for discretionary consumer spending from 
numerous other record companies and other forms of entertainment offered by film
companies, video companies and others. We compete directly with other recorded  
music companies, including the five major recorded music companies, which       
distribute contemporary music, as well as with other record companies for       
signing artists and acquiring music catalogs. Many of these competitors have    
significantly longer operating histories, greater financial resources and larger
music catalogs than we do. Our ability to compete is dependent upon identifying 
such markets, obtaining additional capital, signing and retaining successful    
artists and introducing music products which are accepted by consumers.         

ORGANIZATION                                                                    

We were incorporated in the State of Delaware on July 18, 1996. Our 
principal executive offices are located at 53 West 23rd Street, New York, New   
York, 10010 and our telephone number is (212) 590-2100.                         

EMPLOYEES/INDEPENDENT CONTRACTORS                                               

    As of December 31, 2000, we had 48 employees, 30 of whom were located at
our New York offices, 7 of whom were located in Nashville, Tennessee and 11 of  
whom were located in California. None of our employees are represented by a     
labor union. We have not experienced any work stoppage and consider relations   
with our employees to be good.                                                  

  As is customary in the music business, we also utilize the services of
artists, performers, composers, producers, engineers, roadies, booking agents   
and others who are independent contractors. These independent contractors hire  
out their services on an as needed basis and receive a set fee for the services.
The services performed by these independent contractors are not needed on a full
time basis. As a result, services of independent contractors are less expensive 
than having full time employees perform these services.                         

ITEM 2. DESCRIPTION OF PROPERTY                                                 

     We lease office space at the locations listed below. Our rent expense for
the fiscal year ended December 31, 2000 was approximately $635,000.             

      o     Our headquarters, commercial music recording studios and All Access,
           PDSE Records, Push Records, and Rave subsidiaries are located at 53
           West 23rd Street in New York, New York where we lease approximately
         20,000 square feet pursuant to a lease that expires in July 2007.
      o     Our Picture Vision subsidiary is located at 209 10th Avenue South in
            Nashville, Tennessee where it leases 2,050 square feet pursuant to a
lease that expires in August 2005.                      
     o     Our Straw Dogs subsidiary is located at 8330 West Third Street, Los
    Angeles, CA where it leases approximately 10,000 square feet
pursuant to a lease that expires in July 2009.          

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     o     Straw Dogs also rents approximately 2,500 square feet at 40 Wooster
Street, New York, NY, on a month to month basis.        
    o     Our Shelter Films subsidiary is located at 900 Broadway, New York,
         NY, where it leases approximately 4,500 square feet pursuant to a
lease that expires in November 2001.                    

ITEM 3. LEGAL PROCEEDINGS                                                       

    Paradise's subsidiary Shelter Films, Inc. was involved in an arbitration
proceeding brought by a former commercial director asserting a claim for profit 
participation earned during the term of his exclusive director agreement.       
Shelter refuted the claim and asserted that the director breached the           
exclusivity and non-solicitation provisions of the director agreement. On       
January 25, 2001, the arbitrator awarded the director the sum of $210,336 with  
interest at the rate of 9% per annum from February 15, 2000 to the date of      
payment. Paradise incurred attorney's fees and costs in connection with the     
action. In the opinion of management, the award should not have a material      
impact on the liquidity, results of operations or financial condition of        
Paradise.                                                                       

      Except for the matter set forth above and proceedings in the normal course
of business, neither Paradise nor any of our subsidiaries is a party to or      
involved in any material pending legal proceedings.                             

ITEM 4. MATTERS SUBMITTED TO STOCKHOLDER VOTE                                   

An annual meeting of stockholders was held on June 29, 2000. At the 
meeting, the stockholders approved the election of a board of directors to serve
until the next annual meeting. The voting was as follows:                       

              Votes For     Withheld
              ---------     --------

Jesse Dylan          6,810,940      29,315        
Richard J. Flynn     6,798,480      41,775        
Robert A. Buziak     6,811,780      28,475        
Thomas J. Edelman    6,811,280      28,975        
Jeffrey Rosen        6,811,480      28,775        

 At the meeting, stockholders also ratified the appointment of Ernst &
Young, LLP as the Company's principal accountants. The voting was as follows:   

Votes For        Votes Against         Abstentions
---------        -------------         -----------

6,812,540            4,700                23,015  

 PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                

Market Information:                                                             

Our common stock began trading on the Nasdaq SmallCap Market and the
Boston Stock Exchange on January 22, 1997 under the symbol "PDSE" and "PMU,"    
respectively. The high and low bid prices of our common stock (as reported by   
Nasdaq and the Boston Stock Exchange) for each quarter since our initial public 
offering were as follows:                                                       

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Nasdaq SmallCap Market

Period                           High             Low   
------                           ----             ---   
2000        01/01/00 - 03/31/00             $3-1/4           $1-7/8             
04/01/00 - 06/30/00             $2-1/3           $ 3/4  
07/01/00 - 09/30/00             $1-7/8           $1/2   
10/01/00 - 12/31/00             $1-1/4           $3/97  

1999        01/01/99 - 03/31/99             $5-3/8           $1-1/4             
03/31/99 - 06/30/99             $7-3/4           $3-7/8 
07/01/99 - 09/30/99             $9-3/4           $3-7/8 
10/01/99 - 12/31/99             $5-1/4           $1-1/2 

1998        01/01/98 - 03/31/98             $4               $2-13/16           
04/01/98 - 06/30/98             $3-3/4           $2     
07/01/98 - 09/30/98             $3               $1-1/8 
10/01/98 - 12/31/98             $2               $1/2   

1997        01/22/97 - 03/31/97             $7               $5-3/8             
04/01/97 - 06/30/97             $5-7/8           $3-1/2 
07/01/97 - 09/30/97             $5-1/32          $3-5/8 
10/01/97 - 12/31/97             $6-3/8           $3     

 Boston Stock Exchange

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

1999        01/01/99 - 03/31/99             $5-3/8           $1-1/8             
03/31/99 - 06/30/99             $7-1/8           $3-5/8 
07/01/99 - 09/30/99             $4-1/8           $4-1/8 
    10/01/99 - 12/31/99             no activity      no activity

1998        01/01/98 - 03/31/98             $4               $2-13/16           
04/01/98 - 06/30/98             $3-5/8           $2     
07/01/98 - 09/31/98             $1-7/8           $1     
10/01/98 - 12/31/98             $1-1/2           $7/16  

1997        01/22/97 - 03/31/97             $7               $5                 
04/01/97 - 06/30/97             $6               $3     
07/01/97 - 09/30/97             $5-3/64          $3-5/8 
10/01/97 - 12/31/97             $6-3/8           $3     

 The prices set forth above reflect interdealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual       
transactions. The public market for our common                                  

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stock is limited and the foregoing quotations should not be taken as necessarily
reflective of prices which might be obtained in actual market transactions or in
transactions involving substantial numbers of shares.                           

     The approximate number of holders of record of our common stock was 50 as
of March 16, 2001. We believe that there are in excess of 500 round lot         
beneficial owners of common stock whose shares are held in street name.         

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

Recent Sales of Unregistered Securities:                                        

    Except as described below, we did not issue any equity securities during
the fiscal period from January 1, 2000 through December 31, 2000 which were not 
registered under the Securities Act of 1933, as amended. We did issue equity    
securities during the fiscal period which were not registered under the         
Securities Act of 1933, as amended, as follows: (i) executive bonus grants on   
January 2, 2001 and January 5, 2001, for the prior year of service totaling     
375,000 shares at $.25 per share; (ii) grants to consultants for services       
rendered in the amount of 61,996 in November 2000 at $1 per share and 3,000     
shares in June 2000 at $1.063 per share; (iii) grants made to Outside Directors 
under the Outside Director Compensation Program; and (iv) sales previously      
described on our Quarterly Reports on Form 10-QSB for the periods ended June 30,
2000 and September 30, 2000.                                                    

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

Forward-Looking Statements:                                                     

      Except for the historical information contained herein, this annual report
on Form 10-KSB 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.                                                 

Results of Operations:                                                          

Twelve Months Ended December 31, 2000 Compared to                               
Twelve Months Ended December 31, 1999.                                          

In aggregate, revenues for the twelve months ended December 31, 2000
increased to $36,434,589 or 204% compared to $11,964,258 for the twelve-month   
period ended December 31, 1999. The net loss was $4,816,650 for the twelve      
months ended December 31, 2000 compared to $3,665,435 for the twelve months     
ended December 31, 1999. The net loss for the twelve months ending December 31, 
2000 includes a one time gain on extinguishments of debt of $336,815. A         
significant portion of the loss during the twelve months ended December 31, 2000
relates to $3,656,645 associated with additional overhead                       

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related to the commercial production operations of Straw Dogs and Shelter Films,
and in costs associated with the development of new record labels.              

     While both Music Group and Film & TV Group revenues are higher, Film & TV
Group revenues, principally from commercial production, were negatively impacted
due to the Screen Actors Guild ("SAG") strike. In order to better align its cost
structure and overhead with its revenues, the Company has continued personnel   
and overhead cost reductions.                                                   

 PDSE Film & TV Group revenues increased to $27,622,909 for the twelve
months ended December 31, 2000 from $6,928,620 for the twelve months ended      
December 31, 1999, an increase of $20,694,289 or 299 %. The increase in revenues
is primarily due to the contribution from the operations of Straw Dogs and      
Shelter Films, although the performance of these has been affected by the SAG   
strike.                                                                         

      PDSE Film & TV Group cost of sales increased to $21,267,365 for the twelve
months ended December 31, 2000 from $5,098,369 for the twelve months ended      
December 31, 1999, an increase of $16,168,996 or 317%. Gross profit as a        
percentage of PDSE Film & TV Group revenues decreased to 23% for the twelve     
months ended December 31, 2000, compared to 28% for the twelve months ended     
December 31, 1999. The change in cost of sales and gross profit margin is       
primarily due to the acquisition of Straw Dogs and Shelter Films which operate  
with lower gross profit margins than the other Film & TV Group businesses.      

   PDSE Music revenues increased to $8,453,849 for the twelve months ended
December 31, 2000, from $5,035,638 for the twelve months ended December 31,     
1999, an increase of $3,418,211 or 68%. The increase in revenues is primarily   
due to the increased sales generated from a growing slate of recordings being   
released through the Company's agreements with Kinetic Records, Trippin' 'N'    
Rhythm Records, and the first releases from Label M. In addition there was an   
increase in royalty and residual revenues from original music scores made for   
television programs such as Pokemon.                                            

  PDSE Music cost of sales increased to $5,963,683 for the twelve months
ended December 31, 2000 from $2,410,958 for twelve months ended December 31,    
1999, an increase of $3,552,752 or 147%. The increase is principally due to     
greater overall album sales and new releases. Gross profit, as a percentage of  
recorded music and artist management revenues decreased to 29% for the twelve   
months ended December 31, 2000, compared to 52% for the twelve months ended     
December 31, 1999. The decreased margin is due to the increase in sales of      
recorded music product compared to higher margin artist management commissions  
in the prior year.                                                              

      PDSE Digital revenue was $357,831 for the twelve months ended December 31,
2000. This is the fourth quarter of operation for this business, so there are no
comparable results for the same period last year. Revenues were primarily the   
result of production work for various destination portals and Internet          
syndicators. The net loss for this division was $777,637. Due to the rapid shift
in digital entertainment markets, PDSE Digital operations have been cut back    
significantly.                                                                  

Paradise's marketing, selling, general and administrative expenses  
increased to $12,410,033 for the twelve months ended December 31, 2000 from     
$8,181,173 for the twelve months ended December 31, 1999, an increase of        
$4,492,569 or 52%. The increase is primarily attributable to marketing, selling,
general and administrative expenses resulting from the addition of the Straw    
Dogs and Shelter Films operations. Additionally, marketing, selling, general and
administrative expense reflects $373,000 in one-time costs associated with      
severance and other costs due to the overhead reduction program initiated       
primarily in the second quarter of 2000. Some of these increases have been      
offset by personnel and overhead cost reductions initiated by the Company toward
the end of the second quarter.                                                  

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  Depreciation and amortization expenses increased to $1,117,920 for the
twelve months ended December 31, 2000, compared to $263,709 for the twelve month
period ended December 31, 1999, principally as a result of the increased        
depreciation and amortization related to the acquisitions of Straw Dogs and     
Shelter Films, and the amortization of goodwill.                                

  Net interest expense increased to $568,691 for the twelve months ended
December 31, 2000, compared to net interest income of $83,807 for the twelve    
months ended December 31, 1999, an increase of $652,498. The increase is the    
result of interest due on the convertible debt and associated imputed interest  
expense attributable to the financing costs and debt discount. The convertible  
debt was issued in March 2000 and subsequently cancelled in December 2000.      

      The Company's net loss before taxes increased to $5,124,070 for the twelve
months ended December 31, 2000, from $3,642,435 for the twelve months ended     
December 31, 1999, an increase of $1,481,635 or 41%. The increase was primarily 
due to increased marketing, selling, general and administrative expenses        
principally related to expenses associated with the addition of the Straw Dogs  
and Shelter Films operations, one-time severance and other costs due to the     
overhead reduction program, increased interest expenses, decreased profitability
associated with the effect of the SAG strike, costs associated with the         
development of new record labels and related businesses and the development of  
the PDSE Digital initiative, increased depreciation and amortization expenses   
resulting principally from the Straw Dogs and Shelter Films acquisition. These  
costs were partially offset by personnel and expense reductions as referenced   
above.                                                                          

Liquidity and Capital Resources - Twelve Months ended December 31, 2000:        

      Net cash used in operating activities for the twelve months ended December
31, 2000 was $4,351,069. The operating loss for the twelve months was partially 
offset by non-cash expenses such as depreciation and amortization and non-cash  
interest expense.                                                               

      Net cash used in investing activities for the twelve months ended December
31, 2000 was $648,259. This was principally due to payments of acquisition costs
in addition to amounts used to acquire property and equipment.                  

 Net cash provided by financing activities for the twelve months ended
December 31, 2000 was $4,519,982 which is substantially represented by the net  
proceeds from the issuance of subordinated convertible debt and warrants to     
BayStar Capital and BayStar International, and the net proceeds of a private    
equity financing with Renessence Venture.                                       

   The Company had working capital of $968,752 and stockholder's equity of
$11,194,533 at December 31, 2000. During the third and fourth quarters, the     
Company continued an aggressive cost and staff reduction initiative whereby we  
eliminated approximately 40 staff positions and reduced overhead expenses. These
reductions are expected to save approximately $4.5 million annualized. The full 
effects of these reductions will not show up in the Company's operations until  
fiscal 2001. The Paradise Digital Production division expended approximately    
$670,000 in salary costs and overhead over the year ended December 31, 2000. We 
have reduced these expenses by terminating personnel and integrating employees  
from our other operating divisions into such staff positions. Our Music Group   
had one time start-up costs of approximately $350,000 in connection with the    
expansion of its record subsidiaries. We have fully integrated the Mesa and Indy
5000 divisions into the PDSE Records subsidiary and therefore have eliminated   
additional staff and overhead expenses previously experienced. We are also      
currently negotiating with various lenders, strategic partners and equity       
investors to assist in meeting our short term cash flow needs.                  

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Results of Operations for the six months ended December 31, 1999:               

In aggregate, revenues for the six months ending December 31, 1999  
increased $2,303,222 or 40% compared to the six-month period ending December 31,
1998. The net loss was $1,296,243 for the six months ending December 31, 1999   
compared to $1,344,737 for the six months ending December 31, 1998. A major     
portion of the loss during the six months ending December 31, 1999, is $701,459 
in non-cash expenses associated with warrants, and $105,000 in professional fees
associated with changing our fiscal year end. Earnings before interest, taxes   
depreciation and amortization and non-cash consulting expense for the six months
ended December 31, 1999, excluding one-time charges described above, was a loss 
of $410,200 compared to a loss of $1,352,411 for the six months ended December  
31, 1998.                                                                       

    PDSE Film & TV revenues increased to $4,429,544 for the six months ended
December 31, 1999 from $4,103,985 for the six months ended December 31, 1998 an 
increase of $325,559 or 7.9% (revenue from the acquisition of Straw Dogs is not 
included). The increase in revenues is primarily due to an increase in the      
number of television music specials and music videos produced during the six    
months ended December 31, 1999.                                                 

 PDSE Film & TV cost of sales decreased slightly to $3,299,034 for six
months ended December 31, 1999 from $3,369,926 for the six months ended December
31, 1998, a decrease of $70,892 or 2.1%. Gross profit as a percentage of        
television and film production revenues increased to 25.5% for the six months   
ended December 31, 1999. The increase was primarily attributable to the higher  
gross profit percentage on the television music specials.                       

PDSE Music revenues increased to $3,652,809 for the six months ended
December 31, 1999 from $1,675,146 for the six months ended December 31, 1998 an 
increase of $1,977,663 or 118%. The increase in revenues is primarily due to the
increased sales generated from the Paul Hardcastle and JazzMasters III releases 
through the company's joint venture with the adult contemporary jazz label,     
Trippin' `N Rhythm Records, and the release of Tranceport II through the        
company's joint venture with Kinetic Records. In addition there was an increase 
in royalty and residual revenues from original music scores made for television 
programs such as Pokemon. These increases in revenue are partially offset by the
reduction of concerts performed by artists under management. The recorded music 
operation has been restructured to decrease operating overhead by having fewer  
releases of new records and by forming joint ventures with other companies      
willing to absorb the costs associated with the production, marketing and       
promotion of records.                                                           

 PDSE Music cost of sales increased to $1,830,771 for six months ended
December 31, 1999 from $556,663 for six months ended December 31, 1998, an      
increase of $1,274,108 or 229%. The increase is due to greater overall album    
sales when compared to the six months ended December 30, 1998. Gross profit as a
percentage of recorded music and artist management revenues was 50% for the six 
months ended December 31, 1999 compared to 67% for the six months ended December
31, 1998. The decreased margin is due to the increase in sales of recorded music
product compared to higher margin artist management commissions in the prior    
year.                                                                           

Paradise's marketing, selling, general and administrative expenses  
increased to $3,599,107 for the six months ended December 31, 1999 from         
$3,220,416 for the six months ended December 31, 1998, an increase of $378,691  
or 11.8%. The increase is primarily attributable to fees associated with        
services provided to Paradise pursuant to outside consulting arrangements with  
regard to new business ventures and changing fiscal years. These fees were paid 
predominately through the use of common stock purchase warrants.                

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     For the six months ending December 31, 1999, Paradise incurred a one-time
non-cash charge associated with writing off certain warrants. These warrants    
were granted to an individual to assist in identifying acquisition candidates,  
employee recruitment, structuring transactions and financing to support the     
company's growth. As of December 1999, the Company did not anticipate any       
further transactions occurring under this agreement. The write-off resulted in a
one time charge of $330,000 for the remainder of prepaid consulting expenses.   

      Interest income increased to $71,775 for the six months ended December 31,
1999 from $25,537 for the six months ended December 31, 1998 an increase of     
$46,238 or 181.1%. The increase resulted from additional investment balances    
from Paradise's financing transactions during the last six month period ended   
December 31, 1999.                                                              

      The Company's loss before income taxes decreased to $1,276,243 for the six
months ended December 31, 1999 from $1,341,737 for the six months ended December
31, 1998, a decrease of $65,495 or 4.9%. The decrease was primarily due to      
increased profitability from the two operating segments as mentioned above.     
These increases are partially offset by non-cash write-offs of certain warrants 
and professional fees associated with changing our fiscal year.                 

 Liquidity and Capital Resources - six months ended December 31, 1999:

   Net cash used in operating activities for the six months ended December
31, 1999 was $2,259,751. This was principally due to the operating loss for the 
period combined with the increase in accounts receivables.                      

   Net cash used in investing activities for the six months ended December
31, 1999 was $1,350,259. This was principally due to acquisition costs          
associated with the purchase of Straw Dogs, and the investment in Eruptor       
Entertainment, Inc.                                                             

Net cash provided by financing activities for the six months ended  
December 31, 1999 was $4,310,675, which is represented substantially by the net 
proceeds from the sales of the Company's common stock, net of expenses Paradise 
has working capital of $1,758,492 and stockholders' equity of $12,425,108 at    
December 31, 1999. In March 2000, the company completed a $3 million private    
senior convertible subordinated financing with private equity funds BayStar     
Capital, L.P. and BayStar International Ltd. The notes are convertible at $2.375
per share. In addition, we issued five-year warrants to purchase an additional  
631,579 shares at an initial price of $2.6125 per share. The company believes   
that its cash, operating cash flows and its access to capital markets, taken    
together, provide adequate resources to fund ongoing operating requirements and 
capital expenditures related to the expansion of existing businesses, future    
acquisitions and development of new projects for the next twelve month period.  

Fiscal Year Ended June 30, 1999 Compared to June 30, 1998:                      

     Recorded music and artist management revenues decreased to $3,167,863 for
the fiscal year ended June 30, 1999 from $4,596,257 for the fiscal year ended   
June 30, 1998 a decrease of $1,428,394 or 31.1%. The decrease in revenues is    
primarily due to the reduction in sales volume of Daryl Hall and John Oates     
album "Marigold Sky", in addition to a reduction of touring of artists under    
management.                                                                     

   Television and film production revenues decreased to $6,493,173 for the
fiscal year ended June 30, 1999 from $8,997,169 for the fiscal year ended June  
30, 1998 a decrease of $2,503,996 or 27.8%. The decrease in revenues is         
primarily due to a reduction in the number of television music specials produced
during the fiscal year ended June 30, 1999, partially offset by an increase in  
royalty and residual revenues                                                   

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from original music scores made for television programs such as Pokemon and Mr. 
Men. Cost of sales decreased to $6,305,511 for the fiscal year ended June 30,   
1999 from $9,761,508 for fiscal year ended June 30, 1998, a decrease of         
$3,455,997 or 35.4%. The decrease is due to fewer record releases and lower     
overall album sales when compared to the prior year and a new distribution      
agreement Push Records executed with V2 Records which reduced Push Record's     
costs to produce and market the recordings and provides for a portion of the    
profits from such recordings to be shared with V2.                              

Paradise's marketing, selling, general and administrative expenses  
increased to $7,101,023 for fiscal year ended June 30, 1999 form $6,828,087 for 
the fiscal year ended June 30, 1998, an increase of $272,936 or 4%. The increase
in primarily attributable to fees associated with services provided to Paradise 
pursuant to outside consulting arrangements with regard to liquidity and        
acquisitions. These fees were paid predominately through the use of common stock
purchase warrants. The increase in marketing, sales, general and administrative 
expenses were partially offset by decreases in other administration costs as a  
result of staff reductions and other cost containment measures implemented.     

   Interest income decreased to $37,569 for the fiscal year ended June 30,
1999 from $139,040 for the fiscal year ended June 30, 1999, a decrease of       
$101,471 or 72.9% The decrease resulted from the use of proceeds from Paradise's
initial public offering during fiscal 1998, which were invested in interest     
bearing accounts.                                                               

      Paradise's loss before income taxes increased to $3,707,929 for the fiscal
year ended June 30, 1999 from $2,857,129 for the fiscal year ended June 30,     
1998, an increase of $850,800 or 29.8%. The increase was primarily due to the   
decrease in gross profits realized by the two operating segments as mentioned   
above, as well as one-time items that impacted fiscal operating results which   
include, fees associated with the hiring of key management personnel to drive   
Paradise forward in its new growth phase; certain charges relating to the       
restructuring of the Push Records subsidiary; and a charge associated with the  
termination of Push's record distribution agreement with BMG, precipitated by   
its new joint venture with V2; all of which reflected efforts to recapitalized  
and restructure Paradise's core businesses.                                     

ITEM 7. FINANCIAL STATEMENTS                                                    

See the index to our financial statements attached hereto.          

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

 On December 18, 2000, the Company terminated Ernst & Young LLP as its
principal accountant. The Company appointed Rothstein, Kass & Company, P.C. as  
its principal accountant effective as of December 18, 2000. This change in the  
principal accountants was approved by the Board of Directors of Paradise on     
December 18, 2000.                                                              

    Ernst & Young's report on the financial statements for December 31, 1999
and the six months then ended and through the date of this report, contained no 
adverse opinion or disclaimer of opinion, nor was modified as to uncertainty,   
audit scope, or accounting principles.                                          

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      Paradise is not, nor has ever been involved in any dispute or disagreement
about any matter of accounting principles or practices, financial statement     
disclosure, audit scope or procedures, or any reportable events with Ernst &    
Young, LLP.                                                                     

PART III

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

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

                                                        [Enlarge/Download Table]

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             Name            Age             Position with Company              Held      Principal Occupation or Employment, if   
             ----            ---             ---------------------              -----     --------------------------------------   
                                                                                Since                     Different                
                                                                                -----                     ---------                
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Kelly Hickel (1)(2)         58     Chairman                                   Feb. 2001    CEO iball Media, Inc.                   
-----------------------------------------------------------------------------------------------------------------------------------
Jesse Dylan                 35     Director                                   Jan. 1999    Commercial director Straw Dogs, Inc. ;  
                                                                                           film director                           
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Jeff Rosen (1) (2)          45     Director                                   Jan. 1999    General Manager, Davassee Enterprises   
-----------------------------------------------------------------------------------------------------------------------------------
Robert Sparacino (1)(2)     73     Director                                   Feb. 2001    President Sparacino Associates, Inc.    
                                                                                           and Sparacino Management Co., Inc.      
-----------------------------------------------------------------------------------------------------------------------------------
Richard J. Flynn (2)        43     Director, Chief Operating Officer, Chief   Oct. 1996                                            
                                   Financial Officer, Treasurer, Secretary                                                         
-----------------------------------------------------------------------------------------------------------------------------------
Brian Doyle                 44     Chief Executive Officer All Access         Oct. 1996                                            
-----------------------------------------------------------------------------------------------------------------------------------
John Loeffler               49     Chief Executive Officer Rave               Oct. 1996                                            
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David Pritchard             53     Chief Executive Officer Paradise           Feb. 2001                                            
-----------------------------------------------------------------------------------------------------------------------------------
Craig Rodgers               42     Chief Executive Officer Straw Dogs         July 1999                                            
-----------------------------------------------------------------------------------------------------------------------------------
Jon Small                   54     Chief Executive Officer Picture Vision     Oct. 1996                                            
-----------------------------------------------------------------------------------------------------------------------------------

(1)   Member of Compensation Committee.                             
(2)   Member of Audit Committee.                                    

 KELLY HICKEL was recently appointed as our Chairman in February 2001.
Since 1990, he has also served as the Chairman and Chief Executive Officer of   
iball Media, Inc. Mr. Hickel was also the turn-around President to Miniscribe   
Corp., a troubled Fortune 500 disk drive manufacturer, from 1989 to 1990. Mr.   
Hickel has been building products and services based on the Internet since 1981.
Mr. Hickel was the President of the Maxwell Technology Information Systems Group
from 1993 until 1997. During his tenure, Maxwell Technology became the 9th best 
performing stock on the Nasdaq in 1996. Mr. Hickel is a graduate of Indiana     
University, with a Bachelors of Science.                                        

     JESSE DYLAN has served as a Director since January 1999. He served as our
Chief Executive Officer from July 1, 1999, through December 31, 2000, and as our
Chairman from April 1999 through December 31, 2000. Mr. Dylan is also a         
commercial director for our Straw Dogs subsidiary and recently completed a      
commercial for Doritos which ran during the Super Bowl. Mr. Dylan also recently 
completed directing the feature film "How High" for Universal Pictures. Mr.     
Dylan served as president of Consolidated Entertainment LLC, d/b/a Straw Dogs, a
film and television production company, which he co-found with Craig Rodgers in 
February 1998. Mr. Dylan has been engaged in the entertainment business for over
five years, as, among other things, a director of music videos and television   
commercials. From 1994 through 1996, Mr. Dylan worked for H.K.M. Productions,   
where he directed nationally acclaimed television                               

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commercials for numerous national advertisers, including Coca-Cola, Pepsi, Nike,
and Chase Manhattan. Mr. Dylan began his directorial career at Propaganda Films 
where he directed music videos for artists such as Lenny Kravitz, Tom Petty, and
Tom Waits, for which he received the Rolling Stone Magazine Award.              

     JEFFREY ROSEN has served as a Director since January 1999. Since 1986, he
has served as the General Manager of Bob Dylan's various music-publishing       
companies, managing the New York office and administering the publishing of Mr. 
Dylan's musical compositions. During this time he has also acted as a consultant
to several entertainment companies, including Columbia Records, Sony Music, Time
Life Records and Time Life Home Video. Mr. Rosen is also on the board of        
directors of The Association of Independent Music Publishers, and is a graduate 
of the State University of New York at Oneonta, with a B.A. in Literature.      

      ROBERT SPARACINO has served as a Director of Paradise since February 2001.
Mr. Sparacino has been a director of iball Media, Inc. since 2000. He has served
as the President of both Sparacino Associates, Inc., a management consulting    
firm, since 1981 and Sparacino Management Co. Inc., a venture capital firm,     
since 1983. From 1992 to 2000, Mr. Sparacino served as a director of Tristar    
Corp., a company involved in the manufacture and marketing of toiletry products.
Mr. Sparacino also served as a director of Concurrent Computer Corp., a computer
manufacturer, from 1994 through 1997. Mr. Sparacino was President of the Xerox  
Corp. Information Technology Group from 1975 to 1980, and Senior Vice President 
Information Systems Group to 1982.                                              

   RICHARD FLYNN has served as our Chief Operating Officer since September
2000, Chief Financial Officer since February 1999, Treasurer since December     
1996, Secretary since July 1996 and as a Director since October 1996. From      
September 1994 to September 1996, Mr. Flynn was the managing co-owner of All    
Access Management and from September 1996, he was Vice President and General    
Manager of All Access. Mr. Flynn was Vice President and General Manager of PUSH 
Records since February 1997. From March 1990 until September 1994, Mr. Flynn    
served as General Counsel to Horizon Entertainment and Management Group Inc.    
("Horizon") and its clients. Since 1983 Mr. Flynn has been a practicing attorney
in New York State specializing in entertainment, corporate and public sector    
law.                                                                            

    BRIAN DOYLE served as a Director from our inception in July 1996 through
January 2000. Mr. Doyle served as our Chief Executive Officer from December 1998
through April 1999 and as our Executive Vice President from July 1996 through   
December 1998. In 1994 Mr. Doyle founded All Access Management, and from 1994 to
the present he has served as its President. Mr. Doyle has been the Chief        
Executive Officer of All Access Management since 1996 and has been the Chief    
Executive Officer of PUSH Records since February 1997. From 1991 to 1994, Mr.   
Doyle served as Chief Executive Officer and President of Horizon. With over     
twenty years of experience in the artist management field, Mr. Doyle has built  
All Access Management into a thriving artist-friendly company guiding both      
well-established and up-and-coming artists through their careers.               

     JOHN LOEFFLER has served as our Chairman Emeritus since April 1999 and as
a Director from our inception in July 1996 through January 2000. Mr. Loeffler   
served as our Chairman of the Board and President from July 1996 through April  
1999 and served as Chief Executive Officer from July 1996 through December 1998.
From 1986 to present, Mr. Loeffler has served as the Chief Executive Officer of 
Rave Music, a company Mr. Loeffler founded approximately twenty years ago. Mr.  
Loeffler, a talented musician in his own right, has built Rave Music into a     
premier creator of original scores and advertising themes for television, radio 
and film. Mr. Loeffler's vast experience in his field has contributed to Rave   
Music's extensive client list which has grown to include a large number of      
well-known and leading advertisers.                                             

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    DAVID PRITCHARD has served as our Chief Executive Officer since February
2001. From 1997 through 1999, Mr. Pritchard was Chief Executive Officer and     
President of Film Roman, a Nasdaq traded television and animation studio that   
produced such animated shows as The Simpsons, King of The Hill, and The Family  
Guy. In 1990, Mr. Pritchard began Popular Arts Entertainment ("PAE") which      
became the third largest entertainment news operation in the U.S. In 1996, Mr.  
Pritchard left PAE and created an entertainment company called Little Fish which
developed and produced television properties. Mr. Pritchard is a director of    
Altamira, a high tech software image compression company and of MSHE, an        
over-the-counter company involved in television production. Mr. Pritchard has   
been nominated for numerous ACE and Emmy Awards and has won prime-time Emmy's   
for King of The Hill in 1998, Dr. Katz - Licensed Therapist in 1999, and The    
Simpsons in 2000.                                                               

    CRAIG RODGERS has served as the Chief Executive Officer of the Company's
Straw Dogs subsidiary since July 1, 1999. In 1998, Mr. Rodgers co-founded, along
with Jesse Dylan, Consolidated Entertainment, LLC, d/b/a Straw Dogs, where he   
served as its President. Previously, Mr. Rodgers worked for eight years as an   
executive director at Gartner/Grasso/GLG Productions. During his directorial    
career, Mr. Rodgers has worked with nearly all of the leading directors in the  
television commercial production business, as well as the top executives in the 
advertising industry. Mr. Rodgers is the recipient of numerous industry honors, 
including the prestigious Directors Guild of America's, Director of the Year    
award.                                                                          

JON SMALL served as a Director and Executive Vice President from our
inception in July 1996 through January 2000. Since September 1996, Mr. Small has
been the Chief Executive Officer of Picture Vision, an Emmy-award-winning video 
and television program production company, which he also founded in 1984. From  
1984 to September 1996, Mr. Small had been the President of Picture Vision.     
Picture Vision has produced a number of music videos for acclaimed artists,     
several television specials and television commercials. Picture Vision has      
grown, under Mr. Small's leadership, to become one of the leading independent   
production companies currently in operation.                                    

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

 Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires our officers and directors and holders of more than 10%
of our common stock (collectively "Reporting Person") to file reports of initial
ownership, ownership and changes in ownership of the common stock with the      
Securities and Exchange Commission within certain time periods and to furnish us
with copies of all such reports. Based solely on our review of copies and such  
reports furnished to us by such Reporting Persons or on the written             
representations of such Reporting Persons that no reports on Form 4 or 5 were   
required, we believe that, during the fiscal period ended December 31, 2000 all 
of the Reporting Persons complied with their Section 16(a) filing requirements. 

ITEM 10. EXECUTIVE COMPENSATION                                                 

Summary Compensation Table                                                      

    The following table sets forth all compensation awarded to, earned by or
paid by Paradise or its subsidiaries during each of the last three fiscal years 
to David Pritchard, our current Chief Executive Officer; Jesse Dylan who served 
as Chief Executive Officer from June 1999 through December 31, 2000; and each of
the five most highly compensated executive officers, other than the persons who 
had served as Chief Executive Officer during the fiscal year, whose annual base 
salary and bonus compensation exceeded $100,000 (the "Named Executive           
Officers").                                                                     

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                                                        [Enlarge/Download Table]

                                      Annual Compensation (1)                      Long Term Compensation Awards                 
                                      ------------------------                     -----------------------------                 

---------------------------------------------------------------------------------------------------------------------------------
Name/Principal Position     Year Ended Dec.    Salary ($)      Bonus ($)   Restricted       Securities         All Other         
-----------------------     ----------------   ----------      ---------   -----------      -----------        ---------         
                            2000 (2)                                       Stock Awards     Underlying         Compensation (3)  
                            --------                                       ------------     -----------        ----------------  
                                                                                            Options                              
                                                                                            -------                              
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                 
David Pritchard             2000               ---             ---         ---              ---                ---               
---------------------------------------------------------------------------------------------------------------------------------
CEO since Feb. 2001         Stub 1999          ---             ---         ---              ---                ---               
---------------------------------------------------------------------------------------------------------------------------------
                            1999               ---             ---         ---              ---                ---               
---------------------------------------------------------------------------------------------------------------------------------
                            1998               ---             ---         ---              ---                ---               
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
Jesse Dylan                 2000               $750,000        ---         ---              ---                $14,250           
---------------------------------------------------------------------------------------------------------------------------------
CEO until Feb. 2001         Stub 1999           375,000        ---         ---              750,000 (4)        ---               
---------------------------------------------------------------------------------------------------------------------------------
                            1999               ---             ---         ---              ---                ---               
---------------------------------------------------------------------------------------------------------------------------------
                            1998               ---             ---         ---              ---                ---               
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
Brian Doyle                 2000               $275,000        $50,000     ---              25,000             $25,000           
---------------------------------------------------------------------------------------------------------------------------------
CEO Push/All Access         Stub 1999           137,500        ---         ---              ---                 12,500           
---------------------------------------------------------------------------------------------------------------------------------
Since 1997 and 1996         1999                225,000        $75,000     ---              350,000             25,000           
---------------------------------------------------------------------------------------------------------------------------------
                            1998                300,000        ---         ---              ---                 28,000           
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
Richard Flynn               2000               $275,000        ---         300,000          ---                $25,000           
---------------------------------------------------------------------------------------------------------------------------------
COO since Sept. 2000        Stub 1999           137,500        ---         ---              ---                 12,500           
---------------------------------------------------------------------------------------------------------------------------------
                            1999                225,000        $100,000    ---              350,000             18,000           
---------------------------------------------------------------------------------------------------------------------------------
                            1998                300,000        ---         ---              ---                 15,000           
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
John Loeffler               2000                $325,000       $150,000    ---              50,000             $25,000           
---------------------------------------------------------------------------------------------------------------------------------
CEO Rave since 1996         Stub 1999           162,500        ---         ---              ---                 12,500           
---------------------------------------------------------------------------------------------------------------------------------
                            1999                225,000        $100,000    ---              50,000              25,000           
---------------------------------------------------------------------------------------------------------------------------------
                            1998                310,000        ---         ---              ---                 34,000           
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
Craig Rodgers               2000               $350,000        ---         ---              ---                $47,675           
---------------------------------------------------------------------------------------------------------------------------------
CEO Straw Dogs              Stub 1999          $175,000        ---         ---              100,000            ---               
---------------------------------------------------------------------------------------------------------------------------------
Since July 1999             1999               ---             ---         ---              ---                ---               
---------------------------------------------------------------------------------------------------------------------------------
                            1998               ---             ---         ---              ---                ---               
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
Jon Small                   2000               $387,500        $100,000    ---              25,000             $20,000           
---------------------------------------------------------------------------------------------------------------------------------
CEO Picture Vision          Stub 1999           187,500        ---         ---              90,000              25,000           
---------------------------------------------------------------------------------------------------------------------------------
Since 1996                  1999                345,000        $125,000    ---              50,000              50,000           
---------------------------------------------------------------------------------------------------------------------------------
                            1998                310,000         150,000    ---              ---                 60,000           
---------------------------------------------------------------------------------------------------------------------------------

(1)   We were incorporated in July 1996. Compensation for the period January 1, 
2000 through December 31, 2000 represents amounts paid by Paradise. 
    Compensation for the fiscal years ended June 30, 1999, and 1998, and the
transition fiscal ended December 31, 1999 represents amounts paid by
Paradise, Rave Music, Picture Vision, All Access Management and PUSH
Records.                                                            

(2)   We changed our fiscal year to a calendar year as of December 31, 1999. The
      periods ended 1999 and 1998 are for the years ended June 30. The Stub 1999
  period is for the six month transition period ended December 31, 1999.

(3)   Includes amounts paid by us which we deemed to be for the benefit of such 
     executive, including amounts paid for lodging, transportation, insurance,
entertainment and other perquisites.                                

(4)   These options were cancelled as of January 1, 2001, pursuant to the terms 
of a separation agreement between Mr. Dylan and Paradise.           

Option Grants in Fiscal Period January 1, 2000 through December 31, 2000:       

     The following table sets forth, for each of the Named Executive Officers,
information regarding individual grants of options made during the fiscal period
January 1, 2000 through December 31, 2000.                                      

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                                Individual Grants                                                  
---------------------------------------------------------------------------------------------------
              (a)    (b)                    (c)                           (d)             (e)      
---------------------------------------------------------------------------------------------------
                              % of Total Options Granted to        Exercise or Base    Expiration  
     Name            Grant       Employees in Fiscal Year            Price ($/sh)         Date     
     ----            -----       ------------------------            ------------         ----     
---------------------------------------------------------------------------------------------------
                                                                                                   
David Pritchard       --                    --                            --               --      
---------------------------------------------------------------------------------------------------
Jesse Dylan           --                    --                            --               --      
---------------------------------------------------------------------------------------------------
Brian Doyle          25,000                2.6%                          $1.00          8/10/05    
---------------------------------------------------------------------------------------------------
Richard Flynn         --                    --                            --               --      
---------------------------------------------------------------------------------------------------
John Loeffler        50,000                5.2%                          $1.00          8/10/05    
---------------------------------------------------------------------------------------------------
Craig Rodgers         --                    --                            --               --      
---------------------------------------------------------------------------------------------------
Jon Small            25,000                2.6%                          $1.00          8/10/05    
---------------------------------------------------------------------------------------------------

Aggregate Option/SAR Exercises; Fiscal 2000 Year End Option/SAR Values:         

    The following table provides information related to options exercised by
the Named Executive Officers during the fiscal period ended December 31, 2000   
and the number and value of options held by them at December 31, 2000 which were
then exercisable. No options were exercised during the fiscal year ended        
December 31, 2000.                                                              

                                                        [Enlarge/Download Table]

                                         ---------------------------    ----------------------------
                                         Number of Securities           Value of Unexercised In     
                                         Underlying Unexercised         the Money Options/SARs      
                                         Options/SARs at FY-End         at FY-End (1)               
                                         ---------------------------    ----------------------------

----------------------------------------------------------------------------------------------------
                   Shares    Value                                                                  
                   Acquired  Realized                                                               
                   on                                                                               
                   Exercise                                                                         
Name               (#)                 Exercisable     Unexercisable   Exercisable    Unexercisable 
----               ---                 -----------     -------------   -----------    ------------- 
----------------------------------------------------------------------------------------------------
                                                                                                    
David Pritchard       --        --           --             --             --               --      
----------------------------------------------------------------------------------------------------
Jesse Dylan           --        --        250,000        500,000           --               --      
----------------------------------------------------------------------------------------------------
Brian Doyle           --        --        350,000         25,000           --               --      
----------------------------------------------------------------------------------------------------
Richard Flynn         --        --        350,000           --             --               --      
----------------------------------------------------------------------------------------------------
John Loeffler         --        --         55,000         50,000           --               --      
----------------------------------------------------------------------------------------------------
Craig Rodgers         --        --         33,333         66,667           --               --      
----------------------------------------------------------------------------------------------------
Jon Small             --        --         78,333         91,667           --               --      
----------------------------------------------------------------------------------------------------

(1)   The last sale price on December 29, 2000 was $.250.                       

Directors' Compensation:                                                        

      Pursuant to our Outside Directors Program, directors who are not employees
("Outside Directors") received non-qualified options to purchase 5,000 shares on
January 22, 1997 at $6 per share and are entitled to receive non-qualified      
options to purchase 5,000 shares for each year of service, payable in advance on
July 1 of each year, at an exercise price equal to the closing bid price of the 
common stock on the first trading day of each fiscal year. Accordingly, 5,000   
options were granted at $4 on July 1, 1997, at $2.0625 on July 1, 1998, at      
$5.125 on July 1, 1999, and at $1.50 on July 1, 2000 to each Outside Director.  
Since the fiscal year was changed to a calendar year, the Board subsequently    
approved that the option grant be made at the time of election to the Board and 
that the exercise price be the closing bid price of the common stock on the date
of election.                                                                    

      In addition, Outside Directors are entitled to receive compensation in the
amount of $18,000 per annum, 100% payable in stock. Such amounts are payable    
quarterly in arrears. For the fiscal period ended December 31, 2000, persons who
were Outside Directors during such fiscal year received 55,111 shares of common 
stock.                                                                          

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

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Employment Agreements and Termination of Employment:                            

      Paradise and Jesse Dylan entered into a Termination Agreement effective as
of January 1, 2001 whereby he resigned his positions as Chairman and CEO of the 
Company. In connection with the termination all 750,000 options to purchase     
Paradise common stock held by Mr. Dylan were cancelled. Mr. Dylan agreed that   
1,000,000 shares of Paradise common stock received by him in connection with the
Stock Purchase Agreement and Asset Purchase Agreement, both dated September 23, 
1999, will remain locked up for the lesser of two years following the Effective 
Date of the Termination Agreement or a period equal to the lock up period of the
new chairman. Mr. Dylan will continue as a member of the Paradise Board of      
Directors and as a director for the Company's Straw Dogs subsidiary.            

Straw Dogs, Inc. and Jesse Dylan entered into an exclusive director 
agreement dated January 1, 2001 whereby Mr. Dylan will provide television and   
commercial and music video production services for a two-year term. Each of the 
parties has the option to terminate the agreement at any time upon thirty days  
prior written notice. Pursuant to the Agreement, Mr. Dylan receives profit      
participation and director fees.                                                

Paradise entered into an employment agreement with David Pritchard  
effective as of February 12, 2001, whereby Mr. Pritchard will serve as Chief    
Executive Officer for a two year term. Mr. Pritchard will receive an annual     
salary of $300,000 per year and options to purchase an aggregate of 400,000     
shares of Paradise's common stock at an exercise price of $1 per share. The     
options vest in equal one-third installments on the first, second and third     
anniversary, respectively, of the date of grant.                                

   Paradise and M. Jay Walkingshaw entered into a separation agreement and
general release whereby Mr. Walkingshaw resigned from his position as Chief     
Operating Officer and all positions he held as an officer or director of        
Paradise as of September 1, 2000. Under the terms of the settlement, Mr.        
Walkingshaw received $50,000 and is entitled to additional contingent payments  
up to a maximum of $200,000 in the event that certain EBITDA targets for each of
the next two fiscal years are achieved. In connection with the termination,     
400,000 options held by Mr. Walkingshaw were canceled, leaving him with 200,000 
vested options exercisable at $5 per share.                                     

Brian Doyle, Richard Flynn and John Loeffler are each employed under
employment agreements dated July 1, 1997 as amended. Under the terms currently  
in effect, each of the agreements terminate on June 30, 2001. For the year      
ending December 31, 2000, Mr. Doyle and Mr. Flynn were paid at the rate of      
$275,000 per annum and Mr. Loeffer was paid at the rate of $325,000 per annum.  
In addition, Mr. Doyle was awarded a bonus of $50,000 and Mr. Loeffler was      
awarded a bonus of $150,000. Future bonuses for John Loeffler will be at least  
$100,000 if the profits before taxes of Rave exceed $500,000. Mr. Doyle is      
entitled to a bonus of $100,000 if the profits before taxes of All Access exceed
$500,000. All other bonuses are in the discretion of the Board of Directors.    

 Jon Small is employed as the President and Chief Executive Officer of
Picture Vision under an employment contract for a three year term which began on
July 1, 1999. Pursuant to the contract, his base salary for the second year of  
the agreement increased to $387,500 (and will be $400,000 for the third year).  
He also received a bonus of $100,000, and is entitled to a bonus of $100,000 in 
each subsequent year of the contract that pretax income of Picture Vision       
exceeds $500,000.                                                               

    Craig Rodgers is employed as Chief Executive Officer of Straw Dogs for a
three year term which began on July 1, 1999 at an annual salary of $350,000. Mr.
Rodgers' compensation is to be reviewed annually with bonus awards or increases 
in salary to be considered based on his and Straw Dogs' overall                 

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performance. Mr. Rodgers is entitled to receive an annual bonus of $100,000 per 
year if the pre-tax profits of Straw Dogs at the end of each fiscal year are at 
least $850,000.                                                                 

  For the year ending December 31, 2000, approximately $263,000 has been
expensed under the bonus plans and Executive Agreements, New Agreements and     
Employment Modification Agreements and are included in marketing, selling,      
general and administrative expenses.                                            

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT         

   The following table sets forth certain information as of March 16, 2001
regarding the share ownership of the company by (i) each person who is known to 
us to be the record or beneficial owner of more than five percent (5%) of our   
common stock; (ii) each director and each Named Executive Officer; and (iii) all
directors and executive officers as a group.                                    

                                                        [Enlarge/Download Table]

-------------------------------------------------------------------------------------------------
                                                    Amount and Nature of     % of Outstanding    
     Name and Address of Beneficial Owner (1)     Beneficial Ownership (2)    Shares Owned (3)   
-------------------------------------------------------------------------------------------------
Named Executive Officer and Directors:                                                           
-------------------------------------------------------------------------------------------------
                                                                                                 
Jesse Dylan                                            1,100,000 (4)                 9.9%        
-------------------------------------------------------------------------------------------------
Brian Doyle                                              514,250 (5)                 4.5%        
-------------------------------------------------------------------------------------------------
Richard Flynn                                            814,250 (6)                 7.1%        
-------------------------------------------------------------------------------------------------
Kelly Hickel                                                   0                     n/a         
-------------------------------------------------------------------------------------------------
John Loeffler                                            414,601(7)                  3.7%        
-------------------------------------------------------------------------------------------------
David Pritchard                                                0                     n/a         
-------------------------------------------------------------------------------------------------
Craig Rodgers                                            474,333(8)                  4.3%        
-------------------------------------------------------------------------------------------------
Jeff Rosen                                               125,409(9)                  1.1%        
-------------------------------------------------------------------------------------------------
Jon Small                                                 72,333(10)                 3.3%        
-------------------------------------------------------------------------------------------------
Robert Sparacino                                               0                     n/a         
-------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------
All Named Executive Officers and Directors as a        3,815,176(4) - (10)           31.6%       
group (10 persons)                                                                               
-------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------
Beneficial Owners in Excess of 5% (other than Named                                              
Executive Officers and Directors):                                                               
-------------------------------------------------------------------------------------------------
Michael A. Roth and Brian J. Stark, filing as joint    2,131,579(11)(12)              9.99%      
filers pursuant to Rule 13d-1(k) for holders BayStar                                             
Capital, L.P. and BayStar International Ltd.                                                     
-------------------------------------------------------------------------------------------------
Renessence Ventures bv                                 1,846,235(13)                 16.3%       
-------------------------------------------------------------------------------------------------

(1) The address of each beneficial owner identified is c/o Paradise Music &     
Entertainment, Inc., 53 West 23rd Street, New York, NY 10010, except for (i)    
Kelly Hickel, which is c/o iball Media, Inc. 1002 Creek Court Longmont, CO      
80503, (ii) Jesse Dylan, Craig Rodgers and David Pritchard which is c/o Straw   
Dogs, 8330 W. 3rd Street, Los Angeles, CA, 90048 (iii) Jeffrey Rosen, which is  
c/o Davasee Enterprises, 67 Irving Place, 11th Floor, New York, New York 10003, 
(iv) Robert Sparacino, which is c/o Sparacino Associates, Inc., 175 Blackberry  
Drive Stamford, CT 06903, (v) BayStar which is c/o 1500 W. Market St., Suite    
200, Mequon, WI 53092, and (vi) Renessence Ventures which is Rossinilaan 6, 1217
CB Hilversum, Netherlands.                                                      

(2) Unless otherwise indicated, we believe that all persons named in the table  
have sole voting and investment power with respect to all shares of common stock
beneficially owned by them. A person is                                         

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deemed to be the beneficial owner of securities that can be acquired by such    
person within 60 days of March 16, 2001 upon the exercise of options, warrants  
or convertible securities.                                                      

(3) Each beneficial owner's percentage ownership is determined by assuming (i)  
that options, warrants or convertible securities that are held by such person   
(but not those held by any other person) and which are exercisable within 60    
days of March 16, 2001 have been exercised and converted, and (ii) 11,100,957   
shares of common stock were outstanding, before any consideration is given to   
such options, warrants or convertible securities.                               

(4) Includes 51% member interest in Consolidated Entertainment, LLC which entity
is being dissolved and the assets distributed to its principals. Does not       
include non-qualified options to purchase 750,000 shares at an exercise price of
$5 per share granted on July 1, 1999 which were cancelled pursuant to the terms 
of a Termination Agreement dated January 1, 2001.                               

(5) Includes non-qualified options to purchase 300,000 shares at $5 per share   
granted on February 19, 1999 and non-qualified options to purchase 50,000 shares
of common stock at $5.25 per share granted on April 21, 1999. Does not include  
non-qualified options to purchase 25,000 shares of common stock at $1.00 per    
share which are not exercisable within 60 days of March 16, 2001.               

(6) Includes non-qualified options to purchase 300,000 shares at $5 per share   
granted on February 19, 1999 and non-qualified options to purchase 50,000 shares
of common stock at $5.25 per share granted on April 21, 1999.                   

(7) Includes non-qualified options to purchase 50,000 shares of common stock at 
$5.25 per share granted on April 21, 1999 and non-qualified options to purchase 
5,000 shares granted in December 1996 at $6 per share. Includes 18,600 shares   
owned by Mr. Loeffler's pension plan and 3,800 shares owned by Mr. Loeffler's   
wife. Does not include non-qualified options to purchase 50,000 shares of common
stock at $1.00 per share which are not exercisable within 60 days of March 16,  
2001.                                                                           

(8) Includes Mr. Rodgers 49% member interest in Consolidated Entertainment LLC  
which entity is being dissolved and the assets distributed to the principals.   
Includes non-qualified options to purchase 33,333 shares at $5 per share which  
represents one-third of the non-qualified options to purchase 100,000 shares    
granted on July 1, 1999.                                                        

(9) Includes non-qualified options granted under the Outside Directors Option   
Program of 5,000 shares at $5.125 per share granted on July 1, 1999 and 5,000   
shares at $1.50 per share granted on July 1, 2000. Includes warrants to purchase
100,000 shares at $1.25 per share repriced as of September 1, 2000 from 200,000 
shares at $5.25 per share.                                                      

(10) Includes non-qualified options to purchase 5,000 shares granted in December
1996 at $6 per share and 65,000 shares at $5.25 per share granted on July 1,    
1999. Includes non-qualified options to purchase 8,333 shares at $5 per share   
which represents one-third of the non-qualified options to purchase 25,000      
shares granted on July 1, 1999. Does not include 50,000 shares at $5.25 per     
share and 25,000 shares at $1 per share which are not exercisable within 60 days
of March 16, 2001.                                                              

(11) Includes securities held by BayStar Capital, L.P. as follows: (i) 666,667  
shares of common stock and (ii) warrants which are exercisable as of March 7,   
2001, to purchase the lesser of (A) 754,386 shares of common stock or (B)       
calculated with its "affiliates" as defined in Rule 144 and including BayStar's 
common stock holdings, 9.99% of the then issued and outstanding common stock,   
and any excess is not exercisable. BayStar Capital, L.P. may be deemed an       
affiliate of BayStar International, Ltd.                                        

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(12) Includes securities held by BayStar International Ltd. as follows: (i)     
333,333 shares of common stock and (ii) warrants which are exercisable as of    
March 7, 2001, to purchase the lesser of (A) 377, 193 shares of common stock or 
(B) calculated with its "affiliates" as defined in Rule 144 and including       
BayStar's common stock holdings, 9.99% of the then issued and outstanding common
stock, and any excess is not exercisable. BayStar International, Ltd. may be    
deemed an affiliate of BayStar Capital, L.P.                                    

(13) Includes securities held by Renessence Ventures bv as follows: (i)         
1,605,422 shares of common stock and (ii) warrants which are exercisable as of  
January 1, 2001, to purchase 240,813 shares of common stock at an exercise price
of $1.75 per share.                                                             

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

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                         

On February 10, 2001, the Paradise Board of Directors approved the  
execution of a Memorandum of Understanding (the "MOU") with iball Media, Inc.   
("iball") stipulating the intent of the Company and iball to combine their      
respective businesses into a merged entity. Our Chairman Kelly Hickel is the    
Chairman and Chief Executive Officer of iball and Robert Sparacino, a director  
of Paradise, is a director of iball. The terms of the MOU are more fully        
described at Part I, Item 1.                                                    

     We entered into an employment agreement with David Pritchard effective as
of February 12, 2001, whereby Mr. Pritchard will serve as Chief Executive       
officer for a two year term. Mr. Pritchard will receive an annual salary of     
$300,000 per year and options to purchase an aggregate of 400,000 shares of     
Paradise's common stock at an exercise price of $1 per share. The options vest  
in equal one-third installments on the first, second and third anniversary,     
respectively, of the date of grant.                                             

Our subsidiary Straw Dogs, Inc. entered into an exclusive director  
agreement dated January 1, 2001 with Jesse Dylan, a director of Paradise. Under 
the agreement, Mr. Dylan will provide television and commercial and music video 
production services for a two-year term. Each of the parties has the option to  
terminate the agreement at any time upon thirty days prior written notice.      
Pursuant to the Agreement, Mr. Dylan receives profit participation and director 
fees.                                                                           

 At the closing of the acquisition of Straw Dogs in December 1999, the
Company assumed a lease with 8330 West Third Street, LLC, an affiliate of Mr.   
Dylan and Mr. Rodgers which runs from August 1, 1998 through July 2009. The     
lease is for 10,147 square feet of space at the rental rate of $2.25 per square 
foot per month. This rate is subject to escalation in accordance with inflation 
after 5 years. The rental rate was determined by an independent appraisal of    
market rate. As described in the proxy statement dated November 10, 1999, for   
the special meeting of stockholders held on December 16, 1999, at which the     
Straw Dogs acquisition was approved, the Asset Purchase agreement between the   
Company and Straw Dogs was supplemented by a letter agreement dated September   
22, 1999. An exhibit to the letter agreement set forth the agreed upon terms    
covering the leasing of space by the Company from 8330 West Third Street, LLC.  

8330 West Third Street, LLC, signed a promissory note payable to the
Company, dated December 16, 1999 which will reflect the full indebtedness owed  
the Company. The note provides for monthly payments by 8330 West Third Street,  
LLC to the Company pursuant to a ten year self amortizing payment schedule with 
interest at prime plus 1% floating quarterly with a floor of 6% and capped at 12

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1/2%. The payment obligation under the note has been acknowledged by Mr. Dylan  
and Mr. Rodgers as their personal obligation as provided for in the Asset       
Purchase Agreement.                                                             

     We have a promissory note receivable with Mr. Loeffler which provided for
borrowings up to approximately $129,000, with interest at 8.5% per annum. The   
promissory note is collateralized by 200,000 shares of Mr. Loeffler's common    
stock of the company and provides for mandatory prepayments as defined in the   
agreement. As of December 31, 2000, $64,000 was outstanding under this          
promissory note. An additional $20,000 was repaid in January 2001.              

 PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K                                       

(a) Exhibits                                                        

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

3.1     Certificate of Incorporation of the Registrant (1)                      

3.2     Amended and Restated By-Laws of the Registrant (1)                      

4.1     Specimen of Registrant's Common Stock Certificate (1)                   

4.2     Specimen of Registrant's Warrant Certificate (1)                        

4.3     Form of Representative's Warrant Agreement including form of Warrant (1)

4.4     Form of Warrant Agreement between Registrant and Continental Stock      
Transfer and Trust Company (1)                                  

10.7    Form of The Registrant's 1996 Stock Option Plan (corrected version) (1) 

10.14   Lease Agreement dated as of October 21, 1996 between the Registrant and 
    Twenty Third Street joint Venture, together with Escrow Letter dated
December 11, 1996 (1)                                           

10.19   Distribution Agreement with BMG Music d/b/a BMG Entertainment and PUSH  
Records, Inc. (3)                                               

10.20   Lease Agreement dated July 10, 1997 between the Registrant and          
Twenty-third Street Joint Venture (3)                           

10.23   Form of Service Agreement dated September 22, 1997 between Daryl Hall & 
John Oates and PUSH Records (3)                                 

10.24   Employment Agreement dated as of October 1, 1997 between Rave Music and 
Paul Hoffman (4)                                                

10.25   Employment Agreement dated as of July 1, 1997 among the Registrant, Rave
Music and John Loeffler (4)                                     

10.26   Employment Agreement dated as of July 1, 1997 among the Registrant, All 
Access Management and Richard Flynn (4)                         

10.27   Employment Agreement dated as of July 1, 1997 among the Registrant, PUSH
Records and Brian Doyle (4)                                     

10.29   Employment Agreement Amended dated as of July 1, 1997 among the         
Registrant, Rave Music and John Loeffler (5)                    

10.30   Employment Agreement Amended dated as of July 1, 1997 among the         
Registrant, All Access Management and Richard Flynn (5)         

10.31   Employment Agreement Amended dated as of July 1, 1997 among the         
Registrant, PUSH Records and Brian Doyle (5)                    

10.34   Consulting Agreement dated as of January 15, 1998 between Registrant and
Thomas J. Edelman (5)                                           

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10.36   Outside Director Compensation Agreement dated January 15, 1998 between  
Registrant and Thomas J. Edelman (5)                            

10.38   Personal Services Agreement between PUSH Records and Bruce M. Somers and
Nancy Free p/k/a/ Kidney Thieves (5)                            

10.39   Form of Licensing Agreement dated November 4, 1997 between PUSH Records 
and Eagle Rock Entertainment, PLC. (5)                          

10.40   Promissory Note and Stock Pledge Agreement dated December 31, 1997      
between Registrant and John Loeffler (6)                        

10.42   Personal Services Agreement dated June 18, 1998 between PUSH Records and
Legend Entertainment Corporation. (7)                           

10.43   Promissory Note in the amount of $23,960 dated as of August 7, 1998     
between Registrant and Thomas Edelman. (7)                      

10.44   Promissory Note in the amount of $90,000 dated as of July 1, 1998       
between Registrant and Thomas Edelman. (7)                      

10.45   Promissory Note in the amount of $23,960 dated as of August 7, 1998     
between Registrant and Paul Thomas Cohen. (7)                   

10.46   Employment Modification Letter Agreement dated as of September 24, 1998 
  among Registrant and Messrs, Doyle, Flynn, Loeffler and Small. (7)

10.47   Consulting Agreement dated April 21, 1999 between the Company and Dana  
Giacchetto (8)                                                  

10.48   Warrant dated April 21, 1999 issued to Dana Giachetto (10)              

10.49   Consulting Agreement dated April 23, 1999 between the Company and       
Jeffrey Rosen (10)                                              

10.50   Warrant dated April 23, 1999 issued to Jeffrey Rosen (10)               

10.51   Consulting Agreement dated April 8, 1999 between Thomas Edelman and the 
Company (10)                                                    

10.52   Warrant dated April 8, 1999 issued to Thomas Edelman (10)               

10.53   Interim Agreement between Paradise Music & Entertainment, Inc., and     
       Jesse Dylan (incorporated by reference to the Company's 10-KSB filed on
November 12, 1999).(11)                                         

10.54   Employment Agreement between Paradise Music & Entertainment, Inc. and   
Jesse Dylan (11)                                                

10.55   Asset Purchase Agreement dated September 23, 1999 by and among Paradise 
       Music & Entertainment, Inc., Straw Dogs Acquisition Corp., Consolidated
Entertainment, LLC, Jesse Dylan and Craig Rodgers (11)          

10.56   Stock Purchase Agreement dated September 23, 1999 by and among Paradise 
   Music & Entertainment, Inc., Straw Dogs Acquisition Corp. and Jesse
Dylan (11)                                                      

10.57   Purchase Agreement between Eruptor Entertainment, Inc., Cassandra/Chase 
Entertainment Partners, LLC, and Paradise Music & Entertainment,
Inc.(11)                                                        

10.58   Employment Agreement dated as of October 1, 1999 among M. Jay           
Walkingshaw and Paradise Music & Entertainment, Inc.(12)        

10.59   Employment Agreement dated as of July 1, 1999 among Jon Small, Picture  
Vision, Inc. and Paradise Music & Entertainment, Inc.(12)       

10.60   Consulting Agreement dated as of January 26, 2000 among Robert Buziak   
and Paradise Music & Entertainment, Inc.(12)                    

10.61   Warrant dated January 26, 2000 issued to Robert Buziak (12)             

10.62   Memorandum of Understanding dated February 10, 2001, between Paradise   
Music & Entertainment, Inc. and iball Media, Inc. (13)          

10.63   Management Services Engagement Agreement dated February 6, 2001, between
Paradise Music & Entertainment, Inc. and iball Media, Inc. (13) 

10.64   Termination Agreement dated February 9, 2001 between Paradise Music &   
Entertainment, Inc. and Jesse Dylan (13)                        

10.65   Exclusive Director Agreement dated February 9, 2001 between Straw Dogs, 
Inc. and Jesse Dylan (13)                                       

10.66   Employment Agreement dated February 9, 2001 between Paradise Music &    
Entertainment, Inc. and David Pritchard (13)                    

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21.1  Subsidiaries of Registrant (14)                                           

99.1  Risk Factors (14)                                                         

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

      (2)   Filed with the Securities and Exchange Commission on March 17, 1997.

    (3)   Filed with the Securities and Exchange Commission on September 26,
1997.                                                   

   (4)   Filed with the Securities and Exchange Commission on November 14,
1997.                                                   

   (5)   Filed with the Securities and Exchange Commission on February 12,
1998.                                                   

    (6)   Filed with the Securities and Exchange Commission on May 15, 1998.

 (7)   Filed with the Securities and Exchange Commission on October 8,
1998.                                                   

   (8)   Filed with the Securities and Exchange Commission on February 16,
1999.                                                   

    (9)   Filed with the Securities and Exchange Commission on May 17, 1999.

    (10)  Filed with the Securities and Exchange Commission on September 28,
1999.                                                   

   (11)  Filed with the Securities and Exchange Commission on November 12,
1999.                                                   

      (12)  Filed with the Securities and Exchange Commission on March 29, 2000.

    (13)  Filed with current Form 8-K filed with the Securities and Exchange
Commission on February 15, 2001.                        

(14)  Filed herewith.                                               

(b)   Reports on Form 8-K                                           

      o     Report on Form 8-K filed with the SEC on January 13, 2000 announcing
       the Straw Dogs asset purchase and Spur & Buckle stock purchase.

     o     Report on Form 8-K/A filed with the SEC on February 10, 2000 filing
    the financial statements in connection with the acquisition.

o     Report on Form 8-K filed with the SEC on February 14, 2000    
announcing a change in accountants.                     

o     Report on Form 8-K filed with the SEC on December 22, 2000    
          announcing a change in accountants and cancellation of the BayStar
Notes.                                                  

o     Report on Form 8-K/A filed with the SEC on January 16, 2001   
announcing the cancellation of the BayStar Notes.       

o     Report on Form 8-K filed with the SEC on February 15, 2001    
      announcing the proposed merger and certain management changes.

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SIGNATURES

 In accordance with the requirements of the Securities Exchange Act of
1934, as amended, the registrant caused this report to be signed on its behalf  
by the undersigned thereunto duly authorized, in the city of New York, state of 
New York on March 30, 2001.                                                     

                    PARADISE MUSIC & ENTERTAINMENT, INC.

      By /s/ David Pritchard
                                  --------------------------------------------
                              David Pritchard, Chief Executive Officer

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

                                                        [Enlarge/Download Table]

Signature                    Title                                        Date       
---------                    -----                                        ----       

                                                                                     
/S/ RICHARD FLYNN        Chief Operating Officer, Chief Financial      March 30, 2001
-----------------------    Officer, Treasurer, Secretary and Director                
Richard Flynn                                                                        

/s/ KELLY HICKEL         Chairman of the Board                         March 30, 2001
-----------------------                                                              
Kelly Hickel                                                                         

/s/ JESSE DYLAN          Director                                      March 30, 2001
-----------------------                                                              
Jesse Dylan                                                                          

/s/ JEFFREY ROSEN        Director                                      March 30, 2001
-----------------------                                                              
Jeffrey Rosen                                                                        

/s/ ROBERT SPARACINO     Director                                      March 30, 2001
-----------------------                                                              
Robert Sparacino                                                                     

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PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

 CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS

INDEPENDENT AUDITORS' REPORTS                                   F-2 - F-3       

CONSOLIDATED FINANCIAL STATEMENTS                                               

CONSOLIDATED BALANCE SHEET                                   F-4          

CONSOLIDATED STATEMENTS OF OPERATIONS                        F-5          

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY              F-6 - F-7    

CONSOLIDATED STATEMENTS OF CASH FLOWS                        F-8 - F-9    

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                   F-10 - F-22  

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 INDEPENDENT AUDITORS' REPORTS

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

We have audited the accompanying consolidated balance sheet of Paradise Music & 
Entertainment, Inc. and Subsidiaries as of December 31, 2000, and the related   
consolidated statements of operations, stockholders' equity and cash flows for  
the years ended December 31, 2000 and June 30, 1999. These consolidated         
financial statements are the responsibility of the Company's management. Our    
responsibility is to express an opinion on these consolidated financial         
statements based on our audits.                                                 

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

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the financial position of Paradise Music &    
Entertainment, Inc. and Subsidiaries as of December 31, 2000 and the results of 
their operations and their cash flows for the years ended December 31, 2000 and 
June 30, 1999 in conformity with accounting principles generally accepted in the
United States of America.                                                       

                                   /s/ Rothstein, Kass & Company, P.C.

March 16, 2001                                                                  

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 INDEPENDENT AUDITORS' REPORTS

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

We have audited the accompanying consolidated statement of operations,          
stockholders' equity and cash flows of Paradise Music & Entertainment, Inc. and 
Subsidiaries for the six months ended December 31, 1999. These consolidated     
financial statements are the responsibility of the Company's management. Our    
responsibility is to express an opinion on these consolidated financial         
statements based on our audit.                                                  

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

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the results of operations and cash flows of   
Paradise Music and Entertainment, Inc. and Subsidiaries for the six months ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United States.                                                              

                      /s/ Ernst & Young, LLP

March 30, 2000                                                                  

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PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
 December 31, 2000

                                                                [Download Table]

                                                                                
                         ASSETS                                                 

CURRENT ASSETS:                                                                 
   Cash and cash equivalents                         $  1,151,961               
   Accounts receivable, net of reserves of $233,725     5,455,356               
   Inventory                                              330,991               
   Prepaid expenses and other current assets              394,938               
                                                     ------------               

      Total current assets                                          $  7,333,246

PROPERTY AND EQUIPMENT, net                                            1,870,937

OTHER ASSETS:                                                                   
   Goodwill, net                                        8,025,300               
   Security deposits and other                            329,544               
                                                     ------------               

                                                                       8,354,844
                                                                    ------------

                                                                    $ 17,559,027
                                                                    ============

         LIABILITIES AND STOCKHOLDERS' EQUITY                                   

CURRENT LIABILITIES:                                                            
   Accounts payable and accrued expenses             $  6,255,494               
   Accrued payroll and related expenses                   109,000               
                                                     ------------               

      Total current liabilities                                     $  6,364,494

COMMITMENTS AND CONTINGENCIES                                                   

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 10,738, 837 shares           107,388               
   Capital in excess of par value                      24,820,382               
   Common Stock to be issued                               93,750               
   Note receivable, stockholder                           (64,082)              
   Accumulated deficit                                (13,762,905)              
                                                      ------------              

      Total stockholders' equity                                      11,194,533
                                                                    ------------

                                                                    $ 17,559,027
                                                                    ============

See accompanying notes to consolidated financial statements.

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PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF OPERATIONS

                                                        [Enlarge/Download Table]

                                                                           Six Months  
                                              Twelve Months Ended             Ended    
                                         -------------------------------   ----------- 
                                         December 31,         June 30,     December 31,
                                             2000               1999          1999     
                                         ------------       ------------   ----------- 
                                                                                       
REVENUES                                 $ 36,434,589       $  9,661,036   $ 8,082,353 
                                         ------------       ------------   ----------- 
OPERATING EXPENSES                                                                     
  Cost of sales                            27,462,015          6,305,511     5,129,805 
  Marketing, selling, general and                                                      
    administrative                         13,344,220          7,101,023     3,599,107 
  Consulting expense in connection with                                                
    write off of warrants                     183,733                 --       701,459 
                                         ------------       ------------   ----------- 
      Total operating expenses             40,989,968         13,406,534     9,430,371 
                                         ------------       ------------   ----------- 

LOSS FROM OPERATIONS                       (4,555,379)        (3,745,498)   (1,348,018)

INTEREST EXPENSE (INCOME), NET                568,691            (37,569)      (71,775)
                                         ------------       ------------   ----------- 

LOSS BEFORE INCOME TAXES AND               (5,124,070)        (3,707,929)   (1,276,243)
  EXTRAORDINARY ITEM                                                                   

INCOME TAXES                                   29,395              6,000        20,000 
                                         ------------       ------------   ----------- 

LOSS BEFORE EXTRAORDINARY ITEM             (5,153,465)        (3,713,929)   (1,296,243)

GAIN ON EARLY EXTINGUISHMENT OF DEBT          336,815                 --            -- 
                                         ------------       ------------   ----------- 

NET LOSS                                 $ (4,816,650)      $ (3,713,929)  $(1,296,243)
                                         ============       ============   =========== 

BASIC AND DILUTED LOSS PER COMMON SHARE  $      (0.54)      $      (0.98)  $     (0.21)
                                         ============       ============   =========== 
WEIGHTED AVERAGE NUMBER OF COMMON                                                      
  SHARES USED IN COMPUTING BASIC AND                                                   
  DILUTED LOSS PER COMMON SHARE             8,958,396          3,802,805     6,251,482 
                                         ============       ============   =========== 

See accompanying notes to consolidated financial statements.

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PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                                        [Enlarge/Download Table]

                                         Common Stock        Capital in                               Note           Common Stock
                                -------------------------    Excess of     Accumulated  Subscription  Receivable     to be       
                                 Shares           Amount     Par Value     Deficit      Receivable    Stockholder    Issued      
                                --------         --------    -----------   ---------    ------------  -------------  --------    

                                                                                                                                 
Balance July 1, 1998             2,245,143  $     22,451   $  5,861,499   $ (3,936,083)  $       --   $   (129,600)              

SALE OF COMMON STOCK, net                                                                                                        
   of expenses                   2,276,249        22,763      2,352,600                    (100,000)                             

COMMON STOCK issued to                                                                                                           
  outside directors,                                                                                                             
  consultants, vendors                                                                                                           
  and employees                    824,325         8,243      1,527,892                                                          

WARRANTS GRANTED FOR                                                                                                             
  SERVICES                                                    2,069,498                                                          

PAYMENTS OF NOTE                                                                                                                 
  RECEIVABLE                                                                                                58,722               

NET LOSS                                                                    (3,713,929)                                          
                              ------------------------------------------------------------------------------------------------   
Balance June 30, 1999            5,345,717        53,457     11,811,489     (7,650,012)    (100,000)       (70,878)      --      

SALE OF COMMON STOCK, net                                                                                                        
   of expenses                   1,072,879        10,729      4,210,675                                                          

COMMON STOCK issued to                                                                                                           
  outside directors                  3,734            37         17,983                                                          

ISSUANCE OF COMMON STOCK AND                                                                                                     
WARRANTS IN CONNECTION                                                                                                           
WITH ACQUISITION                 1,441,000        14,410      6,780,450                                                          

PAYMENT OF SUBSCRIPTION                                                                                                          
  RECEIVABLE                                                                                100,000                              

PAYMENTS OF NOTE                                                                                                                 
  RECEIVABLE                                                                                                 6,796               

REMEASUREMENT OF WARRANTS                                                                                                        
  GRANTED FOR SERVICE                                        (1,463,785)                                                         
NET LOSS                                                                    (1,296,243)                                          

                              ------------------------------------------------------------------------------------------------   
Balance at December 31, 1999     7,863,330        78,633     21,356,812     (8,946,255)          --        (64,082)      --      
                              ================================================================================================   


See accompanying notes to consolidated financial statements.

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PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)

                                                        [Enlarge/Download Table]

                                            Common Stock     Capital in                                 Note           Common Stock
                                   -----------------------   Excess of     Accumulated   Subscription   Receivable            to be
                                    Shares         Amount    Par Value     Deficit       Receivable     Stockholder          Issued
                                   --------       --------   -----------   ---------     ------------   -------------  ------------

                                   ------------------------------------------------------------------------------------------------
                                                                                                                                   
Balance forward at December 31,                                                                                                    
  1999                             7,863,330  $     78,633   $ 21,356,812   $ (8,946,255)  $       --  $    (64,082)    $     --   

COMMON STOCK issued to                                                                                                             
  outside directors, vendors         120,107         1,201        123,150                                                          

WARRANTS GRANTED FOR                                                                                                               
  SERVICES                                                        183,733                                                          

WARRANTS GRANTED IN                                                                                                                
  CONNECTION WITH LONG TERM                                                                                                        
  FINANCING                                                       713,519                                                          

COMMON STOCK issued in                                                                                                             
  connection with extinguish-                                                                                                      
  ment of long-term financing      1,000,000        10,000        715,500                                                          

SALE OF COMMON STOCK, net                                                                                                          
   of expenses                     1,605,400        16,054      1,550,968                                                          

ISSUANCE OF COMMON STOCK AND                                                                                                       
WARRANTS IN CONNECTION                                                                                                             
WITH ACQUISITION                     150,000         1,500        176,700                                                          

COMMON STOCK GRANTS AWARDED                                                                                                        
  TO EXECUTIVE OFFICERS                                                                                                   93,750   

NET LOSS                                                                      (4,816,650)                                          

                                 ------------------------------------------------------------------------------------------------  
                                  10,738,837  $    107,388   $ 24,820,382   $(13,762,905)  $       --  $    (64,082)  $   93,750   
                                 ================================================================================================  

See accompanying notes to consolidated financial statements.

F-7 

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PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                        [Enlarge/Download Table]

                                                                Twelve months ended        Six Months Ended 
                                                              ---------------------------- ---------------- 
                                                              December 31,        June 30,     December 31, 
                                                                  2000             1999           1999      
                                                              -----------      -----------      ----------- 
                                                                                                            
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                       
Net loss                                                      $(4,816,650)     $(3,713,929)     $(1,296,243)
Adjustments to reconcile to net loss to net cash                                                            
  used in operating activities:                                                                             
   Depreciation and amortization                                1,117,920          199,727          131,348 
   Loss on disposal of branch operations                                            89,646                  
   Non-cash consulting expense in connection with warrants        183,733                           701,459 
   Provision for returns                                          233,725                                   
   Common stock issued and warrants granted to outside                                                      
    directors, consultants, vendors and employees                 218,101          867,119           18,020 
    Non-cash interest expense                                     587,938                                   
   Gain on Debt Extinguishment                                   (336,816)                                  
Changes in operating assets and liabilities:                                                                
   Restricted cash                                                                 464,603                  
   Accounts receivable                                         (1,397,300)          (4,335)      (1,293,196)
   Inventory                                                     (330,991)                                  
   Prepaid expenses and other current assets                     (302,109)        (141,528)        (391,983)
   Security deposits and other assets                             (85,326)        (160,881)         263,477 
   Deferred revenues                                                              (266,636)                 
   Accrued payroll and related expenses                          (228,494)         338,402         (153,507)
   Accounts payable and accrued expenses                          805,200          (42,267)        (239,126)
                                                              -----------      -----------      ----------- 
NET CASH USED IN OPERATING ACTIVITIES                          (4,351,069)      (2,370,079)      (2,259,751)
                                                              -----------      -----------      ----------- 

CASH FLOWS FROM INVESTING ACTIVITIES:                                                                       
Payment for property and equipment                               (309,550)        (152,224)        (136,183)
Restricted Cash                                                                    350,000                  
Costs of acquired business, net of cash acquired                 (338,709)         (95,000)        (220,872)
Investment in Eruptor                                                                            (1,000,000)
Collection of note receivable, officer                                              58,722            6,796 
                                                              -----------      -----------      ----------- 
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES              (648,259)         161,498       (1,350,259)
                                                              -----------      -----------      ----------- 

CASH FLOWS FROM FINANCING ACTIVITIES:                                                                       
   Proceeds from subscription receivables                                                           100,000 
   Proceeds from sale of common stock, net of expenses          1,567,022        2,275,363        4,210,675 
   Proceeds from long term convertible debt, net of expenses    1,732,017                                   
   Proceeds from warrants issued with long term debt            1,220,943                                   
                                                              -----------      -----------      ----------- 
NET CASH PROVIDED BY FINANCING ACTIVITIES                       4,519,982        2,275,363        4,310,675 
                                                              -----------      -----------      ----------- 

NET INCREASE IN CASH                                             (479,346)          66,782          700,665 

CASH, beginning of period                                       1,631,307          863,860          930,642 
                                                              -----------      -----------      ----------- 

CASH, end of period                                           $ 1,151,961      $   930,642      $ 1,631,307 
                                                              ===========      ===========      =========== 

See accompanying notes to consolidated financial statements.

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PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) 

                                                        [Enlarge/Download Table]

                                                                       Twelve months ended        Six Months Ended
                                                                   ---------------------------    ----------------
                                                                   December 31,     June 30,        December 31,  
                                                                       2000           1999              1999      
                                                                   ------------   ------------      ------------  
                                                                                                                  
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION,                                                                 
   Cash paid during the year for income taxes                      $     29,395   $         --      $         --  
                                                                   ============   ============      ============  

   Cash paid during the year for interest                          $     81,435   $         --      $         --  
                                                                   ============   ============      ============  

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND                                                                  
   FINANCING ACTIVITIES:                                                                                          

   Conversion of liabilities into common stock                     $     65,215   $    481,750      $         --  
                                                                   ============   ============      ============  

   Warrants granted for services                                   $         --   $  2,256,764      $    213,000  
                                                                   ============   ============      ============  

   Common stock issued in connection with conversion of long-term                                                 
      financing                                                    $    725,500   $         --      $         --  
                                                                   ============   ============      ============  

   Net assets acquired for stock and warrants                      $    178,200   $         --      $  6,701,215  
                                                                   =============================================  

See accompanying notes to consolidated financial statements.

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        PARADISE MUSIC & ENTERTAINMENT, INC.
        AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS:                                 

Paradise Music & Entertainment, Inc. ("Paradise") was formed in July 1996.      
Paradise is an entertainment company, focused on supplying state-of-the art     
film, video, digital and music-related products, services and content to        
traditional and web-centric entertainment businesses, whose products, content   
and services are offered through three operating groups, namely:                

o     PDSE Film & TV - Involved in the production of television     
        commercial, music video and televised music concerts through its
      Straw Dogs, Picture Vision and Shelter Films subsidiaries. The
          Company plans to expand its production services to the creation of
film and television properties.                         

      o     PDSE Music - Involved in the production of original music scores and
          advertising themes for television, radio and film through its Rave
         subsidiary; the production of music videos and music specials for
            television through its Picture Vision subsidiary; the production and
         commercial release of recorded music through its PDSE Records and
          Push Records subsidiaries; and music artist management through its
All Access subsidiary.                                  

 o     PDSE Digital - Involved in the design, creation, production and
           delivery of new digital formats of programming for Internet-related
         content and digital entertainment consulting services through its
PDSE Digital, Inc. subsidiary.                          

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:                            

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

Revenue Recognition - Commercial music production revenues and the related      
production costs are recognized upon acceptance of the music production by the  
client. Royalty and residual income which relates to musical compositions used  
in television series are recognized when earned and the amount can be reasonably
estimated. For projects which are short in duration, (primarily less than one   
month) video production revenues and related production costs are recorded upon 
completion of the video. For projects that have a longer term, video production 
revenues and related production costs are recorded using the                    
percentage-of-completion method which recognizes income as work on the project  
progresses. In accordance with industry custom, the Company currently operates  
its music artist management business based on oral agreements with certain      
artists and customers. Pursuant to these arrangements the Company receives up to
20% of the gross revenues received in connection with artist entertainment      
related earnings less certain standard industry costs. Record label revenues are
recognized in accordance with the provisions of the various distribution        
agreements. Certain record costs are capitalized as recoverable from future     
revenues and amortized over the expected life of the records, to the extent     
there is reasonable assurance that these costs will be recoverable from future  
sales. The Company is accounting for these costs in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 50 "Financial Reporting in the      
Record and Music Industry."                                                     

Cash and Cash Equivalents - The Company considers all highly liquid investments 
with maturities of three months or less when purchased to be cash equivalents.  
The Company maintains its cash in bank                                          

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        PARADISE MUSIC & ENTERTAINMENT, INC.
        AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

deposit accounts which, at times, may exceed federally insured limits. The      
Company has not incurred any losses in such accounts and believes it is not     
exposed to any significant credit risk on cash.                                 

Inventory - Inventory is stated at the lower of cost or market and consists     
primarily of finished compact discs and tape cassettes. The cost of inventory is
determined by the first-in, first-out (FIFO) method.                            

Property and Equipment - Property and equipment is stated at cost less          
accumulated depreciation and amortization. Depreciation and amortization is     
computed as follows:                                                            

       Estimated
         Asset                      Useful Lives          Principal Method
         -----                      ------------          ----------------
Furniture, fixtures and equipment    3-7 Years             Straight-line    
Leasehold improvements               Term of Lease         Straight-line    
         or 10 years
                  whichever is shorter

Impairment of Long Lived Assets - Impairment losses on long-lived assets        
(including goodwill) is recognized when events and circumstances indicate that  
the undiscounted cash flows estimated to be generated by these assets are less  
than the carrying amounts of those assets.                                      

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

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

Loss Per Common Share - Basic earnings per share excludes dilution and is       
computed by dividing loss applicable to common stockholders by the weighted     
average number of common shares outstanding for the period. Diluted earnings per
share reflects the potential dilution that could occur if securities or other   
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity. Diluted loss per common share is the same as basic loss per common share
for all periods presented. Unexercised stock options to purchase 2,747,500      
shares at December 31, 2000, 2,657,500 shares at December 31, 1999, and         
1,062,500 shares at June 30, 1999 of the Company's common stock were not        
included in the computations of diluted earnings per common share because their 
effect would have been antidilutive as a result of the Company's losses.        

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

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        PARADISE MUSIC & ENTERTAINMENT, INC.
        AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Use of Estimates - The preparation of consolidated financial statements in      
conformity with generally accepted accounting principles requires management to 
make estimates and assumptions that affect the reported amounts of assets and   
liabilities and disclosure of contingent assets and liabilities at the date of  
the consolidated financial statements and the reported amounts of revenues and  
expenses during the reporting period. Actual results could differ from those    
estimates.                                                                      

NOTE 3 - LIQUIDITY:                                                             

During the year ended December 31, 2000 the Company sustained a loss from       
operations of approximately $4,817,000. This loss resulted primarily from (i) a 
Screen Actors Guild strike which lasted six months severely impacting the       
performance of our Straw Dogs subsidiary; (ii) the start up of our PDSE Digital 
subsidiary; and (iii) the expansion of our recorded music subsidiaries. As a    
result, during the third and fourth quarters the Company continued an aggressive
cost and staff reduction initiative and is currently negotiating with various   
lenders, strategic partners and equity investors to provide the liquidity which 
the Company may require to continue to develop and expand its operations.       
Additionally, with the assistance of an outside financial advisor, the Company  
is evaluating further expense reductions, establishing processes for the        
approval of certain expenses and reorganizing its operating business in an      
effort to achieve positive cash flow and maximum profitability of its           
subsidiaries in the near term (see Notes 9 and 16.)                             

Furthermore, the Company is seeking to raise up to $5 million in financing and  
is being assisted in this effort by iball Media, Inc pursuant to the terms of   
the Memorandum of Understanding and the Management Engagement Agreement (see    
Note 16).                                                                       

NOTE 4 - BUSINESS COMBINATIONS:                                                 

The Straw Dogs acquisition was completed on December 16, 1999. In the           
acquisition we purchased, for 900,000 shares of common stock at $5.81,          
substantially all of the business and assets of Straw Dogs business of          
Consolidated Entertainment, LLC ("Consolidated") and assumed substantially all  
its liabilities. Consolidated was owned and operated by Jesse Dylan and Craig   
Rodgers. As part of the Straw Dogs acquisition, we also purchased, for 541,000  
shares of common stock, all of the stock of a related entity owned by Jesse     
Dylan. The shares issued were not registered under the Securities Act of 1933,  
as amended. However, Messrs. Dylan and Rodgers have been granted standard       
"piggyback" registration rights with respect to these shares.                   

The total purchase price of $7.1 million has been allocated to the following    
assets and liabilities:                                                         

Current Assets                     $   2,906,000                                
Other Assets                           1,273,000                                
Goodwill                               7,068,000                                
Current liabilities                    4,167,000                                

The Offshore Pictures, Inc. ("OPI") acquisition was completed on June 15, 2000. 
In the acquisition we purchased, for 150,000 shares of common stock at $1.88,   
substantially all of the business and assets of OPI's business and assumed      
substantially all of its liabilities. OPI was owned and operated by Steve Shore 
and the name was subsequently changed to Shelter Films, Inc. The shares were    
issued at the closing and will be held in escrow by Paradise until the first    
anniversary of the closing in order to secure                                   

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        PARADISE MUSIC & ENTERTAINMENT, INC.
        AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OPI's obligations under the Bill of Sale. The shares issued were not registered 
under the Securities Act of 1933, as amended.                                   

The total purchase price of $178,200 has been allocated to the following assets 
and liabilities:                                                                

Current Assets               $   27,035                                         
Other assets                     77,695                                         
Goodwill                        497,675                                         
Current liabilities             424,205                                         

The following unaudited pro forma condensed consolidated financial information  
for the year ended December 31, 2000, six months ended December 31, 1999 and the
fiscal year ended June 30, 1999, is presented to show the results of the        
company, as if the Shelter Films and Straw Dogs acquisitions had occurred at the
beginning of the periods presented.                                             

                                                        [Enlarge/Download Table]

                                Twelve months       Six months                            
                                     ended             ended         Fiscal year ended    
                               December 31,2000  December 31 ,1999     June 30, 1999      
                               -----------------------------------------------------------
                                                                                          
Net revenues                      37,728,279         17,102,531         41,807,424        
Loss before extraordinary                                                                 
  item                            (5,215,252)        (2,341,482)        (3,893,856)       
Net loss                          (4,878,437)        (2,341,482)        (3,893,856)       
Basic and diluted loss before                                                             
  extraordinary item                    (.58)              (.37)             (1.02)       
Basic and diluted loss per                                                                
  common share                          (.54)              (.37)             (1.02)       

The above unaudited pro forma condensed consolidated results are not necessarily
indicative of results which actually would have occurred if the acquisitions had
actually occurred at the beginning of the dates presented. Further, the         
summarized unaudited pro forma condensed consolidated results are not intended  
to be a projection of future results and do not reflect any integration costs or
cost savings resulting from synergistic opportunities.                          

NOTE 5 - PROPERTY AND EQUIPMENT:                                                

At December 31, 2000, property and equipment consists of the following:         

Furniture, fixtures and equipment                   $1,561,265      
Leasehold improvements                               1,511,106      
                                              ----------
                                               3,072,371
Less accumulated depreciation and amortization       1,201,434      
                                              ----------
                                              $1,870,937
                                              ==========

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        PARADISE MUSIC & ENTERTAINMENT, INC.
        AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - NOTE RECEIVABLE, STOCKHOLDER:                                          

The Company has a promissory note receivable from a stockholder/officer which   
provides for borrowings of approximately $129,000, bearing interest at 8.5% per 
annum. The promissory note is collateralized by 200,000 shares of the officers' 
common stock of the Company and allows for mandatory repayments as defined in   
the note. As of December 31, 2000 the balance of this note was approximately    
$64,000. An additional $20,000 was repaid in January 2001.                      

NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES:                                 

At December 31, 2000, accounts payable and accrued expenses consists of the     
following:                                                                      

Accounts payable                    $   2,281,564             
Accrued job costs                         819,465             
Accrued commercial directors                                  
profit participation                  1,660,135           
Other                                   1,494,330             
                       -------------
                       $   6,255,494
                       =============

NOTE 8 - INCOME TAXES:                                                          

The provision for income taxes consists of state and local taxes. At December   
31, 2000, the Company recorded deferred federal, state and local income tax     
assets aggregating approximately $4,400,000 arising from net operating loss     
carryforwards. A valuation allowance of approximately $4,400,000 has been       
recorded, since management has no assurance that the tax benefit will be        
realized.                                                                       

At December 31, 2000, the Company has federal net operating loss carryforwards  
of approximately $11,044,000, which expire in periods beginning in 2012 through 
2020.                                                                           

The following reconciles income tax benefit computed at the federal statutory   
rate to the actual provision for income taxes.                                  

                                                        [Enlarge/Download Table]

                              Year Ended          Six Months Ended         Fiscal Year Ended     
                              12/31/2000              12/31/1999               6/30/1999         
                         ------------------------------------------------------------------------
                                                                                                 
Tax benefit computed at                                                                          
federal                                                                                          
Statutory rate:                 -34.0%                 -34.0%                   -34.0%           
State and local taxes:             .5%                   2.0%                     0.0%           
Valuation allowance:             34.0%                  34.0%                    34.0%           
                         ------------------------------------------------------------------------

                                 .05%                    2.0%                     0.0%           
                         ========================================================================

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        PARADISE MUSIC & ENTERTAINMENT, INC.
        AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - COMMITMENTS:                                                         

The Company has leases for office facilities which expire in various years      
through July 2009. Rent expense for the year ended December 31, 2000, the six   
months ended December 31, 1999, and fiscal year ended June 30, 1999 was         
approximately $635,000, $139,000 and $247,000 respectively.                     

The aggregate future minimum annual rental payments are as follows:             

Years ended December 31,                                                        

2001         $  658,000     
2002            580,000     
2003            603,000     
2004            603,000     
2005            597,000     
Thereafter                           1,474,000                            
  ----------------
        $4,515,000
  ================

The Company and Mr. Jay Walkingshaw entered into a separation agreement and     
general release whereby Mr. Walkingshaw resigned from all positions he held as  
an officer or director of the Company as of September 1, 2000. Under the terms  
of the settlement, Mr. Walkingshaw received $50,000 and is entitled to          
additional contingent payments up to a maximum of $200,000 in the event that    
certain EBITDA targets for each of the next two years are achieved. In          
connection with the termination, 400,000 options held by Mr. Walkingshaw were   
cancelled, leaving him with 200,000 vested options exercisable at $5.00 per     
share.                                                                          

Brian Doyle, Richard Flynn and John Loeffler are each employed under employment 
agreements dated July 1, 1997 as amended. Under the terms currently in effect,  
each of the agreements terminate on June 30, 2001. For the year ending December 
31, 2000, Mr. Doyle and Mr. Flynn were paid at the rate of $275,000 per annum   
and Mr. Loeffer was paid at the rate of $325,000 per annum. In addition, Mr.    
Doyle was awarded a bonus of $50,000 and Mr. Loeffler was awarded a bonus of    
$150,000. Future bonuses for John Loeffler will be at least $100,000 if the     
profits before taxes of Rave exceed $500,000. Mr. Doyle is entitled to a bonus  
of $100,000 if the profits before taxes of All Access exceed $500,000. All other
bonuses are in the discretion of the Board of Directors.                        

Jon Small is employed as the President and Chief Executive Officer of Picture   
Vision under an employment contract for a three year term which began on July 1,
1999. Pursuant to the contract, his base salary for the second year of the      
agreement increased to $387,500 (and will be $400,000 for the third year). He   
also received a bonus of $100,000, and is entitled to a bonus of $100,000 in    
each subsequent year of the contract that pretax income of Picture Vision       
exceeds $500,000.                                                               

Craig Rodgers is employed as Chief Executive Officer of Straw Dogs for a three  
year term which began on July 1, 1999 at an annual salary of $350,000. Mr.      
Rodgers' compensation is to be reviewed annually with bonus awards or increases 
in salary to be considered based on his and Straw Dogs' overall performance. Mr.
Rodgers is entitled to receive an annual bonus of $100,000 per year if the      
pre-tax profits of Straw Dogs at the end of each fiscal year are at least       
$850,000.                                                                       

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        PARADISE MUSIC & ENTERTAINMENT, INC.
        AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ending December 31, 2000, approximately $263,000 have been expensed
under the bonus plans and Executive Agreements, New Agreements and Employment   
Modification Agreements and are included in marketing, selling, general and     
administrative expenses.                                                        

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. During the year ended December 31, 2000, six months ended   
December 31, 1999 and fiscal year ended June 30, 1999, the Company charged to   
operations approximately $59,000, $9,000 and $45,000, respectively, pursuant to 
this agreement.                                                                 

NOTE 10 - ECONOMIC DEPENDENCY:                                                  

Approximately $11,122,309 and $5,340,000 of television and film production      
revenues for the twelve months ended December 31, 2000 and June 30, 1999        
respectively, were derived from one and 4 customers respectively. Approximately 
$2,204,000 of television and film production revenues for the six months ended  
December 31, 1999 were derived from one customer. At December 31, 2000          
approximately $3,074,000 was owed in the aggregate to the Company related to    
these revenues.                                                                 

Approximately $5,796,000 of music revenues for the twelve months ended December 
31, 2000 were derived from 3 customers. At December 31, 2000, approximately     
$857,000 was owed in the aggregate to the Company related to these revenues.    

NOTE 11 - STOCKHOLDERS' EQUITY:                                                 

The Company entered into consulting agreements with various consultants in 2000 
for professional and financial services. The consultants will be compensated for
their services (either partially or in full) through the issuance of an         
aggregate of 281,500 warrants to purchase the Company's common stock. The       
warrants typically vest immediately and have exercise prices ranging form $1.06 
to $3.00 per share. The warrants, which are valued at approximately $184,000 as 
of December 31, 2000, have been expensed under these agreements.                

On June 28, 2000, Paradise entered into a Subscription Agreement with Renessence
Ventures bv io ("Renessence") whereby Renessence invested approximately $1.6    
million through the purchase of 1,605,400 restricted shares of Paradise common  
stock (the "Shares") and warrants to purchase an additional 240,813 Shares (the 
"Warrants"). The securities granted under the agreement are subject to a lock-up
period for one year commencing on June 22, 2000, the binding date of the        
agreement. The shares issued were not registered under the Securities Act of    
1933, as amended. Also, if at any time after the first anniversary of the       
binding date Paradise is authorized to file a registration statement the        
Renessence securities are subject to piggy-back registration rights. The        
Warrants vested on January 1, 2001 and expire June 28, 2002. The Warrants have  
an exercise price of $1.75 per share.                                           

For the year ended December 31, 2000, certain executive officers were awarded an
aggregate of 375,000 shares of restricted common stock valued at the current    
market price at the date of grant of $.25 as a bonus for services to the        
Company. These awards resulted in a charge to operations aggregating            
approximately $94,000.                                                          

On March 7, 2000, Paradise and BayStar Capital, L.P. and BayStar International  
Ltd. (collectively "BayStar") entered into a $3,000,000 private convertible     
subordinated note financing made in the form of                                 

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        PARADISE MUSIC & ENTERTAINMENT, INC.
        AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Paradise Senior Subordinated Convertible Notes (the "Notes"), convertible at    
$2.375 per share, plus five year warrants to purchase an additional 631,579     
shares.                                                                         

On December 15, 2000, we completed a transaction with BayStar the terms of which
were set forth in a Purchase and Sale Agreement. BayStar converted and exchanged
the Notes and accrued interest for an aggregate of 1,000,000 shares of Paradise 
common stock, warrants to purchase an aggregate of 500,000 shares of Paradise   
common stock, and Paradise's 1,000,000 shares of Series A Preferred Stock of    
Eruptor Entertainment, Inc. The exchange enabled Paradise to eliminate all      
outstanding long-term debt and related annual interest expense. Paradise        
recorded a one-time non-cash gain related to this exchange during the fourth    
quarter 2000 of $336,815.                                                       

NOTE 12 - STOCK OPTIONS:                                                        

On October 8, 1996, the Board of Directors adopted and the stockholders approved
the Option Plan. The Option Plan provides for the granting of incentive stock   
options ("ISOs") within the meaning of Section 422 of the Internal Revenue Code 
of 1986, as amended (the "Code"), non-qualified stock options ("NQSOs") and/or  
Stock Appreciation Rights (SARs) to certain directors, agents and employees of, 
and consultants to the Company. The purpose of the Option Plan is to attract and
retain exemplary employees, agents, consultants and directors. Options and SARs 
granted under the Option Plan may not be exercisable for terms in excess of 10  
years from the date of grant. In addition, no options or SARs may be granted    
under the Option Plan later than 10 years after the Option Plan's effective     
date. The total number of shares of Common Stock with respect to which options  
and SARs will be granted under the Option Plan is 3,000,000. The shares subject 
to and available under the Option Plan may consist, in whole or in part, of     
authorized but unissued stock or treasury stock not reserved for any other      
purpose. Any shares subject to an option or SAR that terminates, expires or     
lapses for any reason, and any shares purchased pursuant to an option and       
subsequently repurchased by the Company pursuant to the terms of the option,    
shall again be available for grant under the Option Plan. At December 31, 2000  
options under the Option Plan to purchase 2, 722,500 shares of common stock are 
outstanding, none of which have been exercised.                                 

As part of the Option Plan, the Board of Directors set aside for Outside        
Directors an aggregate of 100,000 stock options to eligible directors of the    
Company. Each eligible director receives 5,000 stock options per annum, subject 
to adjustment, for his services on the Board on each July 1. The options are    
exercisable at the fair market value of the common stock on the last date       
preceding the date of grant. The maximum term of the stock options is 5 years   
and the stock options may be exercised at any time for a period of 5 years after
the date of grant. At December 31, 2000, options to purchase 25,000 shares of   
common stock were outstanding, none of which have been exercised.               

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        PARADISE MUSIC & ENTERTAINMENT, INC.
        AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The activity in the Option Plan is as follows:                                  

                                                                  Exercise Price
                                                   Number of       Per Share
                                                  Options          Range

Balance outstanding June 30, 1998                      144,000     $2.63 - $6.00
Granted                                              1,000,000      2.06 - 5.25 
Cancelled                                               81,500      2.06 - 6.00 

                                                     ---------------------------
Balance outstanding June 30, 1999                    1,062,500      2.06 - 6.00 
Granted                                              1,595,000      5.00 - 5.25 

                                                     ---------------------------
Balance outstanding Dec. 31, 1999                    2,657,500      2.06 - 6.00 
Granted                                              1,151,500      1.00 - 5.00 
Cancelled                                            1,061,500      1.50 - 5.00 

                                                     ---------------------------
Balance outstanding Dec. 31, 2000                    2,747,500      1.00 - 6.00 

                                                     ===========================
Exercisable December 31, 2000                        1,559,400    $1.00 - $6.00 

                                                     ===========================

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

                 Year ended              Six months ended       Year ended
                    December 31, 2000       December 31, 1999      June 30, 1999
Net Loss:                                                                       
As Reported         $(4,816,650)            $(1,296,243)          $(3,713,929)  
Pro forma            (5,429,781)             (2,880,909)           (4,205,673)  

Basic and diluted loss per common share:                                        

                 Year ended              Six months ended       Year ended
                    December 31, 2000       December 31, 1999      June 30, 1999

As Reported         $(.54)                  $(0.21)                $(0.98)      
Pro forma            (.61)                   (0.46)                 (1.11)      

The fair value of each option grant is estimated on the grant date using the    
Black-Scholes option pricing model with the following assumptions for grants for
the year ended December 31, 2000, six months                                    

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December 31, 1999 and year ended June 30, 1999: risk-free interest rate 5.5%, no
dividend yield, expected life of 5 years and expected volatility of 124.2%,     
108.5% and 115.2% percent, respectively.                                        

NOTE 13 - STOCK WARRANTS:                                                       

The following table summarizes common stock warrant activity:                   

                                                                  Exercise
                                                  Shares          Prices
                                                     ---------     -------------
Warrants outstanding as of July 1, 1998              1,226,500     $4.03 - $7.20
Granted                                              1,052,500      4.00 - 10.00
                                                     ---------     -------------
Warrants outstanding as of July 1, 1999              2,279,000      4.00 - 10.00
Granted                                                590,000       5.00 - 5.81
                                                     ---------     -------------
Warrants outstanding as of December 31, 1999         2,869,000       4.00 - 7.20
Granted                                              2,221,339       1.06 - 8.28
Cancelled                                            2,797,000      4.00 - 10.00
                                                     ---------     -------------
Warrants outstanding as of December 31, 2000         2,293,339     $1.06 - $8.28
                                                     =========     =============

NOTE 14 - INFORMATION CONCERNING BUSINESS SEGMENTS:                             

Segment information listed below reflects the three principal business units of 
the Company for the year ended December 31, 2000, six months ended December 31, 
1999, and fiscal year ended June 30, 1999. Each segment is managed according to 
the products or services provided to the respective customers and segment       
information is reported on the basis of reporting to the Company's Chief        
Operating Decision Maker (CODM).                                                

There has been a restructuring when comparing to historical categories. Rave    
previously was categorized with television and film production (PDSE Film). Rave
is now categorized with PDSE Music (recorded music and artist management). We   
have re-categorized historical results to comply with our current organization  
structure. The Digital Group was established in January 2000.                   

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        PARADISE MUSIC & ENTERTAINMENT, INC.
        AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                                        [Enlarge/Download Table]

For the twelve months ended December 31, 2000                                                                       
                                                        PDSE         PDSE       PDSE                                
                                                        Film        Music     Digital      Corporate   Consolidated 
                                                 -----------  -----------   ---------   ------------   ------------ 
                                                                                                                    
Revenues                                         $27,622,909  $ 8,453,849   $ 357,831   $         --   $ 36,434,589 
Interest Income                                  $    21,143  $       412   $      --   $     79,127   $    100,682 
Depreciation & Amortization                      $   317,801  $    69,390   $   1,855   $    728,874   $  1,117,920 
Loss before income taxes and extraordinary item  $ 1,199,518  $  (202,530)  $(777,637)  $ (5,343,421)  $ (5,124,070)
Gain on Debt Extinguishment                               --           --   $      --   $    336,815   $    336,815 
Addition to long lived assets                    $    70,633  $    17,906   $  22,816   $    198,195   $    309,550 
Total Assets                                     $ 6,927,764  $ 2,453,251   $  31,685   $  8,146,327   $ 17,559,027 


For the twelve months ended June 30, 1999                                                                           
                                                        PDSE         PDSE       PDSE                                
                                                        Film        Music     Digital      Corporate   Consolidated 
                                                 -----------  -----------   ---------   ------------   ------------ 
                                                                                                                    
Revenues                                         $ 6,493,173  $ 3,167,863   $      --   $         --   $  9,661,036 
Interest Income                                  $    21,934  $     2,360   $      --   $     13,275   $     37,569 
Depreciation & Amortization                      $    16,562  $    48,205   $      --   $    134,960   $    199,727 
Loss before income taxes                         $   334,926  $(1,186,693)  $      --   $ (2,856,162)  $ (3,707,929)
Addition to long lived assets                    $    13,636  $    33,811   $      --   $    104,777   $    152,224 
Total Assets                                     $ 1,024,766  $ 1,141,589   $      --   $  3,081,654   $  5,248,009 


For the six months ended December 31, 1999                                                                          
                                                        PDSE         PDSE       PDSE                                
                                                        Film        Music     Digital      Corporate   Consolidated 
                                                 -----------  -----------   ---------   ------------   ------------ 
                                                                                                                    
Revenues                                         $ 4,429,544  $ 3,652,809   $      --   $         --   $  8,082,353 
Interest Income                                  $     9,975  $       170   $      --   $     61,630   $     71,775 
Depreciation & Amortization                      $    13,486  $    36,947   $      --   $     80,915   $    131,348 
Loss before income taxes                         $   532,512  $   702,033   $      --   $ (2,510,788)  $ (1,276,243)
Addition to long lived assets                    $     2,101  $    28,782   $      --   $    105,300   $    136,183 
Total Assets                                     $ 5,571,047  $ 2,036,904   $      --   $ 10,313,336   $ 17,921,287 

NOTE 15 - RELATED PARTY TRANSACTIONS:                                           

In connection with the acquisition of Straw Dogs in December 1999, the Company  
assumed a lease with 8330 West Third Street, LLC, an affiliate of Mr. Dylan and 
Mr. Rodgers which expires July 2009. The lease is for 10,147 square feet of     
space at the rental rate of $2.25 per square foot per month. This rate is       
subject to escalation in accordance with inflation after 5 years. The rental    
rate was determined by an independent appraisal.                                

NOTE 16 - SUBSEQUENT EVENTS:                                                    

On February 10, 2001, the Paradise Board of Directors approved the execution of 
a Memorandum of Understanding (the "MOU") with iball Media, Inc. ("iball")      
stipulating the intent of Paradise and iball to combine their respective        
businesses into a merged entity. Pursuant to the proposed merger structure,     
iball                                                                           

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        PARADISE MUSIC & ENTERTAINMENT, INC.
        AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

shareholders would receive 11,390,000 shares of Paradise common stock. No       
additional options, warrants or conversion rights are to be granted by Paradise 
prior to the closing without iball's consent. The proposed transaction may be   
subject to changes upon completion of due diligence and further discussions     
between the parties.                                                            

The completion of the merger is contingent upon customary closing conditions, as
well execution of a definitive transaction agreement setting forth the terms of 
the merger, approval by the Paradise Board and its shareholders, and receipt of 
a favorable fairness opinion letter from an investment banker selected by an    
independent committee of Paradise directors. Furthermore, the merger is         
contingent upon arrangement by iball, effective on the closing, for financing of
at least $3,000,000, which funds shall be obtained in exchange for equity or    
convertible subordinated debt of the merged entity and arrangement by iball of a
revolving line of credit for the merged entity in an amount sufficient to       
support the merged entity's accounts receivable.                                

Iball will have the right to designate for election to the Board of Directors of
the merged entity, a majority of one with Paradise to designate the balance.    
Certain of the directors, although selected by one party or another, may be     
designated as independent.                                                      

Either party has the right to withdraw from the transaction in the event that a 
definitive agreement has not been executed by April 9, 2001, or if the merger is
not submitted for approval by the Paradise shareholders on or before June 1,    
2001. There is no assurance that the transaction will be completed or that it   
will be completed in the manner described above.                                

On February 10, 2001, the Paradise Board of Directors approved the execution of 
a Management Services Engagement Letter with iball whereby iball will provide   
the management services of Kelly Hickel and David Sunshine for the interim      
period prior to the closing of the proposed merger between Paradise and iball.  
Iball will provide management services in the areas of financial and business   
operational matters, capital structure, and advise pertaining to obtaining      
capital to satisfy Paradise's long and short-term goals. The Services Agreement 
provides for a non-refundable retainer in the amount of $25,000 to be paid by   
Paradise to iball, and a minimum of $25,000 per month. Paradise will also       
reimburse iball for all actual, reasonable and accountable expenses incurred in 
the performance of its services either as budgeted or approved in advance by    
Paradise.                                                                       

On March 9, 2001, Paradise retained Venture Partners Ltd. as its non-exclusive  
financial advisor in connection with a review of the Company's operations, and a
determination of strategic direction and financing alternatives available with  
the goal of developing initiatives intended to enhance operating results and    
maximize shareholder value. The Agreement may be terminated by either party upon
thirty days prior written notice.                                               

Paradise and Jesse Dylan entered into a Termination Agreement effective as of   
January 1, 2001 whereby Mr. Dylan resigned his positions as Chairman and CEO of 
the Company. In connection with the termination all 750,000 options to purchase 
Paradise common stock held by Mr. Dylan were cancelled. Mr. Dylan agreed that   
1,000,000 shares of Paradise common stock received by him in connection with the
Stock Purchase Agreement and Asset Purchase Agreement, both dated December 16,  
1999, will remain locked up for the lesser of two years following the Effective 
Date of the Termination Agreement or a                                          

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        PARADISE MUSIC & ENTERTAINMENT, INC.
        AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

period equal to the lock up period of the new chairman. Mr. Dylan will continue 
as a member of the Paradise Board of Directors and as a director for the        
Company's Straw Dogs subsidiary.                                                

Our subsidiary Straw Dogs, Inc. entered into an exclusive director agreement    
dated January 1, 2001 with Jesse Dylan. Under the agreement, Mr. Dylan will     
provide television and commercial and music video production services for a     
two-year term. Each of the parties has the option to terminate the agreement at 
any time upon thirty days prior written notice. Pursuant to the Agreement, Mr.  
Dylan is entitled to profit participation and receives director fees of at least
$18,500 per shoot day.                                                          

We entered into an employment agreement with David Pritchard effective as of    
February 12, 2001, whereby Mr. Pritchard will serve as Chief Executive officer  
for a two year term. Mr. Pritchard will receive an annual salary of $300,000 per
year and options to purchase an aggregate of 400,000 shares of Paradise's common
stock at an exercise price of $1 per share. The options vest in equal one-third 
installments on the first, second and third anniversary, respectively, of the   
date of grant.                                                                  

On March 30, 2001, Paradise was notified by Nasdaq's listing qualifications     
department that it fails to comply with the minimum bid price requirement for   
continued listing set forth in Marketplace Rule 4310(c), and that its securities
are subject to delisting from the Nasdaq SmallCap Market. Paradise has requested
an oral hearing to review the staff determination. Any delisting action will be 
suspensed by Nasdaq pending the outcome of the appeal.                          

On January 11, 2000, Paradise was notified by Nasdaq's listing qualifications   
department that its public warrants failed to maintain a minimum of two active  
market makers over the previous 10 consecutive trading days as required for     
continued listing on the Nasdaq SmallCap Market. Paradise was unable to regain  
compliance with this rule by February 12, 2001, and its warrants were delisted  
from the Nasdaq Small Cap Market on March 6, 2001.                              

Paradise extended and modified the terms of the 1,146,000 public warrants sold  
under the Initial Public Offering. At the commencement of the current expiration
period, January 21, 2001, (i) the exchange ratio would be such that the warrant 
holders can buy an aggregate of 229,200 shares of common stock (five warrants   
exercisable for one share), (ii) the expiration period would extend to December 
31, 2002, and (iii) the exercise price would be $2.50 per share.                

F-22

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10KSB40’ Filing		Date		First		Last			Other Filings
		12/15/05		6
		3/7/05		6
		12/31/02		7		52			10KSB
		6/28/02		7		46
		12/31/01		45					10KSB,  10KSB/A
		6/30/01		23		45			10QSB,  NT 10-Q
		6/1/01		6		51
		4/9/01		6		51
Filed on:		4/2/01
		3/30/01		7		52
		3/16/01		1		32
		3/9/01		8		51
		3/7/01		6		26
		3/6/01		7		52
		2/15/01		29
		2/12/01		7		52
		2/10/01		5		51			8-K
		2/9/01		28
		2/6/01		28
		1/25/01		10					SC 13G/A
		1/21/01		7		52
		1/16/01		29
		1/5/01		12
		1/2/01		12
		1/1/01		7		52
For Period End:		12/31/00		1		50
		12/29/00		22
		12/22/00		29					8-K
		12/20/00		8
		12/18/00		17
		12/15/00		6		47			8-K,  8-K/A
		11/14/00		8					10QSB
		9/30/00		12					10QSB
		9/1/00		23		45
		7/1/00		22		25
		6/30/00		12					10QSB
		6/29/00		10					DEF 14A
		6/28/00		7		46
		6/22/00		7		46
		6/15/00		5		42
		3/30/00		33					10KSB,  NT 10-K
		3/29/00		29
		3/7/00		6		46
		2/15/00		10
		2/14/00		29					8-K
		2/10/00		29					8-K/A
		1/26/00		28
		1/13/00		29					8-K
		1/11/00		7		52
		1/1/00		1		21
		12/31/99		5		50			10KSB,  NT 10-K
		12/16/99		26		51			8-K,  8-K/A,  DEF 14A
		11/12/99		28		29			10QSB
		11/10/99		26					DEF 14A
		10/1/99		28
		9/28/99		29					10KSB
		9/23/99		7		28
		9/22/99		26
		7/1/99		18		45
		6/30/99		16		50			10KSB
		5/17/99		29					10QSB
		4/23/99		28
		4/21/99		25		28
		4/8/99		28
		2/19/99		25
		2/16/99		29					10QSB
		12/31/98		15		16			10QSB
		12/30/98		15
		10/8/98		29					10KSB
		9/24/98		28
		8/7/98		28
		8/1/98		26
		7/1/98		22		28
		6/30/98		16		21			10KSB,  NT 10-K
		6/18/98		28
		5/15/98		29					10QSB
		2/12/98		29					10QSB
		1/15/98		27		28
		12/31/97		28					10QSB
		11/14/97		29					10QSB
		11/4/97		28
		10/1/97		27
		9/26/97		29					10KSB
		9/22/97		27
		7/10/97		27
		7/1/97		22		45
		3/17/97		29					10QSB
		1/22/97		10		29			424B1
		12/11/96		27
		10/21/96		27
		10/8/96		47
		7/18/96		9
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