Research Report - PDSE ,
 RESEARCH REPORT

from STOCKFIRST and TheInvestorOnline
www.stockfirst.com
www.theinvestoronline.com

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Paradise Music & Entertainment Inc.
Symbol: PDSE - OTCBB
Recommended: 10/15/01 - $0.08
Price as of: 10/15/01 - $0.08
Target: $0.84
52 Wk Range: $0.07 - $1.406
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* Financial Summary

Paradise is a music and entertainment company that is in the process
of a significant restructuring effort, spearheaded by noted
turnaround specialist Kelly Hickel and a new senior management
team.  PDSE is focused on producing and owning state-of-the art
events, film, video, digital and music-related products through its
three groups -Paradise Film & Television, Paradise Music, and
Paradise Festivals & Events.  Paradise's new strategy is to leverage
its integrated creative services and global corporate relationships to
create unique entertainment products which deliver corporate clients'
branding messages to targeted demographic audiences.

The following are a summary of Results of Operations for the Three
Months Ended June 30, 2001 Compared to Three Months Ended
June 30, 2000.  In aggregate, revenues for the three months ended
June 30, 2001 increased to $7,765,268 or 26% compared to
revenues of $6,164,769 in the three-month period ended June 30,
2000.  The net loss was $9,376,245 for the three months ended
June 30, 2001 compared to $2,047,658 for the three months ended
June 30, 2000.  The loss for the three months ended June 30, 2001
included a provision for goodwill impairment of $7,268,586.

Notwithstanding the goodwill impairment provision, the former
Commercial group incurred a loss in the period of $1,003,366,
almost entirely in the Straw Dogs affiliate, reflective of the severe
downturn in the advertising industry.  Additionally, the Company
incurred $414,762 of non-recurring costs relating to the iball merger
and business restructuring.  Exclusive of the provision for goodwill
impairment, the non-recurring costs relating to the iball merger and
business restructuring and the significant loss incurred in the PDSE
Commercial Group (mainly Straw Dogs), the Paradise adjusted net
loss for the current three month period would have been $689,531,
compared with a net loss of $1,576,406 (adjusted for the PDSE
Commercial segments loss in the prior period).  PDSE Commercial
Group revenues increased to $5,591,439 for the three months ended
June 30, 2001, from $3,464,044 for the three months ended June
30, 2000, an increase of $2,127,395 or 61%.  The increase in
revenues is primarily due to the negative impact of the SAG strike
on last year's activity.

More from Market Guide:
http://yahoo.marketguide.com/mgi/signdevt.asp?rt=signdevt&rn=A1
2C2


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* Share-Related Items

Market Capitalization -  $2.2M
Shares Outstanding -  22.0M
Float -  7.9M
Daily Volume (3-month avg) -  32.0K
Daily Volume (10-day avg) -  85.0K
Delayed Quote -  http://quote.yahoo.com/q?s=pdse.ob&d=v1

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* Business Description

Paradise is an award-winning entertainment company dedicated to
leveraging integrated creative services and global corporate
relationships to develop unique entertainment products that deliver
corporate clients' branding messages to targeted demographic
audiences.  Paradise's premier creative talent has recently been
joined by a senior management team specializing in turnarounds and
maximizing shareholder value.  Paradise plans to grow its existing
businesses and extend into the broadcast, festival/event and online
markets.  Revenues are derived from: original music production for
film and television, commercial music production, television special
production, music video production, record sales, music royalties,
tour and concert production fees, and corporate sponsorships.
Paradise Music & Entertainment, Inc. (PDSE) is comprised of:
PDSE Film and TV Group (Picture Vision and Rave Music), PDSE
Music Group (PDSE Records Inc.) and  PDSE Festival & Event
Group.

Visit the Company's website at www.pdse.com

Expanded Business Description:
http://www.theinvestoronline.com/research/pdsebusdes1F.htm

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* Analyst Summary

The entertainment industry has traditionally shown strong growth
through all manner of economic downturn and periods of
uncertainty.  When World War II started, Major League Baseball
had many of its stars go off to war and was considering canceling
play until urged by President Roosevelt to continue, because it was
something that America needed.  During the Great Depression,
people found enough money to go to Movie Theaters, because they
could "get-away" for a while.  We believe that PDSE represents a
value and in the long run an attractive takeover candidate.

Paradise has been very active in the last quarter constructing a
foundation built on a renewed focus on certain high-end niches in
the music and entertainment industry and moves into certain
fragmented, high-margin markets.  We believe these activities will
sustain growth in the months to come.  A renowned creative team
and a new senior management team with extensive turnaround
experience are keys to this success.  Given its price and
performance, we feel PDSE will be a solid play on the small-cap
entertainment field.

Paradise Found --- Since the completion of the iball Media merger,
PDSE has made significant strides in focusing the Company on its
strengths and expanding business.  To increase operating
productivity and margins the new management team has concluded
an extensive restructuring program that includes the shutdown of
non-core Paradise businesses, including the Digital Group, the
Commercial Group, and elements of the Music Group.  The net
result is to reduce revenue by 77% and losses by 88%, and, we
believe, to create a sustainable platform from which to grow the
business profitably.

PDSE has previously disclosed that it has a going concern issue and
has used up its operating cash. As noted above, they have also
disclosed that they have discontinued 77% of their operations
because those operations were losing money and PDSE
management felt those divisions had no strong growth prospects
going forward. Discontinuing those operations has dramatically
reduced PDSE's losses and reduced cash burn. In addition, PDSE
has just disclosed that it is currently negotiating a $750,000 bridge
financing and a $2 million secured subordinated convertible
debenture, secured by all of the assets of PDSE and its subsidiaries,
subordinate only to any other senior debt. We feel that the above
investment represents the capital PDSE requires to continue to
effectively launch it's new strategy.

Due to economic conditions, the current markets for the Company's
traditional past products and services have shrunk dramatically and
or shown flat growth this year. However, that same market
environment has signaled a great deal of interest in the products and
services that form the focus of the Company's new strategy.

PDSE will grow its remaining businesses and extend the energy,
visibility and commerce opportunities further into the broadcast,
festival/event and online markets.  With select partners, PDSE will
be presenting festivals, primetime cable and broadcast specials,
digital properties, music and artist management initiatives, film &
television projects and exclusive event properties for global brand
partners.  In addition to growing its existing businesses, PDSE is
also examining a number of acquisitions in targeted markets, which,
if completed, will result in more rapid growth of the Company.  The
Company's selection of future projects and acquisitions will be
driven by ROI and strategic fit with existing business units.

PDSE will produce sponsor-targeted entertainment leveraging
music, media events, television commercials, television
programming and filmed entertainment to facilitate global branding
campaigns.  Management expects this to provide a profitable,
multi-platform convergence of capabilities with multiple revenue
streams and higher gross profit margins.  Music has become an even
bigger part of getting the message across for many companies, see
this recent article in the NY Times
(www.theinvestoronline.com/research/PDSEMusic.htm).

o Paradise is a multi-faceted entertainment company with an
operating revenue platform stabilizing at $20+ million in annual
revenue and a plan in place to grow quickly and profitably through
internal project developments and targeted acquisitions.

o The Company is uniquely positioned to provide a music-centric
alternative to conventional delivery of the brand message for global
brands.

o The market cap of the Company is less than $5 million.
Paradise consists of a strong, creative management team with
proven accomplishments.

o The Company has just announced that it is negotiating a $750,000
bridge financing and a $2M secured subordinated convertible
debenture.

o The entertainment sector is projected to be strong and high margin
for the foreseeable future.

o Management's strategy is to grow by acquisition both vertically
and horizontally in the entertainment category, and to create a lean,
edgy creative firm focused on providing premier sponsor-targeted
entertainment.

We estimate that PDSE will produce an EPS of $0.04 for 2002.
Excluding potential acquisitions, we believe that PDSE is poised to
grow by 9% in 2002 and in 2003, when all elements are in place
and operating at capacity, we expect sharp revenue growth in excess
of 50%.  We also believe that in the short term the Company will
stabilize revenues, achieving a positive EBITDA in Q1 or Q2 of
2002.  If PDSE is able to achieve the necessary financing, we
believe that several acquisitions will be made that build on the sound
core that has been established, achieving higher revenues and net
earnings then currently estimated.

- Technical Opinion - 10/04/01

The stock has made a new low with the weakness in
over-the-counter stocks, but is now churning on high volume. Since
this low is near last year's low with management expecting good
things on the horizon for the Company, the stock should find a
bottom here. The record high volume with little or no movement on
10/04 also suggests a stalemate between buyers and sellers, which
could be another signal of a bottom.

The stock will meet overhead resistance between $0.17 and $0.20.
If it can break up through $0.20, look for it to retest $0.68 before it
reaches another major overhead level.

Note: Although technical analysis is an important tool to determine
the short-term directional movement of securities, technical analysis
of stocks under $10 is many times not as reliable as higher priced,
higher volume securities.

- Fundamental Opinion - 10/04/01

PDSE's comparative financial analysis offers and suggests
tremendous future stock price appreciation from current levels based
on the Business Services industry comparative figures and even
more conservatively, the Services sector. Assuming the market
returns to bullish conditions and the Company meets projections
provided by the Company and included in this report, at sector
values, the stock could reach a 2001, 2002 and 2003 target price of
$0.84, $2.04 and $6.75, respectively. This would represent a 1-year
gain of almost 10 fold, a two-year gain of close to 27x and a
three-year total gain of almost 75x the investment.
Note: To meet the suggested target prices, the Company would have
to trade at the Services sector multiples and the Company would
have to achieve earnings and revenue estimates provided by
management in this report. A divergence either up or down from the
projections could materially affect the target prices.

Financial Analysis:
http://www.theinvestoronline.com/research/pdseanaly1F.htm

Industry & Market Profiles:
http://www.theinvestoronline.com/research/pdsemktprfl1F.htm

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* Recent News

Thursday, Oct 18, 2001 - Paradise Negotiating Bridge and
Permanent Financing

Thursday, Oct 11, 2001 - Paradise Unit Signs Agreement With
Action Marketing Group

Friday, Sep 28, 2001 - Shelter Films Discontinues Operations

Thursday, Sep 20, 2001 - Straw Dogs Discontinues Operations

Tuesday, Sep 11, 2001 - Paradise's Combined Management Team

Wednesday, Sep 5, 2001 - Paradise Unit Receives CMA Music
Video of the Year Nomination

Tuesday, Aug 21, 2001 - Paradise Announces Second Quarter
Results - Business Wire

Monday, Aug 20, 2001 - PARADISE MUSIC &
ENTERTAINMENT INC - Quarterly Report (SEC form 10QSB)

Thursday, July 12, 2001 - Paradise Hires Shareholder Relations

Wednesday, July 11, 2001 - Paradise Completes iball Merger

Tuesday, July 10, 2001 - Rave Music Selected by 4Kids
Entertainment to Produce Music for YU-GI-OH!

Friday, June 22, 2001 - PARADISE MUSIC &
ENTERTAINMENT INC FILES (8-K) Disclosing Acquisition or
Disposition of Assets

Monday, May 21, 2001 - PARADISE MUSIC &
ENTERTAINMENT INC - Quarterly Report (SEC form 10QSB)

Go to http://biz.yahoo.com/n/p/pdse.ob.html for complete list of
releases and details.

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* Contact Information

John Lefebvre
Shareholder Relations
303-457-2852 or john@shareholder-relations.net

Visit the Company Website at www.pdse.com

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Please go to
http://www.theinvestoronline.com/research/PDSE101801.html to
see the complete TheInvestorOnline Research Report.

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