PARADISE MUSIC & ENTERTAINMENT INC
424B3, 1999-01-11
AMUSEMENT & RECREATION SERVICES
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                                                    Filed Pursuant to Rule 424B3

                                                    File No. 333-69581

Prospectus

                      Paradise Music & Entertainment, Inc.
                                  Common Stock
                                2,628,175 Shares

      The offering is being made only for the benefit of the selling
stockholders. They may elect from time to time to sell their shares but are not
required to do so. We will not receive any of the sale proceeds. We are paying
all the expenses of the offering.

      Our shares currently trade on the Nasdaq Small Cap Market (SM) and on the
Boston Stock Exchange. However, we were recently advised by Nasdaq that they
want to delist us. See "Risk Factors." On December 18, 1998 the last sale price
on NASDAQ was $1.625 per share. (Trading Symbols: Nasdaq Small Cap Market -
PDSE; Boston Stock Exchange - PMU)

      Investing in the Company involves a high degree of risk. You should
purchase shares only if you can afford a complete loss. You should carefully
read and review this prospectus including the "Risk Factors" beginning on page 7
before deciding whether to buy shares in this Offering.

The Securities and Exchange Commission has not approved or disapproved of these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.

                        Prospectus dated January 7, 1999.
<PAGE>

                     WHERE YOU CAN FIND MORE INFORMATION

      We have filed a registration statement which includes this prospectus
covering this offering with the Securities and Exchange Commission ("SEC"). This
prospectus does not contain all the information included in the registration
statement. You can request a copy of the registration statement and the exhibits
from us to get a more complete description of our Company and this offering. We
have provided our address, telephone number and e-mail address in the next
section "Incorporation of Certain Information by Reference" if you wish to
obtain free copies of the registration statement and exhibits.

      We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information we file at the SEC's public reference room in Washington D.C., New
York, New York and Chicago, Illinois. You can also request copies of these
documents, upon payment of a duplicating fee, by writing to the SEC. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public on the SEC
Internet site at http\\www.sec.gov. The registration statement, of which this
prospectus forms a part, including all exhibits, has been filed in electronic
form with the SEC through EDGAR.

                 INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

      The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
Commission will automatically update and supersede this information.

      We incorporate by reference the following documents filed by us with the
SEC:

      o Our Annual Report on Form 10-KSB for the year ended June 30, 1998 filed
with the SEC on October 8, 1998;

      o Our Quarterly Report on Form 10-QSB for the quarter ended September 30,
1998 filed with the SEC on November 20, 1998;

      o All other reports and other documents filed by us pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 ("Exchange Act") since
September 30, 1998;

      o Our registration statement on Form 8-A filed on January 9, 1997 and
declared effective on January 22, 1997 registering the Common Stock under
Section 12(b) of the Exchange Act; and


                                       2
<PAGE>

      o All documents and reports subsequently filed by us pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus
and prior to the filing of a post-effective amendment which indicates that all
securities which may be offered hereby have been sold or which deregisters all
securities then remaining unsold.

      At your request, we will provide you, without charge, with a copy of any
information incorporated by reference in this prospectus. If you want more
information, write or call us at:

                         Paradise Music & Entertainment
                               53 West 23rd Street
                             New York, New York 1010
                                 (212) 590-2100
                           Attn: Philip G. Nappo, III

In addition, the Company's information may be obtained electronically from our
web site at http://www.paradiseme.com or by submitting a request via email to
[email protected].

      You may also obtain information from the SEC as described in "Where You
Can Find More Information."


                                       3
<PAGE>

                               PROSPECTUS SUMMARY

      We have provided you with a summary of important information on our
business. You should read all the information in this prospectus for a more
complete understanding. Some of the information has been incorporated from our
SEC filings. You can obtain copies of this incorporated information from us
without charge as described beginning on page 2. Please be sure to read "Risk
Factors" beginning on page 7 for a description of the high risk involved in
acquiring our shares.

                                  THE COMPANY

Principal Executive      Paradise Music & Entertainment, Inc.
Offices:                 53 West 23rd Street
                         New York, NY 10010
                         (212) 590-2100

Our Business:            We engage in various music related businesses,
                         including:

                         o  Production of music videos and music specials for
                            television and cable through Picture Vision, Inc.
                         o  Music artist management through All Access
                            Entertainment, Inc.
                         o  Production of original scores for television,
                            radio and advertising through Rave Music, Inc.
                         o  Production and commercial release of recorded music
                            through PUSH Records, Inc.

                         Here are highlights of each business.

                                  PICTURE VISION

                         Picture Vision produces:
                         o  Music videos used to promote music artists
                         o  Music specials for television and cable featuring
                            music artists. Recent productions include Janet
                            Jackson's "Velvet Rope Concert" and Garth Brooks'
                            "Live From Central Park Concert" for HBO.
                         These services are provided on a fixed budget basis
                         with profitability dependent on estimating and managing
                         budget costs. Picture Vision has produced music videos
                         and specials for many well-known artists and has
                         received numerous industry awards for its work.

                                  ALL ACCESS

                         All Access provides a full range of management services
                         to music artists. The number of artists represented by
                         All Access is limited and consists of both well-known
                         artists such as Daryl Hall and John Oates and
                         developing artists such as Sheppard (with Mosh
                         Productions, an affiliate of Sony Music), Kim Sozzi, a
                         Columbia Records recording artist, and FAT, a DV8
                         Records recording artist. All Access receives its fees
                         as a fixed percentage of artist revenues. The fee
                         percentage charged varies based on an artist's prior
                         commercial success.

                                  RAVE

                         Rave creates for use on television, radio and film:
                         o  Original music scores, for the television shows
                            Pokemon, Mr. Men and Little Miss.
                         o  Advertising themes for clients such as Downy
                            Fabric Softener, Pringles, JIF Peanut Butter and
                            Dominos Pizza.


                                       4
<PAGE>

                         Rave produces original music at its in-house studios
                         and uses independent musicians, singers and engineers
                         to produce final soundtracks. A substantial portion of
                         Rave's revenues are generated from television
                         commercials. Rave retains the future property rights
                         to its musical compositions.

                                  PUSH

                         PUSH is a start-up record label launched by the Company
                         in early 1997. PUSH has the exclusive rights to records
                         by established artists such as Daryl Hall and John
                         Oates, Daryl Hall, Blessid Union of Souls, and by new
                         and emerging artists such as Luxx and kidneythieves.
                         Push has released three recordings to date through BMG
                         Music, a major distribution company.

                         Push has also negotiated joint ventures to share in the
                         distribution, marketing and promotion of various jazz
                         recordings by artists such as Paul Hardcastle,
                         Jazzmasters and others in exchange for a negotiated
                         percentage of every record sold.

Our Concept of           We offer a broader range of services than most
Combined Services;       independent music companies.  This combination of
Expansion:               services has been structured to foster synergies
                         between the operating companies, more efficient
                         business operations, lower costs and greater
                         convenience to customers. In addition, we intend to
                         expand through acquisitions in related businesses, if
                         sufficient capital can be raised to fund the
                         acquisition program.

Our History Involves     The Company was incorporated in Delaware in July
Substantial Losses:      1996 and commenced operations in October 1996. We
                         originally combined the operations of three established
                         companies (Rave, Picture Vision and All Access) in
                         establishing the Company. Following our public offering
                         in 1997, we launched PUSH, our record label. We have
                         not yet become profitable on a combined basis and
                         cannot assure you that we will become profitable. In
                         the meantime, we have expended substantial capital to,
                         among other things, cover our operating losses.

Recent Developments:     On December 11, 1998, investors represented by The
                         Cassandra Group, Inc., a registered investment advisor
                         ("Cassandra"), purchased 500,000 shares of Common
                         Stock at a price of $1 per share or $500,000 in the
                         aggregate and on December 15, 1998 additional
                         investors represented by Cassandra purchased an
                         aggregate of 1,500,00 shares of Common Stock at a
                         purchase price of $1 per share or $1,500,000 in the
                         aggregate. The Company received the first payment of
                         $500,000 on December 11, 1998 and an additional
                         $100,000 on or about December 23, 1998. The payment
                         for the remaining 1,400,000 shares is due on the
                         effective date of this prospectus. See "Selling
                         Stockholders." The purchase price was higher than the
                         market price on NASDAQ and the book value on the date
                         of payment or date of irrevocable commitment.

                         We agreed with the Cassandra investors to file a
                         registration statement on Form S-3 registering for
                         resale the 2,000,000 shares promptly following the
                         initial funding of $500,000. We are required to have
                         the registration statement declared effective by the
                         SEC no later than the 90th day after its filing with
                         the SEC or the investors have the right to put back to
                         the Company at a price of $1.00 per share the 600,000
                         shares purchased and the sale of the remaining
                         1,400,000 shares could be voided. We also granted
                         Cassandra the right to designate three directors to
                         sit on our nine member Board. No directors have been
                         appointed yet.

                                       5
<PAGE>

                         We raised an additional $100,000 through the sale of
                         100,000 shares to an unaffiliated investor. In
                         addition, certain trade vendors and professionals
                         agreed to convert $528,175 owed to them for 528,175
                         shares, the same price paid by the other investors. We
                         also agreed to register these shares for resale in this
                         S-3.

                                  THE OFFERING

Securities Offered:      2,628,175 shares. The shares are being offered by the
                         selling stockholders. See "Plan of Distribution."

Shares Outstanding:      There were 2,407,200 shares issued and outstanding
                         prior to the share issuances described in "Recent
                         Developments" (the "Investment"). Pursuant to the
                         Investment, a total of 2,628,175 shares have been
                         issued. Accordingly, there are 5,035,375 shares issued
                         and outstanding as of the date hereof (excluding
                         shares which can be purchased under existing warrants
                         and options).

Estimated Offering       $35,000.
Expenses:

Risk Factors:            Investing in our shares is very risky. Investors
                         should be able to bear the complete loss of their
                         investment.

Use of Proceeds:         The proceeds of this offering will be paid to the
                         selling stockholders. None of the proceeds will be
                         paid to the Company. See "Use of Proceeds."

Trading Symbols:         Nasdaq SCM            BSE
                         ----------            ---

        Common Stock      PDSE                 PMU

        Warrants          PDSEW                PMUW

                Special Note Regarding Forward-looking Statements

      Some of the statements contained in this prospectus, including information
incorporated by reference, discuss future expectations, contain projections of
future results of operations or financial condition or state other
"forward-looking" information. Those statements are subject to known and unknown
risks, uncertainties and other factors that could cause the actual results to
differ materially from those contemplated by the statements. The forward-looking
information is based on various factors and was derived using numerous
assumptions.

      Important factors that may cause actual results to differ from projections
include, for example:

      o  the relative success or failure of our efforts to implement our
         business plans;

      o  our ability to raise sufficient capital to fully implement our business
         plans, including the release and promotion of new albums on our record
         label;

      o  our ability to provide music related services which appeal to the
         current trends in the music industry;


                                       6
<PAGE>

      o  our ability to attract quality music artists and professionals;

      o  our ability to negotiate and maintain favorable distribution
         arrangements for our record label;

      o  the effect of changing economic conditions;

      o  changes in government regulations, tax rates and similar matters;

      o  our ability to attract and retain quality employees; and

      o  other risks which may be described in our future filings with the SEC.
         We do not promise to update forward-looking information to reflect
         actual results or changes in assumptions or other factors that could
         affect those statements.

                                  RISK FACTORS

      Investing in our shares is very risky. You should be able to bear a
complete loss of your investment. You should carefully consider the following
factors, among others, before making an investment decision.

Our Shares may be removed from   Our tangible net asset value as of September
Nasdaq SmallCap.                 30, 1998 was below the required Nasdaq SmallCap
                                 requirements. On November 3, 1998, Nasdaq
                                 notified us that they wanted to delist our
                                 shares on November 10, 1998. Prior to November
                                 10, 1998, we requested an oral hearing which is
                                 scheduled for January 8, 1999. On December 15,
                                 1998 we submitted a written business plan in
                                 support of our request to continue to be listed
                                 on Nasdaq. We cannot be sure that our plan will
                                 be acceptable to Nasdaq or what the outcome
                                 will be at the oral hearing. If our shares are
                                 delisted, the price of the shares would be
                                 harmed.

We have been experiencing        The Company has for some time been experiencing
substantial cash shortages.      a cash shortage. Because of this cash shortage,
                                 there have been delays in making timely
                                 payments which have hurt our relationship with
                                 some of our suppliers. In addition, our
                                 landlord has recovered certain rent concessions
                                 that were previously granted based on our
                                 payment delays.

We will need to raise more       We have for some time been actively seeking
money in the future.             additional financing for our business. We have
                                 recently raised $2,100,000 in cash as described
                                 above and an additional $528,175 in debt
                                 conversions also as described above. To date
                                 $700,000 has been paid in cash, all of the debt
                                 conversions have taken place and the balance of
                                 $1,400,000 in cash investments will be paid
                                 promptly following the date of this Prospectus.
                                 More funds will have to be obtained in order to
                                 support our business plans. If we cannot get
                                 more funds, we will have to curtail some of our
                                 plans. We cannot assure you that we can obtain
                                 more capital. We also don't know if the terms
                                 requested by future financing sources will be
                                 acceptable to us.

We are a recently combined       While our operating companies other than the
business which has               record label have been individually in business
experienced substantial          for many years, we have only operated together
losses since the                 since October 1996. We have not yet operated 
combination.                     the combined business on a profitable basis. We
                                 cannot assure you when, if ever, the combined
                                 business will be profitable.


                                       7
<PAGE>

PUSH Records is a high risk      Although large amounts of money have been
business which has never been    invested in PUSH it has never been profitable. 
profitable.                      PUSH must generate revenues from successful
                                 releases which are sufficient to overcome any
                                 losses from unsuccessful releases. PUSH must
                                 also put out enough releases to support its
                                 overhead and marketing activities. We have no
                                 assurance that PUSH will achieve profitability.

                                 PUSH's records are distributed through BMG
                                 Music, one of the five largest music
                                 distribution companies in the world. PUSH has
                                 not met the sales levels required under its
                                 distribution agreement with BMG. While BMG has
                                 orally agreed not to terminate the distribution
                                 agreement at this time, BMG could decide to
                                 terminate at any time in the future. BMG's
                                 termination would significantly harm the PUSH
                                 business.

We depend on our Senior          Our business depends on the skill, creativity
Management and Key Employees.    and business relationships of our employees and
                                 particularly our senior management. The loss of
                                 members of our senior management, including
                                 John Loeffler, Jon Small, Brian Doyle, Philip
                                 G. Nappo III and Richard Flynn would be harmful
                                 to us.

We are dependent on the          Our artist management business and our record
success of independent artists   label business have relationships with a 
with whom we have                limited number of artists. It is difficult to
relationships.                   secure these relationships. Once they have been
                                 secured we depend on the success of these
                                 artists, which success cannot be predicted, in
                                 order to realize revenues.

Our acquisition program has      Our acquisition program has yet to be 
yet to be successful.            successful. It will be difficult to fund and
                                 finance acquisitions unless we raise more money
                                 and our stock price rises. Even if we complete
                                 acquisitions, we cannot be sure that these
                                 acquisitions will benefit our operations.

Competition is intense in all    Our record business competes with numerous
our businesses.                  other independent record labels, many of whom
                                 have greater financial resources than us. In
                                 addition, there are six major companies with
                                 which our record label cannot compete directly
                                 due to the substantial financial resources and
                                 talent pool of their companies.

                                 Our artist management, video production and
                                 original score/production businesses also
                                 compete with numerous other similar businesses,
                                 many of whom have greater financial resources
                                 than us.

We are dependent on some large   One advertising agency/client generated
customers.                       $303,000 and $361,000 of commercial music
                                 production revenues for the years ended June
                                 30, 1998 and June 30, 1997, respectively.

                                 Two music artists produced $750,000 and
                                 $675,000 of music artist management revenues
                                 for the years ended June 30, 1998 and June 30,
                                 1997, respectively.

                                 Video production for two music artists in 1998
                                 and one music artist in 1997 generated
                                 approximately $7,402,000 and $1,867,000, of


                                       8
<PAGE>

                                 video production revenues for the years ended
                                 June 30, 1998 and June 30, 1997, respectively.

                                 The loss of a large customer or the loss of a
                                 significant production would hurt our
                                 businesses.

No dividends have been paid.     We have never declared or paid a cash dividend
                                 and we do not expect to have available cash
                                 with which to pay cash dividends in the
                                 foreseeable future.

A large block of shares can be   Owners of a large block of shares which were
sold under Rule 144.             previously restricted can be sold under Rule
                                 144. The sale of a large number of these shares
                                 could lower the price of our shares or make it
                                 harder to attract new investors.

                                 Additionally, the Company has granted warrants
                                 and options to certain directors, officers,
                                 employees and consultants of the Company to
                                 purchase an aggregate of 329,000 shares of
                                 Common Stock.

We must deal with Year 2000      We have conducted a review of our computer
Compliance Issues.               systems to identify the "Year 2000" problem.
                                 The year 2000 problem is the result of computer
                                 programs being written using two digits rather
                                 than four to define the applicable year. Any
                                 programs that have time-sensitive software may
                                 recognize a date using "00" as the year 1900
                                 rather than the year 2000. This could result in
                                 a major systems failure or miscalculations. We
                                 believe that our computer systems and software
                                 products are fully year 2000 compatible.
                                 However, computer systems or software products
                                 of our suppliers or customers may not accept
                                 input of, store, manipulate and output dates in
                                 the year 2000 or thereafter without error or
                                 interruption. We have retained a consultant to
                                 help us with compliance.

                                 USE OF PROCEEDS

      All of the shares which may be sold pursuant to this prospectus will be
sold from time to time by the selling stockholders for their own accounts or by
pledgees, donees, transferees or other successors in interest thereof. The
Company will receive no proceeds from any such sales of shares.

                              SELLING STOCKHOLDERS

      The following table sets forth the number of shares of Common Stock
beneficially owned by each of the selling stockholders as of December 18, 1998,
the number of shares owned by them covered by this prospectus and the amount and
percentage of shares to be owned by each selling stockholder after the sale of
all of the shares offered by this prospectus. The number of shares indicated
includes the number of shares of Common Stock issuable upon exercise of
currently exercisable options and convertible debentures. The list of selling
stockholders includes Thomas J. Edelman, Paul Thomas Cohen, directors of the
Company, John Loeffler, Brian Doyle and Richard Flynn, directors and officers of
the Company, and Philip G. Nappo, III, an officer of the Company, each of whom
received their shares covered by this prospectus in exchange for amounts owed to
them. The selling stockholders also includes the law firm of Davis & Gilbert
LLP, counsel to the Company, who received its shares covered by this prospectus
in exchange for corporate legal services rendered to the Company. Except for
Messrs. Edelman, Cohen, Nappo, Loeffler, Doyle and Flynn and for other employees
marked with an "E" and trade vendors marked with a "V", none of the selling
shareholders has had any position, office or other material relationship with
the Company within the past three years other than as a result of the ownership
of the shares or other securities of the Company. The information included below
is based on information provided by the selling shareholders. Because the
selling stockholders may offer some or all of their shares, no definitive
estimate as to the number of shares that will be held by the selling
stockholders after such

                                       9
<PAGE>

offering can be provided and the following table has been prepared on the
assumption that all shares of Common Stock offered hereby will be sold.

                                                     Shares        Percentage
                          Shares of                   Owned         of Shares
                        Beneficially     Shares       After         Owned After
Name                        Owned        Offered    Offering(1)   Offering(1)(2)
- ----                        -----        -------    --------      --------------
Lawrence Bortoluzzi-E        8,500         8,500        0             0
Pamela Butler-E              1,000         1,000        0             0
Daniel Caldwell-E           12,500        12,500        0             0
P. Thomas Cohen(3)          45,489        23,960      21,529          *
Davis & Gilbert LLP-V       98,129        88,129      10,000          *
Brian Doyle                189,250        43,750     145,500         2.88
Thomas J. Edelman(4)        97,279        60,000      37,279          *
Richard Flynn              189,250        43,750     145,500         2.88
Jennifer J.                  3,000         3,000        0             0
 Haagen-Islami-E
Michael Jeon-E               1,000         1,000        0             0
Jacqueline Kotler-E          2,000         2,000        0             0
John Loeffler(5)           349,451        27,084     322,367         6.40
John Loeffler Music         18,600        15,000       3,600          *
 Pension Plan Inc. (5)
Jonathan Love-E              2,000         2,000        0             0
Philip G. Nappo             96,882        88,852       8,000          *
Raymond Ovetsky-E            8,000         8,000        0             0
Joseph Parker-V              2,000         2,000        0             0
Michael Rodriguez-E         15,000        15,000        0             0
April Taylor-E               1,650         1,650        0             0
Tiffany Towers-E             6,000         6,000        0             0
Robert Burke               100,000       100,000        0             0
Jesse Dylan                100,000       100,000        0             0
Akiva Goldsman              75,000        75,000        0             0
David Kuhn                  25,000        25,000        0             0
Richard and Ann La         100,000       100,000        0             0
 Gravenese
Stacey Sher                100,000       100,000        0             0
Margery Simkin             100,000       100,000        0             0
Benjamin Affleck            75,000        75,000        0             0
Allegra Productions
 Profit Sharing             10,000        10,000        0             0
Trey Anastasio              70,000        70,000        0             0
Henry Bamberger             10,000        10,000        0             0
Soledad Bastiancich         10,000        10,000        0             0
Steve/Janet                 10,000        10,000        0             0
 Bergman/Surrey
Marianne Boesky             20,000        20,000        0             0
Broadcast Data              10,000        10,000        0             0
 Systems, LP-V
Cecil Trust                 75,000        75,000        0             0
Cornerstone Promotion,      10,000        10,000        0             0
 Inc.-V
Dan Cortese                 20,000        20,000        0             0
Dan Cortese Trust           20,000        20,000        0             0
Claudio Curzi               20,000        20,000        0             0
Matthew P. Damon            75,000        75,000        0             0
Benicio Del Toro            10,000        10,000        0             0
Dennis Gassner &            10,000        10,000        0             0
 Associates, Profit
 Sharing 
Cameron & Billie Diaz       20,000        20,000        0             0
Arthur Dielhenn             20,000        20,000        0             0
Dielhenne Productions       20,000        20,000        0             0
 Profit 


                                       10
<PAGE>

  Sharing
Dionysian Productions,     100,000       100,000        0             0
 Inc.
Gabe Doppelt                10,000        10,000        0             0
Jay Faires                  75,000        75,000        0             0
Alan Finkelstein-V           7,500         7,500        0             0
Jay Finkelstein-V            7,500         7,500        0             0
Jonathan Fishman            20,000        20,000        0             0
Morgan Freeman              10,000        10,000        0             0
Brian Gibson                30,000        30,000        0             0
Burt Goldstein              25,000        25,000        0             0
Mike Gordon                 30,000        30,000        0             0
Lara Harris                 75,000        75,000        0             0
Lauren Holly                75,000        75,000        0             0
Hopalong Company, Inc.
 Profit Sharing             10,000        10,000        0             0
Ted Hope                    10,000        10,000        0             0
James Yoshinobu Iha         30,000        30,000        0             0
Craig Kanarick              75,000        75,000        0             0
Kathy Sue Enterprises       10,000        10,000        0             0
Michelle Kydd               30,000        30,000        0             0
Law offices of Glinert       3,000         3,000        0             0
 & Chidekel-V
Victoria Leacock            10,000        10,000        0             0
David Lonner                10,000        10,000        0             0
Amir Malin                  10,000        10,000        0             0
Margaret Martin             10,000        10,000        0             0
Menchel Family Trust        75,000        75,000        0             0
Amy Ness                    25,000        25,000        0             0
Diarmuid Quinn              10,000        10,000        0             0
Tim Roth                    20,000        20,000        0             0
David Salle                 20,000        20,000        0             0
David Salle Profit Sharing  10,000        10,000        0             0
September Productions,      20,000        20,000        0             0
 Inc. Profit Sharing
Sheldon Kahn                20,000        20,000        0             0
 Retirement Trust
Shepard Family Trust        20,000        20,000        0             0
James Shepard Rev.          20,000        20,000        0             0
 Trust
Leslie Simitch              20,000        20,000        0             0
Martin Spencer              10,000        10,000        0             0
Norman Steinberg            20,000        20,000        0             0
Ken Sunshine                10,000        10,000        0             0
T-Bone Films, Inc.-V         4,000         4,000        0             0
The Roland Trust            20,000        20,000        0             0
Tom Anthony                 33,000        33,000        0             0
 Woodworking-V
Jay Walkingshaw             20,000        20,000        0             0
Sally Wilcox                10,000        10,000        0             0

- ----------

*     Less than 1%

(1)   Assumes sale of all shares owned by the selling stockholders.
(2)   Based on 5,035,405 shares of Common Stock outstanding on the date of this
      prospectus.
(3)   Includes options to purchase 15,000 shares.
(4)   Includes options to purchase 30,000 shares.
(5)   Includes options to purchase 5,000 shares, 18,600 shares owned by Mr.
      Loeffler's Pension Plan and 3,800 shares owned by Mr. Loeffler's wife.


                                       11
<PAGE>

                              PLAN OF DISTRIBUTION

      The shares are being registered in order to facilitate their sale from
time to time by the selling stockholders, or by pledgees, donees, transferees or
other successors in interest thereof, as market conditions permit in one or more
transactions. No underwriting arrangements have been entered into by the selling
stockholders. In addition, as none of the selling stockholders have advised the
Company whether or not they have any current intention of selling any of the
shares, the Company is unable to predict whether or when any of the selling
stockholders will determine to proceed with sales of the shares, as such
determination will be made solely at the discretion of each selling stockholder.
The distribution of the shares by the selling stockholders and/or their
pledgees, donees, transferees or other successors in interest, may be effected
in one or more transactions that may take place on the Nasdaq SCM, the BSE, the
over-the-counter market, including ordinary brokers transactions, privately
negotiated transactions or through sales to one or more dealers for resale of
the shares as principals, or a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. The shares may be sold by one or more of
the following methods, without limitation: (a) a block trade in which a broker
or dealer so engaged will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction;
(b) purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus; (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (d)
face-to-face transactions between sellers and purchasers without a
broker-dealer. In effecting sales, brokers or dealers engaged by the selling
stockholder may arrange for other brokers or dealers to participate. Such
brokers or dealers may receive commissions or discounts from the selling
stockholders in amounts to be negotiated immediately prior to the sale. The
selling stockholders and such brokers and dealers and any other participating
brokers or dealers may be deemed to be "underwriters" within the meaning of the
Securities Act, in connection with such sales. The Company has agreed to bear
all expenses of registration of the shares.

      The Company will receive no proceeds from any sales of the shares offered
hereby by the selling stockholders. The Company has agreed to pay the filing
fees, costs and expenses associated with the registration statement exclusive
of fees of counsel to the selling stockholders, or any of them, but inclusive
of fees relating to compliance with any state blue sky requirements, commissions
and discounts of underwriters, dealers or agents, if any, and any stock transfer
taxes.

      The Company has agreed to indemnify the selling stockholders, or their
transferees or assignees against certain liabilities, including liabilities
under the Securities Act.

                      DISCLOSURE OF COMMISSION POSITION ON
                 INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

      Section 145 of the General Corporation Law of Delaware grants each
corporation organized thereunder the power to indemnify its officers, directors,
employees and agents on certain conditions against liabilities arising out of
any action or proceeding to which any of them is a party by reason of being such
officer, director, employee or agent. The Certificate of Incorporation also
provides for the indemnification, to the fullest extent permitted by the General
Corporation Law of Delaware, of such persons. Insofar as indemnification for
liabilities arising under the Securities Act, may be permitted to directors,
officers or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.

                                LEGAL MATTERS

      The validity of the shares offered hereby is being passed upon for the
Company by Davis & Gilbert LLP, 1740 Broadway, New York, New York, 10019. Walter
M. Epstein, Esq., a member of the firm, owns 10,000 shares of Common Stock and
Davis & Gilbert LLP owns 88,129 shares of Common Stock.


                                       12
<PAGE>

                                    EXPERTS

      The consolidated financial statements as of June 30, 1998 and 1997 and for
the years then ended incorporated by reference in this prospectus, have been
incorporated herein in reliance on the report, which contains an explanatory
paragraph relating to the Company's ability to continue as a going concern, of
Rothstein, Kass & Company, P.C., independent accountants given on the authority
of that firm as experts in accounting and auditing.


                                       13
<PAGE>

================================================================================
Until February 16, 1999, all dealers that effect transactions in these
securities may be required to deliver a prospectus.

We have not authorized any person to give any information or to make any
representations other than those contained in this prospectus. You must not rely
upon any information or representation not contained or incorporated by
reference in this prospectus as if we had authorized it. If any person does make
a statement that differs from what is in this prospectus, you should not rely on
it. This prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any securities other than the securities to which they relate nor
does this prospectus constitute an offer to sell or the solicitation of an offer
to buy securities in any state or other jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction. The
information contained in this prospectus is accurate as of the date of its
cover. When we deliver this prospectus or make a sale pursuant to this
prospectus, we are not implying that the information is current as of the date
of the delivery of the sale.

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

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

Where You Can Find More Information .......................................    2
Incorporation of Certain Information by Reference .........................    2
Prospectus Summary ........................................................    4
Risk Factors ..............................................................    7
Use of Proceeds ...........................................................    9
Selling Stockholders ......................................................    9
Plan of Distribution ......................................................   12
Disclosure of Commission Position on Indemnification For Securities Act
 Liabilities ..............................................................   12
Legal Matters .............................................................   13
Experts ...................................................................   13

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


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

                                2,628,175 Shares
                                           

                                 PARADISE MUSIC
                                       &
                                 ENTERTAINMENT,
                                      INC.
                                           

                                  Common Stock
                                           
                                           
                                ----------------
                                           
                                   PROSPECTUS

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

                                           
                                 January 7, 1999
                                           
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