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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-QSB

(Mark One)



|þ | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended August 31, 2006



| ̈ | Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
|- | --------------------------------------------------------------------------------

For the transition period  to

Commission
File Number 000-29901

PUBLIC MEDIA WORKS, INC.

(Exact name of small business issuer as specified in its charter)



|                                                              |  |                                  
|------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                      |  | 98-0220849                       
|(State or other jurisdiction ofincorporation or organization) |  | (IRS Employer Identification No.)

14759 Oxnard Street

Van Nuys, California 91411

(Address of principal executive offices)

818-904-9029

(Issuers telephone number,

including area code)





---

(Former name, former address and former fiscal year, if changed since last report)

Check
whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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   þ     NO ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): YES ̈NO  þ

On October 9, 2006, the registrant had outstanding 37,189,257 shares of Common Stock, which is the registrants only class of common equity.

Transitional Small Business Disclosure Format (Check one): Yes ̈No  þ



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##### Table of Contents

PUBLIC MEDIA WORKS, INC. AND SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED AUGUST 31, 2006



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PUBLIC MEDIA WORKS, INC. AND SUBSIDIARY

TABLE OF CONTENTS



|                                           |  |     
|------------------------------------------ |  | ----
|                                           |  | Page
|Financial Statements:                      |  |     
|Consolidated Balance Sheets                |  | 4   
|Consolidated Statements of Operations      |  | 5-6 
|Consolidated Statements of Cash Flows      |  | 7-8 
|Notes to Consolidated Financial Statements |  | 9-17



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##### Table of Contents

PART I



|Item 1. | Financial Statements.
|------- | ---------------------

PUBLIC MEDIA WORKS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS



|                                                                                                               |  |                |            |   |                  |   |            |  
|-------------------------------------------------------------------------------------------------------------- |  | -------------- | ---------- | - | ---------------- | - | ---------- | -
|                                                                                                               |  | August 31,2006 |            |   | February 28,2006 |  
|Assets                                                                                                         |  |                |            |   |                  |   |            |  
|Current Assets:                                                                                                |  |                |            |   |                  |   |            |  
|Cash                                                                                                           |  | $              | 2,087      |   |                  | $ | 391        |  
|Accounts receivable, less allowance for doubtful accounts of $-0-                                              |  |                |           |   |                  |   | 994        |  
|                                                                                                               |  |                |            |   |                  |   |            |  
|Total current assets                                                                                           |  |                | 2,087      |   |                  |   | 1,385      |  
|                                                                                                               |  |                |            |   |                  |   |            |  
|Property and equipment, net                                                                                    |  |                | 4,109      |   |                  |   | 9,109      |  
|                                                                                                               |  |                |            |   |                  |   |            |  
|Other Assets:                                                                                                  |  |                |            |   |                  |   |            |  
|Film development costs                                                                                         |  |                | 66,500     |   |                  |   | 66,500     |  
|Investment in limited liability company                                                                        |  |                | 46,363     |   |                  |   | 46,363     |  
|                                                                                                               |  |                |            |   |                  |   |            |  
|Total other assets                                                                                             |  |                | 112,863    |   |                  |   | 112,863    |  
|                                                                                                               |  |                |            |   |                  |   |            |  
|Total Assets                                                                                                   |  | $              | 119,059    |   |                  | $ | 123,357    |  
|                                                                                                               |  |                |            |   |                  |   |            |  
|Liabilities and Stockholders Equity                                                                           |  |                |            |   |                  |   |            |  
|Current Liabilities:                                                                                           |  |                |            |   |                  |   |            |  
|Accounts payable and accrued expenses                                                                          |  | $              | 120,845    |   |                  | $ | 148,854    |  
|Accrued interest                                                                                               |  |                |           |   |                  |   | 2,036      |  
|Accrued interest, stockholders                                                                                 |  |                | 199,113    |   |                  |   | 178,229    |  
|Deferred revenue                                                                                               |  |                | 2,500      |   |                  |   |           |  
|Note payable, line of credit, related party                                                                    |  |                | 182,622    |   |                  |   | 182,622    |  
|Notes payable, stockholders                                                                                    |  |                | 551,452    |   |                  |   | 674,477    |  
|Notes payable                                                                                                  |  |                |           |   |                  |   | 68,155     |  
|                                                                                                               |  |                |            |   |                  |   |            |  
|Total current liabilities                                                                                      |  |                | 1,056,532  |   |                  |   | 1,254,373  |  
|                                                                                                               |  |                |            |   |                  |   |            |  
|Stockholders Equity:                                                                                          |  |                |            |   |                  |   |            |  
|Common stock, $.0001 par value 100,000,000 shares authorized, 37,189,257 and 30,818,991 issued and outstanding |  |                | 3,719      |   |                  |   | 3,082      |  
|Additional paid-in capital                                                                                     |  |                | 2,871,947  |   |                  |   | 2,525,999  |  
|Accumulated deficit                                                                                            |  |                | (3,813,139 | ) |                  |   | (3,660,097 | )
|                                                                                                               |  |                |            |   |                  |   |            |  
|Total Stockholders Equity                                                                                     |  |                | (937,473   | ) |                  |   | (1,131,016 | )
|                                                                                                               |  |                |            |   |                  |   |            |  
|Total Liabilities and Stockholders Equity                                                                     |  | $              | 119,059    |   |                  | $ | 123,357    |  
|                                                                                                               |  |                |            |   |                  |   |            |  

The accompanying notes are an integral part of the financial statements.



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PUBLIC MEDIA WORKS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS



|                             |  |                                            |         |   |                                        |   |          |  
|---------------------------- |  | ------------------------------------------ | ------- | - | -------------------------------------- | - | -------- | -
|                             |  | For the Three Months Ended August 31, 2006 |         |   | For theThree MonthsEndedAugust 31,2005 |  
|Revenues                     |  | $                                          |        |   |                                        | $ |         |  
|                             |  |                                            |         |   |                                        |   |          |  
|Operating Expenses:          |  |                                            |         |   |                                        |   |          |  
|Advertising and promotion    |  |                                            |        |   |                                        |   | 7,540    |  
|Professional fees            |  |                                            | 22,674  |   |                                        |   | 38,073   |  
|Investor relations           |  |                                            |        |   |                                        |   | 60,000   |  
|Listing fees                 |  |                                            |        |   |                                        |   | 2,250    |  
|Office expenses              |  |                                            | 30      |   |                                        |   | 217      |  
|Rent                         |  |                                            | 5,400   |   |                                        |   | 2,700    |  
|Salaries                     |  |                                            | 25,000  |   |                                        |   | (3,443   | )
|Telephone and utilities      |  |                                            | 1,652   |   |                                        |   | 2,502    |  
|Consulting costs             |  |                                            |        |   |                                        |   | 34,050   |  
|Web site development costs   |  |                                            | (2,175  | ) |                                        |   | 12,275   |  
|Depreciation                 |  |                                            | 2,500   |   |                                        |   | 3,000    |  
|Travel and entertainment     |  |                                            | 461     |   |                                        |   | 18       |  
|Other                        |  |                                            | 636     |   |                                        |   | 795      |  
|                             |  |                                            |         |   |                                        |   |          |  
|Total operating expenses     |  |                                            | 56,178  |   |                                        |   | 159,977  |  
|                             |  |                                            |         |   |                                        |   |          |  
|Operating loss               |  |                                            | (56,178 | ) |                                        |   | (159,977 | )
|                             |  |                                            |         |   |                                        |   |          |  
|Other income (expense):      |  |                                            |         |   |                                        |   |          |  
|Interest expense             |  |                                            | (15,243 | ) |                                        |   | (14,822  | )
|                             |  |                                            |         |   |                                        |   |          |  
|Total other income (expense) |  |                                            | (15,243 | ) |                                        |   | (14,822  | )
|                             |  |                                            |         |   |                                        |   |          |  
|Loss before income taxes     |  |                                            | (71,421 | ) |                                        |   | (174,799 | )
|Provision for income taxes   |  |                                            |        |   |                                        |   |         |  
|                             |  |                                            |         |   |                                        |   |          |  
|Net loss                     |  | $                                          | (71,421 | ) |                                        | $ | (174,799 | )
|                             |  |                                            |         |   |                                        |   |          |  
|Net loss per share           |  | $                                          |        |   |                                        | $ | (.01     | )
|                             |  |                                            |         |   |                                        |   |          |  

The accompanying notes are an integral part of the financial statements.



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PUBLIC MEDIA WORKS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS



|                             |  |                                      |          |   |                                      |   |          |  
|---------------------------- |  | ------------------------------------ | -------- | - | ------------------------------------ | - | -------- | -
|                             |  | For the SixMonthsEndedAugust 31,2006 |          |   | For the SixMonthsEndedAugust 31,2005 |  
|Revenues                     |  | $                                    |         |   |                                      | $ |         |  
|                             |  |                                      |          |   |                                      |   |          |  
|Operating Expenses:          |  |                                      |          |   |                                      |   |          |  
|Advertising and promotion    |  |                                      |         |   |                                      |   | 17,170   |  
|Auto expenses                |  |                                      |         |   |                                      |   | 3,230    |  
|Professional fees            |  |                                      | 46,179   |   |                                      |   | 104,294  |  
|Investor relations           |  |                                      |         |   |                                      |   | 105,000  |  
|Listing fees                 |  |                                      | 1,680    |   |                                      |   | 4,600    |  
|Office expenses              |  |                                      | 68       |   |                                      |   | 3,610    |  
|Rent                         |  |                                      | 10,800   |   |                                      |   | 5,400    |  
|Salaries                     |  |                                      | 25,000   |   |                                      |   | 94,121   |  
|Telephone and utilities      |  |                                      | 5,255    |   |                                      |   | 4,957    |  
|Consulting costs             |  |                                      | 9,750    |   |                                      |   | 45,290   |  
|Web site development costs   |  |                                      | 14,381   |   |                                      |   | 38,100   |  
|Depreciation                 |  |                                      | 5,000    |   |                                      |   | 6,000    |  
|Travel and entertainment     |  |                                      | 2,578    |   |                                      |   | 4,214    |  
|Other                        |  |                                      | 1,023    |   |                                      |   | 4,534    |  
|                             |  |                                      |          |   |                                      |   |          |  
|Total operating expenses     |  |                                      | 121,714  |   |                                      |   | 440,520  |  
|                             |  |                                      |          |   |                                      |   |          |  
|Operating loss               |  |                                      | (121,714 | ) |                                      |   | (440,520 | )
|                             |  |                                      |          |   |                                      |   |          |  
|Other income (expense):      |  |                                      |          |   |                                      |   |          |  
|Interest expense             |  |                                      | (30,528  | ) |                                      |   | (30,031  | )
|                             |  |                                      |          |   |                                      |   |          |  
|Total other income (expense) |  |                                      | (30,528  | ) |                                      |   | (30,031  | )
|                             |  |                                      |          |   |                                      |   |          |  
|Loss before income taxes     |  |                                      | (152,242 | ) |                                      |   | (470,551 | )
|Provision for income taxes   |  |                                      | 800      |   |                                      |   | 1,600    |  
|                             |  |                                      |          |   |                                      |   |          |  
|Net loss                     |  | $                                    | (153,042 | ) |                                      | $ | (472,151 | )
|                             |  |                                      |          |   |                                      |   |          |  
|Net loss per share           |  | $                                    | (.01     | ) |                                      | $ | (.02     | )
|                             |  |                                      |          |   |                                      |   |          |  

The accompanying notes are an integral part of the financial statements.



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PUBLIC MEDIA WORKS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                        |  |                                      |          |   |                                      |   |          |  
|----------------------------------------------------------------------- |  | ------------------------------------ | -------- | - | ------------------------------------ | - | -------- | -
|                                                                        |  | For theSix MonthsEndedAugust 31,2006 |          |   | For theSix MonthsEndedAugust 31,2005 |  
|Cash flows from operating activities:                                   |  | $                                    | (153,042 | ) |                                      | $ | (472,151 | )
|Net loss                                                                |  |                                      |          |   |                                      |   |          |  
|Adjustments to reconcile net loss to cash used by operating activities: |  |                                      |          |   |                                      |   |          |  
|Depreciation                                                            |  |                                      | 5,000    |   |                                      |   | 6,000    |  
|Common stock issued for services and interest expense                   |  |                                      | 34,750   |   |                                      |   | 370,377  |  
|Accounts payable and accrued expenses converted to note payable         |  |                                      | 11,680   |   |                                      |   | 180,000  |  
|Decrease in accounts receivable                                         |  |                                      | 994      |   |                                      |   | 3,876    |  
|Decrease in accounts payable and accrued expenses                       |  |                                      | (9,161   | ) |                                      |   | (140,095 | )
|Increase in deferred revenue                                            |  |                                      | 2,500    |   |                                      |   |         |  
|                                                                        |  |                                      |          |   |                                      |   |          |  
|Net cash used by operating activities:                                  |  |                                      | (107,279 | ) |                                      |   | (51,993  | )
|                                                                        |  |                                      |          |   |                                      |   |          |  
|Cash flows from investing activities:                                   |  |                                      |          |   |                                      |   |          |  
|Investment in Car Pool Guy Partners, LLC                                |  |                                      |         |   |                                      |   | (19,061  | )
|                                                                        |  |                                      |          |   |                                      |   |          |  
|Net cash used by investing activities                                   |  | $                                    |         |   |                                      | $ | (19,061  | )
|                                                                        |  |                                      |          |   |                                      |   |          |  

The accompanying notes are an integral part of the financial statements.



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PUBLIC MEDIA WORKS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                  |  |                                      |         |   |                                      |   |         |  
|----------------------------------------------------------------- |  | ------------------------------------ | ------- | - | ------------------------------------ | - | ------- | -
|                                                                  |  | For theSix MonthsEndedAugust 31,2006 |         |   | For theSix MonthsEndedAugust 31,2005 |  
|Cash flows from financing activities:                             |  |                                      |         |   |                                      |   |         |  
|Issuance of common stock                                          |  | $                                    | 50,000  |   |                                      | $ |        |  
|Proceeds from related party borrowings                            |  |                                      | 59,975  |   |                                      |   | 59,923  |  
|Repayment of related party borrowings                             |  |                                      | (1,000  | ) |                                      |   |        |  
|                                                                  |  |                                      |         |   |                                      |   |         |  
|Net cash provided by financing activities                         |  |                                      | 108,975 |   |                                      |   | 59,923  |  
|                                                                  |  |                                      |         |   |                                      |   |         |  
|Net increase (decrease) in cash                                   |  |                                      | 1,696   |   |                                      |   | (11,131 | )
|Cash, beginning of period                                         |  |                                      | 391     |   |                                      |   | 11,560  |  
|                                                                  |  |                                      |         |   |                                      |   |         |  
|Cash, end of period                                               |  | $                                    | 2,087   |   |                                      | $ | 429     |  
|                                                                  |  |                                      |         |   |                                      |   |         |  
|Interest paid                                                     |  | $                                    |        |   |                                      | $ |        |  
|                                                                  |  |                                      |         |   |                                      |   |         |  
|Income taxes paid                                                 |  | $                                    | 800     |   |                                      | $ |        |  
|                                                                  |  |                                      |         |   |                                      |   |         |  
|Common shares issued to pay company expenses                      |  | $                                    | 34,750  |   |                                      | $ | 366,465 |  
|                                                                  |  |                                      |         |   |                                      |   |         |  
|Common shares issued to retire notes payable and accrued interest |  | $                                    | 261,834 |   |                                      | $ | 328,912 |  
|                                                                  |  |                                      |         |   |                                      |   |         |  
|Accounts payable and accrued expenses converted to note payable   |  | $                                    | 11,680  |   |                                      | $ | 180,000 |  
|                                                                  |  |                                      |         |   |                                      |   |         |  

The accompanying notes are an integral part of the financial statements.



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PUBLIC MEDIA WORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|1. | Summary of Business and Significant Accounting Policies
|-- | -------------------------------------------------------



| | a. | Summary of Business
| | -- | -------------------

Public Media Works, Inc.
(formerly Burnam Management, Inc.) was incorporated under the laws of the State of Delaware on March 3, 2000. The Company was formed to seek business opportunities. On August 30, 2003, the Company entered into a share exchange agreement
with Public Media Works, Inc., a private company formed to pursue opportunities in the film/TV and entertainment industry. The Company plans to utilize the concept of interactive marketing. Interactive marketing is a new method to market, promote
and produce films. The new marketing method will presell product placement in films to help fund production costs in the initial stages. The share exchange agreement is essentially a reverse merger with Public Media Works, Inc., the surviving
company.



| | b. | Principles of Consolidation
| | -- | ---------------------------

The consolidated
financial statements contain the accounts of the company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated.



| | c. | Cash Flows
| | -- | ----------

For purposes of the statement of cash
flows, the Company considers all highly liquid investments purchased with a maturity of three months or less to be cash or cash equivalents.



| | d. | Accounts Receivable
| | -- | -------------------

Accounts receivable is
recorded at the amount the Company expects to collect on balances outstanding at year-end. Management closely monitors outstanding balances and writes off, as of year-end, all balances that are deemed uncollectible by the time the financial
statements are issued.



| | e. | Advertising and Promotions
| | -- | --------------------------

The Company expenses
all advertising and promotion costs as incurred.



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| | f. | Property and Equipment
| | -- | ----------------------

Property and equipment are
stated at cost less accumulated depreciation. Depreciation is provided using straight-line methods based on estimated useful lives of five to seven years.



| | g. | Revenue Recognition
| | -- | -------------------

Revenue is recognized on the
accrual basis of accounting when earned. The Companys primary business generates revenue from selling movie scripts and producing movies and television shows. Revenue is recognized in accordance with the provisions of Statement of Position
00-2, Accounting by Producers or Distributors of Films. Revenue is recognized only after all of the following conditions are met.



| | 1. | Persuasive evidence of a sale or licensing arrangement with a customer exists.
| | -- | ------------------------------------------------------------------------------



| | 2. | The film is complete and, in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | The license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale.
| | -- | -----------------------------------------------------------------------------------------------------------------



| | 4. | The arrangement fee is fixed or determinable.
| | -- | ---------------------------------------------



| | 5. | Collection of the arrangement fee is reasonably assured.
| | -- | --------------------------------------------------------



| | h. | Net Loss Per Share
| | -- | ------------------

The net loss per share
calculation is based on the weighted average number of shares outstanding during the period.



| | i. | Use of Estimates
| | -- | ----------------

The preparation of financial
statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.



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| | j. | Fair Value of Financial Instruments
| | -- | -----------------------------------

The amounts
reported for cash, receivables, accounts payable, and other financial instruments, none of which are held for trading purposes, are considered to approximate fair values based upon comparable market information available at the respective balance
sheet date.



|2. | Revenues
|-- | --------

For the six months ended August 31,
2006 and 2005, the Company had no revenue.



|3. | Film Development Costs
|-- | ----------------------

At August 31, 2006 and
February 28, 2006, the Company has capitalized $66,500 for film development costs. On September 6, 2005, the Company purchased the rights to A Taste of History and Run N Gun for $62,500 from World Equities,
LLC. A shareholder and director of the Company is also a member of World Equities, LLC. During 2004, the Company paid $4,000 for a movie script called The Action. The Company intends to develop the screenplays into feature films or a
television series within the next three years.



|4. | Investment in Limited Liability Company
|-- | ---------------------------------------

At
August 31, 2006 and February, 28, 2006, the Company has an investment of $46,363 in Car Pool Guy Partners, LLC. On October 15, 2004, the Company contributed its Car Pool Guy screenplay to the LLC with a capitalized cost of
$4,000. For contribution of the screenplay and production and marketing of the movie, the Company received a producing fee of 10% of the final production budget of $500,000. In addition, the Company will receive 40% of the remaining profit of the
film after 10% is paid to the actors and $700,000 is returned to the original investors of which the Company will receive $100,000.

The
Company is to invest a total of $50,000 into the project. At August 31, 2006, $42,363 has been invested by the Company plus the $4,000 capitalized cost of the screenplay for a total investment of $46,363.

Two stockholders of the Company are also one-third owners each in the LLC. The investment has been accounted for by the cost method because the
Companys contributions are approximately 10% of the equity in the LLC.



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|5. | Property and Equipment
|-- | ----------------------

Property and equipment
comprises the following at August 31, 2006 and February 28, 2006:



|                                     |  |                |        |                  |   |       
|------------------------------------ |  | -------------- | ------ | ---------------- | - | ------
|                                     |  | August 31,2006 |        | February 28,2006
|Furniture and leasehold improvements |  | $              | 2,554  |                  | $ | 2,554 
|Computer and office equipment        |  |                | 54,836 |                  |   | 54,836
|                                     |  |                |        |                  |   |       
|                                     |  |                | 57,390 |                  |   | 57,390
|Less: accumulated depreciation       |  |                | 53,281 |                  |   | 48,281
|                                     |  |                |        |                  |   |       
|Property and equipment, net          |  | $              | 4,109  |                  | $ | 9,109 
|                                     |  |                |        |                  |   |       

Depreciation expense for the periods ended August 31, 2006 and 2005 was $5,000 and $6,000,
respectively.



|6. | Note Payable, Line of Credit, Related Party
|-- | -------------------------------------------

On
August 19, 2004, the Company obtained a $250,000 unsecured line of credit with Mainas Development Corporation (a company owned by a shareholder of Public Media Works, Inc.) to be drawn down upon as needed with an interest rate of 9%. The line
of credit expired on August 18, 2005. At August 31, 2006 and February 28, 2006, the outstanding balance is $182,662.



|7. | Note Payable, Stockholders
|-- | --------------------------

Stockholder notes
payable consist of the following at August 31, 2006 and February 28, 2006:



|                                                                                                                                                        |  |                |         |                  |   |        
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ---------------- | - | -------
|                                                                                                                                                        |  | August 31,2006 |         | February 28,2006
|Note payable to an individual, also a stockholder of the Company, interest is being charged at 8% on $340,000, the note is unsecured and due
on demand. |  | $              | 449,062 |                  | $ | 411,062
|Note payable to an individual, also a stockholder of the Company, the note is unsecured, due on demand and non-interest
bearing.                        |  |                | 16,715  |                  |   | 16,715 
|Note payable to an individual, also a stockholder of the Company, interest is being charged at 6%, the note is unsecured and due July 17,
2006.         |  |                |        |                  |   | 180,000



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|                                                                                                                                                         |  |                |         |                  |   |        
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ---------------- | - | -------
|                                                                                                                                                         |  | August 31,2006 |         | February 28,2006
|Note payable to an individual, also an officer and stockholder of the Company, interest is being charged at 6%, the note is unsecured and due
on demand. |  |                | 4,975   |                  |   |       
|Note payable to an individual, also a stockholder of the Company, interest is being charged at 6%, the note is unsecured and due on
demand.              |  |                | 10,000  |                  |   | 10,000 
|Note payable to an individual, also a stockholder of the Company, interest is being charged at 6%, the note is unsecured and due on
demand.              |  |                | 61,700  |                  |   | 56,700 
|Note payable to an individual, also a stockholder of the Company, the note is unsecured, non-interest bearing and due July 1,
2006.                      |  |                | 9,000   |                  |   |       
|                                                                                                                                                         |  |                |         |                  |   |        
|                                                                                                                                                         |  | $              | 551,452 |                  | $ | 674,477
|                                                                                                                                                         |  |                |         |                  |   |        



|8. | Notes Payable
|-- | -------------

Notes payable consist of the
following at August 31, 2006 and February 28, 2006:



|                                                                                                                 |  |                |   |                  |   |       
|---------------------------------------------------------------------------------------------------------------- |  | -------------- | - | ---------------- | - | ------
|                                                                                                                 |  | August 31,2006 |   | February 28,2006
|Note payable to an individual, interest is being charged at 6%, the note is unsecured and due September 6, 2006. |  | $              |  |                  | $ | 44,155
|Note payable to an individual, interest is being charged at 6%, the note is unsecured and due October 1, 2005.   |  |                |  |                  |   | 24,000
|                                                                                                                 |  |                |   |                  |   |       
|                                                                                                                 |  | $              |  |                  | $ | 68,155
|                                                                                                                 |  |                |   |                  |   |       



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|9. | Issuance of Common Stock
|-- | ------------------------

The Company is authorized
to issue 100,000,000 shares of common stock at $.0001 par value.

On May 4, 2005, the Company issued 1,100,000 shares of its common

stock to two companies that are providing consulting services for the period July 11, 2004 through July 10, 2005. The consulting
services are valued at $120,000 or $.109 per share.

Effective April 26, 2005, the Company entered into a promissory note conversion
agreement. A $100,000 note payable and $3,912 of accrued interest were converted into 259,780 shares of common stock at $.40 per share.

On
May 31, 2005, the Company paid for $56,765 of legal fees by issuing 141,911 shares of common stock at $.40 per share.

Effective
June 13, 2005, the Company paid $60,000 of investor relations expense by issuing 150,000 shares of common stock at $.40 per share.

On
July 18, 2005, the Company entered into a promissory note conversion agreement. A $225,000 note payable was converted into 1,700,000 shares of common stock at $.132 per share. In addition, the Company issued 600,000 shares of common stock to a
former employee as part of a separation and general release agreement. The shares were valued at $.13 per share or $78,000.

In July 2005,
the Company paid $49,700 of expenses by issuing 206,800 shares of common stock. $23,000 or $.23 per share was reported as consulting expense and $26,700 or $.25 per share was reported as professional fees in the accompanying statement of operations.

On September 6, 2005, the Company issued 250,000 shares of common stock to acquire 100% interest in two shows, A Taste in
History and Run N Gun. Film development costs were capitalized at $62,500 or $.25 per share.

In October 2005, the
Company issued 858,000 shares of its common stock at $.10 per share for a total amount of $85,800.

On April 6, 2006, the Company paid
$9,750 of consulting expense by issuing 150,000 shares of common stock at $.065 per share.

On April 14, 2006, the Company converted
$34,154 of promissory note principal into 166,666 shares of common stock at $.20 per share.

On June 7, 2006, the Company issued
1,000,000 shares of its common stock at $.05 per share for a total of $50,000 to a shareholder and director of the Company.



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##### Table of Contents

On July 18, 2006, the Company converted $50,000 of related party promissory note principal into
1,000,000 shares of common stock at $.05 per share.

On July 18, 2006, the Company issued 500,000 shares of common stock to its
President and CEO for recognition of work done on numerous projects and all related products, trailers, pilots, scripts, ideas, plans, research, designs, events, sponsorship agreements and promotional materials. The shares were valued at $.05 per
share or $25,000. The cost was recorded as salary expense in the accompanying consolidated statements of operations.

On July 18, 2006,
the Company converted $177,680 of promissory note principal from a related-party debt holder into 3,553,600 shares of common stock at $.05 per share.



|10. | Stock Options
|--- | -------------

On October 1, 2005, the Company
issued stock options to three members of its management. Each of the three individuals received the right to purchase up to 1,000,000 shares of the Companys common stock at $.25 per share. The stock options expire on October 1, 2008 or
six months after the individual terminates its affiliation with the Companys board of directors, whichever comes first. In addition, the Company granted its legal counsel stock options to purchase up to 500,000 shares of its common stock at
$.25 per share. These stock options expire on October 1, 2008. All of the stock options vested on October 1, 2005.

The
compensation cost that has been charged against income for the stock options issued was $-0- for the six months ending August 31, 2006 and the year ending February 28, 2006.

The fair value of each option award is estimated on the date of grant using the Black Scholes option valuation model that uses the assumptions noted in
the following table. Because the Black Scholes option valuation model incorporate ranges of assumptions for inputs, those ranges are disclosed. Expected volatilities are based on implied volatilities from traded options on the Companys stock,
historical volatility of the Companys stock, and other factors. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted is derived from estimates
and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.



15



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##### Table of Contents

|                            |  |                                 
|--------------------------- |  | --------------------------------
|                            |  | Six months endingAugust 31, 2006
|Expected volatility         |  | .1%                             
|Weighted-average volatility |  | .1%                             
|Expected dividends          |  | 0%                              
|Expected terms (in years)   |  | 1-3                             
|Risk-free rate              |  | 3.5%-6%                         

A summary of option activity under the Plan as of August 31, 2006, and changes during the six months ending
August 31, 2006 is presented below:



|                                 |  |            |   |  |                               |     |                                          |     |                         |   |  
|-------------------------------- |  | ---------- | - |  | ----------------------------- | --- | ---------------------------------------- | --- | ----------------------- | - | -
|Options                          |  | Shares     |   |  | Weighted-AverageExercisePrice |     | Weighted-AverageRemainingContractualTerm |     | AggregateIntrinsicValue
|Outstanding at February 28, 2006 |  | 3,500,000  |   |  | $                             |    |                                          |     |                         |   |  
|Granted                          |  | -0-        |   |  |                               | .25 |                                          |     |                         |   |  
|Exercised                        |  | -0-        |   |  |                               | -0- |                                          |     |                         |   |  
|Forfeited or expired             |  | (1,000,000 | ) |  |                               | .25 |                                          |     |                         |   |  
|                                 |  |            |   |  |                               |     |                                          |     |                         |   |  
|Outstanding at August 31, 2006   |  | 2,500,000  |   |  | $                             | .25 |                                          | 2.3 |                         | $ | 
|                                 |  |            |   |  |                               |     |                                          |     |                         |   |  
|Exercisable at August 31, 2006   |  | 2,500,000  |   |  | $                             | .25 |                                          | 2.3 |                         | $ | 
|                                 |  |            |   |  |                               |     |                                          |     |                         |   |  

The weighted-average grant-date fair value of options granted during the six months ending
August 31, 2006 was $-0-. The total intrinsic value of options exercised during the six months ended August 31, 2006 was $-0-.



|11. | Income Taxes
|--- | ------------

The Company has had no taxable income
under Federal or State tax laws. A state minimum tax of $800 and $1,600 has been reported in the statement of operations for the periods ended August 31, 2006 and 2005, respectively. The Company has loss carryforwards totaling $2,792,126 that
may be offset against future federal income taxes. If not used, the carryforwards will expire between 2020 and 2026. Due to the Company incurring large net operating losses, a valuation allowance has been provided to reduce the deferred tax assets
from the net operating losses to zero. Therefore, there are no tax benefits recognized in the accompanying statement of operations.



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##### Table of Contents

|12. | Going Concern
|--- | -------------

As shown in the accompanying
financial statements, the Company incurred a net loss of $153,042 during six months ended August 31, 2006 and accumulated losses of $3,813,139 since opening for business in 2000. The Companys current liabilities exceed its current assets
by $1,054,445 at August 31, 2006. These factors create an uncertainty as to the Companys ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the success of raising additional
capital through the issuance of common stock and the ability to generate sufficient operating revenue. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.



|13. | Litigation
|--- | ----------

The Company has had a claim filed
against them for non-payment of services provided. The Company has accrued $50,000 in the August 31, 2006 financial statement for services provided for web site development and maintenance. The Company was not satisfied with the services and
has tried to cancel the contract. If the Company cannot settle the claim for the amount accrued, an additional $115,500 could be owed. In October 2006, the Company and the claimant exchanged email correspondence outlining the following agreed upon
settlement terms to be memorialized in a formal settlement agreement: (i) the total outstanding balance owed by the Company is $50,000; (ii) a payment by the Company in the amount of $5,000 to be made during the week of
October 2nd; (iii) monthly payments by the Company of $500 for 11 months after the signing of a settlement
agreement; (iv) a payment of $15,000 on the 12thmonth after the signing of a settlement agreement; (v) in
the 13thmonth after the signing of a settlement agreement, the claimant has the right to negotiate an increased
monthly payment depending on the financial resources of the Company at such time; (vi) the total outstanding balance of $50,000 is to be paid in full during or before October 2008; and (vii) the Companys non-compliance with the
agreed upon settlement terms will permit the claimant to re-file the March 2006 lawsuit. The Company has made the $5,000 payment to the claimant.

On July 11, 2006, and on subsequent dates thereafter, the Company received a demand letter from a third party for non-payment of $10,500 relating to certain financial information services. The demand letter states that legal action
will be instituted against the Company if such amount is not paid. The $10,500 is included in accounts payable in the August 31, 2006 financial statements.



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis or Plan of Operation.
|------- | ----------------------------------------------------------

The following discussion and analysis of should be read in conjunction with its financial statements and the related notes. This discussion contains forward-looking statements based upon current expectations that involve risks and
uncertainties, such as its plans, objectives, expectations and intentions. Its actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements.

Results of Operations

The Company was successful during the quarter
in continuing to reduce it operating expenses. The Companys operating expenses for the quarter and six month periods ending August 31, 2006 were $56,178 and $121,714, respectively, compared to operating expenses of $159,977 and $440,520,
respectively, for the quarter and six month periods ending August 31, 2005. This decrease in operating expenses is largely attributed to the decrease in salary expenses, and a reduction in professional fees, investor relations costs, consulting
costs and advertising and promotion costs. The Companys general monthly expenses during the quarter and six months ending August 31, 2006 were approximately $18,000 and $20,000, respectively, which is a significant reduction from the
general monthly expenses during the quarter and six month ending August 31, 2005 of approximately $53,000 and $73,000, respectively.

The Company was
also able to reduce its net loss for the quarter and six month periods ending August 31, 2006. The Company had a net loss of ($71,421) and ($153,042) for the quarter ending and six months ending August 31, 2006, respectively, compared to a
net loss of ($174,799) and ($472,151), respectively, for the quarter ending and six months ending August 31, 2005. The reduction of net loss is principally attributed to the reduction in operating expenses discussed above. The Company reported
a cumulative net loss of ($3,813,139) from March 3, 2000 (inception of Burnam Management) through August 31, 2006.

The Companys net cash
used by operating activities increased from ($51,993) for the six months ending August 31, 2005, to ($107,279) for the six months ending August 31, 2006. This increase was primarily the result of the Companys payment of operating
expenses with cash, loaned by its officers and directors, instead of the issuance of common stock to pay operating expenses.

The Company generated no
revenues during the quarter and six month periods ending August 31, 2006, and generated no revenues during the quarter and six month periods ending August 31, 2005. The Company did, however, receive an initial $2,500 payment from the Game
Show Network during the quarter ending August 31, 2006 for the right to develop the Companys game show concept entitled Carry Your Weight, with an additional $2,500 payment expected to be paid upon the completion of the
development of the concept. The Company expects to continue to work with the Game Show Network to further develop the concept.

The Companys first
feature film Carpool Guy was released in October 2005. The Company funded the production of the film by entering into an Exclusive Production Agreement in October 2004 with Carpool Partners LLC (the Carpool LLC). Pursuant to
the terms of the agreement, the Companys financing partner, Carpool LLC, owns 60% of the final production, and the Company owns 40%. The three members of Carpool LLC are Thomas Szabo, F. James McCarl and Michael Wittlin, each of whom own
30% of the LLC, and each of whom are stockholders and debtholders of the Company. The sales of the film have been limited and the Company has not received any revenues from the film sales and there can be no assurances the Company will ever receive
any revenues from film sales.



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The Company entered into a binding term sheet dated February 12, 2006 with Mr. Bernsen, Mr. Mainas, Bob
Billet, Van Billet, Denis Shusterman and Bella Web LLC for the formation of a new limited liability company to produce and distribute a screen play known as Bellacam.com. The name of the project has subsequently been changed to
Donna On Demand. Under the term sheet, the Company is obligated to fund up to $125,000 towards the further development of the project. Mr. Bernsen and Mr. Mainas have assigned to the Company any and all interest they may have
in the project or new limited liability company.

Outstanding Loan Repayment Obligations

To date, the Company has funded its operations primarily through the issuance of common stock in exchange for cash and services, and through unsecured loans from
stockholders and third parties. The Company was successful during the quarter in reducing the amount of its aggregate outstanding loan repayment obligations from $1,144,124 at May 31, 2006, to $933,187 at August 31, 2006, through the
conversion of debt into shares of Company common stock. As of August 31, 2006, the Company had the following outstanding loan repayment obligations:



| |  |  | On August 30, 2000, the Company and George Mainas entered into an unsecured promissory note in the principal amount of $340,000, bearing interest at 8%. As of August 31,
2006, the Company had an outstanding balance of $612,361 under the promissory note, including accrued interest. The promissory note is payable on demand. Mr. Mainas is a stockholder and a director of the Company.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On August 19, 2004, the Company entered into an unsecured line of credit with Mainas Development Corporation. The non-revolving line of credit has a maximum draw-down of
$250,000, bears interest of 9% annually, does not maintain an outstanding balance limitation, and is payable on demand. The outstanding balance on this account as of August 31, 2006 was $210,183, including accrued interest. Mr. Mainas and
Mainas Development Corporation made demand to the Company on March 31, 2005 for payment of all amounts due and owing by the Company under the unsecured promissory note and unsecured line of credit.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In May 2002 the Company entered into an unwritten, unsecured promissory obligation to Denis Schusterman, a stockholder, in exchange for his payment of approximately $16,000 in
general and administrative expenses on behalf of the Company. This obligation is payable upon demand and bears no interest. As of August 31, 2006, the outstanding balance under this obligation was $16,715.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In July 2005, F. James McCarl loaned the Company $10,000. The loan bears interest at 6% and is due on demand. As of August 31, 2006, the balance due to Mr. McCarl was
$10,691, including accrued interest. Mr. McCarl is a stockholder of the Company and a member of Carpool Guy LLC.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Thomas Szabo has loaned the Company $61,700 as of August 31, 2006. This loan bears interest at 6% and is due on demand. As of August 31, 2006, the balance due to
Mr. Szabo under this loan was $65,622, including accrued interest. Mr. Szabo is a stockholder of the Company and member of Carpool Guy LLC.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Companys former CEO/Chairman of the Board loaned the Company $44,155 pursuant to the terms of a Promissory Note dated April 2006, which was subsequently assigned to a
third party. In April 2006, the Company and the assignee of the Promissory Note agreed the Companys obligations under the Promissory Note could be satisfied in exchange for the Companys payment of $10,000 on or before July 1, 2006,
and the Companys issuance of 166,666 shares of Company Common Stock. As of August 31, 2006, the balance due under the Promissory Note is $9,000.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Mr. Bernsen, the Companys CEO, has loaned the Company $4,975 as of August 31, 2006. This loan bears interest at 6% and is due on demand. As of August 31, 2006,
the balance due to Mr. Bernsen under this loan was $5,735, including accrued interest.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Board of Directors of the Company has passed
a corporate resolution providing that 50% of all future Company revenues, or debt or equity financing proceeds, will be used to pay down the Companys obligations under these outstanding loan repayment obligations.



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Anticipated Revenue

The Company has several projects that may generate revenue during the current fiscal year, however, there can be no assurances that the Company will secure funding for such projects, or that such projects will result in any revenues.

Critical Accounting Policies

Our discussion and
analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. These principles require us
to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances. Estimated amounts may differ under different assumptions or conditions, and actual results could differ from the estimates. There are many critical accounting policies discussed
in the notes to our financial statements, including the following critical accounting policy that affects the judgments used in the preparation of our financial statements:

Revenue Recognition

Revenue is recognized by the Company on the accrual basis of accounting when earned. The
Companys primary business generates revenue from selling movie scripts, and developing and producing movies and television shows. Revenue is recognized in accordance with the provisions of Statement of Position 00-2, Accounting by Producers or
Distributors of Films. Revenue is recognized only after all of the following conditions are met:



| | (i) | Persuasive evidence of a sale or licensing arrangement with a customer exists;
| | --- | ------------------------------------------------------------------------------



| | (ii) | The film is complete and, in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery;
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | The license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale;
| | ----- | -----------------------------------------------------------------------------------------------------------------



| | (iv) | The arrangement fee is fixed or determinable; and
| | ---- | -------------------------------------------------



| | (v) | Collection of the arrangement fee is reasonably assured.
| | --- | --------------------------------------------------------

Liquidity

At August 31, 2006, our total assets were $119,059, compared to $123,357 at February 28, 2006. At August 31, 2006, our current assets
were $2,087 and our current liabilities were $1,056,532, as compared to current assets of $1,385 and current liabilities of $1,254,373 at February 28, 2006. Our stockholders equity was ($937,473) at August 31, 2006, compared to
stockholders equity of ($1,131,016) at February 28, 2006.

As of August 31, 2006, the Company had a cash balance of $2,087. Although the
Company has substantially minimized its monthly operating expenses, and Mr. Bernsen is not currently paid any cash salary, the Company will need to raise additional funds to satisfy the Companys total operating costs and continued
development of the Companys actual and potential revenue sources. The Company anticipates raising additional funds through debt, convertible debt, the sale of equity, or through advances and loans by the Companys officer and
directors as they have done in the past; provided, however, there can be no assurance as to whether, when, or upon what terms the Company will be able to consummate any financing, or whether such individuals will continue to make such advances or
loans to the Company. The Company may also enter into joint ventures with third parties to fund specific television and film projects

In December 2003, as
part of an overall transaction in which the Company was contemplating a potential acquisition, the Company loaned $125,000 to Old Tucson Company (Old Tucson) for its continued operations. The promissory note to Old Tucson matured on
June 20, 2004. The sole recourse of the



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Company for nonpayment of the note is the return of 312,500 shares Company Common Stock pledged by affiliates of Old Tucson to secure the obligations under
the promissory note. Old Tucson has not repaid the promissory note and the Company expects the pledged shares will be forfeited in satisfaction of the note in which event the shares of Company Common Stock will be cancelled.

Off-Balance Sheet Arrangements

The Company does not have any
off-balance sheet arrangements.

RISK FACTORS

In addition to the other information in this report, you should carefully consider the risks described below before investing in our publicly-traded securities. The risks described below are not the only ones facing us. Our business is
also subject to the risks that affect many other companies, such as competition, general economic conditions and geopolitical changes. Additional risks not currently known to us or that we currently believe are immaterial also may impair our
business operations and our liquidity.

Risks Related To Our Financial Condition

We Have A Limited Operating History, So It Will Be Difficult For Investors To Evaluate The Success Of Our Business Model and The Effectiveness of Our Management. We
Are Experiencing Significant Expenditures Related To Funding Our Operations, And We Are Currently Carrying a Net Loss. If Our Business Model Is Not Successful, Or We Are Unable To Generate Revenue, We May Not Become Profitable.

We have a limited operating history from which to evaluate our business and prospects. We have only earned $175,000 in revenue from our inception to August 31, 2006.
For the quarter ended August 31, 2006, we had a net loss of ($71,421). We had a cumulative net loss of ($3,813,139) for the period since inception at March 3, 2000 through August 31, 2006. We cannot assure you that our future
operations will be implemented successfully or that we will ever have profits. Moreover, we may not realize revenue from our current projects for a substantial period of time, if at all, which may result in our inability to continue financing our
operations. If we are unable to sustain our operations, we will be forced to cease operations entirely. Furthermore, we are experiencing the initial costs and uncertainties of a newly formed business, including additional expenditures, unforeseen
costs and difficulties, complications, and delays, all of which must be resolved and/or paid without the benefit of a predictable revenue stream. These risks and uncertainties include the following:



| |  |  | our business model and strategy are still evolving and are continually being reviewed and revised; and
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | we may not be able to successfully implement our business model and strategy.
| | - |  | -----------------------------------------------------------------------------

We cannot be sure that we will be successful in meeting these challenges and addressing these risks and uncertainties. If we are unable to do so, our business will not be successful.

Our Auditors Have Expressed Substantial Doubt Regarding Our Ability To Continue As A Going Concern. If We Are Unable To Continue As A Going Concern, We May Be
Required To Substantially Revise Our Business Plan or Cease Operations.

As of the date of our most recent annual audit, which included the fiscal years
ended February 28, 2006 and February 28, 2005, we had not generated sufficient revenues for our cash flow needs. As a result, our auditors have expressed substantial doubt about our ability to continue as a going concern. We are operating
at a net loss, and expect to continue to incur losses in the future. We have not established any other source of equity or debt financing other than that which is described in our discussion entitled



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Managements Discussion and AnalysisPlan of OperationsLiquidity. We cannot assure you that we will be able to obtain sufficient
funds to continue the development and pre-production of television shows and motion pictures, that we will be able to produce and sell our scripts, shows and motion pictures, or that our virtual studio will become self-funding. We also cannot assure
you that we will be able to generate sufficient revenue to fund our business. If we cannot continue as a going concern, we may need to substantially revise our business plan or cease operations.

To Satisfy Our Capital Requirements, We May Seek To Raise Funds In The Public or Private Capital Markets, Which May Not Be Given on Terms Favorable To Us, Or We May
Not Be Able To Raise Funds At All. In The Event That We Receive Funds on Undesirable Terms, Or Are Unable To Receive Additional Funds, We May Not Be Able To Fund Our Operations and Will Not Be Able to Continue As A Going Concern.

Our ability to raise additional funds in the public or private markets will be adversely affected if the results of our business operations continue to be unfavorable. We
may seek additional funding through equity financing, loans, or investments from new or existing stockholders. We cannot assure you that any such funding will be available to us, or if available, that it will be available on terms favorable to us.
If adequate funds are not available, we will not be able to complete the production of our developed projects. As a result, we may be required to discontinue our operations without obtaining any value for our scripts or projects under development.
If we are successful in obtaining additional funds, the terms of the financing may have the effect of diluting your interest in our Company.

We Are In
Default Under Our Debt Obligations, and If We Fail to Restructure Our Outstanding Indebtedness, The Lenders May Take Actions That Would Have Material Adverse Impacts On The Company.

The Company has significant outstanding indebtedness, and is in default under its obligations to repay a significant portion of its loan indebtedness. As of August 31, 2006, the Company has an aggregate
outstanding balance of $933,187 in loan repayment obligations (including accrued interest), all of which was past due or due on demand. The Company does not have the cash to pay its existing or future debt obligations. These events of default
provide the lenders with certain rights, including the right to institute an involuntary bankruptcy proceeding against the Company. To date, the lenders have not exercised any material creditors remedies. If they choose to exercise these
rights in the future, the Company may seek the protection afforded by Chapter 11 of the federal bankruptcy laws and any such exercise would have a material adverse effect on the Company. The Companys default on its debt obligations and
our potential need to seek protection under the federal bankruptcy laws raise substantial doubt about our ability to continue as a going concern.

The
Companys Common Stock Is Subject to the Penny Stock Rules.

The Companys common stock is subject to Rule 15g-1 through 15g-9 under the
Exchange Act, which imposes certain sales practice requirements on broker-dealers which sell the Companys common stock to persons other than established customers and accredited investors (generally, individuals with a net worth in
excess of $1,000,000 or annual incomes exceeding $200,000 (or $300,000 together with their spouses)). For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received the
purchasers written consent to the transaction prior to the sale. This rule adversely affects the ability of broker-dealers to sell our common stock and purchasers of our common stock to sell their shares of such common stock. Additionally, our
common stock is subject to the SEC regulations for penny stock. Penny stock includes any non-NASDAQ equity security that has a market price of less than $5.00 per share, subject to certain exceptions. The regulations require that prior
to any non-exempt buy/sell transaction in a penny stock, a disclosure schedule set forth by the SEC relating to the penny stock market must be delivered to the purchaser of such penny stock. This disclosure must include the amount of commissions
payable to both the broker-dealer and the registered representative and current price quotations for the common stock. The regulations also require that monthly statements be sent to



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holders of penny stock which disclose recent price information for the penny stock and information of the limited market for penny stocks. These requirements
adversely affect the market liquidity of our common stock.

Risks Related To Our Business

If Our Films and Television Shows Are Not Commercially Successful, We May Not Be Able To Generate Sufficient Revenue To Fund Our Operations, And May Be Unable to
Continue As A Going Concern.

Producing television shows and feature length films involves substantial risks, because they require that we spend
significant funds based entirely on our preliminary evaluation of the screenplays commercial potential as a film. It is impossible to predict the success of any film or show before the production starts. The ability of a show or film to
generate revenues will depend upon a variety of unpredictable factors, including:



| |  |  | public taste, which is always subject to change;
| | - |  | ------------------------------------------------



| |  |  | the quantity and popularity of other films and shows and leisure activities available to the public at the time of our release;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | the competition for exhibition at movie theatres, through video retailers, on cable television and through other forms of distribution; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the fact that not all shows and films are distributed in all media forms or that chosen distribution channels may be ineffective.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------

For any of these reasons, the shows and films that we produce may be commercially unsuccessful, and the value of our equity interest in any or all of them may be reduced
or eliminated entirely. We operate in a particularly unpredictable industry, and, if we are unable to produce projects which are commercially successful in this industry, we may not be able to recoup our expenses and/or generate revenues. In the
event that we are unable to generate revenues, we may not be able to continue operating as a viable business.

If We Lose The Services Of Key Personnel,
It May Substantially Harm Our Ability To Operate and Earn Revenue.

Our success is highly dependent upon the continued services of our Chief Executive
Officer, President and director, Corbin Bernsen, and our outside director, George Mainas. Virtually all decisions concerning the conduct of our business are made by Messrs. Bernsen and Mainas. The loss of any of these individuals could have a
material adverse effect on us. We have not entered into any agreement with Messrs. Bernsen or Mainas that would prevent them from leaving us, nor have we obtained any key man life insurance. If we lose either of their services, we may not be able to
hire and retain other officers with comparable experience or contacts. As a result, the loss of the services of any of these individuals may limit our ability to properly conduct our operations in a cost-effective manner.

Our Officers and Directors Own A Large Percentage Of Our Outstanding Shares Of Common Stock Which Provides Them Significant Voting Power And Their Interests May
Differ From Those Of Other Shareholders.

As of August 31, 2006, our officer and directors in the aggregate owned approximately 29% of the
Companys issued and outstanding shares. Accordingly, our officer and directors have the ability to influence the election of the Companys directors. Further, our officer and directors may use their voting power to effect a major
transaction requiring shareholder approval. Our articles of incorporation do not provide for cumulative voting. Our officer and directors also have the power to vote their shares to influence a change in control or vote against a transaction that
could be beneficial to the Company. The interests of these shareholders may differ from the interests of the other shareholders, and may limit the ability of other shareholders to affect the Companys management and affairs.



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Since Our Officers and Directors Do Not Devote Their Full Business Time To Our Business, We May Not Be Able To Act On
Our Business Opportunities Or Respond To Industry Or Market Forces In A Timely Manner, Which May Reduce Our Competitiveness and, As A Result, The Viability Of Our Business and Operations.

The persons serving as our officers and directors are not paid any compensation and have existing obligations outside of the Company. We cannot guarantee that any of our
officers or directors will be able to devote sufficient amounts of their business time to enable us to implement our business plan. If our officers or directors do not devote a sufficient amount of their business time to the management of our
business, we may lose our ability to rapidly and appropriately respond to market conditions and opportunities, which may limit our competitiveness. Such a loss of competitiveness may result in our inability to generate sufficient revenue to finance
our continuing operations. This may reduce the value of our company and, accordingly, the value of your investment.

We May Not Be Able To Protect Our
Proprietary Rights and May Infringe On The Proprietary Rights Of Others, Should We Be Deemed To Infringe Upon The Propriety Rights Of Others, We May Face Litigation And/Or Be Required To Alter Out Content Which Contains The Contested Intellectual
Property.

Establishment of trademarks, copyrights and other proprietary rights is important to our success and our competitive position. We cannot
assure you that the actions taken by us to establish and protect any patents or other proprietary rights will be adequate to prevent imitation of our products by others or to prevent others from prohibiting sales of any products we may develop in
violation of the copyrights, trademarks and proprietary rights of others. Moreover, we cannot assure you that others will not assert rights in, or ownership of, trademarks, copyrights and other proprietary rights we may establish or acquire or that
we will be able to successfully resolve such conflicts.

We have not received patent certification from the United States Patent and Trademark Office for
our virtual studio. As a result, if another production company is able to develop a software model identical or similar to our virtual studio, we may not be able to successfully prosecute our patent. Accordingly, we may be forced to compete with
other companies for viewers, sponsors, advertisers, film production companies and television production companies with respect to our virtual studio. If these companies have greater resources than we do for revenue generation, we may not be able to
form a self-sustaining virtual studio business unit.

We May Face Additional Risks Due To Our Reliance On Outsourced Production Studios For Films
and Television Shows We Choose To Produce Ourselves.

We intend to outsource certain aspects of the production requirements for our television and film
projects. We do not intend to maintain a relationship with one particular studio or production group. Consequently, we may be subject to certain risks associated with outsourcing, which include, but may not be limited to:



| |  |  | the outsourcing production studios ability to products shows or films that meet our technical specification and that have minimal defects;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the outsourcing production studios ability to honor the agreed-upon budget estimates and deadlines;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | the financial solvency, labor concerns and general business condition of our outsourcing production studio;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | unexpected changes in regulatory requirements;
| | - |  | ----------------------------------------------



| |  |  | inadequate protection of intellectual property in the entertainment industry;
| | - |  | -----------------------------------------------------------------------------



| |  |  | risks of fire, flood or acts of God affecting production studio facilities; and
| | - |  | -------------------------------------------------------------------------------



| |  |  | our ability to meet our financial obligations to our outsourcing production studio.
| | - |  | -----------------------------------------------------------------------------------



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Moreover, we may not receive competitive pricing from our production studios as we do not intend to form a
relationship with one particular studio. Due to our dependency on outsourced production studios and the inherent difficulty in replacing outsourced production studios in an efficient or expeditious manner, the occurrence of any condition preventing
or hindering the production or delivery of our films and shows by any one or more of our outsourcing production studios may require us to mitigate our actual or potential loss by switching outsourced production studios.

We Are Responsible For The Indemnification Of Our Officers and Directors. Should Our Officers And/Or Directors Require Us To Contribute To Their Defense, We May Be
Required To Spend Significant Amount Of Our Capital.

Our by-laws provide for the indemnification of our directors, officers, employees, and agents,
under certain circumstances, against attorneys fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of our Company. This indemnification policy
could result in substantial expenditures, which we may be unable to recoup. If these expenditures are significant, or involve issues which result in significant liability for our key personnel, we may be unable to continue operating as a going
concern.

If We Exceed Our Project Budgets, We May Be Unable To Recoup Our Costs.

Our business model requires that we be efficient in production of our projects. Actual production costs often exceed their budget, sometimes substantially. The production, completion and distribution of movie and
television projects are subject to a number of uncertainties, including delays and increased expenditures due to creative differences among key cast members and other key creative personnel or other disruptions or events beyond our control. Risks
such as death or disability of star performers, technical complications with special effects or other aspects of production, shortages of necessary equipment, damage to film negatives, master tapes and recordings or adverse weather conditions may
cause cost overruns and delay or frustrate completion of a production. If a production incurs substantial budget overruns, we may be required to seek additional financing from outside sources to complete production. We cannot make assurances
regarding the availability of such financing on terms acceptable to us.

In addition, if a production incurs substantial budget overruns, we cannot assure
you that we will be able to recoup these costs, which could have a material adverse effect on our business, results of operations or financial condition. Increased costs incurred with respect to a particular project may result in the delayed release
of a project at the intended time and potentially the postponement to a less favorable time, all of which could cause a decline in box office revenue and the overall financial success of the movie. Budget overruns could also prevent a movie from
being completed or released, and may leave us with insufficient resources to fund other projects.

Our Revenues May Fluctuate Significantly And Our
Results Of Operations May Be Difficult To Predict.

Revenues and results of operations are difficult to predict and depend on a variety of factors. Our
revenues and results of operations will depend significantly upon the commercial success of our projects that we produce and distribute, which we cannot predict with certainty. Consequently, our revenues and results of operations may fluctuate
significantly from period to period, and the results of any one period may not be indicative of the results for any future periods.

Under The Terms Of
Completion Bonds Covering A Motion Picture Project, In The Event We Fail To Complete The Movie On Schedule And Within Budget, The Bond Company May Take Over Production, Which May Reduce The Artistic Integrity And Commercial Potential Of The Movie.

We may need to obtain a completion bond for each film we produce. If we do not fund a film internally, and a completion bond is required by the
investors of the film, our inability to complete a movie on



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schedule or within budget may result in the completion bond company taking over production. In this event, the bond company will have the right to replace
any member of the production personnel, including members of the films management team. The replacement of the production personnel may change the artistic quality of the movie, reduce our equity interest in the film, and/or limit our ability
to promote distribution of the movie.

In Most Cases Our Movies Will Be Subject To Ratings Restrictions and Censorship That May Result In Ratings That
May Reduce Distribution And Revenue Potential.

Our films and television shows are generally targeted to very specific audiences, which require us to
produce projects that obtain ratings suitable for each such audience. Certain pre-production distribution arrangements we expect to obtain may be based upon the subject movie having a particular rating classification from the Motion Picture
Association of America (or MPAA). With these arrangements in place, we will intend to produce the movie in a manner that will ultimately obtain the expected rating. However, it is difficult to predict the rating classification that the MPAA will
ultimately assign to the movie. If the expected rating were not obtained, distribution support (including marketing and advertising) may be reduced, resulting in fewer distribution venues and smaller viewing audience. Further, censors in foreign
jurisdictions may find elements of a movie objectionable.

At additional and unbudgeted costs, we may be required to revise the movie to obtain the desired
rating classification or to remove the objectionable elements of the movie. Even following revision of the movie, the release in certain jurisdictions may be denied. These events may result in release and distribution delays, which may limit the
commercial potential of the movie, resulting in reduced revenues for our company, and, accordingly, reducing the value of your investment.



|ITEM 3. | CONTROLS AND PROCEDURES
|------- | -----------------------

DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures are controls and other procedures that are designed to ensure that the information required to be disclosed by a
company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the Exchange Act) is recorded, processed, summarized and reported, within the time periods specified in the SECs
rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that a company files or submits under the Exchange Act is
accumulated and communicated to the Companys management, including its Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

We maintain disclosure controls and procedures designed to ensure that material information related to our Company is recorded, processed, summarized and reported within
the time periods specified in the SEC rules and forms.

Under the supervision of our Chief Executive Officer, who also serves as our principal financial
officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer concluded that as of
August 31, 2006, the design and operation of such disclosure controls and procedures were effective.

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL
REPORTING

During the quarter ending August 31, 2006, we did not experience any changes to our internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that has materially affected, or is likely to materially affect, our internal control over financial reporting.



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LIMITATIONS ON DISCLOSURE CONTROLS AND PROCEDURES

Our management, including our Chief Executive Officer, does not expect that our disclosure controls or internal controls over financial reporting will prevent all errors or all instances of fraud. A control system, no
matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control systems objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within
our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management override of the controls. Because of the small size of our current operations, supervision of financial controls is concentrated in a few individuals and we have limited
opportunity to segregate duties or implement checks and balances. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals
under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitation of a cost-effective
control system, misstatements due to error or fraud may occur and not be detected.

PART II - OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------

In March 2006 the Company received a copy of a
complaint filed in the United States District Court for the Western District of Pennsylvania by Savvior Technology Solutions (Savvior) for a breach of contract action in the amount of $165,500 under the terms of the Sales Agreement dated
October 2004 with the Company. Savvior alleged nonpayment of invoices in the amount of $109,500, and damages for sums due through the remaining term of the Agreement of an additional $56,000 for such future periods. The Company and Savvior entered
into a Forbearance Agreement dated May 10, 2006 pursuant to which Savvior dismissed the lawsuit without prejudice and agreed to forbear from re-filing the lawsuit for a minimum of ninety (90) days from the date of such dismissal, in
exchange for the Companys payment of $10,000. Under the terms of the Forbearance Agreement, both parties retained all claims, rights and defenses they have against one another regarding the lawsuit and underlying agreement. On October 2,
2006, the Company and Savvior exchanged e-mail correspondence outlining the following agreed upon settlement terms to be memorialized in a formal settlement agreement or amendment to the Forbearance Agreement: (i) the total outstanding balance
owed to Savvior by the Company is $50,000; (ii) a payment by the Company in the amount of $5,000 to be made during the week of October 2nd; (iii) monthly payments by the Company of $500 for 11 months after the signing of a settlement agreement; (iv) a payment of $15,000 on the 12thmonth after the signing of a settlement agreement; (v) in the 13thmonth after the signing of a settlement agreement, Savvior has the right to negotiate an increased monthly payment depending on the financial resources of the Company as such time; (vi) the total
outstanding balance of $50,000 is to be paid in full during or before October 2008; and (vii) the Companys non-compliance with the agreed upon settlement terms will permit Savvior to re-file the March 2006 lawsuit. The Company has made
the $5,000 payment to Savvior.

On July 11, 2006, and on subsequent dates thereafter, the Company received a demand letter on behalf of Dow
Jones & Company, Inc. for payment of the amount of $10,500 relating to certain financial information services. The demand letter states that legal action will be instituted against the Company if such amount is not paid. The Company intends
to settle this claim or defend itself in any lawsuit which may be filed if settlement cannot be reached.

Other than as described above, there are no legal
proceedings to which the Company is a party at this time. Further, its officers and directors know of no legal proceedings against the Company, or its property contemplated by any governmental authority.



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|Item 2. | Changes in Securities.
|------- | ----------------------

Effective July 18, 2006, the Company
and Mr. Bernsen entered into (i) a Note Conversion Agreement pursuant to which Mr. Bernsen converted the amounts payable under the June 7, 2006 Promissory Note in the principal amount of $50,000 into 1,000,000 shares of Company
Common Stock, and (ii) an Assignment Agreement pursuant to which Mr. Bernsen assigned all of his right, title and interest in certain television and film projects to the Company, and the Company issued Mr. Bernsen 500,000 shares of
Company Common Stock. Mr. Bernsen is the Companys Chief Executive Officer, President, Secretary and a stockholder of the Company. These transactions were exempt from registration under the act pursuant to Section 4(2) of the
Act. These transactions were not conducted in connection with a public offering, and no public solicitation or advertisement was made or relied upon by any investors in connection with this offering.

Effective as of July 18, 2006, the Company and Michael Wittlin entered into a Settlement Agreement and Note Conversion Agreement pursuant to which the Company and
Mr. Wittlin agreed to convert the amount of $177,680 payable under his July 2005 promissory note into 3,553,600 shares of Company Common Stock; the remaining amount due under the promissory note is to be paid in cash; and the Company and
Mr. Wittlin will have no further obligations to one another. Mr. Wittlin is a stockholder of the Company and a member of Carpool Guy LLC. This transaction was exempt from registration under the act pursuant to Section 4(2) of the
Act. This transaction was not conducted in connection with a public offering, and no public solicitation or advertisement was made or relied upon by any investors in connection with this offering.



|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------

As reported above, the Company is
in default under its August 30, 2000 unsecured promissory note in the principal amount of $340,000 with Mr. Mainas, and its August 2004 unsecured line of credit with Mainas Development Corporation. Mr. Mainas and Mainas
Development Corporation have demanded repayment of all amounts due and owing by the Company under the unsecured promissory note and unsecured line of credit, and the Company has failed to make such payments. As of August 31, 2006, the
outstanding balance under the unsecured promissory note was $612,361, and the outstanding balance under the unsecured line of credit was $210,183.



|Item 4. | Submission of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------

None.



|Item 5. | Other Information.
|------- | ------------------

None.



|Item 6. | Exhibits and Reports on Form 8-K.
|------- | ---------------------------------



|(a) | Exhibits required by Item 601 of Regulation S-B
|--- | -----------------------------------------------



|           |  |                                                                                  
|---------- |  | ---------------------------------------------------------------------------------
|ExhibitNo. |  | Description                                                                      
|31         |  | Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act
|           | 
|32         |  | Certification pursuant to 18 U.S.C. §1350                                        



|(b) | Reports on Form 8-K
|--- | -------------------

None.



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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                       |  |  |  |                                       |  |                    |  |                        
|---------------------- |  |  |  | ------------------------------------- |  | ------------------ |  | -----------------------
|                       |  |  |  | Public Media Works, Inc. (Registrant)
|                       |  |  | 
|Date: October 23, 2006 |  |  |  |                                       |  | /s/ Corbin Bernsen
|                       |  |  |  |                                       |  | By:                |  | Corbin Bernsen         
|                       |  |  |  |                                       |  | Title:             |  | Chief Executive Officer



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