**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-QSB**

 

**ý****QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934**

 

**Forthe quarterly period ended May 31, 2004**

 

**o****TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF1934**

 

**Forthe transition period from          to         **

 

**0-29901**

**(Commission File No.)**

 

**PUBLIC MEDIA WORKS, INC**.

(Exact name ofregistrant as specified in its charter)

 
| **Delaware**                                              | ** ** | **98-0220849**                           |
|-----------------------------------------------------------|------------|------------------------------------------|
| (State or  jurisdiction or incorporation or organization) |       | (I.R.S. Employer  Identification Number) |

 

**14759 Oxnard Street**

**Van Nuys, California 91411**

(Address andtelephone number of principal executive offices)

 

**818-904-9029**

(Issuer’stelephone number)

 

**BurnamManagement, Inc.**

**9175Mainwaring Road**

**Sidney,British Columbia**

**V8L1J9 Canada**

(Former name andaddress, if changed since last report)

 

Check whether the issuer(1) filed all reports required to be filed Section 13 or 15(d) of theExchange Act during the past 12 months (or for such shorter period for whichthe registrant was required to file reports), and (2) has been subject to suchfiling requirements for the past 90 days. o Yes  ý No

 

State the number ofshares outstanding of each of the issuer’s classes of common equity, as of thelatest practicable date:  25,512,500shares of common stock issued and outstanding as of July 5, 2004.

 

Transitional SmallBusiness Disclosure Format (Check one):  Yes o   No ý

 

 

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**PART I**

 

**Item 1.****Financial Statements.**

 

PUBLIC MEDIAWORKS, INC. AND SUBSIDIARY

(A DevelopmentStage Company)

(FormerlyBurnam Management, Inc.)

 

CONSOLIDATEDFINANCIAL STATEMENTS

 

FOR THE THREEMONTHS ENDED MAY 31, 2004

 

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PUBLIC MEDIAWORKS, INC. AND SUBSIDIARY

(A DevelopmentStage Company)

(FormerlyBurnam Management, Inc.)

 

TABLE OF CONTENTS

 
| Financial Statements:                      |   |
|--------------------------------------------|--------|
|                                       |   |
| Consolidated Balance Sheets                |   |
|                                       |   |
| Consolidated Statements of Operations      |   |
|                                       |   |
| Consolidated Statements of Cash Flows      |   |
|                                       |   |
| Notes to Consolidated Financial Statements |   |

 

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PUBLIC MEDIAWORKS, INC. AND SUBSIDIARY

(A DevelopmentStage Company)

(FormerlyBurnam Management, Inc.)

 

CONSOLIDATED BALANCESHEETS

 
| ** **                                                                                                       | ** ** | **May 31,  2004** | ** ** | **February 29,  2004** | ** ** |
|------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------------|------------|
| Assets                                                                                                           |       |              |       |                        |       |
|                                                                                                             |       |              |       |                        |       |
| Current  Assets:                                                                                                 |       |              |       |                        |       |
| Cash                                                                                                             |       | $                 | 14,189     |                        | $          | 12,200 |   |
| Note  receivable, related party                                                                                  |       | 125,000           |       | 125,000                     |       |
| Prepaid  expenses                                                                                                |       | 540               |       | 1,154                       |       |
| Interest  receivable                                                                                             |       | 2,236             |       | 986                         |       |
| Stock  subscriptions receivable                                                                                  |       | —            |       | 155,000                     |       |
| Receivable,  officers and directors                                                                              |       | —            |       | 65,000                      |       |
|                                                                                                             |       |              |       |                        |       |
| Total  current assets                                                                                            |       | 141,965           |       | 359,340                     |       |
|                                                                                                             |       |              |       |                        |       |
| Property  and Equipment:                                                                                         |       |              |       |                        |       |
| Furniture  and leasehold improvements                                                                            |       | 20,649            |       | 20,649                      |       |
| Computers  and office equipment                                                                                  |       | 54,836            |       | 54,443                      |       |
|                                                                                                             |       | 75,485            |       | 75,092                      |       |
| Less:  accumulated depreciation                                                                                  |       | 41,846            |       | 38,846                      |       |
|                                                                                                             |       | 33,639            |       | 36,246                      |       |
| Other  Assets:                                                                                                   |       |              |       |                        |       |
| Film  development costs                                                                                          |       | 8,000             |       | 5,500                       |       |
|                                                                                                             |       |              |       |                        |       |
| Total  Assets                                                                                                    |       | $                 | 183,604    |                        | $          | 401,086 |   |
|                                                                                                             |       |              |       |                        |       |
| Liabilities  and Stockholders’ Equity                                                                       |       |              |       |                        |       |
|                                                                                                             |       |              |       |                        |       |
| Current  Liabilities:                                                                                            |       |              |       |                        |       |
| Accounts  payable and accrued expenses                                                                           |       | $                 | 102,653    |                        | $          | 65,719 |   |
| Accrued  interest, stockholders                                                                                  |       | 102,099           |       | 95,299                      |       |
| Notes  payable, stockholders                                                                                     |       | 427,176           |       | 427,176                     |       |
|                                                                                                             |       |              |       |                        |       |
| Total  current liabilities                                                                                       |       | 631,928           |       | 588,194                     |       |
|                                                                                                             |       |              |       |                        |       |
| Stockholders’  Equity:                                                                                      |       |              |       |                        |       |
| Common  stock, $.0001 par value 100,000,000 shares authorized, 25,512,500 and  25,512,500 issued and outstanding |       | 2,551             |       | 2,551                       |       |
| Additional  paid-in capital                                                                                      |       | 1,654,854         |       | 1,654,854                   |       |
| Deficit  accumulated during the development stage                                                                |       | (2,105,729        | )          | (1,844,513                  | )          |
|                                                                                                             |       |              |       |                        |       |
| Total  Stockholders’ Equity                                                                                 |       | (448,324          | )          | (187,108                    | )          |
|                                                                                                             |       |              |       |                        |       |
| Total  Liabilities and Stockholders’ Equity                                                                 |       | $                 | 183,604    |                        | $          | 401,086 |   |

 

The accompanyingnotes are an integral part of the financial statements.

 

1

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PUBLIC MEDIAWORKS, INC. AND SUBSIDIARY

(A DevelopmentStage Company)

(FormerlyBurnam Management, Inc.)

 

CONSOLIDATED STATEMENTSOF OPERATIONS

 
| ** **                        | ** ** | **For the  Three Months  Ended  May 31,  2004** | ** ** | **For the  Three Months  Ended  May 31,  2003** | ** ** | **For the period  March 3, 2000  (Inception)  Through  May 31,  2004** | ** ** |
|-----------------------------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------------------------------------|------------|
|                              |       |                                            |       |                                            |       |                                                                        |       |
| Revenues,  script fees            |       | $                                               | 50,000     |                                            | $          | —                                                                      |       | $ | 50,000 |   |
|                              |       |                                            |       |                                            |       |                                                                        |       |
| Operating  Expenses:              |       |                                            |       |                                            |       |                                                                        |       |
| Advertising  and promotion        |       | 3,294                                           |       | 217                                             |       | 20,449                                                                      |       |
| Auto  expenses                    |       | 6,050                                           |       | —                                          |       | 45,047                                                                      |       |
| Insurance                         |       | —                                          |       | —                                          |       | 10,561                                                                      |       |
| Professional  fees                |       | 41,946                                          |       | 9,283                                           |       | 112,169                                                                     |       |
| Office  expenses                  |       | 2,603                                           |       | 2,128                                           |       | 72,459                                                                      |       |
| Rent                              |       | 2,954                                           |       | 2,700                                           |       | 31,324                                                                      |       |
| Salaries                          |       | 170,012                                         |       | 75,000                                          |       | 895,491                                                                     |       |
| Payroll  taxes                    |       | 14,112                                          |       | 6,641                                           |       | 43,217                                                                      |       |
| Telephone  and utilities          |       | 4,165                                           |       | 112                                             |       | 30,834                                                                      |       |
| Consulting  costs                 |       | 18,700                                          |       | 6,500                                           |       | 225,184                                                                     |       |
| Web  site development costs       |       | —                                          |       | —                                          |       | 236,744                                                                     |       |
| Depreciation                      |       | 3,000                                           |       | 3,000                                           |       | 45,510                                                                      |       |
| Travel  and entertainment         |       | 32,085                                          |       | 6,009                                           |       | 209,236                                                                     |       |
| Other                             |       | 5,045                                           |       | 2,138                                           |       | 63,810                                                                      |       |
|                              |       |                                            |       |                                            |       |                                                                        |       |
| Total  operating expenses         |       | 303,966                                         |       | 113,728                                         |       | 2,042,035                                                                   |       |
|                              |       |                                            |       |                                            |       |                                                                        |       |
| Operating  loss                   |       | (253,966                                        | )          | (113,728                                        | )          | (1,992,035                                                                  | )          |
|                              |       |                                            |       |                                            |       |                                                                        |       |
| Other  income (expense):          |       |                                            |       |                                            |       |                                                                        |       |
| Loss  on disposal of fixed assets |       | —                                          |       | —                                          |       | (6,901                                                                      | )          |
| Interest  income                  |       | 1,250                                           |       | —                                          |       | 2,885                                                                       |       |
| Interest  expense                 |       | (6,800                                          | )          | (6,800                                          | )          | (103,978                                                                    | )          |
|                              |       |                                            |       |                                            |       |                                                                        |       |
| Total  other income (expense)     |       | (5,550                                          | )          | (120,528                                        | )          | (107,994                                                                    | )          |
|                              |       |                                            |       |                                            |       |                                                                        |       |
| Loss  before income taxes         |       | (259,516                                        | )          | (120,528                                        | )          | (2,100,029                                                                  | )          |
|                              |       |                                            |       |                                            |       |                                                                        |       |
| Provision  for income taxes       |       | 1,700                                           |       | 800                                             |       | 5,700                                                                       |       |
|                              |       |                                            |       |                                            |       |                                                                        |       |
| Net  loss                         |       | $                                               | (261,216   | )                                               | $          | (121,328                                                                    | )          | $ | (2,105,729 | ) |
|                              |       |                                            |       |                                            |       |                                                                        |       |
| Net  loss per share               |       | $                                               | (.01       | )                                               | $          | (.02                                                                        | )          | $ | (.25 | ) |

 

The accompanyingnotes are an integral part of the financial statements.

 

2

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PUBLIC MEDIAWORKS, INC. AND SUBSIDIARY

(A DevelopmentStage Company)

(FormerlyBurnam Management, Inc.)

 

CONSOLIDATED STATEMENTSOF CASH FLOWS

 
| ** **                                                                   | ** ** | **For the  Three Months  Ended  May 31,  2004** | ** ** | **For the  Three Months  Ended  May 31,  2003** | ** ** | **For the period  March 3, 2000  (Inception)  Through  May 31,  2004** | ** ** |
|------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------------------------------------|------------|
| Cash  flows from operating activities:                                       |       |                                            |       |                                            |       |                                                                        |       |
| Net  loss                                                                    |       | $                                               | (261,216   | )                                               | $          | (121,328                                                                    | )          | $ | (2,105,729 | ) |
|                                                                         |       |                                            |       |                                            |       |                                                                        |       |
| Adjustments  to reconcile net loss to cash provided by operating activities: |       |                                            |       |                                            |       |                                                                        |       |
| Expenses  paid directly by related party creditors                           |       | —                                          |       | —                                          |       | 84,040                                                                      |       |
| Loss  on disposal of fixed assets                                            |       | —                                          |       | —                                          |       | 6,901                                                                       |       |
| Depreciation                                                                 |       | 3,000                                           |       | 3,000                                           |       | 45,510                                                                      |       |
| Contributions  from stockholders                                             |       | —                                          |       | 9,793                                           |       | 55,515                                                                      |       |
| Common  stock issued for services                                            |       | —                                          |       | —                                          |       | 318,000                                                                     |       |
| Decrease  in shareholder receivable                                          |       | 65,000                                          |       | —                                          |       | —                                                                      |       |
| Increase  in prepaid expenses and interest receivable                        |       | (636                                            | )          | —                                          |       | (2,776                                                                      | )          |
| Increase  (decrease) in accounts payable and accrued expenses                |       | 43,734                                          |       | 4,311                                           |       | 204,752                                                                     |       |
|                                                                         |       |                                            |       |                                            |       |                                                                        |       |
| Net  cash used by operating activities:                                      |       | (150,118                                        | )          | (104,224                                        | )          | (1,393,787                                                                  | )          |
|                                                                         |       |                                            |       |                                            |       |                                                                        |       |
| Cash  flows from investing activities:                                       |       |                                            |       |                                            |       |                                                                        |       |
| Cash  loaned to related party                                                |       | —                                          |       | —                                          |       | (125,000                                                                    | )          |
| Purchase  of property and equipment                                          |       | (393                                            | )          | (7,445                                          | )          | (86,051                                                                     | )          |
| Film  development costs capitalized                                          |       | (2,500                                          | )          | —                                          |       | (8,000                                                                      | )          |
|                                                                         |       |                                            |       |                                            |       |                                                                        |       |
| Net  cash used by investing activities                                       |       | $                                               | (2,893     | )                                               | $          | (7,445                                                                      | )          | $ | (219,051 | ) |

 

The accompanyingnotes are an integral part of the financial statements.

 

3

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| ** **                                 | ** ** | **For the  Three Months  Ended  May 31,  2004** | ** ** | **For the  Three Months  Ended  May 31,  2003** | ** ** | **For the period  March 3, 2000  (Inception)  Through  May 31,  2004** | ** ** |
|--------------------------------------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------------------------------------|------------|
|                                       |       |                                            |       |                                            |       |                                                                        |       |
| Cash  flows from financing activities:     |       |                                            |       |                                            |       |                                                                        |       |
| Issuance  of common stock                  |       | $                                               | 155,000    |                                            | $          | 330,000                                                                     |       | $ | 1,166,500 |   |
| Cash  contributed by stockholders          |       | —                                          |       | 4,700                                           |       | 117,390                                                                     |       |
| Proceeds  from related party borrowings    |       | —                                          |       | —                                          |       | 393,137                                                                     |       |
| Repayment  of related party borrowings     |       | —                                          |       | (25,000                                         | )          | (50,000                                                                     | )          |
|                                       |       |                                            |       |                                            |       |                                                                        |       |
| Net  cash provided by financing activities |       | 155,000                                         |       | 309,700                                         |       | 1,627,027                                                                   |       |
|                                       |       |                                            |       |                                            |       |                                                                        |       |
| Net  increase (decrease) in cash           |       | 1,989                                           |       | 198,031                                         |       | 14,189                                                                      |       |
|                                       |       |                                            |       |                                            |       |                                                                        |       |
| Cash,  beginning of period                 |       | 12,200                                          |       | —                                          |       | —                                                                      |       |
|                                       |       |                                            |       |                                            |       |                                                                        |       |
| Cash,  end of period                       |       | $                                               | 14,189     |                                            | $          | 198,031                                                                     |       | $ | 14,189 |   |
|                                       |       |                                            |       |                                            |       |                                                                        |       |
| Interest  paid                             |       | $                                               | —     |                                            | $          | —                                                                      |       | $ | 1,879 |   |
|                                       |       |                                            |       |                                            |       |                                                                        |       |
| Income  taxes paid                         |       | $                                               | 4,100      |                                            | $          | —                                                                      |       | $ | 5,700 |   |

 

The accompanyingnotes are an integral part of the financial statements.

 

4

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PUBLIC MEDIAWORKS, INC. AND SUBSIDIARY

(A DevelopmentStage Company)

(FormerlyBurnam Management, Inc.)

 

NOTES TOCONSOLIDATED FINANCIAL STATEMENTS

 

1.                   Summary ofBusiness and Significant Accounting Policies

 

a.             Summary ofBusiness

 

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 entertainmentindustry. The Company plans to utilize the concept of interactive marketing.Interactive marketing is a new method to market, promote and produce films. Thenew marketing method will presell product placement in films to help fundproduction costs in the initial stages. The share exchange agreement isessentially a reverse merger with Public Media Works, Inc., the survivingcompany. The Company’s name has been changed to Public Media Works, Inc.

 

The Company has notcommenced principal operations and is considered a “Development Stage Company”as defined by the Financial Accounting Standards Board Statement No. 7.

 

b.             Principles ofConsolidation

 

The consolidatedfinancial statements contain the accounts of the company and its wholly-ownedsubsidiary. All significant intercompany balances and transactions have beeneliminated.

 

c.             Cash Flows

 

For purposes of thestatement of cash flows, the company considers all highly liquid investmentspurchased with a maturity of three months or less to be cash or cashequivalents.

 

d.             Property andEquipment

 

Property and equipmentare stated at cost less accumulated depreciation. Depreciation is providedusing straight-line methods based on estimated useful lives of five to sevenyears.

 

e.             Net Loss Per Share

 

The net loss per sharecalculation is based on the weighted average number of shares outstandingduring the period.

 

5

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f.              Use of Estimates

 

The preparation offinancial statements in conformity with generally accepted accountingprinciples requires management to make estimates and assumptions that affectcertain reported amounts and disclosures. Accordingly, actual results coulddiffer from those estimates.

 

2.                   NoteReceivable, Related Party

 

On December 19, 2003,the Company loaned $125,000 to Old Tucson Corporation, a company owned by astockholder of Public Media Works, Inc. The note receivable matures onJune 20, 2004 and bears interest at 4%. The note is secured by thestockholder’s stock in Public Media Works, Inc. Interest income related to thenote was $1,250 and $986 for the three months ended May 31, 2004 and year endedFebruary 29, 2004, respectively.

 

3.                   FilmDevelopment Costs

 

At May 31, 2004 andFebruary 29, 2004, the Company has capitalized $8,000 and $5,500,respectively, for the purchase of two original screenplays. The Company intendsto develop the screenplays into feature films within the next three years.

 

4.                   NotesPayable, Stockholders

 

The Company has notespayable with two stockholders. The balance at May 31, 2004 andFebruary 29, 2004 was $427,176. The notes are unsecured and due on demand.Interest is being charged at 8% on $340,000. The remaining amount isnon-interest bearing.

 

5.                   Issuance ofCommon Stock

 

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

 

On March 3, 2000,5,000,000 shares of common stock were issued for services rendered with anaggregate consideration of $210.

 

On August 30, 2003,20,000,000 shares of common stock were issued in a share exchange agreementwith a private company, Public Media Works, Inc. (PMW). PMW is a wholly-ownedsubsidiary of the Company and is considered the survivor. Burnam Management,Inc. has no assets, liabilities or operations at the time of the merger; therefore,a pro forma statement of operations is not provided.

 

In September 2003through February 2004, the Company issued 512,500 shares of its commonstock at $.40 per share for a total amount of $205,000.

 

6

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6.                   StockOptions and Warrants

 

No options or warrantsare outstanding to acquire the Company’s common stock.

 

7.                   Income Taxes

 

The Company has had notaxable income under Federal or State tax laws. A state minimum tax of $1,700and $800 has been reported in the statement of operations for the periods endedMay 31, 2004 and 2003, respectively. The Company has loss carryforwardstotaling $1,309,049 that may be offset against future federal income taxes. Ifnot used, the carryforwards will expire between 2020 and 2023. Due to theCompany being in the development stage and incurring net operating losses, avaluation allowance has been provided to reduce the deferred tax assets fromthe net operating losses to zero. Therefore, there areno tax benefits recognized in the accompanying statement of operations.

 

8.                   DevelopmentStage and Operating Deficits

 

As shown in theaccompanying financial statements, the Company incurred a net loss of $261,216during the three months ended May 31, 2004 and accumulated losses of $2,105,729since opening for business in 2000. The Company’s current liabilities exceedits current assets by $489,963 at May 31, 2004. These factors create anuncertainty as to the Company’s ability to continue as a going concern. Theability of the Company to continue as a going concern is dependent upon thesuccess of raising additional capital through the issuance of common stock andthe ability to generate operating revenue. The financial statements do notinclude any adjustments that might be necessary should the Company be unable tocontinue as a going concern.

 

7

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**Item 2.****Management’s Discussion and Plan of Operation.**

 

*The following discussion and analysis of the Company’s planof operation should be read in conjunction with its financial statements andthe related notes.  This discussioncontains forward-looking statements based upon current expectations thatinvolve risks and uncertainties, such as the Company’s plans, objectives,expectations and intentions. The Company’s actual results and the timing ofcertain events could differ materially from those anticipated in theseforward-looking statements as a result of certain factors, including those setforth herein.*

 

***Plan ofOperation***

 

Public Media Works, Inc.was a privately-held company until August 30, 2003.  In order to maintain clarity, references toPublic Media Works prior to the reverse merger effected August 30, 2003will be indicated as “PMW.”  Referencesto “Public Media Works, Inc.,” “Public Media,” “the Company,” etc. collectivelyrefer to the Company immediately following the merger and currently.

 

Costs and Expenses

 

From PMW’s inception onMay 15, 2000 through the end of the fiscal quarter ended May 31, 2004, theCompany has funded the development of its products, including the developmentof its virtual studio and its main website, through the issuance of commonstock in exchange for cash and services, as well as through unsecured notespayable to stockholders.  As of May 31,2004, the Company had 25,512,500 shares of common stock issued and outstanding,15,000,000 shares of which were issued in exchange for services by itsmanagement team.  The Company alsoentered into an unsecured promissory note with George Mainas, a shareholder, onAugust 30, 2000 for $340,000, bearing interest at 8% and is payable ondemand.  As of June 15, 2004, theCompany had an outstanding balance of $443,232, including accrued interest.  The proceeds of this note were used forgeneral working capital.  Mr. Mainas hasalso agreed to pay various, unclassified business expenses from time to time onbehalf of the Company, and the Company agreed to reimburse him for theseexpenditures as soon as practicable.  OnDecember 31, 2003, this agreement was memorialized, including termsindicating that any expenses so paid would bear no interest, and would bepayable on demand to Mr. Mainas.  Theoutstanding balance as of June 15, 2004 was $70,461.  The Company has also entered into a thirdunwritten, unsecured promissory note with Denis Schusterman, a shareholder, inMay 2002 in exchange for payment of approximately $16,000 in general andadministrative expenses.  This note ispayable upon demand and bears no interest. As of June 15, 2004, the outstanding balance was $16,715.

 

The Company had a netloss of $261,216 the fiscal quarter ended May 31, 2004, and from March 3,2000 (inception of Burnam) through May 31, 2004, the Company reported acumulative net loss of $2,105,729.

 

The development of theCompany’s main website and virtual studio was conducted in conjunction with twocompanies: New Media Dimensions, Inc. and MMT Solutions.  On August 25, 2000, the Company

 

8

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enteredinto an agreement with MMT Solutions to begin the basic development of thevirtual studio based upon the Company’s internally developed architecture, inexchange for two payments of $115,000, the first of which was made onSeptember 6, 2000.  The developmentwas not completed according to the terms of the agreement, and the Companyterminated the agreement in November 2000, with no further payment toMMT.  The Company executed a letter oftermination and release on June 2, 2003, and no further claims orobligations exist on the part of either party. On August 8, 2003, the Company entered into an agreement with NewMedia Dimensions to complete the development of its virtual studio and mainwebsite, and to act as host and server for the Company’s virtual studio andwebsite.  The development of the virtualstudio and main website, as well as software development, was completedJanuary 1, 2004, for which New Media Dimensions received $70,000.  New Media Dimensions also received anadditional $7,732 for the purchase of two Pentium-based server hosts and hardware.

 

The Company maintains anongoing, month-to-month agreement with New Media Dimensions to maintain theCompany’s virtual studio and main website and to act as host and server to theCompany’s sites.  The terms of theseongoing services are described in the Company’s agreement with New Media datedAugust 8, 2003.  The Company pays$150 per month for New Media to serve as host, and an additional fee forenhancements, modifications and further development as needed.  These additional costs may range from $0 to$5,000 per month, depending on the Company’s requirements for each period.  This agreement may be terminated by eitherparty upon receipt of 15 days’ notice.

 

On September 22,2003, the Company entered into an agreement with Charles Sherman Public Relationsto engage and manage public relations and the Company’s publicity needs.  The Company has retained this firm on amonthly basis, for a fee of $2,000 per month. This agreement may be terminated by either party upon 30-day notice.

 

The Company’s generalmonthly expenses include rental and maintenance for its offices areapproximately $4,000 per month. The Company’s operating expenses, includingsalaries and travel reimbursement, are approximately $36,000 per month, withtotal monthly costs of $40,000.

 

Revenue

 

The following projectsare in progress, and expect to be the Company’s primary sources of revenue ofthe next twelve months.  To the extentthat the Company has estimated budgeting and production dates, the timing andamounts indicated may be subject to change.

 

On February 27,2004, the Company entered into an agreement with Behind the Hedge Productions,Inc., an unaffiliated production company, to develop a budgeted script andtreatment for a feature-length film in exchange for $50,000.  $25,000 of this fee was received onMarch 1, 2004, as an advance payment for the Company’s scriptdevelopment.  The Company’s budgetedscript and treatment to Behind the Hedge Productions was accepted on May 24,2004, and the remaining $25,000 was received on that same date.  The script was developed internally, withoutadditional fee to an independent screenwriter. As the Company has prepared this script development under contract, theCompany currently does not have any ownership position in the script or in anyrevenue generated by the produced film. However, upon acceptance by Behind the Hedge Productions of theCompany’s script development, it anticipates entering into a productionagreement with Over the Hedge by August 30, 2004.  The Company expects the terms of thisagreement to have a budget of approximately $450,000, and will grant theCompany some degree of equity ownership in exchange for a reduction of theCompany’s production fee.  If the Companyenters into this agreement, it intends to use an outsourced production studio,and anticipates realizing revenue

 

9

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fromthe Company’s producers’ fee upon commencing production.  Producers’ fees are generally set by industrystandards, and typically range from 8% to 15% of a film’s overall budget.  Accordingly, the Company estimates this feeto be $50,000 for this production.  Ifthe Company gains some level of equity ownership in the project, we wouldrealize any additional revenue in an amount and at a time which will be subjectto any distribution agreement in effect with respect to this film.  The Company does not need any additionalfinancing with respect to this project, as it does not owe any additional fundsto complete the script development, and any costs paid with respect to theproduction of the film will be financed by Behind the Hedge Productions.

 

On October 10, 2003,the Company entered into a co-production agreement with Stone-StanleyProductions to develop and sell the Company’s television production “TheUltimate 18.”  The Company andStone-Stanley are currently approaching actors, golf celebrities and sponsorsfor involvement in the show. Stone-Stanley is in the process of meeting with interested networks inorder to sell the show for broadcast.  Ascreators of the show, the Company owns 100% of the concept for this show.  However, in order to develop and produce thisshow, the Company has granted 100% of its ownership to Stone-Stanley for aperiod of six months, which expired in April 2004 and was extended untilNovember 2004.  Should Stone-Stanleyexecute a production agreement with a network to produce and broadcast the showbefore the ownership grant expires, the Company will receive 50% ownership ofthe revenue generated by the produced and broadcast show.  Both the Company and Stone-Stanley arecurrently corresponding with various targeted celebrities in order to determineinterest and scheduling.  Messrs. Szabo,Bernsen and Edwardes will be executive producers for “The Ultimate 18,” althoughnone will receive additional compensation for this work.  The Company and Stone-Stanley anticipatecompletion of casting and beginning production by September 30, 2004, atwhich point the Company will receive 50% of the revenue paid by the purchasing network,with Stone-Stanley receiving the other 50%. The Company anticipates receiving approximately $600,000 upon sale ofthe show to the network.  As televisionnetworks are billed in advance of production, the Company does not anticipateadditional financing requirements for this project.  Once the Company enters into an agreementwith a network, it estimates that production will conclude approximately 90days following the date of such agreement.

 

As of May 31, 2004, theCompany has completed the script and attached actors under formal letters ofintent for the film “3 Day Test.”  TheCompany anticipates entering pre-production for film “3 Day Test” in the thirdquarter of 2004, and anticipates beginning filming in December 2004.  “3 Day Test” is wholly owned by the Company,and will require $1 million of additional financing in the fourth quarter of2004, and $1.5 million of additional financing in the first quarter of2005.  The Company intends to financethis project through the following methods, in order of priority:  (1) corporate sponsorship and productplacement in the film, (2) pre-sales of the film through the virtual studio andforeign sales, (3) debt or equity financing in the film itself, and (4) debt orequity financing in the Company.  The Companydoes not have any agreements regarding sources for this financing, and will notproceed with this project until the additional financing has been secured.  The Company holds 100% ownership of thisfilm, and, once funded, anticipates generating revenue through its producers’fee of approximately $250,000, as well as its portion of box-office sales,retail sales, and sponsorship via the virtual studio.

 

On February 5, 2004,the Company entered into a five-year agreement with the American Basketball Association(ABA) to develop all filmed and digital entertainment products.  Thisincludes movies, video games and television shows, among other things.  The first of these projects will be the film“The Action,” which was tentatively titled “The Shock” at the time of theagreement.  The Company contracted a

 

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screenwriter to draft the script for $4,000, andreceived the first full draft in April 2004.  The Company has begun developing the projectby casting actors, identifying locations and commencing the budgeting andscheduling process.  The Company hasobtained a letter of intent with Dennis Rodman, and is in the process ofsecuring additional talent for the film. The Company anticipates commencing production in the second quarter of2005.

 

OnJune 11, 2004, the Company submitted its proposed budget to the ABA basedupon a total budget of $9.9 million, which the Company anticipates will befully funded by the ABA or its affiliated parties by September 30,2004.  Once the ABA approves theCompany’s budget, both the Company and the ABA will jointly form a limitedliability company for the purpose of funding and producing this film, theownership of which will held by Public Media (90%) and the ABA (10%). Theproject will then be funded by a group of investors, which has not beenidentified as of the date of filing this report.  Upon receipt of funding, the investing groupwill receive 50% of the equity interest in the limited liability company, theABA will retain their 10%, and the Company will retain the remaining 40%interest in the limited liability company.

 

The Company intends touse an outsourced production studio, and anticipates generating revenue ofapproximately $800,000 to $1 million for its work on this project.  The Company has 100% ownership in this film,and may present the film to Regent Entertainment under the terms of itsdistribution agreement, described herein, or may seek distribution through amajor studio.

 

On February 9, 2004,the Company entered into a distribution agreement with Regent Entertainment todistribute three of its films to theaters and/or in retail form (such as DVD orVHS videocassette) worldwide, each of which must have a production budget over$1 million.  For each proposed film thatis accepted for distribution, Regent must secure pre-sold revenues in varyingamounts from various European territories. For each film distributed in thismanner, the Company agrees to pay a fee equal to 25% of its gross revenues foreach film, as well as marketing expenses up to $100,000 per film.  This agreement expires in December 31,2005. Although the Company has not yet formally presented any films fordistribution, the Company anticipates presenting one or more films fordistribution in the next nine months.

 

On February 20,2004, the Company entered into a distribution agreement with OBN Holdings,which conducts television distribution via its subsidiary, OmniBroadcasting.  OBN is a nationaltelevision network with one owned station and 115 independent broadcast andcable affiliates throughout the United States. OBN airs both created and licensed content.  The agreement provides that OBN will providefree airtime in exchange for 50% of the revenue generated by sponsorsadvertising on the Company’s broadcast shows. The Company has agreed to provide six feature-length films, onehour-long dramatic series and one half-hour situation comedy.  The Company has also granted OBN a limited“first look” provision.  Pursuant to thisprovision, the Company may present projects to OBN which it believes aresuitable for distribution on their network. Once it presents a project, OBN then has a 60 day period during whichthey have the exclusive right to determine whether or not they will distributethe television show on their network.  Atthe close of the 60 day “first look” period, if OBN chooses not to distributethe show, the Company may then present the show to other distributors and/ornetworks.  This provision is in effectfor the duration of the agreement.  Thisagreement expires August 20, 2005, and is self-renewing unless terminatedby either party.  The Company does nothave any television programs scheduled for production or pre-production in thenext twelve months that it anticipates presenting to OBN for distribution.

 

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Liquidity

 

Based upon the costs andexpenses indicated above, the Company currently has cash on hand to satisfy itstotal operating costs, continued development of its actual and potentialrevenue sources and the cost of its current secondary offering untilJuly 31, 2004.  The Company iscurrently investigating several methods of capital-raising during this period,keeping in mind the status of the offering. The Company anticipates raising additional funds through one or all ofthe following methods: a revolving credit facility, debt, convertible debt, orthrough the future sale of equity.  TheCompany has not entered onto any agreements or discussions, preliminary orotherwise, regarding any of these options. None of the Company’s agreements with production companies, actors ordistribution companies, including but not limited to letters of intent, requireadditional capital contributions other than as described herein.  Over the next twelve months, the Company doesnot anticipate significant changes in the number of its employees, nor does theCompany anticipate the purchase or sale of any significant equipment.

 

The Company previouslyconsidered acquiring a production studio, and entered into a non-binding letterof intent on December 8, 2003 with Old Tucson Company in Tucson,Arizona.  Subsequently, four of OldTucson Company’s shareholders invested in the Company, each and in theaggregate holding less than 5% ownership in the Company.  These shareholders, in the aggregate,represented a controlling interest in Old Tucson Studios.  On December 19, 2003, while engaged inthe letter of intent, the Company loaned $125,000 to Old Tucson Company foroperations.  The note to Old TucsonCompany matured on June 20, 2004, and bears interest at 4%.  The note is secured by the all of theshareholders’ stock in the Company.  As aresult of the mutual shareholders, the Company’s loan to Old Tucson Company mayhave been deemed a related party. However, during the course of its due diligence, the Company elected notto pursue this option, and the letter of intent expired unexercised onJanuary 15, 2004, although the note still remains an account receivablefor the Company.  The Company does notcurrently have any affiliation with either the four shareholders or Old TucsonCompany, although the shareholders still retain their equity interest in theCompany.  The Company is currently innegotiations with Old Tucson to extend the term of this note.

 

As of June 15, 2004,the Company had a current cash balance of $88,696.84.

 

***Off-Balance Sheet Transactions***

 

The Company does not haveany off-balance sheet transactions.

 

**Item 3.****Controls and Procedures**

 

Under the supervision andwith the participation of the Company’s senior management, including its chiefexecutive officer and chief financial officer, the Company conducted anevaluation of the effectiveness of the design and operation of its disclosurecontrols and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under theSecurities Exchange Act of 1934, as amended, as of the end of the periodcovered by this quarterly report (the “Evaluation Date”).  Based on this evaluation, the Company’s chiefexecutive officer and chief financial officer concluded as of the EvaluationDate that the Company’s disclosure controls and procedures were effective suchthat the information relating to the Company, including any consolidatedsubsidiaries, required to be disclosed in the Company’s Securities and ExchangeCommission (“SEC”) reports (i) is recorded, processed, summarized and reportedwithin the time periods specified in SEC rules and forms, and (ii) isaccumulated and communicated to the Company’s management, including its chiefexecutive officer and chief financial officer, as appropriate to allow timelydecisions regarding required disclosure.

 

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There were no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation.

 

PART II - OTHERINFORMATION

 

**Item 1.****Legal Proceedings.**

 

None.

 

**Item 2.****Changes in Securities.**

 

None.

 

**Item 3.****Defaults Upon Senior Securities.**

 

None.

 

**Item 4.****Submission of Matters to a Vote of Security Holders.**

 

None.

 

**Item 5.****Other Information.**

 

None.

 

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

 

(a) Exhibits required byItem 601 of Regulation S-B

 
| **Exhibit  No.** | ** ** | **Description**                                                                                                                       |
|------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                  |
| 2.1              |       | Share Exchange  Agreement by and between Burnam Management, Inc. and Public Media Works,  Inc., dated August 30, 2003 (2)   |
| 3.1              |       | Certificate of  Incorporation of Burnam Management, Inc. (1)                                                                     |
| 3.2              |       | Certificate of  Amendment of Certificate of Incorporation  (2)                                                              |
| 3.3              |       | By-laws of Burnam  Management, Inc. (1)                                                                                          |
| 3.4              |       | Amended By-laws of  Public Media Works, Inc. (4)                                                                                 |
| 5.1              |       | Form of Stock  Certificate (3)                                                                                                   |
| 10.1             |       | Form of Letter of  Intent for appearing talent (3)                                                                               |
| 10.2             |       | Writers Agreement by  and between Public Media Works, Inc. and Mr. Peter Soldinger, dated  September 11, 2003 (3)           |
| 10.3             |       | Writers Agreement by  and between Public Media Works, Inc. and Mr. Peter Soldinger, dated  February 3, 2004 (3)             |
| 10.4             |       | Distribution Agreement  by and between Public Media Works, Inc. and Regent Entertainment, Inc., dated  February 9, 2004 (4) |
| 10.5             |       | Distribution Agreement  by and between Public Media Works, Inc. and OBN Holdings, Inc., dated  February 20, 2004 (4)        |

 

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| 10.6  |   | Agreement by and  between Public Media Works, Inc. and Stone-Stanley Productions, dated  October 10, 2003 (4)            |
|-------|--------|------------------------------------------------------------------------------------------------------------------------------------|
| 10.7  |   | Amendment to Agreement  by and between Public Media Works, Inc. and Stone-Stanley Productions, dated  April 22, 2004 (4) |
| 10.8  |   | Agency Representative  Agreement by and between Public Media Works, Inc. and U4oria, Inc., dated  January 29, 2004 (4)   |
| 10.9  |   | Promissory Note by and  between Public Media Works, Inc. and Mr. George Mainas, dated August 30,  2000 (4)               |
| 10.10 |   | Memorialized Agreement  by and between Public Media Works, Inc. and Mr. George Mainas, dated  December 31, 2003 (3)      |
| 10.11 |   | Agreement by and  between Public Media Works, Inc. and Behind the Hedge Productions, dated  February 27, 2004 (4)        |
| 10.12 |   | Agreement by and  between Public Media Works, Inc. and the American Basketball Association,  dated February 5, 2004 (3)  |
| 10.13 |   | Agreement by and  between Public Media Works, Inc. and MMT Solutions, dated August 25,  2000 (4)                         |
| 10.14 |   | Letter of Termination  and Release by and between Public Media Works, Inc. and MMT Solutions, dated  June 2, 2003 (4)    |
| 10.15 |   | Agreement by and  between Public Media Works, Inc. and New Media Dimensions, Inc., dated  August 8, 2003 (4)             |
| 10.16 |   | Affiliation Agreement  by and between Public Media Works, Inc. and Amazon.com, Inc., dated May 14,  2002 (3)                  |
| 10.17 |   | Affiliation Agreement  by and between Public Media Works, Inc. and Allposters.com, Inc., dated May  14, 2002 (3)              |
| 10.18 |   | Agreement by and  between Public Media Works, Inc. and Charles Sherman Public Relations, dated  September 22, 2003 (4)   |
| 10.19 |   | Promissory Note by and  between Public Media Works, Inc. and Old Tucson Company, dated  December 19, 2003 (4)            |
| 10.20 |   | Letter of Intent by and  between Public Media Works, Inc. and Old Tucson Company, dated  December 08, 2003 (4)           |
| 31.1  |   | Certification pursuant  to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act, as amended, by  Chief Executive Officer        |
| 31.2  |   | Certification pursuant  to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act, as amended, by  Chief Financial Officer        |
| 32.1  |   | Certification pursuant  to 18 U.S.C. §1350  by Chief Executive Officer                                                        |
| 32.2  |   | Certification pursuant  to 18 U.S.C. §1350  by Chief Financial Officer                                                        |

 

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(1)   Incorporated by reference fromthe Company’s Form 10-SB, as filed on March 29, 2000 (File No. 0-29901).

(2)   Incorporated by reference fromthe Company’s Form 8-K, as filed on September 8, 2003.

(3)   Incorporated by reference fromAmendment No. 1 to the Company’s Form SB-2, as filed on May 4, 2004 (File No.333-113060).

(4)   Incorporated by reference fromAmendment No. 2 to the Company’s Form SB-2, as filed on June 29, 2004.

 

(b)           Reports on Form 8-K

 

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The Company did not fileany reports on Form 8-K for the period ended May 31, 2004.

 

 

**SIGNATURES**

 

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

 
|                           | Public Media Works  |                                  |
|--------------------------------|---------------------|---------------------------------------|
|                           | (Registrant)        |
|                           |                |
| Date:  July 19, 2004 | /s/ Thomas A. Szabo |                                  |
|                           | By:                 | Thomas A. Szabo                       |
|                           | Title:              | Chief Executive Officer  and Chairman |
|                                |                     |                                       |  |

 

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