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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 May 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 of incorporation 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 July 17, 2006, the registrant had
outstanding 32,135,657 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

TABLE OF CONTENTS



|                                           |  |     
|------------------------------------------ |  | ----
|                                           |  | Page
|Financial Statements:                      |  |     
|Consolidated Balance Sheets                |  | 1   
|Consolidated Statements of Operations      |  | 2   
|Consolidated Statements of Cash Flows      |  | 3-4 
|Notes to Consolidated Financial Statements |  | 5-13



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##### Table of Contents

PART I



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

PUBLIC MEDIA WORKS, INC. AND
SUBSIDIARY

CONSOLIDATED BALANCE SHEETS



|                                                                                                               |  |              |            |   |                  |   |            |  
|-------------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | - | ---------------- | - | ---------- | -
|                                                                                                               |  | May 31, 2006 |            |   | February 28,2006 |  
|Assets                                                                                                         |  |              |            |   |                  |   |            |  
|Current Assets:                                                                                                |  |              |            |   |                  |   |            |  
|Cash                                                                                                           |  | $            | 3,944      |   |                  | $ | 391        |  
|Accounts receivable, less allowance for doubtful accounts of $-0-                                              |  |              |           |   |                  |   | 994        |  
|Prepaid expenses                                                                                               |  |              | 6,746      |   |                  |   |           |  
|                                                                                                               |  |              |            |   |                  |   |            |  
|Total current assets                                                                                           |  |              | 10,690     |   |                  |   | 1,385      |  
|                                                                                                               |  |              |            |   |                  |   |            |  
|Property and equipment, net                                                                                    |  |              | 6,609      |   |                  |   | 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                                                                                                   |  | $            | 130,162    |   |                  | $ | 123,357    |  
|                                                                                                               |  |              |            |   |                  |   |            |  
|Liabilities and Stockholders Equity                                                                           |  |              |            |   |                  |   |            |  
|Current Liabilities:                                                                                           |  |              |            |   |                  |   |            |  
|Accounts payable and accrued expenses                                                                          |  | $            | 104,770    |   |                  | $ | 148,854    |  
|Accrued interest                                                                                               |  |              | 2,396      |   |                  |   | 2,036      |  
|Accrued interest, stockholders                                                                                 |  |              | 193,154    |   |                  |   | 178,229    |  
|Note payable, line of credit, related party                                                                    |  |              | 182,622    |   |                  |   | 182,622    |  
|Notes payable, stockholders                                                                                    |  |              | 741,952    |   |                  |   | 674,477    |  
|Notes payable                                                                                                  |  |              | 24,000     |   |                  |   | 68,155     |  
|                                                                                                               |  |              |            |   |                  |   |            |  
|Total current liabilities                                                                                      |  |              | 1,248,894  |   |                  |   | 1,254,373  |  
|                                                                                                               |  |              |            |   |                  |   |            |  
|Stockholders Equity:                                                                                          |  |              |            |   |                  |   |            |  
|Common stock, $.0001 par value 100,000,000 shares authorized, 32,135,657 and 30,818,991 issued and outstanding |  |              | 3,214      |   |                  |   | 3,082      |  
|Additional paid-in capital                                                                                     |  |              | 2,619,772  |   |                  |   | 2,525,999  |  
|Accumulated deficit                                                                                            |  |              | (3,741,718 | ) |                  |   | (3,660,097 | )
|                                                                                                               |  |              |            |   |                  |   |            |  
|Total Stockholders Equity                                                                                     |  |              | (1,118,732 | ) |                  |   | (1,131,016 | )
|                                                                                                               |  |              |            |   |                  |   |            |  
|Total Liabilities and Stockholders Equity                                                                     |  | $            | 130,162    |   |                  | $ | 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
theThree MonthsEndedMay 31, 2006 |         |   | For
theThree MonthsEndedMay 31, 2005 |  
|Revenues                   |  | $                                    |        |   |                                      | $ |         |  
|                           |  |                                      |         |   |                                      |   |          |  
|Operating Expenses:        |  |                                      |         |   |                                      |   |          |  
|Advertising and promotion  |  |                                      |        |   |                                      |   | 9,630    |  
|Auto expenses              |  |                                      |        |   |                                      |   | 3,230    |  
|Professional fees          |  |                                      | 23,505  |   |                                      |   | 66,221   |  
|Office expenses            |  |                                      | 38      |   |                                      |   | 3,393    |  
|Rent                       |  |                                      | 5,400   |   |                                      |   | 2,700    |  
|Salaries                   |  |                                      |        |   |                                      |   | 97,564   |  
|Telephone and utilities    |  |                                      | 3,530   |   |                                      |   | 2,455    |  
|Consulting costs           |  |                                      | 9,750   |   |                                      |   | 11,240   |  
|Investor relations         |  |                                      |        |   |                                      |   | 45,000   |  
|Web site development costs |  |                                      | 16,556  |   |                                      |   | 25,825   |  
|Depreciation               |  |                                      | 2,500   |   |                                      |   | 3,000    |  
|Travel and entertainment   |  |                                      | 2,117   |   |                                      |   | 4,196    |  
|Other                      |  |                                      | 2,140   |   |                                      |   | 6,089    |  
|                           |  |                                      |         |   |                                      |   |          |  
|Total operating expenses   |  |                                      | 65,536  |   |                                      |   | 280,543  |  
|                           |  |                                      |         |   |                                      |   |          |  
|Operating loss             |  |                                      | (65,536 | ) |                                      |   | (280,543 | )
|Other income (expense):    |  |                                      |         |   |                                      |   |          |  
|Interest expense           |  |                                      | (15,285 | ) |                                      |   | (15,209  | )
|                           |  |                                      |         |   |                                      |   |          |  
|Loss before income taxes   |  |                                      | (80,821 | ) |                                      |   | (295,752 | )
|Provision for income taxes |  |                                      | 800     |   |                                      |   | 1,600    |  
|                           |  |                                      |         |   |                                      |   |          |  
|Net loss                   |  | $                                    | (81,621 | ) |                                      | $ | (297,352 | )
|                           |  |                                      |         |   |                                      |   |          |  
|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 CASH FLOWS



|                                                                        |  |                                      |          |   |                                      |   |          |  
|----------------------------------------------------------------------- |  | ------------------------------------ | -------- | - | ------------------------------------ | - | -------- | -
|                                                                        |  | For
theThree MonthsEndedMay 31, 2006 |          |   | For
theThree MonthsEndedMay 31, 2005 |  
|Cash flows from operating activities:                                   |  |                                      |          |   |                                      |   |          |  
|Net loss                                                                |  | $                                    | (81,621  | ) |                                      | $ | (297,352 | )
|Adjustments to reconcile net loss to cash used by operating activities: |  |                                      |          |   |                                      |   |          |  
|Depreciation                                                            |  |                                      | 2,500    |   |                                      |   | 3,000    |  
|Common stock issued for services and interest expense                   |  |                                      | 9,750    |   |                                      |   | 180,677  |  
|Decrease in accounts receivable                                         |  |                                      | 994      |   |                                      |   | 1,270    |  
|Increase in prepaid expenses                                            |  |                                      | (6,746   | ) |                                      |   |         |  
|Increase (decrease) in accounts payable and accrued expenses            |  |                                      | (28,799  | ) |                                      |   | 77,879   |  
|                                                                        |  |                                      |          |   |                                      |   |          |  
|Net cash used by operating activities:                                  |  |                                      | (103,922 | ) |                                      |   | (34,526  | )
|                                                                        |  |                                      |          |   |                                      |   |          |  
|Cash flows from investing activities:                                   |  |                                      |          |   |                                      |   |          |  
|Investment in Car Pool Guy Partners, LLC                                |  |                                      |         |   |                                      |   | (5,000   | )
|                                                                        |  |                                      |          |   |                                      |   |          |  
|Net cash used by investing activities                                   |  | $                                    |         |   |                                      | $ | (5,000   | )
|                                                                        |  |                                      |          |   |                                      |   |          |  

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
theThree MonthsEndedMay 31, 2006 |         | For
theThree MonthsEndedMay 31, 2005 |  
|Cash flows from financing activities:                            |  |                                      |         |                                      |   |         |  
|Issuance of common stock                                         |  | $                                    | 50,000  |                                      | $ |        |  
|Proceeds from related party borrowings                           |  |                                      | 57,475  |                                      |   | 29,322  |  
|                                                                 |  |                                      |         |                                      |   |         |  
|Net cash provided by financing activities                        |  |                                      | 107,475 |                                      |   | 29,322  |  
|                                                                 |  |                                      |         |                                      |   |         |  
|Net increase (decrease) in cash                                  |  |                                      | 3,553   |                                      |   | (10,204 | )
|Cash, beginning of period                                        |  |                                      | 391     |                                      |   | 11,560  |  
|                                                                 |  |                                      |         |                                      |   |         |  
|Cash, end of period                                              |  | $                                    | 3,944   |                                      | $ | 1,356   |  
|                                                                 |  |                                      |         |                                      |   |         |  
|Interest paid                                                    |  | $                                    |        |                                      | $ |        |  
|                                                                 |  |                                      |         |                                      |   |         |  
|Income taxes paid                                                |  | $                                    |        |                                      | $ |        |  
|                                                                 |  |                                      |         |                                      |   |         |  
|Common shares issued to pay company expenses                     |  | $                                    | 9,750   |                                      | $ | 176,765 |  
|                                                                 |  |                                      |         |                                      |   |         |  
|Common shares issued to retire note payable and accrued interest |  | $                                    | 34,154  |                                      | $ | 103,912 |  
|                                                                 |  |                                      |         |                                      |   |         |  

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.



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| | 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.



| | 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.



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| | 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.



| | 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 three months ended May 31,
2006 and 2005, the Company has had no revenue.



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

At May 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
May 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 May 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 May 31, 2006 and February 28, 2006:



|                                     |  |             |        |                  |   |       
|------------------------------------ |  | ----------- | ------ | ---------------- | - | ------
|                                     |  | May 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       |  |             | 50,781 |                  |   | 48,281
|                                     |  |             |        |                  |   |       
|Property and equipment, net          |  | $           | 6,609  |                  | $ | 9,109 
|                                     |  |             |        |                  |   |       

Depreciation expense for the periods ended May 31, 2006 and 2005 was $2,500 and $3,000,
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 May 31, 2006 and February 28, 2006, the outstanding balance is $182,662.



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

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



|                                                                                                                                                       |  |             |         |                  |   |        
|------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------- | ------- | ---------------- | - | -------
|                                                                                                                                                       |  | May 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 |  | $           | 411,062 |                  | $ | 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 |                  |   | 180,000



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|                                                                                                                                                           |  |             |         |                  |   |        
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ------- | ---------------- | - | -------
|                                                                                                                                                           |  | May 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
June 6, 2007 |  |             | 52,475  |                  |   |       
|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                         |  |             | 10,000  |                  |   |       
|                                                                                                                                                           |  |             |         |                  |   |        
|                                                                                                                                                           |  | $           | 741,952 |                  | $ | 674,477
|                                                                                                                                                           |  |             |         |                  |   |        



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

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



|                                                                                                                |  |             |        |                  |   |       
|--------------------------------------------------------------------------------------------------------------- |  | ----------- | ------ | ---------------- | - | ------
|                                                                                                                |  | May 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 |                  |   | 24,000
|                                                                                                                |  |             |        |                  |   |       
|                                                                                                                |  | $           | 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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|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 quarter ending May 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.



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



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



|                                 |  |                                 |  |                                           |     |      |     |                         |   |  
|-------------------------------- |  | ------------------------------- |  | ----------------------------------------- | --- | ---- | --- | ----------------------- | - | -
|Options                          |  | Weighted-AverageExercise Shares |  | Weighted-AverageRemainingContractualPrice |     | Term |     | AggregateIntrinsicValue
|Outstanding at February 28, 2006 |  | 3,500,000                       |  | $                                         |    |      |     |                         |   |  
|Granted                          |  | -0-                             |  |                                           | .25 |      |     |                         |   |  
|Exercised                        |  | -0-                             |  |                                           | -0- |      |     |                         |   |  
|Forfeited or expired             |  | -0-                             |  |                                           | -0- |      |     |                         |   |  
|                                 |  |                                 |  |                                           |     |      |     |                         |   |  
|Outstanding at May 31, 2006      |  | 3,500,000                       |  | $                                         | .25 |      | 2.3 |                         | $ | 
|                                 |  |                                 |  |                                           |     |      |     |                         |   |  
|Exercisable at May 31, 2006      |  | 3,500,000                       |  | $                                         | .25 |      | 2.3 |                         | $ | 
|                                 |  |                                 |  |                                           |     |      |     |                         |   |  

The weighted-average grant-date fair value of options granted during the quarter ending
May 31, 2006 was $-0-. The total intrinsic value of options exercised during the quarter ended May 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 May 31, 2006 and 2005, respectively. The Company has loss carryforwards totaling $2,916,329 that may
be offset against future federal income taxes. If not used, the carryforwards will expire between 2020 and 2025. 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.



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

As shown in the accompanying
financial statements, the Company incurred a net loss of $81,621 during period ended May 31, 2006 and accumulated losses of $3,741,718 since opening for business in 2000. The Companys current liabilities exceed its current assets by
$1,238,204 at May 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 $53,375 in the May 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 $112,125 could be owed.



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##### Table of Contents

|14. | Subsequent Events
|--- | -----------------

On July 18, 2006, the
Company agreed to convert a $50,000 promissory note from its President and CEO into 1,000,000 shares of common stock at $.05 per share. In addition, the Company agreed to convert a $177,680 of promissory note principal from a related party
debtholder into 3,553,600 shares of common stock at $.05 per share.

In July 2006, the Company issued 500,000 shares of common stock for the
assignment of several projects developed by its President and CEO.



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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 did not generate any revenues
during the quarter ending May 31, 2006 or the quarter ending May 31, 2005.

The Companys operating expenses for the quarter ending
May 31, 2006 were $65,536, compared to operating expenses of $280,543 for the quarter ending May 31, 2005. This decrease in operating expenses is largely attributed to the decrease in salary expenses as the Companys officers agreed
to forgo all salaries, and a reduction in professional fees, investor relations costs, website development costs and advertising and promotion costs.

The
Company had a net loss of ($81,621) for the quarter ending May 31, 2006, compared to a net loss of ($297,352) for the quarter ending May 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 ($3,741,718) from March 3, 2000 (inception of Burnam Management) through May 31, 2006.

The Companys net cash used by operating activities increased from $34,526 for the quarter ending May 31, 2005 to $103,922 for the quarter ending May 31, 2006. This increase was primarily the result of the Companys
payment of accounts payable during the quarter ending May 31, 2006.

The Company completed its first feature film Carpool Guy which 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 33% 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.

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 agreed to assign to the Company any and all interest they may have in the project or new
limited liability company.



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##### Table of Contents

Outstanding Debt Obligations

To date, the Company has funded its operations through the issuance of common stock in exchange for cash and services, as well as through unsecured notes payable to stockholders and third parties. As of May 31, 2006, the Company has an
aggregate outstanding balance of $1,144,124 under the following 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 May 31,
2006, the Company had an outstanding balance of $567,561 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 May 31, 2006 was $206,074, 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 May 31, 2006, the outstanding balance under this obligation was $16,715.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On October 1, 2004, the Company entered into a promissory note with Eric and Sharon Perelman, an unaffiliated third party. The principal balance of this note was $24,000,
bearing interest at 6%, and matured on October 1, 2005. As of May 31, 2006, the outstanding balance under this note was $26,396, including accrued interest, and the Company was in default of its repayment obligations under the note.
Subsequent to the period covered by this report, on July 11, 2006, the Perelmans were paid $26,880 in complete satisfaction of all of its outstanding obligations under this promissory note.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In July 2005 the Company entered into a promissory note with Michael Wittlin in the principal amount of $180,000 which accrues interest at 6% and is due and payable in July 2006. As
of May 31, 2006, the outstanding balance under this note was $189,358, including accrued interest. Effective July 18, 2006, the Company and Mr. Wittlin agreed that Mr. Wittlin will convert the amount of $177,680 payable under the
note into 3,553,600 shares of Company Common Stock, the remaining amount due under the note will be paid in cash, and the Company will have no further obligations under the note. Mr. Wittlin is a stockholder of the Company and a member of
Carpool Guy LLC.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In July 2005, F. James McCarl loaned the Company $10,000. The loan bears interest at 6% and is due on demand. As of May 31, 2006, the balance due to Mr. McCarl was
$10,541, 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 May 31, 2006. This loan bears interest at 6% and is due on demand. As of May 31, 2006, the balance due to Mr. Szabo
under this loan was $64,696, including accrued interest. Mr. Szabo is a stockholder of the Company and member of Carpool Guy LLC.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Stephen Brown, the Companys former CEO and Chairman of the Board, loaned the Company $44,155 as of February 28, 2006. This loan was subsequently memorialized in a
Promissory Note dated April 6, 2006 which was assigned by Mr. Brown to a third party. Effective April 14, 2006, the Company entered into an agreement with the assignee third party of the Promissory Note pursuant to which the third
party agreed that all of 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. A portion of this note was repaid on behalf of the Company by Mr. Bernsen in July 2006.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Mr. Bernsen, the Companys CEO, has loaned the Company $52,783 (including accrued interest) as of May 31, 2006. On June 7, 2006, the Company and Mr. Bernsen
executed a Promissory Note in the principal amount of $50,000 for Mr. Bernsens loan to the Company made in May 2006. The note accrued interest at the rate of 6% and was due and payable on June 6, 2007. Subsequent to the period
covered by this report, on July 18, 2006, the Company and Mr. Bernsen entered into a note conversion agreement pursuant to which Mr. Bernsen converted the amounts payable under the note into 1,000,000 shares of Company Common Stock.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 debt obligations.

The proceeds from these notes and
the line of credit were used to meet the general working capital needs of the Company. The Companys general monthly expenses for during the quarter ending May 31, 2006 were approximately $22,000.

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.
| | --- | --------------------------------------------------------



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Liquidity

At
May 31, 2006 our total assets were $130,162, compared to $123,357 at February 28, 2006. At May 31, 2006, our current assets totaled $10,690 and our current liabilities were $1,248,894, as compared to current assets of $1,385 and
current liabilities of $1,254,373 at February 28, 2006. Our stockholders equity at May 31, 2006 was ($1,118,732), compared to stockholders equity at February 28, 2006 of ($1,131,016).

As of May 31, 2006, the Company had a cash balance of $3,944. Although the Company has substantially minimized its monthly operating expenses and Mr. Bernsen
is not currently paid any 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 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.



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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 May 31, 2006. For the quarter ended May 31, 2006, we had a net loss of ($81,621). We had a cumulative net loss of ($3,741,718) for the period since inception at March 3, 2000 through May 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 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.



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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 such indebtedness. As of May 31, 2006, the Company has an aggregate outstanding balance of $1,144,124 in debt obligations (including accrued interest), of which $954,766 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.

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.



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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 May 31, 2006, our officers and directors in the
aggregate owned approximately 31% of the Companys issued and outstanding shares. Accordingly, our officers and directors have the ability to influence the election of the Companys directors. Further, our officers 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 officers 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.

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.



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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.
| | - |  | -----------------------------------------------------------------------------------

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.



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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 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.



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|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
May 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 May 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.

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.



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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 is alleging 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. Both parties retained all claims, rights and defenses they have against one another regarding the lawsuit and underlying agreement. The Company intends to settle the matter with Savvior, or
defend itself in any lawsuit which may be re-filed by Savvior if settlement cannot be reached.

On July 11, 2006 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.



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

In April 2006 the Company issued 150,000
shares of its common stock to a Company employee in recognition of the employees contributions to the Company. The common stock was valued at $.065 per share at the time of issuance. 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.

In April 2006 the Company issued 166,666 shares of its common stock to a third party assignee of a Company promissory in the amount of $44,155, as
consideration for such third partys agreement to allow the Company to satisfy its obligations under the promissory note in exchange for the Companys payment of $10,000 on or before July 1, 2006. 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 May 31, 2006, the outstanding
balance under the unsecured promissory note was $567,561 and the outstanding balance under the unsecured line of credit was $206,074.



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As reported above, during the period covered by this report, the Company was in default under its October 2004 promissory
note with Eric and Sharon Perelman. The principal balance of this note was $24,000, bearing interest at 6%, and matured on October 1, 2005. Subsequent to the period covered by this report, on July 11, 2006, the Perelmans were
paid $26,880 in completed satisfaction of all of its outstanding obligations under the promissory note



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

None.



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

Effective July 18, 2006, the Company and
Mr. Bernsen entered into 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.
Effective as of July 18, 2006, Mr. Bernsen and the Company also entered into 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.

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.



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



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



|           |  |                                                                                  
|---------- |  | ---------------------------------------------------------------------------------
|ExhibitNo. |  | Description                                                                      
|           | 
|10.52      |  | Note Conversion Agreement with Mr. Bernsen dated July 11, 2006                   
|           | 
|10.53      |  | Assignment Agreement with Mr. Bernsen dated July 11, 2006                        
|           | 
|10.54      |  | Settlement Agreement with Michael Wittlin dated July 18, 2006                    
|           | 
|10.55      |  | Note Conversion Agreement with Michael Wittlin dated July 18, 2006               
|           | 
|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
|--- | -------------------

The Company filed a Form 8-K on April 10, 2006
regarding the Company entering into a binding term sheet for Donna on Demand; the termination of the Fox Reality Television Agreement for Fastest Car in America; the resignation of a director; and the termination of an
employment agreement and rescission of an asset purchase agreement.



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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: July 19, 2006 |  |  |  |                                       |  | /s/ Corbin Bernsen
|                    |  |  |  |                                       |  | By:                |  | Corbin Bernsen         
|                    |  |  |  |                                       |  | Title:             |  | Chief Executive Officer



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