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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB



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|x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------



For the quarterly period ended November 30, 2005



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
|- | -----------------------------------------------------------------------



For the transition period from to



000-29901

(Commission File No.)



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PUBLIC MEDIA WORKS, INC.

(Exact name of registrant as specified in its charter)



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



14759 Oxnard Street

Van Nuys, California 91411

(Address and telephone number of principal executive offices)



818-904-9029

(Issuers telephone number)



---



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



State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date: 40,818,991 shares of common stock issued and outstanding as of January 17, 2006.



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



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



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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      |  | 2-3 
|Consolidated Statements of Cash Flows      |  | 4-5 
|Notes to Consolidated Financial Statements |  | 6-15



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##### Table of Contents

PART I



Item 1. Financial Statements.



PUBLIC MEDIA WORKS, INC. AND SUBSIDIARY



CONSOLIDATED BALANCE SHEETS



|                                                                                                               |  |                   |            |   |                   |   |            |  
|-------------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | - | ----------------- | - | ---------- | -
|                                                                                                               |  | November 30, 2005 |            |   | February 28, 2005 |  
|Assets                                                                                                         |  |                   |            |   |                   |   |            |  
|Current Assets:                                                                                                |  |                   |            |   |                   |   |            |  
|Cash                                                                                                           |  | $                 | 3,704      |   |                   | $ | 11,560     |  
|Accounts receivable, related party, Car Pool Guy Partners, LLC                                                 |  |                   | 40,000     |   |                   |   |           |  
|Accounts receivable, less allowance for doubtful accounts of $-0-                                              |  |                   | 1,358      |   |                   |   | 3,876      |  
|                                                                                                               |  |                   |            |   |                   |   |            |  
|Total current assets                                                                                           |  |                   | 45,062     |   |                   |   | 15,436     |  
|                                                                                                               |  |                   |            |   |                   |   |            |  
|Property and equipment, net                                                                                    |  |                   | 16,625     |   |                   |   | 22,967     |  
|                                                                                                               |  |                   |            |   |                   |   |            |  
|Other Assets:                                                                                                  |  |                   |            |   |                   |   |            |  
|Film development costs                                                                                         |  |                   | 66,500     |   |                   |   | 4,000      |  
|Note receivable, related party                                                                                 |  |                   | 125,000    |   |                   |   | 125,000    |  
|Investment in Car Pool Guy Partners, LLC                                                                       |  |                   | 46,362     |   |                   |   | 24,000     |  
|                                                                                                               |  |                   |            |   |                   |   |            |  
|Total other assets                                                                                             |  |                   | 237,862    |   |                   |   | 153,000    |  
|                                                                                                               |  |                   |            |   |                   |   |            |  
|Total Assets                                                                                                   |  | $                 | 299,549    |   |                   | $ | 191,403    |  
|                                                                                                               |  |                   |            |   |                   |   |            |  
|Liabilities and Stockholders Equity                                                                           |  |                   |            |   |                   |   |            |  
|Current Liabilities:                                                                                           |  |                   |            |   |                   |   |            |  
|Accounts payable and accrued expenses                                                                          |  | $                 | 182,700    |   |                   | $ | 255,351    |  
|Accrued salaries and related taxes                                                                             |  |                   |           |   |                   |   | 97,198     |  
|Accrued interest                                                                                               |  |                   | 1,676      |   |                   |   | 10,459     |  
|Accrued interest, stockholders                                                                                 |  |                   | 163,652    |   |                   |   | 128,889    |  
|Deferred revenue                                                                                               |  |                   |           |   |                   |   | 10,000     |  
|Note payable, line of credit, related party                                                                    |  |                   | 182,622    |   |                   |   | 168,000    |  
|Notes payable, stockholders                                                                                    |  |                   | 674,477    |   |                   |   | 530,176    |  
|Notes payable                                                                                                  |  |                   | 24,000     |   |                   |   | 249,000    |  
|                                                                                                               |  |                   |            |   |                   |   |            |  
|Total current liabilities                                                                                      |  |                   | 1,229,127  |   |                   |   | 1,449,073  |  
|                                                                                                               |  |                   |            |   |                   |   |            |  
|Stockholders Equity:                                                                                          |  |                   |            |   |                   |   |            |  
|Common stock, $.0001 par value 100,000,000 shares authorized, 30,818,991 and 25,552,500 issued and outstanding |  |                   | 3,082      |   |                   |   | 2,555      |  
|Additional paid-in capital                                                                                     |  |                   | 2,527,999  |   |                   |   | 1,684,849  |  
|Accumulated deficit                                                                                            |  |                   | (3,460,659 | ) |                   |   | (2,945,074 | )
|                                                                                                               |  |                   |            |   |                   |   |            |  
|Total Stockholders Equity                                                                                     |  |                   | (929,578   | ) |                   |   | (1,257,670 | )
|                                                                                                               |  |                   |            |   |                   |   |            |  
|Total Liabilities and Stockholders Equity                                                                     |  | $                 | 299,549    |   |                   | $ | 191,403    |  
|                                                                                                               |  |                   |            |   |                   |   |            |  



The accompanying notes
are an integral

part of the financial statements.



1



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##### Table of Contents

PUBLIC MEDIA WORKS, INC. AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF OPERATIONS



|                             |  |                                              |         |   |                                              |   |          |  
|---------------------------- |  | -------------------------------------------- | ------- | - | -------------------------------------------- | - | -------- | -
|                             |  | For the Three Months Ended November 30, 2005 |         |   | For the Three Months Ended November 30, 2004 |  
|Revenues, net                |  | $                                            | 50,000  |   |                                              | $ | 65,000   |  
|Cost of film development     |  |                                              |        |   |                                              |   | 58,672   |  
|                             |  |                                              |         |   |                                              |   |          |  
|Gross profit                 |  |                                              | 50,000  |   |                                              |   | 6,328    |  
|                             |  |                                              |         |   |                                              |   |          |  
|Operating Expenses:          |  |                                              |         |   |                                              |   |          |  
|Advertising and promotion    |  |                                              | 11,674  |   |                                              |   | 6,540    |  
|Health insurance             |  |                                              |        |   |                                              |   | 2,706    |  
|Professional fees            |  |                                              | 27,969  |   |                                              |   | 39,750   |  
|Office expenses              |  |                                              | 1,106   |   |                                              |   | 1,995    |  
|Listing fees                 |  |                                              | 3,785   |   |                                              |   |         |  
|Rent                         |  |                                              | 2,700   |   |                                              |   | 2,700    |  
|Salaries                     |  |                                              |        |   |                                              |   | 90,000   |  
|Payroll taxes                |  |                                              |        |   |                                              |   | 2,675    |  
|Telephone and utilities      |  |                                              | 794     |   |                                              |   | 4,218    |  
|Consulting costs             |  |                                              | 13,640  |   |                                              |   | 10,237   |  
|Web site development costs   |  |                                              | (1,292  | ) |                                              |   | 36,056   |  
|Depreciation                 |  |                                              | 3,000   |   |                                              |   | 3,000    |  
|Travel and entertainment     |  |                                              | 13,040  |   |                                              |   | 14,696   |  
|Other                        |  |                                              | 2,144   |   |                                              |   | 5,696    |  
|                             |  |                                              |         |   |                                              |   |          |  
|Total operating expenses     |  |                                              | 78,560  |   |                                              |   | 220,269  |  
|                             |  |                                              |         |   |                                              |   |          |  
|Operating loss               |  |                                              | (28,560 | ) |                                              |   | (213,941 | )
|                             |  |                                              |         |   |                                              |   |          |  
|Other income (expense):      |  |                                              |         |   |                                              |   |          |  
|Interest income              |  |                                              |        |   |                                              |   | 1,250    |  
|Interest expense             |  |                                              | (14,874 | ) |                                              |   | (12,938  | )
|                             |  |                                              |         |   |                                              |   |          |  
|Total other income (expense) |  |                                              | (14,874 | ) |                                              |   | (11,688  | )
|                             |  |                                              |         |   |                                              |   |          |  
|Loss before income taxes     |  |                                              | (43,434 | ) |                                              |   | (225,629 | )
|Provision for income taxes   |  |                                              |        |   |                                              |   |         |  
|                             |  |                                              |         |   |                                              |   |          |  
|Net loss                     |  | $                                            | (43,434 | ) |                                              | $ | (225,629 | )
|                             |  |                                              |         |   |                                              |   |          |  
|Net loss per share           |  | $                                            |        |   |                                              | $ | (.01     | )
|                             |  |                                              |         |   |                                              |   |          |  



The accompanying notes
are an integral

part of the financial statements.



2



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##### Table of Contents

PUBLIC MEDIA WORKS, INC. AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF OPERATIONS



|                             |  |                                             |          |   |                                             |   |          |  
|---------------------------- |  | ------------------------------------------- | -------- | - | ------------------------------------------- | - | -------- | -
|                             |  | For the Nine Months Ended November 30, 2005 |          |   | For the Nine Months Ended November 30, 2004 |  
|Revenues, net                |  | $                                           | 50,000   |   |                                             | $ | 135,000  |  
|Cost of film development     |  |                                             |         |   |                                             |   | 58,672   |  
|                             |  |                                             |          |   |                                             |   |          |  
|Gross profit                 |  |                                             | 50,000   |   |                                             |   | 76,328   |  
|                             |  |                                             |          |   |                                             |   |          |  
|Operating Expenses:          |  |                                             |          |   |                                             |   |          |  
|Advertising and promotion    |  |                                             | 28,844   |   |                                             |   | 22,545   |  
|Auto expenses                |  |                                             | 3,230    |   |                                             |   | 18,193   |  
|Insurance                    |  |                                             |         |   |                                             |   | 6,765    |  
|Professional fees            |  |                                             | 132,263  |   |                                             |   | 120,086  |  
|Investor relations           |  |                                             | 105,000  |   |                                             |   | 20,000   |  
|Listing fees                 |  |                                             | 8,385    |   |                                             |   | 5,500    |  
|Office expenses              |  |                                             | 4,716    |   |                                             |   | 6,764    |  
|Rent                         |  |                                             | 8,100    |   |                                             |   | 8,354    |  
|Salaries                     |  |                                             | 94,121   |   |                                             |   | 377,727  |  
|Payroll taxes                |  |                                             |         |   |                                             |   | 26,327   |  
|Telephone and utilities      |  |                                             | 5,751    |   |                                             |   | 13,010   |  
|Consulting costs             |  |                                             | 58,930   |   |                                             |   | 32,680   |  
|Web site development costs   |  |                                             | 36,808   |   |                                             |   | 40,741   |  
|Depreciation                 |  |                                             | 9,000    |   |                                             |   | 9,000    |  
|Travel and entertainment     |  |                                             | 17,254   |   |                                             |   | 107,181  |  
|Other                        |  |                                             | 6,678    |   |                                             |   | 18,211   |  
|                             |  |                                             |          |   |                                             |   |          |  
|Total operating expenses     |  |                                             | 519,080  |   |                                             |   | 833,084  |  
|                             |  |                                             |          |   |                                             |   |          |  
|Operating loss               |  |                                             | (469,080 | ) |                                             |   | (756,756 | )
|                             |  |                                             |          |   |                                             |   |          |  
|Other income (expense):      |  |                                             |          |   |                                             |   |          |  
|Interest income              |  |                                             |         |   |                                             |   | 3,750    |  
|Interest expense             |  |                                             | (44,905  | ) |                                             |   | (29,805  | )
|                             |  |                                             |          |   |                                             |   |          |  
|Total other income (expense) |  |                                             | (44,905  | ) |                                             |   | (26,055  | )
|                             |  |                                             |          |   |                                             |   |          |  
|Loss before income taxes     |  |                                             | (513,985 | ) |                                             |   | (782,811 | )
|Provision for income taxes   |  |                                             | 1,600    |   |                                             |   | 1,700    |  
|                             |  |                                             |          |   |                                             |   |          |  
|Net loss                     |  | $                                           | (515,585 | ) |                                             | $ | (784,511 | )
|                             |  |                                             |          |   |                                             |   |          |  
|Net loss per share           |  | $                                           | (.02     | ) |                                             | $ | (.03     | )
|                             |  |                                             |          |   |                                             |   |          |  



The accompanying notes
are an integral

part of the financial statements.



3



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##### Table of Contents

PUBLIC MEDIA WORKS, INC. AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                            |  |                                             |          |   |                                             |   |          |  
|--------------------------------------------------------------------------- |  | ------------------------------------------- | -------- | - | ------------------------------------------- | - | -------- | -
|                                                                            |  | For the Nine Months Ended November 30, 2005 |          |   | For the Nine Months Ended November 30, 2004 |  
|Cash flows from operating activities:                                       |  |                                             |          |   |                                             |   |          |  
|Net loss                                                                    |  | $                                           | (515,585 | ) |                                             | $ | (784,511 | )
|Adjustments to reconcile net loss to cash provided by operating activities: |  |                                             |          |   |                                             |   |          |  
|Depreciation                                                                |  |                                             | 9,000    |   |                                             |   | 9,000    |  
|Common stock issued for services and interest expense                       |  |                                             | 370,377  |   |                                             |   |         |  
|Accounts payable and accrued expenses converted to note payable             |  |                                             | 180,000  |   |                                             |   |         |  
|Increase in accounts receivable                                             |  |                                             | (37,482  | ) |                                             |   | (1,800   | )
|Decrease in shareholder receivable                                          |  |                                             |         |   |                                             |   | 65,000   |  
|Increase in prepaid expenses and interest receivable                        |  |                                             |         |   |                                             |   | (2,596   | )
|Increase (decrease) in accounts payable and accrued expenses                |  |                                             | (143,869 | ) |                                             |   | 152,960  |  
|Decrease in deferred revenue                                                |  |                                             | (10,000  | ) |                                             |   |         |  
|                                                                            |  |                                             |          |   |                                             |   |          |  
|Net cash used by operating activities:                                      |  |                                             | (147,559 | ) |                                             |   | (561,947 | )
|                                                                            |  |                                             |          |   |                                             |   |          |  
|Cash flows from investing activities:                                       |  |                                             |          |   |                                             |   |          |  
|Purchase of property and equipment                                          |  |                                             | (2,658   | ) |                                             |   | (393     | )
|Film development costs capitalized                                          |  |                                             |         |   |                                             |   | (2,500   | )
|Investment in Car Pool Guy Partners, LLC                                    |  |                                             | (22,362  | ) |                                             |   |         |  
|                                                                            |  |                                             |          |   |                                             |   |          |  
|Net cash used by investing activities                                       |  | $                                           | (25,020  | ) |                                             | $ | (2,893   | )
|                                                                            |  |                                             |          |   |                                             |   |          |  



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 the Nine Months Ended November 30, 2005 |         |   | For the Nine Months Ended November 30, 2004 |  
|Cash flows from financing activities:                                       |  |                                             |         |   |                                             |   |         |  
|Issuance of common stock                                                    |  | $                                           | 85,800  |   |                                             | $ | 155,000 |  
|Proceeds from related party borrowings                                      |  |                                             | 78,923  |   |                                             |   | 50,000  |  
|Proceeds from short-term borrowings                                         |  |                                             |        |   |                                             |   | 349,000 |  
|                                                                            |  |                                             |         |   |                                             |   |         |  
|Net cash provided by financing activities                                   |  |                                             | 164,723 |   |                                             |   | 554,000 |  
|                                                                            |  |                                             |         |   |                                             |   |         |  
|Net increase (decrease) in cash                                             |  |                                             | (7,856  | ) |                                             |   | (10,840 | )
|Cash, beginning of period                                                   |  |                                             | 11,560  |   |                                             |   | 12,200  |  
|                                                                            |  |                                             |         |   |                                             |   |         |  
|Cash, end of period                                                         |  | $                                           | 3,704   |   |                                             | $ | 1,360   |  
|                                                                            |  |                                             |         |   |                                             |   |         |  
|Interest paid                                                               |  | $                                           |        |   |                                             | $ |        |  
|                                                                            |  |                                             |         |   |                                             |   |         |  
|Income taxes paid                                                           |  | $                                           |        |   |                                             | $ | 4,100   |  
|                                                                            |  |                                             |         |   |                                             |   |         |  
|2,198,711 common shares issued to pay company expenses                      |  | $                                           | 366,465 |   |                                             | $ |        |  
|                                                                            |  |                                             |         |   |                                             |   |         |  
|1,959,780 common shares issued to retire notes payable and accrued interest |  | $                                           | 328,912 |   |                                             | $ |        |  
|                                                                            |  |                                             |         |   |                                             |   |         |  
|Accounts payable and accrued expenses converted to note payable             |  | $                                           | 180,000 |   |                                             | $ |        |  
|                                                                            |  |                                             |         |   |                                             |   |         |  
|250,000 common shares issued to purchase film rights and scripts            |  | $                                           | 62,500  |   |                                             | $ |        |  
|                                                                            |  |                                             |         |   |                                             |   |         |  



The accompanying notes
are an integral

part of the financial statements.



5



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##### Table of Contents

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
share exchange agreement is essentially a reverse merger with Public Media Works, Inc., the surviving company.



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



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



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



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



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



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



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



The Company expenses all advertising and promotion costs as incurred.



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##### Table of Contents

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



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



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



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



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



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



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



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



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



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



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



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



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



7



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##### Table of Contents

| | 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 nine months ended November 30, 2005 and 2004, the Company has recognized $50,000 and $135,000 of revenue, respectively. $50,000 was earned in
October 2005 for producing the movie Car Pool Guy. See note 5 for information related to the joint venture with Car Pool Guy Partners, LLC. $50,000 was earned for writing a movie script in March 2004 called Over the Hedge.
$85,000 was earned in the second quarter of 2004 for producing a pilot for a potential television reality show with a joint venture partner, see note 6.



|3. | Note Receivable, Related Party
|-- | ------------------------------



On November 30, 2005 and February 28, 2005, the Company has a $125,000 note receivable. On December 19, 2003, the Company loaned $125,000
to Old Tucson Corporation, a company owned by stockholders of Public Media Works, Inc. The note receivable bears interest at 4% and matured on June 20, 2004, which is now in default. The note is secured by the stockholders stock (625,000
common shares) in Public Media Works, Inc. The Company is currently negotiating repayment terms on the note receivable. Under terms of the original agreement, $3,750 of interest income would have been recorded in the nine months ending
November 30, 2005, however, due to the non-payment, interest has not been recorded. $3,750 of interest income was recorded in the Statement of Operations for the nine months ended November 30, 2004.



|4. | Film Development Costs
|-- | ----------------------



At November 30, 2005 and February 28, 2005, the Company has capitalized $66,500 and $4,000, respectively 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 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.



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##### Table of Contents

|5. | Investment in Car Pool Guy Partners, LLC
|-- | ----------------------------------------



At November 30, 2005 and February, 28, 2005, the Company has an investment of $46,362 and $24,000 in Car Pool Guy Partners, LLC, respectively. 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 will receive 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 November 30, 2005, $42,362 has been invested by the Company plus the $4,000 capitalized cost of the screenplay for a total investment of $46,362.



A stockholder of the Company is also a one-third owner 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.



|6. | Investment in NFPMW, LLC
|-- | ------------------------



On August 17, 2004, the Company received a 25% interest in NFPMW, LLC. The LLC was created so that if the reality television show pilot that the
Company produced in 2004 is sold to one of the television networks, the Company is to receive 25% of the future profits from the joint venture. At November 30, 2005 and February 28, 2005, the investment in the LLC is -0-. The Company has
made no capital contributions to the LLC and the LLC has had no income or loss since inception.



|7. | Property and Equipment
|-- | ----------------------



Property and equipment comprises the following at November 30, 2005 and February 28, 2005:



|                                     |  |                   |        |                   |   |       
|------------------------------------ |  | ----------------- | ------ | ----------------- | - | ------
|                                     |  | November 30, 2005 |        | February 28, 2005
|Furniture and leasehold improvements |  | $                 | 20,649 |                   | $ | 20,649
|Computer and office equipment        |  |                   | 57,494 |                   |   | 54,836
|                                     |  |                   |        |                   |   |       
|                                     |  |                   | 78,143 |                   |   | 75,485
|Less: accumulated depreciation       |  |                   | 61,518 |                   |   | 52,518
|                                     |  |                   |        |                   |   |       
|Property and equipment, net          |  | $                 | 16,625 |                   | $ | 22,967
|                                     |  |                   |        |                   |   |       



Depreciation expense
for the periods ended November 30, 2005 and 2004 was $9,000.



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##### Table of Contents

|8. | Deferred Revenue
|-- | ----------------



At November 30, 2005 and February 28, 2005, the company has recorded $-0- and $10,000 of deferred revenue, respectively for producing the film
Car Pool Guy. See note 5. In accordance with its revenue recognition policy, the producing fee has been properly reported as deferred revenue until all conditions of revenue recognition have been met.



|9. | 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
and officer 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 November 30, 2005, the line of credit has not been renewed and the creditor has
demanded repayment. At November 30, 2005 and February 28, 2005, the outstanding balance is $182,622.



|10. | Note Payable, Stockholders
|--- | --------------------------



Stockholder notes payable consist of the following at November 30, 2005 and February 28, 2005:



|                                                                                                                                                       |  |                   |         |                   |   |        
|------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------- | ------- | ----------------- | - | -------
|                                                                                                                                                       |  | November 30, 2005 |         | February 28, 2005
|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 |                   | $ | 410,461
|                                                                                                                                                       |  |                  
|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 |                   |   |       
|                                                                                                                                                       |  |                  
|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  |                   |   | 100,000



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##### Table of Contents

|                                                                                                                                           |  |                   |         |                   |   |        
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------- | ------- | ----------------- | - | -------
|                                                                                                                                           |  | November 30, 2005 |         | February 28, 2005
|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 |  |                   | 56,700  |                   |   | 3,000  
|                                                                                                                                           |  |                   |         |                   |   |        
|                                                                                                                                           |  | $                 | 674,477 |                   | $ | 530,176
|                                                                                                                                           |  |                   |         |                   |   |        



|11. | Notes Payable
|--- | -------------



Notes payable consist of the following at November 30, 2005 and February 28, 2005:



|                                                                                                              |  |                   |        |                   |   |        
|------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------ | ----------------- | - | -------
|                                                                                                              |  | November 30, 2005 |        | February 28, 2005
|Note payable to an individual, interest is being charged at 6%, the note is unsecured and due June 1, 2005    |  | $                 |       |                   | $ | 225,000
|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 |                   | $ | 249,000
|                                                                                                              |  |                   |        |                   |   |        



|12. | Issuance of Common Stock
|--- | ------------------------



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



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



On August 30, 2003, 20,000,000 shares of common
stock were issued in a share exchange agreement with a private company, Public Media Works, Inc. (PMW). PMW is a wholly-owned subsidiary of the Company and is considered the survivor. Burnam Management, Inc. has no assets, liabilities or operations
at the time of the merger.



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



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##### Table of Contents

On February 13, 2005, the Company issued 40,000 shares of its common stock at $.75 per share for a
total amount of $30,000.



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 $51,700 of expenses by issuing 206,800 shares of common stock at $.25 per share. $25,000 was reported as consulting expense
and $26,700 was reported of 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.



|13. | Stock Options and Warrants
|--- | --------------------------



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 his affiliation with the Companys Board of Directors, whichever occurs
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.



12



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##### Table of Contents

Had compensation costs for the stock options been determined on the fair value at the grant date
October 1, 2005, consistent with the provisions of SAFS No. 123, the Companys net loss would have remained the same as indicated below:



|                                                                                      |  |                  |          |  
|------------------------------------------------------------------------------------- |  | ---------------- | -------- | -
|                                                                                      |  | November 30,2005 |         
|Net loss, as reported                                                                 |  | $                | (515,585 | )
|Less: stock based compensation determined under the fair value methods for all awards |  |                  |         |  
|                                                                                      |  |                  |          |  
|Net loss, pro forma                                                                   |  | $                | (515,585 | )
|                                                                                      |  |                  |          |  



The weighted average
fair value at date of grant for options granted during the nine months ended November 30, 2005 was $.25. The fair value of options at date of grant was estimated using the Black-Scholes option pricing model with the following weighted average
assumptions:



|                                  |  |               
|--------------------------------- |  | --------------
|Expected life (years)             |  | 9 mo. to 3 yrs
|Risk free interest rate           |  | 2.1% to 3.4%  
|Dividend yield                    |  | 0.00%         
|Volatility (Minimum Value Method) |  | .001          



At November 30,
2005, the options that are exercisable total 3,500,000.



For
options outstanding at November 30, 2005, the weighted average remaining contract life in months is 26.



|14. | Income Taxes
|--- | ------------



The Company has had no taxable income under Federal or State tax laws. A state minimum tax of $1,600 and $1,700 has been reported in the statement of
operations for the periods ended November 30, 2005 and 2004, respectively. The Company has loss carryforwards totaling $2,213,608 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.



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##### Table of Contents

|15. | Going Concern
|--- | -------------



As shown in the accompanying financial statements, the Company incurred a net loss of $515,585 during the nine months ended November 30, 2005 and
accumulated losses of $3,460,659 since opening for business in 2000. The Companys current liabilities exceed its current assets by $1,184,065 at November 30, 2005. 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.



|16. | Subsequent Events
|--- | -----------------



On December 21, 2005, the Company purchased certain assets from Milago Entertainment, Inc. The Company purchased ten feature film projects and two
other projects from Milago in exchange for 6,000,000 shares of the Companys common stock valued at $.10 per share or $600,000.



The Company entered into a three-year employment agreement with its new Chief Executive Officer and Interim Chief Financial Officer, Mr. Stephen
Brown. Under the terms of the agreement, Mr. Brown will receive 4,000,000 shares of the Companys common stock subject to the Companys repurchase rights, an annual cash salary of $20,000 per month in the second year of employment and
$30,000 per month in the third year of employment and stock options to purchase up to 20,000,000 shares of common stock as follows. Between May 21, 2006 and June 21, 2006, 5,000,000 shares may be purchased at $.15 per share if the
Companys trading price exceeds $.30 per share for thirty days preceding exercise of the options. Between December 21, 2006 and January 21, 2007, 5,000,000 shares may be purchased at $.30 per share if the Companys trading price
exceeds $.60 per share for thirty days preceding exercise of the options. Between May 21, 2007 and June 21, 2007, 5,000,000 shares may be purchased at $.60 per share if the Companys trading price exceeds $1.20 per share for thirty
days preceding exercise of the options. Between December 31, 2007 and January 21, 2008, 5,000,000 shares may be purchased at $1.20 per share if the Companys trading price exceeds $2.40 per share for thirty days preceding exercise of
the options.



Also effective December 21, 2005, the
Company terminated the October 1, 2005 employment agreements with its President, Corbin Bernsen, Former Chief Financial Officer, George Mainas and it consulting agreement with its former Chairman of the Board, Thomas Szabo.



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##### Table of Contents

|17. | Litigation
|--- | ----------



The Company has had a claim filed against them for non-payment of services provided. The Company has not contested the amount of the claim and has accrued
and recorded the unpaid amount in the November 30, 2005 financial statements.



|18. | New Accounting Pronouncements
|--- | -----------------------------



On December 16, 2004, the Financial Accounting Standards Board issued SFAS No. 123 (revised 2004), Share-Based Payment (SFAS
No. 123(R)), which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS
No. 95, Statement of Cash Flows. Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to employees, including
grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. The new standard will be effective for public entities in the first interim or annual reporting
period beginning after June 15, 2005. The Company has not yet assessed the impact of adopting this new standard.



15



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##### Table of Contents

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



The following plan of operation should be read in conjunction with the Companys 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. The Companys actual results and the timing of certain events could differ materially
from those anticipated in these forward-looking statements.



Asset
Purchase From Milagro Entertainment, Inc.



After the period covered by
this report, effective as of December 21, 2005, the Company completed an asset purchase with Milagro Entertainment, Inc. and Stephen Brown, as the sole shareholder of Milagro. Under the terms of the asset purchase agreement, the Company
purchased ten feature film projects and two projects from Milagro, in exchange for the Companys issuance of 6,000,000 shares of Company Common Stock. The acquired projects include life story rights of entertainers, published book rights,
completed scripts for adaptation to film and/or television, and numerous television projects in different stages of development in areas including drama, comedy and reality television. The Company intends to develop several of theses projects, as
well as existing Company projects, and any additional television and movie projects it may identify. The Company intends to conduct business under the name Milagro Pictures. The purchase and development of these projects represents a
shift by the Company from a web-based interactive virtual studio to a more traditional television and film production company which will seek out a variety of projects for development and distribution.



Management Reorganization



After the period covered by this report, effective as of December 21, 2005,
Mr. Mainas resigned as the Chief Executive Officer of the Company, and Mr. Szabo resigned from the Board of Directors, and as its Chairman, of the Company. The resignations of Mr. Mainas and Mr. Szabo were not due to any
disagreements with the Company. Corbin Bernsen, the Companys founder, remains as the President and as a director of the Company. Effective as of December 21, 2005, the Board of Directors of the Company appointed Mr. Brown as the
Chief Executive Officer and Interim Chief Financial Officer of the Company, and appointed Mr. Brown as the Chairman of the Board of Directors of the Company. The Company entered into the following agreements with Mr. Brown effective as of
December 21, 2005:



| |  |  | A three year employment agreement with Mr. Brown pursuant to which he is to serve as Chief Executive Officer and Interim Chief Financial Officer of the Company. Under the terms
of the employment agreement, Mr. Brown is to receive (i) 4,000,000 shares of Company Common Stock, subject to the Companys repurchase rights as described below, (ii) an annual cash salary to be paid during the second and third
year of his employment, and (iii) options to purchase up to 20,000,000 shares of Company Common Stock with such vesting, exercise prices and exercise rights as described below. The terms of Mr. Browns Employment Agreement require him
to devote his full business time, energy, and skill to the affairs of the Company, and Mr. Brown does not intend to conduct any further business within Milagro Entertainment.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | A Restricted Common Stock Purchase Agreement pursuant to which the Company has certain rights to repurchase, at $.0001 per share, the above-referenced 4,000,000 shares of Company
Common Stock granted to Mr. Brown. Under the terms of the agreement, the Company may exercise such repurchase rights in the event of Mr. Browns termination of employment with the Company, with such repurchase rights to terminate
commencing January 21, 2005 at the rate of approximately 166,166 shares per month during the term of the Employment Agreement.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | A Stock Option Agreement pursuant to which the Company granted Mr. Brown the option to purchase up to 20,000,000 shares of Company Common Stock as follows: (i) between
May 21, 2006 and June 21, 2006, Mr. Brown may purchase up to 5,000,000 shares of Company Common Stock at an exercise price of $.15 per share, provided the average closing price of the Company Common Stock on the OTC Bulletin Board or
a national securities exchange (the Trading Price) meets or exceeds $.30 per share for the thirty (30) trading days preceding Mr. Browns election to exercise the options; (ii) between December 21, 2006 and
January 21, 2007, Mr. Brown may purchase up to 5,000,000 shares of Company Common Stock at an exercise price of $.30 per share, provided the Trading Price meets or exceeds $.60 per share for the thirty (30) trading days preceding
Mr. Browns election to exercise the options; (iii) between May 21, 2007 and June 21, 2007, Mr. Brown may purchase up to 5,000,000 shares of Company Common Stock at an exercise price of $.60 per share, provided the
Trading Price meets or exceeds $1.20 per share for the thirty (30) trading days preceding Mr. Browns election to exercise the options; and (iv) between December 21, 2007 and January 21, 2008, Mr. Brown may
purchase up to 5,000,000 shares of Company Common Stock at an exercise price of $1.20 per share, provided the Trading Price meets or exceeds $2.40 per share for the thirty (30) trading days preceding Mr. Browns election to exercise
the options; provided, however, in the event of any termination of Mr. Browns employment under his Employment Agreement, all of the options will expire sixty (60) days after such termination.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As part of the management reorganization, the Company entered into the following agreements
with Mr. Bernsen, Mr. Mainas, and Mr. Szabo:



| |  |  | A letter agreement pursuant to which Mr. Bernsen agreed to terminate his employment agreement dated October 1, 2005, and to amend the terms of his option agreement dated
October 1, 2005 to purchase up to 1,000,000 shares of common stock, at an exercise price of $.25 per share. The amendment to the option agreement provides that such options shall expire if not exercised within six (6) months after
Mr. Bernsen ceases to be on the Board of Directors of the Company.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | A letter agreement pursuant to which Mr. Mainas agreed to terminate his employment agreement dated October 1, 2005, and to amend the terms of his option agreement dated
October 1, 2005 to purchase up to 1,000,000 shares of common stock, at an exercise price of $.25 per share. The amendment to the option agreement provides that such options shall expire if not exercised within six (6) months after
Mr. Mainas ceases to be on the Board of Directors of the Company.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | A letter agreement pursuant to which Mr. Szabo agreed to terminate his consulting agreement dated October 1, 2005 and to amend the terms of his option agreement dated
October 1, 2005 to purchase up to 1,000,000 shares of common stock, at an exercise price of $.25 per share. The amendment to the option agreement provides that such options shall expire if not exercised within six (6) months after
December 21, 2005.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Plan of Operations



The Company had $50,000 in revenues during the quarter ended November 30, 2005. As of
November 30, 2005, the Company had a cash balance of $3,704. With the loan commitment by Company management, and cash on hand, management believes the Company has the capital resources necessary to satisfy the Companys total operating
costs through June 2006. The Company will need to raise additional funds in the next twelve months for working capital. The Company anticipates raising such funds through debt, convertible debt, or the sale of equity. There can be no
assurance as to whether, when, or upon what terms the Company will be able to consummate any financing or raise any additional funds. The Company also anticipates entering into joint ventures with third parties to fund specific television and film
projects.



Over the next twelve months, the Company does not anticipate
significant changes in the number of the Companys employees, nor does the Company anticipate the purchase or sale of any significant equipment or any product research and development costs.



17



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##### Table of Contents

The Company had a net loss of ($43,434) for the quarter ended November 30, 2005 and a net loss of ($515,585) for the
nine months ended November 30, 2005. The Company has a cumulative net loss of ($3,460,659) from March 3, 2000 (inception of Burnam Management) through November 30, 2005. To date, the Company has funded its operations principally
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 November 30, 2005, the Company has an aggregate outstanding balance of $1,046,427 under
the following obligations:



| |  |  | On August 30, 2000, the Company and George Mainas, a member of the Board of Directors of the Company, entered into an unsecured promissory note in the principal amount of
$340,000, bearing interest at 8%. As of November 30, 2005, the Company had an outstanding balance of $553,961 under the promissory note, including accrued interest. The promissory note is payable on demand. 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 November 30, 2005 was $197,841 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. The Board of Directors of the Company has passed a corporate resolution providing that 50% of all future revenues of the Company will be used to pay down the
Companys obligations under outstanding promissory notes, including Mr. Mainas promissory note, and the 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 November 30, 2005, the outstanding balance under this obligation was $16,715.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On October 1, 2004, the Company entered into a promissory note with Eric and Sharon Pearlman, an unaffiliated third party. The principal balance of this note was $24,000,
bearing interest at 6%, and matured on October 1, 2005. The Company is in default of its repayment obligations under the promissory note. On November 30, 2005, the outstanding balance under this note was $25,676, including accrued
interest.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 November 30, 2005, the outstanding balance under this note was $183,995 including accrued interest. Mr. Wittlin is a shareholder 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 November 30, 2005, the balance due to Mr. McCarl was
$10,242. Mr. McCarl is a shareholder of the Company and a member of Carpool Guy LLC.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | As of November 30, 2005, Thomas Szabo has loaned the Company $56,700. This loan bears interest at 6% and is due on demand. As of November 30, 2005, the balance due to
Mr. Szabo under this loan was $57,997, including accrued interest. Mr. Szabo is a shareholder of the Company and member of Carpool Guy LLC.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



During the next twelve months, the Company may generate revenues from the projects acquired from Milagro Entertainment, from the existing
Company projects listed below, or from new projects identified by the Company; provided, however, there can be no assurances that any such projects will be completed, or if completed, will result in any revenues to the Company.



Fastest Car In America



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The Company has developed the concept for a reality-based street racing television show called Fastest Car In
America. The Company entered into an agreement with Fox Reality Television in January 2006 pursuant to which the Company has agreed to purchase 13 weeks of airtime during the second calendar quarter of 2006 to run the show in exchange for the
Companys payment of $160,000. The Company is currently negotiating with various third party sponsors for the show.



Car Pool Guy



The Company finished principal photography of its first feature film Carpool Guy in March 2005. The Company funded the film production by entering into an
exclusive production agreement in October 2004 with Carpool Guy Partners LLC (the Carpool LLC). Pursuant to the terms of the exclusive production agreement, as amended, the Company assigned its rights in the Carpool Guy
production to Carpool LLC and agreed to provide marketing and public relations services for the film, in exchange for the right to receive 40% of the distributable profits of Carpool LLC and the payment of a $50,000 production fee which the Company
received in October 2005. The other members of Carpool LLC include Thomas Szabo, the Companys Chairman of the Board, and Michael Wittlin, a former Company employee.



The Company entered into a distribution agreement with LA Ideas, Inc. in April 2005 for the marketing and distribution of the film. Pursuant
to the terms of the distribution agreement, LA Ideas has been granted the exclusive right to manufacture, advertise, promote and distribute on a sale or rental basis, all DVDs, video compact discs, and laser discs videotapes of the film, and the
right to exploit the film by means of video-on-demand, pay per view and internet transmission. Under the terms of the distribution agreement, LA Ideas is to remit the gross proceeds from the film revenues to Carpool LLC and the Company, after
deducting an amount sufficient to reimburse LA Ideas marketing and distribution costs and expenses, and a distribution fee. The Company also entered into a license agreement with Shoolery Design, Inc. in February 2005 pursuant to which the
Company, in exchange for a fee, has granted Shoolery Design an exclusive license for the creation, manufacture and sale of all print materials, merchandise and home video artwork related to the film.



The Company commenced pre-sales of DVDs for the film in May 2005 and released the DVD for
commercial sale in October 2005. As of the date of this report, there have been limited sales of the DVD and the Company has not yet realized any revenues from DVD sales. The retail rental of the DVD will commence in early February 2006.



3 Day Test



The Company is currently rewriting the script for its full length feature film entitled
3 Day Test as a follow-up to its first full length feature film, Carpool Guy. The Company expects to commence pre-production of the film in November 2006. The Companys ability to commence pre-production and complete the
film is dependent upon raising funds for the project.



Bella



The Company previously executed a non-binding term sheet with
Mr. Bernsen, Mr. Mainas and third parties for the formation of a limited liability company to produce a film entitled Bella a.k.a. Donna on Demand. The Company is continuing its evaluation of the project to
determine its potential.



Reveal



On August 17, 2004, the Company entered into a joint venture agreement with Neon DVD,
Inc. and Familian Productions, LLC for the production of a reality-based television show entitled Reveal. Pursuant to the agreement, the Company and the other two parties formed NFPMW, LLC for the purpose of developing, producing
and distributing the half-hour pilot for Reveal. Pursuant to the terms of the agreement, in exchange for the Companys production services, the Company received a production fee of $75,000 and twenty-five percent (25%) interest
in NFPMW, LLC and the production. NFPMW, LLC has



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##### Table of Contents

entered into a twelve-month distribution agreement with Cinamour Entertainment pursuant to which Cinamour will receive a fee of twenty-five percent
(25%) of the gross receipts derived from domestic sales and thirty percent (30%) of the gross receipts derived from international sales of the program during the term of the distribution agreement. The Company is no longer actively
pursuing distribution of this project.



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



Recent Accounting Pronouncements



On December 16, 2004, the Financial Accounting Standards Board issued SFAS No. 123 (revised 2004), Share-Based Payment (SFAS
No. 123(R)), which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS
No. 95, Statement of Cash Flows. Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to employees, including
grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. The new standard will be effective for public entities in the first interim or annual reporting
period beginning after June 15, 2005. The Company has not yet assessed the impact of adopting this new standard.



Off-Balance Sheet Transactions



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



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,



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technological obsolescence, labor relations, 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. In Addition, We are Currently In An Early Stage of Operations, We Are
Experiencing Significant Expenditures Related To Funding Our Initial Operations, And We Are Currently Carrying a Net Loss. If Our Business Model Is Not Successful, Our Management Is Not Effective, Or We Are Unable To Generate Sufficient Revenue To
Offset Our Start-Up Expenditures, We May Not Become Profitable, And The Value Of Your Investment May Decline Or Be Lost Entirely.



We have a limited operating history from which to evaluate our business and prospects. We have earned $175,000 in revenue from our inception to November 30, 2005.
For the quarter ended November 30, 2005, we had a net loss of ($43,434) and we had a cumulative net loss of ($3,460,659) for the period since inception at March 3, 2000 to November 30, 2005. 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, 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, and you may lose your entire investment. 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;
| | - |  | --------------------------------------------------------------------------------------------------

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

| |  |  | our management has not worked together for very long;
| | - |  | -----------------------------------------------------

| |  |  | we have recently had a high turnover in the positions of Chief Executive Officer and principal financial officer and recently appointed a new Chief Executive Officer; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | we recently purchased several new projects which do not fit into our traditional business model.
| | - |  | ------------------------------------------------------------------------------------------------



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 and the value of your investment in our company will decline or may be lost altogether.



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 audit, which included the fiscal years ended February 28, 2005 and February 29, 2004, 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 substantial losses as we complete the development of our business. 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 or Pan of Operations. 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 or shows and motion pictures. If we cannot continue as a going concern, we may need to substantially revise our business plan or cease
operations, which may reduce or negate the value of your investment.



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We Are In Default Under Our Debt Obligations. If We Are Unable To Resolve These Defaults, These Creditors Could
Initiate Legal Proceedings or Insolvency Proceedings.



As described in Part
II, Item 3 below, we are currently in default under several of our debt obligations. If we are unable to satisfy these obligations, these creditors may exercise their contract or legal remedies, including initiating legal action or insolvency
proceedings against us, or cause us to initiate such proceedings to seek protection from these creditors. Such remedies may reduce of negate the value of your investment.



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. In Addition, The Additional Funding May Have Terms Which Will Dilute The Value of Your Investment.



Our ability to raise additional funds in the public or private markets will be adversely affected if the results of our business operations are not favorable, or if any
of the scripts or films we develop are not well-received. We may seek additional funding through corporate collaborations and other financing vehicles or from loans, credit facilities 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, thereby reducing or eliminating the value of our equity, or we could be forced to relinquish rights to some or all of
our projects under development in return for an amount substantially less than we expended to develop such products. If we are successful in obtaining additional funds, the terms of the financing may have the effect of diluting your interest in our
company.



All Of Our Revenues Were Generated By Three Clients. If We Fail To
Diversify Our Revenue Base, We May Not Be Able To Generate Sufficient Revenues To Meet Our Expenditures. In This Event, We May Not Be Able To Continue Our Business Operations.



As of November 30, 2005, all of our revenues were derived from three clients. We do not have an ongoing contract to do further work
with any of these clients. Accordingly, if we fail to generate additional sources of revenue, we may not be able to continue our business operations.



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. Although some of our films and shows will be funded and
produced by third parties, we will not retain ownership of these films and shows. We may wish to retain ownership of a portion of our developed shows and films, and will require additional funding to produce these films and shows, and will be
subject to risks of ownership, including lack of assurance of profitability and revenues. 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;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



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| |  |  | 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.
| | - |  | -------------------------------------------------------------------------



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 products 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, and you may lose your investment entirely.



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 key members of our management,
including Stephen Brown, our Chairman and CEO, and Corbin Bernsen, our President and a director. Virtually all decisions concerning the conduct of our business, including the properties and rights to be created or acquired by the Company, and the
arrangements to be made for such distribution, are made by Messrs. Brown and Bernsen. The loss of any of these individuals could have a material adverse effect on us. 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, and will require us to identify, employ and train
new personnel, which will require both financial resources and the time of our remaining employees. Should we be unable to locate adequate replacement personnel, we may not be sufficiently competitive in our market to generate sufficient revenue to
finance our continuing operations. We also have not obtained any key man life insurance. Accordingly, the loss of any of these individuals may result in our inability to continue operations in the same manner and with the same level of industry and
investment interest as may exist prior to their departure, which, as a result, may reduce the value of your investment.



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 the date of this report, our
officers and directors in the aggregate own approximately 48% 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.



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. In This Event, We May Be Required To Expend Significant Amounts Of Capital In Defending Our Intellectual Property, And May Lose Revenue If We Are Unable To Successfully Defend Our Use Of Such Content And Are Unable To Create A
Successful Alternative.



Establishment of trademarks, copyrights and other
proprietary rights is important to our success and our competitive position. Accordingly, we intend to devote resources to the establishment and protection of copyrights and other proprietary rights. 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



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copyrights, trademarks and proprietary rights of others. Moreover, we cannot assure you that others will not assert rights in, or ownership of, trademarks,
copyrights and other proprietary rights we may establish or acquire or that we will be able to successfully resolve such conflicts.



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



We May Face Additional Risks Due To Our Reliance On Outsourced Production Studios For
Films and Television Shows We Choose To Product Ourselves. These Risks Include Our Inability To Fully Control The Quality and Budgeting Constraints For Any Outsourced Studio. Whether Or Not We Are Able To Mitigate Our Loss, Should We Experience
Significant Deficiencies With Any Outsourced Studio, We May Face Increased Costs And/Or Product With Decreased Or Poor Quality, Which Will Limit The Amount of Revenue We May Be Able To Generate From That Particular Project, And, If A Repeated
Occurrence, May Harm Our Competitiveness Within Our Industry.



In order to
minimize our expenses relative to our revenue, we have outsourced substantially all of our production requirements for the television shows and films we choose to produce. 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.
| | - |  | -----------------------------------------------------------------------------------



In addition, our outsourcing production studios may require further supplies and talent from various third parties, and similar risks are
involved in such procurement efforts. 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. Whether or not we are able to mitigate such loss, we may face increased costs and/or be forced to market a product of decreased or
poor quality, which will limit the amount of revenue we may be able to generate from that particular project. If such a problem occurs repeatedly, our reputation in our industry may suffer, and we may not be sufficiently competitive to generate
adequate revenue to fund our operations.



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, Which Will Then Be Unavailable For Product Development or
Other Revenue-Generating Activity, Resulting In Decreased Earnings For Our Company.



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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, and you may
lose your investment entirely.



If We Exceed Our Budgets In Our Projects, We
May Be Unable To Recoup Our Costs, Which May Result In Our Inability To Fund Our Continuing Operations, As Well As Limit The Amount Of Capital We Have Available To Finance Other Projects Which May Generate Revenue



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



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



Our Revenues May Fluctuate Significantly Based On The Financing Arrangements For Particular Projects, And The Commercial Success Of Individual Projects, Consequently,
Our Results Of Operations May Be Difficult To Predict, Which May Cause Our Market Price To Fluctuate Unpredictably, Or Reduce It Overall



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. We cannot assure you that we will manage the acquisition, production, and distribution of our projects as profitably from period to period. Accordingly, you should not rely on the results of
any one quarter as an indication of our future performance. If in some future quarter our results of operations were to fall below the expectations of securities analysts and investors, the trading price of our common stock would likely decline.



Work Strikes Or Other Union Job Actions Could Result in Delays And Could
Result In Delays And Failures To Complete Projects According To Defined Deadlines And Within Prescribed Budgets. As A Result, We May Face Increased Costs and Reduced Revenues As Well As a Limited Ability To Market Future Projects.



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The projects that we intend to produce generally will utilize actors, directors, and writers who are members of the
Screen Actors Guild, Directors Guild of America, and Writers Guild of America, respectively, pursuant to industry-wide collective bargaining agreements. A strike by one or more of the unions that provide personnel essential to the production of our
projects could delay or halt our ongoing production activities for that project. A union-related halt or delay, depending on the length of time, could cause a delay or interruption in our release of any projects conducted with the use of union
labor. As a result, we may experience significant delays and/or reductions in revenues for our union-produced projects, which may limit our ability to invest in new projects on a short-term basis.



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 Takeover Production, Which May Reduce The Artistic Integrity And Commercial Potential Of The Movie, Resulting In Reduced Revenue For The Company.



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.



Our ability to
adhere to the production schedule and budget will be subject to many factors not within our control, including



| |  |  | the ability to attract suitable production and creative staff within our budget,
| | - |  | --------------------------------------------------------------------------------

| |  |  | the availability of our production personnel, including directors, producers, and actors (particularly the lead and supporting actors) on the scheduled basis,
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | the weather conditions (seasonable or unseasonable, predicted or unpredicted) during the production phase,
| | - |  | ----------------------------------------------------------------------------------------------------------

| |  |  | the availability of desirable locations from a cost or timing viewpoint, and
| | - |  | ----------------------------------------------------------------------------

| |  |  | the ability to utilize appropriate facilities for post-production phase on a timely basis.
| | - |  | ------------------------------------------------------------------------------------------



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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We Intend To Distribute Our Shows and Films Internationally, And May Be Subject To Additional Risks Due To Our
International Operations. These Risks May Reduce Or Limit Our Potential Revenue From International Sources, Which May Significantly Reduce Our Revenue.



We intend to distribute our productions outside the United States through third party licenses and derive revenues from these sources. As a result, our business is
subject to certain risks inherent in international business, many of which are beyond our control. These risks include:



| |  |  | changes in local regulatory requirements, including restrictions on content;
| | - |  | ----------------------------------------------------------------------------



| |  |  | changes in laws and policies affecting trade, investment and taxes (including laws and policies relating to the repatriation of funds and to withholding taxes);
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | differing degrees of protection for intellectual property;
| | - |  | ----------------------------------------------------------



| |  |  | instability of foreign economies and governments;
| | - |  | -------------------------------------------------



| |  |  | cultural barriers; and
| | - |  | ----------------------



| |  |  | wars and acts of terrorism, to the extent such threats or acts limit or prevent potential viewers of our films from attending theaters.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



|Item 3. | Controls and Procedures
|------- | -----------------------



Under the supervision and with the participation of the Companys Chief Executive Officer, who also acts as the Companys Interim Chief Financial Officer, the
Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the
period covered by this quarterly report (the Evaluation Date). Based on this evaluation, the Companys Chief Executive Officer concluded as of the Evaluation Date that the Companys disclosure controls and procedures were
effective such that the information relating to the Company, including any consolidated subsidiaries, required to be disclosed in the Companys Securities and Exchange Commission (SEC) reports (i) is recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Companys management, including its Chief Executive Officer, as appropriate to allow timely decisions
regarding required disclosure. There were no significant changes in the Companys internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation.



PART IIOTHER INFORMATION



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



In May 2005 the Company received a copy of a complaint filed in Los Angeles Superior Court in Van Nuys, California by Alexandra Wortsman for a breach of contract action alleging nonpayment of fees in the amount
of $43,748.28 for services performed on behalf of the Company. The Company did not contest the complaint and a judgment was entered against the Company. In November 2005 the Company entered into an agreement with Ms. Wortsman for the
payment of the judgment, and as of the date of this report, the entire amount of such judgment has been paid by the Company.



Effective as of July 18, 2005, the Company entered into a Separation and General Release Agreement (Separation Agreement) with Michael Wittlin, a former
employee of the Company. Pursuant to the terms of the Separation Agreement, in exchange for a mutual release of all claims and in fulfillment of all obligations to Mr. Wittlin under the terms of this employment agreement, the Company agreed to
issue Mr. Wittlin shares of its common stock and execute a promissory note in the principal amount of $180,000 which is due and payable in twelve months. As part of the Separation Agreement, Mr. Wittlin also agreed to convert his
promissory note in the principal amount of $225,000, which was due and payable on June 1, 2005, into 1,700,000 shares of Company common stock. On November 16, 2005, the Company received from the State of California Labor Commissioner a
Notice of Claim and Conference filed in Van Nuys,



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California by Mr. Wittlin seeking payment of wages, severance pay and expenses in the amount of $160,000 for the period of his employment with the
Company prior to the Separation Agreement. The filing of such claim with the Labor Commissioner by Mr. Wittlin is a breach of the terms of his Separation Agreement. Mr. Wittlin has provided written correspondence to the Company indicating
that this matter has been settled and that he has instructed his attorney to withdraw the claim with the Labor Commissioner, however, Mr. Wittlin has not withdrawn the claim. The Company believes the claim is frivolous and without merit.



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



On September 6, 2005, the Company completed its purchase of certain assets from World Equities LLC in exchange for the issuance of 250,000 shares of Company common
stock. The shares of Company common stock were valued at $.25 per share. Mr. Mainas is a member of World Equities LLC. The shares issued were exempt from registration under the Securities Act of 1933 (the Act) pursuant to
Section 4(2) of the Act.



Effective October 1, 2005, the Company
granted Mr. Mainas options to purchase up to 1,000,000 shares of common stock, vesting immediately, at an exercise price of $.25 per share, and expiring on October 1, 2008. The options issued were exempt from registration under the Act
pursuant to Section 4(2) of the Act. As described in Part I, Item 2 above, the terms of these options were subsequently modified on December 21, 2005 to provide that such options shall expire if not exercised within six
(6) months after Mr. Mainas ceases to be on the Board of Directors of the Company.



Effective October 1, 2005, the Company granted Mr. Bernsen options to purchase up to 1,000,000 shares of common stock, vesting immediately, at an exercise price of $.25 per share, and expiring on
October 1, 2008. The options issued were exempt from registration under the Act pursuant to Section 4(2) of the Act. As described in Part I, Item 2 above, the terms of these options were subsequently modified on December 21,
2005 to provide that such options shall expire if not exercised within six (6) months after Mr. Bernsen ceases to be on the Board of Directors of the Company.



Effective October 1, 2005, the Company granted Mr. Szabo options to purchase up to 1,000,000 shares of common stock, vesting
immediately, at an exercise price of $.25 per share, and expiring on October 1, 2008. The options issued were exempt from registration under the Act pursuant to Section 4(2) of the Act. As described in Part I, Item 2 above, the
terms of these options were subsequently modified on December 21, 2005 to provide that such options shall expire if not exercised within six (6) months after December 21, 2005.



Effective October 1, 2005, the Company and its outside legal counsel entered into an
option agreement pursuant to which the Company granted options to purchase up to 500,000 shares of common stock, vesting immediately, at an exercise price of $.25 per share, and expiring on October 1, 2008. The options issued were exempt from
registration under the Act pursuant to Section 4(2) of the Act.



Effective November 15, 2005, the Company sold 858,000 shares of its common stock at price of $.10 per share to three individuals in a private placement. The proceeds to the Company from these sales were $85,800. 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.



As described above in Part I, Item 2,
after the period covered by this report, in connection with Mr. Browns employment agreement dated December 21, 2005, the Company issued Mr. Brown 4,000,000 shares of Company Common Stock, and options to purchase up to 20,000,000
shares of Company Common Stock at the exercise prices, vesting and expiration terms described above. The issuance of the Companys shares of Common Stock and grant of options to Mr. Brown was exempt from registration under the Act pursuant
to Section 4(2) of the Act.



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As described above in Part 1, Item 2, after the period covered by this report, in connection with the Asset Purchase
Agreement with Milagro and Mr. Brown dated December 21, 2005, and as consideration for the assets purchased, the Company issued Mr. Brown, as assigned of Milagro, 6,000,000 shares of Company Common Stock. The issuance of the
Companys shares of Common Stock to Mr. Brown was exempt from registration under the Act pursuant to Section 4(2) of the Act.



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



As reported in Part I, Item 2, 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 has 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 November, 2005, the outstanding principal and interest under the unsecured promissory note was $411,062 and $142,899, respectively, and the
outstanding balance under the unsecured line of credit was $182,622 and $15,219, respectively.



As reported in Part I, Item 2, the Company is in default under its October 2004 promissory note with Eric and Sharon Pearlman. The principal balance of this note was $24,000, bearing interest at 6%, and
matured on October 1, 2005. As of November, 2005, the outstanding principal and interest under the unsecured promissory note was $24,000 and $1,676, respectively.



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



None.



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



None.



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



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



|           |  |                                                                                                                     
|---------- |  | --------------------------------------------------------------------------------------------------------------------
|ExhibitNo. |  | Description                                                                                                         
|           | 
|10.40      |  | Asset Purchase Agreement dated December 21, 2005 between the Company, Stephen Brown and Milagro Entertainment, Inc. 
|           | 
|10.41      |  | Employment Agreement dated December 21, 2005 with Stephen Brown                                                     
|           | 
|10.42      |  | Option Agreement dated December 21, 2005 with Stephen Brown                                                         
|           | 
|10.43      |  | Restricted Stock Agreement dated December 21, 2005 with Stephen Brown                                               
|           | 
|10.44      |  | Termination of Consulting Agreement and Modification of Option Agreement dated December 21, 2005 with Thomas Szabo  
|           | 
|10.45      |  | Termination of Employment Agreement and Modification of Option Agreement dated December 21, 2005 with Corbin Bernsen
|           | 
|10.46      |  | Termination of Employment Agreement and Modification of Option Agreement dated December 21, 2005 with George Mainas 
|           | 
|10.47      |  | Agreement with Fox Reality Television dated January 3, 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



29



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##### Table of Contents

After the period covered by this report, the Company filed a Form 8-K on December 28, 2005 regarding the
Companys management restructuring and acquisition of assets from Milagro Entertainment, Inc., as referenced in Part 1, Item II of this report.



The Company filed a Form 8-K on October 11, 2005 regarding the Company entering into certain employment, consulting and option agreements.



The Company filed a Form 8-K on September 28, 2005 regarding the resignation of
Mr. Szabo as Chief Executive Officer, Acting Chief Financial Officer and Secretary of the Company, and the appointment of Mr. Mainas as a director and the Chief Executive Officer of the Company.



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: January 23, 2006 |  |  |  | /s/ Stephen Brown             
|                       |  |  |  |                                |  | By:    Stephen Brown
|                       |  |  |  | Title: Chief Executive Officer



30