**SECURITIES AND EXCHANGE COMMISSION****Washington****, D.C. 20549**

**FORM 10-QSB**

**QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF****THE SECURITIES EXCHANGE ACT OF 1934**

**For the quarterly period ended April 30, 2005**

| **000-29921**          |
|------------------------|
|                        |
| Commission file number |

|                                                              |
|-------------------------------------------------------------------|
| **MAGIC MEDIA NETWORKS, INC.**                                    |
|                                                                   |
| (Exact name of small business issuer as specified in its charter) |

| **Delaware**             |   | **65-0494581**                       |
|--------------------------|--------|--------------------------------------|
|                          |   |                                      |
| (State of incorporation) |   | (IRS Employer Identification Number) |

| **530 North Federal Highway****Fort Lauderdale****, Florida 33301** |
|---------------------------------------------------------------------|
|                                                                     |
| (Address of principal executive office)                             |

| **(954) 764-0579**          |
|-----------------------------|
|                             |
| (Issuer's telephone number) |

| **Check whether the issuer:**                                                                                                                                                                                         |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports)

**Yes [X] No[ ]** |
| and                                                                                                                                                                                                                   |
| (2) has been subject to such filing requirements for the past 90 days.**Yes [X] No [ ]**                                                                                                                              |

|                                                                                                                                                                           |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Applicable only to corporate issuers**                                                                                                                                       |
| As of June 17, 2005 (the most recent practicable date), there were          37,709,642 shares of the issuer's Common Stock, $0.0001 par value per          share, outstanding. |
| Transitional Small Business Disclosure Format (check one)**Yes [ ] No [X]**                                                                                                    |

----

| **MAGIC MEDIA NETWORKS, INC.****FORM 10-QSB****TABLE OF CONTENTS** |
|--------------------------------------------------------------------|
|                                                               |   |   |
| **PART I**                                                         |   | **FINANCIAL INFORMATION** |
| Item 1                                                             |   | Financial Statements |
|                                                               |   |      Consolidated Balance Sheets |
|                                                               |   |      Consolidated Statements of Operations |
|                                                               |   |      Consolidated Statements of Cash Flows |
|                                                               |   |      Notes to Financial Statements |
| Item 2                                                             |   | Management's Discussion and Analysis of Financial Condition and Results of Operations |
| Item 3                                                             |   | Controls and Procedures |
|                                                               |   |   |
| **PART II**                                                        |   | **OTHER INFORMATION** |
| Item 1                                                             |   | Legal Proceedings |
| Item 2                                                             |   | Unregistered Sales of Equity Securities and Use of Proceeds |
| Item 6                                                             |   | Exhibits and Reports on Form 8-K |
|                                                               |   |   |
| **SIGNATURES**                                                     |

----

**PART I**

**FINANCIAL INFORMATION**

** ITEM 1 - FINANCIAL STATEMENTS**

| **MAGIC MEDIA NETWORKS, INC.****Consolidated Balance Sheets**                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                               |   | **April 30,****2005****(unaudited)** |   |   |   | **October 31,****2004** |   |   |   |
|                                                                                                                                                               |   |  |   |  |   |
| ASSETS                                                                                                                                                             |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                               |   |   |   |   |   |   |   |   |   |
| Current assets:                                                                                                                                                    |   |   |   |   |   |   |   |   |   |
|    Cash and cash equivalents                                                                                                                        |   | $ | 29,516 |   |   | $ | 233,810 |   |   |
|     Prepaid expenses                                                                                                                                |   |   | 158 |   |   |   | 0 |   |   |
|                                                                                                                                                               |   |   |  |   |   |   |  |   |   |
|       Total current assets                                                                                                           |   |   | 29,674 |   |   |   | 233,810 |   |   |
|                                                                                                                                                               |   |   |   |   |   |   |   |   |   |
| Property and equipment - net                                                                                                                                       |   |   | 129,669 |   |   |   | 101,020 |   |   |
| Acquired amortizable intangible assets                                                                                                                             |   |   | 2,830 |   |   |   | 2,980 |   |   |
| Goodwill                                                                                                                                                           |   |   | 238,943 |   |   |   | 0 |   |   |
|                                                                                                                                                               |   |   |  |   |   |   |  |   |   |
|       Total Assets                                                                                                                   |   |  $ | 401,116 |   |   |   | $ 337,810 |   |   |
|                                                                                                                                                               |   |   |  |   |   |   |  |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                              |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                               |   |   |   |   |   |   |   |   |   |
| Current liabilities:                                                                                                                                               |   |   |   |   |   |   |   |   |   |
|    Accounts and accrued expenses payable                                                                                                                 |   |  $ | 194,166 |   |   |   | $ 175,685 |   |   |
|    Payroll taxes payable                                                                                                                            |   |   | 129,299 |   |   |   | 98,747 |   |   |
|    Convertible notes payable - related party                                                                                                        |   |   | 200,000 |   |   |   | 325,000 |   |   |
|    Note payable - La Jolla Cove Investors                                                                                                           |   |   | 0 |   |   |   | 300,000 |   |   |
|                                                                                                                                                               |   |   |  |   |   |   |  |   |   |
|       Total Current Liabilities                                                                                                      |   |   | 523,465 |   |   |   | 899,432 |   |   |
|                                                                                                                                                               |   |   |  |   |   |   |  |   |   |
|                                                                                                                                                               |   |   |   |   |   |   |   |   |   |
| Stockholders' Deficit                                                                                                                                              |   |   |   |   |   |   |   |   |   |
|    Preferred stock, Series B Convertible ($0.0001 par value)                   3,750,000 shares authorized and issued |   |   | 150,000 |   |   |   |        150,000 |   |   |
|    Common stock                                                                                                                                     |   |   |   |   |   |   |   |   |   |
|       46,250,000 ($0.0001 par value) shares authorized                                                                               |   |   |   |   |   |   |   |   |   |
|       34,790,412 shares issued (23,408,058 in 2004)                                                                                       |   |   | 4,500,288 |   |   |   | 3,282,177 |   |   |
|    Deficit accumulated since quasi-reorganization October 31, 1999                                                                             |   |   | (4,689,304 | ) |   |   | (3,993,799 | ) |   |
|    Deferred compensation                                                                                                                                 |   |   | (83,333 | ) |   |   | 0 |   |   |
|                                                                                                                                                               |   |   |  |   |   |   |  |   |   |
|       Total Stockholders' Deficit                                                                                                    |   |   | (122,349 | ) |   |   | (561,622 | ) |   |
|                                                                                                                                                               |   |   |  |   |   |   |  |   |   |
|       Total Liabilities and Stockholders' Deficit                                                                                    |   | $ | 401,116 |   |   | $ | 337,810 |   |   |
|                                                                                                                                                               |   |   |  |   |   |   |  |   |   |
|                                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |

See Notes to Financial Statements

The interim financial statements include all adjustments, which, in the opinion of management, are necessary in order to make the financial statements not misleading.

F-1

----

| **MAGIC MEDIA NETWORKS,          INC.****Consolidated Statements of Operations**** (unaudited)** |
|-------------------------------------------------------------------------------------------------------|
|                                                                                                  |   | **Three          Months****Ended** |   | **Six Months****Ended** |
|                                                                                                  |   | **April 30,****2005** |   | **April 30,****2004** |   | **April          30,****2005** |   | **April 30,****2004** |   |
|                                                                                                  |   |  |   |  |   |  |   |  |   |
| Net sales                                                                                             |   | $ | 6,800 |   |   | $ | 19,801 |   |   | $ | 9,100 |   |   | $ | 38,632 |   |   |
|                                                                                                  |   |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |
| Selling, general and administrative expenses                                                          |   |   | 200,420 |   |   |   | 215,071 |   |   |   | 435,334 |   |   |   | 462,140 |   |   |
| Consulting expenses                                                                                   |   |   | 130,000 |   |   |   | 416,000 |   |   |   | 246,875 |   |   |   | 491,000 |   |   |
| Interest expense                                                                                      |   |   | 11,146 |   |   |   | 9,963 |   |   |   | 22,396 |   |   |   | 19,377 |   |   |
|                                                                                                  |   |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |
| Total expenses                                                                                        |   |   | 341,566 |   |   |   | 641,034 |   |   |   | 704,605 |   |   |   | 972,517 |   |   |
|                                                                                                  |   |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |
| Net loss before income taxes                                                                          |   |   | (334,766 | ) |   |   | (621,233 | ) |   |   | (695,505 | ) |   |   | (933,885 | ) |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income tax expense                                                                                    |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |
|                                                                                                  |   |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |
| Net loss                                                                                              |   | $ | (334,766 | ) |   | $ | (621,233 | ) |   | $ | (695,505 | ) |   | $ | (933,885 | ) |   |
|                                                                                                  |   |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted loss per share                                                                      |   | $ | (0.01 | ) |   | $ | (0.02 | ) |   | $ | (0.02 | ) |   | $ | (0.04 | ) |   |
|                                                                                                  |   |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |
| Weighted average common share equivalent outstanding                                                  |   |   | 36,025,805 |   |   |   | 25,738,299 |   |   |   | 32,827,450 |   |   |   | 23,210,068 |   |   |
|                                                                                                  |   |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |

See Notes to Financial Statements.

The interim financial statements include all adjustments, which, in the opinion of management, are necessary in order to make the financial statements not misleading.

F-2

----

| **MAGIC MEDIA NETWORKS, INC.****Consolidated Statements of Cash Flows** |
|-------------------------------------------------------------------------|
|                                                                    |   |   |
|                                                                    |   | **Six Months Ended** |
|                                                                    |   | **April 30,****2005****(unaudited)** |   | **April 30,****2004****(unaudited)** |
|                                                                    |   |  |   |  |
| Operating Activities:                                                   |   |   |   |   |   |   |   |   |
| Net loss                                                                |   | $ | (695,505 | ) |   | $ | (933,885 | ) |
| Adjustments to reconcile net loss to cash:                              |   |   |   |   |   |   |   |   |
| Non-cash expenses included in net loss                                  |   |   |   |   |   |   |   |   |
|                                                                    | Depreciation and amortization |   |   | 11,900 |   |   |   | 7,183 |   |
|                                                                    | Stock issued for services |   |   | 219,166 |   |   |   | 223,600 |   |
|                                                                    | Extension of stock options for consulting services |   |   | 79,875 |   |   |   | 391,000 |   |
|                                                                    | Increase in payables and accrued expenses |   |   | 49,033 |   |   |   | 15,631 |   |
|                                                                    | Increase in prepaid expenses |   |   | (158 | ) |   |   | 0 |   |
|                                                                    |   |   |  |   |   |   |  |   |
| Cash used by operating activities                                       |   |   | (335,689 | ) |   |   | (296,471 | ) |
|                                                                    |   |   |   |   |   |   |   |   |
| Financing Activities:                                                   |   |   |   |   |   |   |   |   |
|                                                                    | Proceeds from issuance of common stock |   |   | 582,500 |   |   |   | 750,000 |   |
|                                                                    | Proceeds note payable - related party |   |   | 0 |   |   |   | 40,000 |   |
|                                                                    | Repayment note payable - La Jolla Cove Investors |   |   | (300,000 | ) |   |   | 0 |   |
|                                                                    |   |   |  |   |   |   |  |   |
| Cash generated by financing activities                                  |   |   | 282,500 |   |   |   | 790,000 |   |
|                                                                    |   |   |   |   |   |   |   |   |
| Investing Activities:                                                   |   |   |   |   |   |   |   |   |
|                                                                    | Acquisition of fixed assets |   |   | (29,270 | ) |   |   | (61,478 | ) |
|                                                                    | Acquisition of National Hotel Network |   |   | (100,000 | ) |   |   | 0 |   |
|                                                                    | Acquisition of ALW Communications |   |   | (21,835 | ) |   |   | 0 |   |
|                                                                    |   |   |  |   |   |   |  |   |
| Cash used by investing activities                                       |   |   | (151,105 | ) |   |   | (61,478 | ) |
|                                                                    |   |   |   |   |   |   |   |   |
| Increase (decrease) in cash                                             |   |   | (204,294 | )  |   |   | 432,051 |   |
| Cash and cash equivalents - beginning                                   |   |   | 233,810 |   |   |   | 25,658 |   |
|                                                                    |   |   |  |   |   |   |  |   |
| Cash and cash equivalents - ending                                      |   | $ | 29,516 |   |   | $ | 457,709 |   |
|                                                                    |   |   |  |   |   |   |  |   |

See Notes to Financial Statements.

The interim financial statements include all adjustments, which, in the opinion of management, are necessary in order to make the financial statements not misleading.

F-3

----

**MAGIC MEDIA NETWORKS, INC.** Notes to Interim Consolidated Financial Statements     April 30, 2005     (Unaudited)

**Note 1 -** **Basis of Presentation**

**           ** The interim consolidated financial statements of Magic Media Networks, Inc. ("the Company") include all adjustments, which, in the opinion of management, are necessary in order to make the financial statements not misleading. The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB and do not include all of the information and footnotes required by Generally Accepted Accounting Principles in the United States for complete financial statements. The financial statements presented herein have been prepared in accordance with the accounting policies described in the Company's October 31, 2004 Annual Report on Form 10-KSB and should be read in conjunction with the Notes to financial statements which appear in that report. The consolidated financial statements include the results of the Company's wholly owned subsidiaries; Bar TV, Inc., Destination Television, Inc., and Hotel TV, Inc., which were incorporated in Florida in November 2002, August 2003, and November 2004, respectively. Also included, from the date of acquisition (December 31, 2004) are the results of ALW Communications, Inc. and National Hotel Television Network, Inc. All significant inter-company account balances and transactions between the Company and its subsidiaries have been eliminated in consolidation.

**Note 2 - Notes Payable**

**            Convertible Notes Payable - Dr. Terry**

            On April 15, 2003, the Company issued to Dr. H. K. Terry a $100,000 unsecured promissory note originally due April 15, 2004, which was extended to April 15, 2005 and further extended to April 15, 2006. On October 12, 2003, the Company issued an additional one-year promissory note for up to $100,000 of which $60,000 had been advanced as of October 31, 2003 and an additional $40,000 was advanced on November 24, 2003. The maturity date of this note was extended to October 12, 2005. The notes are unsecured and bear interest at 6%. The notes, including any accrued interest, are convertible, at the holder's option, into common stock at the average closing price of the Company's common stock for the five trading days prior to the date of receipt of election to convert but not less than $0.05 per share. On October 13, 2004, Dr. Terry advanced the Company an additional $125,000 for which the Company issued a one-year promissory note that was convertible, at the holder's option, at $0.10 per share. The notes were issued to document Dr. Terry's loans to the Company. The proceeds of the loans were used for working capital. In January 2005, Dr. Terry exercised the right to convert the $125,000 note issued on October 13, 2004 into 1,250,000 shares of the Company's common stock.

**            Note Payable - La Jolla Cove Investors, Inc.**

            On October  23, 2003, as part of a legal settlement, the Company issued a $300,000 non-convertible  6-3/4% promissory note to La Jolla Cove Investors, Inc. ("La Jolla") due April  24, 2005 to replace a 7-3/4% convertible promissory note that had a maturity  date of September 24. 2004. The new note continued to be secured by a $300,000  real estate mortgage on the land and building owned by Dr. Harold Terry that  houses the Company's offices.  On April 24, 2005, the Company paid La Jolla  $345,830, including $45,830 of accrued interest, in full payment of the promissory  note.

**Note 3** - **Stockholders' Deficit**

**           ****Stock Issued for Cash**

**           ** During  the three months ended January 31, 2005, the Company issued 2,600,000 shares  of restricted common stock to Dr. Terry for $260,000 or $0.10 per share as further  described below - *Related Party Transactions.* The Company also issued  in the three months ended January 31, 2005, 1,125,000 shares of common stock  for $112,500 upon exercise of stock options, which were granted in September  2003, as described below - *Common Sock Options and Warrants.*

            During the three months ended April 30, 2005, the Company issued an additional 975,000 shares of restricted common stock of which 675,000 shares were issued to Dr. Terry for $67,500 or $0.10 share as further described below - *Related Party Transactions,* and 300,000 shares were issued to another party for $30,000 or $0.10 per share. The Company also issued in the three months ended April 30, 2005, 1,125,000 shares of common stock for $112,500 upon exercise of stock options, which were granted in September 2003, as described below - *Common Sock Options and Warrants.*

**            Stock Issued for Services**

            During the three months ended January 31, 2005, the Company issued a total of 1,725,000 shares of common stock for services, consisting of 1,000,000 shares issued in connection with a new three-year employment agreement with the Company's President, Gordon Scott Venters, described below in *Note 4, Commitments, Employment Agreements*; 100,000 shares as directors' fees (50,000 to Mr. Venters and 50,000 to Mr. Nugent); 250,000 to Worldwide Financial Marketing Inc. for investor relations services; and 375,000 to various employees. The shares were valued at $172,500 or $0.10 per share, which was representative of the approximate market value at the dates of issuance.     

            During the  three months ended April 30, 2005, the Company issued a total 1,300,000 shares  to three individuals for consulting services. The shares were valued at $130,000  or $0.10 per share, which was representative of the approximate market value  at the dates of issuance.

            None of  the above described shares issued for services has been registered under the  Securities Act of 1933, as amended, and therefore, may not be transferred in  the absence of an exemption from registration under such laws and will be considered  "restricted securities" as that term is defined in Rule 144 adopted under the  Securities Act, and may be sold only in compliance with the resale provisions  set forth therein.

**            Acquisition of ALW Communications and National Hotel Television**

**           ** On December 31, 2004 the Company completed the acquisition of all of the issued and outstanding stock of National Hotel Network, Inc. ("NHN") and ALW Communications, Inc. ("ALW"). The purchase price of the transactions was $100,000 cash (for the stock of NHN) and 1,282,354 shares of the Company's common stock, valued at $128,235 (for the stock of ALW) for a total consideration of $228,235. The financial statements of the acquired companies, at the date of acquisition, reported total assets of the combined acquired companies, at December 31, 2004, of $12,693; total liabilities of $23,401; and shareholders' deficit of $10,708. The amount by which the purchase price exceeds the net assets of the acquired companies, $238,943, was recorded by the Company as *Goodwill,* and will be subject to impairment review when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. The primary measure of fair value is based on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.

**           ** In  May 2005, the Company commenced a lawsuit regarding its acquisition of ALW and  NHN. The suit alleges breach of contract; unjust enrichment; conversion; and  breach of fiduciary position and the Company is seeking injunctive relief to  prevent the transfer of the shares of its common stock, which were issued as  partial consideration for the acquisition of ALW and NHN; and rescission of  the acquisitions; return of common stock issued and cash paid in connection  with the acquisitions; damages and other relief. In accordance with the Company's  policy, it considers the commencement of this lawsuit an event that may indicate  a change in the carrying value of the acquired assets. The Company is in the  process of determining the impact of these events on the expected future pre-tax  cash flows, and expects to complete the assessment of possible impairment in  the fiscal quarter ending July 31, 2005.

**            Common Stock Options and Warrants**

**            Consultants' Options**

**           ** In September 2003, the Company granted options to two individuals, pursuant to consulting agreements to purchase 3,208,334 and 3,208,333 shares of common stock, for a total of 6,416,667 shares. The options, with an original expiration date of March 5, 2004, gave the right to purchase shares of common stock at exercise prices of $0.10 to $0.25, or an average of $0.1558 per share. The number of shares of common stock to be received by each of the grantees was limited so that each would not beneficially own more than 10% of the then outstanding shares of common stock. In February and March 2004, options representing 4,166,667 underlying shares were exercised at $0.10 and $0.15 with proceeds to the Company of $500,000. Also in March, the expiration date of the remaining 2,250,000 unexercised options was extended to April 2, 2004 and again extended to June 30, 2004. At the time of the original extension, pursuant to the Black-Scholes valuation model, the options were deemed to have a fair value of $391,000, which was reflected as additional *Consulting Expense* of $391,000, and was reported in the Consolidated Statement of Operations for the three months ended April 30, 2004. On June 30, 2004, the expiration date of the remaining 2,250,000 options was further extended to September 30, 2004 and was again further extended to the date of partial exercise and subsequent re-pricing, January 5, 2005, at which date 1,125,000 options were exercised, in accordance with the modified exercise price of $0.10 per share, and the Company received $112,500. The term of the remaining 1,125,000 options was extended to April 30, 2005 and their fair value was recalculated, resulting in a charge of $79,875 to *Consulting Expense* in the quarter ended January 31, 2005.  During the fiscal year ended October 31, 2004, an aggregate of $465,000 was recognized as fair value of the extended options and was charged to *Consulting Expense.*

            In April 2005, the remaining 1,125,000 options were exercised in accordance with the modified exercise price of $0.10 per share, and the Company received $112,500.

            **La Jolla Warrants*     ***

            In October 2003, La Jolla Cove Investors, Inc. entered into a two-year warrant agreement for the purchase of 10,000,000 shares of the Company's common stock, exercisable before October 22, 2005 at a price equal to the greater of (a) 85% of the average of the 5 lowest volume weighted average prices in the prior 20 trading days before the date of exercise, or (b) $0.25 per share.  Although the settling parties referred to this document as a "warrant", La Jolla agreed that (subject to the terms and conditions of such "warrant") La Jolla will exercise such "warrant" if and when (a) the market price of our common stock pursuant to the above formula equals $0.29 or more per share, (b) La Jolla's "piggy-back" rights have been declared "effective" by the S.E.C., and (c) in an amount at least equal to 10% of the volume of the common shares that trade at a price of $0.29 or more per share, excluding block trades of 50,000 shares or more. La Jolla was granted "piggy-back" rights for the above 10,000,000 shares on any Registration Statement that the Company files with the S.E.C. during a period of two years from the execution date of the Definitive Agreement. The number of shares of common stock to be received by La Jolla upon exercise of the warrants is limited so that La Jolla will not beneficially own more than 9.9% of the then outstanding shares of common stock.

**Note 4 - Commitments**

**            Facilities**

            The Company leases from a stockholder, Dr. H. K. Terry, pursuant to an oral agreement on a month-to-month basis, an 8,500 square foot building in Fort Lauderdale, Florida, which serves as its administrative offices and computer operations center. The rent is $4,500 per month and the Company is responsible for utilities.

            **Employment Agreements**

            Gordon Scott Venters is employed as the Company's President and Chief Executive Officer, pursuant to an employment agreement, which began October 1, 1997 and provided for a base salary of $75,000, $100,000 and $133,000 for years one, two and three, respectively and which was renewed to October 31, 2004. On November 15, 2004, effective November 1, 2004, the employment agreement was extended until October 31, 2007, and provides for an annual salary of $133,000, which is the same as in previous years; annual increases of a minimum of 5%; and participation in incentive or bonus plans at the discretion of the Board of Directors. Mr. Venters also received 1,000,000 shares of the Company's common stock, which are restricted as to transferability. The shares were valued at $100,000, ($0.10 per share), which was charged to *Deferred Compensation,* to be expensed over the 36-month term of the agreement at $2,778 per month.  The agreement additionally provides for certain confidentiality and non-competition provisions and a minimum payment of 18 months salary in the event of a change of control or termination "without cause," or if the employee terminates for "good reason."

**Note 5 - Related Party Transactions**

            Dr. Harold Terry, the owner of more than 25% of the Company's common stock, in January 2005, acquired 2,600,000 shares of common stock from the Company for cash consideration of $260,000. The shares, which are restricted as to transferability, were issued at $0.10 per share. Also, in January 2005, Dr. Terry converted the $125,000 convertible promissory note, which was issued in October 2004, in exchange for 1,250,000 shares of common stock. During the three months ended April 30, 2005, the Company issued an additional 675,000 shares of restricted common stock to Dr. Terry for $67,500 or $0.10 per share. Dr. Terry, who assumed the Company's contractual obligation to acquire the building housing its office facilities for $480,000, has continued to lease the building to the Company, on a month-to-month basis, at $4,500 per month, which has been accrued by the Company but not paid. Dr. Terry had also consented to the use of the property as collateral for the $300,000 La Jolla promissory note, which was paid in April 2005. As of April 30, 2005 and October 31, 2004, the Company was indebted to Dr. Terry for accrued rent in the amounts of $126,000 and $99,000, respectively and for accrued interest in the amounts of $21,735 and $15,547, respectively.

            Gordon Scott  Venters, in November 2004, entered with the Company into a new three-year employment  agreement, which is described above in *Note 4-Commitments-Employment Agreement.*

**Note 6 - Ability to Continue as a Going Concern and Management Plan**

            The financial statements have been prepared assuming that the Company will continue as a going concern. The Company has had only nominal revenue in the ordinary course of its business. The lack of sales and recurring losses from operations raises substantial doubt about the Company's ability to continue as a going concern. Management's plan in regards to these matters is to seek further equity or debt funding to allow it to pursue its business plan which involves the sale of advertising on the Company's Bar TV, Gym TV and Hotel TV networks and the possible acquisition of companies in related or unrelated businesses. The Company intends to increase its revenues by concentrating its sales efforts on attracting national advertisers to its Gym TV network and its newly formed Hotel TV network; and to reduce its fixed cash operating expenses so that sales exceed the Company's fixed expenses.

**Note 7 - Subsequent Events**   

            In May 2005, the  Company issued 2,150,000 shares of its restricted common stock, including 1,000,000  shares issued to Dr. Terry for $100,000.

            On June 9, 2005, the Company entered into a letter of intent to purchase all of the outstanding stock of a privately held California based audiovisual systems integrator in exchange for shares of a new series of the Company’s Preferred stock, which will be convertible into 49.9% of the then outstanding stock of the combined company.** ** Completion of the proposed transaction is subject to approval by the parties of a definitive acquisition agreement that will include various conditions that are set forth in the letter of intent. 

----

** ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

**GENERAL**

          Magic Media Networks, Inc. ("we" or "the Company") is a media production and promotion company focused primarily on the television advertising industry. Our subsidiary, Destination Television Inc., provides access to our private television networks, Bar TV, Gym TV and Hotel TV that deliver national, regional, and local advertising content to high traffic leisure destinations.

          Our primary business is the production and distribution of television commercials designed to influence consumers' purchasing decisions. We provide proprietary advertising concepts, which we produce, as well as advertising content provided by our advertisers. Our digital networks allow for content to be specific for each targeted demographic group. We promote our networks as being able to increase exposure and brand recognition and strengthen the influence of consumer purchasing decisions, both at the point-of-purchase as well as at the retail level. Our digital technology and premium locations provide advertisers with instant delivery and flexibility of content that can be unique to each location, which allows our clients the ability to change their programming or select a specific location to target-market potential consumers. Our private television networks are not currently regulated by the FCC, which offers distribution opportunities to companies that are unable to advertise their products on conventional networks or cable television.

            Our revenue is derived from the production and sale of custom advertising and the subsequent airing of the ads on our Bar TV, Gym TV and Hotel TV networks. We offer leisure destinations, primarily bars, taverns and nightclubs, for Bar TV; and health clubs and gyms, for Gym TV; and hotels and resorts, for Hotel TV, a system consisting of hardware and software and if necessary, television monitors to distribute our programming.

            Our executive offices are located at 530 North Federal Highway, Fort Lauderdale, Florida 33301 and our telephone number is (954) 764-0579.

**            Strategy**

**           ** We have revised our business model to concentrate on the concept that "leisure destinations drive traffic to retail locations." We have developed relationships with leisure destinations such as bars, taverns, nightclubs, gyms, health clubs and most recently through acquisition, we now operate in hotels and resorts in desirable tourist areas.

**           ** We plan to limit our active solicitation of advertising customers for our Bar TV and Gym TV networks but will now concentrate on promotional events instead; whether it is, for example, the launch of a new alcoholic beverage that we can promote in our nightclubs or a new vitamin enriched health drink that can be sold in the gyms. In addition, we intend to derive the majority of our revenues with strategic alliances and agreements with retail locations whereby they pay a fee to be on our network and "pass- through" national advertisers that pay the retailer "slotting" fees or co-op fees.

            We also will direct our attention to obtaining our business through national and regional advertising agencies and promotion and public relation firms. We will attempt to be a venue of choice for major promotions, whether the ultimate sale takes place in the retail location that is part of our network or it brings the customer out of our leisure destination to a retail establishment off premises.

            We currently  have a total of approximately 100 locations installed and broadcasting Bar TV  on a daily basis. We have approximately 63 locations in Fort Lauderdale, West  Palm Beach and the South Beach entertainment district in Miami Beach. We believe  that this base of anchor locations has established our regional footprint in  the Southeast Florida corridor, which covers the highly populated and affluent  counties of Palm Beach, Broward and Miami-Dade. We also have approximately 31  locations in Central Florida (metropolitan Orlando and Tampa) and 7 in the Florida  Keys. Some of these locations are not actively engaged in our network and may  be removed by us, may discontinue their association with Bar TV or may again  become active participants.

            We believe that our business model can only be successful if we are able to attract national and major regional advertisers for major promotions. In order to accomplish this goal, we must continue to place our broadcast in high traffic locations in the entertainment districts throughout the United States. There is no assurance that we will able to enter into agreements with a sufficient number of business locations within the United States to interest the advertisers we are seeking.

            In order to interest viewers to watch our monitors and see and pay attention to our advertisements, we must provide entertaining content. We use the same approach as network television which provides content, which may be situation comedies, quiz, reality, talent or late-night talk shows to draw viewers and keep them entertained and focused on their television sets so that during the commercial breaks they watch the ads and eventually buy the products. Just as an "ads-only" channel has not proven to be popular, we believe that to be successful in presenting advertisements, we must provide some form of entertainment and we have chosen first-run motion picture trailers and music videos as our entertainment. We have not taken any surveys as to whether our locations' patrons like being exposed to ads or movie trailers.

           We utilize as "backbone" or "core" content, movie trailers of first-run motion pictures from the major motion picture studios, including Twentieth Century Fox, Columbia Pictures, MGM, Warner Bros., Paramount Pictures and Universal highlighting upcoming releases, and music videos. The movie trailers, which are rated as suitable for general audiences, are supplied to us, without charge, by Fahlgren Entertainment, Inc., an Atlanta based entertainment oriented advertising and public relations agency.  Fahlgren Entertainment, Inc. has agreements with the studios to receive print and ad ("P & A") marketing materials, which they provide to third-party entertainment companies such as our company to expand the "P & A" promotion of upcoming theatrical releases. The music videos, which are promotions for upcoming album releases, are provided to us by Elektra Music, which include videos by Warner, Atlantic Records and Elektra, and by Epitaph Records.

            We then schedule local, regional and national advertisements, before and after the filmed movie trailers.  Because music is generally played in our locations by disk jockeys or juke boxes, it is necessary that our broadcasts of movie trailers and music videos and ads be graphically intensive and without sound.

            We currently do not receive any direct revenues from these trailers and videos, but we are free to use them as content in our broadcasts to the locations that comprise our network. In exchange for allowing us to broadcast our ads and content to their location to be viewed by their patrons, we provide free advertisements, which includes producing a five-second static advertisement for the retail location utilizing its logo, address, website address and phone number. We also provide an "event calendar" with digital photographs of patrons and employees and allocate up to two minutes of airtime per hour of broadcast to their location.

            We maintain a similar relationship with our Gym TV locations, except that in addition to providing the businesses with free advertisements, we pay the locations, on a pro-rata basis, from 10% to 33% of the gross ad revenue. 

            **Industry Background**

            The point-of-purchase  market together with the out-of-home advertising business is currently estimated  at $6 billion annually. The advertising industry is diverse and includes television,  newspapers, magazines, radio, specialty media, the Internet, billboards, direct  mail and telephone directories. Approximately $460 billion was spent on worldwide  advertising in 2000, including over $240 billion in the United States alone.

            In recent years, non-traditional media, particularly digital technology, has brought in an era of change, providing advertisers new forms and formats by which they can connect with and impact their target audience.  Many industry analysts believe that the relative importance of traditional advertising media will decrease as advertisers look for more creative solutions to reach consumers.

            Through our networks, we have created advertising distribution channels that permit advertisers to effectively reach their audience in an out-of-home environment. We intend to capture an increasing share of the total advertising market. We believe that point-of-purchase advertising networks appeal to both traditional in-home and out-of-home advertisers who today employ a broad range of advertising mediums.

**            Network Program**

            Our "networks," which is the term we use to describe our groups of locations that permit their patrons to view our broadcasts, offer advertisers the ability to target specific demographics on a site-by-site basis. Placing monitors in high traffic leisure destinations such as sports bars, taverns, nightclubs, gyms and health clubs, increases exposure and ad impressions. The monitors are profiled based on specific characteristics of their audience, including age, gender, race and income. This is not accomplished scientifically, but by word-of-mouth and anecdotal observation, which we believe to be reliable. Some examples of the type of information which may be helpful for advertisers are the price of drinks in a bar, which gives information as to patrons' income; the breakdown by sexes, which might indicate the type of drink, which would appeal to a particular gender; the types of cars and trucks in the parking lot, are all items of information that may be useful to advertisers in determining the demographics make-up of the viewing population.  This information availability allows us to appeal to both local advertisers targeting a small geographic area within a major city, as well as national advertisers targeting a wide range of demographic groups.

            Our advertising monitor plays a repeating or looping sequence of advertising and programming.  As currently configured, a broadcast consists of 120 thirty-second advertising spots per hour.  The broadcast in each specific area can support 240 thirty-second airing slots, including entertainment spots, on the DVD installed at each location. New technology has been announced that may make available to us double-layered DVDs that can provide increased storage and broadcast availability. We intend to make use of this technology when it becomes available.

            Installation costs for a new site include the cost of acquiring hardware and the cost of installing equipment.  The fully installed average per site cost for a typical location with a single video monitor is approximately $600.  Some sites may contain multiple monitors. We secure three-year placement contracts for locations to install monitors.  There is no monthly recurring fee for the retail establishment that wants the monitors installed and we do not permit ads of competing bars and restaurants to be broadcast to the retail locations that form our network.  The retail establishment is responsible for supplying electricity to the equipment and keeping the monitor on, during normal business hours. As compensation for allowing us to place our monitors in their business location, which at present is generally a busy bar, tavern or nightclub, the retail establishment receives free advertising spots. We usually provide the business location with at least one minute of advertisements that air, without charge, at least twice per hour. The location may display, without charge, its monthly event calendar, five-second static ad and photo gallery that are all updated monthly at minimal cost to us.  

**            Advertising Sales**

            Our strategy is to derive a significant portion of our revenue from advertisements placed on our network.  We are attempting to procure national advertisers, primarily through advertising and promotion agencies and public relations firms that have the ability to direct promotion funds to our networks. Examples of products that are constantly having special promotions are automobile manufacturers and fashion firms. We are also seeking advertisers that are looking for alternate media to promote their products that are limited by law or tradition as to their advertising options. We also look for opportunities for advertisers whose products can be sold immediately on an impulse basis such as beverages in a Bar TV location and health foods and supplements in a Gym TV location.

           We believe that advertising and product demonstrations at the point-of-purchase could significantly influence which products consumers purchase. Advertising rates are based upon the availability of space for the desired location, the size and demographic make-up of the market served by the screens and the availability of alternative advertising media in the area.  Advertising sales are generally made pursuant to contracts with local, regional or national advertisers.

            As we grow, we intend to license territories to individuals or corporations to sell the local, regional and national advertisements for their territory. We intend to operate the new locations and network broadcast remotely utilizing a "media box" consisting of a digital and still camera shipped to the location to capture the necessary location content and shipped back for editing. We then intend to mail back the edited broadcast with the new ads on a monthly basis. We plan to compensate any necessary sales force with a base salary and an incentive plan if we are unable to license the territories. If we are unable to operate the new territories remotely, it could have a substantial and adverse impact on our expansion and capital plan.

**            Competition**

            Competition for advertisers is intense. We will be competing with similar networks and also with radio, television and cable companies and other forms of advertising including newspapers, magazines, the Internet, direct mail and billboards. We believe that our strategy of offering advertising in leisure destinations provides particular advertisers with access to a select clientele at attractive rates with favorable brand recall and significant point-of-purchase potential. We expect to compete with these forms of advertising on the basis of price and our ability to reach potential customers at the point of purchase. A large number of companies that provide advertising in the point-of-purchase segment of the advertising industry and other sectors have significantly greater financial, marketing, technical and other resources than we have. Potential competitors may be able to devote greater resources to marketing promotional campaigns, adopt more aggressive pricing policies and devote more resources to technology than we can. Increased competition may reduce our market share and may require us to reduce advertising rates and therefore lower our operating margins. We may not be able to compete successfully against current and future competitors. There can be no assurances that we will be able to obtain the desired results from our business strategy or to be profitable.

**            Gym TV**           

**           ** We plan to expand the Bar TV concept, which is directed at a specific demographic population focused on patrons of bars, taverns and nightclubs, to a concept focused on health club members, which will be part of our business unit, Destination Television. We believe that manufacturers and retailers that market health related products such as vitamins, health foods, bicycles, athletic equipment and sporting events will be anxious to direct part of their promotional budget to a specific sector of the population. We believe that the health club/gym market is well suited to our concept that "leisure destinations drive traffic to retail locations." 

            We completed  the beta testing of our Gym TV network at locations with Gold's Gym franchisees  in South Florida. We attended the National Fitness Trade Shows, and were able  to execute new agreements for Gym TV locations in several additional states  as part of our national roll out. We are now broadcasting to approximately 36  locations and are awaiting installation of our equipment at approximately 25  additional facilities.

            In addition to having made application to register the trademark for Bar TV, we have made application to register the trademark of the Gym TV and Hotel TV brands with the United States Patent and Trademark Office under Section 038 of narrowcast media/audio in out-of- home (OOH) locations.

**            Acquisition of National Hotel Network and ALW Communications **

**           ** On  December 31, 2004, we completed the acquisition of all of the issued and outstanding  stock of National Hotel Network, Inc. ("NHN") and ALW Communications, Inc. ("ALW").  The combined purchase price of the transactions was $100,000 cash (for the stock  of NHN) and 1,282,354 shares of our common stock (for the stock of ALW). We  planned to integrate the new acquisitions, under the brand Hotel TV, Inc., with  our existing operations, Bar TV and Gym TV so as to offer national advertisers  an opportunity to reach a targeted audience at leisure destinations at relatively  reasonable advertising rates. In May 2005, we commenced a lawsuit regarding  the acquisition of ALW and NHN. The suit alleges breach of contract; unjust  enrichment; conversion; and breach of fiduciary position and we are seeking  injunctive relief to prevent the transfer of the shares of our common stock,  which we issued as partial consideration for our acquisition of ALW and NHN;  and rescission of the acquisitions; return of common stock issued and cash paid  in connection with the acquisitions; damages and other relief. We are unable  to determine the outcome of the litigation and how it will affect our plans  for Hotel TV, Inc.

**            Description of the Acquired Companies **

**           ** ALW  Communications, Inc. was formed in August 2002 and shortly thereafter, the concept  for the City Traveler television program was introduced to South Florida's largest  and most well known hotels. The show is an in-room television program designed  to be a hotel guest's visual guide to the area. Each episode runs in a continuous  loop on a dedicated channel, giving guests 24-hour access to an "insider's look"  at the area's finest restaurants, attractions and shopping destinations. In  May 2003, the show went live and now airs in approximately 18 premier hotels  in the Greater Miami and Fort Lauderdale areas. At the time of our acquisition,  we had understood that the show aired in 30 hotels. The City Traveler television  show is currently offered at no cost to hotels and is broadcast from equipment  installed in each hotel by independent contractors paid by ALW Communications,  Inc. Hotels traditionally grant City Traveler exclusive broadcast rights for  this type of programming.

**           ** Unlike traditional television shows with conventional commercials, City Traveler attracts advertisers by offering advertisements that are actual pieces of a television show. Our production staff works with each client to create a unique 60- to 120-second "advertorial" to entertain, educate and motivate targeted hotel guests. City Traveler episodes consist of 15-30 of these individual segments, each highlighting a specific destination.

**           ** In  early 2004, in order to attract national advertisers, the National Hotel Network  was formed as a sales organization to represent five companies (including ALW  Communications, Inc.) that operated City Traveler-type channels in 11 U.S. cities.  Through these local affiliates, the network had a viewer base in more than 470  hotels and 135,000 hotel rooms. Each affiliate independently produces their  own travel show, however the National Hotel Television Network has contracts  with each to sell customary 30, 60, and 90-second commercials. These contracts  require that affiliates may not join a competing network, and that National  Hotel Television Network not represent competitors airing programming in the  affiliates' local markets. Shortly after completing our acquisition of ALW and  NHN, we were notified that the largest of the five companies, City Explorer  TV, cancelled its agreement with NHN. This cancellation resulted in a reduction  of the number of affiliates from 11 to five and the reduction of the number  of hotels to 228 and the number of hotel rooms to 37,715. Because we believe  the former owners of ALW and NHN knew of the impending cancellation, we commenced  litigation which is detailed below in *Part II, Item 1 - Legal Proceedings*.

**           ** We plan to use our capabilities both at Hotel TV and our other divisions to offer our services for producing commercials and other advertising materials. We expect to bill for these services separately from the sale of advertising time. Our production services will be offered to both advertisers and non-advertisers alike.

**            Government Regulation**

            Because we operate private networks at retail locations, we are not currently restricted by licensing program content and related regulations of the Federal Communications Commission.  In addition, the advertising industry is subject to regulation by the Federal Trade Commission, the Food and Drug Administration and other federal and state agencies and is reviewed by various civic groups and trade organizations.  The introduction of new laws, regulations or interpretation of existing regulations governing advertising could have a material adverse effect on our business.

**            Employees**

            We currently  have seven full-time employees and also employ independent commission sales  representatives. We typically enter into independent contractor agreements or  work-for-hire agreements with individuals to provide services on an as-needed  basis.

            **Mergers and Acquisitions**

            In addition to pursuing our revised business model, we are seeking to acquire companies or enter into joint ventures with companies that are in the advertising or promotion fields. We believe that our concept of leisure destinations driving traffic to retail locations is relevant to all forms of advertising, whether in digital or print or sound format. We believe that there are companies, in Florida and elsewhere that could benefit from our capabilities and industry relationships and that can also complement our existing network structure. In light of our limited cash position and relatively high debt load, there is no assurance that we will be able to complete the acquisition of any company.

            **Letter of Intent to Acquire Be Media**

**           ** On June 9, 2005, we entered into a letter of intent to purchase all of the outstanding stock of Be Media, which is a privately held California based audiovisual systems integrator. The letter of intent provides for the issuance by us of a new series of our Preferred stock, which will be convertible into 49.9% of the then outstanding stock of the combined company.** ** Completion of the proposed transaction is subject to approval by the parties of a definitive acquisition agreement that will include various conditions that are set forth in the letter of intent that was included as an exhibit to our Report on Form 8-K that was filed with the Securities and Exchange Commission on June 10, 2005. 

**RESULTS OF OPERATIONS**

            The following critical accounting policies are important to the portrayal of our company's financial condition and results.

***Revenue Recognition:***

            All of our revenue is derived from the production and sale of custom advertising and its subsequent airing throughout our Bar TV network. Our primary obligations are to produce a completed video clip ("Production revenue") and to air that clip on our networks for an initial 90-day period ("Air Time revenue"). Production revenue is recognized upon the delivery and acceptance of the produced piece while Air Time revenue is recognized ratably over the 90-day period. Our advertising agreements provide one sum for both services. Management estimates the portion of the contract sum to be allocated to Production revenue based upon the projected production costs to be incurred. The remaining balance is allocated to Air Time revenue. Our network advertising medium is fairly unique and no statistics are currently available to support the nature and extent of our success in reaching a target market. We run produced spots at our own expense in order to generate the quantitative support necessary to eventually market this aspect of our business.

***Valuation of Long-lived Assets:***

            We review the recoverability of our long-lived assets including equipment, goodwill and other intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. Our primary measure of fair value is based on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.

            We amortize  the costs of other intangibles over their estimated useful lives unless such  lives are deemed indefinite. Amortizable intangible assets are also tested for  impairment based on undiscounted cash flows and, if impaired, written down to  fair value based on either discounted cash flows or appraised values. Intangible  assets with indefinite lives are tested for impairment, at least annually, and  written down to fair value as required.

            In May 2005,  we brought suit against the former owners of ALW and NHN in connection with  our acquisition of their companies. In accordance with our policy, we consider  the commencement of this lawsuit an event that may indicate a change in the  carrying value of the acquired assets. We are in the process of determining  the impact of these events on the expected future pre-tax cash flows, and expect  to complete the assessment of possible impairment in the fiscal quarter ending  July 31, 2005.

*Results of operations for the Three Months Ending April 30, 2005 and April 30, 2004*

            The following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read in conjunction with the financial statements and footnotes that appear elsewhere in this report.

**Sales and Other Revenues**

            In the three months ending April 30, 2005, we had incidental sales in the nominal amount of $6,800. This compares to the nominal sales of $19,801 in the three months ended April 30, 2004. Our sales in both periods were primarily of an experimental nature in which we tested and refined different concepts and approaches for potential advertisers. We do not expect any sum of revenues other than nominal amounts until we have in place a sufficient number of broadcast locations to attract national and regional advertisers.

**Expenses**

**           ** Selling,  general and administrative expenses, for the quarter ended April 30, 2005, excluding  consulting expenses, decreased $14,651 or 6.8%, to $200,420 from $215,071 in  the comparable 2004 quarter. In the April 2005 quarter, our major expenses included  $46,158 for independent sales and production personnel; $13,500 for rent; $18,175  for professional expenses and $41,583 for officer's compensation, of which $8,333  included the allocation of expense of previously issued shares. In the comparable  April 2004 quarter, our major expenses included $59,437 for independent  sales and production personnel; $13,500 for rent; $20,450 for professional expenses  and $33,250 for officer's salary.

            Consulting  expenses were $130,000 for the quarter ended April 30, 2005, all of which was  paid in stock, in lieu of cash, compared to $416,000 for the quarter ended April  30, 2004, which included a non-cash expense of $391,000 representing the fair  value of the extension of consultants' options. 

            Interest expense for the quarter ended April 30, 2005, increased $1,183 or 11.9% to $11,146 from $9,963 in the comparable 2004 quarter. Interest expense for both quarters consists of interest on the La Jolla and Terry notes and payroll taxes payable.

**Income Tax Expense (Benefit)**

            We have substantial net operating loss carry-forwards, which may be used to offset operating profits in the future. In the periods covered by this report, there was no income tax expense or benefit reported on our financial statements. We determined that it was more likely than not that our net operating loss carry-forwards would not be utilized; therefore, we have provided a valuation allowance against the related deferred tax asset.

**Losses**

            Our net  loss before taxes for the fiscal quarter ended April 30, 2005 decreased $286,467  to $334,766 from $621,233 in the comparable fiscal 2004 quarter. This decrease  in the loss before taxes was the result of a decrease of consulting expenses  of $286,000; a decrease of selling, general and administrative expenses of $14,651;  offset by an increase of interest expense of $1,183, and a decrease of $13,001  of nominal revenues.          

            Although we believe our revised business model may provide for an increase in revenue and a reduction in losses for the year ending October 31, 2005, there can be no assurance that we will achieve or maintain profitability or that revenues will be generated or that growth can be sustained in the future. The viability of our business plan necessitates that we significantly expand the number of locations that are part of our network to reach that level of critical mass of locations needed to attract advertisers. Without required funding, we will not be able to increase the number of locations and, consequently, we will be unable to secure the necessary advertisers.   

**Loss per Share**

            The basic  and diluted loss per share of common stock was $0.01 in the fiscal quarter ended  April 30, 2005 compared to $0.02 in the fiscal 2004 quarter ended April 30,  2004, which was computed by dividing the net loss, by the weighted average common  shares outstanding. In the fiscal 2005 quarter, the weighted average of outstanding  common shares, which includes the weighted average number of common shares into  which the preferred stock is convertible, was 36,025,805 compared to 25,738,299  in the fiscal year 2004 quarter. For the purpose of computing loss per share  of common stock, the Preferred Stock is treated as if it were a separate class  of common stock with rights and attributes identical to the common shares in  all respects except voting rights.

*Six months ended**April 30, 2005* and *six months ended**April 30, 2004*

**Sales**

            In the six months ended April 30, 2005, our sales were $9,100 compared to $38,632 in the six months ended April 30, 2004.

**Expenses**

            Selling,  general and administrative expenses, for the six months ended April 30, 2005,  excluding consulting expenses, decreased $26,806 or 41%, to $435,334 from $462,140  in the comparable 2004 six-month period. In the six months ended April 30, 2005,  our major expenses included $138,368 of which, $37,500 was paid in stock in  lieu of cash, for independent sales and production personnel; $27,000 for rent;  $22,025 for professional expenses; and $83,167 for officer's compensation, of  which $16,667 included the allocation of expense of previously issued shares.  In the comparable April 2004 six months, our major expenses included $223,409,  of which $123,600 was paid in stock in lieu of cash, for independent sales and  production personnel; 27,000 for rent; $25,950 for professional expenses; and  $66,500 for officer's salary.

            Consulting  expenses were $246,875 for the six months ended April 30, 2005, of which $12,000  was paid in cash; $155,000 was paid in stock, in lieu of cash; and $79,875 was  a non-cash expense, representing the fair value of the extension of consultants'  options. Total consulting expenses were down $244,125 from $491,000 in the first  half of 2004, which included a non-cash expense of $391,000, representing the  fair value of the extension of consultants' options; and $100,000, paid in stock  in lieu of cash.           

            Interest  expense for the six months ended April 30, 2005, increased $3,019, or 15.6%,  to $22,396 from $19,377 in the comparable 2004 six-month period. Interest expense  for the 2004 period consists of the accrued interest on the La Jolla and Terry  notes and payroll taxes payable.

**Losses**

            Our net  loss, before taxes, decreased $238,380 from $933,885, in the April 30, 2004  six months, to $695,505 in the April 30, 2005 six-month period. Included in  our losses for both periods was the  non-cash charge for the fair value  of the extension of consultants' options of $79,875 in the 2005 period and $391,000  in the comparable 2004 period. Although we have substantial tax carry-forwards,  we have not reduced our net loss for the six month period by any tax benefit  because we determined that it was more likely than not that our net operating  loss carry-forwards would not be utilized; therefore, we have provided a  valuation allowance against the related deferred tax asset and, consequently,  our net loss before taxes and after taxes is the same.

**Loss per Share**

            The basic and diluted loss per share of common stock, in the six months ended April 30, 2005, was $0.02, compared to $0.04 in the like six-month period of fiscal 2004. The loss per share was computed by dividing the net loss, by the weighted average common and equivalent shares outstanding. In the fiscal 2005 six-month period, the weighted average, which includes the weighted average number of common shares into which the preferred stock is convertible, was 32,827,450 compared to 23,210,068 in the fiscal 2004 six-month period. For the purpose of computing loss per share of common stock, the Series A Preferred Stock (in the 2004 and 2005 periods) and the Series B Preferred Stock (in the 2005 period) were treated as if they were separate classes of common stock as the rights and attributes of the common shares and preferred shares are identical in all respects except for voting rights.

**Liquidity and Capital Resources**

            As of April  30, 2005, we had a net working capital deficit of $493,791, which compared to  a net working capital deficit of $665,622 at October 31, 2004. The excess of  current liabilities over current assets has caused us to defer the timely payment  of outstanding liabilities including accounts payable, rent payments and payroll  taxes. Dr. Terry's agreement to defer rent payments together with his advancing  funds to us has allowed us to continue to operate while having a working capital  deficit.           

            As of April 30, 2005, we had cash of $29,516 compared to $329,228, on January 31, 2005 and $233,810, on October 31, 2004. The substantial cash reduction resulted from our April 24, 2005 payment of $345,830 to retire in full, including interest of $45,830, the La Jolla promissory note. 

            At April 30, 2005, our liabilities consisted of accounts and accrued expenses payable of $194,166; payroll taxes payable of $129,299, and convertible notes payable to Dr. Terry of $200,000. Our accounts payable, payroll taxes payable and accrued expenses payable, which totaled $323,465, increased $49,033 from $274,432 at October 31, 2004. Included in our accrued expenses payable at April 30, 2005 was accrued rent payable to Dr. Terry of $126,000 and accrued interest due him of $21,735. Our total liabilities, all of which were due within one year, were $523,465 at April 30, 2005 for a decrease of approximately $376,000 from October 31, 2004, which resulted primarily from the payment of the La Jolla promissory note of $300,000 plus accrued interest of $45,830. We are developing a plan to handle our past due liability for payroll taxes.       

**           ** We  did not generate cash from operations at any time in the period beginning November  1, 1999 through April 30, 2004. Our operating activities consumed cash of $621,320  in the fiscal year ended October 31, 2004 and $335,689 in the six months ended  April 30, 2005.

**           ** During  the first six months of fiscal year 2005, we issued $801,666 of our securities  of which $582,500 was for cash and $219,166 for services. Similarly, our financing  activities provided cash and services of $790,000 and $223,600 for a total $1,013,600  for the first six months of fiscal year 2004. During fiscal year 2004,  our financing activities provided total funds of $915,000.

            We have  been funding our cash needs through the issuance of our common stock and convertible  notes. We also used our common stock, in lieu of cash, to obtain professional  and employment services. We intend to cover our cash needs over the next 12  months through the sale of additional shares of our common stock and/or convertible  securities and the possible exercise of outstanding warrants. We have filed  a Registration Statement under Form SB-2, which has been deemed effective by  the SEC, for the sale by La Jolla of up to 10,000,000 shares of our common stock,  which may be acquired upon exercise of the 10,000,000 common stock warrants  owned by them. The exercise of the warrants is determined by a formula in the  warrant agreement, which is based on the market price and trading volume of  our common stock. Any proceeds from the exercise of the warrants will be used  to support our existing and proposed operations including the reduction of our  liabilities.  There is no assurance that La Jolla will elect to or will  be required to exercise any of their warrants. There is also no guarantee, that  we will be able to raise any additional funds from the sale of our securities  or from borrowings or from any other source.

**Capital Expenditures**

            The only significant capital expenditure we expect to make in the upcoming year is for televisions to be placed in the various locations, primarily Gym TV locations that receive and transmit our programming and advertising.

**Ability to Continue as a Going Concern and Management Plan**

            Our financial statements have been prepared assuming that we will continue as a going concern. We have generated only nominal revenue in the ordinary course of our business. The lack of sales and recurring losses from operations raises substantial doubt about our ability to continue as a going concern. Our management's plan in regards to these matters is to seek further equity or debt funding to allow us to pursue our business plan which involves the sale of advertising on our Bar TV, Gym TV and Hotel TV networks and the possible acquisition of companies in related or unrelated businesses. We intend to increase our revenues by concentrating our sales efforts on attracting national advertisers to our Gym TV network and our newly formed Hotel TV network; and to reduce our fixed cash operating expenses so that sales exceed our fixed expenses.

**ITEM 3 - CONTROLS AND PROCEDURES**

**           ** We  carried out an evaluation of the effectiveness of the design and operation of  our disclosure controls and procedures as of April 30, 2005. This evaluation  was accomplished under the supervision and with the participation of our chief  executive officer, chief financial officer/ principal accounting officer who  concluded that our disclosure controls and procedures are effective to ensure  that all material information required to be filed in the quarterly report on  Form 10-QSB has been made know to him. As of April 30, 2005, and the date of  this Report, Gordon Scott Venters served as our Chief Executive Officer and  Chief Financial Officer (which duties include that of principal accounting officer).  There have been no significant or material changes in our internal controls  over financial reporting or in other factors which have materially affected  or that are reasonably likely to materially affect our internal controls over  financial reporting.

             Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

----

** PART II**

**OTHER INFORMATION**

**ITEM 1 - LEGAL PROCEEDINGS**

**           **On  May 13, 2005, we commenced an action entitled *Magic Media Networks, Inc.  v. Alec M. Lindenauer and Louis T. Wolfson* (Circuit Court of the 17th Judicial  District, Civil Division, Broward County, Florida - Case No. CACE 05 007429)  regarding our acquisition on December 31, 2004 of ALW Communications, Inc. ("ALW")  and National Hotel Television Network, Inc. ("NHN"). We brought suit  alleging: breach of contract; unjust enrichment; conversion; and breach of fiduciary  position. It is our contention that the defendants knew that a significant contractual  relationship was about to be cancelled and intentionally failed to disclose  this information causing us serious monetary harm. We are seeking injunctive  relief to prevent the transfer of 1,282,352 shares of our common stock, which  were issued as partial consideration for our acquisition of ALW and NHN. We  are also seeking rescission; return of common stock issued and cash paid in  connection with the acquisitions; damages in an amount to be specifically proven  and identified at trial; pre-judgment and post-judgment interest; punitive damages;  attorneys' fees and costs; and any and all other relief. The defendants submitted  an answer to our complaint in which they denied our allegations and raised various  affirmative defenses. The defendants also counterclaimed alleging breach of  contract and are seeking approximately $47,000 for "unpaid wages, unpaid  commissions, severance commissions and unpaid expenses. " The case is in  a very early stage and it is too soon to determine how the various issues raised  by the lawsuit will be resolved. There can be no assurance that we will be successful  in our suit against Lindenauer and Wolfson or that their counterclaims will  not be upheld.

             In March  2004, we were sued in an action entitled *Domenic Franco v. Magic Media Networks,  Inc.* (Circuit Court of the 17th Judicial District, Civil Division, Broward  County, Florida - Case No. CACE 04 -004093), regarding the payment for investor  relations services. The plaintiff alleged breach of contract in our failure  to issue shares of our stock for the services allegedly rendered. We contend  that we did not enter into a contract with the plaintiff and that he did not  provide us with any services. In a non-binding arbitration, the arbitrator determined  that we should pay the plaintiff $51,300 plus interest and possibly attorney's  fees. We disagree with the determination of the arbitrator and have made a motion  with the Court to proceed with a trial. We believe that the decision of the  arbitrator in the non-binding arbitration is not indicative of the ultimate  determination at trial. However, there is no assurance that we will be successful  in our defense of the lawsuit. 

**ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

            During the three months ended April 30, 2005, we issued the following securities:     

            In April 2005, we issued 600,000 shares of our restricted common stock, valued at $60,000, to Norman. Gross; 600,000 shares of restricted common stock, valued at $60,000, to James Chincholl; and 100,000 shares of restricted common stock, valued at $10,000, to Christopher Knapp. The shares, which were issued for compensation for consulting services, were valued at $0.10 per share, which was representative of the market value at the date of issuance. The issuances were made in reliance on Section 4(2) of the Securities Act of 1933 and were made without general solicitation or advertising. The recipients had access to all relevant information necessary to evaluate the investment and they represented to us that the securities were being acquired for investment purposes.

           We issued 300,000 shares of restricted common stock in February 2005 and 375,000 shares in April 2005 to Dr. Harold K. Terry at $0.10 per share for a total of $67,500, which was used for working capital. The issuances to Dr. Terry were made in reliance on Section 4(2) of the Securities Act of 1933 and were made without general solicitation or advertising. The purchaser is a sophisticated "accredited" investor with access to all relevant information necessary to evaluate the investment and he represented to us that the securities were being acquired for investment purposes. We also issued in April 2005 to L. Orton, at $0.10 per share, 300,000 shares of common stock for a total of $30,000. This issuance was also made in reliance on Section 4(2) of the Securities Act of 1933.

            As of April 30, 2005, we had 34,790,412 shares of common stock outstanding. As of the same date, we had 3,750,000 shares of Series B Preferred Stock outstanding.

** ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K**

|   | (a)    |   | Exhibits

Exhibit 31.1 - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer and Principal Financial Officer and Principal Accounting Officer

Exhibit 32.1 - Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer and Principal Financial Officer and Principal Accounting Officer |
|--------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | (b)    |   | Reports on Form 8-K

**           ** On April 27, 2005, we reported on Form 8-K, under Item 8.01that on April 24, 2005, we paid $345,830, to La Jolla Cove Investors, Inc., as full payment of a promissory note in accordance with its terms.                                                                                                                                                                                          |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

** 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.

|   |          |   |      | **MAGIC MEDIA NETWORKS, INC.**                                                                                                                                                                                                                            |
|--------|---------------|--------|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |          |   |      |                                                                                                                                                                                                                                                      |
|   | June 20, 2005 |   | By:  | /s/ Gordon Scott Venters                                                                                                                                                                                                                                  |
|   |          |   |      |                                                                                                                                                                                                                                                           |
|   |          |   |      | Gordon Scott Venters           President and Chief Executive Officer           (Principal Executive Officer) and           Acting Chief Financial Officer           (Principal Financial Officer and           Principal Accounting Officer) and Director |