UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~August~~November 3130, 2011

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

For the transition period to

Commission File Number 0-29901

PUBLIC MEDIA WORKS, INC.

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

Delaware		98-4802535
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

~~2330~~4000 ~~Marinship Way~~Bridgeway, Ste. #~~300~~400

Sausalito, CA 94965

(Address of principal executive offices)

(415) 331-7700

(Issuer’s telephone number, including area code)

(Former address)

2330 Marinship Way, Ste. #300

Sausalito, CA 94965

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ¨ NO ¨x

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

On ~~October~~January 144, ~~2011~~2012, the registrant had outstanding 38,~~389~~315,~~700~~615 shares of Common Stock, which is the registrant’s only class of common equity

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting Company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting Company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨

Non accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x

Transitional Small Business Disclosure Format (Check one): YES ¨ NO x

PUBLIC MEDIA WORKS, INC.

(Debtor-in-Possession)

Form 10-Q

For the Three and ~~Six~~Nine Months Ended

~~August~~November 3130, 2011

TABLE OF CONTENTS

Page PART I – FINANCIAL INFORMATION 3 Item 1. Condensed Consolidated Financial Statements 3 Condensed Consolidated Balance Sheets as of August 31, 2011 (Unaudited) and February 28, 2011 3 Condensed Consolidated Statements of Operations for the Three and Six Months ended August 31, 2011 and 2010 (Unaudited) 4 Condensed Consolidated Statements of Cash Flows for the Three and Six Months ended August 31, 2011 and 2010 (Unaudited) 5 Notes to Condensed Consolidated Financial Statements (Unaudited) 6 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 12 Item 3. Quantitative and Qualitative Disclosures About Market Risk 15 Item 4. Controls and Procedures 15 PART II – OTHER INFORMATION 16 Item 1. Legal Proceedings 16 Item 1A. Risk Factors 16 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 16 Item 3. Defaults Upon Senior Securities 17 Item 4. (Removed and Reserved) 17 Item 5. Other Information 17 Item 6. Exhibits 17 Signatures 17

		Page

PART I – FINANCIAL INFORMATION		3

Item 1. Condensed Consolidated Financial Statements		3

Condensed Consolidated Balance Sheets as of November 30, 2011 (Unaudited) and February 28, 2011		3

Condensed Consolidated Statements of Operations for the Three and Nine Months ended November 30, 2011 and 2010 (Unaudited)		4

Condensed Consolidated Statements of Cash Flows for the Three and Nine Months ended November 30, 2011 and 2010 (Unaudited)		5

Notes to Condensed Consolidated Financial Statements (Unaudited)		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13

Item 3. Quantitative and Qualitative Disclosures About Market Risk		16

Item 4. Controls and Procedures		16

PART II – OTHER INFORMATION		17

Item 1. Legal Proceedings		17

Item 1A. Risk Factors		17

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		17

Item 3. Defaults Upon Senior Securities		18

Item 4. (Removed and Reserved)		18

Item 5. Other Information		18

Item 6. Exhibits		18

Signatures		18

PART I

PUBLIC MEDIA WORKS, INC.

~~Condensed Consolidated Balance Sheets~~ (~~Unaudited~~Debtor-in-Possession)

	August 31,			February 28,
	2011			2011
	(Unaudited)
Assets
Current assets:
Cash	$	5,794		$	385,888
Accounts receivable, net		—			6,561
Inventory		45,741			61,564
Prepaid expenses and other assets		3,549			346,728
Total current assets		55,084			800,741
Deposits on kiosks		—			394,206
Equipment, net		168,875			—
Other assets		11,202			11,485
Total assets	$	235,161		$	1,206,432
Liabilities and Stockholders’ Deficit 3
Current liabilities:
Accounts payable and accrued expenses	$	448,531		$	271,562
Notes payable and accrued interest to stockholders		726,287			14,000
Note payable		—			27,090
Total current liabilities		1,174,818			312,652
Notes payable and accrued interest to stockholders and a related party		—			855,185
Total liabilities		1, 174,818			1,167,837
Stockholders’ deficit
Common stock $0.0001 par value, 125,000,000 shares authorized 38,389,700 and 30,208,459 issued and outstanding as of August 31, 2011 and February 28, 2011, respectively		3,839			3,021
Additional paid-in capital		18,268,506			12,901,495
Subscriptions receivable		—			(30,000	)
Accumulated deficit		(19,212,002	)		(12,835,921	)
Total stockholders’ deficit		(939,657	)		38,595
Total liabilities and stockholders’ deficit	$	235,161		$	1,206,432

Condensed Consolidated Balance Sheets

	November 30,			February 28,
	2011			2011
	(Unaudited)
Assets
Current assets:
Cash	$	25,233		$	385,888
Accounts receivable, net		—			6,561
Inventory		—			61,564
Prepaid expenses and other assets		2,000			346,728
Total current assets		27,233			800,741
Deposits on kiosks		—			394,206
Other assets		—			11,485
Total assets	$	27,233		$	1,206,432
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accrued liabilities-post petition	$	18,480		$	—
Convertible note-post petition		25,000			—
Total liabilities not subject to compromise		43,480			—
Liabilities subject to compromise		1,032,254			1,167,837
Total liabilities		1,075,734			1,167,837
Stockholders’ equity (deficit)
Common stock $0.0001 par value, 125,000,000 shares authorized 38,315,615 and 30,208,459 issued and outstanding as of November 30, 2011 and February 28, 2011, respectively		3,832			3,021
Additional paid-in capital		18,295,520			12,901,495
Subscriptions receivable		—			(30,000	)
Accumulated deficit		(19,347,853	)		(12,835,921	)
Total stockholders’ equity (deficit)		(1,048,501	)		38,595
Total liabilities and stockholders’ equity (deficit)	$	27,233		$	1,206,432

The accompanying notes are an integral part of these condensed consolidated financial statements.

PUBLIC MEDIA WORKS, INC.

(Debtor-in-Possession)

Condensed Consolidated Statements of Operations (Unaudited)

	Three months ended August 31,						Six months ended August 31,
	Three months ended November 30,						Nine months ended November 30,
	2011			2010			2011			2010
Revenue	$	~~18,881~~—		$	~~339~~239		$	39,117		$	~~339~~578
Expenses
Direct operating expenses		~~105,890~~—			—			169,~~603~~605			—
Marketing		25,566			61,779			78,418			94,596
General and administrative expenses		37,042			3,195,491			4,359,821			4,955,264
General and administrative expenses		1,409,850			380,740			4,014,852			1,690,973
Total expenses		37,042			3,195,491			4,529,426			4,955,264
Professional fees		69,766			—			229,507			—
Loss from operations		(37,042	)		(3,195,252	)		(4,490,309	)		(4,954,686	)
Total expenses		1,611,072			442,519			4,492,380			1,785,569
Loss from operations		(1,592,191	)		(442,180	)		(4,453,263	)		(1,785,230	)
Other expenses:
Interest		1027,~~011~~436			3316,~~390~~207			2552,~~052~~487			~~219~~260,~~373~~726
Loss on conversion of debt to equity		~~1,478,693~~—			—			1,478,693			46,550
Depreciation		29,397			13,288			48,996			14,593
Loss on sale of assets		71,370			20,354			71,370			20,354
Equipment impairment		370,077						370,077
Depreciation		—			1,384			48,996			15,957
Total other expenses		1,888,178			46,678			1,922,818			280,516
Equipment impairment		—			—			370,077			—
Loss before income taxes		(3,480,369	)		(488,858	)		(6,376,081	)		(2,065,746	)
Total other expenses		98,806			37,945			2,021,623			343,587
Loss before income taxes		(135,848	)		(3,233,197	)		(6,511,932	)		(5,298,273	)
Provision for income taxes		—			—			—			—
Net loss	$	(3135,~~480,369~~848	)	$	(~~488~~3,~~858~~233,197	)	$	(6,~~376~~511,~~081~~932	)	$	(25,~~065~~298,~~746~~273	)
Net loss per common share – basic and diluted	$	(0.1000	)	$	(0.0316	)	$	(0.1918	)	$	(0.1533	)
Weighted average number of shares – basic and diluted		3638,~~530~~315,~~395~~615			1520,~~453~~576,~~528~~892			3435,~~359~~794,~~350~~596			1316,~~794~~029,~~681~~953

The accompanying notes are an integral part of these condensed consolidated financial statements.

PUBLIC MEDIA WORKS, INC.

(Debtor-in-Possession)

Condensed Consolidated Statements of Cash Flows (Unaudited)

	Six months ended August 31, 2011			Six months ended August 31, 2010
	Nine months ended			Nine months ended
	November 30, 2011			November 30, 2010
OPERATING ACTIVITIES:
Net loss	$	(6,~~376~~511,~~081~~932	)	$	(25,~~065~~298,~~746~~273	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation		48,996			35,~~805~~422
Amortization		110,~~834~~551			—
Impairment of equipment		370,077			—
Interest expense accrued but unpaid on convertible of debt		2527,~~052~~488			166,079
Share based compensation		3,~~527~~529,~~184~~191			24,~~583~~385,~~479~~652
Warrants issued for services		11,086			—
Loss on conversion of debt to equity		1,478,693			46,550
Bad debt expense		7,794			—
Shares issued to settle dispute		—			132,509
Debt discount		25,000			—
Changes in operating assets and liabilities:
Accounts receivable		(1,233	)		—
Prepaid expenses and other assets		3335,~~562~~111			(1,~~681~~316,~~674~~809	)
Inventory		(9484,~~728~~460	)		~~(773~~—	)
Other assets		—10,125			(79,448	)
Accounts payable and accrued expenses and accrued interest		230,502			574,496
Payables and accrued liabilities-post petition		18,480			—
Net cash used in operating activities		(628,262	)		(381,232	)
Deposit on Kiosk		—			(10,000	)
Accounts payable and accrued expenses and accrued interest		228,502			290,140
Net cash used in operating activities		(696,531	)		(1,608,178	)
INVESTING ACTIVITIES:
Purchase of equipment		(199,742	)		(49,249	)
Proceeds from sale of equipment		—			20,355
Net cash used in investing activities		(199,742	)		(49,249	)
Purchase of equipment		(139,034	)		(49,482	)
Net cash used in investing activities		(139,034	)		(29,127	)
FINANCING ACTIVITIES:
Issuance of common stock for cash		216,000			~~761~~1,438,394
Subscriptions receivable		30,000			—
Due to stockholders		~~164~~166,000			—78,636
Payments on note payable		(27,090	)		—
Notes payable		65,000			—
Convertible note-post petition		25,000			—
Payment on note payable to related party		—			(137,923	)
Notes payable-Short term		65,000			32,697
Net cash provided by (used in) financing activities		447,910			623,471
Proceeds from notes payable to stockholders		—			145,481
Net increase (decrease) in cash		(380,094	)		192,990
Net cash provided by (used in) financing activities		474,910			1,695,208
Net increase (decrease) in cash		(360,655	)		57,903
Cash - beginning of period		385,888			44
Cash – end of period	$	525,~~794~~233		$	~~193~~57,~~034~~947
SUPPLEMENTAL DISCLOSURES OF NON CASH FINANCING ACTIVITIES
Common stock issued upon reverse merger	$	—		$	1,171
Conversion of accounts payable to convertible promissory note	$	—		$	50,000
Cancellation of common shares	$	—		$	338
Common stock issued for consulting services	$	468,125		$	1,698,500
Common stock issued to directors, officers and advisors	$	275,000		$	1,~~125~~779,~~000~~500
Conversion of notes payable and interest to equity	$	831,758		$	—
Common stock issued as prepayment on kiosks	$	100,000		$	—
Sale of assets to pay down secured note	$	145,000		$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

PUBLIC MEDIA WORKS, INC.

(Debtor-in-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~August~~November 3130, 2011

1. Basis of Presentation & Summary of Significant Accounting Policies

The accompanying consolidated financial statements include the accounts of Public Media Works, Inc. and its wholly-owned subsidiary, EntertainmentXpress, Inc. (Collectively, the “Company”). All intercompany accounts and transactions have been eliminated in consolidation.

~~The Company filed a voluntary petition on September 23, 2011 (the “Petition Date”), for reorganization under Chapter 11 of the~~ Bankruptcy ~~Code (the “Bankruptcy Code”) with the United States Bankruptcy Court for the Central District of California, Riverside Division (the “Bankruptcy Court”).~~Filing

~~The~~On ~~consolidated~~September 23, ~~financial~~2011, ~~statements~~the asCompany offiled ~~August~~a ~~31,~~voluntary ~~2011~~petition ~~and~~ for ~~the~~relief ~~three~~under ~~and~~Chapter 11 ~~six~~of ~~months~~the ~~then~~United ~~ended~~States ~~were~~Bankruptcy ~~prepared~~Code in ~~accordance~~the ~~with~~United ~~ASC~~States ~~852~~Bankruptcy ~~“reorganizations”,~~Court ~~which~~for ~~does not change~~ the ~~application~~Central District of USCalifornia, ~~GAAP~~Riverside ~~with~~Division ~~respect to~~ (the ~~preparation~~"Bankruptcy ofCourt"). ~~our~~The ~~financial~~Chapter 11 Case ~~statements~~Number is: 6:11-bk-40137-MJ. As ~~such,~~The ~~the~~purpose ~~financial~~in ~~statements~~filing ~~for~~ the ~~three~~Chapter 11 ~~and~~Case ~~six~~is ~~months~~to ~~ended~~give ~~August~~the ~~31,~~Company ~~2011~~time ~~reflect~~to ~~the~~restructure ~~estimated~~its ~~realizable~~debt ~~values~~obligations ofto ~~our~~its ~~assets~~secured and ~~estimated~~unsecured ~~fair~~creditors. ~~value of our liabilities~~Thereafter, ~~and~~we ~~are~~will ~~therefore~~prepare ~~not~~a ~~comparable~~Disclosure toStatement ~~the~~and ~~financial~~a ~~statements~~Plan ~~for~~of ~~the~~Reorganization ~~three~~that ~~and~~describes ~~six~~our ~~months~~plan ~~ended~~to ~~August 31,~~emerge ~~2010.~~from ~~As part of the~~ Chapter 1111as ~~filing~~a ~~and~~viable ascompany. ~~discussed~~We ~~further~~will ~~below,~~file wethose ~~anticipate~~documents with the ~~development~~Bankruptcy Court and ~~implementation~~submit ofthem ~~a plan of reorganization~~ to ~~restructure~~all ~~our~~creditors ~~debt~~for ~~obligations~~their ~~and~~approval ~~business~~with ~~operations. Confirmation of~~ a ~~plan~~view oftowards ~~reorganization~~obtaining ~~would~~an ~~likely~~Order ~~materially~~from ~~alter~~ the ~~classifications~~Bankruptcy ~~and~~Court ~~amounts~~confirming ~~reported~~our inPlan ~~our~~of ~~consolidated~~Reorganization ~~financial~~so ~~statements. For~~that ~~further~~we ~~information~~may ~~see~~successfully ~~Footnote~~exit ~~10,~~from ~~Subsequent~~Court ~~Events~~protection.

The consolidated financial statements as of November 30, 2011 and for the three and nine months then ended were prepared in accordance with ASC 852 “reorganizations”, which does not change the application of US GAAP with respect to the preparation of our financial statements. As such, the financial statements for the three and nine months ended November 30, 2011 reflect the estimated realizable values of our assets and estimated fair value of our liabilities, and are therefore not comparable to the financial statements for the three and nine months ended November 30, 2010. As part of the Chapter 11 filing, we anticipate the development and implementation of a plan of reorganization to restructure our debt obligations and business operations. Confirmation of a plan of reorganization would likely materially alter the classifications and amounts reported in our consolidated financial statements.

The condensed consolidated balance sheet as of February 28, 2011, which was derived from audited financial statements has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

In the opinion of management, all adjustments (consisting of normal and recurring adjustments as well as adjustments required for entities in reorganization under the Bankruptcy Code) necessary for a fair presentation of the results of operations have been included in the accompanying condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes thereto included in the “Company‘s Annual Report on Form 10-K as of and for the year ended February 28, 2011, as filed with the Securities Exchange Commission.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Going Concern and Liquidity Matters

On September 23, 2011, the Company filed for protection under Chapter 11 of the Bankruptcy Code and as such, the accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities during the normal course of business. Historically, the Company has incurred significant losses, and has not demonstrated the ability to generate sufficient cash flows from operations to satisfy its liabilities and sustain operations.

Inventory

Inventory iswas mainly comprised of our DVD and Blu-ray rental library and merchandise inventories held for rental and resale. Inventory, ~~which~~mainly isconsisted ~~considered~~of finished goods, iswas stated at the lower of cost or market. Our DVD and Blu-ray library iswas capitalized and amortized to estimated salvage value (sales value of used DVDs and Blu-ray discs) on a straight-line basis to direct operating expense over the average estimated high usage periods of the DVDs and Blu-rays which is typically four months. ~~The cost of inventory includes the cost of materials and to a lesser extent, the labor and overhead in stocking the DVD and Blu-ray rental inventory.~~ Inventory also ~~includes~~included a small amount of DVD cases and radio frequency identification devices (RFID tags) ~~to be used on future movies~~. Due to our removing our kiosks from operation and the filing of the bankruptcy petition, ~~at August 31, 2011,~~ the Company wrote all ~~inventory~~inventories down to its estimated net realizable value and took a charge of approximately $26,000. On November 22, 2011, the bankruptcy court approved the sale of majority of the Company’s assets and accordingly on November 30, 2011, the Company executed the Asset Purchase Agreement whereby majority of Company’s assets including its inventory were sold for an amount of $145,000.

PUBLIC MEDIA WORKS, INC.

(Debtor-in-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~August~~November 3130, 2011

Equipment

At February 28, 2011, equipment is stated at cost, less accumulated depreciation. Due to the filing of the bankruptcy petition, at ~~August~~November 3130, 2011, the Company wrote all equipment down to its estimated net realizable value and in the three and ~~six~~nine months ended ~~August~~November 3130, 2011, the Company took a charge of approximately $370,~~077~~000.

Expenditures for maintenance and repairs ~~are~~were charged to expense as incurred. Included in the cost of the kiosk is the cost to deliver and install the kiosk as well as applicable sales tax. Items of property and equipment with costs greater than $1,000 ~~are~~were capitalized and depreciated on a straight-line basis over the estimated useful lives, as follows:

Description		Estimated Useful Life
Office equipment and furniture		2 to 5 years
Kiosks		5 years

Net Loss per Common Share – Basic and Diluted

Net loss per common share – basic and diluted is computed based on the weighted average number of shares outstanding for the period. Diluted net loss per common share is computed by dividing net loss by the weighted average shares outstanding assuming all dilutive potential common shares were issued. As of ~~August~~November 3130, 2011 and February 28, 2011, the Company had 11,595,791 and 8,497,291 warrants outstanding, respectively. As of ~~August~~November 3130, 2011 and February 28, 2011, the Company had 51,~~970~~025,000 and 4,005,000 stock options outstanding, respectively. Neither was included in the net loss per common share due to the options and warrants being anti-dilutive. Additionally, there were no adjustments to net loss to determine net loss available to common stockholders. As such, basic and diluted net loss per common share equals net loss, as reported, divided by the weighted average common shares outstanding for the respective periods.

Recent Issued and Adopted Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2010-19 (“ASU 2010-19”), New and Enhanced Disclosures about Fair Value Measurements. ASU 2010-06 provides amendments to FASB ASC 820-10 that requires new fair value disclosures and clarifies existing fair value disclosures required under FASB ASC 820-10. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for certain disclosures about purchases, sales, issuances, and settlements in the roll forward activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of the new provisions within ASU 2010-06 did not have a material impact on our consolidated financial position, results of operations, cash flows, or disclosures.

3In May 2011, the FASB issued ASU No. ~~Prepaid expenses~~2011-04, Fair Value Measurement (Topic 820), Amendments to Achieve Common Fair Value Measurement and ~~Other~~Disclosure ~~Assets~~Requirements in U.S. GAAP and IFRSs. Under the amendments of this ASU will result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. This ASU is effective during interim and annual periods beginning after December 15, 2011. The Company is evaluating the impact of the adoption of this ASU.

~~Prepaid~~2. ~~expenses~~Proceedings ~~principally~~Under ~~consist~~Chapter 11 of ~~deferred costs related to stock compensation to vendors where stock has been issued for services to be rendered in~~ the ~~future.~~Bankruptcy ~~Stock is subject to repurchase if services are not rendered.~~Code

	August 31, 2011		February 28, 2011
Investor relations fees	$	—	$	316,667
Prepayment on kiosks		—		100,000
Deposits		—		2,500
Insurance		500		4,182
Rent		3,049		8,621
Legal retainer		—		5,983
Other		—		8,775
Total prepaid expenses and deposits	$	3,549	$	346,728

On September 23, 2011 (the "Petition Date"), the Company filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code with the Bankruptcy Court. The petition was filed in order to enable the Company to pursue reorganization efforts under Chapter 11 of the Bankruptcy Code. The Company continues to operate its business as debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In general, as debtor-in-possession, the Company is authorized under Chapter 11 to continue to operate as an ongoing business, but may not engage in transactions outside of the ordinary course of business without the prior approval of the Bankruptcy Court.

No assurance can be provided as to what values, if any, will be ascribed in the bankruptcy proceedings to the Company's prepetition liabilities, common stock and other securities. Based upon the status of the Company's plan of reorganization, it is uncertain whether holders of our securities will receive any payment in respect of such securities.

PUBLIC MEDIA WORKS, INC.

(Debtor-in-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~August~~November 3130, 2011

~~The~~Subject ~~Company~~to ~~has~~certain aexceptions ~~four~~under tothe ~~eight~~Bankruptcy ~~week~~Code, ~~lead~~the ~~time~~Bankruptcy ~~between~~Filing ~~when~~automatically itenjoins, ~~orders~~or astays, ~~kiosk~~the ~~and~~continuation ~~when~~of itany isjudicial ~~delivered~~or ~~for~~administrative ~~deployment.~~proceedings ~~Upon~~or ~~order~~other ~~and~~actions ~~again~~against ~~prior~~the Company or its property to ~~shipment~~recover on, ~~the~~collect ~~Company~~or ~~must~~secure ~~make~~a ~~partial~~claim ~~payment~~arising ~~for~~prior to the ~~cost~~Petition ofDate. ~~the~~Thus, ~~kiosk.~~for Asexample, creditor actions ~~the~~to ~~manufacturer~~obtain possession ~~retains~~of ~~ownership~~property ~~until~~from the ~~kiosk~~Company, or isto ~~deployed~~create, perfect ~~these~~or ~~up-front~~enforce ~~payments~~any ~~are~~lien ~~treated~~against asthe ~~deposits~~property ~~until~~of the ~~kiosks~~Company, or ~~are~~to ~~received.~~collect Ason ofor ~~August~~otherwise ~~31,~~exercise ~~2011,~~rights ~~the~~or ~~Company~~remedies ~~had~~with norespect ~~kiosks~~to ona ~~order~~Prepetition claim ~~compared~~are toenjoined 25unless atand ~~February~~until ~~28,~~the ~~2011~~Bankruptcy Court lifts the automatic stay.

4In order to successfully exit Chapter 11 bankruptcy, the Company will need to propose, and obtain Bankruptcy Court confirmation of, a plan of reorganization that satisfies the requirements of the Bankruptcy Code. ~~Equipment~~A plan of reorganization would, among other things, resolve the Debtors' prepetition obligations, set forth the revised capital structure of the newly reorganized entity, and provide for corporate governance subsequent to exit from bankruptcy.

~~Equipment~~Under ~~consisted~~section 365 of the ~~following~~Bankruptcy asCode, the Company may assume, assume and assign, or reject executory contracts and unexpired leases, including real property and equipment leases, subject to the approval of ~~August~~the 31Bankruptcy Court and certain other conditions. Rejection constitutes a court-authorized breach of the lease or contract in question and, ~~2011~~subject to certain exceptions, relieves the Company of its future obligations under such lease or contract but creates a deemed prepetition claim for damages caused by such breach or rejection. Parties whose contracts or leases are rejected may file claims against the Company for damages.

Kiosk equipment	$	587,948
Less: accumulated depreciation and write-down to net realizable value		(419,073	)
	$	168,875

The Company sold substantially all of its assets effective November 30, 2011 and the currently proposed plan of reorganization restricts the Company's management to liquidating the Company's assets and making distributions on allowed claims until all allowed claims are satisfied and reserves are established for disputed claims. When and if all allowed claims are satisfied or fully reserved for, it is not known at this time whether the Company will commence new business opportunities or liquidate, and the mechanism for making this determination has yet to be established. The ability of the Company to continue as a going concern is dependent upon, among other things, (i) acquiring assets; (ii) the ability of the Company to generate cash from operations; (iii) the ability of the Company to maintain adequate cash on hand; (iv) the ability of the Company to obtain confirmation of and to consummate a plan of reorganization under the Bankruptcy Code; and, (v) the cost, duration and outcome of the reorganization process. Uncertainty as to the outcome of these factors raises substantial doubt about the Company’s ability to continue as a going concern. The Company is currently evaluating various courses of action to address the operational issues it is facing. There can be no assurance that any of these efforts will be successful. The accompanying financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern.

~~Kiosk~~As ~~equipment~~a isresult ~~stated~~of atthe ~~cost~~Bankruptcy ~~and~~Filing, ~~depreciated~~realization onof aassets ~~straight-line~~and ~~basis~~liquidation ~~over~~of anliabilities ~~estimated~~are ~~useful~~subject ~~life~~to ~~of 5 years~~uncertainty. ~~Depreciation~~While ~~expense~~operating ~~for~~as ~~the~~a ~~three~~debtor-in-possession ~~and~~under ~~six~~the ~~months~~protection ~~ended~~of ~~August~~Chapter 3111, ~~2011~~and ~~amounted~~subject to ~~$29,397~~Bankruptcy ~~and~~Court ~~$48,996,~~approval ~~respectively.~~or ~~During~~otherwise ~~the~~as ~~three~~permitted ~~and~~in ~~six~~the ~~months~~normal ~~ended~~course ~~August~~of 31business, ~~2011,~~ the Company ~~wrote~~may ~~its~~sell ~~equipment~~or ~~down~~otherwise todispose ~~estimated~~of ~~net~~assets ~~realizable~~and ~~value~~liquidate ~~and~~or ~~took~~settle aliabilities ~~charge~~for ofamounts ~~$370,077.~~other Asthan ~~described~~those ~~above,~~reflected in the ~~Company~~financial ~~had~~statements. noNo ~~Kiosks~~adjustments into ~~place~~liabilities aswere ofrecognized ~~February~~during 28the nine months ended November 30, 2011.

~~5. Notes Payable~~Further, ~~Accrued Interest~~ a plan of reorganization could materially change the amounts and ~~Other~~classifications ~~Short-term Obligations~~ reported in our financial statements. Our historical financial statements do not give effect to ~~Stockholders~~ any adjustments to the carrying value of assets or amounts of liabilities that might be necessary as a consequence of confirmation of a plan of reorganization.

AsUnder athe ~~result~~priority scheme established by the Bankruptcy Code, unless creditors agree otherwise, post-petition liabilities and prepetition liabilities must be satisfied or reserved for in full before shareholders of ~~its~~the ~~Chapter~~Company 11are ~~filing~~entitled onto ~~September~~receive 23any distribution or retain any property under a plan of reorganization. The ultimate recovery, ~~2011~~if any, to creditors and shareholders of the Company iswill innot ~~default~~be ondetermined ~~all~~until confirmation and consummation of ~~its~~a ~~notes~~plan ~~payable~~of ~~which~~reorganization. No ~~were~~assurance ~~previously~~can ~~classified~~be given as ~~long-term. At~~to ~~August~~what 31values, ~~2011~~if any, will be ascribed in the Bankruptcy to each of these constituencies or what types or amounts of distributions, if any, they would receive. Accordingly, the Company ~~classified~~urges ~~long-term~~that ~~notes~~extreme ~~payable~~caution ~~and~~be ~~accrued~~exercised ~~interest~~with asrespect ~~current~~to ~~which~~existing ~~consisted~~and future investments in any of the ~~following:~~Company's liabilities and/or securities.

	Principal		Interest		Total
8% Note to George Mainas/Mainas Development Corporation	$	187,384	$	5,387		192,771
9% Line of Credit to George Mainas/Mainas Development Corporation		201,274		4,926		206,200
Advances due George Mainas/Mainas Development Corporation		180,000		—		180,000
10% Note due to Niesar Vestal, LLP		50,000		5,000		55,000
7% Note payable to Steve Davis		25,000		2,316		27,316
Due to other shareholders		65,000		—		65,000
Total notes payable and accrued interest to shareholders	$	708,658	$	17,629	$	726,287

Reorganization Items

InReorganization ~~May~~items ~~and~~represent ~~June, 2011,~~ the ~~Company~~direct ~~entered into an Agreement with George Mainas, Mainas Development Corporation (collectively “Mainas”)~~ and ~~three~~incremental ~~entities~~costs ~~(“Purchasers”)~~related ~~whereby~~to ~~Purchasers purchased $400,000 of~~ the Company’s ~~debt~~Chapter ~~due~~11 ~~to Mainas. The Company agreed to allow the Purchasers the option to convert this debt at a conversion rate of $0.25 per share into 1~~case,~~600,000~~ ~~shares~~such ofas ~~common~~professional ~~stock~~fees ~~and 1~~incurred,~~600,000~~ ~~warrants~~net ~~to purchase common stock~~ of ~~the~~interest ~~Company~~income ~~for~~earned ~~$0.40~~on ~~per~~accumulated ~~share~~cash, ~~for~~if ~~three~~any, ~~years~~during ~~from~~ the ~~date~~Chapter of11 ~~the Agreements~~process. These Inrestructuring ~~connection~~activities ~~with~~may ~~the~~result ~~change~~ in ~~the~~additional ~~conversion~~charges ~~price~~ and ~~the~~other ~~issuance~~adjustments offor ~~the~~expected ~~warrants,~~allowed inclaims ~~the~~(including ~~six~~claims ~~months ended August 31, 2011, the Company recorded an expense of $ 1,054,343. The conversion agreements allows~~ that, ~~should the Company issue new shares for less than $0.25 per share, the investor who converted debt and still own these shares will~~ have ~~additional~~been ~~shares~~allowed ~~issued~~by ~~to bring his net cost per share for~~ the ~~remaining~~Court) ~~shares down to this lessor price. Also, in May~~ and ~~June,~~other ~~2011,~~reorganization ~~Purchasers~~items ~~notified the Company~~ that ~~they~~could ~~were exercising this option to convert. The shares of Company’s common stock will~~ be ~~issued~~material ~~without restriction under the Act under an exemption provided pursuant~~ to ~~Rule 144 of~~ the ~~Act. The warrants and shares of the~~ Company’s ~~common~~financial ~~stock~~position ~~which may be issued upon exercise of the warrants are restricted securities, and may not be sold, transferred~~ or ~~otherwise~~results ~~disposed without registration under Act, or an exemption thereunder. The securities were offered and sold in reliance on the exemption from registration under Section 4(2)~~ of ~~the~~operations ~~Act and/or Rule 506 of Regulation D under the Act. The offering was not conducted~~ in connection with a public offering, and no public solicitation or advertisement was made or relied upon by the individual in connection with the offering. In July 2011, the Company issued shares for $0.10 which triggered the repricing discussed above. The Company issued and additional 2,121,750 shares to the three purchases and took a charge of $424,350. All principal and accrued interest under the promissory note may be converted into shares of Company common stock at the election of the holder at any ~~time~~given ~~upon written notice to the Company at a price of $4~~period.00 per share, and all principal and accrued interest under the promissory note shall automatically convert into shares of Company common stock in the event that the 10 day trailing VWAP (volume weighted average price) for the Company’s common stock shall exceed $4.00 per share at any time prior to the Maturity Date.

3. Prepaid Expenses and Other Assets

Prepaid expenses principally consisted of deferred costs related to stock compensation to vendors where stock has been issued for services to be rendered in the future. Stock is subject to repurchase if services are not rendered.

	November 30, 2011		February 28, 2011
Investor relations fees	$	—	$	316,667
Deposits		—		2,500
Insurance		—		4,182
Rent		—		8,621
Legal retainer		—		5,983
Other		2,000		8,775
Total prepaid expenses and deposits	$	2,000	$	346,728

PUBLIC MEDIA WORKS, INC.

(Debtor-in-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~August~~November 3130, 2011

The ~~promissory~~Company ~~note~~had toa ~~Mr.~~four ~~Steve~~to ~~Davis~~eight ~~bears~~week ~~interest~~lead attime 7%between ~~per~~when ~~annum.~~it ~~All~~orders ~~principal~~a kiosk and ~~accrued~~when ~~interest~~it ~~under~~is ~~the~~delivered ~~promissory~~for ~~note~~deployment. ~~may~~Upon beorder ~~converted~~and ~~into~~again ~~shares~~prior ofto ~~Company~~shipment, ~~common stock at~~ the ~~election~~Company ofhad ~~the~~to ~~holder~~make atpartial ~~any~~payment ~~time~~for ~~upon written notice to~~ the ~~Company~~cost ~~at a price~~ of $4the kiosk.00 ~~per~~As ~~share,~~the ~~and~~manufacturer ~~all~~retains ~~principal~~ownership ~~and~~until ~~accrued interest under~~ the ~~promissory~~kiosk ~~note~~is ~~shall~~deployed, ~~automatically~~these ~~convert~~up-front ~~into~~payments ~~shares~~were oftreated ~~Company~~as ~~common~~deposits ~~stock~~until in the ~~event~~kiosks ~~that~~are ~~the~~received. 10As ~~day~~of ~~trailing~~November ~~VWAP~~30, ~~(volume~~2011, ~~weighted average price) for~~ the Company’s ~~common~~had ~~stock~~no ~~shall~~kiosks ~~exceed~~on ~~$4.00~~order ~~per~~compared ~~share~~to 25 at ~~any~~February ~~time~~28, ~~prior to the Maturity Date~~2011.

~~On August 31, 2010, the Company entered into a settlement agreement with Niesar Vestal, LLP for all outstanding obligations~~4. ~~The~~Equipment agreement calls for a series of cash payments totaling $45,000 over 12 months plus a convertible note for $50,000. $40,000 of the short-term note has been paid, with $5,000 remaining. The note accrues interest at 10%. The terms of the debt agreement provide for all principal and ~~accrued~~Asset ~~interest~~Purchase to be converted into shares of common stock at $1.50 per share at any time within the term of the note. All principal and accrued interest under the note shall automatically convert into shares of common stock in the event that the 30 day trailing volume weighted average price for the stock exceeds $2.00 per share at any time after June 1, 2011 and prior to the maturity date.Agreement

~~The~~On ~~Company~~November ~~has~~22, ~~outstanding~~2011, ~~current~~the ~~liabilities~~bankruptcy ~~due~~court toapproved ~~stockholders~~the assale of ~~August~~majority ~~31,~~of ~~2011~~the Company’s assets and ~~February~~accordingly 28on November 30, 2011, inthe Company executed the ~~amount~~Asset ofPurchase ~~$180,000~~Agreement ~~and~~whereby ~~$14,000,~~majority ~~respectively.~~of ~~These~~Company’s ~~amounts~~assets ~~represent~~including ~~either~~its ainventory ~~short-term~~were ~~loans~~sold orfor ~~operating~~an ~~expenses~~amount ~~paid~~of on$145,000 ~~the~~to ~~Company’s~~an ~~behalf~~unrelated party. ~~These~~Accordingly, ~~liabilities~~as ~~are~~of ~~interest~~November ~~free~~30, 2011 and ~~due~~February ~~on demand. The $180~~28,~~000~~ is2011 ~~due~~the ~~Mr.~~Company ~~Mainas~~did ~~and~~not ishave ~~covered~~any byassets ~~his~~in ~~security~~place. ~~interest~~In inrelation to the ~~assets~~Asset ofPurchase Agreement, the Company recorded approximately $71,000 as loss on sale of assets.

~~The~~Depreciation ~~Company~~expense ~~also~~for ~~has~~the ~~short-term~~three ~~notes payable~~ and ~~accrued~~nine ~~interest~~months ofended ~~$65,000~~November ~~and $27~~30,~~090~~ as2011 ofamounted ~~August~~to ~~31,~~$0 ~~2011~~ and ~~February 28~~$48, ~~2011~~996, respectively. ~~The~~During ~~August~~the ~~31,~~three ~~2011~~and ~~balance~~nine ~~consists~~months ofended aNovember ~~non-interest~~30, ~~bearing~~2011, ~~convertible~~and ~~notes.~~right ~~These~~before ~~notes are convertible by either~~ the ~~Company~~consummation orof the ~~holder~~Asset ~~into~~Purchase ~~common~~Agreement, ~~stock of~~ the Company atwrote ~~$0.10~~its ~~per~~equipment ~~share~~down ~~any~~to ~~time~~estimated ~~before~~net ~~they~~realizable ~~are~~value ~~due~~and ontook ~~October~~a ~~31,~~charge ~~2011.~~of Atapproximately ~~February 28, 2011, the~~ $27370,~~090 was owed to Niesar Vestal, LLP. $25,~~000 ~~and to Imperial Credit Corp~~.~~$2,090 related to financing an insurance policy.~~

6 5. ~~Common Stock~~Liabilities Subject to Compromise

OnLiabilities ~~March~~subject 7,to ~~2011,~~compromise ~~the~~at ~~board~~November ~~of directors accelerated the vesting on 583~~30,~~335~~ ~~shares~~2011 ~~due Martin W. Greenwald, CEO~~ and ~~Chairman~~February ~~under an employment agreement between Mr. Greenwald and the Company. The Board also authorized an additional 500~~28,~~000~~ ~~fully~~2011 ~~vested~~include ~~shares to be issued to Mr. Greenwald. The Company recorded $695,646 in expense related to these issuances in~~ the ~~six~~following ~~months~~pre-petition ~~ended August 31, 2011.~~liabilities:

	November 30,		February 28,
	2011		2011
Accounts payable and accrued liabilities	$	448,531	$	271,562
Due to stockholders		180,000		14,000
Note payable		65,000		27,090
8% Note to George Mainas/Mainas Development Corporation		48,687		465,409
9% Line of Credit to George Mainas/Mainas Development Corporation		207,307		310,835
7% Note payable to Steve Davis		27,423		26,441
10% Note due to Niesar Vestal, LLP		55,306		52,500
Total liabilities subject to compromise	$	1,032,254	$	1,167,837

On November 30, 2011 and in relation to the Asset Purchase Agreement mentioned above, the court approved the sale of majority of Company’s assets and concurrently using the funds from the sale to partially pay down the 8% Note to George Mainas which was the only secured note. Accordingly, the balance of this note was re-classified to liabilities subject to compromise as no more assets are available to satisfy the secured credit obligation.

PUBLIC MEDIA WORKS, INC.

(Debtor-in-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

November 30, 2011

6. Convertible Note-Post Petition

On November 9, 2011, the Company issued an unsecured convertible note for an amount of $25,000 and bears interest at 8% per year. The term of the note is one year from the date where the Company obtains the Bankruptcy Court approval for the financing; the Company obtained such approval on November 22, 2011. The outstanding principal and interest on this note is convertible at any time on or after the date of Bankruptcy Court approval into Company’s shares of common stock on the basis of five (5) shares for each $0.01. In accordance with the applicable guidance in GAAP, the Company recorded a beneficial conversion feature (BCF) for an amount of $25,000 on date of issuance. The BCF amount was calculated as the difference between the market price and conversion price on date of issuance and was charged to operations on such date.

7. Common Stock

On March 7, 2011, the board of directors accelerated the vesting on 583,335 shares due Martin W. Greenwald, CEO and Chairman under an employment agreement between Mr. Greenwald and the Company. The Board also authorized an additional 500,000 fully vested shares to be issued to Mr. Greenwald. The Company recorded $695,646 in expense related to these issuances in the nine months ended November 30, 2011.

On March 7, 2011, the Company issued 687,500 shares to four consultants for services rendered. The Company recorded $378,125 in consulting expense in the three months ended May 31, 2011 as the grants were for past services and vested immediately to the holder.

On March 7, 2011, the Company executed a common stock and warrant agreement with an accredited investor for $79,000 in cash. The accredited investor received 316,000 common stock and 316,000 warrants to purchase an additional share of the Company at $0.40 within three years. As of ~~August~~November 3130, 2011, the accredited investor held 316,000 warrants related to this purchase.

In May and June 2011, the Company agreed to convert $400,000 of long-term debt and related interest by issuing 1,600,000 common shares and 1,600,000 warrants. The investors were granted piggyback registration rights for the shares of common stock and shares underlying the warrants. The shares of the Company’s common stock are freely trading securities, under SEC Rule 144. The warrants have a life of three years and are convertible at $0.40 per share.

In June 2011, one consultant made a cashless exercise of a stock option and 128,571 shares were issued.

In June 2011, the Company issued 200,000 shares of common stock to a supplier. In return, the supplier agreed to give the Company a discount on future purchases of kiosks.

On August 2, 2011, the Company issued 600,000 shares to Salzwedel Financial Services for services to be rendered. The Company expensed this amount in the period ended ~~August~~November 3130, 2011.

In August 2011, one creditor elected to convert $7,408 of accounts payable into 74,085 shares of common stock of the Company.

In the quarter ending August 31, 2011, the Company executed common stock agreements with five accredited investors for $137,000 in cash. The accredited investors received 1,370,000 shares of common stock and one investor received 750,000 warrants to purchase an additional share of the Company at $0.10 within three years. These sales triggered an anti-dilution clause in the aforementioned $400,000 conversion of debt to equity and an additional 2,121,750 shares of common stock were issued.

910

PUBLIC MEDIA WORKS, INC.

(Debtor-in-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~August~~November 3130, 2011

78. Share Based Compensation

The Company has 2007 and 2010 Equity Incentive Plans. The 2007 Equity Incentive Plan, which permits the grant of awards in the form of incentive stock options, nonstatutory stock options, stock appreciation rights, stock awards and stock units to its key employees for up to 1 million shares of common stock. The Company believes that such awards promote the long-term success of the Company and the creation of stockholder value by offering key employees an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, and to encourage such key employees to continue to provide services to the Company and to attract new individuals with outstanding qualifications. Awards are generally granted with an exercise price that approximates the market price of the Company’s common stock at the date of grant.

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

	Six months ended August 31,
	Nine months ended November 30,
	2011			2010
Expected Volatility		70	%		~~706~~697.6886	%
Expected dividends		0	%		0	%
Expected terms (in years)	1 to 3				15.0
Risk-free rate	0.25% to 1.22		%		1.3447	%
Forfeiture rate 20%		0	%
Forfeiture rate		20	%		0	%

A summary of option activity as of ~~August~~November 3130, 2011, and changes during the period then ended is presented below:

				Weighted-		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Options			Price		Life (Years)		Value
Outstanding at February, 2011		4,005,000		$	0.99		3.67	$	205,000
Granted		3,015,000			0.6162
Exercised		(200,000	)		0.10		—		—
Forfeited or expired		(15,~~050~~795,000	)		10.0996		—		—
Outstanding at August 31, 2011		5,970,000			0.85		2.37		—
Outstanding at November 30, 2011		1,025,000			0.83		0.65		—
Exercisable at August 31, 2011		4,476,959		$	0.79		3.06		—
Exercisable at November 30, 2011		892,123		$	0.88		3.92		—

During the ~~six~~nine months ended ~~August~~November 3130, 2011, 128,571 shares were issued in connection with the cashless exercise of 200,000 options.

The Company has an additional $~~912~~33,~~123~~843 to expense in future periods for unvested stock options. There was no unvested compensation as of ~~August~~November 3130, 2010. During the ~~six~~nine months ended ~~August~~November 3130, 2011, 3,015,000 stock options were granted. The Company has recorded a stock option expense of $~~327~~2,~~601~~006 and $~~876~~878,~~120~~126 in three and ~~six~~nine months ended ~~August~~November 3130, 2011, respectively, in general and administrative expenses. Due to the Company filing for bankruptcy and termination of almost all employees, an additional 4,345,000 option were forfeited during the quarter ended November 30, 2011 which represent the number of options that were not exercised within 90 days of termination for the respective employees.

Warrants

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

	August 31,
	November 30,
	2011
Expected volatility		70	%
Expected dividends		—
Expected terms (in years)		3
Risk-free rate		0.79	%
Forfeiture rate		0	%

1011

PUBLIC MEDIA WORKS, INC.

(Debtor-in-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~August~~November 3130, 2011

A summary of warrant activity for the ~~six~~nine months ended ~~August~~November 3130, 2011, is presented below:

	Warrants			Weighted- Average Exercise Price		Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at February 28, 2011		8,497,291		$	0.36		2.81	$	2,379,427
Granted		3,316,000		$	0.26.		2.59
Exercised		—		$	—		—		—
Forfeited or expired		(217,500	)	$	1.25		—		—
Outstanding at August 31, 2011		11,595,791		$	0.32		2.43		—
Outstanding at November 30, 2011		11,595,791		$	0.32		2.18		—
Exercisable at August 31, 2011		11,595,791		$	0.32		2.43		—
Exercisable at November 30, 2011		11,595,791		$	0.32		2.18		—

There were no warrants exercised during the ~~six~~nine months ended ~~August~~November 3130, 2011 or 2010. There were no unvested warrants as of ~~August~~November 3130, 2011. During the ~~six~~nine months ended ~~August~~November 3130, 2011, the Company issued 3,316,000 warrants to six investors at an average exercise price $0.26. In relation to 1,600,000 of these warrants, using the Black-Scholes valuation model the Company ~~the~~then recorded a loss on conversion of debt of $392,468.

89. Income Taxes

The Company has commenced analyzing filing positions in all of the federal and state jurisdictions (California) where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The last tax return filed by the Company was for the year ended February 28, 2007.

Due to the existence of a full valuation allowance against deferred tax assets, future changes in our unrecognized tax benefits will not impact the Company’s effective tax rate.

As a corporation, the Company is primarily subject to U.S. federal and state income tax. The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of ~~August~~November 3130, 2011 and ~~August~~November 3130, 2010, the Company had no accruals for interest or penalties related to income tax matters.

~~9. Commitments and Contingencies~~12

Effective May 6, 2010, the Company entered into a lease for 3,040 square feet of office space located at 2330 Marinship Way, #300, Sausalito, California 94965. The term of the lease is 23.5 months commencing May 15, 2010 and the monthly rent is $7,752.

On August 31, 2010, the Company entered into a settlement agreement with Niesar Vestal, LLP for all outstanding obligations. The agreement calls for a series of cash payments totaling $45,000 over 12 months plus a convertible note for $50,000. The note had a maturity date of June 30, 2012 and accrues interest at 10%. The terms of the debt agreement provide for all principal and accrued interest to be converted into shares of common stock at $1.50 per share at any time within the term of the note. All principal and accrued interest under the note shall automatically convert into shares of common stock in the event that the 30 day trailing volume weighted average price for the stock exceeds $2.00 per share at any time after June 1, 2011 and prior to the maturity date. As discussed previously, the Company is in default on this note.

10. Subsequent Events

In preparing these condensed consolidated financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through August 31, 2011 and through October 17, 2011, the date the condensed consolidated financial statements were available to be issued.

Chapter 11 - On September 23, 2011, Public Media Works, Inc. ("we") filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (the "Chapter 11 Case") in the United States Bankruptcy Court for the Central District of California, Riverside Division (the "Bankruptcy Court"). The Chapter 11 Case Number is: 6:11-bk-40137-MJ . The purpose in filing the Chapter 11 Case is to give the Company time to restructure its debt obligations to its secured and unsecured creditors.. Thereafter, we will prepare a Disclosure Statement and a Plan of Reorganization that describes our plan to emerge from Chapter 11as a viable company. We will file those documents with the Bankruptcy Court and submit them to all creditors for their approval with a view towards obtaining an Order from the Bankruptcy Court confirming our Plan of Reorganization so that we may successfully exit from Court protection.

PUBLIC MEDIA WORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

August 31, 2011

We continue to manage our business as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. We have obtained approval from the Company’s secured Creditors to continue to pay critical vendor post-petition obligations. The kiosks and movies have been removed from retail locations and placed in a secure storage facility to protect the value of our only significant tangible assets.

Over the next few weeks we will try to raise $150,000 of equity or DIP Financing (collectively “Financing”) which should fund the Company through December 31, 2011. If we are able to raise this Financing, we will 1) work with secured and unsecured creditors and the Bankruptcy Court to restructure and/or satisfy their claims; and 2) develop an operational plan.

While we intend to maintain business operations through the reorganization process, our liquidity and capital resources are significantly affected by the Chapter 11 Case, which has resulted in various restrictions on our activities, limitations on financing and a need to obtain Bankruptcy Court approval for various matters. In particular, we are not permitted to make any payments on pre-petition liabilities without prior Bankruptcy Court approval.

At this time, it is not possible to predict with certainty the effect of the Chapter 11 Case on our business or various creditors, or if or when we will emerge from these proceedings. Future results will depend on both raising the Financing and upon our ability to propose and confirm a Plan of Reorganization. The longer we remain under the jurisdiction of the Bankruptcy Court the more legal and bankruptcy-related costs we incur. These costs are currently having an adverse effect on the results of operations and will continue to do so, until we can emerge from bankruptcy Court protection..

We currently have minimal cash on hand and no source of revenue. Thus, if we are unable to raise the Financing, we will be forced to convert our case to a Chapter 7 and liquidation. Our secured creditors would likely receive all of our assets, as we believe their fair market value is significantly below that of the amount owed the secured creditors. In a Chapter 7, we believe that the unsecured creditors and shareholders would receive nothing.

While we are striving to raise Financing and restructure our debt through the Chapter 11 Case, there are no guarantees we will be successful. Our cash is not sufficient to meet our short-term needs let alone our debt obligations as currently structured or to meet anticipated operating and general and administrative expenses during the next 12 months. Thus, if we are not successful within the timeframes imposed by the Bankruptcy Court to raise Financing and propose a Plan of Reorganization, our Chapter 11 Case will be converted to a Chapter 7 liquidation. Even if we timely file a Plan of Reorganization, if our creditors do not approve it or if the Bankruptcy Judge hearing our case refuses to issue and Order confirming our Plan of Reorganization then our Chapter 11 Case would be converted to a Chapter 7 liquidation case. Upon a liquidation, we believe that all unsecured creditors and shareholders would receive nothing, as the amount of the claims held by our secured creditors exceeds the value of all of the our assets, and after payment of the secured claims there would be nothing left over to distribute to any creditors or shareholders. The Consolidated Financial Statements herein illustrate the point as they include writing down our assets to estimated net realizable value.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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

Overview

The Company and its wholly-owned subsidiary, EntertainmentXpress, Inc., a California corporation (“EntertainmentXpress”), were engaged in the business of offering self-service Kiosks which deliver DVD and Blu-ray movies and other potentially other products to consumers.

In order to maintain clarity in this report, references to the business of the Company’s subsidiary EntertainmentXpress will be indicated as “EntertainmentXpress”; and references to the “Company,” “we,” “us” or “our” refer to the combined businesses of Public Media Works, Inc. and EntertainmentXpress after May 4, 2010.

~~Going~~Proceedings ~~Concern~~Under ~~and~~Chapter ~~Liquidity Matters~~11

The Company filed a voluntary petition on September 23, 2011 under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the Central District of California, Riverside Division (the “Bankruptcy Court”). We will continue to operate our business as "debtor-in-possession" under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and the order of the Court, as we devote renewed efforts to resolve our liquidity problems and develop a reorganization plan.

12Pursuant to the provisions of the Bankruptcy Code, we are not permitted to pay any claims or obligations which arose prior to the filing date (prepetition claims) unless specifically authorized by the Court or as may ultimately be provided in a plan of reorganization. Similarly, claimants may not enforce any claims against us that arose prior to the date of the filing. In addition, as a debtor-in-possession, we have the right, subject to the Court's approval, to assume or reject any executory contracts and unexpired leases in existence at the date of the filing. Parties having claims as a result of any such rejection may file claims with the Court which will be dealt with as part of the Chapter 11 case.

~~The~~It ~~consolidated~~is ~~financial~~our ~~statements~~intention asto ofaddress ~~August~~all ~~31,~~of ~~2011~~our ~~and~~prepetition ~~for~~claims ~~the~~in ~~three~~a ~~and~~plan ~~six~~of ~~months~~reorganization ~~then~~in ~~ended~~our ~~were~~Chapter ~~prepared~~11 incase. ~~accordance~~At ~~with~~this ~~ASC 852 “reorganizations”~~juncture, ~~which~~it ~~does~~is ~~not~~impossible ~~change~~to ~~the~~predict ~~application of US GAAP~~ with ~~respect~~any todegree ~~the preparation~~ of ~~our~~certainty ~~financial~~how ~~statements. As~~ such, ~~the~~a ~~financial~~plan ~~statements~~will ~~for~~treat ~~the~~such ~~three~~claims and ~~six~~the ~~months~~impact ~~ended~~that ~~August~~our ~~31,~~Chapter ~~2011~~11 ~~reflect~~cases ~~the~~and ~~estimated~~any ~~realizable~~reorganization ~~values~~plan ofwill ~~our~~have ~~assets~~on ~~and~~the ~~estimated~~trading ~~fair~~market ~~value~~for of our ~~liabilities~~stock. Generally, ~~and~~under ~~are~~the ~~therefore~~provisions ~~not~~of ~~comparable to~~ the ~~financial~~Bankruptcy ~~statements~~Code, ~~for~~holders ~~the~~of ~~three~~equity ~~and~~interests ~~six~~may ~~months~~not ~~ended~~participate ~~August 31,~~under ~~2010.~~a Asplan ~~part~~ of ~~the~~reorganization ~~Chapter~~unless 11the ~~filing~~claims ~~and~~of ascreditors ~~discussed~~are ~~further~~satisfied ~~below,~~in wefull ~~anticipate~~under the ~~development~~plan ~~and~~or ~~implementation~~unless ofcreditors accept a reorganization plan ofwhich ~~reorganization~~permits toholders ~~restructure~~of ~~our~~equity ~~debt~~interests ~~obligations~~to ~~and~~participate. ~~business~~The ~~operations.~~formulation ~~Confirmation~~and implementation of a plan of reorganization ~~would~~in ~~likely alter~~ the ~~classifications~~Chapter ~~and~~11 ~~amounts~~cases ~~reported~~could intake ~~our~~a ~~consolidated~~significant ~~financial~~period ~~statements. For~~of ~~further information see Footnote 10, Subsequent Events~~time.

The condensed consolidated balance sheet as of February 28, 2011, which was derived from audited financial statements, and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.13

The accompanying condensed consolidated financial statements of the Company have been prepared under the assumption that we will continue as a going concern. Such assumption contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Our independent registered public accounting firm’s report for 2011 and 2010 in our Form 10K filed with the SEC on June 3, 2011 state that our significant net losses, negative cash flows from operations and accumulated deficit through February 28, 2011 create substantial doubt as to the Company’s ability to continue as a going concern.

The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing as may be required, and ultimately to attain profitability. There can be no assurance that the Company will be able to obtain any additional financing, or that any such financing will be available on acceptable terms. The condensed consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.

Results of Operations

Revenue

In early 2011, the Company entered the start-up phase of operation. In the three and ~~six~~nine months ended ~~August~~November 3130, 2011 it generated $~~18,881~~0 and $39,~~117~~116 in revenue as compared to $~~339~~239 and $578 in ~~revenue~~revenues for ~~both~~ the three and ~~six~~nine months ended ~~August~~November 3130, 2010. Revenue in the ~~three~~nine ~~and six~~ months ended ~~August~~November 3130, 2011 came principally from 25 kiosks placed in operation in March 2011 and going through beta testing. The Company was using a newly manufactured kiosk and operating software. As the Company was unable to raise additional equity to continue operating the kiosks, in early September, 2011, the Company removed the kiosks and placed them in storage until they were sold on November 30, 2011. The remainder of revenue during periods came from a joint venture in Canada. No future revenue is expected from this joint venture.

For the three and ~~six~~nine months ended ~~August~~November 3130, 2011, the Company’s operating expenses were $137,~~611,072~~042 and $4,~~492~~529,~~380,~~425 respectively, compared to operating expenses of $~~442~~3,~~519~~195,491 and $~~1785~~4,~~569~~955,264, respectively, for the three and ~~six~~nine months ended ~~August~~November 3130, 2010.

	Three months ended August 31,				Six months ended August 31,
	Three months ended November 30,				Nine months ended November 30,
	2011		2010		2011		2010
Direct operating expenses		~~105,890~~—		—		169,~~603~~604		—
Marketing		25,566		61,779		78,418		94,596
General and administrative expenses		37,042		3,195,491		4,359,821		4,955,264
General and administrative expenses		1,409,850		380,740		4,014,852		1,690,973
Total expenses		37,042		3,195,491		4,529,425		4,955,264
Professional fees		69,766		—		229,507		—
Total expenses		1,611,072		442,519		4,492,380		1,785,569

The increase in the direct operating expenses is a direct result of placing the kiosks in operations. Direct operating expenses principally include: amortization of our DVD and Blu-Ray movie inventory; commissions or fees to retailers; credit card fees and field operations support, such as loading and cleaning the kiosks and monitoring the kiosks. In addition, in the three and ~~six~~nine months ended ~~August~~November 3130, 2011, the Company wrote off $16,117 of prepaid support due to its removing the kiosks from retail locations.

~~Marketing~~General ~~expenses~~and ~~decreased~~administrative ~~59%~~expenses ~~for~~during the ~~three~~nine months ~~ended~~period ~~August~~ending 31November 30, 2011 asamounted ~~compared~~ to ~~the~~$4,359,821consisted ~~three~~primarily ~~months~~of ~~ended~~$3,429,275 ~~August~~non-cash 31charges related to issuance of stock, ~~2010~~restricted stock and stock options to officers and consultants. ~~For~~General and administrative expenses decreased significantly during the ~~six~~three months ended ~~August~~November 3130, 2011 asto ~~compared~~$37,042 due to ~~the~~entering ~~six~~into ~~months~~bankruptcy ~~ended~~proceedings ~~August~~on ~~31,~~September ~~2010~~23, ~~marketing~~2011 ~~expenses~~accordingly ~~decreased~~departure ~~17%.~~of ~~For~~all ~~both~~employees ~~the three~~ and ~~six~~discontinuing ~~month~~our ~~periods~~operating activities, ~~the~~this ~~decreases~~amount ~~were~~consisted ~~the~~primarily ~~result~~ of ~~minimal~~$25,000 ~~advertising~~related ~~and~~to ~~promotion~~the ~~costs~~beneficial inconversion ~~the~~feature ~~current~~for ~~fiscal~~the ~~year~~convertible ~~due~~note toissued ~~the~~in ~~Company’s~~November ~~cash constraints~~2011.

13General and administrative expenses during the three and nine month periods ending November 30, 2010, was primarily due to a Company restructuring during the first quarter of May 31, 2010. Included in the general and administrative expenses above for the three and nine months ended November 30, 2010 is stock compensation expense of $1,647,215 and $2,365,198, respectively. Also included are stock option and warrant expense of $754,364 and $1,588,219, respectively.

~~In the three and six months ended August 31, 2011, general and administrative expenses included $1,201,643 and $3,527,184 of non-cash costs comprised of:~~14

	Three months		Six months
Officers stock compensation	$	163,625	$	1,022,896
Stock option expense		327,601		876,120
Stock and warrant compensation consultants and suppliers		710,417		1,628,168
Total non-cash expenses	$	1,201,643	$	3,527,184

The major components of cash expenses in General & Administrative for the three and six months ended August 31, 2011 were: salaries and related ($84,262 and $176,291, respectively) travel and entertainment ($29,704 and $75,818, respectively); facilities ($16,530 and $34,665, respectively); and engineering and product development ($42,829 and $94,955, respectively).

Liquidity and Capital Resources

~~Our~~In ~~primary~~September ~~requirements~~2011, ~~for~~the ~~working~~Company ~~capital~~decided ~~are~~ to ~~fund~~cease ~~purchases~~operating ofthe kiosks and ~~movies~~place the kiosks in a safe warehouse location while it reorganized under a voluntary bankruptcy filing (Chapter 11). The Company is seeking $150,000 ~~and~~to allow it to ~~cover~~operate ~~our~~under ~~operating~~the ~~expenses~~protection of the U.S. Inbankruptcy ~~recent~~laws ~~years~~while it converts most of its non-secured debt, weincluding ~~have~~accounts ~~incurred~~payable, ~~losses~~to ~~from~~equity ~~operations~~as ~~and~~well ~~have~~as ~~undertaken~~renegotiating ~~several~~its agreements with its secured creditor. Finally, it will need to raise additional equity ~~financing~~to ~~transactions~~continue to ~~provide~~fund usits ~~with~~operations ~~capital~~beyond asthe wethree ~~worked~~to four months it believes it will take it to ~~grow~~go ~~our~~through ~~business~~the bankruptcy process. However, Inthere ~~March~~can ~~2011~~be no assurance as to whether, wewhen, ~~installed~~or ~~our~~upon ~~first~~what 25terms ~~kiosks~~the inCompany ~~test~~will ~~locations~~be inable ~~Southern~~to ~~California~~consummate any additional financing.

As of August 31, 2011, the Company had a cash balance of $5,794. The Company does not currently have sufficient cash on hand to satisfy its operating costs and continued expansion efforts, and needs to reduce debt and raise additional capital. In September 2011, the Company decided to cease operating the kiosks and place the kiosks in a safe warehouse location while it reorganized under a voluntary bankruptcy filing (Chapter 11). The Company is seeking $150,000 to allow it to operate under the protection of the U.S. bankruptcy laws while it converts most of its non-secured debt, including accounts payable, to equity as well as renegotiating its agreements with its secured creditor. Finally, it will need to raise additional equity to continue to fund its operations beyond the three to four months it believes it will take it to go through the bankruptcy process. However, there can be no assurance as to whether, when, or upon what terms the Company will be able to consummate any additional financing.

If the Company is unable to raise additional equity, it will likely convert its filing to a Chapter 7 liquidation.

The Company had net cash used in operating activities of $628,262. These funds were used primarily to fund the loss from operations of $4,453,263 less non-cash charges of $4,145,148. We also purchased approximately $94,728 of DVDs and Blu-ray Discs for our kiosks. Offset against these uses was an increase in accounts payable of $186,377.

The Company completed the purchase of its first 25 kiosks capitalizing $199,742 of costs related to these kiosks. These costs included $40,000 in shipping and installation as well as $45,450 of sales tax.

During the six months ended August 31, 2011, the Company raised $216,000 in new equity, borrowed 180,000 from a shareholder, $65,000 from two individuals and received $30,000 due from shares sold in February 2011.

To date, the Company has funded its operations primarily through the issuance of common stock in exchange for cash and services, as well as through notes payable to stockholders and third parties.

On September 23, 2011, the Company filed voluntary petitions for relief under Chapter 11 (Chapter 11 Proceedings) of the U.S. Bankruptcy Code (Bankruptcy Code) in the U.S. Bankruptcy Court for the Central District of California (Bankruptcy Court).

Commitments

Please see Item 1 Notes to Unaudited Condensed Consolidated Financial Statements, Footnotes, 4 and 8 for a summary of the Company’s obligations and commitments.

USE OF ESTIMATES AND CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”).

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The preparation of these condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during each reporting period. On an ongoing basis, management evaluates its estimates and assumptions, including those related to income taxes, long lived asset valuation, and stock based compensation. Management bases its estimates and judgments on historical experience of operations and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Recent Accounting Pronouncements

~~Please~~In ~~see~~January ~~Item~~2010, 1the ~~Notes~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2010-19 (“ASU 2010-19”), New and Enhanced Disclosures about Fair Value Measurements. ASU 2010-06 provides amendments to ~~Unaudited~~FASB ~~Condensed~~ASC ~~Consolidated~~820-10 ~~Financial~~that ~~Statements~~requires new fair value disclosures and clarifies existing fair value disclosures required under FASB ASC 820-10. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, ~~Footnote~~2009, 2except for certain disclosures about purchases, ~~Summary~~sales, ofissuances, ~~Significant~~and ~~Accounting~~settlements ~~Policies~~in the roll forward activity in Level 3 fair value measurements. Those disclosures are effective for ~~management’s~~fiscal ~~discussion~~years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of the new provisions within ASU 2010-06 did not have a material impact on our consolidated financial position, results of operations, cash flows, or disclosures.

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820), Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. Under the amendments of this ASU will result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. This ASU is effective during interim and annual periods beginning after December 15, 2011. The Company is evaluating the impact of the adoption of this ASU.

Off-Balance Sheet Arrangements

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

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Intentionally omitted pursuant to Item 305(e) of Regulation S-K.

Item 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. . We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Exchange Act. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of November 30, 2011, our disclosure controls and procedures were not effective in ensuring that the information required to be filed or submitted under the Exchange Act is recorded, presented, summarized and reported as specified in the Securities and Exchange Commission’s rules and forms, and accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We believe, however, that the accompanying condensed consolidated financial statements presented in this Form10-Q fairly present the financial condition and results of operations for the periods indicated.

Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of August 31, 2011, our disclosure controls and procedures were not effective in ensuring that the information required to be filed or submitted under the Exchange Act is recorded, presented, summarized and reported as specified in the Securities and Exchange Commission’s rules and forms, and accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We believe, however, that the accompanying condensed consolidated financial statements presented in this Form10-Q fairly present the financial condition and results of operations for the periods indicated.

The identified material weaknesses in our internal control over financial reporting relate to the following matters:

•

We identified a lack of sufficient segregation of duties, particularly in cash disbursements. Specifically, this material weakness is such that the design over the areas of cash disbursements relies primarily on detective controls and could be strengthened by adding preventative controls to properly safeguard company assets.

•

Management has identified a lack of sufficient personnel in the accounting function due to the limited resources of the Company with appropriate skills, training and experience to perform the review of processes to ensure the complete and proper application of generally accepted accounting principles, particularly as it relates to taxes, valuation of share based payments, consolidation of entities, and equity transactions. Specifically, this material weakness lead to segregation of duties issues and resulted in audit adjustments to the annual consolidated financial statements and revisions to related disclosures, share based payments, consolidation of various entities, and other equity transactions.

Our plan to remediate those material weaknesses remaining as of ~~August~~November 3130, 2011 iswill asdepend ~~follows:~~on the outcome of our Bankruptcy filing.

• Improve the effectiveness of the accounting group by continuing to augment existing Company resources with additional consultants or employees to improve segregation procedures and to assist in the analysis and recording of complex accounting transactions and preparation of tax disclosures. The Company plans to mitigate the segregation of duties issues by hiring additional personnel in the accounting department once the Company has raised significant additional working capital.

• Improve segregation procedures by strengthening cross approval of various functions including cash disbursements and quarterly internal audit procedures where appropriate.

CHANGES IN CONTROLS AND PROCEDURES

As required by Rule 13-15(d) of the Exchange Act, the Company, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer (principal financial officer), also evaluated whether any changes have occurred to the Company’s internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, such control.

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During the second quarter, Joseph Merhi and Edward Frumkes resigned directors. In September 2011, Mr. Martin W. Greenwald resigned as Chief Executive Officer and John Hackett joined as Chief Executive Officer.

On October 13, 2011 John Hackett resigned as Chief Executive Officer and Garrett Cecchini joined as Chief Executive Officer. ~~From~~ ~~2006~~Garrett ~~through 2007, Mr.~~ Cecchini ~~was~~resigned ~~Executive~~as ~~Vice~~the ~~President,~~Company's ~~business~~Chief ~~development~~Executive Officer and aChief ~~Director~~Financial ofOfficer ~~Zvue~~effective ~~Corp. From~~as ~~2007 through 2009, Mr. Cecchini was a professional investor and a Director~~ of ~~Debut~~October ~~Broadcasting~~28, ~~Corp. From~~2011 ~~2009~~Effective ~~through~~October ~~April 2010 he was a founder of~~31, ~~and~~2011 ~~CEO~~the ~~of,~~Company ~~Entertainment~~named ~~Express,~~Martin ~~Inc~~W. ~~the~~Greenwald ~~predecessor~~its ~~company~~Chief ofExecutive ~~Public Media Works, Inc~~Officer. ~~With the Merger,~~ Mr. ~~Cecchini~~Greenwald ~~became~~is ~~CEO~~currently ~~and~~Chairman ~~Chair~~ of the Board of ~~Directors of Public Media Works. In August 2010, Mr. Cecchini resigned as CEO and in March 2011, he resigned from~~ the ~~Board of Directors~~Company. ~~In 2011, he co-founded and continues to be a partner in Magna Group, LLC, a merchant bank.~~

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings.

There are no other material pending legal proceedings to which the Company is a party or of which any of the Company’s property is subject as of the date of this report. Further, as of the date of this report, the Company is not aware of any legal proceedings against the Company, or its property contemplated by any governmental authority.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Part II, Item 6— Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended February 28, 2011 which was filed with the SEC on June 3, 2011 (the “Form 10K”). These risks and uncertainties have the potential to materially affect our business, financial condition, results of operations, cash flows, projected results and future prospects. As of the date of this report, we believe that the previously discussed bankruptcy filing is a material changes to the risk factors previously disclosed in our Form 10K.

Item 1A. Risk Factors

There has been one material change from risk factors as previously disclosed under the heading “Risk Factors” in the Company’s Annual Report Form on 10-K for the year ended February 28, 2011 and the Quarterly Report Form 10Q for the quarter ended ~~May~~August 31, 2011.

Chapter 11 Bankruptcy . The Company filed a voluntary petition on September 23, 2011 (the “Petition Date”), for reorganization under Chapter 11 of the United States Code (the “Bankruptcy Code”) with the United States Bankruptcy Court for the Central District of California (the “Bankruptcy Court”). The Company is seeking debtor in Possession financing. There can be no assurance that such financing will be forthcoming, in which case the Company would need to amend its filing to a Chapter 7 filing for liquidation.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

In June 2011, one consultant made a cashless exercise of a stock option and 128,571 shares were issued. The securities were offered and sold in reliance on the exemption from registration under Section 4(2) of the Act and/or Rule 506 of Regulation D under the Act. The offering was not conducted in connection with a public offering, and no public solicitation or advertisement was made or relied upon by the individual in connection with the offering.

In June 2011, the Company issued 200,000 shares of common stock to a supplier. In return, the supplier agreed to give the Company a discount on future purchases of kiosks. The Company recorded $100,000 in expenses related to this transaction.

In July 2011, the Company issued 2,121,750 shares related to an anti-dilution clause in $400,000 of previously reported debt converted to equity.

On August 2, 2011, the Company issued 600,000 shares to Salzwedel Financial Services for services to be rendered. The Company recorded $90,000 in expense related to this transaction.

In August 2011, one creditor elected to convert $7,408 of accounts payable into 74,085 shares of common stock of the Company.

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Item 3. Defaults Upon Senior Securities.

None

Item 4. (Removed and Reserved).

None

Item 5. Other Information.

None

Item 6. Exhibits

Exhibit No.		Description
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		Public Media Works, Inc. (Registrant)
Date: October 17, 2011		/s/ Garrett Cecchini
Date: January 19, 2012		/s/ Martin W. Greenwald
	By:	~~Garrett~~Martin ~~Cecchini~~W. Greenwald
	Title:	Chief Executive Officer

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