In 1977, Burns formed a band with contemporaries Julian Cope, Pete Wylie, and Phil Hurst, calling themselves The Mystery Girls. They played only one gig (opening for Sham 69 at Eric's in Liverpool in November 1977) before disintegrating. Burns returned in early 1979 with a new band, Nightmares in Wax (original name: 'Rainbows Over Nagasaki'), featuring a gothic post-punk sound, with backing from keyboardist Martin Healy, guitarist Mick Reid (ex-Crash Course and Glass Torpedoes), bassist Rob Jones, who left soon afterwards to be replaced by Walter Ogden, and drummer Paul Hornby, formerly of 051 and Pink Military, who also exited soon after the band's formation to be replaced by Phil Hurst. Nightmares in Wax played their first gig supporting Wire at Eric's in July 1979, and, around the same time, recorded demos which included a cover of the Simon Dupree and the Big Sound song "Kites", a feature of their early shows. Although signed to the Eric's Records label, their only release, a three-track 7" EP entitled "Birth of a Nation", appeared in March 1980 on Inevitable Records. A 12-inch single featuring two of the tracks from the EP, "Black Leather" and "Shangri-La", was released in 1985. The EP featured "Black Leather", which halfway through turned into K.C. & the Sunshine Band's "That's the Way (I Like It)" (a song later revived by Dead or Alive).