UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2005
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
Commission File Number: 0-5014
AEROTELESIS, INC.
(Name of Small Business Issuer in its charter)
Delaware 95-2554669
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
1554 S Sepulveda Blvd. Suite 118, Los Angeles, CA 90025
-------------------------------------------------------
(Address of principal executive offices)(Zip Code)
Issuer's telephone number: (310) 235-1727
--------------
Indicate by check mark if the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or 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. x Yes ___ No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. []Yes[]No
APPLICABLE ONLY TO CORPORATE ISSUERS
State number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding at June 30, 2005
Common Stock, $.00008 83,805,712 shares
-----------------
par value Outstanding Securities
Transitional Small Business Disclosure Format (check one): Yes[] No[x]
AEROTELESIS, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying unaudited financial statements are presented in accordance with
generally accepted accounting principles for interim financial information and
the instructions to Form 10-QSB and Item 310 under subpart A of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
The accompanying statements should be read in conjunction with the audited
financial statements for the year ended March 31, 2005. In the opinion of
management, all adjustments (consisting only of normal occurring accruals)
considered necessary in order to make the financial statements not misleading,
have been included. Operating results for the three months ended June 30, 2005
are not necessarily indicative of results that may be expected for the year
ending March 31, 2006. The financial statements are presented on the accrual
basis.
aeroTelesis, Inc.
(A Developmental Stage Enterprise)
Balance Sheets
June 30 March 31
2005 2005
---- ----
-----------------------------------------
(Unaudited)
A S S E T S
Current Assets:
Cash $ 7,639 $ 1,913
Accounts Receivable - 3,535
Prepaid Expenses - -
------------------- -------------------
Total Current Assets 7,639 5,448
Fixed Assets:
Furniture & Equipment, net of $23,933 of accumulated 122,919 75,637
depreciation
Other Assets:
Deposit 18,317 18,153
License 2,698,781 2,698,781
------------------- -------------------
Total Other Assets 2,717,098 2,716,934
------------------- -------------------
Total Assets $ 2,847,656 $ 2,798,019
=================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 309,101 $ 281,319
Related Party Payable 118,120 8,600
Current Portion-Long Term Debt 12,041 3,046
------------------- -------------------
Total Current Liabilities 439,262 292,965
Long-Term Liabilities
Long Term Debt, Net of Current Portion 45,279 3,594
------------------- -------------------
Total Liabilities 484,541 296,559
------------------- -------------------
Commitments and Contingencies - -
- -----------------------------
Stockholders' Equity
Preferred Stock, $.0001 par value, 2,000,000 shares - -
authorized; none issued and outstanding
Common stock, 200,000,000 authorized, par value $.00008 6,704 6,675
83,805,712 and 83,437,701 shares issued and
outstanding, respectively
Additional paid-in capital 4,743,598 4,144,559
Stock Subscription Receivable - (7,500)
Accumulated deficit during the development stage (2,387,187) (1,642,274)
------------------- -------------------
Total Stockholders' Equity 2,363,115 2,501,460
------------------- -------------------
Total Liabilities and Stockholders' Equity $ 2,847,656 $ 2,798,019
=================== ===================
aeroTelesis, Inc.
(A Developmental Stage Enterprise)
Statements of Operations
(Unaudited)
Cumulative
Three Months Ended Loss
June 30 June 30 During the
--------------------------- Development
2004 2004 Stage
--------------------------- -------------
Revenues:
Revenue $ 8,600 $ 121,010 $ 478,090
--------------------------- -------------
Total revenues 8,600 121,010 478,090
Operating Expenses:
Cost of Revenues - - 17,349
Legal & Professional Fees 176,101 128,900 1,337,949
Depreciation Expense 7,335 - 23,933
Rent 33,460 26,261 212,766
Options Expense 478,575 - 478,575
Payroll Expenses 26,598 43,537 271,914
Interest 4,520 - 15,655
Travel 1,642 43,742 313,657
Operating Expenses 25,910 41,522 194,107
--------------------------- -------------
754,141 283,962 2,865,905
--------------------------- -------------
Net Loss from operations (745,541) (162,952) (2,387,815)
--------------------------- -------------
Other Income (Expenses)
Other Income 628 - 628
------------- ------------ -------------
Provision for Income Taxes:
Income Tax Benefit (Expense) - - -
------------- ------------ -------------
Net Income (Loss) $ (744,913) $ (162,952) $ (2,387,187)
============= ============ =============
Loss per common share:
From operations $ (0.01) $ (0.00)
------------- ------------
Weighted average common shares 83,546,411 81,550,720
outstanding ============= ============
See accompanying notes to Financial Statements
aeroTelesis, Inc.
(A Developmental Stage Enterprise)
Statements of Cash Flows
(Unaudited)
Cumulative
Loss
Three Months Ended During the
June 30 June 30 Development
2005 2004 Stage
------------- ------------ -------------
Cash Flows from Operating Activities:
Net Loss $ (744,913) $ (162,952) $ (2,387,187)
Adjustments to Reconcile net loss to
net cash provided by (used in) operating
activities:
Depreciation 7,335 - 23,933
Value of Options Issued for 478,575 - 835,099
Service
Other Non-Cash Expenses 20,000 - 93,730
Changes in operating assets and
liabilitities:
Accounts Payable and Accrued 113,728 33,764 382,006
Expenses
Prepaid Expenses - 488 18,105
Related Party Payable (8,600) - -
Deposit (165) (636) (18,317)
Receivables 3,535 (23,500) 55,000
------------- ------------ -------------
Net Cash used in Operating Activities $ (130,505) $ (152,836) $ (997,631)
------------- ------------ -------------
Cash Flows from Investing Activities:
Capital Expenditures (3,937) - (59,297)
Licenses - (25,803) (86,556)
------------- ------------ -------------
Net Cash used in Investing Activities $ (3,937) $ (25,803) $ (145,853)
------------- ------------ -------------
Cash Flows from Financing Activities:
Common Stock for Cash 14,548 - 37,048
Stock Subscription Receivable 7,500 - 7,500
Long Term Debt Repayment - - (488)
Revolving Line of Credit Advance 118,120 187,113 1,107,063
------------- ------------ -------------
Net Cash provided by Financing $ 140,168 $ 187,113 $ 1,151,123
Activities ------------- ------------ -------------
Net Increase (Decrease) in cash and 5,726 8,474 7,639
cash equivalents
Cash at beginning of period $ 1,913 $ 10,687 $ -
============= ============ =============
Cash at end of period $ 7,639 $ 19,161 $ 7,639
============= ============ =============
Supplemental disclosure:
Total interest paid $ - $ - $ 7,279
============= ============ =============
Total taxes paid $ - $ - $ -
============= ============ =============
Non-Cash Transaction:
Stock Issued for Services $ 20,000 # $ - $ 376,524
============= ============ =============
Stock Issued for Debt $ - $ 187,113 $ 1,092,139
============= ============ =============
Subscription Receivable $ - $ - $ -
============= ============ =============
Long-Term Debt used to acquire $ 50,680 $ - $ -
Equipment ============= ============ =============
See accompanying notes to Financial Statements
AeroTelesis, Inc.
Notes to Financial Statements
June 30, 2005
(Unaudited)
Note 1 - Summary of Significant Accounting Policies
BASIS OF PRESENTATION
General
The consolidated unaudited interim financial statements of AeroTelesis, Inc (the
"Company") as of June 30, 2005 and for the three months ended June 30, 2005 and
2004, included herein have been prepared in accordance with the instructions for
Form 10QSB under the Securities Exchange Act of 1934, as amended, and Article 10
of Regulation S-X under the Securities Act of 1933, as amended. The March 31,
2005 Consolidated Balance Sheet was derived from audited financial statements,
but does not include all disclosures required by generally accepted accounting
principles. Certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and regulations
relating to interim consolidated financial statements.
In the opinion of management, the accompanying consolidated unaudited interim
financial statements reflect all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial position of the
Company at June 30, 2005 and March 31, 2005, and the results of its operations
for the three months ended June 30, 2005 and 2004 and the developmental period,
and its cash flows for the three months ended June 30, 2005 and 2004 and during
the developmental period.
The results of operations for such periods are not necessarily indicative of
results expected for the full year or for any future period. These financial
statements should be read in conjunction with the audited financial statements
as of March 31, 2005 and related notes included in the Company's Form 10-KSB
filed with the Securities and Exchange Commission.
Organization
AeroTelesis, Inc. was incorporated under the laws of the State of Delaware in
1968 for the purpose to promote and carry on any lawful business for which a
corporation may be incorporated under the laws of the State of Delaware. The
company has a total of 200,000,000 authorized common shares with a par value of
$.00008 and 2,000,000 preferred shares with a par value of $.001 per share and
with 83,805,712 common shares issued and outstanding and no preferred shares
issued and outstanding as of June 30, 2005.
Basis of preparation and presentation:
The accompanying consolidated financial statements have been prepared to reflect
the legal acquisition on October 2, 2003 of aeroTelesis Philippines Inc ("ATP")
by aeroTelesis Inc.. formerly Pacific Realm Inc. ("Company") (the
"Acquisition"). The consolidated financial statements of the Company give effect
to the Acquisition under which the shareholders of ATP exchanged all of their
common shares of ATP for common shares of the Company.
Notwithstanding its legal form, the Acquisition has been accounted for as a
reverse takeover, as the former shareholders of ATP own in aggregate
approximately 90% of the common shares of the Company, and so are now the
majority shareholders of the Company. Also, as the Company was a company with
nominal net non-monetary assets, the Acquisition has been accounted for as an
issuance of stock by the Company accompanied by a recapitalization
AeroTelesis, Inc.
Notes to Financial Statements
June 30, 2005
(Unaudited)
Note 1 - Summary of Significant Accounting Policies (con't)
Basis of preparation and presentation (con't)
Accounting Method
The Company's financial statements are prepared using generally accepted
accounting principles (United States). Revenues are recognized when consulting
engagements have been earned and completed and expenses when incurred on the
related consulting engagements.
Earnings per Common Share
The Company adopted Financial Accounting Standards (SFAS) No. 128,
"Earnings Per Share," which simplifies the computation of earnings per share
requiring the restatement of all prior periods.
Basic earnings per share are computed on the basis of the weighted average
number of common shares outstanding during each year.
Diluted earnings per share are computed on the basis of the weighted average
number of common shares and dilutive securities outstanding. Dilutive securities
having an anti-dilutive effect on diluted earnings per share are excluded from
the calculation.
Note 2 - Common Stock
The company has a total of 200,000,000 authorized common shares and 2,000,000
preferred shares with a par value of $.00008 per share and with 83,805,712
common shares issued and outstanding and no preferred shares issued and
outstanding as of March 31, 2005.
During the quarter ended June 30, 2005, the Company issued the following shares
of its common stock:
1) In May of 2005, a total of 25,393 shares of stock were issued for
$14,550 cash pursuant to a private placement program.
2) A total of 32,618 shares of stock were issued for debt in the amount
of $79,943.
3) In May of 2005 a total of 10,000 shares of stock were issued for
services with a total expense recognized of $$20,000.
4) In June 2005, a total of 300,000 share of stock was issued pursuant
to the 2003 Stock Option Plan. The option price of $.02 per share
($6,000) was used to reduce outstanding payables to the consultant.
AeroTelesis, Inc.
Notes to Financial Statements
June 30, 2005
(Unaudited)
Note 2 - Common Stock (con't)
On April 29, 2005, the Company granted 1,080,000 stock options, at an exercise
price of $1.00, to various employees, consultants and advisors. The options vest
as follows:
Number of Shares Vesting Date
----------------- ------------------
380,000 June 1, 2005
300,000 January 1, 2006
100,000 March 31, 2006
25,000 June 1, 2006
275,000 January 1, 2007
-----------------
1,080,000
================
On April 29, 2005, the Company granted 900,000 stock options at an exercise
price of $2.00, to various employees, consultants and advisors. One half of the
options vest on March 31, 2006 and the balance vests on March 31, 2007.
The options that were issued to consultants and advisors were valued at $478,575
using the Black-Scholes valuation method and included as an expense to the
statement of operations based on the vesting schedule. The options expense will
be evaluated quarterly until the options vest.
The option shares were not included in the computation since they would be
anti-dilutive.
Note 3 - Long Term Debt
On October 1, 2004, the Company renewed a loan agreement with Nations for a line
of credit up to $1,000,000 for a period of twelve months as a working capital
loan. The loan agreement contained an interest provision of 7% to be accrued
quarterly. The Company issued warrants (at fair value on the commitment date) to
Nations for 1,000,000 shares to be used to convert the debt to common stock at
the rate of $3.25 per share. The $3.25 per share represent the fair value of the
share at the date of the loan commitment. During the quarter ended June 30, 2005
a total of $118,120 was advanced under the working capital loan and $787 was
accrued for interest.
In May of 2005 the Company entered into a capital lease for a copier. The
payments are $1,204 including sales tax per month for a period of 60 months with
a fair market buyout at the end of the lease term. The copies has been
capitalized at $53,000 and be depreciated over the term of the lease.
Future capitalized lease payments are as follows:
2005 $ 6,628
2006 9,265
2007 10,204
2008 11,239
Future Years 15,664
---------
$ 53,000
=========
AeroTelesis, Inc.
Notes to Financial Statements
June 30, 2005
(Unaudited)
Note 4 - Commitment and Contingencies
The Company filed suit in Los Angeles County against its former CEO and
Director, Jagan Narayanan, on January 13, 2005, alleging breach of contract,
fraud, breach if fiduciary duty and seeking equitable relief in the form of a
declaratory judgment that the Company owes him no salary or any stock options.
The Los Angeles County case was Case No. AC084087, filed in Los Angeles Superior
Court in Santa Monica, California.
Mr. Narayanan has filed a lawsuit against the Company in Alameda County, in
Northern California. Mr. Narayanan's case seeks damages and penalties for unpaid
wages and seeks specific performance for the sale of shares pursuant to a stock
option. Consolidation of the matters was sought and the court ruled in late May,
2005 that venue was proper in Alameda County (where the defendant lives) so the
Company's case has been transferred there. The Alameda County Case is No.
HG05-199556 and was filed on February 19, 2005. The cases are now at the
discovery stage.
The Company has engaged legal counsel to represent it in these matters and
intends to vigorously defend itself against Mr. Narayanan's allegations and to
pursue its claim against Mr. Narayanan.
Note 5 - Subsequent Events
On May 10, 2005, the Company entered into a bridge debenture agreement, whereby
an investor committed to purchase $3,000,000 of convertible debentures from the
Company. The agreement included various terms, including the following:
o $1,500,000 disbursed at closing
o $1,500,000 disbursed immediately prior to the Company filing a
registration statement
o 10% Interest rate
o 12 Month maturity
o Secured by all assets of the Company
o Fixed conversion price equal to 75% of the VWAP on the closing day
o 30% Warrant coverage at an exercise price of $3.00, 20% warrant
coverage at an exercise price of $4.00
The Company received the initial amount at closing on July 27, 2005.
Item 2. Management's Discussion and Analysis or Plan of Operation
Except for disclosures that report the Company's historical results, the
statements set forth in this section are forward-looking statements. Actual
results may differ materially from those projected in the forward-looking
statements. Additional information concerning factors that may cause actual
results to differ materially from those in the forward-looking statements are in
the Company's annual report on Form 10-KSB for the year ended March 31, 2005 and
in the Company's other filings with the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company assumes no
obligation to update any forward-looking statements or comments on the reasons
why actual results may differ there from.
Results of Operations
The Company realized a net loss of ($745,541) from operations for the
three month period ended June 30, 2005 compared to a net loss of ($162,952) for
the three month period ended June 30, 2004. The difference in results for this
three month period as compared to the prior year is due to the Company's
increased operating expenses for the quarter compared to the prior year and the
Company's loss of revenue income for this quarter. For the three month period
ended June 30, 2005, the Company had revenue of approximately $8,600, composed
of consulting income compared to revenues of $121,000 for the three month period
ended June 30, 2004. The net loss per share for the three month period ended
June 30, 2005 was $(.01) per share compared to a net loss per share of nil for
the three month period ended June 30, 2004.
The Company had costs and expenses of approximately $754,000 for the three
month period ended June 30, 2005 compared to costs and expenses of approximately
$284,000 for the three month period ended June 30, 2004. The Company's expenses
consist of option expenses of approximately $479,000, legal and professional
fees, including consulting fees, of approximately $176,000, rent of
approximately $33,000, payroll expenses of approximately $27,000, travel
expenses of approximately $1,600 general and administrative expenses of
approximately $26,000, interest expense of approximately $4,500 and depreciation
expense of approximately $7,300. For the three month period ended June 30, 2004,
the Company's costs and expenses totaled approximately $284,000 and consisted of
legal and professional fees of 129,000, rent expense of $26,000, payroll
expenses of $44,000, travel expense of $44,000 and general and administrative
expenses of $42,000. The increase is expenses from the prior year is due to the
Company's increased operating costs as well as the Company's expenses incurred
in issuing options to its employees, officers, directors and consultants during
the three month period ended June 30, 2005.
The Company's assets at June 30, 2005 were $2,847,656 compared to assets
of $2,798,019 at March 31, 2005. The difference is due to the Company's
acquisition of furniture and equipment during the quarter. At June 30, 2005, the
Company's current assets were comprised of cash of approximately $7,600 compared
to cash of approximately $2,000 and accounts receivable of approximately $3,500
at March 31, 2005. The Company's fixed assets are furniture and equipment of
approximately $123,000 and the Company's Other Assets are a deposit of $18,317
and a license of approximately $2,700,000 compared to fixed assets that included
furniture and equipment of approximately $76,000 and Other assets that included
a deposit of $18,153 and a license of approximately $2,700,000.
The Company's liabilities at June 30, 2005 were approximately $485,000,
comprised of accounts payable of approximately $309,000, related party payables
of approximately $118,000 and the current portion of long-term debt of
approximately $12,000. The Company's liabilities at March 31, 2005 were
approximately $297,000. The increase in liabilities is due to the Company's
increased operating expenses and the related party payable which was not
converted to stock as in previous quarters.
Total shareholders' (deficit) increased from ($1,642,274) at March 31,
2005 to ($2,387,187) at June 30, 2005. The increase in deficit is due to the
Company's increased operating expenses.
During the quarter ended June 30, 2005, the Company issued 1,080,000
options to purchase shares of the Company's common stock at $1 per share to
various employees, consultants and advisors. 380,000 of the options vested on
June 1, 2005. The remaining options vest over time commencing in January 2006
with the final 275,000 options vested January 1, 2007. These options were issued
at market price of the Company's common stock at the time of their issuance.
The Company also issued 900,000 options to purchase shares of the
Company's common stock at an exercise price of $2.00 per share to various
employees, consultants and advisors. One half of these options vest on March 31,
2006 and the balance vest on March 31, 2007. These options were issued above the
market price of the Company's common stock at the time of issuance.
The Company issued 14,500 shares of its common stock in registered from to
certain consultants for services provided to the Company. The shares were valued
at a market price at the time of issuance.
Liquidity and Capital Resources
As of June 30, 2005, the Company had negative working capital of
approximately ($431,000) consisting of approximately $8,000 in current assets
and $439,000 in current liabilities. The Company had negative working capital of
approximately ($288,000) at March 31, 2005 consisting of current assets of
approximately $5,000 and $293,000 in current liabilities. The Company has a line
of credit of $1,000,000 available to it to pay its operating and other expenses.
Additionally, on May 1, 2005, the Company entered into a Convertible Debenture
that will provide it with $3,000,000 of operating capital over the next two
quarters. Approximately $1,500,000 was received by the Company in late July,
2005 and the balance of $1,500,000 is anticipated to be received in early fall
of 2005, when the Company files a registration statement covering the
convertible debentures and the Standby Equity Distribution Agreement that the
Company entered into with Cornell Capital Partners, LLP. Thereafter, once the
registration statement is declared effective, the Company may put stock to
Cornell upon given terms and conditions up to $100,000,000 over a period of 24
months. As a result, the Company believes that it will have adequate working
capital for its current operations.
Effect of Inflation
The Company's results of operations have not been affected by inflation
and management does not expect inflation to have a significant effect on its
operations in the future.
New Accounting Pronouncements
In April 2002, the FASB approved for issuance Statements of Financial
Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44 and 64,
Amendment of SFAS 13, and Technical Corrections" ("SFAS 145"). SFAS 145 rescinds
previous accounting guidance, which required all gains and losses from
extinguishment of debt be classified as an extraordinary item. Under SFAS 145
classification of debt extinguishment depends on the facts and circumstances of
the transaction. SFAS 145 is effective for fiscal years beginning after May 15,
2002 and is not expected to have a material effect on the Company's financial
position or results of its operations.
In July 2002, the FASB issued Statements of Financial Accounting Standards
No. 146, "Accounting for Costs Associated with Exit or Disposal Activities"(SFAS
146). SFAS 146 requires companies to recognize costs associated with exit or
disposal activities when they are incurred rather than at the date of a
commitment to an exit or disposal plan. Examples of costs covered by SFAS 146
include lease termination costs and certain employee severance costs that are
associated with a restructuring, discontinued operation, plant closing, or other
exit or disposal activity. SFAS 146 is to be applied prospectively to exit or
disposal activities initiated after December 31, 2002. The adoption of SFAS 146
is not expected to have a material effect on the Company's financial position or
results of its operations.
In December 2002, the FASB issued Statements of Financial Accounting
Standards No. 148 "Accounting for Stock-Based Compensation--Transition and
Disclosure--an amendment of FASB Statement No. 123." This Statement amends FASB
Statement No. 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition, this
Statement amends the disclosure requirements of Statement 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. The adoption of SFAS 148 is not expected to
have a material effect on the Company's financial position or results of its
operations.
ITEM 3. CONTROLS AND PROCEDURES
Based on the evaluation of the Company's disclosure controls and procedures by
Mr. Joseph Gutierrez, president and chief accounting officer of the Company, as
of a date within 90 days of the filing date of this quarterly report, such
officer has concluded that the Company's disclosure controls and procedures are
effective in ensuring that information required to be disclosed by the Company
in the reports that it files or submits under the Securities and Exchange Act of
1934, as amended, is recorded, processed, summarized and reported, within the
time period specified by the Securities and Exchange Commission's rules and
forms.
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses
PART II OTHER INFORMATION
Items 1, 3, 4 and 5 are Inapplicable
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On May 6, 2005, the Company sold 25,393 shares of the Company's common stock to
an non-affiliated investor for $14,550. As part of this transaction, the Company
will issue a warrant to purchase 19,045 shares of the Company's common stock for
$.85 per share and a warrant to purchase an additional 19,045 shares of the
Company's common stock at $1.71 per share. Both warrants will have piggyback
registration rights and expire December 31, 2008. The proceeds received were
used to pay the Company's expenses.
The Company also issued 18,118 shares of its common stock to a shareholder in
satisfaction of $21,295 indebtedness owed to the shareholder.
Item No. 6 Exhibits and Reports on Form 8-K
(a) A report on Form 8-K was filed on June 21, 2005 and was the only report on
Form 8-K filed during the three months ended June 30, 2005.
(b) Exhibits
None.
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.
AEROTELESIS, INC.
August 15, 2005 By /s/ Joseph Gutierrez
Joseph Gutierrez, President, CFO