UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549




**FORM
      10-QSB**




(Mark
                One)x
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934
              for
                the quarterly period ended September 30, 2005o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934
              for
                the transition period from _____________ to _____________





COMMISSION
      FILE NUMBER: 0-5014





aeroTelesis,
      Inc.


(Exact
      Name of Small Business Issuer as Specified in its Charter)


Delaware
            95-2554669(State
                or Other Jurisdiction of
              Incorporation
                or Organization)
            (I.R.S.
                Employer
              Identification
                No.)


1554
      S.
      Sepulveda Blvd., Suite 118, Los Angeles, CA 90025


(Address
      of Principal Executive Offices)





(310)
      235-1727


(Issuer’s
      Telephone Number, Including Area Code)










(Former
      Name, Former Address and Former Fiscal Year, if Changed Since Last
      Report)





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 the filing requirements for the past 90
      days. Yes
x No o








Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).        
      o Yes
      x 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
      Sections 12, 13 or 15(d)of the Exchange Act subsequent to the distribution
      of
      securities under a plan confirmed by a
      court. o Yes o No





APPLICABLE
      ONLY TO CORPORATE ISSUERS:





Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of the latest practicable date:


Class
            
            Outstanding
                as of November 9, 2005Common
                stock, $0.00008 par value
            
            85,747,794




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








**PART
      I**


**FINANCIAL
      INFORMATION**




**Item
      1. Financial Statements.**





**aeroTelesis,
                  Inc.****(A
                  Development Stage Enterprise)****Balance
                  Sheet****(Unaudited)**
  **September
                  30**
              
              **March
                  31****2005**
              
              **2005****ASSETS**Current
                Assets:Cash
              
              $
              88,425
              
              $
              1,913Accounts
                  Receivable
              
              
              –
              
              
              3,535Accounts
                  Receivable - Employees
              
              
              10,400
              
              
              –Total
                  Current Assets
              
              
              98,825
              
              
              5,448Fixed
                  Assets:Furniture
                  & Equipment, net of $31,426 of accumulated
                  depreciation
              
              
              119,427
              
              
              75,637Other
                  Assets:Deposit
              
              
              218,316
              
              
              18,153Deferred
                  Offering Finance Costs
              
              
              1,400,000
              
              
              –License
              
              
              2,698,781
              
              
              2,698,781Total
                  Other Assets
              
              
              4,317,097
              
              
              2,716,934Total
                  Assets
              
              $
              4,535,349
              
              $
              2,798,019**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY**Current
                  Liabilities:Accounts
                  Payable and Accrued Liabilities
              
              $
              385,203
              
              $
              281,319Related
                  Party Payable
              
              
              5,486
              
              
              8,600Convertible
                  Debenture
              
              
              1,500,000
              
              
              –Beneficial
                  Conversion, net
              
              
              (1,039,986
              )
              
              –Current
                  Portion - Long Term Debt
              
              
              11,841
              
              
              3,046Total
                  Current Liabilities
              
              
              862,544
              
              
              292,965Long-Term
                  Liabilities:Long
                  Term Debt, Net of Current Portion
              
              
              40,936
              
              
              3,594Total
                  Liabilities
              
              
              903,480
              
              
              296,559Commitments
                  and Contigencies:
              
              
              –
              
              
              –Stockholders'
                  Equity:Preferred
                  Stock, $.001 par value, 2,000,000 shares
              
              
              –
              
              
              –authorized;
                  none issued and outstandingCommon
                  stock, $.00008 par value, 200,000,000 shares
              
              
              6,857
              
              
              6,675authorized;
                  85,712,794 and 83,437,701 shares issued and outstandingAdditional
                  paid-in capital
              
              
              7,510,801
              
              
              4,144,559Stock
                  Subscription Receivable
              
              
              –
              
              
              (7,500
              )Accumulated
                  deficit during the development stage
              
              
              (3,885,789
              )
              
              (1,642,274
              )Total
                  Stockholders' Equity
              
              
              3,631,869
              
              
              2,501,460Total
                  Liabilities and Stockholders' Equity
              
              $
              4,535,349
              
              $
              2,798,019


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




-2-




**aeroTelesis,
                  Inc.****(A
                  Development Stage Enterprise)****Statement
                  of Operations****(Unaudited)**
  CumulativeLossThree
                  Months Ended
              
              Six
                  Months Ended
              
              During
                  theSeptember
                  30
              
              September
                  30
              
              September
                  30
              
              September
                  30
              
              Development2005
              
              2004
              
              2005
              
              2004
              
              StageRevenues:Revenue
              
              $
              –
              
              $
              105,535
              
              $
              8,600
              
              $
              226,545
              
              $
              478,090Total
                  revenues
              
              
              –
              
              
              105,535
              
              
              8,600
              
              
              226,545
              
              
              478,090Operating
                  Expenses:Cost
                  of Revenues
              
              
              –
              
              
              5,882
              
              
              –
              
              
              5,882
              
              
              17,349Legal
                  & Professional Fees
              
              
              634,574
              
              
              144,481
              
              
              810,675
              
              
              273,381
              
              
              1,972,523Depreciation
              
              
              7,492
              
              
              5,676
              
              
              14,827
              
              
              10,934
              
              
              31,425Research
                  & Development
              
              
              550,000
              
              
              –
              
              
              550,000
              
              
              –
              
              
              550,000Rent
              
              
              31,225
              
              
              31,926
              
              
              64,685
              
              
              58,187
              
              
              243,991Options
                  Expense
              
              
              (121,345
              )
              
              –
              
              
              357,230
              
              
              –
              
              
              357,230Salaries
              
              
              73,934
              
              
              76,121
              
              
              100,532
              
              
              119,658
              
              
              345,848Interest
              
              
              263,923
              
              
              598
              
              
              268,443
              
              
              2,015
              
              
              279,578Travel
              
              
              38,428
              
              
              7,064
              
              
              40,070
              
              
              50,806
              
              
              352,085General
                  and Administrative
              
              
              22,557
              
              
              22,141
              
              
              48,466
              
              
              56,988
              
              
              216,663Total
                  Expenses:
              
              
              1,500,788
              
              
              293,889
              
              
              2,254,928
              
              
              577,851
              
              
              4,366,692Income
                  (Loss) from operations
              
              
              (1,500,788
              )
              
              (188,354
              )
              
              (2,246,328
              )
              
              (351,306
              )
              
              (3,888,602
              )Other
                  Income (Expenses)Other
                  Income
              
              
              2,185
              
              
              –
              
              
              2,813
              
              
              –
              
              
              2,813Net
                  Income (Loss)
              
              $
              (1,498,603
              )
              $
              (188,354
              )
              $
              (2,243,515
              )
              $
              (351,306
              )
              $
              (3,885,789
              )Loss
                  per common share
              
              $
              (0.02
              )
              $
              (0.00
              )
              $
              (0.03
              )
              $
              (0.00
              )Weighted
                  average commonshares
                  outstanding
              
              
              84,779,711
              
              
              81,550,720
              
              
              84,292,711
              
              
              81,550,720


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










-3-




**aeroTelesis,
                  Inc.****(A
                  Development Stage Enterprise)****Statement
                  of Cash Flows****(Unaudited)**
  CumulativeLossSix
                  Months Ended
              
              During
                  theSeptember
                  30
              
              September
                  30
              
              Development2005
              
              2004
              
              StageCash
                  Flows from Operating Activities:Net
                  Income
              
              $
              (2,243,515
              )
              $
              (351,306
              )
              $
              (3,885,789
              )Depreciation
              
              
              14,827
              
              
              10,934
              
              
              31,425Stock
                  Issued for Services
              
              
              467,567
              
              
              40,000
              
              
              445,165Value
                  of Options Issued for Services
              
              
              357,230
              
              
              –
              
              
              713,754Other
                  Non-Cash Expenses
              
              
              233,750
              
              
              –
              
              
              307,480Adjustments
                  to Reconcile net loss to net cash provided by (used in) operating
                  activities:Changes
                  in operating assets and liabilities:Accounts
                  Payable and Accrued Expenses
              
              
              (38,575
              )
              
              80,273
              
              
              266,795Receivables
              
              
              (6,865
              )
              
              (8,535
              )
              
              44,600Inventory
              
              
              –
              
              
              (4,630
              )
              
              –Related
                  Party Payable
              
              
              (8,600
              )
              
              –
              
              
              –Prepaid
                  Expenses
              
              
              –
              
              
              975
              
              
              18,105Deposit
              
              
              (162
              )
              
              (936
              )
              
              (18,317
              )Net
                  Cash provided by (used in) Operating Activities
              
              $
              (1,224,343
              )
              $
              (233,225
              )
              $
              (2,076,782
              )Cash
                  Flows from Investing Activities:Capital
                  Expenditures
              
              
              (7,938
              )
              
              (46,002
              )
              
              (63,297
              )Licenses
              
              
              –
              
              
              –
              
              
              (86,556
              )Net
                  Cash provided by (used in) Investing Activities
              
              $
              (7,938
              )
              $
              (46,002
              )
              $
              (149,853
              )Cash
                  Flows from Financing Activities:Common
                  Stock
              
              
              53,050
              
              
              276,129
              
              
              63,548Stock
                  Subscription Receivable
              
              
              7,500
              
              
              –
              
              
              7,500Long
                  Term Debt Repayment
              
              
              (4,543
              )
              
              –
              
              
              (5,851
              )Convertible
                  Debenture
              
              
              1,500,000
              
              
              –
              
              
              1,500,000Debt
                  Discount
              
              
              (242,700
              )
              
              –
              
              
              (242,700
              )Revolving
                  Line of Credit Payments
              
              
              (136,500
              )
              
              –
              
              
              –Revolving
                  Line of Credit Advance
              
              
              141,986
              
              
              –
              
              
              992,563Net
                  Cash provided by (used in) Financing Activities
              
              $
              1,318,793
              
              $
              276,129
              
              $
              2,315,060Net
                  Increase (Decrease) in cash and cash equivalents
              
              
              86,512
              
              
              (3,098
              )
              
              88,425Cash
                  at beginning of period
              
              $
              1,913
              
              $
              10,687
              
              $
              –Cash
                  at end of period
              
              $
              88,425
              
              $
              7,589
              
              $
              88,425Supplemental
                  disclosure:Total
                  interest paid
              
              $
              2,011
              
              $
              –
              
              $
              7,279Total
                  taxes paid
              
              $
              –
              
              $
              –
              
              $
              –Non-Cash
                  Transactions:Stock
                  Issued for Services
              
              $
              467,567
              
              $
              40,000
              
              $
              485,165Stock
                  Issued for Debt
              
              $
              –
              
              $
              –
              
              $
              1,092,139Long-term
                  Debt used to acquire Equipment
              
              $
              50,680
              
              $
              –
              
              $
              50,680Deposits
              
              $
              200,000
              
              
              –
              
              $
              200,000Deferred
                  Offering Finance Costs
              
              $
              1,400,000
              
              
              –
              
              $
              1,400,000Accounts
                  Payable
              
              $
              57,541
              
              
              –
              
              $
              57,541Beneficial
                  Conversion
              
              $
              1,031,036
              
              
              –
              
              $
              1,031,036


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




-4-





aeroTelesis,
      Inc.


Notes
      to
      Financial Statements


September
      30, 2005


(Unaudited)








Note
        1 -
        Summary of Significant Accounting Policies
 
 BASIS
        OF
        PRESENTATION
 
 General
 
 The
        unaudited interim financial statements of aeroTelesis, Inc. (the "Company")
        as
        of September 30, 2005 and for the three and six months ended September 30,
        2005
        and 2004, included herein have been prepared in accordance with the instructions
        for Form 10-QSB 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 unaudited interim financial statements
        reflect all adjustments, consisting only of normal recurring adjustments,
        necessary to present fairly the financial position of the Company at September
        30, 2005, and the results of its operations for the three and six months
        ended
        September 30, 2005 and 2004 and the developmental period, and its cash flows
        for
        the six months ended September 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 of promoting and carrying 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 $0.00008
        and 2,000,000 preferred shares with a par value of $0.001 per share and with
        85,712,794 common shares issued and outstanding and no preferred shares issued
        and outstanding as of September 30, 2005.
 
 Basis
        of
        preparation and presentation:
 
 The
        accompanying financial statements have been prepared to reflect the legal
        acquisition on October 2, 2003 (the "Acquisition") of aeroTelesis
        Philippines Inc ("ATP") by aeroTelesis Inc., formerly Pacific Realm Inc.
        (the
        "Company"). The 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.








-5-





aeroTelesis,
      Inc.


Notes
      to
      Financial Statements


September
      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, with a par value
        of
        $0.00008 and 2,000,000 preferred shares with a par value of $0.001 per share
        and
        with 85,712,794 common shares issued and outstanding and no preferred shares
        issued and outstanding as of September 30, 2005.
 
 During
        the quarter ended September 30, 2005, the Company issued the following shares
        of
        its common stock:
 
 1)
              In
                  September 2005, a total of 520,000 shares of stock were
                  issued
                  pursuant to the 2003 Stock Option Plan. The shares were expensed
                  under
                  legal and professional fees for $416,000, the market price at the
                  time of
                  issuance.
 
 2)
              A
                  total of 1,000,000 shares of stock were issued as a fee for the
                  Standby
                  Equity Distribution Agreement. The stock was recorded at $1.40
                  per share
                  and recorded in the other asset section of the balance sheet as
                  a deferred
                  offering cost.
 
 3)
              In
                  July 2005 a total of 7,332 shares of stock were issued for
                  services
                  with a total expense recognized of
                  $9,165.
 
 4)
              In
                  July 2005, a total of 300,000 shares of stock were issued pursuant
                  to the
                  2003 Stock Option Plan. The option price of $.02 per share ($6,000)
                  was
                  used to reduce outstanding payables to Joseph Gutierrez, the Company’s
                  President.
 
 5)
              A
                  total of 6,713,212 shares of stock were issued in escrow for delivery
                  upon
                  exercise of the convertible debt. These shares are not considered
                  as
                  outstanding at September 30, 2005.
 
 6)
              A
                  total of 79,750 shares of stock were issued for cash for a total
                  of
                  $26,500.


-6-





aeroTelesis,
      Inc.


Notes
      to
      Financial Statements


September
      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. As issued, the options
        were to vest as follows:


Number
                of Shares
            
            Vesting
                Date380,000
            
            
            June
                1, 2005300,000
            
            
            January
                1, 2006100,000
            
            
            March
                31, 200625,000
            
            
            June
                1, 2006275,000
            
            
            January
                1, 20071,080,000





On
        September 30, 2005, the Company agreed to immediately vest all of the remaining
        $1.00 options.
 
 On
        October 18, 2003, the Company granted 250,000 options at an exercise price
        of
        $2.00 to various employees, consultants and advisers. Additionally,
        on April 29, 2005, the Company granted 900,000 stock options at an
        exercise
        price of $2.00 to various employees, consultants and advisors. As issued,
        one
        half of the options were to vest on March 31, 2006 and the balance were to
        vest
        on March 31, 2007. On September 30, 2005, the Company agreed to cancel 
        900,000 of the $2.00 options and to immediately vest the 250,000 options
        that
        were granted on October 18, 2003. None of the options cancelled were
        vested.
 
 The
        options that were issued to consultants and advisors were valued at $357,230
        as
        of September 30, l2005 using the Black-Scholes valuation method and included
        as
        an expense to the statement of operations based on the vesting schedule.
 
 The
        option shares were not included in the computation since they would be
        anti-dilutive.
 
 NOTE
        3 -
        STOCK-BASED COMPENSATION
  The
        Company accounts for stock-based compensation to employees using the intrinsic
        value method prescribed in APB Opinion No. 25, "Accounting for Stock Issued
        to
        Employees" and related interpretations. Compensations cost, if any, is measured
        as the excess of the fair value of the Company's stock at the date of grant
        over
        the amount an employee must pay to acquire the stock. Statement of Financial
        Accounting Standards ("SFAS") 123, Accounting for Stock-Based Compensation,
        amended by SFAS 148, Accounting For Stock-Based Compensation - Transition
        and
        Disclosure, established accounting and disclosure requirements using a fair
        value based method of accounting for stock-based employee compensation; however,
        it allows an entity to continue to measure compensation for those plans using
        the intrinsic value method of accounting prescribed by APB Opinion No. 25.
        The
        Company has elected to continue to measure compensation under the APB Opinion
        No. 25, and has adopted the disclosure requirements of SFAS No. 123 and SFAS
        No.
        148.


-7-





aeroTelesis,
      Inc.


Notes
      to
      Financial Statements


September
      30, 2005


(Unaudited)





Note
      3 -
      Stock-Based Compensation ( con’t)




If
      the
      fair value of the stock options granted to employees during a fiscal year had
      been recognized as compensation expense on straight-line basis over the vesting
      period of the grants, stock-based compensation costs would have impacted our
      net
      income and earnings per common share for the fiscal periods as
      follows:




Three
                Months Ended September 30
            
            Six
                Months Ended September 302005
            
            2004
            
            2005
            
            2004(Unaudited)
            
            (Unaudited)
            
            (Unaudited)
            
            (Unaudited)Net
                Income (Loss) as Reported
            
            $
            (1,498,603
            )
            $
            (188,354
            )
            $
            (2,243,515
            )
            $
            (351,306
            )Deduct:
                Stock Based Compensation Costs, Net of Taxes Under SFAS
                123
            
            
            (221,426
            )
            
            (49,914
            )
            
            (251,009
            )
            
            (99,828
            )Pro
                Forma Net Income (Loss)
            
            $
            (1,720,029
            )
            $
            (238,268
            )
            $
            (
                2,494,524
            )
            $
            (451,134
            )Per
                Share Information:Basic,
                as Reported
            
            $
            (0.02
            )
            $
            (0.00
            )
            $
            (0.03
            )
            $
            (0.00
            )Basic,
                Pro Forma
            
            $
            (0.02
            )
            $
            (0.00
            )
            $
            (0.00
            )
            $
            (0.00
            )Diluted,
                as Reported
            
            $
            (0.02
            )
            $
            (0.00
            )
            $
            (0.00
            )
            $
            (0.00
            )Diluted,
                Pro Forma
            
            $
            (0.02
            )
            $
            (0.00
            )
            $
            (0.00
            )
            $
            (0.00
            )


The
      fair
      value of the stock-based awards was estimated using the Black-Scholes model
      with
      the following weighted average assumptions for fiscal periods:




Three
                Months Ended September 30
            
            Six
                Months Ended September 302005
            
            2004
            
            2005
            
            2004(Unaudited)
            
            (Unaudited)
            
            (Unaudited)
            
            (Unaudited)Estimated
                Fair Value
            
            $
            1.02
            
            $
            1.02
            
            $
            1.02
            
            $
            1.02Expected
                Life (Years)
            
            
            2.96
            
            
            2.96
            
            
            2.96
            
            
            2.91Risk
                Free Interest Rate
            
            
            3.82
            %
            
            3.82
            %
            
            3.82
            %
            
            4.08
            %Volatility
            
            
            108
            %
            
            108
            %
            
            108
            %
            
            208
            %Dividend
                Yield
            
            
            –
            %
            
            –
            %
            
            –
            %
            
            –
            %





Note
      4 -
      Long Term Debt





On
        October 1, 2004, the Company renewed a loan agreement the Company’s majority
        stockholder,  Nations Mobile Networks, Ltd. (“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 expired September 30, 2005 and has not been renewed. 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 represents the fair value of the shares
        at
        the date of the loan commitment. During the quarter ended September 30, 2005,
        a
        total of $22,000 was advanced and $136,500 was repaid under the working capital
        loan and $1,866 was accrued for interest.





-8-





aeroTelesis,
      Inc.


Notes
      to
      Financial Statements


September
      30, 2005


(Unaudited)





Note
      4 -
      Long Term Debt (con’t)





In
        May 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 copier has been
        capitalized at $50,680 and will be depreciated over the term of the
        lease.
 
 Note
        5 -
        Convertible Debt
 
 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:
 
 ·
              $1,500,000
                  disbursed at closing
 
 ·
              $1,500,000
                  disbursed immediately prior to the Company filing a registration
                  statement
 
 ·
              10%
                  interest rate per annum
 
 ·
              12
                  month maturity
 
 ·
              Secured
                  by substantially all assets of the
                  Company
 
 ·
              Fixed
                  conversion price equal to 75% of the volume weighted average price
                  on the date of closing
                  ($1.117)
 
 ·
              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 25, 2005.
 
 The
        beneficial conversion of the convertible debentures was computed as $380,036.
        The warrants were valued at $651,000 and recorded as a part of the beneficial
        conversion cost as a reduction of the liability and to be amortized over
        the 12
        months. A total of $242,700 was paid for commissions and shown as a reduction
        of
        the debt and is being amortized over 12 months or the length of the debt.
        A
        total of $223,750 (two months and 5 days) has been amortized for these items
        for
        the period ended September 30, 2005.
 
 The
        convertible debentures are convertible into shares of the Company’s common stock
        at $1.117 per share. Interest in the amount of $ 26,767 has been charged
        to
        interest expense during the quarter ended September 30, 2005.





-9-





aeroTelesis,
      Inc.


Notes
      to
      Financial Statements


September
      30, 2005


(Unaudited)





Note
        6 -
        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
        of 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.
 
 The
        Company entered into an Agreement of Settlement and Mutual and General Release
        with a former consultant with the Company. The Company agreed to issue 300,000
        options and pay such consultant a fee for a future acquisition of $200,000,
        payable $50,000 within ten days of the execution of the Agreement, $50,000
        no
        later than March 1, 2006, and $100,000 no later than July 1, 2006.
 
 Note
        7 -
        Subsequent Events
 
 The
        Company received the second amount of funding of the bridge debenture agreement
        on October 26, 2005 in the amount of $1,500,000 with a conversion price of
        $0.506 per share.


-10-





**Item
      2. Management’s Discussion and Analysis or Plan of
      Operation.**




**Overview**




aeroTelesis
      is a start-up, technology-driven communications company dedicated to offering
      our customers voice, data and video services. Our targeted application markets
      include fixed and mobile wireless broadband, and satellite
      communications.




Our
      core
      wireless technology platform is a modulation technique known as Ultra Spectral
      Modulation(TM) (USM) which we license from Photron Technologies, Ltd under
      certain license agreements. USM is a technology that we believe significantly
      increases frequency bandwidth efficiency for wireless applications (such as
      wireless local loop, cellular, satellite, and others) to produce faster data
      transmission rates and higher data capacity while requiring significantly less
      frequency spectrum allocation in comparison to other traditional wireless
      technologies in the market today. We believe the implementation of this USM
      technology has far reaching implications for the wireless communications
      industry. We believe USM holds the promise to deliver high quality
      broadband-like services through far narrower frequency channels than
      conventional wireless technologies. Through the frequency efficiency provided
      by
      USM, we believe we will be able to reduce the cost of deployment for wireless
      networks and, therefore, allow us to price its services at more cost competitive
      rates for its USM users. We believe these cost advantages should enable us
      to
      capture a share of customers, especially in developing countries where we
      believe there are lower penetration rates for communication services and price
      sensitivity is an important factor to reach a critical mass of users. Currently,
      Photron in developing a chipset that will be used in the commercialization
      of
      products using USM technology. It is anticipated the chipset will be completed
      by the end of 2006. Once there is a chipset, we anticipate we will begin
      producing products for sale to customers.




*To
      date, we have not received any revenues from any products using USM technology
      and we currently have no other sources of revenues.* If
      Photron is unable to develop a chipset, we may not have a product to
      sell.




In
      the
      future, we will attempt to implement both satellite and terrestrial-based
      wireless broadband services using USM technology upon its commercialization,
      which is now in the chipset development stage. It is anticipated that the
      chipset development process will be completed by the end of 2006. In contrast
      to
      traditional wireless technologies that we believe rely on conventional
      modulation methods and broad frequency spectrum requirements, we believe USM
      represents an original and fundamental shift in modulation technology which
      can
      create a new breed of next generation networks.




Formerly
      known as Pacific Realm, Inc., aeroTelesis was incorporated in Delaware on August
      26, 1968 as Continental Convalescent Centers, Inc. and was involved in the
      health care industry. We subsequently changed our name to Century Convalescent
      Centers, Inc., National Health Services, Inc., Carex International, Inc. and
      Medica USA, Inc. On July 6, 1984, we changed our name to “Pacific Realm,
      Inc.” when it entered into the gold mining business. Those operations were
      ultimately unsuccessful and terminated. We were inactive and dormant from 1989
      through 2000. During this period, we did not have revenues, operating profits
      or
      any identifiable assets attributable to any industry segment. In 2000, we began
      limited operations and began seeking opportunities to act as a consultant to
      companies interested in establishing telecom businesses in the Asia-Pacific
      region as well as in Latin America and other less-developed areas of the
      world.




In
      October 2003, we acquired all issued and outstanding shares of Aerotelesis
      Philippines, Inc., a British Virgin Islands company, in exchange for the
      issuance of 75,000,000 shares of our common stock to the sole shareholder of
      AeroTelesis Philippines, Inc., Nations Mobile Networks Ltd., formerly known
      as
      Aerotelesis Ltd. As a result of this transaction, AeroTelesis Philippines,
      Inc.
      is our wholly-owned subsidiary and Nations now holds approximately 91.86% of
      the
      fully diluted outstanding shares of our common stock.




In
      addition to AeroTelesis Philippines, Inc., we have two other subsidiaries:
      Aerotelesis IP Networks, Inc. and Aerotelesis Satellite Networks Inc., both
      are
      Delaware corporations. These subsidiaries do not have any
      operations.




**Critical
      Accounting Policies**




***Loss
      per Common Share***




We
      have
      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.






-11-




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.




***Useful
      Life of Licenses***




Our
      accounting policy relating to the useful life for the two licenses acquired
      in
      2004 for total consideration of $1,000,000 is ten (10) years based upon the
      term
      of the licenses in both agreements. Although these licenses provide for renewal
      for successive five (5) year terms after the initial ten year term, the renewals
      are not automatic and provide for additional negotiations between the parties
      to
      both license agreements.




Our
      useful life of our ATP License is fifteen years, based upon the time remaining
      on the franchise granted to its Philippine partner.




**Results
      Of Operations For The Three and Six Months Ended September 30, 2005 Compared
      To
      The Three and Six Months Ended September 30, 2004**




***Revenues***




For
      the
      three months ended September 30, 2005, we had no revenues compared to revenues
      of $105,535 for the three months ended September 30, 2004. For the six months
      ended September 30, 2005, we had revenues of $8,600 compared to revenues of
      $226,545 for the six months ended September 30, 2004. Our lack of revenues
      for
      the three months ended September 30, 2005 and our insubstantial revenues for
      the
      six months ended September 30, 2005 are due to the expiration of our
      telecommunications consulting agreement and our focus on the development of
      a
      wireless technology platform by our licensor, Photron Technologies, Ltd.




***Expenses***




We
      had
      expenses of $1,500,788 for the three months ended September 30, 2005 compared
      to
      expenses of $293,889 for the three months ended September 30, 2004. This is
      an
      increase in expenses by $1,206,899. The increase in expenses from the prior
      year
      is primarily due to:




·
            an
                increase in our legal and professional fees by $490,093 primarily
                associated with option related expense of $416,000 paid to consultants
                and
                legal fees of $74,412 for the negotiation and consummation of the
                standby
                equity distribution agreement with Cornell Capital Partners, the
                secured
                convertible debentures issued to Cornell Capital Partners and Highgate
                House Funds, Ltd. and related
                agreements;




·
            an
                increase in our research and development expenses by $550,000 related
                to
                the new USM wireless technology;
                and




·
            an
                increase in our interest expenses by $263,325 primarily due to the
                amortized amount of the beneficial conversion cost related to the
                issuance
                of convertible debentures and associated warrants in the amount of
                $1,500,000 and other borrowings and financings during the three months
                ended September 30, 2005.




These
      expenses were offset by a reversal of option expense by $(121,345) during the
      three months ended September 30, 2005 primarily due to the cancellation of
      900,000 options with an exercise price of $2.00.




We
      had
      expenses of $2,254,928 for the six month period ended September 30, 2005
      compared to expenses of $577,851 for the six month period ended September 30,
      2004. This is an increase in expenses by $1,677,077. The increase in expenses
      from the prior year is primarily due to our increased expenses during the three
      months ended September 30, 2005 as described above.




***Net
      Loss***




We
      realized a net loss of $(1,498,603) from operations for the three month period
      ended September 30, 2005 compared to a net loss of $(188,354) for the three
      month period ended September 30, 2004. The increase in net loss for the three
      month period ended September 30, 2005 was due to the lack of revenues for the
      three month period ended September 30, 2005 and the increase in expenses
      described above. The net loss per share for the three month period ended
      September 30, 2005 was $(0.02) per share compared to a net loss per share of
      nil
      for the three month period ended September 30, 2004.




We
      realized a net loss of $(2,243,515) from operations for the six month period
      ended September 30, 2005 compared to a net loss of $(351,306) for the six month
      period ended September 30, 2004. The increase in net loss for the six month
      period ended September 30, 2005 was due to the lack of revenues for the three
      month period ended September 30, 2005 and insignificant revenues for the first
      three months of the six months ended September 30, 2005 and the increase in
      expenses described above. The net loss per share for the six month period ended
      September 30, 2005 was $(0.03) per share compared to a net loss per share of
      nil
      for the six month period ended September 30, 2004.




-12-




**Liquidity
      And Capital Resources**




As
      of
      September 30, 2005, we had negative working capital of $(763,719) consisting
      of
      $98,825 in current assets and $862,544 in current liabilities.




Our
      assets at September 30, 2005 were $4,535,349 compared to assets of $2,798,019
      at
      March 31, 2005. The difference is due to the increase in cash by $86,512 due
      to
      our successful convertible debt financing with Cornell Capital Partners
      and
      Highgate House Funds, our capitalization of $1,400,000 in deferred offering
      costs, an increase in our deposits by $200,163, and our acquisition of furniture
      and equipment during the quarter ended June 30, 2005. At September 30, 2005,
      our
      current assets were comprised of cash of approximately $88,425 and accounts
      receivable from employees of $10,400 associated with the exercise price of
      employee stock options that were exercised in September 2005. Our assets, in
      addition to our current assets, consisted of furniture and fixtures of
      approximately $119,427, net of depreciation, deposits of approximately $218,316
      and net licenses of approximately $2,698,781, which consist of three licenses
      listed under Other Assets. The three licenses are the AeroTelesis Philippines
      Inc. license for approximately $1,700,000 and two licenses from Photron
      Technologies Ltd. to utilize and deploy USM-based products and systems for
      satellite communication services and wireless telephony service in the
      Philippines. We paid $500,000 in 2004 for each Photron license, respectively.
      The two Photron licenses are treated as having a useful life of ten years based
      upon the agreements we have with Photron, which are for ten years with renewal
      provisions that are not automatic. The useful life of the AeroTelesis
      Philippines, Inc. license has been set at 15 years which is the term of years
      remaining on the franchise held by our local partner in the Philippines.




Our
      total
      liabilities at September 30, 2005 were $903,480 compared to liabilities at
      March
      31, 2005 of $296,559. The increase in liabilities by $606,921 is primarily
      due
      to the increase in our research and development expenses by $550,000, the
      increase in legal and professional fees of $74,412 and other increased
      expenses and an increase in net liability of $200,000 in accounts payable to
      a
      former consultant.




Total
      shareholders’ deficit accumulated in the development stage increased from
      $1,642,274 at March 31, 2005 to $3,885,789 at September 30, 2005. The $2,243,515
      increase in deficit is due to the increase in our research and development
      expenses by $550,000, the increase in legal and professional fees of $74,412
      and
      other increased expenses and an increase in net liability of $200,000 in
      accounts payable to a former consultant .




On
      April
      29, 2005, we issued 1,080,000 options to purchase shares of our common stock
      at
      $1 per share to various employees, consultants and advisors. 380,000 of the
      options vested on June 1, 2005 and we agreed to accelerate vesting of all
      remaining options on September 30, 2005. These options were issued at an
      exercise price of $1.00 per share, the market price of our common stock at
      the
      time of their issuance.




On
      October 18, 2003, we granted 250,000 options at an exercise price of $2.00
      to
      various employees, consultants and advisers. On April 29, 2005, we also issued
      900,000 options to purchase shares of our common stock at an exercise price
      of
      $2.00 per share to various employees, consultants and advisors. On September
      30,
      2005, we cancelled 900,000 of the options and accelerated vesting of the 250,000
      options previously granted on October 18, 2003.




In
      July
      2005, we issued 300,000 shares of our common stock pursuant to our 2003 Stock
      Option Plan to our president, Joseph Gutierrez, and offset the aggregate option
      exercise price of $6,000 against an outstanding account payable to him. In
      September 2005, we issued an additional 520,000 shares of our common stock
      pursuant to our 2003 Stock Option Plan.




In
      July
      2005, we issued 7,332 shares of our common stock to certain consultants for
      services provided to us and recognized an expense of $9,165. Also, during the
      three months ended September 30, 2005, we issued 79,750 shares of our common
      stock for cash of $26,500.




On
      July
      25, 2005, we entered into a standby equity distribution agreement with Cornell
      Capital Partners. Under the standby equity distribution agreement, we may issue
      and sell to Cornell Capital Partners common stock for a total purchase price
      of
      up to $100,000,000. The purchase price for our shares is equal to 99% of the
      offering price, which is defined in the standby equity distribution agreement
      as
      the lowest volume weighted average price of the common stock during the five
      trading days following the notice date. The amount of each cash advance is
      subject to a maximum advance amount of $1,500,000, with no cash advance
      occurring within seven trading days of a prior advance. On July 25, 2005,
      Cornell Capital Partners received 1,000,000 shares of common stock issued as
      a
      one-time commitment fee under the standby equity distribution agreement. Cornell
      Capital Partners will be paid a fee equal to 5% of each advance, which will
      be
      retained by Cornell Capital Partners from each advance. On July 25, 2005, we
      also entered into a placement agent agreement with Monitor Capital, Inc., a
      registered broker-dealer. Pursuant to the placement agent agreement, we paid
      Monitor Capital, Inc. a one-time placement agent fee of 7,143 restricted shares
      of common stock equal to approximately $10,000 based on the market price of
      the
      stock at the time of issuance.




On
      July
      25, 2005, we also entered into a securities purchase agreement with Cornell
      Capital Partners and Highgate House Funds, Ltd. Pursuant to the securities
      purchase agreement, Cornell Capital Partners and Highgate House Funds, Ltd.
      were
      obligated to purchase secured convertible debentures from us in the original
      principal amount of $3,000,000, of which $1,500,000 was funded on July 25,
      2005
      and $1,500,000 was funded on October 26, 2005. The secured convertible
      debentures have a 12-month term and accrue annual interest of 10%. The secured
      convertible debentures may be redeemed by us at any time, in whole or in part.
      If on the date of redemption, the closing price of our common stock is greater
      than the conversion price in effect, we shall pay a redemption premium of 20%
      of
      the amount redeemed in addition to such redemption. These secured convertible
      debentures are also convertible at the holder’s option at a conversion price
      equal to $1.117. The debentures are secured by substantially all our
      assets.






-13-




In
      connection with the securities purchase agreement we issued a total of four
      warrants: two warrants to Cornell Capital Partners and two warrants to Highgate
      House Funds, Ltd. Two of the warrants issued to Cornell Capital Partners and
      Highgate House Funds, Ltd. are for 150,000 shares of common stock each and
      have
      an exercise price equal to $3.00 or as adjusted under the terms of the warrant.
      The second two warrants issued to Cornell Capital Partners and Highgate House
      Funds, Ltd. are for 75,000 shares of our common stock each and have an exercise
      price equal to $4.00 or as adjusted under the terms of the warrant. The warrants
      expire five years from July 25, 2005.




During
      the fiscal year ended March 31, 2005, we issued 417,698 shares of our common
      stock as repayment of our outstanding debt to our majority shareholder, Nations
      Mobile Networks Ltd. We also issued 79,425 shares of our common stock to
      unrelated parties who provided services to us. We also issued 25,451 shares
      of
      our common stock to an unrelated third party for cash during the fiscal year
      ended March 31, 2005.




As
      noted
      above, we have a working capital deficit with no revenues anticipated for the
      near term. Management believes that the funds provided by the convertible
      debenture issuance and the funds that will be available under the standby equity
      distribution agreement with Cornell Capital Partners will be sufficient to
      pay
      operating expenses going forward. However, our ability to use fully the standby
      equity distribution agreement for our capital needs depends on the maintenance
      of our stock price, which may fluctuate significantly, and on Cornell Capital
      Partners’ ability to sell our shares. Cornell Capital Partners is not required
      to purchase our shares or make an advance if it holds more than 9.9% of our
      then-outstanding common stock. Cornell Capital Partners is not currently able
      to
      sell our shares in significant numbers until we register such shares for resale
      with the Securities and Exchange Commission. A significant drop in our stock
      price could affect Cornell Capital Partners’ ability to sell our shares and
      could cause us to be unable to draw the full amount available under the standby
      equity distribution agreement if we lack sufficient authorized shares. In order
      to increase the number of authorized shares, we would need to amend our
      certificate of incorporation, which requires the approval of our stockholders.
      We are also limited to a maximum cash advance of $1,500,000 during any seven
      trading day period, which may affect our liquidity.




Our
      ability to generate revenues depends on the ability of Photron to develop a
      marketable product and on our ability to sell such product in sufficient
      numbers. Photron has developed only a working prototype and our business model
      is unproven. If Photron is unable to develop a chipset or goes out of business
      before it does and we are unable to obtain additional financing, we may be
      unable to continue as a going concern. In addition, our rights to sell chipsets
      developed by Photron depend on the enforceability of our license with Photron
      and the validity of its patents. Further, our ability to exclusively market
      products based on the technology covered by the Photron license depends on
      our
      ability to enforce the intellectual property rights granted under the Photron
      license, which may require significant expense and could be uncertain.




**Off-Balance
      Sheet Arrangements**




We
      do not
      have any off-balance sheet arrangements that have or are reasonably likely
      to
      have a current or future effect on our financial condition, changes in financial
      condition, revenues or expenses, results of operations, liquidity, capital
      expenditures or capital resources that are material to investors.




**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.




-14-




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.




Forward-Looking
      Statements




Information
        included or incorporated by reference in this report may contain forward-looking statements.
        This information may involve known and unknown risks, uncertainties and other
        factors which may
        cause
        our actual results, performance or achievements to be materially different
        from
        the future results,
        performance or achievements expressed or implied by any forward-looking
        statements. Forward- looking
        statements, which involve assumptions and describe our future plans, strategies
        and expectations, are
        generally identifiable by use of the words
“may,”“will,”“should,”“expect,”“anticipate,”“estimate,”“believe,”“intend” or
“project” or the negative of these words or other variations on these words or comparable
        terminology.
  This
          report contains forward-looking statements, including statements regarding,
          among other things,
          (a) our projected sales and profitability, (b) our growth strategies, (c)
          anticipated trends in our industry,
          (d) our future financing plans and (e) our anticipated needs for working
          capital. These statements may
          be
          found under "Management's Discussion and Analysis," as well as in this
          report
          generally. Actual events
          or
          results may differ materially from those discussed in forward-looking statements
          as a result of various factors, including without limitation the factors
          outlined under "Management's Discussion and Analysis" and matters described
          in
          this report generally. In light of these risks and uncertainties, there
          can be
          no
          assurance that the forward-looking statements contained in this report
          will in
          fact occur.


**Item
      3. Controls and Procedures.**




Based
      on
      the evaluation of the Company's disclosure controls and procedures by Mr. Joseph
      Gutierrez, president and chief financial 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**




**Item
      1. Legal Proceedings.**




In
      August
      2005, we were served by the Plaintiff Neil Sloane, along with a former
      shareholder of ours, with respect to a case brought in the Superior Court,
      Los
      Angeles County, California. The Plaintiff is suing the Company and such former
      shareholder over shares of stock alleged to have been sold by the former
      shareholder to the Plaintiff in 1988, prior to current management’s involvement
      with the Company. The Plaintiff is seeking damages of $135,000. Discovery has
      begun and the Company intends to defend itself vigorously in this
      matter.




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




A
      total
      of 79,750 shares of stock were issued for cash for a total of $26,500. The
      Company used the proceeds to pay for operating expenses.




**Item
      3. Defaults Upon Senior Securities.**




None.




**Item
      4. Submission of Matters to a Vote of Security Holders.**




None.




**Item
      5. Other Information.**




None.




-15-




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




**Exhibit
                No.**
            
            **Description**3.1*
            
            Certificate
                of Incorporation of aeroTelesis, Inc., composite as
                amended3.2*
            
            Amended
                and Restated Bylaws of aeroTelesis, Inc.4.1
            
            Registration
                Rights Agreement dated as of July 25, 2005 between the Company and
                Cornell
                Capital Partners, LP (incorporated by reference from Exhibit 99.3
                to the
                Company’s 8-K filed on July 27, 2005)4.2
            
            Investor
                Registration Rights Agreement dated as of July 25, 2005 between the
                Company, Cornell Capital Partners, LP and Highgate House Funds, Ltd.
                (incorporated by reference from Exhibit 99.6 to the Company’s 8-K filed on
                July 27, 2005)4.3
            
            Warrant
                dated as of July 25, 2005 issued to Cornell Capital Partners, LP
                (incorporated by reference from Exhibit 99.8 to the Company’s 8-K filed on
                July 27, 2005)4.4
            
            Warrant
                dated as of July 25, 2005 issued to Cornell Capital Partners, LP
                (incorporated by reference from Exhibit 99.9 to the Company’s 8-K filed on
                July 27, 2005)4.5
            
            Warrant
                dated as of July 25, 2005 issued to Highgate House Funds, Ltd.
                (incorporated by reference from Exhibit 99.10 to the Company’s 8-K filed
                on July 27, 2005)4.6
            
            Warrant
                dated as of July 25, 2005 issued to Highgate House Funds, Ltd.
                (incorporated by reference from Exhibit 99.11 to the Company’s 8-K filed
                on July 27, 2005)4.7
            
            Secured
                Convertible Debenture dated as of July 25, 2005 issued to Highgate
                House
                Funds, Ltd. (incorporated by reference from Exhibit 99.12 to the
                Company’s
                8-K filed on July 27, 2005)4.8
            
            Convertible
                Debenture dated as of July 25, 2005 issued to Cornell Capital Partners,
                LP
                (incorporated by reference from Exhibit 99.13 to the Company’s 8-K filed
                on July 27, 2005)10.1
            
            Standby
                Equity Distribution Agreement dated as of July 25, 2005 between the
                Company and Cornell Capital Partners, LP (incorporated by reference
                from
                Exhibit 99.1 to the Company’s 8-K filed on July 27,
                2005)10.2
            
            Securities
                Purchase Agreement dated as of July 25, 2005 between the Company
                and
                Cornell Capital Partners, LP and Highgate House Funds, Ltd. (incorporated
                by reference from Exhibit 99.2 to the Company’s 8-K filed on July 27,
                2005)10.3
            
            Security
                Agreement dated as of July 25, 2005 between the Company, Cornell
                Capital
                Partners, LP and Highgate House Funds, Ltd. (incorporated by reference
                from Exhibit 99.4 to the Company’s 8-K filed on July 27,
                2005)10.4
            
            Security
                Agreement dated as of July 25, 2005 between the Company, Cornell
                Capital
                Partners, LP and Highgate House Funds, Ltd. (incorporated by reference
                from Exhibit 99.5 to the Company’s 8-K filed on July 27,
                2005)10.5
            
            Placement
                Agent Agreement dated as of July 25, 2005 by and among the Company,
                Cornell Capital Partners, LP and Monitor Capital, Inc. (incorporated
                by
                reference from Exhibit 99.7 to the Company’s 8-K filed on July 27,
                2005)10.6
            
            Pledge
                and Escrow Agreement dated July 25, 2005 among the Company, Cornell
                Capital Partners, LP, Highgate House Funds, Ltd. and David Gonzalez,
                Esq.
                (incorporated by reference from Exhibit 99.14 to the Company’s 8-K filed
                on July 27, 2005)10.7
            
            Escrow
                Agreement dated July 25, 2005 among the Company, Cornell Capital
                Partners,
                LP and David Gonzalez, Esq. (incorporated by reference from Exhibit
                99.15
                to the Company’s 8-K filed on July 27, 2005)10.8
            
            Escrow
                Agreement dated July 25, 2005 among the Company and David Gonzalez
                Esq.
                (incorporated by reference from Exhibit 99.16 to the Company’s 8-K filed
                on July 27, 2005)10.9
            
            Subsidiary
                Security Agreement dated as of July 25, 2005 between AeroTelesis
                Phillipines, Inc., Cornell Capital Partners, LP and Highgate House
                Funds,
                Ltd. (incorporated by reference from Exhibit 99.17 to the Company’s 8-K
                filed on July 27, 2005)10.10
            
            Subsidiary
                Security Agreement dated as of July 25, 2005 between AeroTelesis
                Satellite
                Networks, Inc., Cornell Capital Partners, LP and Highgate House Funds,
                Ltd. (incorporated by reference from Exhibit 99.18 to the Company’s 8-K
                filed on July 27, 2005)10.11
            
            Subsidiary
                Security Agreement dated as of July 25, 2005 between AeroTelesis
                IP
                Networks, Inc., Cornell Capital Partners, LP and Highgate House Funds,
                Ltd. (incorporated by reference from Exhibit 99.19 to the Company’s 8-K
                filed on July 27, 2005)31.1*
            
            Certification
                of Principal Executive and Financial Officer pursuant to Rule 13a-14
                and
                15d-14 under the Securities Exchange Act of 1934, as
                amended.31.2*
            
            Certification
                of Principal Executive and Financial Officer pursuant to 18 U.S.C.
                Section
                1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                of
                2002.





*
            Filed
                herewith.





-16-





**SIGNATURES**




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




**AEROTELESIS,
              INC.**November
              14, 2005
            By:
            /s/ Joseph
              GuitierrezJoseph
                Guitierrez
              President and Chief Financial Officer
              (Principal Executive and Financial
                Officer)





-17-





**EXHIBIT
      INDEX**


**Exhibit
                  No.**
              
              **Description**3.1*
              
              Certificate
                  of Incorporation of aeroTelesis, Inc., composite as
                  amended3.2*
              
              Amended
                  and Restated Bylaws of aeroTelesis, Inc.4.1
              
              Registration
                  Rights Agreement dated as of July 25, 2005 between the Company
                  and Cornell
                  Capital Partners, LP (incorporated by reference from Exhibit 99.3
                  to the
                  Company’s 8-K filed on July 27, 2005)4.2
              
              Investor
                  Registration Rights Agreement dated as of July 25, 2005 between
                  the
                  Company, Cornell Capital Partners, LP and Highgate House Funds,
                  Ltd.
                  (incorporated by reference from Exhibit 99.6 to the Company’s 8-K filed on
                  July 27, 2005)4.3
              
              Warrant
                  dated as of July 25, 2005 issued to Cornell Capital Partners, LP
                  (incorporated by reference from Exhibit 99.8 to the Company’s 8-K filed on
                  July 27, 2005)4.4
              
              Warrant
                  dated as of July 25, 2005 issued to Cornell Capital Partners, LP
                  (incorporated by reference from Exhibit 99.9 to the Company’s 8-K filed on
                  July 27, 2005)4.5
              
              Warrant
                  dated as of July 25, 2005 issued to Highgate House Funds, Ltd.
                  (incorporated by reference from Exhibit 99.10 to the Company’s 8-K filed
                  on July 27, 2005)4.6
              
              Warrant
                  dated as of July 25, 2005 issued to Highgate House Funds, Ltd.
                  (incorporated by reference from Exhibit 99.11 to the Company’s 8-K filed
                  on July 27, 2005)4.7
              
              Secured
                  Convertible Debenture dated as of July 25, 2005 issued to Highgate
                  House
                  Funds, Ltd. (incorporated by reference from Exhibit 99.12 to the
                  Company’s
                  8-K filed on July 27, 2005)4.8
              
              Convertible
                  Debenture dated as of July 25, 2005 issued to Cornell Capital Partners,
                  LP
                  (incorporated by reference from Exhibit 99.13 to the Company’s 8-K filed
                  on July 27, 2005)10.1
              
              Standby
                  Equity Distribution Agreement dated as of July 25, 2005 between
                  the
                  Company and Cornell Capital Partners, LP (incorporated by reference
                  from
                  Exhibit 99.1 to the Company’s 8-K filed on July 27,
                  2005)10.2
              
              Securities
                  Purchase Agreement dated as of July 25, 2005 between the Company
                  and
                  Cornell Capital Partners, LP and Highgate House Funds, Ltd. (incorporated
                  by reference from Exhibit 99.2 to the Company’s 8-K filed on July 27,
                  2005)10.3
              
              Security
                  Agreement dated as of July 25, 2005 between the Company, Cornell
                  Capital
                  Partners, LP and Highgate House Funds, Ltd. (incorporated by reference
                  from Exhibit 99.4 to the Company’s 8-K filed on July 27,
                  2005)10.4
              
              Security
                  Agreement dated as of July 25, 2005 between the Company, Cornell
                  Capital
                  Partners, LP and Highgate House Funds, Ltd. (incorporated by reference
                  from Exhibit 99.5 to the Company’s 8-K filed on July 27,
                  2005)10.5
              
              Placement
                  Agent Agreement dated as of July 25, 2005 by and among the Company,
                  Cornell Capital Partners, LP and Monitor Capital, Inc. (incorporated
                  by
                  reference from Exhibit 99.7 to the Company’s 8-K filed on July 27,
                  2005)10.6
              
              Pledge
                  and Escrow Agreement dated July 25, 2005 among the Company, Cornell
                  Capital Partners, LP, Highgate House Funds, Ltd. and David Gonzalez,
                  Esq.
                  (incorporated by reference from Exhibit 99.14 to the Company’s 8-K filed
                  on July 27, 2005)10.7
              
              Escrow
                  Agreement dated July 25, 2005 among the Company, Cornell Capital
                  Partners,
                  LP and David Gonzalez, Esq. (incorporated by reference from Exhibit
                  99.15
                  to the Company’s 8-K filed on July 27, 2005)10.8
              
              Escrow
                  Agreement dated July 25, 2005 among the Company and David Gonzalez
                  Esq.
                  (incorporated by reference from Exhibit 99.16 to the Company’s 8-K filed
                  on July 27, 2005)10.9
              
              Subsidiary
                  Security Agreement dated as of July 25, 2005 between AeroTelesis
                  Phillipines, Inc., Cornell Capital Partners, LP and Highgate House
                  Funds,
                  Ltd. (incorporated by reference from Exhibit 99.17 to the Company’s 8-K
                  filed on July 27, 2005)10.10
              
              Subsidiary
                  Security Agreement dated as of July 25, 2005 between AeroTelesis
                  Satellite
                  Networks, Inc., Cornell Capital Partners, LP and Highgate House
                  Funds,
                  Ltd. (incorporated by reference from Exhibit 99.18 to the Company’s 8-K
                  filed on July 27, 2005)10.11
              
              Subsidiary
                  Security Agreement dated as of July 25, 2005 between AeroTelesis
                  IP
                  Networks, Inc., Cornell Capital Partners, LP and Highgate House
                  Funds,
                  Ltd. (incorporated by reference from Exhibit 99.19 to the Company’s 8-K
                  filed on July 27, 2005)31.1*
              
              Certification
                  of Principal Executive and Financial Officer pursuant to Rule 13a-14
                  and
                  15d-14 under the Securities Exchange Act of 1934, as
                  amended.31.2*
              
              Certification
                  of Principal Executive and Financial Officer pursuant to 18 U.S.C.
                  Section
                  1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                  of
                  2002.


*
            Filed
                herewith.






-18-