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, 2004

                          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, 2004
Common Stock, $.00008                         83,085,945 shares
                                              -----------------
      par value                        Outstanding Securities

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

<PAGE>

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,  2004.  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, 2003
are not  necessarily  indicative  of results  that may be expected  for the year
ending March 31, 2005.  The  financial  statements  are presented on the accrual
basis.


<PAGE>

<TABLE>
<CAPTION>

                                AEROTELESIS INC.
                        (A Development Stage Enterprise)
                        Statement of Stockholders' Equity

                                                                                               Deficit
                                                                                              Accumulated
                                                     Preferred       Common                   During the
                               Common     Preferred   $0.0001       $0.00008       Paid-In   Development   Accumulated Stockholders'
                               Shares       Shares   Par Value      Par Value      Capital     Stage        Deficit       Equity
                            -------------  ----------------------  ------------  -----------------------  ------------ -------------
<S>                           <C>                                         <C>        <C>                    <C>              <C>
 Balance, April 1, 2002      5,474,826            -          -           438        973,017                (979,515)#       (6,060)
                          ---------------------------------------------------------------------------------------------------------
 Net Income                                                                                                  82,946         82,946
                          -------------   ---------- ----------  ------------  -------------            ------------  -------------
 Balance, March 31, 2003     5,474,826            -          -           438        973,017                (896,569)#       76,886
                          ---------------------------------------------------------------------------------------------------------

Prior capital replaced
 by aeroTelesis                                                         (438)                               (16,102)       (16,540)
Philippines capital
under reverse
takeover accounting

Transferred to
 Additional Paid in Capital                                                        (912,671)                912,671              -

Curent capital replaced
 by aeroTeles               75,000,000                                 6,000      1,606,225                              1,612,225
Philippines capital
 upon consolidation
 under reverse
 takeover accounting

 March 1, 2004
 Stock Issued for
  License Agreements           200,000                                    16        999,984                              1,000,000

 March 31, 2004
 Stock Issued for Debt         613,832                                    49        613,783                                613,832

 Net Loss                                                                                    (581,684)            -       (581,684)
                          ---------------------------------------------------------------------------------------------------------
 Balance, March 31, 2004    81,288,658                                 6,065      3,280,338  (581,684)            -      2,704,719
                          =========================================================================================================

June 16, 2004
 Stock Dividend              1,610,174                                   129           (129)        -

 June 30, 2004
 Stock Issued for Debt         187,113                                    15        187,098                                187,113

 Net Loss                                                                                    (162,952)                    (162,952)
                          ---------------------------------------------------------------------------------------------------------
 Balance, March 31, 2004    83,085,945                                 6,209      3,467,307  (744,636)            -      2,728,880
                          =========================================================================================================

</TABLE>


                                       1
<PAGE>

<TABLE>
<CAPTION>

                                AEROTELESIS, INC.
                                 BALANCE SHEETS
                                   (UNAUDITED)

                                                                  JUNE 30         MARCH 31
                                                                    2004           2004
                                                                 -----------    -----------
           ASSETS

Current Assets:
<S>                                                              <C>            <C>
Cash                                                             $    19,161    $    10,687
Accounts Receivable                                                   23,500             --
Prepaid Expenses                                                         975          1,463
                                                                 -----------    -----------
           Total Current Assets                                       43,636         12,150

Fixed Assets:
Furniture & Equipment, net                                            63,042         37,239

Other Assets:
Deposit                                                               18,468         17,832
License                                                            2,698,781      2,698,781
                                                                 -----------    -----------
           Total Other Assets                                      2,717,249      2,716,613
                                                                 -----------    -----------
           Total Assets                                          $ 2,823,927    $ 2,766,002
                                                                 ===========    ===========

         LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts Payable                                                 $    95,047    $    61,283
                                                                 -----------    -----------
           Total Current Liabilities                                  95,047         61,283

Commitments and Contigencies                                              --             --


Stockholders' Equity
Preferred Stock,  $.0001 par value,  2,000,000 shares                     --             --
       authorized;  none issued and outstanding
Common stock,  $.00008 par value,  200,000,000 shares                  6,209          6,065
       authorized; 83,085,945 and 81,288,658 shares issued and
       outstanding
Additional paid-in capital                                         3,467,307      3,280,338
Accumulated deficit during the development stage                    (744,636)      (581,684)
                                                                 -----------    -----------


           Total Stockholders' Equity                              2,728,880      2,704,719
                                                                 -----------    -----------

           Total Liabilities and Stockholders'  Equity           $ 2,823,927    $ 2,766,002
                                                                 ===========    ===========

</TABLE>

                                       2
<PAGE>

                               AEROTELESIS, INC.
                            STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

                                                  Three Months Ended
                                                June 30        June 30
                                             ------------    ------------
                                                 2004            2003
                                             ------------    ------------
Revenues:
       Revenue                               $    121,010    $         --
                                             ------------    ------------

           Total revenues                         121,010              --

Operating Expenses:
       Legal & Professional Fees                  128,900          12,553
       Rent                                        26,261
       Salaries                                    43,537
       Travel                                      43,742
       General and Administrative                  41,522              --
                                             ------------    ------------

                                                  283,962          12,553
                                             ------------    ------------

           Income (Loss) from operations         (162,952)        (12,553)
                                             ------------    ------------

Provision for Income Taxes:
       Income Tax Benefit (Expense)                    --              --


           Net Income (Loss)                 $   (162,952)   $    (12,553)
                                             ============    ============

Loss per common share:

           From operations                   $      (0.00)   $      (0.00)
                                             ------------    ------------

Weighted average common shares outstanding     81,550,720       5,474,826
                                             ============    ============


                                       3
<PAGE>


                                AEROTELESIS, INC.
                            Statements of Cash Flows
                                   (Unaudited)

                                                           Three Months Ended
                                                         June 30       June 30
                                                         ---------    ---------
                                                           2004          2003
                                                         ---------    ---------

Cash Flows from Operating Activities:
Net Income                                               $(162,952)   $ (12,553)


Adjustments to Reconcile net loss to net cash
 provided by (used in) operating activities:
        Changes in operating assets and liabilities:
           Accounts Payable                                 33,764           --
           Prepaid Expenses                                    488
           Deposit                                            (636)          --
           Accounts Receivable                             (23,500)          --
                                                         ---------    ---------
Net Cash provided by (used in) Operating Activities      $(152,836)   $ (12,553)

Cash Flows from Investing Activities:
        Fixed Assets                                       (25,803)          --
                                                         ---------    ---------
Net Cash provided by (used in) Investing Activities      $ (25,803)   $      --

Cash Flows from Financing Activities:
        Common Stock                                       187,113       15,000
                                                         ---------    ---------
Net Cash provided by (used in) Financing Activities      $ 187,113    $  15,000

Net Increase (Decrease) in cash and cash equivalents         8,474        2,447

Cash at beginning of period                              $  10,687    $   2,989
                                                         =========    =========

Cash at end of period                                    $  19,161    $   5,436
                                                         =========    =========

Supplemental disclosure:
        Total interest paid                              $      --    $      --
                                                         =========    =========

                                       4
<PAGE>

                                AeroTelesis, Inc.
                          Notes to Financial Statements
                                  June 30, 2004


NOTE 1- BASIS OF PRESENTATION

GENERAL
The consolidated  unaudited  interim  financial  statements of the Company as of
June 30, 2004 and for the three  months  ended June 30, 2004 and 2003,  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, 2004
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 June 30, 2004 and March 31, 2004, and the results of their operations for the
three  months  ended June 30, 2004 and 2003,  and their cash flows for the three
months ended June 30, 2004 and 2003.

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, 2004 and related  notes  included in the  Company's  Form 10-KSB
filed with the Securities and Exchange Commission

ORGANIZATION
AeroTelesis,  Inc. ("the Company") 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  83,085,945  common  shares  issued  and  outstanding  and no
preferred  shares issued and  outstanding as of June 30, 2004. The Company filed
an amendment of its Certificate of  Incorporation  with the State of Delaware to
increase the  authorized  shares from  20,000,000  authorized  common  shares to
200,000,000 authorized shares and to change its par value from $.0001 to $.00008
in March 2003.  Also, on September 12, 2003,  the Company  approved a one-to-two
forward stock split of the common stock shares.  Additionally,  the Company,  on
October 22, 2003, filed an amendment to the Articles of  Incorporation  with the
State of Delaware to change the name of the Company to AeroTelesis, Inc.

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

                                       5
<PAGE>

                                AeroTelesis, Inc.
                          Notes to Financial Statements
                                  June 30, 2004

NOTE 1  -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CON'T)

BASIS OF PREPARATION AND PRESENTATION (CON'T)

issuance of stock by the Company accompanied by a recapitalization

As required under reverse takeover  accounting,  these financial statements have
been  issued  under  the name of the  Company  and  reflect  the  share  capital
structure of ATP.  However,  they reflect the  financial  statements  of ATP and
account  for the  Acquisition  as an  acquisition  of the  Company  by ATP.  The
consolidated financial statements therefore include:

     (a) a consolidated balance sheet prepared from the unaudited balance sheets
         of the Company and ATP at June 30, 2004.

     (b) consolidated  statements  of  operations,  cash  flows and  changes  in
         shareholders'  equity (deficit) prepared from the unaudited  statements
         of operations, cash flows and changes in shareholders' equity (deficit)
         of the Company for the three  months  ended June 30, 2004 and the three
         months ended June 30, 2003 for ATP. The results of operations  and cash
         flows changes in shareholders'  equity (deficit) of the Company and ATP
         are included commencing October 3, 2003, the date of the Acquisition.

ACCOUNTING METHOD

The Company's financial statements are prepared using the accrual method of
accounting. Revenues are recognized when consulting engagements have been earned
and completed and expenses when incurred on the related consulting engagements.
Since the consulting engagements are usually less than one year, the Company
recognizes its revenues when the engagements are completed. This method is used
because the typical contract is completed in six months or less and does not
contain a refund provision in the contract. An engagement is considered complete
when all costs except significant items have been incurred. Revenues from time
contracts are recognized currently as the work is performed. Losses on contract
are recognized by expenses the actual expenses on the completed job.

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.


                                       6
<PAGE>

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  80,474,826
common  shares  issued  and  outstanding  and no  preferred  shares  issued  and
outstanding as of June 30, 2003.

In August 2002, the Board of Directors authorized a 20 to 1 reverse split of the
Company's  common stock. In January 2003, the Board of Directors  authorized a 3
to 1 forward  split of the Company's  common  stock.  The result of this forward
split increased the outstanding shares from to 911,356 outstanding common shares
to 2,737,413 outstanding common shares after adjusting for fractional shares.

On September 12, 2003, the Board of Directors  authorized a 1 to 2 forward split
of the Company's  common stock.  The result of this forward split  increased the
outstanding  shares from to  2,737,413  outstanding  common  shares to 5,474,826
outstanding common shares after adjusting for fractional shares. These financial
statements reflect this forward split of common shares.

On  October  2,  2003,  the  Company  entered  into  an  Agreement  and  Plan of
Reorganization (the "Agreement") with AeroTelesis Ltd. ("ATL"), a British Virgin
Islands  company,  whereby the Company issued  75,000,000  shares of "restricted
securities"  (common  stock) to ATL in exchange  for,  among other  things,  all
assets and operations of ATL's wholly-owned subsidiary, AeroTelesis Philippines,
Inc. ("ATP"), a British Virgin Islands company, in consideration of the exchange
of 100% of the issued and  outstanding  shares of ATP.  ATL also gave a right of
first refusal to the Company to acquire operations in other developing  nations,
primarily in Southeast Asia,  Central and South America and the Middle East. The
shares to be issued to ATL amount to  approximately  92% in the aggregate of the
post-Agreement outstanding voting securities of the Company.

In March of 2004,  the Company  issued  200,000  shares of common  stock for the
license to use the USM technology for wireless  telephony services and satellite
communication services in the Republic of Philippines..

On March 31, 2004, the Company agreed to issue 613,832 shares of common stock to
Nations Mobile Network Ltd.  ("Nations").  to convert the outstanding balance of
the advances on the line of credit along with accrued interest to equity.

The Company issued a stock  dividend  effect June 16, 2004. A total of 1,610,174
shares were  issued.  The shares were  recorded at par value since the  retained
earnings is at a deficit.

On June 30, 2004,  the Company agreed to issue 187,113 shares of common stock to
Nations Mobile Network Ltd.  ("Nations").  to convert the outstanding balance of
the advances on the line of credit along with accrued interest to equity.


                                       7
<PAGE>

                               AEROTELESIS, INC.
                         NOTES TO FINANCIAL STATEMENTS
                                 JUNE 30, 2004

NOTE 3 - LONG TERM DEBT

On September 25, 2003,  the Company  entered into 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 vaule 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 $1.00 per share. These warrants were valued using the Black
Scholes  option  pricing model;  the relative fair value was  insigificant  when
granted. On June 30, 2004, the Company issued 187,113 shares of common stock for
the outstanding principle and accrued interest.

NOTE 4 - COMMITMENT AND CONTINGENCIES

The Company has not recognized any commitments or contingencies at this time.

NOTE 5 - SUBSEQUENT EVENTS

There are no other subsequent events that warrant  disclosure in these financial
statements.

                 [ THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]

                                       8
<PAGE>

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, 2004 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  ($162,952)  from  operations  for the
three month period ended June 30, 2004  compared to a net loss of ($12,553)  for
the three month period ended June 30, 2003.  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. For the
three month period ended June 30, 2004, the Company had revenue of approximately
$121,000,  composed of consulting  income  compared to no revenues for the three
month period  ended June 30, 2003.  The net profit per share for the three month
period ended June 30, 2004 was nil per share  compared to a net profit per share
of nil for the three month period ended June 30, 2003.

      The Company had costs and expenses of approximately $284,000 for the three
month period ended June 30, 2004 compared to costs and expenses of approximately
$13,000 for the three month period ended June 30, 2003.  The Company's  expenses
consist  of  legal  and  professional  fees,   including   consulting  fees,  of
approximately  $129,000,  rent of  approximately  $26,000,  salary  expenses  of
approximately $44,000,  travel expenses of approximately $44,000 and general and
administrative expenses of approximately $42,000.

      The Company's  assets at June 30, 2004 were $2,823,927  compared to assets
of  $2,766,002  at  March  31,  2004.  The  difference  is due to the  Company's
acquisition  of  furniture  and  equipment  during  the  quarter  as well as the
Company's accounts  receivables for the quarter. At June 30, 2004, the Company's
current assets were comprised of cash of approximately  $19,000, $975 in prepaid
expenses and accounts  receivable of $23,500  compared to cash of  approximately
$11,000, 1,463 in prepaid expenses at March 31, 2004. The Company's fixed assets
are furniture and equipment of approximately $63,000, the Company's Other Assets
are a deposit of $18,468 and a license of approximately  $2,700,000  compared to
fixed assets that included  furniture and equipment of approximately  37,000 and
Other assets that  included a deposit of $17,832 and a license of  approximately
$2,700,000.

      The Company's  liabilities  at June 30, 2004 were  approximately  $95,000,
comprised of accounts payable. The Company's  liabilities at March 31, 2004 were
approximately  $61,000.  The  increase in  liabilities  is due to the  Company's
increased operating expenses.

      Total shareholders'  (deficit) increased from ($581,684) at March 31, 2004
to ($744,636) at June 30, 2004.

      During  the  quarter  ended  June 30,  2004,  the  Company  announced  and
implemented  a two percent  (2%) stock  dividend  for  holders of the  Company's
common stock. This resulted in the issuance of approximately 1,610,174 shares of
the Company's common stock during the quarter.

                                       9
<PAGE>

Liquidity and Capital Resources

      As of  June  30,  2004,  the  Company  had  negative  working  capital  of
approximately  ($51,000)  consisting of approximately  $44,000 in current assets
and $95,000 in current liabilities.  The Company had negative working capital of
approximately  ($49,000)  at March 31,  2004  consisting  of  current  assets of
approximately $12,000 and $61,000 in current liabilities. The Company has a line
of credit of $1,000,000 available to it to pay its operating and other expenses.
As a result,  the Company  believes that it has adequate working capital for its
current  operations.  However,  the  Company  may  seek  additional  sources  of
financing,  including  seeking to raise capital,  to fund its operations for the
fiscal year, If the need arises to increase the growth of the Company.

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.

                                       10
<PAGE>

ITEM 3. CONTROLS AND PROCEDURES

Based on the evaluation of the Company's  disclosure  controls and procedures by
Dr. Jagan  Narayanan,  chief  executive  officer of the Company,  and Mr. Joseph
Gutierrez,  chief accounting officer of the Company, as of a date within 90 days
of the filing date of this quarterly  report,  such officers have 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, 2, 3, 4 and 5 are Inapplicable

Item No. 6 - Exhibits and Reports on Form 8-K

(a)   A report on Form 8-K was filed on June 8, 2004 and was the only  report on
Form 8-K filed during the three months ended June 30, 2004.

(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.

Date August 12, 2004                    By /s/ Jagan Narayanan
                                        Dr. Jagan Narayanan, CEO

                                        By/s/ Joseph Gutierrez
                                        Joseph Gutierrez, CFO

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