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 September 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 September 30, 2004
Common Stock, $.00008                         83,183,129 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 September 30,
2004 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>

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

<TABLE>
<CAPTION>
                                                                                                                     Deficit
                                                                                                                    Accumulated
                                                                          Preferred        Common                   During the
                                              Common        Preferred      $0.0001        $0.00008     Paid-In      Development
                                              Shares         Shares       Par Value      Par Value     Capital         Stage
                                            -----------    -----------   -----------   -----------    -----------    -----------
 Balance, April 1, 2002                       5,474,826             --            --           438        973,017
                                            --------------------------------------------------------------------------------------
<S>                                         <C>            <C>           <C>           <C>            <C>            <C>
 Net Income

                                            -----------    -----------   -----------   -----------    -----------
 Balance, March 31, 2003                      5,474,826             --            --           438        973,017
                                            --------------------------------------------------------------------------------------

Prior capital replaced by aeroTelesis                                                         (438)
Philippines capital under reverse
takeover accounting

Transferred to Additional Paid in Capital                                                                (912,671)

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

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

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

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

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

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

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

July 12, 2004
 Stock Issued for Services                        2,168                                          0         10,000             --

 Sept 20, 2004
Stock Issued for Services                         6,000                                          0         30,000

 September 30, 2004
 Stock Issued for Debt                           89,016                                          6         89,010

 Net Loss                                                                                                               (188,354)
                                            --------------------------------------------------------------------------------------
 Balance, September 30, 2004                 83,183,129                                      6,216      3,596,317       (932,990)
                                            ======================================================================================

<CAPTION>
                                             Accumulated   Stockholders'
                                              Deficit        Equity
                                             -----------   -----------
 Balance, April 1, 2002                         (979,515)       (6,060)
                                            --------------------------
<S>                                          <C>           <C>
 Net Income                                       82,946        82,946

                                             -----------   -----------
 Balance, March 31, 2003                        (896,569)       76,886
                                            --------------------------

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

Transferred to Additional Paid in Capital        912,671            --

Curent capital replaced by aeroTelesis                       1,612,225
Philippines capital upon consolidation
under reverse takeover accounting

 March 1, 2004
 Stock Issued for License Agreements                         1,000,000

 March 31, 2004
 Stock Issued for Debt                                         613,832

 Net Loss                                             --      (581,684)
                                            --------------------------
 Balance, March 31, 2004                              --     2,704,719
                                            ==========================

June 16, 2004
 Stock Dividend

 June 30, 2004
 Stock Issued for Debt                                         187,113

 Net Loss                                                     (162,952)
                                            --------------------------
 Balance, March 31, 2004                              --     2,728,880
                                            ==========================

July 12, 2004
 Stock Issued for Services                                      10,000

 Sept 20, 2004
Stock Issued for Services                                       30,000

 September 30, 2004
 Stock Issued for Debt                                          89,016

 Net Loss                                                     (188,354)
                                            --------------------------
 Balance, September 30, 2004                          --     2,669,542
                                            ==========================
</TABLE>

<PAGE>

                                AEROTELESIS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                                 BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     SEPTEMBER 30    MARCH 31
                                                                         2004          2004
                                                                     -----------    -----------
                                     ASSETS
<S>                                                                  <C>            <C>
    Current Assets:
    Cash                                                             $     7,589    $    10,687
    Accounts Receivable                                                    8,535             --
    Inventory                                                              4,630             --
    Prepaid Expenses                                                         488          1,463
                                                                     -----------    -----------
               Total Current Assets                                       21,242         12,150

    Fixed Assets:
    Furniture & Equipment, net                                            72,307         37,239

    Other Assets:
    Deposit                                                               18,768         17,832
    License                                                            2,698,781      2,698,781
                                                                     -----------    -----------
               Total Other Assets                                      2,717,549      2,716,613
                                                                     -----------    -----------
               Total Assets                                          $ 2,811,098    $ 2,766,002
                                                                     ===========    ===========
                      LIABILITIES AND STOCKHOLDERS' EQUITY

    Current Liabilities
    Accounts Payable                                                 $   141,556    $    61,283
                                                                     -----------    -----------
               Total Current Liabilities                                 141,556         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                  6,216          6,065
           authorized; 83,183,129 and 81,288,688 shares issued and
           outstanding
    Additional paid-in capital                                         3,596,316      3,280,338
    Accumulated deficit during the development stage                    (932,990)      (581,684)
                                                                     -----------    -----------

               Total Stockholders' Equity                              2,669,542      2,704,719
                                                                     -----------    -----------

               Total Liabilities and Stockholders'  Equity           $ 2,811,098    $ 2,766,002
                                                                     ===========    ===========
</TABLE>

                See accompanying notes to Financial Statements.


                                       2
<PAGE>

                                AEROTELESIS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                       Three Months Ended                     Six Months Ended
                                                September 30       September 30       September 30        September 30
                                                ---------------------------------------------------------------------
                                                   2004               2003               2004               2003
                                                -------------------------------       -------------------------------
<S>                                             <C>                <C>                <C>                <C>
Revenues:
      Revenue                                   $    105,535       $     30,000       $    226,545       $     60,000
                                                -------------------------------       -------------------------------
          Total revenues                             105,535             30,000            226,545             60,000

Operating Expenses:
      Cost of Revenues                                 5,882                 --              5,882                 --
      Legal & Professional Fees                      144,481             41,245            273,381             66,621
      Rent                                            31,926             58,187
      Salaries                                        76,121            119,658
      Travel                                           7,064             50,806
      General and Administrative                      28,415              6,186             69,937              9,919
                                                -------------------------------       -------------------------------
                                                     293,889             47,431            577,851             76,540
                                                -------------------------------       -------------------------------
          Income (Loss) from operations             (188,354)           (17,431)          (351,306)           (16,540)
                                                -------------------------------       -------------------------------

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

          Net Income (Loss)                     $   (188,354)      $    (17,431)      $   (351,306)      $    (16,540)
                                                ===============================       ===============================

Loss per common share:

          From operations                       $      (0.00)      $      (0.00)      $      (0.00)      $      (0.00)
                                                -------------------------------       -------------------------------
Weighted average common shares outstanding        81,550,720          5,474,826         81,550,720          5,474,826
                                                ===============================       ===============================
</TABLE>

                See accompanying notes to Financial Statements.


                                       3
<PAGE>

                                AEROTELESIS, INC.
                        (A Development Stage Enterprise)
                            Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                  Six Months Ended
                                                            September 30      September 30
                                                             ----------------------------
                                                                2004               2003
                                                             ----------------------------
<S>                                                          <C>                <C>
Cash Flows from Operating Activities:
Net Income                                                   $(351,306)         $ (16,540)
        Stock Issued for Services                               40,000                 --
Adjustments to Reconcile net loss to net cash
     provided by (used in) operating activities:
        Changes in operating assets and liabilities:
           Depreciation                                         10,934                 --
           Accounts Receivable                                  (8,535)            16,000
           Inventory                                            (4,630)
           Accounts Payable                                     80,273              5,936
           Prepaid Expenses                                        975
           Deposit                                                (936)                --
                                                             ---------          ---------
Net Cash provided by (used in) Operating Activities          $(233,225)         $   5,396

Cash Flows from Investing Activities:
        Fixed Assets                                           (46,002)           (18,105)
                                                             ---------          ---------
Net Cash provided by (used in) Investing Activities          $ (46,002)         $ (18,105)

Cash Flows from Financing Activities:
        Common Stock                                           276,129                 --
                                                             ---------          ---------
Net Cash provided by (used in) Financing Activities          $ 276,129          $      --

Net Increase (Decrease) in cash and cash equivalents            (3,098)           (12,709)

Cash at beginning of period                                  $  10,687          $  12,989
                                                             =========          =========

Cash at end of period                                        $   7,589          $     280
                                                             =========          =========

Supplemental disclosure:
        Total interest paid                                  $      --          $      --
                                                             =========          =========
        Stock Issued for Services                            $  40,000          $      --
                                                             =========          =========
</TABLE>

                See accompanying notes to Financial Statements.


                                       4
<PAGE>

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

NOTE 1- BASIS OF PRESENTATION

GENERAL

The consolidated  unaudited  interim  financial  statements of the Company as of
September 30, 2004 and for the three and six months ended September 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 September  30, 2004 and March 31, 2004,  and the results of their  operations
for the three and six months ended  September 30, 2004 and 2003,  and their cash
flows for the three months ended September 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  83,183,129  common  shares  issued  and  outstanding  and no
preferred  shares issued and  outstanding  as of September 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

<PAGE>

                                AEROTELESIS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 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  September  30, 2004 and March 31,
            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 and six months ended
            September 30, 2004 and the three and six months ended  September 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.

<PAGE>

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

NOTE 2 - COMMON STOCK

The company has a total of  200,000,000  authorized  common shares and 2,000,000
preferred  shares  with a par value of  $.00008  per  share and with  83,183,129
common  shares  issued  and  outstanding  and no  preferred  shares  issued  and
outstanding as of September 30, 2004.

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 September 30, 2004, the Company agreed to issue 89,016 shares of common stock
to Nations Mobile Network Ltd.  ("Nations").  to convert the outstanding balance
of the advances for the quarter  ended  September 30, 2004 on the line of credit
along with accrued interest to equity.

During the quarter  ended  September  30, 2004 the Company  issued  8,168 common
shares for legal services that was valued at $40,000.

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 September 30, 2004, the Company issued 89,016 shares of common stock
for the outstanding principle and accrued interest for the quarter ended..

NOTE 4 - COMMITMENT AND CONTINGENCIES

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

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

                 [THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]

<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  ($188,354)  from  operations  for the
three month period ended  September 30, 2004 compared to a net loss of ($17,431)
for the three month period ended  September 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  September  30,  2004,  the Company had
revenue of  approximately  $105,535,  composed of consulting and equipment sales
income  compared  to  $30,000  in  revenues  for the three  month  period  ended
September  30,  2003.  The net loss per share for the three month  period  ended
September 30, 2004 was nil per share compared to a net loss per share of nil for
the three month period ended September 30, 2003.

      The Company had costs and expenses of approximately $294,000 for the three
month  period  ended  September  30,  2004  compared  to costs and  expenses  of
approximately  $47,000 for the three month period ended  September 30, 2003. The
Company's expenses consist of legal and professional fees,  including consulting
fees, of approximately  $144,481, rent of approximately $32,000, salary expenses
of approximately  $76,000,  travel expenses of approximately  $7,000,general and
administrative  expenses  of  approximately  $28,000,  and cost of  revenues  of
approximately $6,000.

      The Company  realized a net loss of ($351,306) from operations for the six
month period ended  September  30, 2004  compared to a net loss of ($16,540) for
the six month period ended  September 30, 2003.  For the six month periods ended
September  30, 2004 and 2003,  the Company had  revenues of $226,545 and $60,000
respectively,  composed of equipment sales and consulting  income.  The net loss
per share for the six month period ended  September 30, 2004 was nil compared to
a net loss of nil for the six month period ended September 30, 2003.

      The Company had costs and expenses of  approximately  $578,000 for the six
month  period  ended  September  30,  2004  compared  to costs and  expenses  of
approximately  $77,000 for the six month period ended  September  30, 2003.  The
Company's  expenses  consist  of legal and  professional  fees and  general  and
administrative  expenses. The increase in expenses is due to the increased costs
of operating as the  Company's  revenues  have  increased  along with  increased
professional  expenses due to the  Company's  resumption  of periodic  reporting
under the Securities Exchange Act of 1934.

      The Company's  assets at June 30, 2004 were $2,811,098  compared to assets
of  $2,766,002  at  March  31,  2004.  The  difference  is due to the  Company's
acquisition  of  inventory  and  equipment  during  the  quarter  as well as the
Company's  accounts  receivables  for the quarter.  At September  30, 2004,  the
Company's current assets were comprised of cash of approximately $8,000, $500 in
prepaid  expenses,  accounts  receivable  of $8,500,  and  $4,630 in  inventory,
compared  to cash of  approximately  $11,000  and $1,463 in prepaid  expenses at
March 31, 2004.  The Company's  fixed assets at September 30, 2004 are furniture
and equipment of approximately  $72000, the Company's Other Assets are a deposit
of $18,768 and a license of approximately $2,700,000 compared to fixed assets at
March 31, 2004 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.

<PAGE>

      The  Company's  liabilities  at  September  30,  2004  were  approximately
$142,000,  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 ($932,990) at September 30, 2004.

      Liquidity and Capital Resources

As  of  September  30,  2004,  the  Company  had  negative  working  capital  of
approximately  ($121,000)  consisting of approximately $21,000 in current assets
and $142,000 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.

<PAGE>

      In December  2002,  the FASB issued  Statements  of  Financial  Accounting
Standards  No. 148  "Accounting  for  Stock-Based  Compensation--Transition  and
Disclosure--an  amendment of FASB Statement No. 123." This Statement amends FASB
Statement  No.  123,  Accounting  for  Stock-Based   Compensation,   to  provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee  compensation.  In addition,  this
Statement  amends  the  disclosure  requirements  of  Statement  123 to  require
prominent  disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported  results.  The  adoption of SFAS 148 is not  expected to
have a material  effect on the  Company's  financial  position or results of its
operations.

ITEM 3. CONTROLS AND PROCEDURES

Based on the evaluation of the Company's  disclosure  controls and procedures by
Mr. Joseph Gutierrez,  president and chief accounting officer of the Company, as
of a date  within 90 days of the  filing  date of this  quarterly  report,  such
officer has concluded that the Company's  disclosure controls and procedures are
effective in ensuring that  information  required to be disclosed by the Company
in the reports that it files or submits under the Securities and Exchange Act of
1934, as amended, is recorded,  processed,  summarized and reported,  within the
time period  specified by the  Securities  and Exchange  Commission's  rules and
forms.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their  evaluation,  including any corrective  actions with regard to significant
deficiencies and material weaknesses.

                            PART II OTHER INFORMATION

Items 1, 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.

November 22, 2004                 AEROTELESIS, INC.


                                  By/s/ Joseph Gutierrez
                                  ----------------------
                                  Joseph Gutierrez, President, CFO