**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**





**FORM
      10-KSB**





**ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**





**For
      the year ended September 30, 2005**





**Commission
      File Number** **0-50051**





**ARIEL
      WAY, INC.**


(Name
      of Small Business Issuer in Its Charter)








**FLORIDA**
            **65-0983277**(State
                or Other Jurisdiction of
              Incorporation
                or Organization)
            (I.R.S.
                Employer
              Identification
                No.)**8000
                Towers Crescent Drive, Suite 1220, Vienna, VA**
            **22182**(Address
                of Principal Executive Offices)
            (Zip
                Code)





**(703)
      918-2430**


(Issuer’s
      Telephone Number, Including Area Code)





Securities
      registered under Section 12(b) of the Exchange Act:





None.





Securities
      registered under Section 12(g) of the Exchange Act:





Common
      Stock, $0.001 par value per share





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





Check
      if there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will be
      contained, to the best of registrant’s knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-KSB
      or any amendment to this Form 10-KSB.





Ariel
      Way’s revenue for its most recent fiscal year ending September 30, 2005 was
      $1,052,616.





As
      of January 12, 2006, the aggregate market value of the shares of common stock
      held by non-affiliates (based on the closing price of $0.07 ** for
      the common stock as quoted on that date) was approximately $ 978,338 .





As
      of January 12, 2006, the Company had 38,286,943 **** shares
      of its common stock, $0.001 par value per share, outstanding.





**TABLE
      OF CONTENTS**





**ITEM
                NUMBER AND CAPTION**
            **PAGE****PART
                I**Item
                1.
            Description
                of Business
            1Item
                2.
            Description
                of Property
            9Item
                3.
            Legal
                Proceedings
            10Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            11**PART
                II**Item
                5.
            Market
                for Common Equity, Related Stockholder Matters and Small Business
                Issuer
                Purchases of Equity Securities
            12Item
                6.
            Management’s
                Discussion and Analysis or Plan of Operation
            15Item
                7.
            Financial
                Statements
            31Item
                8.
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure
            32Item
                8A.
            Controls
                and Procedures
            32Item
                8B.
            Other
                Information
            32**PART
                III**Item
                9.
            Directors
                and Executive Officers of the Registrant
            33Item
                10.
            Executive
                Compensation
            37Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            40Item
                12.
            Certain
                Relationships and Related Transactions
            42Item
                13.
            Exhibits
            43Item
                14.
            Principal
                Accountant Fees and Services
            48








**PART
      I**





**SPECIAL
      NOTE REGARDING FORWARD LOOKING STATEMENTS**





This
      Annual Report on Form 10-KSB contains forward-looking statements that involve
      risks and uncertainties. The statements contained in this document that are
      not
      purely historical are forward-looking statements within the meaning of Section
      27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
      Act
      of 1934, or the Exchange Act, including without limitation statements regarding
      our expectations, beliefs, intentions or strategies regarding our business.
      This
      Annual Report on Form 10-KSB includes forward-looking statements about our
      business including, but not limited to, the level of our expenditures and
      savings for various expense items and our liquidity in future periods. We may
      identify these statements by the use of words such as “anticipate,” 
“believe,”  “continue,”  “could,”  “estimate,” 
“expect,”  “intend,”  “may,”  “might,”  “plan,” 
“potential,”  “predict,”  “project,”  “should,” 
“will,”  “would” and other similar expressions. All forward-looking
      statements included in this document are based on information available to
      us on
      the date hereof, and we assume no obligation to update any such forward-looking
      statements, except as may otherwise be required by law. Our actual results
      could
      differ materially from those anticipated in these forward-looking
      statements.





**Item
      1. Description of Business.**





**Overview
      of The Company**





We
      are a
      technology and services company for highly secure global communications
      solutions and technologies. We are focused on developing innovative and secure
      technologies, acquiring and growing profitable advanced technology companies
      and
      global communications service providers and creating strategic alliances with
      companies in complementary product lines and service industries. Our
      communications solutions are provided by our majority-owned subsidiary
      dbsXmedia, Inc., a Delaware corporation (“dbsXmedia”), and our technology
      development effort for highly secure telecommunications services is conducted
      through our wholly-owned subsidiary Enfotec, Inc., a Delaware corporation
      (“Enfotec”). We were initially named Netfran Development Corp., and we provided
      franchise Internet web site design and consulting services until, on February
      2,
      2005, when we acquired Ariel Way, Inc. (“Old Ariel Way”) in a share exchange
      transaction. Old Ariel Way was engaged in the development of highly secure
      global communications technologies. After the acquisition of Old Ariel Way,
      we
      ceased to conduct the franchise business we had previously conducted in order
      to
      concentrate solely on the development of the highly secure global communications
      technology business.





As
      of September 30, 2005, we marketed and sold our integrated multimedia services to
      clients who are leading retail and finance-oriented services companies and
      leading technology and manufacturing companies throughout the United States
      and
      Europe. We are focused on growing our current customer bases, developing and deploying solutions
      for Business Television (BTV), digital signage and interactive media delivered
      over a combination of satellite, terrestrial and wireless local
      networks.




We
      were incorporated under the laws of Florida in January, 2000. Our principal
      executive offices are located at 8000 Towers Crescent Drive, Suite 1220, Vienna,
      VA 22182 and our telephone number at that address is (703) 918-2430. We maintain
      a corporate web site at *www.arielway.com* .
      We make available free of charge through our web site our annual report on
      Form
      10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-K, and
      all
      amendments to those reports, as soon as reasonably practicable after we
      electronically file or furnish such material with or to the SEC. The contents
      of
      our web site are not a part of this report. The SEC also maintains a web site
      at *www.sec.gov* that
      contains reports, proxy statements and other information regarding various
      companies including Ariel Way, Inc.





1





**Recent
      Developments**





On
      October 13, 2005, we announced the appointment of Victor Halpert to our board
      of
      directors. Mr.
      Halpert is the Managing Member of Halpert Capital, LLC and has a number of
      year’s experience in finance, investments, and equity research from firms to
      include Salomon Smith Barney, Robertson Stephens and Israel Equity Research
      & Management in Chicago. Mr.
      Halpert is on the board of directors of Top Image Systems (NASDAQ-TISA), Unity
      Wireless (NASDAQ-UTYW) and Israel Technology Acquisition
      (NASDAQ-ISLT).  Mr.
      Halpert has a bachelor’s of science degree in Accounting from State University
      of New York, College at New Paltz, NY, a Master of Science in Accounting from
      the University of Illinois at Chicago, Graduate Business School and an MBA
      from
      the University of Chicago Graduate Business School.




On
      October 20, 2005, we announced the appointment of William Stapleton to our
      advisory board. Mr. Stapleton is the president and managing director of the
      Stapleton Group, Inc., a management consulting firm with emphasis on the
      start-up and restructuring of high-performance telecommunications companies.
      He
      has performed executive management duties for 11 mid-sized companies since
      1995
      and assisted Goldman Sachs, Citicorp, MCI WorldCom, Siemens and others with
      capital restructuring, asset recovery services and interim management
      assignments. He was a director at AT&T, responsible for leading and
      executing marketing and sales efforts to assist various AT&T business
      segments to achieve growth and profitability. Stapleton has served on the board
      of directors of SCii Telecom, SA, Lasergate Systems, Inc., and GVN Technologies.
      He holds a degree in business from Syracuse University and completed academic
      fellowships at MIT, Cambridge Institute of Technology, the University of
      Pennsylvania, Wharton School of Business Management and the Menniger Institute
      for Personal Behavior Studies.




On
      October 26, 2005 we announced that our subsidiary dbsXmedia had opened a new
      European headquarters in Plymouth, UK. The move finalizes dbsXmedia's
      integration of the business and systems acquired from Loral Space and
      Communications to support dbsXmedia’s European business television
      division.




On
      January 12, 2006 we announced that our subsidiary, dbsXmedia has signed a new
      multi-year contract with Avnet, Inc. to provide business television network
      infrastructure and technology to allow migration to IP services over
      time.





**Financial
      Condition**





The
      table below provides a summary of some of our key financial metrics. This
      information should be read in conjunction with, and is qualified by reference
      to, our consolidated financial statements and notes thereto in Item 7 of this
      report and “Management’s Discussion and Analysis or Plan of Operations” in Item
      6 of this report.





**Year
                Ended September 30,****2005**
            **2004****Operating
                Results:****Operating Revenue**
            $1,052,616
            $41,000**Cost of Goods Sold**
            $328,497
            $0**Gross Profit**
            $724,119
            $41,000**Operating Expenses**
            $2,851,635
            $144,273**Net Income (Loss)**
            $(2,389,342)
            $(103,273)








**Year
                Ended September 30,****2005****Balance
                Sheet Data:****Current Assets**
            $496,064**Current Liabilities**
            $2,890,380**Accumulated Deficit**
            $(2,492,615)**Shareholder’s Equity (Deficit)**
            $(1,841,181)





2


Over
      the
      past year we have experienced significant growth in revenues and related
      expenses. Our increase in revenues is due primarily to our acquisition of
      dbsXmedia. We are taking a number of measures designed to improve our financial
      condition such as looking into other potential acquisitions, cost reductions,
      expansion of the dbsXmedia multimedia services and the integration of various
      new acquisitions. However, if revenue and cash provided by operations do not
      outpace our expenses, if economic conditions weaken or if competitive pressures
      increase, our ability to meet our debt obligations and our financial condition
      could be materially and adversely affected, thereby potentially adversely
      affecting our credit ratings, our ability to access the capital markets and
      our
      compliance with debt covenants.




**The
      Company**




We
      are a
      technology and services company for highly secure global communications
      solutions and technologies. We are focused on developing innovative and secure
      technologies, acquiring and growing profitable advanced technology companies
      and
      global communications service providers and creating strategic alliances with
      companies in complementary product lines and service industries. Our
      communications solutions are provided by our majority-owned subsidiary
      dbsXmedia, Inc., a Delaware corporation (“dbsXmedia”), and our technology
      development effort for highly secure telecommunications services is conducted
      through our wholly-owned subsidiary Enfotec, Inc., a Delaware corporation
      (“Enfotec”). We were initially named Netfran Development Corp., and we provided
      franchise Internet web site design and consulting services until, on February
      2,
      2005 when we acquired Ariel Way, Inc. (“Old Ariel Way”) in a share exchange
      transaction. Old Ariel Way was engaged in the development of highly secure
      global communications technologies. After the acquisition of Old Ariel Way,
      we
      ceased to conduct the franchise business we had previously conducted in order
      to
      concentrate solely on the development of the highly secure global communications
      technology business.




dbsXmedia
      provides communication infrastructure and integrated multimedia services to
      corporations throughout the United States and Europe. dbsXmedia's executive
      management has over 25 years of experience in the video and transmission
      industry. dbsXmedia operates from offices in Frederick, Maryland and Plymouth,
      United Kingdom, providing solutions for Business Television (BTV), digital
      signage and interactive media delivered over a combination of satellite,
      terrestrial and wireless local networks. Digital signage includes technologies
      using LCD TV and plasma screens to deliver video based messaging directly to
      consumer audiences. Digital signage is an effective direct advertising method
      providing focused marketing for targeted audiences. Integrated multimedia
      services include music radio, video, and IP (Internet Protocol)-based file
      transfer for training/catalogs/point of sale integrated with other information
      to the clients.





dbsXmedia
      provides services to clients who are leading retail and finance-oriented
      services companies and leading technology and manufacturing companies. We
      estimate that consolidation in the BTV industry in 2006 will provide dbsXmedia
      with good opportunities for growth and partnering as result of diminished
      competition in the marketplace. dbsXmedia intends to launch its next generation
      of services in the first quarter of 2006. The new services are designed to
      give
      existing and new customers the ability to change from current broadcast
      technology called MPEG-2 to upgraded multimedia service technologies based
      on
      the IP technology. We believe that our ability to deliver these services over
      satellite, terrestrial DSL broadband and the emerging wireless standard called
      WiMAX will enable dbsXmedia to compete successfully in the retail digital
      signage market and the BTV industry. **** Interactive
      media provides retail satellite services, that are currently "dumb", meaning
      they do not allow the user/viewer to make real-time choices, to select content
      other than the "standard issue version". We believe this will permit
      personalized experience and better training because the addition of
      interactivity will allow users to control the content and therefore adapt it
      to
      their need or environment. dbsXmedia aims to achieve this over all our delivery
      mechanisms - satellite, terrestrial and local wireless.




Enfotec
      is a development stage company that designs, manufactures and markets high-speed
      security appliance solutions with a fully-integrated Linux operating system,
      which is an open-based operating system that integrates high-performance Virtual
      Private Network, “VPN”, firewall, intrusion detection, anti-virus and management
      in a single network appliance. Enfotec’s “EN” Security Appliance and “CSA”
Custom Security Appliance products feature hardware-based technology that
      delivers true wire-line data speed performance and high level of security.
      The
      Enfotec EN series of products is scalable while being easy to configure and
      manage. The EN series of products also enable third party software applications
      to be integrated, thus providing a flexible approach to data and
      telecommunications security. We believe that Enfotec’s products differentiate
      from other security appliances that require proprietary, expensive customized
      semiconductor chips, operating systems and computer data systems. Enfotec
      designs firmware and software technologies, for which we have filed patent
      disclosure documents with the US Patent Office, utilizes standard off-the-shelf
      components combined with the Linux operating system. We believe this provides
      customers with high performance in a non-proprietary, cost effective,
      hardware-based security appliance.




3


The
      Enfotec EN Series is intended to have product models that range from the EN5
      to
      the EN500, where the product numbers delineate performance benchmarks as the
      VPN
      traffic throughput data speed in megabits per second. These models support
      data
      speeds up to a gigabit per second of firewall performance while simultaneously
      supporting 500 megabits per second of true 3DES-CBC VPN encryption, a
      description which is the industry standard encryption method used for data
      traffic over the Internet. These performance benchmarks are achieved with
      standard personal computer “PC” based hardware by utilizing Enfotec’s
      technologies, for which we have filed disclosure
      documents with the US Patent Office for protection of these
      technologies for highly secure telecommunication: Chain Packet Processing,
“CPP”
and Packet Signature Recognition, “PSR”. Enfotec’s CPP  technology
      enables utilization of up to 97% of the capacity of the standard PC Internal
      data bus “PCI”, as in an ordinary desktop PC, versus the 40% of the capacity of
      the standard PCI that is generally seen in the industry. Enfotec’s PSR
      technology is a firmware algorithm that can check packet signature patterns
      at
      data speeds up to a gigabit per second. These differentiating technologies
      utilize other Enfotec firmware based intellectual property that can actually
      be
      upgraded in the same product model chassis. We believe that proprietary security
      appliances from other product providers do not provide this type of
      protection.




**Competition**




We
      believe that we can be competitive based on several factor including price,
      engineering support to the customers and in maintenance support of the purchased
      or installed equipment.




For
      dbsXmedia, we believe our primary competitors include: GlobeCast, an operational
      division within France Telecom that has been proactive and successful with
      satellite services for BTV over the past two years, Convergent which we believe
      is the largest competitor in terms of revenue and specializes in interactive
      training to high tech industries and federal and local governments, and
      EchoStar, which is pursuing BTV largely due to the available satellite
      transmission capacity on its own satellites. Other significant competitors
      of
      which we are aware include Broadcast International and Inmedia, and British
      Telecom.





We
      believe that dbsXmedia can be competitive based on factors including price,
      service offering, installation service, maintenance support and engineering
      support.




For
      Enfotec, we believe our primary competitors to be various data security
      companies. As telecommunication networks become increasingly sophisticated
      and
      mission critical, we believe, the advent of true high-speed security
      alternatives becomes crucial for cost effective capacity scalable implementation
      strategies. The existing VPN/firewall companies that we believe dominate the
      technology and products are Cisco at the high-end capacity, Nortel and Nokia,
      both using the Checkpoint Firewall and Juniper Networks/Netscreen security
      solutions at the mid-range capacity, and Sonicwall, Enterasys, Alcatel and
      Watchguard at the low end capacity. For intrusion detection and prevention,
      companies such as Tipping Point, Network Associates and ISS offer specialized
      products for these solutions. Each company indicated has used various
      proprietary hardware and software technologies to penetrate these VPN markets.
      The primary product solution for this penetration is VPN and/or firewall. We
      believe that one compelling weakness for all these companies is the lack of
      performance achieved by any of these technologies.




**Sales
      And Marketing**




Our
      intent for dbsXmedia is to consolidate the existing client base that was
      acquired from Loral and to develop certain targeted requests for proposals
      during the initial period of operation after the acquisition from Loral. We
      intend to focus our marketing to these select opportunities and the media for
      profile building. Subsequently to this period, we intend to emphasize marketing
      of our retail products, again using targeted marketing. We envisage this stage
      requiring trade shows, demonstration periods and a quality blend of salesmanship
      with effective documentation.




Our
      sales
      and marketing strategy for our Enfotec technology is intended to be a mix of
      trade show event participation, a strong channel presence, and a high-visibility
      public relations campaign. Geographically, we believe that North America is
      the
      most important market with an estimated 50% of the world revenues, according
      to
      the research firm Infonetics, but the expanding European and Pacific Rim markets
      are also included in our initial strategy. Our Enfotec product line is intended
      to cut across different markets and customer types.




4


**Intellectual
      Property**




We
      have
      filed disclosure documents with the US Patent Office on two technologies, Chain
      Packet Processing and Pattern Signature Recognition. These technologies are
      at
      the core of our Enfotec products. These are the enabling technologies that,
      we
      believe, allow us to perform at speeds better than proprietary platforms offered
      by our competitors while having an open system architecture at our
      core.




Enfotec
      filed Disclosure Documents with the US Patent Office for protection
      of:




-
            Chained
                Packet Processing, “CPP”, with Patent Office Disclosure Document No.
                528391; and




-
            Packet
                Signature Recognition, “PSR” technologies, with Patent Office Disclosure
                Document No. 528389




We
      intend
      to actively pursue through research and development additional advanced
      intellectual properties in the area of global highly secure telecommunications
      and associated technologies and we intend to apply for protection of all
      intellectual properties with the US Patent Office.




**Governmental
      Approvals**




Our
      subsidiary dbsXmedia provides services using third party facilities such as
      Loral Skynet, who in turn has all necessary permits. Thus we believe that there
      is no need for any specific government approval for any of dbsXmedia’s
      services.




We
      do not
      believe that there is a need for any specific government approval for any of
      Enfotec’s products and for their highly secure technologies since these do not
      include any radio transmitters and do not radiate any radio frequency
      signals.




Enfotec
      has applied for and been approved for exportation licensing regarding its entire
      product line.




**Employees**




As
      of
      January 12, 2006, we employed 13 full-time or part-time employees and 5
      consultants. We have no collective bargaining agreements with our employees. We
      anticipate that we will need additional people to fill administrative, sales
      and
      technical positions if we continue to be successful in raising capital to
      implement our strategic business plan.




**Corporate
      History**




Ariel
      Way, Inc. is a technology company and currently trades on the Bulletin Board
      under the stock symbol “AWYI”. The following is a history of Ariel
      Way.




5


We
      were initially named Netfran Development Corp., and we were incorporated in
      the
      State of Florida in January 2000 to market the Netspace Franchise System
      provided by Netvertise, Inc., a Florida company, as a franchisor of Internet
      web
      site design, hosting, updating, maintenance, administration, e-mail publishing
      and consulting services, marketing and advertising services and related services
      under the registered servicemark "NETSPACE". Our strategy was to support
      franchisees to assist small and medium size businesses to implement an effective
      Internet World Wide Web strategy. We had a total of 56 franchises in the United
      States and United Kingdom as of March 10, 2003. Our management also managed
      Netvertise, Inc. Between 2000 and end year 2004, substantially all of our
      revenues were derived from franchise operations, which included franchise fees,
      revenue sharing with franchisees, royalties based on gross retail revenues
      to
      the franchisees' customers, and advertising fees based on revenues generated
      by
      its franchisees. We anticipated that the revenues from ongoing royalties would
      rise as the franchisees established and built their businesses. We believed
      that
      sales of franchises would continue to generate the bulk of our revenues for
      several years, in view of the large part of the country where we had not sold
      franchises. Thereafter, when sales of franchises slow or decline, we would
      become more dependent on ongoing royalties from our franchisees. We supported
      the franchisees by advertising and training, but, ultimately, the level of
      revenues achieved from ongoing royalties from our franchisees were not adequate
      to sustain long-term operations.




In
      2001, we filed with the SEC a registration statement relating to the
      distribution of 3,340,088 shares of our common stock to holders of record of
      Netvertise, Inc. common stock as of the close of business on July 18, 2001
      (the
      "record date"). The registration statement was declared effective on October
      31,
      2002. The shares were distributed on the basis of one of our shares for every
      share of Netvertise, Inc. held on the record date. The shares of Netvertise
      being distributed represented 99% of our total outstanding shares and Netvertise
      owned none of our shares of common stock after the distribution. Our common
      stock began trading on the Over-The-Counter market on February 10, 2003, and
      was
      quoted on the NASD Electronic Bulletin Board and initiated trading under the
      symbol “NFDV”.




On
      February 2, 2005 we acquired
      Old Ariel Way, Inc., a Delaware corporation, in exchange for the issuance by
      us
      of 33,289,434 shares of our common stock to the former stockholders of Old
      Ariel
      Way. The acquisition was made pursuant
      to the Share Exchange Agreement dated January 20, 2005, between Netfran, Old
      Ariel Way and the shareholders of Old Ariel Way common stock. Under
      the terms of the Share Exchange Agreement, each share of Old Ariel Way common
      stock outstanding immediately prior to the Effective Date was converted into
      1.6762 shares of our common stock. Netfran’s outstanding common stock was not
      affected by the transaction. In addition to the common stock issued to the
      stockholders of Old Ariel Way, under the Share Exchange Agreement each
      outstanding option or warrant to purchase Old Ariel Way common stock was
      converted into an option to purchase the number of shares of our common stock
      equal to the number of Old Ariel Way common stock underlying the option or
      warrant immediately prior to the Effective Date multiplied by 1.6762 and the
      exercise price of each option or warrant issued by us equaled the exercise
      price
      of the corresponding Old Ariel Way option or warrant in effect immediately
      prior
      to the Effective Date divided by 1.6762.






In
      connection with the share exchange transaction on February 2, 2005, Old Ariel
      Way and Elliot Krasnow, who was our Chief Executive Officer until the Effective
      Time, entered into a Stock Purchase and Sale Agreement pursuant to which Mr.
      Krasnow sold 300,000 shares of our common stock to Old Ariel Way for $300,000.
      Old Ariel Way intends to retire the shares it acquired from Mr. Krasnow. In
      order to finance the $300,000 payment to Mr. Krasnow and to fund the expenses
      related to the acquisition, Old Ariel Way borrowed $400,000 from Cornell Capital
      Partners, L.P. (“Cornell Capital”), one of the stockholders of Old Ariel Way
      (and now a stockholder of ours). The loan bears interest at the rate of 12%
      per
      annum and was due and payable on May 31, 2005. We are now in default unless
      we
      can renegotiate the terms of the loan for an extension with Cornell Capital.
      Cornell Capital is not a controlling stockholder of us, and we believe the
      terms
      of the loan are at least as favorable to us as could be obtained from an
      unrelated third party. In order to induce Cornell Capital to make the loan
      to
      Old Ariel Way, Arne Dunhem, the Chairman and Chief Executive Officer of Old
      Ariel Way before the Effective Time and our Chief Executive Officer after the
      Effective Time, provided a personal guarantee of payment to Cornell Capital.
      We
      expect to compensate Mr. Dunhem for undertaking the personal guarantee and
      pledge on our behalf, but the terms of any such compensation have not yet been
      agreed to. Our Compensation Committee of the Board of Directors will determine
      the amount and nature of compensation to Mr. Dunhem, but we do not expect that
      any compensation to him will be paid in cash.




On
      February 2, 2005, following the Effective Date of the share exchange transaction
      and our acquisition of Old Ariel Way, we ceased to conduct the Internet
      franchise business we had conducted prior to the Effective Date in order to
      concentrate solely development of its highly secure global communications
      business.




On
      February 2, 2005, in connection with the acquisition and pursuant to the Share
      Exchange Agreement dated January 20, 2005, all of our executive officers
      resigned and the executive officers of Old Ariel Way immediately prior to the
      Effective Date became our new executive officers.




On
      February 25, 2005 we filed with the Securities and Exchange Commission a
      Preliminary Information Statement and thereafter we filed a Definitive
      Information Statement on April 28, 2005 to inform the holders of record of
      shares of our common stock as of the close of business on February 23, 2005
      (the
“Record Date”), that our Board of Directors had recommended, and that the
      holders of a majority of our common stock as of such record date have approved,
      by written consent in lieu of a special meeting of stockholders dated February
      23, 2005, the following corporate actions:




6




1.
            Amending
                our Articles of Incorporation to change our name from “Netfran Development
                Corp.” to “Ariel Way, Inc.”; and2.
            Amending
                our Articles of Incorporation to increase the total number of authorized
                shares of our capital stock from 50,000,000 shares, consisting solely
                of
                our common stock, to a total of 250,000,000 shares of our capital
                stock,
                consisting of 245,000,000 shares of our common stock and 5,000,000
                shares
                of our preferred stock, with all of the preferred stock to be “blank
                check” preferred stock. Our capital stock is described more fully below
                at
                “Description of Capital Stock”.





On
      February 19, 2005 we completed the acquisition of dbsXmedia, Inc., a Delaware corporation with
      offices in Maryland and United Kingdom. dbsXmedia, Inc. provides satellite-based
      services for Business Television (BTV), digital signage, training and
      multimedia. We purchased from dbsXmedia 1,500 shares of its common stock, par
      value $0.001 per share. After this transaction dbsXmedia had 2,500 shares of
      common stock issued and outstanding out of which we own 60%
      and Zygot, LLC, which is owned by the management of dbsXmedia, became the
      minority 40% shareholder. dbsXmedia continues to operate under its existing
      name. As part of the purchase consideration (and related to the dbsXmedia
      acquisition described in the next paragraph), we delivered a commitment to
      the
      benefit of dbsXmedia in the form of a Conditional Guaranty, in favor of Loral
      Skynet Network Services, Inc., CyberStar, L.P., CyberStar, LLC, and Loral
      Skynet, a division of Loral SpaceCom Corporation, having a total value of
      $3,000,000. We agreed that dbsXmedia will provide employment contracts and
      full
      benefits for two members of the dbsXmedia management team for three years.
      dbsXmedia operates as a subsidiary of our’s but with autonomous offices and
      management control.





On
      April
      21, 2005, concurrently with our acquisition of dbsXmedia, dbsXmedia completed
      a
      transaction pursuant to an asset Purchase Agreement with Loral Skynet Network
      Services, Inc., CyberStar L.P., and CyberStar, LLC, pursuant to which dbsXmedia
      purchased Loral Skynet’s Business Television product line and assumed the
      management and further development of Loral Skynet’s traditional business
      television services (BTV). Under the terms of the transaction, dbsXmedia
      acquired Loral Skynet’s BTV client base in exchange for $400,000 in cash,
      300,000 shares of our common stock, and dbsXmedia’s assumption of ongoing
      contracts for infrastructure support from Loral Skynet. The ownership transition
      will leave unchanged the services for current customers, under an agreement
      that
      maintains the existing teleport and satellite infrastructure provided by Loral
      Skynet. dbsXmedia agreed that some of the employees of Loral Skynet's BTV group
      will transfer to dbsXmedia's new offices in Frederick, Maryland and Plymouth,
      United Kingdom. This team will take over the daily operations of customers’
corporate communications networks, ensuring seamless, high quality
      service . dbsXmedia
      made and will make cash purchase price payment to Loral Skynet in three
      installments as follows: (i) $250,000
      at the closing of the transaction, (ii) $75,000
      on the first anniversary of the closing of the transaction; and (iii) $75,000
      on the second anniversary of the Closing of the transaction. T he
      $250,000 cash at closing was allocated from prepaid revenue transfered to
      dbsXmedia from Loral Skynet as part of the business acquired. As
      part
      of the transaction, we delivered
      a commitment to the benefit of dbsXmedia in the form of a Conditional Guaranty
      in favor of Loral Skynet Network Services, Inc., CyberStar, L.P., CyberStar,
      LLC, and Loral Skynet, a division of Loral SpaceCom Corporation, having a total
      value of $3,000,000.





On
      May
      26, 2005 we changed our name from Netfran Development Corp. to Ariel Way, Inc.
      and we changed our trading symbol from “NFDV” to the new symbol
“AWYI”.




**History
      of Old Ariel Way**




Old
      Ariel
      Way was formed in the State of Delaware as a Limited Liability Corporation
      on
      February 10, 2004 and focused on providing executive management and merger
      and
      acquisition services within the area of highly secure global communications
      services for government customers and global telecommunications operators and
      corporate enterprises. On September 23, 2004, Old Ariel Way converted from
      a
      limited liability company to a Delaware C-corporation and changed its name
      to
“Ariel Way, Inc.”




On
      September 27, 2004, Old Ariel Way closed a transaction with the publicly traded
      Delaware corporation Market Central, Inc. “OTCBB:MKTE”, and issued to Market
      Central 2,000,000 shares of Old Ariel Way common stock pursuant to the terms
      of
      a Stock Purchase Agreement dated September 24, 2004. The purchase consideration
      had an aggregate value of $250,000, consisting of the rights to certain software
      technology with a value of $200,000 and development/support services
      consideration rendered by Market Central’s senior executives with a value of
      $50,000.




7


On
      September 30, 2004, Old Ariel Way entered into an Agreement and Plan of Merger
      with Enfotec, Inc., a private Delaware company, pursuant to which a newly
      formed, wholly-owned subsidiary of Old Ariel Way merged into Enfotec. The merger
      was consummated on September 30, 2004. As a result of the merger, Enfotec became
      a wholly-owned subsidiary of Old Ariel Way. On September 30, 2004, Old Ariel
      Way
      issued 1,000,000 shares of its common stock to the holders of Enfotec’s common
      stock, with an additional 1,000,000 shares of Old Ariel Way’s common stock held
      in reserve for issuance to the Enfotec stockholders if Enfotec met certain
      revenue milestones as of July 15, 2005. On September 30, 2004 Old Ariel Way
      also
      issued to certain creditors of Enfotec, Inc. 200,000 shares of Old Ariel Way’s
      common stock pursuant to the terms of a settlement of certain liabilities of
      Enfotec.




On
      April 19, 2005 Old Ariel Way designated 2,000,000 shares of Old Ariel Way
      preferred stock as “Series A Redeemable Preferred Stock”. Each issued and
      outstanding share of Old Ariel Way Series A Redeemable Preferred Stock accrues
      a
      dividend from the original issue date equal to twelve percent (12%) of the
      original purchase price (which was $1.00 per share, as adjusted upon any stock
      split, reverse stock split, combination or recapitalization affecting the shares
      of Series A Redeemable Preferred Stock) per annum, which shall be payable when,
      as and if declared by the Old Ariel Way Board of Directors. Old Ariel Way shall
      not pay or declare any dividends on the Common Stock of Old Ariel Way unless
      the
      full accrued and unpaid dividends on the Series A Redeemable Preferred Stock
      described in this paragraph have been paid.





On
      April 21, 2005, Old Ariel Way sold and issued to Cornell Capital Partners,
      LP,
      all of the Series A Redeemable Preferred Stock of Old Ariel Way, for a purchase
      price of $1.00 per share and an aggregate purchase price of $2,000,000. The
      equity provided by the sale of the Series A Preferred Stock enabled us to
      satisfy a closing condition of a transaction to acquire the Loral Skynet
      Business TV client base. These
      shares were redeemed by Old
      Ariel
      Way on
      August
      10, 2005 for a redemption price of $2,074,301 including dividend and the
      preferred stock was returned to Old Ariel Way’s treasury. We believe the
      issuance of the stock to be exempt from registration under Section 4(2) of
      the Securities Act.





8




**Item
      2. Description of Property**




Our
      principal headquarters executive offices are located in approximately 900 square
      feet of office space at 8000 Towers Crescent Drive, Suite 1220, Vienna, VA
      22182. The
      term
      of the lease is on a month-to-month basis at a rent of $2,100 per month
      including utilities .
      Our
      subsidiary dbsXmedia occupies approximately 2,800 square feet of office space
      at
      411 Aviation Way, Frederick, Maryland. The term of the lease is five years
      at a
      rent of $5,350 per month including utilities that expires in April 2010
      dbsXmedia also occupies approximately 2,950 square feet of office space at
      Plymouth, United Kingdom. The term of the lease is fifteen years at a rent
      of UK
      Pounds 4,490 per month including taxes that expires in 2015. Our subsidiary
      Enfotec, Inc. occupies a small office in Irvine, California on a month-by-month
      basis, currently at a nominal deferred charge.





9





**Item
      3. Legal Proceedings**





As
      of January 12, 2006, to our best knowledge, there are no material legal pending
      or threatened proceedings.








10


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





Not
      applicable.








11


**PART
      II**





**Item
      5. Market for Common Equity, Related Stockholder Matters and Small Business
      Issuer Purchases of Equity Securities.**





Our
      common stock is quoted on the Over-the-Counter Bulletin Board under the symbol
      “AWYI”.





The
      following table sets forth the average high and low bid prices for the common
      stock for each calendar quarter since October 1, 2003, as reported by the
      National Quotation Bureau, and represents interdealer quotations, without retail
      markup, markdown or commission and may not be reflective of actual
      transactions.





**Bid
                Price Per Share****High**
            
            **Low****2003**October
                2003 - December 2003
            
            $
            1.25
            
            $
            1.05**2004**January
                2004 - March 2004
            
            $
            1.25
            
            $
            0.90April
                2004 - June 2004
            
            $
            0.90
            
            $
            0.06July
                2004 - September 2004
            
            $
            1.04
            
            $
            0.11October
                2004 - December 2004
            
            $
            0.75
            
            $
            0.10**2005**January
                2005 - March 2005
            
            $
            0.37
            
            $
            0.25April
                2005 - June 2005
            
            $
            0.35
            
            $
            0.05July
                2005 - September 2005
            
            $
            0.05
            
            $
            0.02





**Stockholders**





As
      of January 12, 2005, we believe there were approximately 308 holders of record
      of our common stock. We believe that a substantially greater number of holders
      of our common stock are “street name” or beneficial holders, whose shares are
      held of record by banks, brokers and other financial institutions.





**Dividends**





We
      have never declared or paid cash dividends on our common stock. We currently
      intend to retain all available funds and any future earnings to fund the
      development and growth of our business and do not anticipate declaring or paying
      any cash dividends on our common stock in the foreseeable future.





**Equity
      Compensation Plan Information**





On
      February 11, 2003, the Board of Directors approved the Netfran Development
      Corp.
      2003 Stock Incentive Plan under which employees, officers, non-employee
      directors and consultants are eligible to receive grants of stock options,
      thereby creating a means to raise the level of stock ownership by such
      individuals in order to attract, retain, and reward such individuals. We have
      reserved a total of 600,000 shares of common stock under the 2003 Stock
      Incentive Plan. The Board of Directors administers the 2003 Stock Incentive
      Plan. Subject to the provisions of the 2003 Stock Incentive Plan, the Board
      of
      Directors has full and final authority to select the individuals to whom options
      will be granted, to grant the options and to determine the terms and conditions
      and the number of shares issued pursuant thereto. However, no option shall
      be
      exercisable more than ten years after the date of grant. Options shall be
      exercisable at such time and subject to such terms and conditions as shall
      be
      determined by the Committee at grant.




We
      did
      not grant any options during the year ended September 30, 2005. Options that
      had
      been granted by us prior to February 2, 2005 and had not been exercized as
      of
      that date were cancelled pursuant to the Share Exchange Agreement dated January
      20, 2005, between Netfran, Old Ariel Way and the shareholders of Old Ariel
      Way
      common stock.





12




The
      following table sets forth certain information, as of September 30, 2005,
      concerning securities authorized for issuance under the 2003 Stock Incentive
      Plan:





**Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights**
            **Weighted-average
                exercise price of outstanding options, warrants and rights**
            **Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column (a))****(a)**
            **(b)**
            **(c)**Equity
                compensation plans approved by security holders (1)
            0
            N/A
            275,000Equity
                compensation plans not approved by security holders (2)
            9,860,097
            $0.020
            N/ATotal
            9,860,097
            $0.020
            N/A





(1)
            Includes
                600,000 shares available for issuance under our 2003 Stock Incentive
                Plan,
                or Plan, all of which may be issued as stock options, restricted
                stock or
                stock bonuses.(2)
            Includes
                options to purchase 310,097 shares and warrants to purchase 9,550,000
                shares outstanding as of September 30, 2005 that were issued by Ariel
                Way
                under non-plan options and warrants.








13


**Ariel
      Way Non-Plan Option and Warrant Grants**





We
      currently have no option grant outstanding which was granted under our 2003
      Stock Incentive Plan. The remaining options and warrants outstanding were
      granted to individuals outside of any equity compensation plan adopted by us
      (“Non-Plan Grants”). As of September 30, 2005, of these Non-Plan Grants,
      warrants to purchase 2,750,000 shares were held by members of our board of
      directors and warrants to purchase 3,450,000 ****** shares
      were held by executive officers of Ariel Way. Warrants to purchase 4,500,000
      shares were held by other individuals. Such Non-Plan Grants were made pursuant
      to the terms of option or warrant agreements, as applicable, with each such
      grant authorized by the board of directors of Ariel Way. The Non-Plan Grants
      have not been approved by our stockholders.





**Recent
      Sales of Unregistered Securities**





The
      following provides information concerning all sales of our securities within
      the
      last three years that were not registered under the Securities Act of
      1933:




On
      January 2003, we issued 33,738 shares of our common stock as payment for legal
      services rendered to us during 2002. The value per share at the time legal
      services were rendered was $0.24 per share. These shares were deemed issuable
      as
      of December 31, 2002. We
      believe the issuance of the stock to be exempt from registration under Section
      4(2) of the Securities Act.




On
      February 11, 2003, pursuant to our 2003 Stock Incentive Plan, we granted to
      three executives and directors shares of restricted common stock. Each
      participant signed a restricted stock award agreement in connection with such
      grant. The awarded shares contain a restrictive legend restricting transfer
      without registration under the Securities Act of 1933 or an exemption there
      from. Each such participant is an accredited investor under Regulation D. The
      grantees were: Elliot Krasnow 200,000 shares; Robert S. Steinberg 100,000
      shares; and Dellray Lefevere 25,000 shares. The value per share at the time
      the
      services were rendered was $0.25 per share. We
      believe the issuance of the stock to be exempt from registration under Section
      4(2) of the Securities Act.




On
      July
      22, 2003, we signed a letter agreement with Stategica Management LLC of Miami,
      Florida to provide advisory services designed to generate at least $10 million
      of value over a three-year period ending in 2006. The value was to be in the
      form of funding, acquisition transactions or other business transactions
      identified by Strategica. In connection with the agreement, we issued 668,018
      shares of common stock to Strategica. Since there could be no assurance of
      any
      level of value we may receive from such engagement, we retained the option
      to
      repurchase such shares to the extent that $10 million of value, as defined
      in
      the agreement, was not provided by Strategica during the term of the engagement.
      The value per share at the time the services were rendered was assumed to be
      $0.25 per share. We believe
      the issuance of the stock to be exempt from registration under Section 4(2)
      of
      the Securities Act.




On
      August
      19, 2004, we terminated our advisory agreement with Strategica Management LLC,
      as reported on Form 8-K filed with the Commission on August 26, 2004. The
      668,018 shares of common stock issued to Strategica Management LLC were returned
      to the transfer agent for cancellation.




On
      February 2, 2005, under the terms of the Share Exchange Agreement, by and among
      us, Old Ariel Way and the holders of Old Ariel Way common stock, dated as of
      January 20, 2005, each share of Old Ariel Way common stock outstanding
      immediately prior to February 2, 2005 was converted into 1.6762 shares of our
      common stock. Our then outstanding common stock was not affected by the
      acquisition. As a result of the acquisition, we issued 33,289,434 shares of
      common stock to the former stockholders of Old Ariel Way. In addition to the
      common stock issued to the former stockholders of Old Ariel Way, under the
      Share
      Exchange Agreement each outstanding option or warrant to purchase Old Ariel
      Way
      common stock was converted into an option to purchase the number of shares
      of
      our common shares equal to the number of Old Ariel Way common shares underlying
      the option or warrant immediately prior to February 2, 2005 multiplied by 1.6762
      and the exercise price of each option or warrant we issued equals the exercise
      price of the corresponding Old Ariel Way option or warrant in effect immediately
      prior to February 2, 2005 divided by 1.6762. We
      believe the issuance of the stock to be exempt from registration under Section
      4(2) of the Securities Act.




On
      February 2, 2005, after we acquired Old Ariel Way, we issued 499,341 shares
      of
      our common stock to Joel Bernstein, Esq., for providing legal services in
      connection with the acquisition transaction and we issued 499,342 shares of
      common stock to Mr. Michael Jordan for advisory services in connection with
      the
      acquisition transaction.




14


On
      April
      28, 2005, pursuant to an asset Purchase Agreement with Loral Skynet Network
      Services, Inc., CyberStar L.P. and CyberStar, LLC, dbsXmedia purchased Loral
      Skynet’s Business Television product line and assumed the management and further
      development of Loral Skynet’s traditional business television services (BTV).
      Under the terms of the transaction, dbsXmedia acquired Loral Skynet’s BTV client
      base in exchange for cash and shares of common stock and the assumption of
      ongoing contracts for infrastructure support from Loral Skynet. As
      part
      of the transaction, we issued
      to Loral Skynet a total of 300,000 shares of common stock. The value per share
      at the time the transaction was $0.35 per share. We believe
      the issuance of the stock to be exempt from registration under Section 4(2)
      of
      the Securities Act.




On
      September 23, 2004, Old Ariel Way issued an aggregate of 14,680,000 shares
      of its common stock in connection with a conversion to a corporation from a
      predecessor limited liability company, Ariel Way, LLC, as follows: 7,600,000
      shares to The Dunhem Family Partnership, 2,800,000 shares to Anand Kumar,
      1,100,000 shares to Magdy Battikha, 900,000 shares to Aziz Bennani, 900,000
      shares to Voula Kanellias, 480,000 shares to Chivas Capital, Inc., 400,000
      shares to J. David Morris, 300,000 shares to Michael H. Jordan, and 200,000
      shares to Steven Toro. All of the shareholders had acquired their limited
      liability company interests from Ariel Way, LLC at various dates from the
      forming of Ariel Way, LLC on February 10, 2004. We believe the issuance of
      the
      stock to be exempt from registration under Section 4(2) of the Securities
      Act.




On
      September 27, 2004, Old Ariel Way issued to Market Central, Inc., 2,000,000
      shares of Old Ariel Way’s common stock pursuant to the terms of a Stock Purchase
      Agreement for a purchase consideration in an aggregate value of $250,000,
      consisting of the rights to certain software technology with a value of $200,000
      and development/support services consideration rendered by Market Central’s
      senior executives with a value of $50,000. We believe the issuance of the stock
      to be exempt from registration under Section 4(2) of the Securities
      Act.




On
      September 30, 2004, Old Ariel Way entered into a 2004 Standby Equity
      Distribution Agreement with Cornell Capital. This
      agreement was terminated on July 20, 2005 and we entered into a new 2005 Standby
      Equity Distribution Agreement with Cornell Capital on July 21, 2005. In
      connection with the 2004 Standby Equity Distribution Agreement, Cornell Capital
      received a commitment fee in the form of 1,980,000 shares of Old Ariel Way
      common stock that were converted into an aggregate of 3,318,876 shares of our
      common stock as a result of our acquisition of Old Ariel Way on February 2,
      2005. The issuance of the shares was valued at $1,128,600, the fair value of
      our
      stock at that time. We believe the issuance of the stock to be exempt from
      registration under Section 4(2) of the Securities Act.




On
      September 30, 2004, Old Ariel Way issued to the stockholders of Enfotec
      1,000,000 shares of Old Ariel Way’s common stock pursuant to the terms of a
      share exchange under which Old Ariel Way acquired Enfotec. In addition, on
      September 30, 2004, Old Ariel Way also issued to certain stockholders and
      creditors of Enfotec. 200,000 shares of Old Ariel Way common stock, valued
      at a
      fair value of $114,000, based on a price of $0.57 per share, pursuant to the
      terms of a settlement of certain liabilities of Enfotec. We believe the issuance
      of the stock to be exempt from registration under Section 4(2) of the
      Securities Act.




On
      April
      21, 2005, Old Ariel Way sold and issued to Cornell Capital, 2,000,000 shares
      of
      the Series A Redeemable Preferred Stock of Old Ariel Way, for a purchase price
      of $1.00 per share and an aggregate purchase price of $2,000,000 with the
      rights, preference and privileges set forth in the Certificate of Designation
      filed by Old Ariel Way on April 19, 2005 with the Delaware Secretary of State
      on
      the terms and conditions set forth in a Stock Purchase Agreement by and between
      Ariel Way, Inc. and Cornell Capital Partners, LP, dated April 19, 2005. These
      shares were redeemed by Old Ariel Way on August 10, 2005 for a redemption price
      of $2,074,301 including dividend and the preferred stock was returned to Old
      Ariel Way’s treasury. We believe the issuance of the stock to be exempt from
      registration under Section 4(2) of the Securities Act.




Except
      as
      otherwise noted, the securities described in this Item were issued pursuant
      to
      the exemption from registration provided by Section 4(2) of the Securities
      Act of 1933. Each such issuance was made pursuant to individual contracts,
      which
      are discrete from one another and are made only with persons who were
      sophisticated in such transactions and who had knowledge of and access to
      sufficient information about us to make an informed investment decision. Among
      this information was the fact that the securities were restricted
      securities.




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




The
      following is a discussion and analysis of our results of operations and
      financial position for the two years ended September 30, 2005 and the factors
      that could affect our future financial condition and results of operations.
      Historical results may not be indicative of future performance.





15


This
      discussion and analysis should be read in conjunction with our consolidated
      financial statements and the notes thereto included elsewhere in this 10-KSB.
      Our consolidated financial statements are prepared in accordance with United
      States Generally Accepted Accounting Principles. All references to dollar
      amounts in this section are in United States dollars.




**General**




On
      February 2, 2005, we completed the acquisition of Old Ariel Way, Inc. under
      the
      terms of the Share Exchange Agreement dated January 20, 2005, between Netfran
      Development Corp. and Ariel Way, Inc. As a result of the stock exchange
      transaction, the former shareholders of Old Ariel Way now own a substantial
      majority of our common stock. As a result of the share exchange transaction
      consummated on February 2, 2005, our financial statements are based on Old
      Ariel
      Way’s operation which became ours and the business we formerly conducted under
      the name Netfran Development Corp. ceased. Our fiscal year also changed as
      a
      result of the share exchange transaction from December 31 to September 30.
      Our
      business includes after April 21, 2005 also the satellite Business TV line
      of
      business that was acquired by our subsidiary dbsXmedia.




**Revenue
      and Expenses**




**Overall
      Operating Results:**




Our
      revenues from operations were $1,052,616 in fiscal year 2005 ending September
      30, 2005. Old Ariel Way was formed on February 10, 2004 with limited revenues
      and thus our revenues from operations were $41,000 in fiscal year 2004 ending
      September 30, 2004 . As
      stated above, as a result of the share exchange transaction consummated on
      February 2, 2005, the financial statements for the fiscal year ended September
      30, 2005 are based on Old Ariel Way’s operation which became Ariel Way’s and the
      business we formerly conducted under the name Netfran Development Corp.
      ceased. **** Our
      fiscal year also changed as a result of the share exchange transaction from
      December 31 to September 30.




Our
      total fiscal year 2005 ending on September 30, cost and expenses were $3,180,132
      compared to $144,273 for fiscal year 2004, i.e. from inception on February
      10,
      2004 through September 30, 2004.




As
      of
      September 30, 2005 we had $122,640 in cash and cash equivalents compared to
      $29,546 as of September 30, 2004 since
      there was only limited operation during fiscal year 2004 .
      As of
      September 30, 2005, our accounts payable and accrued expenses were
      $1,390,380 *.*




**Operating
      and Net Losses**




We
      had a net loss of $2,389,342 for the fiscal year ended September 30, 2005 and
      we
      had a net loss of $103,273 for the fiscal year ended September 30, 2004, which
      was from inception on February 10, 2004 through September 30, 2004.




As
      of September 30, 2005 we had accumulated $2,492,615 in operating losses that
      may, on a limited basis, be offset against future taxable income. There are
      limitations on the amount of net operating loss carryforwards that can be used
      due to the change in the control of the ownership as a result of our stock
      exchange transaction on February 2, 2005 of the now wholly-owned Old Ariel
      Way
      subsidiary. No tax benefit has been reported in the financial
      statements.




**Liquidity
      and Capital Resources**




Net
      cash
      used by operating activities was $1,081,254 for the fiscal year ended September
      30, 2005 compared with $454 for the fiscal year ended September 30, 2004, i.e.
      from inception on February 10, 2004 through September 30, 2004 since there
      was
      only limited operation during fiscal year 2004.




As
      of
      September 30, 2005 we had a total Stockholders’ Deficit of $1,841,181 compared
      with September 30, 2004, when we had a total Stockholders’ Equity of $422,727.
      At September 30, 2005, we
      had a
      net loss in working capital (current assets minus current liabilities) of
      approximately $2,394,316 compared with at September 30, 2004 when we had a
      net
      loss in working capital (current assets minus current liabilities) of
      approximately $95,416.




16


On
      September 30, 2004, Old Ariel Way, which we acquired on February 2, 2005,
      entered into a 2004 Standby Equity Distribution Agreement with Cornell
      Capital .
      This
      agreement was terminated on July 20, 2005 and we entered into a new 2005 Standby
      Equity Distribution Agreement with Cornell Capital on July 21, 2005. The 2005
      Standby Equity Distribution Agreement provides, generally, that Cornell will
      purchase up to $50 mil lion
      of
      common stock over a two-year period, with the timing and amount of such
      purchases, if any, at our discretion. Any sh ares
      of
      common stock sold under the 2005 Standby Equity Distribution Agreement will
      be
      priced at a 4% discount of the lowest volume weighted average price of the
      common stock as
      reported by Bloomberg LP during the five consecutive trading days after we
      give
      notice to Cornell that we wish to sell stock to them. We are not permitted
      to
      draw down more than $4 million in any 30-day calendar period. In addition,
      in
      order for us to draw down on the 2005 Standby Equity Distribution Agreement,
      we
      must file and obtain the effectiveness of the registration statement of which
      this prospectus is a part, registering the resale of the shares of common stock
      that may be issued to Cornell under the 2005 Standby Equity Distribution
      Agreement. At the time of each draw down, we are obligated to pay Cornell a fee equal to 3% percent of the amount of each draw
      down. In connection with the 2004 Standby Equity Distribution Agreement, on
      September 30, 2004, Cornell Capital received a commitment fee in the form of
      1,980,000 shares of Old Ariel Way common stock that were converted into an
      aggregate of 3,318,876 shares of our common stock as a result of our acquisition
      of Old Ariel Way on February 2, 2005. The issuance of the shares was valued
      at
      $1,128,600, the fair value of our stock at that time. We believe the issuance
      of
      the stock to be exempt from registration under Section 4(2) of the
      Securities Act.




Even
      if
      we are able to draw down on the 2005 Standby Equity Distribution Agreement ,
      we may
      need and we may not be able to obtain additional sources of financing. We may
      need ad ditional
      financing, from time to time, for the following:


-
                  Acquisitions
                      of one or more companies
  -
                  Investment
                      in infrastructure equipment and facilities for our multimedia
                      services
  -
                  Investment
                      in laboratory facilities including test and simulation
                      equipment
  -
                  General
                      working capital purposes
 On
        September 30, 2004, Old Ariel Way entered into a Securit ies
        Purchase Agreement and issued a convertible debenture to Cornell Capital
        in the
        original principal amount of $500,000. The convertible debenture was amended
        on
        July 21, 2005. The convertible debenture accrues interest at a rate of 5%
        per
        year and is due and payable on September 29, 2006. At our option, we have
        the
        right to redeem a portion or all outstanding convertible debenture. The
        redemption price shall be one hundred twenty percent (120%) of the amount
        redeemed plus accrued interest. The convertible debenture is convertible
        at the
        holder’s option any time up to maturity at the fixed conversion price (the
“Conversion Price”) in effect on any Conversion Date to be equal to Thirty Cents
        ($0.30), which may be adjusted pursuant to the other terms of the convertible
        debenture. Except after an event of default, as set forth in the convertible
        debenture, the holder is not entitled to convert such debenture for a number
        of
        shares of our common stock in excess of that number of shares which, upon
        giving
        effect to such conversion, would cause the aggregate number of shares of
        common
        stock beneficially held by such holder and its affiliates to exceed 4.99%
        of our
        outstanding shares of common stock.




On
      February 2, 2005 Old Ariel Way borrowed $400,000 from Cornell
      Capital. The loan
      bears interest at the rate of 12% per annum and was due and payable on May
      31,
      2005 and we are now in default unless we can renegotiate the terms of the loan
      for an extension with Cornell Capital. Cornell Capital is not a controlling
      stockholder of Old Ariel Way, and we believe the terms of the loan are at least
      as favorable to us as could be obtained from an unrelated third party. In order
      to induce Cornell Capital to make the loan to Old Ariel Way, Arne Dunhem, the
      Chairman and Chief Executive Officer of Old Ariel Way before the Effective
      Time
      and our Chief Executive Officer after the Effective Time, provided a personal
      guarantee of payment to Cornell Capital. We expect to compensate Mr. Dunhem
      for
      undertaking the personal guarantee and pledge on our behalf, but the terms
      of
      any such compensation have not yet been agreed to. Our Compensation Committee
      of
      the Board of Directors will determine the amount and nature of compensation
      to
      Mr. Dunhem, but we do not expect that any compensation to him will be paid
      in
      cash.




On
      April 21, 2005, Old Ariel Way sold and issued to Cornell Capital, 2,000,000
      shares of the Series A Redeemable Preferred Stock of Old Ariel Way for a
      purchase price of $1.00 per share and an aggregate purchase price of $2,000,000
      with the rights, preference and privileges set forth in the Certificate of
      Designation filed by Old Ariel Way on April 19, 2005 with the Delaware Secretary
      of State on the terms and conditions set forth in a Stock Purchase Agreement
      by
      and between Ariel Way, Inc. and Cornell Capital, dated April 19,
      2005.





On
      July 28, 2005, we borrowed
      $600,000 from Montgomery Equity Partners, Ltd. (“Montgomery Equity”). We
      received $240,000 of this amount on July 28, 2005 and we received the remaining
      $360,000 on August 10, 2005. The loan bears interest at the rate of 12% per
      annum and is due and payable on January 28, 2006. On July 28, 2005 we issued
      to
      Montgomery Equity a warrant to purchase 1,000,000 shares of our common
      stock that is exercisable for a period of three (3) years at an exercise
      price per share of $0.025. The warrant shares shall have “piggy-back” and demand
      registration rights. Montgomery Equity is not a controlling stockholder of
      Ariel
      Way, and we believe the terms of the loan are at least as favorable to us as
      could be obtained from an unrelated third party.




17


On
      August
      10, 2005, we elected through our subsidiary Old Ariel Way to redeem and purchase
      from Cornell Capital 2,000,000 shares of Old Ariel Way Series A Redeemable
      Preferred Stock for a total of $2,074,301. In connection with the redemption,
      we
      acknowledged to Cornell Capital that the purchase price represented an agreed
      upon price of $1.00 per share of Preferred Stock along with $74,301 of dividends
      accrued on the Preferred Stock to August 10, 2005. We also acknowledged that
      the
      sum of $30,000 had been paid to Cornell Capital from the closing on July 28,
      2005 of the $600,000 that we borrowed from Montgomery Equity. We also
      represented that we shall owe to Cornell Capital the balance of the Purchase
      Price, or the sum of $30,271.




If
      our
      revenue from operations and funds raised from the 2005 Standby Equity
      Distribution Agreement are not sufficient to implement our business plan, we
      will be required to raise money from other sources. Other sources of funds
      may
      not be available or may be available only on terms that are unfavorable to
      us.
      If we are unable to raise sufficient funds, the implementation of our Plan
      of
      Operation will be delayed and we might need to cease operations.





**Off-Balance
      Sheet Arrangements**




We
      have no off-balance sheet arrangements. On
      April
      21, 2005, as
      part of
      a transactionpursuant
      to an asset Purchase Agreement with Loral Skynet,
      wedelivered
      a commitment to the benefit of dbsXmedia in the form of a Conditional Guaranty
      for satellite services in favor of Loral Skynet, having a total value of
      $3,000,000 that will reduce to $1,500,000 on April 21, 2006 and fully expire
      on
      April 21, 2007.




**Plan
      Of Operation**




We
      were
      formed in 2000 under the name Netfran Development Corp. to market the Netspace
      Franchise System provided by Netvertise, Inc., a Florida company, as a
      franchisor of Internet web site design, hosting, updating, maintenance,
      administration, e-mail publishing and consulting services, marketing and
      advertising services and related services under the registered servicemark
      "NETSPACE". Our initial strategy was to support franchisees to assist small
      and
      medium size businesses to implement an effective Internet World Wide Web
      strategy. We had a total of 56 franchises in the United States and United
      Kingdom as of March 10, 2003. Our management also managed Netvertise, Inc.
      Between year 2000 and end year 2004, substantially all of our revenues were
      derived from franchise operations, which included a franchise fee, in an
      identified territory, revenue sharing with franchisees, and on-going royalties
      based on gross retail revenues to the franchisees' customers, and advertising
      fees of revenues generated by its franchisees. We anticipated that the revenues
      from ongoing royalties would rise as the franchisees established and built
      their
      businesses. We believed that sales of franchises would continue to generate
      the
      bulk of our revenues for several years in view of the large part of the country
      where we had not sold franchises. However, when sales of franchises slow or
      decline we would become more dependent on ongoing royalties from our
      franchisees. We supported the franchisees by advertising and training but the
      level of revenues achieved from ongoing royalties from our franchisees were
      not
      adequate to sustain long-term operation.




Upon
      completion of our acquisition of Old Ariel Way on February 2, 2005, the business
      strategy, direction and focus of Old Ariel Way became our dominant operating
      focus. In February
      2005, we also decided to further pursue a strategy of acquiring profitable
      companies providing solutions, services and technologies in the area of highly
      secure global communication. From
      February 2, 2005, we focused through our wholly owned subsidiary Enfotec, Inc.
      in the design, manufacture and marketing of high-speed security appliance
      solutions with a fully integrated Linux operating system, which is an open
      based
      operating system, that integrate high-performance Virtual Private Network,
      “VPN”, firewall, intrusion detection, anti-virus and management in a single
      network appliance. Enfotec’s “EN” Security Appliance and “CSA” Custom Security
      Appliance products feature certain hardware-based technology that delivers
      we
      believe, true wire-line data speed performance and with high level of
      security.




After
      the
      change of our business strategy on February 2, 2005, we subsequently also
      completed the acquisition of the start-up company dbsXmedia, Inc. and
      established satellite business TV services as a new line of business through
      this subsidiary. Through dbsXmedia, we provide communication infrastructure
      and
      integrated multimedia services to corporations throughout the United States
      and
      Europe. dbsXmedia's executive management has over 25 years of experience in
      the
      video and transmission industry. dbsXmedia operates from offices in Frederick,
      Maryland and Plymouth, United Kingdom, providing solutions for Business
      Television (BTV), digital signage and interactive media delivered over a
      combination of satellite, terrestrial and wireless networks. Digital signage
      includes technologies using LCD TV and plasma screens to deliver video based
      messaging directly to consumer audiences. We believe digital signage is an
      effective direct advertising method providing individually targeted marketing.
      Integrated multimedia services include music radio, video, and IP (Internet
      Protocol)-based file transfer for training/catalogs/point of sale integrated
      with other information to the clients.




18


At
      the
      time of its acquisition by Old Ariel Way, the Enfotec subsidiary had filed
      disclosure documents with the US Patent Office on two technologies, Chain Packet
      Processing and Pattern Signature Recognition. These technologies are at the
      core
      of our Enfotec products. These are the enabling technologies that, we believe,
      allow us to perform at speeds better than proprietary platforms offered by
      our
      competitors while having an open system architecture at our core.




We
      are
      pursuing both acquisitions and strategic alliances to leverage our strategy
      of
      creating a technology and services company for highly secure global
      communications solutions and technologies. Our objectives are to create high
      margin revenues and shareholder value, expand our reach in the global market
      for
      highly secure global communications solutions and technologies and position
      us
      to play a more visible role in providing next generation highly secure
      communications solutions, products, services and technologies.




In
      order
      to implement our overall business plan including both the full development
      of
      the business of our Enfotec and dbsXmedia operations and planned acquisition
      opportunities, we intend to attempt to raise at least $5,000,000 over the next
      12 months in order to fund:


-
              Expenses
                  associated with acquisitions of
                  companies;
  -
              Investment
                  in laboratory facilities including test and simulation
                  equipment;
  -
              Acquisition
                  or licensing of certain intellectual property related to the development
                  of highly secure communications technology and software development
                  technology;
  -
              Compensation
                  for employees and consultants;
  -
              Legal
                  and accounting fees and other general administrative
                  overhead;
  -
              General
                  working capital purposes


In
      addition, we may need additional funds if we use a greater percentage of cash
      rather than stock in connection with future acquisitions.




**New
      Accounting Pronouncements**





On
      October 3, 2001, the FASB issued Statement of Financial Accounting Standards
      No.
      144, “ *Accounting
      for the Impairment or Disposal of Long-Lived Assets”* (“SFAS
      144”), which is applicable to financial statements issued for fiscal years
      beginning after December 15, 2001. The FASB’s new rules on asset impairment
      supersede SFAS 121, *“Accounting
      for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
      of,”* and
      portions of Accounting Principles Board Opinion 30, “Reporting the Results of
      Operations.” This Standard provides a single accounting model for long-lived
      assets to be disposed of and significantly changes the criteria that would
      have
      to be met to classify an asset as held-for-sale. Classification as held-for-sale
      is an important distinction since such assets are not depreciated and are stated
      at the lower of fair value and carrying amount. This Standard also requires
      expected future operating losses from discontinued operations to be displayed
      in
      the period (s) in which the losses are incurred, rather than as of the
      measurement date as presently required.





In
      April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
      4,
      44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections. This
      statement rescinds SFAS No. 4, Reporting Gains and Losses from Extinguishment
      of
      Debt, and an amendment of that statement, SFAS No. 44, Accounting for Intangible
      Assets of Motor Carriers, and SFAS No. 64, Extinguishments of Debt Made to
      Satisfy Sinking-Fund Requirements. This statement amends SFAS No. 13, Accounting
      for Leases, to eliminate inconsistencies between the required accounting for
      sales-leaseback transactions and the required accounting for certain lease
      modifications that have economic effects that are similar to sales-leaseback
      transactions.





Also,
      this statement amends other existing authoritative pronouncements to make
      various technical corrections, clarify meanings, or describe their applicability
      under changed conditions. Provisions of SFAS No. 145 related to the rescissions
      of SFAS No. 4 were effective for the Company on November 1, 2002 and provisions
      affecting SFAS No. 13 were effective for transactions occurring after May 15,
      2002. The adoption of SFAS No. 145 did not have a significant impact on the
      Company’s results of operations or financial position.


19


In
      June 2003, the FASB issued SFAS No. 146, Accounting for Costs Associated with
      Exit or Disposal Activities. This statement covers restructuring type activities
      beginning with plans initiated after December 31, 2002. Activities covered
      by
      this standard that are entered into after that date will be recorded in
      accordance with provisions of SFAS No. 146. The adoption of SFAS No. 146 did
      not
      have a significant impact on the Company’s results of operations or financial
      position.





In
      December 2002, the FASB issued Statement No. 148, “Accounting for Stock-Based
      Compensation-Transition and Disclosure, an amendment of FASB Statement No.
      123”
(“SFAS 148”). SFAS 148 amends FASB Statement No. 123, “Accounting for
      Stock-Based Compensation,” to provide alternative methods of transition for an
      entity that voluntarily changes to the fair value based method of accounting
      for
      stock-based employee compensation. It also amends the disclosure provisions
      of
      that Statement to require prominent disclosure about the effects on reported
      net
      income of an entity’s accounting policy decisions with respect to stock-based
      employee compensation. Finally, this Statement amends Accounting Principles
      Board (“APB”) Opinion No. 28, “Interim Financial Reporting”, to require
      disclosure about those effects in interim financial information. SFAS 148 is
      effective for financial statements for fiscal years ending after December 15,
      2002. The Company will continue to account for stock-based employee compensation
      using the intrinsic value method of APB Opinion No. 25, “Accounting for Stock
      Issued to Employees,” but has adopted the enhanced disclosure requirements of
      SFAS 148.





In
      April 2003, the FASB issued SFAS Statement No. 149, “Amendment of Statement 133
      on Derivative Instruments and Hedging Activities”, which amends and clarifies
      financial accounting and reporting for derivative instruments, including certain
      derivative instruments embedded in other contracts (collectively referred to
      as
      derivatives) and for hedging activities under FASB Statement No. 133, Accounting
      for Derivative Instruments and Hedging Activities. This Statement is effective
      for contracts entered into or modified after June 30, 2003, except for certain
      hedging relationships designated after June 30, 2003. Most provisions of this
      Statement should be applied prospectively. The adoption of this statement did
      not have a significant impact on the Company’s results of operations or
      financial position.





In
      May 2003, the FASB issued SFAS Statement No. 150, “Accounting for Certain
      Financial Instruments with Characteristics of both Liabilities and Equity”. This
      Statement establishes standards for how an issuer classifies and measures
      certain financial instruments with characteristics of both liabilities and
      equity. It requires that an issuer classify a financial instrument that is
      within its scope as a liability (or an asset in some circumstances). This
      statement is effective for financial instruments entered into or modified after
      May 31, 2003, and otherwise is effective at the beginning of the first interim
      period beginning after June 15, 2003, except for mandatory redeemable financial
      instruments of nonpublic entities, if applicable. It is to be implemented by
      reporting the cumulative effect of a change in an accounting principle for
      financial instruments created before the issuance date of the Statement and
      still existing at the beginning of the interim period of adoption. The adoption
      of this statement did have a significant impact on the Company’s results of
      operations or financial position. (See Note 10)





In
      November 2002, the FASB issued Interpretation No. 45 (“FIN 45”), Guarantor’s
      Accounting and Disclosure Requirements for Guarantees, Including Indirect
      Guarantees of Indebtedness of Others. FIN 45 requires a company, at the time
      it
      issues a guarantee, to recognize an initial liability for the fair value of
      obligations assumed under the guarantees and elaborates on existing disclosure
      requirements related to guarantees and warranties. The recognition requirements
      are effective for guarantees issued or modified after December 31, 2002 for
      initial recognition and initial measurement provisions. The adoption of FIN
      45
      did not have a significant impact on the Company’s results of operations or
      financial position.





In
      January 2003, the FASB issued FASB Interpretation No. 46 (“FIN 46”),
      Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.
      FIN 46 requires certain variable interest entities to be consolidated by the
      primary beneficiary of the entity if the equity investors in the entity do
      not
      have the characteristics of a controlling financial interest or do not have
      sufficient equity at risk for the entity to finance its activities without
      additional subordinated financial support from other parties. FIN 46 is
      effective for all new variable interest entities created or acquired after
      January 31, 2003. For variable interest entities created or acquired prior
      to
      February 1, 2003, the provisions of FIN 46 must be applied for the first interim
      or annual period beginning after June 15, 2003. The adoption of FIN 46 did
      not
      have a significant impact on the Company’ results of operations or financial
      position.


20


In
      December 2004, the FASB issued SFAS No. 123 (Revised 2004),
“Share-Based Payment” (“SFAS No. 123R”). SFAS No. 123R requires that
      the compensation cost relating to share-based payment transactions be recognized
      in financial statements. That cost will be measured based on the fair value
      of
      the equity or liability instruments issued. The scope of SFAS No. 123R
      includes a wide range of share-based compensation arrangements including share
      options, restricted share plans, performance-based awards, share appreciation
      rights and employee share purchase plans. SFAS No. 123R replaces SFAS
      No. 123, “Accounting for Stock-Based Compensation,” and supersedes APB
      Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS
      No. 123, as originally issued in 1995, established as preferable a
      fair-value-based method of accounting for share-based payment transactions
      with
      employees. However, that Statement permitted entities the option of continuing
      to apply the guidance in APB No. 25, as long as the footnotes to the
      financial statements disclosed what net income would have been had the
      preferable fair-value-based method been used. The adoption of SFAS No. 123R
      will not have any affect on the Company’s financial position or results of
      operations.





In
      December 2004, the FASB issued SFAS No. 151, “Inventory Costs.” SFAS
      No. 151 requires abnormal amounts of inventory costs related to idle
      facility, freight handling and wasted material expenses to be recognized as
      current period charges. Additionally, SFAS No. 151 requires that allocation
      of fixed production overheads to the costs of conversion be based on the normal
      capacity of the production facilities. The standard is effective for fiscal
      years beginning after June 15, 2005. The Company does not have
      manufacturing operations or goods held for resale and does not expect the
      adoption of SFAS No. 151 to have any impact on the Company’s financial
      position or results of operations.





In
      December 2004, the FASB issued SFAS No. 153, “Exchanges of
      Non-monetary Assets - An Amendment of APB Opinion No. 29.” SFAS
      No. 153 amends APB Opinion No. 29, “Accounting for Non-monetary
      Transactions.” The amendments made by SFAS No. 153 are based on the
      principle that exchanges of non-monetary assets should be measured based on
      the
      fair value of the assets exchanged. Further, the amendments eliminate the narrow
      exception for non-monetary exchanges of similar productive assets and replace
      it
      with a broader exception for exchanges of non-monetary assets that do not have
      “commercial substance.” Previously, APB No. 29 required that the accounting
      for an exchange of a productive asset for a similar productive asset or an
      equivalent interest in the same or similar productive asset should be based
      on
      the recorded amount of the asset relinquished. The provisions in SFAS
      No. 153 are effective for non-monetary asset exchanges occurring in fiscal
      periods beginning after June 15, 2005. The Company does not expect the
      adoption of SFAS No. 153 to have a material impact on the Company’s
      financial position or results of operations.





**Inflation**





Our
      monetary assets, consisting primarily of cash and receivables, and our
      non-monetary assets, consisting primarily of intangible assets and goodwill,
      are
      not affected significantly by inflation. We believe that replacement costs
      of
      equipment, furniture and leasehold improvements will not materially affect
      our
      operations. However, the rate of inflation affects our expenses, such as those
      for employee compensation and costs of network services, which may not be
      readily recoverable in the price of services offered by us.




21




**RISK
      FACTORS**




**We
      are subject to various risks that may materially harm our business, financial
      condition and results of operations. You should carefully consider the risks
      and
      uncertainties described below and the other information in this filing before
      deciding to purchase our common stock. If any of these risks or uncertainties
      actually occur, our business, financial condition or operating results could
      be
      materially harmed. In that case, the trading price of our common stock could
      decline and you could loose all or part of your
      investment.**




**Risks
      Related To Our Business**




**We
      are a technology company with a revised and new and unproven enterprise
      technology model and a short operating history, which makes it difficult to
      evaluate our current business and future prospects and may increase the risk
      of
      your investment.**




We
      have
      only a limited operating history with our revised and new business model upon
      which to base an evaluation of our current business and future prospects. Our
      limited operating history with the new business model makes an evaluation of
      our
      business and prospects very difficult. You must consider our business and
      prospects in light of the risks and difficulties we may encounter as a
      developing company with a revised and new business model in the rapidly evolving
      market for technology and services supporting the business of highly secure
      global communications. These risks and difficulties include, but are not limited
      to, the following:


-
              our
                  revised and new and unproven business and technology
                  model;
  -
              a
                  limited number of service offerings and risks associated with developing
                  new product and service offerings;
  -
              the
                  difficulties we may face in managing rapid growth in personnel
                  and
                  operations;
  -
              a
                  failure of our physical infrastructure or internal systems caused
                  by a
                  denial of service, third-party attack, employee error or malfeasance,
                  or
                  other causes;
  -
              a
                  general failure of satellite services and the Internet that impairs
                  our
                  ability to deliver our service;
  -
              a
                  loss or breach of confidentiality of customer
                  data;
  -
              the
                  negative impact on our brand, reputation or trustworthiness caused
                  by any
                  significant unavailability of our
                  service;
  -
              the
                  systematic failure of a core component of our service from which
                  it would
                  be difficult for us to recover;
  -
              the
                  timing and success of new service introductions and new technologies
                  by
                  our competitors;
  -
              our
                  ability to acquire and merge subsidiaries in a highly competitive
                  market;
                  and
  -
              drastic
                  changes in the regulatory environment that could have an adverse
                  impact in
                  the Telecommunications industry.
 We
          may
          not be able to successfully address any of these risks or others. Failure
          to
          adequately do so could force us to curtail or cease our business
          operations.


**We
      have historically lost money and we expect losses will continue in the near
      term, which means that we may not be able to continue operations unless we
      obtain additional funding**




We
      have
      historically lost money. In the fiscal year ended September 30, 2005 we had
      a
      net loss of $ 2,389,342 and as
      of September 30, 2004 we had a net loss of $103,273 .
      Future
      losses are likely to occur. Accordingly, we may experience liquidity and cash
      flow problems if we are not able to raise additional capital as needed and
      on
      acceptable terms. No assurances can be given that we will be successful in
      reaching or maintaining profitable operations; or that we will be able to raise
      or borrow adequate funds to execute our business plan and consummate any future
      acquisitions.




22




**We
      have historically generated revenue which has not been adequate to support
      our
      full operation and this may continue in the future, which means that we may
      not
      be able to continue operations unless we can increase our generated
      revenue**




We
      have
      generated revenue from operations; however, if we do not begin generating more
      revenue we may have to cease operations. At September 30, 2005, we had an
      accumulated deficit of $ 2,492,615 .
      In
      order to become profitable, we will need to generate revenues to offset our
      cost
      of research and development and general and administrative expenses. We may
      not
      achieve or sustain our revenue or profit objectives and our losses may increase
      in the future and ultimately, we may have to cease operations.




Our
      operating results are not possible to predict because we have limited
      operations. As a result, we cannot determine if we will be successful in our
      proposed plan of operation. Accordingly, we cannot determine what the future
      holds for our proposed plan of business. As such an investment in our business
      is extremely risky and could result in the entire loss of your
      investment.




**We
      will need to raise additional capital to continue our operations and consummate
      any future acquisitions or we may be unable to fund our operations, promote
      our
      products or develop our technology**




We
      have
      relied on external financing to fund our operations and acquisitions to date.
      Such financing has historically come from a combination of borrowings from,
      and
      sale of common stock to, third parties and funds provided by certain officers
      and directors. Over the next two years we anticipate that, in addition to the
      $50 million available to us under the 2005 Standby Equity Distribution
      Agreement from Cornell Capital, we may need to raise additional capital to
      fund
      additional acquisitions and/or to fund operations. We anticipate that these
      additional funds will be in the range of $10 million to $50 million,
      depending on the pace and size of our acquisitions. We cannot assure you that
      financing, whether from external sources or related parties, will be available
      if needed or on favorable terms. The sale of our common stock to raise capital
      may cause dilution to our existing shareholders. If additional financing is
      not
      available when required or is not available on acceptable terms, we may be
      unable to fund our operations and expansion, successfully promote our brand
      name, products or services, develop or enhance our technology, take advantage
      of
      business opportunities or respond to competitive market pressures, any of which
      could make it more difficult for us to continue operations. Any reduction in
      our
      operations may result in a lower stock price.




A
      portion
      of our future revenue is dependent upon the success of long-term projects,
      which
      require significant up-front expense to us. We are dependent on external
      financing to fund our operations and the up-front costs. There can be no
      assurance that revenues will be realized until the projects are completed or
      certain significant milestones are met. Our failure, or any failure by a
      third-party with which we may contract, to perform services or deliver products
      on a timely basis could force us to curtail or cease our business
      operations.




**We
      may not be able to access sufficient funds when needed under the 2005 Standby
      Equity Distribution Agreement and the price of our common stock will affect
      our
      ability to draw down on the 2005 Standby Equity Distribution
      Agreement**




We
      are
      currently dependent upon external financing to fund our operations. Our
      financing needs are expected to be provided, in large part, by our 2005 Standby
      Equity Distribution Agreement. The amount of each advance under the 2005 Standby
      Equity Distribution Agreement is subject to a maximum amount equal to $1,000,000
      in an advance period defined as any 5-day period. Because of this maximum
      advance restriction, we may not be able to access sufficient funds when needed.
      If the market price of our shares of common stock declines, we would be required
      to issue more shares of common stock in order to draw down the same dollar
      amount of an advance than if our stock price were higher. Our Articles of
      Incorporation currently authorize Ariel Way to issue a total of 250,000,000
      shares of our capital stock, consisting of 245,000,000 shares of our common
      stock and 5,000,000 shares of our preferred stock.




In
      addition, pursuant to the terms of the 2005 Standby Equity Distribution
      Agreement, Cornell Capital may not own more than 9.9% of our outstanding shares
      of common stock. In the event Cornell Capital is unable to sell the shares
      of
      our common stock that are issued after we receive an advance in order to keep
      them below 9.9% beneficial ownership, we might not be able to draw down
      additional funds when needed under the 2005 Standby Equity Distribution
      Agreement. Therefore, if we are unable to draw down on our 2005 Standby Equity
      Distribution Agreement and cannot secure external financing from other sources,
      we may be forced to curtail or cease our business operations.




**We
      have a working capital deficit; we need to raise additional capital to finance
      operations**




We
      have
      relied on significant external financing to fund our operations. As of September
      30, 2005, we had $122,640 cash on hand and our total current assets were
      $494,064 as of September 30, 2005. We will need to raise additional capital
      to
      fund our anticipated operating expenses and future expansion. Among other
      things, external financing may be required to cover our operating costs. Unless
      we obtain profitable operations, it is unlikely that we will be able to secure
      additional financing from external sources. If we are unable to secure
      additional financing or we cannot draw down on the 2005 Standby Equity
      Distribution Agreement, we may be forced to curtail or cease our business
      operations. We estimate that we will require $5,000,000 to fund our anticipated
      operating expenses for the next twelve months. The sale of our common stock
      to
      raise capital may cause dilution to our existing shareholders. Our inability
      to
      obtain adequate financing will result in the need to curtail business
      operations. Any of these events would be materially harmful to our business,
      may
      result in a lower stock price and you could lose your entire investment. Our
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.




23


**We
      are in default on a $400,000 loan from Cornell Capital unless the terms can
      be
      renegotiated and the term be extended by Cornell Capital**




On
      February 2, 2005 Old Ariel Way borrowed $400,000 from Cornell Capital, and
      we
      assumed this loan when we acquired Old Ariel Way. The loan bears interest at
      the
      rate of 12% per annum and was due and payable on May 31, 2005. We are now in
      default unless we can renegotiate the terms of the loan for an extension with
      Cornell Capital. Cornell Capital is not a controlling stockholder of Ariel
      Way,
      and we believe the terms of the loan are at least as favorable to us as could
      be
      obtained from an unrelated third party. In order to induce Cornell Capital
      to
      make the loan to Old Ariel Way, Arne Dunhem, the Chairman and Chief Executive
      Officer of Old Ariel Way before the Effective Time and our Chief Executive
      Officer after the Effective Time, provided a personal guarantee of payment
      to
      Cornell Capital. We expect to compensate Mr. Dunhem for undertaking the personal
      guarantee and pledge on our behalf, but the terms of any such compensation
      have
      not yet been agreed to. The Compensation Committee of our Board of Directors
      will determine the amount and nature of compensation to Mr. Dunhem, but we
      do
      not expect that any compensation to him will be paid in cash.




**Our
      common stock is deemed to be “penny stock,” which may make it more difficult for
      investors to resell their shares due to suitability
      requirements**




Our
      common stock is deemed to be “penny stock” as that term is defined in
      Rule 3a51-1 promulgated under the Securities Exchange Act of 1934. Penny
      stocks are stocks:


-
              With
                  a price of less than $5.00 per
                  share;
  -
              That
                  are not traded on a “recognized” national
                  exchange;
  -
              Whose
                  prices are not quoted on the NASDAQ automated quotation system
                  (NASDAQ
                  listed stock must still have a price of not less than $5.00 per
                  share);
                  or
  -
              Of
                  issuers with net tangible assets less than $2.0 million (if the
                  issuer has been in continuous operation for at least three years)
                  or
                  $5.0 million (if in continuous operation for less than three years),
                  or with average revenues of less than $6.0 million for the last three
                  years.


Broker/dealers
      dealing in penny stocks are required to provide potential investors with a
      document disclosing the risks of penny stocks. Moreover, broker/dealers are
      required to determine whether an investment in a penny stock is a suitable
      investment for a prospective investor. These requirements may reduce the
      potential market for our common stock by reducing the number of potential
      investors. This may make it more difficult for investors in our common stock
      to
      sell shares to third parties or to otherwise dispose of them. This could cause
      our stock price to decline and you could lose your entire
      investment.




Our
      securities are covered by the penny stock rules, which impose additional sales
      practice requirements on broker-dealers who sell to persons other than
      established customers and “accredited investors”. The term “accredited investor”
refers generally to institutions with assets in excess of $5,000,000 or
      individuals with a net worth in excess of $1,000,000 or annual income exceeding
      $200,000 or $300,000 jointly with their spouse. The penny stock rules require
      a
      broker-dealer, prior to a transaction in a penny stock not otherwise exempt
      from
      the rules, to deliver a standardized risk disclosure document in a form prepared
      by the SEC which provides information about penny stocks and the nature and
      level of risks in the penny stock market. The broker-dealer also must provide
      the customer with current bid and offer quotations for the penny stock, the
      compensation of the broker-dealer and its salesperson in the transaction and
      monthly account statements showing the market value of each penny stock held
      in
      the customer’s account. The bid and offer quotations, and the broker-dealer and
      salesperson compensation information, must be given to the customer orally
      or in
      writing prior to effecting the transaction and must be given to the customer
      in
      writing before or with the customer’s confirmation. In addition, the penny stock
      rules require that prior to a transaction in a penny stock not otherwise exempt
      from these rules, the broker-dealer must make a special written determination
      that the penny stock is a suitable investment for the purchaser and receive
      the
      purchaser’s written agreement to the transaction. These disclosure requirements
      may have the effect of reducing the level of trading activity in the secondary
      market for the stock that is subject to these penny stock rules. Consequently,
      these penny stock rules may affect the ability of broker-dealers to trade our
      securities. We believe that the penny stock rules discourage investor interest
      in and limit the marketability of, our common stock.





24


The
      National Association of Securities Dealers, or NASD, has adopted sales practice
      requirements which may also limit a stockholder’s ability to buy and sell our
      stock.




In
      addition to the “penny stock” rules described above, the NASD has adopted rules
      that require that in recommending an investment to a customer, a broker-dealer
      must have reasonable grounds for believing that the investment is suitable
      for
      that customer. Prior to recommending speculative low priced securities to their
      non-institutional customers, broker-dealers must make reasonable efforts to
      obtain information about the customer’s financial status, tax status, investment
      objectives and other information. Under interpretations of these rules, the
      NASD
      believes that there is a high probability that speculative low priced securities
      will not be suitable for at least some customers. The NASD requirements make
      it
      more difficult for broker-dealers to recommend that their customers buy our
      common stock, which may limit investors’ ability to buy and sell our stock and
      have an adverse effect on the market for our shares.




**We
      have a new executive team and may not be successful in integrating the
      management teams of Enfotec and dbsXmedia which could adversely affect the
      leadership of Ariel Way, divert management time and adversely affect the
      business and results of operations**




As
      a
      result of completion of our acquisition of Old Ariel Way on February 2, 2005,
      Mr. Arne Dunhem became our new Chairman, President and Chief Executive
      Officer; Ms. Voula Kanellias became our Chief Financial Officer; and Mr.
      Anand Kumar became our Executive Vice President. Mr. Dunhem served as the
      Chairman, President and Chief Executive Officer of Old Ariel Way since February
      2, 2004, Ms. Kanellias, served as the Chief Financial Officer of Old Ariel
      Way
      since September 2, 2004 and Mr. Kumar served as Executive Vice President of
      Old
      Ariel Way since August 10, 2004. Prior to Ms. Kanellias joining Old Ariel
      Way, Mr. Dunhem and Ms. Kanellias had no experience working together. On
      February 21, 2005, with the acquisition of dbsXmedia, Mr. David Howgill became
      the day-to-day head of operations for our Business Television (BTV) business.
      Failure to successfully integrate the management teams of the companies could
      divert management time and resources, which would adversely affect our
      operations. Our future success also depends on our ability to identify, attract,
      hire, retain and motivate other well-qualified managerial, technical, sales
      and
      marketing personnel.




**Our
      business revenue generation model is unproven and could
      fail**




Our
      revenue model is revised and new and evolving, and we cannot be certain that
      it
      will be successful. Our ability to generate revenue depends, among other things,
      on our ability to provide quality highly secure global communications solutions
      and technologies to our customers and to develop and ultimately sell various
      security appliances products. We have limited experience with our highly secure
      global communications solutions and technologies business and our success is
      largely dependent upon our ability to successfully integrate and manage any
      acquisitions we may consummate. If we are unable to sell our services and
      provide them efficiently, we will be forced to curtail or cease our business
      operations.




**If
      we are not able to compete effectively in the highly competitive highly secure
      global communications solutions and technologies industries we may be forced
      to
      curtail or cease operations**




Our
      ability to compete effectively with our competitors depends on the following
      factors, among others:




-
            the
                performance of our products, services and technology in a manner
                that
                meets customer expectations;




-
            the
                success of our efforts to develop effective channels of distribution
                for
                our products and services;




-
            our
                ability to price our products and services that are of a quality
                and at a
                price point that is competitive with similar or comparable products
                and
                services offered by our
                competitors;




-
            general
                conditions in the highly secure global communications solutions and
                technologies industries;




-
            the
                success of our efforts to develop, improve and satisfactorily address
                any
                issues relating to our technology;




-
            our
                ability to effectively compete with companies that have substantially
                greater market presence and financial, technical, marketing and other
                resources than we have; and




25




-
            our
                ability to adapt to the consolidation of providers ofhighly
                secure global communications solutions and technologieswith
                or into larger entities, or entry of new entities into the highly
                secure
                global communications solutions and technologies market, would likely
                result in greater competition for
                us.




If
      we are
      unable to successfully compete in our industry, we may be forced to curtail
      or
      cease our business operations.




**Consolidations
      in the industry in which we compete could adversely affect our businesses to
      include a reduction or elimination of our proportionate share of those
      markets**




The
      highly secure global communications solutions and technologies industry
      has experienced consolidation of participants, and this trend may continue.
      If
      highly secure global communications solutions and technologies providers consolidate with companies that utilize technologies that are similar to or
      compete with our secure technology, our proportionate share of the emerging
      market for highly secure global communications solutions and technologies may
      be
      reduced or eliminated. This reduction or elimination of our market share could
      reduce our ability to obtain profitable operations and could cause us to curtail
      or cease our business operations.




We
      believe that our ability to compete successfully in the highly secure global
      communications solutions and technologies market
      depends on a number of factors, including market presence; the adequacy of
      its
      member and technical support services; the capacity, reliability and security
      of
      its network infrastructure; the ease of access to and navigation of the
      capabilities provided by our solutions and technologies; our pricing policies,
      our competitors and suppliers; the timing of introductions of new services
      by us
      and our competitors; our ability to support existing and emerging industry
      standards; and industry and general economic trends. If any of these factors
      negatively impact us, we may be forced to curtail or cease our business
      operations.




**Management
      and directors of Ariel Way have a significant percentage of the fully diluted
      number of common shares and such concentration of ownership may have the effect
      of delaying or preventing a change of control of Ariel
      Way.**




Our
      management and directors beneficially own a significant percentage of our
      outstanding common stock, on a fully diluted basis. **** As
      a
      result, these management and director equity holders will have significant
      influence in matters requiring stockholder approval, including the election
      and
      removal of directors, the approval of significant corporate transactions, such
      as any merger, consolidation or sale of all or substantially all of our assets,
      and the control of our management and affairs. Accordingly, such concentration
      of ownership may have the effect of delaying, deferring or preventing a change
      in control of us, impeding a merger, consolidation, takeover or other business
      combination involving us or discouraging a potential acquirer from attempting
      to
      obtain control of us.




**We
      may not be able to effectively protect our intellectual property rights, the
      foundation of our business, which could harm our business by making it easier
      for our competitors to duplicate our services**




We
      regard
      certain aspects of our products, processes, services and technology as
      proprietary. We intend to take steps to protect them with patents, copyrights,
      trademarks, restrictions on disclosure and other methods. Despite these
      precautions, we cannot be certain that third parties will not infringe or
      misappropriate our proprietary rights or that third parties will not
      independently develop similar products, services and technology. Any
      infringement, misappropriation or independent development could cause us to
      cease operations.




Enfotec
      has filed with
      the
      US Patent Office for protection of technologies related to highly secure telecommunication: Chain Packet
      Processing, CPP and Packet Signature Recognition, PSR, but patents may not
      be
      issued, and if issued, may not protect the intellectual property from
      competition which could seek to design around or invalidate these patents.
      Our
      failure to adequately protect our proprietary rights in our products, services
      and technology could harm the business by making it easier for competitors
      to
      duplicate our services.




We
      own
      several Internet domain names, including www.arielway.com, www.dbsxmedia.com
      and
      www.enfotec.net. The regulation of domain names in the United States and in
      foreign countries may change. Regulatory bodies could establish additional
      top-level domains or modify the requirements for holding domain names, any
      or
      all of which may dilute the strength of our name. We may not acquire or maintain
      our domain name or additional common names in all of the countries in which
      our
      marketplace may be accessed, or for any or all of the top-level domains that
      may
      be introduced. The relationship between regulations governing domain names
      and
      laws protecting proprietary rights is unclear. Therefore, we may not be able
      to
      prevent third parties from acquiring domain names that infringe or otherwise
      decrease the value of our trademarks and other proprietary rights.




26


We
      may
      have to resort to litigation to enforce our intellectual property rights,
      protect our trade secrets, determine the validity and scope of the proprietary
      rights of others, or defend ourselves from claims of infringement, invalidity
      or
      unenforceability. Litigation may be expensive and divert resources even if
      we
      win. This could adversely affect our business, financial condition and operating
      results such that it could cause us to reduce or cease operations.




**Other
      parties may assert that our technology infringes on their intellectual property
      rights, which could divert management time and resources and possibly force
      us
      to redesign our technology**




Technology-based
      industries, such as ours, are characterized by an increasing number of patents
      and frequent litigation based on allegations of patent infringement. From time
      to time, third parties may assert patent, copyright and other intellectual
      property rights to technologies that are important to us. While there currently
      are no outstanding infringement claims pending by or against us, we cannot
      assure you that third parties will not assert infringement claims against us
      in
      the future, that assertions by such parties will not result in costly
      litigation, or that they will not prevail in any such litigation. In addition,
      we cannot assure you that we will be able to license any valid and infringed
      patents from third parties on commercially reasonable terms or, alternatively,
      be able to redesign products on a cost-effective basis to avoid infringement.
      Any infringement claim or other litigation against or by us could have a
      material adverse effect on us and could cause us to reduce or cease
      operations.




**If
      we are unable to successfully develop the technology necessary for our
      solutions, products and processes, we will not be able to bring our products
      to
      market and may be forced to reduce or cease operations**




Our
      ability to commercialize our solutions and products is dependent on the
      advancement of our existing technology. In order to obtain and maintain market
      share we will continually be required to make advances in technology. We cannot
      assure you that our research and development efforts will result in the
      development of such technology on a timely basis or at all. Any failures in
      such
      research and development efforts could result in significant delays in product
      development and cause us to reduce or cease operations. We cannot assure you
      that we will not encounter unanticipated technological obstacles, which either
      delay or prevent us from completing the development of our products and
      processes.




**If
      we cannot deliver the features and functionality our customers demand, we will
      be unable to attract customers**




Our
      future success depends upon our ability to determine the needs of our customers
      and to design and implement technology products and highly secure global
      communications solutions and technologies that meet their needs in a cost
      efficient manner. If we are unable to successfully determine customer
      requirements or if our current or future services do not adequately satisfy
      customer demands, we will be forced to curtail or cease our business
      operations.




**Our
      limited operating history with the revised and new business model may impede
      acceptance of our technologies and service by medium-sized and large
      customers**




Our
      ability to increase revenue and achieve profitability depends, in large part,
      on
      widespread acceptance of our technologies and services by various sized and
      type
      of businesses. Our efforts to sell to these customers may not be successful.
      In
      particular, because we are a relatively new company with a revised and new
      business model and a limited operating history, these target customers may
      have
      concerns regarding our viability and may prefer to purchase critical hardware
      and/or software applications or other services from one of our larger, more
      established competitors. Even if we are able to sell our service to these types
      of customers, they may insist on additional assurances from us that we will
      be
      able to provide adequate levels of service, which could harm our business and
      forced to curtail or cease our business operations.




**Our
      future financial performance will depend on the introduction and widespread
      acceptance of new features to, and enhanced editions of, our technologies and
      services**




Our
      future financial performance will depend on our ability to develop and introduce
      new features to, and new editions of, our technologies and services. The success
      of new features and editions depends on several factors, including the timely
      completion, introduction and market acceptance of the feature or edition.
      Failure in this regard may significantly impair our revenue growth. In addition,
      the market for our technologies and solutions may be limited if prospective
      customers, particularly medium and large customers, require customized features
      or functions that are incompatible with our application delivery model. If
      we
      are unable to develop new features or enhanced editions of our technologies
      and
      solutions that achieve widespread levels of market acceptance or if prospective
      customers require customized features or functions, we will be forced to curtail
      or cease our business operations.




27




**We
      may be dependent on third parties to complete certain projects with the risk
      of
      failure of the project if the third party does not adequately
      perform**




A
      potential difficulty in completing a project could have a material adverse
      effect on our reputation, business and results of operations. In certain
      instances, we may be dependent on the efforts of third parties to adequately
      complete our portion of a project and, even if our products and processes
      perform as required, a project may still fail due to other components of the
      project supplied by third parties. Any such project failure could force us
      to
      curtail a crease our business operations.




**If
      we fail to develop our brand cost-effectively, our business may
      suffer**




We
      believe that developing and maintaining awareness of our brand in a
      cost-effective manner is critical to achieving widespread acceptance of our
      existing and future solutions and technologies and is an important element
      in
      attracting new customers. Furthermore, we believe that the importance of brand
      recognition will increase as competition in our markets develops. Successful
      promotion of our brand will depend largely on the effectiveness of our marketing
      efforts and on our ability to provide reliable and useful technologies and
      services at competitive prices. Brand promotion activities may not yield
      increased revenue, and even if they do, any increased revenue may not offset
      the
      expenses we incurred in building our brand. If we fail to successfully promote
      and maintain our brand, or incur substantial expenses in an unsuccessful attempt
      to promote and maintain our brand, we may fail to attract enough new customers
      or retain our existing customers to the extent necessary to realize a sufficient
      return on our brand-building efforts, and we could be forced to curtail or
      cease
      our business operations.




**Any
      failure to adequately expand our direct sales force will impede our
      growth**




We
      expect
      to be substantially dependent on a direct sales force to obtain new customers,
      particularly medium and large enterprise customers, and to manage our customer
      base. We believe that there is significant competition for direct sales
      personnel with the advanced sales skills and technical knowledge we need. Our
      ability to achieve significant growth in revenue in the future will depend,
      in
      large part, on our success in recruiting, training and retaining sufficient
      direct sales personnel. New hires require significant training and may, in
      some
      cases, take more than a year before they achieve full productivity. Our recent
      hires and planned hires may not become as productive as we would like, and
      we
      may be unable to hire sufficient numbers of qualified individuals in the future
      in the markets where we do business. If we are unable to hire and develop
      sufficient numbers of productive sales personnel, sales of our services will
      suffer and we could be forced to curtail or cease our business
      operations.




**Sales
      to customers outside the United States expose us to risks inherent in
      international sales**




Our
      anticipated sales outside the United States represent, in addition to our
      anticipated sales in the Americas, a significant portion of our future total
      revenue. We intend to expand our domestic and international sales efforts.
      As a
      result, we will be subject to risks and challenges that we would otherwise
      not
      face if we conducted our business only in the United States. These risks and
      challenges include:




-
              localization
                  of our technologies and services, including translation into foreign
                  languages and associated expenses;
  -
              laws
                  and business practices favoring local
                  competitors;
  -
              more
                  established competitors with greater
                  resources;
  -
              compliance
                  with multiple, conflicting and changing governmental laws and regulations,
                  including tax, privacy and data protection laws and
                  regulations;
  -
              different
                  employee/employer relationships and the existence of workers’ councils and
                  labor unions;
  -
              different
                  pricing environments;
  -
              difficulties
                  in staffing and managing foreign
                  operations;
  -
              longer
                  accounts receivable payment cycles and other collection difficulties;
                  and
  -
              regional
                  economic and political conditions.


These
      factors could force us to curtail or cease our business operations.




28


**We
      may not be able to keep up with rapid technological changes, which could render
      our solutions, technologies and processes obsolete**




The
      highly secure global communications solutions and technologies industry is
      characterized by rapid technological change, changes in customer requirements
      and preferences, frequent introduction of products and services embodying new
      technologies and the emergence of new industry standards and practices that
      could render our existing technology and systems obsolete. Our future success
      will depend on our ability to enhance and improve the responsiveness,
      functionality, accessibility and features of our products. We expect that our
      marketplace will require extensive technological upgrades and enhancements
      to
      accommodate many of the new products and services that we anticipate will be
      added to our marketplace. If we are unable to expand and upgrade our technology
      and systems, and successfully integrate new technologies or systems in the
      future, to accommodate such increases in a timely manner, we may be forced
      to
      curtail or cease our business operations.




**We
      may not effectively manage the growth necessary to execute our business plan,
      which could adversely affect the quality of our operations and our
      costs**




In
      order
      to achieve the critical mass of business activity that we believe is necessary
      to successfully execute our business plan, we must significantly increase the
      business operation through acquisitions in addition to increasing the number
      of
      strategic partners and customers that use our solutions, technologies and
      services. This growth will place significant strain on our personnel, systems
      and resources. We also expect that we will continue to hire employees, including
      technical, management-level employees, and sales staff for the foreseeable
      future. This growth will require us to improve management, technical,
      information and accounting systems, controls and procedures. We may not be
      able
      to maintain the quality of our operations, control our costs, continue complying
      with all applicable regulations and expand our internal management, technical
      information and accounting systems in order to support our desired growth.
      If we
      do not manage our growth effectively, we could be forced to curtail or cease
      our
      business operations.




**We
      may not successfully execute or integrate acquisitions**




Our
      business model is dependent upon growth through acquisition of other technology
      and communications solutions providers. We expect to attempt to complete
      acquisitions that we anticipate will enable us to build our highly secure global
      communications solutions and technologies business. Acquisitions involve
      numerous risks, including the following:


-
              Difficulties
                  in integrating the operations, technologies, products and personnel
                  of the
                  acquired companies;
  -
              Diversion
                  of management’s attention from normal daily operations of the
                  business;
  -
              Difficulties
                  in entering markets in which we have no or limited direct prior
                  experience
                  and where competitors in such markets have stronger market
                  positions;
  -
              Initial
                  dependence on unfamiliar partners;
  -
              Insufficient
                  revenues to offset increased expenses associated with acquisitions;
                  and
  -
              The
                  potential loss of key employees of the acquired
                  companies.


Acquisitions
      may also cause us to:


-
              Issue
                  common stock that would dilute our current shareholders’ percentage
                  ownership;
  -
              Assume
                  liabilities;
  -
              Record
                  goodwill and non-amortizable intangible assets that will be subject
                  to
                  impairment testing on a regular basis and potential periodic impairment
                  charges;
  -
              Incur
                  amortization expenses related to certain intangible
                  assets;
  -
              Incur
                  large and immediate write-offs, and restructuring and other related
                  expenses; or
  -
              Become
                  subject to litigation.
  29


Mergers
      and acquisitions of high-technology companies are inherently risky, and no
      assurance can be given that our previous or future acquisitions will be
      successful and will not materially adversely affect our business, operating
      results or financial condition. Failure to manage and successfully integrate
      acquisitions we make could force us to curtail or cease our business
      operations.




**We
      may not be successful in integrating the management teams of our acquired
      companies, which could adversely affect the leadership of our company, divert
      management time and adversely affect the business and results of
      operations**





Mr. Arne
      Dunhem became our President and Chief Executive Officer in February 2005 and
      became the President and Chief Executive Officer of Old Ariel Way in February
      2004. In February 2005, Ms. Voula Kanellias became our Chief Financial
      Officer and became the Chief Financial Officer of Old Ariel Way in September
      2004. Prior to Ms. Kanellias joining Old Ariel Way, Mr. Dunhem and Ms.
      Kanellias had no experience working together. Since Mr. Dunhem joined Old Ariel
      Way and subsequently our Company we have completed two acquisitions and
      integrated various different management teams into our operations. Prior to
      closing those acquisitions, Mr. Dunhem and Ms. Kanellias had not previously
      worked with management at each of our subsidiaries and divisions. Failure to
      successfully integrate the management teams of our acquired companies could
      divert management time and resources, which would adversely affect our
      operations. Our future success also depends on our ability to identify, attract,
      hire, retain and motivate other well-qualified managerial, technical, sales
      and
      marketing personnel. There can be no assurance that these professionals will
      be
      available in the market or that we will be able to meet their compensation
      requirements.




**If
      we were to lose the services of Mr. Arne Dunhem, or other members of our
      management team, we may not be able to execute our business
      strategy**





Our
      future success depends in a large part upon the continued service of key members
      of our senior management team. In particular, our CEO Arne Dunhem is critical
      to
      the overall management of Ariel Way as well as the development and
      implementation of our business strategy. Although we have not a formal
      employment agreement with Mr. Dunhem and other key personnel, we intend to
      design each of their employment agreements to provide incentives to our
      executives to fulfill the terms of their agreements with us, each executive
      or
      employee may terminate their employment with us at any time. We do not maintain
      any key-person life insurance policies. The loss of any of our management or
      key
      personnel could seriously harm our business.




**Our
      business depends upon the growth and maintenance of the global satellite,
      telecommunications and internet infrastructure**




Our
      success will depend on the continued growth and maintenance of the global
      satellite, telecommunications and Internet infrastructure. This includes
      maintenance of a reliable network backbone with the necessary speed, data
      capacity and security for providing reliable Internet services. Satellite,
      telecommunications and Internet infrastructures may be unable to support the
      demands placed on it if the number of users continues to increase, or if
      existing or future users access the Internet more often or increase their
      bandwidth requirements. In addition, viruses, worms and similar programs may
      harm the performance of the Internet. The Internet has experienced a variety
      of
      outages and other delays as a result of damage to portions of its
      infrastructure, and it could face outages and delays in the future. These
      outages and delays could reduce the level of telecommunications and Internet
      usage as well as our ability to provide our solutions. Any failure of the
      Internet infrastructure could force us to curtail or cease our business
      operations.


30


**Item
      7. Financial Statements**








**ARIEL
      WAY, INC. AND SUBSIDIARIES**





**CONSOLIDATED
      FINANCIAL STATEMENTS**


**FOR
      YEAR ENDED SEPTEMBER 30, 2005 AND**


**PERIOD
      FEBRUARY 10, 2004 (INCEPTION)**


**THROUGH
      SEPTEMBER 30, 2004**





31


**ARIEL
      WAY, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      FINANCIAL STATEMENTS**


**FOR
      THE YEAR ENDED SEPTEMBER 30, 2005 AND PERIOD FEBRUARY 10, 2004**


**(INCEPTION)
      THROUGH SEPTEMBER 30, 2004**





**INDEX
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


PAGE(S)Report
                of Independent Registered Public Accounting Firm
            
            F-1-2Consolidated
                Financial StatementsBalance
                Sheet as of September 30, 2005
            
            F-3Statement
                of Operations for the Year Ended September 30, 2005 and Period
                February 10, 2004 (Inception) through September 30,
                2004
            
            F-4Statement
                of Stockholders’ Equity for the Year Ended September 30, 2005 and
                Period February 10, 2004 (Inception) through September 30,
                2004
            
            F-5Statement
                of Cash Flows for the Year Ended September 30, 2005 and Period
                February 10, 2004 (Inception) through September 30,
                2004
            
            F-6-7Notes
                to Consolidated Financial Statements
            
            F-8-20







**BAGELL,
        JOSEPHS & COMPANY, L.L.C.**
 Certified
        Public Accountants
 
 High
        Ridge Commons
 Suites
        400-403
 200
        Haddonfield Berlin Road
 Gibbsboro,
        New Jersey 08026
 (856)
        346-2828 Fax (856) 346-2882
 
 **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 Board
        of
        Directors
 Ariel
        Way, Inc.
 Vienna,
        Virginia 22182
  We
        have
        audited the accompanying consolidated balance sheet of Ariel Way, Inc. and
        Subsidiaries as of September 30, 2005 and the related consolidated statement
        of
        operations, changes in consolidated stockholders’ (deficit), and consolidated
        cash flows for the year ended September 30, 2005 and the period February
        10,
        2004 (Inception) through September 30, 2004. These consolidated financial
        statements are the responsibility of the Company’s management. Our
        responsibility is to express an opinion on these consolidated financial
        statements based on our audits.
  We
        have
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the
        consolidated financial statements are free of material misstatement. An audit
        includes examining, on a test  basis,
        evidence supporting the amounts and disclosures in the consolidated financial
        statements. An audit also includes assessing the accounting principles used
        and
        significant estimates made by management, as well as evaluating the overall
        consolidated financial statement presentation. We believe that our audits
        provide a reasonable basis for our opinion.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the consolidated financial position of Ariel Way,
        Inc.
        and Subsidiaries, as of September 30, 2005 and the period February 10, 2004
        (Inception) through September 30, 2004 and the results of its consolidated
        operations and its consolidated cash flows for the year then ended in conformity
        with accounting principles generally accepted in the United States of
        America.
 
 The
        accompanying consolidated financial statements have been prepared assuming
        the
        Company will continue as a going concern. As discussed in "NOTE 11 - GOING
        CONCERN, the Company: had substantial losses and negative cash flow from
        operations in 2005 and 2004, which significantly reduced stockholders' equity
        and resulted in substantial retained deficits and working capital deficits
        at
        September 30, 2005; and will require additional funding to cover substantial
        expected negative cash flows in 2006. These conditions raise substantial
        doubt
        about the Company's ability to continue as a going concern. Management's
        plans
        in regard to these matters are also described in “NOTE 11 - GOING CONCERN." The
        consolidated financial statements do not include any adjustments that might
        result from the outcome of this uncertainty.
  MEMBER
                    OF:
                AMERICAN
                    INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA)CENTER
                      FOR PUBLIC COMPANY AUDIT FIRMS (CPCAF)NEW
                    JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTSPENNSYLVANIA
                    INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTSFLORIDA
                    STATE BOARD OF ACCOUNTANCY
 
 F-1
  As
        discussed in Note 12, the Company has restated its previously issued consolidated financial statements for the period February 10, 2004 (Inception) through
        September 30, 2004 on its report dated November 29, 2004. The Company has
        restated its consolidated financial statements to decrease the amount of goodwill recorded for the
        purchase of Enfotec, Inc., in the period ended September 30, 2004. The
        transaction reflected the issuance of the Company’s common stock shares in
        exchange for the assets and liabilities of Enfotec, Inc. The consolidated financial statements have been restated as fair value of the stock price
        of the
        1,200,000 shares issued were reduced from $0.596 per share to $0.125 per
        share.
        These transactions did not result in a change in net loss applicable to common
        shares for the period ended September 30, 2004, but resulted in a decrease
        in
        the net stockholders’ deficit during period to $422,727.
 
 BAGELL,
        JOSEPHS & COMPANY, L.L.C.
 Bagell,
        Josephs& Company, LLC.
 Gibbsboro,
        New Jersey
 January
        13, 2006


F-2




**ARIEL
                  WAY, INC. AND SUBSIDIARIES****CONSOLIDATED
                  BALANCE SHEET****SEPTEMBER
                  30, 2005****ASSETS**
  **CURRENT
                  ASSETS**Cash
                  and cash equivalents
              
              $
              122,640Accounts
                  receivable - net
              
              
              315,155Prepaid
                  expenses and other current assets
              
              
              58,269**Total
                  current assets**
              
              
              496,064**PROPERTY
                  AND EQUIPMENT - NET**
              
              
              204,650**OTHER
                  ASSETS**Goodwill
              
              
              100,000Due
                  from related parties
              
              
              15,221Financing
                  fees - net
              
              
              70,000Advances
              
              
              75,000**Total
                  other assets**
              
              
              260,221**TOTAL
                  ASSETS**
              
              $
              960,935**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT****CURRENT
                  LIABILITIES**Accounts
                  payable and accrued expenses
              
              $
              1,390,380Promissory
                  notes
              
              
              1,000,000Debenture
                  payable
              
              
              500,000**Total
                  current liabilities**
              
              
              2,890,380**Total
                  liabilities**
              
              
              2,890,380COMMITMENTS
                  AND CONTINGENCIES**MINORITY
                  INTEREST**
              
              
              (88,264
              )**STOCKHOLDERS'
                  DEFICIT**Preferred
                  stock, $1 par value; 5,000,000 shares authorized;-0-
                  shares issued and outstanding
              
              
              -Common
                  stock, $.001 par value; 245,000,000 shares authorized;38,286,943
                  shares issued and outstanding
              
              
              38,286Additional
                  paid-in capital
              
              
              613,148Deficit
              
              
              (2,492,615
              )**Total
                  stockholders' deficit**
              
              
              (1,841,181
              )**TOTAL
                  LIABILITIES AND STOCKHOLDERS' DEFICIT**
              
              $
              960,935


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


F-3




**ARIEL
        WAY, INC. AND SUBSIDIARIES**
 **STATEMENTS
        OF CONSOLIDATED OPERATIONS**
 **FOR
        YEAR ENDED SEPTEMBER 30, 2005 AND PERIOD**
 **FEBRUARY
        10, 2004 (INCEPTION) THROUGH SEPTEMBER 30, 2004**


**September
                  30,**
              
              **September
                  30,****2005**
              
              **2004****REVENUES**
              
              $
              1,052,616
              
              $
              41,000**COST
                  OF GOODS SOLD**
              
              
              328,497
              
              
              -**GROSS
                  PROFIT**
              
              
              724,119
              
              
              41,000**OPERATING
                  EXPENSES**Professional
                  fees
              
              
              453,722
              
              
              131,986Salaries
              
              
              353,656
              
              
              -Software
                  maintenance
              
              
              37,503
              
              
              -Bank
                  service charges and other
              
              
              2,505
              
              
              155Travel
                  and entertainment
              
              
              101,721
              
              
              1,182Marketing
              
              
              85,748
              
              
              5,130Insurance
              
              
              34,474
              
              
              -Satellite
                  expenses
              
              
              795,000
              
              
              -Payroll
                  taxes and expenses
              
              
              59,005
              
              
              -Telephone
              
              
              27,515
              
              
              1,216Depreciation,
                  Amortization and Impairment
              
              
              617,223
              
              
              -Office
                  supplies
              
              
              12,561
              
              
              3,576Rent
              
              
              85,425
              
              
              -Miscellaneous
              
              
              54,586
              
              
              -Automobile
              
              
              1,041
              
              
              258Dues
                  and subscriptions
              
              
              4,566
              
              
              770Postage
                  and delivery
              
              
              9,177
              
              
              -Printing
              
              
              16,207
              
              
              -Other
              
              
              100,000
              
              
              -**Total
                  Operating Expenses**
              
              
              2,851,635
              
              
              144,273**NET
                  (LOSS) BEFORE OTHER INCOME (EXPENSE)**
              
              
              (2,127,516
              )
              
              (103,273
              )**OTHER
                  INCOME (EXPENSE)**Interest
                  income
              
              
              16,841
              
              
              -Interest
                  expense
              
              
              (60,247
              )
              
              -Other
                  expense
              
              
              (5,684
              )
              
              -Minority
                  interest
              
              
              88,264
              
              
              -Organization
                  costs
              
              
              (301,000
              )
              
              -**Total
                  Other Income (Expense)**
              
              
              (261,826
              )
              
              -**NET
                  (LOSS) BEFORE PROVISION FOR INCOME TAXES**
              
              
              (2,389,342
              )
              
              (103,273
              )Provision
                  for income taxes
              
              
              -
              
              
              -**NET
                  (LOSS) APPLICABLE TO COMMON SHARES**
              
              $
              (2,389,342
              )
              $
              (103,273
              )**NET
                  (LOSS) PER BASIC SHARES**
              
              $
              (0.07
              )
              $
              (0.02
              )**WEIGHTED
                  AVERAGE NUMBER OF COMMON SHARES OUTSTANDING**
              
              
              35,215,785
              
              
              6,639,224




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


F-4




**ARIEL
                    WAY, INC. AND SUBSIDIARIES****STATEMENT
                    OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                    RESTATED****FOR
                    THE YEAR ENDED SEPTEMBER 30, 2005 AND PERIOD FEBRUARY 10, 2004
                    (INCEPTION)
                    THROUGH SEPTEMBER 30, 2004**
  **Additional**
                
                
                
                **Deferred****Preferred
                    Stock**
                
                **Common
                    Stock**
                
                **Paid-In**
                
                
                
                **Financing****Shares**
                
                **Amount**
                
                **Shares**
                
                **Amount**
                
                **Capital**
                
                **(Deficit)**
                
                **Fees**
                
                **Total**Balance,
                    February 10, 2004
                
                $
                -
                
                $
                -
                
                
                -
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                -Common
                    shares issued to founders (services)
                
                
                -
                
                
                -
                
                
                14,200,000
                
                
                14,200
                
                
                51,800
                
                
                -
                
                
                -
                
                
                66,000Common
                    shares issued to Chivas Capital, Inc. for cash
                
                
                -
                
                
                -
                
                
                240,000
                
                
                240
                
                
                29,760
                
                
                -
                
                
                -
                
                
                30,000Common
                    shares issued to Chivas Capital, Inc. for services
                
                
                -
                
                
                -
                
                
                240,000
                
                
                240
                
                
                29,760
                
                
                -
                
                
                -
                
                
                30,000Common
                    shares issued to Market Central, Inc. for asoftware
                    license agreement and prepayment forsoftware
                    technology support services
                
                
                -
                
                
                -
                
                
                2,000,000
                
                
                2,000
                
                
                248,000
                
                
                -
                
                
                -
                
                
                250,000Common
                    shares issued to Cornell Capital forequity
                    line of credit commitment
                
                
                -
                
                
                -
                
                
                1,980,000
                
                
                1,980
                
                
                1,126,620
                
                
                -
                
                
                (1,128,600
                )
                
                -Common
                    shares issued for merger with Enfotec, Inc.
                
                
                -
                
                
                -
                
                
                1,000,000
                
                
                1,000
                
                
                124,000
                
                
                -
                
                
                -
                
                
                125,000Common
                    shares issued for creditors of Enfotec, Inc.
                
                
                -
                
                
                -
                
                
                200,000
                
                
                200
                
                
                24,800
                
                
                -
                
                
                -
                
                
                25,000Net
                    loss for the period
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (103,273
                )
                
                -
                
                
                (103,273
                )Balance,
                    September 30, 2004
                
                
                -
                
                
                -
                
                
                19,860,000
                
                $
                19,860
                
                $
                1,634,740
                
                $
                (103,273
                )
                $
                (1,128,600
                )
                $
                422,727Common
                    stock issued in reverse merger
                
                
                
                
                
                
                
                
                17,428,260
                
                
                17,428
                
                
                (17,428
                )
                
                -
                
                
                -
                
                
                -Common
                    stock issued for services
                
                
                
                
                
                
                
                
                499,342
                
                
                499
                
                
                99,369
                
                
                -
                
                
                -
                
                
                99,868Common
                    stock issued for services
                
                
                
                
                
                
                
                
                499,341
                
                
                499
                
                
                99,368
                
                
                -
                
                
                -
                
                
                99,867Termination
                    Cornell deal
                
                
                
                
                
                
                
                
                -
                
                
                -
                
                
                (1,128,600
                )
                
                -
                
                
                1,128,600
                
                
                -Preferred
                    stock issued
                
                
                2,000,000
                
                
                2,000,000
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                2,000,000Redemption
                    of preferred stock
                
                
                (2,000,000
                )
                
                (2,000,000
                )
                
                -
                
                
                -
                
                
                (74,301
                )
                
                -
                
                
                -
                
                
                (2,074,301
                )Net
                    (loss) for the period
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (2,389,342
                )
                
                -
                
                
                (2,389,342
                )Balance,
                    September 30, 2005
                
                
                -
                
                
                -
                
                
                38,286,943
                
                $
                38,286
                
                $
                613,148
                
                $
                (2,492,615
                )
                $
                -
                
                $
                (1,841,181
                )




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


F-5




**ARIEL
                  WAY, INC. AND SUBSIDIARIES****CONSOLIDATED
                  STATEMENTS OF CASH FLOW****FOR
                  THE YEAR ENDED SEPTEMBER 30, 2005 AND THE****PERIOD
                  FEBRUARY 10, 2004 (INCEPTION) THROUGH SEPTEMBER 30,
                  2004**
  **RESTATED****2005**
              
              **2004****CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  (loss)
              
              $
              (2,389,342
              )
              $
              (103,273
              )**Adjustments
                  to reconcile net (loss) to net cash****provided
                  by (used in) operating activities:**Issuance
                  of stock for services
              
              
              199,736
              
              
              96,000Depreciation,
                  Amortization and Impairment
              
              
              617,223
              
              
              -Minority
                  Interest
              
              
              (88,264
              )
              
              -**Changes
                  in assets and liabilities:**(Increase)
                  in accounts receivable
              
              
              (315,155
              )
              
              -(Increase)
                  in prepaid expenses
              
              
              (19,870
              )
              
              -Increase
                  in accounts payable and accrued expenses
              
              
              914,418
              
              
              6,819**Total
                  adjustments**
              
              
              1,308,088
              
              
              102,819**Net
                  cash (used in) operating activities**
              
              
              (1,081,254
              )
              
              (454
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Acquisition
                  of intangible asset
              
              
              (100,000
              )
              
              -Acquisition
                  of property and equipment
              
              
              (208,373
              )
              
              -Acquisition
                  of financing fees
              
              
              (107,500
              )
              
              -**Net
                  cash (used in) investing activities**
              
              
              (415,873
              )
              
              -**CASH
                  FLOWS FROM FINANCING ACTIVITIES**(Advances)
              
              
              90,221
              
              
              -Proceeds
                  from promissory notes
              
              
              1,000,000
              
              
              -Proceeds
                  from convertible debenture
              
              
              500,000
              
              
              30,000**Net
                  cash provided by financing activities**
              
              
              1,590,221
              
              
              30,000**INCREASE
                  IN CASH AND CASH EQUIVALENTS**
              
              
              93,094
              
              
              29,546**CASH
                  AND CASH EQUIVALENTS - BEGINNING OF YEAR**
              
              
              29,546
              
              
              -**CASH
                  AND CASH EQUIVALENTS - END OF YEAR**
              
              $
              122,640
              
              $
              29,546




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


F-6


**ARIEL
                    WAY, INC. AND SUBSIDIARIES****CONSOLIDATED
                    STATEMENTS OF CASH FLOW (CONTINUED)****FOR
                    THE YEAR ENDED SEPTEMBER 30, 2005 AND THE****PERIOD
                    FEBRUARY 10, 2004 (INCEPTION) THROUGH SEPTEMBER 30,
                    2004**
  **RESTATED****2005**
                
                **2004****SUPPLEMENTAL
                    DISCLOSURE OF CASH FLOW INFORMATION:**Cash
                    paid during the period for:Interest
                    paid
                
                $
                -
                
                $
                -Income
                    taxes paid
                
                $
                -
                
                $
                -**SUPPLEMENTAL
                    DISCLOSURE OF NON-CASH INFORMATION:**Net
                    cash effect of stock acquisition of Enfotec, Inc.:Equipment,
                    net
                
                
                -
                
                
                93Goodwill
                
                
                -
                
                
                8,675Accounts
                    payable
                
                
                -
                
                
                309,468$
                -
                
                $
                318,236Common
                    stock issued for the acquisition of Enfotec, Inc.
                
                $
                -
                
                $
                150,000Net
                    effect of acquisition of dbsXmedia Inc.:Equipment,
                    net
                
                
                -
                
                
                -Contracts
                
                
                210,000
                
                
                -Goodwill
                
                
                100,000
                
                
                -Accounts
                    payable
                
                
                (301,000
                )
                
                -Common
                    stock issued for the acquisition of dbsXmedia, Inc.
                
                $
                9,000
                
                $
                -Common
                    stock issued for services
                
                $
                199,736
                
                $
                96,000Common
                    stock issued for equity line of credit commitment
                
                $
                -
                
                $
                1,128,600




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


F-7
 **ARIEL
            WAY, INC., AND SUBSIDIARIES**
 **NOTES
            TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
            30, 2005 AND 2004**
  **NOTE
          1-** **ORGANIZATION
          AND BASIS OF PRESENTATION**
  Ariel
          Way, Inc., a Florida corporation (“Ariel Way” or the “Company”) was initially
          named Netfran Development Corp., and was incorporated in the State of Florida
          in
          January 2000 as a franchisor of Internet web site design, hosting, updating,
          maintenance, administration, e-mail publishing and
          consulting services, marketing and advertising services and related services
          under the registered service mark "NETSPACE".
  In
          2001, the Company filed with the SEC a registration statement relating
          to the
          distribution of 3,340,088 shares of the Company’s common stock to holders of
          record of Netvertise, Inc., a Florida corporation, common stock as of the
          close
          of business on July 18, 2001 (the "record date"). The registration statement
          was
          declared effective on October 31, 2002. The shares were distributed on
          the basis
          of one of the Company’s shares for every share of Netvertise, Inc. held on the
          record date. The shares of Netvertise being distributed represented 99%
          of the
          Company’s total outstanding shares and Netvertise owned none of the Company’s
          shares of common stock after the distribution. The Company’s common stock began
          trading on the Over-The-Counter market on February 10, 2003, and was quoted
          on
          the NASD Electronic Bulletin Board and initiated trading under the symbol
          “NFDV”.
  On
          February 2, 2005 the Company acquired Ariel Way, Inc., a Delaware corporation,
          (“Old Ariel Way”) in exchange for the issuance by the Company of 33,289,434
          shares of the Company’s common stock to the former stockholders of Old Ariel
          Way. The acquisition was made pursuant to a Share Exchange Agreement dated
          January 20, 2005, between Netfran, Old Ariel Way and the shareholders of
          Old
          Ariel Way common stock. Under the terms of the Share Exchange Agreement,
          each
          share of Old Ariel Way common stock outstanding immediately prior to the
          Effective Date was converted into 1.6762 shares of the Company’s common stock.
          The Company’s outstanding common stock was not affected by the transaction
          besides the issuance of stock to the former stockholders of Old Ariel Way.
          In
          addition to the common stock issued to the stockholders of Old Ariel Way,
          under
          the Share Exchange Agreement each outstanding option or warrant to purchase
          Old
          Ariel Way common stock was converted into an option to purchase the number
          of
          shares of the Company’s common stock equal to the number of Old Ariel Way common
          stock underlying the option or warrant immediately prior to the Effective
          Date
          multiplied by 1.6762 and the exercise price of each option or warrant issued
          by
          us equaled the exercise price of the corresponding Old Ariel Way option
          or
          warrant in effect immediately prior to the Effective Date divided by 1.6762.
  As
          a
          result of the share exchange transaction consummated on February 2, 2005,
          the
          Company’s financial statements are based on Old Ariel Way’s operation, which
          became the Company’s and the business the Company formerly conducted under the
          name Netfran Development Corp. ceased. The Company’s fiscal year also changed as
          a result of the share exchange transaction from December 31 to September
          30. Old
          Ariel Way was formed on February 10, 2004, (“the inception”), and financial
          statements are available from this date.
  In
          connection with the share exchange transaction on February 2, 2005, Old
          Ariel
          Way and Elliot Krasnow, who was the Company’s Chief Executive Officer until the
          Effective Time, entered into a Stock Purchase and Sale Agreement pursuant
          to
          which Mr. Krasnow sold 300,000 shares of the Company’s common stock to Old Ariel
          Way for $300,000. Old Ariel Way retired the shares it acquired from Mr.
          Krasnow.
          In order to finance the $300,000 payment to Mr. Krasnow and to fund the
          expenses
          related to the acquisition, Old Ariel Way borrowed $400,000 from Cornell
          Capital
          Partners, L.P., one of the stockholders of Old Ariel Way (and now one of
          the
          Company’s stockholder). The loan bears interest at the rate of 12% per annum and
          was due and payable on May 31, 2005. The Company is now in default unless
          the
          Company can renegotiate the terms of the loan for an extension with Cornell
          Capital. Cornell Capital is not a controlling stockholder of the Company,
          and
          the Company believes the terms of the loan are at least as favorable to
          the
          Company as could be obtained from an unrelated third party. In order to
          induce
          Cornell Capital to make the loan to Old Ariel Way, Arne Dunhem, the Chairman
          and
          Chief Executive Officer of Old Ariel Way
  F-8
 **ARIEL
              WAY, INC., AND SUBSIDIARIES**
 **NOTES
              TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
              30, 2005 AND 2004**
  **NOTE
          1-** **ORGANIZATION
          AND BASIS OF PRESENTATION (CONTINUED)**
  before
          the Effective Time and the Company’s Chief Executive Officer after the Effective
          Time, provided a personal guarantee of payment to Cornell Capital. The
          Company
          expects to compensate Mr. Dunhem for undertaking the personal guarantee
          and
          pledge on the Company’s behalf, but the terms of any such compensation have not
          yet been agreed to. The Company’s Compensation Committee of the Board of
          Directors will determine the amount and nature of compensation to Mr. Dunhem,
          but the Company does not expect that any compensation to him will be paid
          in
          cash.
  On
          February 2, 2005, following the Effective Date of the share exchange transaction
          and the Company’s acquisition of Old Ariel Way, the Company ceased to conduct
          the Internet franchise business conducted prior to the Effective Date in
          order
          to concentrate solely on the development of its highly secure global
          communications business.
  On
          February 2, 2005, in connection with the acquisition and pursuant to the
          Share
          Exchange Agreement dated January 20, 2005, all of the Company’s executive
          officers resigned and the executive officers of Old Ariel Way immediately
          prior
          to the Effective Date became the Company’s new executive officers.
  On
          February 19, 2005 the Company completed the acquisition of dbsXmedia, Inc., a Delaware corporation
          (“dbsXmedia”) with offices in Washington, D.C. and United Kingdom. dbsXmedia
          provides satellite-based services for Business Television (BTV), digital
          signage, training and multimedia. The Company purchased from dbsXmedia
          1,500
          shares of its common stock, par value $0.001 per share. After this transaction
          dbsXmedia had 2,500 shares of common stock outstanding out of which the
          Company owns 60%
          and Zygot, LLC, which is owned by the management of dbsXmedia, became the
          minority 40% shareholder. dbsXmedia continues to operate under its existing
          name.
 
 On
          April
          21, 2005 dbsXmedia completed a transaction pursuant to an asset Purchase
          Agreement with Loral Skynet Network Services, Inc., CyberStar L.P., and
          CyberStar, LLC, pursuant to which dbsXmedia purchased Loral Skynet’s Business
          Television product line and assumed the management and further development
          of
          Loral Skynet’s traditional business television services (BTV). Under the terms
          of the transaction, dbsXmedia acquired Loral Skynet’s BTV client base in
          exchange for $400,000 in cash, 300,000 shares of the Company’s common stock, and
          dbsXmedia’s assumption of ongoing contracts for infrastructure support from
          Loral Skynet. The ownership transition will leave unchanged the services
          for
          current customers, under an agreement that maintains the existing teleport
          and
          satellite infrastructure provided by Loral Skynet. dbsXmedia made and will
          make
          cash purchase price payment to Loral Skynet in three installments as follows:
          (i) $250,000
          at the closing of the transaction, (ii) $75,000
          on the first anniversary of the closing of the transaction; and (iii) $75,000
          on the second anniversary of the Closing of the transaction. T he
          $250,000 cash at closing was allocated from prepaid revenue transferred
          to
          dbsXmedia from Loral Skynet as part of the business acquired. As
          part
          of the transaction, the Company delivered
          a commitment to the benefit of dbsXMedia in the form of a Conditional Guaranty
          in favor of Loral Skynet Network Services, Inc., CyberStar, L.P., CyberStar,
          LLC, and Loral Skynet, a division of Loral SpaceCom Corporation, having
          a total
          value of $3,000,000.
 
 On
          April
          28, 2005, the Company increased the total number of authorized shares of
          the
          Company’s capital stock from 50,000,000 shares, consisting solely of the
          Company’s common stock, to a total of 250,000,000 shares of the Company’s
          capital stock, consisting of 245,000,000 shares of the Company’s common stock
          and 5,000,000 shares of the Company’s preferred stock, with all of the preferred
          stock to be “blank check” preferred stock
 
 On
          May
          26, 2005 the Company changed the Company’s name from Netfran Development Corp.
          to Ariel Way, Inc. and the Company changed the Company’s trading symbol from
“NFDV” to the new symbol “AWYI”.
  F-9
 **ARIEL
                WAY, INC., AND SUBSIDIARIES**
 **NOTES
                TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
                30, 2005 AND 2004**
 **NOTE
          1-** **ORGANIZATION
          AND BASIS OF PRESENTATION** **(CONTINUED)**
 
 **History
          of Old Ariel Way**
  Old
          Ariel
          Way was formed in the State of Delaware as a Limited Liability Corporation
          on
          February 10, 2004 and focused on providing executive management and merger
          and
          acquisition services within the area of highly secure global communications
          services for government customers and global telecommunications operators
          and
          corporate enterprises. On September 23, 2004, Old Ariel Way converted from
          a
          limited liability company to a Delaware corporation and changed its name
          to
“Ariel Way, Inc.”
  On
          September 27, 2004, Old Ariel Way closed a transaction with the publicly
          traded
          Delaware corporation Market Central, Inc. “OTCBB:MKTE”, and issued to Market
          Central 2,000,000 shares of Old Ariel Way common stock pursuant to the
          terms of
          a Stock Purchase Agreement dated September 24, 2004. The purchase consideration
          had an aggregate value of $250,000, consisting of the rights to certain
          software
          technology with a value of $200,000 and development/support services
          consideration rendered by Market Central’s senior executives with a value of
          $50,000.
  On
          September 30, 2004, Old Ariel Way entered into an Agreement and Plan of
          Merger
          with Enfotec, Inc., a private Delaware company, pursuant to which a newly
          formed, wholly-owned subsidiary of Old Ariel Way merged into Enfotec. The
          merger
          was consummated on September 30, 2004. As a result of the merger, Enfotec
          became
          a wholly-owned subsidiary of Old Ariel Way. On September 30, 2004, Old
          Ariel Way
          issued 1,000,000 shares of its common stock to the holders of Enfotec’s common
          stock, with an additional 1,000,000 shares of Old Ariel Way’s common stock held
          in reserve for issuance to the Enfotec stockholders if Enfotec met certain
          revenue milestones as of July 15, 2005. On September 30, 2004 Old Ariel
          Way also
          issued to certain creditors of Enfotec, Inc. 200,000 shares of Old Ariel
          Way’s
          common stock pursuant to the terms of a settlement of certain liabilities
          of
          Enfotec.
  On
          April 19, 2005 Old Ariel Way designated 2,000,000 shares of Old Ariel Way
          preferred stock as “Series A Redeemable Preferred Stock”. Each issued and
          outstanding share of Old Ariel Way Series A Redeemable Preferred Stock
          accrues a
          dividend from the original issue date equal to twelve percent (12%) of
          the
          original purchase price (which was $1.00 per share, as adjusted upon any
          stock
          split, reverse stock split, combination or recapitalization affecting the
          shares
          of Series A Redeemable Preferred Stock) per annum, which shall be payable
          when,
          as and if declared by the Old Ariel Way Board of Directors. Old Ariel Way
          shall
          not pay or declare any dividends on the Common Stock of Old Ariel Way unless
          the
          full accrued and unpaid dividends on the Series A Redeemable Preferred
          Stock
          described in this paragraph have been paid.
 
 On
          April 21, 2005, Old Ariel Way sold and issued to Cornell Capital Partners,
          LP,
          all of the Series A Redeemable Preferred Stock of Old Ariel Way, for a
          purchase
          price of $1.00 per share and an aggregate purchase price of $2,000,000.
          The
          equity provided by the sale of the Series A Preferred Stock enabled us
          to
          satisfy a closing condition of a transaction to acquire the Loral Skynet
          Business TV client base. The preferred stock was redeemed on August 10,
          2005,
          and the Company returned the $2,000,000 to Cornell Capital Partners,
          LP.
 F-10
 **ARIEL
                WAY, INC., AND SUBSIDIARIES**
 **NOTES
                TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
                30, 2005 AND 2004**
 **NOTE
          2-** **SUMMARY
          OF SIGNIFICANT ACCOUNTING POLICIES**
 
 **Principles
          of Consolidation**
 
 The
          consolidated financial statements include the accounts of the Company and
          its
          subsidiaries. All significant inter-company accounts and transactions have
          been
          eliminated in consolidation.
 
 **Cash
          and Cash Equivalents**
 
 The
          Company considers all highly liquid debt instruments and other short-term
          investments with an initial maturity of three months or less to be cash
          or cash
          equivalents.
 
 The
          Company maintains cash and cash equivalents with a financial institution
          that
          exceeds the limit of insurability under the Federal Deposit Insurance
          Corporation. However, due to management’s belief in the financial strength of
          Bank of America, management does not believe the risk of keeping deposits
          in
          excess of federal deposit limits at Bank of America to be a material risk.
 
 **Restricted
          Cash**
 
 The
          Company was during the reporting period required to maintain restricted
          cash for
          the performance of obligations under certain service agreements. On April
          21,
          2005, Old Ariel Way sold and issued to Cornell Capital Partners, LP, (“Cornell
          Capital”), 2,000,000 Series A Redeemable Preferred Stock of Old Ariel Way, for
          a
          purchase price of $1.00 per share and an aggregate purchase price of $2,000,000.
          The cash proceeds provided by the sale of the Series A Preferred Stock
          that
          became restricted cash, enabled us to satisfy a closing condition of a
          transaction to acquire the Loral Skynet Business TV client base. The
          Company redeemed the 2,000,000 Series A Redeemable Preferred Stock on
          August 10, 2005.
 
 **Revenue
          Recognition**
 
 The
          Company records its transactions under the accrual method of accounting
          whereby
          income gets recognized when the services are rendered.
 
 The
          Company, in addition to its Business
          Television services, from time to time receives miscellaneous revenues. During the
          years
          ended September 30, 2005 and 2004, the Company generated $55,300 and $0
          in
          miscellaneous revenues, respectively.
 
 **Long-Lived
          Assets**
 
 The
          Company reviews its long-lived assets for impairment whenever events or
          changes
          in circumstances indicate that the carrying amount of an asset may not
          be
          recoverable.
 
 **Goodwill
          and Other Intangible Assets**
  In
          June
          2001, the FASB issued Statement No. 142, “ *Goodwill
          and Other Intangible Assets* ”.
          This
          statement addresses financial accounting and reporting for acquired goodwill
          and
          other intangible assets and supersedes APB Opinion No. 17, Intangible Assets.
          It
          addresses how intangible assets that are acquired individually or with
          a group
          of other assets (but not those acquired in a business combination) should
          be
          accounted for in financial statements upon their acquisition. This Statement
          also addresses how goodwill and other intangible assets should be accounted
          for
          after they have been initially recognized in the financial statements.
          The
          Company impaired $509,468 for the year ended September 30, 2005.
 
 F-11
 **ARIEL
                WAY, INC., AND SUBSIDIARIES**
 **NOTES
                TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
                30, 2005 AND 2004**
 **NOTE
          2-** **SUMMARY
          OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 **Income
          Taxes**
 
 The
          Company has adopted the provisions of Statement of Financial Accounting
          Standards (“SFAS”) No. 109, Accounting for Income Taxes. The Statement requires
          an asset and liability approach for financial accounting and reporting
          of income
          taxes, and the recognition of deferred tax assets and liabilities for the
          temporary differences between the financial reporting bases and tax bases
          of the
          Company’s assets and liabilities at enacted tax rates expected to be in effect
          when such amounts are realized or settled.
 
 **Use
          of Estimates**
 
 The
          preparation of financial statements in conformity with the accounting principles
          generally accepted in the Untied States of America requires management
          to make
          estimates and assumptions that affect the reported amounts of assets and
          liabilities and disclosure of contingent assets and liabilities at the
          date of
          the financial statements, and the reported amounts of revenue and expenses
          during the reporting period. Actual results could differ from those
          estimates.
 
 **Reclassification**
 
 Certain
          amounts in the September 30, 2004 financial statements were reclassified
          to
          conform to the September 30, 2005 presentation. The reclassifications in
          the
          September 30, 2004 financial statements resulted in no changes to the
          accumulated deficits.
 
 
 **Property
          and Equipment**
 
 Property
          and equipment are stated at cost and depreciated using straight-line and
          accelerated methods over the following estimated useful lives of the
          assets:
 
 Computer
                    equipment
                3
                    -
                    5 yearsAutomobile
                3
                    -
                    5 yearsEquipment
                5
                    -
                    7 years
 
 Differences
          between the straight-line method of depreciation and the tax-accelerated
          method
          of depreciation are immaterial.
 
 **Recent
          Accounting Pronouncements**
 
 In
          December 2004, the FASB issued SFAS No. 123(R ), *Share-Based
          Payment* ,
          which
          supersedes APB Opinion 25, *Accounting
          for Stock Issued to Employees* ,
          and
          replaces FASB Statement 123, *Accounting
          for Stock-Based Compensation* .
          to
          provide investors and other users of financial statements with more complete
          and
          neutral financial information by requiring that the compensation cost relating
          to share-based payment transactions be recognized in the financial statements.
          That cost is measured based on the fair value of the equity or liability
          instruments issued. The adoption of this standard will not have impact
          on the
          Company’s financial condition or results of operations.
 
 F-12
 **ARIEL
                WAY, INC., AND SUBSIDIARIES**
 **NOTES
                TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
                30, 2005 AND 2004**
  **NOTE
          2-** **SUMMARY
          OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 **Recent
          Accounting Pronouncements (Continued)**
 
 On
          December 16, 2004, FASB issued Statement of Financial Accounting Standards
          No.
          153, Exchanges of Non-monetary Assets, an amendment of APB Opinion No.
          29,
          Accounting for Non-monetary Transactions (" SFAS 153"). This statement
          amends
          APB Opinion 29 to eliminate the exception for non-monetary exchanges of
          similar
          productive assets and replaces it with a general exception for exchanges
          of
          non-monetary assets that do not have commercial substance. Under SFAS 153,
          if a
          non-monetary exchange of similar productive assets meets a commercial-substance
          criterion and fair value is determinable, the transaction must be accounted
          for
          at fair value resulting in recognition of any gain or loss. SFAS 153 is
          effective for non-monetary transactions in fiscal periods that begin after
          June
          15, 2005. The Company does not anticipate that the implementation of this
          standard will have a material impact on its financial position, results
          of
          operations or cash flows.
 
 In
          May
          2005, the FASB issued SFAS No. 154, *Accounting
          Changes and Error Corrections* ,
          which
          replaces APB Opinion No. 20, *Accounting
          Changes* ,
          and
          FASB Statement No.3, *Reporting
          Accounting Changes in Interim Financial Statements* .
          This
          statement applies to all voluntary changes in accounting principle, and
          changes
          the requirements for accounting for and reporting a change in accounting
          principle. The statement will also apply to changes in accounting principle
          required by an accounting.
 
 **Fair
          Value of Financial Instruments**
 
 The
          carrying amounts reported in the consolidated balance sheets for cash and
          cash
          equivalents, and accounts payable approximate fair value because of the
          immediate or short-term maturity of these financial instruments.
 
 **Advertising
          Costs**
 
 The
          Company expenses the costs associated with advertising as incurred. Advertising
          and promotional expenses were approximately $85,748 and $0 for the years
          ended
          September 30, 2005 and 2004, respectively.
 
 **Fixed
          Assets**
 
 Furniture
          and equipment are stated at cost. Depreciation is computed using the
          straight-line method over the estimated useful lives of the assets. The
          costs
          associated with normal maintenance, repair, and refurbishment of equipment
          are
          charged to expense as incurred. The capitalized cost of equipment under
          capital
          leases is amortized over the lesser of the lease term or the asset’s estimated
          useful life, and is included in depreciation and amortization expense in
          the
          consolidated statements of operations.
 
 When
          assets are retired or otherwise disposed of, the costs and related accumulated
          depreciation are removed from the accounts, and any resulting gain or loss
          is
          recognized as income for the period. The cost of maintenance and repairs
          is
          charged to income as incurred; significant renewals and betterments are
          capitalized. Deductions are made for retirements resulting from renewals
          or
          betterments.
 
 **Accounts
          Receivable**
 
 The
          Company conducts business and extends credit based on an evaluation of
          the
          customers’ financial condition, generally without requiring collateral. Exposure
          to losses on receivables is expected to vary by customer due to the financial
          condition of each customer. The Company monitors exposure to credit losses
          and
          maintains allowances for anticipated losses considered necessary under
          the
          circumstances. ******
 
 F-13
 **ARIEL
                WAY, INC., AND SUBSIDIARIES**
 **NOTES
                TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
                30, 2005 AND 2004**
  **NOTE
          2-** **SUMMARY
          OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 **Accounts
          Receivable (Continued)**
 
 Accounts
          receivable are generally due within 30 days and collateral is not required.
          Unbilled accounts receivable represents amounts due from customers for
          which
          billing statements have not been generated and sent to the customers. The
          Company has not made any allowances for the doubtful accounts as there
          are no
          material aged receivables as of September 30, 2005. Management of the Company
          feels the receivables are fully collectible.
 
 **Deferred
          Financing Fees**
 
 On
          September 30, 2004, Old Ariel Way entered into a 2004 Standby Equity
          Distribution Agreement with Cornell Capital. This agreement was terminated
          on
          July 20, 2005 and the Company entered into a new 2005 Standby Equity
          Distribution Agreement with Cornell Capital on July 21, 2005. In connection
          with
          the 2004 Standby Equity Distribution Agreement, Cornell Capital received
          a
          commitment fee in the form of 1,980,000 shares of Old Ariel Way common
          stock
          that were converted into an aggregate of 3,318,876 shares of our common
          stock as
          a result of our acquisition of Old Ariel Way on February 2, 2005. These shares were issued as payment for financing fees to Cornell Capital
          for
          issuing the 2004
          Standby Equity Distribution Agreement and was valued at $1,128,600 .
          The 2005
          Standby Equity Distribution Agreement runs for a period of 24 months. The prior agreement was terminated and
          the
          financing fee was written off against Additional Paid-In Capital.
 
 **Stock-Based
          Compensation**
 
 Employee
          stock awards under the Company's compensation plans are accounted for in
          accordance with APB Opinion No. 25, “Accounting for Stock Issued to Employees”
(“APB 25”), and related interpretations. The Company provides the disclosure
          required by Statement of Financial Accounting Standard No. 123(R ),
“ *Share
          Based Payment* ”
          (“SFAS 123 (R )”), and related interpretations. Stock-based awards to
          non-employees are accounted for under the provisions of SFAS 123 (R ) and
          have
          adopted the enhanced disclosure provisions of Statement of Financial Accounting
          Standard No. 148, “Accounting for Stock-Based Compensation-Transition and
          Disclosure, an Amendment of SFAS No. 123” (“SFAS No.148”).
 
 The
          Company measures compensation expense for its employee stock-based compensation
          using the intrinsic-value method. Under the intrinsic-value method of accounting
          for stock-based compensation, when the exercise price of options granted
          to
          employees is less than the estimated fair value of the underlying stock
          on the
          date of grant, deferred compensation is recognized and is amortized to
          compensation expense over the applicable vesting period. In each of the
          periods
          presented, the vesting period was the period in which the options were
          granted.
 
 The
          Company measures compensation expense for its non-employee stock-based
          compensation under the FASB Emerging Issues Task Force Issue No. 96-18,
          “Accounting for Equity Instruments ** that
          are Issued to Other Than Employees for Acquiring, or in Conjunction with
          Selling
          Goods or Services”. The fair value of the option issued is used to measure the
          transaction, as this is more reliable than the fair value of the services
          received. The fair value is measured at the value of the Company’s common stock
          on the date that the commitment for performance by the counterparty has
          been
          reached or the counterparty’s performance is complete. The fair value of the
          equity instrument is charged directly to compensation expense and additional
          paid-in capital.
 
 F-14
 **ARIEL
                WAY, INC., AND SUBSIDIARIES**
 **NOTES
                TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
                30, 2005 AND 2004**
  **NOTE
            2-** **SUMMARY
            OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 **Earnings
          (Loss) Per Share of Common Stock**
 
 Historical
          net income (loss) per common share is computed using the weighted average
          number
          of common shares outstanding. Diluted earnings per share (EPS) include
          additional dilution from common stock equivalents, such as stock issuable
          pursuant to the exercise of stock options and warrants. Common stock equivalents
          were not included in the computation of diluted earnings per share when
          the
          Company reported a loss because to do so would be antidilutive for periods
          presented.
 
 The
          following is a reconciliation of the computation for basic and diluted
          EPS:
 **2005**
                  
                  **2004**Net
                      loss
                  
                  $
                  (2,389,342
                  )
                  $
                  (103,273
                  )Weighted-average
                      common sharesOutstanding
                      (Basic)
                  
                  
                  35,215,785
                  
                  
                  6,639,224Weighted-average
                      common stockEquivalentsStock
                      options
                  
                  
                  -
                  
                  
                  -Warrants
                  
                  
                  -
                  
                  
                  -Weighted-average
                      common sharesOutstanding
                      (Diluted)
                  
                  
                  35,215,785
                  
                  
                  6,639,224
  Options
            and warrants outstanding to purchase stock were not included in the computation
            of diluted EPS for September 30, 2005 and 2004 because inclusion would
            have been
            antidilutive.
  **Currency
            Risk and Foreign Currency Translation**
 
 The
            Company transacts business in currencies other than the U.S. Dollar,
            primarily
            the British Sterling Pound and the Euro Dollar. All currency transactions
            are
            undertaken in the spot foreign exchange market and the Company does not
            use
            currency forward contracts, currency options, currency borrowings interest
            rate
            swaps or any other derivative hedging strategy at this point in time.
            Foreign
            currency translation losses were immaterial during fiscal year
            2005.
 
 **NOTE
            3-** **EQUIPMENT**
  Property
                      and equipment at September 30, 2005 and 2004 is as
                      follows:**2005**
                  
                  **2004**Equipment
                  
                  $
                  187,407
                  
                  $
                  8,675Computers
                  
                  
                  12,460
                  
                  
                  -Furniture
                  
                  
                  17,181
                  
                  
                  -Less:
                      accumulated depreciation
                  
                  
                  (12,398
                  )
                  
                  -Net
                      equipment
                  
                  $
                  204,650
                  
                  $
                  8,675
  Depreciation
            expense for the years ended September 30, 2005 and 2004 was $12,398 and
            $0,
            respectively.
 F-15
 **ARIEL
                  WAY, INC., AND SUBSIDIARIES**
 **NOTES
                  TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
                  30, 2005 AND 2004**
 **NOTE
            4-**   **DEBENTURE
            PAYABLE**
 
 Ariel
            Way, Inc. on September 30, 2004, issued a secured debenture to Cornell
            Capital
            Partners, L.P., whereas Ariel Way, Inc. would receive $500,000, with
            a promise
            to pay to Cornell Capital Partners the principal sum of $500,000 together
            with
            interest on the unpaid principal of this debenture at the rate of 5%
            per year
            from the date of the debenture until paid. The secured debenture is due
            on
            September 29, 2006 and is secured by the Company’s stock.
 
 **NOTE
            5-**   **PROMISSORY
            NOTES**
 
 Ariel
            Way, Inc on February 2, 2005, borrowed an additional $400,000 from Cornell
            Capital Partners, L.P. whereas Ariel Way received the $400,000, with
            a promise
            to pay to Cornell Capital Partners the principal sum of $400,000 together
            with
            interest on the unpaid principal at the rate of 12% per annum and is
            due and
            payable on May 31, 2005 and is secured by the Company’s stock. The Company is
            currently in default with this loan.
 
 Ariel
            Way, Inc on July 28, 2005, borrowed an additional $600,000 from Cornell
            Capital
            Partners, L.P. whereas Ariel Way received the $600,000, with a promise
            to pay to
            Cornell Capital Partners the principal sum of $600,000 together with
            interest on
            the unpaid principal at the rate of 12% per annum and is due and payable
            on May
            31, 2006 and is secured by the Company’s stock.
 
 **NOTE
            6-** **COMMITMENTS
            AND CONTINGENCIES**
 
 On
            September 30, 2004, Old Ariel Way entered into a $50 million 2004 Standby
            Equity
            Distribution Agreement with Cornell Capital. This agreement was terminated
            on
            July 20, 2005 and the Company entered into a new 2005 Standby Equity
            Distribution Agreement with Cornell Capital on July 21, 2005. The 2005
            Standby Equity Distribution Agreement provides, generally, that Cornell will purchase up to $50 million of
            common
            stock over a two-year period, with the time and amount of such purchases,
            if
            any, at the Company’s discretion. Cornell will purchase the shares at a 4%
            discount to the prevailing market price of the common stock. There
            are certain conditions applicable to the Company’s ability to draw down on
            the 2005
            Standby Equity Distribution Agreement including the filing and effectiveness of a registration statement covering
            the
            resale of all shares of common stock that may be issued to Cornell under
            the 2005
            Standby Equity Distribution Agreement and the Company’s adherence with certain covenants. The registration statement
            has not yet become effective. In
            the year ended September 30, 2005, the Company has not drawn down any
            funds
            under the 2005
            Standby Equity Distribution Agreement from Cornell Capital.
  On
            April
            21, 2005, a s
            part of
            a transaction pursuant
            to an asset Purchase Agreement with Loral Skynet ,
            we delivered
            a commitment to the benefit of dbsXmedia in the form of a Conditional
            Guaranty
            for satellite services in favor of Loral Skynet, having a total value
            of
            $3,000,000 that will reduce to $1,500,000 on April 21, 2006 and fully
            expire on
            April 21, 2007.
  F-16
 **ARIEL
                  WAY, INC., AND SUBSIDIARIES**
 **NOTES
                  TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
                  30, 2005 AND 2004**
 
 **NOTE
            7-** **STOCKHOLDERS’
            EQUITY (DEFICIT)**
 
 **Preferred
            Stock**
 
 The
            Company has 5,000,000 shares of preferred stock authorized, at $1.00
            par value
            per share, of which none of the shares of preferred stock is outstanding
            as of
            September 30, 2005 and 2004.
 
 On
            April
            21, 2005, Old Ariel Way sold and issued to Cornell Capital Partners,
            LP, two
            million (2,000,000) shares of the Series A Redeemable Preferred Stock
            of Old
            Ariel Way, for a purchase price of $1.00 per share and an aggregate purchase
            price of $2,000,000 with the rights, preference and privileges set forth
            in the
            Certificate of Designation filed by Old Ariel Way on April 19, 2005 with
            the
            Delaware Secretary of State on the terms and conditions set forth in
            a Stock
            Purchase Agreement by and between Ariel Way, Inc. and Cornell Capital
            Partners,
            LP, dated April 19, 2005. These shares were redeemed by Old Ariel Way
            on August
            10, 2005 for a redemption price of $2,074,301 including dividend and
            the
            preferred stock was returned to the Company’s treasury. We believe the issuance
            of the stock to be exempt from registration under Section 4(2) of the
            Securities Act.
  **Common
            Stock**
 
 As
            of September 30, 2005, the Company had 245,000,000 shares of common stock
            authorized at $0.001 par value per share, and 38,286,943 issued and outstanding.
 
 The
            following describes the common stock transactions for the year ended
            September
            30, 2005.
 
 On
            September 30, 2004, Old Ariel Way entered into a 2004 Standby Equity
            Distribution Agreement with Cornell Capital Partners, LLP. This
            agreement was terminated on July 20, 2005 and we entered into a new 2005
            Standby
            Equity Distribution Agreement with Cornell Capital on July 21, 2005.
            In
            connection with the 2004 Standby Equity Distribution Agreement, Cornell
            Capital
            received a commitment fee in the form of 1,980,000 shares of Old Ariel
            Way
            common stock that were converted into an aggregate of 3,318,876 shares
            of our
            common stock as a result of our acquisition of Old Ariel Way on February
            2,
            2005.
 
 On
            September 30, 2004, Old Ariel Way issued to the stockholders of Enfotec
            1,000,000 shares of Old Ariel Way’s common stock pursuant to the terms of a
            share exchange under which Old Ariel Way acquired Enfotec. In addition,
            on
            September 30, 2004, Old Ariel Way also issued to certain stockholders
            and
            creditors of Enfotec. 200,000 shares of Old Ariel Way common stock, valued
            at a
            fair value of $25,000, based on a price of $0.125 per share, pursuant
            to the
            terms of a settlement of certain liabilities of Enfotec.
 
 On
            February 2, 2005, under the terms of the Share Exchange Agreement, by
            and among
            us, Old Ariel Way and the holders of Old Ariel Way common stock, dated
            as of
            January 20, 2005, each share of Old Ariel Way common stock outstanding
            immediately prior to February 2, 2005 was converted into 1.6762 shares
            of our
            common stock. Our then outstanding common stock was not affected by the
            acquisition. As a result of the acquisition, we issued 33,289,434 shares
            of
            common stock to the former stockholders of Old Ariel Way. In addition
            to the
            common stock issued to the former stockholders of Old Ariel Way, under
            the Share
            Exchange Agreement each outstanding option or warrant to purchase Old
            Ariel Way
            common stock was converted into an option to purchase the number of shares
            of
            our common shares equal to the number of Old Ariel Way common shares
            underlying
            the option or warrant immediately prior to February 2, 2005 multiplied
            by 1.6762
            and the exercise price of each option or warrant we issued equals the
            exercise
            price of the corresponding Old Ariel Way option or warrant in effect
            immediately
            prior to February 2, 2005 divided by 1.6762.
  F-17
 **ARIEL
                  WAY, INC., AND SUBSIDIARIES**
 **NOTES
                  TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
                  30, 2005 AND 2004**
  **NOTE
              7-** **STOCKHOLDERS’
              EQUITY (DEFICIT) (CONTINUED)**
 
 **Common
            Stock (Continued)**
  On
            February 2, 2005, in connection with the Acquisition, Old Ariel Way,
            Inc. and
            Netfran Development Corp., entered into a Stock Purchase and Sale Agreement
            pursuant to which Netfran Development Corp. sold 300,000 shares of its
            common
            stock to Old Ariel Way, Inc., for $300,000. Old Ariel Way will retire
            the shares
            it acquired from Netfran Development Corp. As of June 30, 2005 these
            300,000
            shares are still issued and outstanding.
  On
            February 2, 2005, after we acquired Old Ariel Way, we issued 499,341
            shares of
            our common stock to Joel Bernstein, Esq., for providing legal services
            in
            connection with the acquisition transaction and we issued 499,342 shares
            of
            common stock to Mr. Michael Jordan for advisory services in connection
            with the
            acquisition transaction.
  On
            April
            28, 2005, pursuant to an asset Purchase Agreement with Loral Skynet Network
            Services, Inc., CyberStar L.P. and CyberStar, LLC, dbsXmedia purchased
            Loral
            Skynet’s Business Television product line and assumed the management and further
            development of Loral Skynet’s traditional business television services (BTV).
            Under the terms of the transaction, dbsXmedia acquired Loral Skynet’s BTV client
            base in exchange for cash and shares of common stock and the assumption
            of
            ongoing contracts for infrastructure support from Loral Skynet. As
            part
            of the transaction, we issued
            to Loral Skynet a total of 300,000 shares of common stock. The value
            per share
            at the time the transaction was $0.35 per share.
  On
            April
            21, 2005, Old Ariel Way sold and issued to Cornell Capital Partners,
            LP, two
            million (2,000,000) shares of the Series A Redeemable Preferred Stock
            of Old
            Ariel Way, for a purchase price of $1.00 per share and an aggregate purchase
            price of $2,000,000 with the rights, preference and privileges set forth
            in the
            Certificate of Designation filed by Old Ariel Way on April 19, 2005 with
            the
            Delaware Secretary of State on the terms and conditions set forth in
            a Stock
            Purchase Agreement by and between Ariel Way, Inc. and Cornell Capital
            Partners,
            LP, dated April 19, 2005.
 
 **NOTE
            8-** **PATENTS**
 
 As
            of September 30, 2005, the Company had filed disclosure
            documents with the US Patent Office on two technologies, Chain Packet
            Processing
            and Pattern Signature Recognition. These technologies are at the core
            of our
            Enfotec products. These are the enabling technologies that, we believe,
            allow us
            to perform at speeds better than proprietary platforms offered by our
            competitors while having an open system architecture at our core.
  Enfotec
            filed Disclosure Documents with the US Patent Office for protection
            of:
  -
                  Chained
                      Packet Processing, “CPP”, with Patent Office Disclosure Document No.
                      528391; and
  -
                  Packet
                      Signature Recognition, “PSR” technologies, with Patent Office Disclosure
                      Document No. 528389
  We
            intend
            to actively pursue through research and development additional advanced
            intellectual properties in the area of global highly secure telecommunications
            and associated technologies and we intend to apply for protection of
            all
            intellectual properties with the US Patent Office. As
            of September 30, 2005, the Company has not been granted approval of any
            patents.
 
 F-18
 **ARIEL
                  WAY, INC., AND SUBSIDIARIES**
 **NOTES
                  TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
                  30, 2005 AND 2004**
  **NOTE
              9-** **LITIGATION/
              LEGAL PROCEEDINGS**
 
 As
            of September 30, 2005, the Company was not party to any material legal
            proceedings.
 
 **NOTE
            10-** **PROVISION
            FOR INCOME TAXES** ****
 
 Income
            taxes are provided for the tax effects of transactions reported in the
            financial
            statements and consist of taxes currently due. Deferred taxes related
            to
            differences between the basis of assets and liabilities for financial
            and income
            tax reporting will either be taxable or deductible when the assets or
            liabilities are recovered or settled. The difference between the basis
            of assets
            and liabilities for financial and income tax reporting are not material
            therefore, the provision for income taxes from operations consist of
            income
            taxes currently payable.
 
 There
            were no provisions for income taxes for the period ended September 30,
            2005.
 
 At
            September 30, 2005, deferred tax assets approximated the following:
 Deferred
                        tax assets
                    
                    $
                    997,046Valuation
                        for deferred asset
                    
                    
                    (997,046
                    )Net
                        deferred tax assets
                    
                    $
                    -
 At
                September 30, 2005, the Company had accumulated deficits approximating
                $2,492,615, available to offset future taxable income through 2025.
                The Company
                established valuation allowances equal to the full amount of the
                deferred tax
                assets due to the uncertainty of the utilization of the operating
                losses in the
                future period.
 
 **NOTE
                11-** **GOING
                CONCERN** ****
 
 The
                  Company and its Subsidiaries’ consolidated financial statements have been
                  prepared on the basis that it will continue as a going concern,
                  which
                  contemplates the realization of asset values and the satisfaction
                  of liabilities
                  in the normal course of business. Certain conditions indicate that
                  the Company
                  may be unable to continue as a going concern:
 
 -
                  The
                  Company reported net losses of $2,389,342 and $103,273 for the
                  year and period
                  ended September 30, 2005 and 2004.
 
 -
                  Net
                  cash used by the Company's operating activities was $1,081,254
                  and $454 for the
                  years ended September 30, 2005 and 2004.
 
 -
                  At
                  September 30, 2005, stockholder's equity was $(1,841,181) and included
                  an
                  accumulated deficit of ($2,492,615).
 
 -
                  At
                  September 30, 2005 there was working capital deficit of $2,394,316.
 
 -
                  The
                  Company had gross profit margins of $724,119 and $41,000 for the
                  years ended
                  September 30, 2005 and 2004.
 
 The
                  Company expects positive cash flow from operations end fiscal year
                  2006,
                  however, the Company will require additional funding to cover expected
                  negative
                  cash flows until end fiscal year 2006.
 
 The
                  Company's ability to continue as a going concern is dependent upon
                  increasing
                  its revenues and gross profit margins to cover cost of revenues
                  and other
                  operating expenses, generating positive cash flows from operations,
                  obtaining
                  debt or equity capital to fund expected negative operating cash
                  flows and
                  returning the Company to profitable operations. In this connection,
                  the
 Company
                  has adopted the following operating and management plans to in
                  order to provide
                  positive cash flow from operations end fiscal year 2006:
 
 -
                  Expand
                  and develop its Business TV business with existing customer base
                  and additional
                  contract for new services.
 
 -
                  Continue to develop and expand its digital signage business through
                  targeted
                  marketing initiatives in both the US and Europe.
  -
                    Continue overall cost and expense control and adoption of efficient
                    service and
                    equipment roll-out approaches resulting in improved gross profits
                    and reduced
                    operating expenses.
 
 -
                    Expand
                    operation and revenue base through an aggressive acquisition
                    program of
                    profitable companies with operation and services with synergy
                    to its current
                    operation.
 F-19
 
 -
                  Develop
                  strategic partnerships with major companies in the area of secure
                  wireless
                  communications supporting the Company’s strategy. This strategic initiative is
                  believed to provide increased revenues and result in reduced operating
                  expenses.
 
 -
                  Develop
                  strategic partnerships with major companies providing content and
                  advertising
                  services for the Company’s digital signage operation roll-out.
 
 -
                  Negotiate with creditors including Cornell Capital in order to
                  convert current
                  debt to equity to significantly improve the Company’s working capital
                  deficit.
 
 -
                  Raise
                  additional capital.
 
 Although
                  the results of these actions cannot be predicted with certainty,
                  management
                  believes that if the Company can continue to increase its revenues
                  and gross
                  profit margins, reduce expenses, and can obtain additional debt
                  or equity
                  financing to fund the negative cash flow from operations in 2006,
                  the Company
                  has the ability ultimately to return to profitability.
 **NOTE
                12-**  **RESTATEMENT
                OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS**
 
 The
                Company has restated its previously issued financial statements for
                the period
                February 10, 2004 (inception) through September 30, 2004 on its report
                dated
                November 29, 2004. The Company has restated its financial statements
                to decrease
                the amount of goodwill recorded for the purchase of Enfotec, Inc.,
                in the period
                ended September 30, 2004. The transaction reflected the issuance
                of the
                Company’s common stock shares in exchange for the assets and liabilities
                of
                Enfotec, Inc. The financial statements have been restated as fair
                value of the
                stock price of the 1,200,000 shares issued was reduced from $0.596
                per share to
                $0.125 per share. These transactions did not result in a change in
                net loss
                applicable to common shares for the period ended September 30, 2004,
                but
                resulted in a decrease in the net stockholders’ deficit during period to
                $422,727.
 
 con'd
                    F-19
 **ARIEL
                      WAY, INC., AND SUBSIDIARIES**
 **NOTES
                      TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
                      30, 2005 AND 2004**
  **NOTE
                13-** **SUBSEQUENT
                EVENTS**
 
 On
                October 13, 2005, the Company announced the appointment of Victor
                Halpert to the
                Company’s board of directors. Mr.
                Halpert is the Managing Member of Halpert Capital, LLC and has a
                number of years
                experience in finance, investments, and equity research from firms
                to include
                Salomon Smith Barney, Robertson Stephens and Israel Equity Research
&
Management in Chicago.  Mr. Halpert is on the board of directors of Top
                Image Systems (NASDAQ-TISA), Unity Wireless (NASDAQ-UTYW) and Israel
                Technology
                Acquisition (NASDAQ-ISLT). Mr.
                Halpert has a bachelor’s of science degree in Accounting from State University
                of New York, College at New Paltz, NY, a Master of Science in Accounting
                from
                the University of Illinois at Chicago, Graduate Business School and
                an MBA from
                the University of Chicago Graduate Business School.
  On
                October 20, 2005, the Company announced the appointment of William
                Stapleton to
                the Company’s advisory board. Mr. Stapleton is the president and managing
                director of the Stapleton Group, Inc., a management consulting firm
                with
                emphasis on the start-up and restructuring of high-performance
                telecommunications companies. He has performed executive management
                duties for
                11 mid-sized companies since 1995 and assisted Goldman Sachs, Citicorp,
                MCI
                WorldCom, Siemens and others with capital restructuring, asset recovery
                services
                and interim management assignments. He was a director at AT&T, responsible
                for leading and executing marketing and sales efforts to assist various
                AT&T
                business segments to achieve growth and profitability. Stapleton
                has served on
                the board of directors of SCii Telecom, SA, Lasergate Systems, Inc.,
                and GVN
                Technologies. He holds a degree in business from Syracuse University
                and
                completed academic fellowships at MIT, Cambridge Institute of Technology,
                the
                University of Pennsylvania, Wharton School of Business Management
                and the
                Menniger Institute for Personal Behavior Studies.
  On
                October 26, 2005 the Company announced that the Company’s subsidiary dbsXmedia,
                Inc. had opened a new European headquarters in Plymouth, UK. The
                move finalizes
                dbsXmedia's integration of the business and systems acquired from
                Loral Space
                and Communications to support dbsXmedia’s European business television division.
 
 On
                January 12, 2006 the Company announced that
                its subsidiary, dbsXmedia, Inc., has signed a new multi-year contract
                with
                Avnet, Inc. to provide business television network infrastructure
                and technology
                to allow migration to IP services over time.


F-20




**Item
      8. Changes in and Disagreements with Accountants on Accounting and Financial
      Disclosure**





Not
      applicable.





**Item
      8A. Controls and Procedures**





Evaluation
      of Disclosure Controls and Procedures:





We
      maintain disclosure controls and procedures that are designed to ensure that
      information required to be disclosed in our Exchange Act reports is recorded,
      processed, summarized and reported within the time periods specified in the
      SEC’s rules and forms, and that such information is accumulated and communicated
      to our management, including our chief executive officer and chief financial
      officer, as appropriate, to allow timely decisions regarding required
      disclosure. In designing and evaluating the disclosure controls and procedures,
      they are designed to provide reasonable assurance of achieving the
      objectives.





As
      of September 30, 2005 we completed an evaluation, under the supervision and
      with
      the participation of our management, including our chief executive officer
      and
      chief financial officer, of the effectiveness of the design and operation of
      our
      disclosure controls and procedures. Based on the foregoing, our chief executive
      officer and chief financial officer concluded that the Company’s disclosure
      controls and procedures were effective at the reasonable assurance
      level.





Changes
      in Internal Controls:





There
      have not been any 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.





**Item
      8B. Other Information**





Not
      applicable.







32


**PART
      III**




**Item
      9. Directors and Executive Officers of the Registrant**





**MANAGEMENT**





Our
      directors and executive officers and their ages as of January 12, 2006 are
      as
      follows:





**Name**
            **Age**
            **Position**Arne
                Dunhem
            55
            President,
                Chief Executive Officer and Chairman of the BoardVoula
                Kanellias
            43
            Chief
                Financial OfficerAnand
                Kumar
            61
            Executive
                Vice PresidentDavid
                Howgill
            32
            Chief
                Executive Officer, dbsXmedia, Inc.Leif
                T. Carlsson
            63
            DirectorVictor
                Halpert
            45
            Director





The
      following is a description of the background of our directors and executive
      officers.




**Background
      Information**




***Arne
      Dunhem.*** Mr. Arne
      Dunhem, has served as our Chairman, President and Chief Executive Officer since
      February 2, 2005 and was the Chairman, President and Chief Executive Officer
      of
      Old Ariel Way from the founding of Old Ariel Way on February 10, 2004. Mr.
      Dunhem has over thirty years of executive management and engineering experience
      with large complex multinational corporations, large international organizations
      as well as early stage technology companies. He has over the years been
      instrumental in arranging more than $300 million in investor and vendor
      financing commitments and is knowledgeable in international business, finance,
      management, information systems, network operations and engineering for both
      publicly traded and privately held corporations. Between February 2004 and
      February 2, 2005, Mr. Dunhem was the Chairman, President and CEO of Old Ariel
      Way, a company focused on the build-up of a publicly traded highly secure global
      communications solutions and technology company headquartered in the
      metropolitan Washington, D.C. area, USA. Between December 2003 and February
      2004, Mr. Dunhem was a consultant providing executive management and merger
      and
      acquisition support services. Between January 2002 and November 2003, Mr. Dunhem
      was the Chairman, President and CEO of MobilePro Corp., a publicly traded
      technology company in Rockville, MD. He was instrumental in merging the private
      Neoreach, Inc., a development stage company developing third generation wireless
      modem and semiconductor systems, with the publicly traded MobilePro Corp.
      Between July 2001 and January 2002 Mr. Dunhem was working as a strategic
      business consultant and was in January 2002 hired by Neoreach, Inc. as its
      President & CEO. Mr. Dunhem was between November 1998 and June 2001 the
      Chairman & CEO of erbia, Inc., a U.S. domestic long-distance communications
      company which he led from its start-up phase through the sale of the operation
      to a U.S. publicly traded company. Prior to 2000, he was working between January
      1998 and October 1998 as a strategic business consultant for various private
      companies. Between July 1993 and September 1997 he was the Chairman of Tele8
      Kontakt AB, a Swedish nationwide start-up cell-phone operator and also between
      January 1993 and December 1997 the Chairman of Nordiska Tele8 AB of Sweden,
      an
      international long distance and local telephone services company. He took the
      company from its start-up phase through full operation and eventually the sale
      of both companies. Between May 1991 and January 1993 Mr. Dunhem was the
      President for CruiseComm, a company developing high-speed satellite
      communications for voice and data for large passenger cruise ships sailing
      in
      the Baltic Sea, the Mediterranean and in the Caribbean. Between September 1989
      and April 1991 Mr. Dunhem was the Executive Vice President, Engineering &
Operations of Comvik Skyport AB, a Swedish telecommunications company providing
      satellite and data communications services, now the European Tele2
      telecommunications operator. During the period September 1978 through July
      1989
      Mr. Dunhem was with INTELSAT, Washington, D.C., an international satellite
      communications organization in a capacity growing from staff engineer to program
      manager where he had responsibilities for building-up some of the largest
      command, control and monitoring networks. He previously was with the Saab-Scania
      Aerospace Corporation and the Swedish Telecom. Mr. Dunhem earned his M.S. in
      1974 in space telecommunications from Chalmers University of Technology, Sweden.
      Mr. Dunhem is the Chairman of the Swedish Lutheran Church of Washington, D.C.,
      is active with several community organizations, is the founder of a
      Swedish-American Community Center in Washington, D.C. and has over many years
      been active with the Boy Scouts of America. Mr. Dunhem is a U.S. citizen and
      has
      lived in the Washington, D. C. area since 1978.




33


***Voula
      Kanellias.*** Ms.
      Kanellias, who has served as our Chief Financial Officer since February 2,
      2005
      and joined Old Ariel Way on September 2, 2004 as Old Ariel Way’s Chief Financial
      Officer, has extensive experience as a Chief Financial Officer in private
      companies, pre-IPOs, international operations, acquisitions, manufacturing
      operations and turnarounds. Ms. Kanellias served from 2000 through 2004 as
      Chief
      Financial Officer for HeliOss Communications Inc. of Waltham, MA, a pre-IPO
      wireless point-to-point equipment company; from 2000 through 2001 as the Chief
      Financial Officer for Reach Internet Incubator, Reach Venture Partners LLC
      of
      Boston, MA Prior to 2000 Ms. Kanellias served from 1998 through 2000 as Chief
      Financial Officer and Vice President of Finance and Administration for MarketOne
      Associates, Inc. of Maynard, MA; from 1997 through 1998 as Chief Financial
      Officer and Vice President of Finance and Administration for Impole, Inc. of
      Waltham, MA; from 1996 through 1997 as associate with KPMG Peat Marwick in
      Moscow, Russia; from 1986 through 1995 as principal with Kosmos Enterprises
      of
      Needham, MA; and from 1987 through 1989 as financial analyst with Fidelity
      Investments of Boston, MA. **** Ms.
      Kanellias has a Masters in Business Administration, Magna Cum Laude, from Babson
      College, Wellesley, MA and Double Majors in Economics and Applied Mathematics
      from University of California, Berkeley, CA with graduate level work and
      recommendation from Nobel Prize Laureate Gerald Debrieu.




***Leif
      T. Carlsson*** .
      Mr. Carlsson, who since February 2, 2005 has served as an independent
      Director of our Board and has served on Old Ariel Way’s Board since October 11,
      2004, is a senior European executive who since 2003 has been working with Arrow
      Capital, a European Venture Capital firm based in Stockholm, Sweden. Mr.
      Carlsson has over the years been a President & CEO of a number of European
      corporations including during 2001 through 2002 with Scanfood AB, currently
      part
      of Swedish Meats AB. Prior to 2000, Mr. Carlsson worked during 1992 through
      2000
      with Scandic Hotels Europe AB, currently part of the global Hilton Hotel-Group;
      during 1990 through 1992 with FFV Aerotech AB and FFV Aerotech Ltd, currently
      part of the Saab Group and FL Schmidt; during 1988 through 1990 with the
      Kinnevik AB Group establishing Comvik Skyport/TELE2; and during 1974 through
      1988 with the Nobel Industries AB, now AkzoNobel for several of their
      corporations. Comvik Skyport/TELE2 became in 1990 the second only private
      telecommunications company in Europe while telecommunications services in Europe
      were still dominated by government monopolies. Mr. Carlsson has been the
      executive **** for
      a
      number of companies in several different countries including the U.S., the
      U.K.,
      Sweden and in Asia and has also been on several different Board of Directors
      including IAHI, International Association of Holiday Inns, Inc., and Tele8,
      an
      American telecommunications operator active in Europe. Mr. Carlsson has through
      his corporate career been active on a global basis and has experience in the
      European corporate world. With his base out of Europe and with his European
      experience, Mr. Carlsson will assist us if we proceed with the corporate
      strategy to establish European and other overseas operations. Mr. Carlsson
      earned his M.S. degree in 1969 in Civil Engineering from Chalmers University
      of
      Technology, Sweden and has completed several graduate studies in corporate
      finance, national economy and legal studies from the University of Uppsala,
      Sweden. Mr. Carlsson is a Swedish citizen and lives in Stockholm,
      Sweden.




***Victor
      Halpert.*** Mr.
      Halpert, who since October 13, 2005 has served as an independent Director of
      our
      Board, is the Managing Member of Halpert Capital, LLC. Prior to founding Halpert
      Capital, LLC, Mr. Halpert was a Director of equity research at Salomon Smith
      Barney, division of Citigroup, focusing on technology companies from
      1999-2003.  At Salomon, Mr. Halpert managed a highly ranked team (based on
      Institutional Investor and Extel surveys), covering U.S.-listed technology
      companies.  Mr. Halpert has published numerous research reports, including
      regular reviews and earnings reports, in-depth industry analysis and market
      comments on dozens of companies.  Mr. Halpert has maintained strong working
      relationships with major technology and emerging markets institutional
      investors.  He lead efforts in obtaining debt and equity investment banking
      mandates to more than $2 billion in capital raising and he assisted in more
      than
      $2 billion of M&A transactions. Prior to Salomon, Mr. Halpert was a Vice
      President at Robertson Stephens.  At Robertson Stephens, Mr. Halpert
      managed a successful equity research team, covering telecommunications hardware
      and software companies from 1998-1999. Prior to that, between 1995 and 1997,
      Mr.
      Halpert was Vice-President of equity research for Salomon Brothers in London
      and
      New York.  During that time, Mr. Halpert developed Salomon’s research
      coverage of Israeli companies and wrote economical reviews concerning Israel
      generally. From 1993 to 1995, Victor Halpert was a Senior Equity Research
      Analyst at Israel Equity Research & Management in Chicago.  During that
      time Mr. Halpert developed the equity and economical research capabilities
      of
      the firm.  In addition, Mr. Halpert helped build the firm’s asset
      management group, with approximately $10 million under management. Between
      1995
      and the present, Mr. Halpert has personally invested in approximately 30
      privately held technology companies.  During this time, Mr. Halpert has
      realized eight exits from such investments producing returns of more than
      500%.  Furthermore, Mr. Halpert has also invested in three different
      venture capital funds during this time. Mr. Halpert is on the board of directors
      of Top Image Systems (NASDAQ-TISA), Unity Wireless (NASDAQ-UTYW) and Israel
      Technology Acquisition (NASDAQ-ISLT). Mr.
      Halpert has a bachelor’s of science degree in Accounting from State University
      of New York, College at New Paltz, NY, a Master of Science in Accounting from
      the University of Illinois at Chicago, Graduate Business School and an MBA
      from
      the University of Chicago Graduate Business School.




34


***Anand
      Kumar*** .
      Mr. Kumar, who has served as our Executive Vice President since February 2,
      2005 and joined Old Ariel Way on August 10, 2004 as Old Ariel Way’s Director and
      Executive Vice President, has during his professional career, spanning almost
      35
      years, founded and operated a number of companies including the founding in
      1992
      of an international consulting company called Communications Strategies Group,
      advising foreign telecommunications administrations such as among others Iceland
      Telecom, Andorra Telecom, Cyprus Telecom, Bangladesh Telecom Board and U.S.
      domestic carriers including Cable & Wireless, Comsat RSI, AT&T, Sprint,
      MCI, Startec Global Communications and various others. During this period Mr.
      Kumar also helped build a European based telecommunications carrier called
      Esprit Telecom, later acquired by Global TeleSystems, and an international
      satellite teleport, Satellite Media Services, operating in the U.K. Prior to
      2000 Mr. Kumar in January 1999, Mr. Kumar established Global TeleSolutions,
      Inc.
      for the origination and termination of multiple types of international telephony
      and data traffic. Prior to this, Mr. Kumar co-founded and participated in
      building the international operating locations for an international
      telecommunications carrier called Facilicom International, Inc. in Washington,
      D.C. In addition to establishing multiple gateway telecommunications switch
      locations and offices in more than 12 foreign locations, Mr. Kumar was also
      part
      of the raising of $300 million in high-yield debt financing. In 1986, Mr. Kumar
      co-founded and served as the President until 1992 of Washington International
      Teleport, WIT, an international satellite teleport in Alexandria, Virginia.
      WIT
      evolved to operate 30 large satellite antennas for multiple satellites for
      a
      diverse group of customers from MCI to CNN. It was built to offer both back
      haul
      services on optical fiber and microwave connections and diverse types of
      satellite based services for full time and ad-hoc users. Previous to these
      activities Mr. Kumar was also for a number of years in various managerial
      capacities within the Bell operating company environment, such as Bell Canada,
      Bell Northern Research, and AT&T. Mr. Kumar is trained as an Electrical
      Engineer both at the undergraduate and graduate levels in the U.S. and was
      a
      doctorate candidate in communications studying under the guidance of professors
      from MIT.




**Committees
      of the Board**





The
      Board has four (4) standing committees: the Audit & Finance Committee, the
      Compensation Committee, the Governance Committee, and the Financing and M&A
      Committee. The functions of each of these committees and their members are
      specified below. The Board has determined that each director who serves on
      these
      committees, except for the Financing and M&A Committee, is “independent” as
      defined in Nasdaq Rule 4200(a)(15).





The
      members of the committees are identified in the following table.





**Director**
            **Audit
                and Finance Committee**
            **Compensation**
              **Committee**
            **Governance**
              **Committee**
            **Financing
                and M****&A**
              **Committee**Leif
                T. Carlsson
            Yes
            Chair
            Chair
            YesVictor
                Halpert
            Chair
            Yes
            Yes
            YesArne
                Dunhem
            No
            No
            No
            Chair




The
      Audit and Finance Committee is currently comprised of Messrs. Carlsson and
      Halpert, each of whom meets each of the independence and other requirements
      for
      audit committee members under the rules of The Nasdaq Stock Market. The Board
      of
      Directors has determined that Mr. Halpert is an “audit committee financial
      expert” as defined by SEC regulations. The Board has also determined that one or
      more other members of the Audit and Finance Committee may also meet the
      definition of “audit committee financial expert” as defined by SEC regulations.
      The Audit and Finance Committee assists the Board in its oversight of our
      financial accounting, reporting and controls by meeting with members of
      management and our independent auditors. The committee has the responsibility
      to
      review our annual audited financial statements, and meets with management and
      the independent auditors at the end of each quarter to review the quarterly
      financial results. In addition, the committee considers and approves the
      employment of, and approves the fee arrangements with, independent auditors
      for
      audit and other functions. The Audit and Finance Committee reviews our
      accounting policies and internal controls. The Audit and Finance Committee
      has a
      written charter which was adopted on February 2, 2005.


35


The
      Compensation Committee is currently comprised of Messrs. Carlsson and Halpert.
      The Compensation Committee recommends cash-based and stock compensation for
      executive officers of Ariel Way, administers the company’s stock option and
      makes recommendations to the Board regarding such matters. The Compensation
      Committee has a written charter which was adopted on February 2,
      2005.





The
      Governance Committee is currently comprised of Messrs. Carlsson and Halpert.
      The
      Governance Committee is entrusted with responsibility for consideration and
      review of corporate governance matters in addition to its responsibilities
      for
      nominating candidates for membership to the Board. The Nominating and Governance
      Committee has a written charter which was adopted on February 2,
      2005.





The
      Financing and M&A Committee is currently comprised of Messrs. Carlsson,
      Halpert and Dunhem. The Financing and M&A Committee is entrusted with
      responsibility to
      assist the Board in carrying out its oversight responsibilities relating to
      certain financial matters affecting the Company. The Committee will have the
      authority to take all actions on behalf of the Board as the Committee or its
      Chairperson may from time to time determine to be consistent with its purpose
      and the Charter for the Committee.The Financing and M&A Committee Committee has a written charter which was
      adopted on February 2, 2005.





**Code
      of Ethics**




The
      Company has adopted a code of business conduct and ethics for its directors,
      officers and management employees. The
      Company’s Code of Ethics with Business Ethics and Conduct Policy was disclosed
      as part of the Company’s
      Form 10-KSB filing December 31, 2003.




**Change
      of Control Arrangements**





The
      Company's 2003 Stock Incentive Plan provides that in the event of a change
      in
      control as defined in the plan, all outstanding options under the plan will
      immediately become exercisable 100% for each participant and the restrictions
      on
      any restricted stock issued under the Plan will cease.





**Section
      16(a) Beneficial Ownership Reporting Compliance**





Section
      16(a) of the Exchange Act and related regulations require the Company’s
      directors, certain officers, and any persons holding more than 10% of the
      Company’s common stock (“reporting persons”) to report their initial ownership
      of the Company’s common stock and any subsequent changes in that ownership to
      the Securities and Exchange Commission. Specific due dates have been
      established, and the Company is required to disclose in this Item 9 any failure
      to file by these dates during 2005.





Initial
      reports of ownership on Form 3 were filed on January 13, 2006 by Arne Dunhem,
      Voula Kanellias, and Anand Kumar all being executive officers during year 2005
      and by Leif T. Carlsson and Victor Halpert being members of our board of
      directors. All individuals and forms were late in filing.





In
      making this disclosure, the Company has relied on written representations of
      reporting persons and filings made with the Commission.


36


**Item
      10. Executive Compensation**




**Executive
      Compensation**




***Summary
      Compensation Table*** .
      The
      following table sets forth the annual and long-term compensation for services
      in
      all capacities for the fiscal years ended September 30, 2005, 2004 and 2003,
      paid to our most highly compensated executive officers. No officer earned over
      $100,000 in such fiscal year. We had no written employment contract with Mr.
      Elliot Krasnow who was the Chief Executive Officer from the inception of the
      Company until February 2, 2005. Mr. Arne Dunhem became the Chief Executive
      Officer, President and Chairman on February 2, 2005. We had no written
      employment agreement with Mr. Dunhem during the fiscal year ended September
      30,
      2005.




**Summary
      Compensation Table**


**Annual
                Compensation**
            
            **Long
                Term Compensation****Awards**
            
            **Payouts****Securities****Underlying****Other**
            
            **Restricted**
            
            **Options****Annual**
            
            **Stock**
            
            **LTIP**
            
            **All
                Other****Year**
            
            **Salary**
            
            **Bonus**
            
            **Compensation**
            
            **Award(s)**
            
            **Payouts
                ($)**
            
            **Compensation**Elliot
                Krasnow
            2005
            
            -
            
            -
            
            
            
            -
            
            -
            
            $0(Until
                February 2, 2005) Chief Executive Officer
            2004
            
            -
            
            -
            
            
            
            -
            
            -
            
            $02002
            
            $75,000
            
            -
            
            
            
            50,000
            
            40,000
            
            $0Arne
                Dunhem
            2005
            
            $0
            
            -
            
            $11,000
            
            -
            
            -
            
            $0(After
                February 2, 2005) Chief Executive Officer,
            2004
            
            $0
            
            -
            
            $0
            
            -
            
            -
            
            $0President
                and Chairman
            2003
            
            $0
            
            -
            
            $0
            
            -
            
            -
            
            $0Anand
                Kumar
            2005
            
            $0
            
            -
            
            $11,000
            
            -
            
            -
            
            $0(After
                February 2, 2005) Executive Vice President
            2004
            
            $0
            
            -
            
            $0
            
            -
            
            -
            
            $0(Director
              until June
              6, 2005)
            2003
            
            $0
            
            -
            
            $0
            
            -
            
            -
            
            $0Voula
                Kanellias
            2005
            
            $0
            
            -
            
            $11,000
            
            -
            
            -
            
            $0(After
                February 2, 2005) Chief Financial Officer
            2004
            
            $0
            
            -
            
            $0
            
            -
            
            -
            
            $02003
            
            $0
            
            -
            
            $0
            
            -
            
            -
            
            $0David
                Howgill
            2005
            
            $120,000
            
            -
            
            $0
            
            -
            
            -
            
            $0(After
                February 19, 2005) Chief Executive Officer, dbsXmedia,
                Inc.
            2004
            
            $0
            
            -
            
            $0
            
            -
            
            -
            
            $02003
            
            $0
            
            -
            
            $0
            
            -
            
            -
            
            $0




(1)
              Mr.
                  Dunhem, Mr. Kumar, and Ms. Kanellias each joined Ariel Way during
                  the
                  Fiscal Year ended September 30, 2005. No formal employment agreements
                  have
                  yet been provided besides a right to be granted warrants as described
                  below.(2)
              The
                  amounts listed represent the fair market value of the stock on
                  the date of
                  grant.(3)
              As
                  a result of the Netfran Stock Exchange Agreement dated February
                  2, 2005,all
                  issued and outstanding warrants to purchase shares of Old Ariel
                  Way Stock
                  were exchanged for warrants to purchase shares of our common stock,
                  at a
                  ratio of 1.6762 shares of our common stock for each share of Ariel
                  Way
                  Stock, and the exercise price of each such warrant was adjusted
                  to equal
                  the existing exercise price divided by 1.6762.(4)
              Mr.
                  Dunhem, Mr. Kumar, and Ms. Kanellias each received during 2004
                  Old Ariel
                  Way Warrant Agreements to receive a right to warrants of Old Ariel
                  Way
                  common stock. As a result of the Netfran Stock Exchange Agreement
                  consummated February 2, 2005, warrants to acquire Old Ariel Way
                  common
                  stock were exchanged to warrants of our common stock. Mr. Dunhem,
                  Mr.
                  Kumar, and Ms. Kanellias each after an amendment dated March 21,
                  2005 to
                  their respective year 2004 Old Ariel Way Warrant Agreements and
                  after the
                  warrant exchange received warrants to purchase 1,150,000 shares
                  of our
                  common stockat
                  an exercise price of $0.010 per share (the “Warrant Shares”) to vest as
                  follows: (i) 60,000 Warrant Shares shall vest monthly each month
                  after February 2, 2005 during the term of an agreement or immediately
                  if
                  their involvement with our Company is terminated without cause
                  or for good
                  reason or due to a change in control, sale of a majority of our
                  common
                  stock or substantially all of the assets of the Company or merger
                  of the
                  Company into or with another company (unless such company is less
                  than
                  fifty percent (50%) of the size (measured by market value) of the
                  Company)
                  or reverse merger with another company; and (ii) 430,000 Warrant
                  Shares
                  will vest immediately upon the Company achieving a $20 million
                  market cap
                  for ten (10) consecutive trading days and a price per share of not
                  less than $0.50.
  37




Option/SAR
      Grants in Last Fiscal Year


(Individual
      Grants)





**Name**
            **Number
                of Securities Underlying Options/SARs Granted**
            **Percent
                of Total Options/SARs Granted to Employees In Fiscal
                Year**
            **Exercise
                of Base Price ($/Sh)**
            **Expiration
                Date**Arne
                Dunhem (1)
            1,150,000
              ******
            N/A
            $0.01
              ******
            3/20/15
              ******Anand
                Kumar (1)
            1,150,000
              ******
            N/A
            $0.01
              ******
            3/20/15
              ******Voula
                Kanellias (1)
            1,150,000
              ******
            N/A
            $0.01
              ******
            3/20/15
              ******





(1)
      The vesting provisions of each of the above listed options or warrants are
      provided above.





38




**Aggregated
      Option Exercises In Last Fiscal Year And Fiscal**


**Year-End
      Option Values**





The
      following table sets forth certain information concerning the number and value
      of securities underlying exercisable and unexercisable stock options and
      warrants as of the fiscal year ended September 30, 2005 by our executive
      officers listed in the Summary Compensation Table above.





**Name**
            **Number
                of**
              **Shares**
              **Acquired
                on**
              **Exercise**
            **Value**
              **Realized**
            **Number
                of Securities**
              **Underlying
                Unexercised**
              **Options
                at**
              **September
                30, 2005 (1)**
              **Exercisable/Unexercisable**
            **Value
                of Unexercised**
              **In-the-Money
                Options at**
              **September
                30, 2005 (1)**
              **Exercisable/Unexercisable**Arne
                Dunhem
            0
            $0
            480,000
                /670,000
            $12,000
                / $16,750Anand
                Kumar
            0
            $0
            480,000
                /670,000
            $12,000
                / $16,750Voula
                Kanellias
            0
            $0
            480,000
                /670,000
            $12,000
                / $16,750


_________________________





(1)
            The
                value of unexercised in-the-money options at fiscal year end is calculated
                using the last sale price of $0.025 per share as of September 30,
                2005,
                the last trading day of fiscal year 2005 as reported on the OTC Bulletin
                Board, less the applicable exercise price.




**Compensation
      Of Directors**




We
      have
      an arrangement pursuant to which our independent Directors are compensated
      for
      services provided as Directors. In addition to an individual grant of warrants to
      purchase shares of our common stock in connection with the Director’s agreement
      to serve on our Board of Directors, we also
      compensate the independent Directors for each Board meeting attended with $500
      in cash. The Board will review compensation arrangements for subsequent
      years.




On
      August 22, 2005, in connection with his agreement to serve on our Board of
      Directors, we granted Mr. Leif T. Carlsson a warrant to purchase 1,600,000
      shares of our common stock, at an exercise price of $0.025 per share. This
      Warrant shall vest
      as follows: (i)  533,333 Warrant Shares shall vest immediately
      on August 22, 2005; and (ii) 44,444 Warrant Shares shall vest monthly each of the first Twenty
      Four (24) months during Mr. Carlsson’s engagement as a Director on the Company’s
      Board of Directors or immediately if Mr. Carlsson’s engagement as a Director is
      terminated without cause or for good reason or due to a change in control,
      sale
      of a majority of the common stock or substantially all of the assets of the
      Company or merger of the Company into or with another company (unless such
      company is less than fifty percent (50%) of the size (measured by market value)
      of the Company) or reverse merger with another company .
      When
      Mr. Carlsson in September, 2004, joined the Board of Directors of Old Ariel
      Way,
      he was granted 180,000 options to purchase shares of Old Ariel Way common stock,
      which vested on October 11, 2004 and had an exercise price of $0.125 per share.
      These options were on February 2, 2005 converted to an aggregate of 310,097
      options to purchase shares of our common stock at an exercice price of
      $0.073.




On
      September 26, 2005, in connection with his agreement to serve on our Board
      of
      Directors, we granted Mr. Victor Halpert a warrant to purchase 1,000,000 shares
      of our common stock, at an exercise price of $0.03 per share. This
      Warrant shall vest
      as follows: (i)  333,333 Warrant Shares shall vest on October 26,
      2005 ; and (ii) 27,778 Warrant Shares shall vest monthly each of the first Twenty
      Four (24) months during Mr. Halpert’s engagement as a Director on the Company’s
      Board of Directors or immediately if Mr. Halpert’s engagement as a Director is
      terminated without cause or for good reason or due to a change in control,
      sale
      of a majority of the common stock or substantially all of the assets of the
      Company or merger of the Company into or with another company (unless such
      company is less than fifty percent (50%) of the size (measured by market value)
      of the Company) or reverse merger with another company .





39




**2003
      Stock Incentive Plan**




On
      February 11, 2003, the Board of Directors approved the Netfran Development
      Corp.
      2003 Stock Incentive Plan under which employees, officers, non-employee
      directors and consultants are eligible to receive grants of stock options,
      thereby creating a means to raise the level of stock ownership by such
      individuals in order to attract, retain, and reward such individuals. We have
      authorized a total of 600,000 shares of common stock under the 2003 Stock
      Incentive Plan with a total of 275,000 shares of common stock remaining under
      the plan for future issuance. The Board of Directors administers the 2003 Stock
      Incentive Plan. Subject to the provisions of the 2003 Stock Incentive Plan,
      the
      Board of Directors has full and final authority to select the individuals to
      whom options will be granted, to grant the options and to determine the terms
      and conditions and the number of shares issued pursuant thereto. However, no
      option shall be exercisable more than ten years after the date of grant. Options
      shall be exercisable at such time and subject to such terms and conditions
      as
      shall be determined by the Committee at grant.




We
      did
      not grant any options under the 2003 Stock Incentive Plan during the year ended
      September 30, 2005.




**Indemnification**




As
      permitted by the provisions of the General Corporation Law of the State of
      Florida, we have the power to indemnify any person who was or is a party or
      is
      threatened to be made a party to any threatened, pending or completed action,
      suit or proceeding, whether civil, criminal, administrative or investigative,
      by
      reason of the fact that the person is or was a director, officer, employee
      or
      agent of us, if such officer or director acted in good faith and in a manner
      reasonably believed to be in or not opposed to our best interests. Any such
      person may be indemnified against expenses, including attorneys’ fees,
      judgments, fines and settlements to the extent they have been on the merits
      or
      otherwise in defense of any action, suit or proceeding. Further, we maintain
      liability insurance on behalf of our officers, directors, employees and agents.
      Insofar as indemnification for liabilities arising under the Securities Act
      of
      1933 may be permitted to directors, officers and controlling persons pursuant
      to
      the foregoing provisions, or otherwise, we have been advised that in the opinion
      of the Securities and Exchange Commission such indemnification is against public
      policy as expressed in the Securities Act of 1933 and is, therefore,
      unenforceable.





**Employment
      Agreements**





Our
      corporate company Ariel Way does not currently have employment agreements with
      any of our executive officers while our dbsXmedia subsidiary has employment
      agreements with its Chief Executive
      Officer and President and Chief Operating Officer .





**Item
      11. Security Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.**





**Beneficial
      Owners**





As
      of January 12, 2006, other than the directors and executive officers, Market
      Central, Inc. and Cornell Capital Partners, LP, as identified
      in the table below, to our knowledge no person owned beneficially more than
      five
      percent (5%) of our common stock.





**Directors
      and Executive Officers**





The
      following table shows the amount of our capital stock beneficially owned by
      our
      directors, the executive officers named in the Summary Compensation Table above,
      beneficial owners of 5% or more of our common stock and by all directors and
      executive officers as a group as of January 12, 2006. Unless otherwise
      indicated, beneficial ownership is direct and the person indicated has sole
      voting and investment power. As of January 12, 2006 we had 38,286,943 shares
      of common stock outstanding.




40




**Shares
                to be****Beneficially**
            
            **Percent****Name
                and Address**
            
            **Title
                of Class**
            
            **Owned****(1)**
            
            **of
                Class****(1)**Elliot
                Krasnow**(2)**
              c/o
                Netvertise, Inc.
              2801
                N.E. 208th Terrace, 2nd Floor
              Miami,
                FL 33180
            
            Common
            
            1,270,340
            
            3.3%Arne
                Dunhem**(3)**
              8000
                Towers Crescent Drive
              Suite
                1220
              Vienna,
                VA 22182
            
            Common
                (Shares
              and
                warrants)
            
            13,579,159
            
            34.7%Anand
                Kumar**(4)**
              8000
                Towers Crescent Drive
              Suite
                1220
              Vienna,
                VA 22182
            
            Common
                (Shares
              and
                Warrants)
            
            5,533,374
            
            14.1%Voula
                Kanellias
              8000
                Towers Crescent Drive
              Suite
                1220
              Vienna,
                VA 22182
            
            Common
                (Shares
              and
                Warrants)
            
            2,348,585
            
            6.0%Leif
                T. Carlsson**(5)**
              8000
                Towers Crescent Drive
              Suite 1220
              Vienna,
                VA 22182
            
            Common
                (Options
              and
                Warrants)
            
            1,154,538
            
            2.9%Victor
                Halpert**(6)**
              8000
                Towers Crescent Drive
              Suite 1220
              Vienna,
                VA 22182
            
            Common
              (Warrants)
            
            472,223
            
            1.2%Market
                Central, Inc.**(7)**
              1650A
                Gum Branch Road
              Jacksonville,
                NC 28540
            
            Common
              (Shares)
            
            3,352,400
            
            8.8%Cornell
                Capital Partners, LP**(8)**
              101
                Hudson Street
              Suite
                3700
              Jersey
                City, NJ 07302
            
            Common
                (Shares
              and
                Warrants)
            
            3,318,876
            
            8.7%Officers
                and Directors as a Group
              (5
                Persons)
            
            
            
            17,554,505
            
            54.4%




*
              Less
                  than 1%.(1)
              Applicable
                  percentage of ownership is based on 38,286,943 shares of common
                  stock
                  outstanding as of January 12, 2006, together with applicable options,
                  warrants and convertible securities for each shareholder. Beneficial
                  ownership is determined in accordance with the rules of the Securities
                  and
                  Exchange Commission and generally includes voting or investment
                  power with
                  respect to securities. Shares of common stock subject to securities
                  exercisable or convertible into shares of common stock that are
                  currently
                  exercisable or exercisable within 60 days from January 12, 2006 are
                  deemed to be beneficially owned by the person holding such options
                  for the
                  purpose of computing the percentage of ownership of such person,
                  but are
                  not treated as outstanding for the purpose of computing the percentage
                  ownership of any other person.(2)
              Elliot
                  Krasnow was our Chief Executive Officer until February 2, 2005.
                  From and
                  after this date he is no longer with us.(3)
              Represents
                  6,369,560 shares held directly by Arne Dunhem, our Chairman and
                  CEO,
                  warrants issued to Mr. Dunhem during fiscal year 2005, and 6,369,560
                  shares held****by
                  the Dunhem Family Partnership, of which Mr. Dunhem, our Chairman
                  and CEO
                  is a General Partner and who with his wife Eva Dunhem jointly and
                  equally
                  make all investment decisions of The Dunhem Family Partnership.
                  This
                  information does not include any shares that may be issued to Mr.
                  Dunhem
                  as compensation for his providing a personal guarantee of the financing
                  necessary to effect the stock exchange transaction on February
                  2, 2005
                  since the nature and amount of such compensation has not been determined.
                  We expect any such compensation will be non-cash
                  consideration.(4)
              Anand
                  Kumar is our Executive Vice President.(5)
              Leif
                  T. Carlsson is an independent Director of our Board. The shares
                  beneficially ownedare
                  310,097 optionsthat have vested and are immediately exercisable and a total of
                  1,154,538
                  warrants that are exercisable within 60 days from January 12,
                  2006.(6)
              Victor
                  Halpert is an independent Director of our Board. The shares beneficially
                  ownedarea
                  total of 472,223 warrants that are exercisable within 60 days from
                  January
                  12, 2006.(7)
              Doyal
                  Bryant, the President and CEO of Market Central, Inc. makes all
                  investment
                  decisions on behalf of Market Central, Inc.(8)
              All
                  investment decisions of Cornell Capital Partners, LP are made by
                  its
                  general partner, Yorkville Advisors, LLC. Mark Angelo, the managing
                  member
                  of Yorkville Advisors, makes the investment decisions on behalf
                  of
                  Yorkville Advisors.




41


**Item
      12. Certain Relationships and Related Transactions.**





During
      the period from year 2000 though February 1, 2005, we derived our revenue
      primarily from the sale of the Netspace franchises and from royalties paid
      by
      the franchise holders. The Netspace franchise system was developed by
      Netvertise, Inc. Netvertise was, during the period from year 2000 though
      February 1, 2005, owned by substantially the same shareholders as the Company.
      Netvertise expected to profit from the sale of products and services to the
      franchise owners who used the Netspace system and consumers who used Netspace
      products and services. We did not compensate Netvertise for the right to sell
      the Netspace franchise, and prior to October 20, 2001 there was no written
      agreement between the two companies. Effective October 20, 2001, we and
      Netvertise entered into a written agreement whereas Netvertise provided products
      and services to our franchisees. The services consisted of website development,
      website hosting, maintenance support and upgrading, graphic design, copy
      writing, training, e-publishing and on-line file back up, sharing and storage.
      The agreement also stipulated that Netvertise provided its personnel, office
      space, facilities, and support services as requested by us. The cost of these
      services was to be reimbursed to Netvertise on a monthly basis. This agreement
      was terminated on February 2, 2005.




During
      the period from year 2000 though February 1, 2005, we reimbursed Netvertise
      for
      the costs it incurred in providing services and facilities to us pursuant to
      the
      agreement. For personnel which were shared between us and Netvertise, a
      reasonable allocation was made by management of us and Netvertise, to include
      Messrs. Krasnow and Steinberg, president and chief financial officer,
      respectively of both firms, based upon the relative time spent by such shared
      employees working on Netvertise matters or our matters. We paid Netvertise
      $2,800 per month for use of office facilities, including rent, utilities, office
      furnishings and supplies and the expense of a shared receptionist and office
      manager which we believed was a fair allocation of such expenses.
      Messrs. Krasnow and Steinberg also allocated other shared expenses incurred
      by Netvertise on our behalf, such as insurance by estimating the cost of such
      items used by us. We paid directly and not through Netvertise its direct
      non-shared expenses such as advertising, travel, training and non-shared
      personnel.




Under
      the
      terms of the Share Exchange Agreement dated January 20, 2005 for our acquisition
      of Old Ariel Way, on February 2, 2005, each share of Old Ariel Way common stock
      outstanding immediately prior to February 2, 2005 was converted into 1.6762
      shares of our common stock. Our outstanding common stock was not affected by
      the
      acquisition. As a result of the acquisition, we issued 33,289,434 shares of
      common stock to the former stockholders of Old Ariel Way. In addition to the
      common stock issued to the former stockholders of Old Ariel Way, under the
      Share
      Exchange Agreement, each outstanding option or warrant to purchase Old Ariel
      Way
      common stock was converted into an option to purchase the number of shares
      of
      our common shares equal to the number of Old Ariel Way common shares underlying
      the option or warrant immediately prior to February 2, 2005 multiplied by 1.6762
      and the exercise price of each option or warrant we issued will equal the
      exercise price of the corresponding Old Ariel Way option or warrant in effect
      immediately prior to February 2, 2005 divided by 1.6762.




In
      connection with our acquisition of Old Ariel Way, on February 2, 2005, Old
      Ariel
      Way and Elliot Krasnow, who was our Chief Executive Officer until the February
      2, 2005, entered into a Stock Purchase and Sale Agreement pursuant to which
      Mr.
      Krasnow sold 300,000 shares of our common stock to Old Ariel Way for $300,000.
      Old Ariel Way intends to retire the shares it acquired from Mr. Krasnow. In
      order to finance the $300,000 payment to Mr. Krasnow and to fund the expenses
      related to the acquisition, Old Ariel Way borrowed $400,000 from Cornell
      Capital, one of the stockholders of Old Ariel Way (and now a stockholder of
      us).
      The loan bears interest at the rate of 12% per annum and was due and payable
      on
      May 31, 2005 and we are now in default unless we can renegotiate the terms
      of
      the loan for an extension with Cornell Capital. Cornell Capital is not a
      controlling stockholder of us, and we believe the terms of the loan are at
      least
      as favorable to us as could be obtained from an unrelated third party. In order
      to induce Cornell Capital to make the loan to Old Ariel Way, Arne Dunhem, the
      Chairman and Chief Executive Officer of Old Ariel Way prior to February 2,
      2005
      and our Chief Executive Officer after February 2, 2005, provided a personal
      guarantee of payment to Cornell Capital. We expect to compensate Mr. Dunhem
      for
      undertaking the personal guarantee and pledge on our behalf, but the terms
      of
      any such compensation have not yet been agreed to. Our Compensation Committee
      of
      the Board of Directors will determine the amount and nature of compensation
      to
      Mr. Dunhem, but we do not expect that any compensation to him will be paid
      in
      cash.




On
      April
      21, 2005, Old Ariel Way sold and issued to Cornell Capital, 2,000,000 shares
      of
      the Series A Redeemable Preferred Stock of Old Ariel Way, for a purchase price
      of $1.00 per share and an aggregate purchase price of $2,000,000 on the terms
      and conditions set forth in a Stock Purchase Agreement by and between Ariel
      Way,
      Inc. and Cornell Capital Partners, LP, dated April 19, 2005. These shares were
      redeemed by Old Ariel Way on August 10, 2005 for a redemption price of
      $2,074,301 including dividend and the preferred stock was returned to Old Ariel
      Way’s treasury.




On
      July 28, 2005, we borrowed
      $600,000 from Montgomery Equity. We received $240,000 of this amount on July
      28,
      2005 and we received the remaining $360,000 on August 10, 2005. The loan bears
      interest at the rate of 12% per annum and is due and payable on January 28,
      2006. On July 28, 2005 we issued to Montgomery Equity a warrant to purchase
      1,000,000 shares of our common stock that is exercisable for a period of
      three (3) years at an exercise price per share of $0.025. The warrant shares
      shall have “piggy-back” and demand registration rights. Montgomery Equity is not
      a controlling stockholder of Ariel Way, and we believe the terms of the loan
      are
      at least as favorable to us as could be obtained from an unrelated third
      party.




42


Arne
      Dunhem, our Chairman and Chief Executive Officer, advanced during the period
      January 1, 2005 through August 3, 2005 an aggregate of $ 42,250 to
      cover
      the payment of certain expenses for us. On September 26, 2005, we issued to
      Mr.
      Dunhem a convertible debenture in the principal sum of $42,250 with interest
      at
      the annual rate of 5% on the unpaid principal of the debenture which is due
      on
      September 25, 2006. Interest on the outstanding principal balance shall be
      due
      and payable monthly, in arrears, commencing on September 25, 2006 and shall
      continue on the first day of each calendar month thereafter that any amounts
      under the debenture are due and payable. Principal shall be due and payable
      in 6
      equal installments of $7,041.74 each. The installments of principal shall be
      due
      and payable commencing on October 1, 2006 and subsequent installments shall
      be
      due and payable on the first day of each calendar month thereafter until the
      outstanding principal balance is paid in full. The debenture shall be
      convertible into shares of our Common Stock at the option of Mr. Dunhem, in
      whole or in part at any time and from time to time, after the Original Issue
      Date. The conversion price in effect on any conversion date shall be equal
      to
      $0.30, which may be adjusted pursuant to the other terms of the
      debenture.




On
      May
      17, 2005 Eva Dunhem, the wife of Arne Dunhem, our Chairman and Chief Executive
      Officer, advanced as a short-term loan an aggregate of $70,000 to us. On
      September 26, 2005, we issued to Mrs. Dunhem a promissory note in the principal
      sum of $70,000 together with interest at the annual rate of 12% on the unpaid
      principal of the note on or before the 12th month anniversary of the funding
      date which will be May 17, 2006. In addition, we also issued to Mrs. Dunhem
      a
      warrant to purchase 200,000 shares of our common stock for a period of 3 years
      at an exercise price of $0.03 which was the price as of the issuance of the
      warrant. The warrant shares shall have “piggy-back” and demand registration
      rights.




We
      granted warrants to purchase our common stock to certain of our directors prior
      to their appointment to our Board of Directors in connection with their service
      as members of our advisory board. We subsequently provided additional grants
      to
      our directors in connection with their service as members of our Board of
      Directors. The terms of those grants are described in this Annual Report in
      our
      discussion of the compensation provided to our directors.





We
      believe that each of the above referenced transactions was made on terms no
      less
      favorable to us than could have been obtained from an unaffiliated third party.
      Furthermore, any future transactions or loans between us and our officers,
      directors, principal stockholders or affiliates, and any forgiveness of such
      loans, will be on terms no less favorable to us than could be obtained from
      an
      unaffiliated third party, and will be approved by a majority of our
      directors.





**Item
      13. Exhibits.**




**Exhibit****No.**
              
              **Description**
              
              **Location**2.1
              
              Share
                  Exchange Agreement, by and among Netfran Development Corp., Ariel
                  Way,
                  Inc., and the shareholders of Ariel Way common stock, dated as
                  of December
                  29, 2004.****
              
              Incorporated
                  by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K
                  filed on February 8, 2005 (File No. 0-50051)2.2
              
              Amendment
                  to Share Exchange Agreement, by and among Netfran Development Corp.,
                  Ariel
                  Way, Inc., and the shareholders of Ariel Way common stock, dated
                  as of
                  January 20, 2005.****
              
              Incorporated
                  by reference to Exhibit 2.2 to the Registrant’s Current Report on
                  Form 8-K filed on February 8, 2005 (File No.
                  0-50051)****2.3
              
              Stock
                  Purchase Agreement among Ariel Way, Inc. and dbsXmedia, Inc., dated
                  February 15, 2005.****
              
              Incorporated
                  by reference to Exhibit 99.3 to the Registrant’s Current Report on
                  Form 8-K filed on February 28, 2005 (File No.
                  0-50051)2.4
              
              Asset
                  Purchase Agreementby
                  and among dbsXmedia Inc., Loral Skynet Network Services, Inc.,
                  CyberStar
                  L.P., CyberStar, LLC and Netfran Development Corp.dated February 18, 2005.
              
              Incorporated
                  by reference to Exhibit 99.1 to the Registrant’s Current Report on
                  Form 8-K filed on April 28, 2005 (File No.
                  0-50051)
  43
  **Exhibit****No.**
              
              **Description**
              
              **Location**
 2.5
              
              Amendment
                  No. One to Asset Purchase Agreementby
                  and among dbsXmedia Inc., Loral Skynet Network Services, Inc.,
                  CyberStar
                  L.P., CyberStar, LLC and Netfran Development Corp.,dated April 13, 2005
              
              Incorporated
                  by reference to Exhibit 99.2 to the Registrant’s Current Report on
                  Form 8-K filed on April 28, 2005 (File No.
                  0-50051)2.6
              
              Security
                  Agreementbetween
                  dbsXmedia Inc., Loral Skynet Network Services, Inc., CyberStar
                  L.P., and
                  CyberStar, LLCdated
                  February 18, 2005
              
              Incorporated
                  by reference to Exhibit 99.3 to the Registrant’s Current Report on
                  Form 8-K filed on April 28, 2005 (File No.
                  0-50051)2.7
              
              Teleport
                  Service Agreement by and between dbsXmedia, Inc., and Loral Skynet
                  Network
                  Services, Inc.,
                  dated February 18, 2005
              
              Incorporated
                  by reference to Exhibit 99.4 to the Registrant’s Current Report on
                  Form 8-K filed on April 28, 2005 (File No.
                  0-50051)2.8
              
              Guaranty
                  Agreementby
                  Netfran Development Corp. in favor of Loral Skynet Network Services,
                  Inc.,
                  CyberStar, L.P., CyberStar, LLC, and Loral Skynet, a division of
                  Loral
                  SpaceCom Corporation, dated February 18, 2005
              
              Incorporated
                  by reference to Exhibit 99.5 to the Registrant’s Current Report on
                  Form 8-K filed on April 28, 2005 (File No.
                  0-50051)2.9
              
              Stockholders
                  Agreement by and among dbsXmedia, Inc., Netfran Development Corp.,
                  and
                  Zygot, LLC, dated February 21, 2005****
              
              Incorporated
                  by reference to Exhibit 99.4 to the Registrant’s Current Report on
                  Form 8-K filed on February 28, 2005 (File No.
                  0-50051)2.10
              
              Stock
                  Purchase Agreement between Ariel Way, Inc. and Market Central,
                  Inc., dated
                  September 24, 2004
              
              Incorporated
                  by reference to Exhibit 2.10 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)2.11
              
              Agreement
                  and Plan of Merger between Ariel Way, Inc. and Enfotec, Inc., dated
                  September 30, 2004
              
              Incorporated
                  by reference to Exhibit 2.5 to the Registrant’s Annual Report on Form
                  10-KSB filed on April 15, 2005 (File No. 0-50051)3.1
              
              Articles
                  of Incorporation, dated January 24**,**2000,
                  of Registrant
              
              Incorporated
                  by reference to Exhibit 3.1 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-102894) filed on July 26, 2001 (File No.
                  0-50051)3.2
              
              By-laws
                  of Registrant, dated January 24**,**2000.
              
              Incorporated
                  by reference to Exhibit 3.2 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-102894) filed on July 26, 2001.****(File
                  No. 0-50051)3.3
              
              Articles
                  of Amendments to Articles of Incorporation, dated April 28, 2005,
                  of the
                  Registrant
              
              Incorporated
                  by reference to Exhibit A to the Company's Schedule 14C Information
                  Statement filed on April 28, 2005.
  44
  **Exhibit****No.**
              
              **Description**
              
              **Location**
 3.4
              
              Certificate
                  of Conversion of Ariel Way, LLC, dated September 23, 2004.
              
              Incorporated
                  by reference to Exhibit 3.4 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)3.5
              
              Certificate
                  of Incorporation of Ariel Way, Inc. (DE), dated September 23,
                  2004.
              
              Incorporated
                  by reference to Exhibit 3.5 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)3.6
              
              Certificate
                  of Designations of Series A Redeemable Preferred Stock, dated April
                  19,
                  2005
              
              Incorporated
                  by reference to Exhibit 3.6 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)3.7
              
              By-Laws
                  of Ariel Way, Inc. (DE), dated September 23, 2004
              
              Incorporated
                  by reference to Exhibit 3.7 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)10.1
              
              Standby
                  Equity Distribution Agreement, dated July 21, 2005 between Ariel
                  Way, Inc.
                  and Cornell Capital Partners, LP
              
              Incorporated
                  by reference to Exhibit 10.1 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)10.2
              
              Registration
                  Rights Agreement, dated July 21, 2005, between Ariel Way, Inc.
                  and Cornell
                  CapitalPartners,
                  LP
              
              Incorporated
                  by reference to Exhibit 10.2 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)10.3
              
              Placement
                  Agent Agreement, dated July 21, 2005, between Ariel Way, Inc.,
                  Newbridge
                  Securities Corporation and Cornell Capital Partners, LP
              
              Incorporated
                  by reference to Exhibit 10.3 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)10.4
              
              Escrow
                  Agreement, dated July 21, 2005, between Ariel Way, Inc., Cornell
                  Capital
                  Partners, LP and David Gonzalez, Esq.
              
              Incorporated
                  by reference to Exhibit 10.4 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)10.5
              
              Termination
                  Agreement, dated July 20, 2005, between Ariel Way, Inc. and Cornell
                  Capital Partners, LP
              
              Incorporated
                  by reference to Exhibit 10.5 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)
  45
  **Exhibit****No.**
              
              **Description**
              
              **Location**
 10.6
              
              Securities
                  Purchase Agreement dated September 30, 2004, between Ariel Way,
                  Inc. and
                  Cornell Capital Partners, LP
              
              Incorporated
                  by reference to Exhibit 10.6 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)10.7
              
              Investor
                  Registration Rights Agreement dated September 30, 2004, between
                  Ariel Way,
                  Inc. and Cornell Capital Partners, LP
              
              Incorporated
                  by reference to Exhibit 10.7 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)10.8
              
              Security
                  Agreement dated September 30, 2004, between Ariel Way, Inc. and
                  Cornell
                  Capital Partners, LP
              
              Incorporated
                  by reference to Exhibit 10.8 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)10.9
              
              Irrevocable
                  Transfer Agent Instructions dated September 30, 2004, between Ariel
                  Way,
                  Inc. and Interwest Transfer Co., Inc.
              
              Incorporated
                  by reference to Exhibit 10.9 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)10.10
              
              Secured
                  Convertible Debenture issued by Ariel Way, Inc. on July 21, 2005
                  to
                  Cornell Capital Partners, LP
              
              Incorporated
                  by reference to Exhibit 10.10 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)10.11
              
              Promissory
                  Note by Ariel Way, Inc. and Cornell Capital Partners, LP, dated
                  February
                  1, 2005
              
              Incorporated
                  by reference to Exhibit 10.9 to the Registrant’s Annual Report on Form
                  10-KSB filed on April 15, 2005 (File No. 0-50051)10.12
              
              Guaranty
                  given by Arne Dunhem in Favor of Cornell Capital Partners, LP,
                  dated
                  February 1, 2005
              
              Incorporated
                  by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form
                  10-KSB filed on April 15, 2005 (File No. 0-50051)10.13
              
              Pledge
                  and Escrow Agreement by and among Cornell Capital Partners, LP,
                  dated
                  February 1, 2005, Ariel Way, Inc., Arne Dunhem and David Gonzalez,
                  Esq.,
                  dated February 1, 2005
              
              Incorporated
                  by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form
                  10-KSB filed on April 15, 2005 (File No. 0-50051)10.14
              
              Independent
                  Contractor Consulting Agreement between Securities Counseling and
                  Management, Inc. and Ariel Way, Inc. dated August 16, 2004
              
              Incorporated
                  by reference to Exhibit 10.8 to the Registrant’s Annual Report on Form
                  10-KSB filed on April 15, 2005 (File No. 0-50051)10.15
              
              Warrant
                  Agreement between Ariel Way, Inc. and Arne Dunhem dated August
                  1, 2004 and
                  Amendment No. 1 to Warrant Agreement between Arne Dunhem and Netfran
                  Development Corp., dated March 21, 2005.
              
              Incorporated
                  by reference to Exhibit 10.12 to the Registrant’s Annual Report on Form
                  10-KSB filed on April 15, 2005 (File No.
                  0-50051)
  46
  **Exhibit****No.**
              
              **Description**
              
              **Location**
 10.16
              
              Warrant
                  Agreement between Ariel Way, Inc. and Anand Kumar dated August
                  10, 2004
                  and Amendment No. 1 to Warrant Agreement between Anand Kumar andNetfranDevelopment
                  Corp., dated March 21, 2005.
              
              Incorporated
                  by reference to Exhibit 10.13 to the Registrant’s Annual Report on Form
                  10-KSB filed on April 15, 2005 (File No. 0-50051)10.17
              
              Warrant
                  Agreement between Ariel Way, Inc. and Voula Kanellias dated August
                  10,
                  2004 and Amendment No. 1 to Warrant Agreement between Voula Kanellias
                  and
                  Netfran Development Corp., dated March 21, 2005.
              
              Incorporated
                  by reference to Exhibit 10.14 to the Registrant’s Annual Report on Form
                  10-KSB filed on April 15, 2005 (File No. 0-50051)10.18
              
              Warrant
                  Agreement between Ariel Way, Inc. and Magdy Battikha dated November
                  1,
                  2004 and Amendment No. 1 to Warrant Agreement between Magdy Battikha
                  and
                  Netfran Development Corp., dated March 21, 2005.
              
              Incorporated
                  by reference to Exhibit 10.15 to the Registrant’s Annual Report on Form
                  10-KSB filed on April 15, 2005 (File No. 0-50051)10.19
              
              Warrant
                  Agreement between Ariel Way, Inc. and Aziz Bennani dated November
                  1, 2004
                  and Amendment No. 1 to Warrant Agreement between Aziz Bennani and
                  Netfran
                  Development Corp., dated March 21, 2005.
              
              Incorporated
                  by reference to Exhibit 10.16 to the Registrant’s Annual Report on Form
                  10-KSB filed on April 15, 2005 (File No. 0-50051)10.20
              
              Independent
                  Contractor Services Fee Agreement between Michael Jordan and Netfran
                  Development Corp., dated December 28, 2004
              
              Incorporated
                  by reference to Exhibit 99.5 to the Registrant’s Current Report on
                  Form 8-K filed on February 28, 2004 (File No.
                  0-50051)10.21
              
              Legal
                  Services Fee Agreement between Joel Bernstein, Esq. and Netfran
                  Development Corp., dated December 28, 2004
              
              Incorporated
                  by reference to Exhibit 99.6 to the Registrant’s Current Report on
                  Form 8-K filed on February 28, 2004 (File No.
                  0-50051)10.22
              
              Warrant
                  Agreement between Ariel Way, Inc. and Oberon Securities, LLC dated
                  May 28,
                  2005.
              
              Incorporated
                  by reference to Exhibit 10.22 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)10.23
              
              Promissory
                  Note issued by Ariel Way, Inc. on July 28, 2005 to Cornell Capital
                  Partners, LP
              
              Incorporated
                  by reference to Exhibit 10.23 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)10.24
              
              Warrant
                  issued by Ariel Way, Inc. on July 28, 2005 to Cornell Capital Partners,
                  LP
              
              Incorporated
                  by reference to Exhibit 10.24 to the Company's registration statement
                  on
                  Form SB-2 (file no. 333-127363) filed on August 9, 2005.****(File
                  No. 0-50051)10.25
              
              Promissory
                  Note issued by Ariel Way, Inc. on September 26, 2005 to Mrs. Eva
                  Dunhem
              
              Provided
                  herewith10.26
              
              Warrant
                  issued by Ariel Way, Inc. on September 26, 2005 to Mrs. Eva
                  Dunhem
              
              Provided
                  herewith10.27
              
              Convertible
                  Debenture issued by Ariel Way, Inc. on September 26, 2005 to Mr.
                  Arne
                  Dunhem
              
              Provided
                  herewith
  47
  **Exhibit****No.**
              
              **Description**
              
              **Location**
 21.1
              
              List
                  of Subsidiaries
              
              Provided
                  herewith23.1
              
              Consent
                  of Bagell, Josephs & Company, L.L.C., dated January 13, 2006
              
              Provided
                  herewith31.1
              
              Certification
                  by Arne Dunhem, Chief Executive Officer, pursuant to Rule 13a-14(a)
              
              Provided
                  herewith31.2
              
              Certification
                  by Voula Kanellias, Chief Financial Officer, pursuant to Rule
                  13a-14(a)
              
              Provided
                  herewith32.1
              
              Certification
                  by Arne Dunhem and Voula Kanellias, pursuant to 18 U.S.C. Section
                  1350, as
                  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002*
              
              Provided
                  herewith








*
      These certifications are not deemed filed by the SEC and are not to be
      incorporated by reference in any filing of the Registrant under the Securities
      Act of 1933 or the Securities Exchange Act of 1934, irrespective of any general
      incorporation language in any filings.








**Item
      14. Principal Accountant Fees and Services.**





During
      the fiscal year ended September 30, 2005, the aggregate fees billed by Bagell,
      Josephs & Company, L.L.C. for principal accountant fees and services was
      $40,000.





48


**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) 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.





**Ariel
                Way, Inc.**By
            /s/
                Arne DunhemName:
            Arne
                DunhemTitle:
            President
                and Chief Executive Officer,Date:
            January
                13, 2006





Pursuant
      to the requirements of the Securities Exchange Act of 1934, this Report has
      been
      signed below by the following persons on behalf of the Registrant and in the
      capacities and on the dates indicated.





**SIGNATURE**
            
            **TITLE**
            
            **DATE**/s/
                Arne Dunhem
            
            President,
                Chief Executive Officer,
            
            January
                13, 2006Arne
                Dunhem
            
            Principal
                Executive Officer and Director/s/
                Voula Kanellias
            
            Chief
                Financial Officer, Principal Financial
            
            January
                13, 2006Voula
                Kanellias
            
            and
                Principal Accounting Officer/s/
                Leif T. Carlsson
            
            Director
            
            January
                13, 2006Leif
                T. Carlsson/s/
                Victor Halpert
            
            Director
            
            January
                13, 2006Victor
                Halpert





49