SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report:

~~August~~June 17 27, ~~2005~~ 2007

ARIEL WAY, INC.

(Exact Name of Registrant as Specified in Charter)

Florida	0-50051	65-0983277
(State of Incorporation)	(Commission File Number )	(IRS Employer Identification No.)

8000 Towers Crescent Drive, Suite 1220

Vienna, VA 22182

(~~703)~~Address ~~918-2430~~ of principal executive offices) (Zip Code)

(703) 918-2420

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material ~~Definitive~~ Agreement.

On ~~July~~ June 21, ~~2005~~2007, weAriel ~~entered~~Way, ~~into~~on abehalf ~~Standby~~of ~~Equity~~its ~~Distribution~~60 ~~Agreement~~% ~~(“the~~owned ~~2005 Standby~~subsidiary ~~Equity Distribution Agreement”) with Cornell Capital Partners~~dbsXmedia, LInc.~~P.,~~ ~~(“Cornell~~ closed ~~Capital”).~~on ~~The~~a ~~2005 Standby Equity Distribution~~ Settlement Agreement ~~provides, generally,~~and ~~that~~General ~~Cornell~~Release ~~Capital~~(the ~~will~~“Settlement ~~purchase~~and upRelease”) ~~to $50 million of common~~with ~~stock over~~ Loral aSkynet ~~two-year~~Network ~~period~~Services, ~~with~~Inc. ~~the~~(“Loral ~~timing~~Skynet”). ~~and~~As ~~amount~~part of ~~such purchases, if~~the ~~any, at~~Settlement ~~our~~ and ~~discretion.~~Release, ~~Any~~Ariel ~~shares~~Way ofpaid ~~common~~Loral ~~stock~~Skynet ~~sold~~on ~~under~~June ~~the~~21, ~~2005~~2007 ~~Standby Equity Distribution Agreement will be priced at~~ a 4%total ~~discount~~ of ~~the lowest volume~~$57,000, ~~weighted~~ that ~~average~~was ~~price of~~ the ~~common~~agreed ~~stock~~to asSettlement ~~reported~~Payment byin ~~Bloomberg~~settlement LPof ~~during the~~all ~~five~~amounts ~~consecutive trading days after we give notice to Cornell Capital~~owed ~~that~~ from we dbsXmedia ~~wish~~and/or toAriel ~~sell~~Way ~~stock~~ to ~~them.~~Loral WeSkynet, ~~are~~as ~~not~~well ~~permitted~~as ~~to draw down more than $4 million in~~ any ~~30-day~~and ~~calendar~~all ~~period. In addition, in order for us to draw~~obligations ~~down on~~ and ~~the~~liabilities ~~2005~~between ~~Standby Equity Distribution Agreement, we must file~~ and ~~obtain~~ among the ~~effectiveness~~ ofparties ato ~~registration statement, registering~~ the ~~resale~~various ofagreements ~~the~~set ~~shares of~~ forth ~~common~~in ~~stock that may be issued to Cornell Capital under~~ the ~~2005~~Settlement ~~Standby Equity~~and ~~Distribution~~Release Agreement. Atand ~~the~~disclosed ~~time~~in ofprior ~~each draw down, we are obligated~~filings to with ~~pay Cornell Capital a fee equal to 3% percent of~~ the ~~amount~~Securities ofand ~~each~~Exchange ~~draw down~~Commission.

On ~~July~~ June 21 13, ~~2005,~~2007 wethe ~~amended~~Company issued a ~~convertible~~Promissory ~~debenture~~Note to Cornell Capital Partners, L.P. in the ~~original~~ principal amount of $~~500~~57,000 ~~that~~with ~~was entered into by our subsidiary Ariel~~an ~~Way,~~ interest ~~Inc.,~~ at athe ~~Delaware~~annual ~~company~~rate ~~(“Old~~of ~~Ariel~~eleven ~~Way”~~percent (11%) on ~~September~~the ~~30,~~unpaid ~~2004.~~balance ~~The amended convertible debenture dated July 21, 2005, accrues interest at a rate of 5% per year and is~~ due and payable on ~~September~~or ~~29,~~before ~~2006.~~June ~~At our option~~13, ~~we have~~2008. ~~the~~ The ~~right~~ foregoing tois ~~redeem~~only a ~~portion~~summary orof ~~all~~the ~~outstanding~~terms ~~convertible debenture. The redemption price shall be one hundred twenty percent (120%)~~ of the ~~amount redeemed~~ ~~plus~~Promissory ~~accrued~~Note ~~interest.~~and ~~The convertible debenture~~ is ~~convertible~~qualified ~~at the holder’s option any time up to maturity at the fixed conversion price (the “Conversion Price”)~~ in ~~effect~~its onentirety ~~any~~by ~~Conversion~~reference ~~Date~~ to ~~be equal to $0.30, which may be adjusted pursuant to~~ the ~~other~~Promissory ~~terms of the convertible debenture. Except after an event of default~~Note, ~~as set forth in the convertible debenture, the holder is not entitled to convert such debenture for~~ a ~~number~~copy of ~~shares of our common stock in excess of that number of shares~~ which, ~~upon~~is ~~giving effect~~ attached to ~~such conversion,~~this ~~would~~Current ~~cause~~Report ~~the~~on ~~aggregate~~Form ~~number~~8-K ofas ~~shares~~Exhibit of10.1 ~~common stock beneficially held by such holder~~ and ~~its~~incorporated ~~affiliates to exceed 4.99% of our~~herein ~~outstanding shares of common stock~~ by reference.

On July 28, 2005, we borrowed $600,000 from Montgomery Equity Partners, LP. (“Montgomery Equity”). We received $240,000 of this amount on July 28, 2005 and the balance 360,000 on August 8, 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 stockItem ~~that is exercisable for a period of three (3) years at an exercise price per share of $0~~9.~~025. The warrant shares shall have “piggy-back” and demand registration~~01 ~~rights.~~ Financial ~~Montgomery~~Statements ~~Equity 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~~Exhibits.

~~-2-~~(c) Exhibits Furnished.

~~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 (“Preferred Stock”) for a total of $2,074,301.~~37, the “Purchase Price”. These shares of Preferred Stock were sold and issued on April 21, 2005, by us to Cornell Capital, for a purchase price of $~~1~~.00~~ ~~per~~Promissory ~~share~~Note ~~and~~dated ~~an aggregate~~June ~~purchase price of $2~~13,~~000,000~~ ~~with~~2007 ~~the~~issued ~~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 Old Ariel~~ Way ~~and Cornell Capital~~, ~~dated April 19, 2005~~Inc. ~~In connection with our 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~~Partners,~~301.37~~ ~~of dividends accrued on the Preferred Stock to August 10, 2005~~L. ~~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~~P. ~~We also represented that we shall owe to Cornell Capital the balance of the Purchase Price, or the sum of $30,271.25.~~

~~Item 1.02 Termination of a Material Definitive Agreement~~2

On July 20, 2005, we terminated a Standby Equity Distribution Agreement (the “2004 Standby Equity Distribution Agreement”) with Cornell Capital that was entered into by our subsidiary Old Ariel Way, on September 30, 2004. The 2004 Standby Equity Distribution Agreement provided, generally, that Cornell Capital would purchase up to $50 million of common stock over a two-year period, with the timing and amount of such purchases, if any, at our discretion. Any shares of common stock sold under the 2004 Standby Equity Distribution Agreement would 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 gave notice to Cornell Capital that we wished to sell stock to them. We were 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 2004 Standby Equity Distribution Agreement, we had to file and obtain the effectiveness of a registration statement, registering the resale of the shares of common stock that might have been issued to Cornell Capital under the 2004 Standby Equity Distribution Agreement. At the time of each draw down, we were obligated to pay Cornell Capital a fee equal to 3% percent of the amount of each draw down. The reason for the termination of the 2004 Standby Equity Distribution Agreement is that a new 2005 Standby Equity Distribution Agreement was intended to be entered into by us on July 21, 2005. There were no early termination penalties incurred and there were no disputes or defaults under the 2004 Standby Equity Distribution Agreement and the parties were in mutual agreement with the termination.

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Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

On June 06, 2005, Anand Kumar resigned for personal reasons from our Board of Directors. Mr. Kumar was a member of our Board of Directors since February 2, 2005. Mr. Kumar continues to be our Executive Vice President. His departure from the Board did not involve a dispute as to our operations, policies or practices. We have not named a replacement filling the vacancy after Mr. Kumar.

Item 8.01 Other Events.

On June 05, 2005 we were served with a complaint in the Fairfax County Virginia Circuit Court by Pierce Financial Corporation. In the complaint, Pierce Financial claimed $23,000 in payment of a fee related to an acquisition transaction. We paid Pierce Financials $23,000 on August 15, 2005 and we have received from Pierce Financials a full settlement and full release from the claim.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ARIEL WAY, INC.

By: /s/ Arne Dunhem

Name: Arne Dunhem

Title: President and Chief Executive Officer

Date: ~~August~~ June 1727, ~~2005~~2007

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