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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
        AND EXCHANGE COMMISSION</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WASHINGTON,
        D.C. 20549</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FORM
        8-K</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CURRENT
        REPORT</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PURSUANT
        TO SECTION 13 OR 15(d) OF THE</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
        EXCHANGE ACT OF 1934</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
        of
        Report:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">August
        17, 2005</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>ARIEL
        WAY, INC.
</strong></font>
        <div>
          <hr style="COLOR: #000000" align="left" noshade size="1" width="100%">
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
        Name of Registrant as Specified in Charter)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
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        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Florida</font></div>
              </td>
              <td valign="top" width="24%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0-50051</font></div>
              </td>
              <td valign="top" width="24%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">65-0983277</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="24%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
                  of Incorporation)</font></div>
              </td>
              <td valign="top" width="24%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Commission
                  File Number )</font></div>
              </td>
              <td valign="top" width="24%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(IRS
                  Employer Identification No.)</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: -9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8000
        Towers Crescent Drive, Suite 1220</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Vienna,
        VA 22182 </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
        <div>
          <hr style="COLOR: #000000" align="left" noshade size="1" width="100%">
        </div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
        of principal executive offices) (Zip Code)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(703)
        918-2430 </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
        <div>
          <hr style="COLOR: #000000" align="left" noshade size="1" width="100%">
        </div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Registrant's
        telephone number, including area code)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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
        (</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>see</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        General
        Instruction A.2 below):</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">o</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;Written
        communications pursuant to Rule 425 under the Securities Act (17 CFR
        230.425)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">o</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;Soliciting
        material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
        240.14a-12)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">o</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;Pre-commencement
        communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
        240.14d-2(b))</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">o</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;Pre-commencement
        communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
        240.13e-4(c)) </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
        1.01. Entry into a Material Definitive Agreement</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        July
        21, 2005, we entered into a Standby Equity Distribution Agreement (&#8220;the 2005
        Standby Equity Distribution Agreement&#8221;) with Cornell Capital Partners, L.P.,
        (&#8220;Cornell Capital&#8221;). The 2005 Standby Equity Distribution Agreement provides,
        generally, that Cornell Capital will 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 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 Capital
        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 a registration statement, registering the resale of the
        shares
        of common stock that may be issued to Cornell Capital under the 2005 Standby
        Equity Distribution Agreement. At the time of each draw down, we are obligated
        to pay Cornell Capital a fee equal to 3% percent of the amount of each draw
        down.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        July
        21, 2005, we amended a convertible debenture to Cornell Capital in the original
        principal amount of $500,000 that was entered into by our subsidiary Ariel
        Way,
        Inc., a Delaware company (&#8220;Old Ariel Way&#8221;) on September 30, 2004. The amended
        convertible debenture dated July 21, 2005, 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&#160;(120%) of the
        amount
        redeemed plus accrued interest. The convertible debenture is convertible
        at the
        holder&#8217;s option any time up to maturity at the fixed conversion price (the
&#8220;Conversion Price&#8221;) in effect on any Conversion Date to be equal to $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.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        July
        28, 2005, we</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        borrowed
        $600,000 from Montgomery Equity Partners, LP. (&#8220;Montgomery Equity&#8221;). 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 stock&#160;that is
        exercisable for a period of three (3) years at an exercise price per share
        of
        $0.025. The warrant shares shall have &#8220;piggy-back&#8221; and demand registration
        rights. Montgomery 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.</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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 (&#8220;Preferred Stock&#8221;) for a total of $2,074,301.37, the &#8220;Purchase
        Price&#8221;. 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 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 Old Ariel Way and
        Cornell
        Capital, dated April 19, 2005. 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 $74,301.37 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 $30,271.25.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
        1.02 </strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Termination
        of a </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Material
        Definitive Agreement</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        July
        20, 2005, we terminated a Standby Equity Distribution Agreement (the &#8220;2004
        Standby Equity Distribution Agreement&#8221;) 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. </font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
        5.02</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Departure
        of Directors or Principal Officers; Election of Directors; Appointment of
        Principal Officers </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        June
        06, 2005, Anand Kumar</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        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.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
        8.01</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Other
        Events.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.
</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SIGNATURES</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ARIEL
        WAY, INC.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:&#160;&#160;
        </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
        Arne
        Dunhem
</font>
        <div style="MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <hr style="COLOR: #000000" align="left" noshade size="2" width="35%">
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Name:
        </font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Arne
        Dunhem</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Title:
        President and Chief Executive Officer</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date:
        August 17, 2005</font></div>
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{"company-data": {"conformed-name": "ARIEL WAY INC", "cik": "0001145254", "assigned-sic": "6794", "irs-number": "650983277", "state-of-incorporation": "FL", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-50051", "film-number": "051034533"}, "business-address": {"street1": "2801 N E 208TH TERRACE 2ND FLOOR", "city": "MIAMI", "state": "FL", "zip": "33180", "phone": "3059314000"}, "mail-address": {"street1": "2801 N E 208TH TERRACE 2ND FLOOR", "city": "MIAMI", "state": "FL", "zip": "33180"}, "former-company": [{"former-conformed-name": "ARIELWAY", "date-changed": "20050815"}, {"former-conformed-name": "NETFRAN DEVELOPMENT CORP", "date-changed": "20010718"}]}
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
        17, 2005
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
(Address
        of principal executive offices) (Zip Code)
(703)
        918-2430
(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
        21, 2005, we entered into a Standby Equity Distribution Agreement ("the 2005
        Standby Equity Distribution Agreement") with Cornell Capital Partners, L.P.,
        ("Cornell Capital"). The 2005 Standby Equity Distribution Agreement provides,
        generally, that Cornell Capital will 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 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 Capital
        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 a registration statement, registering the resale of the
        shares
        of common stock that may be issued to Cornell Capital under the 2005 Standby
        Equity Distribution Agreement. At the time of each draw down, we are obligated
        to pay Cornell Capital a fee equal to 3% percent of the amount of each draw
        down.
On
        July
        21, 2005, we amended a convertible debenture to Cornell Capital in the original
        principal amount of $500,000 that was entered into by our subsidiary Ariel
        Way,
        Inc., a Delaware company ("Old Ariel Way") on September 30, 2004. The amended
        convertible debenture dated July 21, 2005, 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 $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
        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 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 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.
-2-
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 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 Old Ariel Way and
        Cornell
        Capital, dated April 19, 2005. 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 $74,301.37 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 $30,271.25.
Item
        1.02
Termination
        of a
Material
        Definitive Agreement
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.
-3-
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 17, 2005
-4-