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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>
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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"><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">July
      26,
      2006</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: 14pt; FONT-FAMILY: Times New Roman"><strong>ARIEL
      WAY, INC.</strong></font></div>
    <div>
      <hr style="COLOR: black" align="left" noshade size="1" width="100%">
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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">(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>
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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>
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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">(State
                of Incorporation)</font></div>
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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">(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>
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    <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>
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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">(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
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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">(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>
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      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>
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    <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&#160;1.01
      Entry into a Material 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
      June
      21, 2006, the Company filed with the Securities and Exchange Commission its
      quarterly report for the period ending March 31, 2006. In this filing, the
      Company disclosed that on May 8, 2006, the Company&#8217;s subsidiary dbsXmedia, Inc.
      (&#8220;dbsXmedia or &#8220;Debtor&#8221;) received a letter from Loral Skynet Network Services,
      Inc. (&#8220;Loral Skynet&#8221;), with the text of the letter included in the disclosure.
      The disclosed letter stated that Debtor was in default under that certain
      Security Agreement, dated as of April 21, 2005 (the "Security Agreement"),
      by
      and among Debtor, Loral Skynet, CyberStar, L.P. and CyberStar, LLC, granting
      a
      security interest in the Collateral thereunder (which includes all business
      television-related assets and receivables of dbsXmedia). The outstanding balance
      due from Debtor to Loral Skynet, as of May 8, 2006, was $2,470,842.50 (the
      "Balance"). In the letter, Loral Skynet requested that dbsXmedia send to Loral
      Skynet a signed, written statement of dbsXmedia&#8217;s objection to certain of its
      actions, to include foreclosure of the Collateral, within twenty (20) days
      of
      the date of the letter. If Loral Skynet had not received a signed, written
      objection from dbsXmedia within the prescribed time period, dbsXmedia would
      be
      deemed to have consented to the proposed actions by Loral Skynet and would
      have
      no further right to object thereto, and Loral Skynet would retain the Collateral
      in partial satisfaction of the Balance, as described in the letter.</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 id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s subsidiary dbsXmedia did not send a written statement of objection to
      Loral Skynet by May 28, 2006 and, as a result, dbsXmedia was</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      deemed
      to have consented to the actions proposed by Loral Skynet in its May 8, 2006
      letter, has no further right to object thereto, and </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Loral
      Skynet</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      was
      entitled to retain the Collateral in partial satisfaction of the Balance, as
      described in the letter.</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">The
      Company also disclosed in its quarterly report for the period ending March
      31,
      2006, that the Company had and was, on behalf of dbsXmedia, in negotiations
      with
      Loral Skynet for a potential settlement between Loral Skynet, dbsXmedia and
      Ariel Way. The Company reported that no settlement had as of June 21, 2006
      been
      reached. </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
      26, 2006, the Company, on behalf of dbsXmedia, had reached a </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">settlement
      agreement and general release (the &#8220;Settlement and Release&#8221;) </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">with
      Loral Skynet, included as Exhibit 99.1 to this Current Report. </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">The
      Settlement and Release provides that both the outstanding balance due from
      dbsXmedia to Loral Skynet of $2,470,842.50 and the parental guarantee to the
      benefit of Loral Skynet by Ariel Way at $1,500,000 on behalf of dbsXmedia will
      be cancelled and terminated, effective upon payment to Loral Skynet of the
      Settlement Payment (as defined below).</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"><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">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Settlement and Release was made and entered into on July 25, 2006 by and among
      dbsXmedia, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ariel
      Way, Loral Skynet, Loral Cyberstar L.L.C. (&#8220;LCL&#8221;), and CyberStar LLC (&#8220;CL&#8221;).
      Loral Skynet, LCL and CL are sometimes referred to in the </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Settlement
      and Release</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      collectively as the &#8220;Sellers&#8221;. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ariel
      Way
      and/or dbsXmedia shall pay Loral Skynet a cumulative total payment of $200,000
      (the &#8220;Settlement Payment&#8221;) on the closing date, to occur no later than August
      15, 2006, the payment of which may be paid entirely by Ariel Way, entirely
      by
      dbsXmedia, or divided between them in any proportion that is agreeable to Ariel
      Way and dbsXmedia.</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">Loral
      Skynet will, immediately upon receipt of the full amount of the Settlement
      Payment, deliver a bill of sale, assignment, or other appropriate document
      of
      conveyance transferring ownership of the foreclosed Collateral from Loral Skynet
      to dbsXmedia, to Ariel Way, or to a third party designated in writing by Ariel
      Way. Effective upon Loral Skynet&#8217;s receipt of the full amount of the Settlement
      Payment, each of the Transaction Documents (as defined in the Settlement and
      Release) related to the acquisition by dbsXmedia of certain assets from Loral
      Skynet, will be considered terminated by mutual consent of the parties. Upon
      such termination, all of the parties&#8217; rights and obligations under each of the
      Transaction Documents will also terminate, including without limitation the
      non-competition obligations set forth in Section 6.4 of the Asset Purchase
      Agreement dated April 21, 2005 related to the acquisition by dbsXmedia of
      certain assets from Loral Skynet, and no party will thereafter have any
      liability based on such Transaction Documents to any other party. Effective
      upon
      Loral Skynet&#8217;s receipt of the full amount of the Settlement Payment, each of the
      Sellers agreed to waive any and all rights it may have to collect, and to
      release dbsXmedia and Ariel Way from paying, any and all amounts that may
      currently be due and payable, or may in the future become due and payable to
      any
      or all of the Sellers pursuant to any of the Transaction Documents.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</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">The
      closing of the settlement and release transaction described in the Settlement
      and Release is required under the terms of the agreement to occur no later
      than
      August 15, 2006, unless otherwise agreed upon by the parties. In the event
      that
      the closing does not occur on or before August 15, 2006, unless the parties
      otherwise agree in writing, the Settlement and Release and any and all rights
      and obligations of the parties thereunder will automatically terminate.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</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">The
      Company is engaged in discussions with a potential investor in order to provide
      it with funding to, among other things, enable the Company to make the
      Settlement Payment to Loral Skynet under the Settlement and Release. There
      can
      be no assurance the Company will be able to obtain such funding and,
      consequently, be able to consummate the closing under the Settlement and
      Release. </font></div>
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      Financial Statements and Exhibits. </strong></font></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">&#160;&#160;&#160;&#160;&#160;</font></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)</font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exhibits
                Furnished. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Settlement
                Agreement by and among dbsXmedia Inc., </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ariel
                Way, Inc., Loral Skynet Network Services, Inc., Loral Cyberstar L.L.C.,
                and CyberStar LLC, dated July 26, 2006.
</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>&#160;</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"><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"><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: 36pt; 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:
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>/s/
      Arne
      Dunhem&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</u></font></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">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>
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      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>
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      July 26, 2006</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": "0930"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-50051", "film-number": "06982695"}, "business-address": {"street1": "8000 TOWERS CRESCENT DRIVE,SUITE 1220", "city": "VIENNA", "state": "VA", "zip": "22182", "phone": "(703) 918-2420"}, "mail-address": {"street1": "8000 TOWERS CRESCENT DRIVE,SUITE 1220", "city": "VIENNA", "state": "VA", "zip": "22182"}, "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:
July
      26,
      2006
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 Agreement.
On
      June
      21, 2006, the Company filed with the Securities and Exchange Commission its
      quarterly report for the period ending March 31, 2006. In this filing, the
      Company disclosed that on May 8, 2006, the Company's subsidiary dbsXmedia, Inc.
      ("dbsXmedia or "Debtor") received a letter from Loral Skynet Network Services,
      Inc. ("Loral Skynet"), with the text of the letter included in the disclosure.
      The disclosed letter stated that Debtor was in default under that certain
      Security Agreement, dated as of April 21, 2005 (the "Security Agreement"),
      by
      and among Debtor, Loral Skynet, CyberStar, L.P. and CyberStar, LLC, granting
      a
      security interest in the Collateral thereunder (which includes all business
      television-related assets and receivables of dbsXmedia). The outstanding balance
      due from Debtor to Loral Skynet, as of May 8, 2006, was $2,470,842.50 (the
      "Balance"). In the letter, Loral Skynet requested that dbsXmedia send to Loral
      Skynet a signed, written statement of dbsXmedia's objection to certain of its
      actions, to include foreclosure of the Collateral, within twenty (20) days
      of
      the date of the letter. If Loral Skynet had not received a signed, written
      objection from dbsXmedia within the prescribed time period, dbsXmedia would
      be
      deemed to have consented to the proposed actions by Loral Skynet and would
      have
      no further right to object thereto, and Loral Skynet would retain the Collateral
      in partial satisfaction of the Balance, as described in the letter.
The
      Company's subsidiary dbsXmedia did not send a written statement of objection to
      Loral Skynet by May 28, 2006 and, as a result, dbsXmedia was
deemed
      to have consented to the actions proposed by Loral Skynet in its May 8, 2006
      letter, has no further right to object thereto, and
Loral
      Skynet
was
      entitled to retain the Collateral in partial satisfaction of the Balance, as
      described in the letter.
The
      Company also disclosed in its quarterly report for the period ending March
      31,
      2006, that the Company had and was, on behalf of dbsXmedia, in negotiations
      with
      Loral Skynet for a potential settlement between Loral Skynet, dbsXmedia and
      Ariel Way. The Company reported that no settlement had as of June 21, 2006
      been
      reached.
On
      July
      26, 2006, the Company, on behalf of dbsXmedia, had reached a
settlement
      agreement and general release (the "Settlement and Release")
with
      Loral Skynet, included as Exhibit 99.1 to this Current Report.
The
      Settlement and Release provides that both the outstanding balance due from
      dbsXmedia to Loral Skynet of $2,470,842.50 and the parental guarantee to the
      benefit of Loral Skynet by Ariel Way at $1,500,000 on behalf of dbsXmedia will
      be cancelled and terminated, effective upon payment to Loral Skynet of the
      Settlement Payment (as defined below).
The
      Settlement and Release was made and entered into on July 25, 2006 by and among
      dbsXmedia,
Ariel
      Way, Loral Skynet, Loral Cyberstar L.L.C. ("LCL"), and CyberStar LLC ("CL").
      Loral Skynet, LCL and CL are sometimes referred to in the
Settlement
      and Release
collectively as the "Sellers".
Ariel
      Way
      and/or dbsXmedia shall pay Loral Skynet a cumulative total payment of $200,000
      (the "Settlement Payment") on the closing date, to occur no later than August
      15, 2006, the payment of which may be paid entirely by Ariel Way, entirely
      by
      dbsXmedia, or divided between them in any proportion that is agreeable to Ariel
      Way and dbsXmedia.
Loral
      Skynet will, immediately upon receipt of the full amount of the Settlement
      Payment, deliver a bill of sale, assignment, or other appropriate document
      of
      conveyance transferring ownership of the foreclosed Collateral from Loral Skynet
      to dbsXmedia, to Ariel Way, or to a third party designated in writing by Ariel
      Way. Effective upon Loral Skynet's receipt of the full amount of the Settlement
      Payment, each of the Transaction Documents (as defined in the Settlement and
      Release) related to the acquisition by dbsXmedia of certain assets from Loral
      Skynet, will be considered terminated by mutual consent of the parties. Upon
      such termination, all of the parties' rights and obligations under each of the
      Transaction Documents will also terminate, including without limitation the
      non-competition obligations set forth in Section 6.4 of the Asset Purchase
      Agreement dated April 21, 2005 related to the acquisition by dbsXmedia of
      certain assets from Loral Skynet, and no party will thereafter have any
      liability based on such Transaction Documents to any other party. Effective
      upon
      Loral Skynet's receipt of the full amount of the Settlement Payment, each of the
      Sellers agreed to waive any and all rights it may have to collect, and to
      release dbsXmedia and Ariel Way from paying, any and all amounts that may
      currently be due and payable, or may in the future become due and payable to
      any
      or all of the Sellers pursuant to any of the Transaction Documents.
The
      closing of the settlement and release transaction described in the Settlement
      and Release is required under the terms of the agreement to occur no later
      than
      August 15, 2006, unless otherwise agreed upon by the parties. In the event
      that
      the closing does not occur on or before August 15, 2006, unless the parties
      otherwise agree in writing, the Settlement and Release and any and all rights
      and obligations of the parties thereunder will automatically terminate.
The
      Company is engaged in discussions with a potential investor in order to provide
      it with funding to, among other things, enable the Company to make the
      Settlement Payment to Loral Skynet under the Settlement and Release. There
      can
      be no assurance the Company will be able to obtain such funding and,
      consequently, be able to consummate the closing under the Settlement and
      Release.
Item 9.01
      Financial Statements and Exhibits.
(c)
Exhibits
                Furnished.
99.1
Settlement
                Agreement by and among dbsXmedia Inc.,
Ariel
                Way, Inc., Loral Skynet Network Services, Inc., Loral Cyberstar L.L.C.,
                and CyberStar LLC, dated July 26, 2006.
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:
      July 26, 2006