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aeroTelesis Issues Letter to Shareholders Tuesday, February 8, 9:00 am ET

LOS ANGELES--(BUSINESS WIRE)--Feb. 8, 2005--aeroTelesis(TM), Inc. (OTCBB: AOTL) President, Joseph Gutierrez, issued the following Letter to Shareholders: Dear Shareholders, As the New Year begins, I would like to update you on some of our latest developments as well as outline our immediate strategies and opportunities. The entire aeroTelesis(TM) team has been working diligently to focus on core business initiatives that should create important momentum for us over the next 180 days and move the Company to a higher level. Here in this shareholders letter, I will cover the following areas: 1. VoIP Review and Progress Report 2. Acquisitions Strategy 3. USM (TM)Technology Update 4. Strategic Initiatives VoIP Review and Progress Report Towards the end of 2004, we launched our Voice over Internet Protocol (VoIP) enterprise solution known as aeroOffice(TM). Currently, aeroOffice(TM) has been deployed in several locations, most notably at a national travel agency (Picasso Travel), for a series of field trials. To date, the performance has been exceptional, especially at Picasso where all of their branch offices across the country have now integrated aeroOffice(TM) into their internal communications infrastructure. In recent weeks, we have begun to upgrade our network to include new value added features, and we expect to demonstrate these enhanced capabilities to Picasso and the other users in the coming weeks. Thereafter, it can be expected that the field trials will continue for another 45 to 60 days before the system is commercialized for these initial user groups. With regards to our overall VoIP strategy for the wholesale and retail market segments, our team has been focusing on multiple opportunities in diverse communities in the United States, where there are growing populations of international people who keep in frequent communication with friends and family back in their home lands. Because of the strong international make-up and expertise of our management team, we confidently believe that the Company can make its greatest impact in these communities and leverage upon the technical benefits and cost efficiencies that VoIP technology provides to these end users. As you will see in the coming months, we will be executing an ambitious strategy to capture a significant customer base and extensive distribution networks that will generate new cash flow and earnings opportunities that can elevate the Company to new heights. Acquisitions Strategy To expedite the implementation of our business strategy for our VoIP network services, we have recently made the strategic decision to prudently expand our customer base and distribution network by pursuing several profitable acquisitions that have been identified and are now under negotiations. Historically, these companies have been involved in traditional voice services, such as international wholesale and retail carrier services along with prepaid calling cards. Currently, these companies are replacing much of their tandem based switching equipment with VoIP soft switches and integrating VoIP technology into their networks to "haul" domestic and international bound voice traffic through an IP network, thus bypassing the traditional high costs associated with circuit switching, surcharges, tariffs and other fees. Upon successful completion of these acquisition opportunities, aeroTelesis(TM) will have significant market share and leadership positions in several affluent ethnic communities. Furthermore, we are confident that the Company will be able to achieve operational synergies by consolidating and integrating the existing networks of its acquisition companies into a more centralized location, streamlining operational costs, improving network efficiencies, and reducing redundant overhead costs that will ultimately result in a sustainable profit margin increase. Through our "growth through acquisitions" strategy, there will be numerous advantages for the Company, including: -- Immediately Generate Substantial Revenues and Earnings Acquire a substantial stream of revenues and profits that have grown significantly and sequentially since 2001. -- Accretive Transactions Acquire companies at very reasonable valuations utilizing a combination of cash, stock and notes that are immediately accretive to the Company's earnings. -- Low Customer Acquisition Costs Acquire established companies that have a large base of existing and loyal subscribers in multiple communities that are much more cost effective approach to acquiring customers instead of building the business from the ground level. -- Margin Expansion Pre-tax margins will improve post-acquisition as a result of an ongoing transition to an IP-based telephony infrastructure. -- Operational Synergies Reduce costs through operational synergies, including consolidating and integrating the existing networks of the acquisition candidates into a central location, streamlining operational costs, improving network efficiencies and reducing redundant overhead. -- Brand Recognition Acquire companies that are deeply entrenched in their respective territories with well established brand recognition and leverage upon the successful branding that has already been achieved. -- Distribution Channels Immediate access to extensive distribution channels to cross market new VoIP products and services. USM(TM) Technology Update Although you will certainly see significant activity with our VoIP network services and our acquisitions program in 2005, the Ultra Spectral Modulation (USM(TM)) technology remains our long term, core focus and development. The Company's primary objective is to become a leading technology and service provider, facilitating the wireless industry's transition to next generation networks for fixed and mobile wireless applications. Over the past several months, the USM(TM) engineering team has made significant progress and reached new milestones. Just prior to the holiday season, a formal presentation and update report was given to the aeroTelesis(TM) executive team as well as the Board of Directors. In summary, the essential highlights were as follows: -- An end-to-end MATLAB(R) simulation had been completed, demonstrating USM's(TM) ability to transmit data at 5 Mbps (megabits per second) through frequency bandwidths of 50 KHz (kilohertz) and smaller; -- Through the completion of the MATLAB(R) simulation, USM(TM) is ready for conversion from "software" language into hardware design language (HDL) for integration into a USM(TM)-enabled chip; -- A USM(TM) "test chip" will be developed in the second half of 2005 to demonstrate the viability of USM(TM) in silicon hardware; and -- Alliances and partnerships are being established with major, world-class semiconductor companies for the final design, development and manufacture of a USM(TM) enabled chip in both FPGA and ASIC formats For all of us here at the Company, these latest USM(TM) developments are especially encouraging. We expect to see the next development milestones reached by the end of the first quarter. Upon the future commercialization of USM(TM), the Company believes that it can help lead and define the future of next generation wireless networks with a paradigm shift to a communications world where broadband services can be delivered through a more efficient use of narrowband spectrum. USM(TM) will then move to the forefront of the Company's activities. Strategic Initiatives Beyond the broad overview that has been detailed above, there are several strategic initiatives that we will focus upon in the near term: -- VoIP Technology Developments Several research and development opportunities have been presented to us, and we intend to establish various partnerships with these technology outfits to help advance our network capabilities and deliver more value added services to our customers. -- Closing the Acquisitions To quickly achieve greater scale in our revenues and earnings performance, we are aggressively pursuing the acquisitions strategy. Our negotiations with the various target companies are moving to advanced stages. We expect to enter into formal agreements with them in the coming weeks, and move towards closure by the end of the quarter. -- USM (TM)Opportunities In tandem with the implementation of our VoIP networks services, the Company will pursue broadband wireless opportunities in the international markets, such as Southeast Asia, the Middle East, Eastern Europe and Latin America. As the development of the USM(TM) chipset is advancing, we will continue to forge new alliances and partnerships with existing operators in both the satellite and terrestrial wireless markets, similar to the strategic relationship that has been established with Mabuhay Satellite in the Philippines. -- Investment Banking Relationships Since late last year, we have been in discussions with several well respected investment banks about potential financing activities and other forms of sponsorship, including research coverage and other support to generate more institutional interest in the Company. As we embark upon our acquisitions program and USM (TM)gets closer to commercialization, I expect to formalize one or more banking relationships in the immediate future. As the Company moves forward into 2005, we are filled with great confidence and excitement about its' future. On behalf of our entire team, I would like to reiterate our fullest appreciation for all of your continued support. Sincerely, Joseph Gutierrez President About aeroTelesis(TM), Inc. Headquartered in Los Angeles, aeroTelesis(TM) is a technology-driven communications company dedicated to providing next generation communication services and offering its customers a more efficient, cost-effective delivery of voice, data and video services on a global basis. The Company's targeted application markets include Voice over Internet Protocol (VoIP), fixed and mobile wireless broadband, and satellite communications. The Company's core technology platform is an exclusively licensed modulation technique known as Ultra Spectral Modulation (USM)(TM). USM(TM) is a technology that significantly increases spectral efficiency in wireless applications and provides for high-speed and high-capacity networks at substantially lower cost relative to existing wireless technologies. USM(TM) is designed to avoid bottlenecks by providing data transmission channels with higher quality and throughput rates than those of conventional modulation techniques. For more information on aeroTelesis(TM) Inc., please visit www.aerotelesis(dot)com. Forward Looking Statements This press release contains forward-looking statements made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements include, but are not limited to, the Company's growth strategy, future milestones and projected operations. Forward-looking statements are inherently subject to uncertainties and other factors, which could cause actual results to differ materially from the forward-looking statements. These factors and uncertainties include: the Company's ability to develop and commercialize its USM(TM) technology, expand its operations to meet anticipated demand; the ability of the company's technology to achieve anticipated benefits for its customers; ability to secure operating licenses in host countries; anticipated growth of the Company's target markets; unanticipated delays in manufacturing or shipments to customers, and its ability to achieve anticipated sales and profits. The Company refers interested parties to its most recent Annual Report on form 10K and its other SEC filings for a description of additional uncertainties and the factors that may affect forward-looking statements. Forward-looking statements are based on information presently available to senior management, and the Company has not assumed any duty to update its forward-looking statements. www.aerotelesis(dot)com