International Aerospace Enterprises, Inc.(fka IARO)

[Thirsty Tiger]

10-Q out.

http://www.sec.gov/Archives/edgar/data/1156293/000109432807000041/calba10qsb052807woex.txt

The extra "E" will come off on Thursday

Revenues

CalbaTech has generated revenues of $311,970 from operations for the three months ended March 31, 2007, compared to $412,567 for the three months ended March 31, 2006. This decrease was due to the last repercussions from the move into the new facility by KD and Molecula, and any significant downtime from operations that were impaired from the move has been eliminated. The Company believes that revenues will increase in the coming year for the following reasons as Molecula and KD Medical can more efficiently capitalize on their synergistic operations and increase marketing efforts to take advantage of common markets between Molecula and KD. Redundancies in management teams have also been eliminated.
Cost of revenues consists of direct manufacturing costs and applied overhead expenses for the research reagent business, as well as labor costs associated with its service revenue. Cost of revenues as a percentage of net revenues were 49% for the three months ended March 31, 2007, as compared to 47% for the same period in 2006. The cost of goods sold percentage will fluctuate from quarter to quarter because absorbed overhead increases when volume is decreasing and because labor ratios are less than optimized in manufacturing processes when revenues are lower. As revenues increases, cost of goods sold as a percentage of revenue should become more and more favorable for the company.

Costs and Expenses

Total operation expenses decreased from $574,690 for the three months ended March 31, 2006 to $471,923 for the same period in 2007, an 18% decrease as management has worked to cut costs and control expenses.

Net Income

Due primarily to an unrealized gain on adjustment of derivative and warrant liability to fair value of underlying securities relating to the convertible notes it obtained in 2005, the Company realized Net Income for the three months ended March 31, 2007 of $66,050 as compared to $1,177,539 at March 31, 2006 which was also due primarily due primarily to an unrealized gain on adjustment of derivative and warrant liability to fair value of underlying securities relating to the convertible notes it obtained in 2005. Operationally, the Company believes that increased revenues and profitability generated by KD Medical, continued growth and new profitability of Molecula, along with anticipated sales of the service of the Stem Cell Microbank™ will result in a net profit for 2007.

Liquidity and Capital Resources

As of March 31, 2007, CalbaTech had current assets of cash, accounts receivable, and inventory totaling $340,021, and total assets of $494,529. These numbers compare to current assets of $348,771 and total assets of $520,443 as of December 31, 2006. As a result of our operating losses, for the three months ended March 31, 2006, we generated a cash flow deficit of $18,728 from operating activities. The Company has used its working capital to finance ongoing operations and the development and marketing of its products.