International Aerospace Enterprises, Inc.(fka IARO)

[DDGUY]

If the company was commiting fraud, which I just don't think they are, they wouldn't set such a big trap for themselves.

International Aerospace Enterprises Inc. filed its annual report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2009 (10K filings) on 04 -15 –2010. There have been a number of inquiries by shareholders asking why the $16,000,000 USD in contracts, previously announced by the company, were not booked in the 2009 10-K filing? I would like to direct your attention to the Revenue Recognition Section of the 10- K (summary of accounting policies) pp 22 of the 10-K filing. After lengthy discussions between IAE’s management and the PCAOB auditors, it was determined that IAE’s policy of not shipping military aircraft spare parts to international customers without full payment in advance, even with confirmed sales contracts, that IAE could not Recognize the Revenues of nearly $20,000,000 USD in 2009 because it did not meet one (1) of the four (4) basic criteria, in accordance with Accounting Standards Codification 605-10, Revenue Generation (ASC 605-10). ASC 605-10 requires that all four basic criteria be met before revenues can be recognized. The criteria is as follows: (1) persuasive evidence of an arrangement exists; this criteria has been met by IAE’s previously announced contracts. (2) delivery has occurred; this criteria could not be met because of IAE’s policy of not shipping military parts out of the United States, to potentially hostile foreign territories without advance payment having been made by the customer and received by IAE in advance of shipment. (3) The selling price is fixed and determinable; this criteria has been met in the detailed purchase contracts issued to IAE by its customer. (4) collectability is reasonably assured; this criteria has been met by the contracts terms which requires full payment in advance of shipment by following the company’s strict policy of “full payment before shipping”. The policy enables IAE to avoid booking substantial accounts receivable and the risk of nonpayment when selling to foreign entities.

IAE’s management is in agreement with our PCAOB auditor’s decisions on 2009 Revenue Recognition. Management has taken the position that the risks would simply be too extreme if they shipped their military aircraft spare parts to foreign countries without having received full payment in advance even though a decision to ship the parts would have enabled the company to book the sales as accounts receivable for fiscal year 2009. IAE’s management fully expects that the sales will meet all four criteria under ASC 605-10 for revenue recognition in fiscal year 2010.