10QSB

FORM 10-QSB

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2000

ATI NETWORKS, INC.
COLORADO
84-1089801

460 Cedar Street
Fond du Lac, Wisconsin
54935
(920) 922-7030
(920) 922-7011 (fax)

Check whether the issuer (1) filed all reports required
to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was
required to file such report(s), and (2) has been
subject to such filing requirements for the past 90
days.

     Yes [X]        No [   ]

Indicate the number of shares outstanding of each
of the issuer's classes of common stock, as of the
latest practical date:

Common Stock, $0 Par Value -
7,413,630 shares as of September 30, 2000.

TYPE:  10QSB OTHERDOC
 SEQUENCE:  1
 FILENAME:  0001.txt
 DESCRIPTION:  FORM 10-Q PERIOD ENDING 9/30/2000

FORM 10-QSB

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2000

ATI NETWORKS, INC.
COLORADO
84-1089801

460 Cedar Street
Fond du Lac, Wisconsin
54935
(920) 922-7030
(920) 922-7011 (fax)

Check whether the issuer (1) filed all reports required
to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was
required to file such report(s), and (2) has been
subject to such filing requirements for the past 90
days.

     Yes [X]        No [   ]

Indicate the number of shares outstanding of each
of the issuer's classes of common stock, as of the
latest practical date:

Common Stock, $0 Par Value -
7,413,630 shares as of September 30, 2000.


PART I - FINANCIAL INFORMATION

ATI NETWORKS, INC.
BALANCE SHEET
AS OF SEPTEMBER 30, 2000


ASSETS

Current assets
Cash and equivalents                 $     6,777
Accounts receivable                       15,000

Inventories                                1,319

Total current assets                      23,096

Property and equipment                    81,393
Accum. depreciation                      (65,740)

Net property and equipment                15,653
Investment in Sterling Media
  Capital Fund I, L.P.                10,000,000

Total assets                         $10,038,749
                                     ===========



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable                     $    22,850
Accrued expenses                          25,763
Deferred payroll                         116,100
Line of credit - Firstar Bank            146,567

Total current liabilities                311,280

Long-term liabilities
Notes payable                            206,783

Total liabilities                        518,063

Stockholders' equity
Series A Convertible Preferred
  Stock; $100 par value; authorized
  20,000,000 shares; none issued               0

Common stock Class A; no par value;
  authorized 20,000,000 shares;
  7,413,630 issued                    11,367,424
  Accumulated deficit                 (1,837,079)
Stock subscription receivable             (9,659)

Total stockholders equity              9,520,686

Total liabilities & capital          $10,038,749
                                     ===========


ATI NETWORKS, INC.

STATEMENT OF OPERATIONS (Unaudited)

ATI Networks, Inc. Summary Income Statement
For the Three Months ending September 30, 2000 and 1999

                                             2000             1999
Net sales                                 $       12       $  13,212

Operating expenses:
  Cost of sales                                  663           1,634
  Sales and marketing expense                  5,636           4,960
  General and administrative expense          86,570          31,194
  Research & development expense               6,822           3,782
  Depreciation and amortization                3,000          43,275

  Total operating expenses                   102,691          84,845

Net operating income (loss)                 (102,679)        (71,633)
Other income (expenses)

Interest expense                             27,338           (3,870)
Other                                             0              (51)

Net other income (expenses)                  27,338           (3,921)

Net income (loss) before taxes             (130,017)         (75,554)
Income tax provision                              0                0
Net income (loss)                         $(130,017)      $  (75,554)
                                          ==========         ========


Net loss per common share                 $    (.02)      $     (.02)
  (basic and diluted)
Weighted average number of common
  shares outstanding                      7,413,630        3,146,194


ATI NETWORKS, INC.

STATEMENT OF OPERATIONS (Unaudited)

ATI Networks, Inc. Summary Income Statement
For the Nine Months ending September 30, 2000 and 1999

                                             2000             1999
Net sales                                  $   3,903       $  15,419

Operating expenses:
  Cost of sales                                3,232           7,938

  Sales and marketing expense                 20,200          54,944
  General and administrative expense         193,528          91,781
  Research & development expense              14,963          25,164
  Amortization                                     0         (33,390)
  Depreciation                                 9,000           9,225

Total operating expenses                     240,923         155,662

Net operating income (loss)                 (237,020)       (140,243)

Interest expense                             (32,297)         (9,132)
Other                                           (105)           (230)

Net loss                                   $(269,422)     $  (149,605)
                                           ==========        =========

Net loss per common share (basic
  and diluted)                             $    (.04)     $      (.05)

Weighted average number of common
  shares outstanding                       7,413,630        3,146,194


ATI NETWORKS, INC.
STATEMENT OF CASH FLOWS FOR THE NINE MONTHS

ENDED SEPTEMBER 30, 2000 (Unaudited)

ATI Networks, Inc.
Statement of Cash Flow
For the Nine Months ended September 30, 2000


Cash Flows from Operating Activities:
Net loss                                $(269,422)          $(149,605)
Adjustments to reconcile net
  loss to net cash used in
  operating activities
Depreciation and amortization              9,000                9,225
Accounts receivable(net)                  60,000              (70,390)
Inventory                                   (445)              (1,937)
Prepaid expenses                             670                 (880)
Other assets                                   0               26,610
Accounts payable and accrued expenses       (442)               12,167
Accrued salaries                         (48,483)               65,077

  Net cash used in operating activities (249,122)             (109,733)

Cash Flows From Investing Activities:
Gain on sale of property and equipment        809                    0
Purchase of property and equipment              0                 (540)

Cash Flows from Financing Activities:
Line of credit                           146,567              251,441
Payments on capital lease obligations     (4,758)              (5,253)
Proceeds from capital stock issuances    175,099               46,275
Payments on note payable                 (62,819)            (196,171)

Net cash provided by
  financing activities                   254,089               96,292

Change in cash and equivalents             5,776              (13,981)

Cash and cash equivalents,
  beginning of year                        1,001              14,872
Cash and cash equivalents,
  end of period                       $    6,777            &    891
                                           =====              ======


ATI Networks, Inc. and Subsidiary
Notes to Consolidated Financial Statements(unaudited)September
30,2000

A. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and
Item 310 (b) of Regulation S-B.  Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete
financial statements.  In the opinion of management, all
adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have
been included. Operating results for the three months
ended September 30, 2000 are not necessarily indicative of
the results that may be expected for the year ended December
31, 2000.  For further information, refer to the
consolidated financial statements and footnotes thereto
included in the Company's Form 10-KSB/A filed on May 11,
2000.

B.   ORGANIZATION
ATI Networks is a U.S. based development company that is
building a global e-business with products that can be used
for business advertising, automated vehicle tracking, wireless
communications, and entertainment.  The principal market
for the Company's products and technologies are companies
seeking to advertise their products and services on these
software platforms. Additional markets include companies
with mobile assets, organizations requiring the wireless
transfer of data, and the general public.

C.   CREDIT LINES

In September 1998, the Company signed an agreement for a
$250,000 line-of-credit with Firstar Bank of Wisconsin.
Accrued interest and outstanding principal was due and
payable September 1999. The line-of-credit was
collateralized by a general business security agreement.
Outstanding borrowings, including interest and other
charges, under this line-of-credit amounted to $276,996
and the bank entered a judgement for $276,996 on May 31,
2000.

In June 2000, the company entered into a new borrowing
agreement with JetDisc.com, a private company owned by
officers and directors of the company, specifically Mr.
Sorenson, Dr. Sybesma, and Mr. Bestor. This line-of-credit
was collateralized by a general business security agreement.
Proceeds from this loan were used to pay Firstar Bank
$150,000 of the outstanding amount due to it. The balance
of $117,000, plus interest was due by September 30, 2000.
Lack of current available cash reserves has prevented the
company from paying this remaining balance due to Firstar,
but the company expects to do so before year end, provided
either new equity funds or a large credit line can be
secured on behalf of the company. It is not expected that
positive cashflow will be reached before 2nd or 3rd quarter
2001.

D.   NET LOSS PER COMMON SHARE

As required by SFAS No. 128, the following is a
reconciliation of the basic and diluted EPS calculations
for the three months ended September 30:

                                    2000         1999
Net loss (numerator)              (130,017)   (75,554)
Weighted average share
     (denominator)               7,413,630  3,146,194
Basic net loss per share       $     (.02)    $  (.02)
Dilutive shares
     (denominator)               7,413,630  3,146,194
Diluted net loss per share     $     (.02)     $  (.02)

SFAS No. 128 also requires disclosure of any transaction
occurring after the end of the most recent period but
before issuance of the financial statements that would
have materially changed the number of common shares or
potential common shares outstanding at the end of the
period if the transaction had occurred before the end
of the period.  There are no such matters to record.

E.   STOCK OPTION PLAN

The Company has a Stock Purchase and Option Plan ("Plan")
under which it has granted stock options and warrants to
purchase common stock to employees, directors, officers,
and others at various times since 1994. Options and
warrants are granted at an option price per share equal to
or greater than fair value at the date of grant.
Generally, options granted to employees vest over a five-
year period and expire 10 years after the date of grant.
Canceled options are available for future grant. The
following is a summary of stock option plan activity for
the three months ended September 30, 2000:

Share options:
Granted   -  0
Exercised -  1,000
Canceled  -  0

September 30:
Outstanding    5,716,410
Exercisable    5,173,360

Average exercise price per share
Granted   -
Exercised $0.10
Canceled  -

September 30:
Outstanding    $1.33
Exercisable    $1.31

Stock options outstanding at September 30, 2000 had a range of
exercise prices of $.10 to $5.00 and an average remaining
contractual life of three years.

Options outstanding with an exercise price of $1.00 or
less totaled 4,976,409, of which 4,513,209 were exercisable at
September 30, 2000. The remaining 741,000 options outstanding had
a price of greater than $1.00, of which 619,150 were exercisable
at September 30, 2000. The weighted-average remaining contractual
life for each of these groups of options was two years and six
years, respectively.

The Company has adopted the disclosure only provisions of the
Statements of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" (SFAS 123), but continues to measure
compensation cost for the stock options using the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25.
Accordingly, no compensation expense has been recognized for the
options granted, since the options are granted, at the discretion
of the Board of Directors, at an option price per share not less
than fair market value, as determined by the Board, at the date of
grant.


IMPORTANT FACTORS RELATED TO FORWARD-LOOKING STATEMENTS
AND ASSOCIATED RISKS

The statements contained in this report that are not purely
historical are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the
"Securities Act") and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), including statements
regarding the Company's expectations, hopes, intentions or
strategies regarding the future.  All forward-looking statements
included herein are based on information available to the Company
on the date 3-31-2000. Forward-looking statements encompass the
(i) expectation that the Company can secure additional capital,
(ii) continued expansion of the Company's operations through joint
ventures and acquisitions, (iii) success of existing and new
marketing initiatives undertaken by the Company, and (iv)success
in controlling the cost of services provided and expenses as a
percentage of revenues.The forward-looking statements included
herein are based on current expectations that involve a number of
risks and uncertainties. These forward-looking statements were
based on assumptions that the Company would continue to expand,
that capital will be available to fund the Company's growth at a
reasonable cost, that competitive conditions within the industry
would not change materially or adversely, that demand for the
Company's services would remain strong, that there would be no
material adverse change in the Company's operations or business,
and that changes in laws and regulations or court decisions will
not adversely or significantly alter the operations of the
Company. Assumptions relating to the foregoing involve judgements
with respect to, among other things, future economic, competitive,
regulatory and market conditions, which are difficult to predict
accurately and many of which are beyond the control of the
Company.


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
       		 CONDITION AND PLAN OF OPERATION

The following discussion should be read in conjunction with the
Financial Statements thereto.

The third quarter of FY 2000 has seen an increase in the number of
daily visitors to its newest website, YouthNetworks.com. The
company has entered into discussions with a number of companies
that management believes will be able to provide new content
and additional site traffic. Over the next six months the
Company expects to acheive traffic levels sufficient to
receive revenues from site advertising, website product sales,
and new webcasts.

The rapid growth of the Internet as a distribution medium
continues to expand the global market for the Company's core
products, while at the same time creates new opportunities for
the Company to create and sell variations of its products. It
is expected that with the additional exposure of the Company
and its products to the online community, demand and traffic
will continue to increase for the Company's content, products,
and websites. The Company believes continuing to expand
exposure to the online community is a must to creating brand
name recognition, while partnering and distribution contracts
are expanded.

Company management expects to see significant growth in its
future sales figures as awareness of the company and its products
expands. However, to create and maintain mindshare of the
Company's products in the mind of the public requires an increase
in marketing and sales related expenses. The ability of the
company to survive beyond the end of FY 2000 will require
additional capital to fund operations until profitability is
reached. During the course of this year, management has sought
outside funding from venture firms and angel investors. Although
agreements were reached that would have provided venture
funding to the company, the company has not yet received funds
from the companies agreeing to provide funding under these
agreements. Company management believes it is unlikely to receive
funds from the previous agreements with KAL Equity or VentureNet,
so it has now entered into discussions with other venture partners.

Given current market conditions, there is no assurance that
the capital required for the company to continue operations
will be secured, nor that the company will survive beyond the
end of FY 2000. To increase working capital, management plans
to sell or otherwise use a portion of the prepaid media credits
held by the Company to raise capital and provide advertising for
the company's websites and products. The advertising will be
targeted to increase site traffic and product sales. In October,
the company launched an online newsletter for the young audience
of youthnetworks.com in order to increase site traffic, and
product sales. As the company expands the awareness
of its Internet websites, it is expected that the increased
public use of its websites will impact positively on the
company's net profits throughout the balance of the year 2000.

The company has recently engaged the firm Kranitz and Phillips
as its securities counsel. Mr. Kranitz has been an attorney
in private practice since 1970, emphasizing securities,
banking and business law. Prior to establishing Kranitz &
Phillip (formally the law offices of Richard K. Kranitz),
he was with the law offices of Fretty & Kranitz, and McKay,
Martin & Kranitz. Mr. Kranitz has served as the law clerk
to the honorable Myron L. Gordon, US District Court and is a
graduate of the University of Wisconsin Law School. Mr.
Kranitz is a Director at the Grafton State Bank, while
serving as venture capital consultant and director of
various private companies. He is an entrepreneur and has
served as a director of a number of professional, civic,
and charitable organizations. Mr. Kranitz expertise and
resources are committed to ATI Networks to oversee and
implement all future securities filings and company offerings.


PART II - OTHER INFORMATION

PART I

ITEM 1.  DESCRIPTION OF BUSINESS

ATI Networks is building a global e-business by leveraging its
Proprietary online technology, compelling content, and proven
marketing techniques, to create high volume, high profit margin
websites. The company plans to continue expanding its exciting
community of sites that enable people to carry on retail and B2B
commerce, download digital audio and video media, while fostering
a feeling of community among site visitors.

The company owns a number of software technologies and public
websites that enable the public to do voting online, to carry on
ecommerce, watch live video streaming over the Internet, and to
track GPS-enabled wireless devices over the Internet. The company
is focusing its e-business on building and acquiring websites
that meet the growing demands of both consumers and businesses in
the categories of computer products and entertainment.


IMPORTANT FACTORS RELATED TO FORWARD-LOOKING
STATEMENTS AND ASSOCIATED RISKS

The statements contained in this report that
are not purely historical are forward-looking
statements within the meaning of Section 27A of
the Securities Act of 1933, as amended (the
"Securities Act") and Section 21E of the
Securities Exchange Act of 1934, as amended
(the "Exchange Act"), including statements
regarding the Company's expectations, hopes,
intentions or strategies regarding the future.
All forward-looking statements included herein
are based on information available to the
Company on the date 3-31-2000. Forward-looking
statements encompass the (i) expectation that
the Company can secure additional capital, (ii)
continued expansion of the Company's operations
through joint ventures and acquisitions, (iii)
success of existing and new marketing
initiatives undertaken by the Company, and
(iv)success in controlling the cost of services
provided and general administrative expenses as
a percentage of revenues.

The forward-looking statements included herein
are based on current expectations that involve
a number of risks and uncertainties. These
forward-looking statements were based on
assumptions that the Company would continue to
expand, that capital will be available to fund
the Company's growth at a reasonable cost, that
competitive conditions within the industry
would not change materially or adversely, that
demand for the Company's services would remain
strong, that there would be no material adverse
change in the Company's operations or business,
and that changes in laws and regulations or
court decisions will not adversely or
significantly alter the operations of the
Company. Assumptions relating to the foregoing
involve judgements with respect to, among other
things, future economic, competitive,
regulatory and market conditions, which are
difficult to predict accurately and many of
which are beyond the control of the Company.


PART II

ITEM 1.

LEGAL PROCEEDINGS

A judgement was entered against the company by
Firstar Bank for a line-of-credit business
loan, in the amount of $267,000. Since the
judgement was entered, the loan has been
partially repaid by the company and the current
existing balance is $117,000 plus interest.
Additionally, there was a judgement entered
against a ATI, Inc., a subsidiary of the company,
by a disgruntled former employee for $25,000. The
company has contested this judgement, and has
refused to pay it.

ITEM 2.

CHANGES IN SECURITIES

None


ITEM 3.

DEFAULTS IN SENIOR SECURITIES

None.


ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF

SECURITY HOLDERS

Not Applicable.


ITEM 5.

OTHER INFORMATION

DIVIDENDS on ATI NETWORKS, INC. COMMON STOCK

ATI Networks, Inc. does not intend to pay any
dividends in the foreseeable future and will
follow a policy of retaining its earnings for
use in its operations.  In addition, under its
proposed loan agreement, ATI Networks,Inc. will
be prohibited from paying cash dividends
without prior approval of its lender banks.

TRANSFER AGENTS

The transfer agent for the ATI Networks, Inc.
Common Stock is Computershare, whose address
is 12039 W. Alameda Parkway, Suite Z-2,
Lakewood, Colorado 80228 and whose
number is (303) 986-5400.

SIGNATURES

In accordance with Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the registrant
caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

ATI NETWORKS, INC.
Registrant

August 4, 2000

/s/  Lawrence Bestor
Lawrence Bestor
Chief Executive Officer/Director

/s/ Steven Sorenson
Steven Sorenson
Secretary/ Director

EX-27

 

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