UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1998
Commission file Number33-2832-D
ATI Networks, Inc.
(Exact name of registrant as specified in its charter.)
Colorado 84-1089801
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
460 Cedar Street, Fond du Lac, WI U.S.A.54935
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code:
(920) 922-7030
(920) 922-7011 telecopier
Indicate by check mark whether the registrant(1) has 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 reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [ ] NO [X]
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 - 2,753,840 shares as of March 31, 1998.
<PAGE> 1
<TABLE>
PART I. - FINANCIAL INFORMATION
ATI NETWORKS, INC.
BALANCE SHEET
FOR THE THREE MONTHS
ENDED MARCH 31, 1998 AND YEAR ENDED DECEMBER 31, 1997
(Unaudited)
<CAPTION>
Three months ended Year ended
March 31 December 31
__________________ _________________
1998 1997
_______ _______
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents $ 11,719 24,938
Bank Checking Account 1,952 -
Money Market Cash Account 7,709 -
MIA Cash Account 2,057 -
Accounts Receivable 1,012,440 8,113
Stock Subscriptions Receivable 500,000 -
Security Deposits 647 -
Bad Debt Reserve (4,015) (4,015)
Inventories at Whsl Cost 11,219 10,050
Prepaid Insurance 729 1,376
Total Current Assets 1,532,740 48,477
Property and Equipment
Equipment 71,915 78,749
Accum. Depr. - Equipment (35,009) (36,095)
Furniture & Fixtures 8,432 -
Accum. Depr. - F&F (3,516) -
Total Property and Equipment 41,822 42,654
Other Assets
Capitalized R&D Costs 353,648 426,610
Media Gems 32,432 -
Total Other Assets 386,080 -
Total Assets $ 1,960,641 $ 517,741
<PAGE> 2
LIABILITIES AND CAPITAL
Current Liabilities
Accounts Payable $ 211,693 $ 14,840
Accrued Liabilities 17,800 5,602
Accrued PR Taxes 1,640 -
Accrued Payroll 13,542 -
Accrued Vacation 2,708 -
Other Withholding (56) -
Accrued Sec125 FSA 22 -
Sales Tax Payable 7.75 -
Current Portion Deferred Revenue 52,416 52,416
Line of Credit - Bank One 50,000 50,000
Total Current Liabilities 331,972 125,382
Long-Term Liabilities
Prepaid Interest (2,405) -
Note Payable - Advanta 10,406 -
Deferred Revenue 39,312 52,416
Total Long-Term Liabilities 47,313 -
Total Liabilities 379,285 183,275
Capital
Common Stock 215,000 1,126,391
Paid-in Capital 911,391 -
Stock Subscribed Equity 500,000 -
Accumulated Deficit (775,125) (775,125)
Net Income 730,090 (16,800)
Total Capital 1,581,356 334,466
Total Liabilities & Capital $ 1,960,641 $ 517,741
<FN>
See Accompanying Notes to
Financial Statements
</TABLE>
<PAGE> 3
<TABLE>
ATI NETWORKS, INC.
STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
March 31, 1998 March 31, 1997
_______________ ________________
<S> <C> <C>
Total Revenues 1,026,672 41,176
Cost of Sales 194,781 7,194
Gross Profit 831,891 33,982
Operating Expenses
Sales and Marketing Expense 7,848 13,804
General and
Administrative Expense 33,914 11,334
Research &
Development Expense 1,016 47,319
Amort.of Capitalized R&D 40,530 28,932
Depreciation 2,430 2,430
Total Operating Expenses 85,738 103,819
Net Operating Income (Loss) 746,153 (69,837)
Other Income (Expenses)
Service Charge Income (30) (29)
Dividend & Interest Income 163 51
Capital Gains (Losses) (15,953) (6,545)
Interest Expense (97) -
Net Other Income (Expenses) (16,064) (6,223)
Net Income (Loss) $ 730,089 $ (76,060)
<FN>
See Accompanying Notes to
Financial Statements
</TABLE>
<PAGE> 4
<TABLE>
ATI NETWORKS, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND MARCH 31, 1997
(Unaudited)
<CAPTION>
Quarter Quarter
Ending Ending
March 31, March 31,
1998 1997
------------- -------------
<S> <C> <C>
Cash Flows from
operating activities:
Net Income $ 730,090 $ (76,058)
Adjustments to reconcile
net income to net cash provided
by operating activities:
Accum. Depr. - Equipment 2,250 5,910
Accum. Depr. - F&F 180 180
Accounts Receivable (1,000,312) 69,503
Stock Subscriptions Receivable (500,000) -
Inventories at Whsl Cost (1,170) (3,462)
Accounts Payable 196,853 (11,763)
Accrued Fed. PR Taxes 1,037 -
Accrued State WH 169 -
Accrued UC Taxes 228 1,315
Accrued Payroll 10,834 -
Accrued Sec125 FSA 22 37
Sales Tax Payable (29) (57)
Accrued Other 0 0
____________ ____________
Total Adjustments (1,289,937) 62,934
____________ ____________
Net Cash provided by Operations (559,847) (13,125)
<PAGE> 5
Quarter Quarter
Ending Ending
March 31, March 31,
1998 1997
------------ ------------
<S> <C> <C>
Cash Flows from
investing activities
Used For:
Equipment (1,598) (7,086)
Software 0 0
Furniture &
Fixtures 0 0
___________ ___________
Net cash used in investing (1,598) (12,703)
___________ ___________
Cash Flows from
financing activities
Proceeds From:
Stock Subscribed Equity 500,000 0
Beginning Balance Equity 0 0
Used For
Deferred Revenue (13,104) (13,101)
___________ ___________
Net cash used in financing 486,896 170,373
___________ ___________
Net increase <decrease> in cash $ (74,550) $144,546
___________ ___________
Summary
Cash Balance at End of Period $ 11,719 $ 59,156
Cash Balance at Beginning of Period (16,781) (69,451)
___________ ___________
Net Increase <Decrease> in Cash $ (5,062) $(10,294)
<FN>
See Accompanying Notes to
Financial Statements
</TABLE>
<PAGE> 6
ATI NETWORKS, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
Note 1. Summary of Significant Accounting Policies
The accompanying unaudited financial statements have been
prepared in accordance with Generally Accepted Accounting Principles
for interim financial information and with the instructions to Form
10QSB and Rule 310 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 fair presentation have been included.
The accompanying unaudited financial statements should be read
in conjunction with the audited balance sheet of ATI Networks Inc. ("the
Company") included in the Annual Report and filed on Form 10KSB.
The unaudited financial statements have been prepared in the ordinary
course of business for the purpose of providing information with respect
to the interim period.
Note 2. Net Income Per Common Share
Computation of net income per common share was based on the weighted
average number of shares outstanding during such periods. These amounted
to 2,753,840 shares for the three months ending March 31, 1997 and
2,753,840 shares for the three months ending March 31, 1996 as
adjusted.
Note 3. Long Term Debt - Short Term Financing
All loans and repayment of lines of credit payable to Bank One of
Fond du Lac and future borrowings under any such credit facilities have
been collateralized by the accounts receivable and equipment of the
Company, as well as the personal guarantee of the chief executive
officer and majority stockholder.
Note 4. Majority Stockholder
Mr. Larry Bestor presently owns approximately 51.8% of the Common Stock
of the Company.
Note 5. Additional Events
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
ATI NETWORKS, INC.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
March 31, 1998
RESULTS OF OPERATIONS:
======================
THREE MONTHS ENDING MARCH 31, 1998
=====================================
Note:
Financial Accounting Standard No. 96 "Accounting for Income
Taxes" which requires that no later than 1996, companies change
from the deferred method to the liability method of accounting
for income taxes, has not been adopted by the Company for 1996.
Implementation of the Standard is not expected to have any
material affect on the Company's financial condition or results
of operations.
Results of Operations
Cost of sales as a percentage of net sales and operating revenues
remained virtually unchanged compared with the same period in the prior
year.
Liquidity
Working capital deficit at March 31, 1998, decreased from December 31,
1997. This improvement in the working capital deficit was primarily due
to a decrease in short term borrowings and an increase in shareholders'
equity.
Capital Resources
Management has not committed to any material capital expenditures
for the future.
<PAGE> 8
Research and Development Resources
The Company has several products in the research and development stage.
Management continues to fund the R&D of these products as needed.
The Company has been in the process of developing new and innovative
products. The development of these products has taken longer than planned.
The Company brought some of these products to market, which have been met
with a demand for improvements and changes to the products. Management
plans to develop upgrades and improvements to existing products utilizing
state of the art technology and to re-market these products to a
substantial existing client base. Management expects sales and profits to
significantly increase when the improved products are re-marketed.
<PAGE> 9
OTHER INFORMATION
===================
EXECUTIVE SUMMARY
The Company was founded as a Research and Development Company to create and
license leading edge software applications. In December of 1995, the Company's
first product, AutoNav for Windows, was selected by Automotive Engineering
Magazine readers as one of the Top 50 Products of the Year. In 1996, with its
LogiTrak software, ATI became the first company in the world to enable
wireless communications and vehicle tracking over the INTERNET. In 1997, ATI
completed the development and recently began marketing of two proprietary
website properties. The first is a fully automated, global real estate
exchange website known as ARealGem.com. The second is ArtGems.com, the first
fully automated, online art auction on the Internet. Having already received
over 6,000 timeshare listings for aRealGem.com in the past 90 days, and
$7,000,000 of art inventory for ArtGems.com, the Company is well on its way
to meeting its sales objectives for these sites in 1998.
The company is a C-Corporation with its principal business offices located at
460 Cedar Street, Fond du Lac, Wisconsin.
Business
The company has developed proprietary software technologies for real time data
communications over the Internet, vehicle tracking, vehicle navigation, and an
informational database Internet website. The Company designs and develops the
technologies it sells, both with its own in-house engineers and privately
contracted developers. When outside developers are used, as well as with its
employee engineers and scientists, all ownership, trade secrets and
proprietary rights to the technology is assigned to ATI.
Future revenue sources include development fees, software licensing fees,
Internet advertising fees, wireless communications fees, and the sale of
mobile data communications and tracking equipment. Future sales will also
include maintenance (upgrades) for software map data bases, software mapping
applications, and fees for properties sold on its proprietary real estate
database website.
The Company is now in the growth stage of business, having begun international
sales of its software technologies and use of its Internet websites.
<PAGE> 10
Products
ATI has developed the following products:
NavQuest - Mapping, Routing, and Navigation Software. A CD-ROM product that
includes all US and many Canadian streets and highways on one CD. NavQuest
also contains advanced routing features found in more expensive programs. An
earlier version of this mapping software, under the tradename AutoNav,
received Automotive Engineering Magazine's prestigious Top 50 Products Award.
Sale of the mapping, routing, and navigation software product is now in the
growth stage. Having shipped just over 5,000 copies in 1996, the Company was
back ordered for 6,000 units in January of 1998 alone. Management expects to
ship over 100,000 units in 1998. They plan to follow the US/Canadian product
with extensions to their line, which will include versions for distribution
in France, Germany, and the United Kingdom.
LogiTrak - Map Based Tracking and Messaging Via the INTERNET- Incorporating
the NavQuest mapping and routing engines, LogiTrak includes all the
functionality of NavQuest plus enabling the user to do multiple vehicle
tracking and wireless data communications over the INTERNET. LogiTrak can be
configured to operate in a regional mode without an INTERNET connection using
a local wireless device such as the MicroTracker.
Internet WebSites - At the end of 1997, ATI completed the development and
began marketing two proprietary website properties, www.aRealGem.com and
www.ArtGems.com.
Known on the web as arealgem.com, (pronounced A Real Gem), the site enables
Timeshare property buyers and sellers around the world to connect with each
other directly in one place on the Internet. Visitors to the site may view or
search for available properties for sale in 70 countries around the world. By
following the easy, step-by-step instructions to list property(s) for sale,
individual users complete an on-line listing form, submit a picture, or video
file of the property, and all of their property information is immediately
available for viewing by any of the 70 million users of the Internet. The
Company provides a complete buyer's service to online timeshare buyers by
handling escrow and title insurance for every timeshare sold on its sites.
When creating its web sites, the Company's engineers creatively utilized the
latest active server technology from Microsoft, to provide online buyers
access to a large database of inventory in a compelling and exciting, live
auction environment. The site allows multiple auctions to take place
simultaneously by enabling participants to scan through all of the currently
available inventory, view digital pictures of each item, then make bids on
their favorite(s). Multiple bids can be made on multiple items by anyone
<PAGE> 11
logged onto the sites, with the Company's web server acting as the traffic cop
for all auction transactions. Imagine a combination of a stock exchange and
art, and you have the format for ArtGems. Ditto for timeshares. The result is
a dynamic and friendly environment to engage in electronic exchanges of art
and timeshare properties.
Technology
ATI, Inc., is pleased to announce the establishment of the world's first fully
automated, global real estate exchange web site. By applying sophisticated
database technology to the Internet, ATI has created an easy to use, yet
powerful, real estate information website that can be viewed by any Internet
Web Browser. Unlike other real estate sites established solely for Realtors,
the aRealGem website now makes it easy for everyone, realtor and layman alike
to list their property for sale on the most comprehensive high-traffic,
Internet website dedicated to real estate sales of all kinds. The aRealGem
website was formed to use ATI's proprietary Internet technology to facilitate
and promote the listing and sale of properties in 70 countries to the global
online community, by providing a convenient, central point of exchange.
Known on the web as arealgem.com, (pronounced A Real Gem), the site enables
real estate property buyers and sellers around the world to connect with each
other directly in one place on the world wide web. For Sale by Owner (FSBO)
types and Realtors alike can now advertise their properties to the global
community by going to the Real Gem website. Visitors to the site may view or
search for available properties for sale in 70 countries around the world. By
following the easy, step-by-step instructions to list property(s) for sale,
individual users complete an on-line listing form, submit a picture or video
file of the property, and all of their property information is immediately
available for viewing by any of the 70 million+ users of the Internet.
The Company charges a basic fee of $20 per month to submit a property listing
on the site, and currently is running a travel promotion that gives 2 nights
free lodging at major hotels and motels in many resort cities for every
listing submitted. The Company gives discounts to Realtors for submitting
large numbers of listings. The Company expects to receive over 20,000 listings
by the end of 1998, and to add 5,000 listings per month in 1999. There is no
charge to search and view properties for sale on the site.
When creating its web sites, the Company's engineers creatively utilized the
latest active server technology from Microsoft, to provide online buyers
access to a large database of inventory in a compelling and exciting, live
auction environment. The site allows multiple auctions to take place
simultaneously by enabling participants to scan through all of the currently
available inventory, view digital pictures of each item, then make bids on
their favorite(s). Multiple bids can be made on multiple items by anyone
<PAGE> 12
logged onto the sites, with the Company's web server acting as the traffic cop
for all auction transactions. Imagine a combination of a stock exchange and
art, and you have the format for ArtGems. Ditto for timeshares. The result is
a dynamic and friendly environment to engage in electronic exchanges of art
and timeshare properties.
Market
The INTERNET and the World Wide Web
The INTERNET is a global collection of computer networks, linking millions of
public and private computers around the world. Historically, the INTERNET was
used by academic institutions and government agencies to exchange information
and send and receive electronic mail. A number of factors, including the
proliferation of communication-enabled personal computers, the availability of
intuitive, graphical software and wide accessibility to an increasingly robust
network infrastructure, have allowed widespread access to the INTERNET at a
rapidly declining cost, and have facilitated the emergence of the Web, a
client/server system of hyper-link, multimedia databases.
The Web enables non-technical users to easily access information on the
INTERNET and enables individuals or organizations to offer textual or
graphical and other information directly to end users. Users can easily access
information on the Web using client software known as Web "browsers." In
recent years, the Web has experienced a rapid increase in the number of
individual users. Price Waterhouse and International Data Corporation ("IDC")
have estimated that the number of INTERNET users will exceed 200 million
people by the end of 1999, from approximately 70 million in mid-1997; and an
October 1995 Commerce Net/Nielsen INTERNET Demographics Survey indicated that
approximately 18 million people in the U.S. and Canada had used the Web
during the three month period prior to the survey.
Additionally, many businesses and individuals in developing countries have
purchased personal computers in increasing numbers, but lack access to
reliable telecommunications services in their area. Since these businesses and
individuals do not want to be left behind in the race for access to global
information, it is anticipated by all Internet research firms that growth in
developing nations will also increase at a rapid pace.
Marketing
The Company plans to promote the site nationally and internationally over the
Internet with banner ads on high traffic sites such as HomeNet, USAToday, and
YAHOO, that link directly to arealgem.com. Currently a travel promotion is
being offered in conjunction with Advantage Travel for each listing placed on
the site. The Company has partnered with CPNM, Cable/Print Network Marketing
Corp, a major national multimedia conglomerate, to manage the media rollout
<PAGE> 13
and promotion of both the new RealGem website, as well as future Company
websites. By applying brand name development strategies, Company management
intends to position AREALGEM as the definitive source on the Internet to
advertise and exchange all types of real estate.
Advertising and Promotion
The Company's partnership agreement with CPNM, a US marketing firm that owns
interests in cable television networks, newspapers, magazines, and Direct
Broadcast satellite channels. Under the terms of the agreement, CPNM will
market and advertise arealgem.com through a variety of Direct Response
advertising promotions in its national media. These venues include Family
Guide magazine, hundreds of weekly newspapers, and Direct Response cable and
satellite television infomercials. In addition, CPNM will be nationally
advertising and promoting the Company's future media properties through these
same channels. The audience for this combined media blitz represents over 35
million US households. The partnership gives the Company recurring national
exposure for its consumer products through well established national media.
Additionally, the Company is working with editors of national magazines to
position its Internet consumer products as major brand names. The capital
investment the Company is seeking will help expand this national advertising
effort to rapidly build the site's brand name awareness.
Over the past 90 days, the Company has secured exclusive, 24-month Internet
marketing rights with nationally known artists and publishers, for the online
sale of over $7,000,000 of art inventory on its ArtGems site and related
partner sites. Additional artist's and publisher's inventories are being added
weekly. Additionally, the company has received over 6,000 timeshare listings
for aRealGem.com. The company receives a minimum sales commission of $500 for
each of the timeshares purchased from the company's sites. The Company has
agreed to supply some of its inventory to Onsale.com, a publicly traded,
online general auction site with over $85 million in 1997 sales. OnSale states
in their Prospectus that they are the largest revenue generating, general
consumer auction site on the Internet. This website partner currently
generates between 500 and 700 orders per day of general merchandise sales.
Similar arrangements have been made with Home Shopping Network's online
auction, FirstAuction.com, under a lucrative revenue sharing agreement.
Company management believes the strategic relationships with many distribution
partners enhances the Company's brand name awareness among the Internet
community, and significantly improves its ability to achieve future revenue
and profit goals.
<PAGE> 14
Market Definition
Mapping, Routing and Navigation Software
With NavQuest, the Company is competing in the computer mapping and routing
market. This market was composed of approximately 300,000 units last year,
according to IDC. ATI believes the major future trend in the industry will be
toward high quality, value oriented mapping product offerings. This market
will continue to grow substantially over the next decade as automobile
manufacturers and aftermarket automobile equipment manufacturers begin to
offer these products in the US, as they already do in Japan and Germany.
The US auto market is comprised of over 17 million new vehicles annually, and
is a virtually untapped market for vehicle navigation systems. Market research
by Automotive Engineering Magazine and the Big 3 automakers suggests the
vehicle navigation market will grow to over 3,000,000 units annually by the
year 2000. Company management expects the niche in which it competes to grow
over the next decade, as more automotive equipment and electronics
manufacturers seek to enter the US market with their product offerings. The
major forces affecting this change will be the falling cost of electronic
components, more travel by technically capable baby boomers, and the growing
use of personal computers.
Map Based Tracking and Messaging
LogiTrak - This market includes over 10,000 long haul truck companies, and
thousands of local delivery companies that represent over 11 million pickup
and delivery vehicles in the US alone. Internationally, anyone that wishes to
track or communicate with mobile fleets, service technicians, or salespeople
can use ATI's tracking and data communications services. Sales are comprised
of LogiTrak software that is used by dispatchers in addition to the mobile
communication units for vehicles.
Wireless Telecommunications
Since the 1980's, the availability and use of wireless telecommunications
services has grown dramatically. The major growth sectors have included mobile
cellular telephone and specialized mobile radio which provide voice and data
communications, paging, and satellite-based mobile data services which provide
data communications. The growth in wireless services has been driven primarily
by technology advances and changes in telecommunications regulations and
consumer behavior. In addition, in less developed markets, wireless services
have become an alternative to fixed wireline services which are characterized
by poor quality, limited capacity and long installation waiting periods.
<PAGE> 15
Wireless Communications systems increasingly are being adopted in developing
markets in order to more quickly implement fixed communications services. In
many international markets, including the People's Republic of China ("PRC").
India, Indonesia and Brazil, fixed telephone systems are inadequate to handle
demand with telephone line penetration ranging from less than 1% to less than
10% compared with over 50% in major developed markets. Wireless Communications
systems provide an attractive alternative to traditional copper and fiber
based fixed services with the potential to be implemented more quickly and at
lower cost than wireline services. The installation of Wireless Communications
systems minimizes the need to obtain right-of-ways and excavate existing roads
and infrastructure to lay copper or fiber cables. There is a rapidly growing
global demand for the use of wireless communications devices, and the
software that makes these devices communicate.
Position
The NavQuest software CDROM is a consumer mapping product that is useful,
inexpensive, and fun. Various demographic groups have a need for this product,
and ATI plans to tailor national advertising and marketing accordingly. The
product will continue to be revised and updated continuously to provide
increasingly better value as well as expanded demographic market penetration.
Although the Company originally positioned its LogiTrak mobile data
communications and tracking software to meet the need of the transportation
industry to keep in touch with their drivers, it plans to expand the market to
others. With this goal in mind, ATI designed and developed LogiTrak as an easy
to use tool for anyone with a PC running Windows 95. Using a modular approach
to product development, the ATI development team has made it possible to add
communications drivers for cellular, CDPD, and PCS systems to the software's
existing satellite and RF communications capabilities. The Company expects
that by the addition of these drivers to the software, this it can expand the
potential market for users of its tracking software to include everyone with
a computer that uses the Windows 95 operating system.
All website products are positioned to provide the INTERNET web user with the
ability to use the Company's products anywhere in the world, with any of the
three major web browsers. The Company's server architecture is scaleable to
allow growth as usage of the Company's websites continues to grow.
Pricing
Pricing strategy for all products is to be competitive with the market. The
company arrives at pricing based on a combination of gross margin objectives
and market prices of similar product offerings. This pricing is reviewed
monthly to ensure that potential profits are not squandered, while enabling
the Company to continue selling its products at competitive pricing that
enable rapid increase in market share. Duplication and distribution costs
are
<PAGE> 16
less than 20% of current wholesale prices, so profit margins are adequate to
maintain this pricing strategy, while enabling ATI to reach its market share
objectives.
Distribution Channels
The distribution channels used for NavQuest mapping and routing navigation
software product are cataloguers, retailers, and tourist information
services. With the additional funding, ATI would like to extend distribution
to include national direct response TV ads. The Company began an ad campaign
just prior to the summer travel season, since the desire to plan for vacations
on one's home computer increases consumer response to advertising. These
channels make sense for delivering the product to the end user because of
customer profile and geography. Some of the competition uses the wholesaler
channel, while no competitor uses all of the same channels as ATI. ATI's
distribution strategy is advantageous because the partnership with CPNM into
established distribution channels enables ATI to increase market share of its
consumer products, without substantially sacrificing profit margins.
To sell mobile data communications services effectively, ATI believes it is
necessary to recruit and train a technically competent, direct sales
organization, while also continuing to license reseller/partners to sell its
wireless communications technology. Upon completing funding, the Company plans
to hire additional sales people to market and license its products globally.
Customers
ATI's customers number in the tens of thousands and include the following
major companies:
WP6-34; AT&T
WP6-34; Harley Davidson
WP6-34; Bell South Mobility
WP6-34; Trimble Navigation Limited.
WP6-34; Flash, Inc.
<PAGE> 17
PART II - OTHER INFORMATION
Item #1 Legal Proceedings
Neither the Registrant nor any of its affiliates are a
party, nor is any of their property subject, to material
pending legal proceedings or material proceedings known
to be contemplated by governmental authorities.
Item #2 Changes in Securities
None
Item #3 Defaults Upon Senior Securities
None
Item #4 Submission of Matters to a Vote of Security Holders
None
Item #5 Other Information
None
Item #6 Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K
No reports have been filed on Form 8-K during this
quarter.
<PAGE> 18
ATI NETWORKS INC.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of
1934, the registrant has duly cause this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ATI NETWORKS, INC.
Registrant
June 29, 1998 /s/ Mark T. Thatcher
Date
MARK T. THATCHER,
Secretary and Filing Agent
June 29, 1998 /s/ Larry Bestor
Date
LARRY BESTOR
Principal Executive Officer
<TABLE> <S> <C>
<ARTICLE>5
<MULTIPLIER>1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 11,719
<SECURITIES> 0
<RECEIVABLES> 1,012,440
<ALLOWANCES> 0
<INVENTORY> 11,220
<CURRENT-ASSETS> 1,532,740
<PP&E> 71,915
<DEPRECIATION> (35,009)
<TOTAL-ASSETS> 1,960,641
<CURRENT-LIABILITIES> 331,972
<BONDS> 0
<COMMON> 215,000
0
0
<OTHER-SE> 911,391
<TOTAL-LIABILITY-AND-EQUITY> 1,960,641
<SALES> 1,026,672
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<NET-INCOME> 730,089
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<EPS-DILUTED> .28
</TABLE>
