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               June 30, 1998  
  
          Commission file Number                       33-2832-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
 
<PAGE>

     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 [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 - 3,184,357 shares as of June 30, 1998.  

<PAGE>  1

<TABLE>  

PART I. - FINANCIAL INFORMATION  

                            ATI NETWORKS, INC.  

                              BALANCE SHEET       
                AS OF JUNE 30, 1998 AND DECEMBER 31, 1997  
    

<CAPTION>  
                                      (UNAUDITED)           (AUDITED)           
                                      June 30               December 31 
                                      __________________    _________________
                                      1998                  1997  
                                      __________________    _________________

<S>                                   <C>                   <C> 

ASSETS

Current Assets
Cash and Cash Equivalents             $     8,139           $    24,938
Investment Accounts                        20,000                     -
Accounts Receivable                     1,009,045                 8,113     
Stock Subscriptions Receivable            500,000                     -
Security Deposits                             647                     -
Inventories at Whsl Cost                    9,949                10,050
Prepaid Expenses                            3,134                 1,376
Total Current Assets                    1,550,914                48,477

Property and Equipment
Equipment                                  73,501                78,749
Accum. Depr. - Equipment                  (37,259)              (36,095)
Furniture & Fixtures                        8,432                     -
Accum. Depr. - F&F                         (3,696)                    -
Total Property and Equipment               40,978                42,654

Other Assets
Capitalized R&D Costs - Net               313,118               426,610
Media Gems - Net                           32,432                     -
Total Other Assets                        345,550                     -
Total Assets                          $ 1,937,442           $   517,741

<PAGE> 2

LIABILITIES AND CAPITAL
Current Liabilities
Accounts Payable                      $   210,395           $    14,840
Accrued PR Taxes                              397                     -
Accrued Payroll                            13,542                     -
Accrued Vacation                            2,708                     -
Other Withholding                             584                     -
Accrued Sec125 FSA                           (711)                    -
Sales Tax Payable                               7                     -
Current Portion Deferred Revenue           52,416                52,416
Line of Credit - Bank One                  50,000                50,000
Total Current Liabilities                 329,338               125,382

Long-Term Liabilities
Note Payable - Advanta                     10,406                     -
Note Payable - L&S Bestor                  20,000                     -
Deferred Revenue                           39,312                52,416
Total Long-Term Liabilities                69,718                     -
Total Liabilities                         399,057               183,275

Capital
Common Stock                            1,163,391             1,126,391
Stock Subscribed                          500,000                     -
Accumulated Deficit                      (125,005)             (775,125)
Unrealized Loss on Investments                  -               (16,800)
Total Capital                           1,538,386               334,466
Total Liabilities & Capital           $ 1,937,442           $   517,741

<FN>    
See Accompanying Notes to 
Financial Statements  
</TABLE>

<PAGE> 3

<TABLE>         
                             ATI NETWORKS, INC. 
                          STATEMENT OF OPERATIONS
                                (Unaudited)

<CAPTION>  
                                     Six Months Ended     Six Months Ended
                                     June 30, 1998        June 30, 1997 
                                     ________________     ________________
<S>                                  <C>                  <C> 

Total Revenues                       $  1,027,392         $     64,928

Cost of Sales                             200,622               12,596
Gross Profit                              826,770               52,332
Operating Expenses

Sales and Marketing Expense                17,001               28,802

General and 
Administrative Expense                     50,924               30,543

Research & 
Development Expense                         3,981                4,000

Amort. of Capitalized R&D                  81,060               57,865

Depreciation                                4,860                4,860
Total Operating Expenses                  157,826              126,070
Net Operating Income (Loss)               668,944              (73,738)     
Other Income (Expenses)

Dividend & Interest Income                     82                  487
Capital Gains (Losses)                    (15,953)              (6,345)
Interest Expense                           (2,953)                   -
Net Other Income (Expenses)               (18,824)              (5,858)
Net Income (Loss)                    $    650,120         $    (79,596)
Net Income Per Share                 $       0.20         $      (0.03)

<FN> 
See Accompanying Notes to
Financial Statements  
</TABLE>

<PAGE>  4

<TABLE>  
                             ATI NETWORKS, INC.
                          STATEMENTS OF CASH FLOWS  
                    FOR THE THREE MONTHS AND SIX MONTHS 
                            ENDED JUNE 30, 1998 
                                (Unaudited)  
<CAPTION>  

                                               Current          Year to
                                               Quarter          Date
                                               June 30,         June 30,
                                               1998             1998
                                               -------------    -------------  
<S>                                            <C>              <C>  
Cash Flows from operating activities
Net Income                                     $    (79,990)    $   650,120

Adjustments to reconcile net
income to net cash provided
by operating activities
Depreciation                                          2,430           4,860
Amortization                                         40,530          81,060
Accounts Receivable                                   3,395        (996,917)
Stock Subscriptions Receivable                            0        (500,000)
Bad Debt Reserve                                     (4,015)         (4,015)
Inventories at Whsl Cost                              1,270             100
Accounts Payable                                     (1,298)        195,555
Accrued Fed. PR Taxes                                (1,370)           (333)
Accrued FICA                                            735             735
Accrued State WH                                       (169)              0
Accrued UC Taxes                                       (440)           (211)
Accrued Payroll                                           0          10,834
Other Withholding                                       642             642
Accrued Sec125 FSA                                     (734)           (711)
Sales Tax Payable                                         0             (29)
Total Adjustments                                    40,977      (1,208,430)
Net Cash provided by Operations                     (39,013)       (558,310)

Cash Flows from investing activities
Used For
Investments                                         (20,000)        (16,000)
Equipment                                            (1,587)         (3,185)
Net cash used in investing                          (21,587)        (19,185) 

<PAGE>  5

                                               Current          Year to
                                               Quarter          Date
                                               June 30,         June 30,
                                               1998             1998
                                               -------------    -------------  
<S>                                            <C>              <C>  

Cash Flows from financing activities
Proceeds From

Note Payable - L & S Bestor                          20,000          20,000 
Paid-in Capital                                      37,000          37,000
Unrealized Loss on Investments                            0          16,800
Stock Subscribed                                          0         500,000
Deferred Revenue                                          0         (13,104)

Net cash used in financing                           57,000         560,696
Net increase <decrease> in cash                $     (3,600)    $   (16,799)

Summary
Cash Balance at End of Period                  $      8,139     $     8,139
Cash Balance at Beginning of Period                 (11,739)        (24,938)
Net Increase <Decrease> in Cash                $     (3,600)    $   (16,799)

<FN>  
See Accompanying Notes to 
Financial Statements  

</TABLE>

<PAGE> 6

ATI NETWORKS, INC.

NOTES TO FINANCIAL STATEMENTS  
June 30, 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 1997 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 3,184,357 shares for the six months ending June 30, 1998 and
2,582,540 shares for the six months ending June 30, 1997 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 42.6% of the 
Common Stock of the Company.  

<PAGE> 7

Item 2.    Management's Discussion and Analysis of Financial Condition 
           and Results of Operations

ACCOUNTING STANDARDS

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.  

FORWARD-LOOKING INFORMATION

This Analysis and Discussion contains certain forward-looking 
statements within the meaning of Section 27 (A) of the Securities 
and Exchange Act of 1933 and Section 21 (E) of the Securities and 
Exchange Act of 1934.  Actual results could differ materially from 
those projected in the forward-looking statements as a result of certain 
risks factors set forth below and elsewhere in this report.  In addition 
to the other information contained in this report, individuals should 
carefully consider the following risk factors:

1. The Company believes that its assumptions are based upon 
reasonable data derived from and known about its business 
and operations.  No assurances are made that actual results of 
operations or the results of the Company's future activities 
will not differ materially from its assumptions;  

2. Additional risks factors such as the uncertainty of the Company's 
marketing activities, and the results of bringing additional 
acquisitions and affiliations into a smooth operation with 
Company are unknown;  

3. Additional concerns regarding the year 2000 compliance standards
as they effect the Company's operating technology as well as the 
technologies of the industry which effect the Company's operations; 

<PAGE>  8

4. In addition to the uncertainties regarding Federal and state 
government regulations;  and the Company's approach to defining
and maintaining an appropriate and thorough compliance 
program for such Federal and state standards;  

5. Additional uncertainties regarding the ability for operating cash 
to meet the current and projected cash flow needs of the organization;  

6. Readers are cautioned not to place undue reliance on these 
forward-looking statements, as they attempt to speak only of activities 
known or anticipated as of this date.   

YEAR 2000 COMPLIANCE

The Company continues to review its technology systems to attempt to 
discover what effects year 2000 issues may have on its operations.  Many 
of the earlier systems, found not to be compliant, have been replaced while 
others are being modified to comply.  The Company is working with its 
known suppliers of  technology or services controlled by technology that 
might be effected by the year 2000 events and are seeking written 
assurances from those determined to have a potential effect upon 
Company's operations.  However, there can be assurance that the Company
will identify all of its data handling problems in its business systems or 
those of its suppliers or clients in advance of any effect  upon Company's 
operations.  The Company, therefore, bears some unlimited and unknown 
risks to the year 2000 issue and could also be adversely effected if other 
entities do not adequately or timely resolve their problems.  

RESULTS OF OPERATIONS

SALES

Cost of sales as a percentage of net sales and operating revenues 
remained virtually unchanged compared with the same period in the prior 
year. 

OPERATING EXPENSES

Increases in operating expenses during the period were principally due to 
the initial expenses of becoming a fully reporting public company,
which resulted in increases in legal and accounting fees. 

<PAGE>  9

LIQUIDITY

ATI Networks completed most of its corporate organization costs prior
to this quarter.  Anticipated public reporting expenses and planned 
acquisitions will place additional demands on liquidity during the 
remainder of the next year.  Management will maintain a routine 
analysis of the lines of credit and the Company's capital needs.  

CAPITAL RESOURCES

Management plans to invest $100,000 in new equipment
expenditures in the next six months.

RESEARCH AND DEVELOPMENT RESOURCES
  
The Company has completed several software products. Management 
continues to fund the further development of these products as needed to
stay competitive in the marketplace..

The Company has recently brought these products to market, which has 
illustrated both the demand for the products and the need to continue 
upgrading and maintaining these software products. Management plans to 
continue upgrades and improvements to existing products utilizing state 
of the art technology and to re-market these products to the growing 
client base.  Management expects sales and profits to significantly 
increase as the company implements its marketing plan.

<PAGE>  10

PART II - OTHER INFORMATION  


Item No. 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 No. 2    Changes in Securities

         None


Item No. 3    Defaults Upon Senior Securities

         None


Item No. 4    Submission of Matters to a Vote of Security Holders

         None


ITEM No 5.    Other Information

ATI Networks, Inc. spent this third quarter of fiscal 1998 preparing
their organization for rapid sales growth and expansion.  We have 
revised our operating policies, continue to refine our new financial 
management system and continue to recruit experienced, operational 
and management personnel.  Additionally, we maintain our current 
public reporting status pursuant to Section 12 of the Securities 
Exchange of 1934 (the "Exchange Act")  and have applied to have 
our common equity listed for trading on the OTC Bulletin Board 
under the symbol OTCBB: ATII.  This will allow the Company to 
approach capital markets and initiate the raising of equity when 
needed to fuel growth through mergers and acquisitions.  Access to
public markets is critical, since the growth rates will be too rapid to 
fund through earnings or debt.

ATI Networks has initiated and maintains ongoing discussions with
businesses regarding  potential business alliances. The Company is 
working with investment firms, specializing in computer technology, 
information systems and the Internet, who may arrange future 
capitalization.  ATI Networks is also developing relationships with 
retail brokerage firms who will assist in providing stock support to the 
public float.


<PAGE>  11

MAJOR ACQUISITION

The Company has ongoing discussions with various companies 
concerning potential business mergers and acquisitions that would 
continue to strengthen ATI Networks and its product lines.  

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 
thousands of timeshare listings for aRealGem.com,  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 
Internet commerce. 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 copyrights, to the technology 
retained by the Company.

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 upgrades for software map data bases, software mapping 
applications, and sales commissions for properties sold on its websites.

The Company is now in the growth stage of business, having begun international 
sales of its software technologies and is experiencing growing consumer
awareness of its Internet websites. 

<PAGE>  12

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, as found in more expensive programs, 
that permit the user to look up and locate nearly any street address in the 
United States, and calculate the shortest route to a destination. Included 
with the software are 35,000 attractions across the U.S. that can be located
quickly and easily using NavQuest. An earlier version of this mapping 
software, under the tradename AutoNav, received Automotive Engineering 
Magazine's prestigious Top 50 Products Award.

Sale of the NavQuest 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.

Technology - 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 
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 

<PAGE>  13

art, and you have the format for ArtGems. Similar technology has been
employed for the sale of timeshares on ARealGem.com. The result is 
dynamic and friendly environments to engage in electronic commerce 
of art and timeshare properties. 

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.
 
Market

NavQuest

Sale of the NavQuest 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

The global market for LogiTrak is as broad and compelling as the number of 
wireless devices currently in use. In the transportation industry, it can be 
used by the over 600,000 businesses that make their living by hauling freight. 
On the consumer side, it could eventually be used to track the over 70 million 
cellular phone users in the US, or 10+ million pager users that want to save 
money on communication with their homes and offices. Internationally, the 
market demand would be similar. 

<PAGE>  14

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 a major marketing partner, to manage 
the media rollout 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. 

<PAGE>  15

Advertising and Promotion

The Company has a marketing agreement with a US marketing firm that owns 
interests in cable television networks, newspapers, magazines, and Direct 
Broadcast satellite channels. Under the terms of the agreement, the marketing
partner 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, the partner 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. 

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 thousands of 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.

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. 

<PAGE>  16

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. 

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.

<PAGE>  17

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 
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

<PAGE>   18

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.

  
Item No. 6    Exhibits and Reports on Form 8-K  
  
              a.     Exhibits  
  
                     Exhibit 27. Financial Data Schedule
  
              b.     Reports on Form 8-K  
  
                     The Registrant filed a Form 8-K  
                     during this quarter on July 10-13, 1998.

<PAGE>  19


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  
  
  
August 14, 1998        /s/ Mark T. Thatcher                
Date

                       MARK T. THATCHER,            
                       Secretary and Filing Agent  
  
  
August 14, 1998        /s/ Larry Bestor              
Date

                       LARRY BESTOR        
                       Principal Executive Officer