**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-QSB**








xQUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For
      the
      quarterly period ended June
      30, 2006




࿠    
      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT


For
      the
      transition period from _____________________ to ______________





Commission
      file number **333-126158**





SPUTNIK,
      INC.





(Exact
      name of small business issuer as specified in its charter)





Nevada
            52-2348956(State
                or other jurisdiction of incorporation or organization)
            (IRS
                Employer Identification No.)





650
      Townsend Street, Suit 320


San
      Francisco, CA 94103


(Address
      of principal executive offices)





(415)
      355-9500


(Issuer’s
      telephone number)





N/A


(Former
      name, former address and former fiscal year, if changed since last
      report)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 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  ̈   Nox





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes  ̈   No x





As
      of
      August 4, 2006, there were 13,513,919 shares issued and outstanding of the
      registrant’s common stock.





Transitional
      Small Business Disclosure Format:


Yes o  No x








**INDEX**




**Page**PART
                I.
            FINANCIAL
                INFORMATIONItem
                1.
            Financial
                Statements
            3Balance
                Sheets as of June 30, 2006 (unaudited) and December 31, 2005
            3Statements
                of Operations for Three and Six Months Ended June 30, 2006 and 2005
                (unaudited)
            4Statements
                of Cash Flows for the six months ended June 30, 2006 and 2005
                (unaudited)
            5Notes
                to Unaudited Financial Statements
            6Item
                2.
            Management’s
                Discussion and Analysis or Plan of Operation
            7Item
                3.
            Controls
                and Procedures
            11PART
                II.
            OTHER
                INFORMATIONItem
                1.
            Legal
                Proceedings
            11Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            11Item
                3.
            Defaults
                Upon Senior Securities
            12Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            12Item
                5.
            Other
                Information
            12Item
                6.
            Exhibits
            12Signatures
            
            12











**PART
      I — FINANCIAL INFORMATION**





**Item
      1.**  **Financial
      Statements.**





SPUTNIK,
      INC.


BALANCE
      SHEETS


June
      30,
      2006 (unaudited) and December 31, 2005





June
                  30, 2006
                (unaudited)
              
              December
                  31, 2005ASSETSCurrent
                  AssetsCash
              
              $
              17,207
              
              $
              26,782Accounts
                  receivable
              
              
              1,053
              
              
              1,821Inventory
              
              
              18,774
              
              
              19,725Prepaid
                  expenses
              
              
              3,214
              
              
              5,078Total
                  Current Assets
              
              
              40,248
              
              
              53,406Property
                  and equipment, net of accumulated depreciation of $4,387 and $2,682,
                  respectively
              
              
              14,382
              
              
              8,399Deposit
              
              
              2,700
              
              
              2,700TOTAL
                  ASSETS
              
              $
              57,330
              
              $
              64,505LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIT)Current
                  LiabilitiesAccounts
                  payable
              
              $
              53,011
              
              $
              38,840Bank
                  revolving line of credit
              
              
              40,513
              
              
              -Other
                  current liabilities
              
              
              23,225
              
              
              21,766Total
                  Current Liabilities
              
              
              116,749
              
              
              60,606Stockholders'
                  Equity (Deficit)Common
                  stock, $.001 par value, 50,000,000 shares authorized, 13,513,919
                  shares
                  issued and outstanding as of June 30, 2006 and December 31,
                  2005
              
              
              13,514
              
              
              13,514Paid-in
                  capital
              
              
              884,941
              
              
              884,941Retained
                  deficit
              
              
              (957,874
              )
              
              (894,556
              )Total
                  Stockholders' Equity (Deficit)
              
              
              (59,419
              )
              
              3,899TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
              
              $
              57,330
              
              $
              64,505





SPUTNIK,
      INC.


STATEMENTS
      OF OPERATIONS


Three
      and
      Six Months Ended June 30, 2006 and 2005


(unaudited)




Three
                  Months Ended
              
              Six
                  Months EndedJune
                  30, 2006
              
              June
                  30, 2005
              
              June
                  30, 2006
              
              June
                  30, 2005Revenue
              
              $
              170,716
              
              $
              138,536
              
              $
              268,085
              
              $
              252,641Cost
                  of goods sold
              
              
              54,364
              
              
              67,923
              
              
              89,233
              
              
              118,841Gross
                  profit
              
              
              116,352
              
              
              70,613
              
              
              178,852
              
              
              133,800ExpensesNon
                  cash compensation
              
              
              -
              
              
              14,000
              
              
              -
              
              
              64,000General
                  and administrative costs
              
              
              98,153
              
              
              84,534
              
              
              173,218
              
              
              161,218Research
                  and development
              
              
              33,037
              
              
              18,378
              
              
              66,017
              
              
              35,878Depreciation
                  and amortization
              
              
              852
              
              
              516
              
              
              1,704
              
              
              871Total
                  operating expense
              
              
              132,042
              
              
              117,428
              
              
              240,939
              
              
              261,967Operating
                  Loss
              
              
              (15,690
              )
              
              (46,815
              )
              
              (62,087
              )
              
              (128,167
              )Interest
                  expense
              
              
              (903
              )
              
              (1,151
              )
              
              (1,277
              )
              
              (1,982
              )Interest
                  income
              
              
              35
              
              
              -
              
              
              47
              
              
              -Other
                  income
              
              
              -
              
              
              61,000
              
              
              -
              
              
              61,000NET
                  INCOME (LOSS)
              
              $
              (16,558
              )
              $
              13,034
              
              $
              (63,317
              )
              $
              (69,149
              )Basic
                  and diluted loss per share
              
              $
              (0.00
              )
              $
              0.00
              
              $
              (0.00
              )
              $
              (0.00
              )Weighted
                  average shares outstanding
              
              
              13,513,919
              
              
              10,443,457
              
              
              13,513,919
              
              
              8,858,551








SPUTNIK,
      INC.


STATEMENTS
      OF CASH FLOWS


Six
      Months Ended June 30, 2006 and 2005


(unaudited)


2006
              
              2005Cash
                  Flows from Operating ActivitiesNet
                  loss
              
              $
              (63,317
              )
              $
              (69,149
              )Adjustments
                  to reconcile net loss to cash from operating activities:Depreciation
              
              
              1,705
              
              
              871Stock
                  issued for services
              
              
              -
              
              
              15,050Changes
                  in working capital:Accounts
                  receivable
              
              
              767
              
              
              (1,002
              )Stock
                  payable
              
              
              -
              
              
              50,000Inventory
              
              
              951
              
              
              8,945Prepaid
                  expenses
              
              
              1,864
              
              
              20Accounts
                  payable and accrued liabilities
              
              
              15,630
              
              
              6,910Net
                  cash provided by (used in) operating activities
              
              
              (42,400
              )
              
              11,645Cash
                  Flows from Investing ActivitiesPurchase
                  of property and equipment
              
              
              (7,688
              )
              
              (3,682
              )Cash
                  Flows from Financing ActivitiesLine
                  of credit
              
              
              40,513
              
              
              (70,819
              )Deposit
                  on stock payable
              
              
              -
              
              
              81,000Net
                  cash provided by financing activities
              
              
              40,513
              
              
              10,181Net
                  change in cash
              
              
              (9,575
              )
              
              18,144Cash
                  at beginning of period
              
              
              26,782
              
              
              8,571Cash
                  at end of period
              
              $
              17,207
              
              $
              26,715Supplemental
                  Disclosures of Cash Flow InformationCash
                  paid during the period for interest
              
              $
              -
              
              $
              -Cash
                  paid during the period for taxes
              
              
              -
              
              
              -








SPUTNIK,
      INC.


Notes
      to
      Financial Statements


(unaudited)





NOTE
      1 -
      BASIS OF PRESENTATION





The
      accompanying unaudited interim financial statements of Sputnik, Inc. (“Sputnik”)
      have been prepared in accordance with accounting principles generally accepted
      in the United Sates of America and the rules of the Securities and Exchange
      Commission, and should be read in conjunction with Sputnik’s audited 2005 annual
      financial statements and notes thereto. In the opinion of management, all
      adjustments, consisting of normal recurring adjustments, necessary for a fair
      presentation of financial position and the result of operations for the interim
      periods presented have been reflected herein. The results of operations for
      interim periods are not necessarily indicative of the results to be expected
      for
      the full year. Notes to the financial statements, which would substantially
      duplicate the disclosure required in Sputnik’s 2005 annual financial statements
      have been omitted.





Use
      of
      estimates





The
      preparation of these financial statements is in conformity with accounting
      principles generally accepted in the United States of America and requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and disclosure of contingent assets and liabilities
      at
      the date of the financial statements and the reported amount of revenues and
      expenses during the reporting period. Actual results could differ from those
      estimates.


NOTE
        2 -
        BANK REVOLVING LINE OF CREDIT
 
 Sputnik
        has a revolving line of credit that is secured by the assets of certain
        stockholders. The line of credit has a maximum borrowing amount of $107,000,
        and
        an interest rate of 9% at June 30, 2006.





**Item
      2.****Management’s
      Discussion and Analysis or Plan of Operation.**




*This
      10−QSB contains forward-looking statements. Our actual results could differ
      materially from those set forth as a result of general economic conditions
      and
      changes in the assumptions used in making such forward-looking statements.
      The
      following discussion and analysis of our financial condition and results of
      operations should be read together with the audited consolidated financial
      statements and accompanying notes and the other financial information appearing
      else where in this report. The analysis set forth below is provided pursuant
      to
      applicable Securities and Exchange Commission regulations and is not intended
      to
      serve as a basis for projections of future events. Refer also to "Cautionary
      Note Regarding Forward Looking Statements" and “Updates to Risk Factors”
below.*




The
      following discussion of our financial condition and results of operations as
      of
      June 30, 2006 should be read in conjunction with our financial statements and
      the related notes as provided under Item 1. With respect to the discussion
      within this Item 2, the terms “Sputnik,” “we,” “us,” and “our” refer to Sputnik,
      Inc.





Overview





Our
      customers are service providers and businesses that want to offer their own,
      proprietary wireless internet access services to their customers. These networks
      are commonly referred to as Wi-Fi networks. However, our customers do not want
      to give the general public unrestricted access to these networks. Further,
      they
      want the ability to be able to generate revenues from the operation of their
      networks.





Sputnik
      provides software that gives service providers and businesses the ability to
      control and limit access to their Wi-Fi networks. It also provides them the
      ability to generate revenues from the operation of their networks.





Sputnik
      additionally provides Wi-Fi access point hardware and accessories, such as
      antennas and power supplies.





Results
      of Operations For the Three Months Ended June 30, 2006 Compared to the Three
      Months Ended June 30, 2005





We
      had
      revenue of $170,716 for the three months ended June 30, 2006, which was an
      increase of $32,180 from our revenue for the three months ended June 30, 2005,
      which was $138,536. Our
      revenue increased as a result of higher sales of subscriptions and software,
      which more than offset decreased hardware sales. In
      both
      quarters our revenue streams included: hardware (Wi-Fi access points, antennas,
      and accessories), proprietary Sputnik software, software subscriptions
      (SputnikNet setup, monthly, and annual fees), and services (training,
      support incidents, and consulting) .
      In the
      June 30, 2005 quarter revenues broke down as follows: 72% hardware, 20%
      software, 6% software subscriptions, and 1% services. In the June 30, 2006
      quarter, revenues broke down as follows: 48% hardware, 31% software, 19%
      software subscriptions, and 2% services. Profit margins on the resale of
      hardware ranges from 20% for antennas  to 40% for Wi-Fi access points.








Our
      cost
      of goods sold decreased $13,559, to $54,364, for the three months ended June
      30,
      2006, as compared to cost of goods sold of $67,923 for the three months ended
      June 30, 2005.  Our cost of goods sold decreased as a direct result of
      lower sales of our hardware products.





We
      had
      gross profit of $116,352 for the three months ended June 30, 2006, which was
      an
      increase of $45,739 when compared to our gross profit for the three months
      ended
      June 30, 2005, which was $70,613. Our increase in gross profit was attributable
      to higher sales of software and subscriptions. Our gross margin increased from
      51% for the three months ended June 30, 2005 to 68% for the three months ended
      June 30, 2006 primarily  because the percentage of our revenue attributable
      to hardware sales decreased, while the percentage of our revenue
      attributable to  software subscriptions increased.





Our
      operating expenses increased $14,614, to $132,042 for the three months ended
      June 30, 2006, as compared to operating expenses of $117,428 for the three
      months ended June 30, 2005. Our operating expenses for the three months ended
      June 30, 2005 included 14,000 in non cash compensation, which was not a cost
      for
      us in the three months ended June 30, 2006. Our operating expenses for the
      three
      months ended June 30, 2006 included $98,153
      in general and administrative expenses, a $13,619 increase over general and
      administrative expenses of $84,534 for the three months ended June 30,
      2005 ;
      $33,037
      in research and development expenses, a $14,659 increase over general and
      administrative expenses of $18,378 for the three months ended June 30, 2005;
      and
      depreciation and amortization expense of $852 compared to $516 for the three
      months ended June 30, 2005. We compensated consultants and employees with cash,
      and did not issue equity for compensation in the three months ended June 30,
      2006, which resulted in increases in general and administrative expenses and
      research and development expenses in the three months ended June 30, 2006 versus
      the three months ended June 20, 2005. The
      increase in general and administrative expenses also included increased payroll
      expenses in connection with converting consultants to employees, and increases
      in our advertising and public relations expenses. Other
      income and losses included a decrease in interest expense of $248, to
      $ 903
      for
      the three months ended June 30, 2006, as compared to interest expense of $1,151
      for the three months ended June 30, 2005 ,
      and an
      increase in interest income to $35 for the three months ended June 30, 2006,
      as
      compared to no interest income for the three months ended June 30, 2005. In
      the
      three months ended June 30, 2005 we had other income of $61,000 due to a legal
      settlement; there was no such other income in the three months ended June 30,
      2006.





We
      had a
      net loss of $16,558 for the three months ended June 30, 2006, which represented
      a decrease of $29,592 from our income for the three months ended June 30, 2005,
      which was $13,034.





Results
      of Operations For the Six Months Ended June 30, 2006 Compared to the Six Months
      Ended June 30, 2005





We
      had
      revenue of $268,085 for the six months ended June 30, 2006, which was an
      increase of $15,444 from our revenue for the six months ended June 30, 2005,
      which was $252,641. Our revenue increased as a result of higher sales of
      subscriptions and software, which more than offset decreased hardware sales.
      In
      both periods our revenue streams included: hardware (Wi-Fi access points,
      antennas, and accessories), proprietary Sputnik software, software subscriptions
      (SputnikNet setup, monthly, and annual fees), and services (training, support
      incidents, and consulting). In the six months ended June 30, 2005 revenues
      broke
      down as follows: 68% hardware, 25% software, 6% software subscriptions, and
      1%
      services. In the six months ended June 30, 2006 revenues broke down as follows:
      50% hardware, 28% software, 21% software subscriptions, and 1% services. Profit
      margins on the resale of hardware ranges from 20% for antennas  to 40% for
      Wi-Fi access points.





Our
      cost
      of goods sold decreased $29,608, to $89,233, for the six months ended June
      30,
      2006, as compared to cost of goods sold of $118,841 for the six months ended
      June 30, 2005.  Our cost of goods sold decreased as a direct result of
      lower sales of our hardware products.





We
      had
      gross profit of $178,852 for the six months ended June 30, 2006, which was
      an
      increase of $45,052 when compared to our gross profit for the six months ended
      June 30, 2005, which was $133,800. Our increase in gross profit was attributable
      to higher sales of software and subscriptions. Our gross margin increased from
      53% for the six months ended March  31, 2005 to 67% for the six months
      ended June 30, 2006 primarily  because the percentage of our revenue
      attributable to hardware sales decreased, while the percentage of our
      revenue attributable to  software subscriptions increased.





Our
      operating expenses decreased $21,028, to $240,939 for the six months ended
      June
      30, 2006, as compared to operating expenses of $261,967 for the six months
      ended
      June 30, 2005. Our operating expenses for the six months ended June 30, 2005
      included 64,000 in non cash compensation, which was not a cost for us in the
      six
      months ended June 30, 2006. Our operating expenses for the six months ended
      June
      30, 2006 included $173,218 in general and administrative expenses, a $12,000
      increase over general and administrative expenses of $161,218 for the six months
      ended June 30, 2005; $66,017 in research and development expenses, a $30,139
      increase over general and administrative expenses of $35,878 for the six months
      ended June 30, 2005; and depreciation and amortization expense of $1,704
      compared to $871 for the six months ended June 30, 2005. We compensated
      consultants and employees with cash, and did not issue equity for compensation
      in the six months ended June 30, 2006, which resulted in increases in general
      and administrative expenses and research and development expenses in the six
      months ended June 30, 2006 versus the six months ended June 20, 2005. The
      increase in general and administrative expenses also included increased payroll
      expenses in connection with converting consultants to employees, and increases
      in our advertising and public relations expenses. Other income and losses
      included a decrease in interest expense of $705, to $1,277 for the six months
      ended June 30, 2006, as compared to interest expense of $1,982 for the six
      months ended June 30, 2005, and an increase in interest income to $47 for the
      six months ended June 30, 2006, as compared to no interest income for the six
      months ended June 30, 2005. In the six months ended June 30, 2005 we had other
      income of $61,000 due to a legal settlement; there was no such other income
      in
      the six months ended June 30, 2006.








We
      had a
      net loss of $63,319 for the six months ended June 30, 2006, which represented
      a
      decrease of $5,831 from our net loss for the six months ended June 30, 2005,
      which was $69,149.





Liquidity
      and Capital Resources





We
      had
      total assets of $57,330 as of June 30, 2006, which consisted of total current
      assets of $40,248, which included cash of $17,207, accounts receivable of
      $1,053, inventory of $18,774 and prepaid expenses of $3,214, property and
      equipment of $14,382, and deposit of $2,700.





We
      had
      total liabilities of $116,749 as of June 30, 2006, which consisted solely of
      current liabilities and included $53,011 of accounts payable, and $23,225 of
      other current liabilities.  Our bank revolving line of credit had a balance
      of 40,513 at June 30, 2006 and is personally secured by the assets of our
      Directors, David LaDuke and Arthur Tyde. It has a maximum borrowing amount
      of
      $107,000, bearing interest at a variable annual rate which was 9% as of June
      30,
      2006.





We
      had an
      accumulated deficit of $957,874, as of June 30, 2006.





We
      had
      net cash used in operating activities of ($42,400) for the six months ended
      June
      30, 2006, which consisted of net loss of ($63,317), depreciation of $1,705,
      changes in accounts receivable of $767, inventory of $951, prepaid expenses
      of
      $1,864, and accounts payable and accrued liabilities of $15,630.





We
      had
      net cash used by investing activities of ($7,688) for the six months ended
      June
      30, 2006, which consisted of purchase of property and equipment of
      ($7,688).





We
      had
      $40,513 in net cash provided by financing activities for the six months ended
      June 30, 2006, which consisted of an advance on the line of credit of
      $40,513.





Historically,
      our cash has been provided by collection of sales revenues and short-term bank
      line of credit bearing an interest rate of 9% at June 30, 2006. The only major
      outstanding cash commitments as of June 30, 2006 were our contract with
      GoPublicToday.com, which requires us to pay them $10,000 when our Form SB-2
      is
      declared  effective by the SEC, and the commitment to pay off our debt
      for  legal services to DLA Piper Rudnick Gray Cary, LLC, Sputnik’s 
original law firm, which is $17,337.04, and is payable upon  conclusion of
      the offering described
      in our Prospectus dated June 15, 2006 .
      As we
      expand, we may need to make sizeable cash commitments to hire additional
      personnel and secure inventory, and the impact of this potential trend on our
      business is uncertain. We believe that our mix of capital resources will shift
      from short-term debt to equity-based financing as we become a public company,
      which will cause dilution of current shareholders. Because Sputnik keeps minimal
      inventories and receivables, the predominant component of our liquidity is
      our
      cash on hand.





Our
      ability to continue as a going concern is dependent upon our ability to
      successfully accomplish our business plans and secure additional funding sources
      and attaining profitable operations.  We do not have any commitments or
      identified sources of additional capital from third parties or from our
      officers, directors or majority shareholders.  Additional financing may not
      be available to us on favorable terms, if at all.





Accordingly,
      our accountants have indicated there is substantial doubt about our ability
      to
      continue as a going concern over the next twelve months. Revenues have not
      been
      sufficient to cover operating costs and to allow us to continue as a going
      concern.  Our poor financial condition could inhibit our ability to
      continue in business or achieve our business plan.




Critical
      Accounting Estimates





Due
      to
      the nature of our business, the majority of Sputnik’s revenue is recognized
      either upon shipping of product or delivery of service. Less than 2% of our
      overall revenue is deferred, as it is associated with annual software
      subscriptions, recognized over the period of the subscription. Stock for
      compensation is computed at fair value. Since we carry minimal inventories
      we do
      not set aside an inventory allowance. We make estimates and assumptions that
      affect the reported amounts of assets and liabilities in the balance sheet
      and
      revenues and expenses in the statement of operations, and the disclosure of
      contingent assets and liabilities. Actual results could differ from those
      estimates.







**Cautionary
      Note About Forward-Looking Statements**




The
      information contained in this Report includes some statements that are not
      purely historical and that are “forward-looking statements” within the meaning
      of Section 27A of the Securities Act and Section 21E of the Exchange Act, and
      as
      such, may involve risks and uncertainties. These forward-looking statements
      relate to, among other things, expectations of the business environment in
      which
      we operate, perceived opportunities in the market and statements regarding
      our
      mission and vision. In addition, any statements that refer to projections,
      forecasts or other characterizations of future events or circumstances,
      including any underlying assumptions, are forward-looking statements. You can
      generally identify forward-looking statements as statements containing the
      words
“anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,”
“intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,”
“projects,” “seeks,” “should,” “will,” “would” and similar expressions, or the
      negatives of such terms, but the absence of these words does not mean that
      a
      statement is not forward-looking. For example, our forward-looking statements
      may include statements regarding:





·
            Our
                projected sales and profitability,


·
            Our
                growth strategies,


·
            Anticipated
                trends in our industry,


·
            Our
                future financing plans, and


·
            Our
                anticipated needs for working
                capital.




For
      a
      discussion of the risks, uncertainties, and assumptions that could affect our
      future events, developments or results, you should carefully review the “Risk
      Factors” set forth below. In light of these risks, uncertainties and
      assumptions, the future events, developments or results described by our
      forward-looking statements herein could turn to be materially different from
      those we discuss or imply.




**Risk
      Factors**




*Any
      investment in our common stock involves a high degree of risk. Investors should
      carefully consider the risks described below before engaging in transactions
      in
      the Company’s common stock. The Company’s business, financial condition or
      results of operations could be materially adversely affected by these risks
      if
      any of them actually occur. The trading price of the Company’s common stock
      could decline due to any of these risks, and an investor may lose all or part
      of
      his investment.*




*Some
      of these factors have affected the Company’s financial condition and operating
      results in the past or are currently affecting the Company. This Quarterly
      Report on Form 10-QSB also contains forward-looking statements that involve
      risks and uncertainties. The Company’s actual results could differ materially
      from those anticipated in these forward-looking statements as a result of
      certain factors, including the risks faced by the Company described below and
      in
      the Annual Report on Form 10-KSB.*





**Our
      poor financial condition raises substantial doubt about our ability to continue
      as a going concern.**





We
      have
      generated a net loss for each of the past two fiscal years and had a working
      capital deficit of $772,331 and an accumulated deficit of $880,148 as of
      December 31, 2004, a working capital deficit of $7,201 and an accumulated
      deficit of $894,556 as of December 31, 2005, and a working capital deficit
      of
      $76,501 and an accumulated deficit of $957,874 as of June 30, 2006.





Our
      ability to continue as a going concern is dependent upon our ability to
      successfully accomplish our business plans and secure additional funding sources
      and attain profitable operations.  We do not have any commitments or
      identified sources of additional capital from third parties or from our
      officers, directors or majority shareholders. Additional financing may not
      be
      available to us on favorable terms, if at all.  The offering described in
      our Prospectus dated June 15, 2006 may not raise the required
      funding.





Accordingly,
      our accountants have indicated there is substantial doubt about our ability
      to
      continue as a going concern over the next twelve months. Revenues have not
      been
      sufficient to cover operating costs and to allow us to continue as a going
      concern.  Our poor financial condition could inhibit our ability to
      continue in business or achieve our business plan.





**Because
      the Wi-Fi business is new and there are many competitors offering free services,
      we may not be successful and the value of our securities could become
      worthless.**







Our
      market, business software for Wi-Fi networks, is new and dynamic.  Downward
      price pressure of managed Wi-Fi access software and services due to the
      proliferation of free, open unmanaged Wi-Fi networks, competition from Wi-Fi
      technology providers, and competition from cellular broadband alternatives
      could
      reduce our market potential.  Additionally, some new product may be
      developed in the future, which will supplant Wi-Fi networks and render them
      obsolete.  If the price of, or demand for, managed Wi-Fi access software
      and services is depressed downward, or Wi-Fi networks become obsolete, we could
      lose clients, resulting in our not having sufficient demand for our software
      and
      forcing us to discontinue its business plan. If this were to happen, the value
      of our securities could become worthless.




**Because
      our software system business depends upon our intellectual property rights,
      which we have not taken any formal legal action to protect against third
      parties, our revenues may be reduced.**





We
      have
      currently not taken any formal legal steps to protect important intellectual
      property related to our software. We anticipate we will take these further
      steps
      upon securing additional funding. If we do not take these steps, our competitors
      could copy our technology, which, in turn could result in our revenues being
      reduced.




**Our
      management decisions are made by David LaDuke, our president and CEO; if we
      lose
      his services, our revenues could be reduced.**





The
      success of our business is dependent upon the expertise of David LaDuke, our
      President and Chief Executive Officer.  Because David LaDuke, our president
      and CEO is essential to our operations, you must rely on his management
      decisions.  David LaDuke, our president and CEO will continue to control
      our business affairs after the filing. We have not obtained any key man life
      insurance relating to him. If we lose his services, we may not be able to hire
      and retain another president and CEO with comparable experience. As a result,
      the loss of his services could reduce our revenues.  We have not entered
      into an employment agreement with Mr. LaDuke.





**Because
      Mr. David LaDuke, our president and CEO, controls our activities, he may block
      or deter actions that you might otherwise desire that we take and may cause
      us
      to act in a manner that is most beneficial to him and not to outside
      shareholders.**





Mr.
      David
      LaDuke, our president and CEO controls approximately 60% of our common stock.
      As
      a result, he effectively controls all matters requiring director and stockholder
      approval, including the election of directors, the approval of significant
      corporate transactions, such as mergers and related party transaction. He also
      has the ability to block, by his ownership of our stock, an unsolicited tender
      offer. This concentration of ownership could have the effect of delaying,
      deterring or preventing a change in control of our company that you might view
      favorably and may cause us to act in a manner that is most beneficial to him
      and
      not to outside shareholders.




**Sales
      of our common stock under Rule 144 could reduce the price of our
      stock.**





As
      of
      June 30, 2006, there were 3,263,919 of our common stock held by non-affiliates
      and 10,250,000 shares of our common stock held by our officers and directors
      that Rule 144 of the Securities Act of 1933 defines as restricted securities.
       This is in addition to the up to 1,250,000 shares we are offering in the
      offering described in our Prospectus dated June 15, 2006.  Of the shares
      currently owned by non-affiliates, 344,358 may currently be resold without
      restriction as they have been held two or more years. Ninety days after the
      effective date of our registration statement, there will be 3,638,889 shares
      held by our officers and directors that will be eligible for resale under the
      price and volume limitations of Rule 144(e).





The
      availability for sale of substantial amounts of common stock under Rule 144
      or
      otherwise could reduce prevailing prices for our securities.





**Because
      the offering described in our Prospectus dated June 15, 2006 is a best efforts,
      self-underwritten no minimum offering, we may have less funds available that
      the
      $812,500 maximum offering amount, which may limit our ability to implement
      our
      business plan.**





No
      commitment exists by any broker-dealers and/or agents to purchase all or any
      part of the shares being offered pursuant to our Prospectus dated June 15,
      2006.
      We are selling the shares on a "best efforts, no minimum" basis. The funds
      available to us from the proceeds of the offering will be reduced to the extent
      that less than all the shares offered thereby are sold. There are no minimum
      purchase requirements and no arrangements to place the funds in an escrow,
      trust
      or similar account. All cleared funds will be available to us following deposit
      into our bank account.  Sale of less than the maximum number of shares may
      curtail implementation of our business plan.





**Because
      we do not have an audit or compensation committee, shareholders will have to
      rely on the entire board of directors, all members of which are not independent,
      to perform these functions.**








We
      do not
      have an audit or compensation committee comprised of independent directors.
      Indeed, we do not have any audit or compensation committee.  These
      functions are performed by the board of directors as a whole.  No members
      of the board of directors are independent directors.  Thus, there is a
      potential conflict in that board members who are management will participate
      in
      discussions concerning management compensation and audit issues that may affect
      management decisions.




**Because
      there is not now and may never be a public market for our common stock,
      shareholders may have difficulty in reselling their shares.** ****





Our
      common stock is currently not quoted on any market. No market may ever develop
      for our common stock, or if developed, may not be sustained in the future.
      Accordingly, our shares should be considered totally illiquid, which inhibits
      shareholders’ ability to resell their shares.




**Item
      3.**  **Controls
      and Procedures.**




**Evaluation
      of Disclosure Controls and Procedures**




As
      of the
      end of the period covered by this report on Form 10-QSB, our Chief Executive
      Officer and our Chief Financial Officer performed an evaluation of the
      effectiveness of our disclosure controls and procedures as defined in Rule
      13a-15(e) or Rule 15d-15(e) under the Exchange Act. Based on that evaluation,
      our Chief Executive Officer and our Chief Financial Officer concluded that
      as of
      the end of the period covered by this report on Form 10-QSB, our disclosure
      controls and procedures were effective in timely recording, processing,
      summarizing and reporting material information required to be included in our
      Exchange Act filings.




**Changes
      in Internal Control Over Financial Reporting**




There
      were no changes in the Company’s internal control over financial reporting that
      occurred during the most recent fiscal quarter that have materially affected,
      or
      are reasonably likely to materially affect, its internal control over financial
      reporting for that period.







**PART
      II — OTHER INFORMATION**




**Item
      1.**  **Legal
      Proceedings.**




None.




**Item
      2.**  **Unregistered
      Sales of Equity Securities and Use of Proceeds.**




(a)
            Unregistered
                Sales of Equity Securities.




The
      Registrant did not sell any unregistered securities of the Registrant during
      the
      three-months ended June 30, 2006.




(b)
            Use
                of Proceeds.




On
      June
      15, 2006, the Securities and Exchange Commission declared effective the
      Company's registration statement on Form SB-2 (File No. 333-126158) relating
      to
      the offer and sale of 1,250,000 shares of the Company’s common stock, at a price
      of $0.65 per share. The aggregate price of the offering amount registered is
      $812,500, and as of June 30, 2006 no shares have been sold. The offering will
      terminate 120 days from the date of the prospectus and may be extended, at
      the
      Company’s discretion, for an additional 120 days. The offering has not
      terminated as of the filing of this report.





The
      offering is being conducted in a best efforts, no minimum, direct public
      offering without any involvement of underwriters or broker- dealers and the
      Company has not paid and will not pay commissions in connection with the sale
      of
      the shares. Since June 15, 2006 through the end of the period covered by this
      Report on Form 10-QSB, the Company’s offering expenses (all of which were
      incurred to persons other than our directors, officers or ten percent or greater
      stockholders) were $0.








**Item
      3.**  **Defaults
      Upon Senior Securities**




None.





**Item
      4.**  **Submission
      of Matters to a Vote of Security Holders.**




The
      Registrant did not submit any matters to a vote of its security holders during
      the three-months ended June 30, 2006.




**Item
      5.**  **Other
      Information.**




Not
      applicable.




**Item
      6.**  **Exhibits.**




(a)
      Exhibits.




**Exhibit**
            
            **Item**31.1
            
            Certification
                of Principal Executive and Principal Financial Officer pursuant to
                Section
                302(a) of the Sarbanes-Oxley Act of 200232.1*
            
            Certification
                of Principal Executive and Principal Financial Officer pursuant to
                Section
                302(a) of the Sarbanes-Oxley Act of
                2002


________________


*
      This
      exhibit shall not be deemed “filed” for purposes of Section 18 of the
      Securities Exchange Act of 1934 or otherwise subject to the liabilities of
      that
      section, nor shall it be deemed incorporated by reference in any filing under
      the Securities Act of 1933 of the Securities Exchange Act of 1934, whether
      made
      before or after the date hereof and irrespective of any general incorporation
      language in any filings.





**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.






SPUTNIK,
                INC.Date:August
                4, 2006
            By:
            /s/ David
                LaDuke(Authorized
                Officer and Principal Executive
                Officer)



















**EXHIBIT
      INDEX**






**Exhibit**
            
            **Item**31.1
            
            Certification
                of Principal Executive and Principal Financial Officer pursuant to
                Section
                302(a) of the Sarbanes-Oxley Act of 200232.1*
            
            Certification
                of Principal Executive and Principal Financial Officer pursuant to
                Section
                906 of the Sarbanes-Oxley Act of
                2002




________________


*
      This
      exhibit shall not be deemed “filed” for purposes of Section 18 of the
      Securities Exchange Act of 1934 or otherwise subject to the liabilities of
      that
      section, nor shall it be deemed incorporated by reference in any filing under
      the Securities Act of 1933 of the Securities Exchange Act of 1934, whether
      made
      before or after the date hereof and irrespective of any
      general