**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-QSB**





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




For
      the
      quarterly period ended September
      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 x  No ̈





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
      November 8, 2006, there were 13,798,612 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 September 30, 2006 (unaudited) and December 31, 2005
            3Statements
                of Operations for the Three and Nine Months Ended September 30, 2006
                and
                2005 (unaudited)
            4Statements
                of Cash Flows for the Nine Months Ended September 30, 2006 and 2005
                (unaudited)
            5Notes
                to Unaudited Financial Statements
            6Item
                2.
            Management’s
                Discussion and Analysis or Plan of Operation
            6Item
                3.
            Controls
                and Procedures
            12PART
                II.
            OTHER
                INFORMATIONItem
                1.
            Legal
                Proceedings
            12Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            12Item
                3.
            Defaults
                Upon Senior Securities
            13Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            13Item
                5.
            Other
                Information
            13Item
                6.
            Exhibits
            13Signatures
            
            14








**PART
      I — FINANCIAL INFORMATION**





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





SPUTNIK,
      INC.


BALANCE
      SHEETS


September
      30, 2006 and December 31, 2005


(unaudited)





September
                30, 2006
            
            December
                31, 2005ASSETSCurrent
                AssetsCash
            
            $
            13,399
            
            $
            26,782Accounts
                receivable
            
            
            2,472
            
            
            1,821Inventory
            
            
            22,413
            
            
            19,725Prepaid
                expensesand other assets
            
            
            3,067
            
            
            5,078Total
                Current Assets
            
            
            41,351
            
            
            53,406Property
                and equipment, net of accumulated depreciation of $7,374 and $2,682,
                respectively
            
            
            15,434
            
            
            8,399Deposit
            
            
            2,700
            
            
            2,700TOTAL
                ASSETS
            
            $
            59,485
            
            $
            64,505LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                LiabilitiesAccounts
                payable
            
            $
            36,836
            
            $
            38,840Accrued
                liabilities
            
            
            86,525
            
            
            21,766Total
                Current Liabilities
            
            
            123,361
            
            
            60,606Stockholders'
                Equity (Deficit)Common
                stock, $.001 par value, 50,000,000 shares authorized, 13,580,919
                and13,513,919
              shares
              issued and outstanding in 2006 and 2005, respectively
            
            
            13,581
            
            
            13,514Paid-in
                capital
            
            
            928,424
            
            
            884,941Retained
                deficit
            
            
            (1,005,881
            )
            
            (894,556
            )Total
                Stockholders' Equity (Deficit)
            
            
            (63,876
            )
            
            3,899TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
            
            $
            59,485
            
            $
            64,505




3




SPUTNIK,
      INC.


STATEMENTS
      OF OPERATIONS


Three
      and
      Nine Months Ended September 30, 2006 and 2005


(unaudited)





Three
                Months Ended
            
            Nine
                Months EndedSeptember
                30,
            
            September
                30,2006
            
            2005
            
            2006
            
            2005Revenue
            
            $
            125,607
            
            $
            137,487
            
            $
            393,694
            
            $
            390,128Cost
                of goods sold
            
            
            40,354
            
            
            70,780
            
            
            129,588
            
            
            189,621Gross
                profit
            
            
            85,253
            
            
            66,707
            
            
            264,106
            
            
            200,507ExpensesNon
                cash compensation
            
            
            -
            
            
            14,000
            
            
            -
            
            
            15,050General
                and administrative costs
            
            
            107,562
            
            
            35,338
            
            
            307,260
            
            
            190,507Research
                and development
            
            
            21,358
            
            
            21,310
            
            
            60,895
            
            
            57,188Depreciation
                and amortization
            
            
            2,987
            
            
            668
            
            
            4,692
            
            
            1,539Total
                operating expense
            
            
            (131,907
            )
            
            (71,316
            )
            
            (372,847
            )
            
            (264,284
            )Operating
                Loss
            
            
            (46,654
            )
            
            (4,609
            )
            
            (108,741
            )
            
            (63,777
            )Interest
                income/expense
            
            
            (1,353
            )
            
            (19
            )
            
            (2,584
            )
            
            (2,001
            )Other
                income
            
            
            -
            
            
            -
            
            
            -
            
            
            61,000NET
                LOSS
            
            $
            (48,007
            )
            $
            (4,628
            )
            $
            (111,325
            )
            $
            (4,778
            )Basic
                and diluted loss per share
            
            
            ($
                0.00
            )
            
            ($
                0.00
            )
            
            ($
                0.01
            )
            
            ($
                0.00
            )Weighted
                average shares outstanding
            
            
            13,556,158
            
            
            13,448,919
            
            
            13,528,153
            
            
            13,448,919





4


SPUTNIK,
      INC.


STATEMENTS
      OF CASH FLOWS


Nine
      Months Ended September 30, 2006 and 2005


(unaudited)





2006
            
            2005Cash
                Flows from Operating ActivitiesNet
                loss
            
            $
            (111,325
            )
            $
            (4,778
            )Adjustments
                to reconcile net loss to cash from operating activities:Depreciation
            
            
            4,692
            
            
            1,539Stock
                issued for services
            
            
            -
            
            
            15,050Changes
                in working capital:Accounts
                receivable
            
            
            (651
            )
            
            5,035Inventory
            
            
            (2,688
            )
            
            3,541Prepaid
                expenses & other current assets
            
            
            2,011
            
            
            20Accounts
                payable and accrued liabilities
            
            
            (5,943
            )
            
            (18,617
            )Net
                cash used in operating activities
            
            
            (113,904
            )
            
            1,790Cash
                Flows from Investing ActivitiesPurchase
                of property and equipment
            
            
            (11,727
            )
            
            (7,011
            )Cash
                Flows from Financing ActivitiesLine
                of credit
            
            
            68,698
            
            
            (70,818
            )Proceeds
                from sale of stock
            
            
            43,550
            
            
            81,000Net
                cash provided by financing activities
            
            
            112,248
            
            
            10,182Net
                change in cash
            
            
            (13,383
            )
            
            4,691Cash
                at beginning of period
            
            
            26,782
            
            
            8,571Cash
                at end of period
            
            $
            13,399
            
            $
            13,532Supplemental
                Disclosures of Cash Flow InformationCash
                paid during the period for interest
            
            $
            -
            
            $
            -Cash
                paid during the period for taxes
            
            $
            -
            
            $
            -Supplemental
                Non-cash Investing and Financing InformationStock
                issued for debt
            
            $
            -
            
            $
            763,441Shares
                returned for settlement
            
            $
            -
            
            $
            1,100





5


SPUTNIK,
      INC.


Notes
      to
      Financial Statements


(unaudited)





NOTE
      1 -
      BASIS OF PRESENTATION





The
      accompanying unaudited interim financial statements of Sputnik, Inc. 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 filed with the SEC on form SB-2/A. 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 11%. At September 30, 2006, $68,698 was owed.





**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 “Risk Factors”
below.*




The
      following discussion of our financial condition and results of operations as
      of
      September 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.





6


Results
      of Operations for the Three Months Ended September 30, 2006 Compared to the
      Three Months Ended September 30, 2005





We
      had
      revenue of $125,607 for the three months ended September 30, 2006, which was
      a
      decrease of $11,880 from our revenue for the three months ended September 30,
      2005, which was $137,487. Our
      revenue decreased as a result of lower sales of hardware, combined with higher
      sales of software subscriptions which are recognized monthly over the period
      of
      the subscriptions. 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
      September 30, 2005 quarter, revenues broke down as follows: 74% hardware, 15%
      software, 10% software subscriptions, and 1% services. In the September 30,
      2006
      quarter, revenues broke down as follows: 41% hardware, 27% software, 29%
      software subscriptions, and 3% 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 $30,426, to $40,354, for the three months ended
      September 30, 2006, as compared to cost of goods sold of $70,780 for the three
      months ended September 30, 2005.  Our cost of goods sold decreased as a
      direct result of lower sales of our hardware products.





We
      had
      gross profit of $85,253 for the three months ended September 30, 2006, which
      was
      an increase of $ $18,546 when compared to our gross profit for the three months
      ended September 30, 2005, which was $ 66,707. Our increase in gross profit
      was
      attributable to higher sales of software and subscriptions, higher margin
      products. Our gross margin increased from 49% for the three months ended
      September 30, 2005 to 68% for the three months ended September 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 $60,591, to $131,907 for the three months ended
      September 30, 2006, as compared to operating expenses of $71,316 for the three
      months ended September 30, 2005. Our operating expenses for the three months
      ended September 30, 2005 included $14,000 in non cash compensation, which was
      not a cost for us in the three months ended September 30, 2006. Our operating
      expenses for the three months ended September 30, 2006 included $107,562
      in general and administrative expenses, a $72,224 increase over general and
      administrative expenses of $35,338 for the three months ended September 30,
      2005 ;
      $21,358
      in research and development expenses, a $48 increase over research and
      development expenses of $21,310 for the three months ended September 30, 2005;
      and depreciation and amortization expense of $2,987 compared to $668 for the
      three months ended September 30, 2005. We compensated consultants and employees
      with cash, and did not issue equity for compensation in the three months ended
      September 30, 2006, which resulted in increases in general and administrative
      expenses and research and development expenses in the three months ended
      September 30, 2006 versus the three months ended September 30, 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 an increase in net interest expense of $1,334, to
      $ 1,353
      for
      the three months ended September 30, 2006, as compared to net interest expense
      of $19 for the three months ended September 30, 2005 .





We
      had a
      net loss of $48,007 for the three months ended September 30, 2006, which
      represented an increase of $43,379 from our net loss for the three months ended
      September 30, 2005, which was $4,628.





Results
      of Operations for the Nine Months Ended September 30, 2006 Compared to the
      Nine
      Months Ended September 30, 2005





We
      had
      revenue of $393,694 for the nine months ended September 30, 2006, which was
      an
      increase of $3,566 from our revenue for the nine months ended September 30,
      2005, which was $390,128. 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 nine months ended September 30, 2005 revenues
      broke down as follows: 70% hardware, 21% software, 7% software subscriptions,
      and 1% services. In the nine months ended September 30, 2006 revenues broke
      down
      as follows: 47% hardware, 28% software, 23% software subscriptions, and 1%
      services. Profit margins on the resale of hardware ranges from 20% for
      antennas to 40% for Wi-Fi access points.





7


Our
      cost
      of goods sold decreased $60,033, to $129,588, for the nine months ended
      September 30, 2006, as compared to cost of goods sold of $189,621 for the nine
      months ended September 30, 2005.  Our cost of goods sold decreased as a
      direct result of lower sales of our hardware products.





We
      had
      gross profit of $264,106 for the nine months ended September 30, 2006, which
      was
      an increase of $60,033 when compared to our gross profit for the nine months
      ended September 30, 2005, which was $200,507. Our increase in gross profit
      was
      attributable to higher sales of software and subscriptions. Our gross margin
      increased from 51% for the nine months ended March 31, 2005 to 67% for the
      nine months ended September 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 $108,563, to $372,847 for the nine months ended
      September 30, 2006, as compared to operating expenses of $264,284 for the nine
      months ended September 30, 2005. Our operating expenses for the nine months
      ended September 30, 2005 included $15,050 in non cash compensation, which was
      not a cost for us in the nine months ended September 30, 2006. Our operating
      expenses for the nine months ended September 30, 2006 included $307,260 in
      general and administrative expenses, a $116,753 increase over general and
      administrative expenses of $190,507 for the nine months ended September 30,
      2005; $60,895 in research and development expenses, a $3,707 increase over
      research and development expenses of $57,188 for the nine months ended September
      30, 2005; and depreciation and amortization expense of $4,692 compared to $1,539
      for the nine months ended September 30, 2005. We compensated consultants and
      employees with cash, and did not issue equity for compensation in the nine
      months ended September 30, 2006, which resulted in increases in general and
      administrative expenses and research and development expenses in the nine months
      ended September 30, 2006 versus the nine months ended September 30, 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 an increase in net interest expense of $583, to $2,584 for the nine
      months ended September 30, 2006, as compared to interest expense of $2,001
      for
      the nine months ended September 30, 2005. In the nine months ended September
      30,
      2005 we had other income of $61,000 due to a legal settlement; there was no
      such
      other income in the nine months ended September 30, 2006.





We
      had a
      net loss of $111,325 for the nine months ended September 30, 2006, which
      represented increase of $106,547 from our net loss for the nine months ended
      September 30, 2005, which was $4,778.





Liquidity
      and Capital Resources





We
      had
      total assets of $59,485 as of September 30, 2006, which consisted of total
      current assets of $41,351, which included cash of $13,399, accounts receivable
      of $2,472, inventory of $22,413 and prepaid expenses of $3,067. Other assets
      included property and equipment of $15,434, and deposit of $2,700.





We
      had
      total liabilities of $123,361 as of September 30, 2006, which consisted solely
      of current liabilities and included $36,836 of accounts payable, and $86,525
      of
      accrued liabilities.  Our bank revolving line of credit had a balance of
      $68,698 at September 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 11% as of
      September 30, 2006.





We
      had a
      retained deficit of $1,005,881 as of September 30, 2006.





We
      had
      net cash used in operating activities of ($113,904) for the nine months ended
      September 30, 2006, which consisted of net loss of ($111,325), depreciation
      of
      $4,692, changes in accounts receivable of ($651), inventory of ($2,688), prepaid
      expenses and other current assets of $2,011, and accounts payable and accrued
      liabilities of ($5,943).





We
      had
      net cash used by investing activities of ($11,727) for the nine months ended
      September 30, 2006, which consisted solely of purchase of property and equipment
      of ($11,727).





We
      had
      $112,248 in net cash provided by financing activities for the nine months ended
      September 30, 2006, which consisted of an advance on the line of credit of
      $68,698 and proceeds from sale of stock of $43,550.





8


On
      January 5, 2005, we sold 810,000 shares of our Common Stock in a private
      offering to Twelve (12) individuals in
      consideration for an aggregate amount of $81,000.
      The price per share was $.10 in this private offering. These shares were
      issued in May 2005.





On
      April
      8, 2005, we issued 150,500 shares of our Common Stock to Seven (7)
      individuals in consideration for consulting services provided to us in
      connection with software development, higher education market advisory,
      sales, legal advice, software development and operations.  We valued
      these shares at $.10 per share, $15,050 in total, by assigning a minimal
      value based on our limited operating history.





In
      May
      2005, we issued 6,894,061 shares that had been committed in prior years.
      These shares were valued at $682,441.





As
      of
      September 30, 2006, we sold 67,000 shares of our Common Stock in consideration
      for an aggregate amount of $43,550. The shares were sold pursuant to our
      prospectus dated June 15, 2006. The price per share was $.65.





Historically,
      our cash has been provided by collection of sales revenues and short-term bank
      line of credit bearing an interest rate of 11% at September 30, 2006. The only
      major outstanding cash commitments as of September 30, 2006 was 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:




9




·
            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.*





**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
      $82,010 and an accumulated deficit of $1,005,881 as of September 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.




10


**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
      September 30, 2006, there were 3,330,919 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. Of the shares currently
      owned by non-affiliates, 919,358 may currently be resold without restriction
      as
      they have been held two or more years. An additional 67,000 shares may currently
      be resold without restriction as they were shares sold pursuant to the offering
      described in our Prospectus dated June 15, 2006. 3,638,889 shares
      held by our officers and directors are 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.





11


**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 during the three months
      ended September 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. As of September
      30, 2006, 67,000 shares have been sold with $43,550 in aggregate proceeds,
      of
      which $10,000 was used to pay offering costs and $33,550 was used to pay down
      the Company’s outstanding 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 11%. At September
      30, 2006, $68,698 was outstanding under the line of credit. To the extent
      amounts are outstanding, the Company may use additional proceeds from the
      offering to pay amounts under the line of credit. The offering has been extended
      for an additional 120 days, thus terminating on February 10, 2007. 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.





12


**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 September 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.





13




**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:November
                8, 2006
            By:
            /s/ David
                LaDuke(Authorized
                Officer and Principal Executive
                Officer)




14


**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




15