ATI Networks, Inc. and Subsidiary
Consolidated Financial Statements
For the Years Ended December 31, 1999 and 1998
With Independent Auditors' Report

Financial Data Schedule

Independent Auditors Report                 F-(1)

Consolidated Financial Statements:

Balance Sheets                              F- (2)

Statements of Operations                    F- (3)

Statements of Stockholders' Equity          F - (4)

Statements of Cash Flows                    F - (5)

Notes to Consolidated Financial Statements  F - (6)


INDEPENDENT AUDITORS' REPORT


TO THE BOARD OF DIRECTORS and SHAREHOLDERS of
ATI Networks, Inc.

We have audited the accompanying consolidated balance sheets of
ATI Networks,
Inc. and Subsidiary (the "Company") as of December 31, 1999 and
1998,and the
related consolidated statements of operations, statements of
stockholders'
deficit and cash flows for the years then ended. These
consolidated financial
statements are the responsibility of management. Our
responsibility is to
express an opinion on these consolidated financial statements
based on our
audits.


We conducted our audits in accordance with generally accepted
auditing
standards. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the
consolidated financial
statements are free of material misstatement. An audit includes
examining, on
a test basis, evidence supporting the amounts and disclosures in
the
consolidated financial statements. An audit also includes
assessing the
accounting principles used and significant estimates made by
management, as
well as evaluating the overall financial statement presentation.
We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above
present fairly, in all material respects, the consolidated
financial
position of ATI Networks, Inc. and Subsidiary as of December 31,
1999 and 1998,
and the results of its operations and its cash flows for the years
then ended
in conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been
prepared
assuming that the Company will continue as a going concern.  As
discussed in
Note A to the consolidated financial statements, the Company has
incurred
recurring losses from operations and is in default of their bank
loan
and will require additional capital to fund its operations.  These
matters
raise doubt about the Company's ability to continue as a going
concern.
Management's plans regarding these matters are also described in
Note A. The
consolidated financial statements do not include any adjustments
that might
result from the outcome of this uncertainty.

As described in Note J to the consolidated financial
statements,the
accumulated deficit at the beginning of 1998 has been adjusted.

/s/ HOFFMAN, MORRISON & FITZGERALD, P.C.

McLean, Virginia
April 28, 2000

A. ORGANIZATION AND FINANCING

The Company
ATI Networks, Inc. and its wholly owned subsidiary, ATI, Inc. is a
US based,
public company that is building a global e-business. The companies
products are
used for business advertising, wireless communications over the
Internet,
tracking of wireless devices, and entertainment. The principal
markets for
the company's products are small to medium size businesses,
companies with
mobile staff and other mobile assets, and the general public.

Financing
The Company is a development stage company and has incurred
recurring losses
from operations, and is currently in default on their bank loan,
(see Note C).
It will require additional capital to fund it operations to meet
its on-
going obligations for 2000. Management believes they will be
successful in
their efforts to obtain such financing. There can be no assurance
that the
company will not incur additional losses, or will not require
significant
amounts of additional capital. The accompanying consolidated
financial
statements have been prepared assuming the Company will continue
as a going
concern. The accompanying consolidated financial statements do not
include
any adjustments that might result from the outcome of these
uncertainties.


B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation - The accompanying consolidated
financial
statements present the consolidation of the financial statements
of ATI Networks, Inc. and its wholly-owned subsidiary, ATI, Inc.
Material intercompany transactions and balances have been
eliminated in the
consolidation.

Basis of accounting  - The accounts of the Company are maintained
on the
accrual basis of accounting whereby revenue is recognized when
earned, and
costs and expenses are recognized when incurred.

Use of estimates and assumptions - Management uses estimates and
assumptions
in preparing consolidated financial statements in accordance with
generally
accepted accounting principles. Those estimates and assumptions
affect the
reported amounts of assets and liabilities, the disclosure of
contingent
assets and liabilities, and the reported revenues and expenses.
Actual
results could vary from those estimates.

Accounts receivable - The Company uses the allowance method to
account for amounts, if any, of its accounts receivable which are
considered uncollectible. The Company grants unsecured credit to
its
United States customers.

Cash and cash equivalents - For purposes of the statement of cash
flows, the
Company considers investments held in money funds to be cash
equivalents.

Inventories - Inventories, consisting of computer software and
hardware, are
stated at the lower of cost, determined on the first-in, first-out
method, or
market.

Property and equipment - Property and equipment are stated at
cost.
Expenditures for additions and improvements are capitalized while
replacements, maintenance and repairs which do not improve or
extend the lives of the respective assets are expensed currently
as incurred.
Depreciation is provided over the estimated useful lives, ranging
from 3-10 years, of the respective assets, using the straight-line
method.

Advertising - Advertising costs are charged to operations as
incurred.  For
the years ended December 31, 1999 and 1998, amounts charged to
operations
were $37,093 and $4,667, respectively.

Revenue recognition - Revenue is principally derived from sales of
licenses
for the Company's proprietary software, advertising on the
Company's
websites and commissions and fees relating to website activity.
The revenue
generated is recognized when the products are shipped or the
services have
been rendered.

Income Taxes  - The Company, a C-corporation, accounts for income
taxes
under Statement of Financial Accounting Standards ("SFAS") No.
109,
"Accounting for Income Taxes." Under this method, deferred tax
assets
and liabilities are determined based on differences between the
financial
reporting and tax basis of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when
the
differences are expected to reverse. Valuation allowances are
established when
necessary to reduce deferred tax assets to the amount expected to
be realized.
The principal differences are net operating loss and capital loss
carryforwards and the use of accelerated depreciation methods to
calculate
depreciation expense for income tax purposes.

Software development costs - SFAS No. 86, "Accounting for the
Costs of
Computer Software to be Sold, Leased or Otherwise Marketed",
requires
capitalization of certain software development costs subsequent to
the
establishment of technological feasibility and readiness of
general release.
Costs incurred by the Company between the completion of
technological
feasibility and general release have been insignificant and have
been expensed
in the accompanying consolidated financial statements.

Net loss per common share - The Company reports basic and diluted
earnings
per share ("EPS") according to the provisions of SFAS No. 128,
"Earnings Per
Share."  SFAS No. 128 requires the presentation of basic EPS and,
for
companies with complex capital structures, diluted EPS.  As the
Company has
common stock and common stock equivalents outstanding, basic and
diluted EPS
are presented.  Basic EPS excludes dilution and is computed by
dividing net
income (loss) available to common stockholders by the weighted
average number of
common shares outstanding during the period.  Diluted EPS is
computed by
dividing net income (loss) available to common stockholders,
adjusted by any
convertible preferred dividends; the after-tax amount of interest
recognized
in the period associated with any convertible debt; and any other
changes in
income or loss that would result from the assumed conversion of
those
potential common shares, by the weighted number of common shares
and common
share equivalents (unless their effect is anti-dilutive)
outstanding.

Capital Structure - SFAS No. 129, "Disclosure of Information about
Capital Structure," requires a summary presentation of the
pertinent
rights and privileges of the various securities outstanding. The
Company's
outstanding stock is completely comprised of voting common stock.
There are
no other rights or privileges to disclose.  In addition, entities
are
required to disclose the number of shares issued upon conversion,
exercise, or
satisfaction of required conditions during the periods presented.
See Note H
for the options granted during 1998 and 1999 in accordance with
the Company's
Stock Option Plan.

Comprehensive Income - During 1998, the Company adopted Statement
of
Financial Accounting Standard (SFAS) No. 130, "Reporting
Comprehensive
Income."  This pronouncement established standards for reporting
and display
of comprehensive income and its components in the financial
statements.
Comprehensive income is defined as the change in equity of a
business
enterprise during a period from transactions and other events and
circumstances from non-owner sources. Accordingly, the Company has
modified
the presentation of its consolidated financial statements to
present the
elements of comprehensive income, which included net income and
unrealized
losses on available-for-sale securities.



B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Stock-based compensation - In October 1995, the FASB issued SFAS
No. 123,
"Accounting for Stock-Based Compensation", which encourages
companies to
recognize expense for stock-based awards based on their estimated
fair value
on the grant.  SFAS is effective beginning with the year ending
December 31,
1996.  SFAS No. 123 permits companies to account for stock-based
compensation
based on provisions prescribed in SFAS No. 123 or based on the
authoritative
guidance in Accounting Principles Board Opinion No. 25,
"Accounting for Stock
Issued to Employees".  The Company has elected to continue to
account for its
stock based compensation in accordance with APB 25 which uses the
intrinsic
value method, however, as required by SFAS No. 123, the Company
has disclosed
the pro forma impact on the financial statements assuming the
measurement
provisions of SFAS No. 123 had been adopted. The Company accounts
for all
other issuances of equity instruments in accordance with SFAS No.
123.

Segment Information - Effective for financial statements for
periods
beginning after December 15, 1997, the FASB issued SFAS No. 131,
"Disclosure
about Segments of an Enterprise and Related Information."
This pronouncement requires public enterprises to report certain
information about operating segments, including products and
services,
geographic areas of operations, and major customers.  The Company
has
determined that it does not have any separately reportable
business
segments for the years ended December 31, 1999 and 1998.

NEW ACCOUNTING PRONOUNCEMENTS:

Derivatives Instruments and Hedging Activities - In June 1998, the
FASB
issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging
Activities."  It establishes accounting and reporting standards
for derivative instruments, including certain derivative
instruments embedded
in other contracts and for hedging activities.  It requires that
an entity
recognize all derivatives as either assets or liabilities in the
balance sheet
and measure those instruments at fair value.  The FASB has
recently issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities-
Deferral of Effective Date of FASB Statement No. 133."  The
Statement defers
for one year the effective date of SFAS No. 133.  Management
believes that the
adoption of this standard will not have a material effect on the
Company's
financial position or results of operations.

C. REVOLVING LINE OF CREDIT

The Company had a $50,000 line-of-credit with Bank One of Fond du
Lac,
which was due May 1998.  Interest was payable monthly at prime
plus
1/2%.  The line-of-credit was collateralized by a general business
security agreement and personal guarantee of the majority
shareholder.  The
line-of-credit was paid off during 1998.

In September 1998, the Company signed another agreement for a
$250,000
line-of-credit with Firstar Bank of Wisconsin.  Accrued interest
and
outstanding principal was due and payable September 1999. The line-
of-credit
is ollateralized by a general business security agreement.
Outstanding borrowings, including interest and other charges,
under this
line-of-credit amounted to $269,602 and $200,238 at December 31,
1999 and
1998, respectively. As of December 31, 1999 the Company is in
default under
the terms of the agreement. On March 30, 2000, the Company entered
into an
agreement with the bank consenting to a money judgment of
$287,309, under
which the bank consented to wait to docket and execute on the
judgment until
after May 31, 2000.

D. COMMITMENTS AND CONTINGENCIES

 Capital lease obligationsThe Company leases certain equipment
held under
capital lease agreements expiring in 2002. The assets and
liabilities under
capital leases are recorded at the lower of the present value of
the minimum
lease payments or the fair value of the asset. The assets are
amortized over
their estimated productive lives.  Amortization of assets under
capital leases
is included in depreciation and amortization expense.

Future minimum lease payments due under the capital lease
agreement as
of December 31, 1999 are as follows:

Year ending December 31:
2000 $ 3,762
2001   1,173
2002     684

Total minimum lease payments
       5,619
 Less: amount representing interest
        (861)
       4,758
 Less: current portion
      (3,043)
Long-term capital lease obligations
     $ 1,715


D. COMMITMENTS AND CONTINGENCIES (continued)

Operating leaseThe Company leases its office facilities under a
month-to-month operating lease.  Rent expense under all operating
leases
amounted to $7,200 for the years ended December 31, 1999 and 1998.

Partnering agreementThe Company has entered into a partnering
agreement with
Sybesma Research, LLC ("Sybesma"), whereby Sybesma reimbursed the
Company for
approximately $157,000 of software development costs incurred by
the Company
for their LogiTrak and NaviQuest software.  The Company is
obligated to pay a
royalty to Sybesma equal to 15% of gross profits from their sale
of these
software products.

E. INCOME TAXES

The benefit for income taxes is as follows for the years ended
December 31:

                               1999   1998
Current                        $ -    $ -
Deferred                         -      -

Total benefit for income taxes $ -    $ -

A reconciliation of income tax at the statutory rate to the
Company's
effective rate is as follows for the periods ended December 31:

                                             1999      1998

Computed at the expected statutory rate $ (81,700) $ (78,500)
State income tax - net of Federal
 tax benefit                              (11,900)   (11,500)
Other, net                                    200        600
Less valuation allowance                   93,400     89,400

 Total benefit for income taxes               $ -        $ -


E. INCOME TAXES (continued)

Deferred tax assets and liabilities are as follows as of December
31:

                                            1999   1998

 Deferred tax assets:
  Net  operating loss carryforwards $  525,700 $ 468,600
  Capital loss carryforwards             9,800     9,800
  Accrued vacation                       1,000     1,000
  Accrued payroll                       63,500    27,400
   Gross deferred tax assets           600,000   506,800

 Deferred tax liabilities:
  Depreciation and amortization         (5,300)   (5,600)

 Valuation allowance                  (594,700) (501,200)

Net deferred taxes                         $ -       $ -

The change in the valuation allowance for the years ended December
31,
1999 and 1998 was $93,400 and $89,400 (as adjusted to reflect the
prior-period adjustment, see Note J), respectively.

At December 31, 1999 and 1998, the Company had net operating loss
carryforwards of approximately $1,338,000 and $1,193,000
respectively,
for federal and State income tax purposes, which expire through
2019.

F. RELATED PARTY TRANSACTIONS

As of December 31, 1999 and 1998, the balance of amounts due from
the
President of the Company was $60,000.

G. EMPLOYEE INCENTIVE COMPENSATION PLAN

The Company has an incentive plan for the purpose of providing
incentive
compensation to officers and employees ("Plan"). The Plan provides
that 25%
of net income as defined in the Plan shall be placed in the
Employee
Incentive Fund, to be distributed to employees in amounts to be
determined,
at the sole discretion of the Employee Incentive Compensation
Committee.

Participants in the Plan include all officers upon their initial
hire date and
all salaried employees upon their completion of 12 months
employment with the
Company.  The Board of Directors reserves the right to amend,
modify, suspend,
or discontinue the Plan at any time.

There were no Company payments made under the Plan during the
years
ended December 31, 1999 and 1998.

H. STOCK OPTION PLAN

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

The following is a summary of stock option plan activity for the
years
ended December 31, 1999 and 1998:
                   1999     1998
 Shares:
  Granted         5,000     5,000
  Exercised    (146,590)  (20,000)
  Canceled            -   (76,000)

 December 31:
  Outstanding 6,803,410 6,945,000
  Exercisable 6,077,010 5,407,200

 Average exercise price per share
  Granted            $1.00     $5.00
  Exercised          $0.10     $0.10
  Canceled            -        $3.25

 December 31:
  Outstanding        $1.28     $1.26
  Exercisable        $1.25     $1.14

Stock options outstanding at December 31, 1999 and 1998 had a
range of
exercise prices of $.10 to $5.00 and an average remaining
contractual life of
four years and five years, respectively.

Options outstanding at the beginning of the year ended December
31,
1998 have been restated and total 7,036,000.

Options outstanding with an exercise price of less than $1.00
totaled
6,108,410, of which 5,526,410 were exercisable at December 31,
1999.
The remaining 695,000 options outstanding had a price of $1.00 or
greater, of which 550,600 were exercisable at December 31, 1999.
The weighted-average remaining contractual life for each of these
groups of options was two years and six years, respectively.


H. STOCK OPTION PLAN (continued)

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

If the Company had elected to recognize compensation expense based
on
the value at the grant dates with the method prescribed by SFAS
123; net loss
would have been changed to the proforma amounts indicated in the
table below:

 For the year ended December 31, 1999:

                         Reported     ProForma

Net Loss                $(239,840)   $(373,939)
Basic and diluted
earnings per share             $(.08)       $(.12)

 For the year ended December 31, 1998:

                         Reported     ProForma

Net Loss                $(230,915)   $(364,014)
Basic and diluted
earnings per share             $(.08)       $(.13)

For the years ended December 31, 1999 and 1998, the fair value of
the
stock has been estimated using the Black-Scholes option pricing
model
with the following assumptions: risk free interest rate of 5.65%
and
5.26%, expected volatility of 516% and 139%, a dividend payout
rate of
0% and an expected option life of 10 years.


I. SHARE EXCHANGE WITH WATERFORD INTERNATIONAL, INC.

ATI, Inc. and Waterford International, Inc. ("Waterford") entered
into a Plan
of Share Exchange (the "Plan") dated as of April 21, 1998.
Shareholders of ATI, Inc., a privately-owned company, exchanged
all of the
outstanding common shares of ATI, Inc. for an equal number of
common shares of
Waterford, a publicly-held company.  As of the date of the share
exchange
Waterford International, Inc. was a non-operating public shell
corporation
with no net assets.  In addition, ATI, Inc. paid $35,000 that was
distributed
to an existing shareholder of Waterford in exchange for shares
distributed to
shareholders of ATI, Inc.  Pursuant to the Plan, ATI, Inc. became
a
wholly-owned subsidiary of Waterford.  Subsequent to the share
exchange,
Waterford changed its name to ATI Networks, Inc. Subsequent to the
share exchange, shareholders of ATI, Inc. immediately prior to the
share exchange, owned approximately 86% of Waterford.  Pursuant to
accounting interpretations and guidance issued by the Division of
Corporation
Finance of the SEC, the share exchange was treated as a capital
transaction
in substance, rather than a business combination.  Accordingly,
the
accompanying consolidated financial statements reflect the
activities of ATI,
Inc. prior to the date of the share transfer.

J. PRIOR-PERIOD ADJUSTMENT

The accumulated deficit at the beginning of 1998 has been adjusted
to
correct an error in the amount of capitalized software development
costs and
a related item for the liability for shared development costs
previously
shown as deferred revenue in the balance sheets of the wholly-
owned
subsidiary as of December 31, 1997 and 1996.  The accumulated
deficit, as of
the beginning of 1998 has been increased by $321,778 due to this
prior period
adjustment.  The impact of this change on 1997 and 1996 is as
follows:

                                        Accumulated     Net
Earnings
                                        Deficit         Loss
Per

Share
As previously stated, December 31, 1996 $ (595,299) $ (129,627)
$(.05)
Adjustment:
 Write-off of capitalized software
 development costs and deferred
 revenue, net                             (114,470)   (114,470)

As restated, December 31, 1996          $ (709,769) $ (244,097)
$(.10)

As previously stated, December 31, 1997,
 including 1996 adjustments             $ (889,595) $ (179,826)
$(.07)
Adjustment:
 Write-off of capitalized software
 development costs and deferred
 revenue, net                             (207,308)   (207,308)

As restated, December 31, 1997        $ (1,096,903) $ (387,134)
$(.15)


K. NET LOSS PER COMMON SHARE

As required by SFAS No. 128, the following is a reconciliation of
the basic
and diluted EPS calculations for the periods presented:


                             December 31,   December 31,
                                 1999          1998

Net loss (numerator)       $ (239,840)   $ (230,915)
Weighted average share
(denominator)               3,148,659     2,906,351
Basic net loss per share       $ (.08)       $ (.08)
Dilutive shares
(denominator)               3,148,659     2,906,351
Diluted net loss per share     $ (.08)            $ (.08)

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

L. SUBSEQUENT EVENTS

On March 7, 2000, the Company received, for nominal consideration,
$10 million in estimated value of media credits from a marketing
company.  The Company subsequently conveyed the media credits to
another
company, which is consolidating such media credits for potential
future
gain, in exchange for 10 partnership units.



FINANCIAL STATEMENTS


ATI Networks Inc. and Subsidiary
Consolidated Balance Statements
For the Years Ended December 31, 1998 and 1999

                                                 1999      1998
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                    $  1,001   $14,822
Accounts receivable, net                       15,000     1,175
Inventories                                       896       375
Prepaid expenses                                   -        662
Total current assets                           16,897    17,034

PROPERTY AND EQUIPMENT:
Equipment                                      73,770    73,098
Furniture and fixtures                          8,432     8,432
                                               82,202    81,530
Less: accumulated depreciation and amortization(56,740) (47,743)
Property and equipment, net                    25,462    33,787
DUE FROM OFFICER/STOCKHOLDER                   60,000    60,000

OTHER ASSETS:
Security deposit                                  647       647
                                           $  103,006  $111,468

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Note payable                               $  269,602  $200,238
Capital lease obligations                       3,043     3,070
Accounts payable and accrued expenses          49,055    23,738
Accrued salaries- officer/stockholders        164,583    73,666
Total current liabilities                     486,283   300,712

Capital lease obligations                       1,715     2,183
Total liabilities                             487,998   302,895

Stockholders' deficit:
Series A convertible preferred stock, $100 par value;
authorized 20,000,000 shares; none issued
and outstanding                                    -        -

Common stock, no par value
Class A - authorized 20,000,000; 3,233,030 and
3,059,357 issued and outstanding for 1999
and 1998, respectively                      1,192,325 1,136,391

Class B - authorized 20,000,000; none issued
and outstanding                                    -        -

Less: stock subscription receivable for
Class A common stock                         (9,659)        -

Accumulated deficit                      (1,567,658) (1,327,818)
Total stockholders' deficit                (384,992)   (191,427)
                                           $103,006    $111,468

The accompanying notes are an integral part of these consolidated
financial statements.

2

ATI Networks, Inc. and Subsidiary
Consolidated Statements of Operations
For the Years Ended December 31, 1999 and 1998

                                               1999          1998

Net sales:
Software                                  $  34,234     $  36,105
Websites                                      5,000         4,100
Other                                         6,483         1,219
Total net sales                              45,717        41,424

Operating expenses:
Cost of sales                                13,604        28,270
Research and development                     27,230        15,683
Sales and marketing                          57,016        34,847
General and administrative                  147,279       155,735
Depreciation and amortization                11,825        13,439
Total operating expenses                    256,954       247,974

LOSS FROM OPERATIONS                       (211,237)     (206,550)

OTHER INCOME (EXPENSES):
Loss on sale of investments                      -        (15,953)
Gain on disposal of property and equipment      100           342
Dividend and interest income                     72           238
Interest expense                            (28,775)       (8,992)
Total other expenses                        (28,603)      (24,365)

NET LOSS                                  $(239,840)    $(230,915)

Net loss per common share (basic and diluted)$(0.08)       $(0.08)

Weighted average number of common
shares outstanding                        3,148,659     2,906,351

The accompanying notes are an integral part of these consolidated
financial statements.

3

ATI Networks, Inc. and Subsidiary
Consolidated Statements of Stockholders' Deficit
For the Years Ended December 31, 1999 and 1998

                                              Accumulated
                                                 other
Shares       Common   Accumulated  Stock      comprehensive
Outstanding   Stock   Deficit     Subscriptions  income      Total

Balance, December 31, 1997

2,597,840 $ 1,126,391   $(775,125)    $ -      $ (16,800)
$334,466

Prior period adjustment (see Note J)
   -           -         (321,778)      -         -
(321,778)

Restated Balance, December 31, 1997
2,597,840   1,126,391  (1,096,903)      -       (16,800)
12,688

COMPREHENSIVE INCOME:
Realized loss on sale of investments

    -           -            -          -        16,800
16,800

Net loss
    -           -        (230,915)      -         -
(230,915)

Total comprehensive income
    -           -        (230,915)      -        16,800
(214,115)

Stock issuances
   12,000      30,000        -          -         -
30,000

Stock issuances in lieu of cash for compensation
   12,000      13,000        -          -         -
13,000

Exercise of stock options
   20,000       2,000        -          -         -
2,000

Share exchange (see Note I)
  417,517     (35,000)       -          -         -
(35,000)


Balance, December 31, 1998

3,059,357 $ 1,136,391 $ (1,327,818)   $ -       $ -
$(191,427)

Stock issuances
      300       1,200        -          -         -
1,200

Stock issuances in lieu of cash for compensation
   26,783      40,075        -          -         -
40,075

Exercise of stock options
  146,590      14,659        -      (9,659)       -
5,000

Net loss (comprehensive net loss)
      -           -       (239,840)     -         -
(239,840)


Balance, December 31, 1999

3,233,030 $ 1,192,325 $ (1,567,658)$(9,659)    $  -       $
(384,992)

The accompanying notes are an integral part of these consolidated
financial statements.
4

ATI Networks, Inc. and Subsidiary
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1999 and 1998

                                                  1999
1998
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss                                   $  (239,840)
$(230,915)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization                   11,825
13,439
Gain on disposal of property and equipment        (100)
(342)
Loss on sale of investments                         -
15,953
Stock issued for services in lieu of cash       40,075
13,000

Change in assets and liabilities affecting operations:
Accounts receivable, net                       (13,825)
6,938
Inventories                                       (521)
9,675
Prepaid expenses                                   662
714
Security deposit                                     -
(647)
Accounts payable and accrued expenses           25,317
3,296
Accrued salaries- officer/stockholders          90,917
73,666

Net cash used in operating activities          (85,490)
(95,223)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investments                   -
4,847
Purchases of property and equipment               (340)
(4,230)
Increase in amounts due from officer/stockholder    -
(60,000)
Net cash used in investing activities             (340)
(59,383)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of note payable                          -
(50,000)
Proceeds from note payable                      69,364
200,238
Payments on capital lease obligations           (3,555)
(2,748)
Payment made for share exchange                     -
(35,000)
Proceeds from capital stock issuances            6,200
32,000
Net cash provided by financing activities       72,009
144,490

CHANGE IN CASH AND CASH EQUIVALENTS            (13,821)
(10,116)

CASH AND CASH EQUIVALENTS, beginning of year    14,822
24,938

CASH AND CASH EQUIVALENTS, end of year        $  1,001    $
14,822

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest                        $ 28,775    $
8,992

NON-CASH INVESTING AND FINANCING ACTIVITIES
Financed acquistion of equipment through
capital lease obligation                      $  3,060    $     -

The accompanying notes are an integral part of these consolidated
financial statements.