-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Isgw7YsweQKXcizKgj1xzdaIr9etuxpvBzzw+exstuWL6z2TXW/9y1wVgmpJ/526 UVsNusSGs30q0S+xYsvJfg== 0000725876-98-000012.txt : 19981110 0000725876-98-000012.hdr.sgml : 19981110 ACCESSION NUMBER: 0000725876-98-000012 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GATEWAY INDUSTRIES INC /DE/ CENTRAL INDEX KEY: 0000725876 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576] IRS NUMBER: 330637631 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-13803 FILM NUMBER: 98740947 BUSINESS ADDRESS: STREET 1: 150 EAST 52ND ST 21ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 7075731710 MAIL ADDRESS: STREET 1: 150 EAST 52ND ST 21ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: GATEWAY COMMUNICATIONS INC DATE OF NAME CHANGE: 19920703 10QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB (Mark One) [X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 1998 [ ] Transition report under Section 13 or 15(d) of the Exchange Act For the transition period from ________ to ________ Commission file number 0-13803 GATEWAY INDUSTRIES, INC. (Exact name of Small Business Issuer as Specified in Its Charter) DELAWARE (State or Other Jurisdiction of Incorporation or Organization) 33-0637631 (IRS Employer Identification No.) 150 East 52nd Street New York, NY 10022 (Address of Principal Executive Offices) (212)813-1500 (Issuer's Telephone Number, Including Area Code) 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[ ] Transitional small business disclosure format (check one): Yes[ ] No[X] Shares of Issuer's Common Stock Outstanding at September 30, 1998: 3,592,024 GATEWAY INDUSTRIES, INC. INDEX Part I - Financial Information Page Number Item 1. Condensed Financial Statements(Unaudited) Condensed Balance Sheet September 30, 1998 .............................. 3 Condensed Statements of Operations- Three Months and Nine Months Ended September 30, 1998 and 1997...................... 4 Condensed Statements of Cash Flows- NIne Months Ended September 30, 1998 and 1997..... 5 Notes to Condensed Financial Statements.......... 6 Item 2. Management's Discussion and Analysis or Plan of Operations............................ 8 Part II - Other Information Item 5. Other Information................................ 9 Item 6. Exhibits and Reports on Form 8-K................. 9 Signatures....................................... 10 GATEWAY INDUSTRIES, INC. Part I. FINANCIAL INFORMATION Item 1. Condensed Financial Statements (Unaudited) CONDENSED BALANCE SHEET September 30, 1998 (Unaudited)
ASSETS Current Assets: Cash and cash equivalents................................ $ 5,058,000 Equity investments available for sale.................... 89,000 Prepaid expenses and other current assets................ 142,000 __________ Total current assets................................ 5,289,000 Other assets: Security deposit......................................... 80,000 __________ $ 5,369,000 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accrued expenses and other liabilities.................. $ 24,000 __________ Total current liabilities.......................... 24,000 Commitments Shareholders' equity: Preferred stock, $.10 par value, 1,000 shares authorized, no shares issued or outstanding........ --- Common stock, $.001 par value, 10,000,000 shares authorized, 3,592,024 shares issued (including treasury shares).......................... 4,000 Capital in excess of par value.......................... 9,555,000 Accumulated deficit..................................... (4,164,000) Treasury stock, 11,513 shares........................... (46,000) Accumulated other comprehensive loss.................... (4,000) ___________ Total shareholders' equity......................... 5,345,000 ___________ $ 5,369,000 ===========
See accompanying notes to condensed financial statements. GATEWAY INDUSTRIES, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months For the Nine Months Ended Sept 30, Ended Sept 30, 1998 1997 1998 1997 Revenues $ --- $ --- $ --- $ --- Costs and expenses: General and administrative 75,000 93,000 233,000 228,000 ------- ------- -------- -------- Operating loss (75,000) (93,000) (233,000) (228,000) Other income: Interest income 66,000 75,000 201,000 224,000 Other income --- --- 32,000 --- ------ ------ ------- ------- Total other income 66,000 75,000 233,000 224,000 Net income (loss) $ (9,000) $(18,000) $ 0 $ (4,000) ========== ========= ========= ========== Net income (loss) per share $ .00 $ (.01) $ .00 $ .00 Weighted average number of shares................ 3,592,024 3,592,024 3,592,024 3,592,024
See accompanying notes to condensed financial statements. GATEWAY INDUSTRIES, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
For the Nine Months Ended Sept 30, 1998 1997 ____ ____ Cash flows from operating activities: Net income (loss)........................... $ 0 $ (4,000) Adjustments to reconcile net income (loss) to net cash used by operating activities: Changes in assets and liabilities: Prepaid expenses and other assets....... (205,000) 6,000 Accounts payable........................ (60,000) (13,000) Accrued expenses & other liabilities.... (18,000) (271,000) Total adjustments (283,000) (278,000) Net cash used by operating activities........ (283,000) (282,000) Cash flows from investing activities: Purchase of equity investments.......... (93,000) --- __________ __________ Net cash used by investing activities........ (93,000) --- Net decrease in cash......................... (376,000) (282,000) Cash and cash equivalents at beginning of period............................... 5,434,000 6,044,000 __________ __________ Cash and cash equivalents at end of period... $5,058,000 $5,762,000 ========== ==========
See accompanying notes to condensed financial statements. GATEWAY INDUSTRIES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS September 30, 1998 (Unaudited) 1. General The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instruction to Form 10-QSB and Item 310 of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying unaudited interim financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to make such financial statements not misleading. Results for the three and nine months ended September 30, 1998, are not necessarily indicative of the results that may be expected either for any other quarter in the year ending December 31, 1998 or for the entire year ending December 31, 1998. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1997. 2. Operations The Company currently has no operating business. Management is pursuing various strategic alternatives which include the possible use of the Company's remaining net assets to acquire, merge, consolidate or otherwise combine with an operating business or businesses; however, there is no assurance that any such alternatives will occur. 3. Lease Commitments The Company has entered into a three-year operating lease for office space in New York, NY commencing April 1, 1998. The Company has sublet a portion of its office space to affiliated companies. Future minimum lease payments under this lease are as follows:
Commitments Deduct Sublease Rentals Net Rental Commitments 1998 $73,000 $49,000 $24,000 1999 97,000 65,000 32,000 2000 97,000 65,000 32,000 2001 24,000 16,000 8,000 $291,000 $195,000 $96,000
GATEWAY INDUSTRIES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued) 4. Per Share Results The Company has adopted Statement of Financial Accounting Standard No. 128, "Earnings Per Share" (SFAS No. 128), which is effective for annual and interim financial statements issued for periods ending after December 15, 1997. SFAS No. 128 was issued to simplify the standards for calculating earnings per share (EPS) previously in APB No. 15, "Earnings Per Share." SFAS No. 128 replaces the presentation of primary EPS with a presentation of basic EPS. The new rules also require dual presentation of basic and diluted EPS on the face of the statement of operation. Net income per share was calculated using the weighted average number of common shares outstanding. The effect of all common stock equivalents is not included in the per share computation for the three and nine months ended September 30, 1998 and 1997, as such items are anti-dilutive in these periods; accordingly, basic and diluted income per share are the same for the three and nine months ended September 30, 1998 and 1997. 5. Comprehensive Income Effective January 1, 1998, the Company adopted Statement of Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130 established new rules for the reporting of comprehensive income and its components; however, the adoption of SFAS 130 had no impact on the Company's net income or shareholders' equity. SFAS 130 requires unrealized gains or losses on the Company's available-for-sale equity investments to be included in other comprehensive income. There was no impact on prior period financial statements from the adoption of SFAS 130, as the Company had no unrealized gain or loss on equity securities during the nine months ended September 30, 1997. For the three and nine months ended September 30, 1998, the Company's comprehensive income (loss) was $(8,475) and $(4,000), respectively. The comprehensive income differs from the net income in the first nine months of 1998 due to the inclusion of the Company's unrealized gain/(loss) on equity securities in its comprehensive income. GATEWAY INDUSTRIES, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The Company currently has no operating business. The Board of Directors is pursuing various strategic alternatives which include the possible use of the Company's net assets to acquire, merge, consolidate or otherwise combine with an operating business or businesses. REVENUES AND EXPENSES The Company had no revenues for the nine months ended September 30, Expenses for the nine month period ended September 30, 1998 aggregated $233,000, consisting of general and administrative costs. NET INTEREST INCOME AND OTHER INCOME During the three quarters of 1998, the Company recognized $232,000 of net interest income and other income compared with $224,000 in the comparable period of 1997. LIQUIDITY AND CAPITAL RESOURCES The Company's cash and cash equivalents totaled $5,058,000 at September 30, 1998 and $5,434,000 at December 31, 1997. Decreases in liabilities and increase in assets combined to account for the decrease in cash. At September 30, 1998, the Company's working capital balance was $5,265,000. While the company seeks an acquisition or other business combination, management believes its cash position is sufficient to cover administrative expenses and current obligations for the foreseeable future. YEAR 2000 ISSUE Until recently computer programs were written to store only two digits of date related information in order to more efficiently handle and store data. Such programs are unable to properly distinguish between the year 1900 and the year 2000. This situation is frequently referred to as the "Year 2000 problem." The Company believes that all of its significant computer software is year 2000 compliant and that it will not need to modify or replace its software so that its computer systems will function properly with respect to dates in the year 2000 and beyond. GATEWAY INDUSTRIES, INC. PART II. OTHER INFORMATION ITEM 5. Other Information Discussion to acquire Only Multimedia Network Incorporated, a California corporation, terminated during May 1998. Gateway Industries, Inc. has been advised that Only Multimedia Network expects certain funding from another source. ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibit 27 - Financial Data Schedule. (b) Reports on Form 8-K No reports on Form 8-K have been filed by the registrant for the nine months ended September 30, 1998. GATEWAY INDUSTRIES, INC. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GATEWAY INDUSTRIES, INC. /S/Jack Howard __________________________________________ Jack Howard, Acting President Date: November 7, 1998 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE SEPTEMBER 30, 1998 CONDENSED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1998 SEP-30-1998 5,058,000 89,000 106,000 0 0 5,289,000 0 0 5,369,000 24,000 0 0 0 4,000 5,341,000 5,369,000 0 233,000 0 0 233,000 0 0 0 0 0 0 0 0 0 0 0
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