-----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, VH/6JZCoYvdBMOZiy8TMeGv1yPVbaTDOqr4TiBE2sPI2CcVJffKg5r+n/fGJrDjr Gt8GZTGj3CkDg8IM0U0rjQ== 0000725876-99-000012.txt : 19990811 0000725876-99-000012.hdr.sgml : 19990811 ACCESSION NUMBER: 0000725876-99-000012 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990810 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: 99682530 BUSINESS ADDRESS: STREET 1: 150 EAST 52ND ST 21ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 8774132942 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 GATEWAY INDUSTRIES, INC. 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 June 30, 1999. [ ] 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 33-0637631 (State or Other Jurisdiction of (IRS Employer Incorporation or Organization) Identification No.) 150 East 52nd Street New York, NY 10022 (Address of Principal Executive Offices) 877-431-2942 (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 [ ] Shares of Issuer's Common Stock Outstanding at June 30, 1999: 3,592,024 Transitional small business disclosure format Yes [ ] No [X] GATEWAY INDUSTRIES, INC. INDEX Part I - Financial Information Page Number Item 1. Condensed Financial Statements (Unaudited): Condensed Balance Sheet June 30, 1999............................................... 3 Condensed Statements of Operations Three Months and Six Months Ended June 30, 1999 and 1998.... 4 Condensed Statements of Cash Flows Six Months Ended June 30, 1999 and 1998..................... 5 Notes to Condensed Financial Statements..................... 6 Item 2. Management's Discussion and Analysis or Plan of Operations....................................... 7 Item 3. Quantitative and Qualitative Disclosures About Market Risk.. 7 Part II - Other Information Item 4. Submission of Matters to a Vote of Security Holders......... 8 Item 5. Other Information........................................... 8 Item 6. Exhibits and Reports on Form 8-K............................ 8 Signatures.................................................. 9 PART I - FINANCIAL INFORMATION Item 1. CONDENSED FINANCIAL STATEMENTS GATEWAY INDUSTRIES, INC. CONDENSED BALANCE SHEET June 30, 1999 (Unaudited) ASSETS Current assets: Cash and cash equivalents...................................... $ 5,618,000 Prepaid expenses and other current assets.................... 46,000 ----------- Total current assets......................................... 5,664,000 Other assets: Security deposit............................................... 60,000 ----------- Total assets..................................................... $ 5,724,000 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses......................... $ 61,000 ----------- Total current liabilities................................... $ 61,000 Commitments Shareholders' equity: Preferred stock, $.10 par value, 1,000,000 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........................................... (3,850,000) Treasury stock, 11,513 shares................................. (46,000) ---------- Total shareholders' equity.................................. 5,663,000 ----------- Total liabilities & shareholders' equity........................ $ 5,724,000 =========== See accompanying notes. GATEWAY INDUSTRIES, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months For the Six Months Ended June 30, Ended June 30, 1999 1998 1999 1998 Revenues ............................... $ -- $ -- $ -- $ -- Costs and expenses: General and administrative ........ 134,000 108,000 201,000 158,000 ---------- ---------- ---------- ---------- Operating loss .................... (134,000) (108,000) (201,000) (158,000) Other income: Interest income .............. 57,000 66,000 126,000 134,000 Other income ........................... -- 15,000 -- 32,000 ---------- ---------- ---------- ---------- Total other income ................ 57,000 81,000 126,000 166,000 Net income/(loss) ...................... $ (77,000) $ (27,000) $ (75,000) $ 8,000 Net income per share - basic and diluted $ (.02) $ (.01) $ (.02) $ .00 Weighted average number of shares .............................. 3,592,024 3,592,024 3,592,024 3,592,024 See accompanying notes.
GATEWAY INDUSTRIES, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
For the Six Months Ended June 30, 1999 1998 Cash flows from operating activities: Net income ................................................. $ (75,000) $ 8,000 Adjustments to reconcile net income to net cash provided by/(used in) operating activities: Changes in assets and liabilities: Prepaid expenses and other assets .................. (18,000) (213,000) Note receivable .................................... 566,000 -- Security deposit ................................... 20,000 -- Accounts payable ................................... (15,000) (48,000) Accrued expenses and other liabilities ............. -- (15,000) ---------- ---------- Net cash provided by/(used in) operating activities ........ 478,000 (268,000) Cash flows from investing activities: Purchase of equity investments ..................... -- (93,000) ---------- ---------- Net cash used by investing activities ...................... -- (93,000) Net increase/(decrease) in cash ............................ 478,000 (361,000) Cash and cash equivalents at beginning of period ........... 5,140,000 5,433,000 ---------- ---------- Cash and cash equivalents at end of period ................. $ 5,618,000 $ 5,072,000 ========== ==========
See accompanying notes. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) June 30, 1999 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 months and six months ended June 30, 1999, are not necessarily indicative of the results that may be expected either for any other quarter in the year ending December 31, 1999 or for the entire year ending December 31, 1999. 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, 1998. 2. OPERATIONS The Company currently has no operating business. Management 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; however, there is no assurance that any such alternatives will occur. 3. LEASE COMMITMENTS The Company entered into a three-year operating lease for office space in New York, NY which began 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: Deduct Net Sublease Rental Commitments Rentals Commitments ----------------------------------------- 1999 97,000 65,000 32,000 2000 97,000 65,000 32,000 2001 24,000 16,000 8,000 $ 218,000 $ 146,000 $ 72,000 4. NET INCOME PER SHARE 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 quarters ended June 30, 1999 and 1998, as such items are anti-dilutive in these quarters; accordingly, basic and diluted income per share are the same for the quarters ended June 30, 1999 and 1998. 5. COMPREHENSIVE INCOME For the three and six months ended June 30, 1998, the Company's comprehensive income/(loss) was $(41,000) and $5,000, respectively. The comprehensive income differs from the net income in the first two quarters of 1998 due to the inclusion of the Company's unrealized gain on equity securities in its comprehensive income. For the three and six months ended June 30, 1999, there was no unrealized gain or loss and consequently net (loss) of $(77,000) and $(75,000) were equal to comprehensive income. 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 three and six months ended June 30, 1999. Expenses for the three and six months ended June 30, 1999 aggregated $134,000 and $201,000, respectively consisting of general and administrative expense. General and administrative expenses for the three and six-month period ended June 30, 1998 totaled $108,000 and $158,000, respectively. Increased expense over last year is attributable to proxy and legal costs. NET INTEREST INCOME AND OTHER INCOME During the three and six months ended June 30, 1999, the Company recognized $57,000 and $126,000 of net interest income, respectively compared with $66,000 and $135,000 net interest income in the corresponding periods of 1998. For the three and six months ended June 30, 1998, the Company recorded $15,000 and $32,000 in other income attributable to audit adjustments which were subsequently reclassified and reversed. LIQUIDITY AND CAPITAL RESOURCES The Company's cash and cash equivalents totaled $5,618,000 at June 30, 1999 and $5,140,000 at December 31, 1998. Collection of the note receivable owed by Only Multimedia Network, Inc. ("OMNI") during the first quarter accounted for the increase in cash. At June 30, 1999, the Company's working capital balance was $5,603,000. 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. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK None PART II. OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The following matters were submitted to a vote at the annual meeting of stockholders of the Company, held on June 15, 1999. 1. To elect three directors of the Corporation; (FOR: 3,442;239 AGAINST: 0; ABSTAINED: 6,589). The Board of Directors of the Company currently consists of Jack Howard, Warren Lichtenstein, and Ronald Hayes. All of the current members of the Board of Directors will serve as directors until the next annual meeting of the Company, and until their successors are duly elected and shall have qualified. 2. Ratified the appointment of Ernst & Young LLP, independent accountants, to audit the books and accounts of the Company. (FOR: 3,441,021; AGAINST: 7,079; ABSTAINED: 728) Item 5. OTHER INFORMATION None Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 2.1 Agreement and Plan of Merger of Gateway Industries, Inc., a Delaware Corporation, and Gateway Communications, Inc., a California Corporation. (a) 3.1 Articles of Incorporation. (a) 3.2 By laws. (a) 10.8 Amended and Restated 1990 Incentive Stock Option Plan and 1990 Nonstatutory Stock Option Plan. (a) 10.9 Form of Indemnity Agreement between the Registrant and certain of its Officers and Directors. (b) 10.11 Stock Purchase Agreement, dated December 21, 1996, between Gateway Industries, Inc. and Richard A. Hickland. (c) 27 Financial Data Schedule (d) - --------------- (a) Filed as an exhibit to the Company's Proxy Statement for its Special Meeting of Shareholders held on September 9, 1994, and incorporated herein by reference. (b) Filed as an exhibit to the Company's Form 10-QSB for the quarter ended June 30, 1989, and incorporated herein by reference. (c) Filed as an exhibit to the Company's Form 8-K filed on or about January 5, 1997, and incorporated herein by reference. (d) Filed as part of the electronic filing only (b) Reports on Form 8-K The Registrant filed the following current report on Form 8-K during the last quarter of the period covered by this report: (i) Report in Form 8-K dated June 29, 1999 reporting the termination of the Company's relationship with the audit firm of Ernst & Young, LLP. (ii) Report on Form 8-K dated June 29, 1999 as amended. SIGNATURES Pursuant to the requirements of the Securities 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: August xx, 1999 EX-27 2 FDS --
5 0000725876 Gateway Industries, Inc. 1 6-MOS DEC-31-1999 JAN-1-1999 JUN-30-1999 5,618,000 0 0 0 0 0 5,644,000 0 5,724,000 61,000 0 0 0 4,000 5,659,000 5,724,000 0 0 0 (201,000) 0 0 0 (75,000) 0 (75,000) 0 0 0 (75,000) (.02) (.02)
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