-----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, COovQt087xfKfBaTxkSi/BPzQHgWe5SgMyl8C5GlDvg0LYfh0PIxLW7FkPVjneqo CpFuA4W2ZpATa3LVI4SFpg== 0000950116-98-001170.txt : 19980518 0000950116-98-001170.hdr.sgml : 19980518 ACCESSION NUMBER: 0000950116-98-001170 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GATEWAY INDUSTRIES INC /CA/ CENTRAL INDEX KEY: 0000725876 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576] IRS NUMBER: 953702929 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: SEC FILE NUMBER: 000-13803 FILM NUMBER: 98625002 BUSINESS ADDRESS: STREET 1: 101-01 FOSTER AVENUE CITY: BROOKLYN STATE: NY ZIP: 11236 BUSINESS PHONE: 7182729700 MAIL ADDRESS: STREET 1: 101-01 FOSTER AVENUE CITY: BROOKLYN STATE: NY ZIP: 11236 FORMER COMPANY: FORMER CONFORMED NAME: GATEWAY COMMUNICATIONS INC DATE OF NAME CHANGE: 19920703 10QSB/A 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Amendment No. 1 to 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 March 31, 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 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) (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 ----- ----- Shares of Issuer's Common Stock Outstanding at March 31, 1998: 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 March 31, 1998........................................ 3 Condensed Statements of Operations - Three Months Ended March 31, 1998 and 1997 .............................. 4 Condensed Statements of Cash Flows - Three Months Ended March 31, 1998 and 1997............................... 5 Notes to Condensed Financial Statements............... 6 Item 2. Management's Discussion and Analysis or Plan of Operations................................. 7 Part II - Other Information - --------------------------- Item 6. Exhibits and Reports on Form 8-K...................... 8 Signatures............................................ 9 2 GATEWAY INDUSTRIES, INC. CONDENSED BALANCE SHEET March 31, 1998 (Unaudited) ASSETS Current assets: Cash and cash equivalents........................................ $ 5,111,000 Equity investments available for sale............................ 104,000 Prepaid expenses and other current assets........................ 149,000 ------------ Total current assets......................................... 5,364,000 Other assets: Security deposit................................................. 80,000 ------------ Total assets ........................................................ $ 5,444,000 ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable................................................. $ 10,000 Accrued expenses and other liabilities........................... 39,000 ------------ Total current liabilities.................................... $ 49,000 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.............................................. (4,129,000) Treasury stock, 11,513 shares.................................... (46,000) Accumulated other comprehensive income........................... 11,000 ------------ Total shareholders' equity................................... 5,395,000 ------------ Total liabilities & shareholders' equity.............................. $ 5,444,000 ============
See accompanying notes. 3 GATEWAY INDUSTRIES, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) For the Three Months Ended March 31, 1998 1997 ---- ---- Revenues $ -- $ -- Costs and expenses: General and administrative.............. 50,000 64,000 Operating loss.......................... (50,000) (64,000) Other income: Interest income..................... 79,000 74,000 Other income........................ 6,000 --- Total other income.................. 85,000 74,000 ------------- ------------ Net income ............................... $ 35,000 $ 10,000 ============= ============ Net income per share......................... $ .01 $ 00 ============= ============ Weighted average number of shares............ 3,592,024 3,592,024 ============ ============ See accompanying notes. 4 GATEWAY INDUSTRIES, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
For the Three Months Ended March 31, 1998 1997 ---- ---- Cash flows from operating activities: Net income.................................................... $ 35,000 $ 10,000 Adjustments to reconcile net income to net cash used by operating activities: Changes in assets and liabilities: Equity investments available for sale..................... (94,000) -- Prepaid expenses and other assets......................... (120,000) (16,000) Accounts payable.......................................... (50,000) (17,000) Accrued liabilities....................................... -- (182,000) Net cash used by operating activities......................... (229,000) (205,000) Cash flows from investing activities: Purchase of equity investments............................ (93,000) -- ------------- ------------ Net cash used by investing activities......................... (93,000) Net decrease in cash.......................................... (322,000) (205,000) Cash and cash equivalents at beginning of period.............. 5,433,000 6,045,000 ------------ ------------ Cash and cash equivalents at end of period.................... $ 5,111,000 $ 5,840,000 ============ ============
See accompanying notes. 5 GATEWAY INDUSTRIES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS March 31, 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 months ended March 31, 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: Deduct Net Sublease Rental Commitments Rentals 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 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 earning 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 operations. 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 March 31, 1998 and 1997, as such items are anti-dilutive in these quarters; accordingly, basic and diluted income per share are the same for the quarters ended March 31, 1998 and 1997. 6 GATEWAY INDUSTRIES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (continued) March 31, 1998 (Unaudited) 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 three months ended March 31, 1997. For the three months ended March 31, 1998, the Company's comprehensive income was $46,000. The comprehensive income differs from the net income in the first quarter of 1998 due to the inclusion of the Company's unrealized gain on equity securities in its comprehensive income. 6. Subsequent Event Discussions 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. 7 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 months ended March 31, 1998. Expenses for the quarter ended March 31, 1998 aggregated $50,000, consisting of general and administrative expense. General and administrative expenses for the three month period ended March 31, 1997 totaled $64,000. INTEREST INCOME, NET During the first quarter of 1998, the Company recognized $79,000 of net interest income compared with $74,000 in the comparable period of 1997. LIQUIDITY AND CAPITAL RESOURCES The Company's cash and cash equivalents totaled $5,111,000 at March 31, 1998 and $5,433,000 at December 31, 1997. Decreases in accounts payable and increase in other current assets and other assets combined to account for the decrease in cash. Other assets consist of the security deposit for the office space lease. At March 31, 1998, the Company's working capital balance was $5,315,000. 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. 8 PART II. OTHER INFORMATION ITEM 5 Other Information Discussions 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) Exhibits None (b) Reports on Form 8-K No reports on Form 8-K have been filed by the registrant for the three months ended March 31, 1998. 9 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: May 15, 1998 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH 31, 1998 CONDENSED FINANCIAL STATEMENTS AND IS QUALIFIED AS ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1997 MAR-31-1998 5,111,000 104,000 0 0 0 5,364,000 0 0 5,444,000 49,000 0 0 0 4,000 5,395,000 5,444,000 0 0 0 0 50,000 0 0 35,000 0 35,000 0 0 0 35,000 .01 .01
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