U.S. 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 June 30, 2005.

[ ]  TRANSITION  REPORT  UNDER SECTION  13  OR  15(d) OF THE SECURITIES EXCHANGE
     ACT  OF  1934

                        Commission file number: 000-27879

                           GATEWAY DISTRIBUTORS, LTD.
                 (Name of small business issuer in its charter)

                  Nevada                                      88-0301278
     (State or other jurisdiction of                      (I.R.S. Employer
       incorporation or organization)                    Identification No.)


             3220 Pepper Lane,                                 89120
             Las Vegas, Nevada                               (Zip Code)
(Address of principal executive offices)

                                 (702) 317-2400
                           (Issuer's telephone number)

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 [ ]

     State  the  number of shares outstanding of each of the issuer's classes of
common  equity,  as  of the latest practicable date:  As of August 12, 2005, the
issuer  had  563,980,636  shares  of  its  common  stock issued and outstanding.

Transitional  Small  Business  Disclosure  Format  (check one):  Yes [ ]  No [X]


<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

<S>                                                                       <C>
PART I - FINANCIAL INFORMATION                                            1
    Item 1.  Financial Statements. . . . . . . . . . . . . . . . . . . .  __
    Item 2.  Management's Discussion and Analysis or Plan of Operation .  __
    Item 3.  Controls and Procedures . . . . . . . . . . . . . . . . . .  __
PART II - OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . .  __
    Item 1.  Legal Proceedings . . . . . . . . . . . . . . . . . . . . .  __
    Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds  __
    Item 3.  Defaults Upon Senior Securities . . . . . . . . . . . . . .  __
    Item 4.  Submission of Matters to a Vote of Security Holders . . . .  __
    Item 5.  Other Information . . . . . . . . . . . . . . . . . . . . .  __
    Item 6.  Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . .  __
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  __
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.  __
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.  __
</TABLE>


<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

As  used  herein,  the  term  "Company"  refers to Gateway Distributors, Ltd., a
Nevada  corporation,  and  its  subsidiaries  and  predecessors unless otherwise
indicated.  Unaudited,  interim,  condensed,  consolidated  financial statements
including  a  balance  sheet for the Company as of the period June 30, 2005, and
statements  of  operations, and statements of cash flows, for interim periods up
to  the  date  of  such balance sheet and the comparable period of the preceding
year  are  attached hereto as Pages F-1 through F-12 and are incorporated herein
by  this  reference.

BASIS OF PRESENTATION

The  accompanying  consolidated  interim  unaudited  financial  statements  are
presented  in  accordance  with  accounting principles generally accepted in the
United  States of America for interim financial information and the instructions
for  Form  10-QSB  and  Item 310 under subpart A of Regulation S-B. Accordingly,
they  do not include all of the information and footnotes required by accounting
principles  generally  accepted  in  the  United  States of America for complete
financial  statements. The accompanying statements should be read in conjunction
with  the audited financial statements for the years ended December 31, 2004. In
the opinion of management, all adjustments considered necessary in order to make
the  financial  statements  not misleading have been included. Operating results
for the quarter and period ended June 30, 2005 are not necessarily indicative of
results that may be expected for the year ended December 31, 2005. The financial
statements  are  presented  on  the  accrual  basis.


                      [THIS SPACE LEFT BLANK INTENTIONALLY]


<PAGE>
<TABLE>
<CAPTION>
                   GATEWAY DISTRIBUTORS, LTD. AND SUBSIDIARIES


                                  - CONTENTS -


                                                                    PAGE NUMBER
                                                                    -----------
<S>                                                                 <C>
Financial Statements:

    Balance Sheet                                                           F-1

    Statement of Operations                                                 F-3

    Statement of Stockholders - Equity                                      F-4

    Statement of Cash Flows                                                 F-5

    Notes to Financial Statements                                           F-7
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
          GATEWAY DISTRIBUTORS, LTD AND SUBSIDIARIES
             UNAUDITED CONSOLIDATED BALANCE SHEET
          (CONDENSED, INTERIM FINANCIAL STATEMENTS)

                                                       June 30,
                                                         2005
                                                      -----------
<S>                                                   <C>
                       ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                           $    1,119
  Accounts Receivable                                     23,789
  Receivable from Stock Sales                              2,732
  Inventories                                            368,861
  Property Held for Short Term Investment                      0
  Prepaids                                                     0
                                                      -----------
                                Total Current Assets     396,501
                                                      -----------

PROPERTY & EQUIPMENT
  Property and Equipment, at cost                      3,354,740
  (Less) accumulated depreciation and amortization      (354,139)
                                                      -----------
                           Total Property & Equipment  3,000,601
                                                      -----------

MINORITY INTEREST IN SUBSIDIARY                                0
                                                      -----------

OTHER ASSETS
  Prepaid Advertising                                    230,572
  Product Awaiting Marketing                             187,650
  Formulas                                               536,500
  Investment in QDS of Arizona                           200,000
  Cal-Bay International Stock Held for Investment      1,376,649
  Other Assets                                            15,910
                                                      -----------
                                   Total Other Assets  2,547,281
                                                      -----------

Total Assets                                          $5,944,383
                                                      ===========
</TABLE>

                      See Notes to the Financial Statements


                                      F-1
<PAGE>
<TABLE>
<CAPTION>
          GATEWAY DISTRIBUTORS, LTD AND SUBSIDIARIES
             UNAUDITED CONSOLIDATED BALANCE SHEET
          (CONDENSED, INTERIM FINANCIAL STATEMENTS)

                                                  June 30,
                                                    2005
                                                -------------
<S>                                             <C>
                     LIABILITIES

CURRENT LIABILITIES:

Accounts payable:
  Trade Regular                                 $    343,104
  Commissions                                         13,847
  Set aside for prior amounts due and payable        399,500
Accrued expenses:
  Payroll and employee benefits                      184,391
  Payroll taxes                                      190,131
  Interest                                           420,944
  Other                                               40,943
Current maturities of long-term debt               2,202,393
                                                -------------
Total current liabilities                          3,795,253
                                                -------------

LONG-TERM DEBT                                     1,733,323

                                                -------------
Total Liabilities                                  5,528,576
                                                -------------

                 STOCKHOLDERS' EQUITY

Preferred stock - $.001 par value
  Authorized - 400,000,000 shares
    Series A Preferred
      Authorized - 100,000,000 shares
      4,972,125 issued and outstanding                 4,972
    Series B Preferred
      Authorized - 100,000,000 shares
      15,000,000 issued and outstanding               15,000
    No Series Designated Preferred
      Authorized - 200,000,000 shares
      Issued and outstanding - none
Common stock, - $.001 par value
  Authorized - 25,000,000,000 shares
  Issued and outstanding - 270,980,594               270,981
  Additional paid-in capital                      19,276,322
  Accumulated (deficit)                          (19,151,468)

                                                -------------
Net Stockholders' Equity                             415,807
                                                -------------

Total Liabilities & Stockholders' Equity        $  5,944,383
                                                =============
</TABLE>

                      See Notes to the Financial Statements


                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                                         GATEWAY DISTRIBUTORS, LTD AND SUBSIDIARIES
                                      UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                                          (CONDENSED INTERIM FINANCIAL STATEMENTS)

                                                                  Quarter         Quarter        6 Months       6 Months
                                                                   Ended           Ended           Ended          Ended
                                                                 June 30,        June 30,        June 30,       June 30,
                                                                   2005            2004            2005           2004
                                                               -------------  ---------------  -------------  -------------
<S>                                                            <C>            <C>              <C>            <C>
SALES                                                          $    190,081   $      233,400   $    391,766   $    499,508

COST OF SALES                                                        42,899           45,840         88,482         90,140
                                                               -------------  ---------------  -------------  -------------

GROSS PROFIT                                                        147,182          187,560        303,284        409,368
                                                               -------------  ---------------  -------------  -------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
  Depreciation Expense                                               24,709           11,737         49,418         16,737
  Professional Services Not Classified Elsewhere                    172,924        1,169,299        297,284      1,193,948
  Development of Jeunesse by Francois Product Line                   58,088           74,343        120,159        321,000
  Product Development                                                66,838          931,735        317,464      3,299,663
  All Other Selling, General and Administrative                      82,014          931,053        280,772      1,489,889
                                                               -------------  ---------------  -------------  -------------

TOTAL SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                  404,573        3,118,167      1,065,097      6,321,237
                                                               -------------  ---------------  -------------  -------------

OTHER INCOME (EXPENSE):
  Gain on Sale of Property held for short term investment                 0                0         37,139              0
  Gain on Sale of Aspen Cove                                        652,546                         652,546
  (Loss) on Sale of Equipment                                             0           (1,774)             0         (1,774)
  Additional (Loss) Incurred on 2002 Sale of Subsidiary                   0          (40,000)             0        (40,000)
  (Loss) on Sale of Subsidiary - Los Cabos Beverage                       0                0         (8,256)             0
  (Loss) change in reporting QDS of Arizona as an investment              0                0        (68,535)             0
  (Impairment)  reporting Subsidiary QDS of Arizona                       0                0         (9,101)             0
  as an investment
  (Loss) on Sale of Valley Dr House                                 (10,380)               0        (10,380)             0
  Interest Expense                                                  (64,967)         (66,227)      (110,872)      (129,589)
  Other Income                                                            0           44,635              0         45,524
                                                               -------------  ---------------  -------------  -------------

TOTAL OTHER INCOME (EXPENSE):                                       577,199          (63,366)       482,541       (125,839)
                                                               -------------  ---------------  -------------  -------------

NET INCOME (LOSS) BEFORE MINORITY INTEREST                          319,808       (2,993,973)      (279,272)    (6,037,708)

MINORITY INTEREST                                                         0                0              0              0
                                                               -------------  ---------------  -------------  -------------

NET INCOME (LOSS) BEFORE PROVISION FOR INCOME TAX                   319,808       (2,993,973)      (279,272)    (6,037,708)

PROVISION FOR INCOME TAX                                                  0                0              0              0
                                                               -------------  ---------------  -------------  -------------

NET INCOME (LOSS)                                              $    319,808   $   (2,993,973)  $   (279,272)  $ (6,037,708)
                                                               =============  ===============  =============  =============

BASIC AND DILUTED EARNINGS (LOSS) PER SHARE                    $       0.00   $(2,993,973.00)  $      (0.00)  $(262,509.04)
                                                               -------------  ---------------  -------------  -------------

BASIC & DILUTED WEIGHTED AVERAGE SHARES OF
COMMON STOCK                                                     185,934,066                1    110,200,657             23
                                                               =============  ===============  =============  =============
</TABLE>

                      See Notes to the Financial Statements


                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                                   UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                   FOR THE PERIODS ENDED JUNE 30, 2005 AND DECEMBER 31, 2004

                                           Preferred Stock        Common Stock
                                          Par Value $0.001      Par Value $0.001      Paid in
                                        -------------------  ---------------------     Excess      Accumulated    Net Equity
                                          Shares    Amount     Shares      Amount      of Par       (Deficit)    (Deficiency)
                                        ----------  -------  -----------  --------  ------------  -------------  -------------
<S>                                     <C>         <C>      <C>          <C>       <C>           <C>            <C>
BALANCE - December 31, 2003                726,125  $   726            1  $      1  $ 7,737,264   $(11,478,117)  $ (3,740,126)

Common Stock Issued:
  For Services - Restricted Stock                                 48,010        48       36,642                        36,690
  For Services - Unrestricted Stock                               15,673        16    4,729,272                     4,729,288
  For Debt - Unrestricted Stock                                        0         0       25,000                        25,000
  For Cash                                                        34,906        34    6,696,802                     6,696,836

Preferred Stock Issued
  For Services - Restricted "A" Series   4,246,000    4,246                                                             4,246
Reclass Par to Pd in Excess                                                                                                 0

(Loss) for the Period                                                                               (7,394,079)    (7,394,079)

                                        ----------  -------  -----------  --------  ------------  -------------  -------------
Balance for December 31, 2004            4,972,125    4,972       98,590        99   19,224,980     (18,872,196)      357,855

Common Stock Issued:
  For Services - Restricted Stock                              7,000,000     7,000       (6,900)                          100
  For Services - Unrestricted Stock                               60,004        60        9,040                         9,100
  For Cash                                                    23,822,000    23,822      187,257                       211,079

Preferred Stock Issued
  For Services - Restricted "B" Series  15,000,000   15,000                                                            15,000

(Loss) for Period                                                                                     (599,080)      (599,080)

                                        ----------  -------  -----------  --------  ------------  -------------  -------------
Balance for March 31, 2005              19,972,125   19,972   30,980,594    30,981    19,414,377   (19,471,276)        (5,946)
                                        ----------  -------  -----------  --------  ------------  -------------  -------------

Common Stock Issued:
  For Services - Restricted Stock                             16,000,000    16,000      (15,200)                          800
  For Services - Unrestricted Stock                          200,000,000   200,000     (100,800)                       99,200
  For Cash                                                    24,000,000    24,000      (22,055)                        1,945

Income(Loss) for Period                                                                                319,808        319,808

                                        ----------  -------  -----------  --------  ------------  -------------  -------------
Balance for June 30, 2005               19,972,125  $19,972  270,980,594  $270,981  $19,276,322   $(19,151,468)  $    415,807
                                        ==========  =======  ===========  ========  ============  =============  =============

Recap Preferred Stock Issued:
  Restricted "A" Series                  4,972,125  $ 4,972
  Restricted "B" Series                 15,000,000   15,000

                                        ----------  -------
Total Preferred - March 31, 2005        19,972,125  $19,972
                                        ==========  =======
</TABLE>

                      See Notes to the Financial Statements


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                          GATEWAY DISTRIBUTORS, LTD AND SUBSIDIARIES
                        UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (CONDENSED INTERIM FINANCIAL STATEMENTS)


                                                                        Quarter       Quarter
                                                                         Ended         Ended
                                                                      ------------  ------------
                                                                       June 30,     June 30,
                                                                         2005         2004
<S>                                                                   <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)                                                               (279,272)   (6,037,708)
Adjustments to reconcile net (loss)
    to net cash from (to) operating activities:
    Stock issued for Services                                             124,200     4,523,659
    Depreciation & Amortization Prop & Equip                               49,418        16,737
    Loss on Sale of Valley Dr House                                        10,380
    Gain on Sale of Aspen Cove                                           (652,546)
    Minority Interest                                                           0
    Loss upon report of QDS of Arizona to an investment                   (68,535)
    Impairment of Investment in QDS of Arizona                             (9,101)
    Loss on Sale of Grandma Hammans formula & rights                            0
Changes in operating assets and liabilities which
  increase (decrease) cash flow:
    Accounts Receivable                                                    21,845           728
    Inventories                                                           125,338      (157,683)
    Properties Held for Short Term Investment                             179,741      (770,715)
    Prepaid Expenses and Other Current Assets                              25,500             0
    Accounts Payable and Commissions                                       27,110      (169,468)
    Accrued Liabilities                                                    45,213      (262,170)

                                                                      ------------  ------------
Net cash provided (used) from operating activities                       (400,709)   (2,856,620)
                                                                      ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Product Development Awaiting Production, Later Reclassified as
       Prepaid Advertising and as Product Awaiting Marketing                    0      (248,687)
    Capital (Outlays)/Disposals - net                                    (249,960)   (2,326,988)
    Purchase (Sale) of Trademarks                                               0       (66,873)
    Renegotiation of Purchase of Grandma Hammans                                0       (18,600)
    Other Assets                                                           16,920       (96,735)
    Investment in QDS of Arizona                                          (50,000)            0

                                                                      ------------  ------------
Net cash provided (used) from investing activities                       (283,040)   (2,757,883)
                                                                      ------------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net Proceeds from Term Debt after Principal Payments                  413,778       984,795
    Principle Payment on Debts (over) net proceeds Term Debt                    0             0
    Stock Sales for Cash; Net                                             233,931     5,099,411

                                                                      ------------  ------------
Net cash provided (used) from financing activities                        647,709     6,084,206
                                                                      ------------  ------------

NET INCREASE (DECREASE) IN CASH EQUIVALENTS                               (36,040)      469,703

CASH AND CASH EQUIVALENTS - Beginning of Period                            37,159       163,190
                                                                      ------------  ------------

                                                                      ------------  ------------
CASH AND CASH EQUIVALENTS - End of Period                             $     1,119   $   632,893
                                                                      ============  ============
</TABLE>

                        See Notes to Financial Statements


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                       GATEWAY DISTRIBUTORS, LTD AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
                        (CONDENSED INTERIM FINANCIAL STATEMENTS)


                                                                  Quarter     Quarter
                                                                   Ended       Ended
                                                                  June 30,    June 30,
                                                                    2005        2004
                                                                 ----------  ----------
<S>                                                              <C>         <C>
SUPPLEMENTAL DISCLOSURE

CASH PAID FOR:
  Interest                                                       $  110,872  $   54,638
  Taxes                                                          $        0  $        0


NON CASH INVESTING AND FINANCING ACTIVITIES:

STOCK ISSUED FOR:
  Services                                                       $  124,200  $4,523,659
  Debt                                                           $        0  $        0

TRANSACTIONS WITH CAL-BAY INTERNATIONAL (CAL-BAY)
  Cal-Bay Stock Held for Investment                               1,376,649           0
  Aspen Cove & Valley Dr properties Taken Over By Cal-Bay         1,216,354           0
  Mortgage Debt Assumed by Cal-Bay Upon Taking Over Properties      950,367           0


FORMULA EXCHANGED FOR DEBT PAYOFF
  Payoff of Grandma Hamman's debt in exchange for formula        $        0  $        0

CHANGE IN REPORTING SUBSIDIARY TO AN INVESTMENT
  Loss upon report change of QDS of Arizona to an investment     $   68,535  $        0
  Impairment of QDS of Arizona as an investment                  $    9,101  $        0
</TABLE>

                      See Notes to the Financial Statements


                                      F-6
<PAGE>
                   GATEWAY DISTRIBUTORS, LTD. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2005

NOTE 1  -   BASIS OF PRESENTATION:

     The  consolidated  interim  condensed financial statements at June 30, 2005
     and for the periods ended June 30, 2005 and 2004 are unaudited, but include
     all  adjustments,  which  the  Company  considers  necessary  for  a  fair
     presentation.

     The accompanying unaudited financial statements are for the interim periods
     and  do  not  include all disclosures normally provided in annual financial
     statements,  and  should  be  read  in  conjunction with the Company's Form
     10-KSB  for the year ended December 31, 2004. The accompanying consolidated
     unaudited  interim financial statements for the periods ended June 30, 2005
     and  2004  are  not  necessarily  indicative  of  the  results which can be
     expected  for  the  entire  year.

     The  preparation  of  financial  statements  in  conformity with accounting
     principles  generally  accepted  in  the  United States of America requires
     management  to  make  estimates  and  assumptions  that affect the reported
     amounts  of  assets and liabilities at the date of the financial statements
     and  the  reported  amounts  of  revenues and expenses during the reporting
     period.  Actual  results  could  differ  from  those  estimates.


NOTE 2  -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     Principles of Consolidation

     As of June 30, 2005, the Company has the following wholly owned
     subsidiaries:

          -    The Right Solution Gateway (multilevel marketing and retail
               sales)
          -    Grandma Hammans Specialty Foods (an inactive corporation)
          -    Gateway  Venture  Holdings,  Inc. (a Nevada Corporation organized
               April  30, 2004 to house and manage the real estate, vehicles and
               equipment  of  the  Company)

     The  Company sold it's wholly owned subsidiary, Aspen Cove Resorts, Inc, in
     combination  with  selling the property on which the resort is located. The
     results of operations of this subsidiary are included in these consolidated
     financial  statements  up  to  the  date  of  sale  which was June 2, 2005.

     The  Company  also  owns a 51% interest in Quality Distribution Services of
     Arizona,  a  wholesale distributor of non-alcoholic beverages and food. The
     Company  does  not  report  the operations of this company in the financial
     statements,  but  recognizes it as an investment, not as an equity position
     (See  Note  "Investment  in  Quality  Distribution  Services  of  Arizona"
     ("QDS")).

     The  accompanying consolidated financial statements include the accounts of
     its subsidiaries, except for QDS. All significant intercompany balances and
     transactions  have  been  eliminated.


NOTE 3 -   GRANDMA HAMMANS AND LOS CABOS BEVERAGE:

     The  Company purchased the assets of Grandma Hamman's Specialty Foods, LLC,
     from  Blaine  Wendtland on August 15, 2002. On December 21, 2004 the assets
     and  liabilities  of  Grandma  Hammans,  other  than  some  minor  residual
     receivables  and payables, passed to Blaine Wendtland in exchange for a 51%
     interest  in  the  sale  of  private  label water that Blaine Wendtland had
     developed.  To  date  the  subsidiary,  Grandma  Hammans, remains inactive.


                                      F-7
<PAGE>
     On  December  30,  2004,  the  Company formed a corporation named Los Cabos
     Beverage,  Inc.  ("Los  Cabos")  and  acquired  a  51%  ownership  with the
     remaining 49% going to Blaine Wendtland. Los Cabos was formed to handle the
     operations  of  the  sale  of  private  label  water discussed in the prior
     paragraph.  Operations  were  to  begin  in  2005.  The Company invested no
     initial  money  for  this  joint  venture,  but  it  did provide a place of
     operation  in  its  warehouse  and limited funding for payroll and selected
     other  expenses.

     During  January  and  February  of  2005  Los  Cabos  sales  did  not  meet
     expectations.  Management  determined that the operations would not be cost
     effective for the Company. On February 28, 2005 the Company entered into an
     agreement  with  Blaine  Wendtland  wherein  he  assumed  all ownership and
     obligations  and  the  Company terminated its commitments and relationships
     with  Los  Cabos and with Blaine Wendtland. There is a loss on the disposal
     of  this  subsidiary  of  $8,256 for operations while the Company owned it.


NOTE 4 -   LICENSING / PURCHASE AGREEMENT WITH THE CHELSEA COLLECTION INC. (A
           RELATED PARTY):

     The  Company  entered  into an agreement December 12, 2003 with The Chelsea
     Collection  Inc,  a  Nevada  corporation  ("Chelsea  Collection") which was
     finalized  on  March  15,  2004  and later clarified on a few points May 4,
     2004.  Chelsea Collection is a corporation owned equally by two officers of
     the  Company and Francois Vautour, an unrelated third party of the Company.
     Chelsea  Collection  in an agreement dated November 25, 2003 acquired among
     other  things  from  Francois  Vautour and assigns, except for Romania, all
     worldwide rights, trademarks, formulas and licenses of the Jeunesse by Fran
     ois  Vautour  and  the  GH3  skin  care  line.

     In  the agreement the Company has with Chelsea Collection, the Company will
     have  the  opportunity  to acquire the same Francois Vautour skin care line
     from  Chelsea  Collection for virtually the same price and terms as Chelsea
     Collection  is  buying it from Francois Vautour. The terms of the agreement
     involves a purchase price of $4,000,000, payments are computed based on 15%
     of the gross sales less cost of goods sold with a minimum weekly payment of
     $10,000.  Once  the  purchase price is paid, then a royalty of up to 15% of
     the  gross  sales  less  cost  of goods sold steps into place and continues
     thereafter.  The  cost  outlays  have  been  charged  to  the  statement of
     operations  as  a  selling,  general  and administrative expense which were
     $655,757  for  all of 2004 and $110,160 for the period ended June 30, 2005.

     The  Company has been unable to consistently pay the Chelsea Collection the
     minimum  of  $10,000  per week during 2005. The Chelsea Collection has made
     the  payments  to  Francois  Vautour  in order to maintain the terms of its
     agreement  with  him.  The Chelsea Collection has made tentative agreements
     with the Company to maintain the Company's position in relation to the skin
     care  line.

     No  title or ownership passes to the Company or to Chelsea Collection until
     the  November  25,  2003  agreement between Chelsea Collection and Fran ois
     Vautour  is  satisfied,  the  payment  of  which  is described in the prior
     paragraph.  The  Company  has  opted  not to capitalize the purchase price.

     The  Company  is  responsible  for all product research and development for
     current  and  future marketing as well as carrying inventory on all Gateway
     Distributors  products.  A  portion  of  the cost outlays in 2004 have been
     charged to the balance sheet as an asset under product development awaiting
     production  for  $230,573.  This  remains  unchanged  in  2005.


NOTE 5 -   INVESTMENT IN QUALITY DISTRIBUTION SERVICES OF ARIZONA ("QDS"):

     On May 30, 2004, an agreement was signed with Quality Distribution Services
     of Nevada creating a wholesale beverage distribution center in the Phoenix,
     Arizona  area.  For  this  joint  venture, Quality Distribution Services of
     Arizona, Inc ("QDS"). QDS was incorporated in Nevada on June 7, 2004 and is
     51%  owned  by  Gateway.


                                      F-8
<PAGE>
     The Company invested $282,700 during 2004 and another $50,000 through March
     31,  2005  to  assist in the development of the company. The other party to
     the  joint  venture  has  secured  the  warehouse  and  equipment  and  has
     guaranteed  payments  of  such  as  well  as  continue  providing  for  the
     operations  of  QDS.

     Management  has determined it is in the best interest of the Company not to
     continue  funding this joint venture. Negotiations are presently in process
     wherein  the  Company  would  dispose of its interest. Management is unsure
     what  the  settlement  price will be upon disposing of this investment, but
     has  recognized a reduction by the $196,953 operating loss incurred in 2004
     out  of  the  $332,700  investment.  This is recognized in the Statement of
     Operations  as  of  June  30,  2005.  In  addition,  no  operations of this
     subsidiary  are  recognized in the consolidated statement of operations, as
     management  has  taken  the  position  that the subsidiary is not under its
     control.

     Management  is  of  the opinion that this investment is worth as much as or
     more  than what is recognized on the balance sheet, therefore no impairment
     is  recognized  as  of  June  30,  2005.


NOTE 6-   REAL ESTATE SALES:

     During  the  first  quarter  of  2005,  the  Company borrowed an additional
     $400,000  from a financial institution on a 6.5% equity line secured by the
     office and warehouse property. Proceeds were used for remodeling the office
     and  warehouse  property.

     On  February  28, 2005 the Company sold the Shellstone residential property
     real  estate in Las Vegas for approximately $369,000. The gain on this sale
     has  been  recognized  in  the  Statement of Operations as "Gain on Sale of
     Property  Held  for  Short  Term  Investment".

     In  a  single agreement on June 2, 2005, the Company sold Aspen Cove Resort
     (property)  and the subsidiary Aspen Cove Resort, Inc. (operations of Aspen
     Cove  Resort),  hereafter  referred  to  as  "Aspen  Cove,"  to  Cal-Bay
     International  ("Cal-Bay"). Aspen Cove sold for $2,600,000. It was paid for
     with  (1)  restricted Preferred Series B stock of Cal-Bay, (2) an inactive,
     no  asset  corporation  listed  on  the  pink  sheets,  (3)  mortgage  debt
     assumption,  and  (4) cash paid to the mortgage holder catching up the past
     due  mortgage  payments.  The  Company  is still the primary obligor on the
     mortgage  note. Mortgage payments were current as of June 30, 2005. Because
     there  was  no distinction made between the sale of the Aspen Cove property
     and operations (subsidiary), the gain on the sale was netted into one gain,
     effective  June  2, 2005. The operations of Aspen Cove Resort are reflected
     only  thru June 2, 2005, the date the Company ceased owning the operations.

     The  valuation  of  the  stock received from the sale of Aspen Cove and the
     Valley  Dr.  real  estate, is for a guaranteed minimum sales price of $0.05
     per  share  upon  conversion  from preferred "B" stock to common stock. The
     preferred  stock  is  non-dilutable and, as per the agreement, upon sale as
     common  stock it is guaranteed to sell for no less than $0.05 per share, or
     additional shares will be issued to compensate for any shortage. The market
     value  of  the  common  stock  of  Cal-Bay International remains relatively
     stable  over  the past two years. Based on that analysis and that the stock
     in non-dilutable as to total sales value, Management has concluded that the
     likelihood  of  receiving  cash for sale of the stock in the future exists.
     The value of the stock is $1,600,000 discounted to present value at 10% per
     year for 3 years giving an estimated fair value of $1,251,499. This in turn
     recognizes  the  adjusted sales price, of $2,343,251. The gain on this sale
     has  been  recognized  in  the  Statement of Operations as "Gain on Sale of
     Aspen  Cove"  of  $626,782.

     In addition, during the second quarter 2005, the Company sold a residential
     property  in  Las  Vegas  for  approximately $250,000 to Cal-Bay. Under the
     terms  of  the  agreement  the purchase payment is made up of (1) 3,200,000
     shares  of  Cal-Bay  International  non-dilutable  Preferred  "B"  stock,
     guaranteed  value  at  $0.05  per  share,  (2)  and  debt assumption of the
     underlying  mortgage, and, (3) cash paid to the mortgage holder catching up
     the past due mortgage paymentsThe value of the stock is $160,000 discounted
     to the present value at 10% per year for 3 years, computing to an estimated
     fair  value  of  $125,150.  This  changes  the  recognized sales price from
     approximately  $250,000  to  $251,009.  The  loss  on  this  sale  has been
     recognized  in  the  Statement  of Operations as "Loss on Sale of Valley Dr
     House"  of  $10,380.


                                      F-9
<PAGE>
NOTE 7 -   REVERSE STOCK SPLIT:

     On  March  28,  2005,  the Company did a 500 for 1 reverse stock split. The
     financial  statements have reflected this reverse stock split retroactively
     to  inception.


NOTE 8 -   EMPLOYEE STOCK INCENTIVE PLAN ("ESIP"):

     Since 2003, the Company has filed with the Security and Exchange Commission
     ("SEC")  forms S-8 notifying of Employee Stock Incentive Plans ("ESIP") and
     its  increases  in  stock approved to issue under such plans. No additional
     increases  in  stock  have  been  submitted or approved to issue under such
     plans  since  August  2004.

     During  2004,  the  total number of shares approved to issue in these plans
     was  18,200,000,000  (18  billion,  200 million). Stock issued to employees
     through  the plan is not affected by reverse splits until after it has been
     sold.  The  remaining  unissued stock at any time remains unchanged despite
     what  happens  to  the stock once it is issued. i.e., stock reverse splits,
     dividends, etc. As of June 30, 2005, the remaining shares approved to issue
     under  the  ESIP  plans  are  5,078,400,000.

     During  January  1 through March 31, 2005, the Company issued 1,432,000,000
     shares out of the ESIP plan before stock splits. The number of shares after
     stock splits is recognized on the statement of stockholders equity. The net
     proceeds  to the Company from employee stock sales during the first quarter
     of  2005  is  approximately  $211,000.

     During  April 1 through June 30, 2005, the Company issued 24,000,000 shares
     out  of  the ESIP plan. The net proceeds to the Company from employee stock
     sales  during  the second quarter of 2005 is approximately $31,000. Not all
     stock issued to employees under the ESIP plan during the second quarter has
     been  sold  yet. The Company follows the practice that no value be assigned
     until  the  sale of employee stock. The unrecognized value of this stock to
     the  Company  based  on  the market value of the stock at June 30, 2005 and
     August  11,  2005  would be approximately $19,000, and $9,700 respectively.


NOTE 9 -   RECEIVABLE ESIP STOCK PLAN:

     Stock  sales  through  the  Employee  Stock  Incentive  Plan (ESIP) sold at
     quarter  end  are  reported  as  a  receivable  rather than negative equity
     provided  they  are  received within 45 days after quarter end. Funds to be
     received  from  the ESIP Plan were reported as "Receivable ESIP Stock Plan"
     as  a  current asset in the amount of $2,732. These are for stock issued by
     June  30,  2005,  the  sale  proceeds of which were received by the Company
     during  July  2005.


NOTE 10 -   NON-EMPLOYEE, DIRECTORS AND CONSULTANTS RETAINER STOCK PLAN ("RSP"):

     The  Company continually seeks to improve its financial position by seeking
     investors  in exchange for equity in the Company. The value assigned to the
     stock  for  these  transactions  will vary based on the market value of the
     stock  or  services  performed  at  the  time,  whichever  is  more readily
     ascertainable.

     Since 2003, the Company has filed with the Security and Exchange Commission
     ("SEC")  forms  S-8  notifying  of  Non-Employee  Directors and Consultants
     Retainer  Stock  Plans ("RSP") and its increases in stock approved to issue
     under  such  plans. No additional increases in stock have been submitted or
     approved  to  issue  under  such  plans  since  August  2004.


                                      F-10
<PAGE>
     During  2004,  the  total number of shares approved to issue in these plans
     were  8,500,000,000  (8 billion 500 million). The number of shares approved
     to  issue  through  the  plan  is not affected by reverse stock splits. The
     remaining unissued stock at any time remains unchanged despite what happens
     to the stock once it is issued. i.e., stock reverse splits, dividends, etc.
     As of June 30, 2005, the total remaining shares approved to issue under the
     RSP  plans  are  1,526,000,000.

     During  January  1  through  March  31, 2005, the Company issued 30,000,000
     shares  out of the RSP plan before stock splits. The number of shares after
     stock  splits  is  recognized  on  the  statement  of  stockholders equity.

     During April 1 through June 30, 2005, the Company issued 200,000,000 shares
     out  of  the  RSP  plan.


NOTE 11 -   AUTHORIZATION OF SERIES "B" PREFERRED STOCK AND ISSUANCE OF
            RESTRICTED PREFERRED "B" STOCK TO CONSULTANTS:

     On  January 18, 2005, the Company authorized 100,000,000 shares of Series B
     Preferred  Stock  with  a  par value of 0.001 per share. Series B preferred
     stock  is  convertible  to  common  stock on a one for one basis and has no
     voting  rights.

     During  January  1  through  March  31, 2005, the Company issued 15,000,000
     restricted  shares  of Series B preferred stock to consultants for services
     rendered  with  an  assigned  value  of  $15,000.

     During  April  1  through  June  30,  2005, the Company issued no shares of
     Series  B  preferred  stock


NOTE 12 -   RESTRICTED STOCK ISSUED TO OFFICERS (RELATED PARTY TRANSACTIONS):

     During  January  1  through  March 31, 2005, the Company issued to officers
     7,000,000  shares  of  restricted  common  stock,  valued  at  $100.

     During  January  1  through  March  31, 2005, the Company did not issue any
     shares  of  preferred  stock  to  officers.

     During  April  1  through  June  30,  2005,  the Company issued to officers
     16,000,000  shares  of  restricted  common  stock,  valued  at  $800.


NOTE 13 -   NEPOTISM DISCLOSURE (RELATED PARTY TRANSACTIONS):

     During  the  First  Quarter  of  2005,  the daughter of the Chief Executive
     Officer  worked  as  Marketing  Representative (reassigned March 1, 2005 to
     non-managerial  responsibilities  and  has  since  terminated  employment).

     The  son  of  the  Chief  Operations  Officer  serves  as Vice President of
     Operations  with  additional  responsibilities  in  Information Technology.
     Other  children  of  the  officers  work  part  time  for  the  Company  in
     non-managerial  positions.


NOTE 14 -   RECLASSIFICATION AND RESTATEMENTS:

     Selected  items  in  the  June  30, 2004 financial statements as previously
     reported  have  been  reclassified  and  restated to be consistent with the
     unaudited  financial  statements  as  of  June  30,  2005.

     The Company has no off-balance sheet arrangements.


                                      F-11
<PAGE>
NOTE 15 -   PRODUCTS PENDING PRODUCTION RECLASSISFIED TO PREPAID ADVERTISING
            COSTS AND PRODUCT AWAITING MARKETING:

     During  2004  and  before,  Company  acquired sizeable capital investments.
     Management,  in  an  effort to use wisely and prudently the funds received,
     looks  at  different  alternatives  to invest what it receives. Some of the
     funding  goes  into  the  search  and  subsequent  development  of selected
     projects  and  products.

     The  types  of  costs  the  Company  incurs for product development include
     direct  costs  associated  with the search, evaluation and market study for
     the product development involved. These costs include: 1) outside services,
     2)  travel,  3)  testing  and  analysis,  and 4) other direct cost that may
     arise.  In  accounting  for  these  costs,  we  charge  to  operations  all
     preliminary  and  research  costs  as  well  as all costs stemming from all
     issuances  of  stock.  We  only  recognize  as  an asset those direct costs
     associated  with those projects we consider are beyond research and that we
     have concluded are viable for the future benefit of the Company. We expense
     all  amounts  paid  for  services  and  products  that  are  paid by stock,
     including the common stock is issued by the Company under its Non-Employee,
     Directors  and  Consultants  Retainer  Stock  Plan  ("Plan").

     On  June  30, 2005, management reclassified $230,572 from "Products Pending
     Production"  to  "Prepaid  Advertising  Costs"  as  an "Other Asset" on the
     Balance  Sheet.  This  is  for an infomercial completed and ready to use in
     selected  geographic  areas.  Amortization of this prepaid advertising will
     begin  after  June 30, 2005 and will be based over an estimated useful life
     yet  to be determined. Management is of the opinion that the estimated fair
     value  of  prepaid  advertising  exceeds the cost recognized on the Balance
     Sheet.

     The  remaining  $187,650  left  in  "Products  Pending Production" has been
     reclassified  to  "Product Awaiting Marketing" as an "Other Asset." This is
     the  first  product  within  the  Pete  Rose line. It is now completed with
     product on hand, but it is awaiting dissemination pending negotiations with
     third parties as to how it will be marketed. The Company does not recognize
     products as inventory, or as a current asset, until the method of marketing
     is  established.  The Company originally had a plan and method of marketing
     established,  but  has  since  stopped  the  route  originally  selected to
     reconsider  other  marketing  approaches. Management is of the opinion that
     the  estimated  fair  value  of product awaiting marketing exceeds the cost
     recognized  on  the  Balance  Sheet.

     With  these  two  reclassifications  on the balance sheet, there is nothing
     left classified as "Products Pending Production" as an "Other Asset" on the
     Balance  Sheet.


NOTE 16 -   CONSIDERATIONS AFFECTING THE COMPANY'S ABILITY TO CONTINUE AS A
            GOING CONCERN:

     There  have  been significant recurring losses and negative cash flows from
     operations  for  the  past  years  as well as this year to date, which have
     resulted  in  a severe working capital deficiency. In the event the Company
     is  unable  to  raise  sufficient  operating  capital,  the  aforementioned
     conditions  raise substantial doubt about the Company's ability to continue
     as a going concern. The financial statements do not include any adjustments
     that  might  result  from  the occurrence of such conditions, and have been
     prepared  assuming  that  the  Company  will  continue  as a going concern.

     The Company has reassessed its operating commitments and is taking steps to
     minimize or to stop funding certain operations in order to conserve as well
     as  to  preserve  its  working  capital.


                                      F-12
<PAGE>
NOTE  17  -   COMMITMENTS AND CONTINGENCIES:

COMMITMENTS:
-----------

     On  or  about  November 27, 2003 the Company entered into an arrangement to
     invest  in  the  development  and  marketing  of  a  cosmetic line owned by
     Francois  Vautour.  The  products  of  Francois  Vautour  were  previously
     successfully  marketed  in  various parts of the world. To acquire the full
     rights,  exclusive  of  Romania,  the  cosmetic  line required a $4,000,000
     commitment  plus  the  costs  of  marketing.

     Although  the  Company  desired  to acquire the rights and ownership of the
     line, it was greater than the Company felt was prudent for it to do. So, to
     put  a  stop  loss  feature  in  the  agreement the two key officers of the
     Company,  Rick  Bailey,  CEO  and  Flo  Ternes,  COO,  formed  The  Chelsea
     Collection,  LLC  ("LLC"),  an  entity  to provide the spring board for the
     Company  to acquire the rights and to minimize the Company's risk. This was
     agreeable  with  Francois  Vautour  and  LLC. Refer to Note above "Products
     Pending  Production  Reclassed  to  Prepaid  Advertising  Costs and Product
     Awaiting  Marketing".

     On  a  separate  matter,  dealing  with  a marketing consultant the Company
     signed  in  August  of 2003 a consulting agreement committing to a ten-year
     contract  to  provide  training  for the company distributors. Compensation
     will be based on the ability of the consultant to sign up new distributors.
     Management  believes  it  will  be  a  self-funding  and revenue generating
     program.

     CONTINGENT LIABILITIES:
     -----------------------

     The Company has no errors or omissions insurance for Directors and
     Officers.

     The  Company  originally  acquired  TRSG  Corporation  ("TRSG"),  effective
     January 11, 2001, by passing all of its assets and selected debt to TRSG in
     exchange  for  approximately  78%  of the stock ownership of TRSG. When the
     Company  later  sold  its  approximately  76%  interest  in TRSG, effective
     December  31, 2002, it received $15,000 for the stock. It also acquired all
     of  the  assets  of  TRSG, its operations, and selected debt from TRSG. The
     disposal  of  TRSG  December  31,  2002  effectively  brought back into the
     Company  what  it had before it acquired TRSG in the first place, effective
     January 11, 2001. These transactions, both the original acquisition as well
     as  the  subsequent  disposal,  are  reported  under the purchase method of
     accounting,  with  reported  costs recognized as it was in the hands of the
     predecessor. Under the terms of the agreement, TRSG chooses which creditors
     it  continues  to  owe  and  all  others  are  passed  to the Company. This
     agreement  has  not  been  agreed  upon  by the creditors of TRSG. TRSG has
     ongoing legal matters that may or may not implicate the Company. Management
     is unable to estimate the possible loss exposure, but believes the ultimate
     outcome to be minimal for the Company, and has therefore not recognized any
     contingent  liability  on  this  matter.

     The  Company  has  unidentified  liabilities  of  $399,500  reported on the
     balance  sheet  under  trade  accounts  payable.  These  are  a  portion of
     liabilities  recognized  in  prior  years' financial statements, reduced to
     $400,000  in  2004. The Company has been unsure and unable to identify what
     they  represent.  Some go back as much as ten years ago. Some may represent
     debts  recorded  in  prior mergers and acquisitions that the Company is not
     responsible  to  pay.  Others  may have come about by erroneously recording
     liabilities  that  were  already paid. Others may be duplicated liabilities
     that  did  not  belong  as  debt  in  the  first  place.

     In  the  normal  course  of  business  the  Company experienced a change in
     accepted  product  sold to the public by the Bureaus of Consumer Protection
     of  Nevada  and  Maryland  over  the  selling  of  a  discontinued product.
     Negotiations  are  still  in  process,  the  proposed  penalties  and costs
     associated with this matter could range from $0 to $220,000. No enforcement
     action  has  been  filed  against  the  Company  to  date.


                                      F-13
<PAGE>
     Presently  a  creditor of the Company, Allergy Research group / Nutricology
     filed  in  the District Court of Clark County, Nevada an action against the
     Company  on  an  unpaid  open  account  for goods and merchandise, Case No.
     A-487334,  in  the  amount  of  $168,000.  The  Company contests the amount
     claimed  and  has  made  payment  toward  the  uncontested  amount  while
     negotiations  with  the  plaintiff  continue.  The  litigation  is  in  the
     discovery  phase  with  no trial date set at this time. Management believes
     the  exposure on this claim ranges between $50,000 and $80,000, less future
     payments.

     The  Company  has  recognized  an obligation in the financial statements of
     approximately  $90,000, which is recognized as an accounts payable to cover
     the  potential  liability  exposure  of  these  proceedings.

     Also,  complaints  filed  by  the  Security and Exchange Commission against
     Suburban  Capital  which  names the Company and its CEO are not settled. At
     this juncture, legal counsel is unable to predict what the possible outcome
     of  these  matters  will  be.  The Company therefore has not recognized any
     contingent  liability  for  this  litigation.

     OTHER:
     ------

     As  of June 30, 2005, Management continues negotiations, initiated in 2003,
     with  the Internal Revenue Service ("IRS") to settle back payroll taxes due
     and  anticipates  a  settlement  by  the-end  of  2005.


NOTE 18  -  SUBSEQUENT EVENTS:

     In  July  2005,  the Company has sold it's Las Vegas, Nevada property which
     houses  it's  warehouse  and  office  facilities. The Company is looking to
     purchase  a  smaller  commercial property. The sale is pending financing on
     the  part  of  the  buyer.  There is presently a non-refundable $100,000 in
     escrow  to  be  released to the Company sometime after the middle of August
     2005.  With  the  Company's  consent,  the buyer is occupying the warehouse
     space  unused by the Company. The Company anticipates this sale will result
     in  a  gain.

     The  SEC  has  requested  the  company respond to questions they had raised
     regarding  the  filing  of  the  Company's  10-KSB as of December 31, 2004.
     Management  has  responded  in part to these questions by filing an Amended
     10-KSB ("10-KSB/A"). The 10-KSB/A expanded the explanations and disclosures
     to  the  financial  statements. Subsequent to filing the 10-KSB/A 2004, the
     SEC  has  raised  additional  questions  seeking  further  clarification.
     Management  is  presently  in the process of responding to these questions.
     Management  regards  these questions as ones seeking clarification that may
     or  may  not  change  the  prior  reported  statements.


                                      F-14
<PAGE>
Item  2.     Management's Discussion and Analysis or Plan of Operations.

Forward-Looking Information

     Much  of  the  discussion in this Item is "forward looking" as that term is
used  in  Section  27A  of  the Securities Act and Section 21E of the Securities
Exchange  Act  of 1934. Actual operations and results may materially differ from
present  plans  and  projections  due  to  changes  in  economic conditions, new
business  opportunities,  changed  business  conditions, and other developments.
Other factors that could cause results to differ materially are described in our
filings  with  the  Securities  and  Exchange  Commission.

     There  are  several  factors  that  could cause actual results or events to
differ  materially  from  those anticipated, and include, but are not limited to
general  economic,  financial and business conditions, changes in and compliance
with  governmental  laws  and  regulations,  including various state and federal
environmental  regulations,  our  ability  to  obtain  additional financing from
outside  investors and/or bank and mezzanine lenders and our ability to generate
sufficient  revenues  to  cover  operating  losses  and  position  us to achieve
positive  cash  flow.

     Readers  are  cautioned  not to place undue reliance on the forward-looking
statements  contained herein, which speak only as of the date hereof. We believe
the  information  contained  in  this  Form 10-QSB to be accurate as of the date
hereof.  Changes  may occur after that date. We will not update that information
except  as  required  by  law  in  the  normal  course  of its public disclosure
practices.

     Additionally,  the  following  discussion regarding our financial condition
and  results  of  operations  should  be  read in conjunction with the financial
statements  and related notes contained in Item 1 of Part I of this Form 10-QSB,
as  well as the financial statements in Item 7 of Part II of our Form 10-KSB for
the  fiscal  year  ended,  2  December  31,  2004.

Management's Plan of Operations

General

     We  were originally incorporated in the State of Nevada on May 26, 1993. We
market  and  distribute  different  nutritional  and/or  health  and  skin  care
products.  The  products  which  we  sell  are  intended  to provide nutritional
supplementation  to the users; the products are not intended to diagnose, treat,
cure  or  prevent  any  disease.

Current Business Plan

     Our  current  purpose  is  to  seek, investigate and, if such investigation
warrants,  acquire  an  interest  in  business  opportunities presented to us by
persons  or  firms  who  or  which  desire to seek the perceived advantages of a
corporation  which  is  registered under the Securities Exchange Act of 1934, as
amended.  We  do  not  restrict our search to any specific business; industry or
geographical  location and we may participate in a business venture of virtually
any  kind  or  nature.

     We  may  seek  a  business  opportunity  with  entities which have recently
commenced  operations,  or which wish to utilize the public marketplace in order
to  raise additional capital in order to expand into new products or markets, to
develop a new product or service or for other corporate purposes. We may acquire
assets  and establish wholly owned subsidiaries in various businesses or acquire
existing  businesses  as  subsidiaries.

     As  part  of our investigation of potential merger candidates, our officers
and  directors will meet personally with management and key personnel, may visit
and  inspect material facilities, obtain independent analysis or verification of
certain  information  provided, check references of management and key personnel
and take other reasonable investigative measures, to the extent of our financial
resources  and  management  expertise.  The manner in which we participate in an
opportunity  will  depend on the nature of the opportunity, the respective needs
and  desires  of  us  and  other parties, the management of the opportunity, our
relative  negotiation  strength  and  that  of  the  other  management.

     We  intend  to  concentrate on identifying preliminary prospective business
opportunities  that may be brought to our attention through present associations
of  our officers and directors, or by our stockholders. In analyzing prospective
business  opportunities,  we  will  consider  such  matters  as  the  available
technical,  financial  and  managerial  resources;  working  capital  and  other
financial requirements; history of operations, if any; prospects for the future;
nature  of


                                        2
<PAGE>
present  and  expected  competition;  the  quality  and experience of management
services  which may be available and the depth of that management; the potential
for  further research, development or exploration; specific risk factors not now
foreseeable but which then may be anticipated to impact our proposed activities;
the  potential  for growth or expansion; the potential for profit; the perceived
public  recognition  or  acceptance  of  products,  services  or  trades;  name
identification;  and  other  relevant  factors.

     Our  officers  and  directors  will meet personally with management and key
personnel  of  the  business opportunity as part of their investigation. We will
not  acquire  or  merge  with any company for which audited financial statements
cannot  be  obtained  within  a  reasonable  period of time after closing of the
proposed  transaction,  as  required  by  the  Exchange  Act.

     We  will  not  restrict  our  search to any specific kind of firms, but may
acquire  a  venture  which  is in its preliminary or development stage, which is
already  in  operation,  or  which  is in essentially any stage of its corporate
life.  It  is  impossible  to predict at this time the status of any business in
which  we  may become engaged, in that such business may need to seek additional
capital,  may  desire  to  have  its  shares  publicly  traded or may seek other
perceived  advantages  which  we  may  offer.

Recent Changes in Our Capital Structure

     Effective  January  18,  2005,  we  designated  100,000,000  shares  of our
preferred  stock  as  the  Series  B Preferred Stock. Each share of the Series B
Preferred Stock is convertible into one share of the common stock. The shares of
the  Series  B  Preferred  Stock  do  not  have  voting  rights.

     Effective  March  28,  2005,  we  implemented  a 1-500 reverse split of our
issued  and  outstanding  common  stock.

Results of Operations

Continuing Operations

Second Quarter Costs and Changes in Financial Conditions

     The  balance  of  current  assets  at  December  31, 2004 was approximately
$806,000  compared  to  a  balance  of  $397,000 at June 30, 2005, a decrease of
$409,000.  The  balance  of  current  liabilities was $2,954,000 and $3,795,000,
respectively,  for  the  same  period,  an  increase  of $841,000. The resulting
current  ratio at December 31, 2004 was 0.27 to 1. The current ratio at June 30,
2005  was  .10  to  1.  The  current ratio indicates that our ability to pay our
obligations  has  worsened  since  December  31,  2004.

Revenue & Operating Expenses

Three  months  ended  June  30, 2005 compared to the three months ended June 30,
2004.

     Total  net  sales and revenues were at approximately $190,000 for the three
months ended June 30, 2004 compared to $233,000 for the prior period, a decrease
of  18  percent. This is due to the inactivity of the subsidiary Grandma Hammans
Specialty Foods which has ceased operation at this time, but may be utilized for
new  wholesale  business  in  the  future.

     Our  gross profit for the three months ended June 30, 2005 compared to 2004
decreased  to  $147,000  from  $188,000.  Gross  margin as a percentage of sales
decreased  to  77  percent  in  2005  from  81  percent  in  2004.

     Total  operating expenses for the three months ended June 30, 2005 compared
to 2004 decreased by $2,713,000 to $405,000 from $3,118,000 in the prior period.
This  came  about  primarily  in  the reduction of professional fees and product
development  efforts  of  the  Company  during  the  period.

     Operating  loss decreased $3,314,000 from a loss of $2,994,000 to an income
of $320,000 for the three months ended June 30, 2004 and 2005 respectively. This
came  about  primarily  from  the  reduction  of  professional  services  and


                                        3
<PAGE>
fees,  decrease  in product development efforts, and a $653,000 gain on the sale
of  Aspen  Cove  during  the  most  recent  three  months.

     Net  interest  expense for the three months ended June 30, 2005 was $65,000
as  compared  to  the  same  period  in  2004  of  $66,000.

     Net  loss  from  continuing  operations for the three months ended June 30,
2005  decreased  to a loss of $257,000 from a loss of $2,930,000 compared to the
same  period  2004,  a  decrease of $2,673,000. Even though we have succeeded in
reducing  our  operating losses considerably from that of the prior year, we are
still  unable  to garner an operating profit. Sales still remain insufficient to
cover  our  operating  needs.

Six months ended June 30, 2005 compared to the six months ended June 30, 2004.

     Total  net  sales  and  revenues were at approximately $392,000 for the six
months ended June 30, 2004 compared to $500,000 for the prior period, a decrease
of 21 percent. This is due primarily to the inactivity of the subsidiary Grandma
Hammans  Specialty  Foods  which  has  ceased operation at this time, but may be
utilized  for  new  wholesale  business  in  the  future.

     Our  gross  profit  for the six months ended June 30, 2005 compared to 2004
decreased  to  $303,000  from  $409,000.  Gross  margin as a percentage of sales
decreased  to  77  percent  in  2005  from  82  percent  in  2004.

     Total operating expenses for the six months ended June 30, 2005 compared to
2004  decreased by $5,256,000 to $1,065,000 from $6,321,000 in the prior period.
This  came  about  primarily  in  the reduction of professional fees and product
development  efforts  of  the  Company  during  the  period.

     Operating  loss decreased $5,759,000 from a loss of $6,038,000 to a loss of
$279,000 for the six months ended June 30, 2004 and 2005 respectively. This came
about  primarily  from the reduction of professional services and fees, decrease
in  product  development  efforts, and a $653,000 gain on the sale of Aspen Cove
during  the  most  recent  six  months.

     Net interest expense for the six months ended June 30, 2005 was $111,000 as
compared  to  the  same  period  in  2004  of  $130,000.

     Net  loss from continuing operations for the six months ended June 30, 2005
decreased  to  a loss of $762,000 from a loss of $5,912,000 compared to the same
period 2004, a decrease of $5,150,000. Even though we have succeeded in reducing
our  operating  losses  considerably  from  that of the prior year, we are still
unable  to  garner  an  operating profit. Sales remain insufficient to cover our
operating  needs.

Liquidity and Capital Resources

     As  of June 30, 2005, we had a deficiency in working capital of $3,398,000.

     Net  cash  used  for  the  first  six  months  operating activities came to
approximately  $401,000,  down  $2,455,000  from  this  period  last  year  of
$2,857,000.

     Cash  used  in investing activities netted $250,000, of which approximately
$440,000  used for office building improvements and $50,000 investment in QDS of
Arizona.

     During  the  first  six  months  2005, we received loan proceeds to remodel
office  building  and  paid  on  other  loans for a net increase in term debt of
$443,000.  We  also received $234,000 in proceeds from stock sales to employees.

Critical Accounting Policies

     The preparation of our consolidated financial statements in conformity with
accounting  principles  generally  accepted  in the United States requires us to
make  estimates  and  judgments  that  affect  our reported assets, liabilities,
revenues, and expenses, and the disclosure of contingent assets and liabilities.
We  base  our  estimates  and  judgments on historical experience and on various
other  assumptions  we  believe to be reasonable under the circumstances. Future


                                        4
<PAGE>
events,  however,  may  differ  markedly  from  our  current  expectations  and
assumptions.  While  there  are  a  number  of  significant  accounting policies
affecting  our  consolidated  financial  statements,  we  believe  the following
critical  accounting  policy  involve the most complex, difficult and subjective
estimates  and  judgments.

Stock-Based Compensation

     In December 2002, the FASB issued SFAS No. 148 - Accounting for Stock-Based
Compensation  -  Transition and Disclosure. This statement amends SFAS No. 123 -
Accounting  for  Stock-Based  Compensation,  providing  alternative  methods  of
voluntarily  transitioning  to  the fair market value based method of accounting
for  stock  based employee compensation. FAS 148 also requires disclosure of the
method  used  to account for stock-based employee compensation and the effect of
the  method  in both the annual and interim financial statements. The provisions
of  this  statement related to transition methods are effective for fiscal years
ending  after  December  15,  2002,  while  provisions  related  to  disclosure
requirements  are  effective  in financial reports for interim periods beginning
after  December  31,  2002.

     We  elected to continue to account for stock-based compensation plans using
the  intrinsic  value-based  method  of  accounting  prescribed  by  APB No. 25,
"Accounting  for  Stock Issued to Employees," and related interpretations. Under
the provisions of APB No. 25, compensation expense is measured at the grant date
for  the  difference between the fair value of the stock and the exercise price.

Recent Accounting Pronouncements

     In  November  2004,  the Financial Accounting Standards Board (FASB) issued
SFAS 151, Inventory Costs- an amendment of ARB No. 43, Chapter 4. This Statement
amends  the  guidance  in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify
the  accounting for abnormal amounts of idle facility expense, freight, handling
costs,  and  wasted  material  (spoilage).  Paragraph  5  of  ARB 43, Chapter 4,
previously  stated  that  "under some circumstances, items such as idle facility
expense,  excessive  spoilage,  double  freight,  and rehandling costs may be so
abnormal  as  to  require  treatment  as current period charges." This Statement
requires  that those items be recognized as current-period charges regardless of
whether  they  meet  the criterion of "so abnormal." In addition, this Statement
requires  that  allocation  of  fixed  production  overheads  to  the  costs  of
conversion  be  based  on the normal capacity of the production facilities. This
Statement  is  effective  for  inventory  costs  incurred  during  fiscal  years
beginning  after June 15, 2005. Management does not believe the adoption of this
Statement  will  have  any  immediate  material  impact  on  the  Company.

     In  December 2004, the FASB issued SFAS No.152, "Accounting for Real Estate
Time-Sharing  Transactions-an amendment of FASB Statements No. 66 and 67" ("SFAS
152)  The  amendments made by Statement 152 This Statement amends FASB Statement
No.  66,  Accounting  for  Sales  of  Real  Estate,  to  reference the financial
accounting and reporting guidance for real estate time-sharing transactions that
is  provided  in  AICPA  Statement  of  Position (SOP) 04-2, Accounting for Real
Estate  Time-Sharing Transactions. This Statement also amends FASB Statement No.
67,  Accounting for Costs and Initial Rental Operations of Real Estate Projects,
to  state that the guidance for (a) incidental operations and (b) costs incurred
to  sell  real  estate  projects  does  not  apply  to  real estate time-sharing
transactions.  The  accounting  for those operations and costs is subject to the
guidance  in  SOP 04-2. This Statement is effective for financial statements for
fiscal years beginning after June 15, 2005. with earlier application encouraged.
We  do  not  anticipate  that  the  implementation  of this standard will have a
material  impact on its financial position, results of operations or cash flows.

     On  December  16,  2004,  the Financial Accounting Standards Board ("FASB")
published  Statement  of  Financial Accounting Standards No. 123 (Revised 2004),
Share-Based  Payment  ("SFAS  123R").  SFAS 123R requires that compensation cost
related  to  share-based  payment  transactions  be  recognized in the financial
statements.  Share-based  payment  transactions  within  the  scope of SFAS 123R
include  stock  options, restricted stock plans, performance-based awards, stock
appreciation  rights,  and employee share purchase plans. The provisions of SFAS
123R  are  effective  as  of the first interim period that begins after June 15,
2005.  Accordingly, the Company will implement the revised standard in the third
quarter of fiscal year 2005. Currently, the Company accounts for its share-based
payment  transactions under the provisions of APB 25, which does not necessarily
require  the  recognition  of  compensation  cost  in  the financial statements.
Management  is  assessing  the  implications of this revised standard, which may
materially  impact  the  Company's results of operations in the third quarter of
fiscal  year  2005  and  thereafter.


                                        5
<PAGE>
     On  December  16,  2004,  FASB  issued  Statement  of  Financial Accounting
Standards  No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion
No.  29,  Accounting  for Nonmonetary Transactions (" SFAS 153"). This statement
amends  APB  Opinion  29 to eliminate the exception for nonmonetary exchanges of
similar productive assets and replaces it with a general exception for exchanges
of  nonmonetary assets that do not have commercial substance. Under SFAS 153, if
a nonmonetary exchange of similar productive assets meets a commercial-substance
criterion  and fair value is determinable, the transaction must be accounted for
at  fair  value  resulting  in  recognition  of  any  gain  or loss. SFAS 153 is
effective  for  nonmonetary transactions in fiscal periods that begin after June
15,  2005.  We  do  not anticipate that the implementation of this standard will
have  a material impact on its financial position, results of operations or cash
flows.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item  3.     Controls and Procedures.

     Disclosure  controls  and procedures are controls and other procedures that
are  designed  to  ensure that information required to be disclosed by us in the
reports  that  we  file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange  Commission's  rules  and  forms.  Disclosure  controls  and procedures
include,  without  limitation,  controls  and procedures designed to ensure that
information required to be disclosed by us in the reports that we file under the
Exchange  Act  is  accumulated and communicated to our management, including our
principal  executive  and  financial  officers,  as  appropriate to allow timely
decisions  regarding  required  disclosure.

     Evaluation  of Disclosure and Controls and Procedures. As of the end of the
period  covered  by this Quarterly Report, we conducted an evaluation, under the
supervision  and with the participation of our chief executive officer and chief
financial  officer,  of  our  disclosure  controls and procedures (as defined in
Rules  13a-15(e)  of  the  Exchange  Act).  Based  on this evaluation, our chief
executive  officer  and  chief  financial  officer concluded that our disclosure
controls  and procedures are effective to ensure that information required to be
disclosed  by  us  in  reports  that we file or submit under the Exchange Act is
recorded,  processed,  summarized and reported within the time periods specified
in  Securities  and  Exchange  Commission  rules  and  forms.

     Changes  in Internal Controls Over Financial Reporting. There was no change
in  our  internal  controls,  which  are included within disclosure controls and
procedures,  during  our  most  recently  completed  fiscal  quarter  that  has
materially  affected, or is reasonably likely to materially affect, our internal
controls.


                                        6
<PAGE>
                           PART II - OTHER INFORMATION

Item  1.  Legal Proceedings.

     Reference  is  made  to  Item 3 of our Annual Report on Form 10-KSB for the
fiscal  year  ended  December  31,  2004, filed with the Commission on April 15,
2005.

Item  2.  Unregistered Sales of Equity Securities and Use of Proceeds.

     None.

Item  3.  Defaults Upon Senior Securities

     None.

Item  4.  Submission of Matters to a Vote of Security Holders.

None..

Item  5.  Other Information.

     None.


                                        7
<PAGE>
<TABLE>
<CAPTION>
Item  6.  Exhibits.

Exhibit
-------
 No.                                            Identification of Exhibit
-------                                         -------------------------
<S>      <C>
3.1**    Articles of Incorporation.
3.2**    Amended and Restated Articles of Incorporation.
3.3**    Articles of Amendment to the Articles of Incorporation, filed effective on June 28, 2004.
3.4**    Certificate of Change, filed effective on September 3, 2004
3.5**    Articles of Amendment to the Articles of Incorporation, filed effective on October 4, 2004.
3.6**    Certificate of Amendment to the Certificate of Designation for the Series A Preferred Stock, filed
         effective on November 9, 2004.
3.7**    Certificate of Change, filed effective on December 20, 2004.
3.8*     Certificate of Designation for the Series B Preferred Stock, filed effective on January 18, 2005.
3.9**    Amended By-laws.
10.1**   Financial Advisor Agreement between Sabita Dhingra and Registrant, dated January 12, 2004
10.2**   Financial Advisor Agreement between Venna Kila and Registrant, dated January 12, 2004
10.3**   Financial Advisor Agreement between Patricia M. Spreitzer and Registrant, dated January 12, 2004
10.4**   Financial Advisor Agreement between Avi Sivan and Registrant, dated January 12, 2004
10.5**   Financial Advisor Agreement between Prem Ramchandani and Registrant, dated January 12, 2004
10.6**   Financial Advisor Agreement between Avraham Ovadia and Registrant, dated January 12, 2004
10.7**   Financial Advisor Agreement between Shai Bar-Lavi and Registrant, dated January 12, 2004
10.8**   Financial Advisor Agreement between Glen Bartolini and Registrant, dated January 12, 2004
10.9**   Financial Advisor Agreement between Athony Cassetta and Registrant, dated January 12, 2004
10.10**  Settlement Agreement between William Goins, Jr. and Registrant, dated December 2002
10.11**  Agreement between Suburban Capital Corporation and Registrant, dated January 14, 2003
10.12**  Proposed Consulting and Marketing Agreement between Sprout Investments and Registrant
10.13**  Consultant and Marketing Right Agreement between Mark Neuhaus and Registrant
10.14**  Asset Purchase Agreement between The Right Solution Gateway and Registrant, dated August 11, 2003
10.15**  Endorsement Agreement between Bruce Jenner and The Right Solution, dated November 1, 2003
10.16**  Master Distributorship Indonesia between Master Distributor Mahakam Beta Forma and The Right
         Solution, dated September 23, 2003
10.17**  Promissory Note of  Registrant to Los Cabos Freedom Movement, L.L.C., Lender, dated July 3, 2003
10.18**  Agreement between Tropical Beverage and Registrant, dated September 9, 2003
10.19**  Employment agreement between Blaine Wendtland and Registrant, dated July 7, 2003
10.20**  Promissory Note of Grandma Hamman's to Ed Wendtland, Lender, dated July 3, 2003
10.21**  Consulting Agreement between Jack M. Zufelt and The Right Solutions Gateway, dated July 17, 2003
10.22**  Consulting Agreement between Jack M. Zufelt and The Right Solutions Gateway, dated August 12, 2003
10.23**  Endorsement Agreement between Bruce Jenner and The Right Solution, dated November 1, 2003
10.24**  Consulting Agreement between Jack M. Zufelt and The Right Solutions Gateway, dated December 12,
         2003
10.25**  Consulting Agreement between Jack M. Zufelt and The Right Solutions Gateway, dated December 9,
         2003.
10.26**  Consulting Agreement dated October 27, 2004 by and between the Company and Anthony Munafo.
10.27**  Property Settlement Agreement dated September 29, 2004, by and among Gateway Venture Holdings, a
         Nevada Corporation and SAS Global, Inc., a Nevada Corporation.
10.28**  Consulting Agreement dated August 13, 2004 between the Company and WWD Trading International.
10.29**  Consulting Agreement between the Company and Tarun Mendiratta.
10.30**  Settlement Agreement between the Company, Herbally Yours, and Blaine Wendtland.
10.31**  Consulting Agreement between Jack M. Zufelt and The Right Solution Gateway, dated April 25, 2004.
10.32**  Purchase Agreement between The Chelsea Collection and Gateway Distributors, LTD., dated March 15,
         2004.
10.33**  Consulting Agreement between P2R and The Right Solution Gateway, dated April 15, 2004.
10.34**  Consulting Agreement between Douglas E. Ashman and Gateway Distributors, LTD.


                                        8
<PAGE>
10.35**  Final Asset Purchase Agreement between Los Cabos Beverage and Grandma Hammans, dated December
         20, 2004.
10.36**  Consulting Agreement between Edward Rus and Gateway Distributors, LTD.
10.37**  Consulting Agreement between Grazyna Wnuk and Gateway Distributors, LTD.
10.38**  Non-Disclosure Agreement International Vitamin Co., L.L.C.
10.39**  Agreement between Quality Distribution Services, Inc. and Gateway Distributors, LTD, dated May 20,
         2004.
10.40**  Consulting Agreement between Steven Frye and Gateway Distributors, LTD.
10.41**  Confidentiality Agreement by and between Bill Woo and Gateway Venture Holdings, Inc., dated August
         2, 2004.
10.42**  Consulting Agreement between Jack M. Zufelt and The Right Solutions Gateway, LTD., dated January
         10, 2005.
10.43**  Consulting and Marketing Agreement between Chris Soule and Gateway, LTD.
10.44**  Asset Purchase Agreement between Gateway Venture Holdings Inc. and Cal-Bay International.
10.45**  Asset Purchase Agreement between Gateway Venture Holdings Inc. and Cal-Bay International.
10.45**  Amendment to Asset Purchase Agreement between Gateway Venture Holdings Inc. and Cal-Bay International.
10.46**  Amendment to Asset Purchase Agreement between Gateway Venture Holdings Inc. and Cal-Bay International.
10.7**   Media Services Agreement between Chief Media, L.L.C. and The Right Solution, dated March 10, 2004.
31.1*    Certification of Richard A. Bailey, Chief Financial Officer and Chief Executive Officer of Gateway
         Distributors, Ltd., pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.302 of the Sarbanes-Oxley
         Act of 2002.
32.1*    Certification of Richard A. Bailey, Chief Financial Officer and Chief Executive Officer of Gateway
         Distributors, Ltd., pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.906 of the Sarbanes-Oxley
         Act of 2002.
</TABLE>

__________
*   Filed  Herewith.
**  Previously  Filed

                                   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.

                                    Gateway Distributors, Ltd.

Dated August 22, 2005.

                                    By /s/ Richard A. Bailey
                                       --------------------------------
                                       Richard A. Bailey, President and Director


                                        9
<PAGE>