FORM 10-QSB

                   SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C.  20549


(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

         For the quarterly period ended       September 30, 2001
                                        ------------------------------

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

For the transition period from                    to
                               ------------------    ------------------


                     Commission File Number 0-13817


                        MARGATE INDUSTRIES, INC.
                        ------------------------
         (Exact name of registrant as specified in its charter)


          Delaware                               84-8963939
          --------                               ----------
(State or other jurisdiction         (I.R.S. Employer Identification No.)
of incorporation or organization)


129 N. Main Street      Yale, Michigan                           48097
--------------------------------------                           -----
(Address of principal executive offices)                       (Zip Code)

   (Registrant's telephone number, including area code) (810) 387-4300
                                                        --------------

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 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
                                   -----     -----

As of September 30, 2001, the Company had 1,879,542 shares of its $.015 Par
Value Common Stock outstanding.

<PAGE>
                        MARGATE INDUSTRIES, INC.

                               FORM 10-QSB


                                  INDEX
                                  -----


PART I:   FINANCIAL STATEMENTS                                    PAGE(S)
------    --------------------                                    -------


Item 1.   Financial Information


          Consolidated Balance Sheets. . . . . . . . . . . . . . . . .3-4


          Consolidated Income Statement. . . . . . . . . . . . . . . . .5


          Consolidated Statements of Changes in
            Stockholders' Equity . . . . . . . . . . . . . . . . . . . .6


          Consolidated Statements of Cash Flows. . . . . . . . . . . . .7


          Notes to Consolidated Financial
            Statements . . . . . . . . . . . . . . . . . . . . . . 8 - 11


Item 2.   Management's Discussion and Analysis of Financial
            Condition and Results of Operations. . . . . . . . . .12 - 14


PART II:  OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . 15
-------   -----------------



                                    2
<PAGE>
                MARGATE INDUSTRIES, INC. AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                          SEPTEMBER 30, 2001    DECEMBER 31, 2000
                                                          ------------------    -----------------
ASSETS                                                       (UNAUDITED)
------
<S>                                                           <C>                 <C>
CURRENT ASSETS

  Cash and cash equivalents                                   $  1,467,909        $  1,099,082
  Accounts receivable:
    Trade (net of allowance for doubtful accounts
      of $781,000 at September 30, 2001 and $81,000
      at December 31, 2000)                                        969,212           2,182,743
  Current portion of notes receivable                              441,567             509,132
  Inventories                                                       14,000              32,000
  Prepaid expenses and other                                       104,483              75,112
  Prepaid federal income taxes                                     230,000                   -
  Deferred tax asset                                                75,900               8,000
                                                              ------------        ------------
        Total Current Assets                                     3,303,071           3,906,069

PROPERTY, PLANT AND EQUIPMENT - At cost,
  net of accumulated depreciation and amortization
  of $2,385,174 and $2,333,824 at September 30, 2001
  and December 31, 2000, respectively                            2,586,758           3,530,156

OTHER ASSETS:
  Deferred Service Fees (Note 6)                                         -                   -
  Long-term notes receivable (Note 5)                              162,875             324,726
  Capitalized acquisition costs                                          -             149,911
  Deposits                                                               -              13,041
                                                              ------------        ------------
                                                                   162,875             487,678


        Total Assets                                          $  6,052,704        $  7,923,903
                                                              ============        ============
</TABLE>


See Notes to Consolidated Financial Statements.

                                    3
<PAGE>
                MARGATE INDUSTRIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED BALANCE SHEETS (Continued)


<TABLE>
<CAPTION>
                                                          SEPTEMBER 30, 2001    DECEMBER 31, 2000
                                                          ------------------    -----------------
                                                             (UNAUDITED)
<S>                                                           <C>                 <C>
LIABILITIES & STOCKHOLDER'S EQUITY
----------------------------------

CURRENT LIABILITIES

  Current portion of long-term debt                           $     41,363        $     43,720
  Current portion of capital lease obligations                           -               4,408
  Accounts payable:
    Trade                                                          106,739             280,672
    Other                                                                -              19,597
  Accrued expenses:
    Salaries & wages                                                78,819             106,941
    Income taxes                                                         -             259,300
    Other                                                          119,847              71,308
                                                              ------------        ------------

        Total Current Liabilities                                  346,768             785,946

LONG-TERM DEBT (Note 4)                                             46,816              80,771
DEFERRED TAX LIABILITIES                                                 -             236,800
OTHER POSTRETIREMENT BENEFITS                                      659,992             542,992

STOCKHOLDERS' EQUITY:
  Common stock - $.015 par value
    Authorized - 5,000,000
    Issued and outstanding -
      1,879,542 at September 30, 2001
      and December 31, 2000                                         28,193              28,193
  Paid- in for common stock in excess of par value               7,942,716           7,942,716
  Accumulated deficit                                           (2,971,781)         (1,693,515)
                                                              ------------        ------------
        Total Stockholders' Equity                               4,999,128           6,277,394

        Total Liabilities and Stockholders' Equity            $  6,052,704        $  7,923,903
                                                              ============        ============
</TABLE>


See Notes to Consolidated Financial Statements

                                    4
<PAGE>
                MARGATE INDUSTRIES, INC. AND SUBSIDIARIES
                     CONSOLIDATED INCOME STATEMENTS
                               (unaudited)


<TABLE>
<CAPTION>

                                      THREE MONTHS ENDED           NINE MONTHS ENDED
                                         SEPTEMBER 30,               SEPTEMBER 30,
                                      2001          2000          2001          2000
                                      ----          ----          ----          ----
<S>                                <C>           <C>           <C>           <C>

NET SALES                          $  1,139,764  $  2,755,795  $  5,013,530  $  8,521,263

COST OF SALES                         1,257,373     2,346,617     4,808,067     6,835,662
                                   ------------  ------------  ------------  ------------

GROSS PROFIT (LOSS)                    (117,609)      409,178       205,463     1,685,601

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES               176,460       266,660       663,302       801,864
                                   ------------  ------------  ------------  ------------

OPERATING INCOME (LOSS)                (294,069)      142,518      (457,839)      883,737

OTHER INCOME (EXPENSE):
  Dividend and interest income            8,813        29,812        73,275       113,829
  Interest expense                       (4,996)       (1,859)       (7,762)      (10,014)
  Bad Debts - Service Fees (Note 6)    (700,000)            -      (700,000)            -
  Organizational Costs (Note 7)        (212,239)            -      (212,239)            -
  Loss on Disposal of fixed assets
    (Note 8)                           (645,647)            -      (645,647)            -
  Other                                  32,433        (2,026)      173,946       (92,961)
                                   ------------  ------------  ------------  ------------
TOTAL OTHER INCOME (EXPENSE)         (1,521,636)       25,927    (1,318,427)       10,854

INCOME (LOSS) FROM OPERATIONS
  BEFORE PROVISION FOR INCOME
  TAXES                              (1,815,705)      206,317    (1,776,266)      894,591

PROVISION FOR FEDERAL INCOME
  TAXES                                (511,000)       71,000      (498,000)      323,000

NET INCOME (LOSS)                  $ (1,304,705) $    135,317  $ (1,278,266) $    571,591
                                   ============  ============  ============  ============

BASIC EARNINGS (LOS) PER
  COMMON SHARE                          ($0.694)       $0.073       ($0.680)       $0.339

WEIGHTED AVERAGE SHARES
  OUTSTANDING                         1,879,542     1,863,460     1,879,542     1,685,301
</TABLE>

See Notes to Consolidated Financial Statements

                                    5
<PAGE>
                MARGATE INDUSTRIES, INC. AND SUBSIDIARIES
       CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                               (unaudited)


<TABLE>
<CAPTION>
                                     NINE MONTHS ENDED SEPTEMBER 30, 2001
                                 Common Stock        Paid In For
                               ----------------      Common Stock
                              Number                 In Excess Of   Accumulated   Stockholders'
                            Of Shares     Amount      Par Value       Deficit        Equity
                            ---------     ------      ---------       -------        ------

<S>                         <C>         <C>          <C>            <C>            <C>
Balance - January 1, 2001   1,879,542   $    28,193  $ 7,942,716    $(1,693,515)   $ 6,277,394

Net income (loss)                   -             -            -     (1,278,266)    (1,278,266)
                            ---------   -----------  -----------    -----------    -----------

Balance -
 September 30, 2001         1,879,542   $    28,193  $ 7,942,716    $(2,971,781)   $ 4,999,128
                            =========   ===========  ===========    ===========    ===========
</TABLE>



<TABLE>
<CAPTION>
                                     NINE MONTHS ENDED SEPTEMBER 30, 2000
                                 Common Stock        Paid In For
                               ----------------      Common Stock
                              Number                 In Excess Of   Accumulated   Stockholders'
                            Of Shares     Amount      Par Value       Deficit        Equity
                            ---------     ------      ---------       -------        ------

<S>                         <C>         <C>          <C>            <C>            <C>
Balance - January 1, 2000   1,597,280   $    23,955  $ 7,523,252    $(1,443,987)   $ 6,103,220

Stock Dividend                    262             4          422           (426)             -

Cash Dividend @ $.50 per
 share                                                                 (944,507)

Stock Issued                  292,000         4,384      439,896                       444,280

Stock Reacquired              (10,000)         (150)     (20,854)                      (21,004)

Net income                          -             -            -        571,591        571,591
                            ---------   -----------  -----------    -----------    -----------

Balance -
 September 30, 2000         1,879,542   $    28,193  $ 7,942,716    $(1,817,329)   $ 6,153,580
                            =========   ===========  ===========    ===========    ===========
</TABLE>

                                    6
<PAGE>
                MARGATE INDUSTRIES, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (unaudited)


<TABLE>
<CAPTION>
                                                                    NINE MONTHS ENDED
                                                                       SEPTEMBER 30,
                                                                 2001                2000
                                                                 ----                ----
<S>                                                           <C>                 <C>
INCREASE IN CASH AND CASH EQUIVALENTS:

OPERATING ACTIVITIES                                          $    176,125        $    424,833

INVESTING ACTIVITIES:

  Capital Acquisition Costs                                        (22,743)                  -
  Purchase of plant and equipment                                        -            (160,149)
  Proceeds from sale of equipment                                   26,749               7,800
  Collections from notes receivables - Net                         229,416             109,918
                                                              ------------        ------------
Net cash provided by (used in) investing activities                233,422             (42,431)

FINANCING ACTIVITIES:

  Repayments - line of credit (net)                                 (4,408)           (167,000)
  Proceeds from issuance of common stock                                 -             444,280
  Repurchase of common stock                                             -             (21,004)
  Payment of cash dividend                                               -            (944,507)
  Principal payments under long-term obligations                   (36,312)            (50,288)
                                                              ------------        ------------
Net cash used in financing activities                              (40,720)           (738,519)

NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS                                                 368,827            (356,117)

CASH AND CASH EQUIVALENTS - Beginning                            1,099,082           1,620,120
                                                              ------------        ------------

CASH AND CASH EQUIVALENTS - Ending                            $  1,467,909        $  1,264,003
                                                              ============        ============
</TABLE>

See Notes to Consolidated Financial Statements

                                    7
<PAGE>
                MARGATE INDUSTRIES, INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 -  SIGNIFICANT ACCOUNTING POLICIES

          The consolidated Balance Sheet as of September 30, 2001 and the
          related Consolidated  Statements of Income, Changes in
          Stockholders' Equity, and Cash Flows for the nine months ended
          September 30, 2001 and 2000 are unaudited.  In the opinion of
          management, all adjustments consisting of solely recurring
          adjustments necessary for a fair presentation of such interim
          financial statements have been included. The results of
          operations for the nine months ended September 30, 2001 and 2000
          are not necessarily indicative of the results to be expected for
          the whole year.

          The notes to the financial statements are presented as permitted
          by Form 10-QSB and do not contain certain information included in
          the Company's annual financial statements.

          Certain amounts in 2000 have been reclassified to conform with
          the 2001 financial statement presentation.

NOTE 2 -  DIVIDENDS

          On July 11, 2000, the Company announced a special cash dividend
          of $0.50 per share on all outstanding shares of common stock for
          those shareholders of record on July 24, 2000. The dividend was
          paid on August 25, 2000.

NOTE 3 -  STATEMENTS OF CASH FLOWS

          A reconciliation of net income to net cash flows provided by
          operating activities is as follows:

<TABLE>
<CAPTION>
                                                           NINE MONTHS ENDED SEPTEMBER 30,
                                                                    (UNAUDITED)
                                                              2001                2000
                                                              ----                ----
          <S>                                              <C>                 <C>
          Net income (loss)                                $(1,278,266)        $    571,591
          Adjustments to reconcile net income to
            net cash from operating activities:
              Depreciation and amortization                    271,002              291,435
              Amortization/Write-off of capital
               acquisition fees                                172,654                   -
              Loss (gain) on sale of assets                    645,647               (4,620)
              Changes in assets and liabilities:
                Accounts receivable                          1,213,531             (726,284)
                Deferred tax asset                             (67,900)                  -
                Inventories                                     18,000               10,000
                Prepaid expenses and other                     (29,371)             (93,966)
                Prepaid federal income taxes                  (230,000)                  -
                Deposits                                        13,041                   -
                Accounts payable                              (193,530)              65,407
                Accrued salaries and wages                     (28,122)              45,339
                Accrued federal income tax                    (259,300)              40,348
                Other postretirement benefits                  117,000               78,000
                Deferred tax liability                        (236,800)                  -
                Other accrued liabilities                       48,539              147,583
                                                           ------------        ------------

              Net cash provided by operating activities    $    176,125        $    424,833
</TABLE>

                                    8
<PAGE>
NOTE 4 -  NOTES PAYABLE

          Notes payable consist of the following at September 30, 2001:

          Note payable Ft. Atkinson, due in monthly
          installments of $3,992, including interest
          at 4% through July 2003                               88,179

          Less current portion                                 414,363
                                                           -----------

          Long-term portion                                     46,816

          Maturities of notes payable obligations are as follows:

          Year ending September 30:

              2002                                         $    41,363
              2003                                              46,816
              2004                                                   -
                                                           -----------
                                                           $    88,179
                                                           ===========


          The Company maintains a bank line-of credit of $1,300,000 for
          working capital requirements. The applicable interest rate is at
          1/2% below the prime lending rate, currently 6.75% at September
          30, 2001. The line-of-credit is secured by all accounts
          receivable, inventories and equipment of the Company. The Company
          had no borrowings against the line as of September 30, 2001.









                                    9
<PAGE>
NOTE 5 -  NOTES RECEIVABLE

          Notes receivable consist of the following at September 30, 2001:

          Wesley Industries Inc.- collateralized
          note receivable due in quarterly payments
          of $35,000 commencing June 1, 1998 including
          imputed interest at 6%, with a final payment
          of the remaining outstanding principal and
          imputed interest balance on March 1, 2003.       $   231,245

          NHF - unsecured note receivable, due in
          monthly installments of $32,250 including
          interest at 8% through February 2002.            $   174,339

          Officers - Unsecured notes receivable, due
          in quarterly payments of $ 3,000 commencing
          September 30, 2000 including imputed interest
          at 6%, through 2007                              $    98,858

          USA Teleport - Secured by 30,000 shares of
          stock, due in one lump sum of $100,000 in
          six (6) months (March 31, 2002) at the
          then existing prime interest rate                $   100,000
                                                           -----------

          Total Notes Receivable                           $   604,442

          Less current portion                             $   441,567
                                                           -----------

          Long-term portion                                $   162,875
                                                           ===========


          Maturities of notes receivable are as follows:

          Year ending September 30:

                        2002                               $   441,567
                        2003                                    87,255
                        2004                                    19,884
                        2005                                    21,111
                        2006                                    22,413
                        2007                                    12,212
                                                           -----------

                                                           $   604,442
                                                           ===========

                                   10
<PAGE>
NOTE 6 -  DEFERRED SERVICE FEES

          In April 2001, the cleaning contract with New Haven Foundry, Inc,
          a subsidiary of Wesley Industries was revised.

          The quarterly Service Fee payments payable under paragraph C of
          the Cleaning Contract through and including the January 1, 2002
          payment shall be deferred to The following payment dates:


             SERVICE FEE                   DEFERRED
             PAYMENT DATE                PAYMENT DATE
             ------------                ------------
             July 1, 2000                July 1, 2003
             October 1, 2000             October 1, 2003
             January 1, 2001             January 1, 2004
             April 1, 2001               April 1, 2004
             July 1, 2001                July 1, 2004
             October 1, 2001             October 1, 2004
             January 1, 2002             January 1, 2005

          Due to current economic conditions in the auto industry and the
          conversion in demand from grey iron to aluminum cylinder heads,
          New Haven Foundry has experienced a decline in sales.  As a
          result of these trends, the Company feels it is unlikely that the
          above scheduled payments will be received.  Accordingly, fees in
          the amount of $700,000 have been written off as an expense in the
          current period.  Efforts to receive these funds will continue,
          and it should be noted that the amount due the Company as a note
          receivable from NHF is expected to be received in accordance with
          this separate contract (Note 5).

NOTE 7 -  ORGANIZATIONAL COSTS

          As previously reported to the public, the Company has terminated
          negotiations for a proposed merger with USA Teleport, Inc.  The
          costs listed are the Company's cost expended in the due diligent
          efforts related to this proposed transaction.

NOTE 8 -  PLAN CLOSURE

          Due to the continued economic recession, particularly in the auto
          industry, the Company closed the facility at Ft. Atkinson.  This
          plant accounted for approximately 25% of the Company's overall
          revenue.

          As a result of this plant closure, fixed assets were sold or
          written-off, resulting in a recognized loss of $645,647.



                                   11
<PAGE>
Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
          CONDITION AND RESULTS OF OPERATIONS
          -----------------------------------

     The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial condition
and results of operations during the periods included in the accompanying
consolidated financial statements for the nine (9) months ended
September 30, 2001.

     THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF MARGATE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF SECTION 27a OF THE SECURITIES ACT OF 1933 AND SECTION 21e OF THE
SECURITIES EXCHANGE ACT OF 1934.  MARGATE'S ACTUAL RESULTS AND TIMING OF
CERTAIN EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE
FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING, BUT
NOT LIMITED TO, STRENGTH OF THE AUTOMOTIVE INDUSTRY, CHANGES IN AUTOMOBILE
AND TRUCK PRODUCTION, STRONG COMPETITION, DEPENDENCE ON NHF AND ITS
PRODUCTION LEVELS, ENVIRONMENTAL MATTERS, LABOR PROBLEMS, AND ABILITY TO
DIVERSIFY AND FIND SUITABLE ACQUISITIONS.  IN ADDITION, THE WORDS
"BELIEVE," "MAY," "WILL," "ESTIMATE," "CONTINUE," "ANTICIPATE," "INTEND,"
"EXPECT," AND SIMILAR EXPRESSIONS, AS THEY RELATE TO MARGATE, MARGATE'S
BUSINESS OR MARGATE'S MANAGEMENT, ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS.

GENERAL

     Margate performs finishing, cleaning and testing operations on grey
iron castings for the automotive industry. Margate currently conducts its
operations through its wholly owned subsidiary, Brown City Casting
Corporation, doing business under the name Yale Industries. Because of
continued downturn in the economy the Company discontinued operations at
Fort Atkinson on August 31, 2001.  Yale performs cleaning, grinding and
testing of castings prior to shipment to end purchasers. Yale's primary
customer is the New Haven Foundry ("NHF"), which produces castings for the
automotive industry and other component manufacturers in the United States
and Canada. Mr. Delbert Mullins, a Director, is also a Director and
principal shareholder of Wesley Industries, Inc., which owns NHF.  Our
customers for which we perform finishing operations include Waupaca
Foundry, Inc., Navistar International, and Grede Foundries. Margate has
benefited in recent years for the increased finishing and testing
requirements on automotive suppliers, leading many of those suppliers to
move their finishing operations from in-house to outside providers, such as
Margate. However, with the current slowdown in the economy some foundries,
such as Waupaca, have decreased total production and stopped outsourcing
some of their cleaning operations. Also, because of the conversion of grey
iron cylinder heads to aluminum NHF has drastically reduced its production.

RECENT DEVELOPMENTS

     As stated above, because of continued sales reductions at Fort
Atkinson in Wisconsin the Company ceased operations effective August 31,
2001.

                                   12
<PAGE>
     On June 12, 2001, Margate entered into a letter of intent with USA
Teleport, Inc. ("USA Teleport") wherein USA Teleport would merge, on a
tax-free basis, with and into a wholly owned subsidiary of Margate formed
for the purposes of the merger.  In addition, Margate loaned USA Teleport
$100,000 secured by shares of USA Teleport.

     Margate and USA Teleport agreed to automatically terminate the letter
of intent if a definitive agreement could not be reached by September 30,
2001. (Previously August 31, but extended by mutual consent of both
parties).  Because an agreement was not reached by September 30, and given
the current national economic conditions, Margate chose not to continue
pursuing this merger.

     On October 24, 2001, Margate received notification that New Haven
Foundry, a major customer, has laid-off its entire hourly workforce and
ceased operations for an indefinite period of time.  Margate believes the
loss of this business will have a negative impact on our results over the
short term.  Margate will attempt to retain a portion of this business
being contracted to other foundries.  New Haven Foundry currently
represents 67% of Margate's revenues through the first nine months of 2001.

LIQUIDITY AND CAPITAL RESOURCES:

     Cash balances totaled $1,467,909 at September 30, 2001 compared to
$1,099,083 at December 31, 2000.  The increase in cash for the period is to
be contrasted to a reduction in the accounts receivable, $700,000 of which
was due to the write-off of amounts due from NHF.

     Overall, total assets decreased approximately $1.9 million during the
year, which was largely due to the write-off of fixed assets of
approximately $646,000 and the write-off of acquisition costs of
approximately $150,000 in conjunction with a decrease in accounts
receivable of approximately $1.2 million.

     During the period ended September 30, 2001, long-term debt decreased
by approximately $40,000, reflecting current payments paid during the
period.

     Margate assesses its liquidity in terms of overall ability to generate
sufficient cash to support business needs and to fund growth.  We rely
primarily upon cash flow from operations and our line of credit to finance
our operations.

     Margate has a line of credit of $1,300,000 for working capital
requirements, with monthly interest payments at 1/2 below the prime rate
currently 6.75% at September 30, 2001. This line of credit is
collateralized by substantially all assets of Margate including accounts
receivable, inventories and equipment.  The Company has no borrowing
against this line as of September 30, 2001.

     Margate believes its cash flows from operations are sufficient to fund
its current level of operations.

                                   13
<PAGE>
RESULTS OF OPERATIONS

     The Company is reporting a year-to-date pre-tax loss on operations of
$1,776,266 for the nine months ended September 30, 2001, as compared to a
profit of $894,591 for the same period in 2000, and a loss of $1,815,705
compared to a profit of $206,317 for the three months ended September 30,
2001 and 2000, respectively.  Sales for the period ended September 30, 2001
were approximately $5,013,530, which represents a decrease of 41.2% from
sales through September 30, 2000 of $8,521,263.  Management believes the
decrease is directly attributable to the general economic slowdown in the
automotive industry and the automakers conversion of grey iron cylinder
heads to aluminum.

     The cost of sales for the nine months ended September 30, 2001 as a
percentage of sales was 95.9% as compared to 80.2% for the same period in
2000. The major reason for the increase was the decrease in sales of 41.2%
over the same period last year.

     Selling, General & Administrative Expenses for the nine months ended
September 30, 2001 as a percentage of sales was 13.2% as compared to 9.4%
for the same period in 2000. Basically the Company's SG&A are fixed.  For
the nine month period ended September 30, 2001 SG&A costs were $663,302
compared to $801,864 for the same period ended September 30, 2000.

EFFECTS OF CHANGES IN PRICES

     When possible, Margate attempts to adjust the selling prices of its
services in response to increases in its costs of labor, raw materials and
capital.  However, the market served by Margate is highly competitive and
that competition has limited our ability to increase overall prices.

     During 2001, 2000 and 1999 there were no significant changes in
prices.



                                   14
<PAGE>
                                 PART II

Item 1.   Legal Proceedings
          -----------------

               The Company is not engaged in any material pending legal
               proceeding to which the Company is a party or to which any
               of its property is subject.

Item 2.   Changes in Securities
          ---------------------

               None

Item 3.   Defaults Upon Senior Securities
          -------------------------------

               None

Item 4.   Submission of Matters to a Vote of Securities Holders
          -----------------------------------------------------

               None

Item 5.   Other Information
          -----------------

               None.

Item 6.   Exhibits and Reports on Form 8-K

          --------------------------------

          (a)  The following exhibits required by Item 601 of
               Regulation S-B are filed herewith:

               Exhibit No.    Description
               -----------    -----------

                 None

          (b)  A report on Form 8-K was filed on October 1, 2001 reporting
               the termination of negotiations for a proposed merger
               between Margate and USA Teleport under Item 5.



                                   15
<PAGE>
                               SIGNATURES
                               ----------


     Pursuant to the requirements of Section 13 or 15(d) 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.

MARGATE INDUSTRIES, INC.



By: /s/ William H. Hopton
   ---------------------------------
     William H. Hopton

Date: October 29, 2001









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