U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB



(Mark One)

    [X]            Quarterly report under Section 13 or 15(d)
                   of the Securities Exchange Act of 1934


                 For the quarterly period ended March 31, 2000.

    [ ]            Transition report under Section 13 or 15(d)
                   of the Exchange Act

               For the transition period from _______ to ________.

                         Commission file number 0-13803


                            GATEWAY INDUSTRIES, INC.
        (Exact name of Small Business Issuer as Specified in Its Charter)


           DELAWARE                                              33-0637631
(State or Other Jurisdiction of                                (IRS Employer
 Incorporation or Organization)                              Identification No.)


                        150 East 52nd Street, 21st Floor
                               New York, NY 10022
                    (Address of Principal Executive Offices)

                                  877-431-2942
                (Issuer's Telephone Number, Including Area Code)



         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

                            Yes [X]     No [ ]

     Shares of Issuer's Common Stock Outstanding at May 15, 2000: 4,192,024

     Transitional small business disclosure format:

                             Yes [ ]    No  [X]


<PAGE>
                     GATEWAY INDUSTRIES, INC. AND SUBSIDIARY


                                      INDEX


PART I - FINANCIAL INFORMATION                                       Page Number


Item 1.       CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited):

              Condensed Consolidated Balance Sheet
              March 31, 2000...............................................   3

              Condensed Consolidated Statements
              of  Operations - Three Months Ended
              March 31, 2000 and 1999 .....................................   4

              Condensed Consolidated Statements
              of Cash Flows - Three Months Ended
              March 31, 2000 and 1999......................................   5

              Notes to Condensed Consolidated Financial Statements.........   6

Item 2.       Management's Discussion and Analysis
              or Plan of Operations........................................   7


Part II - Other Information

Item 6.       Exhibits and Reports on Form 8-K.............................   8

              Signatures...................................................   9


<PAGE>
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                 March 31, 2000
                                   (Unaudited)



                                     ASSETS
Current assets:
     Cash and cash equivalents...................................  $  2,809,000
     Accounts receivable.........................................       308,000
     Prepaid expenses and other..................................        34,000
                                                                   ------------
         Total current assets....................................     3,151,000

Other assets:

     Security deposits...........................................        53,000
     Property, plant and equipment, net..........................       321,000
     Goodwill and other intangibles, net.........................     3,481,000
                                                                   ------------
         Total other assets......................................     3,855,000
                                                                   ------------

Total assets  ...................................................  $  7,006,000
                                                                   ============




                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
     Accounts payable and accrued expenses.......................  $    260,000
     Capital lease obligation....................................        22,000
                                                                   ------------

         Total current liabilities...............................  $    282,000


Shareholders' equity
     Preferred stock, $.10 par value, 1,000,000 shares authorized,
         no shares issued or outstanding.........................            --
     Common stock, $.001 par value, 10,000,000 shares authorized,
         4,192,024 shares issued (including treasury shares)......        4,000
     Capital in excess of par value...............................   11,047,000
     Accumulated deficit..........................................   (4,281,000)
     Treasury stock, 11,513 shares of common stock................      (46,000)
                                                                   ------------

         Total shareholders' equity..............................     6,724,000
                                                                   ------------

Total liabilities & shareholders' equity......................... $   7,006,000
                                                                  =============



                             See accompanying notes.


<PAGE>
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                              For the Three Months
                                                                                 Ended March 31,
                                                                              2000             1999
                                                                              ----             ----


<S>                                                                      <C>             <C>
Sales................................................................    $     63,000               --

Cost of sales .......................................................          15,000               --
                                                                         ------------     ------------

Gross profit  .......................................................          48,000               --

Costs and expenses:

     Professional fees................................................         76,000           13,000
     General and administrative.......................................        173,000           53,000
     Depreciation and amortization....................................          6,000               --
                                                                         ------------     ------------


         Total costs and expenses.....................................        255,000           66,000

     Operating loss...................................................       (207,000)         (66,000)

     Other income

         Interest income..............................................         65,000           68,000
         Other income:................................................         18,000               --
                                                                         ------------     ------------

         Total other income...........................................         83,000           68,000


Net income (loss).....................................................   $   (124,000)           2,000
                                                                         ============     ============


Net income (loss) per share - basic and diluted.......................   $       (.03)              --

Weighted average number of shares.....................................      3,657,958        3,592,024
</TABLE>


                             See accompanying notes.


<PAGE>
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                         For the Three Months
                                                                                            Ended March 31,
                                                                                        2000              1999
                                                                                        ----              ----
<S>                                                                               <C>               <C>
Cash flows from operating activities:
     Net income (loss)                                                             $    (124,000)            2,000

Adjustments to reconcile  net income  (loss) to net cash
  provided by (used in) operating activities:
     Amortization of goodwill                                                              6,000                --
     Changes in assets and liabilities:
         Accounts receivable                                                              68,000                --
         Prepaid expenses and other                                                       74,000           (26,000)
         Security deposit                                                                 20,000                --
         Accounts payable                                                                (40,000)          (37,000)
                                                                                   -------------    --------------

              Net cash provided by (used in) operating activities                          4,000           (61,000)

Cash flows from investing activities:
         Purchase of property, plant, and equipment                                       (1,000)               --
         Purchase of Oaktree Systems Inc., net of cash acquired                       (2,659,000)               --
         Note receivable                                                                      --           566,000
                                                                                   -------------    --------------

              Net cash provided by (used in) investing activities                     (2,660,000)          566,000


     Net increase/(decrease) in cash and cash equivalents                             (2,656,000)          505,000
     Cash and cash equivalents at beginning of period                                  5,465,000         5,140,000
                                                                                   -------------    --------------
     Cash and cash equivalents at end of period                                    $   2,809,000         5,645,000
                                                                                   =============    ==============
</TABLE>

On March 21,  2000,  the Company  acquired  100% of the common  stock of Oaktree
Systems,  Inc. for  $4,090,000  which included the issuance of 600,000 shares of
common stock of Gateway Industries, Inc. (see Note 3).

<PAGE>
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2000
                                   (Unaudited)

1.   GENERAL

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally  accepted  accounting  principles for
interim  financial  information and with the instruction to Form 10-QSB and Item
310 of Regulation S-B.  Accordingly,  they do not include all of the information
and footnotes required by generally accepted accounting  principles for complete
financial statements.  In the opinion of management,  the accompanying unaudited
interim financial statements contain all adjustments  (consisting only of normal
recurring accruals) necessary to make such financial  statements not misleading.
Results  for the  three  months  ended  March  31,  2000,  are  not  necessarily
indicative  of the results that may be expected  either for any other quarter in
the year ending  December  31, 2000 or for the entire year ending  December  31,
2000. For further  information,  refer to the consolidated  financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1999.

2.       OPERATIONS

     Gateway  Industries,  Inc. (the "Company") was  incorporated in Delaware in
July 1994.  The Company had no operating  business  from  December 1996 to March
2000,  when it acquired all of the  outstanding  common stock of Oaktree Systems
Inc.  ("Oaktree").  Oaktree  provides  database  development  consolidation  and
management services, and web site design and maintenance to customers throughout
the United  States:  such  customers are  principally  not-for-profit  entities,
health care providers and publishers.

     The  Company  had no full  time  employees  from  December  1996  until the
acquisition of Oaktree in March 2000. The Company's  Chairman,  Acting President
and Steel  Partners  Services,  Ltd.  (an  entity  controlled  by the  Company's
Chairman) devote time to the Company's administration and in exploring potential
acquisitions and other business opportunities.

3.   PURCHASE OF SUBSIDIARY

     During 2000 the Company  acquired 100% of the outstanding  stock of Oaktree
for a purchase  price of  $4,090,000,  consisting  of  $2,000,000  in cash,  the
issuance of 600,000 shares of common stock of Gateway, the repayment of existing
Oaktree  bank debt of $640,000  and  expenses of $82,000.  The  acquisition  was
accounted for as a purchase,  and, accordingly include the results of operations
since the date of acquisition.  The following is a summary of the effect of this
transaction in the Company's  consolidated balance sheet: The excess of purchase
price over the fair value of net assets  acquired  was  recorded as goodwill and
other  intangible  assets,  which  will  be  amortized  over  15  and  5  years,
respectively.

     The  following  consolidated  condensed  unaudited  proforma  statement  of
operations,  as if the  Oaktree  acquisition  had been in  effect in each of the
quarters ending March 31, 2000 and 1999 are as follows:

                                                              March 31,
                                                     2000                 1999
                                                     ----                 ----
             Sales                            $    721,000              745,000
             Cost of expenses                    1,103,000              872,000
             Other (income) expense                (68,000)             (59,000)
                                              ------------        -------------

             Net loss                         $   (314,000)             (68,000)
                                              ============        =============

             Net  loss  per  share            $       (.09)                (.02)
<PAGE>
     Assets acquired and  liabilities  acquired at estimated fair value at March
21, 2000 are as follows:

             Cash                                                 $       8,000
             Accounts receivable                                        376,000
             Other current assets                                        99,000
             Fixed assets, net                                          320,000
             Security deposits                                           13,000
             Accounts payable and accrued expense                      (191,000)
             Capital leases                                             (22,000)
                                                                     ----------

                                                                    $   603,000


4.   LEASE COMMITMENTS

     The Company  entered into a three-year  operating lease for office space in
New York, NY which began April 1, 1998.  The Company has sublet a portion of its
office space to affiliated companies.

     Oaktree  leases 2,500 square feet of office space in  Calverton,  New York.
The lease expires on February 1, 2003. The space is rented from a partnership in
which two of the senior managers of Oaktree each own a material interest. During
1999,  Oaktree  entered into a lease for 806 square feet in St. Paul,  Minnesota
expiring on Dec 31, 2000.

     Future minimum lease payments under these leases are as follows:

                                               Deduct             Net
                                              Sublease          Rental
                          Commitments         Rentals         Commitments
                          -----------         -------         -----------
             2000           199,000            65,000           134,000
             2001           117,000            16,000           101,000
             2002            96,000                --            96,000
                           --------          --------          --------
                           $412,000          $ 81,000          $331,000


5.   NET INCOME PER SHARE

     Net  income  (loss) per share was  calculated  using the  weighted  average
number of common shares outstanding.  The effect of all common stock equivalents
is not included in the per share  computation  for the quarters  ended March 31,
2000 and 1999, as such items are  anti-dilutive in these quarters;  accordingly,
basic and diluted income per share are the same for the quarters ended March 31,
2000 and 1999.

<PAGE>
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

     The Company acquired Oaktree on March 21, 2000 pursuant to a Stock Purchase
Agreement.  The  purchase  price of  Oaktree  was  approximately  $4.1  million,
consisting of $2 million in cash, the issuance of 600,000  restricted  shares of
common stock of the Company and the assumption of approximately $640,000 of debt
(which was repaid in full at closing), plus certain fees and expenses.

     Oaktree  had  revenues  of  approximately  $3.0  million  in  1999  and was
marginally  profitable.  Operating  income  in 1999 was  adversely  impacted  by
expenses related to Year 2000 preparedness,  unusually large software and system
upgrades  and web design  development  projects  which are not expected to recur
annually  to the  extent  incurred  in 1999.  The  Company  believes  that these
expenditures will enable Oaktree to significantly  enhance the services provided
to its customers.

     The  Company  intends to  continue  to enhance  Oaktree's  internal  growth
opportunities and efforts,  and explore acquisitions of established products and
service  providers  that will  provide  opportunities  to present  customers  an
integrated, full-service product offering.

     The Company's  ability to make further  product  acquisitions  will depend,
among  other   things,   on  the   availability   of   appropriate   acquisition
opportunities,  the ability to obtain  appropriate  financing  and the Company's
ability  to  consummate  acquisitions  on  acceptable  terms.  There  can  be no
assurance  that the Company will be able to consummate  any such  acquisition on
acceptable terms.

     Oaktree  competes in a highly  fragmented  industry  with many national and
local  competitors.  Competition  comes  from many  sources  including  database
development companies,  service bureaus, and mailhouses. Many of the competitors
of Oaktree possess  substantially  greater financial,  technical,  marketing and
other resources than Oaktree.

     As of March 25, 2000, Oaktree employed 50 full time employees.  None of the
employees are subject to any  collective  bargaining  agreements and the Company
believes that the relationship with its employees is good.

REVENUES AND EXPENSES

     The  Company's  newly  acquired  subsidiary,  Oaktree had $63,000  revenues
during  the nine day  period of March  22,  2000 to March  31,  2000.  Gateway's
expenses for the quarter ended March 31, 2000 aggregated $153,000, consisting of
professional  fees of $76,000 ($48,000 were legal fees for the resolution of the
Marsel case and $28,000 other legal and accounting expenses,  most of which were
greater than in the comparable 1999 period).  General and administrative expense
of Oaktree for the nine day period of March 22 to 31, 2000 were $102,000.

INTEREST INCOME, NET

     During the first  quarter of 2000,  the Company  recognized  $65,000 of net
interest income compared with $68,000 in the comparable period of 1999.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's  cash and cash  equivalents  totaled  $2,809,000 at March 31,
2000 and $5,645,000 at December 31, 1999. $2,643,000 cash was expended March 21,
2000 for the  acquisition of Oaktree.  Collection of the note receivable owed by
Only  Multimedia  Network,  Inc.  ("OMNI")  during  the  first  quarter  of 1999
accounted  for $581,000 of the  increased  cash  position in 1999.  At March 31,
2000, the Company's working capital balance was $2,869,000.

     While the  Company  seeks an  acquisition  or other  business  combination,
management  believes its cash  position is  sufficient  to cover  administrative
expenses and current obligations for the foreseeable future.



<PAGE>
PART II. OTHER INFORMATION

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         (27)     Financial Data Schedule (filed as part of the electronic
                  filing only)

(b)      Reports on Form 8-K

         The Registrant filed the following  current report on
         Form 8-K during the period covered by this report:

         (i)      Report on Form 8-K dated March 31, 2000,
                  reporting the acquisition of Oaktree.


<PAGE>
                                   SIGNATURES





Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                               GATEWAY INDUSTRIES, INC.





                                By  /s/Jack Howard
                                    --------------------
                                    Jack Howard, Acting President






Date:  May 15, 2000