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

                                  FORM 10-QSB


(Mark One)

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

               For the quarterly period ended June 30, 1999.

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

               For the transition period from __________ to __________.

Commission file number 0-13803


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


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


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

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



     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.
                                 Yes [X] No [ ]

    Shares of Issuer's Common Stock Outstanding at June 30, 1999: 3,592,024

    Transitional small business disclosure format   Yes  [ ]        No  [X]


<PAGE>
                            GATEWAY INDUSTRIES, INC.

                                     INDEX





Part I - Financial Information                                       Page Number

Item 1. Condensed Financial Statements (Unaudited):

        Condensed  Balance Sheet
        June 30, 1999...............................................      3

        Condensed Statements of Operations
        Three Months and Six Months Ended June 30, 1999 and 1998....      4

        Condensed Statements of Cash Flows
        Six Months Ended June 30, 1999 and 1998.....................      5

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

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk..      7

Part II - Other Information

Item 4. Submission of Matters to a Vote of Security Holders.........      8

Item 5. Other Information...........................................      8

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

        Signatures..................................................      9
<PAGE>
                         PART I - FINANCIAL INFORMATION

Item 1.  CONDENSED FINANCIAL STATEMENTS

                            GATEWAY INDUSTRIES, INC.

                            CONDENSED BALANCE SHEET
                                 June 30, 1999
                                  (Unaudited)



                                     ASSETS
Current assets:
  Cash and cash equivalents......................................  $  5,618,000
    Prepaid expenses and other current assets....................        46,000
                                                                    -----------
    Total current assets.........................................     5,664,000

Other assets:
  Security deposit...............................................        60,000
                                                                    -----------
Total assets.....................................................  $  5,724,000
                                                                    ===========



                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued expenses.........................   $     61,000
                                                                    -----------
    Total current liabilities...................................   $     61,000

Commitments

Shareholders' equity:
  Preferred stock, $.10 par value, 1,000,000 shares authorized,
      no shares issued or outstanding...........................            ---
  Common stock, $.001 par value, 10,000,000 shares authorized,
      3,592,024 shares issued (including treasury shares).......          4,000
  Capital in excess of par value................................      9,555,000
  Accumulated deficit...........................................     (3,850,000)
  Treasury stock, 11,513 shares.................................        (46,000)
                                                                     ----------
    Total shareholders' equity..................................      5,663,000
                                                                    -----------
Total liabilities & shareholders' equity........................   $  5,724,000
                                                                    ===========


                            See accompanying notes.

<PAGE>
<TABLE>
                           GATEWAY INDUSTRIES, INC.

                       CONDENSED STATEMENTS OF OPERATIONS
                                  (Unaudited)

<CAPTION>

                                               For the Three Months           For the Six Months
                                                   Ended June 30,                Ended June 30,
                                                1999           1998           1999           1998
<S>                                       <C>             <C>            <C>            <C>

Revenues ...............................   $      --      $      --      $      --      $      --

Costs and expenses:

     General and administrative ........       134,000        108,000        201,000        158,000
                                            ----------     ----------     ----------     ----------
     Operating loss ....................      (134,000)      (108,000)      (201,000)      (158,000)

     Other income:

          Interest income ..............        57,000         66,000        126,000        134,000
Other income ...........................          --           15,000           --           32,000
                                            ----------     ----------     ----------     ----------
     Total other income ................        57,000         81,000        126,000        166,000

Net income/(loss) ......................   $   (77,000)   $   (27,000)   $   (75,000)   $     8,000


Net income per share - basic and diluted   $      (.02)   $      (.01)   $      (.02)   $       .00

Weighted average number
of shares ..............................     3,592,024      3,592,024      3,592,024      3,592,024


                            See accompanying notes.
</TABLE>
<PAGE>

<TABLE>
                            GATEWAY INDUSTRIES, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

<CAPTION>

                                                                            For the Six Months
                                                                              Ended June 30,
                                                                            1999          1998
<S>                                                                    <C>            <C>
Cash flows from operating activities:
        Net income .................................................   $   (75,000)   $     8,000

        Adjustments to reconcile net income to
                net cash provided by/(used in) operating activities:

        Changes in assets and liabilities:

                Prepaid expenses and other assets ..................       (18,000)      (213,000)
                Note receivable ....................................       566,000           --
                Security deposit ...................................        20,000           --
                Accounts payable ...................................       (15,000)       (48,000)
                Accrued expenses and other liabilities .............          --          (15,000)
                                                                        ----------     ----------
        Net cash provided by/(used in) operating activities ........       478,000       (268,000)

Cash flows from investing activities:

                Purchase of equity investments .....................          --          (93,000)
                                                                        ----------     ----------
        Net cash used by investing activities ......................          --          (93,000)


        Net increase/(decrease) in cash ............................       478,000       (361,000)
        Cash and cash equivalents at beginning of period ...........     5,140,000      5,433,000
                                                                        ----------     ----------
        Cash and cash equivalents at end of period .................   $ 5,618,000    $ 5,072,000
                                                                        ==========     ==========
</TABLE>

                            See accompanying notes.

<PAGE>
              NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)

                                 June 30, 1999

1. GENERAL

     The  accompanying   unaudited  condensed  financial  statements  have  been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and with the  instruction to Form 10-QSB and Item 310 of
Regulation  S-B.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.  In the opinion of management,  the accompanying unaudited
interim financial statements contain all adjustments  (consisting only of normal
recurring accruals) necessary to make such financial  statements not misleading.
Results  for the three  months  and six  months  ended  June 30,  1999,  are not
necessarily  indicative of the results that may be expected either for any other
quarter in the year  ending  December  31,  1999 or for the entire  year  ending
December 31, 1999. For further information,  refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1998.

2. OPERATIONS

     The Company  currently  has no operating  business.  Management is pursuing
various strategic  alternatives  which include the possible use of the Company's
net assets to acquire, merge, consolidate or otherwise combine with an operating
business  or  businesses;   however,   there  is  no  assurance  that  any  such
alternatives will occur.

3. LEASE COMMITMENTS

     The Company  entered into a three-year  operating lease for office space in
New York, NY which began April 1, 1998.  The Company has sublet a portion of its
office space to affiliated  companies.  Future minimum lease payments under this
lease are as follows:


                            Deduct          Net
                           Sublease        Rental
          Commitments      Rentals      Commitments
          -----------------------------------------
1999        97,000          65,000         32,000
2000        97,000          65,000         32,000
2001        24,000          16,000          8,000

         $ 218,000       $ 146,000       $ 72,000


4. NET INCOME PER SHARE

     Net income per share was  calculated  using the weighted  average number of
common shares  outstanding.  The effect of all common stock  equivalents  is not
included in the per share  computation  for the quarters ended June 30, 1999 and
1998, as such items are anti-dilutive in these quarters;  accordingly, basic and
diluted  income per share are the same for the quarters  ended June 30, 1999 and
1998.

5. COMPREHENSIVE INCOME

     For  the  three  and  six  months  ended  June  30,  1998,   the  Company's
comprehensive  income/(loss)  was  $(41,000)  and  $5,000,   respectively.   The
comprehensive  income  differs  from the net income in the first two quarters of
1998 due to the inclusion of the Company's  unrealized gain on equity securities
in its comprehensive  income.  For the three and six months ended June 30, 1999,
there was no unrealized  gain or loss and  consequently  net (loss) of $(77,000)
and $(75,000) were equal to comprehensive income.


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


     The Company currently has no operating business.  The Board of Directors is
pursuing various  strategic  alternatives  which include the possible use of the
Company's net assets to acquire, merge, consolidate or otherwise combine with an
operating business or businesses.

REVENUES AND EXPENSES

     The  Company had no  revenues  for the three and six months  ended June 30,
1999.  Expenses  for the three and six  months  ended June 30,  1999  aggregated
$134,000 and $201,000,  respectively  consisting  of general and  administrative
expense.  General and administrative expenses for the three and six-month period
ended June 30, 1998  totaled  $108,000  and  $158,000,  respectively.  Increased
expense over last year is attributable to proxy and legal costs.

NET INTEREST INCOME AND OTHER INCOME

     During the three and six months ended June 30, 1999, the Company recognized
$57,000 and $126,000 of net interest income,  respectively compared with $66,000
and $135,000 net interest income in the  corresponding  periods of 1998. For the
three and six months  ended June 30,  1998,  the  Company  recorded  $15,000 and
$32,000  in  other  income   attributable  to  audit   adjustments   which  were
subsequently reclassified and reversed.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's cash and cash equivalents totaled $5,618,000 at June 30, 1999
and $5,140,000 at December 31, 1998.  Collection of the note  receivable owed by
Only Multimedia  Network,  Inc.  ("OMNI") during the first quarter accounted for
the increase in cash. At June 30, 1999, the Company's  working  capital  balance
was $5,603,000.

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


Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

               None


                           PART II. OTHER INFORMATION

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The  following  matters  were  submitted  to a vote  at the  annual  meeting  of
stockholders of the Company, held on June 15, 1999.

1.   To elect three directors of the Corporation;  (FOR:  3,442;239 AGAINST:  0;
     ABSTAINED: 6,589). The Board of Directors of the Company currently consists
     of Jack Howard,  Warren Lichtenstein,  and Ronald Hayes. All of the current
     members of the Board of Directors  will serve as  directors  until the next
     annual meeting of the Company,  and until their successors are duly elected
     and shall have qualified.

2.   Ratified the appointment of Ernst & Young LLP, independent accountants,  to
     audit the books and  accounts of the  Company.  (FOR:  3,441,021;  AGAINST:
     7,079; ABSTAINED: 728)


Item 5.  OTHER INFORMATION

               None


Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

    (a)  Exhibits
         2.1   Agreement and Plan of Merger of Gateway  Industries,  Inc., a
               Delaware Corporation, and Gateway Communications, Inc., a
               California Corporation. (a)
         3.1   Articles of Incorporation. (a)
         3.2   By laws. (a)
         10.8  Amended and Restated 1990 Incentive Stock Option Plan and 1990
               Nonstatutory Stock Option Plan. (a)
         10.9  Form of Indemnity Agreement between the Registrant and certain of
               its Officers and Directors. (b)
         10.11 Stock Purchase Agreement, dated December 21, 1996, between
               Gateway Industries, Inc. and Richard A. Hickland. (c)
         27    Financial Data Schedule (d)
---------------
          (a)  Filed as an  exhibit  to the  Company's  Proxy  Statement  for
               its  Special Meeting of Shareholders held on September 9, 1994,
               and incorporated  herein by reference.
          (b)  Filed as an exhibit to the Company's Form 10-QSB for the quarter
               ended June 30, 1989, and incorporated herein by reference.
          (c)  Filed as an exhibit to the Company's  Form 8-K filed on or about
               January 5, 1997, and incorporated herein by reference.
          (d)  Filed as part of the electronic filing only
<PAGE>

    (b)  Reports on Form 8-K

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

         (i) Report in Form 8-K dated June 29, 1999 reporting the termination of
             the Company's relationship with the audit firm of Ernst & Young,
             LLP.

        (ii) Report on Form 8-K dated June 29, 1999 as amended.


<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.





                                /s/ Jack Howard
                                Jack Howard, Acting President



Date:  August xx, 1999