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 September 30, 1998

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

             For the transition period from ________ to ________

                      Commission file number 0-13803


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


                                  DELAWARE
      (State or Other Jurisdiction of Incorporation or Organization)

                                 33-0637631
                     (IRS Employer Identification No.)


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

                                (212)813-1500
              (Issuer's Telephone Number, Including Area Code)


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

                                Yes [X]  No[ ]

Transitional small business disclosure format (check one):

                                Yes[ ]   No[X]

Shares of Issuer's Common Stock Outstanding at September 30, 1998:         
 
                                   3,592,024
<PAGE>
                         GATEWAY INDUSTRIES, INC.



                                  INDEX


Part I - Financial Information
                                                             Page Number
Item 1.     Condensed Financial Statements(Unaudited)

            Condensed Balance Sheet
            September 30, 1998 ..............................      3

            Condensed Statements of Operations-
            Three Months and Nine Months Ended
            September 30, 1998 and 1997......................      4

            Condensed Statements of Cash Flows-
            NIne Months Ended September 30, 1998 and 1997.....     5
                       
            Notes to Condensed Financial Statements..........      6

Item 2.     Management's Discussion and Analysis
            or Plan of Operations............................      8


Part II - Other Information

Item 5.     Other Information................................      9

Item 6.     Exhibits and Reports on Form 8-K.................      9

            Signatures.......................................     10
<PAGE>
                        GATEWAY INDUSTRIES, INC.

Part I.                  FINANCIAL INFORMATION      

Item 1.         Condensed Financial Statements (Unaudited)

                         CONDENSED BALANCE SHEET
                           September 30, 1998
                               (Unaudited)

<TABLE>
<CAPTION>
                                   ASSETS
<S>                                                           <C>
Current Assets:
     Cash and cash equivalents................................ $ 5,058,000

     Equity investments available for sale....................      89,000
     Prepaid expenses and other current assets................     142,000
                                                                __________
          Total current assets................................   5,289,000

Other assets:
     Security deposit.........................................      80,000
                                                                __________

                                                               $ 5,369,000
                                                               ===========

                  LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

     Accrued expenses and other liabilities..................  $   24,000
                                                                __________
          Total current liabilities..........................      24,000

Commitments

Shareholders' equity:
     Preferred stock, $.10 par value, 1,000 shares
          authorized, no shares issued or outstanding........          ---
     Common stock, $.001 par value, 10,000,000 shares 
        authorized, 3,592,024 shares issued
        (including treasury shares)..........................        4,000
     Capital in excess of par value..........................    9,555,000
     Accumulated deficit.....................................   (4,164,000)
     Treasury stock, 11,513 shares...........................      (46,000)
     Accumulated other comprehensive loss....................       (4,000)
                                                               ___________
          Total shareholders' equity.........................    5,345,000
                                                               ___________
                                                               $ 5,369,000
                                                               ===========
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
                         GATEWAY INDUSTRIES, INC.

                    CONDENSED STATEMENTS OF OPERATIONS
                                (Unaudited)
<TABLE>
<CAPTION>
                               For the Three Months    For the Nine Months 
                                   Ended Sept 30,         Ended Sept 30,
                                  1998        1997      1998        1997
<S>                          <C>          <C>        <C>        <C>                                                       
Revenues                      $     ---    $   ---    $    ---   $    ---


Costs and expenses:

 General and administrative      75,000     93,000     233,000    228,000
                                -------    -------    --------   -------- 
 Operating loss                 (75,000)   (93,000)   (233,000)  (228,000)         

Other income:

     Interest income             66,000     75,000     201,000    224,000   
     Other income                   ---        ---      32,000        ---   
                                 ------     ------     -------    -------
     Total other income          66,000     75,000     233,000    224,000 
                                                                          
Net income (loss)             $  (9,000)  $(18,000)  $       0  $  (4,000)
                              ==========  =========  =========  ==========
                                                


Net income (loss) per share  $     .00    $   (.01)  $    .00   $     .00


Weighted average number
of shares................    3,592,024   3,592,024  3,592,024   3,592,024
</TABLE>
                                                
See accompanying notes to condensed financial statements.
<PAGE>
                         GATEWAY INDUSTRIES, INC.

                    CONDENSED STATEMENTS OF CASH FLOWS
                               (Unaudited)
<TABLE>
<CAPTION>

                                                      For the Nine Months
                                                         Ended Sept 30,

                                                       1998         1997
                                                       ____         ____
<S>                                                <C>         <C>
Cash flows from operating activities:
     Net income (loss)...........................   $       0     $ (4,000)   
     Adjustments to reconcile net income (loss) to
          net cash used by operating activities:

     Changes in assets and liabilities:

         
          Prepaid expenses and other assets.......   (205,000)       6,000 
          Accounts payable........................    (60,000)     (13,000)
          Accrued expenses & other liabilities....    (18,000)    (271,000)

           Total adjustments                         (283,000)    (278,000)             

     Net cash used by operating activities........   (283,000)    (282,000)

Cash flows from investing activities:

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

     Net decrease in cash.........................   (376,000)    (282,000)
     Cash and cash equivalents at beginning
          of period...............................  5,434,000    6,044,000
                                                   __________   __________
     Cash and cash equivalents at end of period... $5,058,000   $5,762,000
                                                   ==========   ==========  
</TABLE>                                                


See accompanying notes to condensed financial statements.
<PAGE> 
   

                         GATEWAY INDUSTRIES, INC.

                  NOTES TO CONDENSED FINANCIAL STATEMENTS
                            September 30, 1998
                                (Unaudited)


1. General

     The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instruction to Form 10-QSB and
Item 310 of Regulation S-B.  Accordingly, they do not include all of the 
information and footnotes required by generally accepted accounting 
principles for complete financial statements.  In the opinion of 
management, the accompanying unaudited interim financial statements contain 
all adjustments (consisting only of normal recurring accruals) necessary to 
make such financial statements not misleading.  Results for the three and 
nine months ended September 30, 1998, are not necessarily indicative of the 
results that may be expected either for any other quarter in the year 
ending December 31, 1998 or for the entire year ending December 31, 1998.  
For further information, refer to the consolidated financial statements and 
footnotes thereto included in the Company's Annual Report on Form 10-KSB 
for the year ended December 31, 1997.

2. Operations

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

3. Lease Commitments

     The Company has entered into a three-year operating lease for office 
space in New York, NY commencing April 1, 1998.  The Company has sublet 
a portion of its office space to affiliated companies.  Future minimum lease
payments under this lease are as follows:
<TABLE>
<CAPTION>
      Commitments     Deduct Sublease Rentals  Net Rental Commitments
       <C>        <C>          <C>             <C>
        1998        $73,000      $49,000        $24,000
        1999         97,000       65,000         32,000 
        2000         97,000       65,000         32,000 
        2001         24,000       16,000          8,000 
                  
                   $291,000     $195,000        $96,000
</TABLE>
<PAGE>        
                          GATEWAY INDUSTRIES, INC.
              NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

4. Per Share Results

     The Company has adopted Statement of Financial Accounting Standard No.
128, "Earnings Per Share" (SFAS No. 128), which is effective for annual and
interim financial statements issued for periods ending after December 15, 
1997.  SFAS No. 128 was issued to simplify the standards for calculating 
earnings per share (EPS) previously in APB No. 15, "Earnings Per Share."  
SFAS No. 128 replaces the presentation of primary EPS with a presentation 
of basic EPS.  The new rules also require dual presentation of basic and 
diluted EPS on the face of the statement of operation.

     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 three and nine months
ended September 30, 1998 and 1997, as such items are anti-dilutive in these 
periods; accordingly, basic and diluted income per share are the same for 
the three and nine months ended September 30, 1998 and 1997.

5. Comprehensive Income

     Effective January 1, 1998, the Company adopted Statement of Accounting 
Standards No. 130, "Reporting Comprehensive Income" (SFAS 130).  SFAS 130 
established new rules for the reporting of comprehensive income and its 
components; however, the adoption of SFAS 130 had no impact on the 
Company's net income or shareholders' equity.  SFAS 130 requires unrealized 
gains or losses on the Company's available-for-sale equity investments to 
be included in other comprehensive income.  There was no impact on prior 
period financial statements from the adoption of SFAS 130, as the Company 
had no unrealized gain or loss on equity securities during the nine months 
ended September 30, 1997.

     For the three and nine months ended September 30, 1998, the Company's 
comprehensive income (loss) was $(8,475) and $(4,000), respectively.  The 
comprehensive income differs from the net income in the first nine months 
of 1998 due to the inclusion of the Company's unrealized gain/(loss) on 
equity securities in its comprehensive income.




GATEWAY INDUSTRIES, INC.

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 nine months ended September 30, 
  Expenses for the nine month period ended September 30, 1998 
aggregated $233,000, consisting of general and administrative costs.

NET INTEREST INCOME AND OTHER INCOME

     During the three quarters of 1998, the Company recognized $232,000 of 
net interest income and other income compared with $224,000 in the 
comparable period of 1997.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's cash and cash equivalents totaled $5,058,000 at 
September 30, 1998 and $5,434,000 at December 31, 1997.  Decreases in 
liabilities and  increase in  assets combined to account for the decrease 
in cash.   At September 30, 1998, the Company's working capital balance was 
$5,265,000.

     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.

YEAR 2000 ISSUE

     Until recently computer programs were written to store only two digits
of date related information in order to more efficiently handle and store
data.  Such programs are unable to properly distinguish between the year
1900 and the year 2000.  This situation is frequently referred to as the
"Year 2000 problem."  The Company believes that all of its significant
computer software is year 2000 compliant and that it will not need to modify
or replace its software so that its computer systems will function properly
with respect to dates in the year 2000 and beyond.
<PAGE>     
GATEWAY INDUSTRIES, INC.

PART II.     OTHER INFORMATION

ITEM 5.  Other Information

     Discussion to acquire Only Multimedia Network Incorporated, a 
California corporation, terminated during May 1998.  Gateway Industries, 
Inc. has been advised that Only Multimedia Network expects certain funding 
from another source.



ITEM 6.  Exhibits and Reports on Form 8-K

     (a) Exhibit 27 - Financial Data Schedule.
         
     (b) Reports on Form 8-K
        
         No reports on Form 8-K have been filed by the registrant for the  
         nine months ended September 30, 1998.
<PAGE>


                         GATEWAY INDUSTRIES, INC.
                          

                                SIGNATURES





Pursuant to the requirements of the Securities and 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:  November 7, 1998