U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB


[X]  QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES  AND
     EXCHANGE ACT OF 1934 FOR QUARTER ENDED SEPTEMBER 30, 1997

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

               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              (I.R.S. Employer
         incorporation or organization)               Identification No.)

                  750 Lexington Avenue
                   New York, New York                           10022
         (Address of principal executive offices)             (Zip Code)

          Issuer's telephone number, including area code: 212-446-5216


     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act of 1934  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 [ ]

     Transition Small Business Disclosure Format (check one):

          Yes [ ] No [X]



                      APPLICABLE ONLY TO CORPORATE ISSUERS

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest practicable data.

     As of November 3, 1997, the Registrant had  approximately  3,592,000 shares
of Common Stock outstanding.



<PAGE>



                            Gateway Industries, Inc.
Index


Part I--Financial Information

Item 1. Condensed Consolidated Financial Statements (Unaudited):

     Condensed Consolidated Balance Sheet--September 30, 1997............... 3

     Condensed Consolidated Statements of Operations--
     Three and Nine Month Periods Ended September 30, 1997 and 1996......... 4

     Condensed Consolidated Statements of Cash Flows--
     Nine Months Ended September 30, 1997 and 1996.......................... 5

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

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





                                        2
                                   

<PAGE>



                            Gateway Industries, Inc.
                Condensed Consolidated Balance Sheet (Unaudited)
                               September 30, 1997



Assets
Current assets:
Cash and cash equivalents                                           $ 5,762,000
Prepaid expenses and other current assets                                10,000
                                                                    -----------
Total current assets                                                  5,772,000
                                                                    -----------
Total assets                                                        $ 5,772,000
                                                                    ===========

Liabilities and Shareholders' equity 
Current liabilities:
Accounts payable                                                    $    12,000
Accrued expenses and other liabilities                                   77,000
                                                                    -----------
Total current liabilities                                                89,000
                                                                    ===========

Shareholders' equity:
Preferred stock, $.10 par value, 1,000,000 shares authorized,
no shares issued and outstanding                                           --
Common stock, $.001 par value, 10,000,000 shares authorized,
3,592,022 shares issued and outstanding                                   4,000
Capital in excess of par value                                        9,555,000
Accumulated deficit                                                  (3,830,000)
Treasury stock, 11,513 shares                                           (46,000)
                                                                    -----------
Total shareholders' equity                                            5,683,000
                                                                    -----------
Total liabilities and shareholders' equity                          $ 5,772,000
                                                                    ===========


See accompanying notes.


                                        3
                                   

<PAGE>



                            Gateway Industries, Inc.
           Condensed Consolidated Statements of Operations (Unaudited)

<TABLE>
<CAPTION>
                                              For the Three Months                  For the Nine Months
                                              Ended September 30,                   Ended September 30,
                                             1997              1996               1997                 1996
                                             ----              ----               ----                 ----
<S>                                     <C>             <C>                 <C>                <C>               
Net sales                               $               $   5,048,000       $                  $    13,447,000
Cost of sales                                               4,643,000                               12,179,000
                                        ----------------------------------------------------------------------
Gross profit                                                  405,000                                1,268,000
                                                                                                
Sales and marketing                                           379,000                                1,072,000
General and administrative expenses        93,000            255,000             228,000           1,318,000
                                        ----------------------------------------------------------------------
Operating Loss                            (93,000)          (229,000)           (228,000)         (1,122,000)
Other income (expense):                                                                         
   Interest income                         75,000              7,000             224,000              22,000
   Interest expense                                          (197,000)                                (574,000)
   Other income                                                29,000                                   30,000
                                        ----------------------------------------------------------------------
Total other income (expense)               75,000           (161,000)            224,000            (522,000)
                                        ----------------------------------------------------------------------
Net income (loss)                       $ (18,000)      $   (390,000)       $     (4,000)       $ (1,644,000)
                                        ======================================================================
                                                                                                
Net income (loss) per share             $    (.01)      $       (.29)       $       --          $      (1.24)
                                        ======================================================================
Weighted average number of shares                                                               
outstanding                             3,592,022          1,325,000           3,592,022           1,325,000
                                        ======================================================================
</TABLE>
                                                                             
See accompanying notes.                                                      


                                        4
                                   

<PAGE>



                            Gateway Industries, Inc.
           Condensed Consolidated Statements of Cash Flows (Unaudited)

<TABLE>
<CAPTION>
                                                             For the Nine Months
                                                             Ended September 30

                                                            1997           1996
                                                         --------------------------
<S>                                                      <C>            <C>         
Cash flows from operating activities:
Net income (loss) ....................................   $    (4,000)   $(1,644,000)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization ........................                      259,000
Changes in operating assets and liabilities:
Accounts receivable ..................................                     (285,000)
Inventories ..........................................                      353,000
Prepaid expenses and other current assets ............         6,000         25,000
Accounts payable .....................................       (13,000)       532,000
Accrued expenses and other liabilities ...............      (271,000)       343,000
Net cash (used in) provided by operating activities ..      (282,000)      (417,000)
Cash flows from investing activities:
Purchase of machinery and equipment ..................                      (82,000)
                                                         --------------------------
Net cash used in investing activities ................                      (82,000)
Cash flows from financing activities:
Proceeds from issuance of common stock ...............                    5,779,000  
Share issuance expense ...............................                     (130,000)
Purchase of treasury stock ...........................                      (46,000)
Repayments of capital lease obligations ..............                     (169,000)
Repayments of short-term financing ...................                   (4,444,000)
Proceeds from short-term financing ...................                    4,741,000
                                                         --------------------------
Net cash provided by financing activities ............                    5,731,000
                                                         --------------------------

Increase (decrease) in cash and cash equivalents .....      (282,000)     5,232,000
Cash and cash equivalents at beginning of period .....     6,044,000        848,000
                                                         --------------------------
Cash and cash equivalents at end of period ...........   $ 5,762,000    $ 6,080,000
                                                         ==========================
</TABLE>

See accompanying notes.

                                        5
                                   

<PAGE>



1.   General

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  information and with the  instructions 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 consolidated  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, 1997
are not necessarily  indicative of the results that may be expected for the year
ending  December 31, 1997. 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, 1996.

2.   Earnings per Share

In February  1997,  the  Financial  Standards  Board issued  Statement  No. 128,
Earnings per Share,  which is required to be adopted on December  31,  1997.  At
that time,  the Company will be required to change the method  currently used to
compute  earnings  per share and to  restate  all prior  periods.  Under the new
requirements for calculating  primary earnings per share, the dilutive effect of
stock options will be excluded.  The impact of Statement 128 on the  calculation
of  primary  and fully  diluted  earnings  per share for these  quarters  is not
expected to be material.

3.   Pro Forma Information (Unaudited)

On December 21, 1996, the Company sold the stock of its subsidiary Marsel Mirror
and Glass  Products,  Inc.  ("Marsel")  for $1.  The  operations  of Marsel  are
included in the  statement  of  operations  for the three and nine months  ended
September 30, 1996.

The pro  forma  unaudited  results  of  operations  for the  nine  months  ended
September  30,  1996,  assuming  the sale of Marsel had been  consummated  as of
January 1, 1996, are as follows:


         Revenues                              $         --
         Net loss                              $     82,000
         Net loss per common share             $        .02



                                        6
                                   

<PAGE>



Item 2.               MANAGEMENT'S DISCUSSION AND ANALYSIS              
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                

Introduction

     The financial statements included in this Report as of, and for the quarter
and nine months  ended,  September 30, 1996 contain the  consolidated  financial
condition  and  results  of  operation  for the  Company  and  its  wholly-owned
subsidiary,  Marsel Mirror & Glass Products,  Inc.  ("Marsel").  On December 21,
1996,  the  Company  sold all the  outstanding  shares of  Marsel.  The  Company
currently  has no operating  business.  Accordingly,  a comparison  of operating
results with prior periods is not material.

Liquidity and Capital Resources

     The Company's cash and cash equivalents totaled $5,762,000 at September 30,
1997, a decrease of $282,000 from December 31, 1996. The decrease in cash during
the  first  quarter  of 1997 was  attributable  to the  payment  during  1997 of
guarantees of certain of Marsel's payables which were accrued as of December 31,
1996.



                                        7
                                   

<PAGE>


Item 4.  EXHIBITS AND REPORTS ON FORM 8-K

         
Exhibit 27    - Financial Data Schedule

                                   SIGNATURES

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

                                   Gateway Industries, Inc.
                                         (Registrant)


Date: November 11,1997         By: /s/Warren G. Lichtenstein
                                   -------------------------------
                                   Warren G. Lichtenstein
                                   Chairman of the Board
                                   and Principal Financial
                                   and Accounting Officer







                                        8