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, 2000.

        [ ]      Transition report under Section 13 or 15(d) of the
                        Securities 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                                (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 June 30, 2000: 4,192,024

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

<PAGE>

                     GATEWAY INDUSTRIES, INC. AND SUBSIDIARY


                                      INDEX


Part I - Financial Information                                             Page


Item 1. Condensed Consolidated Financial Statements (Unaudited):

        Condensed Consolidated Balance Sheet
        June 30, 2000.....................................................    2

        Condensed Consolidated Statements
        of  Operations - Three Months Ended
        June 30, 2000 and 1999 ...........................................    3

        Condensed Consolidated Statements
        of  Operations - Six Months Ended
        June 30, 2000 and 1999 ...........................................    4

        Condensed Consolidated Statements
        of  Cash Flows - Six Months Ended
        June 30, 2000 and 1999............................................    5

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

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


Part II - Other Information

Item 6. Exhibits and Reports on Form 8-K..................................   10

Signatures................................................................   11
<PAGE>
                    GATEWAY INDUSTRIES, INC. AND SUBSIDIARY


                      CONDENSED CONSOLIDATED BALANCE SHEET
                                  June 30, 2000
                                   (Unaudited)
<TABLE>
<CAPTION>

                                     ASSETS
<S>                                                                                                <C>
Current assets:
     Cash and cash equivalents...............................................................       $  2,630,000
     Accounts receivable.....................................................................            725,000
     Prepaid expenses and other..............................................................             47,000
                                                                                                    ------------
         Total current assets................................................................          3,402,000
                                                                                                    ------------

Other assets:

     Security deposits.......................................................................             46,000
     Property, plant and equipment, net......................................................            337,000
     Goodwill and other intangibles, net.....................................................          3,431,000
                                                                                                    ------------
         Total other assets..................................................................          3,814,000
                                                                                                    ------------

Total assets  ...............................................................................       $  7,216,000
                                                                                                    ============




                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
     Accounts payable and accrued expenses...................................................       $    236,000
     Deferred income.........................................................................            247,000
     Bank debt...............................................................................             75,000
     Note payable............................................................................             60,000
     Capital lease obligation................................................................             18,000
                                                                                                    ------------

         Total current liabilities...........................................................       $    636,000
                                                                                                    ------------


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..........................................................         11,055,000
     Accumulated deficit.....................................................................         (4,433,000)
     Treasury stock, 11,513 shares of common stock...........................................            (46,000)
                                                                                                    ------------

         Total shareholders' equity..........................................................          6,580,000
                                                                                                    ------------

Total liabilities and shareholders' equity...................................................       $  7,216,000
                                                                                                    ============
</TABLE>
                             See accompanying notes.
<PAGE>
                    GATEWAY INDUSTRIES, INC. AND SUBSIDIARY


                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                         For the Three Months
                                                                                             Ended June 30,
                                                                                         2000             1999
                                                                                         ----             ----

<S>                                                                                 <C>              <C>
Sales...........................................................................    $    900,000               --

Cost of sales ..................................................................         172,000               --
                                                                                    ------------     ------------

Gross profit  ..................................................................         728,000               --

Costs and expenses:

     Payroll expenses...........................................................    $    534,000     $         --
     Professional fees..........................................................          43,000               --
     Occupancy..................................................................          28,000               --
     General and administrative.................................................         245,000          134,000
     Depreciation and amortization..............................................          74,000               --
                                                                                    ------------     ------------


         Total costs and expenses...............................................         924,000          134,000
                                                                                    ------------     ------------

     Operating loss.............................................................        (196,000)        (134,000)

     Other income

         Interest income:.......................................................          44,000           57,000
                                                                                    ------------     ------------


Net loss........................................................................    $   (152,000)         (77,000)
                                                                                    =============    =============


Net loss per share - basic and diluted..........................................    $       (.04)            (.02)

Weighted average number of shares...............................................       4,192,024        3,592,024

</TABLE>


                             See accompanying notes.

<PAGE>
                    GATEWAY INDUSTRIES, INC. AND SUBSIDIARY


                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                          For the Six Months
                                                                                             Ended June 30,
                                                                                         2000             1999
                                                                                         ----             ----


<S>                                                                                 <C>              <C>
Sales...........................................................................    $    963,000               --

Cost of sales ..................................................................         187,000               --
                                                                                    ------------     ------------

Gross profit  ..................................................................         776,000               --

Costs and expenses:


     Payroll expenses...........................................................    $    534,000               --
     Professional fees..........................................................         119,000               --
     Occupancy..................................................................          28,000               --
     General and administrative.................................................         418,000          201,000
     Depreciation and amortization..............................................          80,000               --
                                                                                    ------------     ------------



         Total costs and expenses...............................................       1,179,000          201,000
                                                                                    ------------     ------------


     Operating loss.............................................................        (403,000)        (201,000)

     Other income:

         Interest income........................................................         109,000          126,000
         Other income...........................................................          18,000               --
                                                                                    ------------     ------------

         Total other income.....................................................         127,000          126,000


Net loss........................................................................    $   (276,000)         (75,000)
                                                                                    =============    =============


Net loss per share - basic and diluted..........................................    $       (.07)            (.02)

Weighted average number of shares...............................................       3,924,991        3,592,024
</TABLE>



                             See accompanying notes.

<PAGE>
                    GATEWAY INDUSTRIES, INC. AND SUBSIDIARY


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

                                                                                          For the Six Months
                                                                                            Ended June 30,
                                                                                        2000              1999
                                                                                        ----              ----
<S>                                                                                <C>              <C>
Cash flows from operating activities:
     Net loss                                                                      $    (276,000)          (75,000)

     Adjustments  to  reconcile  net loss to net  cash  provided  by  (used  in)
         operating activities:
     Amortization of goodwill                                                             80,000                --
     Changes in assets and liabilities net of assets and liabilities acquired:
         Accounts receivable                                                            (349,000)               --
         Prepaid expenses and other                                                       62,000           (18,000)
         Security deposit                                                                 27,000            20,000
         Accounts payable                                                                (30,000)          (15,000)
         Deferred income                                                                 247,000                --
                                                                                   -------------    --------------

              Net cash used in operating activities                                     (239,000)          (88,000)

Cash flows from investing activities:
         Purchase of property, plant, and equipment                                      (17,000)               --
         Purchase of Oaktree Systems Inc., net of cash acquired                       (2,710,000)               --
         Note receivable                                                                      --           566,000
                                                                                   -------------    --------------

              Net cash (used in) provided by investing activities                     (2,727,000)          566,000

Cash flows from financing activities:

         Repayment of capital lease                                                       (4,000)               --
         Proceeds from note payable                                                       60,000                --
         Proceeds from bank debt                                                          75,000                --
                                                                                   -------------    --------------

              Net cash provided by financing activities                                  131,000                --

     Net (decrease) increase in cash and cash equivalents                             (2,835,000)          478,000
     Cash and cash equivalents at beginning of period                                  5,465,000         5,140,000
                                                                                   -------------    --------------
     Cash and cash equivalents at end of period                                    $   2,630,000         5,618,000
                                                                                   =============    ==============
</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>
                    GATEWAY INDUSTRIES, INC. AND SUBSIDIARY


              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 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 and six months  ended June 30, 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.  Such
customers are  principally  not-for-profit  entities,  health care providers and
publishers throughout the United States.

     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

     March 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 of
$3,137,000 and other intangible  assets of $350,000 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 occurred at the beginning of each
of the three and six months ended June 30, 2000 and 1999.
<PAGE>

<TABLE>
<CAPTION>
                                      Three months ended                            Six months ended
                                           June 30,                                     June 30,
                                     2000            1999                         2000            1999
                                     --------------------                         --------------------
<S>                             <C>              <C>                          <C>               <C>

       Sales                    $   900,000          678,000                   1,621,000         1,328,000
       Cost of expenses           1,096,000          895,000                   2,214,000         1,583,000
       Other income                  44,000           63,000                     129,000           138,000
                                -----------      -----------                  ----------        ----------
       Net loss                 $  (152,000)        (154,000)                   (464,000)         (117,000)
                                ===========      ===========                  ==========        ===========

      Net loss per share
      --basic and diluted       $      (.04)            (.04)                       (.11)             (.03)
</TABLE>

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 9,008 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.
Oaktree has a lease for 1,650 square feet in St. Paul,  Minnesota  which expires
on Dec 31, 2000.

     Future minimum lease payments under these leases are as follows:

                                                  Deduct             Net
                                                 Sublease          Rental
                              Commitments        Rentals         Commitments

             2000               113,000            33,000           80,000
             2001               126,000            16,000          110,000
             2002               105,000                --          105,000
                               --------          --------         --------

                               $344,000           $49,000         $295,000
                               ========          ========         ========

5.       Net Loss Per Share

     Net 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 three and six months  ended June
30,  2000  and  1999,  as  such  items  are  anti-dilutive  in  these  quarters;
accordingly,  basic and diluted  income per share are the same for the three and
six months ended June 30, 2000 and 1999.
<PAGE>
                    GATEWAY INDUSTRIES, INC. AND SUBSIDIARY

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

     The Company  acquired  Oaktree on March 21, 2000,  for a purchase  price of
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),  and
certain fees and expenses.

     Oaktree  had  revenues  of  approximately  $3.0  million  in  1999  and was
marginally profitable. Oaktree's 1999 operating income 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 to an
integrated, full-service product offering.

     The Company's ability to make further product  acquisitions will depend on,
among other things, 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 June 30, 2000, Oaktree employed 64 full time and part 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 had no operating  business from 1996 until the  acquisition  of
Oaktree in March 2000.

     During the three month period ended June 30, 2000,  Oaktree had revenues of
$900,000 and cost of sales of $172,000 and a gross profit of $728,000. Gateway's
consolidated  costs and  expenses for the three month period ended June 30, 2000
aggregated  $924,000,  consisting of payroll expenses of $534,000,  professional
fees of $43,000, general and administrative expense of $245,000,  rental cost of
$28,000, and depreciation and amortization of $74,000.

     During  the  period  from  March 22,  2000 to June 30,  2000,  Oaktree  had
revenues  of  $963,000  and cost of  sales of  $187,000  and a gross  profit  of
$776,000.  Gateway's  consolidated  costs and  expenses for the six month period
ended June 30, 2000  aggregated  $1,179,000,  consisting of payroll  expenses of
$534,000,  professional fees of $119,000, general and administrative expenses of
$418,000, rental costs of $28,000, and depreciation and amortization of $80,000.

     The proforma income statement in note 3 shows that the net loss incurred by
the Company for the three and six months  ended June 30, 2000  calculated  as if
Oaktree  had been  acquired  on  January 1,  1999,  increased  over the net loss
incurred  during the same  periods in 1999.  Sales are higher in both periods in
2000 versus 1999.  Higher expenses in 2000 are attributable to increased payroll
and  related  costs at  Oaktree,  that  were  incurred  in  preparation  for the
commencement of service in July 2000 to a large new client.
<PAGE>
                    GATEWAY INDUSTRIES, INC. AND SUBSIDIARY

OTHER INCOME

     During the second  quarter of 2000, the Company  recognized  $44,000 of net
interest income compared with $57,000 in the comparable  period of 1999. For the
six months ended June 30, 2000, other income totaled $127,000 including interest
income of $109,000  and other  income of $18,000.  For the six months ended June
30, 1999, other income consisted of interest income of $126,000.  The difference
results primarily from less cash equivalents on hand earning interest income due
to the Company's acquisition of Oaktree during March 2000.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's cash and cash equivalents totaled $2,630,000 at June 30, 2000
and $5,465,000 at December 31, 1999. $2,643,000 cash was expended March 21, 2000
for the acquisition of Oaktree.  At June 30, 2000, the Company's working capital
balance  was  $2,766,000.   There  was  approximately   $135,000  in  borrowings
outstanding on bank debt and a note payable.

     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 as amended  dated May 22,
                                  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:  August 14, 2000