SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

            [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                   THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
                      QUARTERLY PERIOD ENDED JUNE 30, 2002

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

                        Commission file number 000-26017

                      GATEWAY INTERNATIONAL HOLDINGS, INC.

             (Exact Name of Registrant as Specified in its Charter)

                       Nevada                        88-0375818
                       ------                        ----------
            (State or Other Jurisdiction of         (IRS Employer
            Incorporation or Organization)         Identification No.)


                    3840 East Eagle Drive, Anaheim, CA 92807
                    ----------------------------------------
                    (Address of principal executive offices)

                                  714-630-6253
                                  ------------
                           (Issuer's telephone number)

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



  Title of each class of Common Stock          Outstanding at August 16, 2002
  -----------------------------------          ------------------------------
   Common Stock, $0.001 par value                        17,021,000

<PAGE>


                                   FORM 10-QSB

               Gateway International Holdings, Inc. and subsidiary

                                      INDEX
                                                                         Page

PART I.      Financial Information                                          2

ITEM 1       Condensed Consolidated Balance Sheet
             June 30, 2002 (Unaudited)                                      3

             Condensed Consolidated Statements of Operations
             (Unaudited) for the
             Nine months ended June 30, 2002 and 2001,
             Three months ended June 30, 2002 and 2001                      4

             Condensed Consolidated Statements of Cash Flows
             (Unaudited) for the
             Nine Months Ended June 30, 2002 and 2001                       5

             Notes to Condensed Consolidated Financial Statements           6

             Management's Discussion and
             Analysis or Plan of Operation                                 10

PART II.     Other Information                                             14

ITEM 1       Legal Proceedings                                             14

ITEM 2       Changes in Securities                                         14

ITEM 3       Defaults upon Senior Securities                               14

ITEM 4       Submission of Matters to a Vote of Security Holders           15

ITEM 5       Other Information - Related Party Transactions                15

ITEM 6       Exhibits and Reports on Form 8K                               15

SIGNATURES                                                                 15



                                     PART I.

FINANCIAL INFORMATION

In the opinion of management,  the accompanying  unaudited financial  statements
included in this Form 10-QSB reflect all adjustments  (consisting only of normal
recurring  accruals)  necessary  for a  fair  presentation  of  the  results  of
operations for the periods presented.  The results of operations for the periods
presented are not  necessarily  indicative of the results to be expected for the
full year.

                                        2
<PAGE>


                          ITEM 1: FINANCIAL STATEMENTS

               GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY

Condensed Consolidated Balance Sheet
                                                                      June 30,
Assets                                                                  2002
                                                                   ------------
                                                                    (unaudited)
Current Assets:


Cash                                                               $    11,247
Accounts Receivable, net                                                98,062
Inventories                                                            500,363
                                                                   ------------
      Total Current Assets                                             609,672

Property & Equipment, net                                               82,446
Other Assets                                                            24,441
                                                                   ------------
Total Assets                                                       $   716,559
                                                                   ============
Current Liabilities:

      Accounts Payable and Accrued Liabilities                     $   603,489
      Current portion of Note Payable                                  512,985
      Current portion of obligation under Capital Lease                  5,547
      Note Payable to Related Parties                                  224,700
                                                                   ------------
       Total Current Liabilities                                     1,346,721

Notes Payable, less Current Portion                                    882,920
                                                                   ------------
Total Liabilities                                                    2,229,641
                                                                   ------------
Stockholders' (Deficit)

      Preferred stock, $0.001 par value; 10,000,000 shares
       authorized; no shares issued and outstanding                        -
      Common stock, $0.001 par value; 100,000,000 shares
       authorized; 17,021,000 shares issued and outstanding             17,021
      Additional Paid-in Capital                                       114,879
      Stockholder Note Receivable                                      (76,461)
      Accumulated Deficit                                           (1,568,521)
                                                                   ------------
       Total Stockholders' Deficit                                  (1,513,082)
                                                                   ------------
Total Liabilities and Stockholders' Deficit                        $   716,559
                                                                   ============




      See accompanying notes to condensed consolidated financial statements


                                       3
<PAGE>

<TABLE>
<CAPTION>

                GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Operations

                                         Nine Months Ended              Three Months Ended
                                            June 30,                        June 30,
                                       2002           2001            2002          2001
                                   ------------   ------------   ------------   ------------
                                   (unaudited)    (unaudited)     (unaudited)    (unaudited)
<S>                               <C>            <C>            <C>            <C>

Net Sales                          $ 1,708,107    $ 2,971,992    $   524,179    $ 1,153,728
Cost of Sales                        1,538,834      1,941,375        455,779        652,517
                                   ------------   ------------   ------------   ------------
Gross Profit                           169,273      1,030,617         68,400        501,211

Operating Expenses

Payroll and Related                    348,925        379,536         96,360        133,464
Selling, General,
   and Administrative                  324,162        400,676        114,833        121,899
                                   ------------   ------------   ------------   ------------
Total Operating Expenses               673,087        780,212        211,193        255,363

Interest Expense                      (120,150)      (123,340)       (45,867)       (40,565)
                                   ------------   ------------   ------------   ------------
Income (Loss) before Taxes            (623,964)       127,065       (188,660)       205,283

Income Taxes                             1,237            800            437            -
                                   ------------   ------------   ------------   ------------
Net Income (Loss)                  $  (625,201)   $   126,265    $  (189,097)   $   205,283
                                   ============   ============   ============   ============
Basic and Diluted
   net Income (Loss) Available
   to Common Stockholders
   per Common Share                $    (0.04)    $     0.01     $    (0.01)    $     0.02
                                   ============   ============   ============   ============
Weighted Average
   number of Common
   Shares Outstanding
   basic & dluted                   16,084,297     12,733,000     17,021,000     12,733,000
                                   ============   ============   ============   ============

</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                       4
<PAGE>

GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                          Nine Months Ended
                                                                              June 30,
                                                                      2002              2001
                                                                  -----------       -----------
                                                                  (unaudited)       (unaudited)
<S>                                                              <C>              <C>
Cash Flows from Operating Activities:

     Net Income (Loss)                                            $ (625,201)       $  126,265
     Adjustments to Reconcile Net Income (Loss) to Net Cash
     Provided by (Used in) Operating Activities:
         Depreciation and Amortization                                29,030            19,858
         Changes in Operating Assets and Liabilities:
              Accounts Receivable                                    104,378           244,385
              Inventories                                            329,577          (127,446)
              Other Assets                                            (8,500)           (1,500)
              Accounts Payable and Accrued Liabilities               208,771          (387,052)
                                                                  -----------       -----------
     Net Cash (Used in) Provided By Operating Activities              38,055          (125,490)
                                                                  -----------       -----------
Cash Flows from Investing Activities

     Purchases of Property and Equipment                              (1,282)          (36,015)
                                                                  -----------       -----------
     Net Cash Used in Investing Activities                            (1,282)          (36,015)
                                                                  -----------       -----------
Cash Flows from Financing Activities:

     Principal Repayments on Notes Payable                          (241,956)         (350,707)
     Principal Repayments of Capital Lease Obligations                (3,620)          (11,436)
     Principal Repayments on Notes Payable to Related Parties        (96,500)         (169,996)
     Principal Borrowings on Notes Payable                               -             412,168
     Principal Borrowings on Notes Payable to Related Parties        118,500           130,000
     Restricted Common Stock Issued for Cash                          91,900               -
     Net Increase in Stockholder Note Receivable                         -                 -
                                                                  -----------       -----------
     Net Cash (Used In) Provided By Financing Activities            (131,676)           10,029
                                                                  -----------       -----------
Net Decrease in Cash                                                 (94,903)         (151,476)

Cash at Beginning of Period                                          106,150           202,653
                                                                  -----------       -----------
Cash at End of Period                                             $   11,247        $   51,177
                                                                  ===========       ===========
Supplemental Disclosure of Cash Flow Information
     Cash paid during the period for:
         Interest                                                 $   57,308        $  123,340
                                                                  ===========       ===========
         Taxes                                                    $    1,237        $      -
                                                                  ===========       ===========
</TABLE>

      See accompanying notes to condensed consolidated financial statements

                                       5
<PAGE>

GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY

Notes to the Condensed Consolidated Financial Statements


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

Basis of Presentation

The consolidated  financial statements of Gateway International  Holdings,  Inc.
("Gateway")  (formerly  known as  Gourmet  Gifts,  Inc.)  for the three and nine
months  ended June 30, 2002 and 2001 are  unaudited.  Due to the  Reorganization
with Elite  Machine Tool Company  ("EM") (see Note 2) the  reporting  amounts of
Gateway are those of the operating  corporation and the results of operations of
Gateway  previously  filed in  prior  years  are not  included  herein.  Certain
information and note disclosures normally included in the consolidated financial
statements prepared in accordance with accounting  principles generally accepted
in the United States of America have been omitted.  These consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and notes  thereto,  which are included in Gateway's Form 8-K/A filed
March 27,  2002.  In the  opinion  of  management,  the  consolidated  financial
statements contain all adjustments,  consisting of normal recurring adjustments,
necessary to present  fairly the  financial  position of Gateway for the periods
presented.  The interim  operating  results may not be  indicative  of operating
results for the full year or for any other interim periods.

Elite Machine Tool Company was originally founded in Orange,  California in 1991
as a sole proprietorship. Elite incorporated in the State of California on March
30, 1998 as E.M. Tool Company,  Inc. The Company  principal  line of business is
marketing Computer Numerical Control ("CNC") machine tools. E.M. Tool is engaged
in  acquiring,   refurbishing  and  selling   pre-owned  CNC  machine  tools  to
manufacturing  customers  across the United States.  The Company's  services are
marketed through sales  affiliates,  independent  sales agents and its own sales
force. The Company is a full service  machinery dealer selling to a diverse base
of customers in aerospace,  military and medical fields. The Company is a dealer
in previously owned CNC machine tools and currently markets Mori Seiki, Kitamura
and Matsuura brands. The Company purchases pre-owned machines from Japan, Europe
and the United  States.  The  machines  are then  transported  to the  Company's
facilities in Anaheim,  CA where they are inspected,  repaired,  refurbished and
made available for resale.

The Company's  revenues consist of sales of CNC machine tools,  sales of tooling
and accessories and service of CNC machine tools and related equipment. Revenues
are  recognized  in the period in which they are earned.  Costs of sales include
the acquisition cost of inventory for sale, freight and  transportation,  repair
parts, outside services, service labor, sales commissions and other direct sales
costs.  General  and  administrative  expenses  consists of the cost of customer
acquisition and retention,  customer service,  accounting,  billing, information
systems  and the  personnel  required  to support the  Company's  operation  and
growth.


                                       6
<PAGE>

GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY

Notes to the Condensed Consolidated Financial Statements


NOTE 1 -ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES,
continued

Going Concern

The accompanying  consolidated  financial statements have been prepared assuming
the Company will continue as a going concern,  which  contemplates,  among other
things,  the realization of assets and satisfaction of liabilities in the normal
course of  business.  The Company has  negative  working  capital of $737,049 an
accumulated  deficit  of  $1,568,521,  losses  from  operations  and a  lack  of
profitable  operational history.  These factors, among others, raise substantial
doubt about the Company's  ability to continue as a going  concern.  The Company
intends to fund operations through increased sales and debt and equity financing
arrangements  which management  believes may be insufficient to fund its capital
expenditures,  working capital and other cash  requirements  for the fiscal year
ending  September  30,  2002.  Therefore,  the  Company  may be required to seek
additional funds to finance its long-term operations.  The successful outcome of
future  activities  cannot be  determined at this time and there is no assurance
that if achieved, the Company will have sufficient funds to execute its intended
business plan or generate positive operating results.

The consolidated  financial statements do not include any adjustments related to
recoverability  and  classification of assets carrying amounts or the amount and
classification  of liabilities that might result should the Company be unable to
continue as a going concern.

Inventories

Inventories,  which  consist  primarily of pre-owned  machine  tools,  including
refurbishment labor and overhead, are stated at the lower of cost or market with
cost  determined  on a specific  identification  basis.  The  Company  regularly
monitors  inventory  for  excess or  obsolete  items  and  makes  any  valuation
corrections when such adjustments are known.

Net  realizable  value  is  based  on  management's  forecast  for  sales of the
Company's  products  in the  ensuing  years.  The  industry in which the Company
operates is characterized by technological advancement and change. Should demand
for the Company's products prove to be significantly less than anticipated,  the
ultimate  realizable value of the Company's  inventories  could be substantially
less than the amount shown on the accompanying consolidated balance sheet.

Risk and Uncertainties

The Company operates in a highly competitive industry.  The Company's operations
are  subject  to  significant  risk  and  uncertainties   including   financial,
operational and other risks associated with an emerging business,  including the
potential risk of business failure.


                                       7
<PAGE>


GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY

Notes to the Condensed Consolidated Financial Statements


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES,
continued

Earnings Per Share

The Company has adopted  Statement of  Financial  Accounting  Standards  No. 128
("SFAS 128"),  "Earnings Per Share." Under SFAS 128, basic earnings per share is
computed by dividing  income  available to common  stockholders  by the weighted
average  number  of  shares  assumed  to be  outstanding  during  the  period of
computation.  Diluted  earnings per share is computed  similar to basic earnings
per share  except that the  denominator  is  increased  to include the number of
additional  common  shares  that would have been  outstanding  if the  potential
common shares had been issued and if the additional  common shares were dilutive
(there were no common share equivalents at June 30, 2002 and 2001).

Revenue Recognition

The Company records sales when the goods a shipped to the customer.

Recent Accounting Pronouncements

In July 2001, FASB issued  Statement of Financial  Accounting  Standards No. 141
("SFAS  141"),   "Business   Combinations,"  which  is  effective  for  business
combinations  initiated  after June 30, 2001. SFAS 141 eliminates the pooling of
interest  method of accounting for business  combinations  and requires that all
business combinations  occurring on or after July 1, 2001 be accounted for under
the  purchase  method.  The Company  does not expect SFAS 141 to have a material
impact on its consolidated financial statements.

In July 2001, the FASB issued  Statement of Financial  Accounting  Standards No.
143  ("SFAS  143"),  "Accounting  for Asset  Retirement  Obligations."  SFAS 143
establishes  standards  associated  with the  retirement of tangible  long-lived
assets and the associated  asset retirement  costs.  This statement is effective
for financial  statements issued for fiscal years beginning after June 15, 2002.
The Company has not yet assessed the impact,  if any,  this standard may have on
its  consolidated  financial  statements,  but does not  expect the impact to be
material.

In August 2001, the FASB issued Statement of Financial  Accounting Standards No.
144 ("SFAS  144"),  "Accounting  for the  Impairment  or Disposal of  Long-Lived
Assets."  SFAS  144  addresses  financial   accounting  and  reporting  for  the
impairment of long-lived assets and for long-lived assets to be disposed of. The
provisions of SFAS 144 are effective for financial  statements issued for fiscal
years beginning after December 15, 2001, and interim periods within these fiscal
years, with early adoption  encouraged.  The Company does not expect SFAS 144 to
have a material impact on its consolidated financial statements.


                                       8
<PAGE>

GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY

Notes to the Condensed Consolidated Financial Statements

In August 2002, the FASB issued Statement of Financial  Accounting Standards No.
146  ("SFAS  146")  "Accounting  for  Costs  Associated  with  Exit or  Disposal
Activities." SFAS 146 is effective for such activities  initiated after December
31, 2002. Activities of this type include  restructurings (such as relocation of
a business and fundamental reorganizations of a business itself), which may give
rise to costs such as contract cancellation provisions, employee relocation, and
one-time  termination  costs.  SFAS 146 prohibits  liability  recognition  based
solely on  management's  intent,  and requires that  liabilities  be measured at
estimated fair value.  Management has not determined the effect, if any, of SFAS
146 on the Company's future financial statements.

NOTE 2 - PLAN OF REORGANIZATION

Pursuant to the Agreement and Plan of  Reorganization  ("Reorganization")  dated
December 11, 2001, the Company completed a transaction whereby it acquired E. M.
Tool Company,  Inc. in a tax-free share exchange under Section  368(a)(1)(B)  of
the Internal Revenue Code of 1986, as amended.  Pursuant to the  Reorganization,
all 21,262  issued and  outstanding  shares of E.M.  Tool  Company,  Inc.  where
exchanged  for shares of the  Company  on a 1 for 637 basis.  At the time of the
Reorganization,  the Company had 3,384,000 shares outstanding,  net of 1,000,000
shares canceled pursuant to the Reorganization. By virtue of the Reorganization,
the  stockholders  of E.M. Tool Company,  Inc.  acquired  13,536,000  restricted
common shares of Gateway. The total issued,  outstanding and committed shares of
the combined entities  subsequent to the Reorganization  were 16,920,000 shares.
The  transaction  was  recorded as a "reverse  acquisition"  whereby  E.M.  Tool
Company,  Inc.  was  considered  to be the  accounting  acquirer  as it retained
control of the Company  after the  Reorganization,  however,  E.M. Tool Company,
Inc. became a wholly-owned subsidiary of the Company after the Reorganization.

NOTE 3 - ACQUISITIONS

In March 2002,  the Company  entered  into a  definitive  Agreement  and Plan of
Reorganization  (the "Agreement")  with Bechler Cams, Inc. ("BCI"),  pursuant to
which BCI would become a  wholly-owned  subsidiary of the Company.  According to
the Agreement,  the Company shall issue 1,300,000  restricted  common shares for
100 common shares of BCI, which represents all of the outstanding shares of BCI.
The Company  will  account for this  transaction  in  accordance  with  purchase
accounting as deemed appropriate under SFAS 141. The closing of this transaction
is dependent on the outcome of various due diligence procedures performed by the
Company, as defined in the related agreement.  At June 30, 2002, the Company had
not completed its due diligence procedures and the transaction had not closed.

In April 2002,  the Company  entered  into a  definitive  Agreement  and Plan of
Reorganization  (the  "Agreement")  with Nelson  Engineering,  Inc.  ("Nelson"),
pursuant to which Nelson would become a wholly owned  subsidiary of the Company.
According to the Agreement,  the Company shall issue 3,125,000 restricted common
shares  for  1,935  common  shares  of  Nelson,  which  represents  all  of  the
outstanding  shares of Nelson.  The Company will account for this transaction in
accordance with purchase  accounting as deemed  appropriate  under SFAS 141. The
closing of this transaction is dependent on the outcome of various due diligence
procedures  performed by the Company,  as defined in the related  agreement.  At
June 30, 2002,  the Company had not completed its due diligence  procedures  and
the transaction had not closed


                                       9
<PAGE>

GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY

Notes to the Condensed Consolidated Financial Statements

NOTE 4 - RELATED PARTY TRANSACTIONS

From time to time,  the Company  borrows  funds from a  stockholder  for working
capital  purposes,  which are  non-interest  bearing  and are due and payable on
demand.  During  quarter  ended June 30, 2002,  the Company had no borrowings or
repayments. At June 30, 2002, outstanding borrowings totaled $224,700.

NOTE 5 - NOTES PAYABLE

During the  quarter  ended June 30,  2002,  the  Company  did not remit  monthly
payments  totaling  $31,558,  including  interest of  approximately  $9,000,  as
required  under  the  terms  of a  note  payable  (the  "Note")  to a  financial
institution. In May, 2002, the Company renegotiated the terms of the Note. Under
the amended  terms,  the Company is to pay monthly  interest  payments of $8,900
beginning June 1, 2002 through August 1, 2002 followed by monthly  principal and
interest  installments  of $31,558 through October 2005 and one final payment of
approximately   $8,204  in  November  2005.  The  Company  made  the  June  2002
installment  pursuant  to the new terms of the Note;  however,  the  Company  is
delinquent in its payments  subsequent to the period ended June 30, 2002.  There
can be no  assurance  that the Company  will have  sufficient  funds to make the
required payments, nor can there be any assurance that the financial institution
will not foreclose on the Note.

NOTE 6 - STOCKHOLDERS' EQUITY

During the period  ended June 30, 2002,  the Company  issued  102,262  shares of
restricted common stock for cash totaling $91,900.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    FINANCIAL CONDITION OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS

The following  information  should be read in conjunction  with the consolidated
financial  statements  and the notes  thereto.  The  analysis set forth below is
provided pursuant to applicable  Securities and Exchange Commission  regulations
and is not intended to serve as a basis for projections of future events. Except
for historical  information contained herein, the matters discussed in this Form
10-QSB are  forward-looking  statements  that are  subject to certain  risks and
uncertainties  that could cause actual results to differ  materially  from those
set forth in such forward  looking  statements.  When used in this  report,  the
words "may," "will," "expect," "anticipate,"  "continue," "estimate," "project,"
"intend,"  and similar  expressions  are  intended  to identify  forward-looking
statements  within the meaning of Section 27A of the  Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 regarding events, conditions,
and financial  trends that may affect the Company's  future plans of operations,
business strategy,  operating results, and financial position. Persons reviewing
this report are cautioned that any forward-looking statements are not guarantees
of future performance and are subject to risks and uncertainties and that actual
results may differ  materially  from those included  within the  forward-looking
statements as a result of various factors.  Actual future results and trends may
differ materially from historical and anticipated results,  which may occur as a
result of a variety of factors.  Such risks and uncertainties  include,  without
limitation,  Gateway's limited operating history,  the  unpredictability  of its
future  revenues,  the  unpredictable  and  evolving  nature of its key markets,
competition,  dependence  on key  personnel,  the  possible  acquisition  of new
businesses  that  result  in  operating   losses  or  that  do  not  perform  as
anticipated,  resulting in unanticipated  losses,  the possible  fluctuation and
volatility of the Company's  operating  results,  financial  condition and stock
price,  inability of the Company to continue as a going concern,  the management
of growth, and Gateway's need for additional capital. Except as required by law,

                                       10
<PAGE>

Gateway  undertakes  no  obligation  to update  any  forward-looking  statement,
whether as a result of new  information,  future  events or  otherwise.  Readers
should carefully review the factors set forth in other reports or documents that
Gateway files from time-to-time with the SEC.

GENERAL OVERVIEW

Gateway  International   Holdings,   Inc.  is  a  Nevada  corporation  that  was
incorporated  on September  24,  1997,  under the name  Gourmet  Gifts,  Inc. On
January 24, 2002,  Gourmet Gifts,  Inc. acquired all of the outstanding stock of
E. M. Tool Company,  Inc.  thereby making E.M. Tool a wholly owned subsidiary of
Gourmet  Gifts,  Inc.  The  transaction  was  recorded as a reverse  acquisition
whereby E.M. Tool was  considered  the acquirer  because it  maintained  control
after the  transaction  was  completed.  Additionally,  as part of the E.M. Tool
acquisition,  the  current  management  and  directors  of Gourmet  Gifts,  Inc.
resigned,  and a new management  team and board of directors was put in place to
run the  new  operations  of the  Company.  Due to the  evolving  nature  of the
Company's  business and as part of the  Reorganization,  the Company's  Board of
Directors  changed  the  Company's  corporate  name  to  Gateway   International
Holdings,  Inc.  Going  forward,  the Company will focus its efforts on a growth
strategy through the acquisition of manufacturing companies.

In  regard  to  the  following  discussions  and  analysis  of  the  results  of
operations, comparisons made to the same period last year will only apply to the
operations  of E.M.  Tool  Company,  Inc.  because they  represent the surviving
operations of the Company.

Elite Machine Tool Company was originally founded in Orange,  California in 1991
as a sole proprietorship. Elite incorporated in the State of California on March
30, 1998 as E.M. Tool Company, Inc. The Company's principal  line of business is
marketing Computer Numerical Control ("CNC") machine tools. E.M. Tool is engaged
in  acquiring,   refurbishing  and  selling   pre-owned  CNC  machine  tools  to
manufacturing  customers  across the United States.  The Company's  services are
marketed through sales  affiliates,  independent  sales agents and its own sales
force. The Company is a full service  machinery dealer selling to a diverse base
of customers in aerospace,  military and medical fields. The Company is a dealer
in previously owned CNC machine tools and currently markets Mori Seiki, Kitamura
and Matsuura brands. The Company purchases pre-owned machines from Japan, Europe
and the United  States.  The  machines  are then  transported  to the  Company's
facilities in Anaheim,  CA where they are inspected,  repaired,  refurbished and
made available for resale.

The Company's  revenues consist of sales of CNC machine tools,  sales of tooling
and accessories and service of CNC machine tools and related equipment. Revenues
are  recognized  in the period in which they are earned.  Costs of sales include
the acquisition cost of inventory for sale, freight and  transportation,  repair
parts, outside services, service labor, sales commissions and other direct sales
costs.  General  and  administrative  expenses  consists of the cost of customer
acquisition and retention,  customer service,  accounting,  billing, information
systems  and the  personnel  required  to support the  Company's  operation  and
growth.

RESULTS OF OPERATIONS OF THE COMPANY

THREE  MONTHS  ENDED JUNE 30, 2001  COMPARED TO THE THREE  MONTHS ENDED JUNE 30,
2002

The operational activities of the Company will focus primarily on the operations
of E.M. Tool. While Gateway  International  operates as a holding company,  E.M.
Tool is actively  engaged in business  activities that are currently the core of
the Company's business.  For the purposes of this overview,  we will concentrate
on the operations of E.M. Tool.

Revenues - Revenues  decreased by $629,549 or 54.6% from  $1,153,728  during the
three months ended June 30, 2001 to $524,179  during the three months ended June
30, 2002.  This  decrease was due to several  factors.  Following  the events of


                                       11
<PAGE>

September 11, 2001,  manufacturing  customers  cancelled  orders or have limited
their acceptance of manufactured  products,  resulting in decreased purchases of
capital  equipment for production.  Decreased demand has severely  decreased the
market prices of machine  tools,  compelling  the Company to sell equipment at a
loss to  maintain  cash  flow.  The  Company  had to expand its focus to include
merger candidates and the additional responsibilities and reporting requirements
of operating a public company.

Cost of Sales - Cost of sales  decreased  by  $196,738  or 30.2%  from  $652,517
during the three months ended June 30, 2001 to $455,779  during the three months
ended June 30, 2002.  The  decrease was due to the overall  decrease in revenues
cited  above.  The  decrease  in cost of  sales is lower  than the  decrease  in
revenues due to the Company's  sales of some machines at a loss to maintain cash
flow. Due to lack of cash flows and decreased  demand,  the Company is reselling
machines for profit on a  consignment  basis and is only  purchasing  additional
inventory when a specific buyer has been identified. As a percentage of revenue,
Cost of Sales  were  56.6% and 87.0%  resulting  in a gross  margin of 43.4% and
13.0% for the three months ended June 30, 2001 and 2002, respectively.

Operating  Expenses  -  Operating  expenses  decreased  by $44,170 or 17.3% from
$255,363 in the three months ended June 30, 2001 to $211,193 in the three months
ended June 30, 2002. Operating expenses for the three months ended June 30, 2001
were  comprised  primarily  of $133,464 in  salaries  and related  taxes paid to
officers and employees;  rent of $27,311;  professional service fees of $15,954;
depreciation  expense  of  $6,620;  and  $72,014  of other  operating  expenses,
including advertising,  auto, office and utilities expenses.  Operating expenses
for the three months ended June 30, 2002 were comprised  primarily of $96,360 in
salaries  and related  taxes paid to  officers  and  employees,  rent of 15,816;
professional  service  fees of $52,186,  depreciation  expense of  $14,515;  and
$32,316 of other operating  expenses,  including  advertising,  auto, office and
utilities expenses.  Payroll variances are due to commissions paid to the inside
sales force.

Interest  Expense - Net  interest  expense  increased  by  $5,302 or 13.1%  from
$40,565 for the three months ended June 30, 2001 to $45,867 for the three months
ended June 30, 2002. The increase was primarily due to higher  interest rates on
notes outstanding during 2002.

As a result,  net  income  was  $205,283,  or $0.02 net income per share for the
three months ended June 30, 2001, and a net loss of $189,097,  or $0.01 loss per
share, for the three months ended June 30, 2002.

Assets and  Liabilities  - Assets  decreased by $548,106  from  $1,264,665 as of
September  30,  2001 to  $716,559  as of June 30,  2002.  The  decrease  was due
primarily  to  a  decline  in  sales,  collections  of  the  Company's  accounts
receivable and a decrease in the Company's inventory held for sale.  Liabilities
decreased by $14,805 from  $2,244,446  as of September 30, 2001 to $2,229,641 as
of June 30,  2002.  The  decrease  was due the  Company  continuing  to make the
payments on its long-term debt, reducing notes payable and obligations under its
capital  lease and  increases  in the  Company's  accounts  payable  and accrued
expenses.  Current  liabilities  increased  by  $89,989  from  $1,256,732  as of
September 30, 2001 to  $1,346,721 as of June 30, 2002.  This is due primarily to
increases in the Company's accounts payable and accrued expenses.

Stockholders'  Deficit  -  Stockholders'  deficit  increased  by  $533,301  from
$979,781  as of  September  30,  2001 to  $1,513,082  as of June 30,  2002.  The
increase was  attributable  to the net loss of $625,201 in the nine months ended
June 30, 2002 and to the sale of common stock for cash totaling $91,900.


                                       12
<PAGE>

NINE MONTHS ENDED JUNE 30, 2001 COMPARED TO THE NINE  MONTHS ENDED JUNE 30, 2002

Revenues - Revenues  decreased by $1,263,885 or 42.5% from $2,971,992 during the
nine months ended June 30, 2001 to $1,708,107  during the nine months ended June
30, 2002.  This  decrease was due to several  factors.  Following  the events of
September 11, 2001,  manufacturing  customers  cancelled  orders or have limited
their acceptance of manufactured  products,  resulting in decreased purchases of
capital  equipment for production.  Decreased demand has severely  decreased the
market prices of machine  tools,  compelling  the Company to sell equipment at a
loss to  maintain  cash  flow.  The  Company  had to expand its focus to include
merger candidates and the additional responsibilities and reporting requirements
of operating a public company.

Cost of Sales - Cost of sales  decreased  by $402,541  or 20.7% from  $1,941,375
during the nine  months  ended June 30,  2001 to  $1,538,834  in the nine months
ended June 30, 2002.  The  decrease was due to the overall  decrease in revenues
cited  above.  The  decrease  in cost of  sales is lower  than the  decrease  in
revenues due to the Company selling machines at a loss to maintain cash flow. As
a percentage of revenue, cost of sales were 65.3% and 90.1% resulting in a gross
margin  of 34.7%  and 9.9% for the nine  months  ended  June 30,  2001 and 2002,
respectively.

Operating  Expenses -  Operating  expenses  decreased  by $107,125 or 13.7% from
$780,212 in the nine  months  ended June 30, 2001 to $673,087 in the nine months
ended June 30, 2002.  Operating expenses for the nine months ended June 30, 2001
were  comprised  primarily  of $379,536 in  salaries  and related  taxes paid to
officers and employees,  rent of $69,274;  professional service fees of $49,955,
depreciation  expense of  $19,858;  and  $261,589 of other  operating  expenses,
including  advertising,  auto,  entertainment,  office and  utilities  expenses.
Operating  expenses  for the nine  months  ended  June 30,  2002 were  comprised
primarily  of  $348,925  in salaries  and  related  taxes paid to  officers  and
employees; rent of $63,841;  professional service fees of $92,083,  depreciation
expense  of  $29,030;  and  $139,208  of  other  operating  expenses,  including
advertising,  auto, office and utilities expenses.  Payroll variances are due to
commissions  paid to the inside  sales  force as general  payroll  expenses  are
expected to remain  relatively  consistent from prior periods as the Company has
maintained the same staff and is paying them relatively the same amount.

Interest  Expense - Net interest  expense  decreased by $3,190 from $123,340 for
the nine months  ended June 30, 2001 to $120,150  for the nine months ended June
30,  2002.  The  decrease  was  primarily  due  to  principal  reduction  of  an
outstanding debt balance in June 2001.

As a result, net profit was $126,265 or $0.01 net income per share, and net loss
of  $625,201,  or $0.04 loss per share,  for the nine months ended June 30, 2001
and 2002, respectively.

LIQUIDITY AND CAPITAL RESOURCES

General - Overall, the Company had negative cash flows of ($94,903) for the nine
months  ended June 30,  2002  resulting  from  $38,055 of cash  provided  by the
Company's operating  activities,  ($1,282) of cash used in investing  activities
and ($131,676) of cash used in financing  activities.  The Company anticipated a
stronger and faster  recovery from the events of September 11, 2001 and expected
funds from operations  would be sufficient to cover daily  operations.  However,
due to an ongoing  decline in sales and a net loss of  $625,201  during the nine
months ended June 30, 2002,  the Company's  funds from  operations are currently
short of meeting monthly operating  obligations.  In the event that sales growth
for the  remainder of the fiscal year ending  September  30, 2002 meets  current
expectations,  the Company expects that cash flow from daily  operations will be
sufficient to meet daily operating costs by the end of the Company's fiscal year
ending September 30, 2002.



                                       13
<PAGE>


Cash Flows from Operating Activities - Net cash provided by operating activities
of $38,055 for the nine months  ended June 30, 2002 was  primarily  due to a net
loss of ($625,201) and changes in operating assets and liabilities,  principally
accounts  payable  and accrued  expenses of  $208,771,  accounts  receivable  of
$104,378,  inventory of $329,577,  and other assets of ($8,500) and depreciation
and amortization expense of $29,030.

Cash Flows from Investing  Activities - Net cash used in investing activities of
($1,282) for the nine months ended June 30, 2002 funded purchases of equipment

Cash Flows from Financing  Activities - Net cash used in financing activities of
($131,676) in the nine months ended June 30, 2002 was primarily due to principal
repayments on notes payable of ($241,956), principal repayments on capital lease
obligations  of ($3,620),  and principal  repayments on notes payable to related
parties of ($96,500) offset by borrowings on notes payable to related parties of
$118,500 and the issuance of restricted common stock for $91,900 in cash.

Financing - As previously  discussed,  the Company's  funds from  operations are
currently insufficient to fund daily operations.  Therefore, the Company will be
required to seek  additional  funds either  through debt or equity  financing to
finance these debts and  contingencies.  Failure to raise  additional  funds may
have a material adverse effect on the Company's long-term operational viability.

GOING CONCERN

The Company's  independent  certified  public  accountants  have stated in their
Auditor's  Report  included in the Company's  Form 8-K/A,  filed March 27, 2002,
that the Company has incurred  operating  losses,  has a working capital deficit
and a significant  stockholders'  deficit.  These conditions  raise  substantial
doubt about the Company's ability to continue as a going concern.

INFLATION

Management  believes  that  inflation  has  not  had a  material  effect  on the
Company's results of operations.

                           PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

The  Company is not  currently  a party to any legal  proceedings,  the  adverse
outcome of which, individually or in the aggregate would have a material adverse
effect on our financial position or results of operations.

Item 2. CHANGES IN SECURITIES

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES

During the  quarter  ended June 30,  2002,  the  Company  did not remit  monthly
payments  totaling  $31,558,  including  interest of  approximately  $9,000,  as
required  under  the  terms  of a  note  payable  (the  "Note")  to a  financial
institution. In May, 2002, the Company renegotiated the terms of the Note. Under
the amended  terms,  the Company is to pay monthly  interest  payments of $8,900
beginning June 1, 2002 through August 1, 2002 followed by monthly  principal and
interest  installments  of $31,558 through October 2005 and one final payment of
approximately   $8,204  in  November  2005.  The  Company  made  the  June  2002
installment  pursuant  to the new terms of the Note;  however,  the  Company  is
delinquent in its payments  subsequent to the period ended June 30, 2002.  There
can be no  assurance  that the Company  will have  sufficient  funds to make the
required payments, nor can there be any assurance that the financial institution
will not foreclose on the Note.

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<PAGE>


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

None.

Item 5.  OTHER INFORMATION

Related Party Transactions

During the nine month period ended June 30, 2002, the Company received a $68,500
short-term loan from a stockholder/officer/director of the Company. The loan was
used to purchase  inventory  for resale and was repaid plus  interest  and costs
upon the sale of the specific inventory during the period ended June 30, 2002.

From time to time,  the Company  borrows  funds from a  stockholder  for working
capital  purposes,  which are  non-interest  bearing  and are due and payable on
demand.  During  quarter  ended June 30, 2002,  the Company had no borrowings or
repayments  of  stockholder  loans.  At June 30,  2002,  outstanding  borrowings
totaled $224,700.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(A) Exhibits.

99.1  Certificate  pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to
Section 906 of the Sarbanes - Oxley Act of 2002.

(B) Reports on Form 8-K

The Company filed a report on Form 8-K on April 17, 2002,  reporting a change in
the Company's certifying accountant.

SIGNATURES

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


Date: August 17, 2002                        By: /s/  Lawrence Consalvi
                                                -----------------------
                                               Larry Consalvi, President and
                                               Interim Chief Financial Officer