UNITED STATES


SECURITIES AND EXCHANGE
COMMISSION


Washington,D.C.20549





Form 10-Q





(Mark
  One)


[X]
            QUARTERLY REPORT UNDER SECTION 13
      OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934





For the quarterly period endedMarch 31,
2009





[   ]
            TRANSITION REPORT UNDER SECTION 13
      OR 15(d) OF THE EXCHANGE ACT





For the transition period from
_______________ to _______________.





Commission file number
0-32341





M
Line Holdings, Inc.


(Exact
Name of Company as Specified in its Charter)




Nevada
              (State or other jurisdiction
      of
              incorporation or
      organization)
            88-0375818
              (I.R.S.
      Employer
              Identification
      No.)2672 Dow
Avenue
              Tustin,CA
              (Address of principal executive
      offices)
            92780
              (Zip Code)(714)
    630-6253(Registrant’s telephone number,
      including area code)Gateway International Holdings,
      Inc.(Former name, former address and
      former fiscal year, if changed since last
  report)




Indicate by check mark whether the
registrant (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 registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90
days.     YesXNo ___.





Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files).YesXNo ___.





Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller
reporting company.  See definitionsof “largeaccelerated filer,”“accelerated filer”and “smaller reporting company”in Rule 12b-2 of the
Exchange Act. (Check one):





Large accelerated
      filer
                    
                    
                    Accelerated
      filerNon-accelerated
      filer
                    
                    
                    Smaller reporting
      company
                    X


(Do not
check if a smaller reporting company)





Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).YesNoX.





Applicable only to issuers involved in
bankruptcy proceedings during the preceding five years










Check whether the registrant filed all
documents and reports required to be filed by Section 12, 13 or 15(d) of the
Exchange Act after the distribution of securities under a plan confirmed by a
court.


YesNo.





Applicable only to corporate
issuers:





Indicate the number of shares
outstanding of each of the issuer’s classes of common stock, as of the latest
practicable date.  As of May 14, 2009,there were27,611,956sharesof common stock, par value $0.001,
issued and 30,861,356 shares outstanding.










M LINE HOLDINGS,
INC.





TABLE OF
CONTENTS








PART I




ITEM 1.
              Financial Statements
      (unaudited).
              4-6ITEM 2.
              Management’s Discussion and
      Analysis of Financial Condition and Results of
      Operations.
              15ITEM 3.
              Quantitative and Qualitative
      Disclosures About Market Risk.
              26ITEM 4T.
              Controls
      and Procedures.
              27




PART II





ITEM 1.
            Legal
      Proceedings.
            30





ITEM 1A.
            Risk
      Factors.
            30





ITEM 2.
            Unregistered Sales of Equity
      Securities and Use of Proceeds.
            30





ITEM 3.
            Defaults Upon Senior
      Securities.
            30





ITEM 4.
            Submission of Matters to a Vote
      of Security Holders.
            31





ITEM 5.
            Other
      Information.
            31





ITEM
      6.
            Exhibits.
            33







3




PART I-FINANCIAL
INFORMATION





M
      LINE HOLDINGS, INC.(FORMELY
      KNOWN AS GATEWAY INTERNATIONAL HOLDINGS, INC.)CONSOLIDATED
      BALANCE SHEETS(UNAUDITED)AssetsMarch
      31, 2009
                          
                          
                          June
      30, 2008Current
      assets:Cash
      and cash equivalents
                          
                          $
                          899,537
                          
                          
                          $
                          1,024,643Accounts
      receivable, net of allowances of  $81,947
      at  March  31, 2009 and  $82,000 at June 30,
      2008, respectively.
                          
                          
                          552,913
                          
                          
                          
                          1,648,217Inventories
                          
                          
                          1,313,646
                          
                          
                          
                          1,721,289Due
      from related party
                          
                          
                          -
                          
                          
                          
                          81,000Prepaid
      and other
                          
                          
                          106,931
                          
                          
                          
                          180,011Deferred
      income taxes
                          
                          
                          83,959
                          
                          
                          
                          179,316Total
      current assets
                          
                          
                          2,956,985
                          
                          
                          
                          4,834,476Property
      and equipment, net
                          
                          
                          1,320,678
                          
                          
                          
                          1,603,675Intangible
      assets, net
                          
                          
                          832,948
                          
                          
                          
                          928,439Goodwill
                          
                          
                          194,378
                          
                          
                          
                          392,547Deposits
      and other
                          
                          
                          153,801
                          
                          
                          
                          61,146Deferred
      income taxes
                          
                          
                          25,790
                          
                          
                          
                          245,497Total
      assets
                          
                          $
                          5,484,580
                          
                          
                          $
                          8,065,780Liabilities
      and Shareholders’ EquityCurrent
      liabilities:Line
      of credit
                          
                          $
                          520,000
                          
                          
                          $
                          330,000Accounts
      payable
                          
                          
                          1,278,956
                          
                          
                          
                          1,646,871Income
      taxes payable
                          
                          
                          800
                          
                          
                          
                          187,954Accrued
      expenses and other
                          
                          
                          313,749
                          
                          
                          
                          213,752Accrued
      interest due to related party
                          
                          
                          -
                          
                          
                          
                          82,173Customer
      deposits
                          
                          
                          29,039
                          
                          
                          
                          149,500Notes
      payable
                          
                          
                          211,708
                          
                          
                          
                          244,635Notes
      payable, related party
                          
                          
                          -
                          
                          
                          
                          734,880Deferred
      income taxes
                          
                          
                          -
                          
                          
                          
                          11,263Capital
      leases
                          
                          
                          154,351
                          
                          
                          
                          85,533Deferred
      rent
                          
                          
                          10,115
                          
                          
                          
                          -Shares
      to be issued
                          
                          
                          650,000
                          
                          
                          
                          -Total
      current liabilities
                          
                          
                          3,168,718
                          
                          
                          
                          3,686,561Notes
      payable
                          
                          
                          177,940
                          
                          
                          
                          429,493Notes
      payable, related party
                          
                          
                          -
                          
                          
                          
                          31,526Capital
      leases
                          
                          
                          186,777
                          
                          
                          
                          130,361Deferred
      income taxes
                          
                          
                          -
                          
                          
                          
                          303,801Deferred
      rent
                          
                          
                          69,167
                          
                          
                          
                          79,126Total
      liabilities
                          
                          
                          3,602,602
                          
                          
                          
                          4,660,868Shareholders’
      equity:Common
      stock, $0.001 par value: 100,000,000 shares authorized27,611,956  and
      28,378,645 shares issued and outstandingat
      March 31, 2009 and June 30, 2008, respectively
                          
                          
                          27,612
                          
                          
                          
                          28,379Additional
      paid-in capital
                          
                          
                          8,857,321
                          
                          
                          
                          8,921,354Accumulated
      deficit
                          
                          
                          (7,002,955
                          )
                          
                          
                          (5,544,821
                          )Total
      shareholders’ equity
                          
                          
                          1,881,978
                          
                          
                          
                          3,404,912Total
      liabilities and shareholders' equity
                          
                          $
                          5,484,580
                          
                          
                          $
                          8,065,780The
      accompanying notes form an integral part of these consolidated financial
      statements





4




M
      LINE HOLDINGS, INC(FORMERLY
      KNOWN AS GATEWAY INTERNATIONAL HOLDINGS, INC)CONSOLIDATED
      STATEMENT OF OPERATIONS(UNAUDITED)Three
      Months ended March 31,
                        
                        
                        Nine
      Months ended March 31,2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008Net
      sales
                        
                        $
                        1,814,526
                        
                        
                        $
                        4,521,789
                        
                        
                        $
                        9,945,282
                        
                        
                        $
                        13,279,306Cost
      of sales
                        
                        
                        1,458,438
                        
                        
                        
                        3,399,254
                        
                        
                        
                        7,538,198
                        
                        
                        
                        9,965,664Gross
      Profit
                        
                        
                        356,088
                        
                        
                        
                        1,122,535
                        
                        
                        
                        2,407,084
                        
                        
                        
                        3,313,642Operating
      expenses:Selling,
      general and administrative
                        
                        
                        852,778
                        
                        
                        
                        1,187,793
                        
                        
                        
                        3,495,114
                        
                        
                        
                        3,618,134Amortization
      of intangible assets
                        
                        
                        31,831
                        
                        
                        
                        31,831
                        
                        
                        
                        95,492
                        
                        
                        
                        81,565Impairment
      of goodwill
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        198,169
                        
                        
                        
                        -Total
      operating income
                        
                        
                        884,609
                        
                        
                        
                        1,219,624
                        
                        
                        
                        3,788,775
                        
                        
                        
                        3,699,699Operating
      loss
                        
                        
                        (528,521
                        )
                        
                        
                        (97,089
                        )
                        
                        
                        (1,381,691
                        )
                        
                        
                        (386,057
                        )Other
      income (expense):Interest
      Income
                        
                        
                        (2,923
                        )
                        
                        
                        2,574
                        
                        
                        
                        1,827
                        
                        
                        
                        4,237Interest
      expenses
                        
                        
                        (26,776
                        )
                        
                        
                        (33,431
                        )
                        
                        
                        (94,127
                        )
                        
                        
                        (108,296
                        )Gain
      on sale of assets
                        
                        
                        -
                        
                        
                        
                        (1,537
                        )
                        
                        
                        16,657
                        
                        
                        
                        43,437Total
      other expense
                        
                        
                        (29,699
                        )
                        
                        
                        (32,394
                        )
                        
                        
                        (75,643
                        )
                        
                        
                        (60,622
                        )Loss
      before income tax
                        
                        
                        (558,220
                        )
                        
                        
                        (129,483
                        )
                        
                        
                        (1,457,334
                        )
                        
                        
                        (446,679
                        )Income
      tax provision (benefit)
                        
                        
                        (800
                        )
                        
                        
                        24,049
                        
                        
                        
                        (800
                        )
                        
                        
                        156,639NET
      LOSS
                        
                        $
                        (559,020
                        )
                        
                        $
                        (105,434
                        )
                        
                        $
                        (1,458,134
                        )
                        
                        $
                        (290,040
                        )Net loss per shareBasis
                        
                        $
                        (0.02
                        )
                        
                        $
                        (0.00
                        )
                        
                        $
                        (0.05
                        )
                        
                        $
                        (0.01
                        )Dilutive
                        
                        $
                        (0.02
                        )
                        
                        $
                        (0.00
                        )
                        
                        $
                        (0.05
                        )
                        
                        $
                        (0.01
                        )Weighted
      average number of common shares outstanding
                        
                        
                        27,611,956
                        
                        
                        
                        28,378,645
                        
                        
                        
                        27,874,721
                        
                        
                        
                        28,287,630The
      accompanying notes form an integral part of these consolidated financial
      statements




5




M
      LINE HOLDINGS. INC.(FORMERLY
      KNOWN AS GATEWAY INTERNATIONAL HOLDINGS, INC)CONSOLIDATED
      STATEMENT OF CASH FLOWS(UNAUDITED)For
      the Nine Months Ended March 31,2009
                        
                        
                        2008Cash
      flows from operating activities:Net
      loss
                        
                        $
                        (1,458,134
                        )
                        
                        $
                        (290,040
                        )Adjustments
      to reconcile net income (loss) to net cash provided by operating
      activities:Depreciation
                        
                        
                        330,945
                        
                        
                        
                        371,460Amortization
      of intangible assets
                        
                        
                        95,491
                        
                        
                        
                        81,565Stock-based
      compensation
                        
                        
                        13,743
                        
                        
                        
                        -Imputed
      interest on related party notes
                        
                        
                        2,458
                        
                        
                        
                        -Impairment
      of goodwill
                        
                        
                        198,169
                        
                        
                        
                        -Changes
      in operating assets and liabilities:Accounts
      receivable
                        
                        
                        1,095,304
                        
                        
                        
                        348,189Inventories
                        
                        
                        407,643
                        
                        
                        
                        (799,025
                        )Prepaid
      expenses and other assets
                        
                        
                        (19,575
                        )
                        
                        
                        27,370Accounts
      payable and accrued expenses
                        
                        
                        (180,990
                        )
                        
                        
                        (97,778
                        )Customer
      deposits
                        
                        
                        (120,461
                        )
                        
                        
                        583,522Deferred
      rent
                        
                        
                        157
                        
                        
                        
                        76,856Deferred
      income taxesNet
      cash provided by operating activities
                        
                        
                        364,751
                        
                        
                        
                        302,119Cash
      flows from investing activities:Capital
      expenditures
                        
                        
                        (128,162
                        )
                        
                        
                        (302,933
                        )Proceeds
      from sale of assets
                        
                        
                        74,790
                        
                        
                        
                        -Net
      cash used in investing activities
                        
                        
                        (53,373
                        )
                        
                        
                        (302,933
                        )Cash
      flows from financing activities:Net
      borrowings on line of credit
                        
                        
                        190,000
                        
                        
                        
                        249,868Proceeds
      from /(payment to) notes payable
                        
                        
                        365,520
                        
                        
                        
                        15,721Payments
      on related party notes payable
                        
                        
                        (848,579
                        )
                        
                        
                        (109,891
                        )Capital
      leases
                        
                        
                        (143,426
                        )
                        
                        
                        (122,131
                        )Net
      cash provide by/(used in) financing activities
                        
                        
                        (436,485
                        )
                        
                        
                        33,567Net
      change in cash and cash equivalents
                        
                        
                        (125,106
                        )
                        
                        
                        32,753Cash
      and cash equivalents at beginning of period
                        
                        
                        1,024,643
                        
                        
                        
                        972,546Cash
      and cash equivalents at end of period
                        
                        $
                        899,537
                        
                        
                        $
                        1,005,299Supplemental
      disclosure of cash flow information:Cash
      paid for interest
                        
                        $
                        94,127
                        
                        
                        $
                        84,260Cash
      paid for income taxes
                        
                        $
                        -
                        
                        
                        $
                        -Conversion
      of portion of line of credit to term loan
                        
                        $
                        -
                        
                        
                        $
                        500,000Stock
      issued for creditor settlement
                        
                        $
                        -
                        
                        
                        $
                        63,000Stock
      issued for acquisition of CNC Repos, Inc.
                        
                        $
                        -
                        
                        
                        $
                        440,000The
      accompanying notes form an integral part of these
      consolidated financial statements




6





M LINEHOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS





1.
            Business





M Line Holdings, Inc formerly Gateway
International Holdings, Inc.(The“Company”, “us”, “we” or
“our”)and its subsidiaries are engaged in the
following businesses which
represent itsbusiness
segments:





·
            Acquiring, refurbishing and
      selling new andused
      CNC machine-tool equipment through our All American CNC Sales, Inc. (“All
      American”) and EM Tool Company, Inc. dba Elite Machine Tool (“Elite”)
      subsidiaries(Machine
      Sales segment).


·
            Manufacturing precision metal
      component parts for the defense, automotive, aerospace and medical
      industries through its Eran Engineering, Inc. (“Eran”) subsidiary
      (Precision Manufacturing
segment).





Effective December 9, 2008, three
affiliate shareholders of the Company, Timothy D. Consalvi, ourformerChief Executive Officer and Director,
Joseph Gledhill, an Executive Vice President, Director and 10% shareholder, and
Lawrence A. Consalvi, a former officer and Director, and a 10% shareholder,
entered into a Stock Purchase Agreement (the “Agreement”) with anon-relatedparty, Money Line Capital,
Inc. (“Money Line”), whereby Money Line agreed to purchase an aggregate of
11,850,000 shares of the Company’s common stock held by the above named
shareholders. These shares represent approximately 43% of our outstanding common
stock. The Company did not issue any new shares of stock.





The Company was not a party to the above
transactions, however, did acknowledge certain representations and warranties.
The Company entered into several ancillary agreements as a result of the above
transaction. First, we terminated our employment agreement with Timothy D.
Consalvi for serving as our Chief Executive Officer and agreed to pay him one of
the two years of severance required under his employment agreement, and entered
into a new employment agreement withMr. Consalvi whereby he is
currentlyemployed by us as
the President of All American. Second, we consolidated the amounts
owed to Mr. Gledhill under previously issued promissory notesand accrued interest into one $650,000promissory
note.  As ofMarch31, 2009, the Company accrued $94,854for unpaid amounts severance due which
has been included in accrued expenses in the accompanying consolidated balance
sheet.





2.
            Basis of Presentation and
      Significant Accounting
Policies





Basis of
Presentation





The consolidated financial statements ofM Lineare unaudited and have been prepared in
accordance with accounting principles generally accepted in theUnited States of Americafor interim financial information,
pursuant to the rules and regulations of the Securities and Exchange
Commission..  The results of operations for the three andnine month periods ended March 31, 2008
and 2009are not
necessarily indicative of the results to be expected for the full year. All
accounts and intercompany transactions have been eliminated in consolidation. In
the opinion of management, the consolidated financial statements include all
adjustments, consisting of normal recurring accruals, necessary to present
fairly the Company's financial position, results of operations and cash flows.
These statements should be read in conjunction with the financial statements and
related notes which are part of the Company's Annual Report on Form 10-K for the
year endedJune 30,
2008.




7




Valuation of Long-lived Assets and Other
Intangible Assets





Long-lived assets consist primarily of
our property, plant, and equipment. Purchased intangible assets include
customer relationship.  Intangible assets are amortized using the
straight-line method over estimated useful lives.  Because all of
intangible assets are subject to amortization, the Company reviews these
intangible assets for impairment in accordance with the provisions of Statement
of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed
of”.





Use of
Estimates





The preparation of consolidated
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the amount of revenues and expenses during the
reporting periods. Management makes these estimates using the best information
available at the time the estimates are made. However, actual results could
differ materially from those results.





Income Taxes





The Company utilizes SFAS No. 109,
"Accounting for Income Taxes," which requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each period end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be realized.
AtMarch 31,
2009and December 31, 2008,
there was no significant book to tax differences.





Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.  The Company has determined its deferred tax assets
resulting from net operating losses will be utilized in future periods to offset
taxable income.




The
Company reviews its individual intangible assets for impairment on an annual
basis or whenever events or changes in circumstances indicate that its carrying
amount may not be recoverable. A long-lived asset or other intangible asset is
considered impaired when its anticipated undiscounted cash flow is less than its
carrying value. In making this determination, the Company uses certain
assumptions, including, but not limited to: (i) estimates of the fair market
value of these assets; and (ii) estimates of future cash flows expected to be
generated by these assets, which are based mainly on sales projections. As of
March 31, 2009, the Company evaluated its intangible asset acquired in
connection with the CNC Repos, Inc. (“CNC Repos”).  Due to the recent
decline in the Company’s estimated stock price and economic downturn, an
impairment test was performed and based on that analysis, no impairment was
required.





8




Net Income (Loss) per
Share





Basic net income (loss) per share is
calculated by dividing net income (loss) by the weighted average common shares
outstanding during the period. Diluted net income (loss) per share reflects
thepotential dilution to
basic earnings per sharethat could occur upon conversion or exercise of securities, options or other
such items to common shares using the treasury stock method, based upon the
weighted average fair value of our common shares during the
period.





3.
            Concentrations





ThePrecision Manufacturing Group is a
manufacturer of precision components used in equipment and machinery in the
commercial aviation, medical, aerospace and defense industries. Sales within
this segment are highly concentrated within one customer, Panasonic Avionics
Corporation (“Panasonic”). The loss of all or a substantial portion of sales to
this customer would cause us to lose a substantial portion of our sales within
this segment and on a consolidated basis, and have a corresponding negative
impact on our operating profit margin due to operation leverage this customer
provides. This could lead to sales volumes not being high enough to cover our
current cost structure or provide adequate operating cash flows. Panasonic has
been a customer of ours for approximately 14 years and we believe our
relationship is good.





Sales to this customer accounted for
consolidated sales for the three andninemonths endedMarch31, 2008and 2009as follows:





Three
      Months Ended March 31,
                  
                  
                  Nine
      Months Ended March 31,2008
                  
                  
                  2009
                  
                  
                  2008
                  
                  
                  2009Percent
      of sales
                  
                  
                  89
                  %
                  
                  
                  67
                  %
                  
                  
                  86
                  %
                  
                  
                  70
                  %Number
      of customers
                  
                  
                  1
                  
                  
                  
                  1
                  
                  
                  
                  1
                  
                  
                  
                  1





Account receivable from the customer
amounted to $178,884 and $691,624 as of March 31, 2009 and June 30,
2008,
respectively.





4.
            Inventories





Inventories consist of the following
at:


June 30,
                                  
                                  
                                  March31,2008
                                  
                                  
                                  2009Finished components and
      parts
                                  
                                  $
                                  612,825
                                  
                                  
                                  $
                                  670,945CNC machines held for
      sale
                                  
                                  
                                  740,421
                                  
                                  
                                  
                                  201,167Work in
    process
                                  
                                  
                                  116,832
                                  
                                  
                                  
                                  207,107Raw materials and
      parts
                                  
                                  
                                  251,211
                                  
                                  
                                  
                                  234,427$
                                  1,721,289
                                  
                                  
                                  $
                                  1,313,646




9




5.
            Goodwill





Goodwill represents the excess of the
purchase price of an acquired business or assets over the fair value of the
identifiable assets acquired and liabilities assumed. The Company evaluates its
goodwill for impairment in the period in which the anniversary date for the
transaction which gave rise, or whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. During the three months
endedMarch31, 2009, the Company tested for impairment of
its goodwill arising from the acquisition of CNC Repos, Inc. (“CNC Repos”).





The Company performed it impairment test
for CNC Repos as prescribed by SFAS No. 142, “Goodwill and Other Intangible
Assets” which provided an indicator that goodwill impairment is
probable.  Accordingly, the Company performed step two of the SFAS 142
impairment analysis to determine the amount of goodwill impairment to be
recorded.  The amount was calculated by comparing the implied fair
value of the goodwill to its carrying amount.  This exercise required
the Company to allocate the fair value determined in step one to the individual
assets and liabilities of the reporting unit.  Any remaining fair
value would be the implied fair value of goodwill on the testing
date.   Based on its analysis, the Company determined that the
carrying value exceeded the fair value, and therefore, an impairment charge of
$198,169was recognized
during the nine months ended March 31, 2009.





The determination as to whether a
write-down of goodwill is necessary involves significant judgment based on the
short-term and long-term projections of the future performance of the reporting
unit to which the goodwill is attributed.  The impairment was
attributable to (i) lower internal sales forecast and cash flows attributable to
the current economic environment which has negatively impacted the ability of
our customers to obtain financing for capital purchases and (ii) a decline the
Company’s stock price since the date of acquisition.





6.
            Accrued
      Expenses





Accrued expenses consist of the
following at:


June 30,
                                            
                                            
                                            March31,2008
                                            
                                            
                                            2009Compensation, benefits
      andrelated
                                            
                                            $
                                            160,071
                                            
                                            
                                            $
                                            60,689Severance due to Larry
      Consalvi
                                            
                                            
                                            --
                                            
                                            
                                            
                                            94,854Other
                                            
                                            
                                            53,681
                                            
                                            
                                            
                                            158,206$
                                            213,752
                                            
                                            
                                            $
                                            313,749





7.
            Line of Credit and Notes
      Payable





Pacific Western Bank Credit
Agreement


OnAugust 21, 2006, the Company entered into credit
agreement with Pacific Western Bank (“PWB”). The credit agreement provides for
borrowings of up to $1,500,000 through a line of credit. OnNovember 15, 2007, the credit agreement was amended to
reduce the amount available under the line of credit to $1,000,000 and to
convert $500,000 of outstanding principal into a term loan. OnSeptember 29, 2008, the Company renewed the credit
agreement throughSeptember
21, 2009. Joseph Gledhill
and Timothy Consalvi, are guarantors under the credit
agreement.




10




The line of credit has a stated interest
rate equal to the lender's referenced prime rate plus 1.5%. Interest is payable
monthly with the outstanding principal balance due onSeptember 21, 2009. The amount available for borrowings is
determined based on a monthly basis based on 80% of eligible accounts
receivable, as defined. As of March 31, 2009, the Company also has an irrevocable
letter of credit outstanding of $100,000. The proceeds from the line of credit have been
used forworking capital
needs.





The term loan provides for borrowings of
up to $500,000. The loan has a stated interest rate equal to the lender's
referenced prime rate plus 1.5%. Principal and interest payments are payable
monthly.





The amount available for borrowings
under the line of credit is determined on a monthly basis based on 80% of
eligible accounts receivable, less the amount outstanding under the letter of
credit, as defined. The term loan provides for borrowings of up to $500,000. The
loan bears interest at the lender's referenced prime rate plus 1.5% with
principal and interest
payments due monthly.  As of March 31, 2009, the balance outstanding
under the line of credit exceeded the borrowing base amount by$90,508.  On April 14, 2009,
the Company repaid $80,000 to reduce the borrowing base amount.  As of
April 30, 2009, the Company was in compliance with it’s obligation under the borrowing base
limit.





As ofMarch31, 2009, the Companymet itsminimum tangible net worthcovenant, as set forth in
thecredit
agreement.





However, as of March 31, 2009, the
Company is in breach of a covenant under the Pacific Western Bank loan agreement
that relates to  losses in two consecutive quarters.  The
Company is currently negotiating with the Bank for a letter of
forbearance.





Related
Party Note Payable


OnDecember 8, 2008, the Company amended the terms of a
notes payable together with accrue interest due to Joseph Gledhill totaling
$644,025 (“Original Note”) dueJanuary 31, 2009into a note for $650,000 (“Amended
Note”).  Under the terms of the Amended Note, the principal balance is
to be repaid as follows:(i) $200,000 onJanuary 31, 2009, (ii) $100,000 per month from February
2009 through April 2009 and (iii) $150,000 onMay 31, 2009. The Amended Note bears interest at a
rate of 8% per annum in the event the Company does not make the principal
payments in accordance with their due dates.  The Company has imputed
an interest rate of 8%.





On March
25, 2009, the Company entered into an Assignment of Promissory Note and Consent
Thereto (the “Assignment”) with Money Line Capital, Inc., a California
corporation (“MLCI”), its largest shareholder, under which MLCI agreed to assume
the Company’s repayment obligations to Joseph Gledhill and Joyce Gledhill under
that certain $650,000 principal amount Promissory Note dated December 8, 2008,
in exchange for the issuance of 3,250,000 shares of the Company’s common stock
(the “Shares”).  Mr. Gledhill, one of the Company’s former directors,
and Joyce Gledhill consented to the Assignment.  Pursuant to the
Assignment, MLCI and the Gledhill’s entered into a new $650,000 principal amount
secured promissory note, a security agreement and a pledge
agreement.  The Company is not a party to the new promissory
note.  The Company has not issued the 3,250,000 shares to MLCI but is
obligated to do so.  The shares will be held in escrow pending MLCI’s
repayment of the promissory note.





11


In accordance withEmerging Issues
Task Force96-19, “Debtor’s Accounting for a
Modification or Exchange of Debt Instruments”, the Company determined the change
in the present value of the expected cash flows between the Amended Note and the
Original Notes was less than 10%; therefore for financial reporting purposes,
the amendment to the Original Note was treated as a modification of
debt.  Accordingly, no gain or loss was recorded as a result of the
modification.





8.
            Litigation





1.           Onofrio Saputo and
Christopher Frisco v. Gateway International Holdings, Inc.,LawrenceConsalvi, Timothy
Consalvi and Joe Gledhill,Court of the State ofCalifornia,CountyofOrange, Case No.
30-2008-00110905.  Plaintiffs filed this action onAugust 21, 2008.





The
Complaint, which has causes of action for securities fraud, breach of fiduciary
duties, fraud and deceit, and rescission, alleges that the defendants
intentionally misrepresented, or failed to disclose, certain facts regarding the
company prior to the plaintiffs purchasing Gateway International Holdings, Inc.
common stock.  The Complaint seeks total monetary damages of
approximately $188,415, plus interest, and punitive damages.  The
Company filed an Answer to the Complaint on October 17, 2008, denying the
allegations of the Complaint, denying that plaintiffs are entitled to any relief
whatsoever and asserting various affirmative defenses.  A trial date has
not yet been scheduled and the Court has set a Case Management Conference for
February 23, 2009.  No amounts have been accrued for this matter in
the accompanying consolidated financial statements.





2.          Voicu Belteu v. Mori Seiki Co.,
Ltd.; Mori Seiki U.S.A., Inc.; All American CNC Sales, Inc. dba Elite Machine
Tool Company; Ellison Manufacturing Tech., Superior Court for the State of
California, County of Orange, Case No. 30-2008-00103710. Plaintiff filed this
action onMarch 7,
2008.





The Complaint, which has causes of
action for strict products liability and negligence, alleges that a CNC machine
manufactured by Mori Seiki and sold through the Company’s subsidiary,All
American CNC Sales, Inc. dba Elite Machine Tool Company, was defective and
injured the plaintiff.  The Complaint seeks damages in excess of
$6,300,000 for medical expenses, future medical expenses, lost wages, future
lost wages and general damages.  The Company filed cross-complaints
against several individuals and entities involved in the machine purchase and
sales transaction, seeking indemnity, contribution, and damages based on other
legal theories.   The Company filed an Answer to the Complaint
along with the various aforementioned cross-complaints.  Currently the
parties are involved in the meet and confer process to resolve outstanding
discovery issues.  The Court has set a Case Management Conference for
May 7, 2009.  No trial date has been set.    The
Company’s management believes it has meritorious defenses to plaintiff’s
claims and plans to vigorously defend against the lawsuit and pursue Mori Seiki,
and possibly other entities or individuals, for any damages the Company
incurs.  However, there can be no assurance as to the outcome of the
lawsuit.  No amounts have been accrued for this matter in the
accompanying consolidated financial statements.





3.          James M. Cassidy v. Gateway
International Holdings, Inc., American Arbitration Association, Case No.
73-194-32755-08.  The Company was served with a Demand for Arbitration
and Statement of Claim, which was filed on September 16,
2008.




12





The
Statement of Claim alleges that claimant is an attorney who performed services
for the Company pursuant to an agreement dated April 2, 2007 between the Company
and the claimant.  The Statement of Claim alleges the Company breached the
agreement and seeks compensatory damages in the amount of $195,000 plus
interest, attorneys’ fees and costs.  The Company denies the allegations of
the Statement of Claim and will vigorously defend against these
allegations.  An arbitrator has not yet been selected, and a trial date has
not yet been scheduled.  The parties have informally agreed to attend
mediation in order to discuss a potential resolution of the matter, which should
occur in the next 60 days.  The parties have agreed to stay
arbitration pending completion of mediation.  No amounts have been
accrued for this matter in the accompanying consolidated financial
statements.





4.          Elite Machine Tool Company v. ARAM
Precision Tool and Die, Avi Amichai, Superior Court for the State ofCalifornia,CountyofOrange, Case No. 30-2008-00090891. Elite
Machinefiled this action
onAugust 8, 2008.





The
Complaint alleges breach of contract for the defendants failing to pay Elite
Machine for a machine the defendants purchased from Elite Machine, and seeks
damages totaling $16,238. ARAM Precision Tool and Die filed its Answer and
Cross-Complaint on October 1, 2008.  The Cross-Complaint alleges that
Elite Machine failed to deliver certain parts of the machine per the sales
contract and seeks damages totaling $25,000.  Plaintiff and Defendant
have both served and responded to discovery, and are now preparing for trial,
currently set for June 8, 2009.  .  No amounts have been
accrued for this matter in the accompanying consolidated financial
statements.





5.          RACL, Inc. v. All American CNC
Sales, Inc., Elite Machine Tool Company/Sales & Services, CNC Repos,
Superior Court for the State of California, County of Riverside, Case No. RIC
509650.  Plaintiff filed this Complaint on October 2,
2008.





The
Complaint alleges causes of action for breach of contract and rescission and
claims All American breached the agreement with RACL by failing to deliver a
machine that conforms to the specifications requested by RACL, and requests
damages totaling $138,750.  Elite Machine filed a timely Answer, on
January 15, 2009.  Discovery has commenced in this matter but is not
expected to be concluded for several months.   The Court has set
a Case Management Conference for September 29, 2009.  Management
intends to aggressively defend itself against this claim.  No trial
date has been set.  No amounts have been accrued for this matter in
the accompanying consolidated financial statements.




6.           All American CNC v. Sunbelt
Machine, Orange County Superior Court, Case No.
0-2008-00112502.  All American filed the Complaint on September 25,
2008.  No trial date has been set.




This case involves a dispute between
All American and Sunbelt regarding the sale of a Makino MC 98 HMC machine by All
American to Sunbelt.  Sunbelt has claimed that it received a machine
that does not conform to the specifications it ordered.  The amount at
issue is approximately $140,000 at this stage.   Subsequent to
filing of the above-referenced suit, Sunbelt filed a similar action in Federal
District Court in Houston, Texas.  All American plans to seek to
transfer and consolidate the federal case into the State of California case in
Orange County, California.  Discovery has not
commenced.  All American anticipates substantial law and motion
activity in this case prior to commencement of discovery.  Management
believes that the machine delivered to Sunbelt was conforming and Sunbelt’s
claims are without merit.  Management intends to vigorously defend
this claim.  The Court has scheduled a Case Management Conference for
May 29, 2009.  No amounts have been accrued for this matter in the
accompanying consolidated financial statements.




13





9.
            Common
  Stock





During the quarter endedSeptember 30, 2008, the Company cancelled 416,689 shares
of common stock previously issued to secure a repaid promissory
note.





OnOctober 6, 2008, Mr. Lawrence Consalvi returned and the
Company cancelled shares 400,000 shares of common stock in exchange for the
cancellation of amounts due to the Company.





10.
            Related Party
      Transactions





In connection with the close of the
Company’s financial statements for the year endedJune 30, 2008, the Company discovered it paid
Lawrence Consalvi for certain expenses submitted for reimbursement. Due to the
lack of documentation surrounding the nature of the expense, Mr. Consalvi agreed
to reimburse the Company $81,000 or return 400,000 shares of the Company’s
common stock. OnOctober 6,
2008, Mr. Consalvi returned
400,000 shares of common stock in exchange for the cancellation of amounts due
to the Company.  There was no gain or loss recognized on this
transaction.





11.
            Segments and Geographic
      Information





The Company’s segments consist of
individual companies managed separately with each manager reporting to the
Board. “Other” represents corporate functions. Sales, and operating or segment
profit, are reflected net of inter-segment sales and profits. Segment profit is
comprised of net sales less operating expenses and interest. Income taxes are
not allocated and reported by segment since they are excluded from the measure
of segment performance reviewed by management.





Machine
      Sales
                    
                    
                    Precision
      Manufacturing
                    
                    
                    Corporate
                    
                    
                    TotalThree
      Months Ended March31,
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008
                    
                    
                    2009Revenues
                    
                    $
                    2,783,248
                    
                    
                    $
                    987,013
                    
                    
                    $
                    1,738,541
                    
                    
                    $
                    827,513
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    4,521,789,
                    
                    
                    $
                    1,814,526Income
      (loss)
                    
                    
                    (256,049
                    )
                    
                    
                    (433,825
                    )
                    
                    
                    45,364
                    
                    
                    
                    (275,870
                    )
                    
                    
                    (105,251
                    )
                    
                    
                    150,675
                    
                    
                    
                    (105,434
                    )
                    
                    
                    (559,020
                    )








Machine
      Sales
                
                
                Precision
      Manufacturing
                
                
                Corporate
                
                
                TotalNine  Months
      Ended March 31,
                
                2008
                
                
                2009
                
                
                2008
                
                
                2009
                
                
                2008
                
                
                2009
                
                
                2008
                
                
                2009Revenues
                
                $
                8,975,607
                
                
                $
                6,115,432
                
                
                $
                4,305,699
                
                
                $
                3,829,850
                
                
                $
                -
                
                
                $
                -
                
                
                $
                13,279,306
                
                
                $
                9,945,282Income
      (loss)
                
                
                (73,668
                )
                
                
                (1,234,432
                )
                
                
                (39,005
                )
                
                
                (492,903
                )
                
                
                (177,367
                )
                
                
                269,202
                
                
                
                (290,040
                )
                
                
                (1,458,134
                )





Sales are derived principally from
customers located within theUnited States.





14





ITEM 2.Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.





This quarterly report on Form 10-Q ofM Line Holdings, Inc.
(formerly known as Gateway International Holdings, Inc., and referred to herein
as “MLH”, “we,” “us” or
“Company”) for the three months endedMarch 31, 2009, contains forward-looking statements,
principally in this Section and “Business.” Generally, you can identify these
statements because they use words like “anticipates,” “believes,” “expects,”
“future,” “intends,” “plans,” and similar terms. These statements reflect only
our current expectations. Although we do not make forward-looking statements
unless we believe we have a reasonable basis for doing so, we cannot guarantee
their accuracy and actual results may differ materially from those we
anticipated due to a number of uncertainties, many of which are unforeseen,
including, among others, the risks we face as described in this filing. You
should not place undue reliance on these forward-looking statements which apply
only as of the date of this quarterly report. These forward-looking statements
are within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, and are
intended to be covered by the safe harbors created thereby. To the extent that
such statements are not recitations of historical fact, such statements
constitute forward-looking statements that, by definition, involve risks and
uncertainties. In any forward-looking statement where we express an expectation
or belief as to future results or events, such expectation or belief is
expressed in good faith and believed to have a reasonable basis, but there can
be no assurance that the statement of expectation of belief will be
accomplished.





We believe it is important to
communicate our expectations to our investors. There may be events in the
future, however, that we are unable to predict accurately or over which we have
no control. The risk factors listed in this filing, as well as any cautionary
language in our annual report on Form 10-K, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. Factors
that could cause actual results or events to differ materially from those
anticipated, include, but are not limited to: our ability to successfully
develop new products; the ability to obtain financing for product development;
changes in product strategies; general economic, financial and business
conditions; changes in and compliance with governmental healthcare and other
regulations; changes in tax laws; and the availability of key management and
other personnel.





Overview





Our business comprises of two segments,
our Machine Sales Group and our Precision Manufacturing
Group.





Our Machine Sales Group is in the
business of acquiring and selling computer numerically controlled (“CNC”)
machines, and related tools, to manufacturing customers. We specialize in the
purchase, refurbishment and sales of used CNC machines. We also serve as a
manufacturer sales representative firm selling new CNC machines we purchase from
third party manufacturers into certain geographic
territories.





Our Precision Manufacturing Group is a
manufacturer of precision components used in equipment and machinery in the
commercial aviation, medical, aerospace and defense industries. Sales within
this segment are highly concentrated within one customer, Panasonic Avionics
Corporation (“Panasonic”). The loss of all or a substantial portion of sales to
this customer would cause us to lose a substantial portion of our sales within
this segment and on a consolidated basis, and have a corresponding negative
impact on our operating profit margin due to operation leverage this customer
provides. This could lead to sales volumes not being high enough to cover our
current cost structure or provide adequate operating cash flows. Panasonic has
been a customer of ours for approximately 14 years and we believe our
relationship is good.





15


Sales to this customer accounted for
consolidated sales for thethree and nine months endedMarch 31, 2009and 2008 as
follows:





Three
      Months Ended March 31,
                  
                  
                  Nine
      Months Ended March 31,2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008Percent
      of sales
                  
                  
                  67
                  %
                  
                  
                  89
                  %
                  
                  
                  70
                  %
                  
                  
                  86
                  %Number
      of customers
                  
                  
                  1
                  
                  
                  
                  1
                  
                  
                  
                  1
                  
                  
                  
                  1





Trends Affecting Our
Business





The recent tightening of the capital
markets has adversely affected our sales of new and used CNC machines.
Historically, as capital markets tighten, companies finance the purchases capital
equipmenton credit, such
astheCNC machineswe sell. Our customers are having more
difficulty in obtaining credit and, therefore, are unable to purchase machines
that they may be able to purchase in better financial times.





The primary components sold by our
Precision Manufacturing segment are parts sold to Panasonic, a leading provider
of in-flight entertainment systems for commercial aircraft.  In early
September 2008, Boeing Co.’s (“Boeing”) largest labor union went on strike,
causing Boeing to immediately halt its production of aircraft. The strike was
settled onNovember 1,
2008.As a result of the strike, Boeing
delivered five commercial aircraft in October 2008 and 12 in September 2008,
down from 36 in both July and August 2008. Although the strike has ended there
is no timetable as to when production levels will be restored to pre-strike
numbers. The Boeing strike and the current economic climate has an adverse
affect on Panasonic’s orders to us, and has resulted in delays in scheduled
shipment of products which has had a negative effect on our business during the
three months endedMarch
31, 2009.





The operating results within our
Precision Manufacturing segment are characterized by relatively high
fixed costs. Increases and decreases in our production activity result in the
allocation of fixed manufacturing costs over a larger or reduced number of
parts, which yields lower or higher per unit costs. As a result, our
manufacturing activity can significantly affect our gross profit margin and the
valuation of our inventory. Our manufacturing rates have varied from period to
period based on production capacity which is drive by market
demand.





Critical Accounting
Policies





Use of Estimates





The preparation of financial statements
in conformity with accounting principles generally accepted in theUnited Statesrequires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities and the reported amounts of
sales and expenses during the reporting period. Significant estimates made by
management are, among others, realization of inventories,utilization of deferred tax assets,collectability of accounts
receivable, litigation, impairment of goodwill, and long-lived assets other than
goodwill. We regularly evaluate our estimates and assumptions based upon
historical experience and various other factors that we believe to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. To the extent actual results differ from
these estimates; our future results of operations may be
affected.





16


Inventories





Within our Precision Manufacturing
segment, we seek to purchase and maintain raw materials at sufficient levels to
meet lead times based on forecasted demand. We generally manufacture parts based
on purchase orders. Within our Machine Tools segment, we purchase machines held
for resale based upon management’s judgment of current market conditions and
demand for both new and used machines. If forecasted demand exceeds actual
demand, we may need to provide an allowance for excess or obsolete quantities on
hand. We also review our inventories for changes demand patterns and in the
market prices of machines held in inventory and provide reserves as deemed
necessary. If actual market conditions are less favorable than those projected
by management, additional inventory reserves for CNC machines and parts may be
required. We state our inventories at the lower of cost, using the first-in,
first-out method on an average costs basis, or market.





Accounting for Income
Taxes





We account for income taxes under the
provisions of SFAS No. 109, “Accounting for Income Taxes”. Under this
method, we determine deferred tax assets and liabilities based upon the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to affect taxable income. The tax consequences of most
events recognized in the current year's financial statements are included in
determining income taxes currently payable. However, because tax laws and
financial accounting standards differ in their recognition and measurement of
assets, liabilities, equity, revenues, expenses, gains and losses, differences
arise between the amount of taxable income and pre-tax financial income for a
year and between the tax bases of assets or liabilities and their reported
amounts in the financial statements. Because it is assumed that the reported
amounts of assets and liabilities will be recovered and settled, respectively, a
difference between the tax basis of an asset or a liability and its reported
amount on the consolidated balance sheet will result in a taxable or a
deductible amount in some future years when the related liabilities are settled
or the reported amounts of the assets are recovered. We then assess the
likelihood that our deferred tax assets will be recovered from future taxable
income and unless we believe that recovery is more likely than not, we must
establish a valuation allowance.





Valuation of Long-lived Assets and Other
Intangible Assets





Long-lived
assets consist primarily of our property, plant, and equipment. Purchased
intangible assets include customer relationship.  Intangible assets
are amortized using the straight-line method over estimated useful
lives.  Because all of intangible assets are subject to amortization,
we review these intangible assets for impairment in accordance with the
provisions of Statement of Financial Accounting Standards (“SFAS”) No. 144,
“Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed of”.





17


Goodwill





Goodwill represents the excess of the
purchase price of an acquired business or assets over the fair value of the
identifiable assets acquired and liabilities assumed. We evaluate our goodwill
for impairment in the period in which the anniversary date for the transaction
which gave rise, or whenever events or changes in circumstances indicate that
the carrying value may not be recoverable. During the three months endedDecember 31,
2008, we tested for
impairment of its goodwill arising from the acquisition of CNC Repos, Inc. (“CNC Repos”).





We
performed our impairment test for CNC Repos as prescribed by SFAS No. 142,
“Goodwill and Other Intangible Assets” which provided an indicator that goodwill
impairment was probable.  Accordingly, we performed step two of the
SFAS 142 impairment analysis to determine the amount of goodwill impairment to
be recorded.  The amount was calculated by comparing the implied fair
value of the goodwill to its carrying amount.  This exercise required
us to allocate the fair value determined in step one to the individual assets
and liabilities of the reporting unit.  Any remaining fair value would
be the implied fair value of goodwill on the testing date.  Based on
its analysis, management determined that the carrying value exceeded the fair
value, and therefore, an impairment charge of $198,169 was recognized
during the nine months ended March 31, 2009.


The impairment was attributable to (i)
lower internal sales forecast and cash flows attributable to the current
economic environment which has negatively impacted the ability of our customers
to obtain financing for capital purchases and (ii) a decline the our estimated
fair value of our stock price since the date of acquisition.







Fair
Value Accounting





Effective
July 1, 2008, we adopted Statement of Financial Accounting Standard (“SFAS,
No. 157”), “Fair Value Measurements”, to account for our financial assets
and liabilities. SFAS No. 157 provides a framework for measuring fair
value, clarifies the definition of fair value and expands disclosures regarding
fair value measurements. SFAS No. 157 defines fair value as the price that
would be received to sell an asset or paid to transfer a liability (an exit
price) in an orderly transaction between market participants at the reporting
date. The standard establishes a three-tier hierarchy, which prioritizes the
inputs used in the valuation methodologies in measuring fair value:




·
            Level
      1 - Observable quoted prices for identical instruments in active
      markets;




·
            Level
      2 - Observable quoted prices for similar instruments in active markets,
      observable quoted prices for identical or similar instruments in markets
      that are not active and model-derived valuations in which all significant
      inputs and significant value drivers are observable in active markets;
      or




·
            Level
      3 - Valuations derived from valuation techniques in which one or more
      significant inputs or significant value drivers are
      unobservable.





We do not have financial assets or
liabilities, as defined under SFAS No. 157.







18





Results of Operationfor the Three Months EndedMarch 31, 2009Compared tothe Three Months EndedMarch31, 2008





Sales





Sales in the fiscal 2009 period
decreased 60% from the comparable period in fiscal 2008. The change is
attributable to declines in sales from both the Precision Manufacturing and
Machine Sales Groups.





During the 2009 period, the Precision
Manufacturing Group’s sales were adversely impacted by lower shipments to our
single largest customer, Panasonic which we believe are due to the Boeing strike
and the current economic climate which has resulted in delays in scheduled
shipment ofparts.





During the 2009 period, the Machine
Sales Group experienced lower unit sales due to the recent tightening of credit
which made it more difficult forourcustomers to obtain credit to purchase
both new and used CNC machines.





Gross Margin





Gross
profit decreased by 68% in the fiscal 2009 period from the comparable period in
fiscal 2008. The change resulted from lower gross margins from both the
Precision Manufacturing and Machine Sales Groups.


19


The decrease within the Precision
Manufacturing Group resulted from lower production activity in the 2009 period.
The lower production activity impacted gross margins as follow (as a percent of
sales):





·
            9% increase resulting in
      underutilization of direct
labor;


·
            4%  increase outside
      services; and


·
            5% increase in direct
      overhead.




Selling, General &
Administrative





Selling,
general and administrative costs decreased by $335,015 compared to the
comparable period in fiscal 2008. The decrease was attributable to the
elimination  of management bonuses and other overheads due to lower
production activity.  During the 2008 period, management bonuses
totaled approximately $171,600.


Impairment of
Goodwill





During the fiscal 2009 period, we
recorded an impairment charge for goodwill of $198,169 compared to $0 for the
comparable period in fiscal 2008.





Interest Expense





Interest
expense decreased by $6,655 compared to the comparable period in fiscal 2008.
The change is attributable to lower average debt balances, and decreases in the
variable interest rates on certain debt obligations, primarily our line of
credit.


Gain onSaleof Assets





During the fiscal 2009 and 2008 periods,
we recognized gains from the sale of assets as we sold certain manufacturing
equipment within the Precision Manufacturing Group.





Income Tax Benefit





During the 2009 period, the effective
tax benefit rate was 33%.  The significant components contributing the
decrease from our statutory tax rate included the non-deductibility of the
impairment of goodwill; partially offset by timing differences for certain
accrued liabilities which impacted the tax benefit rate by a decrease of 20% and
an increase of 33%, respectively.





Results of Operationfor the Nine Months EndedMarch 31, 2009Compared to the Nine Months EndedMarch31, 2008





Sales





Sales in
the fiscal 2009 period decreased 25% from the comparable period in fiscal 2008.
This change in sales results primarily from a decrease in sales in our
Machine Tool Group, which declined, likely due to our customers having
difficulty in obtaining credit and, therefore, being unable to purchase
machines that they may have been able to purchase in better economic
times.


During the second quarter of fiscal 2009
sales within both the Precision Manufacturing and Machine Sales Groups were
adversely impacted. The decline within the Precision Manufacturing Group
resulted from lower shipments to our single largest customer, Panasonic which we
believe are due to the Boeing strike and the current economic climate which has
resulted in delays in scheduled shipment of products.




20




During second quarter of 2009 period,
the Machine Sales Group experienced lower unit sales due to the recent
tightening of credit which made it more difficult for customers to obtain credit
to purchase both new and used CNC machines.





Gross Margin





Gross
profit decreased by 27% in the fiscal 2009 period from the comparable period in
fiscal 2008. The decrease in the gross profit margin was attributable to a
reduction in sales in both our Machine Tools and Precision Manufacturing
Groups.
  Selling,
General & Administrative
 
 Selling,
general and administrative costs decreased by $123,020 compared to the
comparable period in fiscal 2008. The decrease was primarily attributable to the
elimination of management bonuses.  During the 2008 period, management
bonuses totaled approximately $171,600.


Impairment of
Goodwill





During the fiscal 2009 period, we
recorded an impairment charge for goodwill of $198,169 compared to $0 for the
comparable period in fiscal 2008.





Interest Expense





Interest
expense decreased by $14,169 compared to the comparable period in fiscal 2008.
The change is attributable to lower average debt balances, and by decreases
in the variable interest rates on certain debt obligations, primarily our line
of credit.


Gain onSaleof Assets





During the fiscal 2009 and 2008 periods,
we recognized gains from the sale of assets as we sold certain manufacturing
equipment within the Precision Manufacturing Group.





Income Tax Benefit





During the 2009 and 2008 periods, the
effective tax benefit rates were 31.5% and 41.6%.  The significant
components contributing the decrease from our statutory tax rate during the 2009
period included the non-deductibility of the impairment of goodwill; partially
offset by timing differences for certain accrued
liabilities.





Liquidity and Capital
Resources





21


Our
principal sources of liquidity consist of cash and cash equivalents, cash
generated from operations and borrowing from various sources, including Joseph
Gledhill, an executive officer of ours, and Pacific Western Bank (“PWB”). In
addition, on February 23, 2007, we received net proceeds from the sale of our
Precision Manufacturing Group’s facility of $1,926,605, of which $641,667 was
used to repay the balance outstanding on a credit facility secured by the
building. At March 31, 2009, our cash and cash equivalents decreased by $125,106
and our working capital decreased by $1,359,648 from the June 30, 2008 amounts,
respectively.


AtMarch31, 2009, we had $897,778in debt outstanding under our credit
agreement with Pacific Western Bank,an increaseof $31,839fromJune 30, 2008. The credit agreement provides
for borrowings of up to $1,500,000 consisting of a $1,000,000 line of credit and
letter of credit and a $500,000 term loan and a letter of credit. The amount
outstanding under the line of credit, term loan and letter of credit are$520,000, $277,778and $100,000,respectively. The credit agreement is
currently secured by substantially all of our assets and personal guarantees by
two of ourformerexecutive officers, Joseph
Gledhill and Timothy Consalvi.





The amount available for borrowings
under the line of credit is determined on a monthly basis based on 80% of
eligible accounts receivable, less the amount outstanding under the letter of
credit, as defined. The term loan provides for borrowings of up to $500,000. The
loan bears interest at the lender's referenced prime rate plus 1.5% with
principal and interest
payments due monthly.  As of March 31, 2009, the balance outstanding
under the line of credit exceeded the borrowing base amount by$90,508.  On April 14, 2009,werepaid $80,000 to reduce the borrowing
base amount.  As of April 30, 2009,we were in compliance with
ourobligationsunder the borrowing base
limit.





As ofMarch31, 2009, wealso met theminimum tangible net worth covenant, as
set forth in our credit agreement.





However, as of March 31, 2009, we are in
breach of a covenant under the Pacific Western Bank loan agreement that relates
to incurring lossesin two consecutive
quarters.  We are currently negotiating with the Bank for a letter of
forbearance, similar to what we have received for previous covenant
breaches.





Cash Flows





The following table sets forth our cash
flows for the nine months
ended March31:





Provided
      by (used in)
                        
                        2009
                        
                        
                        2008
                        
                        
                        ChangeOperating
      activities
                        
                        $
                        364,751
                        
                        
                        $
                        302,119
                        
                        
                        $
                        62,632Investing
      activities
                        
                        $
                        (53,373
                        )
                        
                        $
                        (302,933
                        )
                        
                        $
                        249,560Financing
      activities
                        
                        $
                        (436,485
                        )
                        
                        $
                        33,567
                        
                        
                        $
                        (470,052
                        )$
                        (125,106
                        )
                        
                        $
                        32,753
                        
                        
                        $
                        (157,859
                        )





Operating Activities





Operating
cash flows during the fiscal 2008 and 2009 fiscal periods reflect our results of
operations, offset by net cash provided by operating assets and liabilities and
non-cash items (depreciation, amortization and stock-based compensation). During
the 2009 period, non-cash expenses included in our results of operations and in
operating activities totaled $640,806 and $453,025 in the 2008 period. The
increase was primarily to the impairment of goodwill charge during the 2009
period totaling $198,169.


22





The changes in operating assets for the
2008 period were primarily attributable a reduction in accounts receivable,
offset increases in inventory and customer deposits. The changes in inventory
resulting purchases of CNC machines for customer deposits received and for
forecasted demand.





Investing Activities





We made
capital expenditures of $128,162 and $302,933 during the first nine months of
the fiscal 2009 and 2008 periods, respectively. During the 2008 period, our
expenditures primarily consisted of equipment employed by our Precision
Manufacturing Group.
 
 Financing
Activities
 
 During
the first nine months of the fiscal 2009 and 2008 periods, we repaid (net of
borrowings) $626,485 and $216,301, respectively of outstanding debt and capital
lease obligations. During the 2009 period, we borrowed a total of $190,000 on
our line of credit, as compared to $249,868 of net repayments during the 2008
period.





Off Balance Sheet
Arrangements





We have no off balance sheet
arrangements.





ITEM
3.                      Quantitative
and Qualitative Disclosures about Market Risk.





As a smaller reporting company we are
not required to provide the information required by this Item. However, we opted
to include the following information.





The only financial instruments we hold
are cash and cash equivalents. We also have a floating interest rate credit
agreement with Pacific Western Bank. Changes in market interest rates will
impact our interest costs.





We are currently billed by the majority
of our vendors in U.S. dollars and we currently bill the majority of our
customers in U.S. dollars. However, our financial results could be affected by
factors such as changes in foreign currency rates or changes in economic
conditions.





ITEM
4T.                      Controls
and Procedures.





Disclosure Controls and
Procedures




23




Under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we have evaluated the
effectiveness of our disclosure controls and procedures as of the end of the
period covered by this report. Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that our disclosure controls
and procedures were effective as of March 31, 2009 in alerting them in a timely
manner to material information required to be disclosed by us in the reports we
file with or submit to the Securities and Exchange Commission under the
Securities Exchange Act of 1934.





Changes in Internal Control over
Financial Reporting





There has
been no change in our internal control over financial reporting during the third
quarter of fiscal 2009 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.





24




PART
II – OTHER INFORMATION





ITEM
1.                      Legal
Proceedings.





1.           Onofrio Saputo and Christopher
Frisco v. Gateway International Holdings, Inc., Lawrence Consalvi, Timothy
Consalvi and Joe Gledhill,Court of the State of California, County of
Orange, Case No. 30-2008-00110905.  Plaintiffs filed this action on
August 21, 2008.
 
 The
Complaint, which had causes of action for securities fraud, breach of fiduciary
duties, fraud and deceit, and rescission, alleged that the defendants
intentionally misrepresented, or failed to disclose, certain facts regarding the
company prior to the plaintiffs purchasing Gateway International Holdings, Inc.
(now M Line Holdings, Inc.) common stock.  The Complaint sought total
monetary damages of approximately $188,415, plus interest, and punitive
damages.  The Company filed an Answer to the Complaint on October 17,
2008, denying the allegations of the Complaint, denying that plaintiffs are
entitled to any relief whatsoever and asserting various affirmative
defenses.  A trial date has not yet been scheduled. No amounts have been
accrued for this matter in the accompanying consolidated financial
statements.





2.          Voicu Belteu v. Mori Seiki Co.,
Ltd.; Mori Seiki U.S.A., Inc.; All American CNC Sales, Inc. dba Elite Machine
Tool Company; Ellison Manufacturing Tech., Superior Court for the State of
California, County of Orange, Case No. 30-2008-00103710. Plaintiff filed this
action onMarch 7,
2008.





The Complaint, which has causes of
action for strict products liability and negligence, alleges that a CNC machine
manufactured by Mori Seiki and sold through our subsidiary,All American
CNC Sales, Inc. dba Elite Machine Tool Company, was defective and injured the
plaintiff.  The Complaint seeks damages in excess of $6,300,000 for
medical expenses, future medical expenses, lost wages, future lost wages and
general damages.  We have filed cross-complaints against several
individuals and entities involved in the machine purchase and sales transaction,
seeking indemnity, contribution, and damages based on other legal
theories.   We filed an Answer to the Complaint along with the
various aforementioned cross-complaints.





Discovery
has commenced in this action both by us and by some of the other parties but
substantial discovery work remains, including depositions of various
witnesses.  Currently the parties are involved in the meet and confer
process to resolve outstanding discovery issues.  The Court has set a
Case Management Conference for May 7, 2009.  No trial date has been
set.  Management believes we have meritorious defenses to plaintiff’s
claims and plan to vigorously defend against the lawsuit and pursue Mori Seiki,
and possibly other entities or individuals, for any damages we
incur.  However, there can be no assurance as to the outcome of the
lawsuit.





3.          James M. Cassidy v. Gateway
International Holdings, Inc., American Arbitration Association, Case No.
73-194-32755-08.  We were served with a Demand for Arbitration and
Statement of Claim, which was filed on September 16, 2008.





The
Statement of Claim alleges that claimant is an attorney who performed services
for us pursuant to an agreement dated April 2, 2007 between us and the
claimant.  The Statement of Claim alleges that we breached the agreement
and seeks compensatory damages in the amount of $195,000 plus interest,
attorneys’ fees and costs.  We deny the allegations of the Statement of
Claim and will vigorously defend against these allegations.  An arbitrator
has not yet been selected, and a trial date has not yet been scheduled. 
The parties have informally agreed to attend mediation in order to discuss a
potential resolution of the matter, which should occur in the next 60
days.  The parties have agreed to stay arbitration pending completion
of mediation.





25


4.          Elite Machine Tool Company v. ARAM
Precision Tool and Die, Avi Amichai, Superior Court for the State ofCalifornia,CountyofOrange, Case No. 30-2008-00090891. Elite
Machinefiled this action
onAugust 8, 2008.





The
Complaint alleges breach of contract for the defendants failing to pay Elite
Machine for a machine the defendants purchased from Elite Machine, and seeks
damages totaling $16,238. ARAM Precision Tool and Die filed its Answer and
Cross-Complaint on October 1, 2008.  The Cross-Complaint alleges that
Elite Machine failed to deliver certain parts of the machine per the sales
contract and seeks damages totaling $25,000.  Plaintiff and Defendant
have both served and responded to discovery, and are now preparing for trial,
currently set for June 8, 2009.





5.          RACL, Inc. v. All American CNC
Sales, Inc., Elite Machine Tool Company/Sales & Services, CNC Repos,
Superior Court for the State of California, County of Riverside, Case No. RIC
509650.  Plaintiff filed this Complaint on October 2,
2008.





The
Complaint alleges causes of action for breach of contract and rescission and
claims All American breached the agreement with RACL by failing to deliver a
machine that conforms to the specifications requested by RACL, and requests
damages totaling $138,750.  Elite Machine filed an Answer timely, on
January 15, 2009.  Discovery has commenced in this matter but is not
expected to be concluded for several months.   The Court has set
a Case Management Conference for September 29, 2009.  Management
intends to aggressively defend itself against this claim.  No trial
date has been set.




6.           All American CNC v. Sunbelt
Machine, Orange County Superior Court, Case No.
0-2008-00112502.  All American filed the Complaint on September 25,
2008.  No trial date has been set.




This case involves a dispute between
All American and Sunbelt regarding the sale of a Makino MC 98 HMC machine by All
American to Sunbelt.  Sunbelt has claimed that it received a machine
that does not conform to the specifications it ordered.  The amount at
issue is approximately $140,000 at this stage.   Subsequent to
filing of the above-referenced suit, Sunbelt has filed a similar action in
Federal District Court in Houston, Texas.  All American plans to seek
to transfer and consolidate the federal case into the State of California case
in Orange County, California.  Discovery has not
commenced.  All American anticipates substantial law and motion
activity in this case prior to commencement of discovery.  Management
believes that the machine delivered to Sunbelt was conforming and Sunbelt’s
claims are without merit.  Management intends to vigorously defend
this claim.  The Court has scheduled a Case Management Conference for
May 29, 2009.





Litigation
is subject to inherent uncertainties, and unfavorable rulings could
occur.  If an unfavorable ruling were to occur in any of the above
matters, there could be a material adverse effect on our financial condition,
results of operations or liquidity.





ITEM
1A.                      Risk
Factors.





As a
smaller reporting company we are not required to provide the information
required by this Item.  However, we did include risk factors in our
Annual Report on Form 10-K for the year ended June 30, 2008, as filed with the
Commission on October 1, 2008.




26





ITEM
2.                      Unregistered
Sales of Equity Securities and Use of Proceeds.





On March
25, 2009, we entered into an Assignment of Promissory Note and Consent Thereto
(the “Assignment”) with Money Line Capital, Inc., a California corporation
(“MLCI”), and our largest shareholder, under which MLCI agreed to assume our
repayment obligations to Joseph Gledhill and Joyce Gledhill under that certain
$650,000 principal amount Promissory Note dated December 8, 2008 (the “M Line
Note”) in exchange for the issuance of 3,250,000 shares of our common stock,
restricted in accordance with Rule 144 (the “Shares”).  We expect to
issue these shares in the near future.  This issuance is exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, and MLCI is
a sophisticated investor and familiar with our operations.





ITEM
3.                      Defaults
upon Senior Securities.





On August 21, 2006,weentered into credit agreement with
Pacific Western Bank (“PWB”). The credit agreement provides for borrowings of up
to $1,500,000 through a line of credit. OnNovember 15, 2007, the credit agreement was amended to
reduce the amount available under the line of credit to $1,000,000 and to
convert $500,000 of outstanding principal into a term loan. OnSeptember 29, 2008,werenewed the credit agreement throughSeptember 21,
2009.Two of our former officers and
directors,Joseph Gledhill
and Timothy Consalvi, are guarantors under the credit
agreement.





The line of credit has a stated interest
rate equal to the lender's referenced prime rate plus 1.5%. Interest is payable
monthly with the outstanding principal balance due onSeptember 21, 2009. The amount available for borrowings is
determined based on a monthly basis based on 80% of eligible accounts
receivable, as defined. As of March 31, 2009,we also havean irrevocable letter of credit
outstanding of $100,000. The proceeds from the line of credit have been
used forworking capital
needs.





The term loan provides for borrowings of
up to $500,000. The loan has a stated interest rate equal to the lender's
referenced prime rate plus 1.5%. Principal and interest payments are payable
monthly.





The amount available for borrowings
under the line of credit is determined on a monthly basis based on 80% of
eligible accounts receivable, less the amount outstanding under the letter of
credit, as defined. The term loan provides for borrowings of up to $500,000. The
loan bears interest at the lender's referenced prime rate plus 1.5% with
principal and interest
payments due monthly.  As of March 31, 2009, the balance outstanding
under the line of credit exceeded the borrowing base amount by$90,508.  On April 14, 2009,
the Company repaid $80,000 to reduce the borrowing base amount.  As of
April 30, 2009,we
werein compliance withourobligationsunder the borrowing base
limit.





As ofMarch31, 2009, wemet ourminimum tangible net worthcovenant, as set forth in
thecredit
agreement.





However, as of March 31, 2009, we are in
breach of a covenant under the Pacific Western Bank loan agreement that relates
to losses in two consecutive quarters.  We are currently negotiating
with the Bank for a letter of forbearance, similar to what we have received for
previous covenant breaches.





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





There
have been no events required to be reported under this Item.





ITEM
5.                      Other
Information.




27





Departure of Directors and
Officers





On
December 8, 2008, three of our affiliate-shareholders, namely, Timothy D.
Consalvi, our Chief Executive Officer and Director, Joseph Gledhill, an
Executive Vice President, Director and 10% shareholder, and Lawrence A.
Consalvi, a former officer and Director, and a 10% shareholder, entered into a
Stock Purchase Agreement (the “Agreement”) with MLCI, under which MLCI agreed to
purchase an aggregate of 11,850,000 shares of our common stock from these
shareholders.  The transaction closed December 9, 2008.





Pursuant
to the Agreement, Mr. Timothy D. Consalvi and Mr. Joseph Gledhill submitted
their resignations from our Board of Directors, effective when accepted by our
Board of Directors.  On March 25, 2009, our Board of Directors
accepted Mr. Consalvi’s and Mr. Gledhill’s resignations.  We are not
aware of any disagreements with Mr. Consalvi or Mr. Gledhill of the type
required to be disclosed per Item 5.02(a) of this Form 8-K.





On March
31, 2009, Stephen Kasprisin, one of our directors, submitted his resignation
from our Board of Directors and from his position as our interim Chief Financial
Officer.    We are not aware of any disagreements with Mr.
Kasprisin of the type required to be disclosed per Item 5.02(a) of this Form
8-K.





Appointment of Directors and
Officers





On March
31, 2009, in response to Mr. Kasprisin’s resignation, we hired Jitu Banker as
our Chief Financial Officer, and appointed Robert Sabahat to fill a vacancy on
our Board of Directors.  Mr. Sabahat was appointed to serve until our
next Annual Meeting of Shareholders and thereafter and until his successor is
elected and qualified.





Jitu
Banker has been one of our Directors since January 2009, and is currently the
President and Chief Financial Officer of Money Line Capital, Inc., our largest
shareholder.  Since 1990, Mr. Banker has also been the owner of Banker
& Co., a company specializing in tax, accounting, Internal Revenue Service
audits, and other related services.  From 2004 to 2006, Mr. Banker was
one of our Directors and our Chief Financial Officer.  Mr. Banker has
a Bachelor of Arts in Accounting with Economics and is a member of the Institute
of Chartered Accountants in England and Wales, the Institute of Management
Accountants in London, England, and the American Institute of Certified Public
Accountants.





Mr.
Sabahat is an owner and partner of Madison Harbor, a law firm located in Orange
County, California.  Mr. Sabahat has held this position since
September 1999.  In this position Mr. Sabahat has a practice focusing
on real estate and commercial litigation involving contract and tort based
claims, business transactions, commercial lease agreements, and unfair
competition.  From June 1995 to September 1999, Mr. Sabahat was
Corporate Counsel for Unicorp Paper Industries, Inc., where he was responsible
for all legal matters for the multinational manufacturer of commercial printing
papers.  Mr. Sabahat received his Juris Doctorate with honors from
Western State University, College of Law in 1994.





Assignment
of Gledhill Note





On March
25, 2009, we entered into an Assignment of Promissory Note and Consent Thereto
(the “Assignment”) with Money Line Capital, Inc., a California corporation
(“MLCI”), and our largest shareholder, under which MLCI agreed to assume our
repayment obligations to Joseph Gledhill and Joyce Gledhill under that certain
$650,000 principal amount Promissory Note dated December 8, 2008 (the “M Line
Note”) in exchange for the issuance of 3,250,000 shares of our common stock (the
“Shares”).  Mr. Gledhill, one of our former directors, and Joyce
Gledhill consented to the Assignment.  Pursuant to the Assignment,
MLCI and the Gledhill’s entered into a new $650,000 principal amount secured
promissory note, a security agreement and a pledge agreement.




28




Money Line Demand
Note





In a
separate transaction, we entered into a Demand Promissory Note dated March 25,
2009 (the “Note”), evidencing the terms under which MLCI will loan us up to
$500,000 on an “as needed” basis for working capital purposes.  The
Note accrues interest at a rate of 10% per annum.  Under the terms of
the Note, MLCI is not obligated to loan us any money, but the Note sets forth
the terms in the event MLCI elects to loan us money for working capital
purposes.





Annual Shareholders
Meeting





We held
our 2009 Annual Meeting of Shareholders on March 25, 2009, in Tustin,
California.  There were shareholders representing 14,941,334 votes
present at the meeting, either in person or by proxy, which represented over 50%
of the 27,611,956 total outstanding votes of the Company, so a quorum was
present.  The following agenda items set forth in the Company’s 14C
Information Statement on file with the SEC, which had been pre-approved by the
holders of a majority of our common stock, went effective on March 25,
2009:







1.           The
election of three (3) directors, namely George Colin, Stephen Kasprisin and Jitu
Banker, to serve until the next Annual Meeting of Shareholders and thereafter
until a successor is elected and qualified. All three nominees were
directors prior to the meeting.  This agenda item was pre-approved by
a majority of our shareholders prior the meeting.  The shares voting
in favor of this agenda item were as follows:





Director
            Votes
      For
            Votes
      Against
            Votes
      Withheld
            Abstentions
            Broker
      Non-VotesGeorge
      Colin
            14,371,334
            -0-
            -0-
            -0-
            -0-Stephen
      Kasprisin
            14,371,334
            -0-
            -0-
            -0-
            -0-Jitu
      Banker
            14,371,334
            -0-
            -0-
            -0-
            -0-





2.           An
amendment to our Articles of Incorporation to change the name of the Company to
M Line Holdings, Inc.  This agenda item was pre-approved by a majority
of our shareholders prior the meeting.  The shares voting in favor of
this agenda item were as follows:





Votes
      For
            Votes
      Against
            Votes
      Withheld
            Abstentions
            Broker
      Non-Votes14,371,334
            -0-
            -0-
            -0-
            -0-





3.           The
ratification of the appointment of Kabani & Companyas independent auditors of
the Company for the fiscal year ending June 30, 2009.  Kabani &
Company were approved as our independent auditors in place of McKennon Wilson & Morgan LLP, who
were removed by our Board of Directors onMarch 16, 2009, prior to the meeting.The
results of the voting were as follows:





Votes
      For
            Votes
      Against
            Votes
      Withheld
            Abstentions
            Broker
      Non-Votes14,371,334
            -0-
            -0-
            -0-
            -0-







29


A more
detailed description of each agenda item at the 2009 Annual Shareholders Meeting
can be found in our Schedule 14C Information Statement dated and filed with the
Securities and Exchange Commission on February 25, 2009.








ITEM
6.                      Exhibits.





(a)           Exhibits


Item No.
            
            Description3.1 (1)
            
            Articles of Incorporation ofM LineHoldings, Inc., aNevadacorporation, as
      amended3.2 (5)
            
            Certificate of Amendment of
      Articles of Incorporation3.3(1)
            
            Bylaws ofM LineHoldings, Inc., aNevadacorporation10.1 (1)
            
            Asset Purchase Agreement with CNC
      Repos, Inc. and certain of its shareholders datedOctober 1,
    200710.2 (1)
            
            Commercial Real Estate Lease datedFebruary 15,
      2007for the office
      space located inTustin,CA10.3 (1)
            
            Commercial Real Estate Lease datedNovember 15,
      2007for the office
      space located inAnaheim,CA10.4 (1)
            
            Employment Agreement with Timothy
      D. Consalvi datedFebruary 1,
      200710.5 (1)
            
            Employment Agreement with Joseph
      T.W. Gledhill datedFebruary 5,
      200710.6 (2)
            
            Employment Agreement with Lawrence
      A. Consalvi datedFebruary 5,
      200710.7 (1)
            
            Share Exchange Agreement with
      Gledhill/Lyons, Inc. datedMarch 26,
    200710.8 (1)
            
            Share Exchange Agreement with
      Nu-Tech Industrial Sales, Inc. datedMarch 19,
    200710.9 (1)
            
            Fee Agreement with Steve Kasprisin
      datedApril 30,
      200810.10 (3)
            
            Separation Agreement by and
      between Gateway International Holdings, Inc., and Mr. Lawrence A.
      Consalvi datedSeptember 26,
      200810.11(4)
            
            Sales Agent Agreement by and
      between Gateway International Holdings,Inc., and Mr. Lawrence A.
      Consalvi datedSeptember 30,
      200810.12 (4)
            
            Loan Agreements with Pacific
      Western Bank datedSeptember 20,
      200810.13(5)
            
            Assignment
      of Promissory Note and Consent Thereto by and between M Line Holdings,
      Inc. and Money Line Capital, Inc. dated March 24, 200910.14(5)
            
            M
      Line Holdings, Inc. Demand Note for up to $500,000 dated March 25,
      200921 (1)
            
            List of
      Subsidiaries  30
  31.1
            
            Rule
      13a-14(a)/15d-14(a) Certification of Timothy D. Consalvi (filed
      herewith).31.2
            
            Rule
      13a-14(a)/15d-14(a) Certification of Steve Kasprisin (filed
      herewith).32.1
            
            Section
      1350 Certification of Timothy D. Consalvi (filed
  herewith).32.2
            
            Section
      1350 Certification of Steve Kasprisin (filed
  herewith).





(1) Incorporated by reference from our
Registration Statement on Form 10-12G filed with the Commission onMay 16, 2008.





(2) Incorporated by reference from our
Registration Statement on First Amended Form 10-12G/A filed with the Commission
onJuly 16,
2008.





(3) Incorporated by reference from our
First Amended Current Report on Form 8-K/A filed with the Commission onOctober 10,
2008.





(4)  Incorporated by reference
from our Quarterly Report on Form 10-Q for the period endedSeptember 30, 2008, as filed with the Commission onNovember 13,
2008.





(5)  Incorporated by reference
from our Current Report on Form 8-K filed with the Commission onApril 24, 2009.





31





SIGNATURES





In accordance with Section 13 or 15(d)
of the Exchange Act, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.








MM
      Line Holdings, Inc.Dated:  May
      18, 2009
            
            /s/
      George ColinBy:
            George
  ColinPresident,
      Chief ExecutiveOfficer
      and a DirectorDated:  May
      18, 2009
            
            /s/
      Jitu BankerBy:
            Jitu
      BankerChief
      Financial Officer,Secretary
      and a Director





32