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



         [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
             Exchange Act of 1934

                For the quarterly period ended: December 31, 2003

         [ ] Transition Report pursuant to 13 or 15(d) of the Securities
             Exchange Act of 1934

                 For the transition period __________to_________

                        Commission File Number: 000-26017

                      GATEWAY INTERNATIONAL HOLDINGS, INC.
        (Exact name of small Business Issuer as specified in its charter)


            Nevada                                       95-3819300
       --------------                                  ---------------
(State or other jurisdiction                   (IRS Employer Identification No.)
of incorporation or organization)


      3840 East Eagle Drive
        Anaheim, California                                92807
---------------------------------                       -----------
(Address of principal executive offices)                 (Zip Code)


          Issuer's telephone number, including area code: 714-630-6253
       Securities registered under Section 12(b) of the Exchange Act: None

 Securities registered under Section 12(g) of the Exchange Act:
                                  Common Stock, par value $0.001 per share

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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. [ ] Yes [X] No


As of October 4, 2005, there were 40,307,254 shares of the registrant's Common
Stock issued and outstanding.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>

                      GATEWAY INTERNATIONAL HOLDINGS, INC.
                                   Form 10-QSB

               For The Fiscal Three Months Ended December 31, 2003

                                TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION.................................................3

   ITEM 1.    FINANCIAL STATEMENTS (UNAUDITED).................................3

   ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
              OF OPERATION.....................................................3

   ITEM 3.    CONTROLS AND PROCEDURES.........................................43

PART II - OTHER INFORMATION...................................................44

   ITEM 1.     LEGAL PROCEEDINGS..............................................44

   ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND
               USE OF PROCEEDS................................................46

   ITEM 3.     DEFAULTS UPON SENIOR SECURITIES................................46

   ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............46

   ITEM 6.     EXHIBITS.......................................................48


<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS (UNAUDITED)

                 GATEWAY INTERNATIONAL HOLDINGS AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEET
                                   (Unaudited)

                                                              December 31, 2003
                                                              -----------------
Assets

Current Assets:

Cash and cash equivalents                                   $          116,908
Accounts receivable, net                                               288,067
Inventories                                                            311,947
Prepaid Insurance                                                        2,808
                                                               ----------------
Total current assets                                                   719,730

Property and equipment,  net                                         2,565,044

Other Assets:

Deposits and Notes Receivable                                           14,442
                                                               ----------------
Total Assets                                                $        3,299,216
                                                               ================

Liabilities and Stockholders' Deficit

Current Liabilities:
Accounts payable and accrued liabilities                    $          971,883
Current Portion of notes payable                                       685,062
Current portion of notes payable to related parties                    104,167
                                                               ----------------
Total Current Liabilities                                            1,761,112

Notes Payable, less current portion                                  3,129,492
Notes Payable to related parties, less current portion                 451,010
                                                               ----------------
Total Liabilities                                                    5,341,614
                                                               ----------------
Commitments and Contingencies
  Stockholders' Deficit
Preferred stock, $0.001 par value; 10,000,000 shares
  authorized; no shares issued and outstanding                              --
Common stock, $0.001 par value; 100,000,000 shares
  authorized; 33,242,,000 shares issued and outstanding                 33,242
Additional paid in capital                                              91,279
Stockholder note receivable                                            (75,391)
Accumulated deficit                                                 (2,091,528)
                                                               ----------------
Total stockholders'  deficit                                        (2,042,398)
                                                               ----------------
Total Liabilities and Stockholders' Deficit                 $        3,299,216
                                                               ================

              The accompanying notes are an integral part of these
                        unaudited financial statements.

                                       3
<PAGE>

              GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
           For the three month period ended December 31, 2003 and 2002
                                   (Unaudited)

                                             Three Months ended December 31,
                                                  2003                2002
                                            --------------      --------------
Net sales                                   $    1,556,550      $    1,984,179
Cost of sales                                    1,208,658           1,452,907
                                             -------------       -------------
Gross Profit                                       347,892             531,272
Operating expenses:

Selling, general and administrative                483,667             271,700
                                             -------------       -------------
Operating (loss) income                          (135,775)             259,572
Other income (expense):
Interest Income                                         76                   -
Gain on disposal of fixed assets                        --              22,250
                                             -------------       -------------
Total other income (expense)                            76              22,250
                                             -------------       -------------
Income (Loss) before income taxes                (135,699)             281,822
Provision for income taxes                           1,600                 800
                                             -------------       -------------
Net Income (Loss)                           $    (137,299)      $      281,022
                                             =============       =============

NET INCOME PER SHARE:
Basic and diluted
Net Income per share
                                            $         0.00      $         0.01
                                             =============       =============

Weighted average
number of common shares outstanding             33,242,000          23,222,739
                                             =============       =============

              The accompanying notes are an integral part of these
                        unaudited financial statements.

                                       4
<PAGE>

              GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
           For the three month period ended December 31, 2003 and 2002
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                      December 31,       December 31,
                                                                         2003                2002
                                                                   -----------------  -----------------
<S>                                                                <C>                   <C>
Cash flows from operating activities:
   Net Income (Loss)                                               $       (137,299)  $         281,022
   Adjustments to reconcile net income (loss) to net cash
     provided by (used in) operating activities:
      Depreciation                                                           74,305              35,913
      Gain on disposal of fixed assets                                           --             (22,250)
     (Increase) decrease in current assets:
         Accounts receivable                                               (280,498)            (51,269)
         Inventories                                                         (8,929)           (108,392)
         Other assets                                                        (7,808)               (786)
      Increase (decrease) in current liabilities:
         Accounts payable and accrued liabilities                           332,761            (101,031)
                                                                    ----------------   ----------------
Net cash (used in) provided by operating activities                         (27,468)             33,207
                                                                    ----------------   ----------------

Cash flows from investing activities:
  Purchases of property and equipment                                       (63,709)            (14,000)
  Cash received on acquisition of Eran Eng.                                  55,845               5,924
                                                                    ----------------   ----------------
Net cash used in operating activities                                        (7,864)             (8,076)
                                                                    ----------------   ----------------

Cash flows from financing activities:
   Principal borrowings (repayments) on notes payable                       246,658             (94,795)
   Principal repayments on capital lease obligations                             --             (32,987)
   Net borrowings on lines of credit                                             --              56,000
   Principal borrowings (repayments) on notes payable to
     related parties                                                       (102,382)            140,000
                                                                    ----------------   ----------------
Net cash provided by financing activities                                   144,276              68,218
                                                                    ----------------   ----------------

Net Increase (decrease) in cash and cash equivalents                        108,944              93,349
Cash at beginning of year                                                     7,964              25,417
                                                                    ----------------   ----------------
Cash at end of year                                                $        116,908   $         118,766
                                                                    ================   ================

Supplemental disclosure of cash flow information
  Cash paid during the year for:
      Interest                                                     $         72,545   $          26,107
                                                                    ================   ================
      Income taxes                                                 $          1,600   $             800
                                                                    ================   ================
</TABLE>

              The accompanying notes are an integral part of these
                        unaudited financial statements.

                                       5
<PAGE>

              GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Gateway International Holdings, Inc. (the "Company") was originally incorporated
on September 24, 1997, under the laws of the State of Nevada. The Company and
its subsidiaries are engaged in acquiring, refurbishing and selling pre-owned
and new Computer Numerically Controlled machine tools, and manufacturing of
precision component parts in the fields of defense, aerospace, automotive and
medical tools. The Company trades on the Pink Sheet Bulletin Board under the
symbol "GWYI.PK".

The accompanying unaudited financial statements consolidate the accounts of the
Company and its wholly owned subsidiary, E.M. Tool Company, Inc. (doing business
as Elite Machine Tool Company, Inc.), and have been prepared in accordance with
accounting principles generally accepted in the United States of America for
interim financial information. However certain information and footnote
disclosures normally included in the financial statements prepared in accordance
with accounting principles generally accepted in the United States of America
have been omitted. In the opinion of the management of the Company, all
adjustments (consisting of normal recurring adjustments) necessary for a fair
presentation have been included and the accompanying financial statements
present fairly the financial position of the Company as of December 31, 2003,
and the results of operations of the Company for the three months ended December
31, 2003 and 2002 and cash flows of the Company for the three months ended
December 31, 2003 and 2002. These financial statements should be read in
conjunction with the Company's September 30th, 2004 audited financial statements
and notes thereto included in the Company's Annual Report on Form 10-KSB filed
with the Securities and Exchange Commission on June 16, 2005. The interim
results are not necessarily indicative of the results of operations for a full
year.

Principles of Consolidation

The consolidated financial statements include the accounts of Gateway
International Holdings, Inc., and its wholly owned subsidiary, E.M. Tool
Company, Inc. (doing business as Elite Machine Tool Company, Inc.).

Risks and Uncertainties

The Company operates in a highly competitive industry subject to intense
competition. There are significant risks and uncertainties associated with
Company's financial, operational and technological environment and that includes
the potential risk of business failure.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management of the
Company to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements, and the reported amounts of revenues
and expenses during the reporting period. Significant estimates made by
management are, among others, valuation allowance on deferred tax assets,
realization of inventories and collectibility of accounts receivable. Actual
results could differ materially from those estimates.


                                       6
<PAGE>

              GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003

Intangible Assets

The Company accounts for its intangible assets under the applicable guidelines
of SFAS 142 "goodwill and other intangible assets" and SFAS 144 "accounting for
the impairment or disposal of long lived assets". Where intangible assets have
finite lives, they are amortized over their useful life unless factors exist to
indicate that the asset has been impaired. The Company evaluates whether the
assets are impaired annually or on an interim basis or if an event occurs or
circumstances change to suggest that an asset's value has diminished. Under SFAS
144, when deemed necessary, the Company completes the evaluation of the
recoverability of its long-lived assets by comparing the carrying amount of the
assets against the estimated undiscounted future cash flows associated with
them. If such evaluations indicate that the future undiscounted cash flows of
long-lived assets are not sufficient to recover the carrying value of such
assets, the assets are adjusted to their estimated fair values. Under SFAS 142,
intangible assets with indefinite useful lives are required to be tested
annually for impairment or whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. If the assets are
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount exceeds the fair value of the assets. Based
on its review, the Company has written off $0 as impairment of its long-lived
assets as of December 31, 2003 and 2002.

Revenue Recognition

The Company records sales when goods are shipped to the customer. Revenue is
recognized when all of the following criteria have been met:

    o    persuasive evidence for an arrangement exists:
    o    delivery has occurred:
    o    the fee is fixed or determinable; and
    o    collectibility is reasonably assured.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin 104 ("SAB 104"), "Revenue Recognition," which outlines the basic
criteria that must be met to recognize revenue and provides guidance for
presentation of revenue and for disclosure related to revenue recognition
policies in financial statements filed with the Securities and Exchange
Commission. Management believes that the Company's revenue recognition policy
conforms to SAB 104.

Basic and Diluted Earnings Per Common Share

Under SFAS 128, "Earnings Per Share", basic earnings per common share is
computed by dividing net income or loss available to common shareholders by the
weighted-average number of common shares outstanding during the period of
computation. Diluted earnings per share is computed similar to basic earnings
per share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive
(there were no additional potential common shares to be issued as of December
31, 2003 and 2002, respectively).

Fair Value of Financial Instruments

SFAS 107, "Disclosures About Fair Value of Financial Instruments," requires
disclosure of fair value information about financial instruments when it is
practicable to estimate that value. The carrying amount of the Company's cash,
accounts receivables, trade payables, accrued liabilities, obligations under
capital leases, and notes payable approximates their estimated fair values due
to the short-term maturities of those financial instruments. The fair value of
stockholder notes receivable and notes payable to related parties are not
determinable as these transactions are with related parties.


                                       7
<PAGE>

              GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003


Segments of Business

Statement of Financial Accounting Standards ("SFAS") 131, "Disclosures about
Segments of an Enterprise and Related Information," changed the way public
companies report information about segments of their business in their reports
issued to stockholders. It also requires entity-wide disclosures about the
products and services the entity provides, the material countries in which it
holds assets and reports revenues and its major customers. Reportable business
segments for the three month period ended December 31, 2003 are from the date of
the acquisition of the various subsidiaries.

Stock-based compensation

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation". SFAS No. 123 prescribes accounting and reporting standards for
all stock-based compensation plans, including employee stock options, restricted
stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123
requires compensation expense to be recorded (i) using the new fair value method
or (ii) using the existing accounting rules prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for stock issued to employees" (APB 25) and
related interpretations with pro-forma disclosure of what net income and
earnings per share would have been had the Company adopted the new fair value
method. The Company uses the intrinsic value method prescribed by APB 25 and has
opted for the disclosure provisions of SFAS No.123.

Statement of Cash Flow

In accordance with Statement of Financial Accounting Standards No. 95,
"Statement of Cash Flows," cash flows from the Company's operations is
calculated based upon the local currencies. As a result, amounts related to
assets and liabilities reported on the statement of cash flows will not
necessarily agree with changes in the corresponding balances on the balance
sheet.

Significant Recent Accounting Pronouncements

In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires
companies to recognize in the statement of operations the grant-date fair value
of stock options and other equity-based compensation issued to employees. FAS
No. 123R is effective beginning in the Company's second quarter of fiscal 2006.
The Company is in the process of evaluating the impact of these pronouncements
on its consolidated financial position, results of operations and cash flows.

                                       8
<PAGE>

              GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003

In December 2004, the FASB issued SFAS Statement No. 153, "Exchanges of
Non-monetary Assets." The Statement is an amendment of APB Opinion No. 29 to
eliminate the exception for non-monetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of non-monetary assets
that do not have commercial substance. The Company believes that the adoption of
this standard will have no material impact on its financial statements.

In March 2004, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 03-01, "The Meaning of Other-Than-Temporary Impairment and its
Application to Certain Investments." The EITF reached a consensus about the
criteria that should be used to determine when an investment is considered
impaired, whether that impairment is other-than-temporary, and the measurement
of an impairment loss and how that criteria should be applied to investments
accounted for under SFAS No. 115, "Accounting In Certain Investments In Debt And
Equity Securities." EITF 03-01 also included accounting considerations
subsequent to the recognition of other-than-temporary impairment and requires
certain disclosures about unrealized losses that have not been recognized as
other-than-temporary impairments. Additionally, EITF 03-01 includes new
disclosure requirements for investments that are deemed to be temporarily
impaired. In September 2004, the Financial Accounting Standards Board (FASB)
delayed the accounting provisions of EITF 03-01; however the disclosure
requirements remain effective for annual reports ending after June 15, 2004. The
Company will evaluate the impact of EITF 03-01 once final guidance is issued.

NOTE 2 - RELATED PARTY TRANSACTIONS

The Company has a note payable with a former related party, Nelson Engineering,
Inc., that requires monthly payments including interest. The balance of the note
is $66,657 at December 31, 2003. The Company paid $2,187 in interest in
connection with these notes payable during the three month period ended December
31, 2003 and $3,168 during the three month period ended December 31, 2002, which
the Company has recorded in the accompanying statements of operations.

From time to time, the Company borrows funds from Joseph Gledhill, a stockholder
and the Vice President of the Company for working capital purposes, which is
non-interest bearing. Also, Joseph Gledhill loaned the Company $160,000 to pay
certain prior stockholders of Gourmet Gifts, Inc. in connection with the reverse
merger, as further. At December 31, 2003, outstanding borrowings on these notes
totaled $555,177.

At the time of the reverse merger of Elite Machine in December 2001, the balance
owed by Larry Consalvi, CEO of our Company, to Elite Machine on advances made by
Elite Machine to Mr. Consalvi was $76,461 . At the time these advances were made
and prior to the reverse merger, Mr. Consalvi was a director and shareholder of
Elite Machine. Subsequent to our reverse takeover of Elite Machine, the balance
owed by Mr. Consalvi to Elite Machine in connection with these advances as of
December 31, 2003 was $75,391.

NOTE 3 - STOCKHOLDERS' EQUITY

Preferred Stock

The Company's Articles of Incorporation authorize up to 100,000,000 shares of
$0.001 par value preferred stock. Shares of preferred stock may be issued in one
or more classes or series at such time as the Board of Directors determine. As
of December 31, 2003, the Company had no shares of preferred stock issued and
outstanding.

                                       9
<PAGE>

              GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003


Common Stock

The Company's Articles of Incorporation authorize up to 100,000,000 shares of
$0.001 par value common stock. At December 31, 2003 , the Company had 33,242,000
shares of common stock issued and outstanding.

NOTE 4 - BUSINESS SEGMENTS

Reportable business segments for the three month period ended December 31, 2003,
are as follows:




Net Sales from continuing operations:
 Elite Machine Tool Company, Inc.                  $     1,122,962
 Eran Engineering, Inc.                                    433,588
                                                     -------------
                                                   $     1,556,550
                                                     -------------







                                       10
<PAGE>

              GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003


                                                            3 month period ended
                                                              December 31, 2003
                                                            --------------------
Operating income from continuing operations:
 Elite Machine Tool Company, Inc.                            $        (40,382)
 Eran Engineering, Inc.                                               (96,917)
                                                               ---------------
                                                             $       (137,299)
                                                               ---------------

Depreciation and amortization - continuing operations:
 Elite Machine Tool Company, Inc.                            $             70
 Eran Engineering, Inc.                                                74,235
                                                               ---------------
                                                             $         74,305
                                                               ---------------

Identifiable assets - continuing operations:
 Elite Machine Tool Company, Inc.                            $        490,778
 Eran Engineering, Inc.                                             2,808,437
                                                               ---------------
                                                             $      3,299,215
                                                               ---------------

Capital expenditures/obligations under capital lease:
 Elite Machine Tool Company, Inc.                            $             --
 Eran Engineering, Inc.                                                    --
                                                               ---------------
                                                             $             --
                                                               ---------------

Interest Paid:
 Elite Machine Tool Company, Inc.                            $         21,947
 Eran Engineering, Inc.                                                50,598
                                                               ---------------
                                                             $         72,545
                                                               ---------------


                                       11
<PAGE>

              GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003

Note 5 (a) - SUBSEQUENT EVENTS ACQUISITIONS COMPLETED IN FISCAL 2004:

Eran Engineering, Inc.:

In October 2003, the Company completed the acquisition of Eran Engineering,
Inc., a company engaged in the manufacture of precision parts in the field of
defense and aerospace.

The total purchase price was less than the assets acquired and negative goodwill
in excess of the purchase price has been adjusted to the amount of plant and
equipment acquired in this transaction.

The purchase price of $2,500,000 was financed partly through a bank loan of $1.3
million, and partly through a note to the sellers, Alice Thallmayer and Hans
Thallmayer of $1.2 million.

The allocation of the purchase price to the assets and liabilities assumed based
on their fair values was as follows:


        Cash and cash equivalents                     $         55,845
        Accounts receivable                                    281,717
        Fixed assets                                         2,162,438
        Total Assets acquired                                2,500,000

        Note payable - Bank                                 (1,300,000)
        Note payable - Seller                               (1,200,000)
                                                        --------------
                                                      $             --
                                                        --------------

As Eran Engineering was acquired at the beginning of the year, the statements of
operation for the period ended December 31, 2003 represents combined operation
of the companies, proforma information of the combined companies is not
necessary.

For 12-31-2002:

Unaudited Proforma revenue and net income assuming the acquisition been
completed at the beginning of the year 2002, on a pro-forma financial results
would be as follows:

                                                 For the 3 month period ended
                                                       December 31, 2002
                                                 ----------------------------
                                                          (Unaudited)

        Revenue                                          $  2,365,2634
        Net Income for period                            $     292,925
        Earnings per share                               $        0.01


                                       12
<PAGE>

              GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003

Note 5 (b) - SUBSEQUENT EVENTS ACQUISITION COMPLETED AFTER FISCAL 2004:

All American CNC Sales, Inc.:

In October 2004, the Company completed the acquisition of All American CNC
Sales, Inc., a company engaged in the sale of new equipment through the various
distributor relationships held by it.

The shareholders of All American CNC Sales, Inc. received 1,000,000 restricted
common stock shares of Gateway International Holdings, Inc. in exchange for all
of the outstanding common stock shares of All American Sales, Inc. The purchase
price, based on the average share price during the period, was $610,000.00.

The allocation of the purchase price to the assets and liabilities assumed based
on their fair values was as follows:

        Current Assets                                $         65,233
        Fixed Assets                                            58,885
        Current Liabilities                                   (166,067)
        Goodwill                                               651,949
                                                       ---------------
                                                               610,000
        Common Stock issued                                   (610,000)
                                                       ---------------
                                                      $             --
                                                       ===============



Gledhill/Lyons, Inc., dba Accurate Technology:

In December 2004, the Company completed the acquisition of Gledhill/Lyons, Inc.,
doing business as Accurate Technology, Inc., a company engaged in the
manufacture of precision parts for the automotive, defense and aerospace
industries.

The shareholders of Gledhill/Lyons, Inc., doing business as Accurate Technology,
Inc., received 12,000,000 restricted common stock shares of Gateway
International Holdings, Inc., valued at $9,720,000, in exchange for all of the
outstanding common stock shares of Gledhill/Lyons, Inc., doing business as
Accurate Technology, Inc. Two of the officers of the Company, Larry Consalvi and
Joseph Gledhill, surrendered 12,000,000 of their shares to the Company so the
acquisition of this company would not result in any overall dilution to the
existing shareholders of the Company.

The allocation of the purchase price to the assets and liabilities assumed based
on the fair values was as follows:

        Current Assets                               $         526,731
        Fixed Assets                                           551,036
        Current Liabilities                                   (871,655)
        Goodwill                                             9,513,888
                                                      ----------------
                                                             9,720,000
                                                      ----------------
        Common Stock issued                                 (9,720,000)
                                                      ----------------
                                                     $              --


                                       13
<PAGE>

              GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003

ESK, Inc.:

In December 2004, the Company completed the acquisition of ESK, Inc., a company
engaged in assembly work for Eran Engineering, Inc. This company was the sole
source of assembly work for Eran Engineering, Inc., and was acquired so that
Eran could control and manage its own parts assembly needs.

The shareholders of ESK, Inc. received 219,800 restricted common stock shares of
Gateway International Holdings, Inc., a cash payment in the amount of $50,000.00
in exchange for all of the common shares of ESK, Inc. The purchase price, based
on the average share price during the period and the cash payment was
$212,000.00

The allocation of the purchase price to the assets and liabilities assumed based
on the fair values was as follows:

        Current Assets                               $              --
        Fixed Assets                                                --
        Current Liabilities                                         --
        Goodwill                                               212,000
                                                      ----------------
                                                               212,000
        Cash                                                   (50,000)
        Common Stock issued                                   (162,000)
                                                      ----------------
                                                     $              --
                                                      ================

A Line Capital Corporation:

In December 2004, the Company formed A Line Capital Corporation, a company that
will be engaged in providing financial services for the Company including the
leasing of machinery and equipment.

This company had no assets and liabilities and no revenues or income or losses
for any period prior to December 2004.

Spacecraft Machine Products, Inc.

In January 2005, the Company entered into a definitive Agreement (the
"Agreement") with Spacecraft Machine Products, Inc. ("Spacecraft") pursuant to
which Spacecraft became a wholly-owned subsidiary of Gateway International
Holdings, Inc. ("Gateway"). According to the Agreement, the shareholders of
Spacecraft received 600,000 restricted common stock shares of Gateway in
exchange for all of the outstanding common stock shares of Spacecraft, plus the
right to receive an additional 150,000 restricted common stock shares of Gateway
per year for three years if Spacecraft meets certain net income targets before
income taxes in exchange for all of the common shares of Spacecraft.

Spacecraft Machine Products specializes in the manufacturing of tooling and
prototypes, an area that will be beneficial to all the manufacturing
subsidiaries of Gateway.

The allocation of the purchase price to the assets and liabilities assumed based
on the fair values was as follows:

         Current Assets                     $    348,098
         Fixed Assets                       $     41,219
         Current Liabilities                $   (751,297)
         Long Term Liabilities              $   (357,663)
         Goodwill                           $  1,181,643
                                            -------------
                                            $    462,000
                                            ------------

         Common Stock issued                $    462,000
                                            ------------

                                       14
<PAGE>

              GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003

Nu-Tech Industrial Sales, Inc.

In March 2005, the Company entered into a definitive Agreement (the "Agreement")
with Nu-Tech Industrial Sales, Inc. ("Nu-Tech") pursuant to which Nu-Tech became
a wholly-owned subsidiary of Gateway International Holdings, Inc. ("Gateway").
Pursuant to the Agreement, the acquisition of Nu-Tech became effective April 1,
2005. According to the Agreement, the shareholders of Nu-Tech received 2,500,000
restricted common stock shares of Gateway in exchange for all of the outstanding
common stock shares of Nu-Tech.

Nu-Tech was acquired to add small tool sales and support to the equipment
division. The synergy between Nu-Tech, All American and Elite has already added
new revenues to all three companies.

A summary of the Nu-Tech Industrial Sales, Inc. assets acquired, liabilities
assumed and consideration paid is as follows:

                                                      Allocated Amount
                                                      ----------------
        Current Assets                               $         920,771
        Fixed Assets                                           470,625
        Current Liabilities                                   (982,630)
        Goodwill                                             1,966,234
                                                      ----------------
                                                             2,375,000
                                                      ================

        Consideration:
        Common Stock issued                          $       2,375,000
                                                      ================


Unaudited Pro-forma revenue and net income assuming all the acquisitions in 2004
and 2005 had been completed at the beginning of the periods reported, on a
pro-forma financial results would be as follows:

                                           For the 3 month period ended
                                     December 31, 2003        December 31, 2002
                                       (Unaudited)              (Unaudited)
                                     -----------------        -----------------
Revenue                                 $ 3,258,436             $ 3,962,304
Net Income for period                   $   (95,741)            $   373,339

Earnings per share                            $0.00                 $  0.02


                                       15
<PAGE>

              GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003

Note 5 (c) - SUBSEQUENT EVENTS OTHERS:

In August 2004, the Company declared a forward stock split and issued 2 shares
of common stock for 1 outstanding share of common stock. All shares and per
share data have been retroactively restated to reflect these stock splits.

In October 2004, the Company issued 1,000,000 restricted common stock shares to
the shareholders of All American CNC Sales, Inc. ("All American") for the
purchase of all of its common stock, pursuant to which All American became a
wholly owned subsidiary of Gateway International Holdings, Inc.

In December 2004, the Company issued 12,000,000 restricted common stock shares
to the shareholders of Accurate Technologies, Inc. ("Accurate") for the purchase
of all of its common stock, pursuant to which Accurate became a wholly-owned
subsidiary of Gateway International Holdings, Inc. Two officers of the Company,
Lawrence Consalvi and Joseph Gledhill, surrendered 12,000,000 of their shares to
the Company so that the acquisition of this company would not result in any
overall dilution to the holdings of the Company's existing shareholders.

In December 2004, the Company issued 219,800 restricted common stock shares to
the shareholders of ESK, Inc. (ESK"), together with a cash payment of $50,000
for the purchase of all of the common stock of ESK, pursuant to which ESK became
a wholly-owned subsidiary of Gateway International Holdings, Inc.

In January 2005, the Company issued 600,000 restricted common stock shares to
the shareholders of Spacecraft Machine Products, Inc., for the purchase of all
of the common stock of Spacecraft, pursuant to which Spacecraft became a wholly-
owned subsidiary of Gateway International Holdings, Inc.

In April 2005, the Company issued 2,500,000 restricted common stock shares to
the shareholders of Nu-Tech Industrial Sales, Inc., for the purchase of all of
the common stock of Nu-Tech, pursuant to which Nu-Tech became a wholly- owned
subsidiary of Gateway International Holdings, Inc.

During the quarter ended March 31, 2005, the company issued shares of common
stock for cash as follows:

     o   740,000 shares of common stock at the rate of $0.49 cents per share.
     o   133,354 shares of common stock at the rate of $0.75 cents per share.
     o   357,142 shares of common stock at the rate of $0.70 cents per share.

                                       16
<PAGE>

              GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003

NOTE 6 - GOING CONCERN

The Company's consolidated financial statements are prepared using the
accounting principles generally accepted in the United States of America
applicable to a going concern that contemplates the realization of assets and
liquidation of liabilities in the normal course of business. As of December 31,
2003 the Company had an accumulated deficit of $(2,091,528).
This matter raises substantial doubt about the Company's ability to continue as
a going concern. The Company has taken certain restructuring steps to provide
the necessary capital to continue its operations. Since the year ended September
30, 2004 the Company, being well aware of the need to find additional capital,
has raised $735,000 through a subscription of new restricted shares of the
Company. Furthermore the addition of five new subsidiaries has further
strengthened the Company.

In April 2005, the SEC instituted proceedings pursuant to Section 12(J) of the
Securities Exchange Act of 1934 (the "1934 Act") and cease and desist
proceedings have been instituted pursuant to Section 21(C) of the 1934 Act
against the Company's President, Chief Executive Officer and Director, Lawrence
A. Consalvi. The SEC seeks to suspend the registration of the Company's
securities for a period not exceeding 12 months or revoke the registration of
its securities pursuant to Section 12 of the 1934 Act, and to cause the Company
and Mr. Consalvi to cease and desist from committing any violations of Section
13(a) of Rules 13a-1 and 13a-13 of the 1934 Act in the future. The proceedings
arose from the Company's failure to comply with its reporting obligations while
its securities were registered with the SEC in that the Company failed to file
its annual report on Form 10-K for the fiscal years ended September 30, 2004 and
2003, and four quarterly reports on Form 10-Q for the quarters ended March 31,
2003, June 30, 2003, December 31, 2003, and March 31, 2004, and that Mr.
Consalvi, during his tenure as the Company's President, caused the Company to
violate these reporting requirements. The Company intends to vigorously defend
itself in this matter as further described in Note 7.

Independent Accountants Scope Limitation

The independent accountants of the Company were unable to review the Company's
statement of operations for the period ended December 31st, 2002 as no
accounting records were made available to the Company for review by its
independent accountants from Nelson Engineering, Inc. and Bechler Cams, Inc. for
the period October 1, 2002 through December 31, 2002.

It is the opinion of the Company's management that the income from operations
that is offset by the loss on disposal of these subsidiaries it immaterial as it
has no effect on the income, net worth or earnings per share of the Company. The
Company's independent accountants have initiated consultation with the
Securities and Exchange Commission in that regard.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

The Company leases certain property under operating lease agreements. The lease
expires on September 30, 2006 and provide for monthly payments of $8,233. The
company intends to continue leasing the property subsequent to September 30,
2006 on a month to month basis.

Future minimum rental commitments as of December 31, 2003 are as follows:

                                                  Operating Leases
                                                  ----------------


        2004                                      $         74,097
        2005                                                98,796
        2006                                                98,796
        2007                                                    --
                                                   ----------------
        Total minimum lease payments              $        271,689
                                                   ================


                                       17
<PAGE>

              GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003


Rent

Rent expense under operating leases for the period ended December 31, 2003 was
$21,745 and $42,500 for the period ended December 31, 2002.

Legal

The Company may be involved from time to time in various claims, lawsuits, and
disputes with third parties, actions involving allegations or discrimination or
breach of contact actions incidental in the normal operations of the business.
The Company is currently not involved in any such litigation which management
believes could have a material adverse effect on its financial position or
results of operations.

The Company is currently involved in the following lawsuits:

The Duffy law Firm V Gateway International Holdings, Inc et. al.

On December 8, 2004, a complaint was filed against the Company and some of its
principles by the Duffy Law Firm in the matter entitled "The Duffy Law Firm vs.
Gledhill, et al." The complaint was filed in Case No. 04CC11981 in the Superior
Court of California, County of Orange, and alleges causes of action for breach
of contract, open book account, quantum meruit, and declaratory relief related
to the plaintiff's claim for unpaid legal services, approximating $100,450, in
connection with the plaintiff's representation of the Company in a lawsuit filed
by Bechler Cams, Inc. and its principals in 2003, which was eventually settled
out of court pursuant to an agreement which rescinded the Company's acquisition
of Bechler Cams, Inc. The Company's management has denied that the plaintiffs
are owed the amounts sought and intends to vigorously defend this action on the
basis brought by the plaintiffs. The potential liability of this suit has been
accrued for in the financial statements of the Company in the sum of
approximately $100,450 as per paragraph above.

Nelson Engineering, Inc. V Gateway International Holdings, Inc.

The plaintiff brought suit against the Company for the balance of a loan due to
plaintiff. The Company does not dispute the amount due of $66,657 for the year
ended September 30, 2004 and 2003, and intends to settle this suit. Nelson
Engineering, Inc. provided a loan to Elite Machine Tool Company Inc. and Gateway
International Holdings, Inc. that has only been partially repaid. The balance
due to Nelson Engineering, Inc. is $66,657, which amount has been provided for
in the financial statements.

BTL Machine V. Elite Machine Tool Company, Inc

On January 4, 2005, a complaint was filed against the Company's wholly-owned
subsidiary, Elite Machine Tool Company, Inc., in the matter entitled "BTL
Machine v. Elite Machine Tool Company, Inc." The complaint was filed in Case No.
05CC01842 in the Superior Court of California, County of Orange, and alleges
causes of action for breach of contract and implied warranty related to BTL
Machine's claim that it received defective products from Elite Machine. BTL
Machine seeks to recover approximately $64,000 in damages. The management of
Elite Machine has denied any such liability for defective products and intends
to vigorously defend the action. Elite Machine has filed a cross-compliant
against BTL Machine seeking to recover approximately $5,000 in past due accounts
receivable. This matter is currently in the discovery phase and, as such, Elite
Machine's counsel has advised it that it is premature to attempt to estimate any
potential outcome or loss at this time. Accordingly, no provision has been made
in the financial statements of the Company.


                                       18
<PAGE>

              GATEWAY INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003


The Securities and Exchange Commission V. Gateway International Holdings, Inc.
and Lawrence A. Consalvi.

In April 2005, the SEC instituted proceedings against the Company pursuant to
Section 12(J) of the Securities Exchange Act of 1934 (the "1934 Act") and cease
and desist proceedings have been instituted pursuant to Section 21(C) of the
1934 Act against the Company's President, Chief Executive Officer and Director,
Lawrence A. Consalvi. The SEC seeks to suspend the registration of the Company's
securities for a period not exceeding 12 months or revoke the registration of
its securities pursuant to Section 12 of the 1934 Act, and to cause the Company
and Mr. Consalvi to cease and desist from committing any violations of Section
13(a) of Rules 13a-1 and 13a-13 of the 1934 Act in the future. This
Administrative Proceeding, File No. 3-11894, arose from the Company's failure to
comply with its reporting obligations while its securities were registered with
the SEC in that the Company failed to file its annual report on Form 10-K for
the fiscal years ended September 30, 2004 and 2003, and four quarterly reports
on Form 10-Q for the quarters ended March 31, 2003, June 30, 2003, December 31,
2003, and March 31, 2004, and that Mr. Consalvi, during his tenure as the
Company's President, caused the Company to violate these reporting requirements.
On May 9, 2005, the Company submitted its answer to the Order alleging that its
failure to meet its reporting obligations was not intentional but the result its
inability to obtain financial information necessary to complete the periodic
reports from Bechler Cams, Inc., who had refused to comply with the Company's
reasonable requests for such financial information.

On July 20, 2005, trial was held on the Order Instituting Proceedings, and on
August 18, 2005, the Administrative Law Judge issued an Initial Decision, and
ordered the revocation of each class of the Company's securities pursuant to
Section 12(j) of the Securities Exchange Act of 1934 (the "Exchange Act"). It
was further ordered that the Company's Chief Executive Officer, President and
Director, Lawrence A. Consalvi, cease and desist from committing any violation
or future violations of Section 13(a) of the Exchange Act and Rules 13a-1 and
13a-13. Specifically, the Administrative Law Judge found that the Company
violated Section 13(a) of Exchange Act in that the Company failed to file two
annual reports on Form 10-K for the Company's fiscal years ended September 30,
2003 and September 30, 2004, and five quarterly reports on form 10-Q for the
quarters ended March 31, 2003, June 30, 2003, December 31, 2003, March 31, 2004
and June 30, 2004, and that Mr. Consalvi, during his tenure as the Company's
President and Chief Executive Officer, caused the Company's violations of
Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13. The Initial
Decision is not yet effective, but shall become effective unless (1) the Company
does not file a petition for a review by the Commission of the Initial Decision
within twenty-one (21) days of the date of the Initial Decision pursuant to Rule
360 of the Commission's Rules of Practice, 17 C.F.R. ss. 201.360, or (2) the
Company files a petition for review with the Commission within this period of
time and the Commission either rejects the Company's petition or accepts the
petition but decides that the registration of the Company's securities should
nevertheless be revoked. On September 7, 2005, the Company filed a petition with
the Commission for a review of the Initial Decision, and on September 12, 2005,
the Commission granted the Company's petition for review pursuant to Rule 411 of
the Commission's Rules of Practice. The Company's brief in support of its
petition for review is due by October 12, 2005.

On October 20, 2004 the Company received correspondence from the Law Office of
Joseph R. Campoli, Jr., attorney for James Betor, Raymond Omerza, Phillip Dubsky
and Charles Harper, alleging violations of the Telephone Consumer Protection
Act, Title 47, United States Code, Section 227 for transmitting the Company's
unsolicited facsimile advertisements to certain individuals and seeking $6,800
in settlement of these claims. Subsequently, the Company's attorney contacted
Mr. Campoli and advised him that the Company neither paid for nor authorized the
sending of the unsolicited facsimiles, and had no knowledge that any third-party
was sending unsolicited facsimiles purportedly on the Company's behalf. The
plaintiffs have not pursued any further action against the Company with respect
to these unsolicited facsimiles.

NOTE  8   - SUPPLEMENTAL DISCLOSURE OF CASH FLOWS

The Company prepares its statements of cash flows using the indirect method as
defined under the Financial Accounting Standard No. 95.

The Company paid $1,600 for income tax and $ 72,545for interest during the six
month period ended December 31, 2003 .

The Company paid $800 for income tax and $26,107 for interest during the year
ended December 31, 2002.

                                       19
<PAGE>

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

Forward Looking Statements

The following presentation of Management's Discussion and Analysis should be
read in conjunction with the financial statements and notes thereto included in
Item 1 of this Quarterly Report on Form 10-QSB. Except for the historical
information contained herein, the discussion in this report contains certain
forward-looking statements that involve risks and uncertainties, such as
statements of our business plans, objectives, expectations and intentions as of
the date of this filing. This cautionary statement about reliance on
forward-looking statements should be taken into serious consideration with
respect to all forward-looking statements wherever they appear in this report,
notwithstanding that the "safe harbor" protections available to some publicly
reporting companies under applicable federal securities law do not apply to us
as an issuer of penny stocks. Prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risk and uncertainties, and that actual results may differ materially from those
contemplated by such forward-looking statements. Readers are urged to carefully
review and consider the various disclosures made by us in this Report as well as
in our other reports filed with the Securities and Exchange Commission.
Important factors currently known to Management could cause actual results to
differ materially from those in forward-looking statements. We undertake no
obligation to update or revise forward-looking statements to reflect changed
assumptions, the occurrence of unanticipated events or changes in the future
operating results over time. We believe that our assumptions are based upon
reasonable data derived from and known about our business and operations. No
assurances are made that actual results of operations or the results of any
future activities will not differ materially from our assumptions.

General Overview

 Gateway International Holdings, Inc. ("us", "we", or the "Company") is a public
company whose common stock is quoted on the Pink Sheets under the symbol "GWYI".
Prior to December 11, 2001, we were engaged in the business of catalogue retail
gifts under the corporate name "Gourmet Gifts." Our principal product then
entailed the packaging, sale and delivery of seasonal gourmet food and beverage
items. However, due to difficulty in raising additional working capital to
execute the business plan, we ceased operations. On December 11, 2001, we
entered into a Plan of Reorganization and Merger (the "Plan" or "Merger") with
E.M. Tool Company, Inc., a California corporation doing business as Elite
Machine Tool Company ("Elite Machine") and principally engaged in the
acquisition, refurbishment, distribution and sales of pre-owned Computer
Numerically Controlled ("CNC") machine tools to manufacturing customers.
Immediately prior to the merger, we had 100,000,000 shares authorized and
3,384,000 shares issued and outstanding. Pursuant to the merger, all of the
21,262 outstanding shares of Elite Machine were exchanged for shares of our
common stock on a 1 to 637 basis or into 13,236,000 (net of 300,000 shares
subsequently cancelled thereafter) shares of our common stock for a total of
16,620,000 shares of common stock issued and outstanding. Immediately after the
merger, all then existing officers and directors of our Company resigned and the
management of Elite Machine were elected and appointed to such positions;
thereby effecting a change of control. Although Elite Machine became our
wholly-owned subsidiary following the transaction, because the transaction
resulted in a change of control, the transaction was recorded as a "reverse
merger" whereby Elite Machine was considered to be our accounting acquirer. We
simultaneously changed our name to Gateway International Holdings, Inc.
Thereafter, we began engaging in the acquisition, refurbishment, distribution
and sales of pre-owned CNC machine tools to manufacturing customers across the
United States of America.


                                       20
<PAGE>

Acquisition of Eran Engineering, Inc.

On October 1, 2003 we closed the acquisition of Eran Engineering, Inc. ("Eran
Engineering") from its two shareholders, Hans B. Thallmayer and Alice
Thallmayer, pursuant to a Stock Purchase Agreement, dated as of June 17, 2003,
whereby we purchased all of the issued and outstanding capital stock of Eran
Engineering for an aggregate purchase price of $1,250,000. In addition to a cash
payment in the amount of $650,000 which was credited to the purchase price, we
executed a promissory note in favor of the sellers in the principal amount of
$600,000, payable in three equal annual installments of $200,000 and accruing
simple interest at the rate of six percent (6%) per annum. Our obligation under
the promissory note was secured by the pledge of Lawrence A. Consalvi, our
Director, President and Chief Executive Officer and Joseph T.W. Gledhill, our
Vice President and Director, of a security interest in certain shares of our
common stock worth $4,285,716 as of the date of the pledge. Concurrently with
the closing of the acquisition, Eran Engineering purchased from R & H
Investments, a partnership owned by the two selling shareholders of Eran
Engineering, the building in which Eran Engineering operates its business. The
purchase price for the building was $1,250,000, and was paid as follows:
$650,000 in cash and a promissory note in the principal amount of $600,000,
bearing simple interest at the rate of 6% per annum. The cash portion of the
purchase price paid by us for Eran Engineering and the building was financed
pursuant to a term loan from Financial Federal Credit ("FFC"), in the principal
amount of $1,300,000. The loan from FFC is primarily secured by a deed of trust
on the building acquired by Eran Engineering and a secured interest in all the
equipment owned by Eran Engineering.

Further in connection with the acquisition, Eran Engineering entered into
employment agreements with Erich Thallmayer to serve as the President and Chief
Executive Officer of Eran Engineering at a annual base salary of $105,600 and
with Hans Thallmayer to serve as its Operating Manager at an annual base salary
of $90,000. Our Director and Vice President, Joseph T.W. Gledhill, subsequently
replaced Erich Thallmayer as the company's President and Chief Executive
Officer. Hans Thallmayer is no longer employed as the Operating Manager of Eran
Engineering.

Eran Engineering was incorporated under the laws of the State of California on
July 1, 1983 and today is primarily involved in the manufacture and assembly of
specialized, precision components used in equipment and machinery by clients in
the aerospace and defense industry. Eran Engineering maintains approximately 40
Computer Numerically Controlled (CNC) machines. Some of Eran Engineering's
customers include: Matsushita Avionic Systems (in-flight entertainment),
Monogram Systems (aerospace infrastructures) and Meggitt Defense Systems
(un-manned tow targets). Eran also manufactures satellite, medical and connector
equipment for Malibu Research (satellites for the U.S. Navy) and Therox (blood
and oxygen equipment).

Rescission of Acquisition of Nelson Engineering, Inc.

On October 4, 2002, we entered into an Agreement of Merger with Nelson
Engineering, Inc. ("NEI"), a first-tier manufacturer of precision machine parts
in the electronics, medical and automotive industry sectors, and GWIH
Acquisition Corp. II, our wholly-owned subsidiary formed solely for the purpose
of effecting the merger with NEI. Pursuant to the Agreement of Merger, we issued
6,175,300 restricted shares of our common stock in exchange for all of the 1,935
common shares of NEI issued and outstanding as of the date of the acquisition.
Subsequent to the merger, we filed a Current Report on Form 8-K regarding the
merger of NEI with and into our wholly-owned subsidiary, and following the
effective date of the merger, NEI continued as our wholly-owned subsidiary. In
the months following the merger, disputes arose between the President and former
controlling shareholder of NEI, and our management over significant apparent
differences in our respective business objectives and policies, such that the
parties each determined that they could not work together and that the merger of
NEI should be rescinded. Accordingly, the parties amicably negotiated a Mutual
Rescission of Contracts and Release of Claims, dated May 15, 2003, pursuant to
which the merger transaction was rescinded effective January 1, 2003. In
connection with the rescission, we returned to the former shareholders of NEI
their shares of NEI acquired in the merger, in exchange for their return of the
shares of our stock they received in the merger, and the immediate resignation
of Don Nelson from our Board of Directors. The agreement also contained mutual
releases of claims. Accordingly, NEI no longer operates as our subsidiary or
affiliate.

                                       21
<PAGE>

Rescission of Acquisition of Bechler Cams, Inc.

On November 15, 2002, we closed the acquisition of 100% of the outstanding
capital stock of Bechler Cams, Inc., a California corporation ("BCI"), pursuant
to an Agreement and Plan of Reorganization dated as of March 31, 2002, as
amended on October 4, 2002, among us, BCI, and GWIH Acquisition Corp., our
wholly-owned subsidiary formed solely for the purpose of effecting the merger
with BCI (the "Bechler Agreement"). BCI is a machine shop specializing in the
manufacturing of precision component parts for customers in the aerospace and
defense sectors and surgical instruments and components in the medical sector.
Pursuant to the Bechler Agreement, we issued 11,837,500 shares of our common
stock in exchange for all of the capital stock of BCI issued and outstanding
capital as of the date of the merger. The merger became effective on November
15, 2002 upon the filing of the Articles of Merger with the Nevada and
California Secretaries of State. Subsequent to the merger, we filed a Current
Report on Form 8-K regarding the merger of BCI with and into our wholly-owned
subsidiary, and following the effective date of the merger, BCI continued as our
wholly-owned subsidiary.

Subsequent to the merger, Daniel Lennert and Laura Stearman, the former owners
and executive officers of BCI (the "BCI parties") commenced litigation against
us, our executives, the executive officers of E.M. Tool Company, Inc. (our
wholly-owned subsidiary), and the Securities and Exchange Commission ("SEC")
alleging that the agreement of the BCI parties to enter into the merger with and
into GWIH Acquisition Corp., was obtained by fraud, misrepresentation, deceptive
business practices, violations of rules 10(b) and 10b-5 of the Exchange Act,
breach of fiduciary duty, and dishonesty by our principals. The case was
subsequently settled pursuant to a Mutual Rescission of Contracts, Settlement
Agreement and Release of Claims, signed as of November 20, 2003 and effective as
of January 1, 2003, pursuant to which the merger transaction was formally
rescinded. In connection with the rescission, we returned to the former
shareholders of BCI, their shares of BCI acquired in the merger, in exchange for
their return of the shares of our stock acquired in the merger, and the
immediate resignation of Daniel Lennert from our Board of Directors. The
agreement also contained mutual releases of claims. Accordingly, BCI no longer
operates as our subsidiary or affiliate.

As of October 4, 2005, we are a diversified holding company that operates
through our wholly-owned subsidiaries principally in the aerospace and defense
markets. As explained below, we currently have 8 subsidiaries in operation
including: Eran Engineering, Inc., Elite Machine Tool Company, Inc., All
American CNC Sales, Inc., A-Line Capital Corporation, Accurate Technology, ESK,
Inc., Spacecraft Machines, Inc., and Nu-Tech Industrial Sales, Inc. Our strategy
has been to seek and acquire profitable, cash flow positive companies that will
compliment and diversify our existing portfolio of companies with a focus on
potential acquisitions in the aerospace and defense markets.


                                       22
<PAGE>

SUBSEQUENT EVENTS.

Acquisition of All American CNC Sales, Inc.

In October 2004, we acquired All American CNC Sales, Inc. ("All American") from
its two shareholders, Tim Consalvi and Kathy Consalvi, pursuant to a Share
Exchange Agreement whereby we acquired all the outstanding capital stock of All
American, aggregating 9,000 shares, for 1,000,000 restricted shares of our
common stock. Further and as contingent consideration for the acquisition of All
American's capital stock, we agreed to issue an additional 250,000 shares of our
common stock to Tim Consalvi and Kathy Consalvi if All American's gross profit
equals or exceeds $300,000 in our fiscal year 2005, and another 250,000 shares
of our common stock if All American's gross profit equals or exceeds $300,000 in
our fiscal year 2006. In connection with the acquisition, All American entered
into an employment agreement with Tim Consalvi to serve as an executive officer
of All American for a period of one year at an annual base salary of $168,000
plus reimbursement of reasonable expenses. All American currently operates as
our wholly-owned subsidiary. Tim Consalvi is the brother of Larry Consalvi, our
Director and President and Kathy Consalvi is his wife.

All American was incorporated under the laws of the state of California in
November 1993, and today specializes in the sale of new CNC machines tools
throughout the Southern California market, of which it has an approximate market
share of 25% and a current customer base of over 360 companies. The primary
product lines offered through All American include: Fadal Vertical Machining
Centers, Giddings and Lewis Horizontal Boring and Machining Centers, Hessapp CNC
Turning and Hwacheon CNC Turning. In addition to the machinery, All American
carries a complete accessory line to support its customer base. All items
carried by All American CNC Sales are represented on an exclusive basis. The top
ten customers of All American are, in descending order: (1) Boeing C-17 Quick
Response Team, (2) Boeing Strategic Defense Team, (3) Boeing Unmanned Aircraft
Exploration, (4) Camtech Corporation, (5) Precise Solutions, (6) John Force
Racing, (7) Edwards Life Sciences, (8) Norotos, Inc., (9) Beckman Coulter, and
(10) St. Gobain. Our management believes that All American's business
compliments that of our other companies, particularly, Elite Machine.

Acquisition of Gledhill/Lyons, Inc. d.b.a. Accurate Technology

In December 2004, we acquired Gledhill/Lyons, Inc., a California corporation
doing business as Accurate Technology ("Accurate"), from its two shareholders,
William Gledhill and David Lyons, pursuant to a Share Exchange Agreement whereby
we acquired all the outstanding capital stock of Accurate, aggregating 1,000
shares, in exchange for 12,000,000 restricted shares of our common stock. In
connection with the acquisition, Accurate entered into employment agreements
with David Lyons to serve as its President at an annual base salary of $192,000
and with William Gledhill to serve as its Vice President at an annual base
salary of $192,000. Accurate currently operates as our wholly-owned subsidiary.

Accurate Technology operates in the aerospace and defense industries and
specializes in the manufacture of precision metal systems. Accurate Technology
has a diverse client base, including its two primary customers: Boeing and
Toyota. Our management believes that the acquisition of Accurate Technology will
further enhance and strengthen our overall precision manufacturing capabilities,
and believes that this acquisition is another positive step in the
implementation of our growth strategy. As of March 11, 2005, the top ten
customers of Accurate, in no particular order are: The Boeing Company - Anaheim
Division, The Boeing Company-B1B, The Boeing Company-C17, The Boeing Company
C-13 Facility, Monogram Systems, ShinMaywa Ltd., The Boeing Company-St. Louis,
TRD U.S.A., Inc., and Western Design.

                                       23
<PAGE>

Establishment of A-Line Capital Corporation

We established A-Line Capital Corporation ("A-Line") in the 1st quarter of
fiscal year ending September 30, 2005 to provide financial services to consumers
who seek financing for the purchase and/or lease of machine tools and equipment.
Our subsidiaries, particularly Elite Machine and All American, currently arrange
for approximately $5,000,000 of equipment lease financing annually for their
customers. A-Line was established to capture much of the potential income stream
that was lost to equipment lease brokers in prior years and to provide equipment
lease financing for transactions for our other subsidiaries. Our management
anticipates that initial cash flow at A-Line will likely come from clients of
our subsidiary sales organizations, particularly Elite Machine and All American,
although A-line may provide equipment leasing services in connection with
third-party sales that are wholly unrelated to our business.

Acquisition of ESK, Inc.

In December 2004, we acquired ESK Engineering Inc. ("ESK") from its sole
shareholder and the former President and Chief Operating Officer of Eran
Engineering, Mr. Eric Thallmayer. The acquisition was accomplished pursuant to a
Share Exchange Agreement whereby we acquired all of the issued and outstanding
capital stock of ESK solely in exchange for 200,000 restricted shares of our
common stock. ESK currently operates as our wholly-owned subsidiary out of its
facilities located in Santa Ana, California. Subsequent to the acquisition, Mr.
Eric Thallmayer remains the President of ESK.

ESK is a parts assembly company located in Southern California and is primarily
engaged in the assembly of precision parts in the aerospace, defense and medical
industries. Our management intends to utilize ESK as the primary assembly
company for all of our manufacturing divisions and believes that ESK represents
a strategic acquisition in that it will allow our manufacturing divisions
control over the quality, timeliness, and cost variables of products
manufactured by ESK for these divisions.

Acquisition of Spacecraft Machine Products, Inc.

In January 2005, we acquired Spacecraft Machine Products, Inc., a California
corporation ("Spacecraft") from its two shareholders, Lloyd R. Leavitt, III and
the Leavitt Family Trust, pursuant to a Share Exchange Agreement whereby we
acquired all of the outstanding capital stock of Spacecraft, aggregating 100,000
shares, in exchange for a total of 600,000 restricted shares of our common
stock, 500,000 shares of which were distributed to Lloyd R. Leavitt, III, and
the remaining 100,000 shares of which were distributed to the Leavitt Family
Trust. The Share Exchange Agreement also provided for the additional payment of
150,000 restricted shares of our common stock in each year that Spacecraft meets
certain annual profit goals as follows: $200,000 gross profits by December 31,
2005, $300,000 gross profits by December 31, 2006, and $350,000 by December 31,
2007. In addition, in connection with the transaction, Lloyd R. Leavitt, III
entered into an employment with Spacecraft at an annual base salary of $115,050.
Further, we engaged Lloyd R. Leavitt, III to serve as our Chief Operating
Officer on a part-time basis during the six months following the closing of the
acquisition, for no additional consideration, after which the parties may
consider entering into a formal employment contract to provide for a salary and
stock options. Spacecraft currently operates as our wholly-owned subsidiary out
of its facilities located in Torrance, California.

                                       24
<PAGE>

In connection with the acquisition of Spacecraft, we executed a non-interest
bearing promissory note in favor of the Leavitt Family Trust in the principal
amount of $220,000, which is to be paid in equal monthly installments over a
60-month period. This note is in full satisfaction of our obligation to repay a
loan in the amount of $300,000 which was previously made to us by the Leavitt
Family Trust. Pursuant to a Pledge and Security Agreement, dated January 31,
2005, our obligation to make payments under this promissory note is secured by
our pledge of a security interest in the Spacecraft stock we acquired pursuant
to the Share Exchange Agreement.

The Spacecraft business has been in operation for over 35 years and operates
primarily in the aerospace and defense industries. In January 2000, it was
incorporated as a California "C" corporation. Our management believes that the
acquisition of Spacecraft represents a positive new component to our growing
portfolio of companies and that the addition of Spacecraft may potentially
provide new business opportunities throughout our organization. Mr. Leavitt's
father, Lt. General Lloyd R. Leavitt (Retired - Air Force) remains a principal
of Spacecraft and has joined our Advisory Board. Our management believes that
the addition of Lt. General Leavitt to our Advisory Board provides enhanced
credibility and experience to our organization, particularly in the aerospace
and defense sectors where his contacts and experience have been a strong asset
for us. Spacecraft's major clients include Northrop Grumman, Raytheon, and
Boeing. Spacecraft also maintains clients in other industries including Walt
Disney Co.'s Disney Imagineering Division.

Acquisition of Nu-Tech Industrial Sales, Inc.

In April 2005, we closed the acquisition of Nu-Tech Industrial Sales, Inc., a
California Corporation ("Nu-Tech"), from its two shareholders, Robert Page and
Kathy Page, pursuant to a Share Exchange Agreement, dated as of March 31, 2005,
whereby we acquired all of the outstanding capital stock of Nu-Tech, aggregating
2,500 shares, in exchange solely for 2,500,000 restricted shares of our common
stock. Nu-Tech currently operates as our wholly-owned subsidiary.

Nu-Tech is a Southern California-based sales organization that operates out of
its offices in Brea, California. Profitable every year since its inception
nearly 6 years ago, Nu-Tech is in the business of supplying tools to the
aerospace, automotive and medical equipment manufacturing industries, with
clients located throughout the United States and Mexico. Nu-Tech's President,
Mr. Robert Page, is an industry veteran with over 25 years experience in the
machine tool business, and he will continue to serve as President of Nu-Tech
going forward. Our management believes that the acquisition of Nu-Tech will
provide synergies between Nu-Tech, Elite Machine and All American as Nu-Tech's
sales force will recommend Elite Machine and All American to its client base. In
addition, both Elite Machine and All American will recommend that their
customers use Nu-Tech as a preferred supplier for industrial tooling needs.

In the Matter of Gateway International Holdings, Inc. and Lawrence A. Consalvi,
Administrative Proceeding File No. 3-11894

In April 2005, the SEC instituted proceedings pursuant to Section 12(J) of the
Securities Exchange Act of 1934 (the "1934 Act") and cease and desist
proceedings have been instituted pursuant to Section 21(C) of the 1934 Act
against our President, Chief Executive Officer and Director, Lawrence A.
Consalvi. The SEC seeks to suspend the registration of our securities for a
period not exceeding 12 months or revoke the registration of our securities
pursuant to Section 12 of the 1934 Act, and to cause us and Mr. Consalvi to
cease and desist from committing any violations of Section 13(a) of Rules 13a-1
and 13a-13 of the 1934 Act in the future. This Administrative Proceeding, File
No. 3-11894, arose from our failure to comply with our reporting obligations
while our securities were registered with the SEC in that we failed to file our
annual reports on Form 10-K for our fiscal years ended September 30, 2004 and
2003, and four quarterly reports on Form 10-Q for the quarters ended March 31,
2003, June 30, 2003, December 31, 2003, and March 31, 2004, and that Mr.
Consalvi, during his tenure as our President, caused us to violate these
reporting requirements. On May 9, 2005, we submitted our answer to the Order
Instituting Proceedings alleging that our failure to meet our reporting
obligations was not intentional but the result our inability to obtain financial
information necessary to complete the periodic reports from Bechler Cams, Inc.,
who had refused to comply with our reasonable requests for such financial
information.

                                       25
<PAGE>

On July 20, 2005, trial was held on the Order Instituting Proceedings, and on
August 18, 2005, the Administrative Law Judge issued an Initial Decision, and
ordered the revocation of each class of our securities pursuant to Section 12(j)
of the Securities Exchange Act of 1934 (the "Exchange Act"). It was further
ordered that our Chief Executive Officer, President and Director, Lawrence A.
Consalvi, cease and desist from committing any violation or future violations of
Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13. Specifically, the
Administrative Law Judge found that we violated Section 13(a) of Exchange Act in
that we failed to file two annual reports on Form 10-K for the Company's fiscal
years ended September 30, 2003 and September 30, 2004, and five quarterly
reports on form 10-Q for the quarters ended March 31, 2003, June 30, 2003,
December 31, 2003, March 31, 2004 and June 30, 2004, and that Mr. Consalvi,
during his tenure as our President and Chief Executive Officer, caused our
violations of Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13. The
Initial Decision is not yet effective, but shall become effective unless (1) we
do not file a petition for a review by the Commission of the Initial Decision
within twenty-one (21) days of the date of the Initial Decision pursuant to Rule
360 of the Commission's Rules of Practice, 17 C.F.R. ss. 201.360, or (2) we file
a petition for review with the Commission within this period of time and the
Commission either rejects our petition or accepts the petition but decides that
the registration of our securities should nevertheless be revoked. On September
7, 2005, we filed a petition with the Commission for a review of the Initial
Decision, and on September 12, 2005, the Commission granted our petition for
review pursuant to Rule 411 of the Commission's Rules of Practice. Our brief in
support of our petition for review is due by October 12, 2005.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their three to
five most "critical accounting policies" in the MD&A. The SEC indicated that a
"critical accounting policy" is one which is both important to the portrayal of
the Company's financial condition and results and requires management's most
difficult, subjective or complex judgments, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain. We
believe that our following accounting policies fit this definition:

Business Combinations

SFAS 141, "Business Combinations," which is effective for business combinations
initiated after June 30, 2001, eliminates the pooling of interest method of
accounting for business combinations and requires that all business combinations
occurring after July 1, 2001 are accounted for under the purchase method of
accounting.


                                       26
<PAGE>

Revenue Recognition

Our net sales consist of revenue from sales of products net of trade discounts
and allowances. We generally obtain oral or written purchase authorizations from
our customers for a specified amount of product at a specified price and
consider delivery to have occurred at the time of shipment. Accordingly, we
record sales when goods are shipped to our customers, and recognize revenue when
persuasive evidence of an arrangement exists, delivery has occurred; the fee is
fixed or determinable, and collectibility is reasonably assured. We believe our
revenue recognition policy complies with SEC Staff Accounting Bulletin No. 104,
"Revenue Recognition in Financial Statements" ("SAB 104"). We assess
collectibility based on the credit worthiness of our customer and our past
transaction history.

Accounts Receivable

Our sales are generally made on an open account basis unless specific experience
or knowledge, or the customer's potential inability or unwillingness to meet the
payment terms, dictate secured payments. Our international sales are generally
made based on secure payments including cash wire advance payments and letters
of credit. Management's ability to manage the credit terms and take advantage of
the leverage or the need for our services is critical to the effective
application of credit terms and minimization of accounts receivable losses. We
maintain an allowance for doubtful accounts which is analyzed on a periodic
basis to insure that it is adequate to the best of management's knowledge. We
believe that we have demonstrated the ability to make reasonable and reliable
estimates of product returns and of allowances for doubtful accounts based on
significant historical experience.

Inventories

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

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


                                       27
<PAGE>

   Results of Operations For The Three Months Ended December 31, 2003 And 2002

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
                                       December 31, 2003                  December 31, 2002
                               ------------------------------    -----------------------------
<S>                            <C>                   <C>         <C>                   <C>
Net Sales                      $    1,556,550           100 %    $     1,984,179         100 %
Cost of Sales                       1,208,658         77.65            1,452,907       73.22
                                --------------     ---------      ---------------     -------

Gross Profits                         347,892         22.35              531,272       26.78
                                --------------     ---------      ---------------     -------
Selling, General and
  Administrative Expenses             483,667         31.07              271,700       13.69
Operating Income (Loss)             (135,775)        (8.72)              259,572       13.08
                                --------------     ---------      ---------------     -------

Interest Income                            76           0.0                   --          --
Gain on Disposal of Fixed
  Assets                                   --                             22,250        1.12
Other Income                               76           0.0               22,250        1.12
Net Income (Loss) before
  Income Taxes                      (135,669)        (8.72)              281,822       14.20
                                --------------     ---------      ---------------     -------
Provision for Income Taxes              1,600          0.10                  800        0.04

Net Profit after Income
  Taxes                             (137,299)        (8.82)              281,022       14.16
-----------------------------------------------------------------------------------------------
</TABLE>

Revenues

Net Revenues for the three months ended December 31, 2003 decreased to
$1,556,550 from $1,984,179 for the three months ended December 31, 2002. The
decreased in net sales of $427,629, or approximately 21.55%, over the 2002
period is due primarily to the disposal of our subsidiaries, Nelson Engineering,
Inc and Bechler Cams, Inc.

Cost of Sales

Cost of sales for the three months ended December 31, 2003 decreased to
$1,208,658 from $1,452,907 for the three months ended December 31, 2002. The
overall decrease in cost of sales of $244,249, or approximately 16.82%, over the
2002 period is due primarily to the disposal of our subsidiaries, Nelson
Engineering, Inc. and Bechler Cams, Inc.

Gross Profits

Overall gross profits for the three months ended December 31, 2003 decreased to
$347,892 from $531,272 for the three months ended December 31, 2002. The overall
decrease in gross profits of $183,380 or approximately 34.52% over the 2002
period is due primarily to the disposal of our subsidiaries, Nelson Engineering,
Inc. and Bechler Cams, Inc.


                                       28
<PAGE>

Operating Expenses

Total operating expenses for the three months ended December 31, 2003 increased
to $483,667 from $271,700 for the three months ended December 31, 2002. The
increase in operating expenses of $211,967, or approximately 78.02% over the
2002 period is covered below in our discussion of Selling, General and
Administrative Expenses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended December
31, 2003 increased to $483,667 from $271,700 for the three months ended December
31, 2002. The increase in selling, general and administrative expenses of
$211,967, or approximately 78.02% over the 2002 period is due primarily to
expenses associated with our acquisition of Eran Engineering, as well as legal
and professional expenses associated with the rescission of our acquisition of
Nelson Engineering, Inc. and Bechler Cams, Inc.

Income (Loss) from Operations

We had a loss from operations of $135,775 for the three months ended December
31, 2003, compared to income from operations of $259,572 for the three months
ended December 31, 2002. The decrease in income from operations of $395,347, or
approximately 152.31% over the prior period, is due primarily to expenses
associated with our acquisition of Eran Engineering, as well as legal and
professional expenses associated with the rescission of our acquisition of
Nelson Engineering, Inc. and Bechler Cams, Inc.

Interest Income

Interest income during the three months ended December 31, 2003, was $76 and we
had no interest income for the three months ended December 31, 2002. Interest
income for the three months ended December 31, 2003 was interest earned on bank
deposits.

Other Income

We had no other income during the three months ended December 31, 2003, and we
had $22,250 for the three months ended December 31, 2002.

Provision for Income Taxes

We had a provision for income taxes in the amount of $1,600 for the three months
ended December 31, 2003. We did not have a provision for income taxes for the
three months ended December 31, 2002.

Net Income (Loss) after Income Tax Provision

We had a Net Loss after income tax provision of $137,299 for the three months
ended December 31, 2003, compared to a Net Income of $281,022 for the three
months ended December 31, 2002. This decrease in our net profitability of
$418,321 or approximately 148.86%, was due primarily to expenses associated with
our acquisition of Eran Engineering, as well as legal and professional expenses
associated with the rescission of our acquisition of Nelson Engineering, Inc.
and Bechler Cams, Inc.

                                       29
<PAGE>

Liquidity and Capital Resources

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                                                               December 31,        December 31,
                                                                       2003                2002
                                                               ------------        ------------
<S>                                                           <C>                        <C>
Net cash provided by (used in) operating activities          $     (27,468)             33,207
Net cash provided by (used in) investing activities                  (7,864)             (8,076)
Net cash provided by (used in) financing activities                 144,276              68,218
----------------------------------------------------------------------------------------------------
</TABLE>

General

For the three months ended December 31, 2003, we had positive cash flows
resulting from $27,468 of cash used in our operating activities, $7,864 of cash
used in our investing activities, and $144,276 provided by our financing
activities. Accordingly, for the three months ended December 31, 2003, our funds
from operations were sufficient to cover our daily operations as further
explained below.

Cash Flows Provided By (Used In) Operating Activities

Net cash used in operating activities of $27,468 for the three months ended
December 31, 2003 was primarily attributable to a net loss of $137,299,
depreciation expense of $74,305, offset by changes in operating assets and
liabilities of accounts receivable of $280,498, inventories of $8,929, other
assets of $7,808 and accounts payable and accrued liabilities of $332,761.

Cash Flows Provided By (Used In) Investing Activities

Net cash used in investing activities of $7,864 for the three months ended
December 31, 2003 was attributable to cash used in the purchase of equipment of
$63,709 and cash provided by our acquisition of Eran Engineering of $55,845.

Cash Flows Provided By (Used In)  Financing Activities

Net cash of $144,276 provided by our financing activities in the three months
ended December 31 was due to cash provided by borrowings on notes payable of
$246,658 and cash used in the repayment on notes payable to related parties of
$102,382.

Internal Sources of Liquidity

For the three months ended December 31, 2003, the funds generated from our
operations were not sufficient to fund our daily operations. Our gross profit
for this period was $347,892, which was not sufficient to meet our operating
expenses of $483,667 for the same period. There is no assurance that funds from
our future operations will meet the requirements of our daily operations, and in
that event, we will need to seek other sources of financing to maintain
liquidity. (See Risk Factors - Risks Related To Our Business).

External Sources of Liquidity

We actively pursue all potential financing options as we look to secure
additional funds to both stabilize and grow our business operations. Our
management will review any financing options at their disposal, and will judge
each potential source of funds on its individual merits. There can be no
assurance that we will be able to secure additional funds from debt or equity
financing, as and when we need to, or if we can, that the terms of such
financing will be favorable to us or our existing stockholders.


                                       30
<PAGE>

On November 5, 2003, our wholly-owned subsidiary, Eran Engineering, entered into
an Equipment Lease Agreement, pursuant to which it financed a total of $35,000
and accruing interest at 7.45% per annum from Intech Funding Corp. These funds
were to be used towards the purchase of equipment described as "1-Used
Mori-Seiki TU-30 Vertical Turning Machine Center". The loan is collateralized by
this equipment and is guaranteed by our Vice President and Director, Joseph T.W.
Gledhill. The loan matures in November 2006. Pursuant to the terms of the
Equipment Lease Agreement, Eran Engineering is to repay the loan by making
monthly payments of $1,088 to Intech Funding Corp. At December 31, 2003, the
principal remaining balance on the loan was $32,159.

On November 5, 2003, our wholly-owned subsidiary, Eran Engineering entered into
a Lease Agreement, pursuant to which Eran Engineering financed a total of
$100,000 and accruing interest at 7% per annum from Intech Funding Corp. These
funds were to be used towards the purchase of equipment described as "1-Used
Mori-Seiki SV-500 with APC Fanuc MSC 501". The loan is collateralized by this
equipment and is guaranteed by our Vice President and Director, Joseph T.W.
Gledhill. The loan matures in November 2006. Pursuant to the terms of the
Equipment Lease Agreement, Eran Engineering is to repay the loan by making
monthly payments of $2,003 to Intech Funding Corp. At December 31, 2003, the
principal remaining balance on the loan was $95,217.

In connection with the closing of our acquisition of Eran Engineering from its
two shareholders, Hans B. Thallmayer and Alice Thallmayer on October 1, 2003, we
executed a promissory note in favor of the sellers in the principal amount of
$600,000, payable in three equal annual installments of $200,000 and accruing
simple interest at the rate of 6% per annum. Our obligation under the promissory
note was secured by the pledge by Lawrence A. Consalvi, our Director, President
and Chief Executive Officer and Joseph T.W. Gledhill, our Vice President and
Director, of a security interest in certain shares of our common stock owned by
them and worth $4,285,716 as of the date of the pledge. At December 31, 2003,
the principal balance on the note was $600,000.

In connection with the closing of our acquisition of Eran Engineering on October
1, 2003, and the contemporaneous purchase of a building by Eran Engineering from
R & H Investments, a partnership owned by the two selling shareholders, Eran
Engineering executed a promissory note in the principal amount of $600,000,
bearing simple interest at the rate of 6% per annum. At December 31, 2003, the
principal balance on the note was $600,000

On September 1, 2003 we executed a non-interest bearing promissory note in favor
of our Vice President and Director, Joseph T.W. Gledhill for the principal
amount of $459,700, which is due and payable on or before September 30, 2006. We
made no payments to Mr. Gledhill under this note during our fiscal years 2003
and 2004. At December 31, 2003, the outstanding principal due under this note
was $459,700.

In August 2003, our wholly owned subsidiary, E.M. Tool Company, Inc. executed a
promissory note in favor of Austin D. Lucas, Inc. in the principal amount of
$131,529, payable in thirteen consecutive monthly installments of approximately
$10,000 and bearing interest at the rate of 10%. At September 30, 2003, the
principal balance on this note was $112,083, and at December 31, 2003, the
principal remaining balance on this note was $84,658.

                                       31
<PAGE>

On June 30, 2003, we and our wholly-owned subsidiary, Eran Engineering, Inc.,
executed a promissory note in favor of Financial Federal Credit, Inc. in the
amount of $2,059,868, payable in consecutive monthly installments commencing on
September 1, 2003 and maturing in May 2008 as follows: 6 installments, each in
the amount of $10,000, then 53 installments, each in the amount of $21,000, and
a balloon payment at maturity in the amount of $886,886. The obligations to make
payment under the note is secured by our grant of a security interest in favor
of Financial Federal Credit, Inc. in our goods, inventory, equipment, accounts,
accounts receivables, documents, instruments, chattel paper, contract rights,
general intangibles, investment property, securities entitlements, deposit
accounts, fixtures and other property belonging to us or in which we have any
interest (collectively, the "Collateral"). In addition, the obligations of Eran
Engineering, Inc. to make payments under the note are likewise secured by its
grant of a security interest in its Collateral to Financial Federal Credit, Inc.
At December 31, 2003, the principal balance on the note was $1,548,128.

On January 1, 2003, we executed a promissory note in favor our Vice President
and Director, Joseph T.W. Gledhill, for the principal amount of $100,000 and
accruing simple interest at the rate of 6% per annum. The principal and accrued
interest under this note became due on January 20, 2003. Although we have not
repaid this note when due, Mr. Gledhill has not called us in default under the
note, and we have agreed to make payments on it as funds become available. At
September 30, 2003, the outstanding principal and interest due under the note
was $100,000. At December 31, 2003, the outstanding principal and interest due
under the note was $95,477.

In our fiscal quarter ended December 31, 2003, we had outstanding debt as
evidenced by a promissory note in favor of an individual, Mr. Daisuke Mikami,
which was payable in 6 monthly installments of $3,500, including interest at 10%
per annum. At December 31, 2003, the outstanding principal balance and interest
due under this note was $21,957.

In September 5, 2002, our wholly-owned subsidiary, Elite Machine, executed a
secured promissory note in the amount of $1,037,683.95 in favor of Financial
Federal Credit, Inc., and bearing interest at the rate of 8.25%. The note is
payable in monthly installments of $8,250 for a period of 60 months, and a
balloon payment on the 61st month of $542,683.96. This note is secured by the
assets of Elite Machine and guaranteed by our Director, President and Chief
Executive Officer, Lawrence A. Consalvi. At December 31, 2003, the principal
balance on the note was $747,778.

Inflation

Our management believes that inflation has not had a material effect on our
results of operations during our fiscal quarter ended December 31, 2003, and
does not expect that it will in fiscal year ended September 30, 2004, except
that rising oil and gas prices may materially and adversely impact the economy
generally.

                                       32
<PAGE>

RISK FACTORS

Our prospects are subject to certain uncertainties and risks. This Quarterly
Report on Form 10-QSB for the three months ending December 31, 2003, also
contains certain forward-looking statements within the meaning of the Federal
securities laws. Our future results may differ materially from our current
results, and our actual results could differ materially from those projected in
the forward-looking statements. Such differences may be the result of certain
risks, including but not limited to those risk factors set forth below, other
one-time events and other important factors previously disclosed or to be
disclosed from time to time in our other filings with the Securities and
Exchange Commission. The following risk factors should be considered carefully
in evaluating the Company and its business because these risks currently have a
significant impact or may have a significant impact in the future on our
business, operating results and financial condition. Prospective investors
should consider carefully the risk factors set out below.

Risks Related To Our Business.

Our auditors have expressed "substantial doubt" about our ability to continue as
a going concern.

As reported by our auditor in Note 6 to our Unaudited Consolidated Financial
Statements included in Item 1 of Part I of this Quarterly Report on Form 10-QSB
for our fiscal quarter ended December 31, 2003, our independent auditor has
expressed "substantial doubt" about our ability to continue as a going concern,
due to our substantial accumulated deficits of $2,091,528 at December 31, 2003.
We have taken certain restructuring steps to provide the necessary capital to
continue our operations, such as the raising of approximately $735,000 through a
sale of new restricted shares of common stock of our Company. Further, our
management believes that the addition of five new profitable subsidiaries has
brought further strength to our financial position. However, there can be no
assurance whether, or when, these steps will resolve our accumulated and working
capital deficits and we may continue to incur net losses through 2005 and
possibly beyond. Additionally, we expect to incur significant expenses as we
focus on our business strategy. As a result, we will need to generate
significant revenue to achieve profitability, which may not occur. Even if we
achieve profitability, we may be unable to sustain or increase profitability on
a quarterly or annual basis in the future. If we are unable to achieve and
maintain profitability our business will be materially impacted and the value of
our stockholders' investments may decline.

The SEC has instituted administrative proceedings against us because we have
failed to meet our reporting requirements under the Securities Exchange Act of
1934.

In April 2005, the SEC instituted proceedings pursuant to Section 12(J) of the
Securities Exchange Act of 1934 (the "1934 Act") and cease and desist
proceedings have been instituted pursuant to Section 21(C) of the 1934 Act
against our President, Chief Executive Officer and Director, Lawrence A.
Consalvi. The SEC seeks to suspend the registration of our securities for a
period not exceeding 12 months or revoke the registration of our securities
pursuant to Section 12 of the 1934 Act, and to cause us and Mr. Consalvi to
cease and desist from committing any violations of Section 13(a) of Rules 13a-1
and 13a-13 of the 1934 Act in the future. This Administrative Proceeding, File
No. 3-11894, arose from our failure to comply with our reporting obligations
while our securities were registered with the SEC in that we failed to file our
annual reports on Form 10-K for our fiscal years ended September 30, 2004 and
2003, and four quarterly reports on Form 10-Q for the quarters ended March 31,
2003, June 30, 2003, December 31, 2003, and March 31, 2004, and that Mr.
Consalvi, during his tenure as our President, caused us to violate these
reporting requirements. On May 9, 2005, we submitted our answer to the Order
Instituting Proceedings alleging that our failure to meet our reporting
obligations was not intentional but the result our inability to obtain financial
information necessary to complete the periodic reports from Bechler Cams, Inc.,
who had refused to comply with our reasonable requests for such financial
information.

                                       33
<PAGE>

On July 20, 2005, trial was held on the Order Instituting Proceedings, and on
August 18, 2005, the Administrative Law Judge issued an Initial Decision, and
ordered the revocation of each class of our securities pursuant to Section 12(j)
of the Securities Exchange Act of 1934 (the "Exchange Act"). It was further
ordered that our Chief Executive Officer, President and Director, Lawrence A.
Consalvi, cease and desist from committing any violation or future violations of
Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13. Specifically, the
Administrative Law Judge found that we violated Section 13(a) of Exchange Act in
that we failed to file two annual reports on Form 10-K for the Company's fiscal
years ended September 30, 2003 and September 30, 2004, and five quarterly
reports on form 10-Q for the quarters ended March 31, 2003, June 30, 2003,
December 31, 2003, March 31, 2004 and June 30, 2004, and that Mr. Consalvi,
during his tenure as our President and Chief Executive Officer, caused our
violations of Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13. The
Initial Decision is not yet effective, but shall become effective unless (1) we
do not file a petition for a review by the Commission of the Initial Decision
within twenty-one (21) days of the date of the Initial Decision pursuant to Rule
360 of the Commission's Rules of Practice, 17 C.F.R. ss. 201.360, or (2) we file
a petition for review with the Commission within this period of time and the
Commission either rejects our petition or accepts the petition but decides that
the registration of our securities should nevertheless be revoked. On September
7, 2005, we filed a petition with the Commission for a review of the Initial
Decision, and on September 12, 2005, the Commission granted our petition for
review pursuant to Rule 411 of the Commission's Rules of Practice. Our brief in
support of our petition for review is due by October 12, 2005. Although we
intend to continue vigorously defend against these actions and to bring all our
delinquent filings up to date, there can be no assurance that the SEC will not
pursue this action even after these filings have been made. If the registration
of our securities is either suspended or revoked, our stockholders will not be
able to publicly sell our securities unless and until, whatever the case may be,
the period of suspension is over or we are able to have a new registration
statement declared effective by the SEC, and there is no assurance that we would
be able to accomplish that, or that any private market for our securities can or
will develop.

Our business is dependent on, among other sectors, the aerospace and defense
industries and is therefore, susceptible to factors which affect that industry
such as acts of terrorism and general economic factors.

We derive much of our sales revenue from services and components sold to the
aerospace industry. As a result of the terrorist attacks of September 11, 2001,
the aerospace industry has suffered a significant decline in operational
efficiency and financial condition and the overall effect of a prolonged
downturn in the commercial airline industry will be a potentially severe
reduction in demand for our aerospace products. Additional acts of sabotage or
terrorism or adverse results to the U.S. in its military conflicts, such as the
current conflict in Iraq, would likely lead to even further reduced demand for
our products and services.

In addition, our business is directly affected by certain characteristics and
trends in the aerospace industry that affect our customers, such as (i)
fluctuations in the aerospace industry's business cycle, (ii) varying fuel and
labor costs, (iii) intense price competition and regulatory scrutiny, (iv)
certain trends, including a possible decrease in aviation activity, a decrease
in outsourcing by aircraft manufacturers or the failure of projected market
growth to materialize or continue, and (v) changes in military budgeting and
procurement for certain military aircraft. In the event that these
characteristics and trends adversely affect customers in the aerospace industry,
they would reduce the overall demand for our products and services, thereby
decreasing our sales and operating income.

                                       34
<PAGE>

We must comply with environmental laws, and any failure to do so could subject
us to claims or regulatory action.

Our facilities are subject to regulations concerning solid waste disposal,
hazardous materials generation, storage, use and disposal, air emissions, waste
water discharge, employee health and other environmental matters. A number of
the metals, chemicals and other materials used in and resulting from our
manufacturing processes are classified as hazardous substances and hazardous
wastes. If we do not meet the requirements of applicable environmental laws, we
could be liable for damages and for the costs of remedial actions. We could also
be subject to fines or other penalties, including revocation of permits needed
to conduct our business. Any permit revocation could require us to cease or
limit production at one or more of our facilities, which could damage our
business and financial performance. We have an ongoing program of monitoring and
addressing environmental matters, and from time to time in the ordinary course
of business we are required to address minor issues of noncompliance at our
operating sites. We are not aware of any historical contamination on our current
properties or involving neighboring activities that we believe could have a
material adverse effect on our results of operations or financial condition.

We do business in industries that are cyclical, which may result in weakness in
demand for our products.

Our products are sold in many industries, including machine tool, automotive and
aerospace, that are highly cyclical. The machine tool industry, in particular
from 1998 to 2003, experienced a significant decline in global demand. Cyclical
weakness in the industries we serve could lead to a reduced demand for our
products.

The industries in which we operate are characterized by intense competition, and
there can be no assurance that competitive pressures will not materially and
adversely affect our future business, financial condition or results of
operation.

Our competitors in the aerospace and defense machine tools industry consist of a
large fragmented group of companies, including certain business units or
affiliates of our customers. We believe that competition within the aerospace
and defense industry will increase substantially as a result of industry
consolidations and trends toward favoring greater outsourcing of components and
reducing the number of preferred suppliers. Certain of our competitors may have
substantially greater financial, production and other resources and may have (i)
the ability to adapt more quickly to changes in customer requirements and
industry conditions or trends, (ii) stronger relationships with customers and
suppliers, and (iii) greater name recognition than us. There can be no assurance
that competitive pressures will not materially and adversely affect our
business, financial condition or results of operation.

From time to time, we may need additional capital to meet the objectives of our
proposed business plan, and there is no assurance that we will be able to raise
such capital or that such financing will be on terms that are favorable or
acceptable to us.

We currently have limited operating capital and cash resources. As a result, we
may require substantial funding to meet the expenses of our anticipated business
expansion in the machine tooling industry. Such funding will be used to update
our current program offerings; expand and upgrade our machine tooling
capabilities; upgrade our facilities; invest in research and development; take
advantage of acquisition opportunities; stabilize and integrate acquisition
targets, if any; and meet additional working capital requirements. Our ability
to raise funding may be severely limited due to our limited assets and the
limited public market for our common stock. Our ability to obtain additional
funding will also be dependent upon our operating results and financial
condition. These factors may make the timing, amount, terms and conditions of
additional financing unattractive or impracticable for us. If we are unable to
raise more money, our growth could be impeded and our business could be
materially adversely affected.

                                       35
<PAGE>

We may not be successful in our ability to identify and acquire suitable
acquisition candidates.

As part of our business strategy, we seek to acquire additional companies that
offer complimentary products, technologies or services. The size of the
potential targets, timing, and success of our acquisition efforts and the
anticipated capital requirements to implement our strategy cannot be predicted.
The success of our acquisition strategy will depend largely on our ability to
identify suitable acquisition candidates and secure any necessary financing,
without diverting our management's attention from the operation of our business.
Competition for acquisition targets could also result in increased acquisition
prices and fewer businesses available for investment. In addition, the due
diligence materials we rely upon in making an acquisition may not be accurate or
complete.

Risks associated with acquisitions could result in increased costs and
production inefficiencies.

A key element of the our growth strategy has been expansion through the
acquisition of complementary businesses involved in the aerospace and defense
industries and strategic acquisitions that would provide us with access to new
industries. The size of the potential targets, timing, and success of our
acquisition efforts and the anticipated capital requirements to implement our
strategy cannot be predicted. Although we evaluate acquisition opportunities
from time to time, there can be no assurance that we will be able to consummate
acquisitions on satisfactory terms, or at all, or that we will be successful in
integrating any such acquisitions into our operations. In addition, these
acquisitions may be accompanied by risks that are commonly encountered in an
acquisition of a business, any of which could seriously harm our business,
including:

    o    adverse effects on our reported operating results due to accounting
         charges associated with acquisitions;
    o    failure of an acquired business to further our strategies;
    o    failure of the acquired business to achieve expected results;
    o    potential disputes with the sellers of acquired businesses;
    o    failure to retain key clients or personnel of the acquired businesses;
    o    increased expenses resulting from newly engaged personnel;
    o    potential loss of key employees of the acquired businesses;
    o    diversion of management's attention from other business concerns; or
    o    difficulties related to the integration of acquired businesses with
         our business.

For all of the above reasons, our pursuit of an overall acquisition and
investment strategy or any individual acquisition or investment could seriously
harm our business.

                                       36
<PAGE>

We may be unsuccessful in retaining the management of the businesses we acquire,
and even if we do, there is no guarantee that existing management would in all
cases make the same judgments we would expect.

Our business strategy has focused upon the acquisition of complementary
businesses to maximize our growth and position in the industry. Inherent in our
approach is the resulting reliance on the current management team of the
subsidiary continuing to manage and guide the acquired company going forward.
Although we have been successful in retaining the current management of our
wholly-owned subsidiaries, there is no guarantee that we will be able to do so
in connection with future acquisitions, nor that if retained, existing
management will in all cases make the same judgments we would expect or desire
of installed management had we put some in place.

Our customers may perceive a conflict of interest, and decide to purchase
equipment from our competitors.

In the past, we have sold products and equipment to many firms that are direct
competitors of our manufacturing subsidiaries. Existing customers may see this
as a conflict of interest and decide to purchase equipment from our competitors.
The loss of existing customers, especially our key customers, who perceive a
conflict of interest and decide to stop purchasing our products and services to
purchase those of our competitors, would have a materially adverse impact on our
operations and financial condition.

Our business is dependent on a concentrated customer base and the loss of our
key customers will have a materially adverse impact on our future results of
operations and financial condition.

During the fiscal quarter ended December 31, 2003, our sales to two customers
represented 12.99% of net sales, and in during the fiscal quarter ended December
31, 2002, our sales to three customers represented approximately 42.1% of net
sales. At December 31, 2003, two of our customers accounted for approximately
64% of accounts receivable and at December 31, 2002, two of our customers
accounted for approximately 46% of accounts receivable. The loss of any of these
key customers would have a materially adverse impact on our future results of
operations and financial condition.

We may not be able to compete successfully because of the number of our
competitors and expected numerous market entrants.

We anticipate that we will compete with many established companies offering
machine tooling and related services. Many of these companies have substantially
greater financial, marketing and technological resources, and greater access to
customers than us. Most of our competitors benefit from greater name recognition
and have substantially greater resources than we have. In addition, as the
machine tooling industry continues to expand, we expect competition to increase
and to see new entrants into the market. Our failure to effectively compete in
this industry would adversely affect our business. Additionally, the
announcement or introduction of new products or the implementation of effective
marketing strategies by our competitors may materially impact our business.

We are controlled by a limited number of persons whose actions could adversely
affect the market price of our common stock and impact the value of our
stockholders' investments.

As of the date of the filing of this Report, a limited number of persons and
their affiliates, including current and past management, own approximately 71%
of our outstanding voting stock (on a pro forma, fully diluted basis, after
giving effect to the above-mentioned acquisitions). Accordingly, these
stockholders, if acting together, would be able to control virtually all matters
requiring approval by stockholders, including the election of directors and the
approval of mergers or other business combinations. These actions could
adversely affect the market price of our common stock and impact the value of
our stockholders' investments.

                                       37
<PAGE>

We may be unable to retain our senior management and other key personnel.

Our future success depends, in significant part, upon the continuing service and
performance of our senior management and other key personnel. We do not maintain
key-person life insurance on senior management or any of our key personnel. If
we lose the services of any of these individuals, including, but not limited to,
Lawrence A. Consalvi, Joseph T.W. Gledhill, and Lloyd R. Leavitt, III, our
ability to effectively deliver services to our clients and manage our business
effectively could be materially impaired. In addition, our wholly-owned
subsidiaries do not maintain key-person life insurance on their respective
senior management or any of their key personnel, and the loss of any of these
individuals may negatively impact such subsidiaries' ability to service their
respective clients and manage their business as well.

An economic weakness in the capital goods market and/or a tightening of credit
by the banking industry may result in a reduction in sales of our products.

Many of our customers depend on long term financing from a financial institution
to purchase our equipment. Economic weakness in the capital goods market and/or
a tightening of credit in the banking industry may result in reduced sales and
accordingly affect our operations and financial condition.

Disputes may arise among us and the businesses we acquire subsequent to the
acquisition which may result in a disruption to our business operations and
adversely impact our ability to meet our reporting requirements under the
federal securities laws.

Subsequent to the acquisition of Nelson Engineering, Inc. and Bechler Cams,
Inc., a dispute arose among our management and the former shareholders of these
businesses, some of whom became our directors pursuant to the respective
acquisition agreements. Such disputes ultimately resulted in the rescission of
these acquisitions, and in the case of Bechler Cams, Inc., our inability to meet
our filing requirements under the federal securities laws. There can be no
assurance that disputes may not arise in the future among us and the
shareholders of companies we may seek to acquire which would also have a similar
negative impact on our business.

If we cannot develop technological improvements to our products through
continued research and engineering, our financial results may be adversely
affected.

In order to maintain our position in the market, we need to continue to invest
in research and engineering to improve our products and technologies and
introduce new products and technologies. If we are unable to make such
investment, if our research and development does not lead to new and/or improved
products or technologies, or if we experience delays in the development or
market acceptance of new and/or improved products, our financial results may be
adversely affected.

                                       38
<PAGE>

Risks Related To Our Industry

We operate in highly competitive industries, many of which are currently subject
to intense price competition, and if we are unable to compete successfully our
results of operations could fail to improve or could deteriorate.

Many of the industries in which we operate are highly competitive. Our products
may not compete successfully with those of our competitors. The markets for
machine tools and related products are highly competitive and include a number
of North American, European and Asian competitors. Principal competitive factors
in the machine tool industry are: price, product features, technology,
performance, reliability, quality, delivery and customer service.

We are currently experiencing increased price competition as a result of the
general economic downturn, which has resulted in a sharp downward trend in
pricing. In certain cases, we have lost business to competitors who offered
prices lower than ours. In addition, certain of our competitors have built up
large excess inventories and therefore may continue to offer their products at
prices lower than ours until such inventories are reduced. In addition, some of
our competitors may have greater financial resources and less debt than we do
which may place us at a competitive disadvantage in the future. These
competitors may be better able to withstand and respond to changes in conditions
within our industry, such as the dramatic reduction in demand and pricing levels
we experienced subsequent to the terrorist attacks of September 11, 2001.

If we fail to keep pace with the rapid industry changes or to effectively manage
the introduction of new products and services, our business and reputation could
be adversely impacted.

The markets in which we compete are characterized by rapid technological change,
frequent new product introductions and evolving industry standards. Customer
preferences are difficult to predict and there is no assurance that our products
and services will receive customer acceptance. If we fail to keep pace with
rapid industry changes or to effectively manage the introduction of new products
and services, our business and reputation could be adversely impacted.

There is significant competition in our industry for highly skilled employees
and our failure to attract and retain technical personnel would adversely affect
our business.

We may not be able to successfully attract or retain highly skilled employees.
We have not yet hired several key members of our anticipated management team,
whom we believe will be necessary for our business success. A high level of
employee mobility characterizes the machine tooling industries, and the market
for highly qualified individuals in engineering and computer applications. This
competition means there are fewer highly qualified employees available to hire
and the costs of hiring and retaining these individuals are high. Even if we are
able to hire these individuals, we may be unable to retain them. Additionally,
there is increasing pressure to provide employees with stock options and other
equity interests, which may dilute our earnings per share. If we are unable to
hire or retain qualified employees, our business would be adversely impacted.

                                       39
<PAGE>

Risks Related To Our Stock

The registration of our securities may be suspended for a period not exceeding
12 months or the registration of our securities may be revoked by the Securities
and Exchange Commission.

In April 2005, the SEC instituted proceedings pursuant to Section 12(J) of the
Securities Exchange Act of 1934 (the "1934 Act") and cease and desist
proceedings have been instituted pursuant to Section 21(C) of the 1934 Act
against our President, Chief Executive Officer and Director, Lawrence A.
Consalvi. The SEC seeks to suspend the registration of our securities for a
period not exceeding 12 months or revoke the registration of our securities
pursuant to Section 12 of the 1934 Act, and to cause us and Mr. Consalvi to
cease and desist from committing any violations of Section 13(a) of Rules 13a-1
and 13a-13 of the 1934 Act in the future. This Administrative Proceeding, File
No. 3-11894, arose from our failure to comply with our reporting obligations
while our securities were registered with the SEC in that we failed to file our
annual reports on Form 10-K for our fiscal years ended September 30, 2004 and
2003, and four quarterly reports on Form 10-Q for the quarters ended March 31,
2003, June 30, 2003, December 31, 2003, and March 31, 2004, and that Mr.
Consalvi, during his tenure as our President, caused us to violate these
reporting requirements. On May 9, 2005, we submitted our answer to the Order
Instituting Proceedings alleging that our failure to meet our reporting
obligations was not intentional but the result our inability to obtain financial
information necessary to complete the periodic reports from Bechler Cams, Inc.,
who had refused to comply with our reasonable requests for such financial
information.

On July 20, 2005, trial was held on the Order Instituting Proceedings, and on
August 18, 2005, the Administrative Law Judge issued an Initial Decision, and
ordered the revocation of each class of our securities pursuant to Section 12(j)
of the Securities Exchange Act of 1934 (the "Exchange Act"). It was further
ordered that our Chief Executive Officer, President and Director, Lawrence A.
Consalvi, cease and desist from committing any violation or future violations of
Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13. Specifically, the
Administrative Law Judge found that we violated Section 13(a) of Exchange Act in
that we failed to file two annual reports on Form 10-K for the Company's fiscal
years ended September 30, 2003 and September 30, 2004, and five quarterly
reports on form 10-Q for the quarters ended March 31, 2003, June 30, 2003,
December 31, 2003, March 31, 2004 and June 30, 2004, and that Mr. Consalvi,
during his tenure as our President and Chief Executive Officer, caused our
violations of Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13. The
Initial Decision is not yet effective, but shall become effective unless (1) we
do not file a petition for a review by the Commission of the Initial Decision
within twenty-one (21) days of the date of the Initial Decision pursuant to Rule
360 of the Commission's Rules of Practice, 17 C.F.R. ss. 201.360, or (2) we file
a petition for review with the Commission within this period of time and the
Commission either rejects our petition or accepts the petition but decides that
the registration of our securities should nevertheless be revoked. On September
7, 2005, we filed a petition with the Commission for a review of the Initial
Decision, and on September 12, 2005, the Commission granted our petition for
review pursuant to Rule 411 of the Commission's Rules of Practice. Our brief in
support of our petition for review is due by October 12, 2005. Although we
intend to continue vigorously defend against these actions and to bring all our
delinquent filings up to date, there can be no assurance that the SEC will not
pursue this action even after these filings have been made. If the registration
of our securities is either suspended or revoked, our stockholders will not be
able to publicly sell our securities unless and until, whatever the case may be,
the period of suspension is over or we are able to have a new registration
statement declared effective by the SEC, and there is no assurance that we would
be able to accomplish that, or that any private market for our securities can or
will develop.

                                       40
<PAGE>

Our stock price is volatile and there is a limited market for our shares.

The stock markets generally have experienced, and will probably continue to
experience, extreme price and volume fluctuations that have affected the market
price of the shares of many small capital companies. These fluctuations have
often been unrelated to the operating results of such companies. Factors that
may affect the volatility of our stock price include the following:

     o   our success, or lack of success, in developing and marketing our
         products and services;

     o   the announcement of new products, services, or technological
         innovations by us or our   competitors;

     o   quarterly fluctuations of our operating results;

     o   changes in revenue or earning estimates by the investment community;
         and

     o   competition.

In addition, broad market fluctuations, as well as general economic and
political conditions, may decrease the market price of our common stock in any
market that develops. Based on the factors described above, recent trends should
not be considered reliable indicators of our future stock prices or financial
results. Additionally, there is a limited market for our common stock on the
Pink Sheets and we cannot assure you that such a market will continue to develop
or be maintained.

You should not expect the payment of dividends by us.

We do not expect to pay dividends on our common stock in the foreseeable future.
Although in May 2005, our management declared and paid a dividend of $0.005 on
our common stock, future dividends, if any, will depend upon our earnings.
Investors who require cash dividends from their investments should not purchase
our common stock.

You may experience significant dilution.

We anticipate that we will need to raise significant capital to fund our
business. In addition, we anticipate that we may issue a significant number of
shares or the rights to acquire shares as a part of our strategy. In either
event, current shareholders may experience significant dilution and our earnings
per share may decrease.

Fluctuations in our quarterly operating results may cause our stock price to
decline and limit our shareholders' ability to sell our common stock in the
public markets.

Our operating results and the operating results of businesses that we may
acquire in the future may fluctuate significantly due to a variety of factors,
many of which are outside of our control. Our operating results may in some
future quarter fall below the expectations of securities analysts and investors.
In this event, the trading price of our common stock could decline
significantly. In addition to the risks disclosed elsewhere in this Report,
factors outside of our control, which may cause our quarterly operating results
to fluctuate may include:

     o   fluctuations in the general economic condition;

                                       41
<PAGE>

     o   demand for our products;

     o   fluctuation in the capital budgets of our customers; and

     o   development of superior products and services by our competitors.

In addition, factors within our control, such as our ability to deliver
equipment in a timely fashion, may cause our operating results to fluctuate in
the future.

The factors listed above may affect both our quarter-to-quarter operating
results as well as our long-term success. Given the potential fluctuation in our
operating results, you should not rely on quarter-to-quarter comparisons of our
results of operations as an indication of our future performance or to determine
any trend in our performance. Fluctuations in our quarterly operating results
could cause the market price and demand for our common stock to fluctuate
substantially, which may limit your ability to sell our common stock on the
public markets.

If persons engage in short sales of our common stock, including sales of shares
to be issued upon exercise of warrants and options, the price of our common
stock may decline.

Selling short is a technique used by a stockholder to take advantage of an
anticipated decline in the price of a security. A significant number of short
sales or a large volume of other sales within a relatively short period of time
can create downward pressure on the market price of a security. Further sales of
common stock issued upon exercise of our warrants and options could cause even
greater declines in the price of our common stock due to the number of
additional shares available in the market, which could encourage short sales
that could further undermine the value of our common stock. You could,
therefore, experience a decline in the value of your investment as a result of
short sales of our common stock.

Our common stock is subject to penny stock regulation, which may affect its
liquidity.

Our common stock is subject to regulations of the Securities and Exchange
Commission (the "Commission") relating to the market for penny stocks. A Penny
Stock, as defined by the Penny Stock Reform Act, is any equity security not
traded on a national securities exchange or quoted on the NASDAQ National or
Small Cap Market that has a market price of less than $5.00 per share. The penny
stock regulations generally require that a disclosure schedule explaining the
penny stock market and the risks associated therewith be delivered to purchasers
of penny stocks and impose various sales price requirements on broker-dealers
who sell penny stocks to persons other than established customers and accredited
investors. The broker-dealer must make a suitable determination for each
purchaser and receive the purchaser's written agreement prior to the sale. In
addition, the broker-dealer must make certain mandated disclosures, including
the actual sale or purchase price and actual bid offer quotations, as well as
the compensation to be received by the broker-dealer and certain associated
persons. The regulations applicable to penny stocks may severely affect the
market liquidity for our common stock and could limit your ability to sell your
securities in the secondary market.

                                       42
<PAGE>

Forward Looking Statements

This Management's Discussion and Analysis of Financial Condition and Results of
Operations include a number of forward-looking statements that reflect our
management's current views with respect to future events and financial
performance. Those statements include statements regarding our intent, belief or
current expectations, and those of members of our management team, as well as
the assumptions on which such statements are based. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risk and uncertainties, and that actual results may
differ materially from those contemplated by such forward-looking statements.
Readers are urged to carefully review and consider the various disclosures made
by us throughout this Report, as well as in our other reports filed with the
Securities and Exchange Commission. Important factors currently known to
Management could cause actual results to differ materially from those in
forward-looking statements. We undertake no obligation to update or revise
forward-looking statements to reflect changed assumptions, the occurrence of
unanticipated events or changes in future operating results over time. We
believe that our assumptions are based upon reasonable data derived from and
known about our business and operations. No assurances are made that actual
results of operations or the results of any future activities will not differ
materially from our assumptions.

Since our trading shares are classified as "penny stocks", we are not entitled
to rely upon the "Safe Harbor" provisions adopted by the SEC under the Exchange
Act with respect to Forward Looking Statements. Nevertheless, investors are
urged to give serious consideration to those factors which we have identified as
outside of our control, and the consequences to us and our investors if our
anticipated results do not come to pass as expected as a result of material
deviations which may occur from the assumptions we have relied upon in making
Forward-Looking Statements.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

ITEM 3.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the
"Exchange Act"), we carried out an evaluation of the effectiveness of the design
and operation of our disclosure controls as of the end of the period covered by
this report, December 31, 2003. This evaluation was carried out under the
supervision and with the participation of our Chief Executive Officer, Mr.
Lawrence A. Consalvi, and our Chief Financial Officer, Mr. Jitu Banker
(collectively, the "Certifying Officers"). Based upon that evaluation, our
Certifying Officers concluded that as of the end of the period covered by this
report, December 31, 2003, our disclosure controls and procedures are effective
in timely alerting management to material information relating to us and
required to be included in our periodic SEC filings.

Disclosure controls and procedures are controls and procedures that are designed
to ensure that information required to be disclosed in our periodic reports
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the Securities and Exchange Commission's rules and
forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed in
our periodic reports that we file under the Exchange Act is accumulated and
communicated to our management, including our principal executive and principal
financial officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.

                                       43
<PAGE>

Internal Control Over Financial Reporting

Further, as required by Rule 13a-15(d) of the Exchange Act and under the
supervision and with the participation of our Certifying Officers, we carried
out an evaluation as to whether there has been any change in our internal
control over financial reporting during our fiscal quarter ended December 31,
2003. Based upon this evaluation, we have concluded that there has not been any
change in our internal control over financial reporting during our fiscal
quarter ended December 31, 2003, that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.

Internal control over financial reporting is a process designed by, or under the
supervision of, our principal executive and principal financial officers, or
persons performing similar functions, and effected by our board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles. Internal control over financial reporting includes those policies
and procedures that: (i) pertain to the maintenance of records that in
reasonable detail accurately and fairly reflect the transactions and
dispositions of our assets; (ii) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations of our
management and directors; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on the financial statements.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

From time to time we are involved in legal proceedings relating to claims
arising out of operations in the normal course of business, as well as claims
arising from our status as an issuer of securities and/or publicly reporting
company. Below is a brief summary of our existing, pending and known threatened
litigation as of the date of this report:

o    On March 17, 2003 we were served with a complaint filed by Daniel Lennert
     and Laura Stearman, the owners and executive officers of Bechler Cams, Inc.
     ("BCI"). At the time we were served, BCI was our wholly-owned subsidiary
     which we had acquired in a merger transaction, effective November 15, 2002.
     The Complaint, which was filed in the Superior Court of California for the
     County of Orange as Case No. 03CC04435, sought, among other claims, to
     rescind the merger in order to return BCI to the plaintiffs, and other
     monetary relief. The complaint also named as defendants our executive
     officers and the executive officers of E.M. Tool Company, Inc., as well as
     the Securities and Exchange Commission (the "SEC"). The SEC subsequently
     removed the action to the United States District Court for the Central
     District of California, as Case No. SA CV 03-367 AHS (MLGx), following
     which it was dismissed on its own motion. Subsequent to being served with
     the Complaint, we filed responsive pleadings in which we denied the claims
     alleged by the BCI related parties, which allegations we contended were
     without merit and based on misstatements and false characterizations of
     fact and law. We engaged independent counsel to vigorously defend us
     against the BCI claims, and to file a cross-complaint against BCI and its
     officers, seeking damages and other relief due to BCI's withholding of
     financial information necessary for us to complete our quarterly report on
     Form 10-QSB for the period ending March 31, 2003 and our subsequent audit
     for fiscal year 2003. The officers of BCI also refused, despite our several
     demands, to deliver to us BCI's financial information for the quarter ended
     March 31, 2003, which prevented us from timely filing our Form 10-QSB for
     the quarter then ended. The case was subsequently settled pursuant to a
     Mutual Rescission of Contracts, Settlement Agreement and Release of Claims,
     dated as of November 20, 2003, pursuant to which the merger transaction was
     rescinded effective as of January 1, 2003. In connection with the
     rescission, we returned to the former shareholders of BCI their shares of
     BCI acquired in the merger, in exchange for the return of their shares of
     our stock received in the merger (aggregating 11,837,500 shares), and the
     immediate resignation of Daniel Lennert from our Board of Directors. The
     agreement also contained mutual releases of claims.

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<PAGE>

o    On June 28, 2002, we received a letter from the SEC requesting that we
     produce documents related to our efforts to become a NASDAQ-listed company,
     including press releases, merger and/or acquisition documents, and
     agreements and/or arrangements with third parties to promote our stock.
     Subsequently, on February 5, 2003, the SEC issued an Order Directing
     Private Investigation and Designating Officers to Take Testimony to
     investigate, among other things, our connection to the unsolicited emails,
     whether persons had acquired more than 5% of our common stock without
     filing a Schedule 13D, whether officers, directors, and holders of more
     than 10% of our common stock had failed to report the sale or purchase of
     our securities with the SEC on Forms 3, 4, and/or 5, and our failure to
     file annual reports certified by an independent accountant and to state
     further material information in such reports. We were prevented from
     meeting our periodic reporting obligations because BCI refused to turn over
     necessary financial information to us and our auditors to timely complete
     the audits so that all required financial information could be included in
     these periodic reports.

     As a result, on October 16, 2003 we were advised by the Central Regional
     Office of the SEC that it intended to recommend that the SEC institute
     enforcement proceedings against us, and our President, Lawrence A. Consalvi
     in connection with our inability to file timely quarterly reports for the
     periods ended March 31, 2003 and June 30, 2003 and our annual report for
     the fiscal year ended September 30, 2003. In addition, the Central Regional
     Office of the SEC recommended the institution of enforcement proceedings
     against us for alleged antifraud violations based on false and misleading
     statements contained in our Current Report on Form 8-K, filed October 18,
     2001 and information statements filed on or about January 10, 2002, January
     23, 2002, and January 25, 2002, which were signed by our former president,
     Joe Thomas relating to Mr. Thomas' ownership of our stock and his
     compliance with certain reporting requirements and for failing to disclose
     payments made by an officer of E.M. Tool Company to us in connection with
     the reverse merger (see above). Upon recommendation by the Central Regional
     Office of the SEC, the SEC subsequently issued an Order Instituting
     Proceedings, Making Findings, and Imposing a Cease-And-Desist Order
     Pursuant to Section 21C of the Securities Exchange Act of 1934 and Revoking
     Registration of Securities Pursuant to Section 12(j) of the Securities
     Exchange Act of 1934 (the "Order Instituting Proceedings"). In the Order
     Instituting Proceedings, the SEC found that we failed to comply with our
     reporting obligations while our securities were registered with the SEC in
     that we failed to file our annual report on Form 10-K for the fiscal year
     ended September 30, 2003, and four quarterly reports on Form 10-Q for the
     quarters ended March 31, 2003, June 30, 2003, December 31, 2003, and March
     31, 2004, and that Mr. Consalvi, during his tenure as our President, caused
     us to violate these reporting requirements. In anticipation of the Order
     Instituting Proceedings, we submitted an Offer of Settlement of Gateway
     International Holdings, Inc. and Lawrence A. Consalvi (the "Settlement
     Offer"), in which we consented to an entry of an Order by the SEC which
     revoked the registration of our securities and Mr. Consalvi consented to a
     cease-and-desist order requiring that he refrain from any future violations
     of Section 13(a) of the Securities Exchange Act of 1934 and Rules 13a-1 and
     13a-13 thereunder. We and Mr. Consalvi have subsequently withdrawn our
     consent following a determination to bring us back into reporting
     compliance. (See "In the Matter of Gateway International Holdings, Inc. and
     Lawrence A. Consalvi, Administrative Proceeding File No. 3-11894" beginning
     on page 6).

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<PAGE>

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Sales of Unregistered Securities

During the three months ended December 31, 2003, we did not sell any of our
equity securities that were not registered under the Securities Act.

Purchases of Equity Securities

We are required by the Securities Act of 1933 to disclose, in tabular format,
any repurchases of our securities during the three months ending December, 30,
2003. We did not repurchase any of our securities during the three months ending
December 31, 2003, and accordingly, we have eliminated such table.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

During the three month period ended December 31, 2003, there were no material
defaults in the payment of principal interest, a sinking or purchase fund
installment, or any other material default not cured within 30 days, with
respect to any of our indebtedness exceeding 5% of our total assets.

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

No matters were submitted to a vote of our security holders in the three month
period ended December 31, 2003.

ITEM 5.  OTHER INFORMATION

(a)      Information Required To Be Disclosed In A Report On Form 8-K, But Not
Reported

Item 1.01 (Entry into a Material Definitive Agreement); Item 1.02 (Termination
of a Material Definitive Agreement); Item 2.01 (Completion of Acquisition or
Disposition of Assets); Item 5.02 (Departure of Directors or Principal
Officers).

On November 15, 2002, we closed the acquisition of 100% of the outstanding
capital stock of Bechler Cams, Inc., a California corporation ("BCI"), pursuant
to an Agreement and Plan of Reorganization dated as of March 31, 2002, as
amended on October 4, 2002, among us, BCI, and GWIH Acquisition Corp., our
wholly-owned subsidiary formed solely for the purpose of effecting the merger
with BCI (the "Bechler Agreement"). BCI is a machine shop specializing in the
manufacturing of precision component parts for customers in the aerospace and
defense sectors and surgical instruments and components in the medical sector.
Pursuant to the Bechler Agreement, we issued 11,837,500 shares of our common
stock in exchange for all of the capital stock of BCI issued and outstanding
capital as of the date of the merger. The merger became effective on November
15, 2002 upon the filing of the Articles of Merger with the Nevada and
California Secretaries of State. Subsequent to the merger, we filed a Current
Report on Form 8-K regarding the merger of BCI with and into our wholly-owned
subsidiary, and following the effective date of the merger, BCI continued as our
wholly-owned subsidiary. Subsequent to the merger, Daniel Lennert and Laura
Stearman, the former owners and executive officers of BCI (the "BCI parties")
commenced litigation against us, our executives, the executive officers of E.M.
Tool Company, Inc. (our wholly-owned subsidiary), and the Securities and
Exchange Commission ("SEC") alleging that the agreement of the BCI parties to
enter into the merger with and into GWIH Acquisition Corp., was obtained by
fraud, misrepresentation, deceptive business practices, violations of rules
10(b) and 10b-5 of the Exchange Act, breach of fiduciary duty, and dishonesty by
our principals. The case was subsequently settled pursuant to a Mutual
Rescission of Contracts, Settlement Agreement and Release of Claims, signed as
of November 20, 2003 and effective as of January 1, 2003, pursuant to which the
merger transaction was formally rescinded. In connection with the rescission, we
returned to the former shareholders of BCI, their shares of BCI acquired in the
merger, in exchange for their return of the shares of our stock acquired in the
merger, and the immediate resignation of Daniel Lennert from our Board of
Directors. The agreement also contained mutual releases of claims. Accordingly,
BCI no longer operates as our subsidiary or affiliate.

                                       46
<PAGE>

(b)      Item 401(g) of Regulation S-B

During our fiscal quarter covered by this Quarterly Report on Form 10-QSB, there
have not been any material change to the procedures by which our security
holders may recommend nominees to our Board of Directors.




                                       47
<PAGE>

ITEM 6.  EXHIBITS

Exhibit
Number                                   Description
------                                   -----------

2.1(5)        Agreement and Plan of Reorganization dated December 11, 2001, by
              and between Gourmet Gifts, Inc., E.M. Tool Company, Inc. and the
              shareholders of E.M. Tool Company, Inc.

2.2(6)        Agreement and Plan of Reorganization dated March 31, 2002 by and
              between Gateway International Holdings, Inc., GWIH Acquisition
              Corp., Bechler Cams, Inc. and the shareholders of Bechler Cams,
              Inc.

2.3(8)        Agreement and Plan of Reorganization dated April 26, 2002 by and
              between Gateway International Holdings, Inc., GWIH Acquisition
              Corp., Nelson Engineering, Inc. and the shareholders of Nelson
              Engineering, Inc.

2.4(8)        First Amendment to the Agreement and Plan of Reorganization dated
              October 4, 2002 by and between Gateway International Holdings,
              Inc., GWIH Acquisition Corp., Nelson Engineering, Inc. and the
              shareholders of Nelson Engineering, Inc.

2.5(8)        First Amendment to the Agreement and Plan of Reorganization dated
              October 4, 2002 by and between Gateway International Holdings,
              Inc., GWIH Acquisition Corp., Bechler Cams, Inc. and the
              shareholders of Bechler Cams, Inc.

2.6(10)       Agreement for Purchase and Sale and Escrow Instructions between
              Gateway International Holdings, Inc. and R&H Investments dated
              June 30, 2003.

2.7(10)       Stock Purchase Agreement between Gateway International Holdings,
              Inc. and Hans B. Thallmayer and Alice Thallmayer dated June 17,
              2003.

3.1(1)(2)     Articles of Incorporation of Gourmet Gifts, Inc., a Nevada
              corporation, filed on September 24, 1997.

3.2(1)(2)     Bylaws of Gourmet Gifts, Inc., a Nevada corporation.

3.3(11)       Amended Articles of Incorporation of Gourmet Gifts, Inc.

4.1(1)(2)     Specimen Common Stock Certificate.

10.1(3)       Promissory Note dated August 10, 2000 between Gourmet Gifts, Inc.
              and Kim Farran.

10.2(4)       Promissory Note dated December 11, 2000 between Gourmet Gifts,
              Inc. and Stanley K. Stilwell.

                                       48
<PAGE>

10.3(11)      Lease dated July 1, 2002 between IPERS Brea/Golden State Business
              Parks, Inc. and Nu-Tech Industrial Sales, Inc.

10.4(11)      Promissory Note dated January 1, 2003 issued by Gateway
              International Holdings, Inc. to Joseph T.W. Gledhill

10.5(11)      Mutual Rescission of Contracts and Releases of Claims dated May
              15, 2003 by and among Gateway International Holdings, Inc., E.M.
              Tool Company, Inc. (doing business as Elite Machine Tool Company,
              Inc.), Lawrence Consalvi, Joseph T.W. Gledhill, Nelson
              Engineering, Inc., Don Nelson and Rich Lund

10.6(11)      Promissory Note dated June 30, 2003 issued by Financial Federal
              Credit, Inc. to Gateway International Holdings, Inc. and E.M. Tool
              Company, Inc.

10.7(11)      Promissory Note dated September 1, 2003 issued by Gateway
              International Holdings, Inc. to Joseph T.W. Gledhill

10.8(11)      Mutual Rescission of Contracts, Settlement Agreement and Release
              of Claims dated November 20, 2003 by and among Gateway
              International Holdings, Inc., E.M. Tool Company, Inc., Lawrence
              Consalvi and Joseph T.W. Gledhill, Bechler Cams, Inc., Daniel
              Lennert and Laura Stearman

10.9(11)      Promissory Note dated January 1, 2004 issued by Gateway
              International Holdings, Inc. to Joseph T.W. Gledhill

10.10(11)     Letter Agreement dated April 8, 2004 between Gateway International
              Holdings, Inc. and Nelson Engineering, Inc.

10.11(11)     Standard Industrial/Commercial Multi-Tenant Lease dated August 20,
              2004 between Lawrence A. Consalvi individually doing business as
              Elite Machine Tool Company and SG&H Partners L.P.

10.12(11)     Addendum to Standard Industrial/Commercial Multi-Tenant Lease
              dated August 20, 2004 between Elite Machine Tool Company and SG&H
              Partners L.P.

10.13(11)     Share Exchange Agreement dated September 28, 2004 between Gateway
              International Holdings, Inc., All American CNC Sales, Inc. and the
              shareholders of All American CNC Sales, Inc.

10.14(11)     Employment Agreement dated September 28, 2004 between All American
              CNC Sales, Inc. and Tim Consalvi

10.15(11)     Share Exchange Agreement dated December 7, 2004 between Gateway
              International Holdings, Inc., Gledhill/Lyons, Inc. (doing business
              as Accurate Technologies) and the shareholders of Accurate
              Technologies.

10.16(11)     Employment Agreement dated December 7, 2004 between
              Gledhill/Lyons, Inc., d/b/a Accurate Technologies, Inc. and David
              Lyons.

                                       49
<PAGE>

10.17(11)     Employment Agreement dated December 7, 2004 between
              Gledhill/Lyons, Inc., d/b/a Accurate Technologies, Inc. and
              William Gledhill

10.18(11)     Share Exchange Agreement dated December 23, 2004 between Gateway
              International Holdings, Inc., ESK, Inc., and the shareholders of
              ESK, Inc.

10.19(11)     Share Exchange Agreement effective January 31, 2005 between
              Gateway International Holdings, Inc., Spacecraft Machine Products,
              Inc., Lloyd R. Leavitt, III and the Leavitt Family Trust

10.20(11)     Secured Promissory Note effective January 31, 2005 issued by
              Gateway International Holdings, Inc. to the Leavitt Family Trust

10.21(11)     Employment Agreement effective January 31, 2005 between Spacecraft
              Machine Products, Inc. and Lloyd R. Leavitt

10.22(11)     Stock Pledge Agreement effective January 31, 2005 between Gateway
              International Holdings, Inc. and Lloyd R. Leavitt

10.23(11)     Share Exchange Agreement dated March 31, 2005 between Gateway
              International Holdings, Inc., Nu-Tech Industrial Sales, Inc. and
              the shareholders of Nu-Tech Industrial Sales, Inc.

10.24(11)     Promissory Note dated October 1, 2002 issued by Gateway
              International Holdings, Inc. to Elite Machine Tool Company, Inc.

10.25(11)     Promissory Note dated September 5, 2002 issued by Financial
              Federal Credit, Inc. to Larry A. Consalvi, d/b/a/ Elite Machine
              Tool Company, Inc. and E.M. Tool Company, Inc.

10.26(13)     Stock Purchase Agreement dated February 6, 2003 between Gateway
              International Holdings, Inc. and Joe Thomas.

14.1(11)      Code of Ethics for Gateway International Holdings, Inc.

16.1(3)       Letter of Albright, Persing & Associates, Ltd. dated January 9,
              2001.

16.2(5)       Letter of David E. Coffey, CPA, dated February 3, 2001.

16.3(11)      Letter of Squar Milner Reehl and Williamson, LLP dated June 14,
              2005.

31.1*         Certification of Chief Executive Officer Pursuant to Section 302
              of the Sarbanes-Oxley Act of 2002.

                                       50
<PAGE>

31.2*         Certification of Chief Financial Officer Pursuant to Section 302
              of the Sarbanes-Oxley Act of 2002.

32.1*         Certification of Chief Executive Officer Pursuant to Section 906
              of the Sarbanes-Oxley Act of 2002.

32.2*         Certification of Chief Financial Officer Pursuant to Section 906
              of the Sarbanes-Oxley Act of 2002.

99.1(7)       Certification of Chief Executive Officer and Chief Financial
              Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
              Section 906 of the Sarbanes-Oxley Act of 2002.

99.2(9)       Unaudited Pro Forma Combined Balance Sheet for Gateway as of
              September 30, 2002.

99.3(9)       Financial Statements for Nelson Engineering, Inc. as of September
              30, 2002.

99.4(9)       Financial Statements for Bechler Cams, Inc. as of September 30,
              2002.

99.5(12)      Press release dated November 8, 2004 regarding the unaudited
              financial results for 2004.

99.6(14)      Press release dated April 21, 2005 regarding the completion of
              financial audits for 2003 and 2004 and the declaration of a cash
              dividend by Gateway's Board of Directors.

99.7(14)      Press release dated May 6, 2005 regarding the financial results
              for the first and second quarter of Gateway's current fiscal year.

          *   Filed herewith.

         (1)  Filed on May 10, 1999 as an exhibit to Gateway's registration
              statement on Form 10-SB and incorporated herein by reference.

         (2)  File on June 8, 1999 as an exhibit to Gateway's amended
              registration statement on Form 10-SB and incorporated herein by
              reference.

         (3)  Filed on January 12, 2001 as an exhibit to Gateway's annual report
              on Form 10-KSB for the fiscal year ended September 30, 2000 and
              incorporated herein by reference.

         (4)  Filed on February 14, 2001 as an exhibit to Gateway's quarterly
              report on Form 10-QSB for the fiscal quarter ended December 31,
              2000 and incorporated herein by reference.

         (5)  Filed on February 7, 2002 as an exhibit to Gateway's report on
              Form 8-K dated February 5, 2002 and incorporated herein by
              reference.

         (6)  Filed on May 20, 2002 as an exhibit to Gateway's quarterly report
              on Form 10-QSB for the fiscal quarter ended March 31, 2002 and
              incorporated herein by reference.

                                       51
<PAGE>

         (7)  Filed on August 19, 2002 as an exhibit to Gateway's quarterly
              report on Form 10-QSB for the fiscal quarter ended June 30, 2002
              and incorporated herein by reference.

         (8)  Filed on November 7, 2002 as an exhibit to Gateway's report on
              Form 8-K dated October 23, 2002 and incorporated herein by
              reference.

         (9)  Filed on January 13, 2003 as an exhibit to Gateway's amended
              report on Form 8-K dated October 23, 2002 and incorporated herein
              by reference.

         (10) Filed on August 8, 2003 as an exhibit to Gateway's report on Form
              8-K dated July 24, 2003 and incorporated herein by reference.

         (11) Filed on June 16, 2005 as an exhibit to Gateway's annual report on
              Form 10-KSB for the fiscal year ended September 30, 2003 and for
              the fiscal year ended September 30, 2004 and incorporated herein
              by reference.

         (12) Filed on July 22, 2005 as an exhibit to Gateway's quarterly report
              on Form 10-QSB for the fiscal quarter ended December 31, 2004 and
              incorporated herein by reference.

         (13) Filed on August 12, 2005 as an exhibit to Gateway's amended report
              on Form 10-QSB for the fiscal quarter ended March 31, 2003 and
              incorporated herein by reference.

         (14) Filed on August 15, 2005 as an exhibit to Gateway's report on Form
              10-QSB for the fiscal quarter ended June 30, 2005 and incorporated
              herein by reference.


SIGNATURES

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

GATEWAY INTERNATIONAL HOLDINGS, INC.


By: /s/ Lawrence A. Consalvi
    -----------------------------------
    Lawrence A. Consalvi
    President, Chief Executive Officer and Director
    Date:  October 4, 2005


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