VisionGateway (VGWA) 10QSB 2008 Q1 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE QUARTERLY PERIOD ENDED July 31, 2007
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

Commission file number 0-30499

VISIONGATEWAY, INC.

(Exact name of Registrant as specified in its charter)

Nevada	90-0015691
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
12707 High Bluff Drive, Suite 200, San Diego, California	92130
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (858) 794-1416

Indicate by check mark whether the registrant: (1) has 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 ýNo o

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

As of July 31, 2007 there were 56,723,505 shares of the registrant’s common stock outstanding.

Transitional Small Business Disclosure Format. Yes o. No ý.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

VISIONGATEWAY, INC.

FORM 10-QSB

FOR THE QUARTERLY PERIOD ENDED JULY 31, 2007

INDEX

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheet at July 31, 2007 (unaudited)	3
	Condensed Consolidated Statements of Operations (unaudited),	4
	Condensed Consolidated Statements of Cash Flows (unaudited)	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis or Plan of Operations	9
Item 3.	Controls and Procedures	19
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	20
Item 4.	Submission of Matters to a Vote of Security Holders	20
Item 5.	Other Information	20
Item 6.	Exhibits and Reports on Form 8-K	21

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

visionGATEWAY, Inc.

Including the accounts of its wholly owned subsidiaries

[A Development Stage Company]

Condensed Consolidated Balance Sheet

July 31, 2007

Unaudited

ASSETS
Assets
Current Assets
Cash	$	61,776
Deposits		125,040
Provision for R&D Rebate		0
Loans to third parties		88,279
Total current assets		275,095
Equipment & Property (net)		9,668
Other assets - goodwill		960,000
Total Assets	$	1,244,763

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Liabilities:
Current Liabilities:
Accounts payable	$	392,725
Deferred Management Salaries & Expenses		1,017,510
Accrued liabilities		468,598
Short Term Note Payable		496,467
Related party payable		1,882,099
Total Liabilities	$	4,257,399
Stockholders’ Deficit:
Preferred Stock - 10,000,000 shares authorized, $.10 par value per share, Nil outstanding		0
Capital Stock - 75,000,000 shares authorized having a par value of $.004 per share; 56,723,505 shares issued and outstanding		226,894
Additional paid-in capital		5.128,255
Deficit accumulated during the development stage		-8,339,060
Accumulated foreign currency translation adjustment		-28,725
Total Stockholders’ Deficit		-3,012,636
Total Liabilities and Stockholders’ Deficit	$	1,244,763

visionGATEWAY, Inc.

Including the accounts of its wholly owned subsidiaries

[A Development Stage Company]

Condensed Consolidated Statements of Operations

For the Three Month Periods Ended July 31, 2007 & 2006, and for the

Period from Reactivation [November 30, 2001] through July 31, 2007

 

	3 mths ended July 31 2007 Unaudited		3 mths ended July 31 2006 Unaudited		Reactivation through July 31, 2007 Unaudited
Revenues	$	0	$	1,950	$	55,356
Research & development		157,799		84,789		1,492,902
General & administrative expenses		455,937		558,345		6,901,514
Operating loss		-613,736		-641,184		-8,339,059
Net Loss Before Income Taxes		-613,736		-641,184		-8,339,059
Current Year Provision for Income Taxes/Rebates		0		0		0
Net Loss		-$613,736		-$641,184		-$8,339,059
Other Comprehensive Income
Unrealized gain(loss) on foreign
Currency translation (net of tax)		-5,079		-4,113		-28,725
		-$618,815		-$645,297		-8,367,784
Loss Per Share - basic and diluted		-$0.01		-$0.01		-$0.22
Weighted Average Shares Outstanding		53,589,002		42,996,296		38,141,634

visionGATEWAY, Inc.

[A Development Stage Company]

Condensed Consolidated Statements of Cash Flows

For the three months Ended July 31, 2007 & 2006, and for the Period from Reactivation

[November 30, 2001] through July 31, 2007

	3 Months Ended July 31, 2007 Unaudited		3 Months Ended July 31, 2006 Unaudited		Reactivation through July 31, 2007 Unaudited
Cash Flows from Operating Activities
Net Loss		-$613,736		-$641,184		-8,339,059
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,242		2,932		64,981
Stock issued for services		0		92,500		862,074
Stock based compensation		123,250		123,250		762,850
Change in current assets		0		-204,379		-213,320
Increase in current liabilities		86,037		189,503		2,120,111
Net Cash Used for Operating Activities		-401,207		-437,378		-4,742,363
Cash Flows from Investing Activities
Purchase of property		0		0		-72,680
Cash Flows from Financing Activities
Proceeds from borrowing		-185,235		438,898		2,380,372
Additional paid in Capital		590,016		3		2,525,172
Net Cash Provided by Financing Activities		404,781		438,901		4,905,544
Effect Of Exchange Rate on cash and cash Equivalents		-5,078		-4,116		-28,724
Net Increase/(Decrease) in Cash		-1,504		-2,593		61,777
Beginning Cash Balance		63,281		7,941		0
Ending Cash Balance	$	61,777	$	5,348	$	61,777
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest		26,434		2,569		650,563
Cash paid during the period for income taxes		0		0		0
Supplemental Disclosure of Non-Cash Financing Activities:
Stock issued to relinquish debt		0		0		1,364,486

visionGATEWAY, Inc.

[A Development Stage Company]

Notes to Condensed Consolidated Financial Statements (unaudited)

July 31, 2007

NOTE 1 ORGANIZATION AND INTERIM FINANCIAL STATEMENTS

(a)Organization

visionGATEWAY, Inc. (the Company) was organized on September 13, 1999, as Peninsula Web Pages, Inc., under the laws of the State of Nevada. It essentially became dormant until November 30, 2001, when its name was changed to visionGATEWAY, Inc. and it acquired two companies. The Company is now a holding company for the software business now being organized in these two wholly owned subsidiaries. Both subsidiaries are Australian corporations; visionGATEWAY Pty Ltd, a distribution and marketing company, and Software Innovisions Pty Ltd, a software development company. The consolidated company is an Enterprise Software Solutions company in the commercialization stage. It is currently growing its planned principal operations, which is development, distribution, and marketing of business software solutions for Internet Resource Management. The accompanying financial statements include the accounts of the Company as well as its wholly owned subsidiaries. All intercompany transactions have been eliminated.

On March 4, 2004, the Company combined with Chiropractic 21 International, Inc., an inactive public Nevada corporation, for the purpose of recapitalization. The combination is accounted for as a reverse purchase.

The financial statements of the Company have been prepared in accordance with U. S. generally accepted accounting principles. The following summarizes the more significant of such policies:

(b)Interim financial statements

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles for complete financial statements generally accepted in the United States of America. In the opinion of management, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial position as of July 31, 2007 and 2006. There has not been any change in the significant accounting policies of visionGATEWAY, Inc. for the periods presented. The results of operations for the three months ended July 31, 2007 are not necessarily indicative of the results for a full-year period. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-KSB for the fiscal year ended April 30, 2007 filed with the Securities and Exchange Commission (the “SEC”). 

(c)Stock based compensation

On May 1, 2006, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123R, “Share-Based Payment,” using the modified prospective method. Consequently, for the three months ended July 31, 2007, the Company’s results of operations reflect compensation expense for new stock options granted and vested under its stock incentive plans during the three months ended July 31, 2007 and the unvested portion of previous stock option grants which vested during the three months ended July 31, 2007. The amount recognized in the financial statements related to stock-based compensation was $123,250 for the three months ended July 31, 2007.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing method. The Company uses historical data to estimate the expected price volatility, the expected option life and the expected forfeiture rate. The Company has not made any dividend payments nor does it have plans to pay dividends in the foreseeable future. The following assumptions were used to estimate the fair value of options granted during the three months ended July 31, 2007 using the Black-Scholes option-pricing model:

	2007
Expected life (years)	10
Interest rate	3.0%
Volatility	100%
Dividend yield	0%

(d)Research & Development Costs

Expensing of Research & Development Costs. Research and Development is expensed as incurred.

NOTE 2 LIQUIDITY/GOING CONCERN

The Company has accumulated losses through July 31, 2007 amounting to $8,339,060 has minimal assets, and has a net working capital deficiency at July 31, 2007 raising substantial doubt about the company’s ability to continue as a going concern.

Management plans include continued development of its planned principal operations and seeking capital either through a private placement or public offering. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Fund raising is underway through Aspen Capital Partners Limited the Company’s major shareholder in Australia. A major fund raising is nearing completion with an investment banking groups in Australia.

NOTE 3  ACCOUNTS PAYABLE

Accounts payable has previously been presented in our accounts as one number. We are now showing separately that part of payables that represents amounts owing to executive management for unpaid salaries and expenses and then the balance of accounts payable.

Item 2. Management’s Discussion and Analysis of Financial Condition and Plan of Operations

Forward-Looking Statements

Statements made in this Form 10-QSB, particularly in this section, which are not purely historical and statements preceded by, followed by or that include the words “may,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets,” or similar expressions, are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and business of the Company.

Forward-looking statements involve inherent risks and uncertainties, and may be dependent upon important factors (many of which are beyond the Company’s control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: general economic or industry conditions, either nationally, internationally or in the communities in which the Company conducts its business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, the Company’s ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, governmental, regulatory and technical factors affecting the Company’s operations, products, services and prices.

Accordingly, results actually received may differ materially from results expected in these statements. Forward-looking statements speak only as of the date they were made. The Company does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date such statements were made.  

Overview

Description of Business

visionGATEWAY is a software development & distribution company with R&D group in Australia, distribution in USA, Europe, Australia/New Zealand and existing customers across three continents. Although total sales during its last two fiscal years were minimal, the Company considers itself in the commercialization stage of its development because of its focus on building its Distribution channels and markets for its products. In Fiscal 2008, the Company is actively commencing its sales growth.

The company provides an extensible platform of software components for Internet Resource Management & Security. These components currently include:

· Holistic Internet Resource Management & Control

· Enhanced security through special modules, including VoIP

· Secure Mail & Secure Data Sharing

· Voice over IP

· IP-based e-Business, m-Commerce & Smart Card Solutions

The visionGATEWAY NG-Linux platform allows our Distributors and Partners to offer their enterprise, small-business and residential customers solutions to the day-to-day problems they face with internet usage - particularly with personal and business security, productivity loss, compliance.

visionGATEWAY’s specialist and proprietary technologies provide the framework business and government customers can use to implement secure IP-based applications with higher revenues, lower operating and management costs, and faster business development cycles.

The company has identified a number of products that it wishes to add to its product offering and that can either be acquired or licensed on a highly cost-effective basis. These products will substantially enhance the company’s position as the one-stop shop for the management of IP-based applications. They include:

· integrated encryption and digital rights management system

· advanced TV Application Manager for IPTV and hybrid digital TV solutions

The Company’s business model is to use outsourced sales channels and to offer meaningful margins to its channel partners. The value chain in the product also provides substantial service revenue opportunities to channel partners.

visionGATEWAY is continuing the building of a global distribution network to grow sales through strategic partnerships - these include:

Ø Avnet Partner Solutions distributorships for United Kingdom, North America, and Australia/New Zealand;

Ø Avnet Technology in UK for supply and support of the appliance systems for INTERScepter version 3;

Ø American Portwell Technology, subsidiary of the large listed Taiwanese company Portwell Inc., who is supplying the appliance devices for INTERScepter version 3 for Enterprise, SMB and Home/SOHO clients;

Ø QED Storage, the Managed Services Provider for USA and EMEA with initial sales expected at over $2m for the next 18 months.

visionGATEWAY has a core software product - “INTERScepter^™”. It is an enterprise business solution that helps to improve company earnings by assisting organizations in understanding, managing and exploiting all aspects of Internet usage and valuable resources, including bandwidth, systems and employee productivity. INTERScepter puts the control of these business issues and costs in the hands of business managers not just the IT department. The INTERScepter^™ solution empowers managers to effectively control, schedule and utilize costly Internet resources, while placing responsibility on users to self manage and modify their Internet usage behavior.

visionGATEWAY’s product innovation for its INTERScepter solution continued with the release of the Linux platform version, and now reaches a significant milestone with the release of a version for the Home/SOHO markets - INTERScepter SmartParent.

The Internet is an ever growing global communications and commerce medium. Traditional organizations (both government and corporate) continue to demonstrate a significant growth in their need for integration of Internet based technologies into their core business and marketing needs. As a result, chief operating and financial officers and managers of business units are faced with three very compelling issues:

1. Managing large amounts of information from the Internet while meeting their corporate and government obligations.

2. Measuring and managing the growing non-productive use of the Internet by staff at work, who use the Internet while at work for non-productive, personal purposes.

3. Maintaining secure and private internet access for staff, while reducing risk and liability relative to internet usage.

visionGATEWAY recognized a market opportunity for the development of software solutions to identify and redirect non-productive use of staff employees at work to profitable uses of their time and Internet availability, while maintaining security and privacy.

visionGATEWAY’s product innovation for its INTERScepter solution continued with the release of the Linux platform version in late 2004, and in early 2006 reached a significant milestone with the release of a version for the Home/SOHO markets, as well as providing many other technical and functional innovations that enhance saleability.

Initially designed as a prototype so it can be embedded onto ADSL/Cable Modems and Wired/Wireless routers, INTERScepter@Home is specifically targeted to the home, home office and small business market segments. Most importantly, it allows a “solution on a chip” to be OEM’d with communications systems manufacturers and communications bandwidth suppliers, particularly the ISP market. The focus has now expanded to provide “SmartParent”.

New synergistic products from 3^rd parties are regularly being evaluated and contracts have been established for distribution in our regional markets for :

v Saturn IQ - provided through an exclusive global licensing agreement - safe and secure email and document storage services available online and from your desktop using software and encryption components;

v Patriot Techcorp - provision of technology solutions to address compliance with the global legislation issues pertaining to Anti-Money Laundering (AML), Anti-Terrorism, the USA PATRIOT Act, Office of Foreign Assets Control (OFAC), the Bank Secrecy Act (BSA), and other related domestic and foreign governmental regulatory requirements. These applications, particularly the new Global Patriot solution, provide unique opportunities in the Financial Services market place for visionGATEWAY and all its solutions.

Although sales have been minimal to date, the Company has built an international presence. Its core software research and development team is based in Brisbane, Australia. The Company’s registered office is located in San Diego, California and a new branch office in the UK has been established. New sales opportunities are also being evaluated in Asia, as well as the United Kingdom. New distribution channels are being negotiated in Australia and New Zealand through various strategic partners as a result of the release of the latest NG platform for INTERScepter and the ability to sell as an “appliance”.

Sales and Marketing

Sales revenue has minimal over the last two years as the Company has built its distribution channels and also sought to prove the strength and viability of the product in various market regions and market segments. Additionally during FY 2007, as a result of market feedback, the company sought to complete version 3 of the INTERScepter product with a focus on :

v Improving technical capabilities by using Linux as the core operating system platform

v Enhancing scalability by providing a solution for the Home market

v Improving installation flexibility by building a single system “appliance” version

The first two elements were completed during FY 2006 and FY 2007, while the third was nearing completion late in FY 2007.

INTERScepter ^™ is marketed and sold as a business tool, not as a technical product, although it is, in the Company’s opinion, technically robust and innovative. The sales proposition is primarily commercial and is targeted at senior management, not solely the IT department. The Company’s business model is to use outsourced sales channels and to offer meaningful margins to its channel partners, which will encourage early and considerable commitment. The value chain in the product also provides substantial service revenue opportunities to channel partners. The Company offers significant product breadth to meet the holistic requirements in Internet Resource Management.

The Company’s strategic decisions, dependent on available capital, are based on rapidly building on an international scale. Three key sales channels will be utilized: strategic distribution partners, large technology resellers and niche technology firms. Additionally, the Company has set a price point and payment model that we believe will encourage product trial and adoption. This product distribution business model also facilitates further growth through the introduction of complementary products, such as those that have now been put in place.

The majority of the Company’s revenues will come from product licenses. As described above, the Company’s first product is the INTERScepter ^™ software solution. It is sold through a network of distribution channels consisting of technology resellers and other distribution outlets, which the Company refers to as its “channel partners.” It provides measurable added value to resellers with only marginal overheads.

Pricing for the INTERScepter ^™ is currently based around a License Pack followed by an ongoing Update Pack. The pricing is based on the number of workstations accessing the Internet rather than the number of users in an organization. Special pricing and bundling has been put together for the new Home product and for the specialist VoIP module.

Channel Partners are contracted to the Company through a Channel Partner Agreement which sets out the terms and conditions of the arrangement, including responsibilities of the parties, product pricing, volume discounts, and channel partner commissions which vary according the value of product sold in a calendar year.

INTERScepter - The Internet Resource Management (IRM) Solution

The Internet impacts every aspect of today’s busy organization so it is no surprise that an organization can benefit from deploying INTERScepter ^™ to manage Internet resources.

Internet Resource Management (IRM) is the Company’s approach to helping organizations to understand how they and their employees are making use of internet resources. The feedback and controls provided by IRM allow organizations and individuals to understand what constitutes good and bad behavior. Managers, for the first time, are provided with the information and the tools to audit and enforce good behavior and individuals are provided with the feedback and controls they need to self-manage their use of expensive internet resources (and company time).

Using IRM, an organization can monitor and report usage, set and enforce usage policies, improve productivity and efficiency and assign costs or plan for future growth.

IRM offers a rapid Return on Investment (ROI) by improving how Internet resources are managed, utilized, and controlled. Most importantly, the massive time wasted as employees make private use of the internet at work can be measured, made highly visible and managed for the first time.

Competition

The Company does not believe that it has any direct competition with respect to its INTERScepter ^™ software program and it is not aware of any competitor offering the same complete solution with the full elements of the software for sale.

The various Internet and network monitoring tools can be classified against an overall framework. Gaps exist between product capabilities and many products are clustered around similar functionality.

INTERScepter™ is different from other management tools. Its perspective is wider in a client sense. It sees all the resource categories as being connected while addressing a particular set of issues relating to Internet usage and policy. INTERScepter™ also provides a real-time reporting engine so that action can be taken to govern Internet access more effectively.

There is, however, substantial indirect competition from products which address issues of immediate concern to clients such as Internet security and violation of web resources. These products address “bad behavior” on network usage. Policing activities tend, however, to intimidate users and bad behavior goes underground and re-offending will generally occur. INTERScepter ^™ assists staff to police their own behavior and guides them to do what is more efficient for the Company.

Competition is also realized from filtering software. Filters eliminate offending materials from the web but the INTERScepter ^™ approach is one of self management rather than forced elimination.

Other products which provide reporting and presentation of gathered statistics, analytics and performance measurement also offer competition for the Company’s product.

There are other competitors in the market as well, however, they mainly supply the home market for parental control of just some aspects of the Internet. Some other products are hardware based and cover the aspect of INTERScepter ^™ that controls bandwidth usage. In the Company’s opinion, no other product has the same total coverage as INTERScepter ^™ .

It must, nevertheless, be considered that competition in the business software industry is intense, with many companies making entries into the market every day. Most of the competitors in the industry are very large businesses with far greater resources than the Company in terms of capital, size and number of employees. The Company’s growth will depend on many variables not in its control, including the ability to obtain additional funding for its operations and development plus many other unforeseen economic and competitive conditions.

Sources and availability of raw materials and the names of principal suppliers

The Company is a producer of software and is not dependent on any one supplier for raw materials for its software products. The underlying technologies are built on publicly available components that are used in conjunction with other software products.

Dependence on one or a few customers

The Company has outsourced its sales channels and has established or is in process of making alliances with distribution channels in numerous locations and, consequently, most of its sales are generated from these various sources. At this time there is no single reseller or group of resellers upon which the Company is dependent.

Patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts, including duration

The Company has registered product trade marks, trade names and logos in Australia and is now in the process of registering these items in the U.S. and Europe. The Company is dependent on its trademark for INTERScepter ^™ to distinguish its software from other products in the market and to create a market identity for its product. Patents are under consideration for next version of INTERScepter ^™ .

At the present time there are no patents in effect upon which the Company is dependent. There are also no concession agreements, franchises, licenses, royalty agreements or labor agreements in effect at this time.

Government approval

The Company is not subject to direct governmental regulation in the conduct of its business.

Effect of existing or probable governmental regulations on the business

At the present time, based on the Company’s business as now conducted, direct governmental regulation of its business is not anticipated.

The Company is, however, subject to the Sarbanes-Oxley Act in the conduct of its business as follows:

Sarbanes-Oxley Act

On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002. This Act imposes a wide variety of new regulatory requirements on publicly-held companies and their insiders. Many of these requirements will affect the Company.

The Sarbanes-Oxley Act has required the Company to review its current procedures and policies to determine whether they comply with the Sarbanes-Oxley Act and the new regulations promulgated thereunder. The Company will continue to monitor its compliance with all future regulations that are adopted under the Sarbanes-Oxley Act and it will take whatever actions are necessary to ensure that it is in compliance.

This Act may also result in higher operating costs to comply as well as higher professional fees.

The estimated amount of capital spent during each of the last two fiscal years on research and development activities.

The estimated amount spent on research and development in the last two fiscal years is approximately $750,000. All of these expenses have been borne by the Company.

Costs and effects of compliance with environmental laws (federal state and local)

The Company has not had any significant cost or effect with respect to compliance with environmental laws, either in the U.S. or in Australia.

Number of employees and number of full time employees

As of July 31, 2007, the total number of employees of the Company is twelve (12) full-time employees of which eleven (11) were engaged in production and sales activities and one (1) was engaged in administrative operations. The Company also uses the services of numerous part-time employees or contract service employees in the areas of product development, accounting and sales functions. These numbers have begun increasing since April 30, 2007 after the slowdown last year as the company restructured its business strategies. During 2007/8 the Company anticipates that it will be increasing its full-time work force as needed to support its proposed global growth strategy, dependent on future sales prospects, the availability of capital and the outcome of proposed acquisitions.

Reports to Security Holders

The Company will voluntarily deliver to all Security holders an annual report which will contain audited financial statements.

The Company regularly files reports with the Securities and Exchange Commission (the “Commission”). These reports include annual reports on Form 10-KSB, quarterly reports on Form 10-QSB and current reports on Form 8-K.

The public may read and copy any materials the Company files with the Commission at the Commission’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information about the Public Reference Room of the Commission by calling the Commission at 1 800 SEC 0330. The Commission also maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically that may be accessed at the Commission’s web site address: http://www.sec.gov.

Management’s Discussion and Analysis of recent activity and Plan of Operation

The following discussion should be reviewed in conjunction with our consolidated financial statements and the related notes and other financial information appearing elsewhere in this report. In addition to historical information, the following discussion and other parts of this document contain forward-looking information that involves risks and uncertainties. Please refer to the section entitled “Forward-Looking Statements” at the beginning of Item 2 of this Form 10-QSB.

The July quarter saw the company continue the execution of its updated business strategy in anticipation of new funding being finalized later in 2007. This resulted in a lift in expenditures compared to previous quarters. Apart from the requirement since May 1, 2006 to reflect the compensation expense for the granting and vesting of existing options ($123,250 for the quarter), much of the additional expenditure relates increased marketing with the release of new product versions, and expenses associated with the funding and M&A activities that are underway. We also began increasing staffing levels, particularly on the sales side, to prepare for the full launch of version 3 of INTERScepter. The company is also reviewing its options from a marketing and investor relations perspective. From a sales and distribution perspective, the Company focused on growing our partnerships in the USA and UK with the focus on leveraging from its existing distribution arrangements as outlined below as well as promoting the company and product in key market segments. The company has also appointed key senior managers to help drive these opportunities in the USA, and now in the UK in conjunction with the setup of a branch office and new staff in the UK. A key focus from a development perspective has been the completion of the key phases of INTERScepter Version 3. This has seen the release of the INTERScepter Home/SOHO and Enterprise “appliance” versions which are being presented to distributors and communications systems manufacturers for OEM opportunities. The quarter also saw the introduction of new products through third party partnerships, focused on internet/email security and compliance, and more recently Voice over IP (VoIP).

The Directors also noted that, the due diligence was continuing in relation to the proposed acquisitions. It is considered likely that the first of these will be completed in the next quarter.

Plan of Operation

Synopsis of Business Strategy and Status

visionGATEWAY is continuing to execute on its updated business plan. The Company’s plan combines organic growth and acquisitions creating greater opportunity for revenue and sales growth through an enhanced corporate and solution package :

INTERScepter

Ø The Company has released the new “appliance” version of INTERScepter for enterprise and SMB markets. Significant enhancements to INTERScepter version 3 have been made from both a technical and user interface perspective;

Ø version 3 is being implemented at Moreton TAFE College in Queensland - long standing client of visionGATEWAY - Unisys who manage their networks is looking to expand the implementation of INTERScepter to other TAFE locations by the end of 2007 for one hundred thousand student users; this would equate to sale value over $800,000 per year when fully operational;

Ø other installations are arranged for new client sites in Australia, as well as in UK and USA;

Ø appliance hardware arrangements have been made for supply of fully specified appliance devices from Portwell of Taiwan and USA through distributors in Australia, USA and UK - Avnet - and their channel partners. Different appliance models are available for Enterprise and SMB level businesses at competitive price points;

Ø shipments of these appliances began July within Australia, as well as to USA and UK;

Ø following on from the “solution on a chip” box version of INTERScepter for Home and SOHO (Small Office Home Office) markets, the Company is to begin during its second fiscal quarter Community trials of “The Smart Parent for the Smart Home” providing full INTERScepter Home/SOHO capability;

Global Distribution & Sales Network

Ø during the year, the Company gained a specialist Strategic Advisor in Tom Kielty of the USA who brings a strong technology background as well as a significant personal network into the Financial Services and Pharmaceutical industries - introductions have already been made to some of the largest global banks, to a number of sales channels, as well to funding sources;

Ø the potential that has evolved from the organizations the Company has already had discussions and live demonstrations with is for 200,000 work stations over the next 12 months;

Ø the Company now has regional sales management established for Australia, USA and UK;

Ø the Company has expanded market coverage to UK and South Africa as part of our Global Distribution Network;

Ø an online stealth marketing program is underway to achieve a rapid uptake and understanding of the benefits INTERScepter v3.0 delivers to the Company’s customers;

Partnerships, Acquisitions & New Products

Ø the Company intends to gain clients and sales plus new products/services through acquisitions;

Ø the Company has added additional synergistic products in e-commerce and point of sale payment solutions, secure mail and secure data sharing, internet security, encryption technologies and VoIP;

Ø the exclusive licensing of Saturn IQ’s IP and technology from the UK will bring a portfolio of revenue generating clients. It is predicted that the immediate sales opportunities can be converted to revenue of an estimated $1,000,000 over the first nine months of the arrangement being implemented.

visionGATEWAY looks to provide, for the companies that it acquires, the ability to obtain the funding they require more cost effectively, strategic leadership and positioning plus enhanced (global) growth potential. VGWA’s objective for the long term is to grow a successful global technology company.

The funding options the Company is progressing facilitate these objectives, and the strategic partnerships the Company has and is putting in place provide the capability to accelerate market access and sales growth.

Funding

The visionGATEWAY business over the last two years has focused on product development and building its market positioning, presence and global distribution channels. In the last twelve months, the key aspects of expenditure have been:

o Building distribution and reseller networks and validating product acceptance in USA, UK, Australia and New Zealand;

o Finding and evaluating synergistic 3^rd party products to bring to the distribution mix;

o Development of INTERScepter version 3 with significant enhancements in functionality and a new underlying platform in Linux for the iGateway component of the product; and

o Development of INTERScepter version to address the Home and SOHO markets.

o Development of INTERScepter “appliance” capability.

During all of fiscal 2007, the Company has focused on arranging major funding that will enable it to take full advantage of the platform that has been built through its product development and global distribution channels. This funding will be used during fiscal 2008 to drive sales in global markets with a key focus on the U.S., Australia and UK. It also enables the Company to focus on some new product initiatives that are aligned to market needs and sales potential.

In the twelve months ended April 2007, with a reduced level of activities, visionGATEWAY has been able to acquire investment and loan funds for working capital of approximately US$1,103,000 from existing and new investors. This has enabled us to pay key operational expenses in Australia and USA, as well as travel and marketing expenses related to the development of distribution and investor efforts in U.S., UK and Australia/New Zealand.

In April 2006 visionGATEWAY announced that it had entered into a Standby Equity Distribution Agreement with Cornell Capital Partners, LP (“Cornell”). Under the agreement, Cornell would provide up to $15 million of funding that can be accessed at the Company’s discretion over a 24-month period by issuing common stock of the Company, pursuant to the conditions and limitations thereunder. Proceeds received by the Company would enable it to execute on its established sales growth strategy.

Any sale of common stock under the agreement would occur pursuant to an effective registration statement, which the Company would establish prior to selling any shares of common stock that it may sell under the agreement. This registration statement is yet to be filed and the SEDA facility is yet to be activated.

While this funding structure provides flexibility to access additional equity capital at selected times when additional capital or liquidity is desirable to drive our growth, it needs to be done at a time that is appropriate taking into account all business and market factors. The Company believes the timing and market factors have not yet been appropriate to access this facility.

The Company has consequently revised its funding strategy moving forward. The key elements of the suggested funding strategy as outlined below are clearly aligned to the updated Corporate Strategy outlined in this report.

Ø Initial funding requirement has been increased to US$10 million - additional requirement would be due to growth requirements in existing markets with the new and enhanced products(particularly the SmartParent), and the initial needs of proposed acquired companies.

Ø Additional tranches of funding to total $20m in 2008 to be accelerated after initial acquisitions are completed to facilitate additional growth in new markets (particularly China, Japan and Korea), a move to a main board listing, and additional acquisitions.

Target Acquisitions

The Company believes these prospective transactions will add real value to the business in the future and that they create the clear emerging leader in our sector. As a combined Company, the business would have a broad product line and technology portfolio, enabling it to provide unparalleled products and support for its customers. In addition, the Company believes it will have an increased ability to address complementary high-growth markets.

As the Company’s markets continue their rapid growth, it expects that these markets will become more attractive to larger players. The combined forces of the companies VGWA bring together increase its abilities to face these competitive challenges by creating a more efficient and financially stronger company, and by increasing the value the Company brings to its customers.

Furthermore, by expanding the Company’s engineering capacity and broadening its technology portfolio, it will be able to accelerate the development of products for complementary markets. The Company’s competitive position is further enhanced by increasing its combined financial strength, and by expanding its management expertise and experience.

The Company has identified significant synergies among the targeted companies, such that the acquisition is accretive to the Company’s earnings commencing in the first full quarter of combined operations, excluding one-time costs associated with the transaction(s). The Company is committed to achieving the synergies it has identified while enhancing its competitive position and momentum in the marketplace.

The combined company would continue to have a significant management and R&D presence in Australia, as well as other centers depending on the acquired companies - most likely Europe. The combined company would also develop sales and support offices in all major regions as sales expand.

Research & Development

The key focus of Research & Development over the last twelve months has been the development of INTERScepter version 3. This version not only addresses the Home and SOHO markets, but also provides an “appliance” approach, database independence and significant technological advantages.

As a result of global exposure to the visionGATEWAY Business Model through investor forums and reseller networks, there is significant interest from other businesses for the Company to consider adding on synergistic product modules and expand the product offering.

The INTERScepter^™ V3 product provides the underlying Internet Resource Management platform on which other modules can be added. These include modules provided by visionGATEWAY as well as specialist modules from third parties such as :

· ࿠ Whole of network traffic monitoring, analysis and performance improvement tools;

· ࿠ Internet Protection and Security tools;

· ࿠ Secure Mail & Secure Data Sharing (IQ Confidential);

· ࿠ Integrated encryption and digital rights management system;

· ࿠ IP-based e-Business, M-Commerce and smart card solutions (SmartCity);

· Facilities to monitor, control and charge Internet traffic over mobile telephony (including PDA’s with phones);

· ࿠ Facilities to monitor, control and charge VOIP traffic (an INTERScepter^™ VoIP Control module is now available);

· ࿠ Specialist security and content review modules as “plug-ins”; and

· ࿠ Process improvement tools e.g. video conferencing.

INTERScepter can also be integrated into Bundled Solutions

ØSecure VoIP - enable new telephony to be secure from threats !

ØIP-based Digital e-Business & m-Commerce - secure / track / measure

ØiNTERNET TRACKER - INTERScepter plus Billing Solution for Higher Education market

ØInternet based security camera control solution - important for additional physical security at key government and corporate locations

The technology of INTERScepter enables visionGATEWAY to build and leverage a number of strategic technology alliances. These can be categorized as follows :

□ Core components

§ Linux operating system

§ Database systems - MS, IBM, Oracle, etc

§ Client workstations - MS, Linux/Novell, Apple

§ User Authentication - MS, Novell, etc

□ Hardware/Networking

§ Server Appliances - IBM, Intel, HP, Tyan

§ Wi-Fi - various technology and solution providers

□ Specialist devices

§ IP based video conferencing

§ IP based Security cameras

§ Voice Over IP (VOIP)

□ Specialist software plug-ins

§ Filters

§ Whole of network bandwidth management

§ Spam management

§ E-mail content checking

§ IM content checking

□ Telcos and ISP’s - differentiate data lines with management tool

New Solutions - INTERScepter@Home - Prototype Overview

Initially designed as a prototype to be embedded onto ADSL/Cable Modems and Wired/Wireless routers, INTERScepter@Home, now also known as SmartParent, is a version of INTERScepter specifically targeted to the home, home office and small business market segments. INTERScepter@Home / SmartParent has been engineered using the NG platform that has been developed by the R&D team as the foundation for all future INTERScepter product variations.

A number of brand name Wireless Routers had been used as a “proof of concept” with the initial version of INTERScepter@Home installed. This work complements the ongoing work using software-based emulators and ensures the product functions on physical hardware.

Features / Functionality

The aim of INTERScepter@Home is to provide control and basic usage statistics for all computers that access the Internet via the INTERScepter@Home hardware device. INTERScepter@Home manages connected computers with “Access Policies” that are assigned and usage statistics that are recorded.

Management of @Home is browser based via a very simple and intuitive interface. @Home is very simple to configure and requires very little on-going management.

Key Points

Ø Using INTERScepter@Home provides the information required to verify ISP usages charges.

Ø INTERScepter@Home on a wireless router / gateway protects unsecured wireless networks by not allowing new computers to access the internet. It will also identify foreign computers using the unsecured wireless network.

Ø INTERScepter@Home is available on ADSL/Cable modems for new broadband users and on Wired/Wireless routers for existing broadband users.

Ø INTERScepter@Home is based on the NG/Linux platform and supports a wide variety of platforms including (but not limited to) PowerPC, ARM, MIPS and Intel CPU’s.

iSmartParent - “The SmartParent for the Smart Home”

visionGATEWAY’s product innovation for its INTERScepter solution continued with the release of the Linux platform version, and now reaches a significant milestone with the release of a version for the Home/SOHO markets - INTERScepter SmartParent.

The next generation home will be increasingly dependant on Internet-based technologies. From MySpace and YouTube to television and radio and alarm systems, nearly every aspect of the home is being networked and redefined in the Internet age. But with these positive advances and conveniences, there are serious issues to consider, especially when children are involved.

visionGATEWAY is on the cutting-edge of this trend with products and solutions originally developed for government agencies and major corporate clients that allow parents to have virtual control and monitoring capabilities over every aspect of the next generation home to ensure total security for personal information as well as powerful tools to ensure that each child is 100 percent safe from predators and unauthorized communications.

Distribution, Marketing & Sales

v Current Situation

INTERScepter is currently installed in sites covering over 5,000 workstations and 50,000 users. The Company’s focus over 2006 and early 2007 has been to continue to prove the market potential of the product (particularly in the USA and UK), consolidate case studies of the business value of the product, and to continue building the distribution and support channels while awaiting the completion of the new version 3 full “appliance” model.

In addition the arrangements to add new 3^rd party products have provided new opportunities for cross-selling of products into specific target market segments.

In conjunction with new funding the Company will begin scaling up its resources to meet the demands of the distribution solutions and channels.  The approach is twofold :

· industry specialization - the Company will bring in industry specialists to drive sales and market opportunities for its solutions in specific target sectors

· solution specialization - the Company will bring on board sales/technical specialists for each of its solutions to work with the industry specialists and the channels in their sales and ongoing support of the client base.

The new funding and resources will facilitate these objectives, and provide the capability to accelerate market access and sales growth. Regional managers have now been put in place for Australia, USA and UK.

v Avnet Partner Solutions and visionGATEWAY

VGWA appointed Avnet Partner Solutions (“APS”) as a distributor. The key component of the Avnet Partner Solutions arrangement is to take INTERScepter ^™ on board in an “appliance” model variation where INTERScepter^™ is linked to IBM brand servers and taken to Avnet’s resellers’ major clients. Through this link with IBM there are opportunities to leverage that company’s resources and client base. IBM has also provided specialist hardware to visionGATEWAY’s R&D team to facilitate the porting of the INTERScepter solution to these systems.

The initial program was targeted at North American customers; but has since been expanded to Australia/New Zealand, and then to the UK. The partnership with APS provides INTERScepter on IBM hardware as a preconfigured appliance model for sales through their many reseller partner channels.

Avnet in UK is now also providing distribution and support of the new appliances, from other vendors, used for the initial rollout of INTERScepter version 3.

v Australian Market Place - early v3 implementations

INTERScepter v3 is being installed at Moreton TAFE with continued customer load testing being completed. The product has also successfully integrated with the TAFE’s student database systems. Completion of client side testing is underway to enable roll out of INTERScepter across the whole of Moreton TAFE and other soon to be merged Queensland based TAFEs.

Expanding TAFE opportunities with Unisys in QLD and NSW. Unisys’ project managers and visionGATEWAY met in February in order to complete the robust testing evaluation and student database integration that is applicable across all Queensland based TAFEs. VGWA is also developing a closer relationship with Unisys’ Brisbane office to gain an entry to Unisys’ NSW customer base and to replicate the INTERScepter implementation across NSW based TAFEs.

v United Kingdom Opportunities

In the United Kingdom pilot installations have been arranged with four local government councils as an entrée to that whole market sector.

Avnet Partner Solutions in UK also have aligned five of their major partner accounts who have pilot customers ready to move forward. Of major interest is one company that is part of the largest global technology supplier of South Africa. They are ready to take the new INTERScepter version 3 appliance to their massive client base.

Item 3.Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Part II—OTHER INFORMATION

Item 1.Legal Proceedings

At July 31, 2007 there were no material legal proceedings pending against the Company and to the knowledge of management, no federal, state or local governmental agency is presently contemplating any such proceedings against the Company or any of its affiliates.

No director, executive officer or affiliates of the Company or any owner of five percent (5%) or more of the Company’s common stock is an adverse party to any action against the Company or its affiliates or otherwise has a material interest adverse to the Company or any of its affiliates.

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

None.

Item 3.Defaults Upon Senior Securities

None.

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

None.

Item 5.Other Information

None.

Item 6.Exhibits and Reports on Form 8-K

(a).Exhibits

2.1(1)	Agreement and Plan of Reorganization, dated February 27, 2004, by and among Chiropractic, Vision Nv, and the stockholders of Vision Nv.
2.2(1)	Addendum to the Agreement and Plan of Reorganization, dated February 27, 2004.
3.1(2)	Articles of Incorporation
3.2(2)	Bylaws of Chiropractic 21 International, Inc.
3.3(2)	Certificate of Amendment to Articles of Incorporation dated September 23, 1970.
3.4(2)	Certificate of Amendment to Articles of Incorporation dated October 29, 1970.
3.5(2)	Certificate of Amendment to Articles of Incorporation dated October 6, 1972.
3.6(2)	Certificate of Amendment to Articles of Incorporation dated November 4, 1980.
3.7(2)	Certificate of Amendment to Articles of Incorporation dated July 15, 1983.
3.8(2)	Certificate of Amendment to Articles of Incorporation dated December 29, 1999.
10.1(3)	Lease, dated February 15, 2004 by and between vision Gateway Pty Ltd and Masinello Holdings Pty Ltd.
10.2(3)	HQ Global Workplaces Virtual Office Program Service Agreement, dated December 1, 2003 by and between the visionGATEWAY, Inc. and HQ Global Workplaces, Inc.
10.3(3)	Buy/Sell Agreement, dated May 14, 2004, by and between visionGATEWAY, Inc. and AVNET, INC.
10.4(3)	Letter Agreement regarding Management Services by and between visionGATEWAY, Inc. and Aspen Capital Partners Pty Ltd.
10.5(3)	Letter Agreement regarding Agent and Consulting Arrangements by and between visionGATEWAY, Inc. and Aspen Capital Partners Pty Ltd.
10.6(3)	Letter Agreement regarding Employment of Michael Emerson by and between visionGATEWAY, Inc., Michael Emerson and MICEL Pty Ltd.
10.7(3)	Letter Agreement regarding Agent and Consulting Arrangements by and between visionGATEWAY, Inc. and MICEL Pty Ltd.
24.1	Power of Attorney (see signature page)
31.1	Certification by Michael Emerson, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Martin G. Wotton, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by Michael Emerson, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, promulgated pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by Martin G. Wotton, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, promulgated pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

_____________________

(1) Incorporated by reference to 8-K12G3 filed with the Securities and Exchange Commission on April 7, 2004.

(2) Incorporated by reference to 10-SB filed with the Securities and Exchange Commission on April 28, 2000.

(3) Incorporated by reference to 10-KSB filed with the Securities and Exchange Commission on August 19, 2004.

(b)   Reports on Form 8-K

We have furnished to the SEC three reports on Form 8-K during the quarter ended July 31, 2007. Two of these (one in May and one in July) related to the change in accountants, and the third (in May) related to the acquisition of Lagmore Limited of UK.

SIGNATURE

Pursuant to the requirements of the Securities Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	VISIONGATEWAY, INC.
	By:	/s/ Michael F. Emerson
		Michael F. Emerson Chief Executive Officer
Date: September 19, 2007