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Filing Pursuant to Rule 424(b)(2)
Registration Statement No. 333-77399
Prospectus Supplement
(To Prospectus Dated April 30, 1999)
30,000 Shares
GATEWAY, INC.
Common Stock
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You should read this prospectus supplement and the accompanying
prospectus carefully before you invest. Both documents contain information you
should consider carefully before making your investment decision.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 2 OF THE PROSPECTUS
PLAN OF DISTRIBUTION
We entered into a Stock and Warrant Purchase and Investor Rights
Agreement dated as of April 26, 2000, as amended on September 15, 2000, with
eSoft, Inc. In the amendment, eSoft agreed to purchase 30,000 shares of our
common stock for an aggregate purchase price of $3,000,000. In April 2000, we
also purchased 640,796 shares of eSoft's common stock for $12,500,000, and on
September 15, 2000, we will make a $12,500,000 4-year loan to eSoft with a 7%
interest rate. The loan will be convertible into eSoft common stock at our
option at a conversion price that can range from $11.00 to $19.507. In
addition, eSoft will issue to us a 5-year warrant to purchase 600,000 shares
of eSoft common stock at an exercise price of $11.00 per share, which becomes
exerciseable when we achieve certain product development and sales criteria
for joint eSoft/Gateway products. We have also entered into a Master Software
License and Services Agreement dated as of February 22, 2000, as amended on
September 15, 2000, with eSoft in which eSoft has agreed to develop a
software product that we have agreed to incorporate with one of our hardware
products to market and sell. There has been no material relationship between
eSoft and us in the past three years other than as described above.
eSoft may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933. We will not pay any compensation in conjunction with the
sale of our common stock to eSoft described above.
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USE OF PROCEEDS
We will receive $3,000,000 gross cash proceeds from the sale of common
stock to eSoft described above. The proceeds will be used for general corporate
purposes.
WHERE YOU CAN FIND MORE INFORMATION
The SEC allows us to "incorporate by reference" information that we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus supplement and the accompanying prospectus.
We incorporate the documents indicated on page 7 of our prospectus and our
annual report on Form 10-K for the year ended December 31, 1999, our proxy
statement dated April 6, 2000 and our Form 10Qs for the quarters ended March 31,
2000 and June 30, 2000.
MARKET FOR OUR COMMON STOCK
On September 11, 2000 the last reported sale price of our common stock
on the New York Stock Exchange was $62.91 per share. Our common stock is listed
on the New York Stock Exchange under the symbol "GTW." The common stock sold
under this prospectus supplement will be listed on the New York Stock Exchange.
As of September 11, 2000, we had 323,017,280 shares of common stock
outstanding.
GENERAL
You should rely only on the information provided or incorporated by
reference in this prospectus supplement and the prospectus. We have not
authorized anyone else to provide you with different information. You should not
assume that the information in this prospectus supplement is accurate as of any
date other than the date on the front of these documents.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus supplement is September 15, 2000
