<PAGE>

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

                                   FORM 10-QSB

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

                For the quarterly period ended September 30, 2000

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

                         For the transition period from
                                       to
                         --------------  --------------

                           Commission File No. 1-4766
                                              -------

                           GATEWAY ENERGY CORPORATION
    ------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


             Delaware                             44-0651207
    -----------------------------      ----------------------------------
   (State or other jurisdiction of    (IRS Employer Identification Number)
    incorporation or organization)

                          500 Dallas Street, Suite 2615
                                Houston, TX 77002
                    (Address of principal executive offices)

Issuer's telephone number : (713) 336-0844


        Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 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
            -------  -------

                      APPLICABLE ONLY TO CORPORATE ISSUERS

     As of November 14, 2000, the Issuer had 15,312,120 shares of its common
                               stock outstanding.

       Transitional Small Business Disclosure Format: Yes       No   X
                                                         -------  -------



                                       1

<PAGE>

                                                 FORM 10-QSB
                                                   PART I
ITEM  1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                                                                                                 PAGE
<S>                <C>                                                                           <C>
                   Unaudited Consolidated Balance Sheet
                   as of September 30, 2000.                                                        3

                   Unaudited Consolidated Statements of Operations for the three
                   months and nine months ended September 30, 2000
                   and September 30, 1999.                                                          4

                   Unaudited Consolidated Statements of Cash Flows for
                   the nine months ended September 30, 2000
                   and September 30, 1999.                                                          5

                   Notes to Consolidated Financial Statements                                       6

</TABLE>










                                       2

<PAGE>

GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
(UNAUDITED)

<TABLE>
<CAPTION>

<S>                                                                                             <C>
ASSETS
Current Assets
   Cash and cash equivalents...........................................................           $         78,506
   Certificates of deposit.............................................................                    691,387
   Trade accounts receivable...........................................................                  1,659,035
   Inventories ........................................................................                     70,040
   Prepaid expenses and other assets ..................................................                    190,927
                                                                                                ------------------
        Total current assets...........................................................                  2,689,895
                                                                                                ------------------

Property and Equipment  - at cost
   Gas gathering, processing and transportation........................................                  8,838,894
   Equipment and office furniture......................................................                    664,933
                                                                                                ------------------
                                                                                                         9,503,827
   Less accumulated depreciation.......................................................                  3,167,638
                                                                                                ------------------
                                                                                                         6,336,189
                                                                                                ------------------
Other Assets
   Notes receivable....................................................................                    119,751
   Equity investment in partnership....................................................                    265,758
   Other...............................................................................                    259,303
                                                                                                ------------------
                                                                                                           644,812
                                                                                                ------------------
                                                                                                  $      9,670,896
                                                                                                ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
   Accounts payable....................................................................           $      1,423,691
   Notes payable.......................................................................                    130,000
   Current maturities of long-term debt................................................                    234,328
   Accrued expenses and other liabilities..............................................                    106,235
                                                                                                ------------------
        Total current liabilities......................................................                  1,894,254
                                                                                                ------------------

Long-term Debt, less current maturities................................................                    608,440
                                                                                                ------------------

Stockholders' Equity
   Preferred stock -  $1.00 par value; 10,000 shares authorized; no shares issued and
      outstanding......................................................................                        -
   Common stock -  $0.25 par value; 17,500,000 shares
       authorized; 15,312,120 shares issued and outstanding............................                  3,828,030
   Additional paid-in capital..........................................................                 16,047,437
   Accumulated deficit.................................................................                (12,707,265)
                                                                                                -------------------
                                                                                                         7,168,202
                                                                                                -------------------
                                                                                                  $      9,670,896
                                                                                                ===================

</TABLE>

                  The accompanying notes are an integral part of this statement.

                                       3

<PAGE>

GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>

                                                             THREE MONTHS ENDED                       NINE MONTHS ENDED
                                                                SEPTEMBER 30,                           SEPTEMBER 30,
                                                    -------------------------------------     ----------------------------------
                                                           2000                 1999              2000               1999
                                                    -------------------     -------------     -------------     ----------------
<S>                                                 <C>                     <C>               <C>               <C>
Operating revenues
    Natural gas sales................................$     3,099,495    $      1,940,649  $      6,192,398    $      4,179,350
    Transportation and processing....................        102,737             195,754           300,012             863,887
    Other............................................         23,657              51,577            68,502             153,156
                                                     ---------------    ----------------  ----------------    ----------------
                                                           3,225,889           2,187,980         6,560,912           5,196,393
Operating costs and expenses
    Cost of natural gas purchased...................       2,435,156           1,437,399         4,989,940           3,187,120
    Operation and maintenance.......................         207,513             286,055           706,009             842,161
    Depreciation and amortization...................         171,796             191,491           514,333             587,019
    General and administrative......................         519,876             745,416         1,391,120           1,859,552
                                                     ---------------    ----------------  ----------------    ----------------
                                                           3,334,341           2,660,361         7,601,402           6,475,852
                                                     ---------------    ----------------  ----------------    ----------------
Operating loss......................................        (108,452)           (472,381)       (1,040,490)         (1,279,459)

Other income (expense)
    Interest income.................................          11,708              16,903            41,776              57,778
    Interest expense................................         (34,158)            (41,685)         (101,182)           (120,118)
    Equity in earnings of partnership...............          26,790              24,962            68,860              65,900
    Other income, net...............................             190                 923           275,864              10,743
                                                     ---------------    ----------------  ----------------    ----------------
                                                               4,530               1,103           285,318              14,303
                                                     ---------------    ----------------  ----------------    ----------------
Loss before income taxes............................        (103,922)           (471,278)         (755,172)         (1,265,156)
Income taxes........................................               -                   -                 -                   -
                                                     ---------------    ----------------  ----------------    ----------------
Net loss.............................................$      (103,922)   $       (471,278) $       (755,172)   $     (1,265,156)
                                                     ===============    ================  ================    ================


Basic and diluted loss per share.....................$         (0.01)   $          (0.03) $          (0.05)   $          (0.08)
                                                     ===============    ================  ================    ================

</TABLE>





              The accompanying notes are an integral part of these statements.






                                       4

<PAGE>

GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
                                                                                      NINE MONTHS ENDED SEPTEMBER 30,
                                                                                --------------------------------------------
                                                                                        2000                    1999
                                                                                --------------------  ----------------------
<S>                                                                             <C>                   <C>
INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS

Cash flows from operating activities
   Net loss................................................................       $     (755,172)       $   (1,265,156)
   Adjustments to reconcile net loss to net cash used in
   operating activities:
      Equity in undistributed earnings of partnerships.....................               (7,763)              (16,646)
      Depreciation and amortization........................................              514,333               587,019
      Gain on sale of properties...........................................             (170,034)                    -
      Stock option compensation expense....................................               86,036                     -
      Non-cash expenses....................................................               42,191               (20,236)
      Settlement of Rosenthal lawsuit......................................                    -               213,607
      Net change in cash and cash
        equivalents, resulting from changes in:
        Trade accounts receivable..........................................             (613,701)              198,102
        Inventories........................................................              (10,724)                5,546
        Prepaid expenses and other current assets..........................              (76,104)              102,424
        Accounts payable...................................................              611,839               150,885
        Accrued expenses and other liabilities.............................             (252,414)              (43,944)
                                                                                -----------------     -----------------
           Net cash used in operating activities...........................             (631,513)              (88,399)
                                                                                -----------------     -----------------

Cash flows from investing activities
   Capital expenditures....................................................             (209,693)             (171,949)
   Proceeds from sale of properties........................................              909,589                     -
   Collections of notes receivable.........................................                    -                75,663
   Decrease (increase) in certificates of deposit..........................              282,153               (40,582)
                                                                                ----------------      -----------------
           Net cash provided by (used in) investing activities.............              982,049              (136,868)
                                                                                ----------------      -----------------

Cash flows from financing activities
   Proceeds from borrowings................................................              330,000               233,500
   Payments on borrowings..................................................             (628,119)              (86,424)
   Issuance of common stock................................................                    -                14,975
                                                                                ----------------      ----------------
           Net cash (used in) provided by financing activities.............             (298,119)              162,051
                                                                                -----------------     ----------------

Net increase (decrease) in cash and cash equivalents.......................               52,417               (63,216)
Cash and cash equivalents at beginning of period...........................               26,089               152,174
                                                                                ----------------      ----------------

Cash and cash equivalents at end of period.................................       $       78,506        $       88,958
                                                                                ================      ================

</TABLE>

                The accompanying notes are an integral part of these statements.

                                       5

<PAGE>

GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         (1)      Principles of Consolidation and Nature of Business

         The consolidated financial statements include the accounts of
Gateway Energy Corporation and its wholly owned subsidiary companies, Gateway
Pipeline Company, Gateway Offshore Pipeline Company, Gateway Energy Marketing
Company, Fort Cobb Fuel Authority, L.L.C. and Gateway Processing Company,
plus a small amount of activity in one joint venture and one partnership.
Based on its ownership, the Company proportionally consolidates its joint
venture interest, and accounts for its partnership interest on the equity
method. All significant intercompany transactions have been eliminated in
consolidation.

         The accompanying consolidated financial statements have been
prepared by the Company, without audit. In the opinion of management, such
financial statements reflect all adjustments necessary for a fair
presentation of the financial position and results of operations in
accordance with generally accepted accounting principles. The financial
statements should be read in conjunction with the financial statements and
the Notes thereto included in the Company's Annual Report on Form 10-KSB for
the ten months ended December 31, 1999. Certain minor reclassifications to
the prior period statements have been made to conform with the September 30,
2000 presentation.

         The Company owns and operates natural gas gathering, transportation
and distribution systems and related facilities in Texas, Oklahoma and
Louisiana, and offshore in Texas and federal waters of the Gulf of Mexico.
The Company also operates a natural gas distribution company in Oklahoma.

         (2)      Earnings Per Share

         Basic earnings per share is computed by dividing net earnings or
loss by the weighted average number of common shares outstanding during the
period. Diluted earnings per share is computed by dividing net earnings or
loss by the weighted average number of shares outstanding, after giving
effect to potentially dilutive common share equivalents outstanding during
the period. Potentially dilutive common share equivalents are not included in
the computation of diluted earnings per share if they are anti-dilutive. For
the three-month and nine-month periods ended September 30, 2000 and 1999, the
diluted loss per common share is the same as basic since the effect of
potentially dilutive common shares arising from outstanding stock options and
warrants was anti-dilutive.

         The weighted average number of common shares outstanding used in the
computation of basic and diluted earnings per share for the three-month
periods ended September 30, 2000 and 1999 and the nine-month periods ended
September 30, 2000 and 1999 were 15,312,172, 15,312,262, 15,312,195, and
15,259,773.

         (3)      Notes Payable

         The Company has an operating line of credit with a bank that
provides for maximum borrowings of $500,000 through September 2001. Interest
is payable monthly at 7.06% per

                                       6

<PAGE>

GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

annum and principal is due on demand, or if no demand is made, at maturity.
The line is collateralized by $500,000 of the Company's certificates of
deposit. At September 30, 2000, the Company had available borrowing capacity
under the line of credit totaling $370,000.

         (4)      Long-term Debt

         Long-term debt at September 30, 2000 consists of the following:

<TABLE>
<CAPTION>
                               <S>                                                             <C>
                               Subordinated notes                                              $     842,768
                               Less current maturities                                               234,328
                                                                                               -------------
                                                                                               $     608,440
                                                                                               =============

</TABLE>

         (5)      New Accounting Rules

         The Company has adopted Financial Accounting Standards Board
Interpretation 44, INTERPRETATION OF APB OPINION 25, ("FIN 44"), issued
effective July 1, 2000, which modifies accounting rules governing stock
compensation. Under FIN 44, the Company is required to use variable award
accounting for outstanding common stock options that were repriced during
1999. Variable award accounting requires recognition of compensation expense
in certain circumstances when the market price of the Company's stock exceeds
the exercise price of the stock option. The adoption of FIN 44 resulted in
recognition of $86,000 of non-cash stock compensation expense in the
accompanying financial statements.

         (6)      Supplemental Disclosures of Cash Flow Information

         Cash paid during the periods is as follows:

<TABLE>
<CAPTION>

                                                                        NINE MONTHS ENDED SEPTEMBER 30,
                                                                         2000                     1999
                                                                 ---------------------     -------------------
                               <S>                               <C>                       <C>
                               Interest                          $     81,841              $    98,870

</TABLE>






                                       7

<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                   RESULTS OF OPERATIONS.

         The following management's discussion and analysis contains trend
analysis and other forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Actual results could differ
materially from those projected in the forward-looking statements throughout
this document as a result of the risk factors set forth below in the section
entitled FACTORS AFFECTING FUTURE RESULTS and elsewhere in this document.

RESULTS OF OPERATIONS

GENERAL

         The Company evaluates each of its activities based on the operating
margin it produces. The Company defines operating margin as revenues, less
the cost of purchased gas and operating and maintenance expenses. Management
reviews and evaluates the operations of three main segments - Onshore
operations, Offshore operations and Fort Cobb operations. The Company
continues to actively pursue opportunities in all three segments.

THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO SEPTEMBER 30, 1999

TOTAL OPERATIONS

         The following table sets forth information for the three months
ended September 30, 2000 and 1999:

<TABLE>
<CAPTION>
                                                           2000                  1999
                                                     ------------------     ----------------
         <S>                                         <C>                    <C>
         Revenues...............................       $    3,225,889         $   2,187,980
         Operating margins......................              583,220               464,526
         Depreciation and amortization..........              171,796               191,491

</TABLE>

         Operating margins for the three months ended September 30, 2000
increased by $119,000 compared to the same period of the prior year. All
operating segments reported higher operating margins than for the same
quarter of last year - Fort Cobb operating margins increased by $74,000,
Onshore by $38,000 and Offshore by $7,000. These segments are discussed
individually below in greater detail. In 2000 the Company continues to focus
on enhancing the profitability of its existing systems by reviewing and
renegotiating transportation agreements and purchase/sale contracts, when
appropriate, and controlling operating and maintenance expenses.


                                       8

<PAGE>

ONSHORE OPERATIONS

         The following table sets forth information for the three months
ended September 30, 2000 and 1999:

<TABLE>
<CAPTION>
                                                           2000                   1999
                                                     ------------------     -----------------
         <S>                                         <C>                    <C>
         Revenues...............................       $  1,936,485         $   1,344,762
         Operating margins......................            335,069               297,625
         Depreciation and amortization..........             95,123               114,079

</TABLE>

         Operating margins for Onshore operations increased in the third
quarter by $38,000 from the same period of the prior year. The increase was
due to additional throughput volumes on several systems, partially offset by
$31,000 of operating margins related to properties sold effective January 1,
2000.

OFFSHORE OPERATIONS

         The following table sets forth information for the three months
ended September 30, 2000 and 1999:

<TABLE>
<CAPTION>
                                                           2000                   1999
                                                     ------------------     ------------------
         <S>                                         <C>                    <C>
         Revenues...............................       $     67,157           $    83,636
         Operating margins......................             (6,927)              (14,302)
         Depreciation and amortization..........             35,198                33,918

</TABLE>

         Operating margins for Offshore operations increased in the third
quarter by $7,000 over the same period of the prior year. The increase was
primarily due to a reduction in third party operating expenses of $24,000,
partially offset by a decrease in revenues of $16,000. The Company continues
to actively pursue several opportunities offshore in the Gulf of Mexico.

FORT COBB OPERATIONS

         The following table sets forth information for the three months
ended September 30, 2000 and 1999:

<TABLE>
<CAPTION>
                                                           2000                   1999
                                                     ------------------     ------------------
         <S>                                         <C>                    <C>
         Revenues...............................       $  1,222,247           $  759,582
         Operating margins......................            255,078              181,203
         Depreciation and amortization..........             41,475               43,494

</TABLE>

         Operating margins for Fort Cobb operations increased in the third
quarter by $74,000 from the same period of the prior year primarily due to
increased sales volumes and a $19,000 reduction in operating expenses.

                                       9

<PAGE>

OPERATIONS SUPPORT

         The following table sets forth information for the three months
ended September 30, 2000 and 1999:

<TABLE>
<CAPTION>
                                                                2000                  1999
                                                          -----------------     -----------------
         <S>                                              <S>                   <S>
         General and administrative...................      $    519,876          $   745,416
         Interest income..............................            11,708               16,903
         Interest expense.............................           (34,158)             (41,685)
         Equity in earnings of partnership............            26,790               24,962
         Other income (expense), net..................               190                  923

</TABLE>

         General and administrative expenses for the quarter are 30% lower
than for the same period of last year, due primarily to lower legal fees,
partially offset by $86,000 of non-cash stock compensation expense related to
stock options that were repriced in 1999. Under the Financial Accounting
Standards Board Interpretation 44, INTERPRETATION OF APB OPINION 25, the
Company is required to account for these options under variable award
accounting, due to the change in the option exercise price. Variable award
accounting requires recognition of compensation expense under certain
circumstances when the market price of the Company's stock exceeds the
exercise price of the stock option.

         Interest income varies directly with the balance on deposit in the
Company's certificates of deposit and short-term money market accounts.

         Interest expense fluctuates directly with the amount of outstanding
long-term debt and the amount of borrowings under the Company's operating
line of credit with a bank.

NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO SEPTEMBER 30, 1999

TOTAL OPERATIONS

         The following table sets forth information for the nine months ended
September 30, 2000 and 1999:

<TABLE>
<CAPTION>
                                                                 2000                 1999
                                                            ----------------     ----------------
         <S>                                                <C>                  <C>
         Revenues.....................................        $  6,560,912         $  5,196,393
         Operating margins............................             864,963            1,167,112
         Depreciation and amortization................             514,333              587,019

</TABLE>

         Operating margins for the nine months ended September 30, 2000
decreased by $302,000 compared to the same period of the prior year. Onshore
and Offshore Operations operating margins decreased $216,000 and $148,000,
respectively, partially offset by an increase in Fort Cobb operating margins
of $62,000. These segments are discussed individually below in greater
detail. In 2000 the Company continues to focus on enhancing the profitability
of its existing systems by reviewing and renegotiating transportation
agreements and purchase/sale contracts, when appropriate, and controlling
operating and maintenance expenses.


                                       10

<PAGE>

ONSHORE OPERATIONS

         The following table sets forth information for the nine months ended
September 30, 2000 and 1999:

<TABLE>
<CAPTION>
                                                            2000                   1999
                                                      ------------------     -----------------
         <S>                                          <C>                    <C>
         Revenues................................       $  4,708,319           $  3,677,319
         Operating margins.......................            726,812                943,025
         Depreciation and amortization...........            287,864                362,468

</TABLE>

         Operating margins for Onshore Operations decreased $216,000 in the
nine months ended September 30, 2000 from the same period of the prior year.
The decrease was due to the termination of a short-term contract for
throughput volumes on the Company's LeLeux system in Louisiana, partially
offset by increases on various other systems. Talks continue with the
producer to regain at least a portion of the throughput volumes. Operating
margins related to properties sold effective January 1, 2000 accounted for
$87,000 of the decrease from the prior period.

OFFSHORE OPERATIONS

         The following table sets forth information for the nine months ended
September 30, 2000 and 1999:

<TABLE>
<CAPTION>
                                                            2000                     1999
                                                      ------------------     ---------------------
         <S>                                          <C>                    <C>
         Revenues................................       $    179,713           $    349,482
         Operating margins.......................            (76,090)                71,586
         Depreciation and amortization...........            101,298                 99,240

</TABLE>

         Operating margins for Offshore Operations decreased $148,000 in the
nine months ended September 30, 2000 from the same period of the prior year.
The decrease was primarily due to the combined impact of lower throughput
volumes from anticipated well production declines and a first quarter
non-recurring maintenance expenditure totaling $62,000, partially offset by
lower operating expenses of $84,000. The Company continues to actively pursue
several opportunities offshore in the Gulf of Mexico.

FORT COBB OPERATIONS

         The following table sets forth information for the nine months ended
September 30, 2000 and 1999:

<TABLE>
<CAPTION>
                                                            2000                     1999
                                                      ------------------     ---------------------
         <S>                                          <C>                    <C>
         Revenues................................       $  1,672,880           $  1,169,592
         Operating margins.......................            214,241                152,501
         Depreciation and amortization...........            125,171                125,311

</TABLE>
                                       11
<PAGE>

         Operating margins for Fort Cobb Operations increased by $62,000 in
the nine months ended September 30, 2000 from the same period of the prior
year primarily due to increased sales volumes delivered to local farmers for
crop irrigation fuel.

OPERATIONS SUPPORT

         The following table sets forth information for the nine months ended
September 30, 2000 and 1999:

<TABLE>
<CAPTION>
                                                              2000                  1999
                                                        -----------------     ------------------
         <S>                                            <C>                   <C>
         General and administrative...............        $  1,391,120          $  1,859,552
         Interest income..........................              41,776                57,778
         Interest expense.........................            (101,182)             (120,118)
         Equity in earnings of partnership........              68,860                65,900
         Other income, net........................             275,864                10,743

</TABLE>

         General and administrative expenses for the nine months ended
September 30, 2000 declined by 25% compared to the same period of the prior
year, due primarily to lower legal and outside professional fees, partially
offset by $86,000 of non-cash stock compensation expense in 2000 related to
stock options that were repriced in 1999. Under the Financial Accounting
Standards Board Interpretation 44, INTERPRETATION OF APB OPINION 25, the
Company is required to account for these options under variable award
accounting, due to the change in the option exercise price. Variable award
accounting requires recognition of compensation expense under certain
circumstances when the market price of the Company's stock exceeds the
exercise price of the stock option.

         Interest income varies directly with the balance on deposit in the
Company's certificates of deposit and short-term money market accounts.

         Interest expense fluctuates directly with the amount of outstanding
long-term debt and the amount of borrowings under the Company's operating
line of credit with a bank.

         Other income for the nine months ended September 30, 2000 includes
gain on the sales of Catarina and Zwolle systems and an adjustment to legal
fees recognized in prior periods.

LIQUIDITY AND CAPITAL RESOURCES

         Net cash used in operating activities totaled $632,000 for the nine
months ended September 30, 2000, compared to $88,000 used in operating
activities for the same period last year. The difference is due to changes in
current asset and liability accounts, which used $754,000 more cash compared
to the prior year, partially offset by a lower net loss for the nine months
ended September 30, 2000. During the period the Company received $910,000 in
proceeds for the January 2000 sales of its interests in the Catarina and
Zwolle systems.

                                       12

<PAGE>

         The Company has cash and cash equivalents and certificates of
deposit totaling $770,000 at September 30, 2000. The Company's operating line
of credit agreement with a bank provides for maximum borrowings of up to
$500,000, and is collateralized with a certificate of deposit for the same
amount. The available borrowing capacity as of September 30, 2000 was
$370,000. The Company's long-term debt to total capitalization was
approximately 8%, which should provide opportunity for the Company to utilize
conventional long-term financing to fund acquisitions or construction
projects.

         Absent acquisitions or significant development projects, the Company
will continue to fund its operations through internally generated funds and
available cash and the certificates of deposit. The Company believes its cash
flows from operations and available cash and certificates of deposit will be
sufficient to fund its ongoing operations for the foreseeable future. Any
significant property acquisitions or development projects will require
outside project financing.

         During the second quarter of 2000, the Company filed an Application
for General Rate Increase with the Oklahoma Corporation Commission (the
"Commission") on behalf of Fort Cobb. Fort Cobb is entitled under the
Commission rules and guidelines to earn additional annual revenues to cover
the costs of service and to provide a reasonable return on the assets
employed to serve its customers. Under Oklahoma law, the Commission has
complete discretion over the amount and timing of any rate increase granted.
If any rate increase is granted, the Company expects that it would not be
effective before December 2000.

FACTORS AFFECTING FUTURE RESULTS

         The Company's strategies for enhancing stockholder value include,
among other things: (i) focusing on gathering, processing, transporting and
marketing of natural gas; (ii) expanding the Company's asset base in core
geographic areas; (iii) developing a niche that will create demand for our
services, and; (iv) acquiring or constructing properties in one or more new
core areas.

         The Company must provide services to its customers, primarily
producers, at competitive prices. Therefore, in order to be successful the
Company must contain its costs in line with industry competitors. The
Company's access to reasonably priced long-term capital will have a
significant effect on its ability to acquire additional properties to
increase operating margins sufficiently to cover its fixed overhead costs.
The Company believes that its low debt, available cash reserves and
experienced operating management will allow the Company to access capital and
find properties which can provide attractive returns. However, there can be
no assurance that the Company will be successful in this endeavor.

         The Company's ability to generate long-term value for the common
stockholders is dependent upon the enhancement of its core assets and the
successful acquisition of additional midstream assets. There are many
companies participating in the midstream segment of the natural gas industry,
many with resources greater than the Company. Greater competition for
profitable operations can increase prices and make it more difficult to
acquire assets at reasonable multiples of cash flow. The Company believes
that it will be able to compete in this environment and will be able to find
attractive investments which compliment its existing properties; however, it
is not possible to predict competition or the effect this will have on the
Company's operations.

                                       13

<PAGE>

         The Company's operations are also significantly affected by factors
which are outside the control of the Company. Gas gathering and processing is
dependent on throughput volume. Throughput on the Company's systems is
significantly dependent on natural gas production which is affected by
natural gas prices as prices affect the willingness of producers to invest
the required capital to obtain geological and geophysical information, drill
development or exploratory wells, and to rework or maximize production on
existing wells. Natural gas prices are at levels which should provide
adequate incentive to producers; however, there is no assurance that such
prices will remain at current levels, and that producers will continue to
react positively to the current prices.

         The Company's revenues, particularly from its retail operations, are
also affected by weather. Much of the retail demand is for crop irrigation
and drying. Heavy precipitation in the spring and summer growing season and
hot, dry weather in the fall can significantly reduce demand for natural gas
in the Company's retail service areas.

                                    PART II

ITEM 1.           LEGAL PROCEEDINGS

                  None

ITEM 2.           CHANGES IN SECURITIES

                  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:

                         27   Financial Data Schedule.

                  b)  Reports on Form 8-K:

                      None


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<PAGE>

                                  SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.


                                      GATEWAY ENERGY CORPORATION

                                               /s/ Michael T. Fadden
                                      -------------------------------------
                                      President and Chief Executive Officer


                                              /s/ Scott D. Heflin
                                      -------------------------------------
                                      Chief Financial Officer and Treasurer



   NOVEMBER 14, 2000
--------------------------
(Date)











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