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 March 31, 2008

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

                         For the transition period from
                             __________to __________

                           Commission File No. 0-6404


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


            Delaware                                         44-0651207
(State or other jurisdiction of                  (I.R.S. Employer Identification
 incorporation or organization)                               Number)

                        1415 Louisiana Street, Suite 4100
                                Houston, TX 77002
                     --------------------------------------
                    (Address of principal executive offices)

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

     Check whether the issuer (1) 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

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

As of May 1, 2008, the Issuer had 19,026,665 shares of its common stock
outstanding.

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

<PAGE>


                                   FORM 10-QSB

                         Part I - Financial Information
                         ------------------------------


Item  1.       Financial Statements

                                                                            Page

              Consolidated Balance Sheet (Unaudited)
                  as of March 31, 2008                                        3

              Consolidated Statements of Operations (Unaudited)
                  for the three month period ended March 31, 2008
                  and March 31, 2007                                          4

              Consolidated Statements of Cash Flows (Unaudited) for the
                  three month period ended March 31, 2008 and
                  March 31, 2007                                              5

              Notes to Consolidated Financial Statements (Unaudited)          6

Item  2.      Management's Discussion and Analysis or Plan of Operations     17

Item  3.      Controls and Procedures                                        23



                           Part II - Other Information
                           ---------------------------

Item  1.      Legal Procedings                                               23

Item  2.      Unregistered Sales of Equity Securities and Use of Proceeds    23

Item  3.      Defaults Upon Senior Securities                                23

Item  4.      Submission of Matters to a Vote of Security Holders            23

Item  5.      Other Information                                              23

Item  6.      Exhibits                                                       23

                                        2

<PAGE>
<TABLE>
<CAPTION>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
March 31, 2008
(Unaudited)



<S>                                                                 <C>
ASSETS
Current Assets
   Cash and cash equivalents ....................................   $  2,246,677
   Accounts receivable trade, net ...............................      2,472,417
   Prepaid expenses and other assets ............................        392,262
                                                                    ------------
        Total current assets ....................................      5,111,356
                                                                    ------------

Property and Equipment, at cost
   Gas gathering, processing and transportation .................     11,123,012
   Office furniture and other equipment .........................        133,989
                                                                    ------------
                                                                      11,257,001
   Less accumulated depreciation and amortization ...............     (3,442,197)
                                                                    ------------
                                                                       7,814,804
                                                                    ------------

Other Assets
   Deferred tax assets, net .....................................      1,668,743
   Intangible assets, net of accumulated amortization of $104,479        882,940
   Other ........................................................        245,609
                                                                    ------------
                                                                       2,797,292
                                                                    ------------
        Total assets ............................................   $ 15,723,452
                                                                    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
   Accounts payable .............................................   $  2,060,087
   Accrued expenses and other liabilities .......................        272,714
   Trade notes payable ..........................................        335,389
   Current maturities of capital lease ..........................         18,046
                                                                    ------------
        Total current liabilities ...............................      2,686,236
                                                                    ------------

Future asset retirement obligations .............................        402,214
Long-term debt ..................................................        750,000
Long-term capital lease, less current maturities ................         24,650
Minority interest ...............................................        810,647

Commitments and contingencies ...................................           --

Stockholders' Equity
   Preferred stock - $1.00 par value; 10,000 shares authorized;
      no shares issued and outstanding ..........................           --
   Common stock - $0.25 par value; 35,000,000 shares authorized;
      19,026,665 shares issued and outstanding ..................      4,756,665
   Additional paid-in capital ...................................     17,106,081
   Accumulated deficit ..........................................    (10,813,041)
                                                                    ------------
        Total stockholders' equity ..............................     11,049,705
                                                                    ------------
        Total liabilities and stockholders' equity ..............   $ 15,723,452
                                                                    ============

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

                                       3

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


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


                                                                   Three Months Ended March 31,
                                                                   ----------------------------
                                                                       2008            2007
                                                                   ------------    ------------
<S>                                                                <C>             <C>
Operating revenues
    Sales of natural gas .......................................   $  2,773,081    $  1,681,111
    Transportation of natural gas and liquids ..................        780,162         472,791
    Treating and other .........................................        148,323          43,986
                                                                   ------------    ------------
                                                                      3,701,566       2,197,888
                                                                   ------------    ------------
Operating costs and expenses
    Cost of natural gas purchased ..............................      2,569,114       1,490,495
    Operation and maintenance ..................................        261,015         121,613
    General and administrative .................................        677,554         523,797
    Depreciation and amortization ..............................        186,497          95,689
    Accretion expense ..........................................          7,574           6,595
                                                                   ------------    ------------
Operating income (loss) ........................................           (188)        (40,301)

Other income (expense)
    Interest income ............................................         11,305          13,562
    Interest expense ...........................................        (43,687)         (5,987)
    Gain on sale of intangible asset ...........................           --           286,579
    Other income, net ..........................................          4,951          (5,079)
    Minority interest in earnings ..............................        (16,930)        (20,955)
                                                                   ------------    ------------
                                                                        (44,361)        268,120
                                                                   ------------    ------------

Income (loss) from continuing operations before income taxes and
    discontinued operations ....................................        (44,549)        227,819
Income tax expense .............................................        (46,000)           --
                                                                   ------------    ------------
Income (loss) from continuing operations .......................        (90,549)        227,819

Discontinued operations, net of taxes
    Income from discontinued operations, net of taxes ..........           --           382,209
                                                                   ------------    ------------
Net income (loss) ..............................................   $    (90,549)   $    610,028
                                                                   ============    ============

Basic and diluted income (loss) per share:
    Continuing operations ......................................   $      (0.00)   $       0.02

    Discontinued operations ....................................           --              0.02
                                                                   ------------    ------------

    Net income (loss) ..........................................   $      (0.00)   $       0.04
                                                                   ============    ============

Weighted average number of common shares outstanding:
    Basic ......................................................     19,026,665      17,140,937
    Diluted ....................................................     19,026,665      17,223,659


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

                                               4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


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


                                                                             Three Months Ended March 31,
                                                                              --------------------------
                                                                                 2008           2007
                                                                              -----------    -----------
<S>                                                                           <C>            <C>
Cash flows from operating activities - continuing operations
   Income (loss) from continuing operations ...............................   $   (90,549)   $   227,819
   Adjustments to reconcile income (loss) from continuing operations to net
      cash provided by operating activities:
      Depreciation and amortization .......................................       186,497         95,689
      Stock based compensation expense ....................................        16,337          6,291
      Accretion expense ...................................................         7,574          6,595
      Amortization of deferred loan costs .................................        34,049          7,978
      Gain on sale of intangible asset ....................................          --         (286,579)
      Change in operating assets and liabilities:
         Minority interest ................................................        16,930         20,955
         Accounts receivable trade ........................................      (619,568)      (326,766)
         Prepaid expenses and other assets ................................        65,450        162,898
         Accounts payable .................................................       921,434        427,153
         Accrued expenses and other liabilities ...........................         9,260          4,994
                                                                              -----------    -----------
              Net cash provided by operating activities ...................       547,414        347,027
                                                                              -----------    -----------

Cash flows from investing activities - continuing operations
      Capital expenditures ................................................        (3,353)        (6,352)
      Proceeds from collection of note receivable .........................          --          300,000
      Other ...............................................................           476           --
                                                                              -----------    -----------
              Net cash provided by (used in) investing activities .........        (2,877)       293,648
                                                                              -----------    -----------

Cash flows from financing activities - continuing operations
      Payments on borrowings ..............................................       (77,410)      (159,039)
      Restricted cash for letter of credit, net ...........................          --           11,648
      Deferred financing costs ............................................          --          (28,500)
      Distributions to minority partner ...................................       (27,674)       (25,122)
                                                                              -----------    -----------
              Net cash used in financing activities .......................      (105,084)      (201,013)
                                                                              -----------    -----------

Net increase in cash and cash equivalents from continuing operations ......       439,453        439,662

Discontinued operations:
   Net cash provided by operating activities ..............................          --          359,845
   Net cash used in investing activities ..................................          --             (496)
   Net cash used in financing activities ..................................          --         (137,969)
                                                                              -----------    -----------

Net increase in cash and cash equivalents from discontinued operations ....          --          221,380

Cash and cash equivalents at beginning of period ..........................     1,807,224        992,821
                                                                              -----------    -----------
Cash and cash equivalents at end of period ................................   $ 2,246,677    $ 1,653,863
                                                                              ===========    ===========

Supplemental disclosures of cash flow information:
      Cash paid for interest ..............................................   $    15,456    $     5,987
                                                                              ===========    ===========

Supplemental schedule of noncash investing and financing activities:
    Trade note payable for insurance premiums .............................   $   408,703    $   438,878
                                                                              ===========    ===========


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

                                                    5
</TABLE>

<PAGE>



GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2008
(Unaudited)


(1)      Nature of Business

         Gateway Energy Corporation (the "Company," or "Gateway"), a Delaware
corporation, was incorporated in 1960 and entered its current business in 1992.
The Company's common stock is traded in the over-the-counter market on the
bulletin board section under the symbol GNRG. Gateway conducts all of its
business through its wholly owned subsidiary companies, Gateway Pipeline
Company, Gateway Offshore Pipeline Company, Gateway Energy Marketing Company and
Gateway Processing Company. Gateway-ADAC Pipeline, L.L.C. which is
majority-owned (67%) by Gateway Pipeline Company, was formed in September 2005.
Access to the Company's annual report on Form 10-KSB, quarterly reports on Form
10-QSB, the Company's Code of Ethics, and current reports on Form 8-K are
available at the Company's website, www.gatewayenergy.com.

         In the following discussion, "Mcf" refers to thousand cubic feet of
natural gas; "Mmcf" refers to million cubic feet of natural gas; "Bbl" refers to
barrel of liquid hydrocarbons of approximately 42 U.S. gallons; "Btu" refers to
British thermal unit, a common measure of the energy content of natural gas;
"MMBtu" refers to one million British thermal units. "Mcfe" refers to thousand
cubic feet equivalent. Liquid hydrocarbons are converted to Mcf equivalents
using the ratio of 1.0 barrel of liquid hydrocarbons to 6.0 Mcf of natural gas.

(2)      Summary of Significant Accounting Policies

         A summary of the significant accounting policies consistently applied
in the preparation of the accompanying consolidated financial statements
follows. Certain reclassifications have been made to the prior period statements
to be consistent with the current presentation.

Principles of Consolidation

         The Company consolidates the financial statements of its majority-owned
and wholly-owned subsidiaries. The portion of Gateway-ADAC Pipeline L.L.C. not
owned by the Company is recorded as minority interest. All significant
intercompany transactions have been eliminated in consolidation.

         Effective May 31, 2007, the Company disposed of 100% of its ownership
interests in Fort Cobb Fuel Authority, LLC. The financial statements reflect the
historical results of its operations as discontinued operations (see Note 7).

         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 U.S. generally
accepted accounting principles. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with U.S.
generally accepted accounting principles have been omitted pursuant to rules and
regulations of the Securities and Exchange Commission. 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 year
ended December 31, 2007.

Revenue Recognition Policy

         Revenues from the sales of natural gas are generated under purchase and
sales contracts that are priced at the beginning of the month based upon
established gas indices. The Company purchases and sells the gas using the same
index to minimize commodity price risk. Revenues from the sales of natural gas
are recognized at the redelivery point, which is the point at which title to the
natural gas transfers to the purchaser. Transportation revenues are generated
under contracts which have a stated fee per unit of production (Mcf, MMBtu, or
Bbl) gathered or transported. Onshore and offshore transportation revenues are
recognized at the Company's receipt point.

Property and Equipment

         Property and equipment is stated at cost, plus capitalized interest
costs on major projects during their construction period. Additions and
improvements that add to the productive capacity or extend the useful life of an
asset are capitalized. Expenditures for maintenance and repairs are charged to
expense as incurred. For the three months ended March 31, 2008, property and
equipment included $83,889 of equipment financed under a capital lease, net of
$16,111 of accumulated amortization. Depreciation and amortization is provided

                                       6

<PAGE>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2008
(Unaudited)


using the straight-line method over estimated useful lives ranging from 6 to 30
years for pipeline systems, gas plant and processing equipment, and from 2 to 10
years for office furniture and other equipment. Upon disposition or retirement
of pipeline components or gas plant components, any gain or loss is charged or
credited to accumulated depreciation. When entire pipeline systems, gas plants
or other property and equipment are retired or sold, any resulting gain or loss
is credited to or charged against operations.

         For the three months ended March 31, 2008 and 2007, depreciation and
amortization expense was $186,497 and $95,689, respectively. Property, plant and
equipment and identifiable intangible assets are reviewed for impairment, in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," whenever
events or changes in circumstances indicate that the carrying amount may not be
recoverable. If the sum of the expected discounted cash flows is less than the
carrying value of the related asset or group of assets, a loss is recognized for
the difference between the fair value and carrying value of the asset or group
of assets. There have been no impairments of long-lived assets required during
the three months ended March 31, 2008.

         The Company provides for future asset retirement obligations under the
provisions of SFAS No. 143, "Accounting for Asset Retirement Obligations"
related to the Shipwreck offshore production platform because, eventually, law
or regulation will require its abandonment. The present value of the estimated
future asset retirement obligation, as of the date of acquisition, was
capitalized to gas gathering, processing and transportation equipment. The
present value of the estimated future asset retirement obligation, as of the
balance sheet date, is presented as a noncurrent liability. Until the platform
is ultimately sold or retired, the Company will recognize (i) depreciation
expense on the additional capitalized costs; (ii) accretion expense as the
present value of the future asset retirement obligation increases with the
passage of time, and; (iii) the impact, if any, of changes in estimates of the
liability. The following table sets forth a reconciliation of the beginning and
ending aggregate carrying amount of asset retirement obligations for the three
months ended March 31, 2008 and 2007:

                                        Three Months Ended March 31,
                                         -------------------------
                                            2008           2007
                                         ----------     ----------
              Beginning balance          $  394,640     $  368,255
              Accretion                       7,574          6,595
              Ending balance             $   02,214     $  374,850


Goodwill and Other Intangibles

         SFAS No. 142, "Goodwill and Other Intangible Assets" addresses the
methods used to capitalize, amortize and to assess the impairment of intangible
assets. In evaluating the Company's intangibles, management considered all of
the criteria set forth in SFAS No. 142 for determining useful life. Management
performs our annual impairment test for intangible assets in the fourth quarter
of each fiscal year. No impairments were indicated as a result of impairment
reviews for intangible assets in 2007 nor were there any indication that
intangible assets were impaired during the three months ended March 31, 2008.

Cash Equivalents

         For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid debt instruments purchased with original maturities
of three months or less to be cash equivalents.

Concentrations of Credit Risk

         The Company maintains all cash in deposit accounts, which at times may
exceed federally insured limits. The Company has not experienced losses in such
accounts.

Income Taxes

         The Company computes income taxes using the asset and liability method
whereby deferred tax assets are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of

                                       7

<PAGE>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2008
(Unaudited)


existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities from
a change in tax rates is recognized in income in the period that includes the
enactment date. A valuation allowance is established against such assets where
management is unable to conclude more likely than not that such asset will be
realized.


Earnings Per Share

         Basic earnings per share is computed by dividing net income or loss by
the weighted average number of common shares outstanding during the period.
Diluted earnings per share is computed by dividing net income 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. Earnings
per common share were computed as follows:

                                                        Three Months Ended
                                                             March 31,
                                                        2008          2007
                                                     ----------    ----------
     Weighted average number of common shares
         outstanding .............................   19,026,665    17,140,937
     Effect of dilutive securities ...............         --          82,722
                                                     ----------    ----------
     Weighted average dilutive common shares
         outstanding .............................   19,026,665    17,223,659
                                                     ==========    ==========

     Income (loss) from continuing operations ....   $  (90,549)      227,819

     Income from discontinued operations,
       net of taxes...............................         --         382,209
                                                     ----------    ----------
     Net income (loss) ...........................   $  (90,549)      610,028
                                                     ==========    ==========

     Basic and diluted income (loss) per common
          share:
          Continuing operations ..................   $    (0.00)   $     0.02
          Discontinued operations ................         --            0.02
                                                     ----------    ----------
          Net income (loss) ......................   $    (0.00)   $     0.04
                                                     ==========    ==========


Accounting Pronouncements and Recent Regulatory Developments

         In September 2006, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 defines
fair value, establishes a framework for measuring fair value and requires
enhanced disclosures about fair value measurements. SFAS 157 requires companies
to disclose the fair value of their financial instruments according to a fair
value hierarchy, as defined, and companies may be required to provide additional
disclosures based on that hierarchy. SFAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years. On February 12, 2008 the FASB approved the
Financial Staff Position ("FSP") No. SFAS 157-2, "Effective Date of FASB
Statement No. 157" ("FSP FAS 157-2"), which delays the effective date of SFAS
157 to fiscal years beginning after November 15, 2008, and interim periods
within those fiscal years for non-financial assets and non-financial
liabilities, except for those items that are recognized or disclosed at fair
value in the financial statements on a recurring basis (at least annually). The
Company adopted SFAS 157 as it applies to financial assets and liabilities as of
January 1, 2008. The partial adoption of SFAS 157 is not expected to materially
affect how the Company determines fair value and it had no material impact on
the Company's unaudited consolidated financial statements for the three months
ended March 31, 2008. The Company is currently evaluating the impact that the
adoption of SFAS 157, as it relates to non-financial assets and liabilities, may
have on its consolidated financial statements.

                                       8

<PAGE>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2008
(Unaudited)


         In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
for Financial Assets and Financial Liabilities" ("SFAS 159"). SFAS 159 permits
companies to measure many financial instruments and certain other items at fair
value. SFAS 159 is effective for fiscal years beginning after November 15, 2007.
The adoption of SFAS 159 did not have a material impact on the Company's
unaudited consolidated financial statements.

         In December 2007, the FASB issued SFAS No. 160, "Noncontrolling
Interests in Consolidated Financial Statements - an Amendment of ARB No. 51"
("SFAS 160"). SFAS 160 changes the way consolidated net income is presented,
requiring consolidated net income to report amounts attributable to both the
parent and the noncontrolling interest but earnings per share will be based on
amounts attributable to the parent. It also establishes protocol for recognizing
certain ownership changes as equity transactions or gain or loss and requires
presentation of noncontrolling ownership interest as a component of consolidated
equity. SFAS 160 is effective for annual reporting periods beginning after
December 15, 2008 and shall be applied prospectively. The Company is currently
evaluating the impact that the adoption of SFAS 160 may have on its unaudited
consolidated financial statements.

         In March 2008, the FASB issued SFAS No. 161, "Disclosures About
Derivative Instruments and Hedging Activities - an amendment of FASB Statement
No. 133" ("SFAS 161"). SFAS 161 expands the disclosure requirements in SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities," regarding
an entity's derivative instruments and hedging activities. SFAS 161 is effective
for the Company's fiscal year beginning January 1, 2008. As SFAS 161 relates
specifically to disclosures, SFAS 161 will have no impact on the Company's
financial condition, results of operations or cash flows.

Use of Estimates

         The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Management's significant estimates include depreciation of
long-lived assets, amortization of deferred loan costs, valuation of the
Shipwreck asset retirement obligation, deferred tax valuation allowance,
valuation of assumed liabilties, intangible lives, pipeline asset allocations,
and valuation of stock based transactions. Actual results could differ from
those estimates.

(3)      Restatement of Previously Issued Financial Statements

         Subsequent to the issuance of the Company's unaudited consolidated
financial statements, the Company determined that certain adjustments were
required to be made for corrections of an error in its previously issued
financial statements for the three month period ended June 30, 2007 and the six
and nine month periods ended June 30, 2007 and September 30, 2007. This error
related to the original allocation of corporate overhead to its Fort Cobb Fuel
Authority, LLC segment that was not eliminated after its disposition. Those
costs, primarily a portion of salaries and benefits, were reinvested in other
Corporate interests.

         As a result of this error, the unaudited consolidated statements of
operations and statements of cash flows for the periods referred to above have
been restated from the amounts previously reported. The restatements had no
effect on the unaudited consolidated balance sheets or net income for any of the
periods previously reported.

         The following is a summary of the effects of the restatement on the
unaudited consolidated financial statements:

                                       9

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<TABLE>
<CAPTION>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2008
(Unaudited)



                                                                      Three Months Ended June 30, 2007
                                                            -------------------------------------------------
                                                            As previously
                                                              reported       Reclassification    As restated
                                                            ------------      ------------       ------------
        <S>                                                 <C>               <C>                <C>
        Statement of Operations
        General and administrative........................  $    249,990      $    232,963       $    482,953
        Operating income (loss) ..........................       221,775          (232,963)           (11,188)
        Income from continuing operations before
            income taxes and discontinued operations......       246,693          (232,963)            13,730
        Loss from discontinued operations, net of taxes ..      (280,130)          232,963            (47,167)
        Net income........................................     1,223,497              --            1,223,497


                                                                       Six Months Ended June 30, 2007
                                                            --------------------------------------------------
                                                            As previously
                                                              reported       Reclassification     As restated
                                                            ------------       ------------       ------------
        Statement of Operations
        General and administrative........................  $    773,788       $    232,963       $  1,006,751
        Operating income (loss) ..........................       181,472           (232,963)           (51,491)
        Income from continuing operations before
            income taxes and discontinued operations......       474,513           (232,963)           241,550
        Income from discontinued operations, net of
            taxes ........................................       102,080            232,963            335,043
        Net income........................................     1,833,527               --            1,833,527


                                                                    Nine Months Ended September 30, 2007
                                                            -------------------------------------------------
                                                            As previously
                                                              reported       Reclassification    As restated
                                                            ------------       ------------      ------------
        Statement of Operations
        General and administrative........................  $  1,322,463       $    232,963      $  1,555,426
        Operating income (loss) ..........................       329,911           (232,963)           96,948
        Income from continuing operations before
            income taxes and discontinued operations......       627,501           (232,963)          394,538
        Income from discontinued operations, net of
            taxes ........................................       102,080            232,963           335,043
        Net income........................................     1,971,303               --           1,971,303



                                                      10
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<PAGE>
<TABLE>
<CAPTION>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2008
(Unaudited)



                                                                       Six Months Ended June 30, 2007
                                                            -------------------------------------------------
                                                            As previously
                                                              reported       Reclassification    As restated
                                                            ------------       ------------      ------------
        <S>                                                 <C>                <C>               <C>
        Statement of Cash Flows
        Continuing operations:
        Income from continuing operations.................  $    474,513       $   (232,963)     $    241,550
        Net cash provided by operating activities ........       905,633           (232,963)          672,670
        Net increase in cash and cash equivalents from
            continuing operations.........................     1,004,112           (232,963)          771,149
        Discontinued operations:
          Net cash provided (used) by operating
              activities..................................       (97,827)           232,963           135,136
        Net increase in cash and cash equivalents from
            discontinued operations.......................     2,076,336            232,963         2,309,299


                                                                    Nine Months Ended September 30, 2007
                                                            -------------------------------------------------
                                                            As previously
                                                             reported        Reclassification    As restated
                                                            ------------       ------------      ------------
        Statement of Cash Flows
        Continuing operations:
        Income from continuing operations.................  $    627,501       $   (232,963)     $    394,538
        Net cash provided by operating activities ........     1,174,761           (232,963)          941,798
        Net decrease in cash and cash equivalents from
            continuing operations.........................    (1,572,831)          (232,963)       (1,805,794)
        Discontinued operations:
          Net cash provided (used) by operating
              activities..................................       (97,827)           232,963           135,136
        Net increase in cash and cash equivalents from
            discontinued operations.......................     2,234,738            232,963         2,467,701


(4)      Acquisition of Gulfshore Midstream Assets

         On September 6, 2007, the Company through its wholly-owned subsidiary
Gateway Offshore Pipeline Company entered into an Asset Purchase Agreement with
Gulfshore Midstream Pipelines, Ltd. ("Gulfshore"), Gulfshore Midstream, LLC,
Trailblazer Partners, Ltd. and Bayou Trail Enterprises, Ltd. The effective date
of the transaction was August 1, 2007.

         Pursuant to the Asset Purchase Agreement, the Company acquired pipeline
assets from Gulfshore which extend from the western and central Gulf of Mexico
in water depths ranging from 50 to 650 feet. These pipeline assets range from 6"
to 16" in diameter. The Company acquired the assets for consideration consisting
of $3,130,000 in cash, 1,550,000 shares of Gateway common stock and the
assumption of certain liabilities related to the pipeline assets acquired.

         The acquisition extended the Company's presence in the offshore Gulf of
Mexico from Galveston Island to New Orleans, Louisiana. The acquisition also
increased the Company's throughput volumes by approximately 65,000 MMBtu per
day.

         The acquisition of Gulfshore was accounted for using the purchase
method of accounting in accordance with SFAS No. 141 "Business Combinations."
Assets acquired and liabilities assumed were recorded at their estimated fair
values as of August 1, 2007, and Gulfshore's results of operations have been
included in the Company's consolidated operations from that date.

                                       11
</TABLE>

<PAGE>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2008
(Unaudited)


         The total purchase price of the acquisition is as follows:

         Cash consideration                      $  3,130,000
         Fair value of Gateway common stock         1,162,500
         Estimated assumed liabilities                374,333
         Direct transaction costs                     274,596
                                                 ------------
         Total purchase price                    $  4,941,429
                                                 ------------


         Direct transaction costs of $274,596 include investment banking, legal
fees, and other external costs directly related to the acquisition which have
been capitalized as part of the purchase price allocation.

         We recorded intangible assets in conjunction with the acquisition in
the amount of $988,286. The intangible assets include the contract rights
attributable to the acqusition and will be amortized over a period from two to
seven years based on the estimated life of the contracts. We do not believe that
the acquired intangible assets have any significant residual value at the end of
their useful life.

     Amortization expense for intangible assets for the three months ended March
31, 2008 was $39,201 and is recorded in depreciation and amortization expense on
the income statement.

Pro Forma Results of Operations

         The following unaudited pro forma consolidated results of operations
for the quarter ended March 31, 2007 is presented as if the Gulfshore
acquisition had been made on January 1, 2007. The operations of Gulfshore have
been included in our statement of operations since the acquisition effective
date of August 1, 2007. The pro forma consolidated net income and earnings per
share includes the income from discontinued operations as presented on the
consolidated statement of operations.

         Revenues................................       $  2,664,271
         Operating costs and expenses............          2,530,803
                                                        ------------
         Operating income........................            133,468
         Other income (expense)..................            268,120
         Discontinued operations, net of tax.....            382,209
                                                        ------------
         Net income..............................       $    783,797
                                                        ============
         Basic and diluted earnings per share....       $       0.05
                                                        ============


(5)      Stock-Based Compensation Plans

         Our 2007 Equity Incentive Plan provides for stock-based compensation
for officers, employees and non-employee directors.

         Effective January 1, 2006, the Company adopted the provisions of SFAS
No. 123 (revised 2004), "Share-Based Payment" ("SFAS No. 123R") utilizing the
modified prospective approach. The options generally vest ratably over three
years and expire between five and ten years.

         Under the modified prospective approach, SFAS No. 123R applies to new
awards and to awards that were outstanding on January 1, 2006 as well as those
that are subsequently modified, repurchased or cancelled. Under the modified
prospective approach, compensation cost recognized for the three months ended
March 31, 2008 includes compensation cost for all share-based awards granted
prior to, but not yet vested as of January 1, 2006, based on the grant-date fair
value estimated in accordance with the original provisions of SFAS No. 123, and
compensation cost for all share-based awards granted subsequent to January 1,
2006, based on the grant-date fair value estimated in accordance with the
provisions of SFAS No. 123R.

         As a result of SFAS No. 123R, compensation cost related to
non-qualified stock options recognized for the three months ended March 31, 2008
and 2007 was $16,337 and $6,291, respectively. We view all awards of share-based
compensation as a single award with an expected life equal to the average
expected life of component awards and amortize the fair value of the award on a
straight-line basis over the life of the award.

                                       12

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<CAPTION>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2008
(Unaudited)


         We receive a tax deduction for certain stock option exercises during
the period the options are exercised, generally for the excess of the value of
the stock on the date of exercise. During the three months ended March 31, 2008,
there were no options exercised. In addition, we receive an additional tax
deduction when restricted stock vests at a higher value than the value used to
recognize compensation expense at the date of grant. We record this deduction as
a tax asset with a corresponding amount recorded as additional paid-in capital
when we can receive a tax cash savings from these awards. Due to the Company
having significant unused net operating-loss carryforwards, the recording of
this tax benefit is deferred until such tax savings is realized.

         The fair value of each option award is estimated on the date of grant
using the Black-Scholes option-pricing model. Expected volatility is estimated
using the annualized historical stock prices to derive an expected term. The
risk-free rate for periods within the contractual life of the option is based on
the U.S. treasury yield curve in effect at the time of grant. The Company uses
the Black-Scholes option pricing model to compute the fair value of stock
options, which requires the Company to make the following assumptions:

     o    The risk-free interest rate is based on the five-year Treasury bond at
          date of grant.

     o    The dividend yield on the Company's common stock is assumed to be zero
          since the Company does not pay dividends and has no current plans to
          do so in the future.

     o    The market price volatility of the Company's common stock is based on
          daily, historical prices for the last three years.

     o    The term of the grants is based on the simplified method as described
          in Staff Accounting Bulletin No. 110.

         In addition, the Company estimates a forfeiture rate at the inception
of the option grant based on historical data and adjusts this prospectively as
new information regarding forfeitures becomes available.

         At March 31, 2008, there was $112,115 of total unrecognized
compensation cost related to non-vested stock option awards which is expected to
be recognized over a weighted-average period of three years.

The following table represents stock option activity for the three months ended
March 31, 2008:

                                                                                     Weighted         Intrinsic
                                                                    Weighted          Average           Value of
                                                                    Average         Contractual      Options as of
                                                                    Exercise         Terms (in          March 31,
                                                  Shares             Price             years)             2008
                                                ----------         ----------        ----------        ----------
<S>                                                <C>               <C>                <C>            <C>
Options outstanding, beginning of period..         790,000           $0.43              4.18
Options granted...........................            --               --                --
Options canceled..........................            --               --                --
Options exercised.........................            --               --                --
Options outstanding, end of period........         790,000           $0.43              3.94           $  317,350
                                                ==========                                             ==========
Options exercisable, end of period........         366,667           $0.38              3.88           $  163,438
                                                ==========                                             ==========

         The market value of the Company's common stock on March 31, 2008 was
$0.83 per share.


(6)      Debt

Trade Notes Payable

         During 2007, the Company executed premium finance agreements for its
insurance premiums. The total of the notes was $523,797 with an interest rate
range from 7.19% to 8.25%. The notes require monthly principal and interest
payments. The amount of the monthly payment varies depending on any changes in
coverage and policy renewal period changes. These notes were paid in full during
December 2007.

         In January 2008, the Company executed a premium finance agreement for
its insurance premiums. The total of the note was $408,703 with an interest rate
of 7.10%. The note requires monthly principal and interest payments. The amount
of the monthly payment varies depending on any changes in coverage and policy
renewal period changes.

                                       13
</TABLE>

<PAGE>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2008
(Unaudited)


Long-term Debt

         Long-term debt at March 31, 2008 consisted of the following:

                  Trade note payable - Insurance......     $   335,389
                  Revolving credit facility...........         750,000
                                                           -----------
                                                             1,085,389
                  Less current maturities.............        (335,389)
                                                           -----------
                                                           $   750,000
                                                           ===========

Revolving Credit Facility

         On August 23, 2007, the Company entered into a Credit Agreement (the
"Agreement") with a bank (the "Lender") regarding a revolving credit facility
provided by the Lender to the Company. The original borrowing base under the
Agreement has been established at $2.5 million, which may be increased at the
discretion of the Lender to an amount not to exceed $20 million. The credit
facility is secured by substantially all of the Company's assets and has a term
of two years, maturing in August 2009. Interest on outstanding balances will
accrue at Lender's prime rate, plus one percent and is payable on a monthly
basis.

             In connection with the acquisition of the Gulfshore Midstream
assets, the Company borrowed $1,150,000 on the credit facility. As of March 31,
2008, the interest rate was 6.25% and the available borrowings were $1,750,000.

Note Payable - Fort Cobb

         Fort Cobb's revolving credit agreement provided for maximum available
borrowings of up to $250,000 through September 16, 2007. Principal outstanding
under the agreement accrued interest at a variable rate, based on the bank's
prime rate index plus 1.25%, with a minimum rate of 8%. The interest rate at May
31, 2007, the disposition date (see Note 8), was 9.50%. The balance under the
agreement was due upon demand, or if no demand is made, at maturity, and is
renewable annually. Costs of obtaining this debt were capitalized as deferred
loan costs and were being charged to interest expense ratably over the maturity
period of the note.

         On May 31, 2007, in conjunction with the sale of the Fort Cobb
subsidiary (see Note 8), the buyer paid in full the remaining balance of the
credit facility. All liens attributable to this note have been released.


Term Note - Fort Cobb

         Effective June 1, 2001, Fort Cobb borrowed $750,000 from a bank.
Principal outstanding under the note accrued interest at a variable rate, based
on the bank's prime rate index plus 1.25%, with a minimum rate of 8%. The
interest rate at May 31, 2007, the disposition date (see Note 8), was 9.50%. The
note required monthly payments of approximately $13,000, with the balance under
the note due June 1, 2008. Costs of obtaining this debt were capitalized as
deferred loan costs and were being charged to interest expense ratably over the
maturity period of the note. Fort Cobb used the proceeds to refinance its
previous borrowings from the Company, and then the Company used the proceeds for
general corporate purposes.

         On May 31, 2007, in conjunction with the sale of the Fort Cobb
subsidiary (see Note 8), the buyer paid in full the remaining balance of the
note. All liens attributable to this note have been released.

                                       14

<PAGE>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2008
(Unaudited)



Term Note - Fort Cobb Vehicles

         During March 2003, Fort Cobb borrowed $57,900 from a bank to buy three
replacement service vehicles. The note required monthly principal and interest
payments of $1,387, bearing interest at a rate of 6.99%, and originally matured
on March 25, 2007. On June 21, 2006, Fort Cobb purchased and financed a new
vehicle. In doing this, Fort Cobb rolled the remaining balance of the March 2003
loan, which was $13,622, into a new note. This note required monthly principal
and interest payments of $1,331, bore interest at a rate of 7.49%, and matured
on May 25, 2009.

         On May 31, 2007, in conjunction with the sale of the Fort Cobb
subsidiary (see Note 8) the buyer paid in full the remaining balance of the
note. All liens attributable to this note have been released.


Letters of Credit

         At March 31, 2008, the Company had outstanding letters of credit for
gas purchases totaling $1,150,000.

(7)      Commitments and Contingencies

         From time to time the Company is involved in litigation concerning its
properties and operations. There is no known or pending litigation expected to
have a material effect on the Company's consolidated financial statements.

(8)      Discontinued Operations

         On April 13, 2007, the Company entered into a Member Interest Purchase
Agreement with Navitas Assets, LLC, regarding the sale of all of the Company's
interest in Fort Cobb Fuel Authority, LLC, subject to due diligence and approval
by the Oklahoma Corporation Commission. The sale was completed on May 31, 2007.
The total purchase price for the sale consisted of cash of $2,585,000, plus the
cash paid for the net working capital of Fort Cobb in the amount of $121,289,
and other customary adjustments. In addition, Gateway was released from its
guarantee of bank debt owed by Fort Cobb. Accordingly, the consolidated
financial statement amounts for the three months ended March 31, 2007 have been
adjusted to give effect to this disposition as a discontinued operation.

     Following are the results of operations of the Fort Cobb subsidiary for the
three months ended March 31, 2007:

              Operating revenues (1).......................   $     921,158
              Operating costs and expenses (2).............         502,763
              General and administrative expenses (3)......          34,353
              Other expenses, net (4)......................           1,833
                                                              -------------
              Income from discontinued operations,
                 net of taxes..............................   $     382,209
                                                              =============
              Basic and diluted income per share from
                 discontinued operations...................   $        0.02
                                                              =============
              Weighted average number of common
                 shares outstanding:
              Basic......................................        17,140,937
              Diluted....................................        17,223,659


(1)  This revenue stream contains gas sales to customers of Fort Cobb.

(2)  This cost is comprised of the gas purchased for sale to customers of Fort
     Cobb, depreciation expense, and other operating expenses.

(3)  This cost is comprised of direct general and administrative expenses of
     Fort Cobb.

                                       15

<PAGE>
<TABLE>
<CAPTION>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2008
(Unaudited)


(4) This cost is comprised of interest expense, miscellaneous non-operating
income, income taxes, and interest income.

(9) Segment Disclosures

         All of the Company's operations are in the domestic U.S., including the
Gulf of Mexico in Texas and federal waters. The Company's management reviews and
evaluates the operations separately of the two main segments--Onshore Operations
and Offshore Operations. Each segment is an aggregation of operations subject to
similar economic and regulatory conditions such that they are likely to have
similar long-term prospects for financial performance. Onshore Operations
include natural gas gathering, transportation and distribution activities in
Texas. Offshore Operations include natural gas and liquid hydrocarbon gathering,
transportation, and processing activities in the Gulf of Mexico in Texas as well
as federal waters. The principal markets for the Onshore segment are affiliates
of large intrastate and interstate pipeline companies and industrial customers;
and for the Offshore segment they are affiliates of large intrastate and
interstate pipeline companies.

         The accounting policies of the reportable segments are the same as
those described in Note 2 to the Consolidated Financial Statements. The Company
evaluates the segments based on operating margin, defined as revenues less cost
of purchased gas and operating and maintenance expenses. Such amounts are before
general and administrative expense, depreciation and amortization expense,
interest income or expense or income taxes. Operating margin is not a GAAP
measure but the components of operating margin are computed by using amounts
that are determined in accordance with GAAP. A reconciliation of operating
margin to operating income, which is its nearest comparable GAAP financial
measure, is included in the tables below.

         Summarized financial information for the periods indicated of the
Company's reportable segments from continuing operations is as follows:

                                                                             Three Months Ended March 31,
                                                                          ---------------------------------
                                                                              2008                2007
                                                                          -------------       -------------
                               Onshore Operations
        <S>                                                               <C>                 <C>
        Revenues......................................................    $   2,888,422       $   1,811,565
        Cost of natural gas purchased.................................        2,569,114           1,490,495
        Operation and maintenance expense.............................           71,346              55,368
                                                                          -------------       -------------
             Operating margin.........................................          247,962             265,702
        Depreciation and amortization expense.........................           48,986              56,227
                                                                          -------------       -------------
             Operating income.........................................          198,976             209,475
                                                                          -------------       -------------

        Interest expense..............................................            1,753               2,333
        Capital expenditures..........................................             --                 2,722

        Total assets..................................................    $   5,160,118       $   5,000,721

                              Offshore Operations
        Revenues......................................................    $     813,144       $     386,323
        Operation and maintenance expense.............................          189,669              66,245
                                                                          -------------       -------------
            Operating margin..........................................          623,475             320,078
        Depreciation and amortization expense.........................          136,314              38,521
        Accretion expense.............................................            7,574               6,595
                                                                          -------------       -------------
             Operating income.........................................          479,587             274,962
                                                                          -------------       -------------
        Interest expense..............................................             --                  --
        Capital expenditures..........................................            2,454               3,630

        Total assets..................................................    $   6,472,120       $   1,355,215

                                                     16

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2008
(Unaudited)


                              Corporate Operations

        <S>                                                               <C>                 <C>
        General and administrative expenses...........................    $     677,554       $     523,797
        Depreciation and amortization expense.........................            1,197                 941
                                                                          -------------       -------------
            Operating loss............................................         (678,751)           (524,738)
                                                                          -------------       -------------

        Interest expense..............................................           41,934               3,654
        Capital expenditures..........................................              899                --

        Total assets..................................................    $   4,091,214       $   1,216,336

                                     Total
        Revenues......................................................    $   3,701,566       $   2,197,888
        Cost of natural gas purchased.................................        2,569,114           1,490,495
        Operation and maintenance expense.............................          261,015             121,613
                                                                          -------------       -------------
             Operating margin.........................................          871,437             585,780
        General and administrative expenses...........................          677,554             523,797
        Depreciation and amortization expense.........................          186,497              95,689
        Accretion expense.............................................            7,574               6,595
                                                                          -------------       -------------
            Operating loss............................................             (188)            (40,301)

        Interest expense..............................................           43,687               5,987
        Capital expenditures..........................................            3,353               6,352

        Total assets..................................................     $ 15,723,452       $   7,572,272


                      Reconciliation to Net Income (Loss)
        Operating margin..............................................    $     871,437       $     585,780
        Less:
        Depreciation and amortization.................................          186,497              95,689
        Accretion and changes in estimates............................            7,574               6,595
        General and administrative....................................          677,554             523,797
        Interest expense..............................................           43,687               5,987
        Minority interest.............................................           16,930              20,955
        Income tax expense............................................           46,000                --
        Plus:
        Interest income...............................................           11,305              13,562
        Gain on sale of intangible asset..............................             --               286,579
        Other income (expense) - net..................................            4,951              (5,079)
        Discontinued operations, net of taxes.........................             --               382,209
                                                                          -------------       -------------
        Net income (loss).............................................    $     (90,549)      $     610,028
                                                                          =============       =============

Item  2. Management's Discussion and Analysis or Plan of Operations.
         -----------------------------------------------------------

         This Quarterly Report on Form 10-QSB contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 that relate to possible future events, our future performance, and our
future operations. In some cases, you can identify these forward-looking
statements by the use of words such as "may," "will," "should," "anticipates,"
"believes," "expects," "plans," "future," "intends," "could," "estimate,"
"predict," "potential," "continue," or the negative of these terms or other
similar expressions. These statements are only our predictions. Our actual
results could and likely will differ materially from these forward-looking

                                       17

</TABLE>

<PAGE>


statements for many reasons, including the risks described in our Annual Report
on Form 10-KSB for the year ended December 31, 2007, and our quarterly reports
on Form 10-QSB. We cannot guarantee future results, levels of activities,
performance, or achievements. We undertake no duty to update any of the
forward-looking statements after the date of this document to conform them to
actual results or to changes in our expectations.

Critical Accounting Policies

         A summary of the significant accounting policies consistently applied
in the preparation of the accompanying consolidated financial statements
follows.

Revenue Recognition Policy

         Revenues from the sales of natural gas are generated under purchase and
sales contracts that are priced at the beginning of the month based upon
established gas indices. The Company purchases and sells the gas using the same
index to minimize commodity price risk. Revenues from the sales of natural gas
are recognized at the redelivery point, which is the point at which title to the
natural gas transfers to the purchaser. Transportation revenues are generated
under contracts which have a stated fee per unit of production (Mcf, MMBtu, or
Bbl) gathered or transported. Onshore and offshore transportation revenues are
recognized at the Company's receipt point.

Property and Equipment

         Property and equipment is stated at cost, plus capitalized interest
costs on major pipeline projects during their construction period. Additions and
improvements that add to the productive capacity or extend the useful life of an
asset are capitalized. Expenditures for maintenance and repairs are charged to
expense as incurred. Depreciation is provided using the straight-line method
over estimated useful lives ranging from 6 to 30 years for pipeline systems, gas
plant and processing equipment, and from 2 to 10 years for office furniture and
other equipment. Upon disposition or retirement of pipeline components or gas
plant components, any gain or loss is charged or credited to accumulated
depreciation. When entire pipeline systems, gas plants or other property and
equipment are retired or sold, any resulting gain or loss is credited to or
charged against operations.

         Impairment losses are recognized for long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows are not sufficient to recover the assets' carrying value. The amount of
impairment is measured by comparing the fair value of the asset to its carrying
amount. There was no impairment required as of March 31, 2008.

Asset Retirement Obligation

         The Company provides for the future asset retirement obligations
related to the Shipwreck offshore platform because, eventually, law or
regulation will require its abandonment. The present value of the estimated
future asset retirement obligation, as of the date of acquisition, was
capitalized to gas gathering, processing and transportation equipment. The
present value of the estimated future asset retirement obligation, as of the
balance sheet date, is presented as a noncurrent liability. Until the platform
is ultimately sold or retired, the Company will recognize (i) depreciation
expense on the additional capitalized costs; (ii) accretion expense as the
present value of the future asset retirement obligation increases with the
passage of time, and; (iii) the impact, if any, of changes in estimates of the
liability.

Use of Estimates

         The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Management's significant estimates include depreciation of
long-lived assets, amortization of deferred loan costs, valuation of the
Shipwreck asset retirement obligation, deferred tax valuation allowance,
valuation of assumed liabilties, intangible lives, pipeline asset allocations,
and valuation of stock based transactions. Actual results could differ from
those estimates.

Restatement

         Subsequent to the issuance of the Company's unaudited consolidated
financial statements, the Company determined that certain adjustments were
required to be made for corrections of an error in its previously issued
financial statements for the three month period ended June 30, 2007 and the six
and nine month periods ended June 30, 2007 and September 30, 2007. This error

                                       18

<PAGE>
<TABLE>
<CAPTION>


related to the original allocation of corporate overhead to its Fort Cobb Fuel
Authority, LLC segment that was not eliminated after its disposition. Those
costs, primarily a portion of salaries and benefits, were reinvested in other
Corporate interests.


         As a result of this error, the unaudited consolidated statements of
operations and statements of cash flows for the periods referred to above have
been restated from the amounts previously reported. The restatements had no
effect on the unaudited consolidated balance sheets or net income for any of the
periods previously reported..

         The following is a summary of the effects of the restatement on the
unaudited consolidated financial statements:

                                                                     Three Months Ended June 30, 2007
                                                            -------------------------------------------------
                                                            As previously
                                                              reported       Reclassification    As restated
                                                            ------------       ------------      ------------
        <S>                                                  <C>                <C>               <C>
        Statement of Operations
        General and administrative........................  $    249,990       $    232,963      $    482,953
        Operating income (loss) ..........................       221,775           (232,963)          (11,188)
        Income from continuing operations before
            income taxes and discontinued operations......       246,693           (232,963)           13,730
        Loss from discontinued operations, net of
            taxes ........................................      (280,130)           232,963           (47,167)
        Net income........................................     1,223,497               --           1,223,497


                                                                       Six Months Ended June 30, 2007
                                                            -------------------------------------------------
                                                            As previously
                                                              reported       Reclassification    As restated
                                                            ------------       ------------      ------------
        Statement of Operations
        General and administrative........................  $    773,788       $    232,963      $  1,006,751
        Operating income (loss) ..........................       181,472           (232,963)          (51,491)
        Income (loss)  from continuing operations
            before income taxes and discontinued
            operations....................................       474,513           (232,963)          241,550
        Income from discontinued operations, net of
            taxes ........................................       102,080            232,963           335,043
        Net income........................................     1,833,527               --           1,833,527


                                                                    Nine Months Ended September 30, 2007
                                                            -------------------------------------------------
                                                            As previously
                                                              reported       Reclassification    As restated
                                                            ------------       ------------      ------------
        Statement of Operations
        General and administrative........................  $  1,322,463       $    232,963      $  1,555,426
        Operating income .................................       329,911           (232,963)           96,948
        Income from continuing operations before income
            taxes and discontinued operations.............       627,501           (232,963)          394,538
        Income from discontinued operations, net of
            taxes ........................................       102,080            232,963           335,043
        Net income........................................     1,971,303               --           1,971,303


                                                      19
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<PAGE>
<TABLE>
<CAPTION>


                                                                       Six Months Ended June 30, 2007
                                                            -------------------------------------------------
                                                            As previously
                                                              reported       Reclassification    As restated
                                                            ------------       ------------      ------------
        <S>                                                 <C>                <C>               <C>
        Statement of Cash Flows
        Continuing operations:
        Income from continuing operations.................  $    474,513       $   (232,963)     $    241,550
        Net cash provided by operating activities ........       905,633           (232,963)          672,670
        Net increase in cash and cash equivalents from
            continuing operations.........................     1,004,112           (232,963)          771,149
        Discontinued operations:
          Net cash provided (used) by operating
              activities..................................       (97,827)           232,963           135,136
        Net increase in cash and cash equivalents from
            discontinued operations.......................     2,076,336            232,963         2,309,299


                                                                    Nine Months Ended September 30, 2007
                                                            -------------------------------------------------
                                                            As previously
                                                              reported       Reclassification    As restated
                                                            ------------       ------------      ------------
        Statement of Cash Flows
        Continuing operations:
        Income from continuing operations.................  $    627,501       $   (232,963)     $    394,538
        Net cash provided by operating activities ........     1,174,761           (232,963)          941,798
        Net decrease in cash and cash equivalents from
            continuing operations.........................    (1,572,831)          (232,963)       (1,805,794)
        Discontinued operations:
          Net cash provided (used) by operating
              activities..................................       (97,827)           232,963           135,136
        Net increase in cash and cash equivalents from
            discontinued operations.......................     2,234,738            232,963         2,467,701


Results of Operations

General

         The Henry Hub closing index price for natural gas during the three
months ended March 31, 2008 averaged $8.03 per MMBtu, compared to $6.77 for the
same period of the prior year. In the accompanying consolidated financial
statements, the Company's revenues from sales of natural gas, along with the
cost of natural gas purchased, increased proportionately from prior year levels.
Because the Company buys and sells gas under purchase and sales contracts that
are priced at the beginning of the month based upon established gas indices to
minimize commodity price risk, the Company's net operating margin is relatively
insensitive to fluctuations in the market price of gas. Accordingly, 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 two main segments--Onshore operations and Offshore operations.

Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007

Total Operations
                                                             Three Months Ended March 31,
                                                         ------------------------------------
                                                             2008                    2007
                                                         -------------           ------------
       Revenues..................................         $3,701,566              $2,197,888
       Operating margin..........................            871,437                 585,780
       Depreciation and amortization.............            186,497                  95,689

         Operating margins for the three months ended March 31, 2008 increased
$286,000 compared to the same period of the prior year. Onshore operating margin
decreased $17,000 and offshore operating margin increased by $303,000. These
segments are discussed individually below in greater detail.

                                       20
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


Onshore Operations
                                                             Three Months Ended March 31,
                                                         ------------------------------------
                                                             2008                    2007
                                                         -------------           ------------
        <S>                                               <C>                     <C>
        Revenues.................................         $2,888,422              $1,811,565
        Operating margin.........................            247,962                 265,702
        Depreciation and amortization............             48,986                  56,227

         Operating margins for onshore operations decreased in the first quarter
by $17,000 from the same period of the prior year. The decrease was mainly due
to a small reduction in throughput volumes on the Company's Madisonville
pipeline system.

Offshore Operations
                                                              Three Months Ended March 31,
                                                         ------------------------------------
                                                             2008                     2007
                                                         -------------           ------------
        Revenues..................................          $813,144                $386,323
        Operating margin..........................           623,475                 320,078
        Depreciation and amortization.............           136,314                  38,521

         Operating margins for offshore operations increased in the first
quarter by $303,000 from the same period of the prior year. The increase was due
to a contribution of $352,000 by the Gulfshore assets, which were acquired
effective August 1, 2007. This increase contributed by the Gulfshore assets was
offset by a decrease in throughput volumes on the Company's Bolivar pipeline
system and increased operating expenses at the Crystal Beach terminal. The
Company continues to see additional drilling activities near its offshore
pipeline facilities. The increase in depreciation and amortization expense is
associated with the Gulfshore Midstream offshore pipeline acquisition completed
in the third quarter of 2007.

Discontinued Operations

         On April 13, 2007, the Company entered into a Member Interest Purchase
Agreement with Navitas Assets, LLC, regarding the sale of all of the Company's
interest in Fort Cobb Fuel Authority, LLC, subject to due diligence and approval
by the Oklahoma Corporation Commission. The sale was completed on May 31, 2007.
The total purchase price for the sale consisted of cash of $2,585,000, plus the
cash paid for the net working capital of Fort Cobb in the amount of $121,289,
and other customary adjustments. In addition, Gateway was released from its
guarantee of bank debt owed by Fort Cobb. Accordingly, the consolidated
financial statement amounts for the three months ended March 31, 2007 have been
adjusted to give effect to this disposition as a discontinued operation.

         Following are the results of operations of the Fort Cobb subsidiary for
the three months ended March 31, 2007:

              Operating revenues (1)......................  $    921,158
              Operating costs and expenses (2)............       502,763
              General and administrative expenses (3).....        34,353
              Other expenses, net (4).....................         1,833
                                                            ------------
              Income from discontinued operations, net
                 of taxes.................................  $    382,209
                                                            ============
              Basic and diluted income per share from
                 discontinued operations..................  $       0.02
                                                            ============

              Weighted average number of common
                 shares outstanding:
              Basic......................................     17,140,937
              Diluted....................................     17,223,659


(1)  This revenue stream contains gas sales to customers of Fort Cobb.

                                       21
</TABLE>

<PAGE>


(2)  This cost is comprised of the gas purchased for sale to customers of Fort
     Cobb, depreciation expense, and other operating expenses.

(3)  This cost is comprised of direct general and administrative expenses of
     Fort Cobb.

(4)  This cost is comprised of interest expense, miscellaneous non-operating
     income, income taxes, and interest income.

Operations Support and Other Income (Expense)

         General and administrative expenses for the first quarter increased by
$154,000 compared to the same period in 2007. This increase relates to the
Company's addition of staff to help identify and support growth opportunities,
its expanded investor relations program, Sarbanes Oxley compliance efforts and
non-cash compensation expenses related to stock options.

         Interest income fluctuates directly with the average amount of cash on
deposit.

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

         Interest expense for the quarter ended March 31, 2008 increased $38,000
compared to the same period in 2007 primarily because of the outstanding balance
on the Company's revolving credit facility which was used to acquire the
Gulfshore assets and the amortization of fees associated with the credit
facility.

         Income tax expense for the first quarter 2008 related to the estimated
alternative minimum tax for the calendar year 2007.

Liquidity and Capital Resources

         Going forward, the Company's strategy is to maximize the potential of
currently-owned properties, to construct new pipeline systems, and to acquire
properties that meet its economic performance hurdles. The Company is actively
seeking additional outside capital to allow it to accelerate the implementation
of its growth strategy, and such new capital may take several forms. There is no
guarantee that we will be able to raise outside capital or be able to sell
assets on terms favorable to the Company. Without a significant infusion of new
capital, we believe we can finance the construction of new facilities and
generate new cash flows to the Company, but only at a pace that can be supported
by cash flows and our existing financing agreements.

         The Company had available cash of $2,246,677 at March 31, 2008.

         Net cash provided by continuing operating activities totaled
approximately $547,000 for the three months ended March 31, 2008, compared to
$347,000 during the same period of the previous year.

         Absent significant acquisitions or development projects, the Company
will continue to fund its operations through internally-generated funds and
available cash and bank borrowings as needed. The Company believes its cash
flows from such sources will be sufficient to fund its ongoing operations for
the foreseeable future.

         On August 23, 2007, the Company entered into a Credit Agreement (the
"Agreement") with Western National Bank, a national banking association (the
"Lender"), regarding a revolving credit facility provided by Lender to the
Company. The original borrowing base under the Agreement has been established at
$2.5 million, which may be increased at the discretion of the Lender to an
amount not to exceed $20 million. The credit facility is secured by
substantially all of the Company's assets and has a term of two years. Interest
on outstanding balances will accrue at Lender's prime rate, plus one percent.

         In connection with the acquisition of the Gulfshore Midstream assets,
the Company borrowed $1,150,000 on the credit facility. As of March 31, 2008,
the interest rate was 8.25% and the available borrowings were $1,750,000.

         At March 31, 2008, the Company had outstanding letters of credit for
gas purchases totaling $1,150,000.

         Natural gas prices as represented by the NYMEX Henry Hub index averaged
$8.03 and $6.77 for the three months ended March 31, 2008 and 2007,
respectively. The Company's operating margin is not significantly affected by
the price of natural gas since gas gathering and transportation are generally
based on fee arrangements and sales of natural gas are made under back-to-back

                                       22

<PAGE>


purchase and sales arrangements. However, natural gas prices can affect
exploration and development which can result in higher or lower volumes
available for gathering and transportation.

Off-Balance Sheet Arrangements

         The Company has no off-balance sheet arrangements at March 31, 2008;
however, see Note 6 to the consolidated financial statements regarding
Commitments and Contingencies.


Item 3.  Controls and Procedures
         -----------------------

         Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in Company
reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in Company reports filed under the Exchange
Act is accumulated and communicated to management, including the Company's
President and Chief Executive Officer and the Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.

         An evaluation of the Company's disclosure controls and procedures (as
defined in Section 13(a)-15(e) and 15d-15(e)) of the Securities Exchange Act of
1934 was carried out under the supervision and with the participation of the
Company's Chief Executive Officer and Chief Financial Officer as of the end of
the period covered by this quarterly report. The Company's Chief Executive
Officer and Chief Financial Officer concluded that the Company's disclosure
controls and procedures as currently in effect are effective in ensuring that
the information required to be disclosed by the Company in the reports it files
or submits under the Act is (1) accumulated and communicated to the Company's
management in a timely manner, and (2) recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms.

         There were no changes in the Company's internal controls over financial
reporting that occurred during the quarter ended March 31, 2008 that have
materially affected, or are reasonably likely to materially affect, the internal
control over financial reporting.

                           Part II - OTHER INFORMATION
                           ---------------------------

Item 1.           Legal Proceedings
                  -----------------

                  None

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
                  --------

                  31.1     Section 302 Certification of Chief Executive Officer
                  31.2     Section 302 Certification of Chief Financial Officer
                  32.1     Section 906 Certification of Chief Executive Officer
                  32.2     Section 906 Certification of Chief Financial Officer

                                       23

<PAGE>


                                   SIGNATURES
In accordance with to the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                            GATEWAY ENERGY CORPORATION

                                            /s/  Robert Panico
                                            -----------------------------------
                                                 Robert Panico
                                                 President and
                                                 Chief Executive Officer

                                            /s/  Christopher M. Rasmussen
                                            -----------------------------------
                                                 Christopher M. Rasmussen
                                                 Chief Financial Officer

May 13, 2008
------------
   (Date)

                                       24