Gateway Resources Ltd.

Balance Sheets

(Unaudited)

March 31,

March 31,

2008

2007

Assets

Current Assets

Cash

$

1,128

$

0

Project Cash Calls

0

0

Accounts Receivable

2,442

1,823

Project Accounts Receivable

0

0

GST

90

108

Due from Gateway Resources U.S.A., Inc.

465,367

468,381

Due from Gateway Oil & Gas, Inc.

9,448

5,368

478,475

475,680

Property and Equipment (Note 2)

11,567

11,913

Investment in U.S. Subsidiary (Note 3)

245,048

245,048

Total Assets:

$

735,090

$

732,641

Liabilities and Shareholders Equity

Current Liabilities

Bank Indebtedness (Note 4)

$

0

153

Accounts Payable and Accruals

0

0

0

153

Long Term Liabilities

Long Term Debt (Note 5)

0

0

Shareholders' Equity

Opening retained earnings

63,813

60,253

Share capital (Note 6)

668,676

668,676

Profit/(loss)

2,601

3,559

735,090

732,488

Total Liabilities:

$

735,090

732,641

Approved by the Directors

See accompanying notes

______________________

Statements of Income and Retained Earnings

(Unaudited)

Year ended

Year ended

March 31,

March 31,

2008

2007

Revenues

Consulting income

$

0

$

0

2008

2007

Oil Sales BBLS

206

301

13,213

17,787

Gas Sales MCF

0

0

0

0

Total sales:

13,213

17,787

Royalties and taxes

(149)

(245)

Production expenses

(6,922)

(11,291)

Total cost of sales:

(7,071)

(11,536)

Total oil and gas income:

6,142

6,251

Asset Sales

0

0

Interest and other

0

0

Total income:

$

6,142

$

6,251

Expenses

General Operations

Contract labour

$

0

$

0

Travel expense

0

0

Repairs and maint.

0

0

Communications

0

0

Expenses/supplies

0

0

$

0

$

0

Oil & Gas Operations

Lease rentals

$

1,000

$

25

Field Seismic costs

0

0

Data processing

0

0

Insurance

0

0

Alberta Royalty Rebate

0

0

Loss on lost or stolen items

0

0

Loss on junked assets

0

0

Depletion of property costs

332

486

Drilling expenses

0

0

$

1,332

$

511

Expenses this page:

$

1,332

$

511

______________________

Statements of Income and Retained Earnings (Continued)

(Unaudited)

Year ended

Year ended

March 31,

March 31,

2008

2007

Income from previous page:

$

6,142

$

6,251

Expenses from previous page:

1,332

511

Expenses (Continued)

Office and Administrative

Contract labour

$

1,800

$

1,800

Employee health insurance

0

0

Expenses/supplies

30

30

Training

0

0

Legal/accounting

365

305

Rent

0

0

Communications

0

0

Travel

0

0

Share trades

0

0

Foreign exchange

0

0

Interest expense

0

26

Depreciation and amortization

14

20

$

2,209

$

2,181

Total expenses:

$

3,541

$

2,692

Net (loss)/gain:

$

2,601

$

3,559

Retained Earnings

Beginning of year Plus rounding Error $1

63,813

60,253

Retained earnings at end of year

66,414

63,812

Note 1 - Accounting Policies

Gateway Resources Ltd. was incorporated under the Business Corporations Act of Alberta May 18, 1989. The Corporation was formed to engage in oil and gas exploration and production. Significant accounting policies of the Corporation are summarized below:

(a) Basis of Presentation

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles except that they have not been prepared in consolidated form. Consolidated financial statements of the Corporation and its subsidiary would differ from the accompanying financial statements.

Consolidated financial statements of the Corporation and its subsidiary have not been prepared as to the Corporation's shareholders have access to all pertinent information concerning the resources and result of operations of the Corporation and its subsidiary. As non-consolidated financial statements have not been prepared for general purposes, some users may require further information.

(b) Subsidiary Corporation

Investment in the 96% owned subsidiary corporation, Gateway Resources (U.S.A.), Inc., an Oklahoma corporation, is accounted for by the equity method, by which the original cost of the shares is adjusted for the Corporation's share of income less dividends received.

(C) Oil and Gas Property

An interest in a non-producing oil and gas property is recorded at cost and is being amortized over ten years. Straight line method.

An interest in a producing oil and gas property is recorded at cost and is depleted by the cost depletion method. The oil and gas reserves are estimated and the property is depleted by the percentage of oil and gas reserves produced to date.

(d) Property and Equipment

Equipment is recorded at cost and depreciated over the estimated useful lives of the various classes of assets. Assets in their respective country are depreciated according to the normally accepted tax methods used. Some of which are presented below:

Long term oil and gas equipment

7 year half year convention

Short term oil and gas equipment

5 year half year convention

Geological equipment

30% Reducing balance method

(e) Goods and Service Tax

Revenues are recorded net of the Goods and Service Tax ("GST") collected. Purchases of goods or services are recorded net of the GST that is recoverable. GST that is not recoverable is included in the cost of the goods or services to which it relates. The net amount due to, or from, the taxation authorities with respect to GST is included in accounts payable, or accounts receivable, as appropriate.

Note 2 - Property and Equipment

2008

2007

Canadian Development Expense

$

45,522

$

45,522

Oil and Gas leases

4,325

4,325

Long term oil and gas equipment

11,040

11,040

Short term oil and gas equipment

990

990

Exploration Equipment

3,257

3,257

Exploration seismic

2,551

2,551

Exploration labour

0

0

Office furniture and equipment

16

16

Computer Software

1,700

1,700

$

69,401

$

69,401

Less depreciation & depletion & Amortization

(57,834)

(57,488)

$

11,567

$

11,913

Note 3 - Investment in Subsidiary

In 1999 Gateway Resources U.S.A., Inc. began to sell shares to US investors. 4,999 US shares were allocated to Gateway Resources Ltd. at Canadian book value of $202,382. An additional $3,000 of shares were purchased by Gateway Resources Ltd. prior to year end.

2008

2007

Gateway Resources U.S.A., Inc. Equity

$

244,980

$

244,980

Gateway Oil & Gas, Inc. Equity

68

68

245,048

245,048

Note 4 - Bank Indebtedness

2008

2007

Cheques issued in excess of cash

$

0

$

153

Note 5 - Long Term Debt

2008

2007

Loans From Private Investors

$

0

$

0

Private Convertible Debentures

0

0

$

0

$

0

Note 6 - Share Capital

2008

2007

Common shares, no par value

$

668,676

$

668,676

Authorized - Unlimited number

Issued

Shares

1,317,269

Shares

1,317,269

Fully Diluted

Shares

1,317,269

Shares

1,317,269

New shares issued

Shares

0

Shares

0

Other Statistics

Canadian Land (net holdings acres)

20

20

______________________

Statements of Income, Cash Flow and Retained Earnings

(Unaudited)

Year ended

Year ended

March 31,

March 31,

2008

2007

Operations Revenue

Consulting income

$

0

$

0

2008

2007

Oil Sales BBLS

206

301

13,213

17,787

Gas Sales MCF

0

0

0

0

Total sales:

13,213

17,787

Royalties and taxes

(149)

(245)

Production expenses

(6,922)

(11,291)

Total cost of sales:

(7,071)

(11,536)

Total oil and gas income:

6,142

6,251

Total operations income:

$

6,142

$

6,251

Operations Expenses

General Operations

Contract Labour

$

0

$

0

Travel/auto

0

0

Insurance

0

0

Lease rentals

(1,000)

(25)

Alberta royalty rebate

0

0

Repairs & maint.

0

0

Expenses/supplies

0

0

Communications

0

0

$

(1,000)

$

(25)

Office and Administrative

Contract labour

$

(1,800)

$

(1,800)

Employee health insurance

0

0

Expenses/supplies

(30)

(30)

Legal/accounting

(365)

(305)

Training

0

0

Rent

0

0

Travel

0

0

Communications

0

0

Share trades

0

0

$

(2,195)

$

(2,135)

Total operations expenses:

(3,195)

(2,160)

Cash flow from operations:

$

2,947

$

4,091

Cash flow per share:

0.002

0.003

______________________

Statements of Income, Cash Flow and Retained Earnings (Continued)

(Unaudited)

Year ended

Year ended

March 31,

March 31,

2008

2007

Cash flow from previous page:

$

2,947

$

4,091

Interest & Financing

Interest and other

0

0

Interest expense

0

(26)

0

(26)

Cash flow before special items:

$

2,947

$

4,065

Exploration and Development

Field seismic costs

0

0

Drilling expenses

0

0

Total E & D:

$

0

$

0

Special one time items

Loss on lost or stolen items

0

0

Loss on junked equipment

0

0

Oil equipment sales

0

0

Cash flow before non cash items:

$

2,947

$

4,065

Non cash items

Foreign exchange

0

0

Depreciation & Amortization

(14)

(20)

Depletion of property costs

(332)

(486)

(346)

(506)

Net (loss)/gain:

$

2,601

$

3,559

Retained Earnings

Beginning of year

63,812

60,253

At end of year

$

66,413

$

63,812