<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
<TABLE>
<S> <C>
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
GATEWAY ENERGY CORPORATION
- - - -----------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
NEIL A. FORTKAMP, EXECUTIVE VICE PRESIDENT, CFO & COO
- - - -----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
-----------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-----------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------------------
3) Filing Party:
-----------------------------------------------------------------------------------
4) Date Filed:
-----------------------------------------------------------------------------------
</TABLE>
<PAGE>
[LOGO]
GATEWAY ENERGY CORPORATION
June 28, 1996
Dear Stockholder:
You are cordially invited to attend the 1996 Annual Meeting of Stockholders
of Gateway Energy Corporation to be held at the Crowne Plaza Hotel, 4445 Main
Street, Kansas City, Missouri 64108, on July 25, 1996, at 10:00 a.m., local
time. The Notice of Annual Meeting and Proxy Statement accompanying this letter
describes the business to be transacted at the meeting.
During the meeting the Board of Directors will report to you on the
Company's progress during this past year and will discuss plans for the current
year. We welcome this opportunity to share our progress with you and look
forward to your comments and questions.
The Board of Directors appreciates and encourages stockholder participation
in the Company's affairs and we hope you can attend in person. Whether or not
you plan to attend the meeting, it is important that your shares be represented.
Therefore, please sign, date, and mail the enclosed proxy in the envelope
provided at your earliest convenience.
Sincerely,
Larry J. Horbach
CHAIRMAN OF THE BOARD OF DIRECTORS,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
GATEWAY ENERGY CORPORATION
10842 OLD MILL ROAD, SUITE 5
OMAHA, NEBRASKA 68154
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 25, 1996
------------------------
To the Stockholders of Gateway Energy Corporation:
The Annual Meeting of Stockholders of Gateway Energy Corporation (the
"Company") will be held at the Crowne Plaza Hotel, 4445 Main Street, Kansas
City, Missouri 64108, on July 25, 1996, at 10:00 a.m., local time, for the
following purposes:
1. To elect a Board of Directors to serve until the next Annual Meeting of
stockholders.
2. To approve an Amendment to the Restated Certificate of Incorporation to
increase the authorized Common Stock to 75,000,000 shares.
3. To ratify the appointment of Grant Thornton LLP as independent public
accountants.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on May 30, 1996, the Record
Date fixed by the Board of Directors, are entitled to notice of and to vote at
the Annual Meeting.
It is important that your shares be represented at the Annual Meeting
regardless of the number of shares you hold and whether or not you are
personally able to attend. Accordingly, please sign the enclosed proxy and
return it as soon as possible in the enclosed envelope provided for your
convenience.
By Order of the Board of Directors
Donald L. Anderson
SECRETARY
Omaha, Nebraska
June 28, 1996
<PAGE>
GATEWAY ENERGY CORPORATION
10842 OLD MILL ROAD, SUITE 5
OMAHA, NEBRASKA 68154
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JULY 25, 1996
------------------------
GENERAL INFORMATION
This Proxy Statement is furnished to the holders of the Common Stock, $.01
par value per share ("Common Stock") in connection with the solicitation of
proxies by the Board of Directors of Gateway Energy Corporation (the "Company")
for use at the Annual Meeting of Stockholders to be held on July 25, 1996, or
any adjournment thereof. The first mailing of the proxy material to the holders
of the Common Stock will be made on July 2, 1996.
The cost of the solicitation of proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited personally, or by
telephone or electronic media by regular employees of the Company. The Company
will reimburse brokers and other custodians, nominees or fiduciaries for their
expenses in forwarding proxy material to security owners and obtaining their
proxies.
Stockholders of record at the close of business on May 30, 1996, are
entitled to vote on matters to come before the meeting. On that date there were
outstanding and entitled to vote 28,463,338 shares of Common Stock.
Any proxy may be revoked by a stockholder at any time before it is exercised
by giving written notice to that effect to the Secretary of the Company or by
signing a later-dated proxy. Stockholders who attend the annual meeting may
revoke any proxy previously granted and vote in person.
All properly executed proxies will be voted in accordance with the
instructions contained thereon, and if no choice is specified, the proxies will
be voted for the election of the four directors named elsewhere in the Proxy
Statement and in favor of each other proposal set forth in the Notice of Annual
Meeting. Abstentions do not constitute a vote "FOR" or "AGAINST" any matter
listed in the accompanying Notice of Annual Meeting, but will be included in
determining the number of shares outstanding for purposes of the meeting. Also
broker "non-votes" (i.e., proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial or other persons
entitled to vote shares on a particular matter with respect to which the brokers
or nominees do not have discretionary power) will be treated the same as
abstentions. If any other business is brought before the Annual Meeting, the
shares represented by proxies will be voted in accordance with the judgment and
discretion of the persons voting them.
1
<PAGE>
BENEFICIAL OWNERSHIP OF VOTING SECURITIES
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. The table below sets forth
the persons who are known to the Company to be beneficial owners of more than
five percent (5%) of the Company's voting Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL BENEFICIAL PERCENT OF
TITLE OF CLASS OWNER OWNER CLASS
- - - ------------------ ------------------------------ --------------- -------------
<S> <C> <C> <C>
Common Stock Harry N. and Betty Davis 1,477,747 5.19%
3760 Martin Road
Smithville, MO 64089
Common Stock John J. Buterin 1,540,242 5.41%
P. O. Box 375
Mission, KS 66201
</TABLE>
PROPOSAL 1
ELECTION OF DIRECTORS
Following is a list of the names and ages of the four nominees, all of whom
are presently serving as Directors. Included is the past five-year business
history of each Director nominee and any public company directorships held by
such persons, the year in which each became a Director of the Company and the
number and percentage of outstanding shares of Common Stock of the Company
beneficially owned by each as of May 30, 1996.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE FOUR
NOMINEES LISTED BELOW.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE EMPLOYMENT HISTORY SINCE NO. OF SHARES %
- - - --------------------- --- -------------------------------------------------------------------- -------- ---------------- -----
<S> <C> <C> <C> <C> <C>
Larry J. Horbach 54 President and CEO since June 1990.Owner of L.J. Horbach & 1990 615,116 shares 2.16%
Associates; Director of Regency Affiliates, Inc. and Templeton State
Savings Bank.
Charles A. Holtgraves 31 Secretary from June 1988 to 1996; Treasurer from 1988 to 1994; Vice 1988 1,363,848 shares 4.79%
President of First Mortgage Investment Co. and also associated with
First National Bank of Independence and Grocers Video Systems, Inc.
Donald L. Anderson 64 Vice President since 1992; Secretary in 1996; for past five years, 1993 449,064 shares 1.58%
has served as a private consultant to investment banking community.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE EMPLOYMENT HISTORY SINCE NO. OF SHARES %
- - - --------------------- --- -------------------------------------------------------------------- -------- ---------------- -----
<S> <C> <C> <C> <C> <C>
John B. Ewing 74 In-house counsel for Company from June 1988 to 1995. He has been in 1988 144,000 shares .51%
private practice for the past five years.
All Directors as a group (4) persons own 2,572,028 shares or 9.04% of the outstanding Common Stock.
</TABLE>
The following information is furnished with respect to officers and
directors as to ownership of shares of preferred stock:
<TABLE>
<CAPTION>
NAME OF NUMBER OF PERCENT OF
SERIES BENEFICIAL OWNER SHARES CLASS
- - - ----------------------- --------------------------------------------- ----------- -------------
<S> <C> <C> <C>
PREFERRED STOCKS
Series B Charles A. Holtgraves 2.5 .14%
John B. Ewing 25.0 1.4%
Series L, M, K, J Charles A. Holtgraves 10.0 .44 %
Series O Donald L. Anderson 1.0 100 %
All Executive officers and directors as a group:
Series B 27.5 1.59 %
Series L, M, K, J 10.0 .44 %
Series O 1.0 100 %
</TABLE>
ADDITIONAL INFORMATION CONCERNING BOARD OF DIRECTORS
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business of the Company is managed under the direction of the Board of
Directors. There were six meetings in the fiscal year ending February 29, 1996.
There were also two occasions in which matters were decided using a Consent of
Directors. During the last fiscal year, no incumbent director attended fewer
than 75% of either the total number of meetings of the Board of Directors or the
total number of meetings held by any committees of the Board of Directors on
which he served. The Board of Directors has established an Audit Committee, a
Compensation Committee and a Stock Option Committee. Presently the Board of
Directors does not have a Nominating Committee.
AUDIT COMMITTEE
This committee reviews the independent audit of the Company and meets with
independent auditors as necessary to discuss matters pertaining to the audit and
any other matters which the Audit Committee or the auditors may wish to discuss.
Messrs. Holtgraves and Ewing comprise the Audit Committee. The committee met two
times during the fiscal year ending February 29, 1996.
COMPENSATION COMMITTEE
This committee recommends to the Board of Directors compensation for the
executive officers for each upcoming year. The committee consists of Messrs.
Holtgraves and Ewing. The committee met two times during the fiscal year ending
February 29, 1996.
3
<PAGE>
STOCK OPTION COMMITTEE
This committee administers the Incentive and Non-Qualified Stock Option Plan
and approves the issuance of stock options and stock appreciation rights in
accordance with the plan. Due to the resignation of James Vickers, currently Mr.
Holtgraves is the only member of the Stock Option Committee. The Board of
Directors will replace Mr. Vickers.
COMPENSATION OF NON-MANAGEMENT DIRECTORS
Non-management members of the Board of Directors currently receive $500 per
day for meetings attended. All directors are reimbursed for reasonable travel
and lodging expenses incurred while attending Board of Directors or Committee
meetings.
LIST OF CURRENT EXECUTIVE OFFICERS OF THE COMPANY
The following is a list of the names and ages of the current executive
officers of the Company, their business history for the past five years and the
year in which each person became an Officer of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION AND PRINCIPAL OCCUPATION SINCE 1991 OFFICER SINCE
- - - --------------------- --- --------------------------------------------------- -------------
<S> <C> <C> <C>
Larry J. Horbach 54 President and CEO since June 1990.Owner of L.J. 1990
Horbach & Associates; Director of Regency
Affiliates, Inc. and Templeton State Savings Bank.
Neil A. Fortkamp 50 Executive Vice President, Treasurer, CFO and COO; 1994
previously employed at Data Duplicating
Corporation.
</TABLE>
EXECUTIVE COMPENSATION
Individual executive officer compensation for the fiscal year ending
February 29, 1996, includes base salary, bonuses based upon financial objectives
accomplished for the year ended February 29, 1995, certain expense allowances
provided by the Company and matching contributions of the Company to its 401(k)
savings plan. As of February 29, 1996, the Company had no bonus or long-term
incentive programs in effect. The following Summary Compensation Table includes
compensation paid in cash and notes:
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION SECURITIES
---------------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY OTHER BONUS OPTIONS/SARS (#)
- - - ------------------------------------------------- --------- ------------ --------- --------- -------------------
<S> <C> <C> <C> <C> <C>
Larry J. Horbach 1994 $ 65,000 0 0 0
President & CEO 1995 95,933 11,264 0 175,000(3)
1996 108,137 9,422 10,617 0
Neil A. Fortkamp 1994 $ 10,833(1) 0 0 0
Executive Vice President, Treasurer, 1995 66,667 5,486 0 162,500(2)(3)
CFO and COO 1996 76,250 7,200 8,009 0
</TABLE>
4
<PAGE>
- - - ------------------------
(1) Mr. Fortkamp joined the Company on January 3, 1994.
(2) As part of 1995 compensation, Mr. Fortkamp received warrants to purchase
12,500 shares of Common Stock exercisable at $.16 per share through February
28, 2000.
(3) On December 1, 1994, Messrs. Horbach and Fortkamp were granted incentive
stock options coupled with tandem stock appreciation rights under the
Company's 1994 Incentive and Non-Qualified Stock Option Plan. Messrs.
Horbach and Fortkamp were granted options and tandem stock appreciation
rights on 175,000 shares and 150,000 shares, respectively, each at an
exercise price of $0.25 per share. The options vest at the rate of 50% per
year commencing December 1, 1994. Under the stock appreciation rights,
holders may exercise such SARs for cash, Common Stock or any combination
thereof in an amount equal to the difference between the market price of the
Company's Common Stock on the date of exercise and the option price at the
date of grant. Mr. Fortkamp also received warrants to purchase 12,500 shares
of Common Stock. See (2) above.
OPTION/SAR GRANTS IN LAST FISCAL YEAR. The Company made no grants of stock
options or stock appreciation rights during the year ended February 29, 1996.
AGGREGATE OPTION/SARS EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
VALUES. No executive officers exercised options during the fiscal year ended
February 29, 1996. The following table sets forth the year-end value of
unexercised options/SARs for officers of the Company:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE(1) OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT YEAR-END: (#) AT YEAR-END: ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- - - --------------------------------------------------------------- ---------------------- ------------------------
<S> <C> <C>
Larry J. Horbach 87,500/87,500 $13,650/13,650
Neil A. Fortkamp (2) 87,500/75,000 $14,800/11,700
</TABLE>
- - - ------------------------
(1) The value of unexercised, in-the-money options has been calculated by
determining the difference between the fair market value of the Company's
Common Stock on February 29, 1996, and the exercise price of the options,
multiplied by the number of options held.
(2) Includes warrants to purchase 12,500 shares of Company Common Stock as
described in Footnote 2 to the Summary Compensation Table.
5
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In fiscal year 1992, the Company entered into an agreement, amended February
29, 1993 and October 28, 1994, with Pipeline Capital, Inc. ("PCI") whereby PCI,
through a sponsorship arrangement, was to raise up to $50,000,000 for the
Company over a five year period through arranging private placements and public
offerings of the Company's securities. Under the Agreement, PCI received a
commission and finder's fees for properties acquired by the Company. PCI was
also issued common stock for successful efforts in raising funds used to
purchase the operating properties. To date, $18,595,000 of capital has been
raised.
In addition, PCI will receive an Exit Amount upon expiration of the
sponsorship agreement to be based upon 50% of the fair market value of the
properties acquired during the period plus 10% of defined net operating income
of the properties to the extent such Exit Amount exceeds finders fees and
commissions paid to PCI. A portion of such 10% amounts have been advanced to
PCI. The Exit Amount due PCI has been evidenced by Series C Preferred Stock
which can only be issued to PCI. Upon payment of the Exit Amount, the agreement
provides that the Series C Preferred Stock will be returned to the Company and
canceled.
Donald L. Anderson and James W. Vickers are shareholders of PCI. Each has a
one-third interest in the capital and in all profits and losses of PCI. The
following table sets forth the cash payments, excluding advances with respect to
the 10% net operating income, and stock issued to PCI during the periods
indicated:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
02/28/94 02/28/95 02/29/96
------------------- ------------------- -------------------
<S> <C> <C> <C>
Cash............... $323,000 $630,000 $231,400
Common Stock....... 232,445 Shares 490,000 Shares 120,000 Shares
Series C
Preferred......... 18.0 Shares 9.75 Shares 0 Shares
</TABLE>
In addition, as of May 6, 1996, the Company had advanced $278,728 to PCI.
The amount bears interest at 7% (and was due not later than February 20, 1999).
To the extent that the Exit Amount as described above is paid to PCI, all
remaining principal and interest on the advances will be deducted from such
amounts payable.
Over the past year, disagreements had arisen between the Company and PCI as
to the proper method of determining the fair market value of the Company's
properties for purposes of determining the Exit Amount. The agreement, its
various amendments and other correspondence and documents between the parties,
provided a basis for widely varying interpretations of how to calculate the Exit
Amount. PCI's position was that the Exit Amount was equal to the greater of 50%
of the fair market value of the properties less any indebtedness against the
properties, or the total of the commissions, finder's fees, advances and common
stock paid to PCI. The position of the Company was that the Exit Amount was
based upon the after tax proceeds upon a sale, or assumed sale, of the
properties, reduced by all commissions, finder's fees, expense advances and the
value of any common stock received by PCI during the term of the agreement.
Further, concerns had also arisen about the continued involvement of PCI in
obtaining capital and securing properties in light of changes in the Company's
operation.
6
<PAGE>
As a result of the ongoing disagreements, the Company and PCI determined to
terminate all prior agreements and the parties entered into a Settlement and
Purchase Agreement effective May 6, 1996. The Settlement and Purchase Agreement
provides as follows:
- The Company repurchased the 56.3 shares of Series C Preferred Stock owned
by PCI, representing its right to receive the Exit Amount and the 10%
interest in defined net operating cash flows for $480,000 represented by a
promissory note requiring payments of $10,000 per month commencing July 1,
1996 and ending June 1, 2000. The Company may, at its option, prepay all
of the note at a discount rate of 8%.
- PCI executed a new promissory note in the amount of $278,728 plus interest
at 7% per annum representing all advances to PCI to date. All principal
and interest on this note will be offset against the amounts which are
payable to PCI upon a "Payment Event" under the Series O Preferred Stock,
described below.
- The Company issued to PCI one share of its Series O Preferred Stock which
is non-voting and has no dividend rights. Upon the following described
events, the following payments will be made to PCI:
A. In the event of the merger of the Company where it is not the
surviving corporation, the sale of all, or substantially all, of its assets
or the sale or exchange of a majority or more of the outstanding common
stock, PCI shall be entitled to receive 10% of the consideration paid in the
transaction.
B. In the event of the liquidation and dissolution of the Company,
after payment of all debts and obligations senior to the Series O Stock and
any distributions required to be made to the holders of the Series G
Preferred Stock, PCI shall receive a payment equal to 10% of the remaining
assets of the Company.
C. If neither of the events described in A or B above have occurred by
July 1, 2000, the Company and PCI will agree upon an investment banking or
appraisal firm to value the Company and PCI shall receive an amount equal to
10% of the fair market value appraisal. The Company must pay $250,000 at
closing, any remaining balance up to $500,000 within twelve (12) months
after closing and if there is any remaining balance, half will be paid
within eighteen (18) months of closing and the remaining half will be paid
within twenty-four (24) months of closing. Any balances bear interest at the
rate of 8% per annum.
In the event the Company pays less than $5,000 on any monthly payment under
the $480,000 promissory note described above and has failed to pay any remaining
amount within thirty (30) days, PCI may either accelerate all remaining payments
under the note or shall have a one time right to increase the 10% amounts
described in subparagraphs A, B and C above to 20%. Each of the events in
subparagraph A, B and C above constitute a Payment Event and all principal and
interest remaining due under the $278,728 PCI note shall be offset against those
amounts.
- The Company has entered into an Employment Agreement with Donald L.
Anderson to employ him as Vice President-Shareholder Relations until July
1, 2000 unless the Agreement is otherwise terminated. Mr. Anderson shall
receive compensation of $6,000 per month. In the event the employment is
terminated as a result of Mr. Anderson's death or permanent disability or
7
<PAGE>
because of a sale or change of control of the Company, Mr. Anderson or his
estate shall be entitled to all remaining salary under the Agreement
reduced to present value at a discount rate equal to 8%.
- The Company has agreed to consider on a property by property basis,
engaging PCI to act as a finder and complete all reasonable and necessary
due diligence on future property acquisitions and to pay to PCI a
so-called Lehman formula (5-4-3-2-1) fee on all such properties actually
acquired.
OTHER TRANSACTIONS
As of February 29, 1996, the Company owed Mr. Horbach $17,129 which was the
amount remaining on a Promissory Note issued in 1992. During fiscal years 1995
and 1996, the Company paid Donald L. Anderson $27,000 and $15,100, respectively,
plus 1,190 shares of Common Stock in Fiscal 1995 as fees for administrative
services performed in connection with the private placement of the Company's
securities during the year.
PROPOSAL 2
AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED COMMON STOCK
The Board of Directors has recommended that the Company increase the
authorized Common Stock from 30,000,000 shares to 75,000,000 shares. It is
anticipated that the newly authorized shares will be used for the purposes of
future financing and capital raising activities, possible acquisition of one or
more operating properties and contemplated conversions and exchanges of certain
Preferred Stock during the current fiscal year. The newly authorized Common
Stock will have the same rights, privileges, as designations as the current
authorized shares.
If the proposed amendment is adopted, Article IV of the Restated Certificate
of Incorporation of the Company will read as follows:
Fourth. The total aggregate number of shares which the Company shall
have authority to issue Seventy-Six Million, Seven Hundred Fifty
Thousand (76,750,000) shares designated as follows: (i) Seventy-Five
Million (75,000,000) shares of Common Stock, par value $.01 per share;
and (ii) One Million, Seven Hundred Fifty Thousand (1,750,000) shares of
Preferred Stock, $1.00 par value per share, which shares of Preferred
Stock may be issued in series, all with such rights, privileges and
restrictions and preferences as the Board of Directors may authorize
from time to time.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL 2 TO
AMEND THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE
AUTHORIZED SHARES OF COMMON STOCK.
PROPOSAL 3
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Grant Thornton LLP, independent public
accountants, to examine the financial statements of Gateway Energy Corporation
for the year ending February 28, 1997, and to perform other audit and accounting
related activities as may be requested from time to time by management or the
Board of Directors.
8
<PAGE>
The Board of Directors has directed that the appointment of Grant Thornton
LLP be submitted to the stockholders for approval. The affirmative vote of a
majority of the shares of Common Stock present or represented and entitled to
vote on the proposal at the Annual Meeting is required for approval. If the
stockholders do not approve, the Audit Committee and the Board of Directors will
reconsider the appointment.
Representatives of Grant Thornton LLP are expected to be present at the
Annual Meeting. They will be available to respond to appropriate questions and
will have an opportunity to make a statement if they so desire.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT ACCOUNTANTS.
OTHER BUSINESS
Management does not intend to bring any business before the Annual Meeting
other than the matters referred to in the accompanying notice and at this date
has not been informed of any matters that may be presented to the Annual Meeting
by others. If, however, any other matters properly come before the Annual
Meeting, it is intended that the person named in accompanying proxy will vote
pursuant to the proxy in accordance with their best judgment on such matters.
ANNUAL REPORT
The Company's Annual Report, including financial statements for the year
ended February 29, 1996, is being mailed to all stockholders concurrently
herewith. The Annual Report is not a part of the proxy solicitation material.
Additional copies of the Annual Report and the Company's Annual Report on Form
10-KSB for the year ended February 29, 1996, will be provided, without charge,
upon written request from any stockholder to: Gateway Energy Corporation, 10842
Old Mill Road, Suite 5, Omaha, Nebraska 68154.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors and persons who
own more than 10% of the registered class of the Company's equity securities to
file reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5
with the Securities and Exchange Commission (the "SEC"). Such officers,
directors, and 10% stockholders are also required by the SEC rules to furnish
the Company with copies of all Section 16(a) forms they file. Charles A.
Holtgraves, a Director of the Company failed to timely file two Form 4 ownership
reports involving two transactions.
STOCKHOLDER PROPOSALS FOR 1997
Stockholders may submit proposals on matters appropriate for stockholder
action at the Company's annual meeting, consistent with regulations adopted by
the Securities and Exchange Commission. Proposals to be considered for inclusion
in the Proxy Statement for the 1997 Annual Meeting must be received by the
Company not later than February 15, 1997. Proposals should be directed to the
attention of the Secretary, Gateway Energy Corporation, 10842 Old Mill Road,
Suite 5, Omaha, Nebraska 68154.
9
<PAGE>
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, IT IS IMPORTANT THAT THEY BE
REPRESENTED AT THE ANNUAL MEETING. YOU ARE RESPECTFULLY REQUESTED TO SIGN, DATE
AND RETURN THE ACCOMPANYING PROXY AT YOUR EARLIEST CONVENIENCE.
By Order of the Board of Directors
Donald L. Anderson
SECRETARY
10
