TUSTIN, CA, May 29, 2008

Gateway International Holdings, Inc. issued the following report by its CEO, Timothy D. Consalvi:

To Our Shareholders:

• Gateway has made significant strides forward since the de-registration of its securities by the Securities and Exchange Commission ("SEC") in 2006. We have addressed many of the issues which resulted in the deregistration of the Company in 2006. We believe we have now assembled a management team to build the infrastructure and controls necessary to allow us to become a reporting company once again and timely comply with the reporting requirements of the Securities Exchange Act of 1934 going forward. We are pleased to announce that on May 16, 2008, we filed a Form 10-12G ("Form 10") with the SEC. Our Form 10 is subject to review by the SEC. We cannot assure you we will be successful in our ultimate goal to have our common stock re-listed, however we can assure you we are committed to regaining our status as a publicly-traded company. A copy of the Form 10 can be found on the SEC website www.SEC.gov, by searching the Edgar filings and inputting our company name.

• As part of our Form 10 filing, we released our internal financial report for the nine months ended March 31, 2008. The following is a brief summary of these financial results: (Please note that financial result for the nine months ended March 31, 2007 reflect the continuing operations of Eran Engineering, Elite Machine Tool and All American CNC exclusive of discontinued operations, unless stated otherwise.)

  	Nine Months Ended	Nine Months Ended
  	March 31, 2007	March 31, 2008	Change($)	Change(%)
  Sales	11,504,509	13,279,306	1,774,797	15%
  Cost of Sales	8,208,294	9,965,664	1,757,370	21%
  Gross profit	3,296,215	3,313,642	17,427	1%
  Operating expenses
  Selling, general and administrative	2,527,650	3,618,134	1,090,484	43%
  Amortization of intangible assets	64,155	81,565	17,410	27%
  Impairment of goodwill				0%
  Total operating expenses	2,591,805	3,699,699	1,107,894	43%
  Operating income (loss)	704,410	(386,057)	(1,090,467)	-155%
  Interest expense	(254,764)	(108,296)	146,468	-57%
  Interest income	1,221	4,237	3,016	247%
  Gain on sale of assets	681,465	43,437	(638,028)	-94%
  Other net	(28,046)		28,046	-100%
  Income (loss) from continuing operations
  before income taxes	1,104,286	(446,679)	(460,498)	-42%
  Income tax (provision) benefit Income (loss)
  from continuing operations	(435,712)	156,639	592,351	-136%
  	668,574	(290,040)	131,853	20%
  Loss from discontinued operations, net of income taxes	(2,459,764)		2,459,764	-100%
  Net loss	(1,791,190)	(290,040)	2,591,617	-145%

  
  
  
  

  	Nine Months Ended March 31
  	2007	2008	Change($)	Change(%)
  Sales by segment
  Machine Sales	7,651,755	8,975,782	1,324,027	17%
  Precision Manufacturing	3,852,754	4,303,524	450,770	12%
  	11,504,509	13,279,306	1,774,797	15%
  Gross profit by segment
  Machine Sales	1,255,772	1,784,477	528,705	42%
  Precision Manufacturing	2,404,443	1,529,164	(511,279)	-25%
  	3,296,215	3,313,641	17,426	1%
  Gross margin
  Machine Sales	16%	20%	3%
  Precision Manufacturing	53%	36%	-17%

  
  
  
  • Sales in 2008 increased 15% compared to the comparable period in 2007. The change is attributable to increases in sales from both the Precision Manufacturing and Machine Sales groups. The Precision Manufacturing group experienced increases demand from Panasonic while the Machine Sales group had increases in sales volume for both new and used machines.
  • Gross profit increased by 1% compared to the comparable period in 2007. Gross margin decreased to 25% from 28%. The change resulted from higher gross margins from the Machine Sales group, offset by a decrease from the Precision Manufacturing group. The increase in the Machine Sales group was attributable to lower acquisition and refurbishment costs for used machines. The decrease in gross margin in the Precision Manufacturing group resulted from increased rent and facility costs related to its relocation of its manufacturing facility to Tustin, California from a company-owned facility sold in February 2007.
  • Selling, general and administrative costs increased by $1,090,484 or 43% compared to the comparable period in 2007. The increase is attributable to higher professional services (legal, accounting and investor relations), increases in personnel headcount and wages increases in facilities costs. During the 2008 period, we also recorded an impairment charge of $101,142 for termination of an enterprises resources planning system implementation.
  • Amortization expense for intangible assets increased by $17,410 compared to the comparable period in 2007. The change is attributable to the amortization of customer relationship intangible asset acquired in connection with the acquisition of CNC Repos, Inc. in October 2007.
  • Interest expense decreased by $146,468 compared to the comparable period in 2007. The change is attributable to lower average debt balances and decreases in the average interest rate paid on our debt and capital lease obligations.
  • Gain on sale of assets decreased by $638,028 compared to the comparable period in 2007. On February 23, 2007, we completed the sale of our former manufacturing facility for proceeds sale price of $2,017,000 resulting in a gain on the sale of the building of $691,967, net of income taxes.
  • The losses from discontinued operations were $0 and $2,459,764 for the nine months ended March 31, 2008 and 2007, respectively. As noted above, for the period ended in 2007, this was primarily related to the sale of Accurate and Nu-Tech in March 2007. See Notes to Consolidated Financial Statements in our Form 10 filing for further discussion.

  Sincerely,
  Timothy (Tim) D. Consalvi
  Chief Executive Officer
  Gateway International Holdings, Inc.
  

  'SAFE HARBOR'

  This press release may contain forward-looking statements. The words ‘estimate’, ‘possible’ and ‘seeking’ and similar expressions identify forward-looking statements, which speak only as to the date the statement was made. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted, or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to, the effect of government regulation, competition and other material risks.

  Investor Relations:

  investors@gih-inc.com

  Tim Consalvi – President and Chief Executive Officer

  714-630-6253