UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               FORM 10-KSB/A NO. 3

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

                   For the Fiscal Year Ended December 31, 2002

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d)
        OF THE SECURITIES EXCHANGE ACT OF 1934

                          Commission File No. 000-27783

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

Delaware                                                      84-1572525
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                           Identification No.)

8001 South InterPort Blvd., Englewood, Colorado            80112
(Address of principal executive offices)                 (Zip Code)

Issuer's telephone number, including area code:  (303) 690-8300

Securities registered under Section 12(b) of the Exchange Act:  None

Securities registered under Section 12(g) of the Exchange Act:

Title of class:  Common Stock, $0.001 par value per share

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. [X] Yes [ ] No

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B in this form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

Nathaniel Energy's revenues for its most recent fiscal year (2002): $175,662

The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the average bid and asked price of such
common equity, as of December 31, 2002 was $10,549,845.

The number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date (April 9, 2003) is 38,262,664 shares.

DOCUMENTS INCORPORATED BY REFERENCE:  None

<PAGE>
                                EXPLANATORY NOTE

     The  amendments  in this Amended  Annual  Report on Form  10-KSB/A No. 3 of
Nathaniel  Energy  Corporation for the year ended December 31, 2002 includes the
following:

-    The Independent  Auditor's Report relating to Nathaniel  Energy's financial
     statements  for the year ended  December  31, 2001 which was  inadvertently
     omitted from  Nathaniel  Energy's  2002 Annual  Report on Form  10-KSB,  as
     previously amended.
-    Corrections or  reclassifications to certain financial data reported in the
     income statement, statement of stockholders' deficit, and statement of cash
     flows for the year ended December 31, 2002. Minor  adjustments were made to
     revenue, selling, general and administrative expenses,  partnership income,
     and minority  interest to correct for  typographical  and reporting errors.
     These  corrections  and  reclassifications:  1) were not the  result of any
     additional  audit work, 2) reduced 2002 net loss by $31,143,  and 3) had no
     effect on stockholders' deficit or net loss per share.
-    The financial statements, financial footnotes, Executive Compensation (Item
     10),  Security  Ownership (Item 11), and Certain  Relationships and Related
     Transactions  (Item 12) have also been corrected for  typographical  errors
     and  omissions  known to the Company as of the filing date of this  Amended
     Annual Report on Form 10-KSB.

                           FORWARD LOOKING STATEMENTS

     Assumptions  about future events used as a basis for certain  statements in
this report about those  expected  events may differ from actual future  events,
causing  the  statements  in this  report  about  those  expected  events  to be
inaccurate and the results of future operations to be different from and perhaps
worse than suggested in this report.  Nathaniel  Energy makes statements in this
report about its  possible  future  based upon its current  expectations.  These
statements are  forward-looking  statements within the meaning of Section 21E of
the  Securities  Exchange  Act and  Section  27A of the  Securities  Act and are
subject to the safe harbors created by those sections. Nathaniel Energy's actual
future may be  materially  different  from its  expectations  described  in this
report.  Some of the words Nathaniel Energy uses to describe its expected future
are "believes",  "anticipates",  "expects",  "intends",  "may", "will" and other
similar  expressions,  but  other  words  may be  used.  Also,  any  information
described  as  forecasts,  projections  or future  events or  circumstances  and
statements made with future-tense verbs are forward-looking statements.  Readers
should realize that many of the possible future events  described in this report
are beyond  Nathaniel  Energy's  control.  Nathaniel  Energy  does not intend to
publicly  publish any  revisions to reflect  events or  circumstances  occurring
after the date of this report  which differ from the  expectations  reflected in
this report.

PART I

Item 1. Description of Business.

Corporate History

     On  December  31,  2002,  MNS Eagle  Equity  Group IV,  Inc.  (MNS) and its
shareholders  entered into a Stock  Exchange  Agreement  with  Nathaniel  Energy
Corporation pursuant to which Nathaniel Energy acquired all of MNS's outstanding
common stock for  $20,750.00  in cash and 50,000  shares of  Nathaniel  Energy's
common  stock.  MNS, a reporting  company  under  Section 12g of the  Securities
Exchange Act of 1934, became a wholly owned subsidiary of Nathaniel Energy.  The
purpose  of  this  transaction  was  for  Nathaniel  Energy  to  succeed  to the
registration  status of MNS under the Exchange Act in reliance  upon Rule 12g-3.
Nathaniel  Energy is the  parent of MNS which is not  engaged  in any  business.
Nathaniel  Energy's  directors and officers became the directors and officers of
MNS.

     Nathaniel  Energy  Corporation  (Ajax) was incorporated in Delaware in 1996
with the name of Ajax Reinsurance Limited.  Nathaniel,  Ltd. was incorporated in
Colorado 1992.  Nathaniel,  Ltd.  started its scrap tire  recycling  business in
1997. In 1998, Nathaniel,  Ltd. merged with G-VII Energy Corp. (G-VII) which had
been  incorporated in Delaware in 1987. In July, 1998, G-VII changed its name to
"Nathaniel Energy Corporation". In December 1998, "Nathaniel Energy Corporation"
merged  into  Ajax.  In  1999,  Ajax  changed  its  name  to  Nathaniel   Energy
Corporation.   On  August  26,  2002,  Nathaniel  Energy  acquired  MCNIC  Rodeo
Gathering,  Inc.,  (MCNIC) a Michigan  corporation,  which owns  18.55% of Keyes
Helium Company,  LLC. On April 3, 2003,  Nathaniel's newly incorporated,  wholly
owned subsidiary,  Nathaniel Energy Oklahoma Holdings Corporation,  acquired the
remaining 81.45 percent of Keyes Helium Company,  LLC.  Nathaniel plans to merge
MCNIC into Nathaniel Energy Oklahoma  Holdings  Corporation.  In connection with
financing for these  acquisitions,  Nathaniel  Energy will  transfer  forty-nine
percent of Nathaniel Energy Oklahoma  Holdings  Corporation's  common stock to a
non-management  stockholder who owns 18.5 percent of Nathaniel's Energy's common
stock.

General

     During  2002,   Nathaniel  Energy's  operations  were  limited  to  a  tire
processing and  reclamation  facility which sells its output of shredded  rubber
and steel  wire to others  primarily  for use as fuel and  recycling  into steel
products. Nathaniel Energy's short term objective is to utilize this and

<PAGE>


plan  additional  tire  shredding  facilities  as a fuel  supply for its planned
Thermal  Combustor  operations.  Nathaniel  Energy's  planned Thermal  Combustor
operations  will enable it to expand its business into the sale of  by-products,
including electric power, and the sale of agricultural produce from greenhouses.
Nathaniel Energy has one wholly owned and one majority owned subsidiary.  MNS is
wholly owned by Nathaniel  Energy and is not engaged in any  business.  MCNIC is
fifty-one percent owned by Nathaniel Energy and has an 18.55 percent interest in
Keyes  Helium  Company,  LLC,  a helium  production  company  located  in Keyes,
Oklahoma. If the opportunity were to present itself, Nathaniel Energy would like
MCNIC to acquire  ownership of the entire facility.  Subsequent to year-end,  on
April 3, 2003, Nathaniel Energy acquired through a newly organized, wholly owned
subsidiary  the joint venture in which MCNIC  participates,  together with other
assets,  with the intent to merge MCNIC into that  subsidiary,  Nathaniel Energy
Oklahoma Holdings Corporation.  Nathaniel Energy is obligated to cause Nathaniel
Energy Oklahoma Holdings Corporation to issue forty-nine percent of its stock to
Nathaniel's  stockholder,  Richard Strain, as part of the financing  transaction
for the acquisitions,  which Mr. Strain provided. Nathaniel Energy will retain a
fifty-one  percent  interest in the subsidiary.  The acquisition  puts Nathaniel
Energy in the  business of helium  production  and natural  gas  collection  and
sales.

Description of Thermal Combustor Technology

     The Thermal Combustor uses waste, such as scrap tires  (tire-derived fuel -
TDF), fuel derived from municipal and industrial  waste streams  (refuse-derived
fuel - RDF), wood waste and agricultural  waste.  Fuel for the Thermal Combustor
is  placed  on a  moving  grate  in a  chamber  where  it is  subjected  to high
temperature and gasified. The resulting gas is withdrawn into a separate chamber
where it is  combusted  at  temperatures  ranging  from  three to four  thousand
degrees Fahrenheit.  The by-products from combustion are heat, elemental carbon,
carbon dioxide, low levels of carbon monoxide, sulfur dioxide, and nitrogen. The
process  also  generates  two  forms of ash,  one being  the  unburnable  solids
remaining in the fuel, such as metals (including small amounts of heavy metals),
rock  and  sand.  The  other  is fly  ash,  small  particles  commonly  known as
particulate,  which is  captured in filters  and  dissolved  in water to produce
primarily sulfuric acid.

     As a  result  of the  pre-combustion  gasification  and  high  temperatures
achieved  in  the  Thermal  Combustor,  carbon  monoxide  is the  only  unusable
pollutant - it is emitted in very small  quantities  that are well below current
and possible future EPA environmental  standards.  The Thermal  Combustor's high
temperature  destroy 99.9% of hazardous air pollutants emitted from RDF and TIRE
DERIVED FUEL,  including  PCBs,  dioxins,  and furans.  Gaseous  pollutants  are
captured by scrubbers or catalytic converters.

     The Thermal  Combustor's  minimal  generation of air pollutants reduces the
size and cost of external air pollution control equipment mandated by regulatory
agencies.

     The Thermal  Combustor is simple in design and  operation.  It has only two
moving parts exposed to the high  temperatures  of the combustion  process,  two
fire belts. All other moving parts are located outside the gasification  chamber
and the combustion  chamber and are easily  accessible for service.  This simple
maintenance and design results in a Thermal  Combustor life expectancy in excess
of thirty years and requires only four hours of scheduled  downtime  every three
months for maintenance. Nathaniel Energy believes it will take approximately one
week to rebuild a Thermal  Combustor,  which should be performed  once every ten
years.

<PAGE>


     In addition to the relatively straightforward  construction of the patented
gasification and combustion  chambers,  Nathaniel Energy's  Intelligent  Process
Control System  features  modern computer  process  technology.  The Intelligent
Process  Control System monitors and controls all aspects of fuel and air volume
to maintain  optimal  combustion.  This system allows for  virtually  unattended
operation.  The Intelligent Process Control System features  self-diagnostic and
corrective  action functions  prompting the operator to take action if a problem
occurs  which is beyond  the  ability of the  computer  system to  correct.  The
Predictive Failure Analysis function pinpoints  potential weak spots that can be
dealt with as a  preventative  maintenance  item  before a more  costly  failure
occurs.

     While the Thermal  Combustor is adaptable to any  combustible  material,  a
1996 study and test found TIRE DERIVED FUEL generates the highest number of BTUs
per pound of any  refuse-derived  fuel. The abundance of discarded  tires in the
United States and resulting  environmental  hazard they  represent  provided the
opportunity  to  position  Nathaniel  Energy to expand into the  collection  and
shredding  of scrap  tires,  which  could  then be used as fuel for the  Thermal
Combustor.

Recent Environmental Testing

     On May 2, 2000 the Irish  equivalent of the U.S.  Environmental  Protection
Agency,  Bord na Noma conducted a comprehensive  environmental test on a Thermal
Combustor temporarily installed at a facility County Louth, Ireland. During this
testing the Thermal Combustor was fueled with Refused Derived Fuel.  Testing was
conducted for more than fifty different chemical  pollutants,  including dioxins
and PCBs, many of which are extremely  hazardous.  The report concludes with the
statement that the Thermal  Combustor meets and exceeds all European  standards.
Management  believes  it is  significant  that the tests  show  extremely  toxic
substances   in   emissions,    including   dioxins,   furans,    chlorophenols,
chlorobenzenes,  and  polyaromatic  hydrocarbons  are  significantly  below  the
European  limits,  less than 10% of standard in all cases,  with many  compounds
completely  absent.  Management  believes  it is also  important  to  note  that
currently the European Community (EC) has the strictest limits on air pollutants
of any country in the world, including the United States.

Marketable By-products

     Most by-products of the Thermal Combustor are marketable.

     These primary by-products include:

     X    Heat - which can be used for heating purposes, such as heating
          greenhouses in colder climates, or for steam generation.
     X    Electricity - produced by the addition of steam turbines and
          generators, for use in a companion project, such as a greenhouse
          facility or for sale to the local utility.

     Secondary by-products are:

     X    Carbon black - which can be sold for tire manufacturing, water
          filtration, and the cosmetics industries.
     X    Carbon dioxide - which can be sold to greenhouse operators for use in
          growth enhancement or for other industrial processes involving
          carbonation.
     X    Sulfur dioxide - which can be sold in the form of sulfuric acid.
     X    Nitrogen - which can be sold for use in natural gas pipelines.
     X    "Bottom ash" - which, after separation of metals, can be sold as a
          component of road base construction.

<PAGE>


     Nathaniel  Energy  believes  the  marketable  by-products  produced  by the
Thermal  Combustor are ideally  suitable for use in proximity  with a variety of
industrial and agricultural operations,  such as gas pipelines, the greenhouses,
especially in colder  climates  where both the heat and carbon dioxide are used,
and any operation desiring co-generation of electricity.

Background on Deployment of the Thermal Combustor

     Early  generations of the Thermal Combustor were sold between 1980 and 1995
by a previous  company in which Stanley Abrams was a  stockholder,  director and
officer.  That company  terminated its sales of Thermal  Combustors  when it was
unable to  obtain  sufficient  funding  to pursue  this line of  business.  That
company is unrelated  to Nathaniel  Energy,  except for the  involvement  of Mr.
Abrams in both. That company sold Thermal Combustors for twenty-three  locations
in which the use was intended for waste  disposal and the production of heat and
electricity in connection with the purchasers' core businesses. Nathaniel Energy
has  been  unable  to  determine  that  any of these  early  generation  Thermal
Combustors   are   still   operating,   except   one   sold   to   the   Atlanta
Journal-Constitution newspaper. Nathaniel Energy believes that discontinuance of
the  Thermal  Combustors  by the  purchasers  was a  result  of  the  purchasers
encountering  difficulty  with  their core  businesses,  in at least a few cases
leading to termination of all operations,  rather than any problems  encountered
with their Thermal Combustor.

Business Model

     Under  Nathaniel  Energy's  current  business  strategy,  Nathaniel  Energy
intends to limit  placement  of Thermal  Combustors  to joint  ventures in which
Nathaniel  Energy  is a  participant.  The  level of  Nathaniel  Energy's  joint
ownership  will vary with each  joint  venture.  Nathaniel  Energy is focused on
forming joint  ventures with partners who possess both the financial  capability
and  governmental  resources  to execute a  successful  operation.  These  joint
ventures  are  expected  to have a  typical  life in  excess  of  thirty  years.
Nathaniel  Energy  does  not  intend  to  pursue  expansion  of its  scrap  tire
reclamation  business,  other than in  connection  with and as a fuel source for
Thermal Combustor  installations in which it has an ongoing financial  interest.
The sale or utilization of the by-products from Thermal Combustor operations are
expected  to  enhance  return  on  Nathaniel  Energy's  investment.  There is no
assurance  Nathaniel Energy will not decide to sell Thermal Combustors from time
to time, depending upon the circumstances, instead of pursuing the joint-venture
model.

Proposed Expansion of Business

     Nathaniel Energy's board has approved an agreement for a joint venture with
Renewable Development LLC ("RDL"). RDL has an agreement with Nye County, Nevada,
one element of which involves the use of Nathaniel Energy's Thermal Combustor to
provide  electricity from waste streams for 3,800 acres of real property planned
for  development  by parties  unrelated  to  Nathaniel  Energy in and around the
Tonopah  Aeronautics and Technology Park.  Under the agreement,  Nye County will
provide  property and water to  Nathaniel  Energy as an incentive to install and
develop a 25-megawatt  electrical  plant and a 200-acre  agricultural  facility.
Nathaniel Energy plans to develop a scrap tire reclamation operation at the site
to process in excess of thirty  million  tires per year as TIRE DERIVED FUEL for
the project.

     Nathaniel  Energy  is  proposing  to place a  Thermal  Combustor  operation
adjacent to the helium plant in Keyes, Oklahoma, in which Nathaniel Energy has a
majority  interest.  Nathaniel  Energy is negotiating to acquire a 191-acre site
with  buildings  adjacent  to the  helium  plant  and a natural  gas  collection
facility.  Nathaniel Energy plans to install a scrap tire shredding operation at
this location and may undertake agricultural operations.

<PAGE>


     In addition to Nathaniel Energy's traditional emphasis on domestic markets,
Nathaniel  Energy will  continue  efforts to grow  Nathaniel  Energy's  business
internationally  by attempting  to develop new markets and  expanding  Nathaniel
Energy's market share. Preliminary approvals for the Thermal Combustor have been
issued in Italy,  with a project  waiting on funding which will involve either a
joint venture or the sale of Thermal Combustors.  Nathaniel Energy has appointed
non-exclusive,  limited  purpose  distributors  in Japan and South Korea.  These
appointments may result in joint ventures or in sales.  Nathaniel Energy entered
into a joint  venture for Ireland to which it provided a Thermal  Combustor  for
demonstration  purposes.  The  Irish  partner  alleged  breach  of  contract  by
Nathaniel  Energy and has  refused to return or divulge the  whereabouts  of the
demonstration  unit.  Nathaniel  Energy has been  advised  by  counsel  that the
agreement  may  be  void  or  voidable  as a  result  of  fundamental,  material
misrepresentations  made by the Irish  partner.  Nathaniel  Energy  is  pursuing
recovery of the thermal combustor. See Note 13 to the financial statements for a
further explanation of the Irish joint venture.

Tire Reclamation Operation

     Nathaniel  Energy's only operation in 2002 was a tire reclamation  facility
in Hutchins,  Texas. Under Texas State regulations  Nathaniel Energy is licensed
as a tire  processor  and tire  storage  facility.  Nathaniel  Energy  is paid a
tipping  fee for  accepting  scrap  tires.  Nathaniel  Energy  plans to use tire
recyclers in the Dallas,  Texas area,  to generate up to 100,000 tires per week.
Nathaniel Energy plans to operate this facility in two shifts,  six days a week.
It has the  capacity to shred 3,000 tires per hour.  Nathaniel  Energy sells the
output of its tire  reclamation  operation  to two major  users.  One is a large
cement company located in Texas, which uses the TIRE DERIVED FUEL for firing its
kilns,  thereby  displacing  equal  amounts  of  coal.  A  national  broker  has
agreements with Nathaniel Energy to purchase TIRE DERIVED FUEL for several paper
mill plants  located in other states.  Until  Nathaniel  Energy places a Thermal
Combustor  in  operation,  which can use TIRE  DERIVED  FUEL,  generated  by its
facility,  Nathaniel  Energy's  income  potential  from this  operation  will be
limited to tipping fees from  collection of scrap tires and selling TIRE DERIVED
FUEL to others.

Proposed Acquisition

     Nathaniel  Energy's  Board of  Directors  has  approved  in  principal  the
purchase of the assets of Ripetouch  Greenhouses,  Inc.  located in Castle Rock,
Colorado. The price not been determined, nor have Ripetouch and its stockholders
approved the transaction. The assets consist of intellectual property, and forty
acres of agricultural ground with an estimated value of $60,000, which Nathaniel
Energy would sell. Nathaniel Energy has been working with Ripetouch for a period
of years to  develop  know how in the use of  energy  derived  from the  Thermal
Combustor using TIRE DERIVED FUEL for greenhouse agriculture.  This acquisition,
if completed,  will give Nathaniel Energy ownership of the know how developed by
Ripetouch.  The price Nathaniel  Energy is willing to pay for Ripetouch would be
offset by advances  Nathaniel  Energy has made to  Ripetouch  and would  involve
Nathaniel Energy's assumption of bridge funding used by Ripetouch. Ripetouch has
assigned  to  Nathaniel  Energy  in  partial  payment  of  advances  Ripetouch's
inventory  of  rubber  bricks  and tire  shreds  with a value  Nathaniel  Energy
estimates at $125,000,  which  Nathaniel  Energy  intends to sell.  See Item 12,
Certain Relationships and Related Transactions.

Intellectual Property

     Nathaniel Energy owns two U.S. patents,  one U.S.  application for a patent
which is scheduled to issue in January  2003 and a European  patent  application
covering the Thermal Combustor  technology.  Nathaniel Energy's ownership of the
technology is by assignment from Stanley Abrams, Nathaniel Energy's Chief

<PAGE>


Executive Officer. These patents and patent applications are for utility patents
directed to devices and methods of uses. The two U.S.  patents expire  September
6, 2011 and December 4, 2012,  respectively,  while the patent expected to issue
in 2003 will have a life of seventeen  years from the date of issue.  Concurrent
with and in  consideration  for the  assignment of the  technology in July 1998,
Nathaniel  Energy entered into a companion  agreement  with Messrs.  Stanley and
Brett Abrams which requires a reassignment of the Thermal  Combustor  technology
to them in the event  either  one or neither  of them is not fully  employed  by
Nathaniel  Energy as an  officer,  Stanley  as  president  and  chief  executive
officer,  Brett as a vice  president  and chief  operating  officer  and both as
directors.  Furthermore, this companion agreement provides for a reassignment of
the technology to Messrs.  Abrams in the event Nathaniel  Energy ceases business
operations or becomes financially bankrupt.  Nathaniel Energy and Messrs. Abrams
intend to examine the  desirability  of replacing and may replace the assignment
of ownership  in the  technology  to Nathaniel  Energy with the grant by Messrs.
Abrams of a perpetual,  non-expiring,  royalty free license to Nathaniel  Energy
subject to automatic  termination  upon the  occurrence of any one of the events
that would now require  Nathaniel at the present time to reassign the technology
to Messrs.  Abrams. Counsel has suggested to Messrs. Abrams and Nathaniel Energy
that a license may be a more  desirable  and  effective  means of achieving  the
results intended by all parties than is achieved by the existing  assignment and
companion  agreement,  particularly  in  the  event  of  business  cessation  or
bankruptcy.

Government Approval / Environmental Laws and Regulation

     Operation  of a  Thermal  Combustor  and a tire  reclamation  facility  are
subject  to a  variety  of  federal,  state,  and  local  laws and  regulations,
including  those relating to the discharge of material into the  environment and
protection  of  the   environment.   The  governmental   authorities   primarily
responsible for regulating Nathaniel Energy's  environmental  compliance are the
U.S.  Environmental  Protection Agency, and comparable  regulatory  agencies and
departments  in  the  states  where  Nathaniel  Energy  establishes  operations.
Nathaniel  Energy is subject to the air quality  programs  contained  in 40 CFR,
Part 60. Nathaniel Energy's tire reclamation  operations in Texas are subject to
regulation by the Texas Natural Resource Conservation Commission.

     Before  Nathaniel  Energy  can begin any  Thermal  Combustor  or scrap tire
reclamation  operations  at any location,  Nathaniel  Energy will be required to
obtain  air  emission  permits.  Nathaniel  Energy  will also need to obtain the
appropriate construction and other permits.

     Failure to comply with the laws promulgated by these authorities may result
in monetary sanctions, liability for environmental clean up, and other remedies.
To maintain Nathaniel Energy's compliance,  Nathaniel Energy may make occasional
changes in Nathaniel Energy's waste generation and disposal procedures,  Thermal
Combustor  operation or other  operations.  Nathaniel Energy believes these laws
and regulations  will not have a material  adverse effect on Nathaniel  Energy's
capital  expenditures or competitive  position.  Nathaniel  Energy believes that
Nathaniel Energy's technologies comply in all material respects with the various
federal,  state, and local regulations that apply to Nathaniel  Energy's current
and proposed operations.

Research and Development

     Nathaniel Energy did not spend any funds on research and development during
the last two fiscal years due to the lack of financing, other than employment of
one full time engineer at an annual salary of $60,000 who devotes  approximately
seventy-five percent of his time to improving the Thermal Combustor technology.

<PAGE>


Nathaniel  Energy has  budgeted  $45,000 for  research  and  development  in the
current year, subject to available funding. Nathaniel Energy intends to continue
its efforts in this area and to increase internal product  development to ensure
Nathaniel  Energy's  customers  with the best product  opportunities.  Nathaniel
Energy's  research and  development  efforts  will also focus on  improving  the
efficiency of the Thermal Combustor.

Market Opportunity

     According  to the  Scrap  Tire  Management  Council,  there are up to three
billion  scrap  tires  in  stockpiles  in the  United  States.  The  Scrap  Tire
Management  Council  estimates  that in  1997  alone,  270  million  tires  were
scrapped.  Of these 270 million tires,  about 201.5 million were recycled,  38.5
million were stockpiled, and 30 million were shredded and buried in landfills or
used as landfill covers.

     The use of scrap tires for fuel  increases  every year and is currently the
largest single use of scrap tires.  Tire-to-energy  technology preserves natural
resources by utilizing the stored energy in petroleum-based  tires. Tires have a
heating  value of 12,000 to 15,000 Btu per pound  (6,668 to 8,335 kilo  calories
per kilogram). Each twenty pound (nine kilogram) car tire is equivalent to about
twenty-five  pounds (11.4  kilograms) of bituminous coal. Tires contain less ash
than  most  types of coal and less  sulfur  than  bituminous  coals.  Tires  are
shredded into chunks as TIRE DERIVED FUEL. In 1997, cement kilns, pulp and paper
mills, electric utilities, waste-to-energy plants, and industrial boilers burned
approximately  140 million  tires.  New  regulations  are expected to reduce the
scrap tires used to fuel cement  kilns.  Although some of these  facilities  use
whole tires and/or TIRE DERIVED FUEL as the only fuel, most mix or "co-fire" the
tires/TIRE  DERIVED FUEL with other fuels,  such as coal.  The TIRE DERIVED FUEL
makes up about 10% of the total fuel mix.

     Nathaniel Energy's Thermal Combustor technology provides a viable method of
utilizing scrap tires to keep them out of landfill and reduce  accumulations  in
stockpile  while  generating  energy  and  other  marketable  by-products  in an
environmentally friendly manner.

Competition

     The  expanding  alternative  fuel industry is a rapidly  changing  field of
technology.  Nathaniel Energy recognizes that to be competitive it must continue
to pursue  courses of action  designed  to further  expand the  application  and
utilization of the Thermal  Combustor.  Nathaniel Energy's  management  believes
that the compactness,  flexibility of multi-fuel capability and comparably lower
cost of  manufacture  and  installation  of the  Thermal  Combustor  will enable
Nathaniel  Energy to capture a share of the  waste-to-energy  market.  Nathaniel
Energy  is not  aware of any  companies  marketing  equipment  for the  50-1,000
horsepower market or who is offering joint ventures for its equipment. Nathaniel
Energy's  competition,  however,  may have financial and marketing resources far
greater  than  those  available  to  Nathaniel   Energy  and  may  have  greater
application for large waste streams, such as municipal waste from large cities.

Helium Production Operation

     On April 3, 2003,  Nathaniel Energy  consolidated its ownership of a helium
production  facility in Keyes,  Oklahoma.  This  facility  produces  169,000 mcf
annually,  8,000 mcf of  natural  gas daily and 5,000  gallons  of  natural  gas
liquids daily.  Nathaniel Energy also acquired a 130-mile pipeline that collects
natural gas for the plant from over fifty gas wells. The acquisition included a

<PAGE>


take-and-pay  contract  with Air  Products  and  Chemicals,  Inc. for the helium
production  and an operating  agreement  for the sale of blended  natural gas to
Colorado Interstate Gas. The liquid petroleum is sold to various parties.

Personnel

     Nathaniel  Energy  has  fifteen  full  time  employees.  Five of  Nathaniel
Energy's employees are located in Colorado,  one in Florida and twelve in Texas.
There are an additional nine employees  located in Keyes,  OK.  Nathaniel Energy
believes that it will need to employ  approximately  eleven full time employees,
six additional at the executive  level,  and an additional ten to twelve at each
facility to carry out its business plan.

Item 2. Description of Property.

     Nathaniel Energy owns a twenty-seven acre property in Hutchins, Texas and a
10,000  square foot  building  located on the property  where  Nathaniel  Energy
operates the tire division. The building is approximately thirteen years old and
has been maintained in good condition.  Nathaniel Energy believes it is suitable
for its existing scrap tire reclamation operations at that location.

     Nathaniel  Energy's  employees in Colorado operate in their respective home
offices in the Denver, Colorado area, at no cost to Nathaniel Energy.

     Subsequent  to  year-end,  on April 3, 2003,  Nathaniel  Energy  acquired a
helium production plant located on 14.9 acres in Keyes,  Oklahoma.  The facility
includes a gas  processing  and liquid  chilling  plant.  Nathaniel  Energy also
acquired  a 130-mile  pipeline  for the  collection  of  natural  gas,  which is
processed at the plant for the extraction of helium.

Item 3. Legal Proceedings.

     Nathaniel  Energy may be involved  from time to time in  litigation  in the
normal course of its business.

     Nathaniel  Energy is a defendant in ABM Fabrication and Machining,  LLC Vs.
Nathaniel Energy  Corporation,  Case No. 2002 CV 0094, District Court, County of
Douglas,  Colorado.  The plaintiff alleges damages of approximately  $41,000 for
unpaid labor and materials invoices.  Nathaniel Energy is defending on the basis
that the  plaintiff's  claims  are  partially  paid and the  balance  claimed is
unreasonable.

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

     No matters  have been  submitted  to a vote of or approval by  stockholders
during the period covered by the requirements of this time.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

     Nathaniel  Energy's  common stock is presently  quoted in the "Pink Sheets"
under the symbol NECX. The following  table sets forth,  for the fiscal quarters
indicated,  the high and low bid quotations for Nathaniel  Energy's common stock
as reported in the "Pink Sheets". The quotations reflect inter-dealer quotations
without retail  markup,  markdown or  commission,  and may not represent  actual
transactions.

<PAGE>

                                                        High         Low
                                                        ----         ---
Year Ended December 31, 2001:
   First Quarter                                        $1.02       $0.34
   Second Quarter                                       $0.60       $0.20
   Third Quarter                                        $0.70       $0.09
   Fourth Quarter                                       $1.01       $0.05
Year Ended December 31, 2002:
   First Quarter                                        $0.95       $0.07
   Second Quarter                                       $1.50       $0.35
   Third Quarter                                        $2.00       $0.81
   Fourth Quarter                                       $3.00       $1.25
Year Ended December 31, 2003:
 First Quarter                                          $1.40       $1.40

     As of March 31, 2003, Nathaniel Energy had approximately 1015 shareholders
of record.

     Dividends.  Nathaniel  Energy has never  declared or paid any  dividends on
Nathaniel  Energy's common stock.  Nathaniel Energy currently  intends to retain
any earnings  for use in Nathaniel  Energy's  business  and  therefore  does not
anticipate  paying any  dividends  in the near  future.  Dividends on the common
stock can be paid lawfully only out of current and retained earnings and surplus
of  Nathaniel  Energy,  when,  as and if  declared  by the  Board of  Directors.
Nathaniel  Energy has not declared or paid any dividends on the common stock and
there is no assurance  dividends  will be paid in the  foreseeable  future.  The
payment of dividends in the future rests within the  discretion  of its Board of
Directors and will depend, among other things, upon Nathaniel Energy's earnings,
its capital requirements and its financial condition,  as well as other factors,
which the Board of Directors deems relevant.

Description of Securities.

     Common Stock.  Nathaniel Energy is authorized to issue 75,000,000 shares of
common  stock,  $.001 par value per share,  and  2,000,000  shares of  preferred
stock,  $.001 par value per share.  An aggregate of 38,262,664  shares of common
stock have been issued and were outstanding on January 8, 2003. Nathaniel Energy
has not issued any preferred  stock.  In addition,  Nathaniel  Energy has issued
common stock purchase  options and warrants  covering  705,883 shares as well as
approved the conversion of accrued and unpaid compensation to executive officers
into a number of shares that will be determined by fair market value at the time
each officer elects to accept the stock in lieu of cash compensation. Holders of
the common  stock (i) have equal and  ratable  rights with all holders of issued
and  outstanding   common  stock  to  dividends  from  funds  legally  available
therefore,  when,  as and if declared  by the Board of  Directors  of  Nathaniel
Energy;  (ii)  are  entitled  to  share  ratably  with  holders  of  issued  and
outstanding  common stock in all of the assets of Nathaniel Energy available for
distribution  to holders  of common  stock,  upon  liquidation,  dissolution  or
winding up of the affairs of  Nathaniel  Energy;  (iii) do not have  preemptive,
subscription  or  conversion  rights;  (iv) have no  redemption  or sinking fund
provisions applicable thereto; (v) have one vote on election of each director to
be elected by their respective class and on other matters submitted to a vote of
stockholders;  and (vi) do not have  cumulative  voting  rights.  All  shares of
common stock  outstanding are duly  authorized,  legally issued,  fully paid and
non-assessable.

     Preferred Stock. Nathaniel Energy is authorized to issue two million shares
of preferred  stock.  Nathaniel  Energy has not issued any preferred  stock. The
Board of  Directors  will need to  establish  the  terms,  relative  rights  and
preferences of every issue of preferred stock by amendment to Nathaniel Energy's
articles of incorporation, which will not require stockholder approval.

<PAGE>


     Transfer Agent.  Nathaniel  Energy's transfer agent is Computer Share Trust
Company, Inc. located at 350 Indiana Street, Suite 800, Golden, Colorado 80401.

     Unregistered sales of securities during the past three years.

<TABLE>
<CAPTION>


Name of Investor    Date of      Common      Type of       How Company       Price per  Total           Type of          Broker and
                    Issuance     Stock       Investor      Located Investor  share      Price           Consideration    Commission
------------------------------------------------------------------------------------------------------------------------------------
<S>                 <C>          <C>                                            <C>      <C>
Richard Strain      02/15/00     10,000     Accredited      Company Officer     1.00     $10,000          Financing          NO/NONE
                                                                                                          Incentive

Jorge Rodriguez     02/29/00     95,239     Accredited      Company Officer     1.05     $100,000         Cash               NO/NONE


K. Pratt            03/22/00     7,750      Accredited      Company Officer     1.00     $7.750           Services not       NO/NONE
                                                                                                          Received

P. Walsh            03/22/00     11,600     Accredited      Company Officer     1.00     $11,600          Services not       NO/NONE
                                                                                                          Received

P. Fakey            03/22/00     10,000     Accredited      Company Officer     1.00     $10,000          Services not       NO/NONE
                                                                                                          Received

P. O'Sullivan       03/22/00     15,500     Accredited      Company Officer     1.00     $15,500          Services not       NO/NONE
                                                                                                          Received

D. Healy            03/22/00     14,275     Accredited      Company Officer     1.00     $14,275          Services not       NO/NONE
                                                                                                          Received

M. Mcdonnell        03/22/00     73,175     Accredited      Company Officer     1.00     $73,175          Services not       NO/NONE
                                                                                                          Received

Donal Moriarity     03/22/00     17,700     Accredited      Company Officer     1.00     $17,700          Services not       NO/NONE
                                                                                                          Received

Shinzu              05/15/00     450,000    Accredited      Company Officer     2.50     $900,000         Financing          NO/NONE
Investments Ltd.                                                                                          Incentive

Andrew I            06/27/00     50,000     Sophisticated   Management/         2.00     $100,000         Judgment           NO/NONE
Telsey, P.C.                                Investor        Directors


Natalia Ramirez     07/20/00     1,000,000  Consultant      Management          1.00     $1,000,000       Services/          NO/NONE
                                                                                                          Consulting

J. DeMasi           07/10/01     75,000     Consultant      Management          .17      $12,750          Services not       NO/NONE
                                                                                                          Received

H. Seidman          07/10/01     75,000     Consultant      Management          .17      $12,750          Services not       NO/NONE
                                                                                                          Received

Cesar Muniz         07/17/01     1,000,000  Control         Management          .17      $170,000         Services/Investor  NO/NONE
                                                                                                          Relations


<PAGE>


Alvin Mordoh        04/12/02     275,000    Accredited      Company Officer     .44      $121,000         Financing          NO/NONE
                                                                                                          Incentive

Paula Lowry         04/12/02     10,000     Accredited      Friend of Investor  .44      $4,400 provided  Issuance of        NO/NONE
                                                                                         by A. Mordoh     stock per
                                                                                                          instructions
                                                                                                          of A. Mordoh


Linda Mordoh        04/12/02     5,000      Accredited      Relative of         .44      $2,200 provided  Issuance of        NO/NONE
                                                            Investor                     by A. Mordoh     stock per
                                                                                                          instructions
                                                                                                          of A. Mordoh


Sam Epstein         04/12/02     5,000      Accredited      Friend of Investor  .44      $2,200 provided  Issuance of        NO/NONE
                                                                                         by A. Mordoh     stock per
                                                                                                          instructions
                                                                                                          of A. Mordoh


Solomon Mordoh      04/12/02     5,000      Accredited      Brother of          .44      $2,200 provided  Isuance of         NO/NONE
                                                            Investor                     by A. Mordoh     stock per
                                                                                                          instructions
                                                                                                          of A. Mordoh


Alternate           05/15/02     13,500,000 Accredited      Management/         .17      $2,295,000       Finance Services   NO/NONE
Energy LLC                                                  Directors


Managerial          07/11/02     198,000    Sophisticated   Management          .69      $136,620         I/R Services       NO/NONE
Advisory                                    Investor
Services

Jackson Morris      07/11/02     200,000    Sophisticated   Management          .94      $188,000         Legal Services     NO/NONE
                                            Investor


Boddent Int'l       07/11/02     600,000    Sophisticated   Management          .94      $564,000         Financing Services NO/NONE
                                            Investor


Mel Siegal          07/11/02     200        Sophisticated   Company Officer     1.00     $200             Conversion of      NO/NONE
                                            Investor                                                      Interest per Note


Sol Adler           07/11/02     200,000    Sophisticated   Company Officer     .70      $140,000         Consulting         NO/NONE
                                            Investor                                                      Services


Kay Rhodes          07/11/02     294,000    Sophisticated   Company Officer     .94      $276,360         Conversion of      NO/NONE
                                            Investor                                                      Debt per Note


Bob and Peggy       07/11/02     29,690     Sophisticated   Management          1.00     $29,690          Services           NO/NONE
Isom                                        Investor                                                      Rendered


Judy Bailey         07/16/02     205,882    Wife of Officer Wife of Officer     .17      $35,000          Conversion of      NO/NONE
                                                                                                          Debt per Note


<PAGE>


Michael Musich      08/09/02     10,000     Sophisticated   Friend of Officer   .75      $7,500           Cash               NO/NONE
                                            Investor


Ken Lucas           08/09/02     50,000     Sophisticated   Management          1.00     $50,000          Financing          NO/NONE
                                            Investor                                                      Service


Rusty Bailey        10/17/02     12,249     Consultant      Son of Officer      1.00     $12,249          Internet           NO/NONE
                                                                                                          Services

Alvin Mordoh        10/17/02     13,333     Accredited      Company Officer     1.00     $13,333          Cash               NO/NONE


Herman J. Calderon  10/17/02     2,000      Sophisticated   Friend of Investor  1.00     $2,000 paid by   Issuance of        NO/NONE
                                            Investor                                     A. Mordoh        stock per
                                                                                                          instructions
                                                                                                          of A. Mordoh


Harry Greenberg     10/17/02     1,000      Sophisticated   Friend of Investor  1.00     $1,000 paid by   Issuance of        NO/NONE
                                            Investor                                     A. Mordoh        stock per
                                                                                                          instructions
                                                                                                          of A. Mordoh


Paula Lowry         10/17/02     1,000      Accredited      Friend of Investor  1.00     $1,000 paid by   Issuance of        NO/NONE
                                                                                         A. Mordoh        stock per
                                                                                                          instructions
                                                                                                          of A. Mordoh


Gilbert Cohen       10/17/02     1,000      Sophisticated   Friend of Investor  1.00     $1,000 paid by   Issuance of        NO/NONE
                                            Investor                                     A. Mordoh        stock per
                                                                                                          instructions
                                                                                                          of A. Mordoh


G. M. Fornmarino    10/17/02     8,000      Sophisticated   Friend of Investor  1.00     $8,000           Cash               NO/NONE
                                            Investor


Kay Rhodes          10/17/02     100,000    Sophisticated   Company Officer     .15      $15,000          Conversion Of      NO/NONE
                                            Investor                                                      Debt


Roberta Clark       11/14/02     21,428     Sophisticated   Company Officer     .60      $12,856          Cash               NO/NONE
                                            Investor


Harry Greenberg     12/24/02     2,000      Sophisticated   Friend of Investor  1.00     $2,000 paid by   Issuance of        NO/NONE
                                            Investor                                     A. Mordoh        stock per
                                                                                                          instructions
                                                                                                          of A. Mordoh

</TABLE>

Shares  issued per  instructions  of Mr.  Mordoh were shares he was  entitled to
receive,  but directed Nathaniel Energy to issue to another person designated by
him.

Nathaniel Energy also issued warrants to purchase 205,882 shares of common stock
at a price of $.17 per share,  expiring  two years  from date of issue,  to Judy
Bailey, wife of Nathaniel Energy's Vice President and Chief Financial Officer.

Nathaniel Energy relies on the exemptions from registration  provided in Section
4(2) of the Securities Act, and Rule 505 and 506 under the act. All of the sales
were made directly by Nathaniel  Energy to persons with whom its  management had
direct  contact and personal  relationships,  to persons who were  introduced to
Nathaniel  Energy by such persons and as negotiated  compensation  to attorneys,
consultants and others who provided professional services.  Nathaniel Energy did
not use any form of public solicitation,  brokers, dealers or finders. Nathaniel
Energy provided investment information to all investors, except those designated
by Mr. Mordoh, on which they could make and informed  investment  decision.  All
shares were issued with a restrictive legend and investors provided subscription
agreements and were informed  regarding the restricted nature of the stock. Even
though the issuances  have not been divided into separate  "offerings"  based on
type of consideration,  nature of investors or other criteria,  Nathaniel Energy
believes  that  issuance  were  made  to  thirty-five  or  fewer  non-accredited
investors during the entire period covered by the table above, even counting Mr.
Mordoh's  designees of his 4/12/02 issuance who made no investment in the shares
they received.


<PAGE>

Item 6. Management's Discussion and Analysis of Results of Operations, Liquidity
        and Financial Condition.

Results of Operations

Year ended December 31, 2002 and 2001

     For the year ended  December 31, 2002 revenue  decreased  from  $417,152 in
2001,  to $175,662,  a decrease of $241,490 or 57.9  percent.  This  decrease in
revenue is primarily due to Nathaniel  Energy's  suspension of new tire receipts
in the Dallas  facility  during the months of April through  December 2002. This
suspension  was a result  of making  design  changes  required  by Texas for the
re-issuance  of permits to operate the  facility.  The  decrease  was  partially
offset by increased sales of tire shreds from existing inventory.

     Cost of sales  increased  from  $383,217  in 2001 to  $449,229  in 2002,  a
increase of $66,012,  or 17.2  percent.  The  increase  is  primarily  due to an
increase in wages and equipment repairs during the period.

     Selling general and  administrative  expenses  increased  $3,445,105 or 282
percent from  $1,220,723  for the year ended December 31, 2001, to $4,665,828 in
2002.  This  is  primarily  due to  the  recording  of  $2,690,949  in  non-cash
compensation  related to the issuance of the Company's common stock to financial
consultants  in the third quarter of 2002, as compared with $170,000 in non-cash
compensation  recorded for the corresponding period of the preceding year. Other
selling,  general and  administrative  expenses  increased  from  $1,005,723  to
$1,941,130, reflecting an increase in travel and professional fees.

     Interest  expense  increased from $270,574 in the period ended December 31,
2001 to $569,073 in comparable  period of 2002,  which is due to the  additional
$4,128,000 in debt financing added during 2002.

Discussion of other Income/Expense Components and Minority Interests

Liquidity and Capital Resources

     As of December 31, 2002, Nathaniel Energy has outstanding installment notes
with financial  institutions  secured by equipment  totaling  $612,872,  with an
average  interest rate of 11.1%.  The  $4,095,470 in  outstanding  notes payable
consist of secured and  unsecured  term loans from  individuals  with an average
interest  rate of  12.1%.  Of the total  amounts  outstanding,  $247,000  is due
immediately  since the notes are past their  scheduled due dates. In April 2002,
the holder of  $1,350,000  in loans  converted  this  amount,  plus  interest of
$300,000, to equity at $0.20 per share. The 8,250,000 shares have been issued to
this creditor and various persons designated by him. The remaining $3,950,000 is
to be repaid in varying installments beginning in 2003.

     Nathaniel  Energy has cash of $202,057 at December 31, 2002. This amount is
earmarked  for the  purchase of equipment  and  additional  investment  in Keyes
Helium Company, LLC.

<PAGE>


     Nathaniel  Energy's  investment in Keyes Helium  through its majority owned
subsidiary,  of $1,450,000 at December 31, 2002,  represented an 18.55% interest
in Keyes  Helium,  which is expected  to provide net cash flow of  approximately
$480,000  per year to the  subsidiary.  Nathaniel  Energy has  committed  to use
eighty  percent of this cash flow to retire its  obligation to a  non-management
affiliate who provided funding for the  acquisition.  In the event subsequent to
year-end,  on April 3, 2003,  Nathaniel Energy purchased the remaining 81.45% of
Keyes Helium Company, LLC.

     The following is a summary of Nathaniel Energy's cash flows from operating,
investing, and financing activities during the periods indicated:

                                        Year ended December 31,
                                              (Rounded)
                                       2002             2001
                                       ----             ----
------------
Operating activities               $(2,116,030)       $(202,748)
Investing activities                (2,480,869)        (157,461)
Financing activities                 4,794,890          351,624
                                   -----------        ---------
Net effect on cash                 $   197,991        $  (8,385)
                                   ===========        =========






<PAGE>


Item 7. Financial Statements.


                          INDEPENDENT AUDITORS' REPORT


TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
NATHANIEL ENERGY CORPORATION AND SUBSIDIARIES

We have audited the accompanying  consolidated balance sheet of Nathaniel Energy
Corporation  and   Subsidiaries  as  of  December  31,  2002,  and  the  related
consolidated  statement of operations,  stockholders' deficit and cash flows for
the year then ended.  These financial  statements are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Nathaniel  Energy  Corporation and Subsidiaries as of December 31, 2002, and the
consolidated  results  of its  operations  and its cash  flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial statements,  the Company has incurred a significant loss approximating
$5.5 million for the year ended  December  31, 2002 and incurred  losses for the
two years ended December 31, 2001. In addition,  the Company has a deficiency in
working  capital  at  December  31,  2002   approximating  $6.8  million  and  a
stockholders'  deficit  approximating  $3.7 million.  The above conditions raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Subsequent to December 31, 2002 the Company  acquired  Keyes Helium Company LLC,
(see Note 14 ) which the Company  expects to provide  adequate  profits and cash
flow to sustain  the  Company.  The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty. Management's
plans concerning these matters are also discussed in Note 2.


Abrams and Company, P.C.
Certified Public Accountants

Melville, New York
April 4, 2003
<PAGE>

                                               Comiskey
                                               -------- Professional Corporation
                                                   & Company


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholders of
Nathaniel Energy Corporation
Englewood, Colorado


We have audited the accompanying  balance sheet of Nathaniel Energy  Corporation
as of December 31, 2001 and the related statements of operations, and cash flows
for the year then ended.  These financial  statements are the  responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and Government  Auditing Standards issued by the
Comptroller  General of the United States.  Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material  misstatement.  An audit includes examining on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Nathaniel Energy Corporation as
of December 31, 2001,  and the results of its  operations and its cash flows for
the year then ended in conformity with accounting  principles generally accepted
in the United States of America.

Denver, Colorado
December 28, 2002                       /s/ Comiskey & Co.
                                        ------------------

                                        PROFESSIONAL CORPORATION



                   Certified Public Accountants & Consultants

               789 Sherman Street - Suite 440 - Denver, CO 80203
   (303) 830-2255 - Fax (303) 830-0876 - info@comiskey.com - www.comiskey.com


<PAGE>

<TABLE>
<CAPTION>

                                         Nathaniel Energy Corporation

                                               BALANCE SHEETS

                                                                     December 31,            December 31,
                                                                         2002                    2001
                                                                     ------------            ------------
<S>                                                                  <C>                      <C>
          ASSETS
CURRENT ASSETS
     Cash                                                            $    202,057            $      4,066
     Accounts receivable                                                    4,784                  25,543
     Inventory                                                            248,040                 142,250
     Other current assets                                                 125,797                     796
                                                                     ------------            ------------
     Total current assets                                                 580,678                 172,655

PROPERTY AND EQUIPMENT
  (net of accumulated depreciation)                                     1,809,556                 965,998
OTHER ASSETS
     Investment in Keyes Helium Project                                 1,450,000                    --
     Accounts receivable related party                                    152,482                 165,663
     Goodwill (net)                                                        16,367                   8,000
                                                                     ------------            ------------
          TOTAL other assets                                            1,618,849                 173,663
                                                                     ------------            ------------
          TOTAL ASSETS                                               $  4,009,083            $  1,312,316
                                                                     ============            ============
          LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
     Accounts payable                                                $    524,498            $    549,699
     Payroll taxes payable                                                  1,464                  97,999
     Accrued wages                                                      1,928,546               1,246,086
     Accrued interest payable                                             496,563                 431,846
     Notes payable                                                      4,095,470                 258,750
     Current portion of long-term debt                                    320,541                 335,521
                                                                     ------------            ------------
          Total current liabilities                                     7,367,082               2,919,901

     Long-term debt, net of current portion                               292,331                 213,242
     Short-term debt to be refinanced on a long-term basis                                      1,350,000
                                                                     ------------            ------------
          Total long-term liabilities                                     292,331               1,563,242

Minority Interest                                                          26,358                  --

STOCKHOLDERS' DEFICIT
     Preferred stock, 2,000,000 shares of $.001 par value
          authorized, none issued or outstanding                             --                    --
     Common stock, 75,000,000 shares of $.001 par value
          authorized, 36,912,664 shares and 12,912,623 shares
          issued and outstanding at December 31, 2002 and 2001             36,913                  12,912
     Additional paid-in capital                                         6,682,704               1,754,695
     Less: Unpaid stock subscriptions receivable                         (175,500)               (175,500)
     Accumulated deficit                                              (10,220,805)             (4,762,934)
                                                                     ------------            ------------
          Total stockholders' deficit                                  (3,676,688)             (3,170,827)
                                                                     ------------            ------------
          TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                $  4,009,083            $  1,312,316
                                                                     ============            ============

    The accountants' report and accompanying notes are an integral part of the financial statements.

                                               F-1

<PAGE>


                                   Nathaniel Energy Corporation

                                     STATEMENTS OF OPERATIONS

                                                                           For the Year Ended
                                                                December 31,             December 31,
                                                                   2002                      2001
                                                               ------------              ------------
Revenue
     Sales (Net)                                               $    175,662              $    417,152

Cost of Sales                                                       449,229                   383,217
                                                               ------------              ------------

     Gross profit                                                  (273,567)                   33,935

Selling, general and administrative expenses
     Non-cash compensation                                        2,690,949                   170,000
     Research and development                                        33,749                    45,000
     Other selling general and administrative expenses            1,941,130                 1,005,723
                                                               ------------              ------------

Total expenses before other (income) and expense                  4,665,828                1,220,723
                                                               ------------              ------------

     Net loss from operations                                    (4,939,395)               (1,186,788)

Other (income) and expense
     Income from investment in Keyes Helium Project                 (53,792)                     --
     (Gain) loss on disposal of equipment                           (23,163)                  446,142
     Interest expense                                               569,073                   270,574
                                                               ------------              ------------

     Net loss before income taxes and minority interest          (5,431,513)               (1,903,504)

     Income tax benefit                                                --                        --
                                                               ------------              ------------
     Loss before minority interest                               (5,431,513)               (1,903,504)

     Minority interest                                              (26,358)                     --
                                                                -----------              ------------

Net loss                                                       $ (5,457,871)             $ (1,903,504)
                                                               ============              ============

Weighted average number of common shares                         20,374,776                12,350,123
                                                               ============              ============

Basic net loss per share                                       $      (0.27)              $      (0.15)
                                                               ============              ============



   The accountants' report and accompanying notes are an integral part of the financial statements.

                                             F-2

<PAGE>


                                                        Nathaniel Energy Corporation

                                                Statement of Stockholders' Equity (Deficit)


                                                  Common Stock            Additional                     Stock           Total
                                            -----------------------        Paid-in      Accumulated      Subscriptions Stockholders'
                                              Shares        Amount         Capital      Deficit          Receivable      Equity
                                                                                                                        (Deficit)
                                            ---------     ---------       ---------   ------------       -----------   ------------

Issuance of stock for cash and
  services February 2000,
  $1.05 per share                              95,239            95         100,157            --              --           100,252

Issuance of stock as loan fee,
  February 2000, $1.00 per share               10,000            10           9,990            --              --            10,000

Issuance of stock for services
  which were not received,
  March 2000, $1.00 per share                 150,000           150         149,850            --          (150,000)           --

Issuance of stock for
  subscription payable
  May 2000, $1.00 per share                   450,000           450         449,550            --              --           450,000


                                                                  F-3
<PAGE>


                                                        Nathaniel Energy Corporation

                                                Statement of Stockholders' Equity (Deficit)


                                                  Common Stock            Additional                       Stock         Total
                                            -----------------------        Paid-in      Accumulated      Subscriptions Stockholders'
                                              Shares        Amount         Capital      Deficit          Receivable      Equity
                                                                                                                        (Deficit)
                                            ---------     ---------       ---------   ------------       -----------   ------------

Issuance of stock for consulting
  services July 2000,
  $1.00 per share                           1,000,000         1,000         999,000            --              --         1,000,000

Warrants issued for financing
  fee, March 2000                                --            --             5,688                            --             5,688

Net loss for December 31, 2000                   --            --              --        (2,432,304)           --        (2,432,304)
                                         ------------    ----------    ------------    ------------    ------------    ------------

Balance for the year ended
  December 31, 2000                        11,762,623    $   11,762    $  1,560,345    $ (2,859,430)   $   (150,000)   $ (1,437,323)
                                         ------------    ----------    ------------    ------------    ------------    ------------

Issuance of stock for which
  consideration has not
  been received, May 2001,
  $0.17 per share                             150,000           150          25,350            --           (25,500)           --

Issuance of stock for past
  services rendered,
  July 2001, $0.17 per share                1,000,000         1,000         169,000            --              --           170,000

Net loss for the year ended
  December 31, 2001                              --            --              --        (1,903,504)           --        (1,903,504)
                                         ------------    ----------    ------------    ------------    ------------    ------------

Balance for the year ended
  December 31, 2001                        12,912,623    $   12,912    $  1,754,695    $ (4,762,934)   $   (175,500)   $ (3,170,827)
                                         ------------    ----------    ------------    ------------    ------------    ------------

Debt conversion premium
  warrants issued January 2002                   --            --            25,000            --              --            25,000

Issuance  of stock for
  financing incentive, February
  2002, $0.17 per share                       300,000           300          50,700            --              --            51,000

Issuance of stock for
  services, March 2002,
  $0.17 per share                          13,500,000        13,500       2,281,500            --              --         2,295,000

Issuance of stock for debt
  conversion, April 2002,
  $0.20 per share                           8,250,000         8,250       1,641,750            --              --         1,650,000

Issuance of stock for cash,
  June through August 2002,
  $0.60 to $1.00 per share                     47,761            48          34,702            --              --            34,750

Issuance of stock for services,
  June 2002, $0.70 per share                  200,000           200         139,800            --              --           140,000

Issuance of stock for services,
  August 2002, $1.00 per share                    200          --               200            --              --               200

Issuance of stock for various
  debt and account payable
  settlements, January to September           325,572           326         106,913            --              --           107,239
                                         ------------    ----------    ------------    ------------    ------------    ------------

                                                              F-3 (Continued)

<PAGE>



                                                         Nathaniel Energy Corporation

                                                 Statement of Stockholder's Equity (Deficit)


                                                  Common Stock            Additional                        Stock         Total
                                            -----------------------        Paid-in      Accumulated      Subscriptions Stockholders'
                                              Shares        Amount         Capital        Deficit          Receivable      Equity
                                                                                                                        (Deficit)
                                            ---------     ---------       ---------   ------------       -----------   ------------

Issuance of stock for debt conversion,
  July 2002, $0.18 per share                  294,118           294          53,260                                          53,554

Issuance of stock for services,
  July 2002, $1.00 per share                  212,249           212         212,037                                         212,249

Issuance of stock for cash, July 2002,
  August 2002, $0.50 to $.60 per share        870,141           871         382,147                                         383,018


Net loss for the year ended
  December 31, 2002                               --            --              --       (5,457,871)           --        (5,457,871)
                                         ------------    ----------    ------------    ------------    ------------    ------------

Balance for the year ended
  December 31, 2002                        36,912,664    $   36,913    $  6,682,704    $(10,220,805)   $   (175,500)   $(3,676,688)
                                         ============    ==========    ============    ============    ============    ===========



                 The accountants' report and accompanying notes are an integral part of the financial statements.


                                                              F-3 (Continued)


<PAGE>


                                         Nathaniel Energy Corporation

                                           STATEMENTS OF CASH FLOWS

                                                                                   For the Year Ended
                                                                           December 31,           December 31,
                                                                               2002                   2001
                                                                           -----------            -----------
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                                              $(5,457,871)           $(1,903,504)
     Adjustments to reconcile net loss to net cash flows
          from operating activities:
               Amortization                                                       --                    2,000
               Depreciation                                                    156,135                 88,715
               Allowance for loss on equipment                                    --                  446,142
               Non cash  compensation                                        2,690,949                170,000
               Changes in assets and liabilities:
                    Decrease (Increase) in accounts receivable                  20,759                 (3,161)
                    (Increase) in inventory                                   (105,790)               (57,300)
                    Increase in accrued expenses                               650,641                997,594
                    (Decrease)Increase in accounts payable                     (70,853)                56,766
                                                                           -----------            -----------
                         Net cash flows used by operating activities        (2,116,030)              (202,748)

CASH FLOWS FROM INVESTING ACTIVITIES
     Investment in Keyes Helium Project                                     (1,450,000)                  --
     Purchase of equipment                                                    (956,518)              (157,461)
     Loans to Ripetouch Greenhouse                                             (74,351)                  --
                                                                           -----------            -----------
                         Cash used by investing activities                  (2,480,869)              (157,461)

CASH FLOWS FROM FINANCING ACTIVITIES
     Issuance of debt                                                        5,158,722                461,519
     Proceeds from sale of stock                                               372,698                   --
     Debt repaid                                                              (762,888)              (109,695)
     Minority interest                                                          26,358                   --
                                                                           -----------            -----------
                         Net cash provided by financing activities           4,794,890                351,824
                                                                           -----------            -----------

NET INCREASE (DECREASE) IN CASH                                                197,991                 (8,385)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                     4,066                 12,451
                                                                           -----------            -----------

CASH AND CASH EQUIVALENTS, END OF YEAR                                     $   202,057            $     4,066
                                                                           ===========            ===========

CASH PAID FOR INTEREST                                                     $   569,073            $    37,003
                                                                           ===========            ===========

CASH PAID FOR INCOME TAXES                                                 $      --              $      --
                                                                           ===========            ===========


      The accountants' report and accompanying notes are an integral part of the financial statements.

                                                       F-4


</TABLE>


<PAGE>


                          Nathaniel Energy Corporation
                          NOTES TO FINANCIAL STATEMENTS
                 For the years ended December 31, 2001 and 2002

1. Significant Accounting Policies and Nature of Operations

Description of Business

Nathaniel  Energy  Corporation  ("the Company") is in the business of developing
energy reclamation processes and recycling, including the operation of used tire
recycling and collection  services since 1997.  Until November 1998, the Company
operated a tire recycling and collection  service in Kansas City,  Missouri.  In
November  1998,  the Company sold that  recycling  and  collection  business and
purchased a facility in Hutchins, Texas which includes 26 acres of property used
for tire disposal and  reclamation.  During 2001 and 2002, the Company  operated
the Hutchins  facility,  as well as engaging in the  development  of alternative
energy  conversion  processes  and  related  technologies.  The  Company  has an
exclusive license to a patented tire combustor.

The Company is the successor to Nathaniel,  Ltd., an entity  incorporated in the
State  of  Colorado  on  February  24,  1992.  In  1998,  Nathaniel,   Ltd.  was
recapitalized  via stock exchanges with two publicly traded shell companies,  as
more fully described in Footnote 3.

Business Segments

Nathaniel's  operations are presently  conducted in a single,  energy  division,
including tire reclamation and combustor services.

Investment

Investments  in  certain  companies  in  which  the  Company  owns a 20% or less
interest are accounted for under the cost method. Advances and distributions are
charged and credited directly to the investment account.

Revenue Recognition

The Company  charges  tipping  fees to the public for  disposing of waste tires.
These fees are fully  earned and  recognized  when the tires are accepted at the
facility. The Company also earns revenue from the sale of processed tire shreds.
This revenue is recognized  when the shreds are  delivered to the end user.  The
Company enters into contracts for the delivery of tire shreds.  These  contracts
specify  quality  standards for attributes such as shred size and steel content.
The  Company's  customers  accept  shipments  of tire  shreds  subject  to these
specifications. The Company employs internal quality control processes to reduce
the risk of  significant  returns  and  allowances  of tire shreds  sold.  Sales
returns are accrued based on the Company's  historical  experience.  The Company
believes it is in compliance  with  Securities and Exchange  Commission  ("SEC")
Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements".

Cash and Cash Equivalents

For the purpose of the  statements  of cash flows,  the  Company  considers  all
highly  liquid  debt  instruments  purchased  with an initial  maturity of three
months or less, to be cash equivalents.

Property and Equipment and Related Depreciation

Property and equipment are recorded at cost.  Depreciation is provided using the
straight-line  method.  Estimated  useful  lives  of  the  assets  used  in  the
computation of depreciation are as follows:

         Machinery and equipment                              5 - 7 years
         Buildings                                               25 years
         Vehicles                                                 5 years

                                      F-5

<PAGE>


Licenses and Goodwill

Licenses and goodwill are intangible  assets  recorded at their  purchased cost.
Intangible assets deemed to have an indefinite useful life will be subject to an
annual review for impairment using fair value measurement  techniques.  Pursuant
to FASB 142, the Company will perform its annual  impairment  review  during the
fourth quarter each year,  commencing in the fourth quarter of 2002.  Intangible
assets such as licenses  having a definite  term are  amortized  over the useful
life.

Inventory

Inventory consists of processed and partially  processed tire shreds,  which are
held for sale to end users.  At December 31, 2002,  the Company had contracts to
sell processed tire shred at an agreed upon per ton price.  Tire shred inventory
is valued at its cost to produce (first-in  first-out method),  but in an amount
not to exceed realizable value,  determined with respect to existing contractual
sales prices, less costs to complete the tire processing.

Advertising Costs

The Company expenses non-direct  advertising costs as incurred.  The Company did
not incur any direct response  advertising costs during the years ended December
31, 2001 and 2002 to be capitalized and deferred to future periods.

Net Income (Loss) Per Common Share

SFAS No. 128,  "Earnings  Per Share"  requires  presentation  of basic (loss) or
earnings  per share  ("Basic  EPS") and  diluted  (loss) or  earnings  per share
("Diluted EPS").

The  computation  of basic loss per share is computed by dividing loss available
to common  stockholders  by the weighted  average number of  outstanding  common
shares  during the period.  Diluted  loss per share gives effect to all dilutive
potential  common  shares  outstanding  during the period.  The  computation  of
diluted  EPS does not assume  conversion,  exercise  or  contingent  exercise of
securities  that  would have an  anti-dilutive  effect on  earnings.  During the
periods  presented,   the  Company  had  no  potentially   dilutive   securities
outstanding.

Use of Estimates

The  preparation  of the  Company's  financial  statements  in  conformity  with
generally accepted accounting  principles  requires the Company's  management to
make estimates and assumptions that affect the amounts reported in the financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.

Equity Issued for Non-cash Compensation

The Company values shares issued in  consideration of services or other non-cash
compensation  at a price  paid for  contemporaneous  cash  sales  of  equivalent
securities.  If no contemporaneous cash sales exist, the Company values non-cash
equity  issuances  at the  fair  value  of the  goods or  services  received  in
exchange.  Options or  warrants  issued to  non-employees  and  consultants  are
recorded using the fair value method,  based on a  Black-Scholes  option-pricing
model. The Company uses the intrinsic value method to account for options issued
to employees.

Fair Value of Financial Instruments

The fair values of cash and cash equivalents,  accounts  receivable,  short-term
debt  and  accounts  payable  approximate  cost  because  of  the  immediate  or
short-term  maturity  of these  financial  instruments.  The  fair  value of the
Company's  long-term  note and  interest  receivable  from  officers and related
parties does not significantly differ from cost at December 31, 2002 and 2001.

                                       F-6

<PAGE>


Income Taxes

Under  SFAS  109,  "Accounting  for  Income  Taxes,"  deferred  tax  assets  and
liabilities  are  generally  determined  based  on the  difference  between  the
financial  statements and the tax bases of assets and liabilities  using enacted
tax rates in  effect  for the years in which the  differences  are  expected  to
reverse. Recognition of a deferred tax asset is allowed if future realization is
probable.  The Company has provided a full valuation  allowance for its deferred
tax asset because its realization is not considered probable.

Stock-Based Compensation

The FASB's SFAS No. 123, "Accounting for Stock-Based  Compensation"  encourages,
but does not require,  companies  to record  compensation  cost for  stock-based
employee compensation plans at fair value. The Company has chosen to account for
stock-based   compensation  using  the  intrinsic  value  method  prescribed  in
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees",  and related  interpretations.  Accordingly,  compensation  cost for
stock  options is measured as the excess,  if any, of the quoted market price of
the  Company's  stock at the date of the grant over the amount an employee  must
pay to acquire the stock. During the periods presented, the Company had no stock
options  subject to the  provisions of  applicable  accounting  standards.  (See
"Stock Option Plan", below.)

Long-Lived Assets

In accordance with the Financial Accounting Standards Board's ("FASB") Statement
of  Financial  Accounting  Standards  ("SFAS")  No.  144,  "Accounting  for  the
Impairment or Disposal of Ling-Lived Assets", the Company reviews its long-lived
assets for impairment whenever events or changes in circumstances  indicate that
the related  carrying  amount may not be  recoverable.  Recovery of assets to be
held and used is measured by a comparison  of the carrying  amount of the assets
to the future net cash flows  expected  to be  generated  by the asset.  If such
assets are  considered  to be  impaired,  the  impairment  to be  recognized  is
measured by the amount by which the  carrying  amount of the assets  exceeds the
fair value of the assets.  Assets to be disposed of are reported at the lower of
the carrying amount or fair value less the cost to sell.

Recent Accounting Pronouncements

In April 2002, the Financial Accounting Standards Board FASB issued Statement of
Financial  Accounting Standards SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64,  amendment of FASB Statement No. 13, and Technical  Corrections".
SFAS No. 145  rescinds  Statement  No. 4, which  required  gains and losses from
extinguishments  of debt to be classified as an extraordinary  item, net of tax.
SFAS 145,  when  adopted,  will  require  applying  the  criteria of  Accounting
Principles  Board  Opinion  No.  30,  "Reporting  the  Results of  Operations  -
Reporting the Effects of Disposal of a Segment of a Business and  Extraordinary,
Unusual and Infrequently  Occurring Events and  Transactions" in determining how
to classify  gains and/or losses  resulting  from  extinguishments  of debt. The
effective date of adoption of SFAS No. 145 is for fiscal years  beginning  after
May 15, 2002. The Company does not expect the adoption of SFAS No. 145 to have a
material effect on its financial position or results of operations.

In July 2002, FASB issued SFAS No. 146,  "Accounting  for Costs  Associated With
Exit or Disposal  Activities".  This Statement requires the recognition of costs
related to exit or disposal  activities  at the time they are  incurred,  rather
than the previously  accepted method of recognizing such costs at the commitment
date of such activities.  SFAS 146 is effective for such activities entered into
or modified after December 31, 2002. The provisions of this statement for assets
held  for  sale  or  other  disposal   generally  are  required  to  be  applied
prospectively after the adoption date to newly initiated disposal activities and
therefore,  will depend on future actions initiated by management.  As a result,
the Company  cannot  determine the  potential  effects that adoption of SFAS 146
will have on the financial statements with respect to future disposal decisions,
if any.

In  December  2002,  FASB  issued  SFAS No.  148,  "Accounting  for Stock  Based
Compensation  - Transition  and  Disclosure",  which amended  Statement No. 123.
"Accounting for Stock Based Compensation".  SFAS No. 148 provides for the use of
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock based compensation. It also amends the disclosure
requirements  of  Statement  No.  123 to  require  prominent  disclosure  of the
Company's  method of  accounting  for such  compensation  and the  effect of the
method used on reported results in annual and interim financial statements. SFAS
No. 148 is  effective  for annual  periods  ending  after  December 15, 2002 and
interim  periods  beginning after December 15, 2002. The Company does not expect
the adoption of SFAS No. 148 to have a material effect on its financial position
or results of operations. See "Stock Option Plan" below.


                                       F-7

<PAGE>


2.       Going Concern

The Company has  experienced  repeated  operating  losses,  resulting in minimal
capital resources  presently available to meet obligations which normally can be
expected  to be  incurred  by similar  companies,  and to carry out its  planned
operations.   It  has  deficiency  in  working  capital  at  December  31,  2002
approximating  $6.8 million,  and a  stockholders'  deficit  approximating  $3.7
million.

Management has negotiated  financing  arrangements  to provide cash flow for the
Company's  continued  operations.  For the first  three  quarters  of 2002,  the
Company arranged debt financing of approximately  $3,500,000,  which was used to
acquire  equipment  and an  interest in a Helium  project,  which is expected to
generate  positive  cash flow (see Note 5). In  addition,  the  Company has both
formally and informally  renegotiated  repayment terms for existing  obligations
which are  currently in default.  Cash flow is  supplemented  by operating  cash
flows from the Company's Texas tire facility.

Management's Plan Going Forward

Management  plans to  increase  revenues  in its  facilities  in its Texas  tire
recycling  plan and in its  Oklahoma  helium  plant  and  gathering  station  by
expanding current operations.  The Hutchins, Texas tire reclamation facility has
been  outfitted  to 90% of its  maximum  manufacturing  capacity by means of new
equipment  purchased in 2002,  innovative  design,  and  strategic  placement of
existing  equipment.  These  developments will allow the facility to process the
maximum tire quantities per pro-forma projections that will increase its revenue

                                      F-8

<PAGE>


streams.  On April  03,  2003 the  Nathaniel  Energy  Corporation  acquired  the
remaining  81.45%  of  Keyes  Helium  Company,   LLC  from  Colorado  Interstate
Gas/ElPaso.  In addition,  the Company  purchased the Keyes Gathering System and
the Sturgis Gas Processing  Plant and compressor  station.  These facilities are
located in Keyes,  OK on a  14.924-acre  site.  Keyes  Helium  Plant  operates a
three-stage helium  extraction,  purification,  and lignification  plant that is
strategically  connected on the Bureau of Land Management's (BLM) helium reserve
and pipeline  system making it beneficial for companies to utilize our services.
On April 3, 2003 the  Company  executed a "Take and Pay"  Operational  Agreement
with  Colorado  Interstate  Gas  (CIG)  for a  minimum  three  year term for the
processing  and sale of low Btu gas for their  pipeline  needs.  The  Company is
negotiating new leases to add revenues to the already profitable  operation that
will  increase  cash  flow  to  the  Company.   The  Company  has  entered  into
negotiations with third party companies (Producers) for gathering and processing
gas from additional wells and gathering fields.

3. Recapitalization

On July 3, 1998, the Company's predecessor,  Nathaniel,  Ltd., ("Nathaniel") and
G-VII Energy Corp.,  completed an Agreement and Plan of  Reorganization  whereby
G-VII Energy Corp.,  issued 4,500,000 shares of its common stock in exchange for
all of the  outstanding  common  stock of  Nathaniel.  Immediately  prior to the
Agreement  and Plan or  Reorganization,  the Company had 50,309 shares of common
stock issued and  outstanding.  In addition,  the Company  issued an  additional
456,075  shares of common  stock,  and paid  $155,000 in fees and  assumption of
liabilities.  Nathaniel,  Ltd.,  was  incorporated  in the state of  Colorado on
February 24, 1992, but did not commence business until 1997.

On December 1, 1998,  the Company  merged with G-VII Energy Corp.  In connection
with the merger,  the Company  issued  6,956,384 of its common stock in exchange
for all of the outstanding common stock of G-VII Energy Corp.  Immediately prior
to the  agreement,  the Company had 51,000  shares of common stock  outstanding.
G-VII Energy Corp. was  incorporated in the state of Delaware on March 26, 1987.
Prior to its  merger  with  Nathaniel,  Ltd.,  activities  were  limited  to its
formation and obtaining initial capitalization.

Ajax  Reinsurance  Limited was  incorporated in the state of Delaware on January
18,  1996.  Prior to its merger with  Nathaniel,  Ltd.,  in December  1998,  its
activities were limited to formation and obtaining initial capitalization.

The acquisitions  were accounted for as  recapitalizations  of Nathaniel,  Ltd.,
because  the  shareholders  of  Nathaniel   controlled  the  Company  after  the
acquisitions.  Therefore,  Nathaniel,  Ltd., is treated as the acquiring entity.
There was no adjustment to the carrying  value of the assets or  liabilities  of
Nathaniel,  Ltd., in the exchanges.  Ajax  Reinsurance  Limited is the surviving
entity for legal  purposes,  and Nathaniel  Ltd.,  is the  surviving  entity for
accounting purposes.

4. Acquisition

On August 27, 2002, the Company acquired a 100% interest of Michigan  Pipeline &
Processing  Corp.(MPPC)  for  $1,450,000.  MPPC  owns 100% of the stock of MCNIC
Rodeo  Gathering,  Inc.  (MICNIC)  MICNIC has an 18.55% interest in Keyes Helium
Company, LLC.

5. Investment in Keyes Helium Company, LLC

On August 26, 2002,  the Company and an outside  investor  acquired  100% of the
outstanding  common shares of MCNIC Rodeo  Gathering,  Inc.,  an 18.55%  limited
partner in Keyes Helium Company, LLC., for $1,450,000. The investor retained 49%
of the MCNIC Rodeo Gathering,  Inc., common stock, and the Company retained 51%.
The  investor  provided  total cash of  $1,800,000  to finance the  acquisition.
Including loans related to this project, this individual holds $3,950,000 of the
Company's debt, and converted $1,350,000 of debt to equity.

                                      F-9

<PAGE>


6. Property and Equipment

Following is a summary of property and equipment at December 31, 2002 and 2001:

       Machinery and equipment                     $1,404,111       $   546,639
       Buildings                                      100,000           105,733
       Vehicles                                       212,835           186,473
       Land                                           290,000           290,000
       Furniture and Fixtures                          18,759                 -
       Land Improvements                               79,672                 -
                                                   ----------       -----------

                                                    2,105,377         1,128,845


       Less: accumulated depreciation                (295,821)         (162,847)
                                                   ----------        ----------
       Property and Equipment (net)                $1,809,556        $  965,998
                                                   ==========        ==========

7. Notes Payable

(a)  At December 31, 2001, the Company had $106,500 in bridge financing  payable
     to  an  individual  with  interest  at  18%.  The  Note  contained  various
     conversion rights between $2.35 per share and $3.125 per share. During 2002
     the Note was converted to stock,  (40,925  shares of $.001 par value common
     stock) with full registration rights due at the time of any registration by
     the Company.  In addition,  upon  conversion,  the noteholder  will receive
     warrants  to  purchase  a like  number of  shares at the same  price as the
     conversion price. This note was converted in November 2002.

(b)  As of December 31, 2001,  the Company had $1,350,000 of notes payable to an
     individual.  As of April 19,  2002,  the  holder of these  notes  agreed to
     convert the entire  balance plus interest into  8,250,000  shares of common
     stock.  Under SFAS No. 6, at December 31, 2001 these notes are presented as
     long-term obligations of the Company.

(c)  At December  31,  2001 and 2002,  the  Company  was  obligated  under three
     eighteen-month  promissory  notes payable to individuals  with a total face
     amount of $72,000.  Interest was payable quarterly at rates of 10-11% until
     the due date in September  2001,  after which a 15% interest rate went into
     effect.  The Company paid a broker loan acquisition fee totaling $7,894 and
     issued  warrants  for the  purchase of 8,750  shares of common stock with a
     fair value of $5,688 in connection with these loans.  The warrants were not
     exercised and expired in September 2001.

(d)  At December  31,  2002 and 2001,  the  Company  was  obligated  under a 12%
     unsecured  demand note with an outstanding  balance of $10,000 and $18,250,
     respectively.

(e)  As of  December  31,  2001,  the Company  was  obligated  to the wife of an
     employee  under a 10%  promissory  note  due  December  11,  2001,  with an
     outstanding  balance of  $35,000.  In July 2002,  this note,  plus  accrued
     interest  thereon,  was  converted at the option of the holder into 205,882
     shares of stock at $0.17 per share. The former noteholder also has warrants
     outstanding for 205,882 shares at $0.17.

(f)  In May 2002,  the  shareholder  referred  to in (b) loaned  the  Company an
     additional  $3,950,000.  The new  loan  carries  a 12%  interest  rate  and
     requires  monthly  principal  and  interest  payments  of $25,000 per month
     beginning  in September  2002 and ending  September  2003,  after which the
     required monthly installments will be $50,000 until paid in full.

(g)  At December  2002,  the Company was obligated to a  shareholder  under a 5%
     promissory note due upon demand.  The note plus accrued  interest  thereon,
     was  converted  to common  shares at the  option of the holder at $0.50 per
     share for the $50,000 debt.

                                      F-10

<PAGE>


As of December 31, 2001,  the Company was obligated  under two unsecured  demand
notes with interest at 5%, for which the outstanding balance was $27,000.

The Company has the following installment debt outstanding at December 31st:

                                                         2002            2001
                                                         ----            ----
13.75% installment note, secured by trailer,
monthly payments of $849 principal plus interest
through October 2003                                    13,956          20,807

13.75% installment note, secured by trailer,
monthly payments of $1,016 principal plus interest
through May 2002                                         1,940           6,743

4.5% installment note, secured by equipment,
monthly payments of $2,531 principal plus interest
through September 2007                                 118,400         143,263

22.56% installment obligation, secured by
equipment, monthly payments of $1,397 principal
plus interest through January 2006                      38,367          45,565

14% note, secured by land and equipment,
monthly interest only payments of $2,567
due July 1, 2003                                       220,000         220,000


10.25% installment note, secured by vehicle,
monthly payments of $730 principal plus interest
through August 2004                                     13,860          20,518

1.90% installment note, secured by equipment,
monthly payments of $707 principal plus interest
through November, 2005                                  24,771              --

8.45% installment note, secured by equipment,
monthly payments of $454 principal plus interest
through November, 2006                                  22,130              --

10.58% installment note, secured by equipment,
monthly payments of $3,231 principal plus interest
through February, 2005                                 143,242              --

9.50% installment note, secured by equipment,
monthly payments of $1,148 principal plus interest
through March, 2004                                     16,206              --

9.25% Installment note, secured by truck, monthly
payments of $277 principal plus interest through
September 2002                                              --           2,382

9.95% Installment note, secured by vehicle,
monthly payments of $687 principal plus interest
through April 2005                                          --          23,249

9.5% Installment note, secured by equipment,
monthly interest only payments, principal plus
interest due October 2001                                   --           3,842

9.5% Installment note, secured by equipment
monthly interest only payments, principal plus
interest due October 2001                                   --          40,683

0% Installment obligation, secured by equipment,
monthly payments of $929 principal plus interest
through April 2003 and purchase rescinded by the
Company in May 2002                                         --          21,711
                                                      --------       ---------


Total Debt:                                           $612,872        $548,763
                                                      --------       ---------
Current Portion:                                      (320,541)       (335,521)
                                                     ---------       ---------
Long-term Portion:                                    $292,331        $213,242
                                                      ========        ========

                                      F-11

<PAGE>


Maturities of long-term installment debt are as follows:

                     December 31,                         Amount
                     ------------                         ------

                        2002                             $320,541
                        2003                               90,187
                        2004                               76,725
                        2005                               67,141
                        2006                               36,763
                      Thereafter                           21,515
                                                          -------

                                                         $612,872
                                                         ========

8. Income Taxes

The components of the provision for income taxes are as follows:

      For the years ended December 31:

                                                    2002              2001
                                                    ----              ----
              Current tax expense (benefit)     (1,836,000)         (95,000)


              Deferred tax (Income)
              U.S. federal                            -                 -
              State and local                         -            (552,000)
                                                ----------        ---------
              Total deferred                          -                 -
                                                ----------        ---------
              Total tax provision (benefit)
              from continuing operation        $(1,836,000)        $(647,000)
                                                 =========         =========


The actual and expected tax rates are similar for both years.

The Company's  deferred tax assets and  liabilities  as of December 31, 2002 and
2001 are as follows:

                                                      2002             2001
                                                      ----             ----

Deferred income tax assets:
 Due to net operating loss carry forwards          $ 1,166,000      $ 3,002,000
 Due to deductible temporary differences               552,000          552,000
         Less valuation allowance                   (1,718,000)      (3,554,000)
                                                    ----------       ----------

Total deferred income tax asset                    $      --        $      --
                                                   ===========      ===========

The increase in the valuation account approximates $1,836,000.


                                      F-12

<PAGE>


As of  December  31,  2002,  the  Company has  approximately  $9,000,000  in net
operating  loss  carry  forwards  available  to offset  future  taxable  income,
expiring  between 2018 and 2022. A portion of these losses may be limited  under
the change in control provisions of Internal Revenue Code Section 382.

9. Stockholders' Outstanding Shares, Options, and Warrants

Preferred Stock
The Board of Directors may  authorize the issuance of up to 2,000,000  shares of
$0.001 par value  Preferred  Stock  from time to time in one or more  series and
shall have such voting, redemption, liquidation and dividend rights as the Board
may deem advisable. As of December 31, 2002, no preferred series shares had been
designated by the Board.

Common Stock
Effective  April 24, 2002,  the Company  increased it authorized  common shares,
$0.001 par value, from 20,000,000 to 75,000,000, which is shown retroactively to
December 31, 2001.

Common Stock Purchase Warrants
At December 31, 2002 and 2001, the Company had outstanding  500,000 common stock
purchase  warrants  exercisable  through  December  2004 at a price of $3.00 per
share and 205,882 at $0.17.

At December 31, 2002 there are 500,000  cashless options that are exercisable at
$3.00 per share, the number of shares issuable vary with the market price of the
stock. The options expire December 31, 2004.

10. Related Party Transactions

The Company has paid certain expenses related to site clean-up on behalf of Ripe
Touch Greenhouse, LLC, ("Ripe Touch Greenhouse",  "RTG") an entity controlled by
the Company's  president.  During the year ended December 31, 2001,  $50,110 was
incurred,  $29,186 was repaid,  and the balance  receivable at December 31, 2001
and December 31, 2002 was $165,663 and $152,482  respectively.  The payments are
secured by an assignment of the assets of RTG and are non-interest  bearing. The
majority of the  receivable  relates to  payments  made on behalf of RTG for the
processing  and removal of tires from RTG's  property in Calhan,  Colorado.  The
Company  expects to collect  these monies from RTG out of proceeds from the sale
of bailed tire shreds  processed from the property,  which have been assigned to
Nathaniel.  The  Board  of  Directors  of the  Company  has  also  approved  the
acquisition of all of the assets and  liabilities  of Ripe Touch  Greenhouse for
stock. The details of this proposed acquisition have not been finalized.

During the year ended  December 31, 2001,  $138,278 in expenses was incurred for
site clean-up,  and for 2002 $115,787.  by RTG,  $278,373 was repaid and in 2002
$102,606  was repaid,  and the balance at December  31, 2001 was a liability  of
$67,542.  Repayments  made during 2001 include  $100,000  made by the  president
directly to a third party in  settlement  of a put option upon which the Company
was  obligated as a result of its merger with GVII Energy  Corp.,  (see Note 3).
The advances  are  informal as to terms,  are  unsecured,  and are  non-interest
bearing.   The  net  amount  due  to/from  the  president  is  included  in  the
accompanying  financial  statements  as an  offset to  unpaid  salaries,  in the
caption "Accrued Wages".

The Company issued to its treasurer 1,000,000 shares of its common stock in July
2001 at $0.17 per share, for services rendered.

Intellectual Property

Nathaniel Energy owns two U.S. patents, one application for a U.S. patent, which
is scheduled to issue in January 2003 and a European patent application covering
the Thermal Combustor technology. Nathaniel Energy's ownership of the technology
is by  assignment  from  Stanley  Abrams,  Nathaniel  Energy's  Chief  Executive
Officer.  These patents and patent applications are for utility patents directed
to devices and methods of uses. The two U.S. patents expire September

                                      F-13

<PAGE>


6, 2011 and December 4, 2012,  respectively,  while the patent expected to issue
in 2003 will have a life of seventeen  years from the date of issue.  Concurrent
with and in  consideration  for the  assignment of the  technology in July 1998,
Nathaniel  Energy entered into a companion  agreement  with Messrs.  Stanley and
Brett Abrams which requires a reassignment of the Thermal  Combustor  technology
to them in the event  either  one or neither  of them is not fully  employed  by
Nathaniel  Energy as an  officer,  Stanley  as  president  and  chief  executive
officer,  Brett as a vice  president  and chief  operating  officer  and both as
directors.  Furthermore, this companion agreement provides for a reassignment of
the technology to Messrs.  Abrams in the event Nathaniel  Energy ceases business
operations or becomes financially bankrupt.  Nathaniel Energy and Messrs. Abrams
intend to examine the  desirability  of replacing and may replace the assignment
of ownership  in the  technology  to Nathaniel  Energy with the grant by Messrs.
Abrams of a perpetual,  non-expiring,  royalty free license to Nathaniel  Energy
subject to automatic  termination  upon the  occurrence of any one of the events
that would now require  Nathaniel at the present time to reassign the technology
to Messrs.  Abrams. Counsel has suggested to Messrs. Abrams and Nathaniel Energy
that a license may be a more  desirable  and  effective  means of achieving  the
results intended by all parties than is achieved by the existing  assignment and
companion  agreement,  particularly  in  the  event  of  business  cessation  or
bankruptcy.

11. Economic Dependency - Major Customer

During 2002 and 2001, the Company's primary sales are made through several local
customers  and two major users of its Tire  Derived  Fuel  (TDF).  The two major
users represent approximately 20% of its Tire Reclamation sales activities.

12. Consulting Agreement

On  March,  1, 2002  Alternate  Capital,  LLC  (Consultant)  agreed  to  provide
consulting services to the Company for 13,500,000 Company shares representing at
least 50% of the  total  outstanding  stock of the  Company  on a fully  diluted
basis, including, but not limited to issuances of options, warrants, and similar
stock rights, etc. The Consultant  distributed these shares among its members in
proportion  to their  ownership  interest in the  Consultant.  These  shares are
unregistered and are subject to restrictions on transferability under applicable
securities laws. The term of the agreement is for 25 years.  Financing services:
The consultant agreed to provide or arrange  for a third party, solicited by the
consultant,  to provide  at least one of the  following  for the  benefit of the
Company  within 14 months (from March 1, 2002):  (a) arranging for $650,000,  or
greater, of purchase money mortgage financing to purchase certain equipment, (b)
providing for a lease arrangement for such equipment (c) arranging financing for
a  financial  project  for the  Company or in which the  Company has a financial
interest.

In  consideration  for the services the Consultant has rendered and shall render
to  the  Company,  the  Company  shall  pay  to  the  Consultant,  a  continuing
Consideration Fee equal to ten percent (10%) of Company's pre-tax profits and as
well any  subsidiary  the  Company  owns at least  one (1)  percent  of,  before
depreciation and amortization and before deductions for stock based compensation
(including,   but  not  limited  to  stock  options)  and  before  any  non-cash
expenditures.  Such Consideration Fee, to the extent there is a profit, shall be
paid to Consultant in quarterly  installments  within sixty (60) days after each
calendar  quarter,  with a yearly  adjustment  after the annual  financials  are
completed,  but not  later  than  April 15 of the year  following  the year end.
Provided,  that the Consideration Fee for calendar year 2002 shall be payable in
a single payment not later than April 15, 2003.

The Company grants to the Consultant a right of first refusal on all funding the
Company  seeks,  whether in the form of loans or capital  infusion.  The Company
will  provide  to the  Consultant  notification  of such  funding  needs and the
Consultant  shall have twenty (20) days after  receipt of such  notification  to
provide  to the  Company  a Letter of  Intent,  with the  proposed  term of such
funding.

Until a certain note for up to $800,000 is paid,  the Company and the Consultant
agree not to enter into any agreements or transactions  which would or may cause
the  Consultant  to fail to maintain at least fifty  percent  (50%) of Company's
outstanding  shares on a fully diluted basis.  If the Company does issue (in any
fashion whatsoever) any additional shares,  warrants,  or options after the date
hereof,  the Company  agrees to give  Consultant  an equal or greater  number of
shares that is sufficient for Consultant to maintain ownership of at least fifty
percent (50%) of Company's  outstanding shares on a fully diluted basis. For the
purposes herein, fully diluted shall include, but not be limited to issuances of
options, warrants, and similar stock rights, etc.

Since the note was paid the anti-dilution clause is no longer effective.

                                      F-14

<PAGE>


In  connection  with  the  Consulting  Agreement,  the  Consultant  agreed  to a
$2,000,000  penalty if the  Consultant  did not provide  funding  for  Nathaniel
Energy  Corporation  (arranging  financing  for  a  financial  project)  in  the
Financing  Services  section of the agreement.  In connection with a "Compliance
Acknowledgement" of June 7, 2002 the Consultant shall be permitted to retain the
13,500,000  shares of the  Company's  common stock  without any penalty  related
thereto,  and  the  Company  agrees  that it has no  right,  title  or  interest
whatsoever in said shares of the Company's common stock.

13. Commitments and Contingencies

Nathaniel Europe Limited

On December 10, 1999,  the Company  entered  into an  agreement  with  McCormack
consultants  ("MCC") to form an Irish  based  company  to be known as  Nathaniel
Europe  Limited  ("NEL").  Under the terms of the  agreement,  the  Company  was
required to contribute to NEL a thermal combustor capable of processing  500,000
tons of solid waste material per year. In addition,  the Company was required to
provide NEL with a cash  investment  of $350,000 and assign rights to the use of
its technology for Ireland and the United Kingdom.

In exchange for the above plus the issuance of additional shares to equal 20% of
shares of the  Company  (2,560,614  shares of common  stock as of  December  31,
1999),  the Company was to receive 20% of the initially issued shares of NEL, as
well  as 40% of  the  net  revenues  of NEC  for  the  first  24  months  of the
operations.  Subsequent  to December 10, 1999,  MCC assigned its interest in the
contract to Life Energy Corporation. NEC takes the position that such assignment
became invalid because of the non-compliance of performance on the part of MCC.

Between February 2000 and December 2000, the Company  purchased a combustor from
its  president  and two  unrelated  individuals  for  $200,000  and  expended an
additional  $300,000 to ready it for use in the NEL arrangement.  This equipment
was  shipped  to  Ireland  in  May  2001,  and  the  Company  conducted  several
demonstrations  of the  combustor.  After a series  of  disagreements  as to the
responsibilities  of  each of the  parties  to the NEL  agreement,  Life  Energy
Corporation  notified  the  Company  that they  considered  the Company to be in
violation of several provisions of that agreement. On July 18, 2000 and again on
October 6, 2000 Nathaniel Energy  Corporation's  attorney notified McCormack and
Consultants that the agreement dated December 10, 1999 between  Nathaniel Energy
Corporation  and McCormack  Consultants was invalid and  non-enforceable  due to
fraudulent  misrepresentations  on the part of McCormack and  non-performance on
the terms of the agreement.  Nathaniel  Energy's  counsel demanded the return of
the  Nathaniel  Combustor  and  properties  that were being  unlawfully  held by
McCormack  et al. On October 23,  2000  McCormack's  attorney  wrote a letter to
Nathaniel  Energy  Corporation's   attorneys  admitting  McCormack  was  holding
Nathaniel Energy Corporation's Combustor and ancillary equipment until Nathaniel
Energy  Corporation  paid an amount of money  demanded by  McCormack.  Nathaniel
Energy  disputes this claim.  On December 31, 2001,  Life Energy  Corporation is
maintaining  physical  possession  of the  combustor  equipment in Ireland.  The
Company has investigated  its options for reclaiming the equipment,  and intends
to  vigorously  contest Life  Energy's  claims.  The  likelihood  of  successful
recovery of the combustor  equipment  and the extent of potential  damage to its
condition  cannot  be  determined  at  this  time.  The  accompanying  financial
statements  for the year ended  December 31, 2001 include a charge to operations
of approximately $470,000 to reflect this uncertainty, representing a charge off
of the net carrying value of this combustor equipment.

Other Litigation and Claims

The  Company  is the  defendant  in ABM  Fabrication  and  Machining,  LLC,  vs.
Nathaniel Energy  Corporation,  Case No. 2002 CV 0094, District Court, County of
Douglas,  Colorado.  The plaintiff alleges damages of approximately  $41,000 for
unpaid labor and materials invoices.  The Company is defending on the basis that
the   plaintiff's   claims  are  partially  paid  and  the  balance  claimed  is
unreasonable.  The unpaid amount is included in accounts payable at December 31,
2002.

The Company is subject to a variety of  litigation  and claims  relating to past
due  payments  for  goods  and  services.  The  Company  is in  the  process  of
negotiating   settlement   arrangements  for  these  items,  and  the  estimated
settlement amounts are recorded on the books in accounts payable.

                                      F-15

<PAGE>


14. Subsequent Events

On April 03, 2003 the Nathaniel Energy Corporation acquired the remaining 81.45%
of Keyes Helium Company,  LLC from Colorado Interstate  Gas/ElPaso for an amount
of  $8,658,855.12.  In addition the Company purchased the Keyes Gathering System
and the Sturgis Gas  Processing  Plant and  Compressor  Station for an amount of
$1,288,360, both of which were subsidiaries of ElPaso Gas.

On March 1, 2003 the Company borrowed $65,000 from Alternate Capital, LLC.



                                      F-16




<PAGE>


Item 8. Changes In and Disagreements With Accountants on Accounting and
        Financial Disclosure.

     None  during  2002.  During  2003,  however,  Nathaniel  Energy  did change
accountants, as reported on a Form 8-K report dated March 11, 2003.

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        With Section 16(a) of the Exchange Act.

     The names,  ages and terms of office of Nathaniel  Energy's  directors  and
executive officers are set forth in the following table:

                                                                      Director
Name                     Age  Positions with Nathaniel Energy           Since
----                    ---  ------------------------                  --------
Brett Abrams             31  Director & Chief Operating Officer          1998
Stanley Abrams           63  Chairman & Chief Executive                  1998
Russell "Gene" Bailey    63  Director, Chief Financial Officer           2000
                                & Vice President
Cesar Muniz              47  Director, Vice President for                2000
                                Corporate Relations
Brian Culvey             48  Vice President-Environmental &
                             Chemical Engineering                        ----

     Directors are elected by holders of the common stock. Officers serve at the
will of the board. Nathaniel Energy may indemnify directors and officers against
damages which qualify, in the opinion of the disinterested members of the board,
for indemnification under Delaware law and Nathaniel Energy's Bylaws. Insofar as
indemnification  for liabilities arising under the federal Securities Act may be
permitted  to  directors,  officers  or  persons  controlling  Nathaniel  Energy
pursuant to Delaware law and its Bylaws, Nathaniel Energy has been informed that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.

                         BIOGRAPHIES OF MANAGEMENT

     Brett Abrams is Nathaniel  Energy's  Chief  Operating  Officer.  Mr. Abrams
joined  Nathaniel  Energy in 1997. In 1996, Mr. Abrams worked for Einstein Bagel
in its marketing  department,  in 1995 he worked in sales for a retail store and
in 1994, he was the marketing  agent for the Colorado Sky Sox. Mr. Abrams earned
a bachelor of science  degree in finance in 1993 from the University of Arizona.
Mr. Abrams is Stanley Abrams' son.

<PAGE>


     Stanley  Abrams  is  Nathaniel  Energy's  Chairman  of the  Board and Chief
Executive Officer.  Mr. Abrams began his term in 1997 as a director of Nathaniel
Energy Ltd., which was acquired by Nathaniel Energy in 1998. Mr. Abrams has been
a successful real estate  developer in Colorado.  Mr. Abrams has thirty years of
extensive  experience in negotiating with both domestic and foreign governments,
municipalities,  and  states.  In 1983 he  purchased  an interest in the Thermal
Combustors  technology and is responsible  for its  commercial  development  and
several  patents.  He  also  has  over  thirty  years  of  extensive  experience
developing many commercial and manufacturing  projects in the public and private
arenas.  Since 1987 Mr. Abrams has also been the president and director of Waste
Conversion  Systems,  Inc., a publicly traded company that ceased  operations in
1995. Mr. Abrams studied  political  science at the University of Colorado.  Mr.
Abrams is Brett Abrams' father.

     Russell "Gene" Bailey is Nathaniel  Energy's Chief Financial  Officer and a
Vice  President.  As CFO and Vice  President,  Mr.  Bailey  is  responsible  for
managing the financial  affairs and operational  affairs for Nathaniel  Energy's
tire division.  Mr. Bailey brings 35 years of finance, and consulting experience
to  Nathaniel  Energy.  From 1976 to  present,  Mr.  Bailey has been a part time
merger and  acquisition  consultant  with Bailey and  Associates on an as needed
basis. From 1994 to 2000, Mr. Bailey has been an adjunct professor at Pikes Peak
Community College teaching geology and physical  geography.  Mr. Bailey earned a
B.S.  degree in geology in 1962 from the University of New Mexico.  He completed
the course work for a Ph.D.  degree in geology in 1965 at the  University of New
Mexico and  completed a year of  graduate  studies at  University  of Arizona in
finance and mining economics in 1974.

     Brian Culvey is Nathaniel Energy's Vice  President-Environmental & Chemical
Engineering.  Dr.  Culvey  brings  twenty years of  combustion  and air emission
engineering experience to Nathaniel Energy.  Recognized worldwide as a leader in
the  combustion  engineering  field,  Dr.  Culvey's  problem  solving  abilities
consistently  produce innovative cost saving solutions.  Dr. Culvey earned a B.S
in Environmental Chemistry from the Colorado School of Mines in 1977 and a Ph.D.
degree in  Metaphysics  from the  Brotherhood  of the White  Temple in  Sedalia,
Colorado in 1982.

     Cesar  Muniz is a  director  and  Nathaniel  Energy's  Vice  President  for
Corporate Relations.  Mr. Muniz's duties include corporate strategy,  compliance
with federal and state  disclosure  laws and  assistance in executing  Nathaniel
Energy's  marketing plan.  Prior to joining  Nathaniel  Energy Mr. Muniz was the
owner and Chief  Executive  Officer of Managerial  Advisory  Services,  Inc., an
investor relations and corporate development  consulting firm, from 1997 through
January  2000.  Mr.  Muniz earned a B.A.  degree in  political  science from the
University of Arizona in 1984.

Section 16(a) Beneficial Ownership Reporting Compliance.

     No person who is identified  as a director,  officer,  beneficial  owner of
more than ten percent of Nathaniel Energy's common stock has filed any Form 3, 4
or 5 required  by section  16(a) of the  Exchange  Act since the date  Nathaniel
Energy became subject to the reporting  requirements  of the Exchange Act. These
persons  intend  to  file  such  reports,  beginning  with a Form  3, as soon as
practicable  following  the  filing of this  report.  No  change  in  beneficial
ownership of these persons has occurred since the date  Nathaniel  Energy became
subject to the reporting requirements.

<PAGE>


Item 10.  Executive Compensation.

     The following table sets forth the compensation  paid during the past three
years to  Nathaniel  Energy's  chief  executive  officer and the two  additional
highest paid officers  whose  remuneration  exceeded  $100,000 per year in 2001.
Nathaniel  Energy did not pay any  non-cash  current  compensation  or long term
compensation to the officers during the listed years.

                              Annual Compensation
                              ------------------------------------------
Name & Position       Year    Salary          Accrued and Unpaid Portion
---------------       ----    --------        --------------------------
Brett Abrams
Chief Operating       2000    $ 75,000        $ 52,500
Officer-Tire          2001    $106,250        $ 98,570
Division              2002    $150,000        $150,000

Stanley Abrams
Chief Executive       2000    $150,000        $ 75,000
Officer               2001    $191,666        $183,333
                      2002    $250,000        $250,000

Cesar Muniz
Chief Information     2000    $137,500        $137,500
Officer & Vice        2001    $150,000        $150,000
President             2002    $150,000        $150,000

     Nathaniel  Energy has employment  agreements  with its executive  officers.
Messrs.  Brett  Abrams,  Stanley  Abrams and Muniz are  employed  under  written
agreements which are identical,  except for annual salary.  Messrs. Brett Abrams
and Muniz annual salary is $150,000 and Mr.  Stanley  Abrams salary is $250,000.
These  agreements  also provide each  officer  with an annual  incentive  bonus.
Provided Nathaniel Energy has pretax income of not less than $500,000, the bonus
for each officer is three  percent on the first $10 million,  two percent of the
next $30 million and one percent of the next $100 million in pre-tax income.

Item 11. Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters.

     The names of  directors  and  officers,  the number of shares of our stock,
which each owns and the  percentage  of the  common  stock  represented  by such
shares at January 8, 2003 is set forth in the following table.

Name                       Number of Shares              Percentage
----                       ----------------              ----------
Brett Abrams                3,000,000                     7.8
Stanley Abrams              2,596,000                     6.8
Russell "Gene" Bailey         411,764 (1)                 1.1
Brian Culvey                     NONE                       -
Cesar Muniz                 1,000,000 (2)                 2.6
All directors and
   Officers as a
   Group (5 persons)        7,007,764 (3)                 18.3
Richard Strain              6,585,000 (4)                 17.2

<PAGE>


     All of the shares  listed above are owned legally and  beneficially  by the
named  persons,  who do not,  to the  best of our  knowledge,  share  voting  or
investment power with any other person.

     (1) Mr. Bailey's shares and percentage of ownership  include 205,882 shares
and 205,882  warrants  to purchase an equal  number of shares at a price of $.17
per share, held by his wife.

     (2) Mr. Muniz's  shares and percentage of ownership do not include  500,000
warrants held by Managerial Advisory Services, Inc., a consulting firm which had
been nominally  owned by his wife and is now owned by him, which have a cashless
exercise based on a value of $3 per share,  the number of shares into which such
warrants can be converted  at any time being  determined  by the market price of
the  common  stock  at the  date  of  exercise.  Calculation  of the  percentage
ownership by directors and officers as a

     (3) group includes warrants owned by Mr. Bailey's wife.

     (4) Mr.  Strain's  shares  include  500,000  shares held in the name of his
wife.

     The address of directors and officers is that of Nathaniel Energy.  Richard
Strain's address is 329 Manchester Rd, Poughkeepsie, NY 12603.

Item 12. Certain Relationships and Related Transactions.

     During  2001  and  2002,   Nathaniel   Energy   engaged  in  the  following
transactions with its directors, officers and principal stockholders:

     In  September  2001  Nathaniel  Energy  executed  a one  year,  convertible
promissory  note  totaling  for a cash loan of  $35,000  from Judy  Bailey,  Mr.
Bailey's wife,  with interest at 10% per annum.  The note entitled Ms. Bailey to
convert it into 205,882  shares of Nathaniel  Energy's  common stock and 205,882
warrants to purchase  common stock at an exercise  price of $.17 per share.  Ms.
Bailey converted the note to stock and warrants on July 2002.

     In January  2000  Stanley  Abrams and two other  individuals  unrelated  to
Nathaniel Energy sold a used Thermal Combustor to Nathaniel Energy for $200,000.
Nathaniel  Energy  now  owes  the  $200,000  to  the  three  individuals,   with
approximately  $61,000 of this amount owed to Mr. Abrams.  The three individuals
had acquired the Thermal  Combustor in a  liquidation  approximately  five years
earlier in  satisfaction  of amounts owed to them by a prior  Thermal  Combustor
licensee in which Stanley  Abrams was a director and officer.  Nathaniel  Energy
estimates  that the new  manufacture  of a similar unit would have cost $700,000
and required  approximately  twenty-six  weeks.  Nathaniel  Energy upgraded this
equipment  and  delivered it as a  demonstrator  unit to an  unrelated  group in
Ireland  with  which it had a  proposed  joint  venture.  At the  present  time,
Nathaniel  Energy is  attempting  to recover the unit and has no plans to pursue
that  proposed  joint  venture.  Management  believes  the price of the  Thermal
Combustor  was fair and  reasonable,  based on the  estimated  replacement  cost
Nathaniel Energy would have incurred to have a similar unit manufactured.

     On December 15, 1998,  Nathaniel Energy issued 500,000 cashless options for
common stock to Managerial  Advisory  Services,  Inc.  exercisable  at $3.00 per
share. The number of shares for which these options can be exercised varies with
the market price of Nathaniel Energy's stock. The options expire on December 15,
2004. Managerial Advisory Services is owned by Mr. Muniz.

     Nathaniel  Energy's  board of  directors  has  approved the purchase of the
assets of Ripe Touch Greenhouses, Inc. of Castle Rock, Colorado at a price which
has not yet been  negotiated.  The directors and  stockholders of Ripetouch have
not  approved  the sale of its  assets  to  Nathaniel  Energy.  Stanley  Abrams,
Nathaniel Energy's chairman and president,  is the chief executive officer and a
director of Ripetouch and owns less than twelve percent of the company. He is in
favor of the transaction. The price which Nathaniel Energy is willing to pay for

<PAGE>


Ripetouch  would offset advances  Nathaniel  Energy has made to Ripetouch to pay
operating   expenses  and  would  involve  Nathaniel   Energy's   assumption  of
Ripetouch's bridge funding used for that purpose.  Management believes the price
it is willing to pay for Ripetouch is fair and reasonable,  being related to the
value  of the  tangible  assets  and  the  cost  incurred  by  Ripetouch  in the
development  of  know  how in the use of the  Thermal  Combustor  in  greenhouse
agriculture.  See Item 1, "Proposed  Acquisition" for more information about the
relationship between Nathaniel Energy and Ripetouch.

     On August 26, 2002,  Nathaniel Energy borrowed  $1,800,000 from a principal
stockholder,  Richard Strain.  Nathaniel  Energy used $1,450,000 if the proceeds
to, acquire MCNIC Rodeo, Inc, an 18.55% limited partner in Keyes Helium Company,
LLC. The balance of the loan has been  earmarked  for capital  investment at the
Keyes plant. In consideration of this loan and previous loans,  Nathaniel Energy
transferred  forty-nine  percent of MCNIC's stock to Mr. Strain.  The note bears
interest at 2% over prime. The note has no stated maturity.  To retire principal
and  pay  interest,  Nathaniel  Energy  has  committed  eighty  percent  of  its
production payments received from Keyes Helium, estimated at a total of $350,000
per  year.  Nathaniel  Energy is  obligated  to cause  its  subsidiary  to issue
forty-nine percent of its stock to Mr. Strain.

     Prior to 2000, Mr. Strain loaned a total of $1,350,000 to Nathaniel Energy.
In April 2002,  Mr. Strain  converted  the  outstanding  balance into  8,250,000
shares of  Nathaniel  Energy's  common  stock at a price of $.20,  which was the
market  price at the date of  conversion.  The shares were not issued  until the
first  week of  January  2003.  Part of these  shares  were  issued  to  persons
designated by Mr. Strain.

Item 13. Exhibits and Reports on Form 8-K.

(a) Exhibits.

     2.1     Stock Exchange Agreement between Nathaniel Energy and MNS Eagle
              Equity Group IV, Inc. ("MNS") its shareholders*
     2.2     Acquisition agreement for MCNIC Rodeo Gathering, Inc.*
     3(i).1  Articles of Incorporation*
     3(i).2  First amendment to the Articles of Incorporation Changing Name*
     3(i).3  Second amendment to the Articles of Incorporation Changing
             Authorized Stock*
     3(ii)   Bylaws*
     10.2    Promissory note to Richard Strain regarding funding of and
              Participation in MCNIC Rodeo Gathering, Inc.*
     10.3   Form of Employment Agreement of Brett Abrams, Stanley Abrams
              and Cesar Muniz*
     10.11  Patent Assignment Agreement dated July 7, 1998*
     10.12  Assignment - Stan Abrams*
     10.13  Assignment - Brett Abrams*
     21.0   Nathaniel Energy's subsidiaries*
     31.1   Certification of Chief Executive Officer and Principal Accounting
            Officer pursuant to Rule 13a-14(a)or Rule 15d-14(a) as adopted
            pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     32.1   Certification of Chief Executive Officer and Principal Accounting
            Officer  pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant
            to Section 906 of the Sarbanes- Oxley Act of 2002


*Previously filed.

  (b) Reports on Form 8-K.

     Nathaniel  Energy was not  subject  to the  reporting  requirements  of the
Securities  Exchange  Act of 1934 during 2002.  Neither it nor its  predecessor,
MNS, registrant filed any reports on Form 8-K during the last quarter of 2002.

Item 14.  Controls and Procedures.

     Nathaniel  Energy's Chief Executive  Officer and Chief  Financial  Officer,
after evaluating the effectiveness of Nathaniel Energy's disclosure controls and
procedures  (as defined in Rules  13a-14(c) and 15d-14(c)  under the  Securities
Exchange  Act of 1934,  as amended) as of November 12,  2002,  (the  "Evaluation
Date"),  have concluded  that, as of the  Evaluation  Date,  Nathaniel  Energy's
disclosure   controls  and  procedures  were  effective  to  ensure  the  timely
collection,  evaluation,  and  disclosure of  information  relating to Nathaniel
Energy that would  potentially  be subject to  disclosure  under the  Securities
Exchange  Act of 1934,  as amended,  and the rules and  regulations  promulgated
under the Act. There were no significant  changes in Nathaniel Energy's internal
controls  or in other  factors  that could  significantly  affect  the  internal
controls subsequent to the Evaluation Date.

<PAGE>


                              SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Nathaniel Energy Corporation
(Registrant)

By:  /s/ Stanley Abrams
     ---------------------------------------
     Stanley Abrams, Chief Executive Officer

Date:  February 20, 2004

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  registrant and in the capacities and on
the dates indicated.

By:  /s/ Stanley Abrams
     --------------------------------------------
     Stanley Abrams, Chief Executive Officer,
     Principal Accounting Officer, and Director


Date:  February 20, 2004

By:  /s/ Russell "Gene" Bailey
    ---------------------------------------------
    Russell "Gene" Bailey, Director

Date:  February 20, 2004

By: /s/ George Cretecos
   ----------------------------------------------
   George Cretecos, Director

Date:  February 20, 2004