U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-QSB/A

                             Quarterly Report Under
                       the Securities Exchange Act of 1934

                        For Quarter Ended: June 30, 2003

                         Commission File Number: 1-12350

                                 FUELNATION INC.

       (Exact name of small business issuer as specified in its charter)

                                     Florida
         (State or other jurisdiction of incorporation or organization)

                                   65-0827283
                        (IRS Employer Identification No.)

                                4121 SW 47th Ave.
                                 Davie, Florida
                    (Address of principal executive offices)

                                      33314
                                   (Zip Code)

                                 (954) 587-3775
                           (Issuer's Telephone Number)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days:
Yes [X] No [ ].

The number of shares of the registrant's only class of common stock issued and
outstanding, as of September 01, 2003 was 2,294,493 shares.

<PAGE>

                         PART I - FINANCIAL INFORMATIOM

ITEM 1. FINANCIAL STATEMENTS.


                           FUELNATION INC.
                     (A Development Stage Company)
                            BALANCE SHEET
<TABLE>
<CAPTION>

                                                                           June 30,                    December 31,
                                                                             2003                         2002
                                                                          (Unaudited)                   (Audited)
                                                                         ------------                  ------------
                                     ASSETS

CURRENT ASSETS:
<S>                                                                      <C>                           <C>
   Cash                                                                  $       --                    $        612
   Inventories                                                                   --                         499,749
   Other                                                                      321,120                        81,120
                                                                         ------------                  ------------
Total Current Assets                                                          321,120                       581,481
                                                                         ------------                  ------------
FIXED ASSETS:
   Office Furniture and Equipment and Computer Systems, net of
     accumulated depreciation of $145,699 and $119,964                        100,981                       126,715
                                                                         ------------                  ------------

OTHER ASSETS:
   Deposits on Equipment                                                         --                         752,500
                                                                         ------------                  ------------
                                                                                 --                         752,500
                                                                         ------------                  ------------
Total  Assets                                                            $    422,101                  $  1,460,696
                                                                         ============                  ============

                     LIABILITIES AND STOCKHOLDERS' [DEFICIT]

CURRENT LIABILITIES:
   Cash Overdraft                                                        $         41                  $       --
   Accounts payable                                                           743,191                       672,803
   Accrued Liabilities                                                        501,446                       329,540
   Payroll and Taxes Payable                                                1,067,110                       880,414
   Convertible Debt                                                            35,953                        35,953
   Note Payable - related party                                               328,000                          --
   Note Payable                                                                25,000                        25,000
   Due to Affiliates                                                          114,316                       121,332
   Other Payables                                                             149,500                       149,500
                                                                         ------------                  ------------
Total Current Liabilities                                                   2,964,557                     2,214,542

Commitments and Contingencies                                                    --                            --

Common Stock Subject to Repurchase, 57,108 Shares Issued and
Outstanding at June 30, 2003 and December 31, 2002                          3,547,973                     3,547,973
                                                                         ------------                  ------------
STOCKHOLDERS' [DEFICIT]:

   Preferred Stock, $.01 par value, 5,000,000 shares
      authorized; none issued and outstanding                                    --                            --
   Common Stock, $.01 par value, 100,000,000 shares
      authorized; 2,237,385  and 2,214,050 issued and outstanding at
      June 30,2003 and December 31, 2002 respectively                          22,374                        22,141
   Additional paid-in capital                                              29,803,452                    29,803,685
   (Deficit) Accumulated in the Development Stage                         (35,916,255)
                                                                         ------------                  ------------
Total Stockholders' [Deficit]                                              (6,090,429)                   (4,301,819)
                                                                         ------------                  ------------
Total Liabilities and Stockholders' [Deficit]                            $    422,101                  $  1,460,696
                                                                         ============                  ============
</TABLE>

                             See Accompanying Notes

                                       1
<PAGE>


                                 FUELNATION INC.
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                     For the Three Months
                                                         Ended June 30,
                                                  ----------------------------
                                                      2003            2002
                                                  -----------      -----------

Revenue                                           $      --        $      --
                                                  -----------      -----------
Operating expenses:
   Salaries and wages including related taxes          85,714          182,668
   Consulting fees                                     72,554           19,478
   Consulting fees - related party                     55,384             --
   Legal and professional                              23,086           74,722
   Marketing and promotion                               --               --
   Rent                                                 4,472             --
   Rent - related party                                  --               --
   Depreciation                                        12,868           21,243
   Other general and administrative expenses           31,415           60,637
   Impairement Loss on Technology                        --
   Write down of Inventory                            499,749             --
   Loss on Equipment deposit                          752,500             --
   Research and development cost                         --               --
   Financing Costs                                     20,270             --
   Non - Cash Consulting fees                            --            582,921
   Non - Cash Consulting fees - related party            --               --
   Non - Cash Printing costs                             --               --
   Non - Cash Financing costs                            --               --
   Non - Cash Employee Compensation                      --            370,374
                                                  -----------      -----------
Total operating expenses                            1,558,012        1,312,043
                                                  -----------      -----------
Operating Loss                                     (1,558,012)      (1,312,043)

Other Income (Expense):
   Other (Expense) Income                                --              2,983
   Interest expense - related party                    (4,100)            --
   Interest expense                                      (869)          (8,441)
                                                  -----------      -----------
Total other (expense), net                             (4,969)          (5,458)
                                                  -----------      -----------
Net Loss                                          $(1,562,981)     $(1,317,501)
                                                  ===========      ===========
Basic and Diluted Net Loss per Common Share       $     (0.68)     $     (0.99)
                                                  ===========      ===========
Basic and Diluted Weighted Average Common
Shares Outstanding                                  2,294,001        1,330,026
                                                  ===========      ===========


                    See Accompanying Notes


                                       2
<PAGE>



                           FUELNATION INC.
                   (A Development Stage Company)
                      STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                                 Accumulative in
                                                   For the Six Months Ended      the Development
                                                            June 30,                  Stage
                                                  ---------------------------- From Sept. 30, 2000
                                                      2003            2002       to June 30, 2003
                                                  -----------      -----------     ------------

<S>                                               <C>              <C>             <C>
Revenue                                           $      --        $      --       $       --
                                                  -----------      -----------     ------------
Operating expenses:
   Salaries and wages including related taxes         152,222          370,839        1,662,739
   Consulting fees                                     72,555           38,934          145,387
   Consulting fees - related party                    110,768             --            387,314
   Legal and professional                              24,342          141,032          847,927
   Marketing and promotion                               --               --            467,158
   Rent                                                29,528             --            255,428
   Rent - related party                                  --               --             45,387
   Depreciation                                        25,735           25,068          145,699
   Other general and administrative expenses           94,430          118,487          631,773
   Impairement Loss on Technology                        --               --           158,1747
   Write down of Inventory                            499,749             --            499,749
   Loss on Equipment deposit                          752,500             --            752,500
   Research and development cost                         --               --             10,000
   Financing Costs                                     20,270             --            110,270
   Non - Cash Consulting fees                            --            582,921       17,014,280
   Non - Cash Consulting fees - related party            --               --          3,644,251
   Non - Cash Printing costs                             --               --             21,000
   Non - Cash Financing costs                            --               --             92,956
   Non - Cash Employee Compensation                      --            455,561        6,863,527
                                                  -----------      -----------     ------------
Total operating expenses                            1,782,099        1,732,842       35,179,092
                                                  -----------      -----------     ------------
Operating Loss                                     (1,782,099)      (1,732,842)     (35,179,092)

Other Income (Expense):
   Other (Expense) Income                                --              2,983         (694,982)
   Interest expense - related party                    (4,100)            --             (4,100)
   Interest expense                                    (2,412)         (16,881)         (38,081)
                                                  -----------      -----------     ------------
Total other (expense), net                             (6,512)         (13,898)        (737,163)
                                                  -----------      -----------     ------------
Net Loss                                          $(1,788,611)     $(1,746,740)    $(35,916,255)
                                                  ===========      ===========     ============
Basic and Diluted Net Loss per Common Share             (0.78)           (1.38)
                                                  ===========      ===========
Basic and Diluted Weighted Average Common
Shares Outstanding                                  2,287,520        1,265,118
                                                  ===========      ===========
</TABLE>


                    See Accompanying Notes

                                       3
<PAGE>


                              FUELNATION INC.
                      (A Development Stage Company)
                         STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                         For the Six Months Ended
                                                                  June 30,              Accumulative in
                                                        ----------------------------    the Development
                                                           2003              2002            Stage
                                                        -----------      -----------      -----------
<S>                                                     <C>              <C>             <C>
Cash Flows from Operating Activities:
 Net loss                                               $(1,788,611)     $(1,746,740)    $(35,916,255)
  Adjustments to reconcile net loss to net cash
    provided by (used) in operating activities:
       Depreciation                                          25,734           25,068          145,698
       Non- Cash Employee Compensation                         --            455,561        6,863,527
       Non- Cash Consulting Fees                               --            582,921       17,014,280
       Non- Cash  Consulting Fees -Related Party               --               --          3,644,251
       Non- Cash Financing Costs                               --               --             92,956
       Non- Cash Printing Costs                                --               --             21,000
       Write- Down of Investments                              --               --            657,686
       Loss on Equipment Deposit                            752,500             --            752,500
       Other                                                   --               --             58,508
       Write - Down of Technology and Inventory             499,749             --          2,081,496
       Amortization of Convertible Debt                        --             15,262           30,394

         Changes in Assets and Liabilities:                    --               --
         Inventory                                             --               --           (499,748)
         Due from Escrow Accounts                              --               --            (45,000)
         Due from Affiliates                                   --            250,158          304,680
         Other                                                 --             33,048            8,705
Increase [Decrease] in :                                       --               --
         Accounts Payable                                    70,389           51,244          776,104
         Due to Affiliates                                   (7,016)            --            397,459
         Accrued Liabilites                                 171,906           42,072          581,538
         Payroll and Taxes Payable                          186,696          182,868        1,067,110
                                                        -----------      -----------      -----------
          Net cash provided by (used) in                    (88,653)        (108,538)      (1,963,111)
             operating activities                              --               --               --
Cash Flows from Investing Activities:
   Payments for Technology                                     --               --           (544,903)
   Payment for Fixed Assets                                    --             (2,667)        (246,679)
  Advances Toward Pending Acquisition                          --               --           (402,724)
  Bond Issuance Deposit                                    (240,000)            --           (320,000)
  Cash Received in Acquisition                                 --               --              1,109
                                                        -----------      -----------      -----------
          Net cash used in investing activities            (240,000)          (2,667)      (1,513,197)
                                                        -----------      -----------      -----------
Cash Flows from Financing Activities:
   Cash Overdraft                                                41             --                 41
   Proceeds from issuance of common stock                      --            110,000        3,453,118
   Proceeds from Issuance of Convertible Debt                  --               --             35,953
   Proceeds (Payment) of Loans Payable                         --               --           (100,000)
   Proceeds - Note Payable related party                    328,000             --            328,000
   Debt Restructuring                                          --               --           (255,804)
   Exercise of Stock options                                   --               --             15,000
                                                        -----------      -----------      -----------
          Net cash provided by financing activities         328,041          110,000        3,476,308
                                                        -----------      -----------      -----------
Net (Decrease) Increase in Cash                                (612)          (1,205)            --

Cash, Beginning of Period                                       612            2,196             --
                                                        -----------      -----------      -----------
Cash, End of Period                                     $      --        $       991      $      --
                                                        ===========      ===========      ===========
Supplemental Disclosures of Cash Flow Information:
   Cash paid during the period for interest:            $      --        $     1,546      $     2,716
                                                        ===========      ===========      ===========
   Cash paid during the period for Income Taxes:        $      --        $      --        $      --
                                                        ===========      ===========      ===========
</TABLE>

                              See Accompany Notes

                                       4
<PAGE>


Supplemental Disclosures of Non Cash Investing and Financing Activities:

During the Six Months Ended June 30, 2003 and June 30, 2002
-----------------------------------------------------------

In February 2003, an additional 23,334 shares of common stock were issued to a
consultant in settlement of the civil suit. The related cost of these shares was
accrued at December 31, 2002.

Inventory with a book value of $ 499,749 was written off in the second quarter
of 2003.

Deposits of Equipment with a book value of $752,500 were written off in the
second quarter 2003.

The following transaction occurred in 2002:
--------------------------------------------------------------

Options to purchase 8,352 shares of common stock were issued and exercised by
the then CEO of the Company at the exercise price of $1.50 per share. The
proceeds totaling $12,528 were offset against the amount due to affiliates and
$85,187 was was recorded as non cash employee compensation.

Options to purchase 111,722 shares of common stock were issued and exercised by
employees of the Company in satisfaction of accrued payroll costs of $167,582,
as well as non-cash employee compensation of $370,374

Options to purchase 53,333 shares of common stock were issued and exercised by
two consultants. Non-cash consulting expense of $297,921 was recorded, which
represented the fair value of the common stock at the time of issuance.

The Company issued 40,000 shares of common stock to a consult for services
rendered. Non-cash consulting expense of $285,000 was recorded, which
represented the fair value of the common stock at the time of issuance.


                    See Accompanying Notes

                                       5
<PAGE>

                        FUELNATION INC.
                  (A Development Stage Company)
                        June 30, 2003
                         (Unaudited)

Note 1. Basis of Presentation

The accompanying unaudited financial statements of FuelNation Inc. (the
"Company") have been prepared in accordance with Regulation S-B promulgated by
the Securities and Exchange Commission and do not include all of the information
and footnotes required by generally accepted accounting principles in the United
States for complete financial statements. In the opinion of management, these
interim financial statements include all adjustments necessary in order to make
the financial statements not misleading. The results of operations for such
interim period are not necessarily indicative of results of operations for a
full year. The unaudited financial statements should be read in conjunction with
the audited financial statements and notes thereto of the Company and
management's discussion and analysis of financial condition and results of
operations included in the Annual Report on Form 10-KSB for the year ended
December 31, 2002.

The accompanying unaudited interim financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
liquidation of liabilities in the normal course of business. However, the
Company has a history of net losses and as of June 30, 2003,has a working
capital deficiency of approximately $2,643,437 and a capital deficiency of
approximately $35.9 million. Since October 2000, the Company has relied on
financial support from equity financing and loans from affiliated entities.
Management is currently seeking additional financing; however no assurances can
be made that such financing will be consummated. The continuation of the Company
as a going concern is dependent upon its ability to obtain financing, and to use
the proceeds from any such financing to increase its business to achieve
profitable operations. The accompanying financial statements do not include any
adjustments that would result should the Company be unable to continue as a
going concern.

Note 2. Significant Accounting Policies

The accounting policies followed by the Company are set forth in Note 2 to the
Company's financial statements in the December 31, 2002 Form 10-KSB.

Note 3. Restructuring Charges

The Company has temporarily put on hold its development of providing real time
e-commerce communications in petroleum marketing and energy services. As a
result management has taken a write off of inventory of $499,749 and equipment
deposit of $752,500 in the second quarter of 2003.

Note 4. Basic and Diluted Loss Per Share

Basic loss per share reflects the amount of loss for the period attributable to
each share of common stock outstanding during the reporting period. Diluted loss
per share reflects basic loss per share, while giving effect to all dilutive
potential common shares that were outstanding during the period, such as common
shares that could result from the potential exercise or conversion of securities
into common stock. The computation of diluted loss per share does not assume
conversion, exercise, or contingent issuance of securities that would have an
anti- dilutive effect on loss per share (i.e. reducing loss per share). The
dilutive effect, if any, of outstanding options and warrants and their
equivalents would be reflected in dilutive earnings per share by the application
of the treasury stock method which recognizes the use of proceeds that could be
obtained upon the exercise of operations and warrants in computing diluted
earnings per share. It assumes that any proceeds would be used to purchase
common stock at the average market price of the common stock during the period.
For the six months ended June 30, 2003 and 2002, all of the Company's potential
common shares were anti-dilutive and a dual presentation of loss per share is
not required.

Note 5. Advances and Notes - Related Parties

The Company has borrowed monies from related parties to fund operations. At June
30, 2003 the balance owed to affiliates was $114,316. Currently, there are no
interest or repayment terms for the debt and it is treated as if due on demand.
In April 2003 the former CEO and board members made arrangements to have a
standby letter of credit issued by a bank in the amount of $500,000 to secure a
loan in the amount of $328,000 with 5% interest and to guarantee performance and
payment of a consulting agreement in the amount of $150,000, both obligations
are due in 6 months. The loans have been secured by stock owned by the
affiliates and guarantees by the affiliates. The company used $240,000 of these
proceeds to satisfy the application and commitment fees related to the bond
financing and standby letter of credit.

Note 6. Stockholders' Equity - Issuance of Common Stock

On January 27,2003, the Company affected a 150:1 reverse split of its common
stock. At the same time, the Company amended its certificate of incorporation
authorizing it to issue 105,000,000 shares of capital stock, of which 5,000,000
shares are classified as preferred stock, par value of $.01 per share, issuable
in one or more series and 100,000,000 shares are classified as common stock, par
value $.01. All periods presented have been restated to reflect the 150:1
reverse split of common stock.

In February 2003, an additional 23,334 shares of common stock were issued to a
consultant to finalize a settlement of a civil suit.


                                       6
<PAGE>


Note 7.  New Authoritative Accounting Pronouncements

In April 2003, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No 149, "Amendment of Statement 133
on Derivative Instruments and Hedging Activities" ("FASB 149"), which clarifies
financial accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts and for hedging activities,
under FASB Statement No. 133, "Accounting For Derivative Instruments and Hedging
Activities." SFAS No. 149 is effective for contracts entered into or modified
after June 30, 2003 and for hedging relationships designated after June 30,
2003.

In May 2003, the FASB issued Statement of Financial Accounting Standards No.
150, "Accounting for Certain financial Instruments with Characteristics of both
Liabilities and Equity" ("SFAS 150"), which established standards for how an
issuer classifies and measures certain financial instruments. SFAS 150 requires
that an issuer classify certain financial instruments as liabilities (or assets
in some circumstances) that were previously classified as equity. Financial
instruments which embody an unconditional obligation requiring the issuer to
redeem or repurchase it by the transfer of assets or by issuing a variable
number of its equity shares must be classified as a liability. SFAS 150 is
effective for financial instruments entered into or modified after May 31, 2003,
and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003.

Note 8. Stock-Based Compensation

The Company accounts for stock-based employee compensation under the measurement
principles of APB Opinion No. 25 " Accounting for Stock Issued to Employees" and
related interpretations. The following table illustrates the effect on Net
Income and Earnings (Loss) per share if the Company had applied the fair value
recognition provisions of FASB Statement No 123 to stock-based employee
compensation:
<TABLE>
<CAPTION>

                                                                    Three Months                         Six Months
                                                                   Ended June 30,                      Ended June 30,
                                                           -----------------------------      ------------------------------
                                                                2003             2002               2003             2002
                                                           ------------      -----------      -------------      -----------

<S>                                                       <C>                <C>              <C>                <C>
Net Loss, as reported                                     $  (1,562,981)     $(1,317,501)     $  (1,788,611)     $(1,746,740)

Add: Stock-based employee compensation
         expense as reported                                      (--)           370,374              (--)           455,561

Deduct: Stock-based employee compensation
              expense determined under the fair value
              based method                                         --           (474,837)              --           (563,391)
                                                          -------------      -----------      -------------      -----------
Pro- Forma Net Loss                                       $  (1,562,981)     $(1,421,964)     $  (1,788,611)     $(1,854,570)
                                                          =============      ===========      =============      ===========


Basic and Diluted Loss per Share:
  As Reported                                             $        (.68)     $      (.99)     $        (.78)     $     (1.38)
  Pro Forma                                               $        (.68)     $     (1.07)     $        (.78)     $     (1.47)

</TABLE>

                                       7
<PAGE>


Note 9 Contingencies and Legal Proceedings.

On July 25, 2002 the Company was served with a civil action from one of the four
individual note holders, Peter Gianoukas, in the amount of $11,541 principal
amount. Further details on the notes are given in the Liquidity and Capital
Resources section of this report. The note holder claimed we were in default on
the note and demanded payment. The note was due on September 30, 2002 and not
yet been paid. As of the date of this filing Mr. Gianoukas received a final
default judgment in the state of New Jersey. The Company will defend this suit
with all remedies of the law. As of the date of this filing we are working
diligently to resolve the default.

On December 2, 2002 in a case entitled Richard Maddox vs. FuelNation Inc.
(CASE#02-22492-CACE-25) Broward County, Florida (17th Judicial Circuit), the
Company was named as a defendant by a shareholder in a securities-related suit
for money damages in the amount of $25,000 based on allegations of unjust
enrichment. The company has entered into a stipulation for settlement with the
shareholder and has agreed to buy back the shares prior to November 15, 2003.

On January 17, 2003 the Company was served with a civil suit from Andrew Telsey
vs. FuelNation Inc. (Case# 03-001019-CACE-11) Broward County, Florida (17th
Judicial Circuit). The Company was named as defendant in a collection suit for
attorneys fees in the amount of $24,197.93 based on allegations of breach of
agreement and quantum merit. Responsive pleadings in defense of the claim have
been filed, including affirmative defenses. The parties are now engaged in
pre-trial discovery with no trial date scheduled. The Company deems the lawsuit
frivolous and without merit and is pondering the filing of a counterclaim.

On February 28, 2003 the Company was served with a civil suit from Exodus
Resources, Inc. vs FuelNation Inc. and Chris Salmonson (Case# 03-5178-CA-06)
Dade County, Florida (11th Judicial Circuit). The Company and former CEO were
named as co-defendants, jointly and severally, by a shareholder in a securities
related suit for money damages exceeding $15,000.00 (plus special damages) based
on allegations of breach of fiduciary duty and fraud. Responsive pleadings in
defense of the claim have been filed, including affirmative defenses. The
parties are now engaged in pre-trial discovery with no trial date scheduled. The
Company deems the lawsuit frivolous and without merit and is pondering the
filing of a counterclaim.

In April 2003, our independent auditors received a request from the SEC seeking
the production of documents in connection with an informal investigation. The
Company has not received the notice The Company cannot predict when this
investigation will be completed, nor can it predict what the results of this
investigation may be. It is possible that the Company will be required to pay
fines, consent to injunctions on future conduct, or suffer other penalties, each
of which could have a material adverse effect on its business. The Company
cannot assure you that the effects and result of this investigation will not be
material and adverse to its business, financial condition and liquidity.

                                       8
<PAGE>


Note 10 Subsequent Events

In September 2003 FuelNation authorized the issuance of a one- year subordinated
promissory note which accrues interest at the rate of 18% in the amount of
$1,000,000. The note will be convertible into $0.50 cent shares of FuelNation
common stock at the option of the holder. During the term of the note the
holders will have no voting rights with the shares and the note will be treated
on an as-converted basis. The note holders will be entitled to receive any
benefits, a common stockholder would be entitled to, other than voting rights,
on an as-converted basis. The note holders will be entitled to participate in
any stock dividend, stock split, rights offering, and dividend. The note holders
will have no voting rights as a common stock holder, other than rights they
would receive related to any benefits on an as-converted basis.

The note holders of the one-year subordinated promissory note will be allowed to
apply the value of this note towards payment or partial payment of any stock
rights offering declared by the company and effective by a registration
statement. In the event of a stock rights offering becoming effective before the
maturity of this note and the note holder desires to participate in the rights
offering, this note may be redeemed early and applied toward the payments to
exercise their stock purchase rights under the stock rights offering. FuelNation
will have an option, but not the obligation, to call the shares within a
one-year time frame for a call price of $1.00 per share.

In September 2003 three of the current convertible debt holders were issued
one-year subordinated promissory notes, as described above, in the amount of
$48,823, in settlement of their original notes totaling $24,412 as described
above.

In August 2003, FuelNation Travel Center, LLC ("FNTC"), a special purpose
corporation, changed issuers for the bond offering because of the inability of
the prior lender to satisfy our requirements and investors concerns. The new
issuer for the bonds is a political body and one of the top bond issuers in the
state of Florida. We are in the process of finalizing details for the bond
issuance and the necessary submissions for the first phase of construction. In
addition to the new issuer for the bonds, Brauser Real Estate LLC has agreed to
provide the funds for the bond funding and is providing the necessary guarantees
and finances to complete the bond issue process. Current compensation
negotiations for Brauser Real Estate LLC have not been finalized for assisting
with the financing and the development. The principal owners of Brauser Real
Estate LLC have in excess of 48 years of real estate development in New York and
Florida and currently manage in excess of $150 million of real estate. We are
currently preparing documentation to submit to the lender and the town to start
construction upon receipt of permits for building. It is anticipated that
Brauser Real Estate LLC will be compensated commensurate with the funding and
guarantees they provide on the bond issue. It is further anticipated that an
equity position in the project will be given to Brauser Real Estate LLC in much
the same manner as the prior issuer requested and preferred shares will be
issued by the company with super voting rights until the guarantees are removed.
The terms of the transaction are still being negotiated. The manager and 100%
owner of FNTC is William Schlecht, who is also a director of the Company. In
January 2003, Mr. Schlecht entered into an agreement with the Company pursuant
to which he agreed to assign his membership interests in FNTC and remain as
manager of FNTC until completion of the funding, in exchange for the issuance of
100,000 shares of FuelNation common stock. The Company is not required to
provide any guarantees or other financial assurances to the funding entity

In July 2003 The company has entered into a stipulation for settlement with a
shareholder and has agreed to buy back the shares prior to November 15, 2003 in
a case entitled Richard Maddox vs. FuelNation Inc. (CASE#02-22492-CACE-25)
Broward County, Florida (17th Judicial Circuit.

                                       9
<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS/PLAN OF OPERATION

The following discussion should be read in conjunction with our unaudited
Financial Statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or on our behalf. We disclaim any obligation to update
forward looking statements.

OVERVIEW

FuelNation Inc. ("we," "us," "our," "FuelNation" or the "Company") , a
Florida-based development stage corporation which was incorporated in Florida in
1993, we are planning to build and develop a portfolio of real estate assets
with our concept of the "Super Store" of Travel Centers across America. We have
also been engaged in the development of providing real-time e-commerce
communications in petroleum marketing and energy services.

The Company's business model will be conducted through two divisions, "Super
Store" Travel Center Division ("Travel Center"), and the "Super" Petroleum
Marketing Division ("Petroleum Marketing").

The "Super Store" Travel Center Division. FuelNation plans to build the "Super
Store" of Travel Centers in the state of Florida and additional locations in key
states. We have focused our attention to the needs of the industry and our
location planning to the most populous areas in the state. The plans for the
first location currently consist of three phases of construction. Phase one will
provide for 40,000 sf of Travel Center, restaurant, food service, drivers lounge
and convenience store in one building. Also included in phase one on the
property is a 24 pump diesel fueling depot, 10 pump automotive fueling, truck
and car wash, 311 tractor trailer parking slots. Phase two and three will
provide two 190,000 sf buildings for a total of 380,000sf Travel Center and
Office, 200 room hotel and office center, 35,000 sf retail mall, 30,000 sf spa
and gym and a three story parking garage.

The site selected for the first FuelNation Travel Center is currently located in
an area that is overseen by a Community Redevelopment Agency (CRA). This
location was studied and selected as an ideal location in the "Final Report;
Commercial Vehicle Driver Survey, Truck Stop Terminal Facility Research
Project", dated March 1999. The site is approximately 5 miles west of Port
Everglades and Fort Lauderdale/Hollywood International Airport. The port has
unbeatable connections through the adjacent Fort Lauderdale/Hollywood
International Airport and the direct links with all of Florida's highway system
via I-595. Almost all gasoline, aviation and power plant fuel consumed in South
Florida enters through the seaport, which has reached its capacity.

We not only intend to cater to the traveling public we fully intend to offer our
products to the local community as well. The Travel Center will boast a fresh
farmers market, grocery store and open shop environment with local community
operators. There will be several full service and fast food restaurants, almost
every type of service needed for the transportation and tourism industry. Car
and truck washes and full service repair facilities for cars as well as
tractor-trailers. Complete medical, hair stylist, entertainment, clothing,
electronics, new truck sales, and most major transportation parts and warranty
representatives on site. Shuttles and limousine service will be available to and
from most of the major attractions and transportation hubs. Parking will be in
great abundance as well as hospitality with our 200-room hotel.

The founders of FuelNation have been working on the concept of the "Super Store"
of Travel Centers since 1999. The establishing of site selection, zoning
approvals, and governmental approvals has been a daunting task. The project has
been approved to receive the proceeds of $100 million in secured taxable revenue
notes The Company was required to raise monies to pay for closing costs and
issuance fees in an amount of approximately $5 million. The company originally
made application for $330 million in note offerings and was approved, but
decided to break it into smaller portions because of the difficulty in raising
the funds needed to close and the upfront costs to execute such an enormous
business.

The Travel Center project is on target to fund and break ground this year and
targeted to provide construction for the onsite fueling by end of year 2003. We
have been working diligently to satisfy all requirements to complete the
underwriting for the $100 million secured taxable revenue notes. As of the date
of this filing we have negotiated to start construction in three phases with the
first phase of $25,000,000 to begin the construction of the Davie, Florida
travel center. The final terms are still being negotiated between all parties.


                                       10
<PAGE>


There has been a tremendous difficulty in raising money to execute our complete
business plan during the past 2 years. We have been approached by several
lenders introducing financing proposals, which only addressed our short term,
not long term needs. We have placed all technology development on hold until we
are able to obtain financing. In light of all the changes in the economy, energy
markets, national security, stock and money markets we have been actively
positioning the company for these current and upcoming changes. We have
identified the ability to finance future growth and acquisitions with Secured
Taxable Revenue Notes for approved "Public Purpose Projects". Public Purpose
Projects means "any capital project which furthers the purposes of the
ordinance, whether real or personal property, including any building, land,
fixture, vehicle, equipment, facility, streets, transportation facilities,
street lighting, sidewalks, drainage, sewers, water and utility systems, power
facilities, community facilities, health facilities, recreational facilities,
security, public lodging facilities, educational facilities, etc.."

Our revised business plan and note financing application in the amount of $100
million allows us to integrate and execute our business plan using "Public
Purpose Projects" which create jobs, development, expansion, education and
additional revenue for municipalities. Our first "Public Purpose Project" is to
build the "Super Store" of Travel Centers starting in the state of Florida.
FuelNation will work jointly with local universities to provide on site
accredited studies and college credits for students and faculty that train at
our location. The professors will be assigned to key projects at our site, i.e.,
food and beverage, hotel and hospitality, chemical engineering, transportation
and marketing. The professors will work with graduate students and students in
part time positions to earn college credits and on the job training. The
relationship with the universities gives us wide selection of qualified
assistance and supervised training. It also gives additional assistance with the
development of our communications platform with the complete use of the
universities resources.

The "Super" Petroleum Marketing Division. We intend to consolidate several
petroleum marketers and automate their existing customer base with real time
e-commerce solutions to create a "Super" Petroleum Marketer. The first phase of
our expansion plan will be supplying fuel and offering our automation to
existing branded and unbranded sites for long established petroleum marketers.
The second phase will be aligning our e- commerce automation with transportation
lines to roll-out the FuelNation Brand and identity with unmatched e-commerce
and automation. The third phase will be to identify key assets in the petroleum
marketing industry and acquire them.

We have developed proprietary technology that allows us to provide fully
integrated services relating to the inventory, sales, distribution and financial
reporting functions in the fuel industry. Marketed under the service mark
R2R(SM) ("Rack to Retail"), this technology completely automates and streamlines
the data collection processes for centralization, retrieval and integration of
inventory, financial and accounting information in the fuel industry.

Our operations are conducted through strategic alliances, which principally are
engaged in advanced technology and services solutions for the petroleum
marketing industry, i.e., oil companies, marketers, transports, gas stations and
convenience stores worldwide, and the development of one of the world's most
integrated communications platform for the petroleum industry. We intend to use
Broadband that delivers data to remote stations at speeds reaching 45Mbps,
satellite technology, global positioning system (GPS) with real-time tracking
and path logging of delivery vehicles. We have developed the R2R(sm)
communications technology which allows multiple point of sales, tank monitors,
global positioning system, VSAT, wireless PDA devices, Internet phones,
automated teller machines, back office software, price signs and numerous other
equipment manufacturers to integrate and seamlessly exchange data in an open
architecture environment.

We believe that the value of our product is driven from many factors, including;
economical installation, customizable, rapid scalability, 24 hour help desk,
dependable hardware connection, no setup or programming at site, no equipment
purchases, centralized and scalable main frame database, automated polling and
populating of data from existing hardware, automated population of existing
software, open architecture programming, real time reporting and many more. Our
programmers have successfully written the programming code that communicates to
most of the top hardware and software suppliers for this industry. During the
past two years, we have installed our product for no charge at several
well-established leading companies during the development process. In exchange
for the companies working with us during our development process, our
programmers have been granted complete access to their existing management,
networks, supply chain, vendors, and service contractors for valuable industry
knowledge and guidance. All of this development and valuable industry knowledge
and guidance has led us to the introduction of our service offering and the
company's flagship product, a complete network management system from rack to
retail ("R2R(sm) that utilizes broadband and wireless technology. The remotely
connected system, accessible via any web enabled device, allows oil producers,
major oil companies, petroleum marketers, transports, convenience stores and
major franchises to collect and integrate data from several pieces of equipment
simultaneously, track deliveries with global positioning systems, forecast fuel
inventory needs, manage electronic safe deposits, track detailed retail sales,
automate rebates, enhance security and shrinkage controls, automate payroll
functions, monitor product costs and adjust pricing in "real-time." The R2R(sm)
solution is designed to increase profitability and reduce costs. We believe that
our advantage lies in the multiple solutions achieved through the utilization of
the non-proprietary programmable router which solves the hardware connectivity
issue with a broadband satellite link-up connected to the tank monitors,
point-of-sales cash registers, and many other data generating devices. The
result is a seamless solution enabling efficient economic controls without the
current manual administrative headaches.

The following information is intended to highlight developments in our
operations, to present our results of operations to date, our plan of operation,
to identify key trends affecting our business and to identify other factors
affecting our business for the six month periods ended June 30, 2003 and 2002.

                                       11
<PAGE>


Results of Operations

Comparison of Results of Operations for the six and three month periods ended
June 30, 2003 and 2002

We generated no revenues during the six and three month periods ended June 30,
2003 and 2002 and it is not anticipated that we will be able to generate any
revenues in the foreseeable future unless and until we finalize our bond
financing and begin building the travel center and marketing our technology to
petroleum marketers or otherwise acquire an existing entity which generates
revenues and profits. 2 Total operating expenses were $ 1,558,012 for the three
months ended June 30, 2003, compared to $ 1,312,043 for the three months ended
June 30, 2002. The expenses incurred during the three-month period ended June
30, 2003 arose primarily from salaries and wages ($85,714), professional and
consulting fees ($95,640), consulting fees-related party ($55,384) write down of
inventory ($499,749), loss on equipment deposit ($752,500) and other general and
administrative expenses ($31,415). These expenses increased in 2003 over the
same period in 2002, primarily due to inventory write down of $499,749 and loss
of equipment deposit of $752,500 in 2003, this was offset by reducing the
employment of staff to support the related technology which resulted in a
decrease in salaries and wages of $96,954 and reducing general and
administrative expenses which resulted in a decrease of $29,222. Non-Cash
Employee Compensation decreased by $370,374 and Non-Cash Consulting fees
decreased by $582,921 in 2003 compared with the same period in 2002.

Additionally, we incurred interest expense of $4,969 in 2003. As a result, we
incurred a net loss of $1,562,981 for the three months ended June 30, 2003,
compared to a Net Loss of $1,317,508 for three months ended June 30, 2002.

Total operating expenses were $ 1,782,099 for the six months ended June 30,
2003, compared to $ 1,732,842 for the six months ended June 30, 2002. The
expenses incurred during the six-month period ended June 30, 2003 arose
primarily from salaries and wages ($152,222), professional and consulting fees
($96,897), consulting fees-related party ($110,768) write down of inventory
($499,749), loss on equipment deposit ($752,500) and other general and
administrative expenses ($94,430). These expenses increased in 2003 over the
same period in 2002, primarily due to inventory write down of $499,749 and loss
of equipment deposit of $752,500 in 2003, this was offset by reducing the
employment of staff to support the related technology which resulted in a
decrease in salaries and wages of $218,617 and reducing general and
administrative expenses which resulted in a decrease of $24,057. Non-Cash
Employee Compensation decreased by $455,561 and Non- Cash Consulting fees
decreased by $582,921 in 2003 compared with the same period in 2002.

Additionally, we incurred interest expense of $6,512 in 2003. As a result, we
incurred a net loss of $1,788,611 for the six months ended June 30, 2003,
compared to a Net Loss of $1,746,740 for six months ended June 30, 2002.

Plan of Operation

Because we have not generated any revenues as of the date of this Report, we
hereby submit our Plan of Operation pursuant to the requirements of Regulation
SB, promulgated under the Securities Act of 1933, as amended.

Our objective is to be the leading "Super" Petroleum Marketer engaged in the
development of providing petroleum supply with e- commerce communications in
petroleum marketing and energy services and to build and develop a portfolio of
real estate assets with our concept of the "Super Store" of Travel Centers
across America.

The Company's business model will be conducted through two subsidiaries, "Super"
Petroleum Marketing Division ("Marketing Division"), and the "Super Store"
Travel Center Division ("Travel Center").

The "Super Store" Travel Center Division. FuelNation plans to build the "Super
Store" of Travel Centers in the state of Florida and additional locations in key
states. We have focused our attention to the needs of the industry and our
location planning to the most populous areas in the state. The plans for the
first location currently consist of three phases of construction. Phase one will
provide for 40,000 sf of Travel Center, restaurant, food service, drivers lounge
and convenience store in one building. Also included in phase one on the
property is a 24 pump diesel fueling depot, 10 pump automotive fueling, truck
and car wash, 311 tractor trailer parking slots. Phase two and three will
provide two 190,000 sf buildings for a total of 380,000sf Travel Center and
Office, 200 room hotel and office center, 35,000 sf retail mall, 30,000 sf spa
and gym and a three story parking garage. . The "Super" Petroleum Marketing
Division. We intend to consolidate petroleum marketers and automate their
existing customer base with real time e-commerce solutions. The first phase of
our expansion plan will be supplying fuel and offering our automation to
existing branded and unbranded sites for long established petroleum marketers.
The second phase will be aligning our e-commerce automation with transportation
lines to roll-out the FuelNation Brand and identity with unmatched e- commerce
and automation. The third phase will be to identify key assets in the petroleum
marketing industry and acquire them.

We not only intend to cater to the traveling public we fully intend to offer our
products to the local community as well. The Travel Center will boast a fresh
farmers market, grocery store and open shop environment with local community
operators. There will be several full service and fast food restaurants, almost
every type of service needed for the transportation and tourism industry. Car
and truck washes and full service repair facilities for cars as well as
tractor-trailers. Complete medical, hair stylist, entertainment, clothing,
electronics, new truck sales, and most major transportation parts and warranty
representatives on site. Shuttles and limousine service will be available to and
from most of the major attractions and transportation hubs.

                                       12
<PAGE>


We intend to finance these purchases with the issuance and sale of secured
taxable revenue notes. We have been negotiating the issuance of $100,000,000 of
secured taxable revenue notes. As of the date of this Report, we have
successfully negotiated approval for the issuance of $100,000,000 of secured
taxable revenue notes. We have negotiated to start construction in three phases
with the first phase of $25,000,000 to begin the construction of the Davie,
Florida travel center. The final terms are still being negotiated between all
parties

We have changed issuers for the bond offering because of the inability of the
prior lender to satisfy our requirements and investors concerns. We have paid
fees for the application, commitment and legal retainers in the amount of
$270,000 and are seeking a full refund of these funds from the prior issuer. The
new issuer for the bonds is a political body and one of the top bond issuers in
the state of Florida. We are in the process of finalizing details for the bond
issuance and the first phase of construction.

Our concept to build a "Super" Petroleum Marketer has been developed during our
live onsite testing and development period over the past two years. The industry
has not experienced a substantial consolidation at the Petroleum Marketer level
while missing the economies of scale from the consolidation process. Currently
there have been limited economical resources or the means to communicate with
several hundreds or even thousands of pieces of equipment without being cost
prohibitive. At FuelNation we have developed proprietary technology that allows
us to provide fully integrated services relating to the inventory, sales,
distribution and financial reporting functions in the fuel industry. Marketed
under the service mark R2R(SM) ("Rack to Retail"), this technology completely
automates and streamlines the data collection processes for centralization,
retrieval and integration of inventory, financial and accounting information in
the fuel industry.

The R2R(sm) technology is an inventory management system that allows multiple
point of sales, tank monitors, wireless PDA devices, Internet phones, automated
teller machines, back office software, price signs and numerous other equipment
manufacturers to integrate and seamlessly exchange data in an open architecture
environment without installing computer software. The R2R(sm) technology
includes a proprietary router box connected to an existing retail or wholesale
location, which automatically collects, integrates and distributes the data, in
various formats, to the customer at a centralized location. By utilizing this
technology, the pricing, monitoring of sales, inventory status and reordering of
fuel can be done remotely including through a remote apparatus such as a PDA. In
other words, from a distant location, an R2R(sm) customer can regularly monitor
fuel sales on a real-time basis as well as change the pricing at retail fuel
pumps to reflect current market conditions. Furthermore, the system enables the
automatic reordering of fuel based upon the actual volume of sales and remaining
quantity of fuel at the applicable pump.

The automated system serves as a significant mechanism for companies to monitor
their fuel sales, inventory, and costs. In addition, financial lenders can also
have access to the data in order to monitor the operations of their borrowers on
a real time basis. We expect to receive fees and/or royalty payments either on a
fixed basis per month or on a per gallon basis charge. We intend to license our
technology to service stations, truck stops and/or customers that are otherwise
involved in the distribution and sale of fuel.

We believe that our product offering is unique and is not available via any
other method. The industry is a very difficult market to penetrate. We
originally started marketing our system to the major oil companies and felt this
would give us the immediate market share and the vertical integration we
desired. During our sales initiatives we discovered the following:

The oil companies' main drive is gallons and market share. The oil companies
distribute their products through petroleum marketers, dealers and some company
owned stores. The oil companies require the petroleum marketers and the dealers
to use their credit card processors. This equipment for the credit card
processing is supplied through the oil company and paid by the petroleum
marketers and the dealers. The oil companies typically charge 3% processing fee
for the use of all credit cards on the network and offer their own branded
credit card processing for no charge. The majority of all of the credit card
processing is Visa and MasterCard and therefore the burden and costs are passed
down the food chain to the petroleum marketers and the dealers for the credit
card processing fees.

The reporting requirements of the industry are very labor intensive and the
burden is always passed down to the petroleum marketers and the dealers. New
equipment and programs are usually offered through the major oil companies to
the petroleum marketers and the dealers with a percentage of the offering always
being rebated back to the oil company. There are other alternative equipment and
service suppliers in the industry and they are limited on their entry to the
market by being approved and certified to operate on their credit-processing
network. Our approach is and will continue to be providing the industry with an
open architecture and shared information environment that allows entry to
virtually all equipment and service suppliers. Other industries have state of
the art communications and networks and first class accounting and reporting
packages. We believe the petroleum industry is behind the market by decades.

Our entry to the market is being focused on working with major petroleum
marketers and dealer networks through consolidation and automation. We have
discovered that when several petroleum marketers and dealers are very satisfied
with your products and services and they request the major oil companies to
approve our products and services, they typically get what they want. This
process is not fast, but it is very effective. The oil companies are starting to
follow the lead of petroleum marketers and dealer networks because they see the
efficiencies first hand. We feel confident the industry will start to make
significant changes to the manual processes and allow a more open environment
once they see others operating.

Given the magnitude of these fuel markets, we completed our B2B applications and
automating manual processes. We also intend to find one or more partners to
assist in retail sales of the "Super" Petroleum Marketer concept and
installation of our R2R system. There are also multiple advertising
opportunities that we intend to pursue, including the displaying of our logo at
automated locations and on fuel transports.


                                       13
<PAGE>


Sales Strategy

Our products and services will be marketed through direct and indirect channels.
We intend to accomplish our direct selling in several ways, including:

 - our web sites;
 - direct sales by our own staff and technology partners;
 - affiliate programs;
 - original equipment manufacturers; and - tradeshows.

For our indirect sales efforts, we will use independent petroleum marketer
resellers. Reseller organizations can offer all of our services. These third
party petroleum marketer sales organizations are already involved in marketing
to the petroleum industry. Those in the petroleum marketer reseller program
purchase our services at a discounted rate and then re-sell them to their
clients. They can either use us to bill their customers for these services or
invoice their customers under their own name.

For petroleum marketer resellers, we believe the key element is residual,
transaction-based income. Resellers that manage the entire transactions will
receive a per transaction fee, plus sign-up fees if the reseller uses our
suggested retail pricing. Many resellers actually charge higher prices when the
market will bear it. The use of petroleum marketer resellers allows us to
leverage our resources to maximize revenues. By working with companies as
resellers, we strategically develop an outside sales organization that already
has sound, existing relationships with merchants. These petroleum marketer
resellers recognize that income derived from our installation fees and recurring
transaction charges provide them with significant revenue potential. Most
competitors sell products using a direct sales force.

We will use a variety of marketing activities to increase market awareness of
our services and educate our target audience. In addition to building awareness
of our brand, our marketing activities focus on generating leads for our sales
efforts. To build awareness and attract new merchants we conduct marketing and
partnership programs including advertising, public relations activities,
referral programs, co-branded initiatives, virtual seminars and trade shows.

Our vertical integration strategy is to purchase existing petroleum marketers
and dealers in key distribution markets. We will focus upon the complete
automation of these companies and allow them to continue to operate and
consolidate additional marketers in their markets. This approach has been
received very favorably and we are in negotiations with several very large
marketers on this strategy. However, there can be no assurances that these
negotiations will result in our obtaining contracts, or if we obtain these
contracts, we will become profitable. If we acquire these entities, the
marketers will continue to operate their companies as wholly owned subsidiaries
of our Company and we will provide the high-speed networks and communications to
their existing facilities and equipment. Our current tests on petroleum
marketers to date have shown increases in EBIDTA approaching 30% with the
increased efficiencies in automating manual processes, less shrinkage and
improved buying power.

Data Centers and Network Access

Our data center in the United States is located at leased facilities at Echosat
in Lexington, Kentucky. A data center is a facility containing servers, modem
banks, network circuits and other physical equipment necessary to connect users
to the Internet. The data center has multiple levels of redundant connectivity
to the Internet, back-up power, fire suppression, seismic reinforcement and
security surveillance 24 hours a day, 7 days a week. The current base monthly
rent is $2,000 per month, on a month to month basis.

Our data center in Manama, Bahrain is located at leased facilities at the local
telephone company Batelco. We have suspended all operations in the country of
Bahrain until the company is properly capitalized. Our equipment is still
installed at the location in Bahrain and we have discontinued our lease in
Bahrain until further notice. Our director Shaikh Isa Mohammed Isa Alkhalifa, a
resident of Bahrain, was issued shares in 2002 to satisfy any obligations we may
have in the country of Bahrain for his guarantee.

The technology underlying our e-commerce and Business-to-Business transaction
services provides the following benefits:

Scalability. Our services allow us to deliver consistent quality of service as
transaction volumes grow, and to handle daily and seasonal peak periods. As a
result, we do not have to expand these areas of their transaction-processing
infrastructure as their businesses grow.

High reliability. Our systems are engineered to provide high reliability, and we
provide transaction processing and support 24 hours a day, 7 days a week.

Secure messaging. All communications between our system are facilitated by an
encrypted protocol.

Real-time responses. Because our services enable online e-commerce and
Business-to-Business transactions in real-time, clients can improve their level
of customer satisfaction and reduce their support costs by avoiding delayed
responses and minimizing the need for follow-up communications.

                                       14
<PAGE>


Product Development

Our Florida-based product development team was responsible for the design,
development, testing and release of our core software and services. We have a
well-defined software development methodology that we believe enables us to
deliver services that satisfy real business needs for the global market while
meeting commercial quality expectations. We emphasize quality assurance
throughout our software development lifecycle. We believe that a strong emphasis
placed on analysis, design and rapid prototyping early in the project lifecycle
reduces the number and costs of defects that may be found in later stages. Our
development methodology focuses on delivery of product to a global market,
enabling localization into multiple languages, multi-currency payment
processing, global fraud detection, and local regulatory compliance from a
single code base.

When appropriate, we utilize third parties to expand the capacity and technical
expertise of our internal product development organization. On occasion, we have
licensed third-party technology that we feel provides the strongest technical
alternative. We believe this approach shortens time-to- market without
compromising our competitive position, product quality or service.

Trends

The United States petroleum marketing industry is estimated at $134.2 billion
dollars for 1999, with an anticipated size of $204.8 billion dollars by 2005,
assuming a 7.3 percent growth rate in gas consumption over 10 years. The number
of retail fuel outlets in the U.S., which was approximately 182,600 in 1998, is
estimated at 250,000 by 2005. According to U.S. Government figures, the total
demand for oil will increase to 112 million barrels per day with prices
remaining steady at $28 per barrel in the year 2020.

Our product has been installed and operational at several well established
leading petroleum companies in the United States as well as Manama, Bahrain for
the past two years. The product has been proven to be very successful and
profitable for the petroleum marketers during our development and testing stage.
We have studied and surveyed existing and potential customers for a marketing
strategy.

There can be no assurance that any of our potential products and services can be
successfully marketed. Our technology has no historical results upon which to
forecast future operations. It is expected that business, operating results and
financial condition will be materially adversely affected if revenues do not
meet our projections.

These trends taken together create a picture of opportunity for our future
growth. We anticipate that the vertical integration strategy will bode well for
our future, as activity along the entire value chain should increase not just in
the domestic sense but globally as well. However, there can be no assurances
that this will occur.

Inflation

Inflation has not had a significant impact on our results of operations and is
not anticipated to have a significant negative impact in the foreseeable future.
However, there is no assurance that inflation will not have a material adverse
impact on our future results of operations.


Liquidity and Capital Resources

At June 30, 2003, we had a working capital deficit of $2,643,437. For the six
month period ended June 30, 2003, net cash used by operating activities was
$88,653. This was primarily attributable to a net loss for the period of
$1,788,611 and offset by increase of payables and liabilities of $ 421,975 and a
write -down of inventory of $499,749 and the loss on equipment deposit of
$752,000. The company intends to pay off its existing obligations in the
approximate amount of $2.9 million from the issuance and funding of $100,000,000
secured taxable revenue notes.

It is anticipated that we will, in all likelihood, sustain operating expenses
without corresponding revenues, at least until the end of 2003. There is no
assurance that we will achieve our expansion goals and the failure to achieve
such goals would have an adverse impact on us.

In April 2003 the former CEO and board members made arrangements to have a
standby letter of credit issued by a bank in the amount of $500,000 to secure a
loan in the amount of $328,000 with 5% interest and to guarantee performance and
payment of a consulting agreement in the amount of $150,000, both obligations
are due in 6 months. The loans have been secured by stock owned by the
affiliates and guarantees by the affiliates. The Company is currently
negotiating to have an additional standby letter of credit issued for another
$500,000 to secure additional loans to assist the company in completing the
secured taxable note offering. Our success is dependent upon our ability to
raise additional capital. As of the date of this Report, we have successfully
negotiated the commitment for the issuance of $100,000,000 of loans resulting
from the issuance of a special purpose entity of secured taxable revenue notes.
We have changed issuers for the bond offering because of the inability of the
prior lender to satisfy our requirements and investors concerns. We have paid
fees for the application, commitment and legal retainers in the amount of
$270,000 and are seeking a full refund of these funds from the prior issuer. The
new issuer for the bonds is a political body and one of the top bond issuers in
the state of Florida. We are in the process of finalizing details for the bond
issuance and the first phase of construction. There can be no assurance that the
letter of credit will be attained, that the bond funding will be completed, that
the Company will realize sufficient proceeds to complete the Travel Center or
that the Company will generate sufficient cash flow from operations to pay for
these obligations.

We are also in discussions with investment bankers and others to provide or
assist in providing additional financing. However, as of the date of this
Report, we do not have any written commitments for any additional financing
other than the issuance of the $100,000,000 secured taxable notes and the cost
of issuance and short fall letter of credit in the amount of approximately
$4,000,000 which is refundable from the proceeds of the note issue and the
additional letter of credit for $500,000, and no assurance can be given that we
will obtain any other additional financing. The failure to infuse any other
additional capital into our Company may affect our ability to fully implement
our business plan described herein.

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The current acquisitions in the petroleum marketing industry are on hold until
we have additional funding or alternative means of acquiring the companies.

Our Success is Dependent upon the Management of Growth. Successful
implementation of our business plan will expose us to increased competition,
greater overhead, marketing and support costs and other risks associated with
entry into new markets and solicitation of new customers. We face all risks
which are associated with any new business, such as under-capitalization, cash
flow problems, and personnel, financial and resource limitations, as well as
special risks associated with our proposed operations. To manage growth
effectively, our management will need to implement and continue to improve and
expand operational, financial and management information systems and to expand,
train, motivate and manage employees. Should we be unable to manage growth
effectively, our results of operations could be adversely affected.

Our success is subject to the completion of our taxable revenue note issue,
however, there can be no assurances that the Company will be successful in
acquiring additional capital or that such capital, if available, will be on
terms and conditions acceptable to the Company.

We are subject to competition. There are several thousand Petroleum Marketers
and approximately 4,500 travel plazas and truckstops, and many major oil
companies that operate company owned locations. Our travel centers will compete
with those in the immediate areas of our centers.

The leading B2B ASP providers offer technologies and services related to
procurement, supply-chain management, financial services, logistics, Electronic
Customer Relationship Management "eCRM", sell- side solutions, back-end
integration and enterprise resource planning ("ERP"). We anticipate either B2B
ASPs or existing oil companies, or a combination of the two, to scrutinize our
products, attempt to replicate their offering and compete directly with us.

Many companies that are competitors have longer operating histories,
substantially greater financial, technical, marketing or other resources, or
greater name recognition than we do. Our competitors may be able to respond more
quickly than we can to new or emerging technologies and changes in customer
requirements. Competition could seriously impede our ability to sell additional
services on terms favorable to us. Our potential competitors may develop and
market new technologies that render our existing or future services obsolete,
unmarketable or less competitive. Competitive pressures could reduce our market
share or require the reduction of the prices of our services, either of which
could materially and adversely affect our business, results of operations or
financial condition.

We Have Not Paid Dividends on our Common Stock and do not Anticipate the Payment
of Dividends in the Future. No dividends have been paid on our shares of Common
Stock and management does not anticipate the payment of cash dividends in the
foreseeable future. If operations become profitable, it is anticipated that, for
the foreseeable future, any income received there from would be devoted to
future operations and that cash dividends would not be paid to shareholders.

We Will Need Additional Personnel to Implement Our Business Plan. We believe
that it will be necessary to increase our permanent sales, marketing and
administrative staff in order to implement our business plan. Although we
believe that necessary additional personnel to staff us is available, there can
be no assurance that we will be successful in assembling an effective staff in a
timely manner, particularly as we face considerable competition from other
companies for such personnel. There can be no assurance that we will be able to
attract and retain additional qualified personnel, and any inability to do so
could have a material adverse affect on us.

Issuance of Future Shares May Dilute Investors Share Value. Our Articles of
Incorporation, as amended, authorizes the issuance of 100,000,000 Common Shares,
$.01 par value per share, and 5,000,000 Preferred Shares, $.01 par value per
share. As of the date of this Report, there are 2,293,031 shares of Common Stock
issued and outstanding. The future issuance of all or part of the remaining
authorized Common Stock may result in substantial dilution in the percentage of
Common Stock held by our then existing shareholders. Moreover, any Common Stock
issued in the future may be valued on an arbitrary basis by our Board of
Directors. The issuance of shares for future services or acquisitions or other
corporate actions may have the effect of diluting the value of the shares held
by investors, and might have an adverse effect on our trading market.

Our Common Stock is classified as a "Penny Stock," which has Adverse Effects.
The Securities and Exchange Commission has adopted Rule 15g-9, which established
the definition of a "penny stock," for purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules require: (i)
that a broker or dealer approve a person's account for transactions in penny
stocks; and (ii) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and quantity of the
penny stock to be purchased. In order to approve a person's account for
transactions in penny stocks, the broker or dealer must (i) obtain financial
information and investment experience and objectives of the person; and (ii)
make a reasonable determination that the transactions in penny stocks are
suitable for that person and that person has sufficient knowledge and experience
in financial matters to be capable of evaluating the risks of transactions in
penny stocks. The broker or dealer must also deliver, prior to any transaction
in a penny stock, a disclosure schedule prepared by the Commission relating to
the penny stock market, which, in highlight form, (i) sets forth the basis on
which the broker or dealer made the suitability determination; and (ii) that the
broker or dealer received a signed, written agreement from the investor prior to
the transaction. Disclosure also has to be made about the risks of investing in
penny stock in both public offering and in secondary trading, and about

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commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to
an investor in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.

The foregoing required penny stock restrictions currently apply to our Common
Stock. If our Common Stock is ever approved for listing on a national stock
exchange, it would have certain price and volume information provided on a
current and continuing basis. While it is management's intention to have our
Common Stock approved for trading on a national stock exchange in the future, we
currently do not qualify under the various listing criteria for such listing.
There can be no assurances that any of our securities will qualify for exemption
from these restrictions in the future. Because our Common Stock is subject to
the rules on penny stocks, the market liquidity for our Common Stock has been
severely adversely affected.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management of the Company to
make assumptions, estimates and judgments that affect the amounts reported in
the financial statements, including the notes thereto, and related disclosures
of commitments and contingencies, if any. The Company considers its critical
accounting policies to be those that require the more significant judgments and
estimates in the preparation of the Company's financial statements, including
the following: impairment of long-lived assets; capitalized technology costs and
accounting for expenses in connection with stock issuances, stock options and
warrants. Management relies on historical experience and on other assumptions
believed to be reasonable under the circumstances in making its judgment and
estimates. Actual results could differ materially from those estimates. There
have been no significant changes in the assumptions, estimates and judgments in
the preparation of these financial statements from the assumptions, estimates
and judgments used in the preparation of the Company's prior years audited
financial statements.

ITEM 3. CONTROLS AND PROCEDURES.

DISCLOSURE CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and participation of the Company's Chief
Executive Officer and acting Chief Financial Officer (the "Officers") of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures pursuant to Securities Exchange Act Rule 13a-14. Based upon that
evaluation, the Officers concluded that the Company's disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Company required to be included in the Company's periodic SEC
filings, including this report.

INTERNAL CONTROLS

There were no significant changes made in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation.

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

On July 25, 2002 the Company was served with a civil action from one of the four
individual note holders, Peter Gianoukas, in the amount of $11,541 principal
amount. Further details on the notes are given in the Liquidity and Capital
Resources section of this report. The note holder claimed we were in default on
the note and demanded payment. The note was due on September 30, 2002 and not
yet been paid. As of the date of this filing Mr. Gianoukas received a final
default judgment in the state of New Jersey. The Company will defend this suit
with all remedies of the law. As of the date of this filing we are working
diligently to resolve the default.

On December 2, 2002 in a case entitled Richard Maddox vs. FuelNation Inc.
(CASE#02-22492-CACE-25) Broward County, Florida (17th Judicial Circuit), the
Company was named as a defendant by a shareholder in a securities-related suit
for money damages in the amount of $25,000 based on allegations of unjust
enrichment. The company has entered into a stipulation for settlement with the
shareholder and has agreed to buy back the shares prior to November 15, 2003.

On January 17, 2003 the Company was served with a civil suit from Andrew Telsey
vs. FuelNation Inc. (Case# 03-001019-CACE-11) Broward County, Florida (17th
Judicial Circuit). The Company was named as defendant in a collection suit for
attorneys fees in the amount of $24,197.93 based on allegations of breach of
agreement and quantum merit. Responsive pleadings in defense of the claim have
been filed, including affirmative defenses. The parties are now engaged in
pre-trial discovery with no trial date scheduled. The Company deems the lawsuit
frivolous and without merit and is pondering the filing of a counterclaim.

On February 28, 2003 the Company was served with a civil suit from Exodus
Resources, Inc. vs FuelNation Inc. and Chris Salmonson (Case# 03-5178-CA-06)
Dade County, Florida (11th Judicial Circuit). The Company and former CEO were
named as co-defendants, jointly and severally, by a shareholder in a securities

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related suit for money damages exceeding $15,000.00 (plus special damages) based
on allegations of breach of fiduciary duty and fraud. Responsive pleadings in
defense of the claim have been filed, including affirmative defenses. The
parties are now engaged in pre-trial discovery with no trial date scheduled. The
Company deems the lawsuit frivolous and without merit and is pondering the
filing of a counterclaim.

In April 2003, our independent auditors received a request from the SEC seeking
the production of documents in connection with an informal investigation. The
Company has not received the notice The Company cannot predict when this
investigation will be completed, nor can it predict what the results of this
investigation may be. It is possible that the Company will be required to pay
fines, consent to injunctions on future conduct, or suffer other penalties, each
of which could have a material adverse effect on its business. The Company
cannot assure you that the effects and result of this investigation will not be
material and adverse to its business, financial condition and liquidity.

ITEM 2. CHANGES IN SECURITIES. - NONE

ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE

ITEM 5. OTHER INFORMATION

On August 15, 2002 the then CEO and President of the company, Chris Salmonson,
was arrested by the Sheriff's Office in Broward County, Florida and was held on
charges of grand theft relating to a real estate transaction, that failed, with
a church. It is alleged that he received $1,670,000 from the Church in exchange
for real property that was never conveyed to the Church. The CEO and President
denies that he has committed any offense or violation of law and has assured the
Company that he will vigorously defend himself against the charges made against
him. Mr. Salmonson has retained counsel with respect to these matters, and
counsel is working toward his defense.

Mr. Salmonson stepped down from his management role as CEO and President until
the allegations against him are settled. The board of directors has reviewed key
people to assist with the management and funding responsibilities and agreed in
principal to a successor CEO and President subject to a formal agreement being
signed with the successor CEO and President and the appropriate actions being
adopted by the Company. Chris Salmonson has agreed to stay on as a consultant
and guide the Company through on the funding of the secured taxable revenue
notes.

During the month of September 2002, the company was required to pay $65,000 on a
60-day demand note and resulted in the lender, Richard Gladstone, defaulting
against the collateral of 26,680 restricted common shares of FuelNation stock
pledged by an affiliate, Fuel America. As of December 31, 2002 the Company has
replaced these shares to the affiliate. The collateral has a restrictive legend
and is subject to all rules as may be imposed by Rule 144 of the Securities Act
of 1933, as amended. The company is waiting for confirmation and written
verification from the lender of the total proceeds they received on the
securities to satisfy the obligation and to see if any additional funds are
owed.

During September 2002 the company was required to pay $100,000 on a 60-day
demand note, and resulted in the lender, defaulting against the collateral of
175,717 restricted common shares of FuelNation stock pledged by an affiliate,
Fuel America. As of December 31, 2002 the Company has replaced these shares to
the affiliate. The collateral has a restrictive legend and is subject to all
rules as may be imposed by Rule 144 of the Securities Act of 1933, as amended.
The company is waiting for confirmation and written verification from the lender
of the total proceeds they received on the securities to satisfy the obligation
and to see if any additional funds are owed.

The Company is in discussions with certain debt holders and vendors to convert
their indebtedness into common equity of the Company. It is the intention of the
Company to negotiate most of the outstanding indebtedness into common equity of
the Company and thereby relieving any burden of fund raising for operations or
vendor supplies.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -

(a) Exhibits -

31.1 CHIEF EXECUTIVE OFFICER CERTIFICATION

32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
     SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(b) Reports on Form 8-K

(1) January 27, 2003.


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                           SIGNATURES

Pursuant to the requirements of Section 12 of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly
authorized.

                        FUELNATION, INC.
                          (Registrant)

                  Dated: September 23, 2003,

                    By: /s/ Charles Brodzki
                    --------------------------
                    Charles Brodzki,
                    President


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