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

                                   FORM 10-QSB


                             Quarterly Report Under
                       the Securities Exchange Act of 1934

                        For Quarter Ended: June 30, 2002

                         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 August 14, 2002 was 222,781,004 shares.

<PAGE>

                                  FUELNATION INC.
                           (A Development Stage Company)
                                   BALANCE SHEET
                                   June 30, 2002
                                    (Unaudited)


                                       ASSETS
                                       ------
<TABLE>
<CAPTION>

<S>                                                                    <C>
CURRENT ASSETS:
   Cash                                                                $        991
   Inventory                                                                560,339
   Other                                                                      1,580
                                                                       ------------
Total Current Assets                                                        562,910
                                                                       ------------

FIXED ASSETS:
   Office Furniture and Equipment and Computer Systems, net of
     accumulated depreciation of $94,896                                    151,783
                                                                       ------------

OTHER ASSETS:
   Deposits on Equipment                                                    752,500
   Technology                                                             1,581,747
                                                                       ------------
Total Other Assets                                                        2,334,247
                                                                       ------------

Total  Assets                                                          $  3,048,940
                                                                       ============

                      LIABILITIES AND STOCKHOLDERS' [DEFICIT]
                      ---------------------------------------

CURRENT LIABILITIES:
   Accounts payable                                                    $    586,347
   Accrued Liabilities                                                      276,881
   Payroll and Taxes Payable                                                539,713
   Convertible Debt, net of unamortized discount of $7,227                   28,322
   Due to Affiliates                                                        457,118
   Other Payables                                                           149,500
                                                                       ------------

Total Current Liabilities                                                 2,037,881
                                                                       ------------

Commitments and Contingencies                                                    --
                                                                       ------------

Common Stock Subject to Repurchase, 8,566,113 Shares Issued and
Outstanding at June 30, 2002                                              3,547,973
                                                                       ------------

STOCKHOLDERS' [DEFICIT]:

   Preferred Stock, $.01 par value, 20,000,000 shares
      authorized; none issued and outstanding                                    --
   Common Stock, $.01 par value, 350,000,000 shares
      authorized; 202,214,891 issued and outstanding at June 30,2002      2,022,147
   Additional paid-in capital                                            26,629,756
   (Deficit) Accumulated in the Development Stage                       (31,188,817)
                                                                       ------------
Total Stockholders' [Deficit]                                            (2,536,914)
                                                                       ------------

Total Liabilities and Stockholders' [Deficit]                          $  3,048,940
                                                                       ============
</TABLE>


                             See Accompanying Notes


                                                                               2
<PAGE>

                                         FUELNATION INC.
                                  (A Development Stage Company)
                                    STATEMENTS OF OPERATIONS
                                 SIX MONTHS ENDED JUNE 30, 2002
                                           (Unaudited)

<TABLE>
<CAPTION>
                                                   For the Six Months Ended
                                                           June 30,              Accumulative in
                                                ------------------------------   the Development
                                                     2002            2001             Stage
                                                -------------    -------------    -------------

<S>                                             <C>              <C>              <C>
Revenue                                         $          --    $          --    $          --
                                                -------------    -------------    -------------

Operating expenses:
   Salaries and wages including related taxes         370,839          224,569        1,192,859
   Consulting fees                                     38,934                            68,368
   Consulting fees - related party                                                      221,162
   Legal and professional                             141,032          123,961          751,841
   Marketing and promotion                                             110,817          406,567
   Rent - related party                                                 18,825           45,387
   Depreciation                                        25,068           54,848           94,896
   Other general and administrative expenses          118,487           72,633          577,169
   Research and development cost                                                         10,000
   Non - Cash Consulting fees                         320,000       12,620,422       16,598,718
   Non - Cash Consulting fees - related party                        3,585,000        3,585,000
   Non - Cash financing costs                                                            92,956
   Non - Cash Employee Compensation                   458,066        6,212,966        6,826,032
                                                -------------    -------------    -------------
Total operating expenses                            1,472,426       23,024,041       30,470,955
                                                -------------    -------------    -------------

Operating Loss                                     (1,472,426)     (23,024,041)     (30,470,955)

Other Income (Expense):
   Other (Expense) Income                               2,983                          (691,999)
   Interest expense                                   (16,881)          (1,557)         (25,863)
                                                -------------    -------------    -------------
Total other (expense), net                            (13,898)          (1,557)        (717,862)
                                                -------------    -------------    -------------

Net Loss                                        $  (1,486,324)   $ (23,025,598)   $ (31,188,817)
                                                =============    =============    =============

Basic and Diluted Net Loss per Common Share     $       (0.01)   $       (0.15)
                                                =============    =============

Basic and Diluted Weighted Average Common
Shares Outstanding                                189,767,703      157,288,280
                                                =============    =============
</TABLE>


                             See Accompanying Notes


                                                                               3
<PAGE>

                                         FUELNATION INC.
                                  (A Development Stage Company)
                                    STATEMENTS OF OPERATIONS
                                THREE MONTHS ENDED JUNE 30, 2002
                                           (Unaudited)

<TABLE>
<CAPTION>

                                                 For the Three Months Ended
                                                           June 30,              Accumulative in
                                                ------------------------------   the Development
                                                     2002            2001             Stage
                                                -------------    -------------    -------------

<S>                                             <C>              <C>              <C>
Revenue                                         $          --    $          --    $          --
                                                -------------    -------------    -------------

Operating expenses:
   Salaries and wages including related taxes         182,668          131,733        1,192,859
   Consulting fees                                     19,478                            68,368
   Consulting fees - related party                                                      221,162
   Legal and professional                              74,722          (11,356)         751,841
   Marketing and promotion                                              68,937          406,567
   Rent - related party                                                  9,412           45,387
   Depreciation                                        21,243           27,423           94,896
   Other general and administrative expenses           60,637          (45,518)         577,169
   Research and development cost                                                         10,000
   Non - Cash Consulting fees                         320,000        3,419,542       16,598,718
   Non - Cash Consulting fees - related party                          600,000        3,585,000
   Non - Cash financing costs                                                            92,956
   Non - Cash Employee Compensation                   370,373        6,212,966        6,826,032
                                                -------------    -------------    -------------
Total operating expenses                            1,049,121       10,413,139       30,470,955
                                                -------------    -------------    -------------

Operating Loss                                     (1,049,121)     (10,413,139)     (30,470,955)

Other Income (Expense):
   Other (Expense) Income                               2,983                          (691,999)
   Interest expense                                    (8,441)            (249)         (25,863)
                                                -------------    -------------    -------------
Total other (expense), net                             (5,458)            (249)        (717,862)
                                                -------------    -------------    -------------

Net Loss                                        $  (1,054,579)   $ (10,413,388)   $ (31,188,817)
                                                =============    =============    =============

Basic and Diluted Net Loss per Common Share     $       (0.01)   $       (0.07)
                                                =============    =============

Basic and Diluted Weighted Average Common
Shares Outstanding                                199,503,966      159,609,405
                                                =============    =============
</TABLE>


                             See Accompanying Notes


                                                                               4
<PAGE>
<TABLE>
<CAPTION>

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

                                         FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                                           (Unaudited)
                                                                                                                    Cumulative
                                                                                                                  the Development
                                                                                       2002            2001            Stage
                                                                                   ------------    ------------    ------------
<S>                                                                                <C>             <C>             <C>
Cash Flows from Operating Activities:
   Net loss                                                                        $ (1,486,324)   $(23,025,598)   $(31,188,817)
   Adjustments to reconcile net loss to net cash provided by
      (used) in operating activities:
         Depreciation                                                                    25,068          54,848          94,896
         Non- Cash Employee Compensation                                                458,066       6,212,966       6,826,032
         Non- Cash Consulting Fees                                                      320,000      12,620,422      16,598,718
         Non- Cash  Consulting Fees -Related Party                                                    3,585,000       3,585,000
         Non- Cash Financing Costs                                                                                       92,956
        Write- Down of Investments                                                                                      657,686
         Other                                                                                                           32,500
        Amortization of Discount on Convertible Debt                                     15,262              --          15,262
                                                                                                                             --
         Changes in Assets and Liabilities:
         Inventory                                                                           --          (6,717)       (560,339)
         Due from Escrow Accounts                                                                                       (45,000)
         Due from Affiliates                                                            109,919          57,854         414,599
         Other                                                                           33,048         (13,489)         41,753
Increase [Decrease] in :
         Accounts Payable                                                                51,244         319,396         451,679
         Accrued Liabilites                                                              42,072         277,631         262,973
         Payroll and Taxes Payable                                                      182,868          55,722         707,295
                                                                                   ------------    ------------    ------------

                  Net cash provided by (used) in operating activities                  (248,777)        138,035      (2,012,807)
                                                                                   ------------    ------------    ------------

Cash Flows from Investing Activities:
   Payments for Technology                                                                   --        (258,228)       (544,903)
   Payment for Fixed Assets                                                              (2,667)         (9,173)       (246,680)
  Advances Toward Pending Acquisition                                                                                  (402,724)
  Cash Received in Acquisition                                                               --              --           1,109
                                                                                   ------------    ------------    ------------
                  Net cash used in investing activities                                  (2,667)       (267,401)     (1,193,198)
                                                                                   ------------    ------------    ------------

Cash Flows from Financing Activities:
   Proceeds from issuance of common stock                                               110,000         116,500       3,371,608
   Proceeds from Issuance of Convertible Debt                                                                            35,953
   Payment of Loans Payable                                                                                            (100,000)
   Debt Restructuring                                                                                                  (255,804)
   Increase in loan to officers and stockholders                                        140,239              --         155,239
                                                                                   ------------    ------------    ------------
                  Net cash provided by financing activities                             250,239         116,500       3,206,996
                                                                                   ------------    ------------    ------------


Net (Decrease) Increase in Cash                                                          (1,205)        (12,866)            991

Cash, Beginning of Period                                                                 2,196          13,198              --
                                                                                   ------------    ------------    ------------

Cash, End of Period                                                                $        991    $        332    $        991
                                                                                   ============    ============    ------------

Supplemental Disclosure of Cash Flow Information:
   Cash paid during the period for interest:                                       $      1,546    $      1,557    $      2,854
                                                                                   ============    ============    ============
   Cash paid during the period for Income Taxes:                                   $         --    $         --    $         --
                                                                                   ============    ============    ============

Supplemental Schedule of Non Cash Investing and Financing Activities:

During the Six Month Period Ended June 30, 2002:
------------------------------------------------
Options to purchase 1,252,761 shares of common stock were excercised by a
officer of the company and the amount of $ 12,527 was offset against the loan
to officers and stockholders

The Company entered into two consulting agrements and issued a total of
8,000,000 shares of the Company's common stock for services. Accordingly a
non-cash expense of $320,000 was recorded which was the fair value of the common
stock at the time of issuance

Options to purchase 16,758,232 shares of common stock were excercised by the CEO
and employees of the Company at an exercise price of $.01 per share as
consideration for accrued compensation owed. The Company incurred a non-cash
employee expense of $370,373

During the Six Month Period Ended June 30, 2001:
-----------------------------------------------
The Company issued the following stock options:
1,500,000 shares of common stock for consulting services                           $  3,585,000
15,930,683 shares of common stock for  employee compensation                       $  6,212,966

The Company, through its CEO, pledged shares of common stock to be issued for
various consulting services. The Company recorded a non-cash charge to expense
of $ 9,200,880 which was equal to the fair value of such shares at the time they
were pledged. Such shares were not issued as of June 30,2001 and the total
amount of $ 9,200,880 was credited to additional paid-in capital

The Company issued 4,500,000 shares of common stock for:
                                                           Equipment deposits      $    752,500
                                                                   Technology           590,000
                                                        Consulting agreements           100,000
                                                                                   ------------
                                                                                   $  1,442,500
                                                                                   ============
The Company issued 300,000 shares of common stock for the payment of
professional fees valued at $203,500.

The Company issued 2,000,000 shares of common stock and a related party
transferred shares of Company common stock for consulting costs of $3,149,375.
The amount of $3,149,375 was recorded as additional paid in capital
</TABLE>


                             See Accompanying Notes


                                                                               5
<PAGE>

                                     PART I

ITEM 1.  FINANCIAL STATEMENTS.

Our unaudited financial statements for the six month periods ended June 30, 2002
and 2001 are attached hereto.

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") is a
Florida-based development stage corporation engaged in the development of
providing real-time e-commerce communications and energy services. 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 worlds 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 were incorporated under the laws of the state of Florida on July 6, 1993
under the name "International Pizza Corporation." We have had two other names
and business plans since our incorporation, including QPQ Corporation and
Regenesis Holdings, Inc. We changed our name to the current name in October 2000
and adopted the business plan described under "Plan of Operation" hereinbelow.
In conjunction with our most recent name change, in October 2000 Triad
Petroleum, LLC ("Triad") and Triad's owners as a group, acquired 96% interest in
our company pursuant to the terms of a Share Sale and Contribution Agreement in
exchange for the assignment of all of the rights, title, interest, marketing
rights, patent rights, royalty rights, and any other rights in the Intellectual
Property and technology, and any related trademarks and service marks (or
applications made thereby) Triad may have had with regard to said Intellectual
Property.



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, 2002 and 2001.

Results of Operations

Comparison of Results of Operations for the six month  periods ended June 30,
2002 and 2001

                                                                               6
<PAGE>

We generated no revenues during the six months periods ended June 30, 2002 and
2001 and it is not anticipated that we will be able to generate any revenues in
the foreseeable future unless and until we begin marketing our technology or
otherwise acquire an existing entity which generates revenues and profits.

Total operating expenses were $1,472,426 for the six months ended June 30, 2002,
compared to$23,024,041 for the six months ended June 30, 2001. The expenses
incurred during the six month period ended June 30, 2002 arose primarily from
salaries and wages ($370,839), professional and consulting fees ($179,966),
non-cash consulting fees ($320,000), non-cash employee compensation ($458,066)
and other general and administrative expenses ($118,487). These expenses
decreased in 2002 over the same period in 2001 by reducing the use of outside
consultants which resulted in a decrease in non- cash consulting fees of
$15,885,422. Non-cash employee compensation decreased by $5,754,900 in 2002
compared with the same period in 2001. This was offset by an increase in
salaries and wages of $146,270 due to employment of additional staff to support
the related technology. Additionally, we incurred interest expense of $16,881 in
2002. As a result, we incurred a net loss of $1,486,324 for the six months ended
June 30, 2002.

Total operating expenses were $1,049,121 for the three months ended June 30,
2002, compared to $10,413,139 for the three months ended June 2001. The expenses
incurred during the three month period ended June 2002 arose primarily from
salaries and wages ($182,668), professional and consulting fees ($94,200),
non-cash consulting fees ($320,000), non-cash employee compensation($370,373)
and other general and administrative expenses ($60,637). These expenses
decreased in 2002 over the same period in 2001 by reducing the use of outside
consultants which resulted in a decrease in non- cash consulting fees of
$3,699,542. Non-cash employee compensation decreased by $5,842,593 in 2002
compared with the same period for 2001.Additionally , we incurred interest
expense of $8,441 in 2002. As a result, we incurred a net loss of $1,049,121 for
the three months ended June 30, 2002.

We had working capital deficit of $1,474,971 as of June 30, 2002 and a deficit
accumulated during our development stage thus far of approximately $31.2 million
as of June 30, 2002. The Company's ability to meet its future obligations in
relation to the orderly payment of its recurring obligations on a current basis
is totally dependent on its ability to attain a profitable level of operations;
receive required working capital advances from the Company's shareholders or
obtain capital from outside sources.

Plan of Operation

Our objective is to be the leading worldwide provider of real- time e-commerce
and business-to-business communications in the petroleum marketing industry. Our
vertical integration strategy is to purchase existing petroleum marketers,
transport companies, dealers and related facilities in key distribution markets.

We intend to finance these purchases by raising additional equity through
private placements and equity financing through an equity line of credit.
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 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.

                                                                               7
<PAGE>

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 and as such
we feel we have accomplished major milestones in the industry to date. 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. 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 are currently focusing on B2B
applications and automating manual processes. We also intend to find one or more
partners to assist in retail sales of the 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.

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 resellers. Reseller
organizations can offer all of our services. These third party sales
organizations are either already involved in marketing to the petroleum
industry. Those in the 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 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
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 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.


                                                                               8
<PAGE>

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, 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 the Middle East is currently located at leased facilities at
BATELCO in Manama Bahrain. 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 $7,000 per month, on a month to month basis.

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.



Product Development

Our Florida-based product development team is 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.


                                                                               9
<PAGE>

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.

Manufacturing

We do not have the capacity to manufacture the router devices and have used
contract manufacturers for the devices made to date. For the foreseeable future,
we intend to continue to use contract manufacturers for the router device. We
believe that there are multiple vendors and manufacturers available and that we
will not rely on any one source.

Intellectual Property

Our success depends upon our proprietary technology. We rely on a combination of
patent, copyright, trademark and trade secret rights, confidentiality procedures
and licensing arrangements to establish and protect our proprietary rights.

As part of our confidentiality procedures, we generally enter into
non-disclosure agreements with our employees, distributors, and corporate
partners and into license agreements with respect to our software, documentation
and other proprietary information. Despite these precautions, third parties
could reverse engineer, copy or otherwise obtain our technology without
authorization, or develop similar technology independently. While we police the
use of our services and technology through online monitoring and functions
designed into our products, an unauthorized third-party may nevertheless gain
unauthorized access to our services or pirate our software. We are unable to
determine the extent to which piracy of our intellectual property or software
exists. Software piracy is a prevalent problem in our industry. Effective
protection of intellectual property rights may be unavailable or limited in
foreign countries. We cannot assure you that the protection of our proprietary
rights will be adequate or that our competitors will not independently develop
similar technology, duplicate our services or design around any intellectual
property rights we hold.

Liquidity and Capital Resources

At June 30, 2002, we had $991 in cash and working capital deficit of $1,474,971.
For the six month period ended June 30, 2002, net cash used by operating
activities was $248,777. This was primarily attributable to a net loss for the
period of $1,486,324 and offset by increase of payables and liabilities of $
276,183, expenses paid on behalf of the Company by an affiliated Company of
$109,919, non- cash consulting expense of $320,000 and non-cash employee
compensation of $458,066 arising from stock options granted to an officer of the
company.

Our ability to meet our future obligations in relation to the orderly payment of
our recurring obligations on a current basis is totally dependent on our ability
to commence generating revenues and attain a profitable level of operations,
receive required working capital advances from our shareholders or obtain
capital from outside sources.

During the six months ended June 30, 2002 cash provided by financing activities
was $250,239 which comprised of the sale of common stock for $110,000 and
$152,766 borrowed from Fuel America LLC ["Fuel America"], an entity controlled
by our Chairman of the Board/Chief Executive Officer, Christopher R. Salmonson.
In February 2002, Mr.Salmonson exercised options to purchase 1,252,761 shares of
our common stock at an exercise price of $.01 per share. The proceeds of $12,527
were used to reduce the amount due to Fuel America. At June 30, 2002,the balance
owed Fuel America was $347,199.Currently, there are no interest repayment terms
for the debt and it is treated as if due on demand.

In October 2001, we borrowed approximately $36,000 from four(4)individuals and
issued 9% convertible subordinated promissory notes, which are due by September
30, 2002 and are convertible into 258,654 shares of our common stock, at a rate
of one share of common stock for each $0.139 principal amount of notes.
Additionally, we issued stock purchase warrants to the noteholders, which
entitled these noteholders to purchase 517,309 shares of our common stock at an
exercise price of approximately $.15 per share. The warrants were issued at
twice the conversion rate of our common stock (two warrants for each $0.139
principal amount of notes).The notes are shown net of a discount of
approximately $30,000 which represents the fair value assigned to the warrants
that were issued. The discount is being amortized over the life of the
debt.Amortization amounted to approximately $15,262 for the six months ended
June 30,2002 and is charged to interest expense. Unamortized discount at June
30,2002 is approximately $7,227.


                                                                              10
<PAGE>

We have primarily funded our payroll costs through borrowing from related
parties. Payroll taxes have become delinquent since the second quarter of 2001.
These liabilities, which include penalties and interest through June 30, 2002,
amount to $539,713. Penalties (to the maximum limits) and interest will accrue
on such payroll tax liabilities, as well as additional payroll tax liabilities
incurred subsequent to June 30, 2002, until paid. Mr. Salmonson has deferred
payment of approximately $46,153 of his salary as of June 30, 2002.

Additional financings will be required in order to allow us to implement our
business plan described herein. Our success is dependent upon our ability to
raise additional capital. As of the date of this Report, we have been
negotiating the issuance of $330,000,000 of Bonds. We have agreed to issue the
bonds in three series A, B, C, totaling $330 million dollars. FuelNation is
responsible to pay a cost of issuance and shortfall letter of credit fee in the
amount of $10,500,000 dollars. H&N LLC a fund based in Portland, Oregon will
provide the shortfall letter of credit and the cost of issuance in the amount of
$3,500,000 for the first Series A Bond. Shaikh Isa Mohammed Isa Alkhalifa will
provide the shortfall letter of credit and the cost of issuance in the amount of
$7 million dollars Series B and Series C bond. The company is expecting to get a
firm commitment for the bond funding in the month of August 2002 and funding by
the first of November 2002 from the bond proceeds. The failure to infuse
additional capital into our Company may force management to curtail marketing
expenditures and product introductions, which may affect our ability to fully
implement our business plan described herein.

We have a signed letter of intent with one of the largest southeast petroleum
marketer's since January 9, 2002 to purchase the marketer for $28,500,000 and
the assumption of approximately $40 million dollars of liabilities. The first
acquisition will provide FuelNation with approximately $200 million of sales and
$14 million of EBIDTA. However, as of the date of this Report, until the bond
funding is complete there will be no definitive agreement between us and any
third party and there can be no assurances that such an agreement will be
reached in the future.

We intend to continue our discussions with investment bankers and others to
provide or assist in providing additional financing. However, as of the date of
this Report, the only direction for financing is directed toward the bond
funding, and no assurance can be given that we will obtain any such financing.


                                                                              11
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

In the second quarter of 2002, the Company received a default judgment in the
amount of $104,700 plus interest in favor of Penton Media, Inc . The Company
plans to negotiate a payment plan for the amount owed.

On July 25, 2002 the company was served with a civil action from one of the four
(4) individual note holders, Peter Gianoukas, in the amount of $11,541.00
principal amount. Further details on the notes are given in the Liquidity and
Capital Resources section of this report. The note holder claims we are in
default on the note and has demanded payment. All note holders have been mailed
their interest checks and have cashed the interest checks, excluding Mr. Peter
Gianoukas, which refuses to cash his interest check and sue The Company. The
note becomes due on September 30, 2002 and the company intends to pay back the
principal amount when due. The Company believes the notes are current and will
defend this suit with all remedies of the law.

On July 30, 2002 The Company was served with a civil suit from CLX & Associates,
Inc., attention Robert Weidenbaum claiming FuelNation owes them $140,000 worth
of stock. FuelNation signed a consulting agreement in March 2002 under the
premises that CLX & Associates, Inc was a public relations firm and they would
assist the company. The Company intends to defend this suit with all remedies of
the law.


ITEM 2.  CHANGES IN SECURITIES.

In February 2002, our CEO, Christopher Salmonson, exercised options to purchase
1,252,761 shares of our common stock at an exercise price of $.01 per share.

In May 2002, 16,758,232 options were granted to purchase shares of Company
common stock to the CEO and employees of the Company at an option price of $.01
per share as consideration for accrued compensation owed .The relevant shares
were registered as part of an S-8 registration statement filed with the SEC. The
Company incurred a non-cash charge to operations of $370,373. These options were
simultaneously exercised in May 2002.

During the second quarter of 2002,we issued 8,000,000 shares of our common stock
in exchange for consulting services. These shares were valued at $320,000. The
relevant shares were registered as part of an S-8 registration statement filed
with the SEC.

During the second quarter of 2002, 5,500,000 shares of our common stock were
sold for $110,000. The relevant shares were registered as part of an S-8
registration statement filed with the SEC.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES - NONE

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

ITEM 5.  OTHER INFORMATION - NONE


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

(a) Exhibits - none

(b) Reports on Form 8-K

We did not file any reports on Form 8-K during the six month period ended June
30, 2002.


                                                                              12
<PAGE>

                                 FUELNATION INC.
                          (A Development Stage Company)
                                  June 30, 2002
                                   (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 necessary 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,
2001.

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, 2002,has a working
capital deficiency of approximately $1,474,971 and a capital deficiency of
approximately $31.2 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, 2001 Form 10-KSB.

Note 3.  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 period from January 1, 2002 through June 30, 2002, and January 1, 2001
through June 30, 2001, the Company had outstanding warrants and stock options to
purchase 5,683,753 shares of common stock at prices ranging from $0.01 to $7.50
per share and for the period from January 1, 2001 through June 30, 2001, the
Company had outstanding warrants and stock options to purchase 466,000 shares of
common stock at prices ranging from $2.50 to $7.50 per share.

For the six months ended June 30, 2002 and 2001, all of the Company's potential
common shares were anti-dilutive and a dual presentation of loss per share is
not required

Note 4.  Advances - Related Parties

During the six months ended June 30, 2002 the Company borrowed approximately
$152,766 from Fuel America LLC ["Fuel America"],and $109,919 from Fuel Nation
Group LLC ["Fuel Nation Group"] entities controlled by the Chairman of the
Board/Chief Executive Officer ["CEO"]. In February 2002, the CEO exercised
options to purchase 1,252,761 shares of common stock at an exercise price


                                                                              13
<PAGE>

                                 FUELNATION INC.
                          (A Development Stage Company)
                                  June 30, 2002
                                   (Unaudited)


of $.01 per share. The proceeds of $12,527 were used to reduce the amount due to
Fuel America. At June 30, 2002, the balance owed Fuel America was $347,199 and
owed Fuel Nation Group was $109,919. Currently, there are no interest repayment
terms for the debt and it is treated as if due on demand.


Note 5.  Stockholders' Equity - Issuance of Common Stock

In February 2002, the CEO was granted and exercised options to purchase
1,252,761 shares of common stock at an exercise price of $.01 per share. The
Company incurred non-cash expense of $87,693.

In May 2002, 16,758,232 options were granted to purchase shares of Company
common stock to the CEO and employees of the Company at an option price of $.01
per share as consideration for accrued compensation owed . The Company incurred
a non-cash charge to operations of $370,373. These options were exercised in May
2002 and 16,758,232 shares of Company common stock were issued.

During the second quarter of 2002, 8,000,000 shares of our common stock were
issued in exchange for consulting services. The Company incurred non- cash
expense of $320,000.

During the second quarter of 2002, 5,500,000 shares of our common stock were
sold for $110,000.


Note 6.  New Authoritative Accounting Pronouncements

On August 15, 2001, the FASB issued SFAS No.143, "Accounting for Asset
Retirement Obligations ["SFAS No.143"]. SFAS No.143 requires that the fair value
of a liability for an asset retirement obligation be recognized in the period in
which it is incurred if a reasonable estimate of fair value can be made. The
associated asset retirement costs are capitalized as part of the carrying amount
of the long-lived asset. SFAS No.143 will be effective for financial statements
issued for fiscal years beginning after June 15, 2002. An entity shall recognize
the cumulative effect of adoption of SFAS No.143 as a change in accounting
principle. The Company is not currently affected by this Statement's
requirements.

On April 30, 2002, the Financial Accounting Standards Board (FASB) issued
Statement No.145, Rescission of FASB Statements No.4, 44 and 64,Amendment of
FASB Statement No. 13 and Technical Corrections. The Statement updates,
clarifies and simplifies existing accounting pronouncements.

Statement 145 rescinds Statement 4, which required all gains and losses from
extinguishments of debt to be aggregated and, if material, classified as an
extraordinary item, net of related income tax effect. As result, the criteria in
Opinion 30 will now be used to classify those gains and losses. Statement 64 and
amended Statement 4, is no longer necessary because Statement 4 has been
rescinded.

Statement 44 was issued to establish accounting requirements for the effects of
transition to the provisions of the Motor Carrier Act of 1980. Because the
transition has been completed, Statement 44 is no longer necessary.
Statement 145 amends Statement 13 to require that certain lease modifications
that have economic effects similar to sale-leaseback transactions be accounted
for in the same manner as sale-leaseback transactions. This amendment is
consistent with the FASB's goal of requiring similar accounting treatment for
transactions that have similar economic effects. This Statement also makes
technical corrections to exiting pronouncements. While those corrections are not
substantive in nature, in some instances, they may change accounting practice.

The Company is not currently affected by this Statement's requirements.


                                                                              14
<PAGE>

                                 FUELNATION INC.
                          (A Development Stage Company)
                                  June 30, 2002
                                   (Unaudited)


Note 7.  Subsequent Events

On August 13, 2002,--The Company received a term sheet for the bond funding. The
company finalized the capital raise of $10,500,000 dollars to pay for the cost
of issuance and the funds to guarantee the interest shortfall for the $330
million dollar bond funding. The company submitted the formal application early
last week and has received a term sheet with the funding details, which the
company has been working diligently to complete.


Once the term sheet is agreed and signed a bond commitment is issued. The
funding should take place within approximately 60 days and we will be able to
start our acquisition strategy immediately. The Company was able to arrange the
$10,500,000 dollars to pay for the cost of issuance and the funds to guarantee
the interest shortfall for the $330 million dollar bond funding. We have agreed
to issue the bonds in three series A, B, C, totaling $330 million dollars. H&N
LLC a fund based in Portland, Oregon will provide the shortfall letter of credit
and the cost of issuance in the amount of $3,500,000 for the first Series A
Bond. Shaikh Isa Mohammed Isa Alkhalifa will provide the shortfall letter of
credit and the cost of issuance in the amount of $7 million dollars Series B and
Series C bond. The size of each series A, B, C, totaling $330 million dollars
will be decided based upon the dollars needed to draw acquisition funds and time
lines for due-diligence, acquisitions, legal work, permitting and other items.
We are very confident from this point forward FuelNation should be able to
successfully fulfill our portion of the bond funding requirements. In the event
FuelNation is unable to fulfill its obligations or the bond funding is not
completed we may have to change our financing strategy.


We have had a signed letter of intent with one of the largest southeast
petroleum marketer's since January 9, 2002 to purchase the marketer for
$28,500,000 and the assumption of approximately $40 million dollars of
liabilities. The first acquisition will provide FuelNation with approximately
$200 million of sales and $14 million of EBIDTA. The petroleum marketers will be
identified as soon as the firm bond commitment is issued this month and we have
authorization from the proposed acquisitions. The acquisition strategy allows
the company to acquire key talent in the industry and seamlessly merge synergies
across the FuelNation network.


                                                                              15
<PAGE>

                                   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:  August 14, 2002

                                 By: /s/ CHRISTOPHER R. SALMONSON
                                     ----------------------------------------
                                     Christopher R. Salmonson,
                                     President


                                                                              16