UNITED STATES

SECURITIES AND EXCHANGE COMMISSION



Washington, D.C. 20549



FORM 10-K



|[X]                                                    |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|------------------------------------------------------ |  | ------------------------------------------------------------------------------------
|                                                       |  | For the year ended December 31, 2012                                                
|[   ]                                                  |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  
|                                                       |  |                                                                                     
|For the transition period from             
        to

Commission file number: 333-14477



FUELSTREAM, INC.

(Exact name of registrant as specified in its
charter)



|Delaware                                                      |  | 87-0561426                         
|------------------------------------------------------------- |  | -----------------------------------
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification No.)
|                                                              |  |                                    
|510 Shotgun Road, Suite 110
        Fort Lauderdale, Florida  |  | 33326                              
|(Address of principal executive offices)                      |  | (Zip Code)                         



(954) 423-5345

(Registrant’s telephone number, including
area code)



Securities registered pursuant to Section 12(b) of
the Act:



|None                |  | N/A                                      
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange on which registered



Securities registered pursuant to Section 12(b)
of the Act: None



Securities registered pursuant to Section 12(g) of
the Act:None



Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.  Yes o  No ý



Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o  No ý



Indicate by check mark whether the issuer (1) filed all reports
required to be filed by Sections 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 ý  No o



Indicate by check mark whether the registrant has submitted electronically
and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files).   Yes o  No ý



Indicate by checkmark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ý



Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



|Large accelerated filer o |  | Accelerated filer o        
|------------------------- |  | ---------------------------
|Non-accelerated filer  o  |  | Smaller reporting company ý



Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). o  Yes    ý  No



Based on the closing price of our common stock as listed on
the OTC Bulletin Board, the aggregate market value of the common stock of Fuelstream, Inc. held by non-affiliates as of June
30, 2012 was $5,419,365.



As of April 16, 2013, there were15,266,799 shares of common
stock outstanding.



DOCUMENTS INCORPORATED BY REFERENCE: 
None.







Table of Contents2







|TABLE OF CONTENTS
|-----------------
|PART I           
|ITEM 1.          
|ITEM 1A.         
|ITEM 1B.         
|ITEM 2.          
|ITEM 3.          
|ITEM 4.          
|PART II          
|ITEM 5.          
|ITEM 6.          
|ITEM 7.          
|ITEM 7A.         
|ITEM 8.          
|ITEM 9.          
|ITEM 9A.         
|ITEM 9B.         
|PART III         
|ITEM 10.         
|ITEM 11.         
|ITEM 12.         
|ITEM 13.         
|ITEM 14.         
|PART IV          
|ITEM 15.         
|SIGNATURES       





Table of Contents3







SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Please see the note under
“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation,” for a description
of special factors potentially affecting forward-looking statements included in this report.





































































Table of Contents4





PART I

ITEM 1.	BUSINESS.

Company History

Fuelstream,
Inc. (hereafter, “we”, ”our”, ”us”, “Fuelstream”, or the ”Company”)
was incorporated in the State of Delaware on July 12, 1996. Prior to April 2010, we had operated under the name of “SportsNuts,
Inc.” and had been primarily engaged in sports marketing and management. In April 2010, we underwent a reorganization to
change our management and business model as further described herein, and changed the Company’s name to “Fuelstream,
Inc.” On April 11, 2011, we entered into a joint venture agreement with Aviation Fuel International, Inc., a Florida corporation
(“AFI”) and a purchaser and reseller of aviation fuel for commercial and private aircraft. On January 18, 2012, the
joint venture was terminated upon completion of the acquisition of AFI, which is now a wholly-owned subsidiary of the Company.
You can learn more about us at our website at www.thefuelstream.com. Our website, however, does not constitute a part of
this report.

On May 10, 2012, the Company
along with two partners formed AFI South Africa LLC (“AFI SA”), immediately the Company purchased shares of the other
partners to become 100% owner of AFI SA (refer to note 3). AFI SA was effective as Limited Liability Company under the Act by the
filing organization with the office of the Secretary of State of Florida on May 11, 2012. The Company has been organized for the
purpose of partnering with Global Aviation for brokering the sale of Fuel for aircraft in South Africa.

Operational Overview

Fuelstream
is an in-wing and on-location supplier and distributor of aviation fuel to corporate, commercial, military, and
privately-owned aircraft throughout the world. We also provide a variety of ground services either directly or through our
affiliates, including concierge services, passenger and baggage handling, landing rights, coordination with local aviation
authorities, aircraft maintenance services, catering, cabin cleaning, customs approvals, and third-party invoice
reconciliation. Our personnel assist customers in flight planning and aircraft routing aircraft, obtaining permits, arranging
overflies, and flight follow services.Our principal sources of revenues are from the gross selling price of fuel delivery
contracts. Expenses which comprise the costs of goods sold include the acquisition price of fuel transported, as well as
operational and staffing costs of the trucks and other vehicles used for delivery. General and administrative expenses have
been comprised of administrative wages and benefits; occupancy and office expenses; outside legal, accounting and other
professional fees; travel and other miscellaneous office and administrative expenses. Selling and marketing expenses include
selling/marketing wages and benefits; advertising and promotional expenses; travel and other miscellaneous related
expenses.

On
May 10, 2012, we entered into a joint venture with Global Aviation International Limited (“Global”) and Summit Trading
Limited (“Summit”) to provide aircraft fuel to Global clients and Global’s own aircraft fleet on a worldwide
basis. Global is an international Air Transport Organization whose activities cover acquisition, refurbishment, heavy maintenance,
leasing and chartering of aircraft, primarily throughout South Africa. Global also owns and leases its own commercial aircraft.
As part of its obligations under the joint venture, Global is required to provide us office space, related equipment and supplies
in its Johannesburg, South Africa headquarters, as well as access to all Global clients

Table of Contents5







worldwide. On September
10, 2012, Global and Summit converted its interest in the joint venture into 1,547,662 and 515,888 shares of our common stock.
In addition to Global’s own fleet, our agreement with Global has enabled us to provide fuel to six new airline clients, as
well as to aircraft of the South African government. We intend to expand our business with Global and add additional carriers and
transportation organizations as regular clientele as we grow and develop our business.

Because
we have incurred losses, income tax expenses are immaterial. No tax benefits have been booked related to operating loss carryforwards,
given the uncertainty of the Company being able to utilize such loss carryforwards in future years. We anticipate incurring additional
losses during the coming year.

Market

We
believe that air transportation will play a substantial role in the growth of worldwide trade, particularly in less developed regions
that do not have a cost-effective means of reaching deep water shipping ports or who are seeking to expand same-day access to international
trading markets. Domestically, aircraft utilization, whether for passengers, freight, or corporate use, is closely correlated with
the strength and growth of the U.S. economy. According to the FAA Aerospace Forecast for Fiscal Years 2006 to 2017, the U.S. economy
will grow at an average annual rate of 3% for the next ten years. The world economy is expected to increase at an average annual
rate of 3.1% over the same period. Long-term economic growth is predicted to be strong in Latin America and the Asia/Pacific regions
with 3.8% and 3.6% average annual growth, respectively. More impressive is the forecasted growth for China, with a population of
1.3 billion, and India, with a population of 1.1 billion. Each of these country’s economies is expected to grow at an average
annual rate of 5.8%. The FAA predicts that airline passenger growth in these regions will grow the fastest at 7.0% and 4.9% respectively.
Closer to home, the study forecasts that passenger growth in the Atlantic markets will grow at 4.3% and Canadian trans-boarder
markets will grow at 3.7% annually. U.S. commercial air cargo revenue ton-miles (RTM’s) are expected to grow at an average
annual rate of 5.2% through 2017. The FAA forecasts jet fuel consumption to increase to an average annual rate of 3.7% for air
carriers and 8.6% for general aviation for a weighted average total of 4.0% annually through the year 2017.

Competition



The fuel supply and logistics
business is highly competitive. Our competitors and potential competitors include major oil companies, fuel resellers, fuel card
companies, and independent fuel distributors of varying sizes. Most of our competitors have greater resources than we do and therefore
have greater leverage with respect to securing long-term fuel delivery and supply contracts. We believe a high degree of competition
in this industry will continue for the foreseeable future.



We believe that we can
distinguish Fuelstream from our competition by providing precise accounting, exceptional customer service, comprehensive tax management,
and competitive pricing. While we intend to offer some customers credit terms, in most cases the credit lines will be secured by
corporate or personal guarantees, deposits, letters of credit or other bank instruments, and liens against fueled vehicles and
aircraft.



Employees



As of December 31, 2012,
we had six employees and used the services of various contract personnel from time to time. Although national unemployment rates
remain high relative to historical averages, there exists a significant amount of competition for skilled personnel in the fuel
delivery and



Table of Contents6







logistics industry. Nevertheless, we expect
to be able to attract and retain such additional employees as are necessary, commensurate with the anticipated future expansion
of our business resulting from the acquisition of AFI described herein. Further, we expect to continue to use consultants, contract
labor, attorneys and accountants as necessary.



Available Information



Fuelstream is subject to the information requirements
of the Securities Exchange Act of 1934, as amended, and in accordance therewith files quarterly and annual reports, as well as
other information with the Securities and Exchange Commission (“Commission”) under File No. 333-14477. Such reports
and other information filed with the Commission can be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates, and at various regional and district offices
maintained by the Commission throughout the United States. Information about the operation of the Commission’s public reference
facilities may be obtained by calling the Commission at 1-800-SEC-0330. The Commission also maintains a website at http://www.sec.gov
that contains reports and other information regarding the Company and other registrants that file electronic reports and information
with the Commission.



ITEM 1A.  RISK FACTORS.



Since we are a smaller reporting company, we
are not required to supply the information required by this Item 1A.



ITEM 1B.  UNRESOLVED STAFF COMMENTS.



None.



ITEM 2.    PROPERTIES.



Our principal executive offices are located
at 510 Shotgun Road, Suite 110, Fort Lauderdale, Florida 33325. We believe that our office facilities are suitable and adequate
for our operations as currently conducted and contemplated.



ITEM 3.    LEGAL PROCEEDINGS.



Ryan International Airlines.
One of our subsidiaries, Aviation Fuel International ("AFI") is involved in disputes with two airlines: Ryan International
Airlines, LLC ("Ryan") and Direct Air. Both aviation fuel customers litigation arise out of disputed amounts for the
delivery of Jet Fuel. Disagreements between the parties resulted in both parties filing separate lawsuits in three actions. Ryan
filed a cause of action in Case No. 09-57580, Ryan International Airlines, Inc. v. Aviation Flight Services, LLC (“AFS”)
and Aviation Fuel International, Inc., (“AFI”), and sought recovery of $1,491,308.66 allegedly paid to AFS as pre-payment
of aviation fuel and flight services under a contractual relationship between Ryan and AFS. AFI moved to dismiss the action, to
which, Ryan has subsequently filed a notice of removal to the Federal District Court for the Northern District of Illinois, Bankruptcy
Division Case No.: 12-80802. AFI filed an action for breach of contract for Ryan’s failure to pay certain Jet Fuel invoices
for the delivery of fuel in the amount of $678,000; Aviation Fuel International v. Ryan International Airlines, Inc., a Kansas
corporation, Wells Fargo Bank Northwest, Trustee N.A., a Utah corporation, RUBLOFF 757-MSN24794LLC, an Illinois limited liability
company, RYAN 767 LLC, an Illinois limited liability company, AFT TRUST SUB I, a Delaware corporation, RYAN 767 N123 LLC, an Illinois
limited liability company, and RUBLOFF 440 LLC, an Illinois corporation, Civil Action Case No. CACE 10-



Table of Contents7







037788-04. AFI also filed the corresponding
claims of liens under the FAA Aircraft Registration Branch, for each plane, registered and tail wing number listed therein. This
action has also been recently noticed for been removal to the Federal District Court for the Northern District of Illinois, Bankruptcy
Division Case No.: 12-80802. In addition, as a result of Ryan’s filing a Federal Involuntary Bankruptcy Petition against
Aviation Flight Services (“AFS”) on June 10, 2010, Case No.: 10-27313-JKO, (S.D. of Fla.), our subsidiary AFI, also
filed and was discharged as a creditor in the amount of $269,000.



Southern Sky Air Tours,
d/b/a Myrtle Beach Direct Air and Tours (Direct Air). On or about March 13, 2012, Southern Sky Air Tours, d/b/a Myrtle Beach
Direct Air and Tours (“Direct Air”) ― a public charter operator ― ceased operations. Direct Air has subsequently
filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of Massachusetts (Worcester)(Case no. 12-40944).
The Company currently has $122,000 in cash in escrow with Suntrust Bank, representing a partial payment by Direct Air for Fuel.
This amount was unrecorded in the Company’s financial statements because it has been challenged by the debtor and has been
sequestered by the bankruptcy court in the proceeding. This action is currently pending before the court, as it relates to the
collection of the garnishment.



As a result of the non-payment
for jet fuel by AFI customers, certain of AFI’s suppliers have filed actions that have resulted in judgment and garnishments,
in the amount of $330,000. Most of these outstanding fuel delivery charges are secured, and being challenged through the Bankruptcy
action through the lien filings by both the issuer and individual fuel providers. In addition, AFI incurred certain loan and debt
obligations for which we are attempting to convert into our common stock.



Julian Manuel Leyva
and Gabriel Leyva. On June 8, 2012, Julian Manuel Leyva and Gabriel Leyva (collectively, the “Leyvas”) filed a
lawsuit in the Seventeenth Judicial Circuit Court, Broward County, Florida, against us, our subsidiary AFI, and various others,
alleging various claims in connection with efforts to collect sums allegedly loaned to AFI between September 24, 2009 through February
11, 2011. The Leyvas are seeking damages of $570,000 plus interest in addition to additional damages from other parties to the
lawsuit.



Russell Adler. On
January 11, 2013, Russell Adler, our former Chief Executive Officer, filed a cross-complaint against the Company, AFI, and other
associated persons in the Seventeenth Judicial District Court, Broward County, Florida. Mr. Adler’s complaint alleges various
causes of action, including indemnification from the Company in respect of litigation involving the Leyvas described above, damages
for breach of Mr. Adler’s employment contract, fraud, unpaid legal fees, unjust enrichment, and quantum meruit. We believe
Mr. Adler’s claims are without merit and intend to defend the same.



From time to time, we are also a party to certain
legal proceedings incidental to the normal course of our business including the enforcement of our rights under contracts with
purchasers and suppliers of fuel. While the outcome of these legal proceedings cannot at this time be predicted with certainty,
we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.



ITEM 4.    MINE SAFETY DISCLOSURES



Not Applicable.



Table of Contents8







PART II

ITEM 5.    MARKET FOR REGISTRANT’S
COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Our common stock is
listed on the OTCQB under the symbol “FLST”. We had approximately 393 registered holders of our common stock as of
December 31, 2012. Registered holders do not include those stockholders whose stock has been issued in street name. The last reported
price for our common stock on March 8, 2013 was $2.95 per share.



The following table
reflects the high and low closing sales prices per share of our common stock during each calendar quarter as reported on the OTCQB,
during the two fiscal years ended December 31, 2012:



|               |  |               
|-------------- |  | --------------
|               |  | Price Range(1)
|               |  | High          
|Fiscal 2012    |  |               
|Fourth quarter |  | $             
|Third quarter  |  | $             
|Second quarter |  | $             
|First quarter  |  | $             
|               |  |               
|Fiscal 2011    |  |               
|Fourth quarter |  | $             
|Third quarter  |  | $             
|Second quarter |  | $             
|First quarter  |  | $             



____________________

| | (1) | The above quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission
and may not necessarily represent actual transactions.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

Dividends and Distributions

We have not paid
any cash dividends on our common stock since inception and do not anticipate paying cash dividends in the foreseeable future. We
expect that that any future earnings will be retained for use in developing and/or expanding our business.

Sales of Unregistered Securities



On May 28, 2010, the Company issued 500,000
shares of restricted common stock to its then-Chief Executive Officer.



Table of Contents9







On April 29, 2011, we issued 35,000 shares
of restricted common stock to 4 persons for services rendered.



On September 16, 2011, we issued 333,334 shares
of restricted common stock to a consultant of the company for services rendered.



On October 4, 2011, we issued 550,000 shares
of restricted common stock to 2 persons for services rendered.



On December 16, 2011, we converted approximately
$1.7 million in various debts of the Company in exchange for an aggregate of 891,667 shares of restricted common stock issued to
3 persons.



On December 16, 2011 we issued 716,667 shares
of restricted common stock to various service providers, including 500,000 shares of common stock to its then-Chief Executive Officer.



On January 18, 2012, in connection with the
completion of the acquisition of Aviation Fuel International, Inc. (“AFI”), we issued 7,400,000 shares of common stock
to Sean Wagner, the sole shareholder of AFI.



On September 7, 2012, pursuant to the Company’s
2012 Equity Incentive Plan, the Board of Directors of the Company (“Board”) approved the grant of 2,670,000 common
stock purchase options (collectively, the “Options”) to 5 individuals at an exercise price of $0.01 per share. Only
1,450,000 of the Options are vested with 1,250,000 of such vested Options being issued to Mr. Russell Adler, former Chief Executive
Officer of the Company. The remaining 1,830,000 Options are unvested and are subject to various performance criteria as set forth
in the individual consulting and employment agreements with such option holders. Our Board has subsequently canceled 2,600,000
of the options and has amended the grant date of the remaining 70,000 options to October 1, 2012.



On September 10, 2012
we issued an aggregate of 340,000 shares of restricted common stock to 6 persons for services rendered and against note
issuance.



On September 10, 2012, we issued an aggregate
of 2,063,550 shares of restricted common stock to its joint venture partners in AFI South Africa, LLC to convert their joint venture
interest into shares of the Company.



On October 2, 2012, we issued a convertible
debenture in the principal amount of $120,000 to Peak One Opportunity Fund, L.P. (“Peak One”).



On October 5, 2012, we issued an aggregate of
150,000 restricted shares of unregistered common stock to two former employees of the Company in lieu of cancellation of their
options.



On October 16, 2012, we issued an aggregate
of 2,040,551 restricted shares of unregistered common stock to two accredited investors in private transactions as payment for
services rendered during 2012.



On January 28, 2013, we issued an aggregate
of 49,951 shares of common stock to employees and consultants of the Company. Also on January 28, 2013, pursuant to our 2012 Equity
Incentive Plan, we issued 150,000 common stock purchase options to each of our directors at an exercise price of $1.65 per share.



Table of Contents10







On February 1, 2013, we issued a second convertible
debenture in the principal amount of $100,000 to Peak One.



With respect to the transactions noted above,
no solicitation was made and no underwriting discounts were given or paid in connection with these transactions. We believe that
the issuance of the securities as described above was exempt from registration with the Securities and Exchange Commission pursuant
to Section 4(2) of the Securities Act of 1933.



Penny Stock Rules



The SEC has also adopted rules that regulate
broker-dealer practices in connection with transactions in “penny stocks” as such term is defined by Rule 15g-9. Penny
stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities
exchanges or quoted on the Nasdaq system provided that current price and volume information with respect to transactions in such
securities is provided by the exchange or system).



Our shares constitute penny stocks under the
Exchange Act. The shares may remain penny stocks for the foreseeable future. The classification of our shares as penny stocks makes
it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser
to liquidate his or her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in
Fuelstream will be subject to the penny stock rules.



The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document
approved by the SEC, which: (i) contains a description of the nature and level of risk in the market for penny stocks in both public
offerings and secondary trading; (ii) contains a description of the broker’s or dealer’s duties to the customer and
of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of the Securities
Act; (iii) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and
significance of the spread between the bid and ask price; (iv) contains a toll-free telephone number for inquiries on disciplinary
actions; (v) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (vi) contains
such other information and is in such form as the SEC shall require by rule or regulation. The broker-dealer also must provide
to the customer, prior to effecting any transaction in a penny stock, (i) bid and offer quotations for the penny stock; (ii) the
compensation of the broker-dealer and its salesperson in the transaction; (iii) the number of shares to which such bid and ask
prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (iv) monthly
account statements showing the market value of each penny stock held in the customer’s account.



In addition, the penny stock rules require that,
prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the
receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy
of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the
secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty
selling those securities.



ITEM 6.    SELECTED FINANCIAL DATA.



Not required.



Table of Contents11







ITEM 7.    MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Forward-Looking Statements



This report contains forward-looking statements
that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions
to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual
results are likely to differ materially from those anticipated in these forward-looking statements for many reasons.



Overview



We are a fuel transportation and logistics company
which facilitates the sale and distribution of aviation and other fuels to corporate and commercial consumers. Our principal sources
of revenues result from the gross selling price of fuel delivery contracts, but also include revenue from ancillary services related
to the supply of fuel. Expenses which comprise the costs of goods sold include the acquisition price of fuel, as well as operational
and staffing costs of the trucks and other vehicles used for delivery. General and administrative expenses have been comprised
of administrative wages and benefits; occupancy and office expenses; outside legal, accounting and other professional fees; travel
and other miscellaneous office and administrative expenses. Selling and marketing expenses include selling/marketing wages and
benefits, advertising and promotional expenses, as well as travel and other miscellaneous related expenses.



Because we have incurred
losses, income tax expenses are immaterial. No tax benefits have been booked related to operating loss carryforwards, given our
uncertainty of being able to utilize such loss carryforwards in future years. We anticipate incurring additional losses during
the coming year.

Results of Operations



Following is management’s
discussion of the relevant items affecting results of operations for the years ended December 31, 2012 and 2011.



Revenues.
The Company generated net revenues of $1,054,826 during the year ended December 31, 2012 as compared to $-0- for the year
ended December 31, 2011. The increase in revenues was a direct consequence of our acquisition of AFI in January 2012 and the
resulting fuel supply and delivery contracts that we entered into in 2012.



Cost of Sales.
Our cost of sales for the year ended December 31, 2012 was $907,083 as compared to $-0- for the year ended December 31, 2011.
Our cost of sales consisted principally of the acquisition price of fuel and other petrochemicals delivered to customers and
clients, other related services provided directly or outsourced through our affiliates, as well as operational and staffing
costs with respect thereto.



Selling, General and
Administrative Expenses. Selling, general and administrative expenses were $13,036,694 for the year ended December 31, 2012,
as compared to $2,973,464 for the year ended December 31, 2011.The increase is mainly the result of the issuance of 2,063,550 shares
of common stock, valued at $5,158,875 to our joint venture partners for business development during the third quarter of 2012 and
issuance of 2,530,551 shares of common stock valued at $6,320,877 toward services. We



Table of Contents12







also recorded bad debt expense in the amount of $670,000 which we
set up as an allowance for doubtful accounts during the second quarter of 2012. We anticipate that SG&A expenses will increase
commensurate with an increase in our operations.



Impairment of
Goodwill.During 2012 the Company decided to write off $6,000,410 of goodwill associated with the acquisition of AFI
compare to nil during prior year.



Other Income
(Expense). The Company had net other expenses of $848,180 for the year ended December 31, 2012 compared to net other
income of $511,347 during 2011.The Company recorded a non-cash finance charge of $199,625 and a loss on the change in fair
value of a derivative liability of $83,464. Other expenses incurred were comprised primarily of interest expenses related to
notes payable in the amount of $565,091, which included the amortization of debt discount of $107,994.  Non-cash finance
charge consist of non-cash interest expenses of $62,125 toward derivative liability and $137,500 toward fair value of
55,000 shares issued to note holder for issuing note payable.



Liquidity and Capital Resources



As of December 31, 2012,
our primary source of liquidity consisted of $43,159 in cash and cash equivalents. We hold most of our cash reserves in local checking
accounts with local financial institutions. Since inception, we have financed our operations through a combination of short and
long-term loans, and through the private placement of our common stock.



We have sustained
significant net losses which have resulted in an accumulated deficit at December 31, 2012 of $51,842,805 and are currently
experiencing a substantial shortfall in operating capital which raises doubt about our ability to continue as a going
concern. We generated a net loss for the year ended December 31, 2012 of $19,737,541 compared to a net loss in 2011of
$2,462,117. With the acquisition of AFI and AFI SA in the year 2012, we have experienced an increase in revenues and
operational activity. Nevertheless, without additional revenues, working capital loans, or equity investment, there is
substantial doubt as to our ability to continue operations.



We believe these conditions
have resulted from the inherent risks associated with small public companies. Such risks include, but are not limited to, the ability
to (i) generate revenues and sales of our products and services at levels sufficient to cover our costs and provide a return for
investors, (ii) attract additional capital in order to finance growth, and (iii) successfully compete with other comparable companies
having financial, production and marketing resources significantly greater than those of the Company.



We believe that our capital
resources are insufficient for ongoing operations, with minimal current cash reserves, particularly given the resources necessary
to expand our fuel brokerage business. We will likely require considerable amounts of financing to make any significant advancement
in our business strategy. There is presently no agreement in place that will guarantee financing for our Company, and we cannot
assure you that we will be able to raise any additional funds, or that such funds will be available on acceptable terms. Funds
raised through future equity financing will likely be substantially dilutive to current shareholders. Lack of additional funds
will materially affect our Company and our business, and may cause us to substantially curtail or even cease operations. Consequently,
you could incur a loss of your entire investment in the Company.



Off-Balance Sheet Arrangements



We do not have any off-balance sheet arrangements.



Table of Contents13







Critical Accounting Policies



Financial Reporting Release
No. 60, published by the SEC, recommends that all companies include a discussion of critical accounting policies used in the preparation
of their financial statements. While all these significant accounting policies impact our consolidated financial condition and
results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that
have the most significant impact on our consolidated financial statements and require management to use a greater degree of judgment
and estimates. Actual results may differ from those estimates.



We believe that given current
facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause a material
effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.



We believe the following
more critical accounting policies are used in the preparation of our consolidated financial statements:



Principles
of Consolidation.

The consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States
(“US GAAP”) and include the Company and its wholly-owned subsidiaries. All inter-company accounts and
transactions have been eliminated.



Concentrations of Credit
Risk

For the year ended
December 31, 2012, one customer accounted for 98% of total revenue, representing a material amount of customer concentration.
For the year ended December 31, 2012, one disputed customers accounted for 100% of total accounts receivable, representing a
material amount of credit risk.



Cash and Cash Equivalents

Cash Equivalents include
short-term, highly liquid investments with maturities of three months or less at the time of acquisition.



Accounts Receivable

Accounts receivable are
recorded net of the allowance for doubtful accounts of $670,000 and $-0- as of December 31, 2012 and 2011, respectively. The Company
generally offers 30-day credit terms on sales to its customers and requires no collateral. The Company maintains an allowance for
doubtful accounts which is determined based on a number of factors, including each customer’s financial condition, general
economic trends and management judgment.



Revenue Recognition

Revenue from the sale of
fuel is recognized when the sales price is fixed or determinable, collectability is reasonably assured and title passes to the
customer, which is when the delivery of fuel is made to our customer directly from us, the supplier or a third-party subcontractor.
Our fuel sales are generated principally as a fuel reseller, although at some point we intend to have inventories from which we
may make deliveries. When acting as a fuel reseller, we generally purchase fuel from the supplier, mark it up and contemporaneously
resell the fuel to the customer, normally taking delivery for purchased fuel at the same place and time as the delivery is made
to the customer. We record the gross sale of the fuel as we generally take inventory risk, have latitude in establishing the sales
price, have discretion in the



Table of Contents14







supplier selection, maintain credit risk and
are the primary obligor in the sales arrangement. Returns or discounts, if any, are netted against gross revenues. For the years
ended December 31, 2012 and 2011, sales are recorded net of the allowance for returns and discounts of $-0-.



Use of Estimates.

The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
On a periodic basis, management reviews those estimates, including those related to valuation allowances, loss contingencies, income
taxes, and projection of future cash flows.



Advertising

The Company follows the
policy of charging the costs of advertising to expense as incurred. Advertising expense is included in cost of sales in the consolidated
statements of operations as it relates directly to the revenues associated with events managed by the Company. Advertising expense
for the years ended December 31, 2012 and 2011 was $-0-.



Basic and Fully Diluted
Net Loss Per Share

The basic income (loss)
per share of common stock is based on the weighted average number of shares issued and outstanding during the period of the financial
statements. The Company has no common stock equivalents outstanding.



Research and Development.

Research and development costs are charged to
operations when incurred and are included in operating expenses.



Recent Accounting Pronouncements

We have reviewed accounting
pronouncements issued during the past two years and have adopted any that are applicable to our company. We have determined that
none had a material impact on our consolidated financial position, results of operations, or cash flows for the years ended December
31, 2012 and 2011.



Financial
Instruments

On January 1, 2008, the
Company adopted FASB ASC 820-10-50, “Fair Value Measurements.”  This guidance defines fair value, establishes
a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value
measures.  The three levels are defined as follows:



- Level 1 inputs to the
valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.



- Level 2 inputs to the
valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable
for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.



- Level 3 inputs to valuation
methodology are unobservable and significant to the fair measurement.



Table of Contents15







The carrying amounts reported
in the balance sheets for the cash and cash equivalents, receivables and current liabilities each qualify as financial instruments
and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and
their expected realization and their current market rate of interest.



Share Based Payments

The Company accounts for
its stock based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value based method.
Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service
period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an
entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities
in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled
by the issuance of those equity instruments.



There were various other
accounting standards and interpretations recently issued, none of which are expected to a have a material impact on the Company's
consolidated financial position, operations or cash flows.



MANAGEMENT’S PLAN TO CONTINUE AS A
GOING CONCERN



In order to continue as
a going concern, the Company will need, among other things, additional capital resources. Management’s plans to obtain such
resources for the Company include (1) obtaining capital from the sale of its securities, and (2) short-term borrowings from shareholders
or related party when needed. However, management cannot provide any assurance that the Company will be successful in accomplishing
any of its plans.



The ability of the Company
to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph
and eventually secure other sources of financing and attain profitable operations.



Our independent registered
public accounting firm’s report contains and explanatory paragraph which has expressed substantial doubt about our ability
to continue as a going concern, which may hinder our ability to obtain future financing.



Forward-Looking Statements



This report contains or
incorporates by reference forward-looking statements within the meaning of the United States Private Securities Litigation Reform
Act of 1995 concerning our future business plans and strategies, the receipt of working capital, future revenues and other statements
that are not historical in nature. In this report, forward-looking statements are often identified by the words “anticipate,”
“plan,” “believe,” “expect,” “estimate,” and the like. These forward-looking statements
reflect our current beliefs, expectations and opinions with respect to future events, and involve future risks and uncertainties
which could cause actual results to differ materially from those expressed or implied.



Other uncertainties that
could affect the accuracy of forward-looking statements include:



|• |  | the worldwide economic situation;
|- |  | ---------------------------------

|• |  | any changes in interest rates or inflation;
|- |  | -------------------------------------------

|• |  | the willingness and ability of third parties to honor
their contractual commitments;
|- |  | ------------------------------------------------------------------------------------

Table of Contents16







|• |  | our ability to raise additional capital, as it may be
affected by current conditions in the  stock market and competition for risk capital;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------

|• |  | our capital expenditures, as they may be affected by
delays or cost overruns;
|- |  | -----------------------------------------------------------------------------

|• |  | environmental and other regulations, as the same presently
exist or may later be amended;
|- |  | -----------------------------------------------------------------------------------------

|• |  | our ability to identify, finance and integrate any future
acquisitions; and
|- |  | ---------------------------------------------------------------------------

|• |  | the volatility of our common stock price.
|- |  | -----------------------------------------



This list is not exhaustive
of the factors that may affect any of our forward-looking statements. You should read this report completely and with the understanding
that our actual future results may be materially different from what we expect. These forward-looking statements represent our
beliefs, expectations and opinions only as of the date of this report. We do not intend to update these forward looking statements
except as required by law. We qualify all of our forward-looking statements by these cautionary statements.



ITEM 7A.	QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK

Not Applicable.

Table of Contents17







ITEM 8.	FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA.



|CONTENTS                                                 
|---------------------------------------------------------
|                                                         
|Reports of Independent Registered Public Accounting Firms
|                                                         
|Consolidated Balance Sheets                              
|                                                         
|Consolidated Statements of Operations                    
|                                                         
|Consolidated Statements of Stockholders’ Deficit         
|                                                         
|Consolidated Statements of Cash Flows                    
|                                                         
|Notes to the Consolidated Financial Statements           





Table of Contents18







REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM







To the Board of Directors and Stockholders of

Fuelstream, Inc.



We have audited the
accompanying consolidated balance sheets of Fuelstream, Inc. (the “Company”) as of December 31, 2012, and the related
consolidated statements of operations, stockholder’s deficiency, and cash flows for the year ended December 31, 2012. These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We have conducted our
audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the
consolidated financial statements referred to above present fairly, in all material respects, the financial position of Fuelstream,
Inc. as of December 31, 2012, and the consolidated results of their operation and cash flow for the year ended December 31, 2012,
in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated
financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has sustained substantial net losses and stockholders’ deficit. These conditions
raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also
are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome
of this uncertainty.







/s/RBSM
LLP





New York, NY

April 16, 2013















Table of ContentsF-1







REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM





To the Board of Directors and Stockholders

Fuelstream, Inc. (formerly SportsNuts, Inc.)

Draper, UT



We have audited the accompanying balance
sheets of Fuelstream, Inc. as of December 31, 2011and the related statements of operations, stockholders’ deficit and cash
flows for the year then ended. These financial statements are the responsibility of the Company’s management.  Our responsibility
is to express an opinion on these financial statements based on our audit.



We conducted our audit in accordance
with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
 Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting.  Accordingly, we express no such opinion. An audit also includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We
believe that our audit provides a reasonable basis for our opinion.



In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of Fuelstream, Inc. as of December 31, 2011and
the results of its operations and cash flows for the year ended December 31, 2011in conformity with generally accepted accounting
principles in the United States of America.



The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern.  The Company has suffered recurring losses,
and has no significant current operations which raise substantial doubt about its ability to continue as a going concern.  Management’s
plans in regard to these matters are described in Note 2. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.





/s/ Morrill & Associates





Morrill& Associates

Clinton, Utah 84015

April16, 2012



Table of ContentsF-2









|FUELSTREAM, INC.                                                                       
|---------------------------------------------------------------------------------------
|Consolidated Balance Sheets                                                            
|                                                                                       
|ASSETS                                                                                 
|                                                                                       
|                                                                                       
|                                                                                       
|CURRENT ASSETS                                                                         
|                                                                                       
|Cash and cash equivalents                                                              
|Accounts receivable, net of allowance                                                  
|Loans receivable                                                                       
|                                                                                       
|Total Current Assets                                                                   
|                                                                                       
|TOTAL ASSETS                                                                           
|                                                                                       
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                  
|                                                                                       
|CURRENT LIABILITIES                                                                    
|                                                                                       
|Accounts payable                                                                       
|Due to related parties                                                                 
|Accrued expenses                                                                       
|Notes payable                                                                          
|Notes payable - related parties                                                        
|                                                                                       
|Total Current Liabilities                                                              
|                                                                                       
|LONG TERM LIABILITIES                                                                  
|                                                                                       
|Convertible debenture/notes payable (net of discount of                                
|$262,006 and $-0-, respectively)                                                       
|Derivative liability                                                                   
|                                                                                       
|Total Long Term Liabilities                                                            
|                                                                                       
|TOTAL LIABILITIES                                                                      
|                                                                                       
|STOCKHOLDERS' DEFICIT                                                                  
|                                                                                       
|Preferred stock, $0.0001 par value; 200 shares                                         
|authorized, 200 and 200 shares issued and outstanding                                  
|Common stock, $0.0001 par value; 50,000,000 shares                                     
|authorized, 15,216,848 and 3,167,747 shares issued                                     
|and outstanding, respectively                                                          
|Additional paid-in capital                                                             
|Accumulated deficit                                                                    
|                                                                                       
|Total Stockholders' Deficit                                                            
|                                                                                       
|TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                            
|                                                                                       
|The accompanying notes are an integral part of these consolidated financial statements.



Table of ContentsF-3









|FUELSTREAM, INC.                                                                       
|---------------------------------------------------------------------------------------
|Consolidated Statements of Operations                                                  
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|NET SALES                                                                              
|                                                                                       
|COST OF SALES                                                                          
|                                                                                       
|GROSS MARGIN                                                                           
|                                                                                       
|SELLING, GENERAL AND                                                                   
|ADMINISTRATIVE EXPENSES                                                                
|                                                                                       
|Impairment of goodwill                                                                 
|Selling, general and administrative                                                    
|                                                                                       
|Total Selling, General and                                                             
|Administrative Expenses                                                                
|                                                                                       
|LOSS FROM OPERATIONS                                                                   
|                                                                                       
|OTHER INCOME (EXPENSES)                                                                
|                                                                                       
|Gain on forgiveness of debt                                                            
|Non-cash finance charge                                                                
|Loss on change in fair value of derivative liability                                   
|Interest expense (including amortization of debt                                       
|discount of $107,994 and $-0-, respectively)                                           
|                                                                                       
|Total Other Income (Expenses)                                                          
|                                                                                       
|LOSS BEFORE INCOME TAXES                                                               
|                                                                                       
|INCOME TAX EXPENSE                                                                     
|                                                                                       
|NET LOSS                                                                               
|                                                                                       
|BASIC AND DILUTED:                                                                     
|Net loss per common share                                                              
|                                                                                       
|Weighted average shares outstanding                                                    
|                                                                                       
|The accompanying notes are an integral part of these consolidated financial statements.



Table of ContentsF-4









|FUELSTREAM, INC.                                                                      
|--------------------------------------------------------------------------------------
|Consolidated Statements of Stockholders' Deficit                                      
|For the Period January 1, 2011 through December 31, 2012                              
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Balance, January 1, 2011                                                              
|                                                                                      
|Common stock issued for services, April 2011                                          
|                                                                                      
|Common stock issued for rounding up for                                               
|reverse stock split, June 2011                                                        
|                                                                                      
|Common stock issued for services,                                                     
|August 2011                                                                           
|                                                                                      
|Common stock issued for services,                                                     
|September 2011                                                                        
|                                                                                      
|Common stock issued for services,                                                     
|October 2011                                                                          
|                                                                                      
|Common stock issued for services,                                                     
|December 2011                                                                         
|                                                                                      
|Common stock issued for conversion of debt                                            
|December 2011                                                                         
|                                                                                      
|Record write off of Sportzz.com                                                       
|                                                                                      
|Net loss for the year ended                                                           
|December 31, 2011                                                                     
|                                                                                      
|Balance, December 31, 2011                                                            
|                                                                                      
|Common stock issued for acquisition                                                   
|of Aviation Fuel International, Inc.                                                  
|                                                                                      
|Common stock issued for acquiring interest                                            
|in business in September 2012                                                         
|                                                                                      
|Common stock issued for services and along                                            
|with note payable, September 2012                                                     
|                                                                                      
|Common stock issued for services,                                                     
|October 2012                                                                          
|                                                                                      
|Common stock issued for services,                                                     
|November 2012                                                                         
|                                                                                      
|Beneficial conversion feature relating to                                             
|convertible debt                                                                      
|                                                                                      
|Fair value of vested options                                                          
|                                                                                      
|Net loss for the year ended                                                           
|December 31, 2012                                                                     
|                                                                                      
|Balance, December 31, 2012                                                            
|                                                                                      
|The accompanying notes are an integral part of these consolidated financial statements





Table of ContentsF-5









|FUELSTREAM, INC.                                                                      
|--------------------------------------------------------------------------------------
|Consolidated Statements of Cash Flows                                                 
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                 
|                                                                                      
|Net loss                                                                              
|Adjustments to reconcile net loss to net                                              
|cash used by operating activities:                                                    
|Gain on forgiveness of debt                                                           
|Common stock issued for services and finance expenses                                 
|Operating expenses paid by noteholder                                                 
|Non-cash interest expenses                                                            
|Stock based compensation                                                              
|Change in fair value of derivative liability                                          
|Amortization of debt discounts                                                        
|Impairment of goodwill                                                                
|Bad debt expense                                                                      
|Changes in operating assets and liabilities:                                          
|Accounts payable and accrued expenses                                                 
|Accrued interest                                                                      
|Due to related parties                                                                
|                                                                                      
|Net Cash Used in Operating Activities                                                 
|                                                                                      
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                 
|                                                                                      
|Payments for loans receivable                                                         
|                                                                                      
|Net Cash Used in Investing Activities                                                 
|                                                                                      
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                 
|                                                                                      
|Net proceeds from notes payable                                                       
|Payment on notes payable                                                              
|Proceeds from notes payable - related parties                                         
|                                                                                      
|Net Cash Provided by Financing Activities                                             
|                                                                                      
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                             
|                                                                                      
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                        
|                                                                                      
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                              
|                                                                                      
|SUPPLEMENTAL CASH FLOW INFORMATION                                                    
|                                                                                      
|Cash Payments For:                                                                    
|                                                                                      
|Interest                                                                              
|Income taxes                                                                          
|                                                                                      
|Non-cash financing and investing activity:                                            
|                                                                                      
|Beneficial conversion feature on note                                                 
|Common stock issued for conversion of debt                                            
|Derivative liability on convertible note                                              
|                                                                                      
|Acquisition of AFI                                                                    
|Accounts receivable acquired                                                          
|Goodwill                                                                              
|Accounts payable assumed                                                              
|Notes payable assumed                                                                 
|Total purchase price                                                                  
|Common stock issued                                                                   
|Note payable issued - related party                                                   
|Loan receivable adjusted                                                              
|                                                                                      
|The accompanying notes are an integral part of these consolidated financial statements



Table of ContentsF-6









FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011





NOTE 1 -	ORGANIZATION AND NATURE OF OPERATION



Fuelstream, Inc. (the “Company”)
was incorporated under the laws of the State of Delaware on July 12, 1996 under the name of “Durwood, Inc.” From April
6, 1999 to April 9, 2010, the Company operated as a sports marketing firm under the name of “Sportsnuts.” Inc. On April
9, 2010, the Company changed its name to Fuelstream, Inc. and changed its business model to become a fuel transportation and logistics
company.



On April 11, 2011, the Company entered
into a joint venture agreement (“Joint Venture”) with Aviation Fuel International, Inc., a Florida corporation (“AFI”)
and a purchaser and reseller of aviation fuel for commercial and private aircraft. The Joint Venture required the Company to contribute
up to $200,000 in respect of supplying aviation fuel to various commercial aircraft via tanker trucks which were intended to be
acquired by the Joint Venture. The Company ultimately contributed $183,500 in connection with the Joint Venture. On January 18,
2012, the Joint Venture was terminated upon completion of the acquisition of AFI, which is now a wholly-owned subsidiary of the
Company (refer to note3)



On May 10, 2012, the Company along
with two partners formed AFI South Africa LLC (“AFI SA”), immediately the Company purchased shares of the other partners
to become 100% owner of AFI SA (refer to note 3). AFI SA was effective
as Limited Liability Company under the Act by the filing organization with the office of the Secretary of State of Florida on May
11, 2012. The Company has been organized for the purpose of partnering with Global Aviation for brokering the sale of Fuel for
aircraft in South Africa.



NOTE 2-	GOING CONCERN CONSIDERATIONS



The accompanying consolidated
financial statements have been prepared using generally accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the normal course of business. The accumulated
deficit as of December 31, 2012 was $51,842,805 and the total stockholders’ deficit at December 31, 2012 was $5,428,241
and had working capital deficit, continued losses, and negative cash flows from operations. These factors combined, raise
substantial doubt about the Company’s ability to continue as a going concern. Management’s plans to address and
alleviate these concerns are as follows:



The Company’s management
continues to develop a strategy of exploring all options available to it so that it can develop successful operations and
have sufficient funds, therefore, as to be able to operate over the next twelve months. The Company is attempting to improve
these conditions by way of financial assistance through issuances of additional equity and by generating revenues by
facilitating the sale of aircraft fuel. No assurance can be given that funds will be available, or, if available, that it
will be on terms deemed satisfactory to management. The ability of the Company to continue as a going concern is dependent
upon its ability to successfully increase market share, margins on fuel resales, and greater industry visibility.



NOTE 3 - 	ACQUISITION



On January 18, 2012 the Company completed
the acquisition of 100% of the equity of Aviation Fuel International, Inc., a Florida corporation (“AFI”). AFI is a
purchaser and reseller of aviation fuel for commercial and private aircraft. The consideration for the acquisition of AFI consisted
of

Table of ContentsF-7









FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011





7,400,000 shares of
restricted common stock loan receivable adjusted for $183,500 and a note payable in the amount of $1,000,000. As part of the
acquisition, the Company recorded goodwill in the amount of $6,000,410.



|                             |  |  |           | Amount
|---------------------------- |  |  | --------- | ------
|Accounts receivable acquired |  |  |           |       
|Goodwill acquired            |  |  |           |       
|Less liabilities assumed     |  |  |           |       
|Note payable acquired        |  |  | 1,356,300 |       
|Accounts payable acquired    |  |  | 536,610   |       
|Net liabilities assumed      |  |  |           |       
|Total Purchase price         |  |  |           |       
|                             |  |  |           |       



The total purchase price was $4,957,500
which was paid by issuance of 7,400,000 shares of common stock, payment adjusted through loan receivable of $183,500 and issuance
of note payable of $1,000,000.



Goodwill represents the excess of
the purchase price over the fair value of the net identifiable tangible assets acquired. As of December 31, 2012, the Company impaired
the total goodwill. Management performed impairment analysis in fourth quarter of 2012 and decided to write off goodwill.



Following is a pro-forma unaudited
consolidated statement of operations for the year ended December 31, 2012 and 2011 as though the acquisition of AFI had occurred
at the beginning of each period.





|                                    |  | For the Years Ended
|----------------------------------- |  | -------------------
|                                    |  | December 31,       
|                                    |  | 2012               
|                                    |  |                    
|NET SALES                           |  | $                  
|                                    |  |                    
|COST OF SALES                       |  |                    
|                                    |  |                    
|GROSS MARGIN                        |  |                    
|                                    |  |                    
|Total Selling, General and          |  |                    
|Administrative Expenses             |  |                    
|                                    |  |                    
|LOSS FROM OPERATIONS                |  |                    
|                                    |  |                    
|Total Other Income (Expenses)       |  |                    
|                                    |  |                    
|LOSS BEFORE INCOME TAXES            |  |                    
|                                    |  |                    
|INCOME TAX EXPENSE                  |  |                    
|                                    |  |                    
|NET LOSS                            |  | $                  
|                                    |  |                    
|BASIC AND DILUTED:                  |  |                    
|Net loss per common share           |  | $                  
|                                    |  |                    
|Weighted average shares outstanding |  |                    





Table of ContentsF-8







FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011



On May 10, 2012, the Company along
with two partners formed AFI South Africa LLC (“AFI SA”), during the year itself the Company purchased shares of the
other partners to become 100% owner of AFI SA. AFI SA was effective as Limited Liability Company under the Act by the filing organization
with the office of the Secretary of State of Florida on May 11, 2012. The Company has been organized for the purpose of partnering
with Global Aviation for brokering the sale of Fuel for aircraft in South Africa.



On September 2012, the Company issued
2,063,550 shares of Common stock to the partner to purchase there 20% interest in AFI SA. The Company charged to operation the
fair value of the shares issued of $5,158,875.



NOTE 4 -	SIGNIFICANT ACCOUNTING POLICIES



| | a. | Principles of Consolidation
| | -- | ---------------------------



The consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in the United States (“US
GAAP”) and include the Company and its wholly-owned subsidiaries. All inter-company accounts and transactions have been
eliminated.



| | b. | Concentrations of Credit Risk
| | -- | -----------------------------



For the year ended December
31, 2012, one customer accounted for 98% of total revenue, representing a material amount of customer concentration. For the
year ended December 31, 2012, one disputed customers accounted for 100% of total accounts receivable, representing a material
amount of credit risk.



| | c. | Cash and Cash Equivalents
| | -- | -------------------------



Cash Equivalents include short-term,
highly liquid investments with maturities of three months or less at the time of acquisition.



| | d. | Accounts Receivable
| | -- | -------------------



Accounts receivable are
recorded net of the allowance for doubtful accounts of $670,000 and $-0- as of December 31, 2012 and 2011, respectively. The
Company generally offers 30-day credit terms on sales to its customers and requires no collateral. The Company maintains an
allowance for doubtful accounts which is determined based on a number of factors, including each customer’s financial
condition, general economic trends and management judgment.



| | e. | Revenue Recognition
| | -- | -------------------



Revenue from the sale of fuel is
recognized when the sales price is fixed or determinable, collectability is reasonably assured and title passes to the customer,
which is when the delivery of fuel is made to our customer directly from us, the supplier or a third-party subcontractor. Our fuel
sales are generated principally as a fuel reseller, although at some





Table of ContentsF-9







FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011



NOTE 4 -	SIGNIFICANT ACCOUNTING POLICIES (Continued)



point we intend to have
inventories from which we may make deliveries. When acting as a fuel reseller, we generally purchase fuel from the supplier,
mark it up and contemporaneously resell the fuel to the customer, normally taking delivery for purchased fuel at the same
place and time as the delivery is made to the customer. We record the gross sale of the fuel as we generally take inventory
risk, have latitude in establishing the sales price, have discretion in the supplier selection, maintain credit risk and are
the primary obligor in the sales arrangement. Returns or discounts, if any, are netted against gross revenues. For the years
ended December 31, 2012 and 2011, sales are recorded net of the allowance for returns and discounts of $-0-.



| | f. | Estimates
| | -- | ---------



The preparation of the consolidated
financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.



| | g. | Advertising
| | -- | -----------



The Company follows the policy
of charging the costs of advertising to expense as incurred. Advertising expense is included in cost of sales in the consolidated
statements of operations as it relates directly to the revenues associated with events managed by the Company. Advertising expense
for the years ended December 31, 2012 and 2011was $-0-.



| | h. | Basic and Fully Diluted Net Loss Per Share
| | -- | ------------------------------------------





|                                            |  | For the Years Ended December 31,
|------------------------------------------- |  | --------------------------------
|                                            |  |                                 
|Basic and fully diluted net loss per share: |  |                                 
|                                            |  |                                 
|Loss (numerator)                            |  | $                               
|Shares (denominator)                        |  |                                 
|Per share amount                            |  | $                               



The basic income (loss) per share
of common stock is based on the weighted average number of shares issued and outstanding during the period of the financial statements.
The Company has no common stock equivalents outstanding.



| | i. | Income Taxes
| | -- | ------------



The Financial Accounting Standards
Board (FASB) has issued FASB ASC 740-10.  FASB ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized
in an enterprise's financial statements.  This standard requires a company to determine whether it is more likely than not
that a tax position will be sustained will be sustained upon examination based upon the technical merits of the position.  If
the more-likely-than- not threshold is met,



Table of ContentsF-10







FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011



NOTE 4 -	SIGNIFICANT ACCOUNTING POLICIES (Continued)



a company must measure the tax position
to determine the amount to recognize in the financial statements.  As a result of the implementation of this standard, the
Company performed a review of its material tax positions in accordance with recognition and measurement standards established by
FASB ASC 740-10.



Deferred taxes are provided on a
liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit
carryforwards and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax basis.  Deferred tax assets are reduced by
a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax
assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and
rates on the date of enactment.



At December 31, 2012the
Company had net operating loss carryforwards of approximately $17,669,000 that may be offset against future taxable income
through 2032. No tax benefits have been reported in the financial statements, because the potential tax benefits of the net
operating loss carry forwards are offset by a valuation allowance of the same amount.



Due to the change in ownership
provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject
to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in the future.



Net deferred tax
assets consist of the following components as of December 31, 2012 and 2011:



|                       |  | 2012 |             | 2011
|---------------------- |  | ---- | ----------- | ----
|Deferred tax assets:   |  |      |             |     
|NOL Carryover          |  | $    | 17,669,000  |     
|Valuation allowance    |  |      | (17,669,000 | )   
|                       |  |      |             |     
|Net deferred tax asset |  | $    | —           |     



The income tax provision differs
from the amount of income tax determined by applying the U.S. federal and state income tax rates of 34% to pretax income from continuing
operations for the years ended December 31, 2012and 2011due to the following:



|                      |  | 2012 |            | 2011
|--------------------- |  | ---- | ---------- | ----
|Current Federal Tax   |  | $    | —          |     
|Current State Tax     |  |      | —          |     
|Change in NOL Benefit |  |      | 6,711,000  |     
|Valuation allowance   |  |      | (6,711,000 | )   
|                      |  | $    | —          |     



A reconciliation of the beginning
and ending amount of unrecognized tax benefits is as follows for the years ended December 31, 2012 and 2011:

Table of ContentsF-11







NOTE 4 -	SIGNIFICANT ACCOUNTING POLICIES (Continued)



|                                                         |  |   | 2012 |  |  |   | 2011 | 
|-------------------------------------------------------- |  | - | ---- |  |  | - | ---- | 
|Beginning balance                                        |  | $ | —    |  |  | $ | —    | 
|Additions based on tax positions related to current year |  |   | —    |  |  |   | —    | 
|Additions for tax positions of prior years               |  |   | —    |  |  |   | —    | 
|Reductions for tax positions of prior years              |  |   | —    |  |  |   | —    | 
|Reductions in benefit due to income tax expense          |  |   | —    |  |  |   | —    | 
|Ending balance                                           |  | $ | —    |  |  | $ | —    | 



At December 31, 2012, the Company
had no unrecognized tax benefits that, if recognized, would affect the effective tax rate.



The Company did not have any
tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase
or decrease within the next 12 months.



The Company includes interest
and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes.
 As of December 31, 2012and 2011, the Company had no accrued interest or penalties related to uncertain tax positions.



The tax years that remain subject
to examination by major taxing jurisdictions are those for the years ended December 31, 2012, 2011and 2010.



| | j. | Reclassifications
| | -- | -----------------



Certain amounts in the accompanying
consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications have
no material affect on the consolidated financial statements.



| | k. | Accrued Expenses
| | -- | ----------------



Accrued expenses consisted of the
following:



|                                      |  | December 31,
|------------------------------------- |  | ------------
|                                      |  | 2012        
|                                      |  |             
|Accrued interest – related party      |  | $           
|Accrued interest- on note payable     |  |             
|Accrued interest- on accounts payable |  |             
|Total accrued expenses                |  | $           





















Table of ContentsF-12









FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011





NOTE 4 -	SIGNIFICANT ACCOUNTING POLICIES (Continued)



| | l. | Recent Accounting Pronouncements
| | -- | --------------------------------



We have reviewed accounting pronouncements
issued during the past two years and have adopted any that are applicable to our company. We have determined that none had a material
impact on our consolidated financial position, results of operations, or cash flows for the years ended December 31, 2012 and 2011.



| | m. | Financial Instruments
| | -- | ---------------------



On January 1, 2008, the Company
adopted FASB ASC 820-10-50, “Fair Value Measurements.”  This guidance defines fair value, establishes a
three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures.
 The three levels are defined as follows:



- Level 1 inputs to the valuation methodology
are quoted prices (unadjusted) for identical assets or liabilities in active markets.



- Level 2 inputs to the valuation methodology
include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability,
either directly or indirectly, for substantially the full term of the financial instrument.



- Level 3 inputs to valuation methodology
are unobservable and significant to the fair measurement.



The carrying amounts reported in
the balance sheets for the cash and cash equivalents, receivables and current liabilities each qualify as financial instruments
and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and
their expected realization and their current market rate of interest.



| | n. | Share Based Payments
| | -- | --------------------



The Company accounts for its stock
based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value based method. Under
this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service
period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an
entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities
in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled
by the issuance of those equity instruments.



Table of ContentsF-13









FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011





NOTE 5- 	ACCOUNTS RECEIVABLE



Accounts receivable
at December 31, 2012 are as follow:



|                                      |  | 2012
|------------------------------------- |  | ----
|Accounts receivable (on acquisition)  |  | $   
|                                      |  |     
|Less:allowance on accounts receivable |  |     
|Accounts receivable, net              |  | $   



The Company was involved in disputes with the above accounts
receivable and has filed a lawsuit (refer to note 18)



NOTE 6-	ACCOUNTS PAYABLE



The accounts payable of $805,718,
as of December 31, 2012, includes two parties who are seeking motion for entry for final garnishment judgment, The Company has
assumed these two accounts payable with the acquisition of AFI (refer to note 3).Per court order interest is calculated at rate
of 6% per annum on $325,138 on one of the accounts payable and 18% on $211,471 of the second accounts payable. Accrued interest
of $74,948 has been accounted and accrued in accrued expenses.



Table of ContentsF-14









FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011





NOTE 7-	NOTES PAYABLE



|Notes payable consisted of the following:                                                                          |  |                   |            |                  
|------------------------------------------------------------------------------------------------------------------ |  | ----------------- | ---------- | -----------------
|                                                                                                                   |  | December 31, 2012 |            | December 31, 2011
|Notes payable, issued on May 6, 2011, unsecured, interest at 10%per annum, due on demand.                          |  | $                 | 59,500     |                  
|Notes payable, issued on August 25, 2010, unsecured, interest at 10%per
    annum due on demand.                   |  |                   | 172,500    |                  
|Notes payable issued on May 25, 2012, secured, interest at 6%per annum, due on November 14, 2012, is in default(1) |  |                   | 50,000     |                  
|Notes payable issued on January 28, 2012 to individual, unsecured, interest included, due on demand.(2)            |  |                   | 610,000    |                  
|Notes payable issued on October 18, 2010 to individual, unsecured, interest at 15% per annum, due on demand.(3)    |  |                   | 786,300    |                  
|                                                                                                                   |  |                   |            |                  
|Total notes payable                                                                                                |  |                   | 1,678,300  |                  
|Less: current portion                                                                                              |  |                   | (1,678,300 | )                
|Long-term notes payable                                                                                            |  | $                 | —          |                  



|Maturities of notes payable are as follows: |  |  |  |  |  |   |           | 
|------------------------------------------- |  |  |  |  |  | - | --------- | 
|Year Ending December 31,                    |  |  |  |  |  |   | Amount    | 
|2013                                        |  |  |  |  |  | $ | 1,678,300 | 
|Total                                       |  |  |  |  |  | $ | 1,678,300 | 





Accrued interest on notes payable
for the years ended December 31, 2012and 2011was $221,786 and $16,308, respectively.



| | 1) | This note payable was guaranteed by one of the shareholder. The Company
also issued 25,000 shares of Common stock as a consideration for the note which was fair valued at market rate for $62,500 and
charged to expenses.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2) | This note payable was assumed on the acquisition of AFI. The
                                                                                                     original owner of AFI has pledge 1.2 million shares of the Company in escrow account. The Company has not agreed to the terms
                                                                                                     and has repudiated the same. The matter is scheduled for a hearing in June.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3) | This Note payable was assumed on the acquisition of AFI. The Company
is negotiating a settlement agreement for $786,300, inclusive of all interest on the date of settlement.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Table of ContentsF-15









FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011





NOTE 8-	CONVERTIBLE DEBENTURE/NOTES
PAYABLE





|Convertible debenture issued on October 2, 2012, unsecured, interest included, due on October 2,  2015, convertible into common stock at 60% of the lowest closing bid price for the twenty trading days immediately preceding the date of conversion, (less unamortized debt discount of $110,137 and $-0-, respectively) |  | $ | 9,863   |  |  | $ | — | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ------- |  |  | - | - | 
|Notes payable issued on March 12, 2012, unsecured, interest included, due on March 12, 2014,convertible into common stock at $1.00 per share (less unamortized debt discount of $151,869 and $-0-, respectively)                                                                                                           |  |   | 98,131  |  |  |   | — | 
|Total notes payable                                                                                                                                                                                                                                                                                                        |  |   | 107,994 |  |  |   | — | 
|Less: current portion                                                                                                                                                                                                                                                                                                      |  |   | —       |  |  |   | — | 
|Long-term convertible debenture/notes payable                                                                                                                                                                                                                                                                              |  | $ | 107,994 |  |  | $ | — | 



Convertible note issued March
12, 2012



On March 12, 2012, the Company issued
a $250,000 Convertible Promissory Note which is convertible into 250,000 shares of the Company’s common stock at the holder’s
option, at  $1.00 per share.



In accordance with ASC 470-20,
the Company recognized an embedded beneficial conversion feature present in the note. The Company allocated a portion of the
proceeds equal to the intrinsic value of that feature to additional paid-in capital. The Company recognized and measured an
aggregate of $250,000 of the proceeds, which is equal to the intrinsic value of the embedded beneficial conversion feature,
to additional paid-in capital and a discount against the note. The debt discount attributed to the beneficial conversion
feature is charged to current period operations as interest expense using the effective interest method over the term of the
note.



During the years ended
December 31, 2012 and 2011, the Company amortized $98,131 and $-0- to current period operations as interest
expense, respectively, inclusive of debt discount amortization. The holder of the promissory note made payments of $200,000
directly to vendors of the Company for purchase of fuel and paid $50,000 directly to the Company. As part of the joint
venture agreement the Company has agreed to pay 50% of all the profits generated by all the fuel transactions in South
Africa. As of December 31, 2012 the Company has accounted and paid $48,153 to the joint venture partner



Convertible debenture issued
October 2, 2012



On October 2, 2012, the
Company issued a $120,000 Convertible Promissory Note which bears interest at a rate of 6% and is convertible into the
Company’s common stock at the holder’s option, at the conversion rate of 60% of the lowest closing bid price for
the twenty trading days immediately preceding the date of conversion. The Company also issued 30,000 of shares along with
Note which valued at market rate for $75,000 and was charged to expenses. The Company received net $88,000 from the debenture
holder and balance $32,000 were paid towards the legal expenses and due diligence fees.





Table of ContentsF-16









FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011





NOTE 8-	CONVERTIBLE DEBENTURE/NOTES
PAYABLE (Continued)



The Company
identified embedded derivatives related to the Convertible Promissory Note entered into on October 2, 2012.These embedded
derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that
the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to
adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the
Company determined a fair value of $182,125 of the embedded derivative. The fair value of the embedded derivative was
determined using the Binomial Lattice Model based on the following assumptions:



|Dividend yield: |  |  | -0-   | %
|--------------- |  |  | ----- | -
|Volatility      |  |  | 313.6 | %
|Risk free rate: |  |  | 0.31  | %



The initial fair value of the
embedded debt derivative of $182,125 was allocated as a debt discount up to the proceeds of the note ($120,000) with the
remainder ($62,125) charged to current period operations as interest expense.



During the years ended December
31, 2012 and 2011, the Company amortized $9,863 and $-0- to current period operations as interest expense,respectively.



The fair value of the described
embedded derivative of $265,589 at December 31, 2012 was determined using the Binomial Lattice Model with the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 187.37 | %
|Risk free rate: |  |  | 0.36   | %



At December 31, 2012, the Company
adjusted the recorded fair value of the derivative liability to market resulting in non-cash, non-operating loss of $83,464 for
the year ended December 31, 2012.



Table of ContentsF-17









FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011





NOTE 9-	NOTES PAYABLE - RELATED PARTIES



|Notes payable - related parties consist of the following:                                                                                                                                                                                                                                |  |                   |            |                  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | -----------------
|                                                                                                                                                                                                                                                                                         |  | December 31, 2012 |            | December 31, 2011
|Note payable to a shareholder, secured by tangible
    and               intangible assets of the
    Company, interest at 16%, principal and interest due April 1, 2000, past due.  Note is convertible into common
    stock     of the Company at $0.10 per share. Note is in default |  | $                 | 450,000    |                  
|Note payable to a related individual, interest at 8%,past due. Note is in default(1)                                                                                                                                                                                                     |  |                   | 1,000,000  |                  
|Notes payable to related individuals, unsecured,interest at 10%, due on demand.                                                                                                                                                                                                          |  |                   | 43,500     |                  
|Total notes payable - related parties                                                                                                                                                                                                                                                    |  |                   | 1,493,500  |                  
|Less: current portion                                                                                                                                                                                                                                                                    |  |                   | (1,493,500 | )                
|Long-term notes payable - related parties                                                                                                                                                                                                                                                |  | $                 | —          |                  
|Maturities of notes payable - related parties are as follows:                                                                                                                                                                                                                            |  |                   |            |                  
|Year Ending December 31,                                                                                                                                                                                                                                                                 |  |                   |            |                  
|2013                                                                                                                                                                                                                                                                                     |  |                   |            |                  
|Total                                                                                                                                                                                                                                                                                    |  |                   |            |                  





Accrued interest on notes payable
– related parties for the years ended December 31, 2012and 2011was $892,819 and $742,177, respectively. During the year ended
December 31, 2012, total interest expense to related party was $150,641.



| | 1) | This note was issued for the acquisition of
AFI on January 28, 2012. As of December 31, 2012 and 2011, the Company had accrued interest on the note in the amount of $74,082
and $-0-, respectively.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTE 10 -	LOANS RECEIVABLE



On April 11, 2011, the Company entered
into a joint venture agreement (the “Joint Venture”) with Aviation Fuel International, Inc. (“AFI”), a
Florida corporation, to provide for the supply of aviation fuel to various commercial aircraft via tanker trucks which are intended
to be acquired by the Joint Venture. Pursuant to the Joint Venture, the Company was obligated to contribute working capital of
$200,000 within 90 days of the effective date of the Joint Venture for the purchase of the tanker trucks, as well as salaries,
benefits, and taxes regarding the operation thereof. The Company contributed $183,500 during 2011 toward its working capital obligation
under the Joint Venture. This



Table of ContentsF-18









FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011





NOTE 10 -	LOANS RECEIVABLE (Continued)



amount was recorded on the
balance sheet as Loans Receivable as of December 31, 2011.On January 18, 2012, the Joint Venture was terminated upon
completion of the acquisition of AFI by the Company. Consequently, these Loans Receivable was considered as part of purchase
price.



NOTE 11 -	COMMON AND PREFERRED STOCK TRANSACTIONS



Preferred Stock

The Company is authorized
to issue 200 preferred shares of $0.0001 par value. As of December 31, 2012 and 2011 the Company has 200 shares of preferred
stock as issued and outstanding. Although the preferred stock carries no dividend, distribution, liquidation or conversion
rights, each share of preferred stock carries ten million (10,000,000) votes and holders of our preferred stock are able to
vote together with our common stockholders on all matters. Consequently, the holder of our preferred stock is able to
unilaterally control the election of our board of directors and, ultimately, the direction of our Company.



Common stock

The Company is authorized to
issue 50,000,000 shares of $0.0001 par value of common stock. As of December 31, 2012 and 2011 the Company has 15,216,848 and 3,167,747
shares of common stock as issued and outstanding.



On December 14, 2011, the Company
issued an aggregate of 891,667 shares of restricted common stock to three creditors of the Company in connection with the retirement
of $2,233,891 in various loans, notes, and accrued expenses of the Company in the aggregate.



The market value of the stock
on the date of issuance was $1,783,334 which offset the loans, notes, and accrued expenses with the remainder of $450,557 recorded
as part of the gain on the forgiveness of debt.



During the year ended
December 31, 2012, the Company issued an aggregate of 7,400,000 shares of common stock for acquisition of AFI (refer to note
3). The fair value of the stock on the dates of issuance was arrived at $3,774,000 and was part of the purchase price
consideration.



During the year ended December
31, 2012, the Company issued an aggregate of 490,000shares of common stock to various contract personnel for services provided.
The market value of the stock on the dates of issuance was $1,219,500 and charged to statements of operations.



During the year ended
December 31, 2012, the Company issued an aggregate of 2,040,551 shares of common stock to two accredited investors in private
transactions as payment for services rendered during the year. The market value of the stock on the dates of issuance was
$5,101,378 and was charged to statements of operations.



During the year ended
December 31, 2012, the Company issued an aggregate of 2,063,550 shares of common stock for acquisition of interest in AFI
South Africa, LLC (AFI SA) (refer to note 3). The market value of the stock on the dates of issuance was $5,158,875 and
charged to statements of operations.



During the year ended December
31, 2012, the Company issued an aggregate of 55,000, shares of common stock to note holder. The market value of the stock on the
dates of issuance was $137,500 and charged to finance expenses.

Table of ContentsF-19









FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011





NOTE 12 -	OPTIONS AND WARRANTS



The Company has
adopted FASB ASC 718, “Share-Based Payments” (“ASC 718”) to account for its stock options. The Company
estimates the fair value of each stock award at the grant date by using the Black-Scholes option pricing model. The assumptions
used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and our
experience. Compensation expense is recognized only for those options expect to vest, with forfeitures estimated at the date of
grant based on our historical experience and future expectations.



The following table summarizes the
changes in options outstanding issued to employees of the Company:



| |                                   | Number of Shares |  | Weighted Average 
Exercise Price
| | --------------------------------- | ---------------- |  | --------------------------------
| | Outstanding as of January 1, 2011 |                  |  |                                 
| | Granted                           |                  |  |                                 
| | Exercised                         |                  |  |                                 
| | Cancelled                         |                  |  |                                 
| | Outstanding at December 31, 2011  |                  |  |                                 
| | Granted                           |                  |  |                                 
| | Exercised                         |                  |  |                                 
| | Cancelled                         |                  |  |                                 
| | Outstanding at December 31, 2012  |                  |  |                                 



Common stock options outstanding and exercisable
as of December, 2012 are:



|                 |  | Options Outstanding |      | Options Exercisable      
|---------------- |  | ------------------- | ---- | -------------------------
|Expiration Date  |  | Exercise Price      |      | Number shares outstanding
|                 |  |                     |      |                          
|October  1, 2018 |  | $                   | 0.01 |                          
|Total            |  |                     |      |                          



During the year
ended December 31, 2012, the Company granted 2,250,000 stock options with an exercise price of $0.01 out of which
1,250,000 was immediately vested and balance vesting over three years and expiring ten years from issuance. 1,250,000 of the
options were immediately cancelled by the board due to termination of the officer and the balance of 1,000,000 was
automatically canceled due to termination by clause. Hence no fair valuation was done by the company on the vested
portion.

Table of ContentsF-20







FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011



NOTE 12 -	OPTIONS AND WARRANTS (Continued)



During the year ended December 31,
2012, the Company granted 350,000 stock options with an exercise price of $0.01 vesting over three years and expiring ten years
from issuance. These options were immediately cancelled by the board and instead 150,000 shares of Company common stock were
issued which were fair valued at market rate and charged to expenses.



During the year ended
December 31, 2012, the Company granted 70,000 stock options to consultant with an exercise price of $0.01 and expiring
ten years from issuance. Out of these options 50,000 were immediately vested and 20,000 were vested over the period of three
years. The fair value of the vested portion (determined as described below) of $123,988 was charged to expenses and
additional paid in capital during the year ended December 31, 2012.



The
fair value of these stock options granted and the significant assumptions used to determine those fair values, using a Black-Scholes
option-pricing model are as follows:



|Significant assumptions:              |  |  |               
|------------------------------------- |  |  | --------------
|Risk-free interest rate at grant date |  |  | 1.04%-0.89    
|Expected stock price volatility       |  |  | 199.38%-344.22
|Expected dividend payout              |  |  | —             
|Expected option life-years            |  |  | 6             



NOTE 13 -	RELATED PARTY TRANSACTIONS



On December 14, 2011, the Company
issued 500,000 shares of restricted common stock to its former Chief Executive Officer. These shares vested immediately upon such
appointment.



On December 14, 2011, John Thomas,
the controlling shareholder of the Company and the Company’s former Chief Executive Officer, sold 200 shares of Series A
Preferred Stock of the Company (the “Preferred Stock”) to Sean Wagner, the sole shareholder of AFI and the recipient
of 7,400,000 shares of common stock in connection with the acquisition of AFI. The consideration for the Preferred Shares consisted
of a secured promissory note (“Note”) issued by Mr. Wagner to Mr. Thomas, and required Mr. Wagner to grant Mr. Thomas
a security interest in the Preferred Stock as well as the voting rights attached thereto until the Note is paid in full. Although
the Preferred Stock carries no dividend, distribution, or liquidation rights, and is not convertible into common stock, each share
of Preferred Stock carries 10,000,000 votes per share and is entitled to vote with the Company’s common stockholders on
all matters upon which common stockholders may vote. As a result of the purchase and sale of the Preferred Stock, Mr. Wagner holds
a controlling beneficial interest in the Company and, once the Note is paid in full, may unilaterally determine the election of
the Board and other substantive matters requiring approval of the Company’s stockholders.



From time to time, an officer
of the Company and an entity he owns paid for expenses of the Company for which he has not been reimbursed. These
unreimbursed expenses are disclosed as due to related parties. The balance due at December 31, 2012 and 2011 was $104,254 and
$29,254, respectively.



Table of ContentsF-21







FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011



NOTE 13 -	RELATED PARTY TRANSACTIONS (Continued)



During the year ended December 31,
2012 the Company sold fuel to a previous partner in a joint venture who converted their interest in the joint venture to stock
of the Company. During the year ended December 31, 2012, the Company recorded sales to this party in the amount of $1,034,180.



During the year ended December
31, 2012, the Company issued 1,826,622 shares to a major shareholder for services rendered to the company regarding business in
South Africa which was fair valued at market rate for $4,566,555. During the year ended December 31, 2012, this shareholder was
also paid $67,500 as salary which has been recorded in the statement of operations. No formal compensation agreement has been memorialized
for this shareholder.



NOTE 14-	SUBSEQUENT EVENTS



On January 28, 2013, the Company
issued an aggregate of 49,951 shares of common stock to employees and consultants of the Company. Also on January 28, 2013, pursuant
to its 2012 Equity Incentive Plan, the Company issued 150,000 common stock purchase options to each of their directors at an exercise
price of $1.65 per share.



On February 1, 2013, the Company
issued a second convertible debenture in the principal amount of $100,000.



NOTE 15 -	REVERSE STOCK SPLIT



On June 14, 2011, the Company board
of directors and the holder of a majority in interest of its voting capital stock approved a 1-for-100 reverse split of its common
shares (“Reverse Split”). The Reverse Split became effective on August 3, 2011. As a result of the Reverse Split, each
shareholder of record, received one (1) share of common stock for each one hundred (100) shares of common stock they held prior
to the Reverse Split, provided however, that fractions of a share were rounded up to the nearest whole share and any registered
shareholder who would have otherwise held less than 200 shares following the Reverse Split was rounded up to 200 shares. Consequently,
none of its registered shareholders as of the record date held less than 200 shares following the Reverse Split. This rounding
up to 200 shares resulted in an additional 98,912 shares issued. These consolidated financial statements have been retroactively
restated for this change in capital structure.



NOTE 16 -	OTHER EVENTS



On November 20, 2011, the Board
and holders of a majority of the voting rights of the outstanding capital stock of the Company approved a restatement of the Company’s
Certificate of Incorporation (“November Restatement”). The purpose of the November Restatement was to:(i) decrease
the number of authorized shares of Preferred Stock to 200 and common stock to 50,000,000, (ii) restate, consistent with the Certificate
of Designation filed by the Company on June 14, 2011, with respect to the Preferred Stock, defining the powers, preferences, rights,
and restrictions, thereof, and (iii) amend Article VII, which specifies that no amendment or restatement of the Certificate of
Incorporation of the





Table of ContentsF-22







FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011



NOTE 16 -	OTHER EVENTS (Continued)



Company shall be valid unless approved
by holders of a majority of the voting rights of the Company, which approval shall expressly include voting rights associated with
the outstanding shares of common stock and Preferred Stock of the Company.



On June 14, 2011, the Company amended
and restated the Certificate of Designation to the Company’s Certificate of Incorporation. The Certificate of Designation
concerns the rights, preferences, privileges, and restrictions of Series “A” Preferred Stock (the “Preferred
Stock”), and the amended and restated Certificate of Designation increased the number of voting rights applicable to each
share of Preferred Stock from one million (1,000,000) to ten million (10,000,000).



On June 14, 2011, the Company
amended and restated its Certificate of Incorporation to provide for an increase in the authorized common and preferred
shares of the Company, a reduction in the par value of the Company’s common and preferred shares from $0.002 to $0.0001
per share, and the removal of a classified board of directors and certain super majority requirements. The provisions
relating to the increase in the authorized shares of common and preferred stock were superseded by the November Restatement
described above.



NOTE 17- FAIR VALUE OF FINANCIAL INSTRUMENTS



ASC 825-10 defines fair value as
the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted
to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers
assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions,
and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that
may be used to measure fair value:



Level 1 - Quoted prices in active
markets for identical assets or liabilities.



Level 2 - Observable inputs other
than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume
or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or
can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.



Level 3 - Unobservable inputs to
the valuation methodology that are significant to the measurement of fair value of assets or liabilities.



To the extent that valuation is
based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more
judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In
such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed
is determined based on the lowest level input that is significant to the fair value measurement.





Table of ContentsF-23







FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011



NOTE 17- FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)



Items recorded or measured at fair
value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of December
31, 2012:



|                            |  |                   |         | Fair Value Measurements at December 31, 2012 using:           
|--------------------------- |  | ----------------- | ------- | --------------------------------------------------------------
|                            |  | December 31, 2012 |         | Quoted Prices in Active Markets for Identical Assets (Level 1)
|Liabilities:                |  |                   |         |                                                               
|Debt Derivative liabilities |  | $                 | 265,589 |                                                               



The debt derivative  and
warrant liabilities are measured at fair value using quoted market prices and estimated volatility factors based on historical
prices for the Company’s common stock and are classified within Level 3 of the valuation hierarchy.



The following table provides a summary
of changes in fair value of the Company’s Level 3 financial liabilities as of December 31, 2012:



|                                                                                                   |  | Debt Derivative Liability
|-------------------------------------------------------------------------------------------------- |  | -------------------------
|Balance, December 31, 2011                                                                         |  | $                        
|Initial fair value of debt derivatives at note issuances                                           |  |                          
|Mark-to-market at December 31, 2012                                                                |  |                          
|-Embedded debt derivatives                                                                         |  |                          
|Balance, December 31, 2012                                                                         |  | $                        
|                                                                                                   |  |                          
|Net loss for the period included in earnings relating to the liabilities held at December 31, 2012 |  | $                        



Level 3 Liabilities are comprised of our bifurcated convertible
debt features on Companies our convertible notes.



NOTE 18 - COMMITMENTS AND CONTINGENCIES



Litigation



The Company is subject to certain legal proceedings and
claims, which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the
Company believes that the final disposition of such matters should not have a material adverse effect on its financial position
or results of operations.



Ryan International Airlines.
One of the Companies subsidiaries, Aviation Fuel International ("AFI") is involved in disputes with two airlines: Ryan
International Airlines, LLC ("Ryan") and Direct Air. Both aviation fuel customers litigation arise out of disputed amounts
for the





Table of ContentsF-24







FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011



NOTE 18 - COMMITMENTS AND CONTINGENCIES (Continued)



delivery of Jet Fuel. Disagreements
between the parties resulted in both parties filing separate lawsuits in three actions. Ryan filed a cause of action in Case No.
09-57580, Ryan International Airlines, Inc. v. Aviation Flight Services, LLC (“AFS”) and Aviation Fuel International,
Inc., (“AFI”), and sought recovery of $1,491,308.66 allegedly paid to AFS as pre-payment of aviation fuel and flight
services under a contractual relationship between Ryan and AFS. AFI moved to dismiss the action, to which, Ryan has subsequently
filed a notice of removal to the Federal District Court for the Northern District of Illinois, Bankruptcy Division Case No.: 12-80802.
AFI filed an action for breach of contract for Ryan’s failure to pay certain Jet Fuel invoices for the delivery of fuel in
the amount of $678,000; Aviation Fuel International v. Ryan International Airlines, Inc., a Kansas corporation, Wells Fargo
Bank Northwest, Trustee N.A., a Utah corporation, RUBLOFF 757-MSN24794LLC, an Illinois limited liability company, RYAN 767 LLC,
an Illinois limited liability company, AFT TRUST SUB I, a Delaware corporation, RYAN 767 N123 LLC, an Illinois limited liability
company, and RUBLOFF 440 LLC, an Illinois corporation, Civil Action Case No. CACE 10-037788-04. AFI also filed the corresponding
claims of liens under the FAA Aircraft Registration Branch, for each plane, registered and tail wing number listed therein. This
action has also been recently noticed for been removal to the Federal District Court for the Northern District of Illinois, Bankruptcy
Division Case No.: 12-80802. In addition, as a result of Ryan’s filing a Federal Involuntary Bankruptcy Petition against
Aviation Flight Services (“AFS”) on June 10, 2010, Case No.: 10-27313-JKO, (S.D. of Fla.), our subsidiary AFI, also
filed and was discharged as a creditor in the amount of $269,000.



Southern Sky Air Tours,
d/b/a Myrtle Beach Direct Air and Tours (Direct Air). On or about March 13, 2012, Southern Sky Air Tours, d/b/a Myrtle
Beach Direct Air and Tours (“Direct Air”) ― a public charter operator ― ceased operations. Direct Air
has subsequently filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of Massachusetts
(Worcester)(Case no. 12-40944). The Direct Air currently has $122,000 in cash in escrow with Suntrust Bank, representing a
partial payment by Direct Air for Fuel. This amount was unrecorded in the Company’s financial statements because it has
been challenged by the debtor and has been sequestered by the bankruptcy court in the proceeding. This action is currently
pending before the court, as it relates to the collection of the garnishment.



As a result of the non-payment for
jet fuel by AFI customers, certain of AFI’s suppliers have filed actions that have resulted in judgment and garnishments,
in the amount of $330,000. Most of these outstanding fuel delivery charges are secured in, and being challenged through, the Bankruptcy
action through the lien filings by both the issuer and individual fuel providers. In addition, AFI incurred certain loan and debt
obligations for which the Company are attempting to convert into our common stock.



Julian Manuel Leyva and Gabriel
Leyva. On June 8, 2012, Julian Manuel Leyva and Gabriel Leyva (collectively, the “Leyvas”) filed a lawsuit in the
Seventeenth Judicial Circuit Court, Broward County, Florida, against us, our subsidiary AFI, and various others, alleging various
claims in connection with efforts to collect sums allegedly loaned to AFI between September 24, 2009 through February 11, 2011.
The Leyvas are seeking damages of $570,000 plus interest in addition to additional damages from other parties to the lawsuit. $610,000
has been accounted as payable under note payable.



Table of ContentsF-25









FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011



NOTE 18 - COMMITMENTS AND CONTINGENCIES (Continued)



Russell Adler. On January
11, 2013, Russell Adler, our former Chief Executive Officer, filed a cross-complaint against the Company, AFI, and other associated
persons in the Seventeenth Judicial District Court, Broward County, Florida. Mr. Adler’s complaint alleges various causes
of action, including indemnification from the Company in respect of litigation involving the Leyvas described above, damages for
breach of Mr. Adler’s employment contract, fraud, unpaid legal fees, unjust enrichment, and quantum meruit. The Company believe
Mr. Adler’s claims are without merit and intend to defend the same.



From time to time, the Company is
also a party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights
under contracts with purchasers and suppliers of fuel. While the outcome of these legal proceedings cannot at this time be predicted
with certainty, we do not expect that these proceedings will have a material effect upon its consolidated financial condition or
results of operations.



Lease Commitments



The Company’s headquarters
is located in Fort Lauderdale, Florida. Many administrative functions such as accounting and legal are performed in an office in
Draper, UT.



Future minimum lease and related payments are
as follows:



|2013           |  | $      | 78,900 | 
|-------------- |  | ------ | ------ | 
|2014           |  | 46,025 |       
|2015           |  | -      |       
|2016 and after |  | -      |       



The Company’s main office
is located in Fort Lauderdale, Florida. The lease had a term of 12 months, which began on August 1, 2012 and expires on July 31,
2014.  The Company currently pays rent and related costs of approximately $6,575 per month.



There is no lease obligation in
its administrative office in Draper, Utah.



Employment Agreement



On November 5, 2012, the Company entered into an employment
agreement with the current CEO, Juan Carlos Ley. Terms of the agreement require the Company to pay a base salary of $5,000 per
month and to issue 25,000 shares of the Company’s common stock.











Table of ContentsF-26







ITEM 9.    CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

On March 19, 2013, we dismissed our previous
independent accountant, Morrill & Associates, LLC (“Morrill”), due to rules of the Public Company Accounting Oversight
Board requiring the rotation of the audit partner principally responsible for the audit of our financial statements after a 5-year
period. Because Morrill is a single-partner audit firm, we were required to seek new independent auditors for the Company. Our
Board of Directors approved the decision to change the Company’s independent accountants.



During the year ended
December 31, 2011 through to March 19, 2013, the date of Morrill’s dismissal, there were no disagreements with Morrill
on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which
disagreements, if not resolved to the satisfaction of Morrill would have caused it to make reference to the subject matter of
the disagreements in connection with its report.



Also on March 19, 2013, we engaged RBSM LLP
(“RBSM”), independent registered accountants, as our independent accountant following the dismissal of Morrill. Prior
to the engagement of RBSM, the Company has not consulted with RBSM regarding either:



| | a) | the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company's financial statements, and neither a written report was provided to the Company nor oral advice was provided that RBSM concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | any matter that was either the subject of a disagreement (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K), or a "reportable event" (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We have not had any disagreements with any of
our existing accountants during the past two fiscal years.



ITEM 9A.    CONTROLS AND PROCEDURES



(a)   We maintain a system of
controls and procedures designed to ensure that information required to be disclosed by us in reports that we file or submit under
the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within time periods specified
in the SEC’s rules and forms and to ensure that information required to be disclosed by us in the reports that we file or
submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our
Chief Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure. As of December 31, 2012, under the supervision and with the participation of our Chief
Executive Officer and Principal Financial Officer, management has evaluated the effectiveness of the design and operation of our
disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Principal Financial Officer concluded
that our disclosure controls and procedures were not effective.



Table of Contents19







As permitted by applicable SEC rules, this report
does not include an attestation report of our independent registered public accounting firm regarding internal control over financial
reporting. Management’s report, which is included in Item 8 above, was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual
report.



(b)    There were no changes
in our internal control over financial reporting during the quarter ended December 31, 2012 that materially affected, or is reasonably
likely to materially affect, our internal controls over financial reporting.



MANAGEMENT’S REPORT ON INTERNAL CONTROLS
OVER FINANCIAL REPORTING



Our management is responsible for establishing
and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) under the Exchange
Act.



Our internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes
those policies and procedures that:



| | - | Pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and disposition of assets;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



| | - | Provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations of management and our directors; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | Provide reasonable assurance regarding prevention and timely detection
of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those systems that are determined to be effective provide
only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.



Management assessed the
effectiveness of our internal control over financial reporting based on criteria for effective internal control over financial
reporting described in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission as determined to apply to a company our size.



Based on its assessment,
management concluded that we maintained not effective internal control over financial reporting as of December 31, 2012.



ITEM 9B.    OTHER INFORMATION.



None.





Table of Contents20







PART III



ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE.



Board of Directors

Our board of directors
consists of the following two individuals:

|Name and Year First Elected Director(1) |  | Age |  | Background Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--------------------------------------- |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Thomas McConnell, Jr.
        (2012)    |  | 50  |  | Since 2006, Mr. McConnell has been a Senior Project Manager for
        Weston Custom Homes, Inc., a builder of luxury homes in Florida, Pennsylvania, and Maryland. Additionally, since 2012, Mr. McConnell
        has served as the Senior Project Manager for Robert Castellano Building and Design, LLC, a builder of luxury home communities in
        the eastern United States. From 2006-2008, Mr. McConnell was a Senior Project Manager for Southern Chateaux Homes, Inc. Mr. McConnell
        is a certified Residential Contractor in the State of Florida.                                                                                                                                                                                     
|Paul Douglas Major (2012)               |  | 60  |  | Since 2006, Mr. Major has been the Chief Executive Officer of Major
        Consulting Limited, a consulting firm that offers financial solutions to public and private sector entities and high net worth
        individuals. Prior to 2006, Mr. Major was the Managing Director of Bahamasair from 2000-2005. Mr. Major has extensive finance and
        banking experience, including serving as Vice President and General Manager of Citibank’s Latin American/Carribean division,
        and General Manager of the Bahamas Development Bank. Mr. Major has an MBA from the University of Miami, as well as other institutions
        of higher learning including the School of Banking - New York, Harvard, and the Adam Smith Institute in London.



(1) The business address of each
of our directors is 510 Shotgun Road, Suite 110, Sunrise, Florida 33325.



Director Independence



We consider both of the members of our board
of directors as “independent directors” in accordance with the published listing requirements of the NYSE Euronext
Stock Exchange. The independence definition of the NYSE includes a series of objective tests, such as that the director is not,
and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has
engaged in various types of business dealings with us. In addition, we are required to consider “all relevant facts and circumstances”
in making our determination as to the independence of our directors.



Compensation of Directors



Although we anticipate compensating the members
of our board of directors in the future at industry levels, current members are not paid cash compensation for their service as
directors. Each director may be reimbursed for certain expenses incurred in attending board of directors and committee meetings.







Table of Contents21







Board of Directors Meetings and Committees



Although various items were reviewed and approved
by the Board of Directors via unanimous written consent during 2012, the Board held no in-person meetings during the fiscal year
ended December 31, 2012.



We do not have Audit or Compensation Committees
of our board of directors. Because of the lack of financial resources available to us, we also do not have an “audit committee
financial expert” as such term is described in Item 401 of Regulation S-K promulgated by the SEC.



Changes in Procedures by which Security Holders May Recommend
Nominees to the Board



Any security holder
who wishes to recommend a prospective director nominee should do so in writing by sending a letter to the Board of Directors. The
letter should be signed, dated and include the name and address of the security holder making the recommendation, information to
enable the Board to verify that the security holder was the holder of record or beneficial owner of the company’s securities
as of the date of the letter, and the name, address and resumé of the potential nominee. Specific minimum qualifications
for directors and director nominees which the Board believes must be met in order to be so considered include, but are not limited
to, management experience, exemplary personal integrity and reputation, sound judgment, and sufficient time to devote to the discharge
of his or her duties. There have been no changes to the procedures by which a security holder may recommend a nominee to the Board
during our most recently ended fiscal year.



Executive Officers

Juan Carlos Ley is
our sole executive officer, serving as our Chief Executive Officer and Secretary, as well as our principal accounting and financial
officer. Mr. Ley’s business background is as follows:

|Name and Year First Appointed as Executive Officer |  | Age |  | Background Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-------------------------------------------------- |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Juan Carlos Ley
        (2012)                     |  | 42  |  | Mr. Ley holds a Bachelor of Science degree from Cornell University,
        an Ivy League institution. His academic concentration was Finance and Marketing while complementing his education with independent
        studies at Cornell's Johnson Graduate School of Management. Mr. Ley possesses an entrepreneurial spirit and in the last seventeen
        years has been involved in several start-up companies in both the public and private sectors. Mr. Ley's responsibilities have included,
        but are not limited to managing the day to day operations of these businesses. Mr. Ley has also been profoundly involved with the
        R & D of new products and product lines, increasing production efficiencies, maximizing marginal contributions, financial planning
        and managing relationships with vendors and third party service providers on a daily basis. From December 2011 to March 2012, Mr.
        Ley served as the Chief Executive Officer of MedEx Direct, Inc. (Delaware) (hereafter, “Med Ex Delaware”), a filer
        of reports pursuant to the Securities Exchange Act of 1934. Since February 2010, Mr. Ley has been a principal and founder of Med
        Ex Direct (Florida), Inc., a one-time wholly owned subsidiary of Med Ex Delaware, a distributor of diabetic supplies throughout
        the United States that concentrated principally on Hispanic patients.



Table of Contents22







Significant Employees and Consultants

Sean Wagner serves
as our Vice President of Sales. Mr. Wagner’s business background information is as follows:

|Name and Year First Employed |  | Age |  | Background Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---------------------------- |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Sean Wagner
        (2012)   |  | 41  |  | In February 1991, at the age of 20, Mr. Wagner started as a mechanic
        for World Fuel Services Corporation, moving into sales shortly thereafter. During his more than 15 years at World Fuel Services,
        Mr. Wagner became a senior sales executive, assisting the company in increasing its sales from approximately $211 million in 1990
        to over $8.7 billion in 2005. In December 2005, Mr. Wagner left World Fuel Services and, in 2006, he started Aviation Fuel International,
        Inc. (“AFI”), a small aviation fuel reseller that employed a similar business model as Mr. Wagner operated at World
        Fuels and utilizing Mr. Wagner’s extensive industry relationships. In April 2011, AFI entered into a joint venture with us
        to finance the acquisition of tanker trucks to provide aviation fuel. Although we were unable to ultimately acquire the trucks,
        we operated the joint venture with AFI until it was terminated in January 2012 upon our acquisition of AFI. Mr. Wagner thereupon
        became our Vice President of Sales.



Section 16(a) Beneficial Ownership Reporting Compliance



We are required to identify each person who
was an officer, director or beneficial owner of more than 10% of our registered equity securities during our most recent fiscal
year and who failed to file on a timely basis reports required by Section 16(a) of the Securities Exchange Act of 1934.



During 2012, neither Mr. Thomas McConnell, a
member of the Board of Directors, nor Mr. Paul Douglas Major, also a member of the Board of Directors, filed a report on Form 3
in connection with his receipt of stock options under the Company’s 2012 Equity Incentive Plan. To our knowledge, during
the fiscal year ended December 31, 2012, based solely upon a review of such materials as are required by the Securities and Exchange
Commission, no other officer, director or beneficial holder of more than ten percent of our issued and outstanding shares of Common
Stock failed to timely file with the Securities and Exchange Commission any form or report required to be so filed pursuant to
Section 16(a) of the Exchange Act of 1934.



Code of Ethics



The Company expects that
its Officers and Directors will maintain appropriate standards of honesty and ethical conduct in connection with the performance
of their duties on behalf of the Company. In recognition of this expectation, the Company has adopted a Code of Ethics. The purpose
of this Code of Ethics is to codify standards the Company believes are reasonably necessary to deter wrongdoing and to promote
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional
relationships and full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with,
or submits to, the Securities and Exchange Commission (the “SEC”), or other regulatory bodies and in other public
communications made by the Company.







Table of Contents23







ITEM 11.    EXECUTIVE COMPENSATION.

The following table
summarizes the total compensation for the two fiscal years ended December 31, 2012 of each person who served as our principal executive
officer or principal financial and accounting officer collectively, (the “Named Executive Officers”) including any
other executive officer who received more than $100,000 in annual compensation from the Company. Except as noted in footnote (2)
below, we did not award cash bonuses, stock awards, stock options or non-equity incentive plan compensation to any Named Executive
Officer during the two years ended December 31, 2012, thus these items are omitted from the table below:



|Summary Compensation Table    
|------------------------------
|Name and Principal Position   
|                              
|Juan Carlos Ley               
|Chief Executive Officer       
|                              
|Russell Adler(1)              
|former Chief Executive Officer
|                              
|Mark D. Klok                  
|former Chief Executive Officer
|                              
|John D. Thomas                
|former Chief Executive Officer





| | (1) | In 2012, Mr. Adler received a grant of options to acquire 2,250,000 shares pursuant to our 2012
Equity Incentive Plan. These options were subsequently canceled in connection with the termination of Mr. Adler’s employment
with the Company.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



There is no other arrangement or understanding
between our directors and officers and any other person pursuant to which any director or officer was or is to be selected as such.



Equity Incentive Plan



On September 7, 2012, our Board of Directors
adopted our 2012 Equity Incentive Plan (hereafter, the “Plan”). The Plan allows for the grant and issuance of common
stock purchase options and grants of restricted common stock to employees, non-employee directors, consultants, and advisors of
the Company. We have reserved 6,000,000 shares of common stock for issuance under the Plan. As of December 31, 2012, we have outstanding
options to 2 persons under the Plan to acquire 70,000 shares of our common stock, each at an exercise price of $0.01 per share.
50,000 of the options are vested, with the remainder vesting ratably over a 3-year period commencing October 1, 2012. The options
expire after 5 years if unexercised or if terminated earlier pursuant to the rules of the Plan. There are no other grants or awards
currently outstanding under the Plan. The foregoing summary does not purport to be complete and is qualified in its entirety by
reference to the Plan which was filed as an exhibit to our Current Report on Form 8-K, filed with the SEC on September 13, 2012.

Table of Contents24







Outstanding Equity Awards at Fiscal Year-End



Our Named Executive Officers
did not have any unexercised options or stock awards that have not vested outstanding at the end of our last fiscal year. Other
than as noted above, we did not grant any equity awards to our Named Executive Officers or directors during 2012.



ITEM
12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table
sets forth the beneficial ownership of each of our directors and executive officers, and each person known to us to beneficially
own 5% or more of the outstanding shares of our common stock, and our executive officers and directors as a group, as of March
1, 2013. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with
respect to the securities. Unless otherwise indicated, we believe that each beneficial owner set forth in the table has sole voting
and investment power and has the same address as us. Our address is 510 Shotgun Road, Suite 110, Sunrise, Florida 33325. As of
March 1, 2013, we had 15,266,799 shares of common stock outstanding and 200 shares of preferred stock outstanding. While each of
our shares of common stock holds one vote, each share of our preferred stock holds ten million (10,000,000) votes. The following
table describes the ownership of our voting securities (i) by each of our officers and directors, (ii) all of our officers and
directors as a group, and (iii) each person known to us to own beneficially more than 5% of our common stock or any shares of our
preferred stock.

|                                                                    |  | Amount and Nature of Beneficial Ownership |           |                                   
|------------------------------------------------------------------- |  | ----------------------------------------- | --------- | ----------------------------------
|Name                                                                |  | Sole Voting and Investment Power          |           | Options Exercisable Within 60 Days
|Juan Carlos Ley                                                     |  |                                           | 25,000    |                                   
|Thomas McConnell, Jr.                                               |  |                                           | —         |                                   
|Paul Douglas Major                                                  |  |                                           | —         |                                   
|Sean Wagner(3)                                                      |  |                                           | 9,226,622 |                                   
|John D. Thomas, P.C.(4)                                             |  |                                           | 500,000   |                                   
|Aviation Mondial                                                    |  |                                           | 1,547,662 |                                   
|Peak One Opportunity Fund, L.P.(5)                                  |  |                                           | 34,951    |                                   
|Summit Trading Limited                                              |  |                                           | 1,015,889 |                                   
|All current directors and executive officers as a group (3 persons) |  |                                           | 25,000    |                                   

____________________



|* |  | Indicates less than one percent.
|- |  | --------------------------------

|(1) |  | The calculation of total beneficial ownership for each person in the table above is
based upon the number of shares of common stock beneficially owned by such person, together with any options, warrants, rights,
or conversion privileges held by such person that are currently exercisable or exercisable within 60 days of the date of this
prospectus.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(2) |  | Based on 15,266,799 shares of our common stock, par value $0.0001 per share, outstanding
as of March 1, 2013. Excludes voting rights applicable to shares of our preferred stock. See footnotes (3) and (4) for a discussion
of the percentage of outstanding voting rights beneficially held when taking into account our shares of preferred stock.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | In addition to the shares of common stock shown above, Mr. Wagner also holds 200 shares
of our preferred stock which collectively hold 200,000,000 votes. Mr. Wagner has granted a proxy to John D. Thomas, P.C. (“JDT”)
covering the voting rights of these preferred shares, as well as 4,326,622 shares of common stock held by Mr. Wagner. See “Change
in Control” on page ___ above for a more detailed description of this transaction. If the votes of the preferred stock are
taken into account, Mr. Wagner would beneficially hold 97.19% of the voting securities of the Company.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Includes 500,000 shares of common stock held directly but excludes 200 shares of preferred
stock and 4,326,622 shares of common stock held by Sean Wagner, a voting proxy for which has been granted to JDT. If the votes
of the preferred stock and these shares of common stock are taking into account, JDT would beneficially hold 93.14% of the voting
securities of the Company. John D. Thomas, the sole shareholder of JDT, is not an executive officer or director of the Company.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) |  | Includes 14,951 shares of common stock held directly and 20,000 shares of common stock
held by Peak One Investments, LLC, the general partner and manager of Peak One Opportunity Fund, L.P. Also includes 362,267 shares
of common stock issuable from the conversion of certain debentures. For purposes of the table above, the number of shares beneficially
held assumes that debentures in the face amount of $220,000 have been converted into common stock at a weighted average conversion
price of $0.90 per share, which is based on a discount from the bid price of our shares on the date the first of the two debentures
were issued. The number of shares to be received from conversion of the debentures has been increased by 48.2%, which is the standard
deviation of our stock price since October 1, 2012, the date the first of the two debentures was issued because these debentures
are convertible at the lower of such price or a discount from the bid price for the 20-day trading period prior to conversion,
the actual conversion price may differ substantially and the number of shares issuable from such conversion could therefore be
substantially greater than shown in the table above.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



DESCRIPTION
OF CAPITAL STOCK

On June 14, 2011, the
Company board of directors and the holder of a majority in interest of its voting capital stock approved a 1-for-100 reverse
split of its common shares (“Reverse Split”). The Reverse Split became effective on August 3, 2011. As a result
of the Reverse Split, each shareholder of record, received one (1) share of common stock for each one hundred (100) shares of
common stock they held prior to the Reverse Split, provided however, that fractions of a share were rounded up to the nearest
whole share and any registered shareholder who would have otherwise held less than 200 shares following the Reverse Split was
rounded up to 200 shares. Consequently, none of its registered shareholders as of the record date held less than 200 shares
following the Reverse Split. This rounding up to 200 shares resulted in an additional 98,912 shares issued. These
consolidated financial statements have been retroactively restated for this change in capital structure



On November 20, 2011, the
Board and holders of a majority of the voting rights of the outstanding capital stock of the Company approved a restatement of
the Company’s Certificate of Incorporation (“November Restatement”). The purpose of the November Restatement
was to:(i) decrease the number of authorized shares of Preferred Stock to 200 and decrease the number of authorized shares of common
stock to 50,000,000, (ii) restate, consistent with the Certificate of Designation filed by the Company on June 14, 2011, with respect
to the Preferred Stock, defining the powers, preferences, rights, and restrictions, thereof, and (iii) amend Article VII, which
specifies that no amendment or restatement of the Certificate of Incorporation of the Company shall be valid unless approved by
holders of a majority of the voting rights of the Company, which approval shall expressly include voting rights associated with
the outstanding shares of common stock and Preferred Stock of the Company.



Common Stock

Our charter authorizes
us to issue up to 50,000,000 shares of common stock. All shares of our common stock have equal rights as to earnings, assets, dividends
and voting privileges. Distributions may be paid to the holders of our common stock if, as and when authorized by our board of
directors and declared by us out of assets legally available therefor. Shares of our common stock have no preemptive, conversion
or redemption rights and are freely transferable, except where their transfer is restricted by federal and state securities laws
or by contract. In the event of our liquidation, dissolution or winding up, each share of our common stock would be entitled to
share ratably in all of our assets that are legally available for distribution after we pay all debts and other liabilities and
subject to any preferential rights of holders of our preferred stock, if any preferred stock is





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outstanding at such time. Each
share of our common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of
directors.



Preferred Stock

Our charter authorizes
us to issue up to 200 shares of preferred stock. All 200 of these preferred shares are issued and outstanding as of December 31,
2012. Although the preferred stock carries no dividend, distribution, liquidation or conversion rights, each share of preferred
stock carries ten million (10,000,000) votes and holders of our preferred stock are able to vote together with our common stockholders
on all matters. Consequently, the holder of our preferred stock is able to unilaterally control the election of our board of directors
and, ultimately, the direction of our Company.

Equity Incentive Plan

On September 7, 2012, our
board of directors adopted our 2012 Equity Incentive Plan (hereafter, the “Plan”). The Plan allows for the grant and
issuance of common stock purchase options and grants of restricted common stock to our employees, non-employee directors, consultants,
and advisors. We have reserved 6,000,000 shares of common stock for issuance under the Plan. As of December 31, 2012, we have outstanding
options to 2 persons under the Plan to acquire 70,000 shares of our common stock, each at an exercise price of $0.01 per share.
50,000 of the options are vested, with the remainder vesting ratably over a 3-year period commencing October 1, 2012. The options
expire after 5 years if unexercised or if terminated earlier pursuant to the rules of the Plan. There are no other grants or awards
currently outstanding under the Plan. The foregoing summary does not purport to be complete and is qualified in its entirety by
reference to the Plan which was filed as an exhibit to our Current Report on Form 8-K, filed with the SEC on September 13, 2012.





Limitation of Liability of Directors and Officers; Indemnification
and Advance of Expenses

Pursuant to our
charter and under the General Corporation Law of Delaware (hereafter, the “DGCL”), our directors are not liable to
us or our stockholders for monetary damages for breach of fiduciary duty, except for liability in connection with a breach of duty
of loyalty, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, for
authorization of illegal dividend payments or stock redemptions under Delaware law or any transaction from which a director has
derived an improper personal benefit. Our charter provides that we are authorized to provide indemnification of (and advancement
of expenses) to our directors, officers, employees and agents (and any other persons to which applicable law permits us to provide
indemnification) through Bylaw provisions, agreements with such persons, vote of stockholders or disinterested directors, or otherwise,
to the fullest extent permitted by applicable law.

We have previously
entered into indemnification agreements with certain of our current directors and officers. The indemnification agreement indemnifies
the indemnitee to the fullest extent permitted by law, including against third-party claims and claims by or in right of the Company
or any subsidiary or majority-owned partnership of the Company by reason of that person (including the advancement of expenses
subject to certain conditions) (a) being a director, officer employee or agent of the Company, or of any subsidiary or majority-owned
partnership of the Company or (b) serving at our request as a director, officer, employee or agent of another entity. If appropriate,
we are entitled to assume the defense of the claim with counsel selected by us and approved by the indemnitee (which approval may
not be unreasonably withheld). Separate counsel employed by the indemnitee will be at his or her own expense unless (1) the employment
of separate counsel has been previously authorized by us, (2) the indemnitee reasonably concludes there may be a conflict of interest
or (3) we have not, in fact, employed counsel to assume the defense of such claim.



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Disclosure of Commission Position on Indemnification
for Securities Act Liabilities



Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to
the provisions above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act, and is, therefore, unenforceable.



In the event that a claim
for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one of our directors,
officers, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of our directors,
officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our counsel
the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
is against public policy as expressed in the Securities Act, and we will be governed by the final adjudication of such issue



Provisions of the DGCL and Our
Charter and Bylaws

Our charter and
bylaws provide that our board of directors will have the exclusive power to make, alter, amend or repeal any provision of our bylaws.

Business Combinations

Section 203 of the DGCL,
is applicable to corporations organized under the laws of the State of Delaware. Subject to certain exceptions set forth therein,
Section 203 of the DGCL provides that a corporation shall not engage in any business combination with any “interested stockholder”
for a three-year period following the date that such stockholder becomes an interested stockholder unless (a) prior to such date,
the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder
becoming an interested stockholder, (b) upon consummation of the transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding certain shares) or (c) on or subsequent to such date, the business combination is approved by
the board of directors of the corporation and by the affirmative vote of at least 66 2/3% of the outstanding voting stock which
is not owned by the interested stockholder. Except as specified therein, an interested stockholder is defined to mean any person
that (1) is the owner of 15% or more of the outstanding voting stock of the corporation; or (2) is an affiliate or associate of
the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation at any time within three years
immediately prior to the relevant date, and the affiliates and associates of such person referred to in clause (1) or (2) of this
sentence. Under certain circumstances, Section 203 of the DGCL makes it more difficult for an interested stockholder to effect
various business combinations with a corporation for a three-year period, although the stockholders may, by adopting an amendment
to the corporation's charter or by-laws, elect not to be governed by this section, effective twelve months after adoption. Our
charter and by-laws do not exclude us from the restrictions imposed under Section 203 of the DGCL. It is anticipated that the
provisions of Section 203 of the DGCL may encourage companies interested in acquiring us to negotiate in advance with the board
of directors.



Change of Control



On December 14, 2011, John
Thomas, the controlling shareholder of the Company and the Company’s former Chief Executive Officer, sold 200 shares of Series
A Preferred Stock of the Company (the “Preferred Stock”) to Sean Wagner, the sole shareholder of AFI and the recipient
of 7,400,000 shares of common stock in connection with the acquisition of AFI. The consideration for the Preferred Shares consisted
of a secured promissory note (“Note”) issued by Mr. Wagner to Mr. Thomas, and required Mr. Wagner to grant Mr. Thomas
a





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security interest in the Preferred Stock as well as the voting rights attached thereto until the Note is paid in full. Although
the Preferred Stock carries no dividend, distribution, or liquidation rights, and is not convertible into common stock, each share
of Preferred Stock carries 10,000,000 votes per share and is entitled to vote with the Company’s common stockholders on all
matters upon which common stockholders may vote. As a result of the purchase and sale of the Preferred Stock, Mr. Wagner holds
a controlling beneficial interest in the Company and, once the Note is paid in full, may unilaterally determine the election of
the Board and other substantive matters requiring approval of the Company’s stockholders.



Board of Directors
Meetings and Committees



Although
various items were reviewed and approved by the Board of Directors via unanimous written consent during 2012, the Board held no
formal meetings during the fiscal year ended December 31, 2012.



The
Company does not have Audit or Compensation Committees of the Board of Directors. Because of the lack of financial resources available
to the Company, the Company also does not have an “audit committee financial expert” as such term is described in Item
401 of Regulation S-K promulgated by the Securities and Exchange Commission.



Compensation of
Directors



Although
the Company anticipates compensating the members of its Board of Directors in the future at industry levels, current members are
not paid cash compensation for their service as directors. Each director may be reimbursed for certain expenses incurred in attending
Board of Directors and committee meetings.



ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE.



Certain Relationships and Related Transactions



On January 28, 2013, we
issued 25,000 shares of common stock to Juan-Carlos Ley, our Chief Executive Officer. Also on January 28, 2013, pursuant to our
2012 Equity Incentive Plan, we issued 150,000 common stock purchase options to each of our directors at an exercise price of $1.65
per share.



On October 16, 2012, the
Company issued an aggregate of 2,040,551 restricted shares of unregistered common stock to two accredited investors in private
transactions as payment for services rendered during 2012.



On October 5, 2012, the
Company issued an aggregate of 150,000 restricted shares of unregistered common stock to two former employees of the Company in
lieu of cancellation of their options.



On September 10, 2012,
the Company issued an aggregate of 2,063,550 shares of restricted common stock to its joint venture partners in AFI South Africa,
LLC to convert their joint venture interest into shares of the Company.



On September 10, 2012,
the Company issued an aggregate of 340,000 shares of restricted common stock to 6 persons for services rendered.



On September 7, 2012, pursuant
to the Company’s 2012 Equity Incentive Plan, the Board of Directors of the Company (“Board”) approved the grant
of 2,670,000 common stock purchase options (collectively, the “Options”) to 5 individuals at an exercise price of $0.01
per share. Only 1,450,000 of the Options are vested with 1,250,000 of such vested Options being issued to Mr. Russell Adler, former
Chief Executive Officer of the





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Company. The remaining 1,830,000 Options are unvested and are subject to various performance criteria
as set forth in the individual consulting and employment agreements with such option holders. The Board has subsequently canceled
2,600,000 of the options and has amended the grant date of the remaining 70,000 options to October 1, 2012.



On January 18, 2012, in
connection with the completion of the acquisition of Aviation Fuel International, Inc. (“AFI”), the Company issued
7,400,000 shares of common stock to Sean Wagner, the sole shareholder of AFI.



Director Independence



None of our
directors are considered “independent” in as much as they are either executive officers or exercise substantial
control over the Company. We have not established any board committees. We hope in the future to add at least one independent
director and establish one or more board committees, including an audit committee.





ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES.



The following table
sets forth fees paid to our independent registered accounting firm, Morrill & Associates, LLC for the last two fiscal
years. On March 19, 2013, we engaged RBSM LLP (“RBSM”), independent registered accountants, as our independent
accountant following the dismissal of Morrill. The table below does not include any fees paid to RBSM.



|                   |  | 2012 |        | 2011
|------------------ |  | ---- | ------ | ----
|Audit Fees         |  | $    | 11,900 |     
|Audit Related Fees |  |      | -0-    |     
|Tax Fees           |  |      | -0-    |     
|All Other Fees     |  |      | -0-    |     
|Total Fees         |  | $    | 11,900 |     



It is the policy
of the Board of Directors, which presently completes the functions of the Audit Committee, to engage the independent
accountants selected to conduct our financial audit and to confirm, prior to such engagement, that such independent
accountants are independent of the company. All services of the independent registered accounting firms reflected above were
pre-approved by the Board of Directors.























Table of Contents30





PART IV



ITEM 15.    EXHIBITS.



The following exhibits are filed with or incorporated
by referenced in this report:



|Exhibit Number |  | Description                                                                                                                                                                                                                      
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1            |  | Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed on November 22, 2011).                                                              
|3.2            |  | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed on June 17, 2011).                                                                                        
|10.1.          |  | Form of Indemnification Agreement (incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K/A filed on September 18, 2012).                                                                          
|10.2           |  | 2012 Equity Incentive Plan (incorporated by reference to Exhibit 99.1 to Registrant’s Current Report on Form 8-K/A filed on September 18, 2012).                                                                                 
|10.3           |  | Securities Purchase Agreement between the Registrant and Peak One Opportunity Fund, L.P., dated October 2, 2012 (incorporated by reference to Exhibit 10.3 to Registrant’s S-1 Registration Statement filed on January 23, 2013).
|14.1           |  | Code of Ethics for the Registrant(incorporated by reference to Exhibit 10.3 to Registrant’s S-1 Registration Statement filed on January 23, 2013).                                                                               
|21.1           |  | Subsidiaries of the Registrant (incorporated by reference to Exhibit 10.3 to Registrant’s S-1 Registration Statement filed on January 23, 2013).                                                                                 
|31.1           |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Juan Carlos Ley.                                                                                                                                     
|32             |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Juan Carlos Ley.                                                                                                                                     









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SIGNATURES



In accordance with Section 13 or 15(d) of the
Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                      |                                                                               | FUELSTREAM, INC.
|--------------------- | ----------------------------------------------------------------------------- | ----------------
|                      |                                                                               |                 
|                      |                                                                               |                 
|                      | /s/ Juan Carlos Ley                                                          
|Dated: April 16, 2013 | By: Juan Carlos Ley, Chief Executive Officer, and Principal Financial Officer
|                      |                                                                               |                 
|                      |                                                                               |                 







Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on
the dates indicated.



|/s/ Juan Carlos Ley    |  | Chief Executive Officer |  | April 16, 2013
|---------------------- |  | ----------------------- |  | --------------
|Juan Carlos Ley        |  |                         |  |               
|                       |  |                         |  |               
|/s/ Thomas McConnell   |  | Director                |  | April 16, 2013
|Thomas McConnell       |  |                         |  |               
|                       |  |                         |  |               
|/s/ Paul Douglas Major |  | Director                |  | April 16, 2013
|Paul Douglas Major     |  |                         |  |               
|                       |  |                         |  |               











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