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, 2014                                                
|[   ]                                                  |  | 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 ☐  No ☒



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 ☐  No ☒



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 ☒  No ☐



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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 ☐  No ☒



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. ☒



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 ☐ |  | Accelerated
        filer ☐
|--------------------------------- |  | ---------------------------
|Non-accelerated
    filer  ☐      |  | Smaller
reporting company ☒



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐  Yes    ☒  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, 2014 was $381,872.



As of May 22, 2015, we had 1,938,172,724 shares of common stock
outstanding.



DOCUMENTS INCORPORATED BY REFERENCE: 
None.







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|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       





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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 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

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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, 2014,
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 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.



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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 11650 South State Street, Suite 240, Draper, Utah 84020. 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 10-037788-04. 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

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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.



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 406 registered holders of our common stock as of December
31, 2014. Registered holders do not include those stockholders whose stock has been issued in street name. The last reported price
for our common stock on April 13, 2015 was $0.0001 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, 2014:



|               |  |               
|-------------- |  | --------------
|               |  | Price Range(1)
|               |  |               
|Fiscal 2014    |  |               
|Fourth quarter |  | $             
|Third quarter  |  | $             
|Second quarter |  | $             
|First quarter  |  | $             
|               |  |               
|Fiscal 2013    |  |               
|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 January 28, 2013, we
issued an aggregate of 49,951 shares of common stock, valued at $82,419, 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. The number of shares issued, at the time of such issuance, represented approximately 0.3%
of the issued and outstanding shares of the Company.

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



On March 5, 2013, the Company
issued a promissory note in the original principal amount of $7,500 (“Note”) to a lender. The Note carries an interest
rate of 8% per annum. The Note is convertible at October 5, 2013 to common stock of the Company at a 40% discount to the average
of the 3 lowest trading days in the 10 trading days previous to the conversion.



On May 31, 2013, the Company
issued an aggregate of 254,000 shares of its common stock, valued at $304,800, to certain consulting personnel for services provided.
The number of shares issued, at the time of such issuance, represented approximately 1.6% of the issued and outstanding shares
of the Company.



On June 10, 2013, the Company
issued 45,454 shares of its common stock, valued at $30,000, to Peak One in connection with the conversion of a debenture issued
by the Company to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately
0.2% of the issued and outstanding shares of the Company.



On July 1, 2013, the Company
issued a promissory note in the original principal amount of $24,272 (“Note”) to a lender. The Note matures on April
1, 2014 and carries an interest rate of 8% per annum. The Note shall at the maturity date, be convertible upon the election of
the lender into fully paid and non-assessable shares of Common Stock of the Company at a conversion price equal at market price,
or the lowest conversion price previously honored by the Company for any other debt conversion by an investor in 2013.



On July 11, 2013, the Company
issued 266,134 shares of its common stock, valued at $40,000, to Peak One in connection with the conversion of a debenture issued
by the Company to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately
1.7% of the issued and outstanding shares of the Company.



On July 16,
2013, the Company issued 448,028 shares of its common stock, valued at $25,000, to Peak One in connection with the conversion of
a debenture issued by the Company to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented
approximately 2.82% of the issued and outstanding shares of the Company.

On July 29, 2013, the Company
issued 806,451 shares of its common stock, valued at $15,000, to Peak One in connection with the conversion of a debenture issued
by the Company to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately
4.95% of the issued and outstanding shares of the Company.



On August 1, 2013, the
Company issued 786,163 shares of its common stock, valued at $10,000, to Peak One in connection with the conversion of a debenture
issued by the Company to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately
4.6% of the issued and outstanding shares of the Company.



On August 2, 2013, the
Company issued 864,779 shares of its common stock, valued at $11,000, to Peak One in connection with the conversion of a debenture
issued by the Company to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately
4.83% of the issued and outstanding shares of the Company.

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On August 6, 2013, the
Company issued 75,000 shares of its common stock, valued at $4,500, to a consultant of the Company for services provided. The number
of shares issued, at the time of such issuance, represented approximately 0.4% of the issued and outstanding shares of the Company.



On August 8, 2013, the
Company issued 300,000 shares of its common stock, valued at $3,816, to Peak One in connection with the conversion of a debenture
issued by the Company to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately
1.5% of the issued and outstanding shares of the Company.



On August 9, 2013, the
Company issued 300,000 shares of its common stock, valued at $3,816, to Peak One in connection with the conversion of a debenture
issued by the Company to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately
1.56% of the issued and outstanding shares of the Company.



On August 12, 2013, the
Company issued 264,779 shares of its common stock, valued at $3,368, to Peak One in connection with the conversion of a debenture
issued by the Company to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately
1.36% of the issued and outstanding shares of the Company.



On July 19, 2013, the Company
issued a promissory note in the original principal amount of $78,500 (“Note”) to a lender. The Note matures on April
22, 2014 and carries an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full unless converted
partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of Common Stock of the Company
at a 40% discount to the average of the three lowest daily trading prices as reported on the OTCQB for the ten trading days previous
to the conversion date.



On August 13, 2013, the
Company issued a promissory note in the original principal amount of $3,000 (“Note”) to a lender. The Note matures
on February 13, 2014 and carries an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full.



On August 22, 2013, the
Company issued an aggregate of 531,438 shares of its common stock, valued at $47,829, to certain employees and consulting personnel
for services provided. The number of shares issued, at the time of such issuance, represented approximately 2.7% of the issued
and outstanding shares of the Company.



On August 22, 2013, the
Company issued 2,017,036 shares of unregistered common stock to an accredited investor in exchange for cash in the amount of $137,985.
The number of shares issued, at the time of such issuance, represented approximately 9.98% of the issued and outstanding shares
of the Company.



On August 26, 2013, the
Company issued a promissory note in the original principal amount of $53,000 (“Note”) to a lender. The Note matures
on May 27, 2014 and carries an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full unless
converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of Common Stock
of the Company at a 40% discount to the average of the three lowest daily trading prices as reported on the OTCQB for the ten trading
days previous to the conversion date.



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On August 29, 2013, the
Company entered into a Settlement Agreement with a certain creditor and agreed to convert various loans and promissory notes in
the collective amount of $933,000 into an aggregate of 5,480,000 shares of common stock of the Company. The number of shares issued,
at the time of such issuance, represented approximately 23.06% of the issued and outstanding shares of the Company.



On October 1, 2013, the
Company converted outstanding invoices of the Company in the aggregate amount of $211,254.30 to 2 promissory notes in the original
principal amounts of $17,000, and $194,254.30 (the “Notes”) to two consultants of the Company. The Notes are due upon
demand, and carry an interest rate of 10% per annum. The Notes at the election of the lender are convertible into fully paid and
non-assessable shares of Common Stock of the Company at a 40% discount from the lowest trading price in the five (5) days prior
to the day that the Holder requests conversion.



On October 2, 2013, the
Company recorded a $35,000 draw down and consideration in respect of a credit line and associated promissory note in the original
principal amount of $300,000 (“Note”). The Maturity Date is two years from the effective date of each draw down (“Maturity
Date”). The Note carries an initial interest rate in the first 90 days of 0 percent, thereafter a one-time interest charge
of 12% will apply. The Note shall at the Maturity Date, be due and payable in full unless converted partially or in its entirety
upon the election of the lender into fully paid and non-assessable shares of Common Stock of the Company at 60% of the average
of the two lowest trade prices in the 25 trading days previous to the conversion.



On October 4, 2013, the
Company issued a promissory note in the original principal amount of $6,000 (“Note”) to a lender. The Note matures
on November 4, 2013 and carries an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full
unless converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of Common
Stock of the Company at a 40% discount to the average of the three lowest daily trading days in the ten trading days previous to
the conversion.



On October 5, 2013, the
Company issued a promissory note in the original principal amount of $28,500 (“Note”) to a lender. The Note carries
an interest rate of 8% per annum.



On October 13, 2013, the
Company issued a promissory note in the original principal amount of $30,000 (“Note”) to a lender. The Note matures
on October 13, 2014 and carries an interest rate of 6% per annum. The Note shall at the maturity date, be due and payable in full
unless converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of Common
Stock of the Company at a 40% discount from the lowest trading price in the five (5) days prior to conversion.



On October 17, 2013, the
Company issued a promissory note in the original principal amount of $5,000 (“Note”) to a lender. The Note is due upon
demand and carries an interest rate of 16% per annum.



On October 23, 2013, the
Company issued a promissory note in the original principal amount of $42,500 (“Note”) to a lender. The Note matures
on July 25, 2014 and carries an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full
unless converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of Common
Stock of the Company at a 40% discount to the average of the three lowest daily trading prices as reported on the OTCQB for the
ten trading days previous to the conversion date.



Table of Contents12







On October 23, 2013, the
Company issued an aggregate of 2,100,000 shares of its common stock, valued at $708,500, to officers and directors, and certain
consulting personnel for services provided. The number of shares issued, at the time of such issuance, represented approximately
7.5% of the issued and outstanding shares of the Company.



On October 30, 2013, pursuant
to the terms of a settlement agreement, the Company issued an additional 500,000 shares of common stock, valued at $35,000. The
number of shares issued, at the time of such issuance, represented approximately 1.67% of the issued and outstanding shares of
the Company.



On November 20, 2013, the
Company issued an aggregate of 5,075,713 shares of its common stock, valued at $355,300, to certain employees and contract personnel
for services provided. The number of shares issued, at the time of such issuance, represented approximately 16.74% of the issued
and outstanding shares of the Company.



On November 21, 2013, the
Company converted into 1,800,000 shares of common stock, valued at $28,300, a certain promissory note originally issued by the
Company on December 7, 2004. The number of shares issued, at the time of such issuance, represented approximately 5.08% of the
issued and outstanding shares of the Company.



On December 9, 2013, the
Company recorded an additional $20,000 draw down and consideration in respect of a credit line and associated promissory note in
the original principal amount of $300,000 (“Note”). The Maturity Date is two years from the effective date of each
draw down (“Maturity Date”). The Note carries an initial interest rate in the first 90 days of 0 percent, thereafter
a one-time interest charge of 12% will apply. The Note shall at the Maturity Date, be due and payable in full unless converted
partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of Common Stock of the Company
at 60% of the average of the two lowest trade prices in the 25 trading days previous to the conversion.



On December 12, 2013, the
Company issued a promissory note in the original principal amount of $61,500 (“Note”) to a lender. The Note matures
on December 12, 2014 and carries an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full
unless converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of Common
Stock of the Company at a 40% discount to the average of the three lowest daily trading prices as reported on the OTCQB for the
ten trading days previous to the conversion date.



On December 12, 2013, the
Company issued a promissory note in the original principal amount of $145,000 (“Note”) to a lender. The Note matures
on December 12, 2014 and carries an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full
unless converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of Common
Stock of the Company at a 40% discount to the average of the three lowest daily trading prices as reported on the OTCQB for the
ten trading days previous to the conversion date.



On December 13, 2013, the
Company issued a promissory note in the original principal amount of $810 (“Note”) to a lender. The Note carries an
interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full unless converted partially or in
its entirety upon the election of the lender into fully paid and non-assessable shares of Common Stock of the Company at a 40%
discount to the average of the three lowest daily trading days in the ten trading days previous to the conversion.



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On December 16, 2013, the
Company converted into 250,000 shares of common stock, valued at $7,500, a portion of a loan originally received by the Company
on March 21, 2012. The number of shares issued, at the time of such issuance, represented approximately 0.6% of the issued and
outstanding shares of the Company.



On December 30, 2013, the
Company converted into 277,778 shares of common stock, valued at $5,000, a portion of a loan originally received by the Company
on March 21, 2012. The number of shares issued, at the time of such issuance, represented approximately 0.7% of the issued and
outstanding shares of the Company.



On January 1, 2014, the
Company converted outstanding invoices of the Company into a promissory note in the original principal amounts of $45,000 (the
“Note”) to a consultant of the Company. The Note is due upon demand, and carries an interest rate of 10% per annum.
The Note at the election of the lender is convertible into fully paid and non-assessable shares of Common Stock of the Company
at a 40% discount from the lowest trading price in the five (5) days prior to the day that the Holder requests conversion.



On January 13, 2014, the
Company issued an aggregate of 2,859,067 shares of its common stock to certain consulting personnel for services provided. The
number of shares issued, at the time of such issuance, represented approximately 7.26% of the issued and outstanding shares of
the Company.



On January 14, 2014, the
Company converted into 1,660,026 shares of common stock, valued at $25,000, a portion of a loan originally received by the Company
on March 21, 2012. The number of shares issued, at the time of such issuance, represented approximately 4.4% of the issued and
outstanding shares of the Company.



On January 16, 2014, the
Company issued a promissory note in the original principal amount of $3,000 (“Note”) to a lender. The Note matures
on July 16, 2014 and carries an interest rate of 8% per annum.



On January 22, 2014, the
Company issued a Note in the original principal amount of $212,500. The Note carries an interest rate of 8% per annum. The Note
shall at the maturity date, be due and payable in full unless converted partially or in its entirety upon the election of the lender
into fully paid and non-assessable shares of Common Stock of the Company at a 40% discount to the average of the three lowest daily
trading prices as reported on the OTCQB for the ten trading days previous to the conversion date. The net proceeds of the Note
were used to redeem and retire two 8% convertible notes that were issued to Asher Enterprises, Inc. in the aggregate principal
amount of $131,500 (hereafter, collectively, the “Asher Notes”) The Asher Notes were issued on July 19th, 2013 and
August 26th, 2013.



On January 22, 2014, the
Company issued a promissory note in the original principal amount of $5,000 (“Note”) to a lender. The Note matures
on July 22, 2014 and carries an interest rate of 8% per annum.



On January 27, 2014, the
Company converted into 809,067 shares of common stock, valued at 25,245, a loan originally received by the Company on July 1, 2013.
The number of shares issued, at the time of such issuance, represented approximately 1.95% of the issued and outstanding shares
of the Company.



Table of Contents14







On January 29, 2014, the
Company converted into 1,166,667 shares of common stock, valued at $17,500, a portion of a loan originally received by the Company
on March 21, 2012. The number of shares issued, at the time of such issuance, represented approximately 2.76% of the issued and
outstanding shares of the Company.



On January 30, 2014, the
Company issued a promissory note in the original principal amount of $16,000 (“Note”) to a lender. The Note matures
on January 30, 2015 and carries an interest rate of 8% per annum. The Note at the election of the lender is convertible into fully
paid and non-assessable shares of Common Stock of the Company at a 40% discount from the lowest trading price in the five (5) days
prior to the day that the Holder requests conversion.



On January 30, 2014, the
Company issued a promissory note in the original principal amount of $78,500 (“Note”) to a lender. The Note matures
on November 3, 2014 and carries an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full
unless converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of Common
Stock of the Company at a 40% discount to the average of the three lowest daily trading prices as reported on the OTCQB for the
ten trading days previous to the conversion date.



On January 30, 2014, the
Company issued a promissory note in the original principal amount of $11,209 (“Note”) to a lender. The Note matures
on June 2, 2014 and carries an interest rate of 10% per annum. The Note at the election of the lender is convertible into fully
paid and non-assessable shares of Common Stock of the Company at a 40% discount to the market.



On February 10, 2014, the
Company converted into 1,237,624 shares of common stock, valued at $15,000, a portion of a loan originally received by the Company
on March 21, 2012. The number of shares issued, at the time of such issuance, represented approximately 2.85% of the issued and
outstanding shares of the Company.



On February 18, 2014, the
Company converted into 1,470,588 shares of common stock, valued at $15,000, a portion of a loan originally received by the Company
on March 21, 2012. The number of shares issued, at the time of such issuance, represented approximately 3.29% of the issued and
outstanding shares of the Company.



On February 20, 2014, the
Company recorded an additional $25,000 draw down and consideration in respect of a credit line and associated promissory note in
the original principal amount of $300,000 (“Note”). The Maturity Date is two years from the effective date of each
draw down (“Maturity Date”). The Note carries an initial interest rate in the first 90 days of 0 percent, thereafter
a one-time interest charge of 12% will apply. The Note shall at the Maturity Date, be due and payable in full unless converted
partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of Common Stock of the Company
at 60% of the average of the two lowest trade prices in the 25 trading days previous to the conversion.



On March 3, 2014, the Company
issued 1,000,000 shares of its common stock, valued at $20,000, to a consultant of the Company for services provided. The number
of shares issued, at the time of such issuance, represented approximately 2.16% of the issued and outstanding shares of the Company.



On March 4, 2014, the Company
converted into 2,083,333 shares of common stock, valued at $15,000, a portion of a loan originally received by the Company on March
21, 2012. The number of shares issued, at the time of such issuance, represented approximately 4.42% of the issued and outstanding
shares of the Company.

Table of Contents15









On March 5, 2014, the Company
issued a promissory note in the original principal amount of $10,000 (“Note”) to a lender. The Note matures on September
5, 2014 and carries an interest rate of 8% per annum. The Note at the election of the lender is convertible into fully paid and
non-assessable shares of Common Stock of the Company at a 40% discount to the average of the three lowest daily trading prices
as reported on the OTCQB for the ten trading days previous to the conversion date.



On March 17, 2014, the
Company converted into 2,210,884 shares of common stock, valued at $13,000, a portion of a loan originally received by the Company
on March 21, 2012. The number of shares issued, at the time of such issuance, represented approximately 4.49% of the issued and
outstanding shares of the Company.



On March 31, 2014, the
Company converted into 2,529,762 shares of common stock, valued at $17,000, a portion of a loan originally received by the Company
on March 21, 2012. The number of shares issued, at the time of such issuance, represented approximately 4.92% of the issued and
outstanding shares of the Company.



On April 1, 2014, the Company
converted outstanding invoices of the Company into a promissory note in the original principal amount of $45,000 (the “Note”)
to a consultant of the Company. The Note is due upon demand, and carries an interest rate of 10% per annum. The Note at the election
of the lender is convertible into fully paid and non-assessable shares of Common Stock of the Company at a 40% discount from the
lowest trading price in the five (5) days prior to the day that the Holder requests conversion.



On April 1, 2014, the Company
issued a promissory note in the original principal amounts of $25,000 (the “Note”) to a consultant of the Company for
services rendered. The Note carries an interest rate of 10% per annum, and at the election of the lender is convertible into fully
paid and non-assessable shares of Common Stock of the Company at a conversion price of $0.005 per share.



On April 1, 2014, the Company
issued a promissory note in the original principal amounts of $93,000 (the “Note”) to a consultant of the Company for
services rendered. The Note carries an interest rate of 10% per annum, and at the election of the lender is convertible into fully
paid and non-assessable shares of Common Stock of the Company at a 25%discount to the average of the three lowest trading days
in the ten trading days previous to the conversion.



On April 1, 2014, the Company
converted into 744,048 shares of common stock, valued at $5,000, a portion of a certain convertible promissory note originally
issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately
1.37% of the issued and outstanding shares of the Company.



On April 1, 2014, the Company
issued a promissory note in the original principal amount of $145,000 (“Note”) to a lender. The Note carries an interest
rate of 8% per annum. The Note shall at the maturity date, be due and payable in full unless converted partially or in its entirety
upon the election of the lender into fully paid and non-assessable shares of Common Stock of the Company at a 40% discount to the
average of the three lowest daily trading prices as reported on the OTCQB for the ten trading days previous to the conversion date.



Table of Contents16







On April 1, 2014, the Company
issued a promissory note in the original principal amount of $6,669 (“Note”) to a lender. The Note matures on May 1,
2014 and carries an interest rate of 10% per annum. The Note, at the election of the lender is convertible into fully paid and
non-assessable shares of Common Stock of the Company at a 40%discount to the average of the three lowest trading days in the ten
trading days previous to the conversion.



On April 1, 2014, the Company
issued a promissory note in the original principal amount of $83,500 (“Note”) to a lender. The Note matures on January
2, 2015 and carries an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full unless converted
partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of Common Stock of the Company
at a 40% discount to the average of the three lowest daily trading prices as reported on the OTCQB for the ten trading days previous
to the conversion date.



On April 3, 2014, the Company
converted outstanding invoices of the Company into a promissory note in the original principal amount of $14,000 (the “Note”)
to a consultant of the Company. The Note is due upon demand, and carries an interest rate of 10% per annum. The Note at the election
of the lender is convertible into fully paid and non-assessable shares of Common Stock of the Company at a 40% discount from the
lowest trading price in the five (5) days prior to the day that the Holder requests conversion.



On April 7, 2014, the Company
converted into 1,200,000 shares of common stock, valued at $20,640, a portion of a certain convertible promissory note originally
issued by the Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately
2.19% of the issued and outstanding shares of the Company.



On April 8, 2014, the Company
converted into 1,070,205 shares of common stock, valued at $7,500, a portion of a certain convertible promissory note originally
issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately
1.91% of the issued and outstanding shares of the Company.



On April 9, 2014, the Company
converted into 3,656,379 shares of common stock, valued at $18,434, a portion of a loan originally received by the Company on March
21, 2012. The number of shares issued, at the time of such issuance, represented approximately 6.42% of the issued and outstanding
shares of the Company.



On April 9, 2014, the Company
issued a promissory note in the original principal amount of $2,679.16 (“Note”) to a lender. The Note matures on May
9, 2014 and carries an interest rate of 10% per annum. The Note, at the election of the lender is convertible into fully paid and
non-assessable shares of Common Stock of the Company at a 40%discount to the average of the three lowest trading days in the ten
trading days previous to the conversion.



On April 28, 2014, the
Company converted into 2,400,000 shares of common stock, valued at $16,560, a portion of a loan originally received by the Company
on October 14, 2013. The number of shares issued, at the time of such issuance, represented approximately 3.96% of the issued and
outstanding shares of the Company.



On May 2, 2014, the Company
converted into 3,125,000 shares of common stock, valued at $7,500, a portion of a certain convertible promissory note originally
issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately
4.96% of the issued and outstanding shares of the Company.

Table of Contents17









On May 2, 2014, the Company
converted into 2,500,000 shares of common stock, valued at $16,500, a portion of a certain convertible promissory note originally
issued by the Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately
3.78% of the issued and outstanding shares of the Company.



On May 6, 2014, the Company
converted into 6,854,167 shares of common stock, valued at $71,333, a portion of a certain convertible promissory note originally
issued by the Company on October 23, 2013. The number of shares issued, at the time of such issuance, represented approximately
9.98% of the issued and outstanding shares of the Company.



On May 6, 2014, the Company
converted into 3,125,000 shares of common stock, valued at $7,500, a portion of a certain convertible promissory note originally
issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately
4.14% of the issued and outstanding shares of the Company.



On May 7, 2014, the Company
converted into 5,630,630 shares of common stock, valued at $12,500, a portion of a loan originally received by the Company on March
21, 2012. The number of shares issued, at the time of such issuance, represented approximately 7.16% of the issued and outstanding
shares of the Company.



On May 7, 2014, the Company
converted into 3,400,000 shares of common stock, valued at $13,600, a portion of a loan originally received by the Company on October
14, 2013. The number of shares issued, at the time of such issuance, represented approximately 4.03% of the issued and outstanding
shares of the Company.



On May 7, 2014, the Company
converted into 3,400,000 shares of common stock, valued at $38,114, a portion of a certain convertible promissory note originally
issued by the Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately
3.87% of the issued and outstanding shares of the Company.



On May 7, 2014, the Company
converted into 995,833 shares of common stock, valued at $12,846, a portion of a certain convertible promissory note originally
issued by the Company on October 23, 2013. The number of shares issued, at the time of such issuance, represented approximately
1.09% of the issued and outstanding shares of the Company.



On May 8, 2014, the Company
converted into 4,504,504 shares of common stock, valued at $9,000, a portion of a loan originally received by the Company on March
21, 2012. The number of shares issued, at the time of such issuance, represented approximately 4.89% of the issued and outstanding
shares of the Company.



On May 9, 2014, the Company
converted into 5,000,000 shares of common stock, valued at $36,100, a portion of a loan originally received by the Company on October
14, 2013. The number of shares issued, at the time of such issuance, represented approximately 5.17% of the issued and outstanding
shares of the Company.



On May 9, 2014, the Company
converted into 3,041,667 shares of common stock, valued at $22,813, a portion of a certain convertible promissory note originally
issued by the Company on October 23, 2013. The number of shares issued, at the time of such issuance, represented approximately
2.9% of the issued and outstanding shares of the Company.

Table of Contents18









On May 9, 2014, the Company
converted into 4,750,000 shares of common stock, valued at $29,925, a portion of a certain convertible promissory note originally
issued by the Company on October 23, 2013. The number of shares issued, at the time of such issuance, represented approximately
4.54% of the issued and outstanding shares of the Company.



On May 9, 2014, the Company
converted into 3,500,000 shares of common stock, valued at 35,000, a portion of a certain convertible promissory note originally
issued by the Company in February, 2000. The number of shares issued, at the time of such issuance, represented approximately 3.2%
of the issued and outstanding shares of the Company.



On May 12, 2014, the Company
issued 500,000 shares of its common stock, valued at $2,150, to a director of the Company for services provided. The number of
shares issued, at the time of such issuance, represented approximately 0.4% of the issued and outstanding shares of the Company.



On May 13, 2014, the Company
converted into 3,500,000 shares of common stock, valued at $22,085, a portion of a certain convertible promissory note originally
issued by the Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately
3.08% of the issued and outstanding shares of the Company.



On May 13, 2014, the Company
issued 500,000 shares of restricted common stock, valued at $50,000, to a consultant for services rendered. The number of shares
issued, at the time of such issuance, represented approximately 0.42% of the issued and outstanding shares of the Company.



On May 15, 2014, the Company
converted into 9,615,384 shares of common stock, valued at $15,000, a portion of a loan originally received by the Company on March
21, 2012. The number of shares issued, at the time of such issuance, represented approximately 8.19% of the issued and outstanding
shares of the Company.



On May 16, 2014, the Company
issued a promissory note in the original principal amount of $1,975 (“Note”) to a lender. The Note matures on November
16, 2014 and carries an interest rate of 8% per annum. The Note, at the election of the lender is convertible into fully paid and
non-assessable shares of Common Stock of the Company at a 40%discount to the average of the three lowest trading days in the ten
trading days previous to the conversion.



On May 19, 2014, the Company
issued 500,000 shares of restricted common stock, valued at $50,000, to a consultant for services rendered. The number of shares
issued, at the time of such issuance, represented approximately 0.3% of the issued and outstanding shares of the Company.



On May 21, 2014, the Company
converted outstanding invoices of the Company into a promissory note in the original principal amount of $4,000 (the “Note”)
to a consultant of the Company. The Note is due upon demand, and carries an interest rate of 10% per annum. The Note at the election
of the lender is convertible into fully paid and non-assessable shares of Common Stock of the Company at a 40% discount from the
lowest trading price in the five (5) days prior to the day that the Holder requests conversion.



On May 22, 2014, the Company
converted into 4,166,667 shares of common stock, valued at $7,500, a portion of a certain convertible promissory note originally
issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately
3.26% of the issued and outstanding shares of the Company.

Table of Contents19









On May 23, 2014, the Company
converted into 3,505,263 shares of common stock, valued at $14,722, a portion of a certain convertible promissory note originally
issued by the Company on October 23, 2013. The number of shares issued, at the time of such issuance, represented approximately
2.66% of the issued and outstanding shares of the Company.



On May 13, 2014, the Company
converted into 3,750,000 shares of common stock, valued at $16,688, a portion of a certain convertible promissory note originally
issued by the Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately
2.77% of the issued and outstanding shares of the Company.



On May 15, 2014, the Company
converted into 9,567,901 shares of common stock, valued at $15,500, a portion of a loan originally received by the Company on March
21, 2012. The number of shares issued, at the time of such issuance, represented approximately 6.89% of the issued and outstanding
shares of the Company.



On May 13, 2014, the Company
converted into 5,044,270 shares of common stock, valued at $9,940, a portion of a certain convertible promissory note originally
issued by the Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately
3.31% of the issued and outstanding shares of the Company.



On May 30, 2014, the Company
converted into 4,461,282 shares of common stock, valued at $25,250, a portion of a loan originally received by the Company on October
14, 2013. The number of shares issued, at the time of such issuance, represented approximately 2.84% of the issued and outstanding
shares of the Company.



On May 30, 2014, the Company
converted into 1,050,410 shares of common stock, valued at $3,151, a loan originally received by the Company on August 13, 2013.
The number of shares issued, at the time of such issuance, represented approximately 0.65% of the issued and outstanding shares
of the Company.



On June 3, 2014, the Company
converted into 6,987,877 shares of common stock, valued at $12,578, a portion of a certain convertible promissory note originally
issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately
4.29% of the issued and outstanding shares of the Company.



On June 3, 2014, the Company
converted into 16,025,641 shares of common stock, valued at $25,000, a portion of a loan originally received by the Company on
March 21, 2012. The number of shares issued, at the time of such issuance, represented approximately 9.45% of the issued and outstanding
shares of the Company.



On May 19, 2014, the Company
issued 2,000,000 shares of restricted common stock, valued at $7,800, to a consultant for services rendered. The number of shares
issued, at the time of such issuance, represented approximately 1.07% of the issued and outstanding shares of the Company.



On June 11, 2014, the Company
converted into 17,948,718 shares of common stock, valued at $28,000, a portion of a loan originally received by the Company on
March 21, 2012. The number of shares issued, at the time of such issuance, represented approximately 9.56% of the issued and outstanding
shares of the Company.

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On June 11, 2014, the Company
converted into 8,000,000 shares of common stock, valued at 42,080, a portion of a certain convertible promissory note originally
issued by the Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately
3.89% of the issued and outstanding shares of the Company.



On June 12, 2014, the Company
converted into 8,240,741 shares of common stock, valued at $13,350, a portion of a certain convertible promissory note originally
issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately
3.85% of the issued and outstanding shares of the Company.



On June 23, 2014, the Company
converted into 18,055,556 shares of common stock, valued at $19,500, a portion of a loan originally received by the Company on
March 21, 2012. The number of shares issued, at the time of such issuance, represented approximately 8.13% of the issued and outstanding
shares of the Company.



On June 26, 2014, the Company
converted into 4,545,455 shares of common stock, valued at 6,354, a portion of a certain convertible promissory note originally
issued by the Company on October 4, 2013. The number of shares issued, at the time of such issuance, represented approximately
1.89% of the issued and outstanding shares of the Company.



On June 27, 2014, the Company
converted into 6,437,879 shares of common stock, valued at $8,498, a portion of a certain convertible promissory note originally
issued by the Company in February, 2000. The number of shares issued, at the time of such issuance, represented approximately 2.63%
of the issued and outstanding shares of the Company.



On June 30, 2014, the
Company issued a promissory note in the original principal amount of $1,928.50 (“Note”) to a lender. The Note
matures on December 30, 2014 and carries an interest rate of 8% per annum. The Note, at the election of the lender is
convertible into fully paid and non-assessable shares of Common Stock of the Company at a 40% discount to the average of the
three lowest trading days in the ten trading days previous to the conversion.



On July 1, 2014, the Company
converted outstanding invoices of the Company into a promissory note in the original principal amount of $45,000 (the “Note”)
to a consultant of the Company. The Note is due upon demand, and carries an interest rate of 10% per annum. The Note at the election
of the lender is convertible into fully paid and non-assessable shares of Common Stock of the Company at a 40% discount from the
lowest trading price in the five (5) days prior to the day that the Holder requests conversion.



On July 1, 2014, the Company
issued a promissory note in the original principal amount of $5,000 (“Note”) to a lender. The Note is due upon demand,
and carries an interest rate of 12% per annum.



On July 14, 2014, the Company
converted into 24,057,318 shares of common stock, valued at $18,360, a portion of a loan originally received by the Company on
March 21, 2012. The number of shares issued, at the time of such issuance, represented approximately 9.59% of the issued and outstanding
shares of the Company.



On July 14, 2014, the Company
issued a promissory note in the original principal amount of $5,000 (“Note”) to a lender. The Note is due upon demand,
and carries an interest rate of 12% per annum.

Table of Contents21









On July 14, 2014, the Company
converted into 15,517,241 shares of common stock, valued at 27,000, a portion of a certain convertible promissory note originally
issued by the Company in February, 2000. The number of shares issued, at the time of such issuance, represented approximately 5.64%
of the issued and outstanding shares of the Company.



On July 15, 2014, the Company
converted into 14,202,945 shares of common stock, valued at $10,266, a portion of a certain convertible promissory note originally
issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately
4.66% of the issued and outstanding shares of the Company.



On July 15, 2014, the
Company converted into 14,291,666 shares of common stock, valued at $10,290, a portion of a certain convertible promissory
note originally issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance,
represented approximately 4.69% of the issued and outstanding shares of the Company.



On July 17, 2014, the Company
converted into 25,757,576 shares of common stock, valued at $76,242, a portion of a certain convertible promissory note originally
issued by the Company on December 12, 2013. The number of shares issued, at the time of such issuance, represented approximately
8.07% of the issued and outstanding shares of the Company.



On July 18, 2014, the Company
converted into 8,400,000 shares of common stock, valued at $28,224, a portion of a certain convertible promissory note originally
issued by the Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately
2.43% of the issued and outstanding shares of the Company.



On July 22, 2014, the Company
converted into 16,428,571 shares of common stock, valued at $13,800, a portion of a certain convertible promissory note originally
issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately
4.65% of the issued and outstanding shares of the Company.



On July 23, 2014, the Company
converted into 13,047,619 shares of common stock, valued at $10,960, a portion of a certain convertible promissory note originally
issued by the Company in February, 2000. The number of shares issued, at the time of such issuance, represented approximately 3.53%
of the issued and outstanding shares of the Company.



On July 24, 2014, the Company
converted into 21,323,529 shares of common stock, valued at $35,824, a portion of a certain convertible promissory note originally
issued by the Company on December 12, 2013. The number of shares issued, at the time of such issuance, represented approximately
5.57% of the issued and outstanding shares of the Company.



On July 24, 2014, the Company
converted into 6,944,444 shares of common stock, valued at $5,000, a portion of a certain convertible promissory note originally
issued by the Company on March 21, 2012. The number of shares issued, at the time of such issuance, represented approximately 1.71%
of the issued and outstanding shares of the Company.



On July 24, 2014, the Company
converted into 10,401,348 shares of common stock, valued at $14,458, a portion of a certain convertible promissory note originally
issued by the Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately
2.53% of the issued and outstanding shares of the Company.

Table of Contents22







On July 30, 2014, the Company
converted into 37,037,037 shares of common stock, valued at $45,926, a portion of a certain convertible promissory note originally
issued by the Company on December 12, 2013. The number of shares issued, at the time of such issuance, represented approximately
8.79% of the issued and outstanding shares of the Company.



On August 6, 2014, the
Company converted into 21,851,852 shares of common stock, valued at $11,800, a portion of a certain convertible promissory note
originally issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately
4.76% of the issued and outstanding shares of the Company.



On August 6, 2014, the
Company issued a promissory note in the original principal amount of $5,000 (“Note”) to a lender. The Note is due upon
demand, and carries an interest rate of 12% per annum.



On August 6, 2014, the
Company converted into 45,740,741 shares of common stock, valued at $75,015 a portion of a certain convertible promissory note
originally issued by the Company on January 30, 2014. The number of shares issued, at the time of such issuance, represented approximately
9.52% of the issued and outstanding shares of the Company.



On August 7, 2014, the
Company issued a promissory note in the original principal amount of $1,569 (“Note”) to a lender. The Note is due upon
demand, and carries an interest rate of 12% per annum.



On August 11, 2014, the
Company converted into 26,812,500 shares of common stock, valued at $42,175, a portion of a certain convertible promissory note
originally issued by the Company on December 12, 2013. The number of shares issued, at the time of such issuance, represented approximately
5.09% of the issued and outstanding shares of the Company.



On August 11, 2014, the
Company converted into 45,740,741 shares of common stock, valued at $56,719, a portion of a certain convertible promissory note
originally issued by the Company on January 30, 2014. The number of shares issued, at the time of such issuance, represented approximately
8.27% of the issued and outstanding shares of the Company.



On August 12, 2014, the
Company converted into 15,131,579 shares of common stock, valued at $11,500, a portion of a certain convertible promissory note
originally issued by the Company on March 5, 2013. The number of shares issued, at the time of such issuance, represented approximately
2.52% of the issued and outstanding shares of the Company.



On August 13, 2014,
the Company converted into 29,761,905 shares of common stock, valued at $12,500, a portion of a certain convertible
promissory note originally issued by the Company on October 1, 2013. The number of shares issued, at the time of such
issuance, represented approximately 4.85% of the issued and outstanding shares of the Company.



On August 19, 2014, the
Company converted into 16,666,667 shares of common stock, valued at $28,000, a portion of a certain convertible promissory note
originally issued by the Company on January 30, 2014. The number of shares issued, at the time of such issuance, represented approximately
2.59% of the issued and outstanding shares of the Company.



On August 20, 2014, the
Company converted into 36,826,054 shares of common stock, valued at $31,670, a portion of a certain convertible promissory note
originally issued by the Company on January 30, 2014. The number of shares issued, at the time of such issuance, represented approximately
5.58% of the issued and outstanding shares of the Company.

Table of Contents23









On August 22, 2014, the
Company converted into 24,888,889 shares of common stock, valued at $22,933, a portion of a certain convertible promissory note
originally issued by the Company on January 30, 2014. The number of shares issued, at the time of such issuance, represented approximately
3.57% of the issued and outstanding shares of the Company.



On August 22, 2014, the
Company converted into 62,500,000 shares of common stock, valued at $43,753, a portion of a certain convertible promissory note
originally issued by the Company on January 21, 2014. The number of shares issued, at the time of such issuance, represented approximately
8.66% of the issued and outstanding shares of the Company.



On August 22, 2014, the
Company converted into 52,729,500 shares of common stock, valued at $36,934, a portion of a certain convertible promissory note
originally issued by the Company on January 30, 2014. The number of shares issued, at the time of such issuance, represented approximately
6.72% of the issued and outstanding shares of the Company.



On August 25, 2014, the
Company converted into 40,476,190 shares of common stock, valued at $17,000, a portion of a certain convertible promissory note
originally issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately
4.83% of the issued and outstanding shares of the Company.



On August 29, 2014, the
Company issued a promissory note in the original principal amount of $7,000 (“Note”) to a lender. The Note matures
on November 1, 2014 and carries an interest rate of 12% per annum. The Note, at the election of the lender is convertible into
fully paid and non-assessable shares of Common Stock of the Company at a 40%discount to the average of the three lowest trading
days in the ten trading days previous to the conversion.



On September 2, 2014, the
Company converted into 30,833,333 shares of common stock, valued at $19,606, a portion of a certain convertible promissory note
originally issued by the Company on October 5, 2013. The number of shares issued, at the time of such issuance, represented approximately
3.51% of the issued and outstanding shares of the Company.



On September 10, 2014,
the Company converted into 62,500,000 shares of common stock, valued at $37,500, a portion of a certain convertible promissory
note originally issued by the Company on January 21, 2014. The number of shares issued, at the time of such issuance, represented
approximately 6.88% of the issued and outstanding shares of the Company.



On September 10, 2014,
the Company converted into 76,923,077 shares of common stock, valued at $34,308, a portion of a certain convertible promissory
note originally issued by the Company on January 21, 2014. The number of shares issued, at the time of such issuance, represented
approximately 7.92% of the issued and outstanding shares of the Company.



On September 17, 2014,
the Company converted into 48,000,000 shares of common stock, valued at 32,640, a portion of a certain convertible promissory note
originally issued by the Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately
4.58% of the issued and outstanding shares of the Company.



On September 18, 2014,
the Company converted into 53,720,027 shares of common stock, valued at $14,000, a portion of a certain convertible promissory
note originally issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented
approximately 4.9% of the issued and outstanding shares of the Company.



Table of Contents24







On September 18, 2014,
the Company converted into 50,000,000 shares of common stock, valued at $21,000, a portion of a certain convertible promissory
note originally issued by the Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented
approximately 4.35% of the issued and outstanding shares of the Company.



On September 4, 2014, the
Company issued a promissory note in the original principal amount of $6,000 (“Note”) to a lender. The Note is due upon
demand, and carries an interest rate of 12% per annum.



On September 26, 2014,
the Company converted into 95,000,000 shares of common stock, valued at $28,500, a portion of a certain convertible promissory
note originally issued by the Company on January 21, 2014. The number of shares issued, at the time of such issuance, represented
approximately 7.92% of the issued and outstanding shares of the Company.



On September 30, 2014,
the Company converted into 63,583,333 shares of common stock, valued at $7,630, a portion of a certain convertible promissory note
originally issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately
4.91% of the issued and outstanding shares of the Company.



On October 3, 2014, the
Company converted into 100,000,000 shares of common stock, valued at 30,000, a portion of a certain convertible promissory note
originally issued by the Company on January 21, 2014. The number of shares issued, at the time of such issuance, represented approximately
7.36% of the issued and outstanding shares of the Company.



On October 3, 2014, the
Company converted into 53,000,000 shares of common stock, valued at $19,080, a portion of a certain convertible promissory note
originally issued by the Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately
3.63% of the issued and outstanding shares of the Company.



On October 7, 2014, the
Company converted into 74,166,666 shares of common stock, valued at $8,900, a portion of a certain convertible promissory note
originally issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately
4.9% of the issued and outstanding shares of the Company.



On October 8, 2014, the
Company converted into 51,000,000 shares of common stock, valued at $18,360, a portion of a certain convertible promissory note
originally issued by the Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately
3.21% of the issued and outstanding shares of the Company.



On October 3, 2014, the
Company converted into 67,000,000 shares of common stock, valued at $13,400, a portion of a certain convertible promissory note
originally issued by the Company on January 21, 2014. The number of shares issued, at the time of such issuance, represented approximately
4.09% of the issued and outstanding shares of the Company.



On October 16, 2014, the
Company converted into 32,083,333 shares of common stock, valued at $5,133, a portion of a certain convertible promissory note
originally issued by the Company on March 31, 2014. The number of shares issued, at the time of such issuance, represented approximately
1.88% of the issued and outstanding shares of the Company.



Table of Contents25







On October 16, 2014, the
Company converted into 52,833,333 shares of common stock, valued at $8,454, a portion of a certain convertible promissory note
originally issued by the Company on March 31, 2014. The number of shares issued, at the time of such issuance, represented approximately
3.04% of the issued and outstanding shares of the Company.



On October 17, 2014, the
Company converted into 62,500,000 shares of common stock, valued at 12,500, a portion of a certain convertible promissory note
originally issued by the Company on January 21, 2014. The number of shares issued, at the time of such issuance, represented approximately
3.49% of the issued and outstanding shares of the Company.



On October 24, 2014, the
Company converted into 84,916,667 shares of common stock, valued at $13,587, a portion of a certain convertible promissory note
originally issued by the Company on January 21, 2014. The number of shares issued, at the time of such issuance, represented approximately
4.39% of the issued and outstanding shares of the Company.



With respect to the transactions
noted above. Each of the recipients of securities of the Company was an accredited investor, or is considered by the Company to
be a “sophisticated person”, inasmuch as each of them has such knowledge and experience in financial and business matters
that they are capable of evaluating the merits and risks of receiving securities of the Company. No solicitation was made and no
underwriting discounts were given or paid in connection with these transactions. The Company believes that the issuance of its
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

Table of Contents26







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.



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.



Table of Contents27







Results of Operations



Following is management’s
discussion of the relevant items affecting results of operations for the years ended December 31, 2014 and 2013.



Revenues. The Company
generated net revenues of $689,338 during the year ended December 31, 2014 as compared to $30,000 for the year ended December 31,
2013. The increase is mainly the result of the Company’s ability to obtain funding necessary to purchase our main product,
aviation jet fuel. We continue to pursue substantial funding through investment and the application for lines of credit with financial
institutions.



Cost of Sales. Our
cost of sales for the year ended December 31, 2014 was $609,625 as compared to $26,895 for the year ended December 31, 2013. 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. The increase is a correlation to the increase in sales as described above.



Selling, General and
Administrative Expenses. Selling, general and administrative expenses were $1,488,177 for the year ended December 31, 2014,
as compared to $2,795,600 during the year ended December 31, 2013. During the years ended December 31, 2014 and 2013, the Company
issued 6,050,000, and 8,586,102, shares of common stock, respectively, to our joint venture partners for business development and
other consultants. The stock was valued at $175,450 and $1,538,349, respectively,expensed as SG&A during the years ended December
31, 2014 and 2013. We anticipate that SG&A expenses will increase commensurate with an increase in our operations.



Other Income (Expense).
The Company had net other expense of $1,825,157 for the year ended December 31, 2014 compared to net other expense of $1,350,147
for the year ended December 31, 2013. During 2014, other expenses incurred were comprised primarily of interest expenses related
to notes payable in the amount of $2,205,087 which includes the amortization of debt discount of $1,542,950 and non-cash expenses
of $518,304. These expenses were offset by a gain on the change in fair value of a derivative liability of $898,234.



Liquidity and Capital Resources



As of December 31, 2014,
our primary source of liquidity consisted of $811 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.

Table of Contents28









We have sustained significant
net losses which have resulted in an accumulated deficit at December 31, 2014 of $59,219,068, negative working capital (excess
of current liabilities over current assets) of $6,659,235 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, 2014
of $3,233,621 compared to a net loss in 2013 of $4,142,642. Without additional revenues, working capital loans, or equity investment,
there is substantial doubt as to our ability to continue operations. During the year ended December 31, 2014 the Company used a
net amount of $496,390 in operating activities. The largest item which affected operating activities was the amortization of debt
discounts of $1,542,950 and the change in accounts payable and accrued expenses of $992,745. During the year ended December 31,
2014 the Company was provided a net amount of $497,201 in financing activities. The largest item in financing activities was the
proceeds from notes payable in the amount of $661,198.



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.



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 years ended
December 31, 2014 and 2013, one customer accounted for 100% of total revenue, respectively, representing a material amount of
customer concentration. For the year ended December 31, 2014 and 2013, one disputed customers accounted for 97% and 100%,
respectively, of total accounts receivable, representing a material amount of credit risk.



Table of Contents29







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 as of December 31, 2014 and 2013, 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 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, 2014 and 2013, 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, 2014 and 2013 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 statements.

Table of Contents30









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.



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.

Table of Contents31









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;
|- |  | ------------------------------------------------------------------------------------

|• |  | 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 Contents32





ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA.



|CONTENTS                                               
|-------------------------------------------------------
|                                                       
|Report of Independent Registered Public Accounting Firm
|                                                       
|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 Contents33







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, 2014 and 2013, and the related consolidated
statements of operations, stockholders’ deficit and cash flows for each of the two years in the period ended December 31,
2014. 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 audits.



We have conducted our audits 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 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 audits 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
audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the consolidated financial position of Fuelstream, Inc.
as of December 31, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the two years in
the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.



The accompanying consolidated financial statements
have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the accompanying consolidated
financial statements, the Company has suffered recurring losses from operations, generated negative cash flows from operating activities,
and has an accumulated deficit as of December 31, 2014, which raises substantial doubt about its ability to continue as a going
concern. Management's plans in regard to this matter 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, New York



May 22, 2015









Table of Contents34









|FUELSTREAM, INC.                                                                       
|---------------------------------------------------------------------------------------
|Consolidated Balance Sheets                                                            
|                                                                                       
|ASSETS                                                                                 
|                                                                                       
|                                                                                       
|CURRENT ASSETS                                                                         
|                                                                                       
|Cash and cash equivalents                                                              
|Accounts receivable, net of allowance                                                  
|                                                                                       
|Total Current Assets                                                                   
|                                                                                       
|TOTAL ASSETS                                                                           
|                                                                                       
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                  
|                                                                                       
|CURRENT LIABILITIES                                                                    
|                                                                                       
|Accounts payable                                                                       
|Due to related parties                                                                 
|Accrued expenses                                                                       
|Convertible debenture/notes payable - short term (net of                               
|discount of $6,358 and $286,751, respectively)                                         
|Convertible notes payable - related parties                                            
|Notes payable                                                                          
|Notes payable - related parties                                                        
|Derivative liability                                                                   
|                                                                                       
|Total Current Liabilities                                                              
|                                                                                       
|LONG TERM LIABILITIES                                                                  
|                                                                                       
|Convertible debenture/notes payable (net of discount of                                
|$-0- and $50,082, respectively)                                                        
|                                                                                       
|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; 2,500,000,000                                         
|and 150,000,000 shares authorized, 1,938,172,724 and                                   
|37,709,552 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 Contents35









|FUELSTREAM, INC.                                                                       
|---------------------------------------------------------------------------------------
|Consolidated Statements of Operations                                                  
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|NET SALES                                                                              
|                                                                                       
|COST OF SALES                                                                          
|                                                                                       
|GROSS MARGIN                                                                           
|                                                                                       
|OPERATING EXPENSES                                                                     
|                                                                                       
|Selling, general and administrative                                                    
|                                                                                       
|Total Operating Expenses                                                               
|                                                                                       
|LOSS FROM OPERATIONS                                                                   
|                                                                                       
|OTHER INCOME (EXPENSES)                                                                
|                                                                                       
|Gain on forgiveness of debt                                                            
|Gain on change in fair value of derivative liability                                   
|Non-cash finance charge                                                                
|Interest expense (including amortization of debt discount                              
|of $1,542,950 and $657,161, respectively)                                              
|                                                                                       
|Total Other 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 Contents36









|FUELSTREAM, INC.                                                                      
|--------------------------------------------------------------------------------------
|Consolidated Statements of Stockholders' Deficit                                      
|For the Period January 1, 2013 through December 31, 2014                              
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Balance, January 1, 2013                                                              
|                                                                                      
|Common stock issued for services,                                                     
|January 2013                                                                          
|                                                                                      
|Fair value of vested options                                                          
|                                                                                      
|Common stock issued for services,                                                     
|May 2013                                                                              
|                                                                                      
|Common stock issued for conversion of debt                                            
|                                                                                      
|Common stock issued for services,                                                     
|August 2013                                                                           
|                                                                                      
|Common stock issued for services,                                                     
|October 2013                                                                          
|                                                                                      
|Common stock issued for services,                                                     
|November 2013                                                                         
|                                                                                      
|Beneficial conversion feature relating to                                             
|convertible debt                                                                      
|                                                                                      
|Common stock sold for cash                                                            
|                                                                                      
|Net loss for the year ended                                                           
|December 31, 2013                                                                     
|                                                                                      
|Balance, December 31, 2013                                                            
|                                                                                      
|Common stock issued for conversion of debt                                            
|                                                                                      
|Common stock issued for services,                                                     
|January 2014                                                                          
|                                                                                      
|Common stock issued for services,                                                     
|February 2014                                                                         
|                                                                                      
|Common stock issued for services,                                                     
|Q2 2014                                                                               
|                                                                                      
|Beneficial conversion feature relating to                                             
|convertible debt                                                                      
|                                                                                      
|Fair value of vested options                                                          
|                                                                                      
|Net loss for the year ended                                                           
|December 31, 2014                                                                     
|                                                                                      
|Balance, December 31, 2014                                                            
|                                                                                      
|The accompanying notes are an integral part of these consolidated financial statements







Table of Contents37







|FUELSTREAM, INC.                                                                          
|------------------------------------------------------------------------------------------
|Consolidated Statements of Cash Flows                                                     
|                                                                                          
|                                                                                          
|                                                                                          
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                     
|                                                                                          
|Net loss                                                                                  
|Adjustments to reconcile net loss to net                                                  
|cash used in operating activities:                                                        
|Notes payable realted party issued for services                                           
|Gain on conversion of debt                                                                
|Common stock issued for services and finance expenses                                     
|Stock based compensation                                                                  
|Operating expenses incurred by noteholders on behalf of the Company                       
|Non-cash interest expenses                                                                
|Change in fair value of derivative liability                                              
|Amortization of debt discounts                                                            
|Changes in operating assets and liabilities:                                              
|Accounts receivable                                                                       
|Accounts payable and accrued expenses                                                     
|Due to related parties                                                                    
|                                                                                          
|Net Cash Used in Operating Activities                                                     
|                                                                                          
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                     
|                                                                                          
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                     
|                                                                                          
|Proceeds from sale of common stock                                                        
|Net proceeds from notes payable                                                           
|Net proceeds from notes payable - related parties                                         
|Payments on notes payable                                                                 
|                                                                                          
|Net Cash Provided by Financing Activities                                                 
|                                                                                          
|NET INCREASE (DECREASE) 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 investing and financing activity:                                                
|                                                                                          
|Initial derivative liability on convertible note payable                                  
|Beneficial conversion feature on convertible note credited to additional paid in capital  
|Common stock issued for settlement of notes payable and accrued interest                  
|Reclassification from accrued interest to note payable - related party                    
|Reclassification of note from related party to non-related party                          
|Reclassification from due to related party to convertible note payable - related party    
|Accrued expenses paid by convertible noteholder                                           
|Common stock issued for accrued expenses and accrued interest                             
|Common stock issued for the conversion of notes payable and accrued interest related party
|Accrued interest converted to notes payable                                               
|Accounts payable converted to notes payable related party                                 
|                                                                                          
|The accompanying notes are an integral part of these consolidated financial statements.   



Table of Contents38







FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013





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 note 3)



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, 2014 was
$59,219,068 and the total stockholders’ deficit at December 31, 2014 was $6,659,235 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 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.

Table of Contents39







FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013





|                             |  | Amount
|---------------------------- |  | ------
|Accounts receivable acquired |  |       
|Goodwill acquired            |  |       
|Less liabilities assumed     |  |       
|Note payable acquired        |  |       
|Accounts payable acquired    |  |       
|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.



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, 2014 and 2013,
one customer accounted for 100% of total revenue, respectively, representing a material amount of customer concentration. For the
year ended December 31, 2014 and 2013, one disputed customers accounted for 97% and 100%, respectively, 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.



Table of Contents40







FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013





d.  Accounts Receivable



Accounts receivable are recorded net of the
allowance for doubtful accounts of $670,000 as of December 31, 2014 and 2013, 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 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, 2014 and 2013, 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, 2014 and 2013 was $-0-.



h.  Basic and Fully Diluted Net Loss Per
Share



|                                            |  | For the Years Ended December 31,
|------------------------------------------- |  | --------------------------------
|                                            |  | 2014                            
|Basic and fully diluted net loss per share: |  |                                 
|                                            |  |                                 
|Loss (numerator)                            |  | $                               
|Shares (denominator)                        |  |                                 
|Per share amount                            |  | $                               



Table of Contents41







FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013





The basic 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. Diluted EPS
assumes the exercise of stock option and the conversion of convertible debt, provided the effect is not anti-dilutive. The effect
of computing diluted loss per share is anti-dilutive and, as such, basic and diluted loss per share is the same for the years ended
December 31, 2014 and 2013.



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, 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, 2014 the Company had net operating
loss carryforwards of approximately $20,146,000 that may be offset against future taxable income through 2034. 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, 2014 and 2013:



|                       |  | 2014 |            | 2013
|---------------------- |  | ---- | ---------- | ----
|Deferred tax assets:   |  |      |            |     
|NOL Carryover          |  | $    | 7,349,000  |     
|Valuation allowance    |  |      | (7,349,000 | )   
|                       |  |      |            |     
|Net deferred tax asset |  | $    | —          |     



Table of Contents42







FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013





The actual provision for income taxes differs
from the amount computed by applying the federal statutory rate to losses before income taxes at December 31, 2014 and 2013, as
follows:



|                                         |  | 2014 |      | 2013
|---------------------------------------- |  | ---- | ---- | ----
|Federal income taxes at statutory rate   |  |      | (34  | )%  
|State income tax, net of federal benefit |  |      | (8.7 | )   
|Permanent differences                    |  |      | 0    |     
|Valuation allowance                      |  |      | 42.7 | %   



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, 2014 and 2013 due to the following:



|                      |  | 2014 |            | 2013
|--------------------- |  | ---- | ---------- | ----
|Current Federal Tax   |  | $    | —          |     
|Current State Tax     |  |      | —          |     
|Change in NOL Benefit |  |      | 1,099,000  |     
|Valuation allowance   |  |      | (1,099,000 | )   
|                      |  | $    | —          |     



At December 31, 2014, 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, 2014 and 2013, 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, 2014, 2013 and 2012.



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
effect on the consolidated financial statements.



Table of Contents43







FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



k.  Accrued Expenses



Accrued expenses
consisted of the following:



|                                      |  | December 31,
|------------------------------------- |  | ------------
|                                      |  | 2014        
|                                      |  |             
|Accrued compensation                  |  | $           
|Misc. loans payable                   |  |             
|Accrued interest – related party      |  |             
|Accrued interest- on note payable     |  |             
|Accrued interest- on accounts payable |  |             
|Total accrued expenses                |  | $           



l.Recently
Issued Accounting Standards



In June of 2014 the Financial Accounting Standards
Board issued Accounting Standards Update ASU 2014-10, “Elimination of Certain Financial Reporting Requirements, Including
an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation” (“ASU 2014-10”). The amendments
in ASU 2014-10 remove the definition of a development stage entity from the master glossary of the Accounting Standards Codification,
thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S.
GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information
in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage
entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the
first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.



The amendments also clarify that the guidance
in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations.



The adoption of ASU 2014-10 did not have a
significant impact on our results of operations, financial condition or cash flow.



In June 2014, the FASB issued ASU 2014-12,
"Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That
a Performance Target Could be Achieved after the Requisite Service Period." This ASU provides more explicit guidance for treating
share-based payment awards that require a specific performance target that affects vesting and that could be achieved after the
requisite service period as a performance condition. The new guidance is effective for annual and interim reporting periods beginning
after December 15, 2015. The Company does not expect the adoption of this guidance to have a material impact on the financial statements.



In August 2014, the FASB issued ASU 2014-15,
“Presentation of Financial Statements – Going Concern (Topic 205-40)”, which requires management to evaluate
whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting
period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for
annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company expects to adopt this new
standard for the fiscal year ending December 31, 2015 and the Company will continue to assess the impact on its financial statements.

Table of Contents44





FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



Other recent accounting pronouncements issued
by the FASB and the SEC did not, or are not believed by management to have a material impact on the Company's present or future
consolidated financial statements.



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 Contents45





FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



NOTE 5 - ACCOUNTS
RECEIVABLE



Accounts receivable
at December 31, 2014 and 2013 are as follow:



|                                       |  | 2014
|-------------------------------------- |  | ----
|Accounts receivable (on acquisition)   |  | $   
|                                       |  |     
|Less: allowance on accounts receivable |  |     
|Accounts receivable, net               |  | $   



|                                       |  | 2013
|-------------------------------------- |  | ----
|Accounts receivable (on acquisition)   |  | $   
|                                       |  |     
|Less: allowance on accounts receivable |  |     
|Accounts receivable, net               |  | $   



The Company was involved in disputes
with $698,000 of the above accounts receivable and has filed a lawsuit (refer to note 15).



NOTE 6 - ACCOUNTS PAYABLE



The accounts payable of $959,469
and $826,832 as of December 31, 2014 and 2013 respectively, 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 $192,061 of the second accounts payable.
As of December 31, 2014 and 2013 the Company has accrued interest payable on these accounts of $183,108 and $129,028 which is included
in accrued expenses.

Table of Contents46





FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



NOTE 7 - NOTES PAYABLE



|Notes payable consisted of the following:                                                                                                         |  |                   |            |                  
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | -----------------
|                                                                                                                                                  |  | December 31, 2014 |            | December 31, 2013
|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 October 18, 2010 to individual, unsecured, interest at 15% per annum, due on demand.(1)                                   |  |                   | 786,300    |                  
|Notes payable issued on October 5, 2013 to individual, unsecured, interest at 8% per annum, due on demand.                                        |  |                   | —          |                  
|Notes payable issued on October 17, 2013 to a company, unsecured, interest at 16% per annum, due on demand.                                       |  |                   | —          |                  
|Notes payable issued on October 4, 2013, January 16, 2014, and January 22, 2014 to a company, unsecured, interest at 8% per annum, due on demand. |  |                   | 8,000      |                  
|Notes payable issued on March 5, 2013 to individual, unsecured, interest at 8% per annum, due on demand.                                          |  |                   | 7,500      |                  
|Notes payable issued on July 1, 2013 to a company, unsecured, interest at 8% per annum, due on demand.                                            |  |                   | 810        |                  
|                                                                                                                                                  |  |                   |            |                  
|Total notes payable                                                                                                                               |  |                   | 1,034,610  |                  
|Less: current portion                                                                                                                             |  |                   | (1,034,610 | )                
|Long-term notes payable                                                                                                                           |  | $                 | —          |                  
|Maturities of notes payable are as follows:                                                                                                       |  |                   |            |                  
|Year Ending December 31,                                                                                                                          |  |                   |            |                  
|2015                                                                                                                                              |  |                   |            |                  
|Total                                                                                                                                             |  |                   |            |                  



Accrued interest on notes payable for the years
ended December 31, 2014 and 2013 was $505,482 and $363,507, respectively.



1)  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 Contents47





FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



NOTE 8 - CONVERTIBLE DEBENTURE/NOTES
PAYABLE

|                                                                                                                                                                                                                                                                                                        |  | December 31, 2014 |         | December 31, 2013
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | -----------------
|Notes payable issued on March 21, 2012, unsecured, interest included, due on March 21, 2014,convertible into common stock at $1.00 per share (less unamortized debt discount of $-0- and $12,616, respectively)                                                                                         |  | $                 | —       |                  
|Convertible note issued on March 2013, unsecured, interest at 8%, due on October 05, 2013.                                                                                                                                                                                                              |  |                   | —       |                  
|Convertible note issued on January 2014, unsecured, interest at 8%, due on November 3, 2014. Unamortized debt discount of $0 and $92,011, respectively                                                                                                                                                  |  |                   | —       |                  
|Convertible note issued on October 2013, December 2013 and February 2014, unsecured, zero interest if paid on or before 90 days otherwise one time interest charge of 12%, due on October 2, 2015 December 9, 2015 and February 20, 2016. Unamortized debt discount of $2,352 and $50,082, respectively |  |                   | 1,768   |                  
|Convertible note issued on October 2013, unsecured, interest at 6%, due on October 13, 2014 (in default). Unamortized debt discount of $-0- and $23,507, respectively                                                                                                                                   |  |                   | 9,912   |                  
|Convertible note issued on December 2013 and January 2014, unsecured, interest at 8%, due on December 12, 2014, July 20, 2014 (in default) and January 30, 2015. Unamortized debt discount of $-0- and $58,299, respectively                                                                            |  |                   | 115,000 |                  
|Convertible note issued on December 2013, unsecured, interest at 6%, due on December 12, 2014. Unamortized debt discount of $-0- and $100,317, respectively                                                                                                                                             |  |                   | —       |                  
|Convertible note issued on January 2, 2014, unsecured, interest at 10%, due on June 2, 2014 (in default), convertible into common stock at 60% of the bid price on the date of conversion, (less unamortized debt discount of $-0- and $-0-, respectively)                                              |  |                   | 11,209  |                  
|Convertible note issued on April 1, 2014, unsecured, interest at 10%, due on April 10, 2014 (in default). Unamortized debt discount of $-0- and $-0-, respectively.                                                                                                                                     |  |                   | 6,669   |                  
|Convertible note issued on April 4, 2014, unsecured, interest at 10%, due on May 4, 2014 (in default). Unamortized debt discount of $-0- and $-0-, respectively.                                                                                                                                        |  |                   | 2,679   |                  
|Convertible note issued on March 31, 2014, unsecured, interest at 8%, due on January 2, 2015. Unamortized debt discount of $580 and $-0-, respectively.                                                                                                                                                 |  |                   | 72,730  |                  



Table of Contents48







|Convertible note issued on April 1, 2014, unsecured, interest at 10%, due on September 1, 2014 (in default). Unamortized debt discount of $-0- and $-0-, respectively. |  |  | 93,000 |  |  |  | — | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ------ |  |  |  | - | 
|Convertible note issued on June 4, 2014, unsecured, interest at 16%, due on April 1, 2000 (in default). Unamortized debt discount of $-0- and $-0-, respectively.      |  |  | 25,000 |  |  |  | — | 
|Convertible note issued on June 1, 2014, unsecured, interest at 10%, due on December 1, 2014. Unamortized debt discount of $-0- and $-0-, respectively.                |  |  | 25,000 |  |  |  | — | 
|Convertible note issued on April 1, 2014, unsecured, interest at 10%, due on December 1, 2014. Unamortized debt discount of $-0- and $-0-, respectively.               |  |  | 25,000 |  |  |  | — | 
|Convertible note issued on May 16, 2014, unsecured, interest at 8%, due on November 16, 2014 (in default). Unamortized debt discount of $-0- and $-0-, respectively.   |  |  | 1,975  |  |  |  | — | 
|Convertible note issued on June 30, 2014, unsecured, interest
    at 8%, due on December 30, 2014. Unamortized debt discount of $-0- and $-0-, respectively.           |  |  | 1,929  |  |  |  | — | 
|Convertible note issued on July 9, 2014, unsecured, interest at 10%, due on February 9, 2015. Unamortized debt discount of $827 and $-0-, respectively.                |  |  | 3,730  |  |  |  | — | 
|Convertible note issued on September 8, 2014, unsecured, interest at 8%, due on December 30, 2014. Unamortized debt discount of $-0- and $-0-, respectively.           |  |  | 1,890  |  |  |  | — | 
|Convertible note issued on October 1, 2014, unsecured, interest at 12%, due on January 1, 2015. Unamortized debt discount of $978 and $-0-, respectively.              |  |  | 89,022 |  |  |  | — | 
|Convertible note issued on October 1, 2014, unsecured, interest at 12%, due on January 1, 2015. Unamortized debt discount of $978 and $-0-, respectively.              |  |  | 89,022 |  |  |  | — | 
|Convertible note issued on October 1, 2014, unsecured, interest at 12%, due on January 1, 2015. Unamortized debt discount of $155 and $-0-, respectively.              |  |  | 14,095 |  |  |  | — | 



Table of Contents49





FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



|Convertible note issued on October 1, 2014, unsecured, interest at 12%, due on January 1, 2015. Unamortized debt discount of $489 and $-0-, respectively. |  |   | 44,511   |   |  |   | —        |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | -------- | - |  | - | -------- | -
|                                                                                                                                                          |  |   |          |   |  |   |          |  
|Total notes payable                                                                                                                                       |  |   | 634,141  |   |  |   | 231,168  |  
|Less: current portion                                                                                                                                     |  |   | (634,141 | ) |  |   | (226,250 | )
|Long-term convertible debenture/notes payable                                                                                                             |  | $ | —        |   |  | $ | 4,918    |  



Convertible
note issued March 21, 2012



On March 21, 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, or $1.00 per share, and there is no fluctuation in this conversion rate.



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.



In the year 2012, 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.



On
December 12, 2013, the Note holder assigned $145,000 of its note to another note holder.



During the year 2014, the balance of $105,000
of the note was assigned to another note holder convertible note of February 20, 2014 (see below).



Convertible debenture March 2013:



On March 5, 2013 the Company issued a
$10,000 Convertible Promissory Note against expenses incurred,which bears interest at a rate of 8%, payable on October 5,
2013 The Maker of this Note shall have option after the affected date (October 5, 2013), in its sole discretion, to convert
all or part of the principal balance and accrued interest on this Note to common stock of the Maker at a 40% discount of the
average three lowest trading days in the ten trading days previous to the conversion.



The Company analyzed the
convertible debts for derivative accounting consideration under ASC 815 “Derivatives and Hedging” and determined
that derivative accounting is not applicable. The Company further analyzed the convertible debts for a beneficial
conversion feature under ASC 470-20 on the date of the notes and determined that a beneficial conversion feature exists. The
Note was in default during the year ended December 31, 2013 and $5,000 was charged to interest expenses as penalty.

Table of Contents50





FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



During the year 2014 this note was transferred
to the third party account with accrued interest on July 9, 2014 convertible promissory note (refer to paragraph Convertible note
July 9, 2014 below).



The outstanding balance as of December 31,
2014 on this note is $0.



Convertible debenture July 2013 August 2013,
October 2013 and January 2014



On July 19, 2013, the Company issued a
$78,500 Convertible Promissory Note which bears interest at a rate of 8% and is convertible into the Company’s common
stock at the holder’s option, at the conversion rate of 60% of the lowest three day trading price for ten trading days
immediately preceding the date of conversion.



On August 26, 2013, the Company issued a
$53,000 Convertible Promissory Note which bears interest at a rate of 8% and is convertible into the Company’s common
stock at the holder’s option, at the conversion rate of 60% of the lowest three day trading price for ten trading days
immediately preceding the date of conversion.



On
October 23, 2013, the Company issued a $42,500 Convertible Promissory Note which bears interest at a rate of 8%, due on
July 25, 2014 and is convertible into the Company’s common stock at the holder’s option, at the conversion rate
of 60% of the lowest three day trading price for ten trading days immediately preceding the date of conversion. Any amount
of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%)
per annum from the due date thereof until the same is paid (“Default Interest”) and the note also has
prepayment penalty clause.



On January
30, 2014, the Company issued a $78,500 Convertible Promissory Note which bears interest at a rate of 8%, due on November 3, 2014
and is convertible into the Company’s common stock at the holder’s option, at the conversion rate of 60% of the lowest
three day trading price for ten trading days immediately preceding the date of conversion. Any amount of principal or interest
on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date
thereof until the same is paid (“Default Interest”) and the note also has prepayment penalty clause.



The
Company received a net of $185,000 from the debenture holder, $6,500 was paid towards the accrued legal expenses and due diligence
fees and $36,000 toward legal and professional fees and $25,000 was paid toward accrued professional fees.



During the year ended December 31, 2014, the
Company paid $131,500 for July 2013, August 2013 and October 2013 note. In addition, the Company paid $42,500 as a prepayment penalty
which has been recorded as interest expense.



The Company identified
embedded derivatives related to the Convertible Promissory Note entered into in January 2014. 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 $130,485 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      |  |  | 268.98 | %
|Risk free rate: |  |  | 0.08   | %



Table of Contents51





FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



The initial fair value of the embedded debt
derivative of $130,485 was allocated as a debt discount up to the proceeds of the note ($78,500) with the remainder ($51,985) charged
to current period operations as interest expense for the year ended December 31, 2014.



The
Company issued common stock for the conversion of balance note of $121,000.



Convertible
debenture October 2013, December 2013 and February 2014



During
the year ended December 30, 2014, the Company issued notes of total a $25,000 Convertible Promissory Note which bears interest
at a rate of 8%, due on February 20, 2016 and is convertible into the Company’s common stock at the holder’s option,
at the conversion rate of 60% of the lowest three day trading price for ten trading days immediately preceding the date of conversion.
Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent
(22%) per annum from the due date thereof until the same is paid (“Default Interest”) and the note also has prepayment
penalty clause.



The
Company identified embedded derivatives related to the Convertible Promissory Note entered into in January 2014.
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 $39,722 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      |  |  | 270.02 | %
|Risk free rate: |  |  | 0.34   | %



The
initial fair value of the embedded debt derivative of $39,722 was allocated as a debt discount up to the proceeds of the note
($25,000) with the remainder ($14,722) charged to current period operations as interest expense for the year ended December 31,
2014. The outstanding balance as of December 31, 2014 is $4,120.



Convertible debenture October 13, 2013:



On October 13, 2013, the Company issued a $30,000
Convertible Promissory Note which bears interest at a rate of 6%, due on October 13, 2014 and is convertible into the Company’s
common stock at the holder’s option, at the conversion rate of 60% of the lowest five prior trading days immediately preceding
the date of conversion. Default rate of interest is 24% per annum.



The Company received a net of $26,100 from
the convertible note holder; $1,500 was paid towards the legal expenses and $2,400 toward third party fees.



Table of Contents52





FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



The Company identified embedded derivatives
related to the Convertible Promissory Note entered into in October 2013. 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 $57,750 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      |  |  | 277  | %
|Risk free rate: |  |  | 0.02 | %



The initial fair value of the embedded debt derivative of $57,750
was allocated as a debt discount up to the proceeds of the note ($30,000) with the remainder ($27,750) charged to current period
operations as non-cash interest expense for the year ended December 31, 2013.



During the year 2014 the Company issued 15,261,282 shares for of
common stock to convert note amount of $20,087. The closing balance as of December 31, 2014 is $9,912.



Convertible debenture December 2013 and
January 2014



During the year ended December 31, 2014, the
Company issued two notes of total a $228,500 Convertible Promissory Note which bears interest at a rate of 8%, due on July 20,
2014 and January 30, 2015 and is convertible into the Company’s common stock at the holder’s option, at the conversion
rate of 60% of the lowest three day trading price for ten trading days immediately preceding the date of conversion. Any amount
of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per
annum from the due date thereof until the same is paid (“Default Interest”) and the note also has prepayment penalty
clause.



The
Company identified embedded derivatives related to the Convertible Promissory Note entered into in January 2014. 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 $383,457 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      |  |  | 267.19%-268.98 | % | 
|Risk free rate: |  |  | 0.07%-0.10     | % | 



The initial fair value of the embedded
debt derivative of $383,457 was allocated as a debt discount up to the proceeds of the note ($228,500) with the remainder
($154,957) charged to current period operations as interest expense for the year ended December 31, 2014. The outstanding
balance of this note is $115,000 as of December 31, 2014.



Table of Contents53





FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



Convertible
debenture December 12, 2013:



On
December 12, 2013 one of above note holder assigned its Note of $145,000 to another holder, which bears interest at a rate
of 8%, payable on December 12, 2014 and is convertible into the Company’s common stock at the holder’s option at
40% discount to the lowest trading price in five days prior to date of notice of conversion. Additionally in no event the
floor price for the exercise can't go below $0.00004. If these notes are converted at this rate, the number of shares issued
would be in excess of the authorized limit of share issuance. If the Borrower is unable to issue any shares under this
provision due to the fact that there is an insufficient number of authorized and unissued shares available, the Holder
promises not to force the Borrower to issue these shares or trigger an Event of Default, provided that Borrower takes
immediate steps required to get the appropriate level of approval from shareholders or the board of directors, where
applicable to raise the number of authorized shares to satisfy the Notice of Conversion. In the event of default the Company
has to pay 150% time the sum of outstanding principal and accrued interest. The note also has prepayment penalty clause.
During the year 2013, the Company issued 527,778 shares of company common stock in exchange of convertible note of
$12,500.



During
the year 2014 note amount of $132,000 converted to shares of common stock and outstanding balance as of December 31, 2014 is $0.



Convertible
debenture January 2, 2014



During
the year ended December 31, 2014, the Company issued notes of total a $11,209 Convertible Promissory Note which bears interest
at a rate of 8%, due on June 2, 2014 and is convertible into the Company’s common stock at the maker’s option, at
the conversion rate of 40% of the lowest three day trading price for ten trading days immediately preceding the date of conversion.
Any amount of principal or interest on this Note which is not paid when due shall bear interest at the lesser of i) 10 percent
(10%) per annum or ii) the maximum rate allowed under the applicable law until paid in full or until the Note is reinstated.



The Company analyzed the convertible
debts for derivative accounting consideration under ASC 815 “Derivatives and Hedging” and determined that
derivative accounting is not applicable. The Company further analyzed the convertible debts for a beneficial conversion
feature under ASC 470-20 on the date of the notes and determined that a beneficial conversion feature exists. The intrinsic
value of the beneficial conversion feature was determined to be $7,473 and was recorded as debt discount. The outstanding
balance on this note is $11,209 as of December 31, 2014.



Convertible debentures February 20, 2014:



During the year ended December 31, 2014,
the Company issued Convertible note of $145,000 for expenses incurred of $40,000 and transfer of loan of $105,000. The
Convertible Promissory Note bears interest at a rate of 8%, due on December 30, 2014 is convertible into the Company’s
common stock at the holder’s option, at the conversion rate of 60% of the average of the lowest three day trading price
for ten trading days immediately preceding the date of conversion.



The Company identified Debt discount of
$96,667 related to the Convertible Promissory Note issued on February 20, 2014. The accounting treatment of debt discount
financial instruments requires that the Company record the Debt discount on notes as of the inception date of the Convertible
Promissory note and amortized it over the period of note. The Company has fully amortized $96,667 and charged to current
period operations as interest expense for the year ended December 31, 2014.

Table of Contents54





FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



During the year 2014 note amount of $145,000
converted to shares of common stock and outstanding balance as of December 31, 2014 is $0.



Convertible debentures March 10, 2014 and
April 9, 2014:



During the year ended December 31, 2014,
the Company issued Convertible notes of $6,669 and $2,679 for expenses incurred the Convertible Promissory Notes which bears
interest at a rate of 10%, due on April 9, 2014 and May 9, 2014 respectively,are convertible into the Company’s common
stock at the holder’s option, at the conversion rate of 60% of the average of the lowest three day trading price for
ten trading days immediately preceding the date of conversion.



The Company identified Debt discounts of
$6,629 and $1,182 related to the Convertible Promissory Note issued on March 10, 2014 and April 9, 2014 respectively. The
accounting treatment of debt discount financial instruments requires that the Company record the Debt discount on notes as of
the inception date of the Convertible Promissory note and amortized it over the period of note. The Company has fully
amortized $6,629 and $1,182 and charged to current period operations as interest expense for the year ended December 31,
2014.



The outstanding balance as of December 31,
2014 is $6,669 and $2,679.



Convertible
debentures March 31, 2014:



During the year ended December 31, 2014,
the Company issued note of $83,500 Convertible Promissory Note which bears interest at a rate of 8%, due on January 2, 2015
and is convertible into the Company’s common stock at the holder’s option, at the conversion rate of 60% of the
average of the lowest three day trading price for ten trading days immediately preceding the date of conversion.



The Company identified embedded
derivatives related to the Convertible Promissory Note issued on March 31, 2014. These embedded derivatives included certain
conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair
value of these 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 $157,749 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      |  |  | 266.94 | %
|Risk free rate: |  |  | 0.10   | %



The
initial fair value of the embedded debt derivative of $157,749 was allocated as a debt discount up to the proceeds of the note
($83,500) with the remainder ($74,249) charged to current period operations as interest expense for the year ended December 31,
2014.



The
outstanding balance as of December 31, 2014 is $73,310.



Table of Contents55





FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



Convertible debentures April 1, 2014:



During the year ended December 31, 2014,
the Company issued note of $93,000 for expenses incurred, the Convertible Promissory Note which bears interest at a rate of
10%, due on September 9, 2014 and is convertible into the Company’s common stock at the holder’s option, at the
conversion rate of 75% of the average of the lowest three day trading price for ten trading days immediately preceding the
date of conversion.



The Company identified embedded
derivatives related to the Convertible Promissory Note issued on April 1, 2014. These embedded derivatives included certain
conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair
value of these 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 $111,104 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      |  |  | 266.94 | %
|Risk free rate: |  |  | 0.05   | %



The
initial fair value of the embedded debt derivative of $111,104 was allocated as a debt discount up to the proceeds of the
note ($93,000) with the remainder ($18,104) charged to current period operations as interest expense for the year ended December
31, 2014.



The outstanding balance as of December 31,
2014 is $93,000.



Convertible debentures April 1, 2014 June
1, 2014 and June 4, 2014:



During the year ended December 31, 2014,
the Company issued three convertible note of $25,000 each, $50,000 for expenses incurred and $25,000 transfer of loan. One
Convertible promissory note bears interest at 16% and other two notes bears interest rate of 10%. The notes of $25,000 each
which due September 9, 2014 and December 1, 2014 are convertible into the Company’s common stock at the holder’s
option at conversion price of $0.05, and the note of $25,000 which is due on demand is convertible at the conversion rate of
75% of the average of the lowest trading price for five trading days immediately preceding the date of conversion.



The Company identified Debt discount of
$25,000 each related to the Convertible Promissory Note issued on April 1, 2014 and June 6, 2014. The accounting treatment of
debt discount financial instruments requires that the Company record the Debt discount on note as of the inception date of
the Convertible Promissory Note and amortized it over the period of note. The Company has fully amortized $50,000 and charged
to current period operations as interest expense for the year ended December 31,
2014.



The
outstanding balance for these three convertible notes payable as of December 31, 2014 is $25,000 each.



Table of Contents56





FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



Convertible debentures May 16, 2014:



During the year ended December 31, 2014,
the Company issued Convertible note of $1,975 for expenses incurred the Convertible Promissory Note which bears interest at a
rate of 8%, due on November 16, 2014 is convertible into the Company’s common stock at the holder’s option, at
the conversion rate of 60% of the average of the lowest three day trading price for ten trading days immediately preceding
the date of conversion.



The Company identified Debt discount of
$1,391 related to the Convertible Promissory Note issued on May 16, 2014. The accounting treatment of debt discount financial
instruments requires that the Company record the Debt discount on notes as of the inception date of the Convertible
Promissory note and amortized it over the period of note. The Company has fully amortized $1,391 and charged to current
period operations as interest expense for the year ended December 31, 2014.



The outstanding balance as of December 31,
2014 is $1,975.



Convertible debentures June 30, 2014:



During the year ended December 31, 2014,
the Company issued Convertible note of $1,929 for expenses incurred the Convertible Promissory Note which bears interest at a
rate of 8%, due on December 30, 2014 is convertible into the Company’s common stock at the holder’s option, at
the conversion rate of 60% of the average of the lowest three day trading price for ten trading days immediately preceding
the date of conversion.



The Company identified Debt discount of
$1,417 related to the Convertible Promissory Note issued on June 30, 2014. The accounting treatment of debt discount
financial instruments requires that the Company record the Debt discount on notes as of the inception date of the Convertible
Promissory note and amortized it over the period of note. The Company has fully amortized $1,417 and charged to current
period operations as interest expense for the year ended December 31, 2014.



The outstanding balance as of December 31,
2014 is $1,929.



Convertible debentures July 9, 2014:



During the year ended December 31,
2014, the Company issued note of $16,056 through transfer of convertible note, accrued interest and miscellaneous loans
payable, the Convertible Promissory Note which bears interest at a rate of 10%, due on February 9, 2015 and is convertible
into the Company’s common stock at the holder’s option,at the conversion rate of 60% of the average of the lowest
three day trading price for ten trading days immediately preceding the date of conversion.



The Company identified embedded
derivatives related to the Convertible Promissory Note issued on July 9, 2014. These embedded derivatives included certain
conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair
value of these 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 $20,585 of the embedded derivative. The fair value of the embedded derivative was determined using the Binomial Lattice
Model based on the following assumptions:

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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 294.57 | %
|Risk free rate: |  |  | 0.07   | %



The initial fair value of the embedded debt
derivative of $20,585 was allocated as a debt discount up to the proceeds of the note ($16,056) with the remainder ($4,529) charged
to current period operations as interest expense for the year ended December 31, 2014.



The outstanding balance as of December 31,
2014 is $4,557 after $11,500 converted to shares of common stock during the year ended December 31, 2014.



Convertible debentures September 8, 2014:



During the year ended December 31,
2014, the Company issued note of $1,890 for expenses incurred, the Convertible Promissory Note which bears interest at a rate
of 8%, due on December 30, 2014 and is convertible into the Company’s common stock at the holder’s option,at
the conversion rate of 60% of the average of the lowest three day trading price for ten trading days immediately preceding
the date of conversion.



The Company identified embedded derivatives
related to the Convertible Promissory Note issued on September 8, 2014. These embedded derivatives included certain conversion
features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of these
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 $3,150 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      |  |  | 305.21 | %
|Risk free rate: |  |  | 0.03   | %



The
initial fair value of the embedded debt derivative of $3,150 was allocated as a debt discount up to the proceeds of the note ($1,890)
with the remainder ($1,260) charged to current period operations as interest expense for the year ended December 31, 2014.



The
outstanding balance as of December 31, 2014 is $1,890.



Convertible
debenture August 2014 and September 2014



During the year ended December 31, 2014,
the Company issued notes of total a $58,498 Convertible Promissory Note which bears interest at a rate of 12%, due on
November 1, 2014 and is convertible into the Company’s common stock at the holder’s option, at the conversion
rate of 60% of the lowest day trading price for ten trading days immediately preceding the date of conversion.



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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



The Company identified embedded derivatives
related to the Convertible Promissory Note entered into in August and September 2014. These embedded derivatives included certain
conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value
of these 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 $97,497 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      |  |  | 304.14%-309.19 | % | 
|Risk free rate: |  |  | 0.02           | % | 



The initial fair value of the embedded debt
derivative of $97,497 was allocated as a debt discount up to the proceeds of the note ($58,498) with the remainder ($38,998) charged
to current period operations as interest expense for the year ended December 31, 2014.



The Company repaid these notes in cash during
the year ended December 31, 2014.



Convertible debentures October 1, 2014:



During the year ended December 31, 2014,
the Company issued note of $90,000, the Convertible Promissory Note which bears interest at a rate of 12%, due on January 1,
2015 and is convertible into the Company’s common stock at the holder’s option,at the conversion rate of 60% of
the lowest trading price for ten trading days immediately preceding the date of conversion.



The Company identified embedded derivatives
related to the Convertible Promissory Note issued on October 1, 2014. These embedded derivatives included certain conversion features.
The accounting treatment of derivative financial instruments requires that the Company record the fair value of these 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 $150,000 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      |  |  | 309.19 | %
|Risk free rate: |  |  | 0.02   | %



The
initial fair value of the embedded debt derivative of $150,000 was allocated as a debt discount up to the proceeds of the note
($90,000) with the remainder ($60,000) charged to current period operations as interest expense for the year ended December 31,
2014.



The
outstanding balance as of December 31, 2014 is $90,000.



Convertible
debentures October 2014:



During the year ended December 31, 2014,
the Company issued note of $90,000, the Convertible Promissory Note which bears interest at a rate of 12%, due on January 1,
2015 and is convertible into the Company’s common stock at the holder’s option,at the conversion rate of 60% of
the lowest trading price for ten trading days immediately preceding the date of conversion.

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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



The Company identified embedded derivatives
related to the Convertible Promissory Note issued on October 1, 2014. These embedded derivatives included certain conversion features.
The accounting treatment of derivative financial instruments requires that the Company record the fair value of these 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 $150,000 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      |  |  | 309.19 | %
|Risk free rate: |  |  | 0.02   | %



The
initial fair value of the embedded debt derivative of $150,000 was allocated as a debt discount up to the proceeds of the note
($90,000) with the remainder ($60,000) charged to current period operations as interest expense for the year ended December 31,
2014.



The
outstanding balance as of December 31, 2014 is $90,000.



Convertible
debentures October 1, 2014:



During
the year ended December 31, 2014, the Company issued note of $14,250 the Convertible Promissory Note which bears interest at
a rate of 12%, due on January 1, 2015 and is convertible into the Company’s common stock at the holder’s
option,at the conversion rate of 60% of the lowest trading price for ten trading days immediately preceding the date of
conversion.



The
Company identified embedded derivatives related to the Convertible Promissory Note issued on October 1, 2014. These embedded derivatives
included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record
the fair value of these 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 $23,750 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      |  |  | 309.19 | %
|Risk free rate: |  |  | 0.02   | %



The
initial fair value of the embedded debt derivative of $23,750 was allocated as a debt discount up to the proceeds of the note
($14,250) with the remainder ($9,500) charged to current period operations as interest expense for the year ended December 31,
2014.



The
outstanding balance as of December 31, 2014 is $14,250.



Convertible
debentures October 1, 2014:



During
the year ended December 31, 2014, the Company issued note of $45,000 the Convertible Promissory Note which bears
interest at a rate of 12%, due on January 1, 2015 and is convertible into the Company’s common stock at the
holder’s option,at the conversion rate of 60% of the lowest trading price for ten trading days immediately preceding
the date of conversion.



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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



The Company identified embedded derivatives
related to the Convertible Promissory Note issued on October 1, 2014. These embedded derivatives included certain conversion features.
The accounting treatment of derivative financial instruments requires that the Company record the fair value of these 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 $75,000 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      |  |  | 309.19 | %
|Risk free rate: |  |  | 0.02   | %



The
initial fair value of the embedded debt derivative of $75,000 was allocated as a debt discount up to the proceeds of the note
($45,000) with the remainder ($30,000) charged to current period operations as interest expense for the year ended December 31,
2014.



The
outstanding balance as of December 31, 2014 is $45,000.



The
fair value of the described embedded derivative of $340,825 at December 31, 2014 was determined using the Binomial Lattice Model
with the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 334.26 | %
|Risk free rate: |  |  | 0.00   | %



At December
31, 2014, the Company adjusted the recorded fair value of the derivative liability to market on both notes resulting in noncash,
non-operating gain of $884,692 for the year ended December 31, 2014.



During
the year ended December 31, 2014 and 2013 the Company amortized $1,325,064 and $462,157, respectively, of beneficial debt
discount to the operations as interest expense.



|Maturities of notes payable are as follows: |  |       
|------------------------------------------- |  | ------
|Year Ending December 31,                    |  | Amount
|2015                                        |  | $     
|Total                                       |  |       
|Less: Unamortized debt discount             |  |       
|Total                                       |  | $     



Accrued interest on convertible notes payable
for the years ended December 31, 2014 and 2013 was $43,456 and $7,387, respectively.

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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



NOTE 9 - CONVERTIBLE NOTES PAYABLE - RELATED PARTIES



Convertible Notes payable - related parties consist of the
following

|                                                                                           |  |                   |          |                  
|------------------------------------------------------------------------------------------ |  | ----------------- | -------- | -----------------
|                                                                                           |  | December 31, 2014 |          | December 31, 2013
|Convertible note issued in October 2013, unsecured, interest at 8%, due on demand.         |  | $                 | 1,710    |                  
|Convertible note issued in October 2013, unsecured, interest at 8%, due on demand.         |  |                   | 42,470   |                  
|Convertible note issued in January 2014, unsecured, interest at 10%, due on demand.        |  |                   | 45,000   |                  
|Convertible note issued on April 3, 2014, unsecured, interest at 10%, due on demand.       |  |                   | 14,000   |                  
|Convertible note issued on April 1, 2014, unsecured, interest at 10%, due on demand.       |  |                   | 45,000   |                  
|Convertible note issued on May 21, 2014, unsecured, interest at 10%, due on demand.        |  |                   | 4,000    |                  
|Convertible note issued on June 4, 2014, unsecured, interest at 16%, due on April 1, 2000. |  |                   | 30,542   |                  
|Convertible note issued on July 1, 2014, unsecured, interest at 10%, due on demand.        |  |                   | 45,000   |                  
|Convertible note issued on November 5, 2014, unsecured, interest at 10%, due on demand.    |  |                   | 4,000    |                  
|Convertible note issued on November 5, 2014, unsecured, interest at 10%, due on demand.    |  |                   | 45,000   |                  
|Convertible note issued on December 1, 2014, unsecured, interest at 10%, due on demand.    |  |                   | 4,000    |                  
|Total convertible notes payable - related parties                                          |  |                   | 280,722  |                  
|Less: current portion                                                                      |  |                   | (280,722 | )                
|Long-term convertible notes payable - related parties                                      |  | $                 | —        |                  



Convertible debenture October 2013



On October 1, 2013 the Company issued a $17,000
Convertible Promissory Note against the accounts payable, which bears interest at a rate of 10%, payable on demand and is convertible
into the Company’s common stock at the holder’s option at 40% discount to the lowest trading price in five days prior
to date of notice of conversion. Additionally in no event the floor price for the exercise can't go below $0.00004. If these notes
are converted at this rate, the number of shares issued would be in excess of the authorized limit of share issuance. If the Borrower
is unable to issue any shares under this provision due to the fact that there is an insufficient number of authorized and unissued
shares available, the Holder promises not to force the Borrower to issue these shares or trigger an Event of Default, provided
that Borrower takes immediate steps required to get the appropriate level of approval from shareholders or the board of

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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



directors, where applicable to raise the number
of authorized shares to satisfy the Notice of Conversion. In the event of default the Company has to pay 150% time the sum of outstanding
principal and accrued interest. The note also has prepayment penalty clause.



The Company analyzed the convertible debts
for derivative accounting consideration under ASC 815 “Derivatives and Hedging” and determined that derivative accounting
is not applicable. The Company further analyzed the convertible debts for a beneficial conversion feature under ASC 470-20 on the
date of the notes and determined that a beneficial conversion feature exists. The intrinsic value of the beneficial conversion
feature was determined to be $15,692 and was recorded as debt discount. During the year ended December 31, 2013, debt discount
of $15,692 was amortized.



During the year 2014, the Company issued 15,035,714
shares for the Conversion of note of $15,290. The outstanding balance as of December 31, 2014 is $1,710



Convertible debenture October 1, 2013



On October 2013 the Company issued a $194,254
Convertible Promissory Note against the account payable, which bears interest at a rate of 10%, payable on demand and is convertible
into the Company’s common stock at the holder’s option at 40% discount to the lowest trading price in five days prior
to date of notice of conversion. Additionally in no event the floor price for the exercise can't go below $0.00004. If these notes
are converted at this rate, the number of shares issued would be in excess of the authorized limit of share issuance. If the Borrower
is unable to issue any shares under this provision due to the fact that there is an insufficient number of authorized and unissued
shares available, the Holder promises not to force the Borrower to issue these shares or trigger an Event of Default, provided
that Borrower takes immediate steps required to get the appropriate level of approval from shareholders or the board of directors,
where applicable to raise the number of authorized shares to satisfy the Notice of Conversion. In the event of default the Company
has to pay 150% time the sum of outstanding principal and accrued interest. The note also has prepayment penalty clause.



The Company analyzed the convertible debts
for derivative accounting consideration under ASC 815 “Derivatives and Hedging” and determined that derivative accounting
is not applicable. The Company further analyzed the convertible debts for a beneficial conversion feature under ASC 470-20 on the
date of the notes and determined that a beneficial conversion feature exists. The intrinsic value of the beneficial conversion
feature was determined to be $179,312 and was recorded as debt discount. During the year ended December 31, 2013, debt discount
of $179,312 was amortized.



During the year 2014, the Company issued 340,906,979
shares for the conversion of note of $151,784. The outstanding balance as of December 31, 2014 is $42,470.



Convertible debenture January 1, 2014



On January 2014 the Company issued a $45,000
Convertible Promissory Note against the account payable, which bears interest at a rate of 10%, payable on demand and is convertible
into the Company’s common stock at the holder’s option at 40% discount to the lowest trading price in five days prior
to date of notice of conversion. Additionally in no event the floor price for the exercise can't go below $0.00004. If these notes
are converted at this rate, the number of shares issued would be in excess of the authorized limit of share issuance. If the Borrower
is unable to issue any shares under this provision due to the fact that there is an insufficient number of authorized and unissued
shares available, the Holder promises not to force the Borrower to issue these shares or trigger an Event of Default, provided
that Borrower takes

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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



immediate steps required to get the appropriate
level of approval from shareholders or the board of directors, where applicable to raise the number of authorized shares to satisfy
the Notice of Conversion. In the event of default the Company has to pay 150% time the sum of outstanding principal and accrued
interest. The note also has prepayment penalty clause.



The Company analyzed the convertible debts
for derivative accounting consideration under ASC 815 “Derivatives and Hedging” and determined that derivative accounting
is not applicable. The Company further analyzed the convertible debts for a beneficial conversion feature under ASC 470-20 on the
date of the notes and determined that a beneficial conversion feature exists. The intrinsic value of the beneficial conversion
feature was determined to be $45,000 and was recorded as debt discount. During the year ended December 31, 2014, debt discount
of $45,000 was amortized. The outstanding balance as of December 31, 2014 is $45,000.



Convertible debenture April 1, 2014



In April 2014 the Company issued a $45,000
Convertible Promissory Note against the account payable, which bears interest at a rate of 10%, payable on demand and is convertible
into the Company’s common stock at the holder’s option at 40% discount to the lowest trading price in five days prior
to date of notice of conversion. Additionally in no event the floor price for the exercise can't go below $0.00004. If these notes
are converted at this rate, the number of shares issued would be in excess of the authorized limit of share issuance. If the Borrower
is unable to issue any shares under this provision due to the fact that there is an insufficient number of authorized and unissued
shares available, the Holder promises not to force the Borrower to issue these shares or trigger an Event of Default, provided
that Borrower takes immediate steps required to get the appropriate level of approval from shareholders or the board of directors,
where applicable to raise the number of authorized shares to satisfy the Notice of Conversion. In the event of default the Company
has to pay 150% time the sum of outstanding principal and accrued interest. The note also has prepayment penalty clause.



The Company analyzed the convertible debts
for derivative accounting consideration under ASC 815 “Derivatives and Hedging” and determined that derivative accounting
is not applicable. The Company further analyzed the convertible debts for a beneficial conversion feature under ASC 470-20 on the
date of the notes and determined that a beneficial conversion feature exists. The intrinsic value of the beneficial conversion
feature was determined to be $30,000 and was recorded as debt discount. During the year ended December 31, 2014, debt discount
of $30,000 was amortized. The outstanding balance as of December 31, 2014 is $45,000



Convertible debenture April 3, 2014



In April 2014 the Company issued a $14,000
Convertible Promissory Note against the account payable, which bears interest at a rate of 10%, payable on demand and is convertible
into the Company’s common stock at the holder’s option at 40% discount to the lowest trading price in five days prior
to date of notice of conversion. Additionally in no event the floor price for the exercise can't go below $0.00004. If these notes
are converted at this rate, the number of shares issued would be in excess of the authorized limit of share issuance. If the Borrower
is unable to issue any shares under this provision due to the fact that there is an insufficient number of authorized and unissued
shares available, the Holder promises not to force the Borrower to issue these shares or trigger an Event of Default, provided
that Borrower takes immediate steps required to get the appropriate level of approval from shareholders or the board of directors,
where applicable to raise the number of authorized shares to satisfy the Notice of Conversion. In the event of default the Company
has to pay 150% time the sum of outstanding principal and accrued interest. The note also has prepayment penalty clause.



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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



The Company analyzed the
convertible debts for derivative accounting consideration under ASC 815 “Derivatives and Hedging” and determined
that derivative accounting is not applicable. The Company further analyzed the convertible debts for a beneficial
conversion feature under ASC 470-20 on the date of the notes and determined that a beneficial conversion feature exists. The
intrinsic value of the beneficial conversion feature was determined to be $9,333 and was recorded as debt discount. During
the year ended December 31, 2014, debt discount of $9,333 was amortized. The outstanding balance as of December 31, 2014 is
$14,000



Convertible debenture May 21, 2014



In May 2014 the Company issued a $4,000 Convertible
Promissory Note against the account payable, which bears interest at a rate of 10%, payable on demand and is convertible into the
Company’s common stock at the holder’s option at 40% discount to the lowest trading price in five days prior to date
of notice of conversion. Additionally in no event the floor price for the exercise can't go below $0.00004. If these notes are
converted at this rate, the number of shares issued would be in excess of the authorized limit of share issuance. If the Borrower
is unable to issue any shares under this provision due to the fact that there is an insufficient number of authorized and unissued
shares available, the Holder promises not to force the Borrower to issue these shares or trigger an Event of Default, provided
that Borrower takes immediate steps required to get the appropriate level of approval from shareholders or the board of directors,
where applicable to raise the number of authorized shares to satisfy the Notice of Conversion. In the event of default the Company
has to pay 150% time the sum of outstanding principal and accrued interest. The note also has prepayment penalty clause.



The Company analyzed the
convertible debts for derivative accounting consideration under ASC 815 “Derivatives and Hedging” and determined
that derivative accounting is not applicable. The Company further analyzed the convertible debts for a beneficial
conversion feature under ASC 470-20 on the date of the notes and determined that a beneficial conversion feature exists. The
intrinsic value of the beneficial conversion feature was determined to be $4,000 and was recorded as debt discount. During
the year ended December 31, 2014, debt discount of $4,000 was amortized. The outstanding balance as of December 31, 2014 is
$4,000



Convertible debenture June 4, 2014



In June 2014 the Company issued a $50,000 Convertible
Promissory Note against the account payable, which bears interest at a rate of 10%, payable on demand and is convertible into the
Company’s common stock at the holder’s option at 40% discount to the lowest trading price in five days prior to date
of notice of conversion. Additionally in no event the floor price for the exercise can't go below $0.00004. If these notes are
converted at this rate, the number of shares issued would be in excess of the authorized limit of share issuance. If the Borrower
is unable to issue any shares under this provision due to the fact that there is an insufficient number of authorized and unissued
shares available, the Holder promises not to force the Borrower to issue these shares or trigger an Event of Default, provided
that Borrower takes immediate steps required to get the appropriate level of approval from shareholders or the board of directors,
where applicable to raise the number of authorized shares to satisfy the Notice of Conversion. In the event of default the Company
has to pay 150% time the sum of outstanding principal and accrued interest. The note also has prepayment penalty clause.



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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



The Company identified embedded
derivatives related to the Convertible Promissory Note issued on June 4, 2014. These embedded derivatives included certain
conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair
value of these 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 $46,875 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      |  |  | 290.02 | %
|Risk free rate: |  |  | 0.00   | %



The initial fair value of the embedded debt
derivative of $46,875 was allocated as a debt discount for the year ended December 31, 2014. During the year ended December 31,
2014, debt discount of $46,875 was amortized.



During the year 2014, the Company issued 19,458,498
shares for the conversion of note of $19,458. The outstanding balance as of December 31, 2014 is $30,542



Convertible debenture July 1, 2014



In July 2014 the Company issued a $45,000 Convertible
Promissory Note against the account payable, which bears interest at a rate of 10%, payable on demand and is convertible into the
Company’s common stock at the holder’s option at 40% discount to the lowest trading price in five days prior to date
of notice of conversion. Additionally in no event the floor price for the exercise can't go below $0.00004. If these notes are
converted at this rate, the number of shares issued would be in excess of the authorized limit of share issuance. If the Borrower
is unable to issue any shares under this provision due to the fact that there is an insufficient number of authorized and unissued
shares available, the Holder promises not to force the Borrower to issue these shares or trigger an Event of Default, provided
that Borrower takes immediate steps required to get the appropriate level of approval from shareholders or the board of directors,
where applicable to raise the number of authorized shares to satisfy the Notice of Conversion. In the event of default the Company
has to pay 150% time the sum of outstanding principal and accrued interest. The note also has prepayment penalty clause.



The Company analyzed the
convertible debts for derivative accounting consideration under ASC 815 “Derivatives and Hedging” and determined
that derivative accounting is not applicable. The Company further analyzed the convertible debts for a beneficial
conversion feature under ASC 470-20 on the date of the notes and determined that a beneficial conversion feature exists. The
intrinsic value of the beneficial conversion feature was determined to be $30,000 and was recorded as debt discount. During
the year ended December 31, 2014, debt discount of $30,000 was amortized. The outstanding balance as of December 31, 2014 is
$45,000



Convertible debenture November 5, 2014



In November 2014 the Company issued a $4,000
Convertible Promissory Note against the account payable, which bears interest at a rate of 10%, payable on demand and is convertible
into the Company’s common stock at the holder’s option at 40% discount to the lowest trading price in five days prior
to date of notice of conversion. Additionally in no event the floor price for the exercise can't go below $0.00004. If these notes
are converted at this rate, the number of shares issued would be in excess of the authorized

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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



limit of share issuance. If the Borrower is
unable to issue any shares under this provision due to the fact that there is an insufficient number of authorized and unissued
shares available, the Holder promises not to force the Borrower to issue these shares or trigger an Event of Default, provided
that Borrower takes immediate steps required to get the appropriate level of approval from shareholders or the board of directors,
where applicable to raise the number of authorized shares to satisfy the Notice of Conversion. In the event of default the Company
has to pay 150% time the sum of outstanding principal and accrued interest. The note also has prepayment penalty clause.



The Company analyzed the
convertible debts for derivative accounting consideration under ASC 815 “Derivatives and Hedging” and determined
that derivative accounting is not applicable. The Company further analyzed the convertible debts for a beneficial
conversion feature under ASC 470-20 on the date of the notes and determined that a beneficial conversion feature exists. The
intrinsic value of the beneficial conversion feature was determined to be $2,667 and was recorded as debt discount. During
the year ended December 31, 2014, debt discount of $2,667 was amortized. The outstanding balance as of December 31, 2014 is
$4,000



Convertible debenture November 5, 2014



In November 2014 the Company issued a $45,000
Convertible Promissory Note against the account payable, which bears interest at a rate of 10%, payable on demand and is convertible
into the Company’s common stock at the holder’s option at 40% discount to the lowest trading price in five days prior
to date of notice of conversion. Additionally in no event the floor price for the exercise can't go below $0.00004. If these notes
are converted at this rate, the number of shares issued would be in excess of the authorized limit of share issuance. If the Borrower
is unable to issue any shares under this provision due to the fact that there is an insufficient number of authorized and unissued
shares available, the Holder promises not to force the Borrower to issue these shares or trigger an Event of Default, provided
that Borrower takes immediate steps required to get the appropriate level of approval from shareholders or the board of directors,
where applicable to raise the number of authorized shares to satisfy the Notice of Conversion. In the event of default the Company
has to pay 150% time the sum of outstanding principal and accrued interest. The note also has prepayment penalty clause.



The Company analyzed the convertible debts
for derivative accounting consideration under ASC 815 “Derivatives and Hedging” and determined that derivative accounting
is not applicable. The Company further analyzed the convertible debts for a beneficial conversion feature under ASC 470-20 on the
date of the notes and determined that a beneficial conversion feature exists. The intrinsic value of the beneficial conversion
feature was determined to be $30,000 and was recorded as debt discount. During the year ended December 31, 2014, debt discount
of $30,000 was amortized. The outstanding balance as of December 31, 2014 is $45,000



Convertible debenture December 1, 2014



In December 2014 the Company issued a $4,000
Convertible Promissory Note against the account payable, which bears interest at a rate of 10%, payable on demand and is convertible
into the Company’s common stock at the holder’s option at 40% discount to the lowest trading price in five days prior
to date of notice of conversion. Additionally in no event the floor price for the exercise can't go below $0.00004. If these notes
are converted at this rate, the number of shares issued would be in excess of the authorized limit of share issuance. If the Borrower
is unable to issue any shares under this provision due to the fact that there is an insufficient number of authorized and unissued
shares available, the Holder promises not to force the Borrower to issue these shares or trigger an Event of Default, provided
that Borrower takes

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Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



immediate steps required to get the appropriate
level of approval from shareholders or the board of directors, where applicable to raise the number of authorized shares to satisfy
the Notice of Conversion. In the event of default the Company has to pay 150% time the sum of outstanding principal and accrued
interest. The note also has prepayment penalty clause.



The Company analyzed the
convertible debts for derivative accounting consideration under ASC 815 “Derivatives and Hedging” and determined
that derivative accounting is not applicable. The Company further analyzed the convertible debts for a beneficial
conversion feature under ASC 470-20 on the date of the notes and determined that a beneficial conversion feature exists. The
intrinsic value of the beneficial conversion feature was determined to be $2,667 and was recorded as debt discount. During
the year ended December 31, 2014, debt discount of $2,667 was amortized. The outstanding balance as of December 31, 2014 is
$4,000



The fair value of the described embedded
derivative of $33,333 at December 31, 2014 was determined using the Binomial Lattice Model with the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 334.26 | %
|Risk free rate: |  |  | 0.00   | %



At December 31, 2014, the Company adjusted the recorded fair value
of the derivative liability to market on both notes resulting in noncash, non-operating gain of $13,542 for the year ended December
31, 2014.



For the year ended December 31, 2014 and 2013, interest expenses
charged on the above notes is $38,933 and $4,843, respectively. Accrued interest on convertible notes payable – related parties
as of December 31, 2014 and 2013 was $38,933 and $4,843, respectively.



During the year ended December 31, 2014 and
2013 the Company amortized $217,886 and $195,004, respectively,of beneficial debt discount to the operations as interest expense.

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Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



NOTE 10 - NOTES PAYABLE - RELATED PARTIES



|Notes payable - related parties consist of the following:                                                                                                                                                                                                             |  |                   |            |                  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | -----------------
|                                                                                                                                                                                                                                                                      |  | December 31, 2014 |            | December 31, 2013
|Note payable to a related individual, 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 (1)  |  | $                 | —          |                  
|Note payable to a related individual, 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. (1) |  |                   | 1,080,973  |                  
|Note payable to a related individual, interest at 8%, past due. Note is
    in default(2)                                                                                                                                                                             |  |                   | 1,000,000  |                  
|Notes payable to related individuals, unsecured,interest at 10%, due on demand (3)                                                                                                                                                                                    |  |                   | 28,500     |                  
|Notes payable to related individuals, unsecured,interest at 12%, due on demand (4)                                                                                                                                                                                    |  |                   | 28,633     |                  
|Total notes payable - related parties                                                                                                                                                                                                                                 |  |                   | 2,138,106  |                  
|Less: current portion                                                                                                                                                                                                                                                 |  |                   | (2,138,106 | )                
|Long-term notes payable - related parties                                                                                                                                                                                                                             |  | $                 | —          |                  
|Maturities of notes payable - related parties are as follows:                                                                                                                                                                                                         |  |                   |            |                  
|Year Ending December 31,                                                                                                                                                                                                                                              |  |                   |            |                  
|2015                                                                                                                                                                                                                                                                  |  |                   |            |                  
|Total                                                                                                                                                                                                                                                                 |  |                   |            |                  
|                                                                                                                                                                                                                                                                      |  |                   |            |                  

Accrued interest on notes
payable – related parties for the years ended December 31, 2014 and 2013 was $380,080 and $250,334, respectively.
During the years ended December 31, 2014 and 2013, total interest expense to related party was $197,372 and $207,380,
respectively.



| | 1) | This note was originally issued for $450,000.
During the year ended December 31, 2014, the principle value of $450,000 along with accrued interest of $837,370 was converted
to two new notes for $1,087,370 and $200,000. In the year 2013 the Company issued 2,100,000 shares of the common stock against
settlement of the new note of $200,000 from above. In the year 2014, the Company issued 3,500,000 shares of common stock for Note
value of $35,000 and accrued interest of $6,650. The Balance note along with the balance accrued interest of $130,603 was transferred
to another note holder for $1,080,973. The accrued interest as of December 31, 2014 is $134,378.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | 2) | This note was issued for the acquisition
                                                                                                     of AFI on January 28, 2012. As of December 31, 2014 and 2013, the Company had accrued interest on the note in the amount of
                                                                                                     $233,863 and $154,082, respectively.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3) | During the year ended December 31, 2013,
                                                                                                     one of the note holder for $15,000 along with accrued interest of $13,300 transferred its loan to a non- related party.
                                                                                                     During the year 2013 itself the Company issued 1,800,000 shares of the common stock to settle $28,300 of note of non- related
                                                                                                     party. Accrued interest as of December 31, 2014 and 2013 is $10,585 and $7,743, respectively.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4) | During the year 2014, the Company issued the
note value of $26,000 in cash and $2,632 for expenses incurred. Accrued interest as of December 31, 2014 is $1,255
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



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, 2014 and 2013 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.



On February 10, 2014, the Board of Directors
of the Company approved an amendment and restatement of 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”). The amended and restated Certificate of Designation has increased the conversion rights
applicable to each share of Preferred Stock from ten million (10,000,000) to twenty million (20,000,000).



Common stock

The Company is authorized to issue
2,500,000,000 shares of $0.0001 par value of common stock. As of December 31, 2014 and 2013 the Company had 1,938,172,724 and
37,709,552 shares of common stock as issued and outstanding.



On January 28, 2013, we issued an aggregate
of 49,951 shares of common stock, valued at $82,419, 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.



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



On March 5, 2013, the Company issued a promissory
note in the original principal amount of $7,500 (“Note”) to a lender. The Note carries an interest rate of 8% per annum.
The Note is convertible at October 5, 2013 to common stock of the Company at a 40% discount to the average of the 3 lowest trading
days in the 10 trading days previous to the conversion.



On May 31, 2013, the Company issued an aggregate
of 254,000 shares of its common stock, valued at $304,800, to certain consulting personnel for services provided. The number of
shares issued, at the time of such issuance, represented approximately 1.6% of the issued and outstanding shares of the Company.

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Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



On June 10, 2013, the Company issued 45,454
shares of its common stock, valued at $30,000, to Peak One in connection with the conversion of a debenture issued by the Company
to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately 0.2% of the issued
and outstanding shares of the Company.



On July 1, 2013, the Company issued a promissory
note in the original principal amount of $24,272 (“Note”) to a lender. The Note matures on April 1, 2014 and carries
an interest rate of 8% per annum. The Note shall at the maturity date, be convertible upon the election of the lender into fully
paid and non-assessable shares of Common Stock of the Company at a conversion price equal at market price, or the lowest conversion
price previously honored by the Company for any other debt conversion by an investor in 2013.



On July 11, 2013, the Company issued 266,134
shares of its common stock, valued at $40,000, to Peak One in connection with the conversion of a debenture issued by the Company
to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately 1.7% of the issued
and outstanding shares of the Company.



On July 16, 2013, the Company issued
448,028 shares of its common stock, valued at $25,000, to Peak One in connection with the conversion of a debenture issued by the
Company to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately 2.82%
of the issued and outstanding shares of the Company.

On July 29, 2013, the Company issued 806,451
shares of its common stock, valued at $15,000, to Peak One in connection with the conversion of a debenture issued by the Company
to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately 4.95% of the
issued and outstanding shares of the Company.



On August 1, 2013, the Company issued 786,163
shares of its common stock, valued at $10,000, to Peak One in connection with the conversion of a debenture issued by the Company
to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately 4.6% of the issued
and outstanding shares of the Company.



On August 2, 2013, the Company issued 864,779
shares of its common stock, valued at $11,000, to Peak One in connection with the conversion of a debenture issued by the Company
to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately 4.83% of the
issued and outstanding shares of the Company.



On August 6, 2013, the Company issued 75,000
shares of its common stock, valued at $4,500, to a consultant of the Company for services provided. The number of shares issued,
at the time of such issuance, represented approximately 0.4% of the issued and outstanding shares of the Company.



On August 8, 2013, the Company issued 300,000
shares of its common stock, valued at $3,816, to Peak One in connection with the conversion of a debenture issued by the Company
to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately 1.5% of the issued
and outstanding shares of the Company.



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Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



On August 9, 2013, the Company issued 300,000
shares of its common stock, valued at $3,816, to Peak One in connection with the conversion of a debenture issued by the Company
to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately 1.56% of the
issued and outstanding shares of the Company.



On August 12, 2013, the Company issued 264,779
shares of its common stock, valued at $3,368, to Peak One in connection with the conversion of a debenture issued by the Company
to Peak One in October 2012. The number of shares issued, at the time of such issuance, represented approximately 1.36% of the
issued and outstanding shares of the Company.



On July 19, 2013, the Company issued a promissory
note in the original principal amount of $78,500 (“Note”) to a lender. The Note matures on April 22, 2014 and carries
an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full unless converted partially or
in its entirety upon the election of the lender into fully paid and non-assessable shares of Common Stock of the Company at a 40%
discount to the average of the three lowest daily trading prices as reported on the OTCQB for the ten trading days previous to
the conversion date.



On August 22, 2013, the Company issued an aggregate
of 531,438 shares of its common stock, valued at $47,829, to certain employees and consulting personnel for services provided.
The number of shares issued, at the time of such issuance, represented approximately 2.7% of the issued and outstanding shares
of the Company.



On August 22, 2013, the Company issued 2,017,036
shares of unregistered common stock to an accredited investor in exchange for cash in the amount of $137,985. The number of shares
issued, at the time of such issuance, represented approximately 9.98% of the issued and outstanding shares of the Company.



On August 26, 2013, the Company issued a promissory
note in the original principal amount of $53,000 (“Note”) to a lender. The Note matures on May 27, 2014 and carries
an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full unless converted partially or
in its entirety upon the election of the lender into fully paid and non-assessable shares of Common Stock of the Company at a 40%
discount to the average of the three lowest daily trading prices as reported on the OTCQB for the ten trading days previous to
the conversion date.



On August 29, 2013, the Company entered into
a Settlement Agreement with a certain creditor and agreed to convert various loans and promissory notes in the collective amount
of $933,000 into an aggregate of 5,480,000 shares of common stock of the Company. The number of shares issued, at the time of such
issuance, represented approximately 23.06% of the issued and outstanding shares of the Company.



On October 1, 2013, the Company converted outstanding
invoices of the Company in the aggregate amount of $211,254.30 to 2 promissory notes in the original principal amounts of $17,000,
and $194,254.30 (the “Notes”) to two consultants of the Company. The Notes are due upon demand, and carry an interest
rate of 10% per annum. The Notes at the election of the lender are convertible into fully paid and non-assessable shares of Common
Stock of the Company at a 40% discount from the lowest trading price in the five (5) days prior to the day that the Holder requests
conversion.



On October 2, 2013, the Company recorded a
$35,000 draw down and consideration in respect of a credit line and associated promissory note in the original principal amount
of $300,000 (“Note”). The Maturity Date is two years from the effective date of each draw down (“Maturity Date”).
The Note carries an initial

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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



interest rate in the first 90 days of 0 percent,
thereafter a one-time interest charge of 12% will apply. The Note shall at the Maturity Date, be due and payable in full unless
converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of Common Stock
of the Company at 60% of the average of the two lowest trade prices in the 25 trading days previous to the conversion.



On October 4, 2013, the Company issued a promissory
note in the original principal amount of $6,000 (“Note”) to a lender. The Note matures on November 4, 2013 and carries
an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full unless converted partially or
in its entirety upon the election of the lender into fully paid and non-assessable shares of Common Stock of the Company at a 40%
discount to the average of the three lowest daily trading days in the ten trading days previous to the conversion.



On October 13, 2013, the Company issued a promissory
note in the original principal amount of $30,000 (“Note”) to a lender. The Note matures on October 13, 2014 and carries
an interest rate of 6% per annum. The Note shall at the maturity date, be due and payable in full unless converted partially or
in its entirety upon the election of the lender into fully paid and non-assessable shares of common stock of the Company at a 40%
discount from the lowest trading price in the five (5) days prior to conversion.



On October 23, 2013, the Company issued a promissory
note in the original principal amount of $42,500 (“Note”) to a lender. The Note matures on July 25, 2014 and carries
an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full unless converted partially or
in its entirety upon the election of the lender into fully paid and non-assessable shares of Common Stock of the Company at a 40%
discount to the average of the three lowest daily trading prices as reported on the OTCQB for the ten trading days previous to
the conversion date.



On October 23, 2013, the Company issued
an aggregate of 2,100,000 shares of its common stock, valued at $708,500, to officers and directors, and certain consulting
personnel for services provided. The number of shares issued, at the time of such issuance, represented approximately 7.5% of
the issued and outstanding shares of the Company.



On October 30, 2013, pursuant to the terms
of a settlement agreement, the Company issued an additional 500,000 shares of common stock, valued at $35,000. The number of shares
issued, at the time of such issuance, represented approximately 1.67% of the issued and outstanding shares of the Company.



On November 20, 2013, the Company issued an
aggregate of 5,075,713 shares of its common stock, valued at $355,300, to certain employees and contract personnel for services
provided. The number of shares issued, at the time of such issuance, represented approximately 16.74% of the issued and outstanding
shares of the Company.



On November 21, 2013, the Company converted
into 1,800,000 shares of common stock, valued at $28,300, a certain promissory note originally issued by the Company on December
7, 2004. The number of shares issued, at the time of such issuance, represented approximately 5.08% of the issued and outstanding
shares of the Company.



On December 9, 2013, the Company recorded an
additional $20,000 draw down and consideration in respect of a credit line and associated promissory note in the original principal
amount of $300,000 (“Note”). The Maturity Date is two years from the effective date of each draw down (“Maturity
Date”). The Note carries an initial interest rate in the first 90 days of 0 percent, thereafter a one-time interest

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Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



charge of 12% will apply. The Note shall at
the Maturity Date, be due and payable in full unless converted partially or in its entirety upon the election of the lender into
fully paid and non-assessable shares of common stock of the Company at 60% of the average of the two lowest trade prices in the
25 trading days previous to the conversion.



On December 12, 2013, the Company issued a
promissory note in the original principal amount of $61,500 (“Note”) to a lender. The Note matures on December 12,
2014 and carries an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full unless converted
partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of common stock of the Company
at a 40% discount to the average of the three lowest daily trading prices as reported on the OTCQB for the ten trading days previous
to the conversion date.



On December 12, 2013, the Company issued a
promissory note in the original principal amount of $145,000 (“Note”) to a lender. The Note matures on December 12,
2014 and carries an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full unless converted
partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of common stock of the Company
at a 40% discount to the average of the three lowest daily trading prices as reported on the OTCQB for the ten trading days previous
to the conversion date.



On December 13, 2013, the Company issued a
promissory note in the original principal amount of $810 (“Note”) to a lender. The Note carries an interest rate of
8% per annum. The Note shall at the maturity date, be due and payable in full unless converted partially or in its entirety upon
the election of the lender into fully paid and non-assessable shares of common stock of the Company at a 40% discount to the average
of the three lowest daily trading days in the ten trading days previous to the conversion.



On December 16, 2013, the Company converted
into 250,000 shares of common stock, valued at $7,500, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 0.6% of the issued and outstanding shares
of the Company.



On December 30, 2013, the Company converted
into 277,778 shares of common stock, valued at $5,000, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 0.7% of the issued and outstanding shares
of the Company.



On January 1, 2014, the Company converted outstanding
invoices of the Company into a promissory note in the original principal amounts of $45,000 (the “Note”) to a consultant
of the Company. The Note is due upon demand, and carries an interest rate of 10% per annum. The Note at the election of the lender
is convertible into fully paid and non-assessable shares of common stock of the Company at a 40% discount from the lowest trading
price in the five (5) days prior to the day that the Holder requests conversion.



On January 13, 2014, the Company issued an
aggregate of 2,859,067 shares of its common stock, valued at $200,135, to certain consulting personnel for services provided. The
number of shares issued, at the time of such issuance, represented approximately 7.26% of the issued and outstanding shares of
the Company.



On January 14, 2014, the Company converted
into 1,660,026 shares of common stock, valued at $25,000, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 4.4% of the issued and outstanding shares
of the Company.



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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



On January 22, 2014, the Company issued a Note
in the original principal amount of $212,500. The Note carries an interest rate of 8% per annum. The Note shall at the maturity
date, be due and payable in full unless converted partially or in its entirety upon the election of the lender into fully paid
and non-assessable shares of common stock of the Company at a 40% discount to the average of the three lowest daily trading prices
as reported on the OTCQB for the ten trading days previous to the conversion date. The net proceeds of the Note were used to redeem
and retire two 8% convertible notes that were issued to Asher Enterprises, Inc. in the aggregate principal amount of $131,500 (hereafter,
collectively, the “Asher Notes”) The Asher Notes were issued on July 19th, 2013 and August 26th, 2013.



On January 27, 2014, the Company converted
into 809,067 shares of common stock, valued at 25,245, a loan originally received by the Company on July 1, 2013. The number of
shares issued, at the time of such issuance, represented approximately 1.95% of the issued and outstanding shares of the Company.



On January 29, 2014, the Company converted
into 1,166,667 shares of common stock, valued at $17,500, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 2.76% of the issued and outstanding shares
of the Company.



On January 30, 2014, the Company issued a promissory
note in the original principal amount of $16,000 (“Note”) to a lender. The Note matures on January 30, 2015 and carries
an interest rate of 8% per annum. The Note at the election of the lender is convertible into fully paid and non-assessable shares
of common stock of the Company at a 40% discount from the lowest trading price in the five (5) days prior to the day that the Holder
requests conversion.



On January 30, 2014, the Company issued a promissory
note in the original principal amount of $78,500 (“Note”) to a lender. The Note matures on November 3, 2014 and carries
an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full unless converted partially or
in its entirety upon the election of the lender into fully paid and non-assessable shares of common stock of the Company at a 40%
discount to the average of the three lowest daily trading prices as reported on the OTCQB for the ten trading days previous to
the conversion date.



On January 30, 2014, the Company issued a promissory
note in the original principal amount of $11,209 (“Note”) to a lender. The Note matures on June 2, 2014 and carries
an interest rate of 10% per annum. The Note at the election of the lender is convertible into fully paid and non-assessable shares
of common stock of the Company at a 40% discount to the market.



On February 10, 2014, the Company converted
into 1,237,624 shares of common stock, valued at $15,000, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 2.85% of the issued and outstanding shares
of the Company.



On February 18, 2014, the Company converted
into 1,470,588 shares of common stock, valued at $15,000, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 3.29% of the issued and outstanding shares
of the Company.



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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



On February 20, 2014, the Company recorded
an additional $25,000 draw down and consideration in respect of a credit line and associated promissory note in the original principal
amount of $300,000 (“Note”). The Maturity Date is two years from the effective date of each draw down (“Maturity
Date”). The Note carries an initial interest rate in the first 90 days of 0 percent, thereafter a one-time interest charge
of 12% will apply. The Note shall at the Maturity Date, be due and payable in full unless converted partially or in its entirety
upon the election of the lender into fully paid and non-assessable shares of common stock of the Company at 60% of the average
of the two lowest trade prices in the 25 trading days previous to the conversion.



On March 3, 2014, the Company issued 1,000,000
shares of its common stock, valued at $20,000, to a consultant of the Company for services provided. The number of shares issued,
at the time of such issuance, represented approximately 2.16% of the issued and outstanding shares of the Company.



On March 4, 2014, the Company converted into
2,083,333 shares of common stock, valued at $15,000, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 4.42% of the issued and outstanding shares
of the Company.



On March 5, 2014, the Company issued a promissory
note in the original principal amount of $10,000 (“Note”) to a lender. The Note matures on September 5, 2014 and carries
an interest rate of 8% per annum. The Note at the election of the lender is convertible into fully paid and non-assessable shares
of common stock of the Company at a 40% discount to the average of the three lowest daily trading prices as reported on the OTCQB
for the ten trading days previous to the conversion date.



On March 17, 2014, the Company converted into
2,210,884 shares of common stock, valued at $13,000, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 4.49% of the issued and outstanding shares
of the Company.



On March 31, 2014, the Company converted into
2,529,762 shares of common stock, valued at $17,000, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 4.92% of the issued and outstanding shares
of the Company.



On April 1, 2014, the Company converted outstanding
invoices of the Company into a promissory note in the original principal amount of $45,000 (the “Note”) to a consultant
of the Company. The Note is due upon demand, and carries an interest rate of 10% per annum. The Note at the election of the lender
is convertible into fully paid and non-assessable shares of common stock of the Company at a 40% discount from the lowest trading
price in the five (5) days prior to the day that the Holder requests conversion.



On April 1, 2014, the Company issued a promissory
note in the original principal amounts of $25,000 (the “Note”) to a consultant of the Company for services rendered.
The Note carries an interest rate of 10% per annum, and at the election of the lender is convertible into fully paid and non-assessable
shares of common stock of the Company at a conversion price of $0.005 per share.



On April 1, 2014, the Company issued a
promissory note in the original principal amounts of $93,000 (the “Note”) to a consultant of the Company for
services rendered. The Note carries an interest rate of 10% per annum, and at the election of the lender is convertible into
fully paid and non-assessable shares of common stock of the Company at a 25% discount to the average of the three lowest
trading days in the ten trading days previous to the conversion.



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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



On April 1, 2014, the Company converted into
744,048 shares of common stock, valued at $5,000, a portion of a certain convertible promissory note originally issued by the Company
on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately 1.37% of the issued and
outstanding shares of the Company.



On April 1, 2014, the Company issued a promissory
note in the original principal amount of $145,000 (“Note”) to a lender. The Note carries an interest rate of 8% per
annum. The Note shall at the maturity date, be due and payable in full unless converted partially or in its entirety upon the election
of the lender into fully paid and non-assessable shares of common stock of the Company at a 40% discount to the average of the
three lowest daily trading prices as reported on the OTCQB for the ten trading days previous to the conversion date.



On April 1, 2014, the Company issued a
promissory note in the original principal amount of $6,669 (“Note”) to a lender. The Note matures on May 1, 2014
and carries an interest rate of 10% per annum. The Note, at the election of the lender is convertible into fully paid and
non-assessable shares of common stock of the Company at a 40% discount to the average of the three lowest trading days in the
ten trading days previous to the conversion.



On April 1, 2014, the Company issued a promissory
note in the original principal amount of $83,500 (“Note”) to a lender. The Note matures on January 2, 2015 and carries
an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full unless converted partially or
in its entirety upon the election of the lender into fully paid and non-assessable shares of common stock of the Company at a 40%
discount to the average of the three lowest daily trading prices as reported on the OTCQB for the ten trading days previous to
the conversion date.



On April 3, 2014, the Company converted outstanding
invoices of the Company into a promissory note in the original principal amount of $14,000 (the “Note”) to a consultant
of the Company. The Note is due upon demand, and carries an interest rate of 10% per annum. The Note at the election of the lender
is convertible into fully paid and non-assessable shares of common stock of the Company at a 40% discount from the lowest trading
price in the five (5) days prior to the day that the Holder requests conversion.



On April 7, 2014, the Company converted into
1,200,000 shares of common stock, valued at $20,640, a portion of a certain convertible promissory note originally issued by the
Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately 2.19% of the issued
and outstanding shares of the Company.



On April 8, 2014, the Company converted into
1,070,205 shares of common stock, valued at $7,500, a portion of a certain convertible promissory note originally issued by the
Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately 1.91% of the issued
and outstanding shares of the Company.



On April 9, 2014, the Company converted into
3,656,379 shares of common stock, valued at $18,434, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 6.42% of the issued and outstanding shares
of the Company.





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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



On April 9, 2014, the Company issued a promissory
note in the original principal amount of $2,679.16 (“Note”) to a lender. The Note matures on May 9, 2014 and carries
an interest rate of 10% per annum. The Note, at the election of the lender is convertible into fully paid and non-assessable shares
of common stock of the Company at a 40%discount to the average of the three lowest trading days in the ten trading days previous
to the conversion.



On April 28, 2014, the Company converted into
2,400,000 shares of common stock, valued at $16,560, a portion of a loan originally received by the Company on October 14, 2013.
The number of shares issued, at the time of such issuance, represented approximately 3.96% of the issued and outstanding shares
of the Company.



On May 2, 2014, the Company converted into
3,125,000 shares of common stock, valued at $7,500, a portion of a certain convertible promissory note originally issued by the
Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately 4.96% of the issued
and outstanding shares of the Company.



On May 2, 2014, the Company converted into
2,500,000 shares of common stock, valued at $16,500, a portion of a certain convertible promissory note originally issued by the
Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately 3.78% of the issued
and outstanding shares of the Company.



On May 6, 2014, the Company converted into
6,854,167 shares of common stock, valued at $71,333, a portion of a certain convertible promissory note originally issued by the
Company on October 23, 2013. The number of shares issued, at the time of such issuance, represented approximately 9.98% of the
issued and outstanding shares of the Company.



On May 6, 2014, the Company converted into
3,125,000 shares of common stock, valued at $7,500, a portion of a certain convertible promissory note originally issued by the
Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately 4.14% of the issued
and outstanding shares of the Company.



On May 7, 2014, the Company converted into
5,630,630 shares of common stock, valued at $12,500, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 7.16% of the issued and outstanding shares
of the Company.



On May 7, 2014, the Company converted into
3,400,000 shares of common stock, valued at $13,600, a portion of a loan originally received by the Company on October 14, 2013.
The number of shares issued, at the time of such issuance, represented approximately 4.03% of the issued and outstanding shares
of the Company.



On May 7, 2014, the Company converted into
3,400,000 shares of common stock, valued at $38,114, a portion of a certain convertible promissory note originally issued by the
Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately 3.87% of the issued
and outstanding shares of the Company.



On May 7, 2014, the Company converted into
995,833 shares of common stock, valued at $12,846, a portion of a certain convertible promissory note originally issued by the
Company on October 23, 2013. The number of shares issued, at the time of such issuance, represented approximately 1.09% of the
issued and outstanding shares of the Company.





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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



On May 8, 2014, the Company converted into
4,504,504 shares of common stock, valued at $9,000, a portion of a loan originally received by the Company on March 21, 2012. The
number of shares issued, at the time of such issuance, represented approximately 4.89% of the issued and outstanding shares of
the Company.



On May 9, 2014, the Company converted into
5,000,000 shares of common stock, valued at $36,100, a portion of a loan originally received by the Company on October 14, 2013.
The number of shares issued, at the time of such issuance, represented approximately 5.17% of the issued and outstanding shares
of the Company.



On May 9, 2014, the Company converted into
3,041,667 shares of common stock, valued at $22,813, a portion of a certain convertible promissory note originally issued by the
Company on October 23, 2013. The number of shares issued, at the time of such issuance, represented approximately 2.9% of the issued
and outstanding shares of the Company.



On May 9, 2014, the Company converted into
4,750,000 shares of common stock, valued at $29,925, a portion of a certain convertible promissory note originally issued by the
Company on October 23, 2013. The number of shares issued, at the time of such issuance, represented approximately 4.54% of the
issued and outstanding shares of the Company.



On May 9, 2014, the Company converted into
3,500,000 shares of common stock, valued at 35,000, a portion of a certain convertible promissory note originally issued by the
Company in February, 2000. The number of shares issued, at the time of such issuance, represented approximately 3.2% of the issued
and outstanding shares of the Company.



On May 12, 2014, the Company issued 500,000
shares of its common stock, valued at $2,150, to a director of the Company for services provided. The number of shares issued,
at the time of such issuance, represented approximately 0.4% of the issued and outstanding shares of the Company.



On May 13, 2014, the Company converted into
3,500,000 shares of common stock, valued at $22,085, a portion of a certain convertible promissory note originally issued by the
Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately 3.08% of the issued
and outstanding shares of the Company.



On May 13, 2014, the Company issued 500,000
shares of restricted common stock, valued at $50,000, to a consultant for services rendered. The number of shares issued, at the
time of such issuance, represented approximately 0.42% of the issued and outstanding shares of the Company.



On May 15, 2014, the Company converted into
9,615,384 shares of common stock, valued at $15,000, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 8.19% of the issued and outstanding shares
of the Company.



On May 16, 2014, the Company issued a promissory
note in the original principal amount of $1,975 (“Note”) to a lender. The Note matures on November 16, 2014 and carries
an interest rate of 8% per annum. The Note, at the election of the lender is convertible into fully paid and non-assessable shares
of common stock of the Company at a 40%discount to the average of the three lowest trading days in the ten trading days previous
to the conversion.



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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013





On May 19, 2014, the Company issued 500,000
shares of restricted common stock, valued at $50,000, to a consultant for services rendered. The number of shares issued, at the
time of such issuance, represented approximately 0.3% of the issued and outstanding shares of the Company.



On May 21, 2014, the Company converted outstanding
invoices of the Company into a promissory note in the original principal amount of $4,000 (the “Note”) to a consultant
of the Company. The Note is due upon demand, and carries an interest rate of 10% per annum. The Note at the election of the lender
is convertible into fully paid and non-assessable shares of common stock of the Company at a 40% discount from the lowest trading
price in the five (5) days prior to the day that the Holder requests conversion.



On May 22, 2014, the Company converted into
4,166,667 shares of common stock, valued at $7,500, a portion of a certain convertible promissory note originally issued by the
Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately 3.26% of the issued
and outstanding shares of the Company.



On May 23, 2014, the Company converted into
3,505,263 shares of common stock, valued at $14,722, a portion of a certain convertible promissory note originally issued by the
Company on October 23, 2013. The number of shares issued, at the time of such issuance, represented approximately 2.66% of the
issued and outstanding shares of the Company.



On May 13, 2014, the Company converted into
3,750,000 shares of common stock, valued at $16,688, a portion of a certain convertible promissory note originally issued by the
Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately 2.77% of the issued
and outstanding shares of the Company.



On May 15, 2014, the Company converted into
9,567,901 shares of common stock, valued at $15,500, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 6.89% of the issued and outstanding shares
of the Company.



On May 13, 2014, the Company converted into
5,044,270 shares of common stock, valued at $9,940, a portion of a certain convertible promissory note originally issued by the
Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately 3.31% of the issued
and outstanding shares of the Company.



On May 30, 2014, the Company converted into
4,461,282 shares of common stock, valued at $25,250, a portion of a loan originally received by the Company on October 14, 2013.
The number of shares issued, at the time of such issuance, represented approximately 2.84% of the issued and outstanding shares
of the Company.



On May 30, 2014, the Company converted into
1,050,410 shares of common stock, valued at $3,151, a loan originally received by the Company on August 13, 2013. The number of
shares issued, at the time of such issuance, represented approximately 0.65% of the issued and outstanding shares of the Company.



On June 3, 2014, the Company converted into
6,987,877 shares of common stock, valued at $12,578, a portion of a certain convertible promissory note originally issued by the
Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately 4.29% of the issued
and outstanding shares of the Company.





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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



On June 3, 2014, the Company converted into
16,025,641 shares of common stock, valued at $25,000, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 9.45% of the issued and outstanding shares
of the Company.



On May 19, 2014, the Company issued 2,000,000
shares of restricted common stock, valued at $7,800, to a consultant for services rendered. The number of shares issued, at the
time of such issuance, represented approximately 1.07% of the issued and outstanding shares of the Company.



On June 11, 2014, the Company converted into
17,948,718 shares of common stock, valued at $28,000, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 9.56% of the issued and outstanding shares
of the Company.



On June 11, 2014, the Company converted into
8,000,000 shares of common stock, valued at 42,080, a portion of a certain convertible promissory note originally issued by the
Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately 3.89% of the issued
and outstanding shares of the Company.



On June 12, 2014, the Company converted into
8,240,741 shares of common stock, valued at $13,350, a portion of a certain convertible promissory note originally issued by the
Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately 3.85% of the issued
and outstanding shares of the Company.



On June 23, 2014, the Company converted into
18,055,556 shares of common stock, valued at $19,500, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 8.13% of the issued and outstanding shares
of the Company.



On June 26, 2014, the Company converted into
4,545,455 shares of common stock, valued at 6,354, a portion of a certain convertible promissory note originally issued by the
Company on October 4, 2013. The number of shares issued, at the time of such issuance, represented approximately 1.89% of the issued
and outstanding shares of the Company.



On June 27, 2014, the Company converted into
6,437,879 shares of common stock, valued at $8,498, a portion of a certain convertible promissory note originally issued by the
Company in February, 2000. The number of shares issued, at the time of such issuance, represented approximately 2.63% of the issued
and outstanding shares of the Company.



On June 30, 2014, the Company issued a
promissory note in the original principal amount of $1,928.50 (“Note”) to a lender. The Note matures on December
30, 2014 and carries an interest rate of 8% per annum. The Note, at the election of the lender is convertible into fully paid
and non-assessable shares of common stock of the Company at a 40% discount to the average of the three lowest trading days in
the ten trading days previous to the conversion.





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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



On July 1, 2014, the Company converted outstanding
invoices of the Company into a promissory note in the original principal amount of $45,000 (the “Note”) to a consultant
of the Company. The Note is due upon demand, and carries an interest rate of 10% per annum. The Note at the election of the lender
is convertible into fully paid and non-assessable shares of common stock of the Company at a 40% discount from the lowest trading
price in the five (5) days prior to the day that the Holder requests conversion.



On July 14, 2014, the Company converted into
24,057,318 shares of common stock, valued at $18,360, a portion of a loan originally received by the Company on March 21, 2012.
The number of shares issued, at the time of such issuance, represented approximately 9.59% of the issued and outstanding shares
of the Company.



On July 14, 2014, the Company converted into
15,517,241 shares of common stock, valued at 27,000, a portion of a certain convertible promissory note originally issued by the
Company in February, 2000. The number of shares issued, at the time of such issuance, represented approximately 5.64% of the issued
and outstanding shares of the Company.



On July 15, 2014, the Company converted into
14,202,945 shares of common stock, valued at $10,266, a portion of a certain convertible promissory note originally issued by the
Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately 4.66% of the issued
and outstanding shares of the Company.



On July 15, 2014, the Company converted
into 14,291,666 shares of common stock, valued at $10,290, a portion of a certain convertible promissory note originally
issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented
approximately 4.69% of the issued and outstanding shares of the Company.



On July 17, 2014, the Company converted into
25,757,576 shares of common stock, valued at $76,242, a portion of a certain convertible promissory note originally issued by the
Company on December 12, 2013. The number of shares issued, at the time of such issuance, represented approximately 8.07% of the
issued and outstanding shares of the Company.



On July 18, 2014, the Company converted into
8,400,000 shares of common stock, valued at $28,224, a portion of a certain convertible promissory note originally issued by the
Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately 2.43% of the issued
and outstanding shares of the Company.



On July 22, 2014, the Company converted into
16,428,571 shares of common stock, valued at $13,800, a portion of a certain convertible promissory note originally issued by the
Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately 4.65% of the issued
and outstanding shares of the Company.



On July 23, 2014, the Company converted into
13,047,619 shares of common stock, valued at $10,960, a portion of a certain convertible promissory note originally issued by the
Company in February, 2000. The number of shares issued, at the time of such issuance, represented approximately 3.53% of the issued
and outstanding shares of the Company.



On July 24, 2014, the Company converted into
21,323,529 shares of common stock, valued at $35,824, a portion of a certain convertible promissory note originally issued by the
Company on December 12, 2013. The number of shares issued, at the time of such issuance, represented approximately 5.57% of the
issued and outstanding shares of the Company.



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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013





On July 24, 2014, the Company converted into
6,944,444 shares of common stock, valued at $5,000, a portion of a certain convertible promissory note originally issued by the
Company on March 21, 2012. The number of shares issued, at the time of such issuance, represented approximately 1.71% of the issued
and outstanding shares of the Company.



On July 24, 2014, the Company converted into
10,401,348 shares of common stock, valued at $14,458, a portion of a certain convertible promissory note originally issued by the
Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately 2.53% of the issued
and outstanding shares of the Company.



On July 30, 2014, the Company converted into
37,037,037 shares of common stock, valued at $45,926, a portion of a certain convertible promissory note originally issued by the
Company on December 12, 2013. The number of shares issued, at the time of such issuance, represented approximately 8.79% of the
issued and outstanding shares of the Company.



On August 6, 2014, the Company converted into
21,851,852 shares of common stock, valued at $11,800, a portion of a certain convertible promissory note originally issued by the
Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately 4.76% of the issued
and outstanding shares of the Company.



On August 6, 2014, the Company converted into
45,740,741 shares of common stock, valued at $75,015 a portion of a certain convertible promissory note originally issued by the
Company on January 30, 2014. The number of shares issued, at the time of such issuance, represented approximately 9.52% of the
issued and outstanding shares of the Company.



On August 11, 2014, the Company converted into
26,812,500 shares of common stock, valued at $42,175, a portion of a certain convertible promissory note originally issued by the
Company on December 12, 2013. The number of shares issued, at the time of such issuance, represented approximately 5.09% of the
issued and outstanding shares of the Company.



On August 11, 2014, the Company converted into
45,740,741 shares of common stock, valued at $56,719, a portion of a certain convertible promissory note originally issued by the
Company on January 30, 2014. The number of shares issued, at the time of such issuance, represented approximately 8.27% of the
issued and outstanding shares of the Company.



On August 12, 2014, the Company converted into
15,131,579 shares of common stock, valued at $11,500, a portion of a certain convertible promissory note originally issued by the
Company on March 5, 2013. The number of shares issued, at the time of such issuance, represented approximately 2.52% of the issued
and outstanding shares of the Company.



On August 13, 2014, the Company converted
into 29,761,905 shares of common stock, valued at $12,500, a portion of a certain convertible promissory note originally
issued by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented
approximately 4.85% of the issued and outstanding shares of the Company.



On August 19, 2014, the Company converted into
16,666,667 shares of common stock, valued at $28,000, a portion of a certain convertible promissory note originally issued by the
Company on January 30, 2014. The number of shares issued, at the time of such issuance, represented approximately 2.59% of the
issued and outstanding shares of the Company.





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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



On August 20, 2014, the Company converted into
36,826,054 shares of common stock, valued at $31,670, a portion of a certain convertible promissory note originally issued by the
Company on January 30, 2014. The number of shares issued, at the time of such issuance, represented approximately 5.58% of the
issued and outstanding shares of the Company.



On August 22, 2014, the Company converted into
24,888,889 shares of common stock, valued at $22,933, a portion of a certain convertible promissory note originally issued by the
Company on January 30, 2014. The number of shares issued, at the time of such issuance, represented approximately 3.57% of the
issued and outstanding shares of the Company.



On August 22, 2014, the Company converted into
62,500,000 shares of common stock, valued at $43,753, a portion of a certain convertible promissory note originally issued by the
Company on January 21, 2014. The number of shares issued, at the time of such issuance, represented approximately 8.66% of the
issued and outstanding shares of the Company.



On August 22, 2014, the Company converted into
52,729,500 shares of common stock, valued at $36,934, a portion of a certain convertible promissory note originally issued by the
Company on January 30, 2014. The number of shares issued, at the time of such issuance, represented approximately 6.72% of the
issued and outstanding shares of the Company.



On August 25, 2014, the Company converted into
40,476,190 shares of common stock, valued at $17,000, a portion of a certain convertible promissory note originally issued by the
Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately 4.83% of the issued
and outstanding shares of the Company.



On August 29, 2014, the Company issued a promissory
note in the original principal amount of $7,000 (“Note”) to a lender. The Note matures on November 1, 2014 and carries
an interest rate of 12% per annum. The Note, at the election of the lender is convertible into fully paid and non-assessable shares
of common stock of the Company at a 40% discount to the average of the three lowest trading days in the ten trading days previous
to the conversion.



On September 2, 2014, the Company converted
into 30,833,333 shares of common stock, valued at $19,606, a portion of a certain convertible promissory note originally issued
by the Company on October 5, 2013. The number of shares issued, at the time of such issuance, represented approximately 3.51% of
the issued and outstanding shares of the Company.



On September 10, 2014, the Company converted
into 62,500,000 shares of common stock, valued at $37,500, a portion of a certain convertible promissory note originally issued
by the Company on January 21, 2014. The number of shares issued, at the time of such issuance, represented approximately 6.88%
of the issued and outstanding shares of the Company.



On September 10, 2014, the Company converted
into 76,923,077 shares of common stock, valued at $34,308, a portion of a certain convertible promissory note originally issued
by the Company on January 21, 2014. The number of shares issued, at the time of such issuance, represented approximately 7.92%
of the issued and outstanding shares of the Company.





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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



On September 17, 2014, the Company converted
into 48,000,000 shares of common stock, valued at 32,640, a portion of a certain convertible promissory note originally issued
by the Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately 4.58% of
the issued and outstanding shares of the Company.



On September 18, 2014, the Company converted
into 53,720,027 shares of common stock, valued at $14,000, a portion of a certain convertible promissory note originally issued
by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately 4.9% of
the issued and outstanding shares of the Company.



On September 18, 2014, the Company converted
into 50,000,000 shares of common stock, valued at $21,000, a portion of a certain convertible promissory note originally issued
by the Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately 4.35% of
the issued and outstanding shares of the Company.



On September 26, 2014, the Company converted
into 95,000,000 shares of common stock, valued at $28,500, a portion of a certain convertible promissory note originally issued
by the Company on January 21, 2014. The number of shares issued, at the time of such issuance, represented approximately 7.92%
of the issued and outstanding shares of the Company.



On September 30, 2014, the Company converted
into 63,583,333 shares of common stock, valued at $7,630, a portion of a certain convertible promissory note originally issued
by the Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately 4.91% of
the issued and outstanding shares of the Company.



On October 3, 2014, the Company converted into
100,000,000 shares of common stock, valued at 30,000, a portion of a certain convertible promissory note originally issued by the
Company on January 21, 2014. The number of shares issued, at the time of such issuance, represented approximately 7.36% of the
issued and outstanding shares of the Company.



On October 3, 2014, the Company converted into
53,000,000 shares of common stock, valued at $19,080, a portion of a certain convertible promissory note originally issued by the
Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately 3.63% of the issued
and outstanding shares of the Company.



On October 7, 2014, the Company converted into
74,166,666 shares of common stock, valued at $8,900, a portion of a certain convertible promissory note originally issued by the
Company on October 1, 2013. The number of shares issued, at the time of such issuance, represented approximately 4.9% of the issued
and outstanding shares of the Company.



On October 8, 2014, the Company converted into
51,000,000 shares of common stock, valued at $18,360, a portion of a certain convertible promissory note originally issued by the
Company on October 2, 2013. The number of shares issued, at the time of such issuance, represented approximately 3.21% of the issued
and outstanding shares of the Company.



On October 3, 2014, the Company converted into
67,000,000 shares of common stock, valued at $13,400, a portion of a certain convertible promissory note originally issued by the
Company on January 21, 2014. The number of shares issued, at the time of such issuance, represented approximately 4.09% of the
issued and outstanding shares of the Company.





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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



On October 16, 2014, the Company converted
into 32,083,333 shares of common stock, valued at $5,133, a portion of a certain convertible promissory note originally issued
by the Company on March 31, 2014. The number of shares issued, at the time of such issuance, represented approximately 1.88% of
the issued and outstanding shares of the Company.



On October 16, 2014, the Company converted
into 52,833,333 shares of common stock, valued at $8,454, a portion of a certain convertible promissory note originally issued
by the Company on March 31, 2014. The number of shares issued, at the time of such issuance, represented approximately 3.04% of
the issued and outstanding shares of the Company.



On October 17, 2014, the Company converted
into 62,500,000 shares of common stock, valued at 12,500, a portion of a certain convertible promissory note originally issued
by the Company on January 21, 2014. The number of shares issued, at the time of such issuance, represented approximately 3.49%
of the issued and outstanding shares of the Company.



On October 24, 2014, the Company converted
into 84,916,667 shares of common stock, valued at $13,587, a portion of a certain convertible promissory note originally issued
by the Company on January 21, 2014. The number of shares issued, at the time of such issuance, represented approximately 4.39%
of the issued and outstanding shares of the Company.



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, 2013 |                  |  |                                                                                                               
| | Granted                           |                  |  |                                                                                                               
| | Exercised                         |                  |  |                                                                                                               
| | Cancelled                         |                  |  |                                                                                                               
| | Outstanding at December 31, 2013  |                  |  |                                                                                                               
| | Granted                           |                  |  |                                                                                                               
| | Exercised                         |                  |  |                                                                                                               
| | Cancelled                         |                  |  |                                                                                                               
| | Outstanding at December 31, 2014  |                  |  |                                                                                                               





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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



Common stock options outstanding and exercisable as of December,
2014 are:



|                 |  | Options Outstanding |      | Options Exercisable      
|---------------- |  | ------------------- | ---- | -------------------------
|Expiration Date  |  | Exercise Price      |      | Number shares outstanding
|                 |  |                     |      |                          
|October  1, 2018 |  | $                   | 0.01 |                          
|January 2, 2019  |  |                     | 1.65 |                          
|Total            |  |                     |      |                          



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. Out of which 75,000 were immediately vested and balance vesting over three years and expiring six
years from issuance date.



The fair value
of the vested portion (determined as described below) of $138,002 and $249,643 was charged to expenses and additional paid in capital
during the year ended December 31, 2014 and 2013, respectively.



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 |  | 
|Expected stock price volatility       |  | 
|Expected dividend payout              |  | 
|Expected option life-years            |  | 



NOTE 13 - RELATED PARTY TRANSACTIONS



From time to time, an officer of the Company
and an entity they 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, 2014 and 2013 was 52,973 and $56,973, respectively.



During the year ended December 31, 2014 and
2013, the Company issued -0- and 1,826,622 shares to a major shareholder and Vice President of Sales of the Company, for services
rendered to the Company regarding business in South Africa which was fair valued at market rate for $-0- and $247,733, respectively.



Table of Contents87





FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



NOTE 14 - 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.



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,
2014:



|                            |  |                   |         | Fair Value Measurements at December 31, 2014 using:           
|--------------------------- |  | ----------------- | ------- | --------------------------------------------------------------
|                            |  | December 31, 2014 |         | Quoted Prices in Active Markets for Identical Assets (Level 1)
|Liabilities:                |  |                   |         |                                                               
|Debt Derivative liabilities |  | $                 | 372,939 |                                                               
|                            |  |                   |         |                                                               



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.



Table of Contents88





FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



The following table provides a summary of changes
in fair value of the Company’s Level 3 financial liabilities as of December 31, 2014 and 2013:



|                                                                                                   |  | Debt Derivative Liability
|-------------------------------------------------------------------------------------------------- |  | -------------------------
|Balance, December 31, 2012                                                                         |  | $                        
|Initial fair value of debt derivatives at note issuances                                           |  |                          
|Extinguished derivative liability                                                                  |  |                          
|Mark-to-market at December 31, 2013 - Embedded debt derivatives                                    |  |                          
|Balance, December 31, 2013                                                                         |  | $                        
|Initial fair value of debt derivatives at note issuances                                           |  |                          
|Extinguished derivative liability                                                                  |  |                          
|Mark-to-market at December 31, 2014 - Embedded debt derivatives                                    |  |                          
|Balance, December 31, 2014                                                                         |  | $                        
|                                                                                                   |  |                          
|Net gain for the period included in earnings relating to the liabilities held at December 31, 2014 |  | $                        



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



NOTE 15 - 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 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

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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



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. During
the year 2013 the Company issued 2,100,000 shares of common stock for settlement of $610,000.



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 believes 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.

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FUELSTREAM, INC.

Notes to the Consolidated Financial Statements

December 31, 2014 and 2013



Future minimum lease and related payments are as follows:



|2015           |  | $ | - | 
|-------------- |  | - | - | 
|2016           |  | - |  
|2017           |  | - |  
|2018 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 as only accounting and legal functions are performed there.



NOTE 16 - SUBSEQUENT EVENTS



On December 8, 2014, the board of directors
and the holders of a majority in interest of our voting capital stock approved a 1-for-2,000 reverse split of our common shares
(“Reverse Split”). The Reverse Split is still pending and has yet to be declared effective by FINRA.



On January 6, 2015, the Company issued a convertible
promissory note in the original principal amount of $6,000 (“Note”) to a lender. The Note matures on October 10, 2015
and carries an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full unless converted
partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of Common Stock of the Company
at a 50% discount to the average of the three lowest daily trading prices as reported on the OTCQB for the twenty trading days
previous to the conversion date.









Table of Contents91





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, 2014, 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.



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.

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(b)   There
were no changes in our internal control over financial reporting during the year ended December 31, 2014 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 effective internal control over financial reporting as of December 31, 2014.



ITEM 9B. OTHER INFORMATION.



None.

Table of Contents93







PART III



ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.



Board of Directors

Our board of directors
consists of the following one individual:

|Name and Year First Elected Director(1) |  | Age |  | Background Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--------------------------------------- |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|John D. Thomas
        (2014)           |  | 43  |  | Mr. Thomas, age 43, has practiced law specializing
        in general corporate law, securities, and mergers and acquisitions for his law firm, John D. Thomas P.C. since June, 2003. From
        April 3, 2014 to July 10, 2014, Mr. Thomas served as the Company’s interim Chief Executive Officer and Secretary. From September,
        2013 through December, 2013, Mr. Thomas served on the Board of Directors of Helmer Directional Drilling Corp, a filer of reports
        pursuant to 13(a) and 15(d) of the Securities Exchange Act of 1934. From March 2008 until March 2012, Mr. Thomas served as a member
        of the board of directors and chairman of the audit committee of Bayhill Capital, Inc. (BYHL.OB), a filer of reports pursuant to
        13(a) and 15(d) of the Securities Exchange Act of 1934. From July, 2009 to May, 2011, Mr. Thomas served as a member of the board
        of directors of Vican Resources, Inc. (OTC: VCAN), a filer of reports pursuant to 13(a) and 15(d) of the Securities Exchange Act
        of 1934. Since August 2009, Mr. Thomas has been a member of the board of directors of London Pacific & Partners, Inc. (OTC:
        LDPP), a Los Angeles and London-based investment and advisory firm specializing in healthcare and hospitality finance. In August,
        2009, Mr. Thomas entered into a settlement with the Commodity Futures Trading Commission wherein Mr. Thomas consented to an order
        of permanent injunction from his future involvement in commodity pools trading and commodities operations. Mr. Thomas holds a Juris
        Doctor degree from Texas Tech University School of Law and is licensed to practice law in Texas and Utah.



(1) The business address of Mr.
Thomas is 11650 South State Street, Suite 240, Draper, Utah 84020.



Director Independence



We do not consider our
sole member of our board of directors as an “independent director” 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.



Table of Contents94







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.



Board of Directors Meetings and Committees



Although various items
were reviewed and approved by the Board of Directors via unanimous written consent during 2014, the Board held no in-person meetings
during the fiscal year ended December 31, 2014.



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.



Table of Contents95







Executive Officers

John D. Thomas is
our sole executive officer, serving as our interim Chief Executive Officer and Secretary, as well as our principal accounting and
financial officer. Mr. Thomas business background is as follows:

|Name and Year First Appointed as Executive Officer |  | Age |  | Background Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-------------------------------------------------- |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|John D. Thomas
        (2014)                      |  | 43  |  | Mr. Thomas, age 43, has practiced law specializing in general corporate law, securities, and mergers and acquisitions for his law firm, John D. Thomas P.C. since June, 2003. From April 3, 2014 to July 10, 2014, Mr. Thomas served as the Company’s interim Chief Executive Officer and Secretary. From September, 2013 through December, 2013, Mr. Thomas served on the Board of Directors of Helmer Directional Drilling Corp, a filer of reports pursuant to 13(a) and 15(d) of the Securities Exchange Act of 1934. From March 2008 until March 2012, Mr. Thomas served as a member of the board of directors and chairman of the audit committee of Bayhill Capital, Inc. (BYHL.OB), a filer of reports pursuant to 13(a) and 15(d) of the Securities Exchange Act of 1934. From July, 2009 to May, 2011, Mr. Thomas served as a member of the board of directors of Vican Resources, Inc. (OTC: VCAN), a filer of reports pursuant to 13(a) and 15(d) of the Securities Exchange Act of 1934. Since August 2009, Mr. Thomas has been a member of the board of directors of London Pacific & Partners, Inc. (OTC: LDPP), a Los Angeles and London-based investment and advisory firm specializing in healthcare and hospitality finance. In August, 2009, Mr. Thomas entered into a settlement with the Commodity Futures Trading Commission wherein Mr. Thomas consented to an order of permanent injunction from his future involvement in commodity pools trading and commodities operations. Mr. Thomas holds a Juris Doctor degree from Texas Tech University School of Law and is licensed to practice law in Texas and Utah.



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 the fiscal year
ended December 31, 2014, based solely upon a review of such materials as are required by the Securities and Exchange Commission,
no 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.



Table of Contents96







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.



ITEM 11. EXECUTIVE
COMPENSATION.

The following table
summarizes the total compensation for the two fiscal years ended December 31, 2014 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, 2014, thus these items are omitted from the table below:

|Summary Compensation Table    
|------------------------------
|Name and Principal Position   
|John D. Thomas                
|Chief Executive Officer       
|Thomas McConnell              
|former Chief Executive Officer
|Robert Catala                 
|former Chief Executive Officer
|Juan Carlos Ley               
|former Chief Executive Officer



| | (1) | Based on the closing price per share on the date of award.
| | --- | ----------------------------------------------------------



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.



Table of Contents97







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, 2014, we have outstanding options to 4 persons under the Plan to acquire 370,000
shares of our common stock. 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. During the year ended December 31, 2013, the Company issued 150,000 common
stock purchase options to each of their directors at an exercise price of $1.65 per share. Out of which 75,000 were
immediately vested and balance vesting over three years and expiring six years from issuance date. 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.



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 2014.



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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 April
13, 2015. 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 11650 South State Street, Suite 240 Draper, Utah 84020. As
of April 7, 2015, we had 1,938,172,724 shares of common stock issued and outstanding and 200 shares of preferred stock issued and
outstanding. While each of our shares of common stock holds one vote, each share of our preferred stock holds twenty million (20,000,000)
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                                                              
|John D. Thomas                                                    
|Thomas McConnell, Jr.                                             
|Robert Catala                                                     
|Sean Wagner(3)                                                    
|John D. Thomas, P.C.(4)                                           
|KBM Worldwide, Inc.(5)                                            
|All current directors and executive officers as a group (1 person)

____________________

* 	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.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Based on 1,935,395,089 shares of our common stock, par value $0.0001 per share, outstanding
                                                            as of March 18, 2015. 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 4,000,000,000 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 12,392,668 shares of common stock held by Mr. Wagner. If the votes
of the preferred stock are taken into account, Mr. Wagner would beneficially hold 67.6% of the voting securities of the Company.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Excludes 200 shares of preferred stock. If the votes of the preferred stock and these shares of
common stock are taken into account, JDT would beneficially hold 67.42% of the voting securities of the Company. John D. Thomas,
the sole shareholder of JDT, is the sole executive officer and director of the Company.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | A New York corporation owned and controlled by Seth Kramer, and a convertible noteholder of
                                                            the Company in the principal amounts of $73,310 (the “First Note”) and $6,000 (the “Second Note”).
                                                            The First Note and the Second Note are collectively referred to as the “Convertible Debt”. The First Note is
                                                            convertible into shares of common stock at a 40% discount to the three lowest daily volume-weighted average prices as
                                                            reported on the OTC for the ten trading days prior to the date of conversion. The Second Note is convertible into shares of
                                                            common stock at a 50% discount to the three lowest daily volume-weighted average prices as reported on the OTC for the twenty
                                                            trading days prior to the date of conversion. Because the Convertible Debt is convertible at the discretion of the holder,
                                                            the actual conversion price is undetermined. Consequently, the shares of common stock that may actually be issued from
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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conversion of the
Convertible Debt could be substantially more or less than this number. Based on 1,938,172,724 shares of our common stock issued
and outstanding as of April 13, 2015, and assuming the conversion of the Convertible Debt into the maximum of 4.99% of the issued
and outstanding shares of the Company as per the conversion terms of the Convertible Debt. If the entire amount of the Convertible
Debt were converted at this price, the holder would receive 1,341,833,333 shares of common stock, or 40.94% of our outstanding
shares (adjusted for the dilution caused by the issuance of these new shares).



DESCRIPTION
OF CAPITAL STOCK



The following description
of our capital stock is based on relevant portions of the Delaware General Corporation Law, or the “DGCL,” and on our
Certificate of Incorporation (also sometimes referred to as our “charter”) and Bylaws. This summary may not contain
all of the information that is important to you, and we refer you to the DGCL and our Certificate of Incorporation and Bylaws for
a more detailed description of the provisions summarized below.



Fuelstream was organized
as a corporation under the laws of the State of Delaware on July 12, 1996. As of December 31, 2014 our authorized capital stock
consists of 250,000,000 shares of common stock, par value $0.0001 per share and 200 shares of preferred stock, par value $0.0001
per share. As of December 31, 2014, there were approximately 406 record holders of our common stock. We have also granted common
stock purchase options under our 2012 Equity Incentive Plan as described under “Equity Incentive Plan” below. Other
than 370,000 common stock purchase options awarded under our 2012 Equity Incentive Plan, there are no outstanding other options
or warrants to purchase our stock.



On February
10, 2014, in connection with action taken by our board of directors and the holders of a majority in interest of our voting capital
stock, we effected a restatement of our Certificate of Incorporation to increase the number of authorized shares of our common
stock from 150,000,000 to 2,500,000,000.



On February
10, 2014, the Board of Directors of the Company approved an amendment and restatement of 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”). The amended and restated Certificate
of Designation has increased the voting rights applicable to each share of Preferred Stock from ten million (10,000,000) to twenty
million (20,000,000).



Our charter provides that
our board of directors may not amend our Certificate of Incorporation without approval of our shareholders, including holders of
our preferred shares. A decrease or increase in the number of shares of capital stock which we may issue would require an amendment
of our charter.



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At May 21, 2015, we
had 1,938,172,724 shares of common stock issued and outstanding and 200 shares of preferred stock issued and outstanding. The
number of shares outstanding does not include shares of common stock that we are required to issue in the event of a
conversion of the Note.



|Title of Class |                                                  | Amount Authorized |  | Amount Held by Us or for our Account(1) |               | Amount Outstanding Exclusive of Amounts Shown Under(1)
|-------------- | ------------------------------------------------ | ----------------- |  | --------------------------------------- | ------------- | ------------------------------------------------------
|               | Common stock, par value $0.0001 per share        |                   |  |                                         | 2,500,000,000 |                                                       
|               | Preferred stock, par value $0.0001 per share (2) |                   |  |                                         | 200           |                                                       
|               |                                                  |                   |  |                                         | 2,500,000,200 |                                                       

____________________

| | (1) | Calculated as of May 21, 2015.
| | --- | ------------------------------

| | (2) | Shares of our preferred stock are not convertible into common stock. See “Preferred Stock”
below.
| | --- | -------------------------------------------------------------------------------------------------



Common Stock



Our charter authorizes
us to issue up to 2,500,000,000 shares of common stock. All shares of our common stock have equal rights as to earnings, assets,
dividends and voting privileges. If and when we issue shares of common stock to the selling stockholders as a result of conversion
of the Note, such shares will be duly authorized, validly issued, fully paid and nonassessable. 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
therefore. 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 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.



On December 8, 2014, the
board of directors and the holders of a majority in interest of our voting capital stock approved a 1-for-2,000 reverse split of
our common shares (“Reverse Split”). The Reverse Split is still pending and has yet to be declared effective by FINRA.



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 April 7, 2015.
Although the preferred stock carries no dividend, distribution, liquidation or conversion rights, each share of preferred stock
carries twenty million (20,000,000) 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.

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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, 2014, we have outstanding options to 4 persons under the Plan to acquire 370,000 shares of our
common stock. 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. During the year ended December 31, 2013, the Company issued 150,000
common stock purchase options to each of their directors at an exercise price of $1.65 per share. Out of which 75,000
were immediately vested and balance vesting over three years and expiring six years from issuance date. 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.

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

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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 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. In 2014 the voting power was amended
from 10,000,000 to 20,000,000 votes per preference shares.



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Board of Directors
Meetings and Committees



Although
various items were reviewed and approved by the Board of Directors via unanimous written consent during 2013, the Board held no
formal meetings during the fiscal year ended December 31, 2014.



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
May 12, 2014, we issued 500,000 shares of our common stock, valued at $2,150, to Thomas McConnell, a member of our board of directors,
for his services as a director.

On
November 20, 2013, we issued 3,539,046 shares of our common stock, valued at $247,733, to Sean Wagner, a principal shareholder
of our Company, for services provided as our Vice President of Sales.

On
October 23, 2013, we issued 250,000 shares of our common stock, valued at $37,500, to Thomas McConnell, a member of our board of
directors, for his services as a director.

On
October 23, 2013, we issued 250,000 shares of our common stock, valued at $37,500, to Robert Catala, our Chief Executive Officer,
for services provided by Mr. Catala.

On
January 28, 2013, we issued 25,000 shares of common stock, valued at $41,250, to our former Chief Executive Officer. Also on January
28, 2013, pursuant to our 2012 Equity Incentive Plan, we issued 150,000 common stock purchase options to two of our directors at
an exercise price of $1.65 per share.

Director Independence



The Company’s
sole member of the board of directors is not an “independent director” 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. We have not established any board committees. We hope in the future to add an independent director and
establish one or more board committees, including an audit committee.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.



The following table sets
forth fees paid to our independent registered accounting firm, RBSM LLP for the years ended December 31, 2014 and 2013.



|                   |  | 2014 |        | 2013
|------------------ |  | ---- | ------ | ----
|Audit Fees         |  | $    | 46,500 |     
|Audit Related Fees |  |      | -0-    |     
|Tax Fees           |  |      | -0-    |     
|All Other Fees     |  |      | -0-    |     
|Total Fees         |  | $    | 46,500 |     



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.



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 Amended 10-Q filed on December 8, 2014).   
|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).       
|14.1           |  | Code of Ethics for the Registrant.                                                                                                                     
|21.1           |  | Subsidiaries of the Registrant.                                                                                                                        
|31.1           |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for John D. Thomas.                                                            
|32             |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for John D. Thomas.                                                            









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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/ John D. Thomas                                                          
|Dated: May 22, 2015 | By: John D. Thomas, Chief Executive Officer, and Principal Financial Officer
|                    |                                                                              |                 
|                    |                                                                              |                 



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



|/s/ John D. Thomas |  | Chief Executive Officer and sole director | May 22, 2015
|------------------ |  | ----------------------------------------- | ------------
|John D. Thomas     |  |                                          













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