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  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>
  
  <P STYLE="font: 14pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>UNITED STATES</B></P>
  
  <P STYLE="font: 14pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>
  
  <P STYLE="font: 14pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Washington, D.C. 20549</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>______________________</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>
  
  <P STYLE="font: 14pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FORM 10-Q</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>
  
  <P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><B>[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the
  Securities Exchange Act of 1934</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">For the quarterly period ended March 31,
  2014</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">OR</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><B>[ ] Transition Report Pursuant to Section 13 or 15(d) of the
  Securities Exchange Act of 1934</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">For the transition period from ________ to ___________</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">Commission file number: <U>333-14477</U></P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 14pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B><U>FUELSTREAM, INC.</U></B></P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(Name of Small Business Issuer in Its Charter)</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 70.5pt 0 0; text-align: justify"><FONT STYLE="letter-spacing: -0.2pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 70.5pt 0 0; text-align: justify"><FONT STYLE="letter-spacing: -0.2pt">&nbsp;</FONT></P>
  
  <table cellspacing="0" cellpadding="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif; border-collapse: collapse">
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      <td style="width: 47%; border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 11pt Times New Roman, Times, Serif; letter-spacing: -0.2pt">Delaware</font></td>
      <td style="width: 20%; padding-right: 70.5pt; padding-left: 5.4pt; text-align: justify">&nbsp;</td>
      <td style="width: 33%; border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 11pt Times New Roman, Times, Serif; letter-spacing: -0.2pt">87-0561426</font></td></tr>
  <tr style="vertical-align: top">
      <td style="padding-right: 5.4pt; padding-left: 5.4pt">
          <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="letter-spacing: -0.2pt">(State
          or Other Jurisdiction</font></P>
          <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="letter-spacing: -0.2pt">of Incorporation
          or Organization)</font></P></td>
      <td style="padding-right: 70.5pt; padding-left: 5.4pt; text-align: justify">&nbsp;</td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt">
          <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="letter-spacing: -0.2pt">(IRS Employer</font></P>
          <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="letter-spacing: -0.2pt">Identification
          No.)</font></P></td></tr>
  <tr style="vertical-align: top">
      <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</td>
      <td style="padding-right: 70.5pt; padding-left: 5.4pt; text-align: justify">&nbsp;</td>
      <td style="padding-right: 70.5pt; padding-left: 5.4pt; text-align: center">&nbsp;</td></tr>
  <tr style="vertical-align: top">
      <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 11pt Times New Roman, Times, Serif; letter-spacing: -0.2pt">510 Shotgun Road, Suite 110</font></td>
      <td style="padding-right: 70.5pt; padding-left: 5.4pt; text-align: justify">&nbsp;</td>
      <td style="padding-right: 70.5pt; padding-left: 5.4pt; text-align: center">&nbsp;</td></tr>
  <tr style="vertical-align: top">
      <td style="border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 11pt Times New Roman, Times, Serif; letter-spacing: -0.2pt">Fort Lauderdale, Florida</font></td>
      <td style="padding-right: 70.5pt; padding-left: 5.4pt; text-align: justify">&nbsp;</td>
      <td style="border-bottom: Black 1pt solid; padding-right: -0.9pt; padding-left: 5.4pt; text-align: center"><font style="font: 11pt Times New Roman, Times, Serif; letter-spacing: -0.2pt">33326</font></td></tr>
  <tr style="vertical-align: top">
      <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 11pt Times New Roman, Times, Serif; letter-spacing: -0.2pt">(Address of Principal Executive Offices)</font></td>
      <td style="padding-right: 70.5pt; padding-left: 5.4pt; text-align: justify">&nbsp;</td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 11pt Times New Roman, Times, Serif; letter-spacing: -0.2pt">(Zip Code)</font></td></tr>
  </table>
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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      <td style="width: 11%; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</td>
      <td style="width: 79%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 11pt Times New Roman, Times, Serif"><u>(954) 423-5345</u></font></td>
      <td style="width: 10%; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</td></tr>
  <tr style="vertical-align: top">
      <td style="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 11pt Times New Roman, Times, Serif">(Issuer&rsquo;s Telephone Number)</font></td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</td></tr>
  <tr style="vertical-align: top">
      <td style="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</td>
      <td style="border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt">
          <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
          <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P></td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</td></tr>
  <tr style="vertical-align: top">
      <td colspan="3" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 11pt Times New Roman, Times, Serif">(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)</font></td></tr>
  </table>
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 1 -->
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      <DIV STYLE="page-break-before: always; margin-top: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Indicate by check mark whether the registrant
  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
  months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
  requirements for the past 90 days. Yes [X] No [ ]</P>
  
  <P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Indicate by check mark
  whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required
  to be submitted and posted pursuant to Rule 405 of Regulation S-T (&sect;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 [X] No []</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Indicate by check mark whether the registrant
  is a large accelerated filer, an accelerated filer, non-accelerated filer, or a smaller reporting company. See definition of &ldquo;large
  accelerated filer,&rdquo;&ldquo;accelerated filer,&rdquo; and &ldquo;smaller reporting company in Rule 12b-2 of the Exchange Act.
  (Check one):</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <table cellspacing="0" cellpadding="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif; border-collapse: collapse">
  <tr style="vertical-align: top">
      <td style="width: 39%; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 11pt Times New Roman, Times, Serif">Large Accelerated Filer [&nbsp;&nbsp;]</font></td>
      <td style="width: 18%; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</td>
      <td style="width: 43%; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 11pt Times New Roman, Times, Serif">Accelerated Filer [&nbsp;&nbsp;]</font></td></tr>
  <tr style="vertical-align: top">
      <td style="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</td></tr>
  <tr style="vertical-align: top">
      <td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 11pt Times New Roman, Times, Serif">Non-Accelerated Filer [&nbsp;&nbsp;]</font></td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 11pt Times New Roman, Times, Serif">Smaller reporting company [X]</font></td></tr>
  </table>
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Indicate by check mark whether the registrant
  is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>PROCEEDINGS DURING THE PRECEDING FIVE YEARS</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Check whether the registrant has filed all documents
  and reports required to be filed by Sections 12, 13, or 15(d) of the Exchange Act of 1934 after the distribution of securities
  under a plan confirmed by a court. Yes [ ] No [ ]</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>APPLICABLE ONLY TO CORPORATE ISSUERS</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">State the number of shares outstanding of each
  of the issuer&rsquo;s classes of common equity, as of the latest practicable date. As of May 19, 2014, the Company had outstanding
  60,598,135 shares of common stock, par value $0.0001 per share.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 2 -->
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      <DIV STYLE="page-break-before: always; margin-top: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="letter-spacing: -0.15pt"><B>PART
  I</B></FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="letter-spacing: -0.15pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="letter-spacing: -0.15pt"><B>FINANCIAL
  INFORMATION</B></FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="letter-spacing: -0.15pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="letter-spacing: -0.15pt">The
  Condensed </FONT>Consolidated <FONT STYLE="letter-spacing: -0.15pt">Financial Statements of the Company are prepared as of
  March 31, 2014. </FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="letter-spacing: -0.15pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in"><FONT STYLE="letter-spacing: -0.15pt"><B>ITEM
  1. FINANCIAL STATEMENTS REQUIRED BY FORM 10-Q</B></FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify; text-indent: -0.75in"><FONT STYLE="letter-spacing: -0.15pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
      <td colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt">
          <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><A NAME="a_005"></A>CONTENTS</b></P>
          <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>&nbsp;</b></P></td></tr>
  <tr style="vertical-align: top">
      <td style="width: 96%; padding-right: 5.4pt; padding-left: 5.4pt">
          <A HREF="#a_001">Condensed Consolidated Balance Sheets as of March 31, 2014 (unaudited) and December 31, 2013</A>
          <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P></td>
      <td style="width: 4%; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 11pt Times New Roman, Times, Serif">4</font></td></tr>
  <tr style="vertical-align: top">
      <td style="padding-right: 5.4pt; padding-left: 5.4pt">
          <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><A HREF="#a_002">Condensed Consolidated Statements of Operations for the three months period ended March 31, 2014 and 2013(unaudited)</A></P>
          <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P></td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 11pt Times New Roman, Times, Serif">5</font></td></tr>
  <tr style="vertical-align: top">
      <td style="padding-right: 5.4pt; padding-left: 5.4pt">         <A HREF="#a_003">Condensed Consolidated Statements of Cash
      Flows for the three months period ended March 31, 2014 and 2013 (unaudited)</A>
  
          <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P></td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 11pt Times New Roman, Times, Serif">6</font></td></tr>
  <tr style="vertical-align: top">
      <td style="padding-right: 5.4pt; padding-left: 5.4pt">
          <A HREF="#a_004">Notes to the Unaudited Condensed Consolidated Financial Statements</A>
          <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P></td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 11pt Times New Roman, Times, Serif">7</font></td></tr>
  </table>
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
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  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="9" STYLE="font-weight: bold; text-align: center">FUELSTREAM, INC.</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="9" STYLE="text-align: center"><A NAME="a_001"></A>Condensed Consolidated Balance Sheets</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="9" STYLE="text-align: center">ASSETS</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: center"></TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center">March 31,</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; vertical-align: bottom">December 31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">2014</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">2013</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: center"></TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; vertical-align: bottom">(Unaudited)</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">CURRENT ASSETS</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Cash and cash equivalents</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="width: 63%; text-align: left; padding-bottom: 1pt; padding-left: 10pt">Accounts receivable, net of allowance</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; border-bottom: Black 1pt solid; text-align: right">28,000</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; border-bottom: Black 1pt solid; text-align: right">28,000</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Total Current Assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">28,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">28,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 20pt">TOTAL ASSETS</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">28,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">28,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 20pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD COLSPAN="9" STYLE="text-decoration: underline; text-align: center">LIABILITIES AND STOCKHOLDERS' DEFICIT</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">CURRENT LIABILITIES</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Accounts payable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">847,265</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">826,832</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Due to related parties</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">56,973</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">56,973</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Accrued expenses</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">913,978</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">788,771</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Convertible debenture/notes payable - short term (net of</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">&nbsp;&nbsp;discount of $276,664 and $-0-, respectively)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">263,045</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">226,250</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Convertible notes payable - related parties</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">256,254</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">211,254</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Notes payable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,077,110</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,093,382</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Notes payable - related parties</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,115,870</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,115,870</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Derivative liability</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">873,831</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">558,548</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Total Current Liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,404,326</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,877,880</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">LONG TERM LIABILITIES</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Convertible debenture/notes payable (net of discount of</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">&nbsp;&nbsp;$66,966 and $262,006, respectively)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,034</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,918</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Derivative liability</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Total Long Term Liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13,034</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,918</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">TOTAL LIABILITIES</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,417,360</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,882,798</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">STOCKHOLDERS' DEFICIT</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-left: 10pt">Preferred stock, $0.0001 par value; 200 shares</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">&nbsp;authorized, 200 and 200 shares issued and outstanding</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-left: 10pt">Common stock, $0.0001 par value; 150,000,000</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">&nbsp;and 50,000,000 shares authorized, 53,927,503 and</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">&nbsp;37,709,552 shares issued and outstanding, respectively</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,393</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,771</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Additional paid-in capital</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,520,346</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,126,878</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Accumulated deficit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(56,915,099</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(55,985,447</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Total Stockholders' Deficit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(6,389,360</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(5,854,798</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 20pt">TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">28,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">28,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD COLSPAN="9" STYLE="text-align: center">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD COLSPAN="9" STYLE="text-align: center">The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  
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  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 9pt Sans-Serif; margin: 0; color: Red"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="9" STYLE="font-weight: bold; text-align: center">FUELSTREAM, INC.</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="9" STYLE="text-align: center"><A NAME="a_002"></A>Condensed Consolidated Statements of Operations</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="9" STYLE="text-align: center">(Unaudited)</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: center"></TD><TD>&nbsp;</TD>
      <TD COLSPAN="7" STYLE="text-align: center; vertical-align: bottom">For the Three Months Ended</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: center"></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="text-align: center; vertical-align: bottom">March 31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">2014</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">2013</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 63%; text-align: left">NET SALES</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">47,414</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 1pt">COST OF SALES</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">36,338</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">GROSS MARGIN</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,076</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">SELLING, GENERAL AND</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;ADMINISTRATIVE EXPENSES</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Selling, general and administrative</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">450,133</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">406,984</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 20pt">Total Selling, General and</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">&nbsp;&nbsp;Administrative Expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">450,133</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">406,984</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">LOSS FROM OPERATIONS</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(439,057</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(406,984</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">OTHER INCOME (EXPENSES)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Gain (Loss) on change in fair value of derivative liability</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">238,380</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">61,450</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Interest expense (including amortization of debt discount</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">&nbsp;&nbsp;of $380,021, and $45,864, respectively)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(728,975</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(233,727</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Total Other (Expenses)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(490,595</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(172,277</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">LOSS BEFORE INCOME TAXES</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(929,652</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(579,261</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">INCOME TAX EXPENSE</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">NET LOSS</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(929,652</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(579,261</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">BASIC AND DILUTED:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-bottom: 2.5pt; padding-left: 10pt">Net loss per common share</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.02</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.04</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 2.5pt; padding-left: 10pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-bottom: 2.5pt; padding-left: 10pt">Weighted average shares outstanding</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">45,309,365</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">15,251,259</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD COLSPAN="9" STYLE="text-align: center">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD COLSPAN="9" STYLE="text-align: center">The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.</TD></TR>
  </TABLE>
  
  
  
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  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="13" STYLE="font-weight: bold; text-align: center">FUELSTREAM, INC.</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="13" STYLE="text-align: center"><A NAME="a_003"></A>Condensed Consolidated Statements of Cash Flows</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="13" STYLE="text-align: center">(Unaudited)</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="7" STYLE="text-align: center; vertical-align: bottom">For the Three Months Ended</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="text-align: center; vertical-align: bottom">March 31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">2014</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">2013</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">CASH FLOWS FROM OPERATING ACTIVITIES:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Net loss</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(929,652</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(579,261</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Adjustments to reconcile net loss to net</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;cash used in operating activities:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Common stock issued for services and finance expenses</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">163,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Stock based compensation</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">34,028</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">228,088</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Operating expenses incurred by noteholders on behalf of the Company</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">71,259</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Non-cash interest expenses</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">221,664</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,062</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Change in fair value of derivative liability</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(238,380</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(61,449</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Amortization of debt discounts</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">380,021</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">45,864</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Changes in operating assets and liabilities:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Accounts payable and accrued expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">191,610</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">117,537</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Net Cash Used in Operating Activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(105,950</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(133,159</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">CASH FLOWS FROM INVESTING ACTIVITIES:</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">CASH FLOWS FROM FINANCING ACTIVITIES:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Net proceeds from notes payable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">279,950</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Payments on notes payable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(174,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Net Cash Provided by Financing Activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">105,950</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">90,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">NET DECREASE IN CASH AND CASH EQUIVALENTS</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(43,159</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">43,159</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">CASH AND CASH EQUIVALENTS, END OF PERIOD</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">SUPPLEMENTAL CASH FLOW INFORMATION</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Cash Payments For:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-left: 20pt">Interest</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,725</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">100</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 20pt">Income taxes</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Non-cash investing and financing activity:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 20pt">Initial derivative liability on convertible note payable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">553,664</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">206,062</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 20pt">Beneficial conversion feature on convertible note credited to additional paid in capital</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">54,816</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 20pt">Common stock issued for settlement of notes payable and accrued interest</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">142,746</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 20pt">Reclassification from due to related party to convertible note payable - related party</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">45,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD COLSPAN="9" STYLE="text-align: center">The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 9pt Sans-Serif; margin: 0; text-align: center; color: Red">&nbsp;</P>
  
  
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  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0"></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FUELSTREAM INC. AND SUBSIDIARIES</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_004"></A>Notes to the Unaudited Condensed Consolidated
  Financial Statements</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2014</P>
  
  
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF
  OPERATIONS</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in"><I>Basis of Presentation</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying unaudited condensed consolidated
  financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission.
  Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally
  accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished
  in the interim consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in
  the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the
  disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim consolidated
  financial statements be read in conjunction with the Company&rsquo;s audited financial statements and notes thereto included in
  its Form 10-K for the year ended December 31, 2013. Operating results for the three months ended March 31, 2014 are not necessarily
  indicative of the results to be expected for the year ending December 31, 2014. &#9;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Organization and Nature of Operation</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Fuelstream, Inc. (the
  &ldquo;Company&rdquo;) was incorporated under the laws of the State of Delaware on July 12, 1996 under the name of
  &ldquo;Durwood, Inc.&rdquo;From April 6, 1999 to April 9,2010, the Company operated as a sports marketing firm under the
  name of &ldquo;Sportsnuts&rdquo; 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.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On April 11, 2011, the Company
  entered into a joint venture agreement (&ldquo;Joint Venture&rdquo;) with Aviation Fuel International, Inc., a Florida
  corporation (&ldquo;AFI&rdquo;) 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).</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 10, 2012, the Company along
  with two partners formed AFI South Africa LLC (&ldquo;AFI SA&rdquo;),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.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0"><I>Use of Estimates</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0 0 5pt; text-align: justify">The preparation of unaudited condensed
  consolidated 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 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.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>&nbsp;</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Revenue Recognition</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>&nbsp;</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recognizes revenue in
  accordance with Accounting Standards Codification subtopic 605-10,Revenue Recognition (&ldquo;ASC 605-10&rdquo;)
  which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an
  arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is
  reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature
  of the selling prices of the products delivered and the collectability of those amounts.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  
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  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FUELSTREAM INC. AND SUBSIDIARIES</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">Notes to the Unaudited Condensed Consolidated
  Financial Statements</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2014</P>
  
  
  
  <P STYLE="font: 10.5pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10.5pt/115% Times New Roman, Times, Serif; margin: 0">NOTE 1 -&#9;SIGNIFICANT ACCOUNTING POLICIES AND NATURE
  OF OPERATIONS (Continued)</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">ASC605-10 incorporates Accounting
  Standards Codification subtopic 605-25, Multiple-Element Arrangements(&ldquo;ASC 605-25&rdquo;). ASC 605-25 addresses
  accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use
  assets.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.5in">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0"><I>Principles of Consolidation</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The consolidated financial statements have been prepared in accordance
  with accounting principles generally accepted in the United States (&ldquo;US GAAP&rdquo;) and include the Company and its wholly-owned
  subsidiaries. All inter-company accounts and transactions have been eliminated</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.5in">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Cash</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">The Company considers cash to consist of cash on hand and temporary
  investments having an original maturity of 90 days or less that are readily convertible into cash.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Income Taxes</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has adopted Accounting Standards
  Codification subtopic 740-10, Income Taxes (&ldquo;ASC 740-10&rdquo;) which requires the recognition of deferred tax liabilities
  and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns.
  Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and
  tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
  Temporary differences between taxable income reported for financial reporting purposes and income tax purposes consist primarily
  of timing differences such as deferred officers&rsquo; compensation and stock based compensation accounting.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>&nbsp;</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Net Loss per share</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>&nbsp;</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company complies with accounting and
  disclosure requirements of FASB ASC 260, &ldquo;Earnings Per Share.&rdquo; Net loss per ordinary share is computed by dividing
  net loss applicable to ordinary shareholders by the weighted average number of ordinary shares outstanding for the period. Common
  share equivalents are excluded from the diluted earnings (loss) per share computation if their effect is anti-dilutive.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Stock based compensation</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>&nbsp;</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company follows Accounting
  Standards Codification subtopic 718-10, Compensation (&ldquo;ASC 718-10&rdquo;) which requires that all share-based payments
  to both employees and non-employees be recognized in the income statement based on their fair values.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Stock based compensation recorded in the unaudited condensed consolidated
  financial statements for the three months ended March 31, 2014 and 2013 were $197,528 and $228,088, respectively.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0"><I>Financial Instruments</I></P>
  
  <P STYLE="font: 10pt TimesNewRomanPSMT-Identity-H; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 1, 2008, the Company adopted FASB ASC 820-10-50, &ldquo;Fair
  Value Measurements.&rdquo; 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:</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: TimesNewRomanPSMT-Identity-H">- </FONT><FONT STYLE="font-size: 10.5pt">Level
  1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities
  inactive markets</FONT><FONT STYLE="font-family: TimesNewRomanPSMT-Identity-H">.</FONT></P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>
  
  <!-- Field: Page; Sequence: 8 -->
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  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FUELSTREAM INC. AND SUBSIDIARIES</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">Notes to the Unaudited Condensed Consolidated
  Financial Statements</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2014</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF
  OPERATIONS (Continued)</P>
  
  <P STYLE="font: 10pt TimesNewRomanPSMT-Identity-H; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">- 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.</P>
  
  <P STYLE="font: 10pt TimesNewRomanPSMT-Identity-H; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">- Level 3 inputs to valuation methodology
  are unobservable and significant to the fair measurement.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-size: 10.5pt">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</FONT><FONT STYLE="font-family: TimesNewRomanPSMT-Identity-H">.</FONT></P>
  
  <P STYLE="font: 8.5pt TimesNewRomanPS-BoldMT; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Recently Accounting
  pronouncements</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>&nbsp;</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has adopted all applicable recently-issued
  accounting pronouncements.&nbsp;The adoption of the accounting pronouncements, including any not yet effective, is not anticipated
  to have a material effect on the financial position or results of operations of the Company.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Reclassification</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>&nbsp;</I></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Certain reclassifications have been made
  to prior periods' data to conform to the current period's presentation. These reclassifications had no effect on reported income
  or losses</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">NOTE 2 - GOING CONCERN CONSIDERATIONS</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying unaudited condensed
  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. As
  reported in its Annual Report on Form 10-K for the year ended December 31, 2013, the Company has an accumulated deficit of
  $55,985,447 from inception of the Company through December 31, 2013. It should be noted that prior to the acquisition of AFI
  as discussed in Note 3, the Company had an accumulated deficit of $32,105,264 as reported in its Annual Report on Form 10-K
  for the year ended December 31, 2011. The accumulated deficit as of March 31, 2014 was $56,915,099 and the total
  stockholders&rsquo; deficit at March 31, 2014 was $6,389,360 and had working capital deficit (current liabilities minus
  current assets) of $6,376,326, continued losses and negative cash flows from operations. These factors combined, raise
  substantial doubt about the Company&rsquo;s ability to continue as a going concern. Management&rsquo;s plans to address and
  alleviate these concerns are as follows:</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company&rsquo;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 brokering 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.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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
  attain profitable operations. The accompanying condensed consolidated financial statements do not include any adjustments relating
  to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result
  from the outcome of these uncertainties.</P>
  
  <P STYLE="font: 10.5pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10.5pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  
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  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FUELSTREAM INC. AND SUBSIDIARIES</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">Notes to the Unaudited Condensed Consolidated
  Financial Statements</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2014</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">NOTE 3 - ACQUISITION</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 18, 2012 the Company
  completed the acquisition of 100% of the equity of Aviation Fuel International, Inc., a Florida corporation
  (&ldquo;AFI&rdquo;). 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. On June 25, 2013, the Company disaffirmed the note payable of $1,000,000. However, until the Company receives a
  judicially approved release, the note payable will remain on the financial statements and is included in the balance sheet as
  of September 30, 2013. Prior to the acquisition, AFI had accumulated notes payable of $1,356,300 and accounts payable of
  $536,610. These liabilities have been recorded in the condensed consolidated balance sheet. These liabilities are due from
  AFI and were not incurred or guaranteed by the parent company, Fuelstream, Inc.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">NOTE 4 - LOSS CONTINGENCIES</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company is involved with various legal
  proceedings as described in Part II Item I of this Form 10-Q. The Company has evaluated these contingencies per the requirements
  of ASC 450-20 (previously SFAS 5, &ldquo;Accounting for Contingencies&rdquo;) and determined that the likelihood of loss from these
  proceedings are remote.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in">NOTE 5 - ACCOUNTS RECEIVABLE</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Accounts receivable at March 31, 2014 and
  December 31, 2013 are as follow:</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">March 31, <BR>2014</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">December 31, 2013</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 56%; text-align: left; padding-bottom: 1pt">Accounts receivable</TD><TD STYLE="width: 8%; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 12%; border-bottom: Black 1pt solid; text-align: right">698,000</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 12%; border-bottom: Black 1pt solid; text-align: right">698,000</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">698,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">698,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Less: allowance on accounts receivable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(670,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(670,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Accounts receivable, net</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">28,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company is involved in disputes with the above accounts receivable
  and has filed a lawsuit.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The accounts payable of $847,265, as of
  March 31, 2014, includes two parties who are seeking motion for entry for final garnishment judgment, The Company has assumed
  these two accounts payable with the acquisition of AFI (refer to note 3). Per court order interest is calculated at rate of
  6% per annum on $325,138 on one of the accounts payable and 18% on $211,471 of the second accounts payable. Accrued interest
  on accounts payable balance as of March 31, 2014 and December 31, 2013 is $142,548 and $129,028, respectively. Interest
  expense of $13,520 was charged to expenses during the three months ended March 31, 2014.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% TimesNewRomanPSMT-Identity-H; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% TimesNewRomanPSMT-Identity-H; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% TimesNewRomanPSMT-Identity-H; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% TimesNewRomanPSMT-Identity-H; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% TimesNewRomanPSMT-Identity-H; margin: 0">&nbsp;</P>
  
  
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  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FUELSTREAM INC. AND SUBSIDIARIES</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">Notes to the Unaudited Condensed Consolidated
  Financial Statements</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2014</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">NOTE 7 - NOTES PAYABLE</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10.5pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD>Notes payable consisted of the following:</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">March 31, <BR>2014</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">December 31, <BR>2013</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 70%; text-align: justify; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">Notes payable, issued on May 6, 2011, unsecured, interest at 10% per annum, due on demand.</P>
                                                                       <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P></TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">59,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">59,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: justify; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">Notes payable, issued on August 25, 2010, unsecured, interest at 10% per annum due on demand.</P>
                                                           <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P></TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">172,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">172,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: justify; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">Notes payable issued on October 18, 2010 to individual, unsecured, interest at 15% per annum, due on demand(1).</P>
                                                           <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P></TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">786,300</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">786,300</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: justify; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">Notes payable issued on October 5, 2013 to individual, unsecured, interest at 8%per annum, due on demand.</P>
                                                           <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P></TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: justify; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">Notes payable issued on October 17, 2013 to a company, unsecured, interest at 16% per annum, due on demand.</P>
                                                           <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P></TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: justify; padding-left: 5.4pt">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.</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: justify; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">Notes payable issued on March 5, 2013 to individual, unsecured, interest at 8% per annum, due on demand.</P>
                                                           <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P></TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">Notes payable issued on July 1, 2013 to company, unsecured, interest at 8% per annum, due on demand</P>
                                                                                <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,810</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">28,082</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total notes payable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,077,110</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,093,382</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less: current portion</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,077,110</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,093,382</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term notes payable</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 5.4pt">Maturities of notes payable are as follows:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 1pt; padding-left: 5.4pt"><P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P><P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0"><u>Year Ending March 31,</u></P></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P><P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">Amount</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt; vertical-align: bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2015</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,077,110</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 2.5pt; padding-left: 5.4pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,077,110</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  <P STYLE="font: 10.5pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Accrued interest on notes payable as
  of March 31, 2014 was $399,442 and as of December 31, 2013 was $363,507. Interest expense of $36,027 has been charged to
  expenses for the three months ended March 31, 2014.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-size: 11pt">1)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 11pt">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.</FONT></TD></TR></TABLE>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  
  <!-- Field: Page; Sequence: 11 -->
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      <DIV STYLE="page-break-before: always; margin-top: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0"></P><P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FUELSTREAM INC. AND SUBSIDIARIES</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">Notes to the Unaudited Condensed Consolidated
  Financial Statements</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2014</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in">NOTE 8 - CONVERTIBLE DEBENTURE/NOTES
  PAYABLE</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10.5pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: center; padding-bottom: 1pt"></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="margin-top: 0; margin-bottom: 0">March 31,</P>
                                                                                 <P STYLE="margin-top: 0; margin-bottom: 0">2014</P></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid">December 31, <BR>2013</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 70%; font-size: 11pt; text-align: justify; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">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 $12,616, respectively).</P>
                                                                                        <P STYLE="margin-top: 0; margin-bottom: 0"><BR></P></TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">105,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">92,384</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-size: 11pt; text-align: left; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">Convertible
  note issued on March 2013, unsecured, interest at 8%, due on October 05, 2013, in default.</P>
                                                                         <P STYLE="margin-top: 0; margin-bottom: 0"><BR></P></TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-size: 11pt; text-align: justify; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">Convertible
  note issued on January 2014, unsecured, interest at 8%, due on November 3, 2014. Unamortized debt discount of $61,496 and $92,011,
  respectively.</P>
                                                                            <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P></TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,004</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">81,989</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-size: 11pt; text-align: justify; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">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 $66,966 and $50,082, respectively.</P>
                                                                            <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P></TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,034</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,918</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-size: 11pt; text-align: justify; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">Convertible
  note issued on October 2013, unsecured, interest at 6%, due on October 13, 2014. Unamortized debt discount of $16,110 and $23,507,
  respectively.</P>
                                                                            <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P></TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,890</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,493</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-size: 11pt; text-align: justify; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">Convertible
  note issued on December 2013 and January 2014, unsecured, interest at 8%, due on December 12, 2014, July 20, 2014 and January
  30, 2015. Unamortized debt discount of $187,545 and $58,299, respectively&nbsp;</P></TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">102,455</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,201</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-size: 11pt; text-align: justify; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">Convertible
  note issued on December 2013, unsecured, interest at 6%, due on December 12, 2014. Unamortized debt discount of $8,394 and $100,317,
  respectively.</P>
                                                                            <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P></TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,606</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,183</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-size: 11pt; text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">Convertible
  debenture issued on January 2, 2014, unsecured, interest at 10%, due on June 2, 2014, convertible into common stock at 60% of
  the bid price on the date of conversion, (less unamortized debt discount of $3,118 and $0, respectively).</P>
                                                                                                 <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8,090</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total notes payable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">276,079</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">231,168</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less: current portion</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(13,034</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,918</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term convertible debenture/notes payable</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">263,045</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">226,250</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify"></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 12 -->
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      <DIV STYLE="page-break-before: always; margin-top: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FUELSTREAM INC. AND SUBSIDIARIES</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">Notes to the Unaudited Condensed Consolidated
  Financial Statements</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2014</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in">NOTE 8 - CONVERTIBLE DEBENTURE/NOTES
  PAYABLE (Continued)</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify; text-indent: -0.75in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify; text-indent: -0.75in"><U>Convertible
  note issued March 21, 2012</U></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify; text-indent: -0.75in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 21, 2012, the Company issued a $250,000
  Convertible Promissory Note which is convertible into 250,000 shares of the Company&rsquo;s common stock at the holder&rsquo;s
  option, or $1.00 per share, and there is no fluctuation in this conversion rate.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 operati<FONT STYLE="background-color: White">ons as interest expense using the effective interest method over
  the term of the note.</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in"><FONT STYLE="font-size: 11pt; background-color: White">On
  December 12, 2013, the Note holder assigned $145,000 of its note to another note holder</FONT><FONT STYLE="font: 9pt TimesNewRomanPSMT; background-color: White">.</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White"><U>Convertible
  debenture July 2013 August 2013, October 2013 and January 2014</U></FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">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&rsquo;s common stock at the holder&rsquo;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.</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">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&rsquo;s common stock at the holder&rsquo;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.</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">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&rsquo;s common stock at the holder&rsquo;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(&ldquo;Default Interest&rdquo;) and the note also has prepayment penalty clause.</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">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&rsquo;s common stock at the holder&rsquo;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 (&ldquo;Default Interest&rdquo;) and the note also has prepayment penalty clause.</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>
  
  <!-- Field: Page; Sequence: 13 -->
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      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FUELSTREAM INC. AND SUBSIDIARIES</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">Notes to the Unaudited Condensed Consolidated
  Financial Statements</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2014</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the three months ended March 31, 2014,
  the Company paid $174,000 for July 2013, August 2013 and October 2013 note.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 <FONT STYLE="background-color: White">derivative. The fair value of the embedded derivative
  was determined using the Binomial Lattice Model based on the following assumptions:</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 50%; font: 11pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 56%; text-align: left">Dividend yield:</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">-0-</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>Volatility</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">268.98</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Risk free rate:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.08</TD><TD STYLE="text-align: left">%</TD></TR>
  </TABLE>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">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 three months ended March
  31, 2014.</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White"><U>Convertible
  debenture December 2013 and January 2014 </U></FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">During
  the three months ended March 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&rsquo;s common stock at
  the holder&rsquo;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 (&ldquo;Default Interest&rdquo;)
  and the note also has prepayment penalty clause.</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">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:</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 50%; font: 11pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 51%; text-align: left">Dividend yield:</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 2%; text-align: left">&nbsp;</TD><TD STYLE="width: 23%; text-align: right">-0-</TD><TD STYLE="width: 1%; text-align: left">%</TD>
      </TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>Volatility</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 11pt; background-color: White">267.19%-268.98</FONT></TD><TD STYLE="text-align: left">%</TD>
      </TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Risk free rate:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 11pt; background-color: #CCFFFF">0.07%-0.10</FONT></TD><TD STYLE="text-align: left">%</TD>
      </TR>
  </TABLE>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 three months ended March 31, 2014.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  
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  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FUELSTREAM INC. AND SUBSIDIARIES</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">Notes to the Unaudited Condensed Consolidated
  Financial Statements</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2014</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><U>Convertible debenture October 2013,
  December 2013 and February 2014 </U></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">During
  the three months ended March 31, 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&rsquo;s common stock at the holder&rsquo;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 (&ldquo;Default Interest&rdquo;) and the note
  also has prepayment penalty clause.</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 t<FONT STYLE="background-color: White">he following assumptions:</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 50%; font: 11pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 56%; text-align: left">Dividend yield:</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">-0-</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>Volatility</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">270.02</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Risk free rate:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.34</TD><TD STYLE="text-align: left">%</TD></TR>
  </TABLE>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: -0.75in"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">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 three months ended March
  31, 2014.</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White"><U>Convertible
  debenture January 2014 </U></FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the three months ended March 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&rsquo;s common stock at the maker&rsquo;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.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company analyzed the convertible
  debts for derivative accounting consideration under ASC 815 &ldquo;Derivatives and Hedging&rdquo; 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.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: White">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The fair value of the described embedded
  derivative for all the convertible note is of $873,831 at March 31, 2014 was determined using the Binomial Lattice Model with
  the following assumptions:</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 50%; font: 11pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 56%; text-align: left">Dividend yield:</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 19%; text-align: right">-0-</TD><TD STYLE="width: 1%; text-align: left">%</TD>
      </TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>Volatility</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">266.94</TD><TD STYLE="text-align: left">%</TD>
      </TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Risk free rate:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 11pt">0.05%-0.41</font></TD><TD STYLE="text-align: left">%</TD>
      </TR>
  </TABLE>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At March 31, 2014, the Company adjusted
  the recorded fair value of the derivative liability to market on both notes resulting in non-cash, non-operating loss of
  $238,381 for the three months ended March 31, 2014.</P>
  
  
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  <P STYLE="font: bold 11pt/115% Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">FUELSTREAM INC. AND SUBSIDIARIES</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">Notes to the Unaudited Condensed Consolidated
  Financial Statements</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2014</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the three months ended March
  31, 2014 and 2013 the Company amortized $335,021 and $45,864, respectively, of beneficial debt discount to the operations as
  interest expense</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">NOTE 9 - CONVERTIBLE NOTES PAYABLE - RELATED PARTIES</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">Convertible Notes payable - related parties consist of the
  following:</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10.5pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">March 31, <BR>2014</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">December 31, <BR>2013</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 69%; font-size: 11pt; text-align: justify; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">Convertible note issued on October 2013, unsecured, interest at 8%, due on demand.</P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P></TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 13%; text-align: right">17,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">17,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-size: 11pt; text-align: justify; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">Convertible note issued on October 2013, unsecured, interest at 8%, due on demand.</P>
                                                                            <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P></TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">194,254</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">194,254</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-size: 11pt; text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt"><P STYLE="margin-top: 0; margin-bottom: 0">Convertible note issued on January 2014, unsecured, interest at 10%, due on demand.</P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">45,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: justify; padding-left: 5.4pt">Total convertible notes payable - related parties</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">256,254</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">211,254</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt">Less: current portion</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(256,254</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(211,254</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: justify; padding-bottom: 2.5pt; padding-left: 5.4pt">Long-term convertible notes payable - related parties</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><U>Convertible debenture October 2013</U></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-size: 11pt">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&rsquo;s common stock at the holder&rsquo;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</FONT><FONT STYLE="font-size: 11.5pt">.</FONT></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company analyzed the convertible debts
  for derivative accounting consideration under ASC 815 &ldquo;Derivatives and Hedging&rdquo; 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.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  
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  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FUELSTREAM INC. AND SUBSIDIARIES</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">Notes to the Unaudited Condensed Consolidated
  Financial Statements</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2014</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><U>Convertible debenture October 1, 2013 </U></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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&rsquo;s common stock at the holder&rsquo;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.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company analyzed the convertible debts
  for derivative accounting consideration under ASC 815 &ldquo;Derivatives and Hedging&rdquo; 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.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><U>Convertible debenture January 1, 2014 </U></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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&rsquo;s common stock at the holder&rsquo;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.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company analyzed the convertible debts
  for derivative accounting consideration under ASC 815 &ldquo;Derivatives and Hedging&rdquo; 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 three months ended March 31, 2014, debt discount
  of $45,000 was amortized.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For the three months ended March 31, 2014
  and 2013, interest expenses charged on the above three notes is $6,306 and $0, respectively. Accrued interest on convertible
  notes payable &ndash; related parties as of March 31, 2014 and December 31, 2013 was $11,149 and $4,843, respectively</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  
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  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FUELSTREAM INC. AND SUBSIDIARIES</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">Notes to the Unaudited Condensed Consolidated
  Financial Statements</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2014</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">NOTE 10 - NOTES PAYABLE - RELATED PARTIES</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.75in">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10.5pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD>Notes payable - related parties consist of the following:</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">March 31, <BR>2014</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">December 31, <BR>2013</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 69%; text-align: justify; padding-left: 5.4pt">Note payable to a shareholder, secured by tangible and intangible assets of the Company, interest at 16% per annum, principal and interest due April 1, 2000, past due.&nbsp;&nbsp;Note is convertible into common stock of the Company at $0.10 per share. Note is in default. (2)</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 13%; text-align: right">1,087,370</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,087,370</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: justify; padding-left: 5.4pt">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: justify; padding-left: 5.4pt">Note payable to a related individual, interest at 8% per annum,past due. Note is in default. (1)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: justify; padding-left: 5.4pt">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt">Notes payable to related individuals, unsecured,
      interest at 10%, due on demand.(3)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">28,500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">28,500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: justify; padding-left: 5.4pt">Total notes payable - related parties</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,115,870</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,115,870</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt">Less: current portion</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,115,870</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,115,870</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: justify; padding-bottom: 2.5pt; padding-left: 5.4pt">Long-term notes payable - related parties</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>&nbsp;<BR>Maturities of notes payable - related parties are as follows:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-bottom: 1pt; padding-left: 5.4pt">&nbsp;<BR>Year Ending March 31,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P><P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">Amount</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: right; padding-bottom: 1pt; padding-left: 5.4pt">2015</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,115,870</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-left: 5.4pt">&nbsp;<BR>Total</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,115,870</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Accrued interest on notes payable &ndash;
  related parties for the three months ended March 31, 2014 and year ended December 31, 2013 was $312,857 and $250,334,
  respectively. During the three months ended March 31, 2014, total interest expense to related party was $63,328.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-size: 11pt">1)</FONT></TD><TD STYLE="text-align: justify; padding-right: 4.5pt"><FONT STYLE="font-size: 11pt">This note was issued for the acquisition of
  AFI on January 28, 2012. As of March 31, 2014 and December 31, 2013, the Company had accrued interest on the note in the amount
  of $173,808 and $154,082, respectively. </FONT></TD></TR></TABLE>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-size: 11pt">2)</FONT></TD><TD STYLE="text-align: justify; padding-right: 4.5pt"><FONT STYLE="font-size: 11pt">This note was originally issued for $450,000.
  During the year ended December 31, 2013, the principle value of $450,000 along with accrued interest of $837,369 was converted
  to two new notes for $1,087,370 and $200,000. During the year 2013 the Company issued 2,100,000 shares of the common stock against
  settlement of the new note of $200,000 </FONT></TD></TR></TABLE>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-size: 11pt">3)</FONT></TD><TD STYLE="text-align: justify; padding-right: 4.5pt"><FONT STYLE="font-size: 11pt">During the year ended December 31, 2013,
                                                                                                       one of the note holder for $15,000 along with accrued interest of $13,300 transfer edits 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.</FONT></TD></TR></TABLE>
  
  
  <!-- Field: Page; Sequence: 18 -->
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      <DIV STYLE="page-break-before: always; margin-top: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FUELSTREAM INC. AND SUBSIDIARIES</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">Notes to the Unaudited Condensed Consolidated
  Financial Statements</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2014</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">NOTE 11 &ndash; FAIR VALUE OF FINANCIAL INSTRUMENTS</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">ASC 820 defines fair value as the price that
  would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
  measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the
  asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs
  can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on
  the observability of those inputs.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following tables set forth by level within
  the fair value hierarchy the Company&rsquo;s financial assets and liabilities that were accounted for at fair value as of March
  31, 2014 and December 31, 2013. As required by ASC 820, a financial instrument&rsquo;s level within the fair value hierarchy is
  based on the lowest level of input that is significant to the fair value measurement. The Company&rsquo;s assessment of the significance
  of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities
  and their placement within the fair value hierarchy levels. There were no transfers between fair value hierarchy levels for the
  periods ended March 31, 2014 and December 31, 2013.</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The carrying amounts reported in the balance
  sheets for cash, accounts receivable, loans payable, and accounts payable and accrued expenses, approximate their fair market value
  based on the short-term maturity of these instruments. The following table presents assets and liabilities that are measured and
  recognized at fair value as of March 31, 2014 on a recurring basis:</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Assets and liabilities at fair value on a recurring
  basis at March 31, 2014:</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Level 1</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Level 2</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Level 3</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Total</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold; padding-left: 5.4pt">Liabilities</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="width: 40%; text-align: left; padding-left: 5.4pt">Derivative liability</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">873,831</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">873,831</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold; padding-left: 5.4pt">Total</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: left">$</TD><TD STYLE="font-weight: bold; text-align: right">873,831</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: left">$</TD><TD STYLE="font-weight: bold; text-align: right">873,831</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table provides a summary of changes
  in fair value of the Company&rsquo;s Level 3 financial liabilities as of March 31, 2014:</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Derivative <BR>Liability</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 79%">Balance, December 31, 2013</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 18%; text-align: right">558,548</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Initial fair value of debt derivatives at note issuances</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">553,663</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">-Embedded debt derivatives</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(238,380</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 1pt">Balance,&nbsp;March 31, 2014</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">873,831</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD STYLE="font-size: 10.5pt">&nbsp;</TD>
      <TD STYLE="font-size: 10.5pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10.5pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Net gain for the period included in earnings relating to the liabilities held at March 31, 2014</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">238,380</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  <P STYLE="font: 10pt TimesNewRomanPSMT; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The carrying value of short term financial
  instruments including cash, accounts payable, accrued expenses and short-term borrowings approximate fair value due to the short
  period of maturity for these instruments. The long-term debentures payable approximates fair value since the related rates of interest
  approximate current market rates.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  
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  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FUELSTREAM INC. AND SUBSIDIARIES</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">Notes to the Unaudited Condensed Consolidated
  Financial Statements</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2014</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">NOTE 12 - COMMON AND PREFERRED STOCK TRANSACTIONS</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.75in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Preferred Stock</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.75in">&nbsp;</P>
  
  <P STYLE="font: 11pt/12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company is authorized to
  issue 200 preferred shares of $0.0001 par value. As of March 31, 2014 and December 31, 2013 the Company has 200 shares of
  preferred stock 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.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Common stock</P>
  
  <P STYLE="font: 11pt/12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt/12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company is authorized to issue 150,000,000
  shares of $0.0001 par value of common stock. As of March 31, 2014 and December 31, 2013 the Company had 53,927,503 and 37,709,552
  shares of common stock as issued and outstanding.</P>
  
  <P STYLE="font: 11pt/12pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the quarter ended March 31, 2014,
  the Company issued an aggregate of 13,167,951 shares of common stock for the conversion of debt and accrued interest of
  $142,746.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the quarter ended March 31, 2014, the
  Company issued an aggregate of 3,050,000 shares of common stock to consultants of the Company. The shares were valued at market
  price on the date of issuance which was $163,500.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">NOTE 13 - OPTIONS AND WARRANTS</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has adopted FASB ASC 718, &ldquo;Share-Based
  Payments&rdquo; (&ldquo;ASC 718&rdquo;) 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.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes the changes
  in options outstanding issued to employees of the Company:</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 75%; font: 11pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="3" STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Number of Shares</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Weighted Average Exercise Price</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 1%; text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="width: 48%; text-align: left; vertical-align: bottom"><font style="font-size: 11pt">Outstanding as of January 1, 2014</font></TD><TD STYLE="width: 1%; text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 23%; text-align: right">370,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 21%; text-align: right">0.01</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: bottom"><font style="font-size: 11pt">Granted</font></TD><TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.65</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: bottom"><font style="font-size: 11pt">Exercised</font></TD><TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: bottom"><font style="font-size: 11pt">Cancelled</font></TD><TD STYLE="padding-bottom: 1pt; text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: bottom"><font style="font-size: 11pt">Outstanding at March 31, 2014</font></TD><TD STYLE="padding-bottom: 1pt; text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">370,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1.34</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-indent: 0.5in">&nbsp;</P>
  
  
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  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FUELSTREAM INC. AND SUBSIDIARIES</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">Notes to the Unaudited Condensed Consolidated
  Financial Statements</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2014</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">Common stock options outstanding and exercisable as of March 31,
  2014 are:</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="11" STYLE="text-align: center; border-bottom: Black 1pt solid">Options Outstanding</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="text-align: center; border-bottom: Black 1pt solid">Options Exercisable</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">Expiration <BR>Date</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Exercise Price</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Number shares outstanding</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Weighted Average Contractual Life (Years)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Number Exercisable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Weighted Average Exercise Price</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: right">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 35%; padding-left: 0.75pt">October 1, 2018</TD><TD STYLE="width: 2%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">0.01</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">70,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">4.5</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">59,977</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">0.01</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-bottom: 1pt; padding-left: 0.75pt">January 2, 2019</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.65</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">300,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.75</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">162,123</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.65</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 2.5pt; padding-left: 0.75pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">370,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">222,100</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the year ended December 31, 2013, the
  Company granted 300,000 stock options with an exercise price of $1.65 out of which 75,000 were immediately vested and balance vesting
  over three years and expiring six years from issuance date.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The fair value of the vested portion of $34,028
  was charged to expenses and additional paid in capital during the three months ended March 31, 2014.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-size: 11pt">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</FONT>:</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10.5pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-size: 11pt; border-bottom: Black 1pt solid"><font style="font-size: 11pt">&nbsp;<b>Significant&nbsp;assumptions:</b></font></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-size: 11pt; text-align: left; text-indent: -0.25in">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Risk-free interest rate at grant date</TD><TD STYLE="font-size: 11pt">&nbsp;</TD>
      <TD STYLE="font-size: 11pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 11pt; text-align: right"><font style="font-size: 11pt">1.04%-0.89</font></TD><TD STYLE="font-size: 11pt; text-align: left">&nbsp;</TD>
      <TD STYLE="font-size: 11pt; text-align: right"><font style="font-size: 11pt">%</font></TD><TD STYLE="font-size: 11pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-size: 11pt; text-align: left; text-indent: -0.25in">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expected stock price volatility</TD><TD STYLE="font-size: 11pt">&nbsp;</TD>
      <TD STYLE="font-size: 11pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 11pt; text-align: right"><font style="font-size: 11pt">199.38%-344.22</font></TD><TD STYLE="font-size: 11pt; text-align: left">&nbsp;</TD>
      <TD STYLE="font-size: 11pt; text-align: right"><font style="font-size: 11pt">%</font></TD><TD STYLE="font-size: 11pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-size: 11pt; text-align: left; text-indent: -0.25in">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expected dividend payout</TD><TD STYLE="font-size: 11pt">&nbsp;</TD>
      <TD STYLE="font-size: 11pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 11pt; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="font-size: 11pt; text-align: left">&nbsp;</TD>
      <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-size: 11pt; text-align: left; text-indent: -0.25in">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expected option life-years</TD><TD STYLE="font-size: 11pt">&nbsp;</TD>
      <TD STYLE="font-size: 11pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 11pt; text-align: right">6</TD><TD STYLE="font-size: 11pt; text-align: left">&nbsp;</TD>
      <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">NOTE 14 &ndash; SUBSEQUENT EVENTS</P>
  
  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">Subsequent to March 31, 2014, the Company issued 6,670,632
  shares of common stock as part of a settlement agreement with debt holders of the Company.</P>
  
  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  
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  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0"><B>ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
  AND RESULTS OF OPERATIONS</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The following
  discussion of the financial condition and results of operations of Fuelstream, Inc. (hereafter, &ldquo;Fuelstream,&rdquo; the
  &ldquo;Company,&rdquo; &ldquo;we,&rdquo; &ldquo;our,&rdquo; or &ldquo;us&rdquo;) should be read in conjunction with the
  Unaudited Financial Statements and related Notes thereto included herein. This discussion may contain forward-looking
  statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
  1934, including, without limitation, statements regarding the Company&rsquo;s expectations, beliefs, intentions, or future
  strategies that are signified by the words &quot;expects,&quot; &quot;anticipates,&quot; &quot;intends,&quot;
  &quot;believes,&quot; or similar language. Actual results could differ materially from those projected in the forward looking
  statements. Prospective investors should carefully consider the information set forth herein, and the Company cautions
  investors that its business and financial performance is subject to substantial risks and uncertainties.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>Overview</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We are 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.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our core business has developed
  as a result of a joint venture and eventual acquisition of Aviation Fuel International, Inc., now a wholly-owned subsidiary of
  the Company (&ldquo;AFI&rdquo;). The Company&rsquo;s principal sources of revenues are expected to result from the gross selling
  price of fuel delivery contracts and associated services. Expenses which comprise the costs of goods sold are expected to 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.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On June 21, 2012 the
  Company entered into an agreement to create a fuel logistics joint venture with South African based Global Airways
  (&quot;Global&quot;). Global is an international air transport organization whose activities cover acquisition,
  refurbishment, heavy maintenance, leasing and chartering of air crafts throughout South Africa. We expect that this
  transaction will expand the Company&rsquo;s international footprint in a market that is developing standardized systems to
  meet the aviation fueling needs of commercial and cargo carriers.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The partnership with Global
  underlines the company's strategic plan to generate new revenue streams by partnering with aircraft leasing and MRO businesses
  and includes the development, operation and management of the fuel storage, supply and logistic operations located in South Africa.
  It is anticipated that the partnership will oversee the logistics delivery of up to 3 Million gallons of Jet-A Fuel per month by
  the end of 2013 if the Company is able to secure sufficient means of financing the purchase of such fuel.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  
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  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our ability to generate
  revenues during the year 2013 and beyond depends substantially upon the Company&rsquo;s resources available in order to develop
  and grow the business of AFI as a supplier of fuel and logistics. Such efforts require significant systems development, marketing
  and personnel costs, which, in turn, require substantial funding. If we are unable to obtain such funding, its ability to generate
  revenues will be significantly impaired and we may be unable to continue operations.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Because the Company has
  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.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Results of Operations</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Following is management&rsquo;s
  discussion of the relevant items affecting results of operations for the three month periods ended March 31, 2014 and 2013.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt/12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>Revenues. </B>The
  Company generated net revenues of $47,414 during the three months ended March 31, 2014 as compared to $-0- for the three
  months ended March 31, 2013. In the future, the Company&rsquo;s sole source of revenue is expected to be related to fuel
  delivery contracts and associated services.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>Cost of Sales.</B>
  Our cost of sales for the three months ended March 31, 2014 was $36,338 as compared to $-0- three months ended March 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 direct correlation to the increase in sales as described
  above.</P>
  
  <P STYLE="font: 11pt/12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt/12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>Selling,
  General and Administrative Expenses. </B>Selling, general and administrative expenses for the three months ended March 31,
  2014 were $450,133 compared to $406,984 during the first quarter of 2013. The increase is mainly the result of increased
  activity in the business and compensation paid during the first quarter of 2014. The Company expects that salaries and
  consulting expenses, that are cash- instead of share-based, will increase as we add personnel to build our fuel brokerage
  business.</P>
  
  <P STYLE="font: 11pt/12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt/12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>Other Income
  (Expense)</B>. The Company had net other expenses of $490,595 for the three months ended March 31, 2014 compared to $172,277
  during the first quarter of 2013. Other expenses incurred were comprised primarily of interest expenses related to notes
  payable including amortization of debt discount and setoff with gain on change in derivative liability. During the three
  months ended March 31, 2014 and 2013, interest expense was $728,975 and $233,727, respectively. Included in interest expense
  was the amortization of debt discount of $380,021 and $45,864 for the three months ended March 31, 2014 and 2013,
  respectively. The gain on change in derivative liability was $238,380 and $61,450 for the three months ended March 31, 2014
  and 2013, respectively.</P>
  
  <P STYLE="font: 11pt/12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt/12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>Net Loss</B>.
  The Company had a net loss of $929,652 for the three months ended March 31, 2014 compared to $579,261 during the first
  quarter of 2013. The increase in net loss was mainly due to increase in interest expenses.</P>
  
  <P STYLE="font: 11pt/12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Liquidity and Capital Resources</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As of March 31, 2014, our
  primary source of liquidity consisted of $-0- 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.</P>
  
  
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  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We have sustained
  significant net losses which have resulted in a total stockholders&rsquo; deficit at March 31, 2014 of $6,389,360 and are
  currently experiencing a substantial shortfall in operating capital which raises doubt about our ability to continue as a
  going concern. We anticipate a net loss for the year ended December 31, 2014 and with the expected cash requirements for the
  coming months, without additional cash inflows from an increase in revenues combined with continued cost-cutting or a receipt
  of cash from capital investment, there is substantial doubt as to the Company&rsquo;s ability to continue operations.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">There is presently no agreement
  in place with any source of financing for the Company and we cannot assure you that the Company 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 the Company and its business, and may cause us
  to cease operations. Consequently, shareholders could incur a loss of their entire investment in the Company.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0 0 0 49.5pt; text-indent: -49.5pt"><B>ITEM 3. QUANTITATIVE AND QUALITATIVE
  DISCLOSURES ABOUT MARKET RISK</B></P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As a smaller reporting company we are not required
  to provide this information.</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10.5pt Times New Roman, Times, Serif; margin: 0 0 0 49.5pt; text-indent: -49.5pt"><B>ITEM 4. CONTROLS AND PROCEDURES</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 49.5pt; text-indent: -49.5pt">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>Management&rsquo;s Evaluation on Disclosure Controls and Procedures</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We maintain disclosure
  controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the <I>Securities
  Exchange Act of 1934</I>, as amended, is recorded, processed, summarized and reported within the time periods specified in the
  Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management,
  to allow for timely decisions regarding required disclosure.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As of March 31, 2014,
  the end of our first quarter, we carried out an evaluation, under the supervision of our Chief Executive Officer and
  Controller, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the
  foregoing, we concluded that our disclosure controls and procedures were not effective as of the end of the period covered by
  this quarterly report. Our board of directors has only one member. We do not have a formal audit committee.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Changes in Internal Control over Financial
  Reporting</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">There have been no
  significant changes in our internal controls over financial reporting that occurred during the quarter ended March 31, 2014
  that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 24 -->
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  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>PART II</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>OTHER INFORMATION</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.5in"><B>ITEM 1. LEGAL
  PROCEEDINGS</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><I>Ryan International Airlines</I>.
  One of our subsidiaries, Aviation Fuel International (&quot;AFI&quot;) is involved in disputes with two airlines: Ryan International
  Airlines, LLC (&quot;Ryan&quot;) and Direct Air. Both aviation fuel customers litigation arise out of disputed amounts for the
  delivery of Jet Fuel. Ryan Air failed to pay for fuelings received from AFI. AFI filed under the commercial lien laws as required
  to secure a lien on the planes fueled in order to protect their receivable due from Ryan. 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, <U>Ryan International
  Airlines, Inc. v. Aviation Flight Services, LLC (&ldquo;AFS&rdquo;) and Aviation Fuel International, Inc., (&ldquo;AFI&rdquo;)</U>,
  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&rsquo;s failure to pay certain Jet Fuel invoices for the delivery of fuel in the amount of $678,000
  plus interest; <U>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</U>, Civil Action Case No. CACE 10-037788-04. AFI also filed the corresponding claims of liens
  under the FAA Aircraft Registration Branch, for each plane, registered and tail wing number listed therein. This action has also
  been recently noticed for been removal to the Federal District Court for the Northern District of Illinois, Bankruptcy Division
  Case No.: 12-80802. In addition, as a result of Ryan&rsquo;s filing a Federal Involuntary Bankruptcy Petition against Aviation
  Flight Services (&ldquo;AFS&rdquo;) 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. However, the obligations for the unpaid fuelings owed to AFI still remain
  outstanding as obligations due to AFI.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><I>Southern Sky Air Tours,
  d/b/a Myrtle Beach Direct Air and Tours (Direct Air)</I>. On or about March 13, 2012, Southern Sky Air Tours, d/b/a Myrtle Beach
  Direct Air and Tours (&ldquo;Direct Air&rdquo;) &#8213; a public charter operator &#8213; 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 action is currently pending before the court, as it relates to the collection of the garnishment.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><I>Russell Adler</I>. 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&rsquo;s complaint alleges various
  causes of action, including indemnification from the Company in respect of litigation described above, damages for breach of Mr.
  Adler&rsquo;s employment contract, fraud, unpaid legal fees, unjust enrichment, and quantum meruit. We believe Mr. Adler&rsquo;s
  claims are without merit and intend to defend the same.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As a result of the non-payment
  for Jet Fuel by AFI customers, AFI&rsquo;s suppliers have filed actions that have resulted in judgment and garnishments, in the
  amount of $330,000. Most of these fuel outstanding fuel delivery charges are secured in the bankruptcy action involving Ryan as
  described above,</P>
  
  
  <!-- Field: Page; Sequence: 25 -->
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  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">through lien filings by both the issuer and
  individual fuel providers. In addition, AFI incurred certain loan and debt obligations for which the Company is attempting to convert
  into common stock of the issuer.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>ITEM 1A. RISK FACTORS</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As a smaller reporting
  company, we are not required to provide the information required by this item.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.5in"><B>ITEM 2. UNREGISTERED
  SALES OF EQUITY SECURITIES AND USE OF PROCEEDS</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">No solicitation was made
  and no underwriting discounts were given or paid in connection with these transactions. The Company believes that the issuance
  of shares and options as described above was exempt from registration with the Securities and Exchange Commission pursuant to Section
  4(2) of the Securities Act of 1933.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>ITEM 3. DEFAULTS UPON SENIOR SECURITIES</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Effective February 1, 2000, the Company sold
  and issued a promissory note secured by certain tangible and intangible assets of the Company (&ldquo;Note&rdquo;) in exchange
  for $450,000 in cash proceeds. As of May 1, 2000, the Company is in default with respect to the Note. The Note and its accompanying
  Security Agreement have been filed as an exhibit to the Company&rsquo;s 1999 annual report on form 10-KSB filed with the Securities
  and Exchange Commission on March 30, 2000.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt; text-indent: -58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in"><B>ITEM 4. MINE SAFETY DISCLOSURES</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Not applicable.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in"><B>ITEM 5. OTHER INFORMATION</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Not applicable.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 26 -->
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  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in"><B>ITEM 6. EXHIBITS</B>&#9;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt; text-indent: -58.5pt">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt; text-indent: -22.5pt">The following documents are filed
  as exhibits to this Form 10-Q:</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt; text-indent: -58.5pt">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>INDEX TO EXHIBITS</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 11pt Times New Roman, Times, Serif; border-collapse: collapse">
  <tr style="vertical-align: top">
      <td style="width: 13%; padding-top: 6.95pt; padding-bottom: 3.7pt; font-size: 9pt"><FONT STYLE="font-size: 11pt"><B><U>Number</U></B></FONT></td>
      <td style="width: 5%; padding-top: 6.95pt; padding-bottom: 3.7pt; font-size: 9pt"><FONT STYLE="font-size: 11pt">&nbsp;</FONT></td>
      <td style="width: 82%; padding-top: 6.95pt; padding-bottom: 3.7pt; font-size: 9pt"><FONT STYLE="font: 11pt Times New Roman, Times, Serif"><B><U>Exhibits</U></B></FONT></td></tr>
  <tr style="vertical-align: top">
      <TD STYLE="padding-right: 6.95pt; padding-bottom: 6pt; padding-left: 6.95pt; font-size: 9pt"><FONT STYLE="font-size: 11pt">3.1</FONT></td>
      <td style="padding-top: 6.95pt; padding-bottom: 3.7pt; font-size: 9pt"><FONT STYLE="font-size: 11pt">&nbsp;</FONT></td>
      <TD STYLE="padding-right: 6.95pt; padding-bottom: 6pt; padding-left: 6.95pt; font-size: 9pt"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">Amended
      and Restated Certificate of Incorporation of Fuelstream, Inc</FONT><FONT STYLE="font-size: 11pt">.</FONT></td></tr>
  <tr style="vertical-align: top">
      <TD STYLE="padding-right: 6.95pt; padding-bottom: 6pt; padding-left: 6.95pt; font-size: 9pt"><FONT STYLE="font-size: 11pt">3.2</FONT></td>
      <td style="padding-top: 6.95pt; padding-bottom: 3.7pt; font-size: 9pt"><FONT STYLE="font-size: 11pt">&nbsp;</FONT></td>
      <TD STYLE="padding-right: 6.95pt; padding-bottom: 6pt; padding-left: 6.95pt; font-size: 9pt"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">Amended
      and Restated Bylaws of Fuelstream, Inc.(1) </FONT></td></tr>
  <tr style="vertical-align: top">
      <td style="padding-right: 6.95pt; padding-bottom: 6pt; padding-left: 6.95pt; font-size: 9pt"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">10.1</FONT></td>
      <td style="padding-right: 6.95pt; padding-bottom: 6pt; padding-left: 6.95pt; font-size: 9pt"><FONT STYLE="font-size: 11pt">&nbsp;</FONT></td>
      <td style="padding-right: 6.95pt; padding-bottom: 6pt; padding-left: 6.95pt; font-size: 9pt"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">Form
      of Indemnification Agreement (2)</FONT></td></tr>
  <tr style="vertical-align: top">
      <td style="padding-right: 6.95pt; padding-bottom: 6pt; padding-left: 6.95pt; font-size: 9pt"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">10.2</FONT></td>
      <td style="padding-right: 6.95pt; padding-bottom: 6pt; padding-left: 6.95pt; font-size: 9pt"><FONT STYLE="font-size: 11pt">&nbsp;</FONT></td>
      <td style="padding-right: 6.95pt; padding-bottom: 6pt; padding-left: 6.95pt; font-size: 9pt"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">2012
      Equity Incentive Plan (2)</FONT></td></tr>
  <tr style="vertical-align: top">
      <TD STYLE="padding-right: 6.95pt; padding-bottom: 6pt; padding-left: 6.95pt; font-size: 9pt"><FONT STYLE="font-size: 11pt">31</FONT></td>
      <td style="padding-top: 0.95pt; padding-bottom: 3.7pt; font-size: 9pt"><FONT STYLE="font-size: 11pt">&nbsp;</FONT></td>
      <TD STYLE="padding-right: 6.95pt; padding-bottom: 6pt; padding-left: 6.95pt; font-size: 9pt"><FONT STYLE="font: 11pt Times New Roman, Times, Serif"><A HREF="ex31_302cert.htm">Certification by Chief Executive Officer, John D. Thomas, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</A>.</FONT></td></tr>
  <tr style="vertical-align: top">
      <TD STYLE="padding-right: 6.95pt; padding-bottom: 6pt; padding-left: 6.95pt; font-size: 9pt"><FONT STYLE="font-size: 11pt">32</FONT></td>
      <td style="padding-top: 0.95pt; padding-bottom: 3.7pt; font-size: 9pt"><FONT STYLE="font-size: 11pt">&nbsp;</FONT></td>
      <TD STYLE="padding-right: 6.95pt; padding-bottom: 6pt; padding-left: 6.95pt; font-size: 9pt"><FONT STYLE="font: 11pt Times New Roman, Times, Serif"><A HREF="ex32_906certification.htm">Certification by Chief Executive Officer, John D. Thomas, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</A>.</FONT></td></tr>
  <tr style="vertical-align: top">
      <td style="border-bottom: black 1pt solid; padding-top: 6.95pt; padding-bottom: 3.7pt; font-size: 9pt">&nbsp;</td>
      <td style="padding-top: 6.95pt; padding-bottom: 3.7pt; font-size: 11pt">&nbsp;</td>
      <td style="padding-top: 6.95pt; padding-bottom: 3.7pt; font-size: 9pt">&nbsp;</td></tr>
  </table>
  <P STYLE="font: 9pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 9pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 8pt Times New Roman, Times, Serif; margin: 0">(1) Filed as an Exhibit to the Company&rsquo;s Current Report on
  Form 8-K, filed on June 17, 2011.</P>
  
  <P STYLE="font: 8pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 8pt Times New Roman, Times, Serif; margin: 0">(2) Filed as an Exhibit to the Company&rsquo;s Current Report on
  Form 8-K, filed on September 18, 2012.</P>
  
  <P STYLE="font: 8pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 8pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 8pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 58.5pt"><B>&nbsp;</B></P>
  
  
  <!-- Field: Page; Sequence: 27 -->
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  <P STYLE="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>SIGNATURES</B></P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 238.5pt; text-indent: -238.5pt">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Pursuant to the requirements of the Securities
  Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font-family: Times New Roman, Times, Serif">
  <tr style="vertical-align: top">
      <td style="width: 46%; padding-right: 5.4pt; padding-left: 5.4pt; font-size: 11pt">&nbsp;</td>
      <td style="width: 3%; padding-right: 5.4pt; padding-left: 5.4pt; font-size: 11pt">&nbsp;</td>
      <td style="width: 51%; padding-right: 5.4pt; padding-left: 5.4pt">
          <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">FUELSTREAM, INC.</P>
          <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P></td></tr>
  <tr style="vertical-align: top">
      <td style="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 11pt"><font style="font: 11pt Times New Roman, Times, Serif">Date: May 20, 2014</font></td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 11pt">&nbsp;</td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 11pt"><font style="font: 11pt Times New Roman, Times, Serif">BY: <u>/s/ John D. Thomas</u>__________________</font></td></tr>
  <tr style="vertical-align: top">
      <td style="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 11pt">&nbsp;</td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 11pt">&nbsp;</td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 11pt"><font style="font: 11pt Times New Roman, Times, Serif">John D. Thomas</font></td></tr>
  <tr style="vertical-align: top">
      <td style="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 11pt">&nbsp;</td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 11pt">&nbsp;</td>
      <td style="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 11pt"><font style="font: 11pt Times New Roman, Times, Serif">Chief Executive Officer</font></td></tr>
  </table>
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
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metadata_documents: [{"type": "10-Q", "sequence": "1", "filename": "f10q_flst033114.htm", "description": "FORM 10-Q", "secsgml_size_bytes": 282582}]
metadata_filer: {"company-data": {"conformed-name": "Fuelstream INC", "cik": "0001024920", "assigned-sic": "7389", "irs-number": "870561426", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-54941", "film-number": "14857129"}, "business-address": {"street1": "10757 RIVER FRONT PARKWAY", "street2": "SUITE 125", "city": "SOUTH JORDAN", "state": "UT", "zip": "84095", "phone": "8018162500"}, "mail-address": {"street1": "10757 RIVER FRONT PARKWAY", "street2": "SUITE 125", "city": "SOUTH JORDAN", "state": "UT", "zip": "84095"}, "former-company": [{"former-conformed-name": "SPORTSNUTS  INC", "date-changed": "20011113"}, {"former-conformed-name": "SPORTSNUTS COM INTERNATIONAL INC", "date-changed": "19990420"}, {"former-conformed-name": "DURWOOD INC /UT", "date-changed": "19961015"}]}
text: UNITED STATES
  SECURITIES AND EXCHANGE COMMISSION
  Washington, D.C. 20549
  ______________________
  FORM 10-Q
  [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the
  Securities Exchange Act of 1934
  For the quarterly period ended March 31,
  2014
  OR
  [ ] Transition Report Pursuant to 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.
  (Name of Small Business Issuer in Its Charter)
  Delaware
  87-0561426
  (State
          or Other Jurisdiction
  of Incorporation
          or Organization)
  (IRS Employer
  Identification
          No.)
  510 Shotgun Road, Suite 110
  Fort Lauderdale, Florida
  33326
  (Address of Principal Executive Offices)
  (Zip Code)
  (954) 423-5345
  (Issuer's Telephone Number)
  (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
  Table of Contents
  Indicate by check mark whether the registrant
  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
  months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
  requirements for the past 90 days. Yes [X] No [ ]
  Indicate by check mark
  whether the registrant has submitted electronically and posted on its corporate Web site, 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 [X] No []
  Indicate by check mark whether the registrant
  is a large accelerated filer, an accelerated filer, non-accelerated filer, or a smaller reporting company. See definition of "large
  accelerated filer,""accelerated filer," and "smaller reporting company in Rule 12b-2 of the Exchange Act.
  (Check one):
  Large Accelerated Filer [  ]
  Accelerated Filer [  ]
  Non-Accelerated Filer [  ]
  Smaller reporting company [X]
  Indicate by check mark whether the registrant
  is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
  APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
  PROCEEDINGS DURING THE PRECEDING FIVE YEARS
  Check whether the registrant has filed all documents
  and reports required to be filed by Sections 12, 13, or 15(d) of the Exchange Act of 1934 after the distribution of securities
  under a plan confirmed by a court. Yes [ ] No [ ]
  APPLICABLE ONLY TO CORPORATE ISSUERS
  State the number of shares outstanding of each
  of the issuer's classes of common equity, as of the latest practicable date. As of May 19, 2014, the Company had outstanding
  60,598,135 shares of common stock, par value $0.0001 per share.
  Table of Contents
  2
  PART
  I
  FINANCIAL
  INFORMATION
  The
  Condensed
  Consolidated
  Financial Statements of the Company are prepared as of
  March 31, 2014.
  ITEM
  1. FINANCIAL STATEMENTS REQUIRED BY FORM 10-Q
  CONTENTS
  Condensed Consolidated Balance Sheets as of March 31, 2014 (unaudited) and December 31, 2013
  4
  Condensed Consolidated Statements of Operations for the three months period ended March 31, 2014 and 2013(unaudited)
  5
  Condensed Consolidated Statements of Cash
      Flows for the three months period ended March 31, 2014 and 2013 (unaudited)
  6
  Notes to the Unaudited Condensed Consolidated Financial Statements
  7
  Table of Contents
  3
  FUELSTREAM, INC.
  Condensed Consolidated Balance Sheets
  ASSETS
  March 31,
  December 31,
  2014
  2013
  (Unaudited)
  CURRENT ASSETS
  Cash and cash equivalents
  $
  —
  $
  —
  Accounts receivable, net of allowance
  28,000
  28,000
  Total Current Assets
  28,000
  28,000
  TOTAL ASSETS
  $
  28,000
  $
  28,000
  LIABILITIES AND STOCKHOLDERS' DEFICIT
  CURRENT LIABILITIES
  Accounts payable
  $
  847,265
  $
  826,832
  Due to related parties
  56,973
  56,973
  Accrued expenses
  913,978
  788,771
  Convertible debenture/notes payable - short term (net of
  discount of $276,664 and $-0-, respectively)
  263,045
  226,250
  Convertible notes payable - related parties
  256,254
  211,254
  Notes payable
  1,077,110
  1,093,382
  Notes payable - related parties
  2,115,870
  2,115,870
  Derivative liability
  873,831
  558,548
  Total Current Liabilities
  6,404,326
  5,877,880
  LONG TERM LIABILITIES
  Convertible debenture/notes payable (net of discount of
  $66,966 and $262,006, respectively)
  13,034
  4,918
  Derivative liability
  —
  —
  Total Long Term Liabilities
  13,034
  4,918
  TOTAL LIABILITIES
  6,417,360
  5,882,798
  STOCKHOLDERS' DEFICIT
  Preferred stock, $0.0001 par value; 200 shares
  authorized, 200 and 200 shares issued and outstanding
  —
  —
  Common stock, $0.0001 par value; 150,000,000
  and 50,000,000 shares authorized, 53,927,503 and
  37,709,552 shares issued and outstanding, respectively
  5,393
  3,771
  Additional paid-in capital
  50,520,346
  50,126,878
  Accumulated deficit
  (56,915,099
  )
  (55,985,447
  )
  Total Stockholders' Deficit
  (6,389,360
  )
  (5,854,798
  )
  TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
  $
  28,000
  $
  28,000
  The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
  Table of Contents
  4
  FUELSTREAM, INC.
  Condensed Consolidated Statements of Operations
  (Unaudited)
  For the Three Months Ended
  March 31,
  2014
  2013
  NET SALES
  $
  47,414
  $
  —
  COST OF SALES
  36,338
  —
  GROSS MARGIN
  11,076
  —
  SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES
  Selling, general and administrative
  450,133
  406,984
  Total Selling, General and
  Administrative Expenses
  450,133
  406,984
  LOSS FROM OPERATIONS
  (439,057
  )
  (406,984
  )
  OTHER INCOME (EXPENSES)
  Gain (Loss) on change in fair value of derivative liability
  238,380
  61,450
  Interest expense (including amortization of debt discount
  of $380,021, and $45,864, respectively)
  (728,975
  )
  (233,727
  )
  Total Other (Expenses)
  (490,595
  )
  (172,277
  )
  LOSS BEFORE INCOME TAXES
  (929,652
  )
  (579,261
  )
  INCOME TAX EXPENSE
  —
  —
  NET LOSS
  $
  (929,652
  )
  $
  (579,261
  )
  BASIC AND DILUTED:
  Net loss per common share
  $
  (0.02
  )
  $
  (0.04
  )
  Weighted average shares outstanding
  45,309,365
  15,251,259
  The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
  Table of Contents
  5
  FUELSTREAM, INC.
  Condensed Consolidated Statements of Cash Flows
  (Unaudited)
  For the Three Months Ended
  March 31,
  2014
  2013
  CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss
  $
  (929,652
  )
  $
  (579,261
  )
  Adjustments to reconcile net loss to net
  cash used in operating activities:
  Common stock issued for services and finance expenses
  163,500
  —
  Stock based compensation
  34,028
  228,088
  Operating expenses incurred by noteholders on behalf of the Company
  71,259
  10,000
  Non-cash interest expenses
  221,664
  106,062
  Change in fair value of derivative liability
  (238,380
  )
  (61,449
  )
  Amortization of debt discounts
  380,021
  45,864
  Changes in operating assets and liabilities:
  Accounts payable and accrued expenses
  191,610
  117,537
  Net Cash Used in Operating Activities
  (105,950
  )
  (133,159
  )
  CASH FLOWS FROM INVESTING ACTIVITIES:
  —
  —
  CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from notes payable
  279,950
  90,000
  Payments on notes payable
  (174,000
  )
  —
  Net Cash Provided by Financing Activities
  105,950
  90,000
  NET DECREASE IN CASH AND CASH EQUIVALENTS
  $
  —
  $
  (43,159
  )
  CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
  —
  43,159
  CASH AND CASH EQUIVALENTS, END OF PERIOD
  $
  —
  $
  —
  SUPPLEMENTAL CASH FLOW INFORMATION
  Cash Payments For:
  Interest
  $
  1,725
  $
  100
  Income taxes
  $
  —
  $
  —
  Non-cash investing and financing activity:
  Initial derivative liability on convertible note payable
  $
  553,664
  $
  206,062
  Beneficial conversion feature on convertible note credited to additional paid in capital
  $
  54,816
  $
  —
  Common stock issued for settlement of notes payable and accrued interest
  $
  142,746
  $
  —
  Reclassification from due to related party to convertible note payable - related party
  $
  45,000
  $
  —
  The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
  Table of Contents
  6
  FUELSTREAM INC. AND SUBSIDIARIES
  Notes to the Unaudited Condensed Consolidated
  Financial Statements
  March 31, 2014
  NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF
  OPERATIONS
  Basis of Presentation
  The accompanying unaudited condensed consolidated
  financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission.
  Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally
  accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished
  in the interim consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in
  the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the
  disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim consolidated
  financial statements be read in conjunction with the Company's audited financial statements and notes thereto included in
  its Form 10-K for the year ended December 31, 2013. Operating results for the three months ended March 31, 2014 are not necessarily
  indicative of the results to be expected for the year ending December 31, 2014.
  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.
  Use of Estimates
  The preparation of unaudited condensed
  consolidated 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 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.
  Revenue Recognition
  The Company recognizes revenue in
  accordance with Accounting Standards Codification subtopic 605-10,Revenue Recognition ("ASC 605-10")
  which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an
  arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is
  reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature
  of the selling prices of the products delivered and the collectability of those amounts.
  Table of Contents
  7
  FUELSTREAM INC. AND SUBSIDIARIES
  Notes to the Unaudited Condensed Consolidated
  Financial Statements
  March 31, 2014
  NOTE 1 -	SIGNIFICANT ACCOUNTING POLICIES AND NATURE
  OF OPERATIONS (Continued)
  ASC605-10 incorporates Accounting
  Standards Codification subtopic 605-25, Multiple-Element Arrangements("ASC 605-25"). ASC 605-25 addresses
  accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use
  assets.
  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
  Cash
  The Company considers cash to consist of cash on hand and temporary
  investments having an original maturity of 90 days or less that are readily convertible into cash.
  Income Taxes
  The Company has adopted Accounting Standards
  Codification subtopic 740-10, Income Taxes ("ASC 740-10") which requires the recognition of deferred tax liabilities
  and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns.
  Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and
  tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
  Temporary differences between taxable income reported for financial reporting purposes and income tax purposes consist primarily
  of timing differences such as deferred officers' compensation and stock based compensation accounting.
  Net Loss per share
  The Company complies with accounting and
  disclosure requirements of FASB ASC 260, "Earnings Per Share." Net loss per ordinary share is computed by dividing
  net loss applicable to ordinary shareholders by the weighted average number of ordinary shares outstanding for the period. Common
  share equivalents are excluded from the diluted earnings (loss) per share computation if their effect is anti-dilutive.
  Stock based compensation
  The Company follows Accounting
  Standards Codification subtopic 718-10, Compensation ("ASC 718-10") which requires that all share-based payments
  to both employees and non-employees be recognized in the income statement based on their fair values.
  Stock based compensation recorded in the unaudited condensed consolidated
  financial statements for the three months ended March 31, 2014 and 2013 were $197,528 and $228,088, respectively.
  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
  inactive markets
  .
  Table of Contents
  8
  FUELSTREAM INC. AND SUBSIDIARIES
  Notes to the Unaudited Condensed Consolidated
  Financial Statements
  March 31, 2014
  NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF
  OPERATIONS (Continued)
  - 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
  .
  Recently Accounting
  pronouncements
  The Company has adopted all applicable recently-issued
  accounting pronouncements. The adoption of the accounting pronouncements, including any not yet effective, is not anticipated
  to have a material effect on the financial position or results of operations of the Company.
  Reclassification
  Certain reclassifications have been made
  to prior periods' data to conform to the current period's presentation. These reclassifications had no effect on reported income
  or losses
  NOTE 2 - GOING CONCERN CONSIDERATIONS
  The accompanying unaudited condensed
  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. As
  reported in its Annual Report on Form 10-K for the year ended December 31, 2013, the Company has an accumulated deficit of
  $55,985,447 from inception of the Company through December 31, 2013. It should be noted that prior to the acquisition of AFI
  as discussed in Note 3, the Company had an accumulated deficit of $32,105,264 as reported in its Annual Report on Form 10-K
  for the year ended December 31, 2011. The accumulated deficit as of March 31, 2014 was $56,915,099 and the total
  stockholders' deficit at March 31, 2014 was $6,389,360 and had working capital deficit (current liabilities minus
  current assets) of $6,376,326, 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 brokering 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 accomplish the plans described in the preceding paragraph and eventually
  attain profitable operations. The accompanying condensed consolidated financial statements do not include any adjustments relating
  to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result
  from the outcome of these uncertainties.
  Table of Contents
  9
  FUELSTREAM INC. AND SUBSIDIARIES
  Notes to the Unaudited Condensed Consolidated
  Financial Statements
  March 31, 2014
  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. On June 25, 2013, the Company disaffirmed the note payable of $1,000,000. However, until the Company receives a
  judicially approved release, the note payable will remain on the financial statements and is included in the balance sheet as
  of September 30, 2013. Prior to the acquisition, AFI had accumulated notes payable of $1,356,300 and accounts payable of
  $536,610. These liabilities have been recorded in the condensed consolidated balance sheet. These liabilities are due from
  AFI and were not incurred or guaranteed by the parent company, Fuelstream, Inc.
  NOTE 4 - LOSS CONTINGENCIES
  The Company is involved with various legal
  proceedings as described in Part II Item I of this Form 10-Q. The Company has evaluated these contingencies per the requirements
  of ASC 450-20 (previously SFAS 5, "Accounting for Contingencies") and determined that the likelihood of loss from these
  proceedings are remote.
  NOTE 5 - ACCOUNTS RECEIVABLE
  Accounts receivable at March 31, 2014 and
  December 31, 2013 are as follow:
  March 31,
  2014
  December 31, 2013
  Accounts receivable
  $
  698,000
  $
  698,000
  698,000
  698,000
  Less: allowance on accounts receivable
  (670,000
  )
  (670,000
  )
  Accounts receivable, net
  $
  28,000
  28,000
  The Company is involved in disputes with the above accounts receivable
  and has filed a lawsuit.
  NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
  The accounts payable of $847,265, as of
  March 31, 2014, includes two parties who are seeking motion for entry for final garnishment judgment, The Company has assumed
  these two accounts payable with the acquisition of AFI (refer to note 3). Per court order interest is calculated at rate of
  6% per annum on $325,138 on one of the accounts payable and 18% on $211,471 of the second accounts payable. Accrued interest
  on accounts payable balance as of March 31, 2014 and December 31, 2013 is $142,548 and $129,028, respectively. Interest
  expense of $13,520 was charged to expenses during the three months ended March 31, 2014.
  Table of Contents
  10
  FUELSTREAM INC. AND SUBSIDIARIES
  Notes to the Unaudited Condensed Consolidated
  Financial Statements
  March 31, 2014
  NOTE 7 - NOTES PAYABLE
  Notes payable consisted of the following:
  March 31,
  2014
  December 31,
  2013
  Notes payable, issued on May 6, 2011, unsecured, interest at 10% per annum, due on demand.
  $
  59,500
  $
  59,500
  Notes payable, issued on August 25, 2010, unsecured, interest at 10% per annum due on demand.
  172,500
  172,500
  Notes payable issued on October 18, 2010 to individual, unsecured, interest at 15% per annum, due on demand(1).
  786,300
  786,300
  Notes payable issued on October 5, 2013 to individual, unsecured, interest at 8%per annum, due on demand.
  28,500
  28,500
  Notes payable issued on October 17, 2013 to a company, unsecured, interest at 16% per annum, due on demand.
  5,000
  5,000
  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.
  14,000
  6,000
  Notes payable issued on March 5, 2013 to individual, unsecured, interest at 8% per annum, due on demand.
  7,500
  7,500
  Notes payable issued on July 1, 2013 to company, unsecured, interest at 8% per annum, due on demand
  3,810
  28,082
  Total notes payable
  1,077,110
  1,093,382
  Less: current portion
  (1,077,110
  )
  (1,093,382
  )
  Long-term notes payable
  $
  —
  $
  —
  Maturities of notes payable are as follows:
  Year Ending March 31,
  Amount
  2015
  $
  1,077,110
  Total
  $
  1,077,110
  Accrued interest on notes payable as
  of March 31, 2014 was $399,442 and as of December 31, 2013 was $363,507. Interest expense of $36,027 has been charged to
  expenses for the three months ended March 31, 2014.
  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 Contents
  11
  FUELSTREAM INC. AND SUBSIDIARIES
  Notes to the Unaudited Condensed Consolidated
  Financial Statements
  March 31, 2014
  NOTE 8 - CONVERTIBLE DEBENTURE/NOTES
  PAYABLE
  March 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).
  $
  105,000
  $
  92,384
  Convertible
  note issued on March 2013, unsecured, interest at 8%, due on October 05, 2013, in default.
  10,000
  10,000
  Convertible
  note issued on January 2014, unsecured, interest at 8%, due on November 3, 2014. Unamortized debt discount of $61,496 and $92,011,
  respectively.
  17,004
  81,989
  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 $66,966 and $50,082, respectively.
  13,034
  4,918
  Convertible
  note issued on October 2013, unsecured, interest at 6%, due on October 13, 2014. Unamortized debt discount of $16,110 and $23,507,
  respectively.
  13,890
  6,493
  Convertible
  note issued on December 2013 and January 2014, unsecured, interest at 8%, due on December 12, 2014, July 20, 2014 and January
  30, 2015. Unamortized debt discount of $187,545 and $58,299, respectively
  102,455
  3,201
  Convertible
  note issued on December 2013, unsecured, interest at 6%, due on December 12, 2014. Unamortized debt discount of $8,394 and $100,317,
  respectively.
  6,606
  32,183
  Convertible
  debenture issued on January 2, 2014, unsecured, interest at 10%, due on June 2, 2014, convertible into common stock at 60% of
  the bid price on the date of conversion, (less unamortized debt discount of $3,118 and $0, respectively).
  8,090
  —
  Total notes payable
  276,079
  231,168
  Less: current portion
  (13,034
  )
  (4,918
  )
  Long-term convertible debenture/notes payable
  $
  263,045
  $
  226,250
  Table of Contents
  12
  FUELSTREAM INC. AND SUBSIDIARIES
  Notes to the Unaudited Condensed Consolidated
  Financial Statements
  March 31, 2014
  NOTE 8 - CONVERTIBLE DEBENTURE/NOTES
  PAYABLE (Continued)
  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 operati
  ons 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
  .
  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.
  Table of Contents
  13
  FUELSTREAM INC. AND SUBSIDIARIES
  Notes to the Unaudited Condensed Consolidated
  Financial Statements
  March 31, 2014
  During the three months ended March 31, 2014,
  the Company paid $174,000 for July 2013, August 2013 and October 2013 note.
  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
  %
  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 three months ended March
  31, 2014.
  Convertible
  debenture December 2013 and January 2014
  During
  the three months ended March 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 three months ended March 31, 2014.
  Table of Contents
  14
  FUELSTREAM INC. AND SUBSIDIARIES
  Notes to the Unaudited Condensed Consolidated
  Financial Statements
  March 31, 2014
  Convertible debenture October 2013,
  December 2013 and February 2014
  During
  the three months ended March 31, 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 t
  he 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 three months ended March
  31, 2014.
  Convertible
  debenture January 2014
  During the three months ended March 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 fair value of the described embedded
  derivative for all the convertible note is of $873,831 at March 31, 2014 was determined using the Binomial Lattice Model with
  the following assumptions:
  Dividend yield:
  -0-
  %
  Volatility
  266.94
  %
  Risk free rate:
  0.05%-0.41
  %
  At March 31, 2014, the Company adjusted
  the recorded fair value of the derivative liability to market on both notes resulting in non-cash, non-operating loss of
  $238,381 for the three months ended March 31, 2014.
  Table of Contents
  15
  FUELSTREAM INC. AND SUBSIDIARIES
  Notes to the Unaudited Condensed Consolidated
  Financial Statements
  March 31, 2014
  During the three months ended March
  31, 2014 and 2013 the Company amortized $335,021 and $45,864, respectively, of beneficial debt discount to the operations as
  interest expense
  NOTE 9 - CONVERTIBLE NOTES PAYABLE - RELATED PARTIES
  Convertible Notes payable - related parties consist of the
  following:
  March 31,
  2014
  December 31,
  2013
  Convertible note issued on October 2013, unsecured, interest at 8%, due on demand.
  $
  17,000
  $
  17,000
  Convertible note issued on October 2013, unsecured, interest at 8%, due on demand.
  194,254
  194,254
  Convertible note issued on January 2014, unsecured, interest at 10%, due on demand.
  45,000
  —
  Total convertible notes payable - related parties
  256,254
  211,254
  Less: current portion
  (256,254
  )
  (211,254
  )
  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 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.
  Table of Contents
  16
  FUELSTREAM INC. AND SUBSIDIARIES
  Notes to the Unaudited Condensed Consolidated
  Financial Statements
  March 31, 2014
  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.
  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 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 three months ended March 31, 2014, debt discount
  of $45,000 was amortized.
  For the three months ended March 31, 2014
  and 2013, interest expenses charged on the above three notes is $6,306 and $0, respectively. Accrued interest on convertible
  notes payable – related parties as of March 31, 2014 and December 31, 2013 was $11,149 and $4,843, respectively
  Table of Contents
  17
  FUELSTREAM INC. AND SUBSIDIARIES
  Notes to the Unaudited Condensed Consolidated
  Financial Statements
  March 31, 2014
  NOTE 10 - NOTES PAYABLE - RELATED PARTIES
  Notes payable - related parties consist of the following:
  March 31,
  2014
  December 31,
  2013
  Note payable to a shareholder, secured by tangible and intangible assets of the Company, interest at 16% per annum, 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. (2)
  $
  1,087,370
  $
  1,087,370
  Note payable to a related individual, interest at 8% per annum,past due. Note is in default. (1)
  1,000,000
  1,000,000
  Notes payable to related individuals, unsecured,
      interest at 10%, due on demand.(3)
  28,500
  28,500
  Total notes payable - related parties
  2,115,870
  2,115,870
  Less: current portion
  (2,115,870
  )
  (2,115,870
  )
  Long-term notes payable - related parties
  $
  —
  $
  —
  Maturities of notes payable - related parties are as follows:
  Year Ending March 31,
  Amount
  2015
  $
  2,115,870
  Total
  $
  2,115,870
  Accrued interest on notes payable –
  related parties for the three months ended March 31, 2014 and year ended December 31, 2013 was $312,857 and $250,334,
  respectively. During the three months ended March 31, 2014, total interest expense to related party was $63,328.
  1)
  This note was issued for the acquisition of
  AFI on January 28, 2012. As of March 31, 2014 and December 31, 2013, the Company had accrued interest on the note in the amount
  of $173,808 and $154,082, respectively.
  2)
  This note was originally issued for $450,000.
  During the year ended December 31, 2013, the principle value of $450,000 along with accrued interest of $837,369 was converted
  to two new notes for $1,087,370 and $200,000. During the year 2013 the Company issued 2,100,000 shares of the common stock against
  settlement of the new note of $200,000
  3)
  During the year ended December 31, 2013,
                                                                                                       one of the note holder for $15,000 along with accrued interest of $13,300 transfer edits 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.
  Table of Contents
  18
  FUELSTREAM INC. AND SUBSIDIARIES
  Notes to the Unaudited Condensed Consolidated
  Financial Statements
  March 31, 2014
  NOTE 11 – FAIR VALUE OF FINANCIAL INSTRUMENTS
  ASC 820 defines fair value as the price that
  would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
  measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the
  asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs
  can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on
  the observability of those inputs.
  The following tables set forth by level within
  the fair value hierarchy the Company's financial assets and liabilities that were accounted for at fair value as of March
  31, 2014 and December 31, 2013. As required by ASC 820, a financial instrument's level within the fair value hierarchy is
  based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance
  of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities
  and their placement within the fair value hierarchy levels. There were no transfers between fair value hierarchy levels for the
  periods ended March 31, 2014 and December 31, 2013.
  The carrying amounts reported in the balance
  sheets for cash, accounts receivable, loans payable, and accounts payable and accrued expenses, approximate their fair market value
  based on the short-term maturity of these instruments. The following table presents assets and liabilities that are measured and
  recognized at fair value as of March 31, 2014 on a recurring basis:
  Assets and liabilities at fair value on a recurring
  basis at March 31, 2014:
  Level 1
  Level 2
  Level 3
  Total
  Liabilities
  Derivative liability
  —
  —
  $
  873,831
  $
  873,831
  Total
  —
  —
  $
  873,831
  $
  873,831
  The following table provides a summary of changes
  in fair value of the Company's Level 3 financial liabilities as of March 31, 2014:
  Derivative
  Liability
  Balance, December 31, 2013
  $
  558,548
  Initial fair value of debt derivatives at note issuances
  553,663
  -Embedded debt derivatives
  (238,380
  )
  Balance, March 31, 2014
  $
  873,831
  Net gain for the period included in earnings relating to the liabilities held at March 31, 2014
  $
  238,380
  The carrying value of short term financial
  instruments including cash, accounts payable, accrued expenses and short-term borrowings approximate fair value due to the short
  period of maturity for these instruments. The long-term debentures payable approximates fair value since the related rates of interest
  approximate current market rates.
  Table of Contents
  19
  FUELSTREAM INC. AND SUBSIDIARIES
  Notes to the Unaudited Condensed Consolidated
  Financial Statements
  March 31, 2014
  NOTE 12 - COMMON AND PREFERRED STOCK TRANSACTIONS
  Preferred Stock
  The Company is authorized to
  issue 200 preferred shares of $0.0001 par value. As of March 31, 2014 and December 31, 2013 the Company has 200 shares of
  preferred stock issued and outstanding. Although the preferred stock carries no dividend, distribution, liquidation or
  conversion rights, each share of preferred stock carries ten million (10,000,000) votes and holders of our preferred stock
  are able to vote together with our common stockholders on all matters. Consequently, the holder of our preferred stock is
  able to unilaterally control the election of our board of directors and, ultimately, the direction of our Company.
  Common stock
  The Company is authorized to issue 150,000,000
  shares of $0.0001 par value of common stock. As of March 31, 2014 and December 31, 2013 the Company had 53,927,503 and 37,709,552
  shares of common stock as issued and outstanding.
  During the quarter ended March 31, 2014,
  the Company issued an aggregate of 13,167,951 shares of common stock for the conversion of debt and accrued interest of
  $142,746.
  During the quarter ended March 31, 2014, the
  Company issued an aggregate of 3,050,000 shares of common stock to consultants of the Company. The shares were valued at market
  price on the date of issuance which was $163,500.
  NOTE 13 - 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, 2014
  370,000
  $
  0.01
  Granted
  —
  1.65
  Exercised
  —
  —
  Cancelled
  —
  —
  Outstanding at March 31, 2014
  370,000
  $
  1.34
  Table of Contents
  20
  FUELSTREAM INC. AND SUBSIDIARIES
  Notes to the Unaudited Condensed Consolidated
  Financial Statements
  March 31, 2014
  Common stock options outstanding and exercisable as of March 31,
  2014 are:
  Options Outstanding
  Options Exercisable
  Expiration
  Date
  Exercise Price
  Number shares outstanding
  Weighted Average Contractual Life (Years)
  Number Exercisable
  Weighted Average Exercise Price
  October 1, 2018
  $
  0.01
  70,000
  4.5
  59,977
  $
  0.01
  January 2, 2019
  1.65
  300,000
  4.75
  162,123
  1.65
  Total
  370,000
  222,100
  During the year ended December 31, 2013, the
  Company granted 300,000 stock options with an exercise price of $1.65 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 of $34,028
  was charged to expenses and additional paid in capital during the three months ended March 31, 2014.
  The fair value
  of these stock options granted and the significant assumptions used to determine those fair values, using a Black-Scholes option-pricing
  model are as follows
  :
  Significant assumptions:
  Risk-free interest rate at grant date
  1.04%-0.89
  %
  Expected stock price volatility
  199.38%-344.22
  %
  Expected dividend payout
  —
  Expected option life-years
  6
  NOTE 14 – SUBSEQUENT EVENTS
  Subsequent to March 31, 2014, the Company issued 6,670,632
  shares of common stock as part of a settlement agreement with debt holders of the Company.
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  21
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
  AND RESULTS OF OPERATIONS
  The following
  discussion of the financial condition and results of operations of Fuelstream, Inc. (hereafter, "Fuelstream," the
  "Company," "we," "our," or "us") should be read in conjunction with the
  Unaudited Financial Statements and related Notes thereto included herein. This discussion may contain forward-looking
  statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
  1934, including, without limitation, statements regarding the Company's expectations, beliefs, intentions, or future
  strategies that are signified by the words "expects," "anticipates," "intends,"
  "believes," or similar language. Actual results could differ materially from those projected in the forward looking
  statements. Prospective investors should carefully consider the information set forth herein, and the Company cautions
  investors that its business and financial performance is subject to substantial risks and uncertainties.
  Overview
  We are 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 core business has developed
  as a result of a joint venture and eventual acquisition of Aviation Fuel International, Inc., now a wholly-owned subsidiary of
  the Company ("AFI"). The Company's principal sources of revenues are expected to result from the gross selling
  price of fuel delivery contracts and associated services. Expenses which comprise the costs of goods sold are expected to 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 June 21, 2012 the
  Company entered into an agreement to create a fuel logistics joint venture with South African based Global Airways
  ("Global"). Global is an international air transport organization whose activities cover acquisition,
  refurbishment, heavy maintenance, leasing and chartering of air crafts throughout South Africa. We expect that this
  transaction will expand the Company's international footprint in a market that is developing standardized systems to
  meet the aviation fueling needs of commercial and cargo carriers.
  The partnership with Global
  underlines the company's strategic plan to generate new revenue streams by partnering with aircraft leasing and MRO businesses
  and includes the development, operation and management of the fuel storage, supply and logistic operations located in South Africa.
  It is anticipated that the partnership will oversee the logistics delivery of up to 3 Million gallons of Jet-A Fuel per month by
  the end of 2013 if the Company is able to secure sufficient means of financing the purchase of such fuel.
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  22
  Our ability to generate
  revenues during the year 2013 and beyond depends substantially upon the Company's resources available in order to develop
  and grow the business of AFI as a supplier of fuel and logistics. Such efforts require significant systems development, marketing
  and personnel costs, which, in turn, require substantial funding. If we are unable to obtain such funding, its ability to generate
  revenues will be significantly impaired and we may be unable to continue operations.
  Because the Company has
  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.
  Results of Operations
  Following is management's
  discussion of the relevant items affecting results of operations for the three month periods ended March 31, 2014 and 2013.
  Revenues.
  The
  Company generated net revenues of $47,414 during the three months ended March 31, 2014 as compared to $-0- for the three
  months ended March 31, 2013. In the future, the Company's sole source of revenue is expected to be related to fuel
  delivery contracts and associated services.
  Cost of Sales.
  Our cost of sales for the three months ended March 31, 2014 was $36,338 as compared to $-0- three months ended March 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 direct correlation to the increase in sales as described
  above.
  Selling,
  General and Administrative Expenses.
  Selling, general and administrative expenses for the three months ended March 31,
  2014 were $450,133 compared to $406,984 during the first quarter of 2013. The increase is mainly the result of increased
  activity in the business and compensation paid during the first quarter of 2014. The Company expects that salaries and
  consulting expenses, that are cash- instead of share-based, will increase as we add personnel to build our fuel brokerage
  business.
  Other Income
  (Expense)
  . The Company had net other expenses of $490,595 for the three months ended March 31, 2014 compared to $172,277
  during the first quarter of 2013. Other expenses incurred were comprised primarily of interest expenses related to notes
  payable including amortization of debt discount and setoff with gain on change in derivative liability. During the three
  months ended March 31, 2014 and 2013, interest expense was $728,975 and $233,727, respectively. Included in interest expense
  was the amortization of debt discount of $380,021 and $45,864 for the three months ended March 31, 2014 and 2013,
  respectively. The gain on change in derivative liability was $238,380 and $61,450 for the three months ended March 31, 2014
  and 2013, respectively.
  Net Loss
  .
  The Company had a net loss of $929,652 for the three months ended March 31, 2014 compared to $579,261 during the first
  quarter of 2013. The increase in net loss was mainly due to increase in interest expenses.
  Liquidity and Capital Resources
  As of March 31, 2014, our
  primary source of liquidity consisted of $-0- 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.
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  23
  We have sustained
  significant net losses which have resulted in a total stockholders' deficit at March 31, 2014 of $6,389,360 and are
  currently experiencing a substantial shortfall in operating capital which raises doubt about our ability to continue as a
  going concern. We anticipate a net loss for the year ended December 31, 2014 and with the expected cash requirements for the
  coming months, without additional cash inflows from an increase in revenues combined with continued cost-cutting or a receipt
  of cash from capital investment, there is substantial doubt as to the Company's ability to continue operations.
  There is presently no agreement
  in place with any source of financing for the Company and we cannot assure you that the Company 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 the Company and its business, and may cause us
  to cease operations. Consequently, shareholders could incur a loss of their entire investment in the Company.
  ITEM 3. QUANTITATIVE AND QUALITATIVE
  DISCLOSURES ABOUT MARKET RISK
  As a smaller reporting company we are not required
  to provide this information.
  ITEM 4. CONTROLS AND PROCEDURES
  Management's Evaluation on Disclosure Controls and Procedures
  We maintain disclosure
  controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the
  Securities
  Exchange Act of 1934
  , as amended, is recorded, processed, summarized and reported within the time periods specified in the
  Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management,
  to allow for timely decisions regarding required disclosure.
  As of March 31, 2014,
  the end of our first quarter, we carried out an evaluation, under the supervision of our Chief Executive Officer and
  Controller, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the
  foregoing, we concluded that our disclosure controls and procedures were not effective as of the end of the period covered by
  this quarterly report. Our board of directors has only one member. We do not have a formal audit committee.
  Changes in Internal Control over Financial
  Reporting
  There have been no
  significant changes in our internal controls over financial reporting that occurred during the quarter ended March 31, 2014
  that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
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  24
  PART II
  OTHER INFORMATION
  ITEM 1. 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. Ryan Air failed to pay for fuelings received from AFI. AFI filed under the commercial lien laws as required
  to secure a lien on the planes fueled in order to protect their receivable due from Ryan. 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
  plus interest;
  Aviation Fuel International v. Ryan International Airlines, Inc., a Kansas corporation, Wells Fargo Bank Northwest,
  Trustee N.A., a Utah corporation, RUBLOFF 757-MSN24794LLC, an Illinois limited liability company, RYAN 767 LLC, an Illinois limited
  liability company, AFT TRUST SUB I, a Delaware corporation, RYAN 767 N123 LLC, an Illinois limited liability company, and RUBLOFF
  440 LLC, an Illinois corporation
  , Civil Action Case No. CACE 10-037788-04. AFI also filed the corresponding claims of liens
  under the FAA Aircraft Registration Branch, for each plane, registered and tail wing number listed therein. This action has also
  been recently noticed for been removal to the Federal District Court for the Northern District of Illinois, Bankruptcy Division
  Case No.: 12-80802. In addition, as a result of Ryan's filing a Federal Involuntary Bankruptcy Petition against Aviation
  Flight Services ("AFS") on June 10, 2010, Case No.: 10-27313-JKO, (S.D. of Fla.), our subsidiary AFI, also filed and
  was discharged as a creditor in the amount of $269,000. However, the obligations for the unpaid fuelings owed to AFI still remain
  outstanding as obligations due to AFI.
  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 action is currently pending before the court, as it relates to the collection of the garnishment.
  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 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.
  As a result of the non-payment
  for Jet Fuel by AFI customers, AFI's suppliers have filed actions that have resulted in judgment and garnishments, in the
  amount of $330,000. Most of these fuel outstanding fuel delivery charges are secured in the bankruptcy action involving Ryan as
  described above,
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  25
  through lien filings by both the issuer and
  individual fuel providers. In addition, AFI incurred certain loan and debt obligations for which the Company is attempting to convert
  into common stock of the issuer.
  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 1A. RISK FACTORS
  As a smaller reporting
  company, we are not required to provide the information required by this item.
  ITEM 2. UNREGISTERED
  SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  No solicitation was made
  and no underwriting discounts were given or paid in connection with these transactions. The Company believes that the issuance
  of shares and options as described above was exempt from registration with the Securities and Exchange Commission pursuant to Section
  4(2) of the Securities Act of 1933.
  ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  Effective February 1, 2000, the Company sold
  and issued a promissory note secured by certain tangible and intangible assets of the Company ("Note") in exchange
  for $450,000 in cash proceeds. As of May 1, 2000, the Company is in default with respect to the Note. The Note and its accompanying
  Security Agreement have been filed as an exhibit to the Company's 1999 annual report on form 10-KSB filed with the Securities
  and Exchange Commission on March 30, 2000.
  ITEM 4. MINE SAFETY DISCLOSURES
  Not applicable.
  ITEM 5. OTHER INFORMATION
  Not applicable.
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  26
  ITEM 6. EXHIBITS
  The following documents are filed
  as exhibits to this Form 10-Q:
  INDEX TO EXHIBITS
  Number
  Exhibits
  3.1
  Amended
      and Restated Certificate of Incorporation of Fuelstream, Inc
  .
  3.2
  Amended
      and Restated Bylaws of Fuelstream, Inc.(1)
  10.1
  Form
      of Indemnification Agreement (2)
  10.2
  2012
      Equity Incentive Plan (2)
  31
  Certification by Chief Executive Officer, John D. Thomas, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  .
  32
  Certification by Chief Executive Officer, John D. Thomas, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  .
  (1) Filed as an Exhibit to the Company's Current Report on
  Form 8-K, filed on June 17, 2011.
  (2) Filed as an Exhibit to the Company's Current Report on
  Form 8-K, filed on September 18, 2012.
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  27
  SIGNATURES
  Pursuant to the requirements of the Securities
  Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
  FUELSTREAM, INC.
  Date: May 20, 2014
  BY:
  /s/ John D. Thomas
  __________________
  John D. Thomas
  Chief Executive Officer
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  28