UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

S ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2013~~2014

£ ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission file number: 000-30215

LUSTROS INC.

(Exact name of registrant as specified in its charter)

Utah	45-5313260
(state or other jurisdiction of incorporation or organization)	(I.R.S. Employer I.D. No.)

9025 Carlton Hills Blvd. Suite A Santee, CA 92071 (Address of principal executive offices)

619-449-4800
(Issuer's telephone number)

_____________________________________

(former name or former address, if changes since last report)

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 preceding 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.

S£ Yes £ S 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). S Yes £ No

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

Large Accelerated Filer £ Accelerated Filer £ Non-Accelerated Filer £ Smaller Reporting Company S☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

£ Yes S £ No S

As of ~~November~~March 1125, ~~2013~~ 2015 there were 91121,~~794~~160,~~346~~ 193 shares of the registrant’s $0.001 par value Common Stock outstanding.

LUSTROS INC.

TABLE OF CONTENTS

		PAGE
PART I	FINANCIAL INFORMATION	3
ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1921
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2123
ITEM 4.	CONTROLS AND PROCEDURES	2123
PART II	OTHER INFORMATION	2124
ITEM 1.	LEGAL PROCEEDINGS	2124
ITEM 1A.	RISK FACTORS	2225
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	2226
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	2326
ITEM 4.	MINING SAFETY DISCLOSURE	2326
ITEM 5.	OTHER INFORMATION	2326
ITEM 6.	EXHIBITS	2326

Special Note Regarding Forward-Looking Statements

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Lustros Inc. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Included in these factors are our risk factors included in our Form 10-K for the year ended December 31, ~~2012~~2013. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

*Please note that throughout this Quarterly Report, and unless otherwise noted or the context otherwise required, the words "we," "our," "us," or the "Company," refer to Lustros, Inc. (“Lustros”) and its consolidated subsidiaries.

PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

INDEX
Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012 (unaudited)	4
Consolidated Balance Sheets as of March 31, 2014 and December 31, 2013 (unaudited)	4
Consolidated Statements of Operations for the three and nine months ended September 30, 2013, for the three months ended September 30, 2012, from inception (January 26, 2012) to September 30, 2012, and from inception (January 26, 2012) to September 30, 2013 (unaudited)	5
Consolidated Statements of Operations for the three months ended March 31, 2014 and 2013 (unaudited)	5
Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30, 2013, for the three months ended September 30, 2012, from inception (January 26, 2012) to September 30, 2012, and from inception (January 26, 2012) to September 30, 2013 (unaudited)	5
Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2014 and 2013 (unaudited)	5
Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 from inception (January 26, 2012) to September 30, 2012, and for the period from inception (January 26, 2012) to September 30, 2013 (unaudited)	6
Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013 (unaudited)	6
Notes to Consolidated Financial Statements	7

Lustros, Inc. and Subsidiaries

(AConsolidated ~~Development~~Balance ~~Stage Company)~~Sheets

~~Consolidated Balance Sheets~~(Unaudited)

(Unaudited)

	March 31, 2014			December 31, 2013
ASSETS
Current Assets
Cash	$	91,750		$	615,469
Other receivables		–			915
Prepaid expenses		145,856			124,770
Inventory		91,939			–
Total current assets		329,545			741,154

Non-Current Assets
Fixed asset, net		3,124,665			3,486,711
Land		508,601			534,596
Total non-current assets		3,633,266			4,021,307

TOTAL ASSETS	$	3,962,811		$	4,762,461

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable	$	1,583,192		$	1,792,529
Convertible notes payable, net of unamortized discount of $8,643 and $21,066 respectively		43,139			50,113
Accrued rents Congo		697,858			465,239
Derivative liability from convertible notes		46,740			39,474
Notes payable		358,251			351,183
Notes payable - related party		3,117			2,467
Total current liabilities		2,732,297			2,701,005

Long Term Liabilities
Convertible notes payable - related party, net of unamortized discount of $41,519 and $0 respectively		258,481			–
Asset retirement obligations		446,633			433,794
Total long term liabilities		705,114			433,794

Total liabilities		3,437,411			3,134,799

Stockholders' Equity
Preferred stock, $.001 par value, 10,000,000 shares authorized, 401,876 and 441,416 shares issued and outstanding respectively		402			441
Common stock, $.001 par value, 250,000,000 shares authorized, 101,251,993 and 97,169,346 issued and outstanding respectively		101,252			97,169
Additional paid-in capital		12,456,891			12,384,745
Accumulated other comprehensive income		2,224,006			1,971,935
Accumulated deficit		(12,349,825	)		(11,204,535	)
Total Lustros, Inc. stockholders' equity		2,432,726			3,249,755
Non-controlling interest		(1,907,326	)		(1,622,093	)
Total stockholders' equity		525,400			1,627,662
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	3,962,811		$	4,762,461

	September 30, 2013			December 31, 2012
ASSETS
Current Assets
Cash	$	179,471		$	277,565
Other receivables		123			102
Prepaid expenses		11,145			224,777
Inventory		117,024			142,385
VAT tax receivable		692,434			573,541
Total current assets		1,000,197			1,218,369
Non-Current Assets
Fixed assets, net		4,646,036			4,647,816
Mining property		3,539,768			3,720,011
Land		556,693			585,040
Congo right to use		360,000			360,000
Total non-current assets		9,102,497			9,312,867
TOTAL ASSETS	$	10,102,694		$	10,531,236
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable	$	1,307,130		$	1,000,500
Convertible note payable, net of unamortized discount of $205,463 and $141,411 respectively		316,064			205,589
Notes payable		349,944			684,292
Notes payable - related party		1,090,727			1,825,929
Total current liabilities		3,063,865			3,716,310
Long Term Liabilities
Embedded derivative liability		2,909,604			–
Asset retirement obligations		401,760			396,474
Total long term liabilities		3,311,364			396,474
Total liabilities		6,375,229			4,112,784
Stockholders' Equity
Preferred stock, $.001 par value, 10,000,000 shares authorized, 291,376 and no shares issued and outstanding respectively		291			–
Common stock, $.001 par value, 100,000,000 shares authorized, 91,389,488 and 88,369,618 issued and outstanding respectively		91,389			88,369
Additional paid-in capital		6,932,207			6,234,946
Non-controlling interest		1,154,621			2,005,189
Accumulated other comprehensive income		932,206			1,217,828
Deficit accumulated during development stage		(5,383,249	)		(3,127,879	)
Total stockholders' equity		3,727,465			6,418,452
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	10,102,694		$	10,531,236

See notes to consolidated financial statements.

~~See notes to consolidated financial statements.~~4

4Lustros, Inc. and Subsidiaries

~~Lustros,~~Consolidated ~~Inc.~~Statements of Operations

(~~A Development Stage Company~~Unaudited)

Consolidated Statements of Operations

	For the Three Months Ended March 31, 2014			For the Three Months Ended March 31, 2013

Revenue	$	–		$	–
Cost of goods sold		–			–
Gross profit		–			–

Operating expenses
General and administrative		423,114			239,959
Depreciation		169,055			31,029
Foreign exchange losses		272,214			–
Payroll		209,108			400,956
Legal and accounting		64,218			73,189
Asset impairment		25,233			–
Congo rent expense		232,619			–
Mining costs		–			21,353
Research & development		–			49
Total expenses		1,395,561			766,535

Loss from operations		(1,395,561	)		(766,535	)

Net change in fair value of derivative liability		(7,266	)		–
Interest expense		(27,696	)		(226,028	)

Net loss	$	(1,430,523	)	$	(992,563	)

Less net loss attributable to non-controlling interest	$	(285,233	)	$	(211,056	)
Net loss attributable to Lustros, Inc.	$	(1,145,290	)	$	(781,507	)

Loss per share, basic	$	(0.01	)	$	(0.01	)

Weighted average common shares, basic		98,427,334			89,018,101

Consolidated Statements of Comprehensive Income (~~Unaudited~~Loss)

	For the Three Months Ended
	For the Three Months Ended March 31, 2014			For the Three Months Ended March 31, 2013
	September 30, 2013			September 30, 2012			For the Nine Months Ended September 30, 2013			Inception, (January 26, 2012) to September 30, 2012			Inception, (January 26, 2012) to September 30, 2013
Net loss	$	(1,430,523	)	$	(992,563	)
Revenue	$	66,580		$	2,959		$	66,580		$	54,900		$	121,482
Gain on foreign currency conversion		252,071			113,034
Cost of goods sold		(168,228	)		–			(168,228	)		–			(168,228	)
Total comprehensive loss	$	(1,178,452	)	$	(879,529	)
Gross profit		(101,648	)		2,959			(101,648	)		54,900			(46,746	)
Comprehensive loss attributable to non-controlling interest	$	(184,405	)	$	(98,022	)
Operating expenses
Comprehensive loss attributable to Lustros, Inc.	$	(994,047	)	$	(781,507	)
General and administrative		409,420			725,285			1,001,076			1,637,984			3,051,874
Depreciation		88,138			25,894			205,265			57,821			290,977
Payroll		311,766			419,730			1,094,763			1,045,508			2,535,732
Legal and accounting		127,832			389,767			282,404			489,721			810,882
Mining costs		9,585			58,210			41,919			127,568			229,668
Research & development		2,726			557			3,391			4,244			80,259
Total expenses		949,467			1,619,443			2,628,818			3,362,846			6,999,392
Loss from operations		(1,051,115	)		(1,616,484	)		(2,730,466	)		(3,307,946	)		(7,046,138	)
Net change in fair value of preferred stock derivative liability		(172,208	)		–			94,386			–			94,386
Foreign tax expense		(186,079	)		–			(186,079	)		–			(186,079	)
Interest expense		(49,006	)		(2,859	)		(283,780	)		(4,023	)		(355,101	)
Net loss	$	(1,458,408	)	$	(1,619,343	)	$	(3,105,939	)	$	(3,311,969	)	$	(7,492,931	)
Net loss attributable to minority interest	$	(368,848	)	$	(430,177	)	$	(850,568	)	$	(953,747	)	$	(2,109,682	)
Net loss attributable to Lustros, Inc.	$	(1,089,560	)	$	(1,189,166	)	$	(2,255,371	)	$	(2,358,222	)	$	(5,383,249	)
Loss per share, basic	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.06	)
Weighted average common shares, basic		90,955,692			70,575,212			90,099,911			55,076,483

~~Consolidated~~See ~~Statements~~notes ofto ~~Comprehensive~~consolidated ~~Income~~financial ~~(Loss)~~statements.

	For the Three Months Ended
	September 30, 2013			September 30, 2012			For the Nine Months Ended September 30, 2013			Inception, (January 26, 2012) to September 30, 2012			Inception, (January 26, 2012) to September 30, 2013
Net loss	$	(1,458,408	)	$	(1,619,343	)	$	(3,105,939	)	$	(3,311,969	)	$	(7,492,931	)
Gain/(loss) on foreign currency conversion		14,359			1,112,697			(285,622	)		1,331,745			932,206
Total comprehensive loss	$	(1,444,049	)	$	(506,646	)	$	(3,391,561	)	$	(1,980,224	)	$	(6,560,725	)

~~See~~Lustros, ~~notes~~Inc. toand ~~consolidated financial statements.~~Subsidiaries

5(A Development Stage Company)

~~Lustros,~~Consolidated ~~Inc.~~Statements of Cash Flows

(~~A Development Stage Company~~Unaudited)

Consolidated Statements of Cash Flows

	For the Three Months Ended March 31, 2014			For the Three Months Ended March 31, 2013

Cash flows from operating activities
Net loss	$	(1,430,523	)	$	(992,563	)
Adjustments to reconcile net loss to cash used in operating activities
Depreciation and amortization		169,055			31,029
Amortization of original issued discount		12,363			183,169
Accrued rents Congo		232,619			–
Loss on sale of assets		31,777			–
Loss on settlement of debt		13,066			–
Interest paid with stock		802			–
Loss on change in fair value of convertible note derivative liability		7,266			–
Changes in operating assets and liabilities
Increase in accrued interest included in notes payable		–			5,732
Decrease/(increase) in receivables		868			–
Decrease/(increase) in prepaid expenses		(25,134	)		(897	)
Decrease/(increase) in inventory		(91,939	)		(8,571	)
Decrease/(increase) in tax receivable		–			(58,177	)
Increase/(decrease) in asset retirement obligation		31,898			15,954
Increase/(decrease) in accounts payable		(143,696	)		111,922
Total cash used in operations		(1,191,578	)		(712,402	)

Cash flows from investing activities
Purchase of fixed assets		–			(139,510	)
Total cash used in investing activities		–			(139,510	)

Cash from financing activities
Proceeds from convertible notes payable, related parties		300,000			–
Repayments on convertible notes		–			(40,587	)
Proceeds from notes payable, related parties		650			221,509
Proceeds from the issuance of common stock		–			550,000
Total cash provided by financing activities		300,650			730,922

Effect of foreign currency exchange rate on cash		367,209			(7,513	)

DECREASE IN CASH		(523,719	)		(128,503	)

BEGINNING CASH		615,469			277,565

ENDING CASH	$	91,750		$	149,062

Supplemental disclosure of cash flow information:
Interest paid	$	–		$	14,818
Income taxes paid	$	–		$	–

Supplemental disclosure of non-cash investing activities:
Related party notes transferred to convertible notes	$	–		$	(270,988	)
Convertible notes settled with common stock	$	(20,000	)	$	–
Shares issued in conversion of convertible note		128,647			426,141

~~(Unaudited)~~See notes to consolidated financial statements.

	For the Nine Months Ended September 30, 2013			Inception (January 26, 2012) to September 30, 2012			Inception, (January 26, 2012) to September 30, 2013
Cash flows from operating activities
Net loss	$	(3,105,939	)	$	(3,311,969	)	$	(7,492,931	)
Non-cash transactions to reconcile net loss to cash used in operations
Depreciation and amortization		205,265			57,821			290,977
Amortization of original issued discount		277,056			–			324,645
Gain on change in fair value of preferred stock derivative liability		(94,386	)		–			(94,386	)
Cash used in operations
Increase in accrued interest included in notes payable		5,424			5,732			11,156
Decrease/(increase) in other receivable		(21	)		–			(21	)
Decrease/(increase) in prepaid expenses		213,633			(122,801	)		37,379
Decrease/(increase) in inventory		25,361			–			25,361
Decrease/(increase) in VAT tax receivable		(118,893	)		–			(118,893	)
Increase in asset retirement obligation		5,286			–			20,146
Increase/(decrease) in accounts payable		306,630			998,338			1,240,332
Total cash used in operations		(2,280,584	)		(2,372,879	)		(5,738,236	)
Cash flows from investing activities
Acquisition of Sulfatos Chile by Bluestone		–			892,294			892,294
Cash received in Power Save merger		–			38,572			38,572
Disposal of Power Save operations		–			(20,642	)		(20,642	)
Purchase of fixed assets		(440,985	)		(1,101,414	)		(1,271,661	)
Total cash used in investing activities		(440,985	)		(191,190	)		(361,437	)
Cash from financing activities
Proceeds from convertible notes		69,000			–			69,000
Proceeds from notes payable		–			79,454			79,454
Repayment of notes payable		(40,587	)		(707,476	)		(86,850	)
Proceeds from notes payable, related parties		296,798			2,913,453			3,408,179
Repayment of notes payable, related parties		(309,700	)		(1,726,964	)		(1,695,164	)
Proceeds from the issuance of preferred stock		1,926,000			–			1,926,000
Proceeds from the issuance of common stock		550,000			1,921,000			2,471,000
Total cash provided by financing activities		2,491,511			2,479,467			6,171,619
Effect of foreign currency exchange rate on cash		131,964			333,261			107,525
INCREASE/(DECREASE) IN CASH		(98,094	)		248,659			179,471
BEGINNING CASH		277,565			–			–
ENDING CASH	$	179,471		$	248,659		$	179,471
Supplemental disclosure of cash flow information:
Interest paid	$	–		$	(4,023	)	$	–
Income taxes paid	$	–		$	–		$	–
Supplemental disclosure of non-cash investing activities:
Related party notes transferred to convertible notes	$	(520,988	)	$	–		$	(820,988	)
Shares issued in conversion on convertible note		756,569			–			916,569
Related party notes settled with subscription to common stock	$	–		$	1,529,000		$	1,100,000
Related party notes settled with subscription to preferred stock	$	472,000		$	–		$	901,000
Fair value of deemed derivative liability	$	3,003,998		$	–		$	3,003,998
Net assets acquired in reverse merger with Power Save	$	–		$	(63,207	)	$	(63,207	)
Net assets acquired in Sulfatos Chile acquisition	$	–		$	5,068,464		$	5,068,464
Net assets disposed of in Power Save sale	$	–		$	62,138		$	62,138
Effet of reverse merger with Power Save	$	–		$	(24,635	)	$	(24,635	)
Contributed capital in Sulfatos Chile acquisition	$	–		$	2,696,455		$	2,696,455
Contributed capital in Power Save sale	$	–		$	41,496		$	41,496

~~See~~LUSTROS, ~~notes to consolidated financial statements~~INC.

6(A Development Stage Company)

~~LUSTROS,~~NOTES ~~INC.~~TO CONSOLIDATED

(AFINANCIAL ~~Development Stage Company)~~STATEMENTS

~~NOTES~~Note TO1 ~~UNAUDITED~~- ~~CONSOLIDATED~~Organization and Principal Activities

~~FINANCIAL~~Organization ~~STATEMENTS~~and Description of Business

~~Note~~Lustros, 1Inc. ("Lustros", and together with its consolidated subsidiaries, the "Company"), formerly Power-Save ~~Organization~~Energy Company, is a Utah corporation formed in 1980. The Company is a pre-revenue development stage company that intends to market and ~~Principal~~sell ~~Activities~~high quality food-grade copper sulfate obtained by processing copper ores and tailings at Company-owned processing facilities in Chile.

~~Organization~~On March 9, 2012, Lustros acquired all of the outstanding capital stock and ~~Description~~rights to acquire capital stock of ~~Business~~Bluestone, S.A. a Chilean corporation (“Bluestone”), in exchange for 60,000,000 shares of its common stock (the "Bluestone Acquisition"). Bluestone's principal asset is a 60% equity interest in Sulfatos Chile, S.A. ("Sulfatos"), which it acquired in February 2012.

~~Lustros,~~For ~~Inc.~~accounting ~~("Lustros"~~purposes, ~~and~~ ~~together~~the ~~with~~Company ~~its~~has treated ~~consolidated subsidiaries,~~ the ~~"Company"),~~Bluestone ~~formerly~~Acquisition ~~Power-Save~~as ~~Energy~~a ~~Company,~~reverse isacquisition awith ~~Utah~~Bluestone ~~corporation formed~~as inthe ~~1980.~~acquiring ~~The~~entity ~~Company~~and isLustros aas ~~pre-revenue~~the ~~development~~acquired ~~stage~~entity. As ~~company~~a ~~that~~result, ~~intends~~the toCompany's ~~market~~financial ~~and~~statements ~~sell~~reflect ~~high~~the ~~quality~~financial ~~food-grade copper~~information ~~sulfate~~of ~~obtained~~Bluestone byprior ~~processing~~to ~~copper~~March ~~ores~~9, 2012 and ~~tailings~~the atcombined entity ~~Company-owned~~on ~~processing~~and ~~facilities~~after inMarch ~~Chile~~9, 2012.

On March 925, 2012, ~~Lustros~~the ~~acquired~~Company ~~all of~~sold the assets ~~outstanding~~(including ~~capital~~the ~~stock~~"Power-Save" ~~and~~name) ~~rights~~of toits ~~acquire~~renewable ~~capital~~energy ~~stock~~and ofenergy ~~Bluestone,~~savings ~~S.A.~~product abusiness ~~Chilean corporation (“Bluestone”),~~ in ~~exchange~~which ~~for~~it ~~60,000,000~~had engaged ~~shares~~prior ofto ~~its common stock (~~the "Bluestone Acquisition~~").~~, ~~Bluestone's~~to ~~principal~~the ~~asset~~former ismanagement ~~a 60%~~of ~~equity~~the ~~interest~~Company in(the ~~Sulfatos~~"Power ~~Chile,~~Save ~~S.A. (~~Sale"~~Sulfatos"~~)~~, which it acquired in February 2012~~.

~~For~~On ~~accounting~~June ~~purposes~~25, 2012, the Company ~~has~~ ~~treated~~created ~~the Bluestone Acquisition as~~ a new ~~reverse~~subsidiary, ~~acquisition~~Mineraltus ~~with~~S.A. ~~Bluestone~~(“Mineraltus”), asa ~~the~~Chilean ~~acquiring~~corporation, ~~entity~~to ~~and~~extract ~~Lustros~~copper asfrom the ~~acquired entity.~~tailings As(waste aproducts) of ~~result,~~expired ~~the~~copper ~~Company's~~mines ~~financial~~to ~~statements~~secure ~~reflect~~ the ~~financial~~raw ~~information~~materials ~~of Bluestone prior~~ to ~~March~~manufacture 9high quality, ~~2012~~feed-grade ~~and the~~copper ~~combined~~sulfate. ~~entity~~The onCompany ~~and~~owns ~~after~~80% of ~~March 9, 2012~~Mineraltus.

On ~~March~~August 2522, 2012, the Company ~~sold~~formed ~~the~~Lustros ~~assets~~Chile ~~(including~~SpA ~~the~~as ~~"Power-Save"~~a ~~name)~~100% ofowned ~~its~~subsidiary, ~~renewable~~for ~~energy~~the ~~and~~purpose ~~energy~~of ~~savings~~acting ~~product~~as ~~business~~a inChilean ~~which~~entity ~~it had~~holding ~~engaged~~company ~~prior~~for to the ~~Bluestone Acquisition, to the former management of the~~ Company ~~(the "Power Save Sale"). See~~’s ~~Note~~Chilean 4subsidiaries -Sulfatos, ~~Bluestone~~Mineraltus, ~~Acquisition~~ and ~~Power Save Sale~~Bluestone.

OnThe ~~June~~Company ~~25,~~shut ~~2012,~~down its copper sulfate processing plant in December 2014 pending resolution of certain legal matters including the ~~Company~~bankruptcy ~~created~~of our Sulfatos Chile S.A. asubsidiary. ~~new~~The Company’s subsidiary, ~~Mineraltus~~Sulfatos Chile S.A. ~~(“Mineraltus”),~~is aengaged ~~Chilean~~in ~~corporation,~~litigation tobefore ~~extract~~the ~~copper~~4th ~~from~~Civil ~~the~~Trial ~~tailings~~Court ~~(waste~~of Santiago, ~~products)~~Docket ofNo ~~expired~~25496-2014, ~~copper~~in ~~mines~~the tomatter ~~secure~~of ~~the~~Oryxeio ~~raw~~Ingenieria ~~materials~~Limitada tov. ~~manufacture~~Sulfatos ~~high~~Chile ~~quality~~S.A. On December 22, ~~feed-grade~~2014 ~~copper~~Sulfatos ~~sulfate~~Chile S.A. was declared bankrupt by the court. The ~~Company~~Board of Directors of Sulfatos Chile S.A. decided not to oppose the bankruptcy process. ~~owns~~The ~~80%~~resolution of ~~Mineraltus~~this matter is uncertain.

OnNote ~~August~~2 ~~22,~~- ~~2012,~~Summary ~~the Company formed Lustros Chile SpA as a 100% owned subsidiary, for the purpose~~ of ~~acting~~Significant asAccounting ~~a Chilean entity holding company for the Company’s Chilean subsidiaries Sulfatos, Mineraltus, and Bluestone.~~Policies

~~Note~~Basis ~~2 - Summary~~ of ~~Significant Accounting Policies~~Presentation

~~Basis~~These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of ~~Presentation~~America (“US GAAP”). The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements, including the estimated useful lives of tangible and intangible assets and the asset retirement obligation. Management believes the estimates used in preparing the financial statements are reasonable and prudent. Actual results could differ from these estimates.

These ~~consolidated financial statements~~ ~~have~~statements ~~been~~reflect ~~prepared~~all inadjustments, ~~accordance~~consisting ~~with~~of ~~accounting~~normal ~~principles~~recurring ~~generally~~adjustments, ~~accepted~~which in the ~~United~~opinion ~~States~~ of ~~America~~management, ~~(“US~~are ~~GAAP”).~~necessary ~~The~~for ~~preparation~~a offair ~~these~~presentation ~~consolidated~~of ~~financial~~the ~~statements~~information ~~requires~~contained ~~management~~therein. toIt ~~make~~is ~~estimates~~suggested ~~and~~that ~~assumptions~~these ~~that~~interim ~~affect~~financial ~~the reported~~statements ~~amounts~~be read in conjunction with the ~~consolidated~~ financial statements, ~~including~~of the ~~estimated~~Company ~~useful~~for ~~lives~~the ofyears ~~tangible~~ended ~~and~~December ~~intangible~~31, ~~assets~~ 2013 and ~~the~~2012 ~~asset~~and ~~retirement~~notes ~~obligation.~~thereto ~~Management~~included in ~~believes~~ the ~~estimates~~Company’s ~~used~~10-K inannual ~~preparing~~report. ~~the~~The ~~financial~~Company ~~statements~~follows ~~are~~the ~~reasonable and~~same ~~prudent.~~accounting ~~Actual~~policies ~~results~~in ~~could~~the ~~differ~~preparation ~~from~~of ~~these~~interim ~~estimates~~reports.

~~Principles of Consolidation~~ 7

~~The~~Principles ~~consolidated financial statements include the financial statements~~ of ~~Lustros,~~Consolidation ~~Inc., its subsidiaries Lustros Chile SpA, Mineraltus, Bluestone, and Sulfatos. All significant inter-company balances and transactions have been eliminated in consolidation.~~

~~Use~~The consolidated financial statements include the financial statements of ~~Estimates~~Lustros, Inc., its subsidiaries Lustros Chile SpA, Mineraltus, Bluestone, and Sulfatos. All significant inter-company balances and transactions have been eliminated in consolidation.

~~The~~Use ~~presentation~~ of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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 these estimates.Estimates

~~Foreign~~The ~~Currency~~presentation ~~Translation~~of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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 these estimates.

~~The Company records foreign currency translation adjustments and transaction gains and losses in accordance with ASC 830,~~ Foreign Currency Matters. The functional currency of Bluestone and its subsidiaries is the Chilean Peso ("CLP"). Assets and liabilities of Bluestone and its subsidiaries are translated into United States dollars at the exchange rates as of the balance sheet dates. Revenues and expenses of Bluestone and its subsidiaries are translated into United States dollars at average exchange rates in effect during the period. The resulting cumulative translation adjustments have been recorded as a component of other comprehensive income (loss), included as a separate item in the balance sheet.Translation

7The Company records foreign currency translation adjustments and transaction gains and losses in accordance with ASC 830, Foreign Currency Matters. The functional currency of Bluestone and its subsidiaries is the Chilean Peso ("CLP"). Assets and liabilities of Bluestone and its subsidiaries are translated into United States dollars at the exchange rates as of the balance sheet dates. Revenues and expenses of Bluestone and its subsidiaries are translated into United States dollars at average exchange rates in effect during the period. The resulting cumulative translation adjustments have been recorded as a component of other comprehensive income (loss), included as a separate item in the balance sheet.

For purposes of these consolidated financial statements: (i) the exchange rate was $~~502~~550.9753 CLPs to 1 US dollar at ~~September~~March 3031, ~~2013~~2014; and (ii) the average exchange rates were $~~503~~551.4276 CLPs to 1 US dollar during the three months ended ~~September~~March 3031, ~~2013~~2014.

The Company is exposed to movements in in foreign currency exchange rates. In addition, the Company is subject to risks including adverse developments in the foreign ~~political~~ political and economic environment, trade barriers, managing foreign operations, and potentially adverse tax consequences. There can be no assurance that any of these factors will not have a material negative impact on the Company's financial condition or results of operations in the future.

Financial Instruments

The Company's financial instruments ~~include~~ include cash and cash equivalents, and accounts payable and notes payable. At ~~September~~March 3031, ~~2013~~2014, the carrying cost of these instruments ~~approximated~~ approximated their fair value. The authoritative guidance for fair values establishes a three tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Cash Equivalents

Cash equivalents include highly liquid investments with maturities of three months or less.

Inventory

Inventory, which consists primarily of of raw copper ore, chemicals and copper sulfate, is stated at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method.

The Company evaluates the need to record adjustments for impairment of inventory. As of ~~September~~March 3031, ~~2013~~2014, the Company has not needed to adjust for impairment.

Income Taxes and Deferred Tax Asset

Accounting Standards Codification Topic No. 740 “Income Taxes” (ASC 740) requires the asset and liability method of accounting be used for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

~~Property and Equipment~~8

Property and ~~equipment are stated at cost less accumulated depreciation. Land is not depreciated.~~Equipment

~~Depreciation~~Property is computed principally on the straight-line method over the estimated useful life of each type of asset which ranges from three to five years. Major improvements are capitalized, while expenditures for repairs and ~~maintenance~~equipment are ~~expensed~~stated ~~when incurred. The depreciation methods, and estimated remaining useful lives are reviewed~~ at ~~least annually. If property and equipment is classified as held for sale, it is reviewed~~cost ~~for impairment annually. The impairment charged to the income statement is the excess of the carrying value of the property and equipment over its expected fair value~~ less ~~costs to sell. Upon retirement or disposition, the related costs and~~ accumulated depreciation ~~are~~. ~~removed~~Land ~~from~~is ~~the~~not ~~accounts, and any resulting gains or losses are credited or charged to income~~depreciated.

8Depreciation is computed principally on the straight-line method over the estimated useful life of each type of asset which ranges from three to five years. Major improvements are capitalized, while expenditures for repairs and maintenance are expensed when incurred. The depreciation methods, and estimated remaining useful lives are reviewed at least annually. If property and equipment is classified as held for sale, it is reviewed for impairment annually. The impairment charged to the income statement is the excess of the carrying value of the property and equipment over its expected fair value less costs to sell. Upon retirement or disposition, the related costs and accumulated depreciation are removed from the accounts, and any resulting gains or losses are credited or charged to income.

Mining Properties and Equipment

The Company ~~will~~follows ~~follow~~ the successful ~~efforts~~ efforts method of accounting. All developmental costs ~~will~~are be capitalized. Depreciation and depletion of producing properties will be computed on the unit-of-production method based on estimated proved reserves. Repairs and maintenance ~~will~~are be expensed, while renewals and betterments are ~~will be~~ generally capitalized.

At least quarterly, or more frequently if conditions indicate that long-term assets may be impaired, the carrying value of our properties will be compared to management's future estimated pre-tax cash flow from the properties. If undiscounted cash flows are less than the carrying value, then the asset value will be written down to fair value. Impairment of individually significant unproved properties will be assessed on a property-by-property basis, and impairment of other unproved properties is assessed and amortized on an aggregate basis.

~~Derivatives~~The Company reviewed its long term assets as of March 31, 2014 based on ASC 360-10-35-21, Property, Plant, and Equipment - Overall – Subsequent Measurement – Impairment or Disposal of Long-Lived Assets – Long-Lived Assets Classified as Held and Used – When to Test a Long-Lived Asset, for Recoverability. Pursuant to ASC 360-10-35-21, a long-lived asset (asset group) shall be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

~~Under~~The ~~ASC~~Company ~~815,~~also ~~“Derivatives~~reviewed ~~and Hedging”,~~its ~~the~~long ~~initial~~lived assets ~~balance~~as ~~sheet classification~~ of ~~contracts~~March ~~that~~31, ~~require~~2014 ~~net~~based ~~cash~~on ~~settlement~~ASC ~~are~~932-360-35, ~~recorded~~Extractive asActivities-Mining, ~~assets~~Property, ~~or liabilities.~~Plant Atand ~~each balance sheet date~~Equipment, ~~the~~Subsequent Measurement. ~~Company~~ASC ~~reviews~~932-360-35 ~~contracts~~states ~~and~~that ~~equity~~all ~~instruments~~relevant ~~that~~facts ~~are~~and tocircumstances shall be ~~settled~~evaluated inwhen ~~common~~determining ~~stock~~whether toan ~~determine~~entity ifis making sufficient ~~common~~progress ~~shares are~~on ~~available~~assessing ~~to satisfy~~ the ~~maximum~~reserves ~~number~~and ~~of shares that could be required to net-share settle~~ the ~~contracts,~~economic ~~among~~and ~~other~~operating ~~conditions. Changes~~viability inof ~~fair value are accounted for in~~ the ~~consolidated statement of operations~~project.

~~Asset~~As ~~Retirement~~of ~~Obligation~~March 31, 2014, the Company had no mining properties of any book value and determined that no adjustments for impairment were necessary.

~~The~~Derivatives Company follows ASC 410, Asset Retirement and Environmental Obligations, which requires that an asset retirement obligation (“ARO”) associated with the retirement of a tangible long-lived asset be recognized as a liability in the period in which it is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated asset. The cost of the tangible asset, including the initially recognized ARO, is depleted, such that the cost of the ARO is recognized over the useful life of the asset. The ARO is recorded at fair value, and accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value. The fair value of the ARO is measured using expected future cash flow, discounted at the Company’s credit-adjusted risk-free interest rate. To date, the Company estimates that an asset retirement obligation of $401,760 exists. Accordingly, a liability for this amount has been included in long term liabilities.

~~Revenue~~Under ~~Recognition~~ASC 815, “Derivatives and Hedging”, the initial balance sheet classification of contracts that require net cash settlement are recorded as assets or liabilities and contracts that require settlement in shares are recorded as equity instruments. At each balance sheet date, the Company reviews contracts and equity instruments that are to be settled in common stock to determine if sufficient common shares are available to satisfy the maximum number of shares that could be required to net-share settle the contracts, among other conditions. Changes in fair value are accounted for in the consolidated statement of operations.

Revenue is recognized in accordance with SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements." The Company recognizes revenue when the significant risks and rewards of ownership have been transferred to the customer pursuant to applicable laws and regulations, including factors such as when there has been evidence of a sales arrangement, delivery has occurred, or services have been rendered, the price to the buyer is fixed or determinable, and collection is reasonably assured. The Company is responsible for warehousing and shipping the merchandise.9

~~Earnings/(Loss)~~Asset ~~Per~~Retirement ~~Common Share~~Obligation

~~ASC~~The ~~Topic~~Company ~~260~~follows ASC 410, ~~“Earnings~~Asset Retirement ~~Per~~and ~~Share”~~Environmental Obligations, which requires ~~presentation~~that an asset retirement obligation (“ARO”) associated with the retirement of ~~basic~~a ~~earnings~~tangible ~~per~~long-lived ~~share~~asset ~~and~~be ~~diluted~~recognized ~~earnings~~as ~~per~~a ~~share.~~liability ~~Basic~~in ~~earnings/(loss) per~~the ~~share~~period in which it is ~~computed~~incurred byand ~~dividing~~becomes ~~earnings/(loss)~~determinable, ~~available~~with an tooffsetting ~~common~~increase ~~shareholders~~in bythe carrying amount of the ~~weighted~~associated ~~average~~asset. ~~number~~The cost of ~~common~~ ~~shares~~the ~~outstanding~~tangible (asset, including ~~shares~~the ~~reserved~~initially recognized ~~for~~ARO, ~~issuance)~~is ~~during~~depleted, ~~the~~such ~~period.~~that ~~Diluted~~the ~~earnings~~cost ~~per~~of ~~common~~the ~~share calculations~~ARO ~~are~~is ~~determined~~recognized byover ~~dividing~~the ~~net~~useful ~~income~~life byof the ~~weighted~~asset. ~~average~~The ~~number~~ARO ofis ~~common~~recorded at ~~shares~~fair value, and ~~dilutive~~accretion ~~common~~expense ~~share equivalents~~is ~~outsanding~~recognized over time as the discounted liability is accreted to its expected settlement value. ~~During~~The ~~periods~~fair ~~when~~value ~~common~~of ~~stock~~the ~~equivalents,~~ARO ifis ~~any,~~measured ~~are~~using ~~anti-dilutive~~expected future cash flow, ~~they~~discounted ~~are~~at ~~not~~the ~~considered~~Company’s credit-adjusted inrisk-free ~~the~~interest ~~computation~~rate.

~~Going~~The ~~Concern~~Company determined that an ARO existed at its Sulfatos Chile property to eventually retire the land where the mine and copper sulfate plant were located. The original ARO was determined to be $936,150 over an estimated 10 year life of the property (beginning January 1, 2012) which represents 15% of original $6.9 million cost incurred for the mine acquisition and plant related assets. The Company used a 10% rate to discount to PV. Even though an impairment charge was taken on the value of the mine at December 31, 2013, ARO is a legal obligation to repair the land which has been altered, accordingly a reasonable estimate for retirement cost would be expected to remain.

~~The~~To ~~Company’s financial statements are prepared using US GAAP applicable to a going concern~~date, ~~which contemplates~~ the ~~realization~~Company ofestimates ~~assets~~that ~~and liquidation of liabilities~~an inasset ~~the~~retirement ~~normal~~obligation ~~course~~ of ~~business~~$446,633 exists. AsAccordingly, ~~shown~~a inliability ~~these~~for ~~consolidated~~this ~~financial~~amount ~~statements,~~has ~~the~~been ~~Company~~included ~~has~~in along ~~limited~~term ~~operating history~~liabilities. ~~and~~The ~~limited~~table ~~funds~~below ~~and~~shows ~~has~~the anchanges ~~accumulated~~in ~~deficit~~carrying value of ~~$5,383,249~~ARO asfrom ofDecember ~~September 30~~31, 2013~~. These~~ ~~factors~~through ~~affect~~March ~~the~~31, ~~Company’s ability to continue as a going concern.~~2014:

		December 31, 2013				2014 Currency Fluctuation				2014 Accretion Expense				March 31, 2014
ARO liability		$	433,794			$	(20,006	)		$	32,845			$	446,633

InRevenue order to continue as a going concern and achieve a profitable level of operations, the Company will require additional financing from loans or the sale of debt or equity securities. In addition, the Company will seek to generate revenues from its business lines. If the Company is unable to secure such additional financing or secure such additional financing on favorable terms, the lack of adequate financing could have a material adverse effect on its ability to conduct its business as intended.’Recognition

~~Defaulted~~Revenue ~~Senior~~is ~~Notes~~recognized in accordance with SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements." The Company recognizes revenue when the significant risks and rewards of ownership have been transferred to the customer pursuant to applicable laws and regulations, including factors such as when there has been evidence of a sales arrangement, delivery has occurred, or services have been rendered, the price to the buyer is fixed or determinable, and collection is reasonably assured. The Company is responsible for warehousing and shipping the merchandise.

~~The~~Costs ~~financial statements do not include any adjustments relating to the recoverability and classification~~ of ~~assets~~Goods ~~and/or~~Sold liabilities that might be necessary should the Company be unable to continue as a going concern. The continuation as a going concern is dependent upon the ability of the Company to meet its obligations on a timely basis and ~~ultimately~~Operating ~~to attain profitability. There is no default rate on the note.~~Expenses

~~Recently~~Costs ~~Issued~~of ~~Accounting~~goods ~~Pronouncements~~sold includes the cost of the finished good inventory sold during the period, solvents, chemicals and other consumable materials directly used in the production of our finished good inventory and packaging materials used to ship our product to customers. Consumable goods used in the production of our products but not directly attributable to the finished product are recorded as an operating expense in General and Administrative.

InOperating ~~February~~expenses ~~2013,~~are ~~the~~broken ~~FASB~~down ~~issued authoritative~~into ~~guidance~~General onand ~~the~~Administrative ~~reporting~~which ofinclude ~~reclassifications~~costs ~~out~~such ofas ~~accumulated~~rents, ~~other~~utilities, ~~comprehensive~~telecommunications, ~~income.~~repairs ~~The~~and ~~guidance~~maintenance, ~~requires~~office ~~an entity to~~supplies, ~~present~~insurance, ~~either~~travel, onshareholder ~~the~~costs, ~~face~~commissions ofand ~~the~~consultants; ~~statement~~Depreciation ~~where~~which ~~net~~includes ~~income~~all isdepreciation ~~presented~~for orfixed inassets; Payroll ~~the~~which ~~notes,~~includes ~~significant~~all ~~amounts~~personnel ~~reclassified~~costs ~~out of~~not ~~accumulated~~directly ~~other~~related ~~comprehensive~~to ~~income by~~ the ~~respective~~production ~~line items~~ of ~~net~~finished ~~income~~goods ifinventory; ~~the~~Legal ~~amount~~and isAccounting which ~~reclassified~~includes toall ~~net~~lawyers’ ~~income in~~fees, ~~its~~accounting ~~entirety~~services, inaudit ~~the~~and ~~same~~financial reporting ~~period.~~costs; ~~The~~Mining ~~guidance~~costs iswhich ~~effective~~includes ~~for fiscal years beginning after December 15, 2012, with~~any ~~early~~costs ~~adoption~~related ~~permitted.~~to ~~The~~the ~~adoption~~mine ofwhich ~~this~~do ~~guidance did~~ not ~~have~~produce arevenue; ~~material~~and ~~effect~~Research onand ~~the~~Development ~~Company’s~~which ~~financial~~include ~~condition, results~~costs ofto ~~operations~~improve our products or ~~cash flows~~processes.

~~The~~Earnings/(Loss) ~~Company~~Per ~~has~~Common implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.Share

~~Note~~ASC 3Topic –260, ~~Sulfatos~~“Earnings ~~Acquisition~~Per Share”, requires presentation of basic earnings per share and diluted earnings per share. Basic earnings/(loss) per share is computed by dividing earnings/(loss) available to common shareholders by the weighted average number of common shares outstanding (including shares reserved for issuance) during the period. Diluted earnings/(loss) per share gives effect to all potential dilutive common shares outstanding during the period.

On February 15, 2012, Bluestone purchased a 60% equity interest in Sulfatos Chile from Santa Teresa Minerals S.A., a Chilean corporation ("Santa Teresa Minerals"). The purchase price for the equity interest was: (a) a 20% interest in Bluestone; (b) $2.2 million, with $1.1 million paid by assumption of a demand loan payable by Santa Teresa Minerals to Angelique de Maison, and the balance of $1.1 million to be paid in monthly installments from time to time upon demand by Santa Teresa Minerals. As of December 31, 2012, the entire purchase price had been paid. On October 16, 2012 Angelique de Maison entered into an agreement with Santa Teresa Minerals pursuant to which Santa Teresa Minerals waived and released any claim to any equity interests in Bluestone or Lustros and their affiliated companies, with Bluestone and Lustros Inc. express third party beneficiaries of that waiver and release. As such, Santa Teresa Minerals' 20% interest in Bluestone has been cancelled, and Bluestone is a wholly owned subsidiary of Lustros.10

AtGoing the time of the Sulfatos Acquisition, Bluestone was an affiliate of Santa Teresa Minerals because substantially all of the equity interests of Bluestone were owned by Juan Carlos Camus Villegas and Angelique de Maison, who were officers and/or directors of Santa Teresa Minerals and its parent holding company and were principal shareholders of the parent holding company.Concern

The ~~Sulfatos~~Company’s ~~Acquisition~~financial statements ~~has~~are ~~been~~prepared ~~treated as~~using anUS ~~"asset~~GAAP ~~purchase"~~applicable ~~for~~to ~~financial~~a ~~reporting~~going ~~purposes.~~concern, ~~Because~~which contemplates the ~~Sulfatos~~realization ~~Acquisition~~of ~~was~~assets ~~between~~and liquidation ~~related~~of ~~parties, the~~liabilities ~~purchase~~in ~~price~~the ~~has~~normal ~~been~~course ~~allocated~~of tobusiness. ~~additional~~As ~~paid-~~shown in ~~capital~~these ~~and~~consolidated financial statements, the ~~assets~~Company has a limited operating history and ~~liabilities~~limited ~~were~~funds ~~carried~~and ~~over~~has atan ~~historical costs.~~accumulated ~~Results~~deficit of ~~operations~~$12,349,825 ~~for~~as ~~Sulfatos~~of ~~have~~March ~~been~~31, ~~reflected~~2014. inThese factors affect the Company'’s ~~financial~~ability ~~statements~~to ~~from~~continue ~~the~~as ~~closing~~a ~~date~~going concern.

10In order to continue as a going concern and achieve a profitable level of operations, the Company will require additional financing from loans or the sale of debt or equity securities. In addition, the Company will seek to generate revenues from its business lines. If the Company is unable to secure such additional financing or secure such additional financing on favorable terms, the lack of adequate financing could have a material adverse effect on its ability to conduct its business as intended.

The ~~following~~Company ~~information~~shut ~~presents~~down ~~supplemental~~its copper ~~cash~~sulfate ~~flows~~processing ~~information~~plant in December 2014 pending resolution of ~~assets~~certain ~~acquired~~legal ~~and~~matters ~~liabilities~~including ~~assumed~~the bankruptcy of our Sulfatos Chile S.A. subsidiary. The Company’s subsidiary, Sulfatos Chile S.A. is engaged in ~~connection~~litigation ~~with~~before the 4th Civil Trial Court of Santiago, Docket No. 25496-2014, in the matter of Oryxeio Ingenieria Limitada v. Sulfatos ~~Acquisition:~~Chile S.A. On December 22, 2014 Sulfatos Chile S.A. was declared bankrupt by the court. The Board of Directors of Sulfatos Chile S.A. decided not to oppose the bankruptcy process. The resolution of this matter is uncertain. If the Company is unable to regain the operating assets of Sulfatos Chile out of bankruptcy, there would be a material adverse effect on its ability to conduct its business as intended. The Company will continue to report Sulfatos Chile's operations as continuing operations on its Statement of Operations until such time as the bankruptcy process is resolved. If it becomes apparent that the Company will not be able to restart operations at the Sulfatos Chile plant, then at that time the Company will account for Sulfatos Chile's operations as discontinued.

	Twelve months
	Ended
	December 31, 2012
Prepaid expenses	$	764,551
Equipment		3,289,521
Mining property		3,492,824
Land		549,310
Accounts payable		(447,343	)
Notes payable		(2,580,399	)
	$	5,068,464
Plus, cash acquired		892,294
Total value of acquisition	$	5,960,758
Value of acquisition allocated to additional paid-in capital	$	2,696,455
Value of acquisition allocated to minority interest	$	3,264,303

The financial statements do not include any adjustments relating to the recoverability and classification of assets and/or liabilities that might be necessary should the Company be unable to continue as a going concern. The continuation as a going concern is dependent upon the ability of the Company to meet its obligations on a timely basis and ultimately to attain profitability.

~~The following~~Fair ~~table~~Value summarizes the historical cost values of the assets acquired and liabilities assumed at the date of Sulfatos Acquisition. In accordance with US GAAP, the assets and liabilities acquired are carried over at their historical value because the transaction occurred between related parties.Measurements

	At
	February 15, 2012
Working Capital Items
Cash and cash equivalents	$	892,294
Prepaid expenses and other		764,551
Accounts payable and accrued liabilities		(447,343	)
Notes payable		(2,580,399	)
Subtotal—Working Capital Items		(1,370,897	)
Long-lived Assets:
Property & Equipment
Land		549,310
Mining property		3,492,824
FFE and Equipment		3,289,521
Subtotal—long-lived assets		7,331,655
Total value of acquisition	$	5,960,758
Value of acquisition allocated to additional paid-in capital	$	2,696,455
Value of acquisition allocated to minority interest	$	3,264,303

Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure the fair value. Level inputs, as defined by ASC 820-10, are as follows:

~~Had~~· ~~the~~Level ~~Sulfatos Chile Acquisition taken place on January~~ 1, ~~2012,~~– ~~results~~quoted ofprices ~~operations~~in ~~would~~active ~~have~~markets ~~reflected the following pro forma amounts~~ for ~~the~~identical ~~three~~assets ~~and~~or ~~nine months ended September 30, 2012 as compared to September 30, 2013:~~liabilities.

	Three Months Ended September 30,
	2012																		2013
	Lustros, Inc.			Sulfatos Chile			Lustros Chile						Purchase			Pro
	Actual			Actual			Actual			Consolidated			Adjustments			Forma			Consolidated
Revenues	$	–		$	2,959		$	–		$	2,959		$	–		$	2,959		$	66,580
Cost of goods sold		–			–			–			–			–			–			(168,228	)
Operating expenses		(399,863	)		(1,082,858	)		(136,730	)		(1,619,451	)		(212,807	)		(1,832,258	)		(949,467	)
Other expense		–			–			–			–			–			–			(358,287	)
Interest expense		–			(2,858	)		–			(2,858	)		–			(2,858	)		(49,006	)
Net loss	$	(399,863	)	$	(1,082,757	)	$	(136,730	)	$	(1,619,350	)	$	(212,807	)	$	(1,832,157	)	$	(1,458,408	)

Level 2 – other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date.

11· Level 3 – significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date.

	Nine Months Ended September 30,
	2012																		2013
	Lustros, Inc.			Sulfatos Chile			Lustros Chile						Purchase			Pro
	Actual			Actual			Actual			Consolidated			Adjustments			Forma			Consolidated
Revenues	$	–		$	54,900					$	54,900		$	–		$	54,900		$	66,580
Cost of goods sold		–			–			–			–			–			–			(168,228	)
Operating expenses		(783,564	)		(2,442,552	)		(136,730	)		(3,362,846	)		(212,807	)		(3,575,653	)		(2,628,818	)
Other expense		–			–			–			–			–			–			(91,693	)
Interest expense		–			(4,023	)		–			(4,023	)		–			(4,023	)		(283,780	)
Net loss	$	(783,564	)	$	(2,391,675	)	$	(136,730	)	$	(3,311,969	)	$	(212,807	)	$	(3,524,776	)	$	(3,105,939	)

The following table summarizes fair value measurements by level at March 31, 2014 for assets and liabilities measured at fair value on a recurring basis:

The $212,807 purchase adjustment is the operating expenses incurred by Sulfatos Chile from January 1, 2012 to February 15, 2012.

Level 1

Level 2

Level 3

Total

Cash

91,750

–

91,750

Derivative liability

–

46,740

~~Note~~In 4determining –the ~~Bluestone~~valuation ~~Acquisition~~approach to the derivative, it was determined to estimate the number of shares that would be required to settle the debt and ~~Power-Save~~apply ~~Sale~~the closing price. This was determined to result in the most accurate valuation and effect of settlement as of the balance sheet date. The following assumptions were used in this valuation:

On March 9, 2012, Lustros acquired all of the outstanding capital stock and rights to acquire capital stock of Bluestone in exchange for 60,000,000 shares of its common stock. As of the closing, these shares represented 96.7% of the Company’s outstanding common stock. Bluestone's principal asset was a 60% equity interest in Sulfatos, which Bluestone acquired in February 2012. For financial reporting purposes, the Company has treated the Bluestone Acquisition as a reverse acquisition with Bluestone the acquiring entity and Lustros as the acquired entity. As a result, the Company's financial statements reflect the financial information of Bluestone prior to March 9, 2012 and the combined entity on and after March 9, 2012.

Market trading lookback days used		11
Weighted average closing price	$	0.1126
Estimated rate of conversion		60	%
Estimated conversion rate	$	0.0675

On March 25, 2012, the Company sold the assets (including the "Power-Save" name) of its renewable energy and energy savings product business in which it had engaged prior to the Bluestone Acquisition, to the former management of the Company. The purchase price for the assets was the cancellation of obligation for unpaid salaries and other monies owed to prior management and the assumption by the buyer of certain liabilities of the Company related to the Power-Save business.11

The following ~~information~~table ~~presents~~summarizes ~~supplemental~~fair value ~~cash~~measurements ~~flows~~by ~~information~~level ofat ~~assets~~December ~~acquired~~31, 2013 for assets and liabilities ~~assumed~~measured inat ~~connection~~fair ~~with~~value ~~the~~on ~~Bluestone~~a ~~Acquisition~~recurring basis:

	Twelve months Ended December 31, 2012
	Level 1			Level 2		Level 3		Total
Notes receivable	$	18,446
Cash	$	615,469			–		–	$	615,469
Inventories		65,565
Derivative liability		–			–		39,474		39,474
Prepaid expenses and other		4,765
Property and equipment		48,406
Accounts payable		(181,172	)
Notes payable		(19,217	)
		(63,207	)
Plus, cash acquired		38,572
Total Bluestone Acquisition and Power Save Sale	$	(24,635	)

12In determining the valuation approach to the derivative, it was determined to estimate the number of shares that would be required to settle the debt and apply the closing price. This was determined to result in the most accurate valuation and effect of settlement as of the balance sheet date. The following assumptions were used in this valuation:

The following information presents supplemental cash flows information of assets given and liabilities released in connection with the Power Save Sale:

Market trading lookback days used		11
Weighted average closing price	$	0.2787
Estimated rate of conversion		60	%
Estimated conversion rate	$	0.1672

	Twelve months Ended December 31, 2012
Notes receivable	$	(18,446	)
Inventories		(65,565	)
Prepaid expenses and other		(4,765	)
Property and equipment		(48,406	)
Accounts payable		180,103
Notes payable		19,217
		62,138
Less, cash transferred in disposal		(20,642	)
Total Power Save Sale	$	41,496

Recently Issued Accounting Pronouncements

~~Note~~In 5-February 2013, the FASB issued authoritative guidance on the reporting of reclassifications out of accumulated other comprehensive income. The ~~Congo~~guidance ~~Project~~requires an entity to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income if the amount is reclassified to net income in its entirety in the same reporting period. The guidance is effective for fiscal years beginning after December 15, 2012, with early adoption permitted. The adoption of this guidance did not have a material effect on the Company’s financial condition, results of operations or cash flows.

OnIn ~~October~~April 182014, ~~2012,~~ the ~~Company~~Financial ~~entered~~Accounting ~~into~~Standards Board issued an ~~agreement~~accounting ~~with~~standard ~~Nueva~~update ~~Pudahuel~~that ~~S.A.~~amends ~~dba~~the ~~Sociedad~~definition ~~Minera~~of ~~Pudahuel~~a ~~("SMP")~~discontinued ~~pursuant~~operation to ~~which~~include ~~the~~only ~~Company acquired~~those ~~the~~disposals ~~land~~of components of an entity that represent a strategic shift that has, ~~laboratory~~or will have, ~~tailings~~a major effect on an entity's operations and ~~other~~financial ~~assets~~results. ofThe ~~the~~amendment ~~closed~~should ~~mine~~be ofapplied Laprospectively ~~Africana,~~and ~~commonly~~is ~~known~~effective asfor ~~the~~fiscal ~~"Congo~~years ~~Project”, in~~beginning ~~the~~on ~~Santiago,~~or ~~Chile~~after ~~metropolitan~~December 15, ~~area~~2014. ~~The~~Early ~~land~~adoption is ~~approximately~~permitted ~~81.2~~for ~~hectares~~disposals ~~and~~that ~~contains~~have annot ~~estimated~~been 2reported in financial statements previously issued.4 ~~million~~The adoption ~~tons~~of this guidance will not have a material effect on the Company's financial condition, results of ~~copper-rich~~ ~~tailings~~operations or cash flows.

In May 2014, the FASB issued an accounting standard update on revenue recognition that will be applied to all contracts with customers. The ~~Company~~update ~~entered~~requires ~~into~~an ~~the~~entity ~~agreement~~to recognize ~~through~~revenue ~~Procesamiento~~when deit ~~Relaves~~transfers ~~Pudahuel~~promised ~~Limitada~~goods ~~dba~~or ~~Mineraltus~~services ~~Pudahuel~~to ~~Ltd~~customers in an amount that reflects what it expects in exchange for the goods or services. It also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance will be required to be applied on a ~~newly~~retrospective ~~created~~basis, ~~subsidiary~~using ~~owned~~one ~~99%~~of bytwo methodologies, and will be effective for fiscal years beginning after December 15, 2016, with early application not being permitted. The Company is currently assessing the impact that the guidance will have on the Company's ~~subsidiary~~ ~~Mineraltus~~financial SAcondition and results of operations.

~~The~~In ~~Company~~June ~~has~~2014, ~~agreed~~the toFASB ~~remove~~issued ~~the~~ASU 2014-10, ~~tailings~~Development ~~and~~Stage ~~restore~~Entities ~~the~~(Topic ~~value~~915): Elimination of ~~the~~Certain ~~property~~Financial soReporting ~~that~~Requirements. itASU ~~can~~2014-10 beeliminates ~~used~~the ~~for~~distinction of ~~real~~a ~~estate~~ development ~~projects.~~stage ~~The~~entity ~~Company~~and ~~will~~certain ~~separate the~~related ~~copper~~disclosure ~~from~~requirements, ~~the~~including ~~tailings with~~ the ~~intention~~elimination of ~~manufacturing~~inception-to-date aninformation on ~~estimated~~the ~~24,000~~statements ~~tons~~ of ~~food-grade~~operations, ~~penta-hydrated~~cash ~~copper sulfate~~flows and stockholders' equity. The ~~Company~~amendments ~~plans~~in toASU ~~construct~~2014-10 awill ~~copper~~be ~~sulfate~~effective ~~processing~~prospectively for ~~plant~~annual onreporting ~~the~~periods ~~property~~beginning toafter December ~~process~~15, ~~the~~2014, ~~tailings~~and atinterim anperiods ~~estimated~~within those annual periods, however early ~~cost~~adoption ofis $6permitted.2 ~~million.~~ The ~~project,~~Company ~~known~~adopted inASU 2014-10 during the ~~industry~~quarter asended ~~the~~June ~~"Congo~~30, ~~Project~~2014," ~~has~~thereby ~~received~~no ~~all~~longer ~~necessary~~presenting ~~approvals~~or ~~and~~disclosing ~~permits~~any ~~from~~information ~~the~~required ~~Chilean~~by ~~authorities~~Topic 915.

~~Financing~~The ~~for~~Company ~~the~~has ~~project~~implemented ~~will~~all benew ~~provided~~accounting bypronouncements ~~the~~that ~~Company~~are asin aeffect. ~~loan,~~These ~~and~~pronouncements ~~the~~did ~~Company~~not ~~will~~have beany ~~entitled~~material toimpact ~~100%~~on of the ~~profits.~~financial ~~The~~statements ~~project~~unless ~~was~~otherwise disclosed, ~~structured~~and asthe aCompany ~~purchase~~does /not ~~buy-back to~~believe ~~ensure~~ that ~~all~~there ~~necessary~~are ~~assets~~any ~~remain~~other ~~under~~new ~~our~~accounting ~~control~~pronouncements ~~for~~that ~~the~~have ~~duration~~been ofissued ~~the~~that ~~project.~~might have ~~The~~a ~~Company~~material ~~purchase~~impact ~~price~~on ~~was~~its ~~$7 million~~financial ~~payable~~position asor ~~follows:~~results of operations.

~~· $360,000 was paid on November 26, 2012 for the right to use all assets and facilities;~~12

·Note ~~$436,858~~3- ~~payable~~The ~~upon~~Congo ~~completion of the copper sulfate processing plant on site no later than November 13, 2014 as the final payment for the assets;~~Project

·On $6October 18,~~203,172~~ ~~payable in equal monthly installments of $77~~2012,~~540~~ ~~beginning~~the onCompany ~~July~~entered into 1,an ~~2013~~agreement ~~for~~with ~~the~~Nueva ~~lease~~Pudahuel ofS.A. ~~the~~dba LoSociedad ~~Aguirre~~Minera ~~main~~Pudahuel ~~pit.~~ ("SMP") ~~may~~pursuant ~~request~~to ~~that~~which the ~~final~~Company ~~12 lease payments not be made by~~ acquired the ~~Company~~land, inlaboratory, ~~exchange~~tailings ~~for~~and ~~the~~other ~~return~~assets of ~~60.2~~the ~~hectares~~closed mine of ~~land~~La atAfricana, ~~their~~commonly ~~option~~known onas orthe ~~before~~"Congo ~~date~~Project”, in the ~~69th~~Santiago, ~~lease~~Chile ~~payment~~metropolitan ~~is made~~area. ~~Lease~~The ~~payments~~land ~~had~~is ~~not~~approximately ~~yet~~81.2 ~~begun~~hectares and ~~were~~contains inan ~~default~~estimated as2.4 ofmillion ~~the~~tons ~~time~~ of copper-rich ~~this filing~~tailings.

~~SMP~~The ~~will have the right to buy back 18 of the 21 remaining hectares owned by the~~ Company atentered ~~the~~into ~~end of~~ the ~~project~~agreement through atProcesamiento ~~a rate of 1UF (Unidad~~ de ~~Fomento)~~Relaves ~~per~~Pudahuel ~~square meter~~Limitada ~~which~~dba ~~would~~Mineraltus bePudahuel ~~equal to approximately US$8~~Ltd.8M, ata ~~today’s~~newly ~~exchange~~created ~~rate.~~subsidiary ~~The~~owned ~~Company~~99% ~~will~~by ~~retain ownership of~~ the ~~remaining~~Company's ~~three~~subsidiary ~~hectares~~Mineraltus SA.

~~Note~~The 6-Company ~~Property~~agreed to remove the tailings and ~~Equipment~~restore the value of the property so that it can be used for real estate development projects. The Company was told that the project, known in the industry as the "Congo Project," has received all necessary approvals and permits from the Chilean authorities, however this is currently in dispute.

~~The~~Financing ~~Company~~for ~~acquired property and equipment with a historical cost value of $7,331,655 in~~ the ~~Sulfatos~~project ~~Acquisition~~was into ~~March~~be ~~2012. See Note 3 - Sulfatos Acquisition.~~provided ~~The~~by ~~following~~the ~~table~~Company ~~sets~~as ~~forth~~a ~~our~~loan, ~~property~~ and ~~equipment at~~ the ~~dates~~Company ~~indicated.~~would ~~These~~be ~~assets,~~entitled ~~with~~to ~~the~~100% ~~exception~~ of ~~land~~the ~~which is not depreciable, are being depreciated over their remaining useful lives~~profits. The ~~Company~~project ~~recognized~~was ~~depreciation~~structured ~~expense~~as ofa ~~$88,139~~purchase / ~~and~~buy-back ~~$205,265~~to ~~for~~ensure ~~the~~that ~~three~~all ~~and~~necessary ~~nine~~assets ~~months~~remain ~~ended~~under ~~September~~our ~~30,~~control ~~2013 respectively, $25,894~~ for the ~~three~~duration ~~months~~of ~~ended~~the ~~September 30,~~project. ~~2012,~~The ~~$57,821~~Company ~~from~~purchase ~~inception~~price was ~~(January 26, 2012) to September 30, 2012, and~~ $~~290,977~~7 ~~for~~million ~~the~~payable ~~period~~as ~~from inception to September 30, 2013.~~follows:

13· $360,000 was paid on November 26, 2012 for the right to use all assets and facilities;

	September 30, 2013			December 31, 2012
Buildings	$	172,949		$	164,726
Furniture & fixtures		22,859			24,023
Vehicles		125,010			131,376
Mining equipment		414,325			423,453
Plants/property improvements		4,133,656			3,928,356
Computers		35,696			37,018
Lab equipment		63,342			65,675
Total fixed assets	$	4,967,837		$	4,774,626
Less depreciation		(321,801	)		(126,810	)
Net fixed assets	$	4,646,036		$	4,647,816
Land	$	556,693		$	585,040
Congo right to use	$	360,000		$	360,000
Mining property	$	3,539,768		$	3,720,011
Net property and equipment	$	9,102,497		$	9,312,867

$436,828 payable upon completion of the copper sulfate processing plant on site no later than November 13, 2014 as the final payment for the assets; and

· $6,203,172 payable in equal monthly installments of $77,540 beginning on July 1, 2013 for the lease of the Lo Aguirre main pit. SMP may request that the final 12 lease payments not be made by the Company in exchange for the return of 60.2 hectares of land at their option on or before date the 69th lease payment is made. Lease payments had not yet begun and were in default as of the time of this filing. The agreement is in dispute and the Company is currently in arbitration regarding this agreement. (see Note 710 - ~~Debt~~subsequent events)

~~The~~We ~~following table~~reviewed ~~sets~~our ~~forth~~long ~~the~~lived ~~outstanding~~assets ~~indebtedness~~as of December ~~the~~31, ~~Company~~2013 atbased ~~the~~on ~~date~~ASC ~~indicated~~932-360-35, Extractive Activities-Mining, Property, Plant and Equipment, Subsequent Measurement. ASC ~~Inter~~932-~~company~~360-35 ~~transactions~~states ~~have~~that ~~been~~all ~~eliminated~~relevant facts and circumstances shall be evaluated when determining whether an entity is making insufficient progress on assessing the ~~consolidated~~reserves ~~balance~~and ~~sheet:~~the economic and operating viability of the project.

Description	Total Due at September 30, 2013		Total Due at December 31, 2012
Related party notes
Suprafin, Ltd.	$	350,727	$	785,929
Robert Dickey		240,000		540,000
Bass Energy		500,000		500,000
Total related party notes payable	$	1,090,727	$	1,825,929
Notes payable
Banco de Chile Loan	$	–	$	45,541
Walker River Investments		–		270,988
Land Purchase Balance		349,944		367,763
Total notes payable	$	349,944	$	684,292
Convertible notes, net
Magna Group LLC	$	238,213	$	205,589
July 2013 Convertible Notes		77,851		–
Total beneficial conversion liability	$	316,064	$	205,589

The required lease payments for the Congo Project have not been made to date and production of the copper sulfate processing plant on the property has not yet begun. We have accrued $697,858 of these lease payments as of March 31, 2014. We are currently disputing the validity of the contract in arbitration. It is our position that the contract is invalid because the project was not permitted as we were told it was at the time the contract was signed. The Company was unable to perform under the terms of the contract due to the lack of permits required. The Company is currently in negotiations to amend the original agreement through arbitration but no agreement has been finalized. Because the Company was in default under the original terms of this agreement and the resolution of said default is currently unknown, the Company elected to fully reserve for the $360,000 paid for the right to use as of December 31, 2013. There is approximately $3,017,191 claimed against the Company in arbitration in this matter. Should the arbitrator decide against the Company, it may be forced to liquidate some or all of its assets to satisfy the judgment. (See Note 10 -Subsequent Events).

~~From~~Note ~~February 2012 through September 30, 2013, Suprafin, Ltd. (“Suprafin”) provided the Company a total of $3,467,879 in non~~4-~~interest~~ ~~bearing~~Property ~~unsecured demand loans to enable Bluestone to pay the balance of the purchase price for the Sulfatos Acquisition~~ and for working capital purposes. Zirk de Maison (formerly Engelbrecht), currently a member of the Board of Directors, and formerly the Chief Executive Officer, of the Company, is the owner of Suprafin. In April 2012 Suprafin assigned $570,988 of the loans to Walker River Investments, Corp (“Walker”) and in December 2012 Suprafin assigned an additional $250,000 of the loans to Walker which the Company was informed of in May 2013. In May 2012, Suprafin agreed to cancel $429,000 of these loans in exchange for 100,000 shares of Series A Preferred Stock. In May 2013 Suprafin agreed to cancel an additional $172,000 of these loans in exchange for 17,200 shares of Preferred Series A Stock at $10 per share. As of September 30, 2013, the Company had repaid $1,695,164 of these loans, and the outstanding balance of these loans was $350,727. $296,798 represented the additional advances made by Suprafin, Ltd during the nine month period ended September 30, 2013.Equipment

14The Company acquired property and equipment with a historical cost value of $7,331,655 in the Sulfatos Acquisition in March 2012. The following table sets forth our property and equipment at the dates indicated. These assets, with the exception of land which is not depreciable, are being depreciated over their remaining useful lives. The Company recognized depreciation expense of $169,055 for the three months ended March 31, 2014 and $31,029 for the three months ended March 31, 2013.

In December 2012, Walker sold $300,000 of their loans to Magna Group LLC (“Magna”) in three increments of $100,000 each, and the Company issued to Magna a series of convertible notes (the “Magna Notes”) for the principal amount which bear interest at the rate of 8% per annum. These Magna Notes are convertible into stock of the Company at a discount of 37.5% from the lowest Trading Price the day prior to the execution of the Magna Notes and contain a one-time price reset which allows Magna to take a 37.5% discount from the lowest trading price on the day prior to the day the investor chooses to exercise the reset. We evaluated original issue discount feature derived from the conversion option of this note as of December 31, 2012 and deemed it to be $180,000. Magna chose to convert $100,000 as of December 31, 2012 which represented a $160,000 value with the debt discount of these Magna Notes into 177,714 shares of Common Stock. In February and March 2013, Magna chose to convert the remaining $200,000 which represented a $322,141 value with the debt discount and $2,141 interest of these Magna Notes into 604,357 shares of Common Stock. In March 2013, we recognized $120,803 in amortized debt discount related to these notes. The amount was recorded as interest expense.13

InOn ~~January~~October ~~and February 2013~~16, ~~Walker sold~~2014 anwe ~~additional~~were ~~$270,988~~informed ofthat an ~~their~~injunction ~~loans~~order towas ~~Magna~~granted inagainst ~~two~~Lustros ~~increments~~Chile ofSpA’s ~~$125,000~~assets ~~and~~in ~~$145,988, and~~ the ~~Company~~Congo ~~issued~~Project toarbitration ~~Magna~~ until a ~~series~~resolution ~~of convertible Magna Notes for the principal amount which bear interest at the rate of 8% per annum~~is reached. These ~~Magna~~assets ~~Notes were~~include ~~convertible~~bank ~~into~~accounts ~~stock~~and ofLustros’ ~~the~~shares ~~Company~~in atSulfatos aChile ~~discount of 37~~S.5%A. ~~from~~We ~~the~~have ~~lowest~~elected ~~Trading Price the day prior~~ to ~~the~~shut ~~execution of~~down ~~the~~our ~~Magna Notes and contain a one-time price reset which allows Magna to take a 37.5% discount from the lowest trading price~~copper onsulfate ~~the~~processing ~~day~~plant ~~prior~~pending toresolution ~~the~~of ~~day~~this ~~the investor choses to exercise the reset~~matter. On ~~March~~February 262, ~~2013~~2015, ~~Magna~~our ~~chose~~Chilean tocounsel ~~convert~~reported ~~$65,000~~that ofthey ~~the~~were served ~~$125,000~~with ~~loan,~~an ~~which~~interim ~~represented~~ruling athat ~~$104,000~~revoked ~~value with~~ the ~~debt~~injunction ~~discount,~~orders ~~into~~previously ~~179,311~~put ~~shares~~in ~~of Common Stock~~place. OnResolution ~~April 25, 2013, Magna chose to convert the remaining $60,000~~ of the ~~$125,000~~matter ~~loan,~~is ~~which~~still ~~represented a $96,209 value with the debt discount, into 208,696 shares of Common Stock~~pending.

OnThe ~~June~~Company’s 7subsidiary, ~~2013 Walker sold an additional~~Sulfatos ~~$250,000~~Chile ofS.A. ~~their~~is ~~loans~~engaged toin ~~Magna~~litigation ~~and~~before the ~~Company~~4th ~~and~~Civil ~~Magna~~Trial ~~agreed~~Court ~~to cancel all outstanding prior Magna Notes (which had a principal balance due~~ of ~~$145~~Santiago,~~988~~ ~~and~~Docket ~~interest~~No ~~due of $10~~25496-2014,~~283)~~ in ~~exchange for a new Magna Note which was issued to Magna for~~ the ~~principal amount~~matter of ~~$406,271. This new Magna Note is convertible into stock of the Company at a discount of 35% from the lowest Trading~~Oryxeio ~~Price~~Ingenieria ~~the~~Limitada ~~five~~v. ~~(5)~~Sulfatos ~~days~~Chile ~~prior~~S.A. toOn ~~the~~December ~~execution~~22, of2014 ~~the~~Sulfatos ~~Magna~~Chile ~~Note~~S.A. ~~and~~was ~~contain~~declared ~~six~~bankrupt ~~price~~by ~~resets which allows Magna to take a 35% discount from~~ the ~~lowest trading price on the day prior to the day the investor chooses to exercise the reset~~court. The ~~total balance~~Board ~~due to Magna, including accrued interest~~ of ~~$16,557,~~Directors ~~was $420,245, net~~ of ~~unamortized~~Sulfatos ~~debt~~Chile ~~discount of $305,683 as of June 30, 2013~~S.A. Asdecided ofnot ~~June 30, 2013, we recognized $205,744 in amortized debt discount related~~ to ~~this~~oppose ~~Magna~~the ~~Note~~bankruptcy process. The ~~amount~~resolution ~~was recorded as interest expense. From July through September 2013 Magna chose to convert $152,378~~ of this ~~Magna~~matter ~~Note,~~is which represented a $234,429 value with the debt discount, into 1,027,506 shares of Common Stock leaving a balance due to Magna, including accrued interest of $19,471, of $238,213, net of unamortized debt discount of $165,873as of September 30, 2013uncertain.

From September through December 2012, the Company borrowed a total of $1,040,000 for working capital purposes from Robert Dickey, currently an alternate member of the Board of Directors and Bass Energy. Bill Hlavin, currently a member of the Board of Directors is the owner of Bass Energy. In May 2013 Robert Dickey agreed to cancel $300,000 of his loans in exchange for 30,000 shares of Preferred Series A Stock at $10 per share leaving a balance due of $740,000, $500,000 to Bass Energy and $240,000 to Robert Dickey. These loans are non-interest bearing, unsecured demand loans to be repaid from a future financing or from operating cash flows. These loans are personally guaranteed by Zirk de Maison.

	March 31, 2014			December 31, 2013
Buildings	$	155,644		$	163,600
Furniture & fixtures		20,884			21,951
Vehicles		61,988			120,048
Machinery and mining equipment		378,532			397,879
Plants (crushing and agglomeration plant, heap leaching area, chemical plant and Solvent Extraction and Crystallization (SX - CR - RCR) plant) / property improvements		3,234,955			3,404,244
Computers		34,525			34,324
Lab equipment		57,870			60,828
Total fixed assets	$	3,944,398		$	4,202,874
Less depreciation		(819,733	)		(716,163	)
Net fixed assets	$	3,124,665		$	3,486,711

Land	$	508,601		$	534,596
Net property and equipment	$	3,633,266		$	4,021,307

~~From~~Note ~~January~~5- through June 2013, the Company borrowed a total of $34,000 for working capital purposes from Global Investments I LLC. William Farley, currently our Chief Executive Officer and a member of the Board of Directors, is the owner of Global Investments I, LLC. In May 2013 Global Investments I agreed to cancel the full balance of $34,000 of these loans and contributed an additional $266,000 in exchange for 30,000 shares of Preferred Series A Stock at $10 per share.Debt

InThe ~~July 2013 the Company borrowed a total~~following oftable ~~$69,000~~sets inforth ~~Convertible Notes payable to unrelated third parties for working capital purposes. These Convertible Notes bear interest at~~ the ~~rate~~outstanding ofindebtedness ~~8% per annum and are redeemable in 18 months or convertible after six months into shares~~ of the Company~~’s Common~~ ~~Stock~~ at ~~a price equal to 60% of~~ the ~~average of the variable weighted average price for the 10 trading days prior to the~~ date ~~of conversion~~indicated. ~~The~~Inter-company ~~Company~~transactions ~~accrued $2,441 in interest expense for the three months ended September 30, 2013 for these Convertible Notes. The balance due on these Convertible Notes as of September 30, 2013 was $70,156. We~~ have ~~evaluated~~been ~~original issue discount~~eliminated ~~feature~~in ~~derived from~~ the ~~conversion~~consolidated option of these Convertible Notes upon their issuance and deemed it to be $48,441. As of September 30, 2013, we recognized $6,410 in amortized debt discount related to these notes. The amount was recorded as interest expense. The balance ~~due under these Convertible Notes, including accrued interest of $2,441, was $77,851, net of unamortized debt discount of $39,590 as of September 30, 2013.~~sheet:

Description	Total Due at March 31, 2014		Total Due at December 31, 2013
Related party notes
LV Ventures	$	1,385	$	1,385
Suprafin, Ltd.		1,732		1,082
Total related party notes payable	$	3,117	$	2,467

Notes payable
Land Purchase Balance	$	358,251	$	351,183
Total notes payable	$	358,251	$	351,183

Convertible notes, net
2014 Related Party Notes – Long Term, net	$	258,481	$	–
July 2013 Convertible Notes, net		43,139		50,113
Total convertible notes	$	343,139	$	50,113

In April 2012, Sulfatos borrowed $40,500,223 CLP, or approximately $79,454 US dollars, from Banco de Chile for working capital purposes. This loan bears interest at the rate of 13.43% per annum and was due on March 31, 2013. Monthly payments of principal and interest in the amount of $7,343,229 CLP, or approximately $15,608 US dollars, commenced on October 1, 2012. As of September 30, 2013, the outstanding balance of this loan had been paid in full. The Company paid $3,559,151 CLP, or approximately $7,532 US dollars in interest expense related to these notes.14

~~Defaulted~~From ~~Senior~~February ~~Notes~~2012 through January 2, 2014, Suprafin, Ltd. (“Suprafin”) provided the Company a total of $3,748,414 in non-interest bearing unsecured demand loans to enable Bluestone to pay the balance of the purchase price for the Sulfatos Acquisition and for working capital purposes. Zirk de Maison (formerly Engelbrecht), a member of the Board of Directors until February 13, 2014, and formerly the Chief Executive Officer, of the Company, is the owner of Suprafin. In April 2012 Suprafin assigned $570,988 of the loans to Walker River Investments, Corp (“Walker”) and in December 2012 Suprafin assigned an additional $250,000 of the loans to Walker which the Company was informed of in May 2013. In March 2013 Suprafin agreed to cancel $100,000 of these loans in exchange for 181,000 shares of common stock. In May 2012, Suprafin agreed to cancel $429,000 of these loans in exchange for 100,000 shares of Series A Preferred Stock. In May 2013 Suprafin agreed to cancel an additional $420,000 of these loans in exchange for 42,000 shares of Preferred Series A Stock at $10 per share. In October 2013 Suprafin agreed to cancel an additional $110,000 of these loans in exchange for 22,000 shares of Preferred Series A Stock at $5 per share. On November 13, 2013 the Board of Directors of the Company approved that as a condition to closing a financing transaction, all related party debt would be converted into stock of the Company. $280,640 of Suprafin’s debt was converted into 17,540 shares of Preferred Series A Stock at $16 per share. As of March 31, 2014, the Company had repaid $1,583,964 of these loans, and the outstanding balance of these loans was $1,732.

~~Sulfatos~~In ~~currently~~November ~~owes $176~~2013,~~011,132~~ ~~CLP,~~the Company borrowed ora ~~approximately~~total of $~~349~~1,~~944~~385 USfor ~~dollars~~working capital purposes from LV Ventures, ~~for~~Inc.. ~~the~~William ~~last~~Farley, ~~two~~currently ~~payments~~our Chief Executive Officer and a member of the ~~land~~Board ~~acquired~~of inDirectors, is the ~~first~~owner ~~quarter~~ of ~~2011~~LV Ventures, Inc. ~~This~~The ~~debt~~outstanding ~~is currently~~balance indue ~~default.~~to ~~There~~LV isVentures, noInc. ~~default~~at ~~rate~~March 31, on2014 ~~the~~was ~~note~~$1,385.

~~Note~~In July 2013 the Company borrowed a total of $69,000 in Convertible Notes payable to unrelated third parties for working capital purposes. These Convertible Notes bear interest at the rate of 8-% ~~Stockholders~~per annum and are redeemable in 18 months or convertible after six months into shares of the Company’s Common ~~Equity~~Stock at a price equal to 60% of the average of the variable weighted average price for the 10 trading days prior to the date of conversion. The Company accrued $2,119 in interest expense for the year ended December 31, 2013 and $1,465 for the three months ended March 31, 2014 for these Convertible Notes. On January 16, 2014, a holder of a Convertible Note in the amount of $20,000 elected to convert their Convertible Note into Common Stock of the Company. $20,000 of principal plus $802.19 in accrued interest was converted into 128,647 shares of Common Stock at the rate of $0.1617 (60% of the 10 day average on 1/16/2014) which is a discount of $0.1078 per share. The balance due with accrued interest payable on these Convertible Notes as of March 31, 2014 was $51,782. We evaluated the original issue discount feature derived from the conversion option of these Convertible Notes upon their issuance and deemed it to be $39,474. As of March 31, 2014, we recognized a total of $21,621 in amortized debt discount related to these notes. The amount was recorded as interest expense. The balance due under these Convertible Notes, including original issue discount and accrued interest of $1,782, was $43,139, net of unamortized debt discount of $8,643 as of March 31, 2014.

~~The~~In ~~authorized~~March ~~capital~~2014 ~~stock~~Bass ofEnergy ~~Lustros~~and LV Ventures, ~~consists~~Inc. ofprovided ~~100~~the Company with $300,000~~,000~~ ~~shares~~in ofcash ~~Common~~through ~~Stock,~~two ~~$0.001~~year ~~par~~convertible ~~value~~notes which bear interest at 5% per ~~share,~~annum. ~~and~~These ~~10,000,000~~notes are convertible into shares of ~~Preferred~~the Company’s Common Stock, ~~par~~at ~~value~~ the rate of $0.~~001~~16 per share, ~~designated~~with ~~“Series~~25% Awarrant ~~Preferred~~coverage ~~Stock~~at $0.”25 per ~~Each~~ share which is identical to the financing round closed by the Company in December of ~~Series~~2013. AThe ~~Preferred~~note ~~Stock~~qualifies isfor ~~convertible~~the atscope exception under ASC 815 and as such no derivative accounting is required as the conversion option ofis indexed to the ~~holder~~Company ~~into~~stock and ~~100~~can ~~shares~~be treated as equity. We evaluated the original issue discount feature derived from the conversion option of ~~Common~~these ~~Stock~~Convertible Notes upon their issuance and isdeemed ~~entitled~~it to ~~100~~be ~~votes~~$0. ~~per~~We ~~share~~evaluated the original issue discount feature derived from the the value of the warrants on ~~all~~a ~~matters~~prorated ~~submitted~~basis as per ASC 470 upon their issuance and deemed it to ~~the~~be $41,519. Bill Hlavin, currently a member ~~shareholders~~of the Board of ~~Lustros.~~Directors Atis ~~September~~the 30owner of Bass Energy and William Farley, ~~2013~~currently our Chief Executive Officer and a member of the Board of Directors, ~~there~~is ~~were~~the ~~outstanding~~owner 91of LV Ventures,~~389~~ Inc. The balance due under these Convertible Notes,~~488~~ ~~shares~~including original issue discount, was $258,481 as of ~~Common~~March ~~Stock~~31, ~~and~~2014, ~~291~~$300,~~376~~000 ~~shares~~in principal net of ~~Series~~ Aan ~~Preferred~~unamortized ~~Stock~~debt discount of $41,519.

~~From~~Defaulted ~~January~~Senior 2013 through September 2013, Magna converted $477,378 of their loans and $1,338 in accrued interest valued at $720,570 with the debt discount into 2,019,870 shares of Common Stock, See Note 7 – Debt.Notes

OnAs of March 31, 2014 Sulfatos owed $197,227,995 1CLP, ~~2013~~or approximately $358,251 US dollars, for the ~~Company~~last ~~and~~two ~~Global~~payments ~~Investments~~of I,the ~~LLC~~land ~~(“Global”)~~acquired ~~entered~~in ~~into~~the afirst ~~Stock~~quarter ~~Purchase~~of ~~Agreement,~~2011. ~~whereby~~This ~~Global~~debt ~~agreed~~was toin ~~purchase~~default ~~818,182~~at ~~shares~~March of31, ~~Common~~2014. ~~Stock~~There atis ano ~~purchase~~default ~~price~~rate ofon $0the note.55 ~~per~~In ~~share~~June ~~for~~2014 ~~total~~the ~~proceeds~~debt ofwas ~~$450,000~~renegotiated and was no longer in default. See Note 10 – Subsequent Events.

On March 1, 2013, the Company and Angelique de Maison (“de Maison”) entered into a Stock Purchase Agreement, whereby de Maison agreed to purchase 181,818 shares of Common Stock at a purchase price of $0.55 per share for total proceeds of $100,000.15

OnNote ~~April~~6- 22, 2013, the Board of Directors of the Company approved the sale of up to 100,000 Preferred Series “A” Shares of the Company (Series “A” Shares) at a purchase price of $10.00 per share. Each Series “A” Share is convertible into 100 shares of Company Common Stock upon the satisfaction of certain terms and conditions. On June 25, 2013 the Board of Directors of the Company approved increasing the number of Preferred Series “AStockholders’ Shares available for sale to 142,200. The Series A Shares were offered to small group of accredited investors already familiar with the Company in a private placement transaction exempt from registration under Section 4(2) of the Securities Act of 1933. The termination date of the offering was June 30, 2013, and a total of 142,200 Series “A” Shares for a total of $1,422,000 have been subscribed for to date. $950,000 was received as cash proceeds and $472,000 were settled against related party loans. The offering is only available to this small group of accredited investors and this disclosure does not constitute an offer to sell securities to any persons whatsoever. In accordance with the guidance provided in ASC 480 and ASC 815, the Company determined that the conversion feature of the Series “A” Shares convert into more Common Stock shares than were currently authorized represented a deemed derivative. Accordingly, the Series “A” Shares are not considered to be “conventional” Preferred Stock and thus the embedded conversion feature must be bifurcated and accounted for as a deemed derivative liability. The fair value of $2,909,604 was recorded as an embedded derivative liability, which reduced the value of Equity ~~reflected. See Note 10 – Derivative Liability.~~

On ~~June~~January 2516, ~~2013~~2014, ~~the~~a ~~Board~~holder of ~~Directors~~a Convertible ofNote ~~the~~in ~~Company approved~~ the ~~sale~~amount of ~~up to an additional 50~~$20,000 ~~Preferred~~elected ~~Series~~to ~~“A”~~convert ~~Shares~~their ofConvertible ~~the~~Note ~~Company (Series “A” Shares) at a purchase price of $17.00 per share. Each Series “A” Share is convertible~~ into ~~100 shares of Company~~ Common Stock ~~upon the satisfaction~~ of ~~certain terms and conditions. The Series “A” Shares were offered to small group of accredited investors already familiar with~~ the Company ~~in a private placement transaction exempt from registration under Section 4(2) of the Securities Act of 1933~~. ~~The~~ ~~termination date of the offering is September 30~~$20,000 ~~2013. The offering is only available to this small group~~ of ~~accredited investors and this disclosure does not constitute an offer to sell securities to any persons~~principal ~~whatsoever~~plus $802.19 Inin ~~addition,~~accrued ~~the Board of Directors of the Company approved the sale of Convertible Notes bearing~~ interest atwas ~~the~~converted ~~rate of 10% per annum redeemable in 18 months or convertible after six months~~ into 128,647 shares of ~~the Company’s~~ Common Stock ~~at a price equal to 60% of the average of the variable weighted average price for the 10 trading days prior to the date of conversion~~. ~~As of~~See ~~September~~Note ~~30,~~5 ~~2013,~~– ~~19,176 subscriptions had been sold for $326,000 in cash proceeds and $69,000 in Convertible Notes had been issued~~Debt.

16On March 5, 2014, Suprafin, Ltd. converted 39,540 shares of Series A Preferred Stock into 3,954,000 shares of Common Stock of the Company.

OnNote ~~August~~7- 8,Related ~~2013~~Party the Board of Directors of the Company approved the sale of up to an additional 130,000 Preferred Series “A” Shares of the Company (Series “A” Shares) at a purchase price of $5.00 per share. Each Series “A” Share is convertible into 100 shares of Company Common Stock upon the satisfaction of certain terms and conditions. The Series “A” Shares were offered to small group of accredited investors already familiar with the Company in a private placement transaction exempt from registration under Section 4(2) of the Securities Act of 1933. The termination date of the offering is September 30, 2013. The offering is only available to this small group of accredited investors and this disclosure does not constitute an offer to sell securities to any persons whatsoever. As of September 30, 2013, 130,000 subscriptions had been sold for $650,000 in cash proceeds.Transactions

From February 2012 through January 2014, Suprafin provided the Company a total of $3,748,414 in non-interest bearing unsecured demand loans. Zirk de Maison, previously a member of the Board, and formerly the Chief Executive Officer, of the Company is the owner of Suprafin. As of March 31, 2014, the outstanding balance of these loans was $1,732. See Note 95 - ~~Related~~Debt. ~~Party~~On ~~Transactions~~February 13, 2014, Zirk de Maison submitted his resignation as a member of the Board of Directors and will therefore no longer be considered a related party.

From ~~February~~January ~~2012~~ through ~~September~~ December 2013, ~~Suprafin provided~~ the Company borrowed a total of $335,~~467,879~~385 infor ~~non-interest~~working ~~bearing~~capital ~~unsecured~~purposes ~~demand~~from ~~loans. Zirk de Maison, currently a member of~~ the ~~Board,~~Company’s ~~and formerly the~~ Chief Executive Officer~~, of the Company is the owner of Suprafin~~. As of ~~September 30~~March 31, ~~2013~~2014, the outstanding balance of these loans was $~~350~~1,~~727~~385. See Note 75 - Debt.

~~From~~In ~~September~~March ~~through~~2014 ~~December~~Bass ~~2012~~Energy and LV Ventures, Inc. provided the Company ~~borrowed~~with ~~a total of~~ $1300,~~040,~~000 ~~from~~in ~~two~~cash ~~directors~~through ~~for~~two ~~working~~year ~~capital~~convertible ~~purposes~~notes atwith ~~Sulfatos~~warrant coverage. AsBill ~~of September 30~~Hlavin, ~~2013,~~currently a member of the ~~outstanding~~Board ~~balance~~of Directors is the owner of ~~these~~Bass ~~loans~~Energy ~~was~~and ~~$740~~William Farley,~~000.~~ ~~Mr.~~currently ~~Engelbrecht~~our isChief Executive Officer and a member ~~guarantor~~of the Board of ~~these~~Directors, ~~loans~~is the owner of LV Ventures, Inc. See Note 75 -– Debt.

From January through March 2013, the Company borrowed a total of $34,000 for working capital purposes from the Company’s Chief Executive Officer. As of September 30, 2013, the outstanding balance of these loans was $0. See Note 7 8- ~~Debt.~~Derivative Liability

~~From~~In ~~inception~~July ~~(January~~2013 ~~26,~~the ~~2012)~~Company toborrowed a total ~~September~~of 30$69,000 ~~2013,~~in ~~the~~Convertible ~~Company~~Notes ~~has~~payable ~~issued~~to ~~and~~unrelated ~~sold~~third anparties ~~aggregate~~for ofworking ~~25,136,363~~capital ~~shares~~purposes. ofThese ~~Common~~Convertible ~~Stock~~Notes ~~(including~~bear ~~175,000 shares~~interest at the rate of ~~Series~~8% Aper ~~Preferred~~annum ~~Stock~~and ~~which~~are ~~were~~redeemable ~~converted~~in to18 ~~17,500,000~~months or convertible after six months into shares of the Company’s Common Stock) at a price equal to ~~directors~~60% ~~and~~of ~~executive~~the ~~officers.~~average ~~From April~~of ~~through~~the ~~September~~variable ~~2013~~weighted average price for the ~~Company~~10 ~~has~~trading ~~sold~~days ~~281,023~~prior ~~shares~~to the date of ~~Series~~conversion. AThe ~~Preferred~~Company ~~Stock~~accrued to$2,119 ~~affiliates~~in interest expense for the year ended December 31, ~~directors~~2013 and ~~executive officers~~$1,465 offor the ~~Company.~~three months ~~See~~ended ~~Note~~March 831, –2014 ~~Stockholders’~~for ~~Equity~~these Convertible Notes.

~~Note~~The ~~10-~~conversion ~~Derivative~~option ~~Liability~~has been accounted for in accordance with ASC Topic 815. Accordingly, the Conversion Option is not considered to be solely indexed to the Company’s own stock and, as such, recorded as a liability.

~~From~~The ~~April~~Company’s ~~through~~convertible ~~June~~promissory note ~~2013~~derivative ~~the~~liability ~~Company~~has ~~sold a total~~been ofmeasured ~~142~~at fair value at July,~~200~~ ~~Series~~2013, ~~“A”~~December ~~Shares~~31, to2013 and March 31, 2014 using a ~~small~~level ~~group~~3 input. The fair value of ~~accredited~~the ~~investors~~convertible atnote payable derivative liability is $~~10.00~~30,324 ~~per~~and ~~share~~$39,474 ~~for~~at aJuly, ~~total~~2013 and December 31, 2013, ofrespectively and $146,~~422~~740 at March 31,~~000~~ 2014. ~~Each~~The ~~Series~~increase ~~“A”~~in ~~Share~~the isfair value of the convertible ~~into~~note ~~100~~payable ~~shares~~derivative liability of ~~Company~~$9,150 ~~Common~~at ~~Stock~~December ~~upon~~31, ~~the~~2013 ~~satisfaction~~and $7,266 at March 31, 2014 was recognized as a loss to net change in fair value of derivative ~~certain~~liability ~~terms~~in ~~and~~current ~~conditions~~period earnings. ~~See~~ ~~Note~~The 8value –of ~~Stockholders’~~the ~~Equity~~derivative at July was treated as a discount and is being amortized.

InNote ~~accounting~~9 ~~for~~– ~~the~~Legal Series “A” Shares described above, the Company considered the guidance contained in ASC 815 Derivatives and Hedging and ASC 480 Distinguishing Liabilities from Equity. In accordance with the guidance provided in ASC 480 and ASC 815, the Company determined that the conversion feature of the Series “A” Shares convert into more Common Stock shares than were currently authorized represented a deemed derivative. Accordingly, the Series “A” Shares are not considered to be “conventional” Preferred Stock and thus the embedded conversion feature must be bifurcated and accounted for as a derivative liability.Proceedings

~~The~~We ~~Company~~previously ~~calculated~~were ~~the~~notified ~~fair~~that ~~value of~~ the Company ~~embedded~~was ~~conversion~~named ~~feature~~in ona ~~the~~action ~~date~~filed ofby ~~each~~Unirac, ~~purchase~~Inc. ~~using~~in ~~the~~New ~~Black-Scholes~~Mexico ~~valuation~~State ~~model~~Court ~~with~~on ~~the~~June ~~following~~22, ~~assumptions: market~~2011 ~~prices~~(Unirac, ~~of $0~~Inc.~~394~~ ~~and $0~~v.~~502;~~ ~~exercise~~Power ~~price~~Save ofEnergy $0Corporation et al.~~10;~~, ~~discount~~Case ~~rate of 1~~No.~~41%;~~ ~~expected volatility of 211% and an expected life of one (1~~D-202-CV-2011-06295) ~~year~~. ~~The~~Also ~~fair~~named ~~value~~as ofdefendants ~~$2,027,998~~in ~~was~~this ~~recorded~~lawsuit aswere, aamong ~~deemed derivative liability~~others, ~~which~~SLO ~~reduced~~3 ~~the~~Holdings, ~~value of Equity~~Inc. ~~The Company re-measured the fair value of the embedded conversion feature on June 30~~, ~~2013 using the Black-Scholes valuation~~Michael ~~model~~Forster, ~~with~~and ~~the~~Zirk ~~following~~Engelbrecht ~~assumptions:~~(“Other ~~market~~Defendants”). ~~price~~We ofhave ~~$0.414;~~since ~~exercise~~determined ~~price~~that ofthe ~~$0.10;~~company ~~discount~~named ~~rate~~in ofthis ~~1.41%;~~suit ~~expected volatility~~is ofPower ~~211%~~Save ~~and~~Energy anCorporation, ~~expected~~a ~~life~~Delaware ofcorporation ~~one~~and ~~(1) year.~~not ~~The~~our ~~change~~predecessor incompany, ~~fair~~Power ~~value~~Save ofEnergy ~~$266~~Company,~~594~~ ~~was recorded as~~ a ~~decrease~~Utah ~~to the embedded~~corporation. ~~derivative~~The ~~liability,~~Company ~~and~~is ~~the~~not ~~gain~~a ~~was~~judgment ~~recorded~~debtor in ~~earnings~~this matter.

1716

The Company ~~re-measured~~was engaged in litigation in the ~~fair~~Supreme ~~value~~Court ofin the ~~embedded~~ ~~conversion~~County ~~feature~~of onWestchester, ~~September~~New 30York, Index ~~2013~~No. ~~using~~11139/2009, in the ~~Black~~matter Steeneck v. Power-~~Scholes~~Save ~~valuation~~and ~~model~~Engelbrecht. The ~~with~~claim ~~the~~was ~~following~~brought ~~assumptions:~~before ~~market price~~the ofCourt ~~$0.19;~~on ~~exercise~~or ~~price~~about ofMay ~~$0.10;~~8, ~~discount~~2009, ~~rate~~although ofthe ~~.10%;~~defendants ~~expected~~were ~~volatility~~never notified of ~~133~~the action until September 2012.9% ~~and~~Putting anaside ~~expected~~pleading ~~life~~in ofthe ~~one~~alternative (~~1) year.~~duplicative claims under different legal theories for the same acts/omissions ~~The~~to ~~change~~act) inthe ~~fair~~claim ~~value~~appears ofto be for approximately $~~857~~200,~~437~~000. As reported on Form 8-K filed with the Commission on January 18, 2013, the Company was ~~recorded~~informed asthat on January 10, 2013 the Court filed and entered a ~~decrease~~Decision to& Order stating that the ~~embedded~~statute ~~derivative~~of limitations ~~liability,~~of the action had expired and that the ~~gain~~plaintiff is not entitled to the relief that was ~~recorded~~sought. The plaintiff’s inmotion ~~earnings~~was denied and the case is now marked as disposed by the court.

InThe ~~July 2013 the~~ Company’s ~~sold~~subsidiary, ~~a total~~Sulfatos ~~of 19~~Chile,~~176~~ ~~Series~~is ~~“A”~~engaged ~~Shares~~in toarbitration ain ~~small~~Chile, ~~group~~Docket ofNumber ~~accredited~~1639-2012 ~~investors~~before ~~at $17~~Mr.00 ~~per~~Andres ~~share~~Molina ~~for~~del aRio, ~~total~~whereby ofFranciso ~~$325,992.~~Javier ~~Each~~Morales ~~Series~~Rivera ~~“A”~~E.I.R.L ~~Share~~and isNunez ~~convertible~~Ojeda ~~into~~y ~~100~~da ~~shares~~Silva ofLLC ~~Company~~asked ~~Common~~for ~~Stock upon~~ the ~~satisfaction~~termination of ~~certain~~the ~~terms~~Engineering and ~~conditions. See~~ ~~Note~~Construction 8contract ~~– Stockholders’ Equity. The Company calculated the fair value~~ of the ~~embedded conversion~~Anica ~~feature~~Plant onand ~~September~~sought ~~30,~~damages ~~2013 using the Black-Scholes valuation model with the following assumptions: market prices~~ of $~~0.19;~~1,989,300 ~~exercise price~~for breach of $0contract.~~17;~~ ~~discount~~This ~~rate~~matter ofwas ~~.10%;~~settled ~~expected~~on ~~volatility~~May of6, ~~133.9%~~2014 ~~and~~by anway ~~expected life~~ of ~~one~~a ~~(1) year.~~public ~~The~~deed ~~fair value~~with ofthe ~~$145,667~~claimants ~~was~~and ~~recorded~~respondents asboth adismissing ~~deemed~~their ~~derivative~~claims ~~liability~~and counterclaims respectively.

InThe ~~August~~Company’s ~~and~~subsidiary, ~~September~~Sulfatos Chile, ~~2013~~is ~~the~~engaged ~~Company~~in ~~sold a total~~arbitration ofin ~~130~~Chile,~~000~~ ~~Series~~Docket ~~“A”~~Number ~~Shares~~5765-2013 tobefore aMr. ~~small~~Mauricio ~~group~~Izquierdo, ofwhereby ~~accredited~~in ~~investors~~May atof ~~$5.00~~2013 ~~per~~Minera Anica ~~share~~S.A. asked for athe ~~total~~ dissolution of ~~$650,000.~~Sulfatos ~~Each~~Chile ~~Series “~~S.A”. ~~Share~~as isa ~~convertible~~consequence ~~into~~of ~~100~~a ~~shares~~breach of ~~Company~~the ~~Common~~stockholders’ ~~Stock~~agreement ~~upon~~by Santa ~~the~~Teresa ~~satisfaction~~Minerals ~~of certain~~and ~~terms~~seeking ~~and~~a ~~conditions. See~~to ~~Note~~be 8determined –amount ~~Stockholders’~~of ~~Equity.~~damages ~~The~~to ~~Company~~be ~~calculated~~discussed ~~the~~in ~~fair~~a ~~value~~different stage of the trial. Bluestone ~~embedded~~SpA ~~conversion~~(a ~~feature~~wholly onowned ~~September~~subsidiary 30of Lustros Chile S.A.), ~~2013~~Santa ~~using~~Teresa ~~the~~and ~~Black-Scholes~~Lustros ~~valuation~~Chile ~~model~~SpA. ~~with~~filed ~~the~~their ~~following~~responses ~~assumptions:~~to ~~market~~the claim, ~~prices~~asking ofthe ~~$0.19;~~Court ~~exercise~~to ~~price~~dismiss ~~of $0~~it.~~05;~~ ~~discount~~Also, ~~rate~~Bluestone ofSpA ~~.10%;~~filed ~~expected~~a ~~volatility~~counter ofclaim ~~133~~against Minera Anica S.9%A. ~~and~~Minera anAnica ~~expected~~alleging, ~~life~~among other things, a breach of ~~one~~the ~~(1) year. The~~articles ~~fair~~of ~~value~~incorporation of ~~$1,859,970~~Sulfatos ~~was~~Chile ~~recorded~~S.A. asThe aprobatory ~~deemed~~stage ~~derivative~~of ~~liability~~this case is still pending.

~~Note~~The 11Company’s subsidiary, Lustros Chile SpA, is engaged in arbitration in Chile, Docket Number 1933-2013, ~~Subsequent~~before ~~Events~~Mr. Juan Carlos Varela M. whereby Nueva Pudahuel filed a request for arbitration before the Center for Arbitration and Mediation of the Santiago Center of Commerce in December of 2013 against Lustros Chile, SpA, a wholly owned subsidiary of the Company, asking for the termination of the tails contract referred to the “Congo” project. It is also asking for the restitution of some properties, the payment of due rent, and damages in the amount of $3,017,191, (i) USD 775,396.5 for unpaid rents 2013-2014; (ii) USD 77,539.65 for each month of delay; (iii) UF 50.000.- under penalty clause. Lustros is asking for the termination of the contract, plus damages of UF 50.000 in a counterclaim under the penalty clause. On July 31, 2014 we filed our rejoinder to their claim and our rebuttal to our counter claim. On September 16, 2014 and September 29, 2014, the parties attended conciliatory hearings before the arbitrator. The arbitrator conceded an extension for the parties to continue conversations about the possibility to settle. That extension ended on October 6, 2014. In addition, Lustros Chile SpA has filed a civil law action, objection to an arbitrator Docket Number 111-2014 before the 23rd Civil Trial Court in Santiago. We are asking the Civil Trial Court to declare that Mr. Varela, as an arbitrator for the case Docket Nº 1933-2013 cannot continue the arbitration because of his objection in the process. This action was brought since the arbitrator filed a preliminary decision on the matter before he was allowed to do so. Therefore, we believe that he lacks impartiality for the final ruling. On October 16, 2014, we were informed that an injunction order was granted by Mr. Varela and executed on Lustros Chile SpA’s assets in the arbitration. As a consequence, the following assets are and will remain seized: Lustros Chile SpA’s shares in Sulfatos (600,000 shares though it is alleged that Lustros Chile SPA does not own any property or shares in Sulfatos Chile S.A.); 24,000 shares in Bluestone SpA; bank account ending in 0748 at Itaú Bank; all credit that Lustros Chile SpA has against Sulfatos Chile S.A.; and all credit related to the current account between Lustros Chile SpA and Sulfatos Chile S.A. On October 16, 2014 the Company’s bank account at Itau Bank was levied for 29,019,497 CLP or approximately $49,636 US Dollars. These measures will remain in place until Lustros Chile SpA pays Nueva Pudahuel the full claimed amount, offers assets as guarantee, or arrives at a settlement. Lustros Chile SpA continues to vigorously defend against the actions taken and is working through its Chilean attorneys to resolve these matters as soon as reasonably possible. The arbitration and the trial are in their final stages, the parties having presented their main arguments and means of proof however no decision has been made as of the time of this filing. Our copper sulfate processing plant is currently shut down pending resolution of this matter. Should the arbitrator decide against the Company, it may be forced to liquidate some or all of its assets to satisfy the judgment. On February 2, 2015, our Chilean counsel reported the following with regard to the ongoing arbitration of the Congo Project. The Chilean representatives of Lustros were served with an interim ruling that revoked the following measures previously put in place:

In accordance with Accounting Standards Codification Topic No. 855 “Subsequent Events” (ASC 855), the Company has evaluated subsequent events through the time between the end of the reporting period and November 14, 2013 and has found the following events to report:17

On· ~~October~~Injunction ~~16,~~over ~~2013, Magna converted $25,000 of~~ the ~~$406~~600,~~271 Magna Note into 202,429 shares of Common Stock. On November 11, 2013, Magna converted an additional $25,~~000 ~~of the $406,271 Magna Note into 202,429~~ shares ofin ~~Common~~Sulfatos ~~Stock~~Chile S.A.

In· ~~October~~Injunction ~~2013~~over ~~the~~any Board of Directors of the Company approved the sale of up to an additional 50,000 Preferred Series “A” Shares of the Company (Series “A” Shares) at a purchase price of $5.00 per share. Each Series “A” Share is convertible into 100 shares of Company Common Stock upon the satisfaction of certain terms and ~~conditions. The~~all ~~Series~~credit ~~“A”~~that ~~Shares~~Lustros were offered to small group of accredited investors already familiar with the Company in a private placement transaction exempt from registration under Section 4(2) of the Securities Act of 1933. The termination date of the offering was October 31, 2013. The offering was only available to this small group of accredited investors and this disclosure does not constitute an offer to sell securities to any persons whatsoever. As of October 31, 2013, 50,000 subscriptions had/has ~~been~~against ~~sold~~Sulfatos ~~for~~Chile ~~$250,000, $210,000 in debt conversion and $40,000 in cash proceeds~~S.A.

18· Injunction over all funds that belong to Lustros under the current merchant account (cuenta corriente mercantil) with Sulfatos Chile S.A.

~~ITEM 2. MANAGEMENT'S~~· ~~DISCUSSION~~Injunction ~~AND~~over ~~ANALYSIS~~Lustros’ OFshare ~~FINANCIAL~~in ~~CONDITION~~Bluestone ~~AND RESULTS OF OPERATIONS~~SpA.

~~Overview~~The company’s subsidiary, Sulfatos Chile S.A., in engaged in litigation before the 8th Civil Trial court of Santiago, Docket Nº 18242-2013, in the matter Nueva Pudahuel S.A. v. Sulfatos Chile S.A. The claim was brought before the court on or about November 2013. Nueva Pudahuel S.A. is claiming for the payment of invoices for a total amount of $58,386.61. The company has filed a formal opposition to such claim, under articles 464 et seq of the Chilean Civil Procedural Code., which is currently in the probatory stage.

WeThe ~~are~~Company’s asubsidiary, ~~pre-revenue development stage~~Sulfatos ~~company~~Chile ~~that~~S.A. ~~intends~~is toinvolved ~~market~~in ~~and~~various ~~sell~~labor ~~the~~lawsuits ~~high~~with ~~quality~~former ~~food-grade~~employees ~~copper~~that ~~sulfate~~are ~~obtained~~likely byto ~~processing~~have ~~copper~~an ~~ores~~unfavorable ~~and~~outcome. ~~tailings~~We have ataccrued ~~Company-owned~~approximately ~~processing~~$345,000 ~~facilities~~as inof ~~Chile~~the date of this filing to handle these claims.

OnThe ~~March~~Company’s 9subsidiary, ~~2012, Lustros acquired all~~Sulfatos ofChile ~~the outstanding capital stock and rights to acquire capital stock of Bluestone,~~ S.A. ais ~~Chilean~~engaged ~~corporation ("Bluestone"),~~ in ~~exchange~~litigation ~~for~~before ~~60,000,000 shares of its common stock (~~the ~~"Bluestone~~4th ~~Acquisition").~~Civil AsTrial Court of ~~the closing~~Santiago, ~~these~~Docket ~~shares represented~~No ~~96.7% of Lustros' outstanding common stock. For financial reporting purposes~~25496-2014, ~~the~~in ~~Company has treated~~ the ~~Bluestone~~matter ~~Acquisition~~of asOryxeio aIngenieria ~~reverse~~Limitada ~~acquisition~~v. ~~with~~Sulfatos ~~Bluestone~~Chile ~~the~~S.A. ~~acquiring~~On ~~entity~~December ~~and~~22, ~~Lustros~~2014 asSulfatos ~~the~~Chile ~~acquired entity~~S.A. Aswas adeclared ~~result,~~bankrupt by the ~~Company's~~court. ~~financial~~The ~~statements~~Board ~~reflect~~of ~~the~~Directors ~~financial information~~ of ~~Bluestone~~Sulfatos ~~prior~~Chile toS.A. ~~March~~decided 9,not ~~2012~~to ~~and~~oppose the ~~combined~~bankruptcy ~~entity on and after March 9, 2012~~process. ~~Because~~The ~~Bluestone~~Company ~~commenced~~will ~~operations~~provide inmore ~~January~~information on ~~2012,~~these ~~there~~proceedings ~~are~~via noa ~~results~~Current ofReport ~~operations~~on ~~for~~Form ~~Bluestone~~8-K ~~prior~~as ~~to that~~it ~~date~~becomes available.

OnOther ~~February~~than ~~15,~~the ~~2012~~foregoing, ~~Bluestone~~we ~~purchased a~~know ~~60%~~of ~~equity interest in Sulfatos Chile~~no material, ~~S.A.~~existing ~~from~~or ~~Santa~~pending ~~Teresa~~legal ~~Minerals~~proceedings ~~S.A.,~~against ~~a Chilean corporation ("Santa Teresa Minerals"). The purchase price for~~ the ~~equity interest was: (a) a 20% interest in Bluestone; (b) $2.2 million~~Company, ~~with~~nor ~~$1.1~~are ~~million paid~~we byinvolved ~~assumption~~as of a ~~demand~~plaintiff ~~loan payable by Santa Teresa Minerals to Angelique de Maison, and the balance of $1.1 million to be paid~~ in ~~monthly~~any ~~installments~~material ~~from time to time upon demand by Santa Teresa Minerals. As of December 31, 2012, the entire~~proceeding ~~purchase~~or ~~price~~pending ~~has been paid~~litigation. OnThere ~~October~~are ~~16,~~no ~~2012~~proceedings ~~Angelique~~in ~~de Maison entered into an agreement with Santa Teresa Minerals pursuant to~~ which ~~Santa~~our ~~Teresa~~director, ~~Minerals~~officer ~~waived~~or ~~and released~~ any ~~claim~~affiliates, toor any ~~Equity~~registered ~~Interests in Bluestone~~ or ~~Lustros and their affiliated~~beneficial ~~companies~~shareholder, ~~with~~is ~~Bluestone~~an ~~and~~adverse ~~Lustros Inc. express third~~ party ~~beneficiaries~~or ~~of that waiver and release. As such, Santa Teresa Minerals' 20% interest in Bluestone~~ has ~~been cancelled, and Bluestone is~~ a ~~wholly~~material ~~owned~~interest ~~subsidiary~~adverse ~~of Lustros. This acquisition has been treated as an "asset purchase" for financial reporting purposes. Because the acquisition was between related parties, the purchase price has been allocated~~ to ~~additional~~our ~~paid-in capital and the assets and liabilities were carried over at historical costs~~interest. ~~Results of operations for Sulfatos have been reflected in the Company's financial statements from the closing date.~~

OnNote ~~March~~10 ~~25, 2012, the Company sold the assets (including the "Power~~-~~Save"~~ ~~name)~~Subsequent of its renewable energy and energy savings product business in which it had engaged prior to the Bluestone Acquisition, to the former management of the Company. The purchase price for the assets was the cancellation of obligations for unpaid salaries and other monies owed to prior management and the assumption by the buyer of certain liabilities of the Company related to the Power-Save business.Events

WeIn ~~will~~accordance ~~process~~with ~~copper~~Accounting ~~ore at~~Standards ~~our~~Codification ~~copper~~Topic ~~sulfate processing plant in Puerto Oscuro, Chile~~No. We855 ~~will~~“Subsequent ~~obtain~~Events” ~~the~~(ASC ~~copper ore from our 1~~855),~~325~~ ~~hectare Anica copper mine or by purchase from local artisanal miners. On July 25, 2013~~ the Company ~~announced~~has ~~that~~evaluated ~~Sulfatos~~subsequent ~~Chile~~events ~~SpA,~~through ~~had~~the ~~begun~~time ~~pilot~~between ~~production~~the ofend ~~Pentahydrate Copper Sulfate at its multi-million dollar, state-~~of- the~~-art~~ ~~facility.~~reporting ~~The~~period ~~plant capacity is three times its original design~~ and isMarch ~~capable of processing up to 15~~24,~~000~~ ~~tons~~2015 ~~of mineral per month. It is currently permitted at 5,000 tons per month~~ and ~~permit~~has ~~applications~~found for increased production will be filed very shortly. Current production is expected to result in approximately 529,000 pounds (240,000 kilos) of Pentahydrate Copper Sulfate per month. The current plant capacity of 15,000 tons per month will occur upon receiving permits for unlimited production which we expect to receive in the ~~fourth~~following ~~quarter~~events ~~of 2013 or first quarter of 2014. Cash flow from this first phase is expected~~ to ~~begin in the fourth quarter of 2013 or the first quarter of 2014 and will fund future expansion for an additional 25,000 ton processing plant.~~report:

~~Our~~On ~~consolidated~~March ~~financial~~31, ~~statements contain~~2011, ~~our~~Sulfatos ~~accounts~~Chile ~~and~~SA, ~~those~~a subsidiary of ~~our~~the ~~consolidated~~Company ~~subsidiaries,~~purchased ~~all~~property oflocated ~~which~~in ~~are~~Los ~~wholly-owned~~Vilos, ~~at September 30~~Chile, ~~2013~~and ~~except~~the ~~for Sulfatos~~corresponding ~~and~~water ~~Mineraltus~~rights, ~~which~~under wea ~~control.~~Purchase and ~~Due~~Sale toAgreement (the ~~structure~~“Purchase ofand ~~our~~Sale ~~ownership~~Agreement”) ~~interests~~from inMrs. ~~Sulfatos~~MARÍA ~~and~~ESTER ~~Mineraltus,~~BUGUEÑO inPÉREZ ~~accordance~~and ~~with~~Ms. ~~generally~~EMA ~~accepted~~PÉREZ ~~accounting~~ANDRADE ~~principles,~~(the we“Landowners”). ~~consolidate~~The price of the ~~financial~~Purchase ~~statements~~and ofSale ~~Sulfatos~~Agreement ~~and~~was ~~Mineraltus~~the ~~into~~sum ~~our~~of ~~financial~~CLP$280,000,000, ~~statements~~or ~~rather~~approximately ~~than~~$501,241 ~~present~~US ~~our~~dollars ~~ownership~~at ~~interests~~today’s asexchange ~~equity~~rate, ~~investments~~which was to be paid in three installments. AsThe ~~such~~first installment of CLP$100,000,000 was paid at the ~~non-controlling~~time ~~interests~~of inthe ~~Sulfatos and~~signing ~~Mineraltus~~of ~~are~~the ~~reflected~~public asdeed ~~income~~of ~~attributable~~purchase. The second installment of CLP$90,000,000, equivalent to ~~minority~~4,171.67 ~~interests~~unidades inde ~~our~~fomento, ~~consolidated~~was ~~statements~~payable 365 days from the date of ~~operations~~the Purchase and asSale ~~a component~~Agreement ofin ~~stockholders’~~its ~~equity~~equivalent in onpesos ~~our~~as ~~consolidated~~of ~~balance~~the ~~sheet~~effective date. ~~Throughout~~The ~~this~~third ~~section,~~installment ~~when~~of weCLP$90,000,000, ~~refer~~equivalent to ~~“our” consolidated~~4,171.67 ~~financial~~unidades ~~statements~~de fomento, wewas ~~are~~payable 365 ~~referring~~days tofrom the ~~consolidated~~date ~~results~~of ~~for~~the ~~us,~~Purchase ~~our~~and ~~wholly-owned~~Sale ~~subsidiaries~~Agreement ~~and~~in its equivalent in pesos as of the ~~consolidated results~~effective date. As of ~~Sulfatos~~June ~~and~~12, ~~Mineraltus~~2014, Sulfatos ~~adjusted~~owed ~~for~~the ~~non-controlling~~Landowners ~~interests~~the insum ~~Sulfatos~~of ~~and Mineraltus~~7,900.67 ~~All~~unidades ~~significant~~de ~~intercompany transactions~~fomento, ~~and~~equivalent ~~balances~~to ~~have~~CLP$189,405,053, ~~been~~or ~~eliminated~~approximately in$339,063 US dollars (the ~~consolidation~~“Debt”), offor ~~our~~the ~~financial~~last ~~statements~~two payments under the Purchase and Sale Agreement.

19On April 22, 2014 Angelique de Maison was appointed to the Board of Directors.

~~RESULTS~~On OFJune ~~OPERATIONS~~12, 2014, Sulfatos Chile SA and the Landowners signed a Loan Refinance Agreement (the “Loan Refinance Agreement”) whereby the parties agreed that Sulfatos Chile SA will pay the Debt in thirty-seven ~~Three~~installments, which will accrue interest at a rate of 3% per year, payable at the end ~~and~~of ~~Nine~~the ~~Months~~last ~~Ended~~installment. ~~September~~The 30parties agree that the total amount of the interest accrued will be CLP$7,822,942, ~~2013~~or approximately $14,004 ~~Three~~US ~~Months~~dollars. ~~Ended~~The ~~September~~first 30installment for CLP$10,000,000, ~~2012~~or ~~and~~approximately ~~From~~$17,901 ~~Inception~~US ~~(January~~dollars, 26was paid at the signing of the agreement. The following 35 installments of CLP$5,000,000 ~~2012)~~each, toor ~~September~~approximately $8,951 US dollars, will be paid monthly within 30the first five days of each month, ~~2012~~beginning in August of 2014. The final installment, number 37, for the remaining unpaid principal and all accrued interest, will be made in one payment for a total of CLP$12,227,995, or approximately $21,890 US dollars.

The following discusses results of operations for the three and nine months ended September 30, 2013, for the three months ended September 30, 2012 and from Inception (January 26, 2012) to September 30, 2012.18

~~Revenue~~On ~~for~~June ~~the three and nine months ended September 30~~16, ~~2013 was $66~~2014,~~580~~ ~~compared~~Angelique tode ~~$2,959~~Maison ~~and $54~~converted 178,~~900~~200 ~~for~~shares ~~the~~of ~~three~~Series ~~months~~A ~~ended~~Preferred ~~September~~Stock ~~30,~~into ~~2012 and from Inception (January 26~~17, ~~2012) to September 30~~820,000 ~~2012,~~shares ~~respectively, all~~ of ~~which~~Common ~~was~~Stock ~~derived from the sale~~ of ~~copper and copper sulfate. Gross profit/(loss) for~~ the ~~three~~Company and ~~nine~~a ~~months~~company ~~ended~~controlled ~~September~~by ~~30,~~Ms. de ~~2013~~Maison ~~was~~converted ~~($101,648) compared to $~~2,~~959~~941 ~~and~~shares ~~$54,900~~of ~~for~~Series ~~the three months ended September 30, 2012 and from Inception (January 26, 2012) to September 30, 2012, respectively.~~ A ~~gross~~Preferred ~~loss~~Stock ~~was~~into ~~incurred for the three and nine months ended September 30~~294,100 ~~2013~~shares ~~due~~of toCommon ~~the~~Stock ~~high cost~~ of ~~goods sold required for our pilot production. We expect revenues to increase significantly after~~ the ~~full scale launch of our copper sulfate production facility later this year~~Company.

~~Operating~~On ~~expenses~~July 24, 2014, Lustros Chile SpA, the wholly-owned subsidiary of the Company, which acts as the operating subsidiary for the ~~three~~purpose ~~and~~of ~~nine months~~running ~~ended~~the ~~September~~Company’s 30Chilean operations, ~~2013~~signed ~~were~~a ~~$949~~manufacturing contract with Sulfatos Chile S.A,~~467~~ of which 60% of the equity interests are owned by Lustros Chile and ~~$2,628,818~~the ~~respectively~~balance ~~compared~~is owned by third parties. Pursuant to ~~$1,619,443~~this ~~and~~manufacturing $3contract,~~362,846~~ ~~for~~ the ~~three~~Company’s copper sulfate business ~~months~~will ~~ended~~be ~~September~~apportioned ~~30,~~between ~~2012~~Lustros Chile SpA which will have sole responsibility for sales and ~~from~~purchasing ~~Inception~~and ~~(January~~supply 26of raw materials, and ~~2012)~~Sulfatos Chile S.A. will solely concentrate on manufacturing. Further pursuant to ~~September~~this 30manufacturing agreement, ~~2012~~both entities have agreed to render services exclusively with respect to the Company’s copper sulfate business, ~~respectively.~~and ~~Operating~~neither ~~expenses~~entity may ~~were~~render ~~primarily~~services ~~associated~~to ~~with~~third parties. The agreement sets the ~~operations~~price of copper sulfate to be produced by Sulfatos inChile S.A. to be the actual ~~ordinary~~manufacturing ~~course~~cost (excluding the cost of ~~business~~raw asmaterials ~~well~~which asare ~~legal~~provided ~~and~~by ~~accounting~~Lustros ~~expenses~~Chile SpA) plus 15%. The agreement ~~required~~has a ten year term which automatically extends for additional one year periods unless written notice is given by aone ~~public~~party ~~company~~to the other at least two months before the end of the original or any renewal term.

~~Due~~On toAugust ~~the~~14, ~~losses~~2014, ~~during~~a ~~the~~shareholder ~~period~~converted ~~the~~17,941 ~~Company~~shares ~~has~~of ~~not~~Series ~~recorded~~A aPreferred ~~provision~~Stock ~~for~~into ~~income~~1,794,100 ~~taxes~~shares of Common Stock of the Company.

~~FINANCIAL~~On ~~CONDITION~~August 26, ~~LIQUIDITY~~2014, ~~AND~~Angelique ~~CAPITAL~~de ~~RESOURCES~~Maison resigned as a member of the Board of Directors of Lustros Inc. (the “Company”). Her resignation is not due to a disagreement with the Company.

AsOn of September 3023, ~~2013~~2014, ~~our~~Trisha ~~current~~Malone ~~liabilities~~resigned ~~exceeded~~as ~~our~~the ~~current~~Chief ~~assets~~Financial byOfficer ~~$2,063,668~~of the Company. ~~For~~Her resignation is not due to a disagreement with the ~~nine~~Company. ~~months~~Ms. ~~ended~~Malone ~~September~~will ~~30,~~remain as ~~2013,~~a weconsultant ~~generated~~of ~~cash~~the inCompany to assist with its financial reporting obligations until such time as a new Chief Financial Officer is appointed. She will be compensated at the ~~amount~~rate of $110,~~926,~~000 ~~from~~ ~~the~~per ~~sale~~month ofand ~~preferred~~may ~~stock,~~be ~~$550,000~~terminated ~~from~~by the ~~sale~~Company ofat ~~common~~any ~~stock,~~time ~~$69~~upon 30 days’ prior notice. Upon Board confirmation,~~000~~ inMr. ~~convertible~~Farley ~~notes~~shall ~~payable~~act as both the Principal Executive Officer and ~~$296,798~~Principal ~~from~~Financial ~~related~~Officer ~~party~~of ~~loans,~~the ~~repaid~~Company ~~$309,700~~until insuch ~~related~~time ~~party~~as ~~notes~~a ~~and~~new ~~$40,587~~Chief inFinancial ~~notes~~Officer ~~payable~~is appointed.

~~Cash~~From ~~Requirements~~April 1, 2014 through March 25, 2015 Bass Energy and LV Ventures, Inc. provided the Company with $2,541,454 in cash through two year convertible notes which bear interest at 5% per annum. These notes are convertible into shares of the Company’s Common Stock at the rate of $0.16 per share with 25% warrant coverage at $0.25 per share which is identical to the financing round closed by the Company in December of 2013.

~~During~~The ~~the~~Company’s ~~next~~subsidiary, ~~twelve~~Lustros Chile ~~months~~SpA, ~~the~~is ~~Company~~engaged in arbitration in Chile, Docket Number 1933-2013, before Mr. Juan Carlos Varela M., a Chilean arbitrator, ~~plans~~pursuant to ~~satisfy~~which ~~its~~Nueva ~~cash~~Pudahuel ~~requirements~~is byasking ~~income~~for ~~from~~the ~~operations~~termination of the tails contract referred to the “Congo” project. He is also demanding the restitution of some alleged properties, ~~loans~~the payment of allegedly due rent, and alleged damages in the amount ~~sale~~of $3,017,191 US Dollars: (i) $775,396.50 US Dollars for unpaid rents 2013-2014; (ii) $77,539.65 US Dollars for each month of ~~debt~~delay; and ~~equity~~(iii) ~~securities~~UF (Unidad de Fomento, a funds index used in Chile) 50.000 ~~There~~or ~~can~~approximately be$2.1m under an alleged penalty noclause. ~~assurance~~Lustros ~~that~~is asking for the ~~Company~~termination ~~will~~of bethe ~~successful~~contract, plus damages of UF 50.000 or approximately $2.1m in ~~raising~~a counterclaim under the ~~capital~~penalty itclause. ~~requires~~On ~~through~~July ~~loans~~31, or2014 we filed our rejoinder to their claim and our rebuttal to our counterclaim. On September 16, 2014 and September 29, 2014, the ~~sale~~parties ofattended ~~securities~~conciliatory hearings before the arbitrator. ~~While~~The arbitrator conceded an extension ~~directors~~for the parties to continue conversations about the possibility to settle. That extension ended on October 6, ~~officers~~2014. In addition, Lustros ~~and~~Chile ~~principal~~SpA ~~shareholders~~has ~~provided~~filed ~~funding~~a civil law action, objection to an arbitrator Docket Number 111-2014 before the ~~Company~~23rd ~~through~~Civil ~~September~~Trial 30Court in Santiago. We are asking the Civil Trial Court to declare that Mr. Varela, as an arbitrator for the case Docket Nº 1933-2013, cannot ~~they~~continue ~~have~~the noarbitration ~~commitment~~because of his objection in the process. This action was brought since the arbitrator filed a preliminary decision on the matter before he was allowed to ~~provide~~do ~~additional~~so. ~~funding~~Therefore, we believe that he lacks impartiality for the final ruling.

~~Sulfatos Chile~~19

~~The~~On ~~Company~~October ~~acquired~~16, ~~property and equipment owned by Sulfatos Chile with a historical cost value of $7~~2014,~~331,655~~ inwe ~~the~~were ~~Bluestone~~informed ~~Acquisition~~that an ininjunction ~~March~~order ~~2012. The~~was ~~Company has~~granted ~~spent~~by ~~an additional $1~~Mr.7M inVarela ~~property, plant~~ and ~~equipment~~executed ~~purchases~~on asLustros ofChile ~~September~~SpA’s ~~30,~~assets ~~2013 toward the completion of the copper sulfate processing plant~~ in ~~Puerto Oscuro, Chile. The plant was completed at~~ the ~~end of July~~arbitration.

~~Going~~As ~~forward~~a consequence, the following assets are and will remain seized: Lustros Chile SpA’s shares in Sulfatos (600,000 shares); 24,000 shares in Bluestone SpA; bank account ending in 0748 at Itaú Bank; all credit that Lustros Chile ~~expects~~SpA has against Sulfatos Chile S.A.; and all credit related to ~~incur~~the ~~average~~current ~~monthly~~account ~~costs~~between Lustros Chile SpA and Sulfatos Chile S.A. On October 16, of2014 the Company’s bank account at Itau Bank was levied for 29,019,497 CLP or approximately $~~220~~49,~~000~~636 ~~once~~US itDollars. ~~begins~~These measures will remain in place until Lustros Chile SpA pays Nueva Pudahuel the full ~~production~~claimed amount, offers assets as guarantee, or arrives at a settlement. Lustros Chile SpA continues to vigorously defend against the ~~copper~~actions ~~sulfate~~taken ~~processing~~and ~~plant.~~ is working through its Chilean attorneys to resolve these matters ~~These~~as ~~costs~~soon ~~will~~as bereasonably ~~paid~~possible. ~~for~~We byhave ~~income~~elected ~~from~~to ~~operations~~shut down our copper sulfate processing plant pending resolution of this matter.

~~Congo~~On ~~Project~~October 22, 2014 a bank account belonging to the Company’s subsidiary, Sulfatos Chile S.A. at BICE Bank was levied for 6,196,654 CLP or approximately $10,599 US Dollars.

OnThe ~~October~~Company’s 18subsidiary, ~~2012,~~Sulfatos Chile ~~the~~S.A. ~~Company~~is ~~entered into~~engaged anin ~~agreement~~litigation ~~pursuant~~before tothe ~~which~~4th ~~the~~Civil ~~Company~~Trial ~~acquired~~Court ~~the~~of ~~land~~Santiago, ~~laboratory,~~Docket ~~tailings~~N⁰ ~~and~~25496-2014, ~~other~~in ~~assets of~~ the ~~closed~~matter ~~mine~~ of LaOryxeio ~~Africana,~~Ingenieria ~~commonly~~Limitada ~~known~~v. asSulfatos ~~the~~Chile ~~"Congo~~S.A. ~~Project”,~~On inDecember ~~the Santiago~~22, ~~Chile~~2014 ~~metropolitan~~Sulfatos ~~area~~Chile S.A. ~~The~~was ~~land~~declared isbankrupt ~~approximately 81~~by the court.2 The ~~hectares~~Board ~~and~~of ~~contains~~Directors anof ~~estimated~~Sulfatos 2Chile S.4A. ~~million~~decided ~~tons~~not ofto ~~copper-rich~~oppose ~~tailings~~the bankruptcy process. The ~~purchase~~Company ~~price~~will ~~was~~provide $7more ~~million payable~~information on these proceedings via a Current Report on Form 8-K as ~~follows:~~it becomes available.

·On ~~$360~~February 2,~~000~~ ~~was~~2015, ~~paid~~our inChilean ~~November~~counsel reported ~~2012~~the ~~for~~following ~~the~~with ~~right~~regard to ~~use~~the ~~all~~ongoing ~~assets~~arbitration ~~and~~of ~~facilities;~~the Congo Project. The Chilean representatives of Lustros were served with an interim ruling that revoked the following measures previously put in place:

· ~~$436,858~~Injunction isover ~~payable upon completion of~~ the ~~copper sulfate processing plant on site no later than November 13~~600,000 ~~2014~~shares asin ~~the~~Sulfatos ~~final~~Chile ~~payment for the assets;~~S.A.

· ~~$6,203,172~~Injunction isover ~~payable~~any inand ~~equal~~all ~~monthly~~credit ~~installments of $77,540 beginning on July 1, 2013 for the lease of the Lo Aguirre main pit. SMP may request~~ that ~~the~~Lustros ~~final 12 lease payments not be made by the Company in exchange for the return of 60.2 hectares of land at their option on or before date the 69th lease payment is made. Lease payments~~ had/has ~~not~~against ~~yet~~Sulfatos ~~begun~~Chile ~~and were in default as of the time of this filing~~S.A.

20· Injunction over all funds that belong to Lustros under the current merchant account (cuenta corriente mercantil) with Sulfatos Chile S.A.

~~The~~· ~~Company~~Injunction ~~has~~over ~~agreed~~Lustros’ toshare ~~remove~~in ~~the tailings~~Bluestone ~~and restore the value of the property so that it can be used for real estate development projects~~SpA. The Company will separate the copper from the tailings with the intention of manufacturing an estimated 24,000 tons of food-grade, penta-hydrated copper sulfate. The Company plans to construct a copper sulfate processing plant on the property to process the tailings at an estimated cost of $6.2 million by November 2014.

~~Future~~Lustros ~~Financing~~Chile SpA continues to vigorously defend against the actions taken and is working through its Chilean attorneys to resolve this matter as soon as reasonably possible. As further developments arise, they will be reported on a current basis.

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions, expansions and exploration activities or if we are able to secure additional financing, whether such financing shall be on favorable terms.20

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this Quarterly Report to the “Company”, “we”, “us” or “our” refer to Lustros, Inc., a Utah corporation (“Lustros”), and its consolidated subsidiaries including, Bluestone, S.A, (“Bluestone”), Lustros Chile SpA (“Lustros Chile”), Mineraltus SA (“Mineraltus”) and Sulfatos Chile, S.A., (“Sulfatos Chile”). The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes to the financial statements included elsewhere in this filing.

We market and sell copper sulfate obtained by processing copper ore raw materials purchased from third parties at a Company-owned processing facility in Chile.

On March 9, 2012, Lustros acquired all of the outstanding capital stock and rights to acquire capital stock of Bluestone, S.A. a Chilean corporation, in exchange for 60,000,000 shares of its common stock (the "Bluestone Acquisition"). As of the closing, these shares represented 96.7% of Lustros' outstanding common stock. For financial reporting purposes, the Company has treated the Bluestone Acquisition as a reverse acquisition with Bluestone the acquiring entity and Lustros as the acquired entity. As a result, the Company's financial statements reflect the financial information of Bluestone prior to March 9, 2012 and the combined entity on and after March 9, 2012. Because Bluestone commenced operations in January 2012, there are no results of operations for Bluestone prior to that date.

On February 15, 2012, Bluestone purchased a 60% equity interest in Sulfatos Chile, S.A. from Santa Teresa Minerals S.A., a Chilean corporation ("Santa Teresa Minerals"). The purchase price for the equity interest was: (a) a 20% interest in Bluestone; (b) $2.2 million, with $1.1 million paid by assumption of a demand loan payable by Santa Teresa Minerals to Angelique de Maison, and the balance of $1.1 million to be paid in monthly installments from time to time upon demand by Santa Teresa Minerals. As of December 31, 2013, the entire purchase price has been paid. On October 16, 2012 Angelique de Maison entered into an agreement with Santa Teresa Minerals pursuant to which Santa Teresa Minerals waived and released any claim to any Equity Interests in Bluestone or Lustros and their affiliated companies, with Bluestone and Lustros Inc. express third party beneficiaries of that waiver and release. As such, Santa Teresa Minerals' 20% interest in Bluestone has been cancelled, and Bluestone is a wholly owned subsidiary of Lustros. This acquisition has been treated as an "asset purchase" for financial reporting purposes. Because the acquisition was between related parties, the purchase price has been allocated to additional paid-in capital and the assets and liabilities were carried over at historical costs. Results of operations for Sulfatos have been reflected in the Company's financial statements from the closing date.

On March 25, 2012, the Company sold the assets (including the "Power-Save" name) of its renewable energy and energy savings product business in which it had engaged prior to the Bluestone Acquisition, to the former management of the Company. The purchase price for the assets was the cancellation of obligations for unpaid salaries and other monies owed to prior management and the assumption by the buyer of certain liabilities of the Company related to the Power-Save business.

We process raw copper ore material at our copper sulfate processing plant in Puerto Oscuro, Chile. We obtain the copper ore by purchase from local corporate and artisanal miners. Our copper sulfate facility began crushing and processing 5,000 tons of raw material per month in the second quarter of 2014. However, the Company shut down the copper sulfate processing plant in December 2014 pending resolution of legal matters and our Sulfatos Chile S.A. subsidiary is currently in the process of bankruptcy (See Part II Item 1 - Legal Proceedings). We currently do not know if or when this will be resolved.

Our consolidated financial statements contain our accounts and those of our consolidated subsidiaries, all of which are wholly-owned at March 31, 2014 except for Sulfatos and Mineraltus, which we control. Due to the structure of our ownership interests in Sulfatos and Mineraltus, in accordance with generally accepted accounting principles, we consolidate the financial statements of Sulfatos and Mineraltus into our financial statements rather than present our ownership interests as equity investments. As such, the non-controlling interests in Sulfatos and Mineraltus are reflected as income attributable to non-controlling interests in our consolidated statements of operations and as a component of stockholders’ equity on our consolidated balance sheet. Throughout this section, when we refer to “our” consolidated financial statements, we are referring to the consolidated results for us, our wholly-owned subsidiaries and the consolidated results of Sulfatos and Mineraltus, adjusted for non-controlling interests in Sulfatos and Mineraltus. All significant intercompany transactions and balances have been eliminated in the consolidation of our financial statements.

Future Financing

RESULTS OF OPERATIONS

The following discusses results of operations for the three months ended March 31, 2014 and the three months ended March 31, 2013.

Revenue for the three months ended March 31, 2014 and March 31, 2013 was $0. We finished pilot production and sales of said production in the fourth quarter of 2013. We made plant adjustments during the first quarter of 2014 and had no production or sales during this quarter. Gross loss for the three months ended March 31, 2014 and March 31, 2013 was $0. We expect revenues to increase after the full scale launch of our copper sulfate production facility which began in the second quarter of 2014. However, the Company shut down the copper sulfate processing plant in December 2014 pending resolution of legal matters and our Sulfatos Chile S.A. subsidiary is currently in the process of bankruptcy (See Part II Item 1 - Legal Proceedings). We currently do not know if or when this will be resolved.

Operating expenses for the three months ended March 31, 2014 were $1,395,561 as opposed to $766,535 for the three months ended March 31, 2013. Operating expenses were primarily associated with the operations of Sulfatos in the ordinary course of business as well as legal and accounting expenses required by a public company. In addition, we began depreciating the processing plant in the first quarter of 2014 and had a significant increase in foreign exchange losses.

Due to the losses during the period the Company has not recorded a provision for income taxes. The Company will carry back any net operating loss to recover taxes paid in prior periods.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES.

Liquidity and Capital Resources

Our primary source of liquidity has historically been cash generated from issuances of our equity securities and from debt. From inception through March 31, 2014, we have not generated revenue from operations that was significant enough to produce an operating profit.

Subsequent sources of outside funding will be required to fund the Company’s future growth and will also be required for working capital, capital expenditures and corporate operations if the Company does not reach cash positive cash flow in the near future. No assurances can be given that the Company will be successful in arranging the further funding needed to continue the execution of its business plan including the development and commercialization of new products, or if successful, on what terms. Failure to obtain such funding will require management to substantially curtail, if not cease operations, which will result in a material adverse effect on the financial position and results of operations of the Company.

Cash, Cash Equivalents, and Working Capital

At March 31, 2014 we had cash and cash equivalents of $91,750. At year ended December 31, 2013 we had $615,469 of cash and cash equivalents. At March 31, 2014 we had a working capital deficit of $2,402,752 compared to a working capital deficit of $1,959,851 at December 31, 2013. Cash equivalents consist of short-term liquid investments with original maturities of no more than six months and are readily convertible into cash.

The amount of cash and cash equivalents and short-term investments which we hold outside the U.S. was $31,638 as of March 31, 2014 and $128,063 as of December 31, 2013. These were not needed for our domestic operations, but if they were, we would be required to accrue and pay federal taxes to repatriate these funds. We intend to permanently invest these foreign amounts outside of the U.S. and our current plans do not demonstrate the need to repatriate the foreign amounts to fund our domestic operations.

Cash Flows from Operating Activities

During the three months ended March 31, 2014, $1,191,578 was used for operating activities. Of the net cash used in three months ended March 31, 2014, $1,013,843 was used to fund the operations of the business while $177,735 was used in changes in operating assets and liabilities. Of the net cash used for operating activities of $712,402 during the same period in 2013, $778,365 was used to fund the operations of the business while $65,963 was generated from changes in operating assets and liabilities

Cash Flows from Investing Activities

Net cash used by investing activities for the three months ended March 31, 2014 was $0 compared to net cash used by investing activities of $139,510 for the same period in 2013. Investing activities were primarily for purchases of property and equipment.

Cash Flows from Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2014 was $300,650 compared to net cash provided by financing activities of $730,922 for the same period in 2013. Financing activities were primarily sales of convertible promissory notes and sales of the Company’s Common and Preferred Stock. Cash from financing activities is used to fund ongoing operational requirements, research & development, administrative and capital needs.

Significant Financing Arrangements

From March 5, 2014 through March 25, 2015 Bass Energy and LV Ventures, Inc. provided the Company with $2,841,454 in cash through two year convertible notes which bear interest at 5% per annum. These notes are convertible into shares of the Company’s Common Stock at the rate of $0.16 per share with 25% warrant coverage at $0.25 per share which is identical to the financing round closed by the Company in December of 2013.

As of March 31, 2014, our current liabilities exceeded our current assets by $2,402,752. At March 31, 2014, we had cash in the amount of $91,750.

Subsequent sources of outside funding will be required to fund the Company’s working capital, capital expenditures and corporate operations if the Company does not reach cash flow positive. No such financing arrangements currently exist and no assurances can be given that the Company will be successful in arranging the further funding needed to continue the execution of its business plan including the development and commercialization of new products, or if successful, on what terms. Failure to obtain such funding will require management to substantially curtail, if not cease operations, which will result in a material adverse effect on the financial position and results of operations of the Company.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act").

Based upon the required evaluation, the Principal Executive Officer and Principal Financial Officer concluded that as of ~~September~~March 3031, ~~2013~~2014, the Company’s system of controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The Company’s management intends to address the material weaknesses in its disclosure controls and procedures as soon as possible.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

2123

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

InWe ~~September~~previously ~~21,~~were ~~2011,~~notified ~~Chris~~that ~~Frye filed a lawsuit against~~ the Company ~~in California Superior Court alleging, among other things, breach of contract surrounding the Company’s~~ ~~CBS~~was ~~Television~~named ~~solar project. Chris Frye also filed a cross-complaint~~ in a ~~New Mexico~~ action filed by ~~Uni-Rac~~Unirac, ~~involving a similar subject matter~~Inc. ~~The~~in ~~Company~~New ~~vigorously~~Mexico ~~denies~~State ~~all~~Court ~~allegations and insists the lawsuit is an attempt~~ on ~~Chris~~June ~~Frye’s~~22, ~~part to~~2011 ~~evade~~(Unirac, ~~paying~~Inc. ~~an outstanding invoice owed to the Company~~v. ~~The~~Power ~~California~~Save ~~Suit~~Energy ~~has since been dismissed in its entirety and the~~Corporation ~~cross-complaint~~et inal., ~~New~~Case ~~Mexico has been dismissed as well~~No. ~~Chris Frye and Power~~D-~~Save~~202-CV-2011-06295). ~~have~~Also ~~joined~~named ~~forces~~as todefendants ~~combat Uni-Rac~~ in ~~the New~~this ~~Mexico~~lawsuit ~~portion~~were, ofamong ~~the case~~others, ~~which~~SLO is3 ~~reduced to a dispute of less than $200~~Holdings,~~000~~ ~~regarding the racking supplied in relation to the CBS project~~Inc. ~~The liabilities of the Company relating to this lawsuit~~, ~~including the cost of defense, were assumed by~~ Michael Forster, and ~~SLO~~Zirk 3Engelbrecht ~~Holdings,~~(“Other ~~Inc~~Defendants”). inWe ~~connection~~have ~~with~~since ~~their~~determined ~~purchase~~that of the ~~assets~~company ofnamed ~~the~~in ~~Company's~~this ~~renewable~~suit ~~energy and energy savings~~is ~~business~~Power inSave ~~March~~Energy ~~2012.~~Corporation, ~~Assuming~~a ~~they~~Delaware ~~have~~corporation ~~the~~and ~~financial~~not ~~capacity~~our topredecessor ~~pay~~company, ~~any~~Power ~~judgments~~Save ~~and~~Energy ~~the~~Company, ~~costs~~a ofUtah ~~defense,~~corporation. The ~~the~~ Company ~~should have~~is nonot ~~liability~~a ~~with~~judgment ~~respect~~debtor toin this ~~lawsuit~~matter.

~~Other~~The ~~than~~Company was engaged in litigation in the ~~foregoing,~~Supreme weCourt ~~know~~in the County of no ~~material~~Westchester, ~~existing~~New orYork, Index ~~pending~~No. ~~legal~~11139/2009, ~~proceedings~~in ~~against~~the matter Steeneck v. Power-Save and Engelbrecht. The claim was brought before the ~~Company~~Court on or about May 8, ~~nor~~2009, ~~are~~although wethe ~~involved~~defendants aswere anever ~~plaintiff~~notified of the action until September 2012. Putting aside pleading in ~~any~~the ~~material~~alternative ~~proceeding~~(duplicative claims under different legal theories for the same acts/omissions orto ~~pending~~act) ~~litigation~~the claim appears to be for approximately $200,000. ~~There~~As ~~are~~reported noon ~~proceedings~~Form in8-K ~~which~~filed ~~our~~with ~~director,~~the ~~officer~~Commission oron ~~any~~January ~~affiliates~~18, or2013, the ~~any~~Company ~~registered~~was orinformed ~~beneficial shareholder~~that on January 10, is2013 anthe ~~adverse~~Court ~~party~~filed orand ~~has~~entered a ~~material~~Decision ~~interest~~& ~~adverse~~Order stating that the statute of limitations of the action had expired and that the plaintiff is not entitled to ~~our~~the ~~interest~~relief that was sought. The plaintiff’s motion was denied and the case is now marked as disposed by the court.

~~ITEM~~The 1ACompany’s subsidiary, Sulfatos Chile, is engaged in arbitration in Chile, Docket Number 1639-2012 before Mr. ~~RISK~~Andres ~~FACTORS~~Molina del Rio, whereby Franciso Javier Morales Rivera E.I.R.L and Nunez Ojeda y da Silva LLC asked for the termination of the Engineering and Construction contract of the Anica Plant and sought damages of $1,989,300 for breach of contract. This matter was settled on May 6, 2014 by way of a public deed with the claimants and respondents both dismissing their claims and counterclaims respectively.

~~There~~The ~~are~~Company’s nosubsidiary, ~~material~~Sulfatos Chile, ~~changes~~is toengaged ~~risk~~in ~~factors from~~arbitration ~~those~~in ~~included~~Chile, Docket Number 5765-2013 before Mr. Mauricio Izquierdo, whereby in ~~our~~May ~~Form~~of ~~10-K~~2013 Minera Anica S.A. asked for the ~~year~~dissolution ~~ended~~of ~~December~~Sulfatos 31Chile S.A. as a consequence of a breach of the stockholders’ agreement by Santa Teresa Minerals and seeking a to be determined amount of damages to be discussed in a different stage of the trial. Bluestone SpA (a wholly owned subsidiary of Lustros Chile S.A.), ~~2012~~Santa Teresa and Lustros Chile SpA. filed their responses to the claim, asking the Court to dismiss it. Also, Bluestone SpA filed a counter claim against Minera Anica S.A. Minera Anica alleging, among other things, a breach of the articles of incorporation of Sulfatos Chile S.A. The probatory stage of this case is still pending.

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~24

InThe ~~January~~Company’s subsidiary, Lustros Chile SpA, is engaged in arbitration in Chile, Docket Number 1933-2013, ~~through~~before ~~September~~Mr. Juan Carlos Varela M. whereby Nueva Pudahuel filed a request for arbitration before the Center for Arbitration and Mediation of the Santiago Center of Commerce in December of 2013 against Lustros Chile, ~~Magna~~SpA, a wholly owned subsidiary of the Company, asking for the termination ~~converted~~of the tails contract referred to the “Congo” project. It is also asking for the restitution of some properties, the payment of due rent, and damages in the amount of $~~477~~3,~~378~~017,191, (i) USD 775,396.5 for unpaid rents 2013-2014; (ii) USD 77,539.65 for each month of delay; (iii) UF 50.000.- under penalty clause. Lustros is asking for the termination of the contract, plus damages of UF 50.000 in a counterclaim under the penalty clause. On July 31, 2014 we filed our rejoinder to their ~~loans~~claim and $1our rebuttal to our counter claim. On September 16,~~338~~ 2014 and September 29, 2014, the parties attended conciliatory hearings before the arbitrator. The arbitrator conceded an extension for the parties to continue conversations about the possibility to settle. That extension ended on October 6, 2014. In addition, Lustros Chile SpA has filed a civil law action, objection to an arbitrator Docket Number 111-2014 before the 23rd Civil Trial Court in ~~accrued~~Santiago. ~~interest~~We ~~valued~~are asking the Civil Trial Court to declare that Mr. Varela, as an arbitrator for the case Docket Nº 1933-2013 cannot continue the arbitration because of his objection in the process. This action was brought since the arbitrator filed a preliminary decision on the matter before he was allowed to do so. Therefore, we believe that he lacks impartiality for the final ruling. On October 16, 2014, we were informed that an injunction order was granted by Mr. Varela and executed on Lustros Chile SpA’s assets in the arbitration. As a consequence, the following assets are and will remain seized: Lustros Chile SpA’s shares in Sulfatos (600,000 shares though it is alleged that Lustros Chile SPA does not own any property or shares in Sulfatos Chile S.A.); 24,000 shares in Bluestone SpA; bank account ending in 0748 at Itaú Bank; all credit that Lustros Chile SpA has against Sulfatos Chile S.A.; and all credit related to the current account between Lustros Chile SpA and Sulfatos Chile S.A. On October 16, 2014 the Company’s bank account at Itau Bank was levied for 29,019,497 CLP or approximately $~~720~~49,~~570~~636 ~~with~~US Dollars. These measures will remain in place until Lustros Chile SpA pays Nueva Pudahuel the ~~debt~~full ~~discount~~claimed ~~into~~amount, offers assets as guarantee, or arrives at a settlement. Lustros Chile SpA continues to vigorously defend against the actions taken and is working through its Chilean attorneys to resolve these matters as soon as reasonably possible. The arbitration and the trial are in their final stages, the parties having presented their main arguments and means of proof however no decision has been made as of the time of this filing. Our copper sulfate processing plant is currently shut down pending resolution of this matter. Should the arbitrator decide against the Company, it may be forced to liquidate some or all of its assets to satisfy the judgment. On February 2,~~019~~ 2015,~~870~~ ~~shares~~our Chilean counsel reported the following with regard to the ongoing arbitration of ~~Common~~the ~~Stock~~Congo Project. The Chilean representatives of Lustros were served with an interim ruling that revoked the following measures previously put in place:

On· ~~March~~Injunction 1,over ~~2013,~~ the ~~Company and Global Investments I~~600,000 ~~LLC (“Global”) entered into a Stock Purchase Agreement, whereby Global agreed to purchase 818,182~~ shares of ~~Common Stock at a purchase price of $0.55 per share or net proceeds of $450,000. More information regarding this agreement can be found~~ in ~~the~~Sulfatos ~~Company’s~~Chile ~~Form 8-K filed with the Commission on March 7, 2013~~S.A.

On· ~~March~~Injunction 1,over ~~2013,~~any ~~the Company~~ and ~~Angelique de~~all ~~Maison~~credit ~~(“de~~that ~~Maison”)~~Lustros ~~entered~~had/has ~~into~~against aSulfatos ~~Stock~~Chile ~~Purchase Agreement, whereby de Maison agreed to purchase 181,818 shares of Common Stock at a purchase price of $0~~S.~~55 per share or net proceeds of $100,000~~A. ~~More information regarding this agreement can be found in the Company’s Form 8-K filed with the Commission on March 7, 2013.~~

On· ~~April~~Injunction ~~22,~~over ~~2013~~all ~~the~~funds ~~Board~~that ofbelong ~~Directors of~~to ~~the~~Lustros ~~Company~~under ~~approved~~ the ~~sale~~current ofmerchant upaccount ~~to 100,000 Preferred Series “A” Shares of the Company~~ (~~Series~~cuenta ~~“A” Shares~~corriente mercantil) at a purchase price of $10.00 per share. Each Series “A” Share is convertible into 100 shares of Company Common Stock upon the satisfaction of certain terms and conditions. On June 25, 2013 the Board of Directors of the Company approved increasing the number of Preferred Series “A’ Shares available for sale to 142,200. The Series A Shares were offered to small group of accredited investors already familiar with ~~the~~Sulfatos ~~Company~~Chile ~~in a private placement transaction exempt from registration under Section 4(2) of the Securities Act of 1933~~S. ~~The termination date of the offering was September 30, 2013, and a total of 142,200 Series “~~A~~” Shares for a total of $1,422,000 have been subscribed for to date, $950,000 were received in cash proceeds and $472,000 were settled against related party notes~~.~~. The offering is only available to this small group of accredited investors and this disclosure does not constitute an offer to sell securities to any persons whatsoever.~~

On· ~~June~~Injunction ~~25,~~over ~~2013~~Lustros’ ~~the Board of Directors of the Company approved the sale of up to an additional 50,000 Preferred Series “A” Shares of the Company (Series “A” Shares) at a purchase price of $17.00 per~~ share. Each Series “A” Share is convertible into 100 shares of Company Common Stock upon the satisfaction of certain terms and conditions. The Series “A” Shares were offered to small group of accredited investors already familiar with the Company in aBluestone ~~private placement transaction exempt from registration under Section 4(2) of the Securities Act of 1933~~SpA. The termination date of the offering is September 30, 2013. The offering is only available to this small group of accredited investors and this disclosure does not constitute an offer to sell securities to any persons whatsoever. In addition, the Board of Directors of the Company approved the sale of Convertible Notes bearing interest at the rate of 10% per annum redeemable in 18 months or convertible after six months into shares of the Company’s Common Stock at a price equal to 60% of the average of the variable weighted average price for the 10 trading days prior to the date of conversion. As of September 30, 2013, 19,176 subscriptions had been sold for $326,000 in cash proceeds and $69,000 in Convertible Notes had been issued.

22The company’s subsidiary, Sulfatos Chile S.A., in engaged in litigation before the 8th Civil Trial court of Santiago, Docket Nº 18242-2013, in the matter Nueva Pudahuel S.A. v. Sulfatos Chile S.A. The claim was brought before the court on or about November 2013. Nueva Pudahuel S.A. is claiming for the payment of invoices for a total amount of $58,386.61. The company has filed a formal opposition to such claim, under articles 464 et seq of the Chilean Civil Procedural Code., which is currently in the probatory stage.

OnThe ~~August 8, 2013 the Board of Directors of the~~ Company’s ~~approved the sale of up to an additional 130~~subsidiary,~~000~~ ~~Preferred Series “A” Shares of the Company (Series~~Sulfatos ~~“A”~~Chile ~~Shares) at a purchase price of $5~~S.~~00 per share~~A. ~~Each Series “A” Share~~ is ~~convertible~~involved ~~into~~in ~~100~~various ~~shares of~~labor ~~Company~~lawsuits ~~Common~~with ~~Stock~~former ~~upon~~employees ~~the~~that ~~satisfaction~~are oflikely ~~certain terms and conditions. The Series “A” Shares were offered~~ to ~~small~~have ~~group~~an ofunfavorable ~~accredited~~outcome. ~~investors~~We ~~already familiar with the Company in a private placement transaction exempt from registration~~have ~~under~~accrued ~~Section~~approximately ~~4(2)~~$345,000 as of the ~~Securities Act of 1933. The termination~~ date of ~~the offering is September 30, 2013. The offering is only available to~~ this ~~small~~filing ~~group of accredited investors and this disclosure does not constitute an offer~~ to ~~sell~~handle ~~securities to~~these ~~any persons whatsoever~~claims. ~~As of September 30, 2013, 130,000 subscriptions had been sold for $650,000 in cash proceeds.~~

~~These~~The ~~issuances~~Company’s ~~were~~subsidiary, ~~exempt~~Sulfatos Chile ~~from~~S.A. ~~registration under~~is engaged in litigation before the ~~Securities~~4th ~~Act~~Civil Trial Court of ~~1933~~Santiago, asDocket ~~amended~~No 25496-2014, ~~pursuant~~in tothe ~~Section~~matter of ~~4(2)~~Oryxeio asIngenieria ~~transactions~~Limitada ~~not~~v. ~~involving~~Sulfatos aChile ~~public~~S.A. ~~offering~~On December 22, 2014 Sulfatos Chile S.A. ~~The~~was ~~purchasers~~declared bankrupt by the court. ~~represented~~The Board of Directors of Sulfatos Chile S.A. decided not to oppose the bankruptcy process. The Company ~~that~~will ~~they~~provide ~~were~~more ~~"accredited~~information on ~~investors"~~these ~~and~~proceedings ~~made~~via ~~customary~~a ~~investment~~Current ~~representations~~Report on Form 8-K as it becomes available.

NoOther ~~underwriting~~than ~~discounts~~the foregoing, we know of no material, existing or ~~commissions~~pending ~~were~~legal ~~paid~~proceedings against the Company, nor are we involved as a plaintiff in ~~connection~~any material proceeding ~~with~~or ~~these~~pending ~~issuances~~litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 31A. ~~DEFAULTS~~RISK ~~UPON SENIOR SECURITIES~~FACTORS

~~Sulfatos~~There ~~currently~~are ~~owes~~no ~~$176,011,132 CLP,~~material orchanges ~~approximately~~to ~~$349,944~~risk USfactors from ~~dollars,~~those ~~for~~included ~~the~~in ~~last~~our ~~two~~Form ~~payments~~10-K offor the ~~land~~year ~~acquired~~ended inDecember ~~the~~31, ~~first quarter of 2011~~2013. ~~The debt is currently in default. There is no default rate on the note.~~

~~ITEM 4. MINE SAFETY DISCLOSURE~~25

~~Nothing~~ITEM ~~to report~~2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~ITEM~~On 5January 16, 2014, a holder of a Convertible Note in the amount of $20,000 elected to convert their Convertible Note into Common Stock of the Company. ~~OTHER~~$20,000 ~~INFORMATION~~of principal plus $802.19 in accrued interest was converted into 128,647 shares of Common Stock.

~~Nothing~~On toMarch ~~report~~5, 2014, Suprafin, Ltd. converted 39,540 shares of Series A Preferred Stock into 3,954,000 shares of Common Stock of the Company.

~~ITEM~~These 6issuances were exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) as transactions not involving a public offering. ~~EXHIBITS~~The purchasers represented to the Company that they were "accredited investors" and made customary investment representations.

Exhibit Number		Description of Exhibit
10.01		Stock Purchase Agreement Lustros, Inc. and Global Investments I, LLC dated March 1, 2013. Incorporated by reference as part of Form 8-K filed with the Commission on March 7, 2013
10.02		Stock Purchase Agreement Lustros, Inc. and Angelique de Maison dated March 1, 2013. Incorporated by reference as part of Form 8-K filed with the Commission on March 7, 2013
31.01		Certification of Principal Executive Officer Pursuant to Rule 13a-14*
31.02		Certification of Principal Financial Officer Pursuant to Rule 13a-14*
32.01		CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act*
32.02		CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act*
		*Filed with this report.

No underwriting discounts or commissions were paid in connection with these issuances.

~~The~~ITEM ~~following~~3. ~~materials~~DEFAULTS ~~from~~UPON ~~the~~SENIOR Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2013, formatted in eXtensible Business Reporting Language: (i) the Condensed Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows and (v) the Notes to Condensed Financial Statements, as follows:SECURITIES

101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema

As of March 31, 2014 Sulfatos owed $197,227,995 CLP, or approximately $358,251 US dollars, for the last two payments of the land acquired in the first quarter of 2011. This debt was in default at March 31, 2014. There is no default rate on the note. In June 2014 the debt was renegotiated and was no longer in default.

101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase

ITEM 4.

MINE SAFETY DISCLOSURE

~~101.LAB~~Nothing ~~XBRL~~to ~~Taxonomy Extension Label Linkbase~~report.

23ITEM 5. OTHER INFORMATION

~~SIGNATURES~~Nothing to report.

InITEM ~~accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized~~6. EXHIBITS

LUSTROS, INC.

Exhibit Number	Description of Exhibit
31.01	Certification of Principal Executive Officer Pursuant to Rule 13a-14*
31.02	Certification of Principal Financial Officer Pursuant to Rule 13a-14*
32.01	CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act*
32.02	CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act*
	*Filed with this report.

Dated: November 19, 2013	/s/ William Farley
	By: William Farley Its: Chief Executive Officer (Principal Executive Officer)
Dated: November 19, 2013	/s/ Trisha Malone
	By: Trisha Malone Its: Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

The following materials from the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2014, formatted in eXtensible Business Reporting Language: (i) the Condensed Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows and (v) the Notes to Condensed Financial Statements, as follows:

101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema

101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase

101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Presentation Linkbase Document

SIGNATURES

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

	LUSTROS, INC.

Dated: March 30, 2015

/s/ William Farley

By: William Farley

Its: Chief Executive Officer (Principal Executive Officer) and Principal Financial Officer

Filing Compare · Lustros Inc.