8. Stockholders Equity

12 Months Ended

Dec. 31, 2013

Stockholders' Equity

8. Stockholders Equity

On December 3, 2013 the Company filed a Definitive Schedule 14C Information Form with the SEC informing them that the holders of more than a majority of the outstanding Common Stock of the Company had approved to amend the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock from 100,000,000 to 250,000,000 which had been approved by a vote of the shareholders of the Company on November 20, 2013.

The authorized capital stock of Lustros currently consists of 250,000,000 shares of Common Stock, $0.001 par value per share, and 10,000,000 shares of Preferred Stock, par value of $0.001 per share, designated “Series A Preferred Stock.” Each share of Series A Preferred Stock is convertible at the option of the holder into 100 shares of Common Stock and is entitled to 100 votes per share on all matters submitted to the shareholders of Lustros. At December 31, 2013, there were outstanding 97,169,346 shares of Common Stock and 441,416 shares of Series A Preferred Stock.

From January 2013 through December 2013, Magna converted $527,378 of their loans and $1,338 in accrued interest valued at $977,733 with the debt discount into 2,424,728 shares of Common Stock, See Note 7 – Debt.

On March 1, 2013, the Company and Global Investments I, 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 for total proceeds of $450,000.

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.

On April 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 “A’ 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. $700,000 was received as cash proceeds and $722,000 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. See Note 10 – Derivative Liability.

On June 25, 2013 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 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. 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.

On August 8, 2013 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.

In October 2013 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 $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 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 been sold for $250,000, $210,000 in debt conversion and $40,000 in cash proceeds.

On November 13, 2013 Angelique de Maison agreed to convert 4,500,000 shares of Common Stock into 45,000 shares of Preferred Series “A” Shares of the Company. These Preferred Series “A” Shares are convertible back to Common Stock at the holder’s option at the rate of 100 shares of Common Stock for each Preferred Series “A” 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. A total of $880,640 in debt was converted into 55,040 shares of Preferred Series A Stock at $16 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 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.

On November 15, 2013, the Company entered into a Unit Purchase Agreement (the “Unit Purchase Agreement”) with several accredited investors pursuant to which an initial closing has occurred with respect to which certain accredited investors purchased a total of 1,975,000 units at a purchase price of $.80 per unit, for a total purchase price of $1,580,000. Each unit (“Unit”) consists of five shares of Common Stock of the Company and one warrant to purchase a share of common stock of the Company (“Warrant”). The Unit Purchase Agreement, as amended, allows for sales of up to $1,650,000 aggregate purchase price for the Units, and the Company may have one or more subsequent closings until it reaches the $1,650,000 limit. The shares purchased in conjunction with the Units will be registered on a resale registration statement to be filed by the Company in conjunction with a registration rights agreement which was executed in connection with the Unit Purchase Agreement. As of December 31, 2013 a total of 9,875,000 common shares had been sold under these Unit Purchase Agreements for $1,580,000 in cash proceeds less fees.

This registration statement is required to be filed within 30 days of the closing date as contemplated by the Unit Purchase Agreement. Each Warrant issued in connection with the units bears a $0.25 per share exercise price and expires on the third anniversary of the date of issuance. If at any time the volume weighted average price as reported on Bloomberg, LP on the OTCQB or other principal market for the Company’s common stock for one share of the Company’s common stock is more than $.50 (as adjusted for stock splits and reverse splits) for a period of thirty (30) consecutive calendar days, the Company, may, upon twenty (20) business days prior written notice, repurchase this Warrant in whole or in part, whether or not the actual Warrant is tendered to the Company, at a purchase price of $.001 per share represented by the portion of the Warrant being repurchased, which payment must be made by the Company to the Warrantholder no later than 5 PM Pacific standard time on the 15th business day following the date of tender of written notice by the Company to the Warrantholder to repurchase such Warrant. All issuances of the Company’s securities pursuant to the above have been made, or will be made, in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended and Regulation D, as amended, as promulgated under the Securities Act of 1933, and all investors in the above referenced transaction are accredited investors as such term is defined in Regulation D. No general solicitation or advertising was used in connection with the sale of such securities, and the Company has imposed appropriate limitations on resales.

The following table summarizes stock warrants activity during fiscal 2013 under all plans:

	Number of Shares		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Warrants outstanding at December 31, 2012:		–	$	–		–	$	–
Granted		2,133,000		0.25		3 yrs.		31,455
Exercised		–		–		–		–
Canceled		–		–		–		–
Warrants outstanding at December 31, 2013		2,133,000	$	0.25		3 yrs.	$	31,455
Warrants exercisable at December 31, 2013		2,133,000	$	0.25		3 yrs.	$	31,455