Lustros Inc. - FORM 10-Q - November 14, 2011

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EXCEL - IDEA: XBRL DOCUMENT - Lustros Inc.	Financial_Report.xls
EX-31.02 - EXHIBIT 31.02 - Lustros Inc.	exhibit31-02.htm
EX-32.01 - EXHIBIT 32.01 - Lustros Inc.	exhibit32-01.htm
EX-31.01 - EXHIBIT 31.01 - Lustros Inc.	exhibit31-01.htm
EX-32.02 - EXHIBIT 32.02 - Lustros Inc.	exhibit32-02.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

[Missing Graphic Reference]

FORM 10-Q

[Missing Graphic Reference]

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

For the quarterly period ended September 30, 2011

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

POWER-SAVE ENERGY COMPANY

(Exact name of registrant as specified in its charter)

Utah	87-9369569
(state or other jurisdiction of incorporation or organization)	(I.R.S. Employer I.D. No.)

3940-7 Broad Street, #200,

San Luis Obispo, CA 93401

(Address of principal executive offices)

(866) 297-7192

(Issuer's telephone number)

with a copy to:

Zouvas Law Group, P.C.

2368 Second Avenue

San Diego, CA 92101

Telephone (619) 688-1116

Facsimile: (619) 688-1716

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.

x Yes o 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). o Yes o No (Not required)

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

Large Accelerated Filer o Accelerated Filer o

Non-Accelerated Filer o Smaller Reporting Company x

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

o Yes x No

As of, September 30, 2011, there were 76,828,188 shares of the registrant’s $0.001 par value common stock issued and outstanding.

Page - 1

POWER-SAVE ENERGY COMPANY*

TABLE OF CONTENTS

		PAGE
PART I	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	16
ITEM 4.	CONTROLS AND PROCEDURES	16
PART II	OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	17
ITEM 1A.	RISK FACTORS	17
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	17
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	17
ITEM 4.	[REMOVED AND RESERVED]	17

ITEM 5.	OTHER INFORMATION	17
ITEM 6.	EXHIBITS	18

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 Power-Save Energy Company (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. 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, the words "we," "our," "us," the "Company," or "PWSV" refers to Power-Save Energy Company.

Page - 2

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INDEX	Page
Unaudited Condensed Balance Sheet as of September 30, 2011 and Audited Consolidated Balance Sheet as of December 31, 2010	F-1
Unaudited Condensed Statement of Operations for the three Months Ended September 30, 2011 and 2010 and the Nine Months Ended September 30, 2011 and 2010	F-2
Unaudited Condensed Statement of Cash Flows for the Nine Months Ended September 30, 2011 and 2010	F-3
Notes to Financial Statements	F-4

Page - 3

POWER-SAVE ENERGY COMPANY

BALANCE SHEET

AS OF SEPTEMBER 30 2011 AND DECEMBER 31, 2010

		September 30, 2011			December 31, 2010
		(Unaudited)
	ASSETS
Current Assets:
Cash and cash equivalents		$	372,067		$	33,528
Accounts receivable, net of allowance			324,763			1,509,690
Inventory			65,564			91,066
Federal income taxes recoverable			3,365			77,402
Other current assets			11,881			0
Total current assets			777,640			1,711,686
Equipment, net of accumulated depreciation			36,931			53,067
Intangible assets, net of accumulated amortization			7,992			8,618
Direct response advertising-net			20,259			63,710
Other assets			1,400			1,400
Total assets		$	844,222		$	1,838,481

	LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable		$	183,249		$	579,561
Line of credit			36,963			70,484
Other current liabilities			12,563			166,212
Income taxes payable			-			828
Total current liabilities			232,775			817,075

Stockholders equity
Preferred stock, $0.01 par value, 10,000 shares
Authorized, none issued and outstanding
Common stock, $.001 par value, 100,000,000 shares
Authorized, 76,828,188 and 31,306,988 issued and outstanding			76,828			31,307
Additional paid-in-capital			1,936,255			1,539,564
Retained earnings (accumulated deficit)			(1,401,636	)		(549,475	)
Total stockholders equity			611,447			1,021,396
Total Liabilities and stockholders equity		$	844,222		$	1,838,481

The accompanying notes are an integral part of these financial statements.

F - 1

POWER-SAVE ENERGY COMPANY

STATEMENT OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(Unaudited)

				NINE MONTHS						THREE MONTHS
	2011			2010			2011			2010
Revenue	$	690,157		$	2,846,875		$	186,318		$	1,721,373

Cost of sales
Merchandise		348,822			1,621,183			93,370			1,259,044
Other costs		36,427			85,808			11,415			27,643
Total cost of sales		385,249			1,706,991			104,785			1,286,687

Gross margin		304,908			1,139,884			81,533			434,686

Operating expenses
Advertising and promotion		163,466			298,453			48,397			95,631
Sales commissions		246,666			517,026			133,106			145,745
General and administrative		748,056			797,899			338,056			348,909
Total operating costs and expenses		1,158,188			1,613,378			519,559			590,285

Net income (loss) before provision for income taxes and other income (expenses)		(853,280	)		(473,494	)		(438,026	)		(155,599	)
Interest income		0			2,538			0			2,538
Net income (loss) before provision for income taxes		(853,280	)		(470,956	)		(438,026	)		(153,061	)
Provision for (recovery of) income taxes		0			(5,593	)		0			0
Net income (loss)	$	(853,280	)	$	(465,363	)	$	(438,026	)	$	(153,061	)

Earnings per common share:
Basic	$	(0.02	)	$	(0.02	)	$	(0.01	)	$	(0.01	)

Shares used in computing earnings per share
Basic		57,011,952			30,716,143			65,747,262			30,856,884

The accompanying notes are an integral part of these financial statements.

F - 2

POWER-SAVE ENERGY COMPANY

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 and 2010

	2011			2010

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)	$	(853,280	)	$	(465,363	)
Adjustment to reconcile net income (loss) to
net cash provided by operating activities
Depreciation and amortization		16,761			2,527
Allowance for doubtful accounts					(148,398	)
Change in operating assets and liabilities
Accounts receivable		1,186,047			(1,012,435	)
Inventory		25,501			331,717
Prepaid expenses		31,570			61,251
Income taxes recoverable		74,037			153,675
Deferred taxes		0			50,128
Accounts payable and other liabilities		(252,747	)		783,477
Taxes payable		(829	)		(800	)
Net cash provided by (used) by operating activities		227,060			(244,221	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of equipment		0			(2,749	)
Increase in security deposits		0			(1,400	)
Net cash provided by (used) by investing activities		0			(4,149	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock		145,000			190,000
Reduction in line of credit		(33,521	)		0
Net cash provided (used) by financing activities		111,479			190,000

Net Increase (decrease) in cash and cash equivalents		338,539			(58,370	)

Cash and cash equivalents beginnig of period		33,528			321,637

cash and cash equivalents end of period	$	372,067		$	263,267

Supplemental cash flow disclosures

Common stock issued to settle accounts payable	$	217,212

Common stock issued for services	$	80,000

The accompanying notes are an integral part of these financial statements.

F - 3

POWER-SAVE ENERGY COMPANY

NOTES TO FINANCIAL STATEMENTS

The following financial information is submitted in response to the requirements of Form 10-Q and does not purport to be financial statements prepared in accordance with generally accepted accounting principles. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although the Company believes the disclosures that are made are adequate to make the information presented not misleading. Further, in the opinion of the management, the interim financial statements reflect fairly the financial position and results of operations for the periods indicated.

It is suggested that these interim financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K containing the Company's audited financial statements as of and for the year ended December 31, 2010 filed with the Securities and Exchange Commission. The results of operations for the nine months ended September 30, 2011 are not necessarily indicative of results to be expected for the entire fiscal year ending December 31, 2011.

Note 1 - Organization and Principal Activities

Organization and Description of Business

Power-Save Energy Company (the “Company”) is the successor corporation of Mag Enterprises, Inc., a Utah corporation incorporated on July 30, 1980. On September 10, 1993, an Amendment to the Articles of Incorporation was filed to change its name from Mag Enterprises, Inc. to Safari Associates, Inc. On September 12, 2006, an Amendment to the Articles of Incorporation was filed to change its name from Safari Associates, Inc. to Power-Save Energy Company.

The Company manufactures, markets, and sells renewable energy and energy savings products.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation

The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts in the financial statements, including the estimated useful lives of tangible and intangible assets. Management believes the estimates used in preparing the financial statements are reasonable and prudent. Actual results could differ from these estimates.

Financial Instruments

The Company's financial instruments include cash and cash equivalents, accounts receivable and accounts payable. At September 30, 2011 the carrying cost of these instruments approximate their fair value.

Cash Equivalents

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

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and are not interest bearing. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible receivables. The Company reviews its accounts receivable by aging category to identify significant customers or invoices with known disputes or collectability issues. For those invoices not specifically reviewed, the Company provides reserves based on the age of the receivable. In determining the amount of the reserve, we make judgments about the creditworthiness of significant customers based on ongoing credit evaluations. The Company also considers historical levels of credit losses and current economic trends that might impact the level of future credit losses. When the Company determines that amounts are uncollectible they are written off against the allowance.

Inventory

Inventory is stated at the lower of cost or market, with cost determined on a FIFO basis. Inventory includes electric savings devices and renewable energy solar systems.

Property and Equipment

Property and equipment are carried at cost. Depreciation of property and equipment is provided using the straight-line method for financial reporting purposes at rates based on the following estimated useful lives:

	Years
Machinery and equipment	5-7

For federal income tax purposes, depreciation is computed using the accelerated cost recovery system and the modified accelerated cost recovery system. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred.

F - 4

POWER-SAVE ENERGY COMPANY

NOTES TO FINANCIAL STATEMENTS

Equipment and leasehold improvements consists of the following at September 30, 2011:

Description	2011	2010
Furniture and equipment	$ 70,585	$ 70,585
Less accumulated depreciation	33,654	17,568
TOTAL	$ 36,931	$ 53,067

Intangible Assets

In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets," the Company evaluates intangible assets and other long-lived assets for impairment, at least on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated future cash flows. Recoverability of intangible assets and other long-lived assets is measured by comparing their net book value to the related projected undiscounted cash flows from these assets, considering a number of factors including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss.

Revenue Recognition

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 service 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.

Stock - Based Compensation

The Company may periodically issue shares of common stock for services rendered or for other costs and expenses. Such shares will be valued based on the market price of the shares on the transaction date.

The Company may periodically issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs.

The Company accounts for its stock-based compensation in accordance with ASC Topic 740, "Share-Based Payment, and an Amendment of FASB Statement No. 123." The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees. There were no stock options granted during the period ended December 31, 2010.

Income Taxes

Income taxes are accounted for in accordance with ASC Topic 740, Accounting for Income Taxes, using 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 and tax credit carry forwards. 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.

Earnings Per Common Share

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

Advertising

Advertising, promotion and marketing programs are charged to operations in the period incurred.

Page - 8

POWER-SAVE ENERGY COMPANY

NOTES TO FINANCIAL STATEMENTS

Direct Response Advertising

Direct response advertising and associated costs capitalized and amortized to selling, general and administrative expenses on a straight line basis after production. Costs are amortized on a straight line basis over 3 years. Management assesses the reliability of the amounts of direct-response advertising costs reported as assets at each balance sheet date by comparing the carrying amounts of direct-response advertising costs reported as assets at each balance sheet date by comparing the carrying amounts of such assets to the probably remaining future net cash flows expected to result directly from such advertising. Advertising that does not meet the capitalization requirements is expensed in the current period.

Net realizable value is determined by comparing the carrying amounts of direct-response advertising costs capitalized as assets at each balance sheet date to the probably remaining future net cash flows expected to result directly from such assets, and impairment loss is recognized in an amount equal to that excess.

Segmented Information

Management has determined that the Company operates in one dominant industry segment. Additional segment disclosure requirements will be evaluated as it expands its operations.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents and accounts receivables. The Company places its cash with high quality financial institutions and at times may exceed the FDIC $100,000 insurance limit. The Company extends credit based on an evaluation of the customer’s financial condition, generally without collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses, as required. Accounts are “written-off” when deemed uncollectible.

Special – Purpose Entities

The Company does not have any off-balance sheet financing activities.

Use of estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements. The Company bases its estimates on historical experience, management expectations for future performance, and other assumptions as appropriate. Key areas affected by estimates include the assessment of the recoverability of long-lived assets, which is based on such factors as estimated future cash flows. The Company re-evaluates its estimates on an ongoing basis. Actual results may vary from those estimates.

Website Development Costs

The Company accounts for website development costs in accordance with Emerging Issues Task Force (EITF) No. 00-2. Accordingly, all costs incurred in the planning stage are expensed as incurred, costs incurred in the website application and infrastructure development stage are accounted for in accordance with Statement of Position (SOP) 98-1 which requires the capitalization of certain costs that meet specific criteria, and costs incurred in the day to day operation of the website are expensed as incurred.

Note 3 – Recently issued accounting pronouncements

The adoption of these accounting standards had the following impact on the Company’s statements of income and financial condition:

In December 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Issued Update (“ASU”) No. 2010-28— Intangibles—Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. The amendments in this Update modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that impairment may exist. The qualitative factors are consistent with the existing guidance, which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. For public entities, the amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In January 2011, the FASB issued ASU No. No. 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20. This ASU temporarily delays the effective date of the disclosures about troubled debt restructurings in Update 2010-20 for public entities. The delay is intended to allow the Board time to complete its deliberations on what constitutes a troubled debt restructuring. The effective date of the new disclosures about troubled debt restructurings for public entities and the guidance for determining what constitutes a troubled debt restructuring will then be coordinated. Currently, that guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011. Accordingly, the Company has not included the disclosures deferred by this ASU.

Note 4 - Commitments and Contingencies

The Company entered into a lease for showroom and warehouse space beginning on June 15, 2008 for a period of five years expiring on June 14, 2013. The Company moved out of the location in 2010 and entered into a settlement agreement with the landlord for a total of $30,000 to release it from further obligations under the lease. On March 18, 2011, 142 Cross Street, LLC filed a Complaint against the Company in San Luis Obispo Superior Court, seeking damages for breach of contract. The suit arises from a dispute

surrounding a commercial real estate lease. The current corporate office of the Company is located at 3450 Sacramento San Luis Obispo, CA 93401. The Company is currently leasing a 1400 sq/ft warehouse space on a month-to-month basis for $1,500 per month. There is no material agreement between the Company and the landlord.

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POWER-SAVE ENERGY COMPANY

NOTES TO FINANCIAL STATEMENTS

The Company has negotiated a line of credit with a bank in the amount of $71,000. The current interest rate on the line of credit is 8.75%. The current balance due on the line of credit as of September 30, 2011, is $36,963.

In March 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-11 (“ASU No. 2010-11”), “Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives.” The amendments in this Update are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of each entity’s first fiscal quarter beginning after issuance of this Update. The Company’s adoption of provisions of ASU No. 2010-11 did not have a material effect on the financial position, results of operations or cash flows of the Company.

In February 2010, the FASB issued ASU 2010-10 (“ASU No. 2010-10”), “Consolidation (Topic 810): Amendments for Certain Investment Funds.” The amendments in this Update are effective as of the beginning of a reporting entity’s first annual period that begins after November 15, 2009 and for interim periods within that first reporting period. Early application is not permitted. The Company’s adoption of provisions of ASU No. 2010-10 did not have a material effect on the financial position, results of operations or cash flows of the Company.

In February 2010, the FASB issued ASU 2010-09 (“ASU No. 2010-09”), “Subsequent Events (ASC Topic 855): Amendments to Certain Recognition and Disclosure Requirements.” ASU No. 2010-09 requires an entity that is an SEC filer to evaluate subsequent events through the date that the financial statements are issued and removes the requirement for an SEC filer to disclose a date, in both issued and revised financial statements, through which the filer had evaluated subsequent events. The Company’s adoption of provisions of ASU No. 2010-09 did not have a material effect on the financial position, results of operations or cash flows of the Company.

In January 2010, the FASB issued ASU 2010-06 (“ASU No. 2010-06”), “Improving Disclosures about Fair Value Measurements.” ASU No. 2010-06 amends FASB Accounting Standards Codification (“ASC”) 820 and clarifies and provides additional disclosure requirements related to recurring and non-recurring fair value measurements and employers’ disclosures about postretirement benefit plan assets. This ASU is effective for interim and annual reporting periods beginning after December 15, 2009. The Company’s adoption of provisions of ASU No. 2010-06 did not have a material effect on the financial position, results of operations or cash flows of the Company.

In January 2010, the FASB issued an amendment to ASC Topic 505, “Equity”, where entities that declare dividends to shareholders that may be paid in cash or shares at the election of the shareholders are considered to be a share issuance that is reflected prospectively in EPS, and is not accounted for as a stock dividend. This standard is effective for interim and annual periods ending on or after December 15, 2009 and is to be applied on a retrospective basis. The Company’s adoption of the amendment to ASC Topic 505 did not have a material effect on the financial position, results of operations or cash flows of the Company.

In January 2010, the FASB issued an amendment to ASC Topic 820, “Fair Value Measurements and Disclosure”, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard, for which the Company is currently assessing the impact, is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010. The Company’s adoption of the amendment to ASC Topic 820 did not have a material effect on the financial position, results of operations or cash flows of the Company.

The Company has 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.

Page - 11

Note 5 - Income Taxes

The provision for income taxes consists of the following:
	2011	2010
Federal income (recovery) tax	$0	($55,755)
State income tax	$0	$34
Deferred tax credit	$0	$50,128
Total	$0	($5,593)
Income taxes based on statutory tax rates are as follows Federal income taxes
State income taxes	($298,648)	(106,800)
Other	($75,436)	(27,456)
Valuation Allowance	$374,084	128,663
Total	0	(5,593)

Note 6 - Intangible Assets

Intangible assets consist of those acquired in the asset purchase agreement in 2006 with Advanced Builder Energy Technologies LLC (ABET), and U.S. Energy Conservation Corp. which includes logos, rights, licenses, designs and approvals, the customer lists. A summary of intangible assets as of September 30, 2011 is as follows:

Intangible assets, at cost	$	12,510
Less - amortization allowed		4,518
	$	7,992

Note 7 - Stockholders Equity

On January 21, 2011, the Company registered two million (2,000,000) shares of the Company’s Common Stock on Form S-8, to be issued pursuant to the 2011 Equity Incentive Plan (the “Plan”), to advance the interests of the Company by providing directors, selected employees and consultants of the Company with the opportunity to acquire shares of the Company’s Common Stock. The Company issued the 2,000,000 shares as of March 31, 2011.

On January 29, 2010, the Company issued a total of 1,900,000 shares of restricted common stock in a private placement. The Company received net proceeds from the offering of $190,000. The Company issued 250,104 shares of common stock for consulting services associated with this private placement valued at market value of $25,000.

On April 20, 2011, the Company registered two million (4,000,000) shares of the Company’s Common Stock on Form S-8, to be issued pursuant to the 2011 Equity Incentive Plan (the “Plan”), to advance the interests of the Company by providing directors, selected employees and consultants of the Company with the opportunity to acquire shares of the Company’s Common Stock

On April 21, 2011, the Company issued 16,521,200 shares of its common stock to Michael Forster for services rendered to the Company from January 1, 2009 through December 31, 2010.

On April 21, 2011, the Company issued 1,500,000 shares of its common stock to WorldBridge Partners, Inc., in exchange for $15,000, pursuant to a Subscription Agreement dated January 20, 2011.

Page - 12

POWER-SAVE ENERGY COMPANY

NOTES TO FINANCIAL STATEMENTS

On April 21, 2011, the Company issued 2,100,000 shares of its common stock to J&C Resource LLC, in exchange for $21,000, pursuant to a Subscription Agreement dated March 28, 2011.

On April 21, 2011, the Company issued 1,000,000 shares of its common stock to David Megan, in exchange for $10,000, pursuant to a Subscription Agreement dated March 30, 2011.

On April 21, 2011, the Company issued 2,000,000 shares of its common stock to the Robert E. Dickey Children’s Irrevocable Trust, in exchange for $20,000, pursuant to a Subscription Agreement dated March 30, 2011.

On April 21, 2011, the Company issued 3,000,000 shares of its common stock to John DeLorme, in exchange for $30,000, pursuant to a Subscription Agreement dated March 30, 2011.

On April 21, 2011, the Company issued 1,000,000 shares of its common stock to Structured Management Inc., in exchange for $10,000, pursuant to a Subscription Agreement dated March 30, 2011.

On April 21, 2011, the Company issued 2,400,000 shares of its common stock to WorldBridge Partners, Inc., in exchange for $24,000, pursuant to a Subscription Agreement dated March 30, 2011.

On April 21, 2011, the Company issued 1,500,000 shares of its common stock to WorldBridge Partners, Inc., in exchange for $15,000, pursuant to a Subscription Agreement dated March 30, 2011.

On May 18, 2010, an additional 200,000 shares of restricted common stock was issued in connection with the January 29, 2010 Private Placement. These shares were valued at market value of $34,000.

On June 20, 2011, the Company registered ten million (10,000,000) shares of the Company’s Common Stock on Form S-8, to be issued pursuant to the 2011 Equity Incentive Plan (the “Plan”), to advance the interests of the Company by providing directors, selected employees and consultants of the Company with the opportunity to acquire shares of the Company’s Common Stock. The Company issued the 8,000,000 shares as of June 30, 2011 for services.

On September 15, 2011, the Company issued 4,500,000 shares for services issued for services rendered from January 1 through June 30, 2011.

Note 8 - Going Concern

The Company has not attained profitable operations and is dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.

Note 9-Concentrations

Approximately 90% of the company’s accounts receivable are due from Power-Save of California at September 30, 2011.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2011 compared to September 30, 2010

Revenue for the three months ended September 30, 2011 was $186,318 compared to $1,721,373 for the three months ended September 30, 2010. This was a decrease of $1,535,055 or 89%. In the three months ended September 30, 2010, the Company delivered solar panel and other equipment to California Power Save to install a 411 kW solar array onto CBS Television Studios buildings. The sale of solar and solar related products for this project was for $1,321,800. Sales of the Company’s products have been weak. The Company has been limited in funds available to advertise and this has reduced the opportunity to market the Companies’ products.

Gross profit for the three months ended September 30, 2011 was $81,533 compared to $434,686 for the three months ended September 30, 2010. This was a decrease of $353,153 or 81 %. The gross profit margin for the three months ended September 30, 2011 was 44% compared to 25% for the three months ended September 30, 2010. The gross profit from the sale of the solar products for the CBS Television Studio array was approximately 18% compared to approximately 45% for all other products sold in 2010.

Advertising and marketing expense for the three months ended September 30, 2010 was $48,397 compared to $95,631 for the three months ended September 30, 2010. This is a decrease of $47,234. The Company has eliminated its TV commercials due to the weak response during the prior periods and limitation of funds.

Sales commissions for the three months ended September 30, 2011 were $133,106 compared to $145,745 for the three months ended September 30, 2010. This was a decrease of $12,639 or 9%. Commissions are based primarily on retail rates and wholesale rates without discounts.

General and administrative expenses for the three months ended September 30, 2011 were $338,056 compared to $348,909 for the three months ended September 30, 2010. This is a decrease of $10,853 (3%). The major increases in general and administrative expenses were officer’s compensation which increased by $35,000; legal increasing by approximately $40,000. General and administrative expenses which decreased included bad debt expense decreasing by $97,000 and consulting by $22,000. Other .expenses showed minor increases and decreases.

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.

Nine Months Ended September 30, 2011 compared to 2010

Revenue for the nine months ended September 30, 2011 $690,157 compared to $2,846,875 for the nine months ended September 30, 20010. This was a decrease of $2,156,718 or 76%. The Company delivered solar panel and other equipment to California Power Save to install a 411 kW solar array onto CBS Television Studios buildings. The sale of solar and solar related products for this project was for $1,321,800. Sales of the Company’s products have been weak. The Company has been limited in funds available to advertise and this has reduced the opportunity to market the Companies’ products.

Gross profit for the nine months ended September 30, 2011 was $304,908 compared to $1,139,884 for the nine months ended September 30, 2010. This was a decrease of $834,976 or 73 %. The gross profit margin for the nine months ended June 30, 2010 was 44% compared to 40% for the nine months ended September 30, 2010. The gross profit from the sale of the solar products for the CBS Television Studio array was approximately 18% compared to approximately 45% for all other products sold in 2010.

Advertising and marketing expense for the nine months ended September 30, 2011 was $163,466 compared to $298,453 for the nine months ended September 30, 2010. This is a decrease of $134,987. The Company has eliminated its TV commercials due to the weak response during the prior periods and limitation of funds.

Sales commissions for the nine months ended June 30, 2011 were $246,666 compared to $517,026 for the nine months ended September 30, 2010. This was a decrease of $270,360 (52%). Commissions are based primarily on retail rates and wholesale rates without discounts

General and administrative expenses for the nine months ended September 30, 2011 were $748,056 compared to $797,899 for the nine months ended September 30, 2010. This is a decrease of $49,843 (6%). The major increases in general and administrative expenses were officer’s compensation which increased by $75,000; legal increasing by approximately $92,000. General and administrative expenses which decreased included bad debt expense decreasing by $97,000 and consulting by $49,000, collection costs by $33,000 and occupancy costs by $10,000. Other .expenses showed minor increases and decreases.

The Company has used up all its federal net operating loss carryback.

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Liquidity and Capital Resources.

As of September 30, 2011 the current assets exceeded the current liabilities by $372,067 This is a decrease of approximately $350,000 from December 31, 2010.The Company loss of $853,000 was partially offset by the $145,000 raised in a private placement. The Company issued stock of approximately $300,000 to reduce liabilities and pay professional fees. Cash for the period ended September 30, 2010 increased by $338,539, primarily from the collection of accounts receivable.. The Company has made adjustments to its cost structure that should provide a positive cash flow. The Company does not have any current commitments for capital expenditures or any other commitments that would result in a change in cash flow or cash requirements.

Cash Requirements

Our cash on hand as of September 30, 2011 is $65,044. We do not have sufficient cash on hand to pay the costs of our operations as projected to twelve (12) months or less or to fund our operations for that same period of time. We will require additional financing in order to proceed with some or all of our goals as projected over the next twelve (12) months. We presently do not have any arrangements for additional financing, and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with any of our goals projected over the next twelve (12) months and beyond.

Any additional growth of the Company will require additional cash infusions. We may face expenses or other circumstances such that we will have additional financing requirements. In such event, the amount of additional capital we may need to raise will depend on a number of factors. These factors primarily include the extent to which we can achieve revenue growth, the profitability of such revenues, operating expenses, research and development expenses, and capital expenditures. Given the number of programs that we have ongoing and not complete, it is not possible to predict the extent or cost of these additional financing require

Notwithstanding the numerous factors that our cash requirements depend on, and the uncertainties associated with each of the major revenue opportunities that we have, we believe that our plan of operation can build long-term value if we are able to demonstrate clear progress toward our objectives.

Progress in the development of our business plan will likely lend credibility to our plan to achieve profitability. The failure to secure any necessary outside funding could have an adverse effect on our development and results there from and a corresponding negative impact on shareholder liquidity.

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Future Financings

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 our operations and other activities.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

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Recently Issued Accounting Pronouncements

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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").

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Based on this evaluation, our principal executive and principal financial and accounting officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of September 30, 2011.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On March 18, 2011, 142 Cross Street, LLC filed a Complaint against the Company in San Luis Obispo Superior Court, seeking damages for breach of contract. The suit arises from a dispute surrounding a commercial real estate lease.

On September 21, 2011, Chris Frye filed a lawsuit against the Company alleging, among other things, breach of contract surrounding the Company’s CBS Television solar project. The Company vigorously denies all the allegations and insists the lawsuit is an attempt on Chris Frye’s part to evade paying an outstanding invoice owed to the Company. The Company is in the process of filing a cross-complaint against Chris Frye.

Other than the foregoing, we know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending 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 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. [REMOVED AND RESERVED]

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

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

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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.

	POWER-SAVE ENERGY COMPANY

Dated: November 14, 2011	/s/ Michael Forster
	By: Michael Forster Its: Chief Executive Officer

Dated: November 14, 2011	/s/ Louis Fox
	By: Louis Fox Its: Chief Financial Officer

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

Dated: November 14, 2011	/s/ David Forster
	By: David Forster Its: Director

Dated: November 14, 2011	/s/ Gary D. Stanwyck
	By: Gary D. Stanwyck Its: Director

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Exhibit 31.01

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14

I, Michael Forster, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Power-Save Energy Company;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2011

/s/ Michael Forster

By: Michael Forster

Its: Principal Executive Officer

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Exhibit 31.02

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a-14

I, Louis Fox, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Power-Save Energy Company;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2011

/s/ Louis Fox

By: Louis Fox

Its: Principal Financial Officer

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Exhibit 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Power-Save Energy Company (the “Company”) on Form 10-Q for the period ending September 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Forster, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Michael Forster

By: Michael Forster

Chief Executive Officer

Dated: November 14, 2011

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Exhibit 32.02

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Power-Save Energy Company (the “Company”) on Form 10-Q for the period ending September 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Louis Fox, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Louis Fox

By: Louis Fox

Chief Financial Officer

Dated: November 14, 2011

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Lustros Inc. - FORM 10-Q - November 14, 2011

Attached files

Lustros Inc. Reports