UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE
SECURITIES EXCHANGE ACT OF 1934
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Item 1.01 Entry into a Material Definitive Agreement
On October 29, 2024, BlackStar Enterprise Group, Inc. ("BEGI", "BlackStar", or the "Company") entered into a proposed settlement for purchase of $861,539.26 of debt owed to BlackStar's creditors. Under the terms of the Settlement Agreement and Stipulation ("Settlement Agreement") discussed below, Continuation Capital, Inc. ("CCI") agreed to purchase the bona fide and outstanding and unpaid creditor claims in exchange for shares of BlackStar's common stock in a State court approved transaction in compliance with the terms of Section 3(a)(10) of the Securities Act of 1933, as amended. The Settlement Agreement was subject to the State court fairness hearing pursuant to the requirements of Section 3(a)(10) of the Securities Act of 1933, as amended, and was approved on October 30, 2024. Enclave Capital LLC ("Enclave") acted as placement agent and secured Continuation Capital, Inc., a Delaware corporation, as a purchaser for BlackStar's debt.
If satisfied in full, pursuant to the Settlement Agreement, the Company shall reduce the Company's debt obligations in exchange for the issuance of shares of Company's common stock to CCI at a discount off the market price as disclosed in the Settlement Agreement, in one or more tranches, pursuant to the terms of section 3(a)(l0) of the Securities Act of 1933, as amended. The Settlement Agreement allows Continuation Capital to purchase debt that we owe to our creditors through direct purchase of the debts from our creditors and convert such debt into shares of our common stock at a reduction of forty-two and a half percent (42.5%) off the lowest closing sale price for twenty (20) trading days as disclosed in the Settlement Agreement prior to the date of conversion for each tranche of debt purchased. Upon closing, the Company will immediately issue 60,200,000 freely trading shares pursuant to Section 3(a)(10) of the Securities Act to CCI.
The Settlement Agreement contains a condition that Continuation Capital, Inc., will not be allowed to hold more than 4.99% of BlackStar's issued and outstanding common stock at any time. Pursuant to the Settlement Agreement, for the liabilities purchased by Continuation Capital, Inc., we may issue shares of our common stock pursuant to an exemption from registration afforded by Section 3(a)(l0) of the Securities Act of 1933 to Continuation Capital, Inc. No relationship exists between the Company and CCI or Enclave, other than by entry into the agreement discussed herein.
The foregoing is a summary of the terms of the Settlement Agreement and are qualified in their entirety by the Settlement Agreement that is attached hereto and incorporated herein as Exhibit 10.1. The Order Granting Approval of the Settlement Agreement is attached as Exhibit 10.2.
Item 3.02 Unregistered Sales of Equity Securities
Although the debt will be exchanged for shares of common stock in tranches, it is foreseeable that the total number of securities issued in the 3(a)(10) transaction will exceed 5% of the current outstanding securities. The Company and CCI executed the Settlement Agreement in accordance with and in reliance upon the exemption from securities registration for offers and sales to accredited investors afforded, inter alia, by section 3(a)(10) of the Securities Act of 1933, as amended. CCI understands that the Securities are being offered for exchange in reliance on specific exemptions from the registration requirements of the 1933 Act and state securities laws and that the Company is relying upon the truth and accuracy of, and CCI's compliance with, the representations, warranties, agreements, acknowledgments and understandings of CCI set forth in the Settlement Agreement in order to determine the availability of such exemptions and the eligibility of CCI to acquire the Securities.
See the disclosures under Item 1.01 of this Current Report on Form 8-K, incorporated herein by this reference.
Item 7.01 Regulation FD Disclosure.
Press Release
The information in this Item 7.01 of this Current Report is furnished pursuant to Item 7.01 and shall not be deemed "filed" for any purpose, including for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section.
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The information in this Current Report on Form 8-K shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act regardless of any general incorporation language in such filing.
On November 5, 2024, the Company issued a press release entitled "Blockchain Technology Company BlackStar Secures Institutional Investor for Debt Repayment, Seeks Valuation and Eyes Revenue Possibilities Through IP Licensing" A copy of the press release is attached hereto as Exhibit 99.
Item 9.01 Exhibits
The following exhibits are filed with this report on Form 8-K.
| Exhibit Number | Exhibit | ||
| 10.1 | Settlement Agreement | ||
| 10.2 | Order Approving Settlement Agreement | ||
| 99 | Press Release | ||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.
BLACKSTAR ENTERPRISE GROUP, INC.
By: /s/ Joseph Kurczodyna
_____________________________________________
Joseph Kurczodyna, Chief Executive Officer
Date: November 5, 2024
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