NOTE 11 - COMMITMENTS AND CONTINGENCIES

(i) On November 6, 2023, the Company was notified of a lawsuit filed in Clark County, NV against the Company by GS Capital regarding the unavailability of conversion shares relating to the Promissory Note entered into on October 11, 2021 and the remaining principal balance of $33,682. Shortly after the Plaintiff filed the lawsuit, BlackStar repaid the remaining principal balance. At the outset of the case, a temporary restraining order was entered and required the transfer of 257,000,000 shares of BlackStar’s stock to the Plaintiff to be sold on the open market, which occurred in Q1 and Q2 of 2024. BlackStar has appealed the temporary restraining order to the Nevada Supreme Court and seeks the return of the 257,000,000 shares, among other damages. While the appeal is pending, the Company, through its attorneys, filed an answer to Plaintiff’s complaint and counterclaims against Plaintiff on February 27, 2024. In addition to denying many of the allegations laid out in the lawsuit, the Company invokes several affirmative defenses that bar Plaintiff’s recovery in the action and alleges that Plaintiff breached the terms of the agreement, including, but not limited to, obtaining the conversion of BlackStar’s stock after the Promissory Note was fully paid off. Amongst other claims, the Company alleges that the Plaintiff acted in bad faith and in violation of usury laws by recovering an estimated $600,000 dollars in BlackStar stock off of a $60,000 promissory note, estimated at a roughly 170% interest rate. The Company seeks a judgment in its favor and against Plaintiff, compensatory damages in an amount to be proven at trial, declaratory relief voiding the agreement as illegal under Section 29(b) of the Securities Act, punitive damages in an amount to be proven at trial, interest on all damages, and attorneys’ fees. As a result of the counterclaims, there can be no reasonable estimate of any contingencies as of June 30, 2024. At an April 22, 2024 hearing, the Plaintiff’s motion to dismiss our counterclaims was denied, and again on July 18, 2024 the Court refused to dismiss BlackStar’s counterclaims against Plaintiff. BlackStar intends to pursue those counterclaims for securities violations. BlackStar and the Plaintiff have agreed to a stay of the trial court proceedings while the appeal of the temporary restraining order is resolved, likely in late 2025 or early 2026. The Company is unable to reasonably estimate any potential loss from this matter, and is of the opinion that it will prevail in this action.

(ii) On October 30, 2024, the Company entered into a Settlement Agreement with Continuation Capital, Inc. (“CCI”) for the purchase of $861,539.26 of debt owed to BlackStar’s creditors. The Settlement Agreement was approved in Florida State court in compliance with the terms of Section 3(a)(10) of the Securities Act of 1933, as amended. Under the terms of the Settlement Agreement and Stipulation, CCI agreed to purchase the bona fide and outstanding and unpaid creditor claims in exchange for shares of BlackStar’s common stock. If satisfied in full, pursuant to the Settlement Agreement, the Company will reduce its debt obligations in exchange for the issuance of shares of Company’s common stock to CCI. The shares will be issued at a discount of 42.5% off the market price (the lowest closing sale price for twenty (20) trading days), in one or more tranches, pursuant to the terms of section 3(a)(l0) of the Securities Act of 1933, as amended. Upon closing, the Company issued to CCI 60,200,000 freely trading shares, valued at $138,640, based on the trading price of the Company’s common stock as of the date of the Settlement Agreement, as a fee for entering into the Settlement Agreement, pursuant to Section 3(a)(10) of the Securities Act. In November 2024, the Company issued to CCI an additional 13,377,926 shares of common stock for CCI’s payment of $10,000 to certain creditors of the Company.

At December 31, 2024 and 2023, there were no legal proceedings against the Company, other than the matter with GS Capital mentioned above.